1 00:00:00,800 --> 00:00:04,040 Speaker 1: Welcome to the Bloomberg markets podcast. I'm Paul Sweeney. Alongside 2 00:00:04,040 --> 00:00:06,920 Speaker 1: my co host Matt Miller, every business day we bring 3 00:00:06,960 --> 00:00:11,520 Speaker 1: you interviews from CEOS, market pros and Bloomberg experts, along 4 00:00:11,520 --> 00:00:15,520 Speaker 1: with essential market moving news. Find the Bloomberg markets podcast 5 00:00:15,600 --> 00:00:18,439 Speaker 1: on Apple podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:22,800 Speaker 1: at Bloomberg Dot com slash podcast. Let's give it Jennifer 7 00:00:22,880 --> 00:00:26,640 Speaker 1: Lee here, senior economist and managing director at BMO capital markets. Jennifer, 8 00:00:26,640 --> 00:00:30,440 Speaker 1: thanks so much for joining us here. Lots of data 9 00:00:30,520 --> 00:00:34,080 Speaker 1: crossing the Bloomberg Erman over the last week. Uh. Federal, 10 00:00:34,360 --> 00:00:37,360 Speaker 1: you know, central banks around the world, seemingly in a 11 00:00:37,400 --> 00:00:42,239 Speaker 1: concerted effort to tame global inflation, and led by the 12 00:00:42,240 --> 00:00:45,240 Speaker 1: Federal Reserve yesterday, of course. What did you take away 13 00:00:45,280 --> 00:00:49,839 Speaker 1: from Fed Chairman J PAL so? Good Morning. Um, you 14 00:00:49,880 --> 00:00:52,560 Speaker 1: know what he uh, the sentify basis points. Obviously, was 15 00:00:52,640 --> 00:00:56,040 Speaker 1: widely expected from most. I didn't take his comments as 16 00:00:57,000 --> 00:01:00,000 Speaker 1: being too much focish than he has been already, if any. 17 00:01:00,040 --> 00:01:02,800 Speaker 1: Think I think he made it even more clear. Um, 18 00:01:03,280 --> 00:01:04,840 Speaker 1: I don't think he wanted to be there to be 19 00:01:04,880 --> 00:01:07,840 Speaker 1: any ambiguity and, you know, to say that there's gonna 20 00:01:07,880 --> 00:01:10,800 Speaker 1: be pain felt. You know, we're not there yet. Uh. 21 00:01:10,880 --> 00:01:13,479 Speaker 1: He even just Um didn't he? He didn't even struck 22 00:01:13,480 --> 00:01:15,680 Speaker 1: off the possibility of a recession, which was quite interesting 23 00:01:15,720 --> 00:01:18,039 Speaker 1: as well. But you know, if there is any question, 24 00:01:18,080 --> 00:01:20,200 Speaker 1: and he dealt about the resolves of getting inflation back 25 00:01:20,200 --> 00:01:22,480 Speaker 1: down to two percent, everyone, anyone who has had any 26 00:01:22,480 --> 00:01:25,120 Speaker 1: doubt so obviously put that aside because he made it 27 00:01:25,160 --> 00:01:27,679 Speaker 1: pretty crystal clear that they are continuing to raise rates 28 00:01:27,880 --> 00:01:32,960 Speaker 1: and probably into so talk to us about I guess 29 00:01:32,959 --> 00:01:36,400 Speaker 1: the next thing on you know, investors minds is, all right, 30 00:01:36,440 --> 00:01:38,640 Speaker 1: how bad is this gonna get? I mean we're, I guess, 31 00:01:38,680 --> 00:01:42,480 Speaker 1: recessions now penciled into pretty much everybody's models. I would say, 32 00:01:42,480 --> 00:01:44,560 Speaker 1: what if they go too far, except for it seemed 33 00:01:44,560 --> 00:01:48,120 Speaker 1: pretty clear yesterday that they intend to go intend to 34 00:01:48,160 --> 00:01:51,360 Speaker 1: go too far. So that brings up the recession scenario. 35 00:01:51,840 --> 00:01:55,800 Speaker 1: So what do you, the good folks there, think about 36 00:01:55,840 --> 00:02:00,960 Speaker 1: how deep it might be? Yeah, I think. I mean 37 00:02:01,000 --> 00:02:03,040 Speaker 1: we've got out, we've we've actually been lowering our growth 38 00:02:03,040 --> 00:02:06,279 Speaker 1: forecasts steadily like everyone else, and we've actually got zero 39 00:02:06,320 --> 00:02:11,120 Speaker 1: growth now for three Um we still have only one 40 00:02:11,440 --> 00:02:14,600 Speaker 1: quarter of negative growth. I guess the big difference here, 41 00:02:14,720 --> 00:02:16,440 Speaker 1: you know, in terms of recession, is, you know, the 42 00:02:16,680 --> 00:02:20,280 Speaker 1: labor market, and that's the situation. Yeah, so unique. I 43 00:02:20,280 --> 00:02:23,160 Speaker 1: mean if if everyone was cutting jobs right now, you know, 44 00:02:23,240 --> 00:02:25,359 Speaker 1: if we were seeing negative signs in front of pay rolls, 45 00:02:25,400 --> 00:02:27,280 Speaker 1: and that would be a whole different story. But the 46 00:02:27,320 --> 00:02:29,880 Speaker 1: fact that there is still strong demand out there, I 47 00:02:29,880 --> 00:02:32,239 Speaker 1: mean it's it's it's still it's starting to disappear a 48 00:02:32,240 --> 00:02:34,799 Speaker 1: little bit, but it's still people are still looking for work. 49 00:02:34,840 --> 00:02:37,560 Speaker 1: You know, it's still hard to find truck drivers, for example, Um, 50 00:02:37,760 --> 00:02:40,720 Speaker 1: and it's that's the big story. And and wage and 51 00:02:40,800 --> 00:02:44,040 Speaker 1: wage pressures are still high because of that. Um. I mean, 52 00:02:44,040 --> 00:02:46,200 Speaker 1: he also mentioned yesterday that the labor market has been 53 00:02:46,280 --> 00:02:49,000 Speaker 1: very strong and there's still a strong, robust economy. So 54 00:02:49,040 --> 00:02:50,440 Speaker 1: because of that, you know, he's you know, I think 55 00:02:50,440 --> 00:02:53,720 Speaker 1: they're very comfortable. And there there's I think everyone sort 56 00:02:53,760 --> 00:02:56,320 Speaker 1: of resolves themselves with that possibility that we're going to 57 00:02:56,720 --> 00:02:59,160 Speaker 1: slide into a recession or or a deeper downtown turn 58 00:02:59,240 --> 00:03:01,560 Speaker 1: than a usually had been anticipated. But if that's what 59 00:03:01,600 --> 00:03:04,040 Speaker 1: it takes, too but with lower unemployment, right. I mean 60 00:03:04,080 --> 00:03:07,160 Speaker 1: everyone yesterday was talking about four point four percent unemployment, 61 00:03:07,200 --> 00:03:10,080 Speaker 1: which is, I think, Mike McKee had calculated, that's about 62 00:03:10,120 --> 00:03:14,440 Speaker 1: another one point three million job losses. But still compared 63 00:03:14,480 --> 00:03:20,120 Speaker 1: to the great recession, compared to Um, the Internet bubble burst, Um, 64 00:03:20,160 --> 00:03:23,760 Speaker 1: you know, it's nothing. Four point four percent unemployment, right. 65 00:03:23,800 --> 00:03:27,079 Speaker 1: I remember when five percent was like enviable in the US. 66 00:03:27,200 --> 00:03:31,400 Speaker 1: So can we really hold to an unemployment number that's 67 00:03:31,520 --> 00:03:35,440 Speaker 1: that low? We have it edging up to around maybe 68 00:03:35,440 --> 00:03:38,360 Speaker 1: five percent, I think, by the end of next year. 69 00:03:38,520 --> 00:03:41,160 Speaker 1: But again, let's not forget that, you know, there's still 70 00:03:41,160 --> 00:03:43,560 Speaker 1: over ten million job vacancies out there. So some of 71 00:03:43,600 --> 00:03:45,480 Speaker 1: that will get, you know, soaked up from from that 72 00:03:45,520 --> 00:03:47,920 Speaker 1: point Um, from you know, some of the or some 73 00:03:47,960 --> 00:03:49,840 Speaker 1: of the job openings, and of course some of the 74 00:03:49,880 --> 00:03:52,560 Speaker 1: openings will also be taken off the table. Um. You know, 75 00:03:52,640 --> 00:03:54,360 Speaker 1: as I've been saying for for a long time now, 76 00:03:54,400 --> 00:03:56,760 Speaker 1: you know anyone who has multiple job offers out there, 77 00:03:56,760 --> 00:04:00,000 Speaker 1: you know, take one because it's not gonna last. Um. 78 00:04:00,040 --> 00:04:02,720 Speaker 1: But you know, again, this is all parted personal with 79 00:04:02,800 --> 00:04:05,600 Speaker 1: what happens when there's a central bank who is aggressively tightening. 80 00:04:05,600 --> 00:04:07,280 Speaker 1: You're gonna see that slower growth, you're gonna see it 81 00:04:07,360 --> 00:04:09,520 Speaker 1: hit consumers bending and you're going to see the doubles 82 00:04:09,560 --> 00:04:12,960 Speaker 1: rate to hire. And on that front, Jennifer just the 83 00:04:13,000 --> 00:04:16,720 Speaker 1: consumer here is another kind of variable, and the consumer 84 00:04:16,760 --> 00:04:20,919 Speaker 1: seems pretty dark strong. I mean you cannot get, uh, 85 00:04:21,080 --> 00:04:23,080 Speaker 1: you know, a table at a restaurant even on a 86 00:04:23,160 --> 00:04:25,360 Speaker 1: Wednesday night here in New York and and in the 87 00:04:25,440 --> 00:04:28,800 Speaker 1: surrounding areas. The consumer seems pretty strong. How do you 88 00:04:28,800 --> 00:04:32,320 Speaker 1: think that might play out? Well, that's the that's one 89 00:04:32,360 --> 00:04:33,960 Speaker 1: of the wild cars, I guess. And and then you 90 00:04:34,000 --> 00:04:36,880 Speaker 1: know again, I've always, sadly, I've never underestimate the US consumer, 91 00:04:37,200 --> 00:04:38,800 Speaker 1: and that's one of the biggest things that you're mentioning 92 00:04:38,800 --> 00:04:42,279 Speaker 1: about dying out. I mean, if anyone was seriously, truly, truly, 93 00:04:42,320 --> 00:04:44,880 Speaker 1: truly worried about their balance, she is about their finances. 