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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside

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Speaker 1: my co host Matt Miller. Every business day, we bring

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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along

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Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast

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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and

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Speaker 1: at Bloomberg dot com slash podcast. All right, I've been

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Speaker 1: looking to talk to this guy for a couple of days. Here.

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Speaker 1: I need some perspective. I need a little bit of cynicism,

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Speaker 1: maybe even a little bit of snark, and for that

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Speaker 1: I go to Cameron christ Our Macroman. He's a Bloomberg

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Speaker 1: News Cameron, you're out with the note today saying the

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Speaker 1: yield curve says rate cuts are nearly a certainty. What

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Speaker 1: do you mean by that, Well, I look at the

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Speaker 1: front end of the old curve. I mean the two

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Speaker 1: year note has obviously gone crazy ballistic since the Silicon

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Speaker 1: Valley bank stuff hit the tape, and the inversion between

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Speaker 1: the three months sector and the two year sector is now,

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Speaker 1: you know, kinda hit one hundred basis points earlier earlier today.

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Speaker 1: That's only the second time that's happened in the last

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Speaker 1: forty years. The other one was the very beginning of

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Speaker 1: two thousand and one, which is when the FED actually

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Speaker 1: cut rates kind of on the first real trading day

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Speaker 1: of the year. And if you look at all times

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Speaker 1: when three months two year was inverted by at least

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Speaker 1: fifty basis points, the FED is cut rates within six

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Speaker 1: months on like ninety three percent of those occasions. So statistically,

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Speaker 1: we only get pricing like this when the FED is

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Speaker 1: about to make a pretty swift