94 00:04:45,160 --> 00:04:46,920 Speaker 1: You know, that's where you're gonna come back first dying out. 95 00:04:46,920 --> 00:04:48,840 Speaker 1: You'RE gonna Brown bag it for for launch, YOU'RE NOT 96 00:04:48,839 --> 00:04:50,920 Speaker 1: gonna go up for the drinks, for drinks after work, 97 00:04:51,200 --> 00:04:53,520 Speaker 1: and that's still happening. So that speaks, I don't think, 98 00:04:53,560 --> 00:04:55,320 Speaker 1: a lot about the US consumer, about the strength of 99 00:04:55,720 --> 00:04:59,239 Speaker 1: about the US consumer. Until we start seeing that fold 100 00:04:59,240 --> 00:05:01,000 Speaker 1: a little bit more, you know the ray hypes will 101 00:05:01,040 --> 00:05:04,240 Speaker 1: continue um and that's a different story. By the way, 102 00:05:04,240 --> 00:05:06,599 Speaker 1: I just mentioned what you guys talked about earlier about 103 00:05:06,680 --> 00:05:09,559 Speaker 1: what's happening overseas. You know, this is all demand riven 104 00:05:09,640 --> 00:05:11,680 Speaker 1: right now, whereas where you're looking at overseas with the 105 00:05:11,680 --> 00:05:13,520 Speaker 1: big of England and the U C B, it's all 106 00:05:13,760 --> 00:05:17,159 Speaker 1: energy driven. The supply chain, the supply side of the equation, 107 00:05:17,640 --> 00:05:20,480 Speaker 1: we thought was getting better. We've heard recently from companies 108 00:05:20,480 --> 00:05:25,520 Speaker 1: like Ford Um, you know, more concerning announcements on the 109 00:05:25,600 --> 00:05:30,880 Speaker 1: supply chain. And obviously the chip situation also isn't expected 110 00:05:30,920 --> 00:05:33,080 Speaker 1: to recover. A lot of companies are saying until twenty 111 00:05:33,120 --> 00:05:36,640 Speaker 1: four really, or twenty five even. Is that side, though, 112 00:05:36,800 --> 00:05:39,719 Speaker 1: of the equation getting better to the point where inflation 113 00:05:39,760 --> 00:05:41,320 Speaker 1: is going to come down to the level power wants 114 00:05:41,400 --> 00:05:44,280 Speaker 1: to see it, even without too much demand destruction, by 115 00:05:44,320 --> 00:05:47,480 Speaker 1: like the middle of next year? Probably not enough. I 116 00:05:47,520 --> 00:05:50,000 Speaker 1: mean I think you know, I've I've it's all anecdotes, 117 00:05:50,000 --> 00:05:51,320 Speaker 1: but you know, you hear stories about some of the 118 00:05:51,360 --> 00:05:54,159 Speaker 1: supply chains easing. Um, you know you saw the the 119 00:05:54,200 --> 00:05:56,640 Speaker 1: supplier delivery delays from some of the regional fed surveys 120 00:05:56,680 --> 00:05:59,320 Speaker 1: have been coming down sharply and that's because demand has 121 00:05:59,360 --> 00:06:02,640 Speaker 1: cooled and that's even manufacturer's time to get through that backlog. 122 00:06:02,760 --> 00:06:05,599 Speaker 1: But other areas like the computer chips, for the for 123 00:06:05,680 --> 00:06:09,400 Speaker 1: the for the Automa auto sector, that's still in high demand, Um, 124 00:06:09,480 --> 00:06:13,839 Speaker 1: and that's still pretty backed up. Jennifer, maybe some of 125 00:06:13,839 --> 00:06:16,560 Speaker 1: our listeners don't know that BEMO is short for Bank 126 00:06:16,600 --> 00:06:19,520 Speaker 1: of Montreal. You're in Canada. How are how is the 127 00:06:19,560 --> 00:06:23,680 Speaker 1: economy in Canada? How's the consumer in Canada? How different 128 00:06:23,720 --> 00:06:25,760 Speaker 1: is it maybe there versus the United States? Do you 129 00:06:25,800 --> 00:06:30,520 Speaker 1: think it's actually fairly similar? We're also we've also got 130 00:06:30,520 --> 00:06:33,440 Speaker 1: the heavy weight of the housing market and the housing 131 00:06:33,600 --> 00:06:36,960 Speaker 1: takes of the larger share of Canadian economy here than 132 00:06:37,000 --> 00:06:40,520 Speaker 1: than in the US, and there we're seeing a pretty 133 00:06:40,520 --> 00:06:42,600 Speaker 1: you know, Um, we're seeing a correction right now in 134 00:06:42,640 --> 00:06:45,120 Speaker 1: the housing market just given the weight of higher rates, 135 00:06:45,120 --> 00:06:47,120 Speaker 1: and we actually had a one hundred basis point rate 136 00:06:47,160 --> 00:06:50,000 Speaker 1: hike here from the Bank of Canada back in July, which, 137 00:06:50,080 --> 00:06:52,640 Speaker 1: you know, that has yet to really filter through into 138 00:06:52,680 --> 00:06:54,800 Speaker 1: the housing market. But but you're we're seeing some of 139 00:06:54,839 --> 00:06:57,200 Speaker 1: the other great hips already filtering through. So we won't 140 00:06:57,200 --> 00:06:59,880 Speaker 1: see a big, real big impact until later this year. 141 00:07:00,360 --> 00:07:02,760 Speaker 1: But consumers so far, you know, is to holding up again, 142 00:07:03,200 --> 00:07:05,480 Speaker 1: labor market and and waste pressures, and we're going to 143 00:07:05,520 --> 00:07:07,960 Speaker 1: get a July retail sales number. We're kind of behind 144 00:07:07,960 --> 00:07:09,960 Speaker 1: on that, by the way. We're getting our July retail 145 00:07:10,000 --> 00:07:12,360 Speaker 1: sales numbers on Friday, so we'll see how the volumes 146 00:07:12,360 --> 00:07:14,880 Speaker 1: pan up. But you know, we're looking for declines because 147 00:07:14,960 --> 00:07:16,560 Speaker 1: you know, just like everywhere else, you know you're gonna 148 00:07:16,560 --> 00:07:19,520 Speaker 1: get hit by higher prices and higher energy prices and 149 00:07:19,680 --> 00:07:23,240 Speaker 1: higher boring costs. So how do you see housing markets? Um, 150 00:07:23,280 --> 00:07:26,960 Speaker 1: you know, obviously it's very regional, but if you look at, 151 00:07:27,000 --> 00:07:30,600 Speaker 1: for example, the US housing market versus Canada, versus the UK, 152 00:07:30,760 --> 00:07:32,640 Speaker 1: which I think are the three places where you saw 153 00:07:33,000 --> 00:07:37,320 Speaker 1: extreme heat, Um, are we going to get any, you know, 154 00:07:37,680 --> 00:07:43,360 Speaker 1: serious financial disasters in terms of housing markets or our 155 00:07:43,400 --> 00:07:47,760 Speaker 1: prices just going to, you know, come off ten and Um, 156 00:07:48,080 --> 00:07:52,720 Speaker 1: you know, the frenzy will unravel without, you know, causing 157 00:07:53,080 --> 00:07:56,440 Speaker 1: great financial arts, that's what you want to call it. 158 00:07:56,520 --> 00:07:59,360 Speaker 1: That's Um. We already have seen prices decline and we 159 00:07:59,400 --> 00:08:02,520 Speaker 1: I think we're seeing, for a toll of net pete 160 00:08:02,560 --> 00:08:06,240 Speaker 1: trough decline. But there's still there's underlying demands. Like you know, 161 00:08:06,280 --> 00:08:09,240 Speaker 1: there's still immigration you know, organic demand from you know, 162 00:08:09,320 --> 00:08:11,920 Speaker 1: households moving out, like the millennials. Wins over is probably 163 00:08:11,920 --> 00:08:14,280 Speaker 1: seeing the peak of that coming soon. So there's still that. 164 00:08:14,320 --> 00:08:17,840 Speaker 1: But you're you're absolutely correct. It's very regional. Some places 165 00:08:17,880 --> 00:08:19,960 Speaker 1: are going to get harder, hit harder than others. And 166 00:08:20,240 --> 00:08:22,080 Speaker 1: a lot of this also, still forget, stem from the 167 00:08:22,120 --> 00:08:25,000 Speaker 1: whole work from home situation, which is starting to you know, 168 00:08:25,080 --> 00:08:26,880 Speaker 1: to fade a little bit as well. So but we 169 00:08:26,920 --> 00:08:29,440 Speaker 1: don't see it again. We still we're still seeing a correction. 170 00:08:29,440 --> 00:08:31,320 Speaker 1: There's still some more peam to come, but the Bank 171 00:08:31,320 --> 00:08:33,080 Speaker 1: of Canada is also quite causing some of it. So 172 00:08:33,160 --> 00:08:36,280 Speaker 1: we don't see the bank here raising rates as quickly 173 00:08:36,400 --> 00:08:39,439 Speaker 1: or as aggressively as they said. And Jennifer, just real 174 00:08:39,480 --> 00:08:42,920 Speaker 1: quickly the strong dollar. How high does it go? Is 175 00:08:42,920 --> 00:08:45,000 Speaker 1: there any bear case for the U S dollar? Like 176 00:08:45,040 --> 00:08:47,920 Speaker 1: goodness Um. It's interesting because I remember what at one 177 00:08:47,920 --> 00:08:50,160 Speaker 1: point some people were talking about, you know peak US dollar. 178 00:08:50,240 --> 00:08:54,000 Speaker 1: This is when Um at that one um good CPI report. 179 00:08:54,000 --> 00:08:55,920 Speaker 1: I don't remember that in June where, you know, people 180 00:08:56,040 --> 00:08:57,719 Speaker 1: started thinking that they're gonna be pivoting because of that 181 00:08:57,880 --> 00:09:00,320 Speaker 1: one number. But I think you know, given that the case, 182 00:09:00,360 --> 00:09:03,160 Speaker 1: that the Fed is still super aggressive. Um everyone else 183 00:09:03,200 --> 00:09:06,040 Speaker 1: as raising rates, but not everyone, um so. I think 184 00:09:06,040 --> 00:09:07,880 Speaker 1: we're still there's still a case for a strong invest dollar, 185 00:09:08,000 --> 00:09:11,320 Speaker 1: you know, handing into three. But it was also very interesting, 186 00:09:11,320 --> 00:09:13,560 Speaker 1: by the way, that not everybody was raising rates this week. 187 00:09:13,679 --> 00:09:17,040 Speaker 1: You know, we had, UM, Brazil holding off, for example. 188 00:09:17,160 --> 00:09:19,560 Speaker 1: You know, Norway raising rates. I think they said that. 189 00:09:19,559 --> 00:09:21,080 Speaker 1: You know, that's gonna be it for a little bit because, 190 00:09:21,240 --> 00:09:24,360 Speaker 1: you know, um Um so again it's it's it's interesting. 191 00:09:24,360 --> 00:09:26,080 Speaker 1: And even the RBA, by the way, has been making 192 00:09:26,120 --> 00:09:29,079 Speaker 1: noises and know how it may be time to turn 193 00:09:29,160 --> 00:09:31,760 Speaker 1: it down a little bit. So that's kind of interesting. 194 00:09:31,800 --> 00:09:34,079 Speaker 1: I meanwhile, the Fed is going the other way. They are, 195 00:09:34,120 --> 00:09:36,560 Speaker 1: they certainly are. Jennifer Lee, senior economist, managing director at 196 00:09:36,559 --> 00:09:43,280 Speaker 1: email capital markets. Thanks so much for joining us. Right now, 197 00:09:43,360 --> 00:09:45,280 Speaker 1: let's check in with Greg Han. He's a C I 198 00:09:45,400 --> 00:09:48,920 Speaker 1: O at winterp capital management get a sense, uh, what 199 00:09:49,040 --> 00:09:50,800 Speaker 1: is he thinking about these markets? Greg thanks so much 200 00:09:50,800 --> 00:09:54,280 Speaker 1: for joining us here again. Another uh, week day in 201 00:09:54,320 --> 00:09:57,640 Speaker 1: the markets. Here we had the Federal Reserve yesterday raising rates, 202 00:09:57,679 --> 00:10:00,840 Speaker 1: being very clear in their message that their number one 203 00:10:00,840 --> 00:10:02,960 Speaker 1: mandate is to fight inflation and they will do that 204 00:10:03,040 --> 00:10:05,920 Speaker 1: with the in part with their interest rate mechanisms, and 205 00:10:05,960 --> 00:10:07,719 Speaker 1: today we had some more central banks from around the 206 00:10:07,760 --> 00:10:11,360 Speaker 1: world following suit. Uh. What do you do at winthrop 207 00:10:11,400 --> 00:10:16,680 Speaker 1: couple management with that type of background? Well, that's a Paul, 208 00:10:17,000 --> 00:10:20,199 Speaker 1: is a great question. Uh. So these are difficult markets. 209 00:10:20,480 --> 00:10:23,960 Speaker 1: We're going through a shift right now invaluation and how 210 00:10:24,000 --> 00:10:27,520 Speaker 1: the markets are perceiving valuation. Um, and it's it's really 211 00:10:27,559 --> 00:10:30,480 Speaker 1: that's the whole push higher and short term interest rates. Um, 212 00:10:30,559 --> 00:10:33,280 Speaker 1: and then the dislocation and the equity markets. So we are, 213 00:10:34,000 --> 00:10:35,719 Speaker 1: like I've said, we're kids in the candy store. In 214 00:10:35,760 --> 00:10:38,880 Speaker 1: the fixed income markets. This is a window to Um 215 00:10:38,880 --> 00:10:41,800 Speaker 1: to build portfolios in fixed income that can earn five 216 00:10:41,840 --> 00:10:44,160 Speaker 1: percent without a lot of risk for in a quarter 217 00:10:44,440 --> 00:10:49,000 Speaker 1: on a municipal portfolio. For investors, that the tax free income. 218 00:10:49,080 --> 00:10:52,040 Speaker 1: So that that part of this is that's the easy part. 219 00:10:52,120 --> 00:10:55,240 Speaker 1: The hard part is the the equity Um. We're about 220 00:10:55,240 --> 00:10:58,520 Speaker 1: to hit a storm on the equity side because earnings 221 00:10:58,559 --> 00:11:00,240 Speaker 1: are going to become more and more difficult it as 222 00:11:00,240 --> 00:11:03,080 Speaker 1: we head into the third and fourth quarter because margin compression, 223 00:11:03,520 --> 00:11:06,680 Speaker 1: increased labor costs, Um. It's it's a litany of things. 224 00:11:06,720 --> 00:11:09,480 Speaker 1: And then the latest now is higher interest expense because 225 00:11:09,480 --> 00:11:12,160 Speaker 1: we've got short term interest rates climbing. So what do 226 00:11:12,200 --> 00:11:15,079 Speaker 1: you expect in terms of earnings this year and next year? 227 00:11:15,080 --> 00:11:17,920 Speaker 1: Do you have a forecast? Well, we're, I think you know, 228 00:11:18,040 --> 00:11:20,000 Speaker 1: consensus right now is what to thirty five on the 229 00:11:20,120 --> 00:11:22,680 Speaker 1: S and p. The SUP is is we're looking at. 230 00:11:22,880 --> 00:11:26,280 Speaker 1: Our expectation is we're sixteen and a half times earnings, 231 00:11:26,320 --> 00:11:28,320 Speaker 1: which is now we're kind of kind of getting into 232 00:11:28,400 --> 00:11:31,160 Speaker 1: fair value and we've come down from twenty times. I 233 00:11:31,160 --> 00:11:32,920 Speaker 1: mean this is this is the adjustment, as we were 234 00:11:32,960 --> 00:11:36,000 Speaker 1: so overvalued. The pain that investors are feeling is an 235 00:11:36,000 --> 00:11:38,920 Speaker 1: adjustment from an overvalued market to one that is simply 236 00:11:38,960 --> 00:11:42,679 Speaker 1: fairly valued. Markets overshoot and we can't overshoot when we 237 00:11:42,720 --> 00:11:44,920 Speaker 1: can't go to an undervalued market, which we haven't seen 238 00:11:45,440 --> 00:11:51,160 Speaker 1: in over fifteen years. And Amazing, amazing. That is. No, yeah, yeah, no, 239 00:11:51,240 --> 00:11:53,760 Speaker 1: it's and that's but there's great companies out there. We 240 00:11:54,120 --> 00:11:56,120 Speaker 1: are seeing. I mean he's got stocks that are down 241 00:11:56,200 --> 00:12:01,520 Speaker 1: six are that are they're still great stocks, they're great companies. 242 00:12:01,600 --> 00:12:04,360 Speaker 1: But Um, you just we just have to we're not 243 00:12:04,360 --> 00:12:06,000 Speaker 1: going to pick the bottom. We just want to find 244 00:12:06,040 --> 00:12:07,560 Speaker 1: we want to be able to invest in good, solid 245 00:12:07,600 --> 00:12:10,280 Speaker 1: companies with solid business models. That's the pall. That's the 246 00:12:10,280 --> 00:12:14,280 Speaker 1: other thing that's happening is business models are being challenged. Auto, 247 00:12:14,320 --> 00:12:18,120 Speaker 1: when auto companies can't get cars onto lots, when the 248 00:12:18,160 --> 00:12:21,640 Speaker 1: airline industry is capacity constraint and they can't get passengers 249 00:12:21,640 --> 00:12:23,920 Speaker 1: on the planes because they don't have, you know, the 250 00:12:24,320 --> 00:12:27,040 Speaker 1: the Labor to help support the UH, you know, the 251 00:12:27,040 --> 00:12:29,960 Speaker 1: the business model we've got. That's those are challenges that 252 00:12:30,000 --> 00:12:33,240 Speaker 1: are structural. Raising short term interest rates and isn't going 253 00:12:33,280 --> 00:12:35,120 Speaker 1: to fix that. I just want to quickly jump in 254 00:12:35,160 --> 00:12:41,360 Speaker 1: with the average analyst estimate for earnings is two fours 255 00:12:41,440 --> 00:12:48,280 Speaker 1: for Um and in three I'm looking at an average 256 00:12:48,440 --> 00:12:51,280 Speaker 1: of two and twenty nine dollars. It's not the median fall. 257 00:12:51,440 --> 00:12:54,280 Speaker 1: The median is two thirty two. Yeah, that's what I'm 258 00:12:54,280 --> 00:12:58,840 Speaker 1: looking out on my spx index e page like that. 259 00:13:00,120 --> 00:13:02,480 Speaker 1: So anyway. So, Greg just real quickly, is there a 260 00:13:02,480 --> 00:13:05,000 Speaker 1: sector that I should be looking at right now, given 261 00:13:05,040 --> 00:13:07,840 Speaker 1: that we're likely to be going into a recession, or 262 00:13:07,880 --> 00:13:11,040 Speaker 1: if we're not already in one? So look, I just 263 00:13:11,720 --> 00:13:16,600 Speaker 1: the whole Infotech space, which bleeds over into the the 264 00:13:16,640 --> 00:13:20,440 Speaker 1: communications sector. Uh, there's some those. Some of those stocks 265 00:13:20,440 --> 00:13:23,400 Speaker 1: are just really undervalued. That's where we like and now 266 00:13:23,440 --> 00:13:26,080 Speaker 1: it's it's hard because that's the part that's gotten hit hard. 267 00:13:26,120 --> 00:13:28,679 Speaker 1: But in a storm we're ones to run into the storm, 268 00:13:28,720 --> 00:13:30,920 Speaker 1: that run away from it, and so when stocks are 269 00:13:30,960 --> 00:13:32,839 Speaker 1: down we want to buy loads. So I that kind 270 00:13:32,840 --> 00:13:37,240 Speaker 1: of learned that my my my business school, Um and 271 00:13:37,320 --> 00:13:40,760 Speaker 1: so you know the the you know Microsoft, alphabet. Those 272 00:13:40,800 --> 00:13:43,720 Speaker 1: are the core holdings for us. We we love those stocks. Disneys, 273 00:13:43,760 --> 00:13:47,320 Speaker 1: one that's come into our sweet spot in video, is 274 00:13:47,520 --> 00:13:50,000 Speaker 1: in video has a valuation now that starts to make sense. 275 00:13:50,000 --> 00:13:52,360 Speaker 1: So we're we are seeing opportunities, but it's going to 276 00:13:52,440 --> 00:13:54,160 Speaker 1: get I mean we have the risk of it getting 277 00:13:54,480 --> 00:13:56,600 Speaker 1: a little bit worse here and ending into the second 278 00:13:56,600 --> 00:13:58,640 Speaker 1: half of the year. All right, Greg, I really appreciate it. 279 00:13:58,679 --> 00:14:01,040 Speaker 1: Greg Han Cio, winthrop, but to management. He mentioned his 280 00:14:01,040 --> 00:14:04,160 Speaker 1: business school. That would be Indiana. I get his undergraduate 281 00:14:04,200 --> 00:14:06,760 Speaker 1: from the University of Wisconsin. So all big ten there 282 00:14:06,840 --> 00:14:13,120 Speaker 1: for Greg Hand. Well, I guess after yesterday the question 283 00:14:13,200 --> 00:14:16,160 Speaker 1: isn't so much is the Fed going higher. Yes, they are. 284 00:14:16,240 --> 00:14:19,000 Speaker 1: The question is how high and for how long. Let's 285 00:14:19,040 --> 00:14:21,200 Speaker 1: check up with Ben Emmon's managing director of global macro 286 00:14:21,320 --> 00:14:25,320 Speaker 1: strategy at Medley Global Advisors. So, Ben, what do you 287 00:14:25,400 --> 00:14:29,000 Speaker 1: take away from yesterday's statement and yesterday's comments by Fed 288 00:14:29,040 --> 00:14:32,200 Speaker 1: Scherman J pal about how high are these interest rates 289 00:14:32,200 --> 00:14:36,600 Speaker 1: going to go? Hi, Paul. Well, he was really explicit, 290 00:14:36,680 --> 00:14:39,160 Speaker 1: I felt. You know, he said that at the very 291 00:14:39,240 --> 00:14:42,840 Speaker 1: last question of the press conference, that you know, four 292 00:14:42,880 --> 00:14:46,160 Speaker 1: point six percent fat funds rateing next year is likely, 293 00:14:46,720 --> 00:14:49,160 Speaker 1: and then he also mentioned that one one to one 294 00:14:49,160 --> 00:14:51,200 Speaker 1: and a half percent will rates is where they want 295 00:14:51,200 --> 00:14:55,400 Speaker 1: to get to, to be a restrictive policy. So with 296 00:14:55,480 --> 00:14:57,840 Speaker 1: Dan in mind, as you see the reaction today in 297 00:14:57,880 --> 00:15:01,040 Speaker 1: the markets right, that's being factored in now the two 298 00:15:01,280 --> 00:15:04,680 Speaker 1: you could probably move towards at four point six and 299 00:15:04,720 --> 00:15:06,760 Speaker 1: it will pull up the rest of the you curve too, 300 00:15:06,800 --> 00:15:09,200 Speaker 1: and that's in motion. So I think that was a 301 00:15:09,240 --> 00:15:12,720 Speaker 1: big takeaway for me. In addition that they surprised, of course, 302 00:15:12,760 --> 00:15:16,400 Speaker 1: with that medium dots for two being higher than why 303 00:15:16,440 --> 00:15:19,240 Speaker 1: the market was price. And I think that shows too 304 00:15:19,360 --> 00:15:22,160 Speaker 1: that within the inflorence see there's a real clear push 305 00:15:22,200 --> 00:15:25,960 Speaker 1: of fact we must get quicker to restrictive sense, to 306 00:15:26,000 --> 00:15:30,320 Speaker 1: put a little inflation or were in trouble and they wanted. Well, 307 00:15:30,360 --> 00:15:32,120 Speaker 1: by the way, I was listening to this I thought 308 00:15:32,120 --> 00:15:36,680 Speaker 1: it was a great press conference. UMS entertainment value. Um, yeah, 309 00:15:36,800 --> 00:15:39,560 Speaker 1: I love when Steve Leesman his Mike went out or 310 00:15:39,600 --> 00:15:42,160 Speaker 1: he didn't remember to ask the second question. The MIC 311 00:15:42,240 --> 00:15:44,120 Speaker 1: and the PALSI I don't even want to answer your 312 00:15:44,160 --> 00:15:49,040 Speaker 1: second question, which was pretty good. Yeah, at least. What 313 00:15:49,080 --> 00:15:51,760 Speaker 1: I was thinking was he's so insistent that they want 314 00:15:51,800 --> 00:15:56,760 Speaker 1: to get rates Um to more restrictive level as quickly 315 00:15:56,800 --> 00:16:01,000 Speaker 1: as possible. Um, for from a layman's person, why in 316 00:16:01,040 --> 00:16:03,200 Speaker 1: the hell don't they just say rates are four an 317 00:16:03,200 --> 00:16:07,560 Speaker 1: a percent? Boom, there you go. Yeah, exactly a meth. 318 00:16:07,640 --> 00:16:10,280 Speaker 1: I mean, what are you waiting for? We agree like you, 319 00:16:11,040 --> 00:16:14,240 Speaker 1: sort of one of base points. Hight, that was, you know, 320 00:16:14,480 --> 00:16:17,520 Speaker 1: but you know, envisued by the market. Right, I had 321 00:16:17,560 --> 00:16:21,080 Speaker 1: an eighteen percent probability. It could have just done that yesterday, right, 322 00:16:21,160 --> 00:16:24,800 Speaker 1: and the move is high and would shock it the markets, 323 00:16:24,800 --> 00:16:26,960 Speaker 1: I guess, and maybe it's still holding them back. But 324 00:16:27,440 --> 00:16:30,640 Speaker 1: if it comes down to inflation, you slatch hammered, right, 325 00:16:30,680 --> 00:16:33,360 Speaker 1: so you would bring it up banged like that. But 326 00:16:33,440 --> 00:16:36,880 Speaker 1: you know, it's a policy about seventy five is sort 327 00:16:36,880 --> 00:16:39,920 Speaker 1: of the way to go, you know, touch feel still 328 00:16:40,000 --> 00:16:43,640 Speaker 1: right tied in financial conditions and get to an end destination. 329 00:16:44,280 --> 00:16:46,400 Speaker 1: You know, it does bring the risk that you you're 330 00:16:46,400 --> 00:16:48,880 Speaker 1: not doing enough and you have to do more right, 331 00:16:48,920 --> 00:16:51,320 Speaker 1: and then that will be the such hammer. So I 332 00:16:51,360 --> 00:16:54,120 Speaker 1: think you know, it looks to me they have a 333 00:16:54,240 --> 00:16:57,240 Speaker 1: wall set in speech about it. We Week and half ago, 334 00:16:57,280 --> 00:16:59,280 Speaker 1: when the last time I saw you, that was sort 335 00:16:59,280 --> 00:17:02,240 Speaker 1: of the four book to what happened yesterday within the 336 00:17:02,360 --> 00:17:05,640 Speaker 1: from sea. There's like people banging official on the table. Yes, 337 00:17:05,680 --> 00:17:08,600 Speaker 1: we've got a such hammer here, but it's a consensus. 338 00:17:08,680 --> 00:17:10,560 Speaker 1: So that's why you end up with that seven five 339 00:17:10,600 --> 00:17:13,359 Speaker 1: basis points. But it should move faster. I agree with it. 340 00:17:13,440 --> 00:17:15,439 Speaker 1: I mean I would just do two hundred, except for 341 00:17:15,560 --> 00:17:19,720 Speaker 1: I would stop. I would say inflation is peaked. Let's 342 00:17:19,720 --> 00:17:22,200 Speaker 1: just see how these rate increases trickle through the country 343 00:17:22,280 --> 00:17:24,560 Speaker 1: over the next six months. Is that? That seems to 344 00:17:24,560 --> 00:17:29,280 Speaker 1: be completely off the table. Bed there burns. Yes, thank you. Yeah, yeah, yeah, 345 00:17:29,320 --> 00:17:32,200 Speaker 1: that that is the art of burns issue, and that's 346 00:17:32,320 --> 00:17:34,680 Speaker 1: basically even though the art of Burns, by the way, 347 00:17:34,760 --> 00:17:37,440 Speaker 1: in seven, three, seventy four Hyde grates up to I think. 348 00:17:38,880 --> 00:17:42,520 Speaker 1: So you did, didn't fat the tightening, but the underestimated 349 00:17:43,000 --> 00:17:46,760 Speaker 1: economy being still too far above potential and too much 350 00:17:46,760 --> 00:17:49,240 Speaker 1: stork on an easily economy in terms of both the 351 00:17:49,320 --> 00:17:52,800 Speaker 1: pressure on inflation and so you should have actually done 352 00:17:52,840 --> 00:17:55,639 Speaker 1: more at that time if you look back in history. 353 00:17:55,840 --> 00:17:58,360 Speaker 1: And that's what they're struggling with right. But we're in 354 00:17:58,400 --> 00:18:01,960 Speaker 1: an environment where, you know, at four percent rates, that's 355 00:18:02,200 --> 00:18:04,480 Speaker 1: we're stored glow. Right. You will have to go a 356 00:18:04,480 --> 00:18:07,080 Speaker 1: lot higher than that, and that's still worry in the markets. 357 00:18:07,119 --> 00:18:10,080 Speaker 1: I think facts, you may have to do just so 358 00:18:10,160 --> 00:18:13,000 Speaker 1: much more because because actually will interest rates are still 359 00:18:13,040 --> 00:18:16,479 Speaker 1: too negative and the economy is still too strong. Right. 360 00:18:16,520 --> 00:18:19,840 Speaker 1: It's still too overheated. The claims say that this morning. 361 00:18:20,400 --> 00:18:22,960 Speaker 1: It's just just I think, part of the reason why 362 00:18:23,080 --> 00:18:26,240 Speaker 1: use are up to claims against shoulder right, unbelievable. So 363 00:18:26,520 --> 00:18:29,720 Speaker 1: it's just a strong economy. That's what they have to tackle. Well, 364 00:18:29,760 --> 00:18:32,520 Speaker 1: for sure, judging by the labor market it still looks 365 00:18:32,560 --> 00:18:35,280 Speaker 1: pretty strong. We do see some pink slips going out, 366 00:18:35,320 --> 00:18:37,280 Speaker 1: we see banks starting to call the hurt a little bit, 367 00:18:37,320 --> 00:18:41,640 Speaker 1: but that's just normal. Um. He mentioned a couple of times. 368 00:18:41,720 --> 00:18:44,000 Speaker 1: There are a number of ways you can look at inflation. 369 00:18:44,080 --> 00:18:47,520 Speaker 1: Expectations or inflation forecasts. So I want to ask you 370 00:18:47,760 --> 00:18:50,679 Speaker 1: some dashboard questions. What do you look at Um for 371 00:18:50,760 --> 00:18:57,000 Speaker 1: inflation forecast? Do you like the Um, you know, five year, 372 00:18:57,119 --> 00:19:01,320 Speaker 1: five year, or do you like the any surveys specifically 373 00:19:01,600 --> 00:19:05,520 Speaker 1: better than the others? And also financial conditions, Um, you know, 374 00:19:05,560 --> 00:19:07,719 Speaker 1: I pull up F con go on the Bloomberg. They 375 00:19:07,880 --> 00:19:10,560 Speaker 1: look so they don't look so tight to me, certainly 376 00:19:10,600 --> 00:19:13,760 Speaker 1: not compared to what we saw in March of so 377 00:19:13,880 --> 00:19:17,200 Speaker 1: what do you look at to measure Um? To look 378 00:19:17,359 --> 00:19:20,960 Speaker 1: to sort of gauge inflation expectations or a market forecast? 379 00:19:21,000 --> 00:19:24,600 Speaker 1: And what do you look at to measure financial conditions? Yeah, 380 00:19:25,000 --> 00:19:28,240 Speaker 1: with inflation, what I found was that the Conference Board 381 00:19:28,359 --> 00:19:31,720 Speaker 1: has the one year expectation in there and since the 382 00:19:31,760 --> 00:19:35,320 Speaker 1: spring of that number has been six percent or higher 383 00:19:35,840 --> 00:19:39,280 Speaker 1: and it has been a perfect predictor of where CPI 384 00:19:39,440 --> 00:19:42,119 Speaker 1: actually ended up. So I find out a really strong 385 00:19:42,200 --> 00:19:46,280 Speaker 1: indicator in this environment where inflations and that that one 386 00:19:46,280 --> 00:19:48,760 Speaker 1: of your expectations. That I believe the last Sumer seven 387 00:19:48,800 --> 00:19:51,600 Speaker 1: point six percent, so a little over than my head 388 00:19:51,600 --> 00:19:55,200 Speaker 1: finess now, but that's still really elevated right. So that's one. 389 00:19:56,000 --> 00:19:59,480 Speaker 1: You know that the market break even, the ditch break even. 390 00:19:59,600 --> 00:20:02,040 Speaker 1: I'm a skeptical there because it's a real yield and 391 00:20:02,080 --> 00:20:05,240 Speaker 1: phenomenal yield, and they move around right, so they actually 392 00:20:05,280 --> 00:20:09,439 Speaker 1: react to one another. So find that less credible indicator 393 00:20:10,000 --> 00:20:13,159 Speaker 1: the long term expectations from Michigan is something that the 394 00:20:13,200 --> 00:20:16,240 Speaker 1: fact reacts. You would take that into account. And then 395 00:20:16,240 --> 00:20:19,080 Speaker 1: there's this blue chip survey, which is, you know, you 396 00:20:19,080 --> 00:20:22,000 Speaker 1: have to get this specific access to you know there 397 00:20:22,080 --> 00:20:24,480 Speaker 1: is actually an expectation in there of what people think 398 00:20:24,520 --> 00:20:27,040 Speaker 1: that real interest rates will look like. They're now rising 399 00:20:27,040 --> 00:20:29,160 Speaker 1: in line where the market is. So I find those 400 00:20:29,160 --> 00:20:34,000 Speaker 1: three interesting. COMFERENCE boards, Michigan Blue Chip, some more survey base. 401 00:20:34,520 --> 00:20:37,240 Speaker 1: If you look at financial conditions, you know what's interesting 402 00:20:37,240 --> 00:20:39,720 Speaker 1: on that function is that there's also a tap called 403 00:20:39,880 --> 00:20:44,280 Speaker 1: market details. If you coun go and it shows really 404 00:20:44,359 --> 00:20:47,919 Speaker 1: nicely what what is contributed to the standard of financial conditions. 405 00:20:48,000 --> 00:20:50,960 Speaker 1: And you can tell right, it's particularly real interest rates, 406 00:20:51,440 --> 00:20:54,400 Speaker 1: where the standard deviations is now over to two point 407 00:20:54,480 --> 00:20:58,040 Speaker 1: two or so. So that's, I think, what's really driving 408 00:20:58,040 --> 00:21:01,520 Speaker 1: at there. But not enough. Need to be even more tighter. So, 409 00:21:01,840 --> 00:21:05,480 Speaker 1: as we talked earlier, real interesting actually go even higher 410 00:21:05,520 --> 00:21:08,960 Speaker 1: from here, right, and settle and say one seventy five 411 00:21:09,000 --> 00:21:10,880 Speaker 1: and two year and one on a quarter and antenue 412 00:21:11,119 --> 00:21:14,640 Speaker 1: tip shields are still too low. Uh with safe leady 413 00:21:14,680 --> 00:21:18,880 Speaker 1: are driving Frenchship conditions tight, but not tight enough. All right, Ben, 414 00:21:18,920 --> 00:21:21,720 Speaker 1: good stuff as always, bringing in here. We appreciate it. 415 00:21:21,760 --> 00:21:26,520 Speaker 1: Ben Emmon's, managing director of Global Macro Strategy Medley Global Advisors. 416 00:21:26,520 --> 00:21:28,160 Speaker 1: I'm looking at him. We didn't ask him about Bank 417 00:21:28,160 --> 00:21:31,120 Speaker 1: of Japan. What do you want to ask about? How 418 00:21:31,280 --> 00:21:33,400 Speaker 1: how serious is this that they intervened the first time 419 00:21:33,400 --> 00:21:36,600 Speaker 1: since strengthen the currency? I don't think they're a big 420 00:21:36,600 --> 00:21:38,400 Speaker 1: carry trade. Do you think there's a big carry trade 421 00:21:38,400 --> 00:21:40,880 Speaker 1: out there? Ben, I think we lost him. We'll get 422 00:21:40,920 --> 00:21:43,399 Speaker 1: them next time. Carry Trade. You want to do a 423 00:21:43,480 --> 00:21:45,760 Speaker 1: Japanese yen carry trade? I've been doing it all year. 424 00:21:45,880 --> 00:21:49,480 Speaker 1: Have you nice in my head and you're okay, alright, 425 00:21:49,520 --> 00:21:52,719 Speaker 1: good stuff there, Ben Emmon's we've always appreciate chatting with him. 426 00:21:52,760 --> 00:21:56,119 Speaker 1: Looking at the markets here, SMP off about eight tenths 427 00:21:56,200 --> 00:21:59,640 Speaker 1: of one percent, so still some selling pressure out there, 428 00:22:00,040 --> 00:22:02,639 Speaker 1: given what we heard from our friender reserved. Yes, this 429 00:22:03,720 --> 00:22:13,040 Speaker 1: is Wood Barker Kind O. Next guest in studio. Extra 430 00:22:13,080 --> 00:22:17,640 Speaker 1: Points Gold Star, Amanda Rebello, head of passive sales us 431 00:22:17,720 --> 00:22:19,840 Speaker 1: on shore. I don't know what that means at D 432 00:22:19,960 --> 00:22:24,440 Speaker 1: W S group. Dws, that's Deutsche, that's Deutsche banks, Deutsche 433 00:22:24,720 --> 00:22:29,520 Speaker 1: very wait, Deutsche very poppier specialists, and I believe, yeah, 434 00:22:29,960 --> 00:22:32,199 Speaker 1: you just kind of have German. So what do you 435 00:22:32,200 --> 00:22:34,040 Speaker 1: got for us? Let's talk about e t S. I mean, 436 00:22:34,840 --> 00:22:36,840 Speaker 1: is it still a thing? Is Money still going to 437 00:22:36,920 --> 00:22:40,159 Speaker 1: e t F s like crazy? We still see the 438 00:22:40,200 --> 00:22:42,720 Speaker 1: broader trend. Yeah, so you can see so many benefits 439 00:22:42,720 --> 00:22:46,240 Speaker 1: to e t F s. We see, Um, the DI 440 00:22:46,240 --> 00:22:49,680 Speaker 1: diversification elements are really useful. Um, we see as well 441 00:22:49,800 --> 00:22:53,240 Speaker 1: as an access vehicle, it's providing Um, good access to 442 00:22:53,440 --> 00:22:57,080 Speaker 1: different markets that clients are looking to get into very 443 00:22:57,119 --> 00:22:59,320 Speaker 1: quickly and I think, especially in light of the motility 444 00:22:59,320 --> 00:23:01,680 Speaker 1: in the market at the moment, being able to get 445 00:23:01,720 --> 00:23:05,600 Speaker 1: in and out of positions easily, quickly, efficiently cheaply is 446 00:23:06,000 --> 00:23:08,320 Speaker 1: of the utmost importance. Now, first of all, step up 447 00:23:08,320 --> 00:23:09,919 Speaker 1: to the mic a little bit here. Why do you 448 00:23:09,960 --> 00:23:12,359 Speaker 1: think or why do you head of passive sales? What 449 00:23:12,400 --> 00:23:15,200 Speaker 1: does that mean? Passive sales? Yeah, passive sales for us 450 00:23:15,200 --> 00:23:19,000 Speaker 1: at dws is anything which is linked to an index. 451 00:23:19,480 --> 00:23:21,680 Speaker 1: So we have our e t f range ex trackers 452 00:23:21,920 --> 00:23:25,200 Speaker 1: and then we also offer segregated mandates tracking indices, b 453 00:23:25,320 --> 00:23:27,480 Speaker 1: they on the equities, fix income or commodities. So you 454 00:23:27,480 --> 00:23:29,720 Speaker 1: don't do all the e t f that are actively managed. 455 00:23:29,880 --> 00:23:32,280 Speaker 1: We don't know at the stage now, but it's something 456 00:23:32,520 --> 00:23:34,480 Speaker 1: we've seen in the market as an emerging trend. So 457 00:23:34,520 --> 00:23:36,359 Speaker 1: what are the most popular products or what are the 458 00:23:36,359 --> 00:23:38,000 Speaker 1: hardest products? When you get up in the morning and 459 00:23:38,040 --> 00:23:40,639 Speaker 1: you're super pumped about a new product? What is it 460 00:23:41,600 --> 00:23:44,679 Speaker 1: at the moment? Yeah, I really like hi yield. I 461 00:23:44,720 --> 00:23:46,119 Speaker 1: think that there's going to be a time for it 462 00:23:46,200 --> 00:23:48,640 Speaker 1: again in portfolios. I think it's been hammered. We see 463 00:23:48,840 --> 00:23:51,840 Speaker 1: where spreads are at the moment, but especially in light 464 00:23:51,880 --> 00:23:54,320 Speaker 1: of where the Fed action is. You know, we really 465 00:23:54,320 --> 00:23:56,600 Speaker 1: need to be on the hunt for yield. Um we 466 00:23:56,600 --> 00:23:58,760 Speaker 1: can get equities, but I think when we look at SMP, 467 00:23:58,920 --> 00:24:01,959 Speaker 1: for example, historical defield is only two percent. You need 468 00:24:02,000 --> 00:24:05,440 Speaker 1: to look at fixed income again, but also be willing 469 00:24:05,480 --> 00:24:07,960 Speaker 1: to take on some risks. So fixed income not behaving 470 00:24:07,960 --> 00:24:13,000 Speaker 1: as it historically does as a dampening portfolios y s G. Yes, 471 00:24:13,400 --> 00:24:16,920 Speaker 1: I'm skeptical. Okay, tell me why I shouldn't be skeptical, 472 00:24:16,960 --> 00:24:19,520 Speaker 1: because I know e s g themed e t s 473 00:24:19,560 --> 00:24:23,120 Speaker 1: are very popular in getting a lot were right. We're 474 00:24:23,200 --> 00:24:25,440 Speaker 1: I don't know. I mean I think we're all skeptical now, right, 475 00:24:25,560 --> 00:24:28,800 Speaker 1: aren't we? Isn't the market pretty skeptical? Fair to ask questions, 476 00:24:28,920 --> 00:24:30,719 Speaker 1: you know, I think that's everyone doing their job at 477 00:24:30,760 --> 00:24:33,479 Speaker 1: the end of the day. Um, look, we but we're 478 00:24:33,480 --> 00:24:36,000 Speaker 1: in climate week in New York at the moment, right. Um, 479 00:24:36,080 --> 00:24:38,000 Speaker 1: I think all of us know and feel as well. 480 00:24:38,040 --> 00:24:41,439 Speaker 1: We see record breaking summers. Um, all of us. We 481 00:24:41,480 --> 00:24:43,960 Speaker 1: need to think that when we're making an investment, it's 482 00:24:43,960 --> 00:24:46,639 Speaker 1: a deployment of capital. Right, so can we help the 483 00:24:46,680 --> 00:24:50,960 Speaker 1: situation with that? Right. And so from our stance at dws, 484 00:24:51,040 --> 00:24:54,520 Speaker 1: when we think about E S G, when often thinking 485 00:24:54,560 --> 00:24:56,800 Speaker 1: about not being exclusionary. So I think some of the 486 00:24:56,840 --> 00:24:59,440 Speaker 1: cynicism has come from this in the past, that you're 487 00:24:59,440 --> 00:25:03,240 Speaker 1: just outright filtering names and energy sector, for example, when 488 00:25:03,240 --> 00:25:05,600 Speaker 1: in fact they're part of the solution in terms of 489 00:25:05,640 --> 00:25:08,199 Speaker 1: helping US bring down climate change or at least, you know, 490 00:25:08,280 --> 00:25:10,760 Speaker 1: stabilize it. Right, we all need to have electricity at 491 00:25:10,760 --> 00:25:12,840 Speaker 1: the end of the day. Things like this. So we're 492 00:25:12,880 --> 00:25:15,520 Speaker 1: not really helping the problem there. Um. I think also 493 00:25:15,600 --> 00:25:17,680 Speaker 1: the social components as well, now that we have more 494 00:25:17,720 --> 00:25:21,440 Speaker 1: data points there as well. Um, it's not just something vague, 495 00:25:21,560 --> 00:25:24,159 Speaker 1: it's something more demonstrable. So the kind of rigor that 496 00:25:24,240 --> 00:25:26,840 Speaker 1: we have in investments built on the equities fixing come 497 00:25:26,840 --> 00:25:29,480 Speaker 1: a community side. We can have the same rigor when 498 00:25:29,480 --> 00:25:30,920 Speaker 1: we think about the e, s g Lens. That's a 499 00:25:30,920 --> 00:25:34,679 Speaker 1: good point. The the S is probably Um, the easiest 500 00:25:34,920 --> 00:25:38,960 Speaker 1: to quantify and deal with instantly, right, because the e 501 00:25:39,320 --> 00:25:41,880 Speaker 1: is kind of soft and mushy. The Germans, for instance, 502 00:25:41,880 --> 00:25:45,080 Speaker 1: would rather burn cold and use nuclear power, Um, and 503 00:25:45,320 --> 00:25:48,440 Speaker 1: you can debate whether or not nuclear is green. Um 504 00:25:48,520 --> 00:25:54,240 Speaker 1: The G. let's face it, when you have companies out 505 00:25:54,280 --> 00:25:56,240 Speaker 1: there that are very powerful and make a lot of money, 506 00:25:56,560 --> 00:25:58,440 Speaker 1: the CEO wants to be the chairman and the G 507 00:25:58,440 --> 00:26:01,159 Speaker 1: gets thrown out the window. So the s that we 508 00:26:01,200 --> 00:26:03,760 Speaker 1: can really make some progress on and you can measure 509 00:26:03,760 --> 00:26:05,800 Speaker 1: it and we can all agree, you know, on what 510 00:26:05,880 --> 00:26:08,959 Speaker 1: diversity looks like and how important that is. Um. So 511 00:26:09,000 --> 00:26:11,840 Speaker 1: I think that's that's really fascinating. Let's talk about what 512 00:26:11,960 --> 00:26:15,760 Speaker 1: you did to get into this position. You studied mathematics. 513 00:26:17,600 --> 00:26:21,000 Speaker 1: I think it's interesting and and this is this is 514 00:26:21,040 --> 00:26:22,760 Speaker 1: a great way to get into this kind of this 515 00:26:22,840 --> 00:26:26,119 Speaker 1: kind of work, right. It is. Yeah, not go up 516 00:26:26,119 --> 00:26:29,560 Speaker 1: and start a conversation with the math masters and mathematics person. 517 00:26:30,240 --> 00:26:33,120 Speaker 1: You like engineers, though. You always ask people that engineers, 518 00:26:33,119 --> 00:26:35,280 Speaker 1: why are you studying engineering and getting onto wallster? What 519 00:26:35,280 --> 00:26:36,800 Speaker 1: would you say is the right path to get to 520 00:26:36,840 --> 00:26:39,200 Speaker 1: Wall Street in terms of a major? Well, it's all different, 521 00:26:39,200 --> 00:26:42,200 Speaker 1: and now it's now it is probably math and engineering 522 00:26:42,200 --> 00:26:44,320 Speaker 1: computer you know what the mathematicians say? They say that 523 00:26:44,359 --> 00:26:50,359 Speaker 1: engineers that just want to be mathematicians. In any case, what? What? What? 524 00:26:50,359 --> 00:26:53,080 Speaker 1: What led you to this position? And you know, what 525 00:26:53,119 --> 00:26:54,920 Speaker 1: would you tell others who want to get into into 526 00:26:54,960 --> 00:27:00,359 Speaker 1: the field? Yeah, so, when I was younger, much younger, 527 00:27:00,640 --> 00:27:04,119 Speaker 1: I actually was obsessed with news and probably wanted your 528 00:27:04,160 --> 00:27:08,960 Speaker 1: job in fact. And well, I realized that was finance. 529 00:27:09,000 --> 00:27:10,919 Speaker 1: was actually a really good way to be very engaged 530 00:27:10,960 --> 00:27:12,280 Speaker 1: with news. At the end of the day, I'm talking 531 00:27:12,280 --> 00:27:14,320 Speaker 1: about it as much on the daily basis as you 532 00:27:14,359 --> 00:27:19,240 Speaker 1: are really Um and seeing then the implications in markets. Um, 533 00:27:19,280 --> 00:27:22,000 Speaker 1: my maths background was quite useful for that. I think. 534 00:27:22,040 --> 00:27:24,639 Speaker 1: I don't use any of the numeracy realistically, but I 535 00:27:24,720 --> 00:27:28,120 Speaker 1: use a lot of the logic and argument forming. So 536 00:27:28,440 --> 00:27:31,880 Speaker 1: I think that's Um maybe how the two are tied together. Yeah, 537 00:27:31,920 --> 00:27:34,320 Speaker 1: I mean when we're covering the news, essentially what we 538 00:27:34,400 --> 00:27:36,200 Speaker 1: do is kind of follow the money to find out 539 00:27:36,280 --> 00:27:39,080 Speaker 1: what's going on in your the money friends, things like this. Um, 540 00:27:39,400 --> 00:27:41,239 Speaker 1: the trend of e t F, I think, has been 541 00:27:41,240 --> 00:27:45,240 Speaker 1: amazing to watch. I started looking into it and talking 542 00:27:45,280 --> 00:27:48,239 Speaker 1: about it in hosting conferences about et f about ten 543 00:27:48,280 --> 00:27:49,960 Speaker 1: years ago and I thought this is the future, and 544 00:27:50,040 --> 00:27:53,159 Speaker 1: now we're there. I mean it is huge. So many people, 545 00:27:53,800 --> 00:27:56,359 Speaker 1: not just the kids investing in ets, but so many people, 546 00:27:56,440 --> 00:27:59,280 Speaker 1: because of regulations, can only invest in e TF. A 547 00:27:59,320 --> 00:28:01,359 Speaker 1: lot of people have and having trouble getting into them. 548 00:28:01,400 --> 00:28:03,199 Speaker 1: Now they are. You're seeing a lot of mutual funds 549 00:28:04,119 --> 00:28:07,080 Speaker 1: convert over to E T S in this market. Right 550 00:28:07,600 --> 00:28:10,440 Speaker 1: I P os, with the exception of Porsche, they're like dead, 551 00:28:10,720 --> 00:28:13,280 Speaker 1: but people are launching new e t f s every week. 552 00:28:13,440 --> 00:28:16,159 Speaker 1: It's incredible to see the growth it is. We were 553 00:28:16,200 --> 00:28:21,280 Speaker 1: speaking with contacts at the exchanges, so at Cebo and Nicey, 554 00:28:21,600 --> 00:28:23,600 Speaker 1: and they're saying that nowadays most of the bell ringings 555 00:28:23,600 --> 00:28:26,439 Speaker 1: it's like e t f providers rather than which is super, 556 00:28:26,640 --> 00:28:29,600 Speaker 1: super interesting actually right, when you think about the coverage 557 00:28:29,640 --> 00:28:33,680 Speaker 1: that used to be from you guys, from from other wires, 558 00:28:33,960 --> 00:28:36,480 Speaker 1: it was always about a new company listing, but now 559 00:28:36,720 --> 00:28:39,520 Speaker 1: you know, we're fighting for slots really in terms of 560 00:28:39,880 --> 00:28:43,960 Speaker 1: the bell ringings. So at dwus again, Deutsche Bank's asset 561 00:28:44,000 --> 00:28:46,200 Speaker 1: management businesses. That the way to describe it? Okay, one 562 00:28:46,240 --> 00:28:49,240 Speaker 1: trillion dollar global asset management manager. You guys are big. 563 00:28:49,240 --> 00:28:51,920 Speaker 1: How much of that is passive? Would you say? Yeah, so, 564 00:28:52,040 --> 00:28:55,760 Speaker 1: first and foremost we're actually separately listed from Deutsche Bank, 565 00:28:56,760 --> 00:29:00,560 Speaker 1: but obviously they have a shareholding in us. And then 566 00:29:01,240 --> 00:29:04,640 Speaker 1: about a quarter of our a U M is in passive, 567 00:29:04,720 --> 00:29:08,760 Speaker 1: so in this indexed investment management piece. But do you 568 00:29:08,880 --> 00:29:13,160 Speaker 1: see Um passive? Is that right now sort of on 569 00:29:13,200 --> 00:29:15,400 Speaker 1: the back foot compared to active management in this kind 570 00:29:15,400 --> 00:29:19,360 Speaker 1: of market? I would say Um, people are thinking it 571 00:29:19,440 --> 00:29:22,560 Speaker 1: makes sense to pay a money manager to decipher these 572 00:29:22,560 --> 00:29:24,560 Speaker 1: tough markets at the moment. But also if you have 573 00:29:24,600 --> 00:29:26,560 Speaker 1: a robust index and if you feel then that you 574 00:29:26,600 --> 00:29:29,560 Speaker 1: can add value through Acet allocation rather than through stock picking, 575 00:29:30,000 --> 00:29:33,000 Speaker 1: then passive mandates and e t f s are definitely 576 00:29:33,400 --> 00:29:35,400 Speaker 1: a very useful tool. So we do actually see this 577 00:29:35,440 --> 00:29:37,840 Speaker 1: trend continuing, I think as well, just like, given how 578 00:29:37,880 --> 00:29:40,800 Speaker 1: tough liquidity is at the moment, actually this has added 579 00:29:40,800 --> 00:29:43,000 Speaker 1: fuel to the fire in terms of the growth of ets. Well, 580 00:29:43,000 --> 00:29:45,160 Speaker 1: they're not across purposes really for you, because I could 581 00:29:45,160 --> 00:29:48,520 Speaker 1: go to a money manager who uses your passive products 582 00:29:48,560 --> 00:29:54,080 Speaker 1: to exectively manage my wealth. Exactly. Vanguard and black rock 583 00:29:54,600 --> 00:29:58,280 Speaker 1: control the majority of the tip. Is that a good structure, 584 00:29:58,520 --> 00:30:00,200 Speaker 1: do you think, for the ET F business or wrong? 585 00:30:01,720 --> 00:30:04,560 Speaker 1: I would say that both of these providers add some value. 586 00:30:04,560 --> 00:30:09,080 Speaker 1: I'm actually ex black rock myself. Fantastic leaders that. I 587 00:30:09,080 --> 00:30:12,000 Speaker 1: would say that competition is always healthy, right, and I 588 00:30:12,040 --> 00:30:14,480 Speaker 1: think that sometimes when you have some of these newer players, 589 00:30:14,600 --> 00:30:17,560 Speaker 1: it's great that they innovate so quickly, you know, and 590 00:30:17,560 --> 00:30:20,000 Speaker 1: they get products and markets so quickly. So I think 591 00:30:20,000 --> 00:30:22,240 Speaker 1: there's a place for everyone. Um, I think that some 592 00:30:22,320 --> 00:30:24,440 Speaker 1: of these established products from the likes of vanguard or 593 00:30:24,440 --> 00:30:26,920 Speaker 1: black rock are so useful to clients we won't ever 594 00:30:26,960 --> 00:30:29,120 Speaker 1: be able to compete with them. So there's still a 595 00:30:29,120 --> 00:30:31,200 Speaker 1: place for them too. But you think the duopoly is 596 00:30:31,240 --> 00:30:33,680 Speaker 1: going to stay? I mean, like there are a lot 597 00:30:33,760 --> 00:30:37,360 Speaker 1: of competitors up and coming you do think that vanguard 598 00:30:37,360 --> 00:30:40,200 Speaker 1: and black rock are going to remain these two anchors, 599 00:30:40,200 --> 00:30:44,000 Speaker 1: though I wish I had a Christian it's always I 600 00:30:44,000 --> 00:30:46,800 Speaker 1: always thought about you know, Bloomberg and Reuters are the 601 00:30:46,920 --> 00:30:50,440 Speaker 1: two major. When I started we wanted to beat routers, 602 00:30:50,520 --> 00:30:52,040 Speaker 1: you know, and they wanted to beat us. And throughout 603 00:30:52,080 --> 00:30:55,960 Speaker 1: the years we've seen other upstarts coming business insider axios, 604 00:30:56,080 --> 00:30:58,880 Speaker 1: what have you, but we're still kind of the two 605 00:30:58,920 --> 00:31:02,080 Speaker 1: biggest in terms of business. I think it's basically us 606 00:31:02,920 --> 00:31:05,280 Speaker 1: and then Reuter's all right, Amanda Rebello, head of passive 607 00:31:05,320 --> 00:31:08,520 Speaker 1: sales us on shore for dws group, joining us here 608 00:31:08,520 --> 00:31:15,360 Speaker 1: in our Bloomberg interactive broker studio. We appreciate that. Well then, 609 00:31:15,600 --> 00:31:17,800 Speaker 1: guests are just kind of flowing into the studio these 610 00:31:17,840 --> 00:31:19,520 Speaker 1: days that we're getting back to the old days, which 611 00:31:19,560 --> 00:31:21,040 Speaker 1: is good. Getting people come in we can get in 612 00:31:21,120 --> 00:31:24,320 Speaker 1: some good conversations. Amy O'Brien joins us. She's global head 613 00:31:24,320 --> 00:31:28,600 Speaker 1: of responsible investing at nouvene. Amy, it is you know, 614 00:31:28,640 --> 00:31:30,840 Speaker 1: it's climate week here in New York, in addition to 615 00:31:30,880 --> 00:31:33,760 Speaker 1: being the UN General Assembly. So I'm guessing this is 616 00:31:33,760 --> 00:31:35,760 Speaker 1: a big, big week for you. What how do you 617 00:31:35,800 --> 00:31:40,440 Speaker 1: guys at nouvine kind of describe responsible investing. What's that 618 00:31:40,480 --> 00:31:43,800 Speaker 1: mean to you? Well, responsible investing is our umbrella term 619 00:31:43,960 --> 00:31:47,440 Speaker 1: for how we credibly embed E S G factors into 620 00:31:47,480 --> 00:31:50,280 Speaker 1: investment decision making, how we use our influence in the 621 00:31:50,320 --> 00:31:52,840 Speaker 1: market through our stewardship practices and how we measure and 622 00:31:52,880 --> 00:31:56,760 Speaker 1: manage positive and negative impact. So we had a guest 623 00:31:56,800 --> 00:31:58,760 Speaker 1: on here a few weeks ago, maybe a month ago, 624 00:31:59,200 --> 00:32:01,120 Speaker 1: and he has an et f out calling. You might 625 00:32:01,120 --> 00:32:02,600 Speaker 1: have her. I can remember his name, but he has 626 00:32:02,680 --> 00:32:06,960 Speaker 1: et a D R I l drill, and he's saying basically, 627 00:32:07,800 --> 00:32:12,560 Speaker 1: companies should just maximize profit. They should influence social policy. 628 00:32:12,920 --> 00:32:15,200 Speaker 1: Their job is to maximize profit and if that's buying 629 00:32:15,200 --> 00:32:19,040 Speaker 1: in a oil and gas company, fine, policymakers will take 630 00:32:19,040 --> 00:32:21,680 Speaker 1: care of all the other stuff. How does how do 631 00:32:21,720 --> 00:32:23,880 Speaker 1: you think about that at new vine? Yeah, I think 632 00:32:23,880 --> 00:32:25,680 Speaker 1: that's a debate that's been going on. I mean the 633 00:32:25,720 --> 00:32:28,920 Speaker 1: field is over five decades old and I think one 634 00:32:28,920 --> 00:32:33,760 Speaker 1: of the realities, though, is the client interest in e 635 00:32:33,920 --> 00:32:38,440 Speaker 1: s g investing, in stewardship practices and impact strategies is 636 00:32:38,440 --> 00:32:41,120 Speaker 1: stronger than ever. There are a lot of companies themselves 637 00:32:41,160 --> 00:32:44,840 Speaker 1: who have committed to tackling different types of issues like 638 00:32:44,880 --> 00:32:48,760 Speaker 1: climate risk and investing in opportunity. So while we we 639 00:32:48,880 --> 00:32:51,880 Speaker 1: certainly don't think that the whole world will just be 640 00:32:51,960 --> 00:32:55,160 Speaker 1: E S G leaders tomorrow, we think that all the 641 00:32:55,200 --> 00:32:59,200 Speaker 1: momentum around these factors and what's driving growth means that 642 00:32:59,240 --> 00:33:01,520 Speaker 1: E S G is here to stay. Despite some of 643 00:33:01,560 --> 00:33:04,760 Speaker 1: those some of those views. I'm old school Wall Street. 644 00:33:04,760 --> 00:33:06,440 Speaker 1: My first job, my trader would just come up to 645 00:33:06,480 --> 00:33:09,640 Speaker 1: me every single day, my head trader, and say make money, 646 00:33:09,880 --> 00:33:12,280 Speaker 1: don't lose money and then walk away. That was my 647 00:33:12,280 --> 00:33:16,120 Speaker 1: pep talk. E S G investing. Do I make do 648 00:33:16,160 --> 00:33:19,560 Speaker 1: I get superior returns? Do I sacrifice some returns to 649 00:33:19,960 --> 00:33:23,520 Speaker 1: do social good? What's the data show? So E S 650 00:33:23,560 --> 00:33:26,760 Speaker 1: G and responsible investing is all about making money and 651 00:33:26,800 --> 00:33:29,320 Speaker 1: that has been the approach that many of us who 652 00:33:29,320 --> 00:33:32,600 Speaker 1: are based at commercially oriented firms, uh, you know, have 653 00:33:32,760 --> 00:33:35,280 Speaker 1: to take. We have to be careful about what mean 654 00:33:35,320 --> 00:33:37,240 Speaker 1: by e s G. is at e S G commitment, 655 00:33:37,320 --> 00:33:39,680 Speaker 1: E S G outcome. You know, there are, you know, 656 00:33:39,720 --> 00:33:42,360 Speaker 1: the devils in the details when we're talking about this field, 657 00:33:42,720 --> 00:33:45,800 Speaker 1: but we are we're grounded in them, in the views 658 00:33:45,920 --> 00:33:49,160 Speaker 1: that these factors can help us manage risk across multiple 659 00:33:49,400 --> 00:33:54,200 Speaker 1: asset classes. They're uncovering very unique kinds of investment opportunities, um, 660 00:33:54,200 --> 00:33:57,040 Speaker 1: that clients want and you know, based on where the 661 00:33:57,080 --> 00:34:00,400 Speaker 1: policy environment is going, you know we're we're well position 662 00:34:00,480 --> 00:34:03,960 Speaker 1: to to meet the future demand from clients. So we 663 00:34:03,960 --> 00:34:08,920 Speaker 1: were just talking Um with a head of E T 664 00:34:09,120 --> 00:34:13,839 Speaker 1: F business at at dws and she pointed out that 665 00:34:13,880 --> 00:34:16,799 Speaker 1: it's e. The E is a little squishier. Right. The 666 00:34:17,040 --> 00:34:21,920 Speaker 1: S is pretty easy to identify, Um, and as well 667 00:34:21,960 --> 00:34:24,719 Speaker 1: as the g. But but e is where you get 668 00:34:24,760 --> 00:34:30,480 Speaker 1: a debate. Germans will say nuclear is horrendous for the environment, 669 00:34:30,680 --> 00:34:33,800 Speaker 1: and the rest of Europe, I think just made nuclear green. 670 00:34:34,239 --> 00:34:37,960 Speaker 1: How do you deal with this kind of taxonomy issue? Um? 671 00:34:38,160 --> 00:34:40,480 Speaker 1: That that we're still trying to figure out right. Well, 672 00:34:40,480 --> 00:34:44,480 Speaker 1: it all gets down to data and taxonomy. But then 673 00:34:44,480 --> 00:34:46,399 Speaker 1: it gets then you have to add on what are 674 00:34:46,520 --> 00:34:49,120 Speaker 1: the client's own views, and so we have to build 675 00:34:49,120 --> 00:34:52,279 Speaker 1: out a robust system for which our investment teams can 676 00:34:52,320 --> 00:34:56,360 Speaker 1: have access to credible e s g information across all companies. 677 00:34:56,960 --> 00:35:01,280 Speaker 1: Use that alongside the fundamental research. But increasingly we're seeing 678 00:35:01,320 --> 00:35:03,600 Speaker 1: clients come to US and ask us for you know, 679 00:35:03,800 --> 00:35:08,400 Speaker 1: very specific Um you know, portfolios, separately managed accounts that 680 00:35:08,440 --> 00:35:10,760 Speaker 1: do express your views. So you have to be careful 681 00:35:10,800 --> 00:35:13,200 Speaker 1: about what clients get when it comes to e s 682 00:35:13,239 --> 00:35:16,040 Speaker 1: g versus, you know what across the board and in 683 00:35:16,120 --> 00:35:19,000 Speaker 1: terms of investment discipline, versus what they're coming and asking. 684 00:35:19,040 --> 00:35:22,680 Speaker 1: And many of us do have very customized beliefs depending 685 00:35:22,680 --> 00:35:24,359 Speaker 1: on the region they're in, and we have to work 686 00:35:24,400 --> 00:35:28,120 Speaker 1: with those clients accordingly. So and I guess the probably 687 00:35:28,200 --> 00:35:31,520 Speaker 1: number one conundrum is something like uh, an oil company 688 00:35:31,600 --> 00:35:35,799 Speaker 1: right like BP. Is that an e s g offender 689 00:35:35,920 --> 00:35:39,440 Speaker 1: because they, you know, are pulling oil out of the 690 00:35:39,480 --> 00:35:43,240 Speaker 1: ground and causing environmental problems, or is that a leader 691 00:35:43,400 --> 00:35:47,440 Speaker 1: in E S G because they're looking at alternatives and 692 00:35:47,480 --> 00:35:51,879 Speaker 1: trying to change the way we think of and use energy? Yeah, 693 00:35:51,880 --> 00:35:53,680 Speaker 1: I think we have to also be careful to not 694 00:35:53,719 --> 00:35:55,680 Speaker 1: to have black and white, you know, views on here. 695 00:35:55,760 --> 00:35:58,359 Speaker 1: I mean a lot of investors are working with large 696 00:35:58,400 --> 00:36:01,799 Speaker 1: companies such as BP and others to map out what 697 00:36:01,960 --> 00:36:06,359 Speaker 1: the transition will be to a lower and you've seen 698 00:36:06,440 --> 00:36:10,600 Speaker 1: a lot of proxy votes this year shielder resolutions on 699 00:36:10,600 --> 00:36:13,360 Speaker 1: this topic, and so you know we we aren't taking 700 00:36:13,360 --> 00:36:15,919 Speaker 1: a stand at new being, you know, energy good or bad. 701 00:36:16,080 --> 00:36:18,520 Speaker 1: You know, it's really about a case by case working 702 00:36:18,520 --> 00:36:21,560 Speaker 1: with each company, understanding what their strategy is for our 703 00:36:21,640 --> 00:36:25,000 Speaker 1: views about the long term transition towards a low carbon 704 00:36:25,120 --> 00:36:27,920 Speaker 1: economy and so bp Um, you know, could be used 705 00:36:27,960 --> 00:36:30,719 Speaker 1: by different investors in different portfolios. But we have to 706 00:36:30,760 --> 00:36:33,400 Speaker 1: be precise as asset managers about what our view is 707 00:36:33,440 --> 00:36:36,120 Speaker 1: and when those companies are in a portfolio and when 708 00:36:36,120 --> 00:36:40,319 Speaker 1: they're not. Cope is coming up. What is? Just tell 709 00:36:40,400 --> 00:36:42,759 Speaker 1: us what copy seven is and how it impacts the 710 00:36:42,840 --> 00:36:46,400 Speaker 1: E S G investing world. Yeah, so there's been, you know, 711 00:36:46,440 --> 00:36:49,520 Speaker 1: cop twenty six, of course, was last year and last 712 00:36:49,600 --> 00:36:51,240 Speaker 1: night I was at at an event at the British 713 00:36:51,280 --> 00:36:56,320 Speaker 1: consulate that actually uh where, Um a look. He Sharma 714 00:36:56,480 --> 00:36:59,640 Speaker 1: spoke about what what was achieved in this past year 715 00:36:59,640 --> 00:37:03,440 Speaker 1: and we'll remember the timing here where a cop happened. 716 00:37:03,480 --> 00:37:05,600 Speaker 1: And then we've had, you know, the war in Ukraine 717 00:37:05,640 --> 00:37:08,080 Speaker 1: and all of the issues around covid and President Biden 718 00:37:08,160 --> 00:37:10,880 Speaker 1: left cap twenty six on the phone with the Saudis 719 00:37:10,960 --> 00:37:13,560 Speaker 1: saying please pump more oil. Right, I mean it was really, 720 00:37:13,600 --> 00:37:18,480 Speaker 1: really interesting. Uh M, a time it is, but I 721 00:37:18,480 --> 00:37:21,920 Speaker 1: mean I think what copies achieved for the industry is is, 722 00:37:21,960 --> 00:37:24,880 Speaker 1: you know, bringing together. You know what a credible commitment 723 00:37:24,920 --> 00:37:27,759 Speaker 1: could look like. I mean I think everyone understands that. 724 00:37:28,040 --> 00:37:31,000 Speaker 1: You know, in terms of emissions, we are all long 725 00:37:31,120 --> 00:37:34,600 Speaker 1: term looking for a downward trend. There a significant downward trend, 726 00:37:34,640 --> 00:37:37,720 Speaker 1: but we may have periods where there there are some 727 00:37:37,719 --> 00:37:40,000 Speaker 1: some blips and you know, what's happening in the energy 728 00:37:40,120 --> 00:37:43,400 Speaker 1: markets has to affect our plans. But last night I 729 00:37:43,520 --> 00:37:46,960 Speaker 1: heard a lot of talk from large asset owners, sovereign 730 00:37:46,960 --> 00:37:49,399 Speaker 1: wealth funds, you know, around the world, who are still 731 00:37:49,440 --> 00:37:53,080 Speaker 1: committed to making this transition possible. Believe there's investment to 732 00:37:53,120 --> 00:37:55,560 Speaker 1: be made and money to be made in the transition 733 00:37:55,640 --> 00:37:58,319 Speaker 1: to that long term. Um, you know outcome of net 734 00:37:58,400 --> 00:38:01,680 Speaker 1: zero carbon. So cop twenty seven is coming up in November. 735 00:38:01,800 --> 00:38:04,600 Speaker 1: I think you'll see a lot of the commitments that firms, 736 00:38:04,640 --> 00:38:08,080 Speaker 1: companies and asset managers like us made last year coming 737 00:38:08,080 --> 00:38:11,960 Speaker 1: out with stronger, more detailed implementation plans. I think that's 738 00:38:11,960 --> 00:38:15,880 Speaker 1: really important for investors and other stakeholders. The regulators are 739 00:38:15,880 --> 00:38:18,880 Speaker 1: looking at us on this very topic. Um, we are 740 00:38:18,920 --> 00:38:21,760 Speaker 1: we are being regulated and have disclosure requirements being placed 741 00:38:21,800 --> 00:38:24,760 Speaker 1: on us as an asset manager. More than ever before, 742 00:38:24,880 --> 00:38:27,440 Speaker 1: you know, especially on the issue of climate risk. So 743 00:38:27,480 --> 00:38:30,120 Speaker 1: what are the investment opportunities that you're that you're pumped 744 00:38:30,120 --> 00:38:32,160 Speaker 1: about as we head into that? Yeah, I think we. 745 00:38:32,320 --> 00:38:34,439 Speaker 1: You know, one way that I'd like Um to think 746 00:38:34,440 --> 00:38:37,920 Speaker 1: about this is the investment opportunities here are cross sectors. 747 00:38:37,960 --> 00:38:40,759 Speaker 1: We're placing a lot of emphasis on the energy sector, 748 00:38:41,080 --> 00:38:44,480 Speaker 1: but when we look at other parts of the investable universe, 749 00:38:44,719 --> 00:38:47,720 Speaker 1: there are many companies who are changing business models because 750 00:38:47,719 --> 00:38:52,040 Speaker 1: of consumer preference. So we're looking across asset classes. Um. 751 00:38:52,080 --> 00:38:54,640 Speaker 1: You know, Nuvine has been building out alternatives in a 752 00:38:54,719 --> 00:38:59,280 Speaker 1: natural capital investment area to to kind of capitalize on 753 00:38:59,719 --> 00:39:02,000 Speaker 1: that part of the equation. So there's a lot of 754 00:39:02,040 --> 00:39:05,200 Speaker 1: emphasis on how how you lower emissions, but you know, 755 00:39:05,200 --> 00:39:07,720 Speaker 1: how do we create syncs to which to to remove 756 00:39:07,760 --> 00:39:10,920 Speaker 1: those from from the environment? Tell us about data, like 757 00:39:10,960 --> 00:39:12,800 Speaker 1: it might buy a stock or a bond or company 758 00:39:12,800 --> 00:39:14,759 Speaker 1: and look at the income statement, balance sheet, cash flow 759 00:39:14,800 --> 00:39:17,080 Speaker 1: statement to get a sense of evaluation. Where do I 760 00:39:17,120 --> 00:39:21,719 Speaker 1: go to get good, consistent data for e s G. Paul, 761 00:39:21,760 --> 00:39:23,240 Speaker 1: how much more time do we have in the show? 762 00:39:23,640 --> 00:39:25,600 Speaker 1: I mean this is certainly, you know, an area that 763 00:39:25,640 --> 00:39:27,640 Speaker 1: I started my career out twenty six years ago in 764 00:39:27,680 --> 00:39:30,719 Speaker 1: this space, working for one of the first firms organizations. 765 00:39:30,760 --> 00:39:34,200 Speaker 1: It was a nonprofit Um. That those that's those days. 766 00:39:34,200 --> 00:39:36,839 Speaker 1: That's who was producing E S G ratings Um and 767 00:39:36,880 --> 00:39:38,920 Speaker 1: we were struggling with some of the same challenges we 768 00:39:38,960 --> 00:39:41,720 Speaker 1: are now. But I do see, you know this, we'd 769 00:39:41,760 --> 00:39:44,440 Speaker 1: have to, you know, make sure the world begins to 770 00:39:44,480 --> 00:39:49,880 Speaker 1: align around e s g data needs, uh, disclosure requirements 771 00:39:49,960 --> 00:39:53,040 Speaker 1: from issuers. Then regulators have to get on board about 772 00:39:53,040 --> 00:39:55,560 Speaker 1: then what do they want from the investors themselves? So 773 00:39:55,760 --> 00:40:00,080 Speaker 1: there's this whole data infrastructure ecosystem that we all and 774 00:40:00,120 --> 00:40:02,160 Speaker 1: I would encourage us all to take a look at that, 775 00:40:02,239 --> 00:40:04,000 Speaker 1: because that is really where the rubber is going to 776 00:40:04,080 --> 00:40:05,839 Speaker 1: hit the road. Is when we have good data, we're 777 00:40:05,840 --> 00:40:08,319 Speaker 1: gonna be able to make good decisions. We're gonna be 778 00:40:08,360 --> 00:40:10,600 Speaker 1: able to show who's the leader, you know, in in 779 00:40:10,800 --> 00:40:12,560 Speaker 1: on the S G you know who might be a 780 00:40:12,640 --> 00:40:15,239 Speaker 1: laggard and then, more importantly, you know what were the 781 00:40:15,280 --> 00:40:17,640 Speaker 1: real change that that happened. And you know that's still 782 00:40:17,719 --> 00:40:20,480 Speaker 1: a little muddy right now. And you know, and investors 783 00:40:20,840 --> 00:40:24,279 Speaker 1: to get the credibility and confidence to to further allocate Um. 784 00:40:24,320 --> 00:40:26,239 Speaker 1: You know, we're gonna need to really that's one way 785 00:40:26,239 --> 00:40:29,000 Speaker 1: that we could align as a as an industry. All right, 786 00:40:29,000 --> 00:40:31,800 Speaker 1: Amyo Bryant, great, great stuff. Amy Brian, global head of 787 00:40:31,840 --> 00:40:34,160 Speaker 1: responsible investing at Nouvine, I'll mention you know you go 788 00:40:34,200 --> 00:40:36,239 Speaker 1: to the f a function on the Bloomberg terminal, one 789 00:40:36,280 --> 00:40:39,840 Speaker 1: of the most widely used terminal functions for financial analysis. 790 00:40:40,000 --> 00:40:41,600 Speaker 1: We have a big tab there of all E S 791 00:40:41,640 --> 00:40:45,080 Speaker 1: G data for Jillions of companies. So, Amy Brian, thanks 792 00:40:45,080 --> 00:40:49,239 Speaker 1: so much. We appreciate it. Thanks for listening to the 793 00:40:49,280 --> 00:40:53,200 Speaker 1: Bloomberg markets podcast. You can subscribe and listen to interviews 794 00:40:53,200 --> 00:40:57,480 Speaker 1: with apple podcasts or whatever podcast platform you prefer. I'm 795 00:40:57,520 --> 00:41:00,680 Speaker 1: Matt Miller. I'm on twitter at Matt Leer in nineteen 796 00:41:00,719 --> 00:41:03,359 Speaker 1: seventy three, and on ball sweeney. I'm on twitter at 797 00:41:03,400 --> 00:41:06,239 Speaker 1: PT Sweeney. Before the podcast, you can always catch US 798 00:41:06,280 --> 00:41:07,720 Speaker 1: worldwide at Bloomberg radio.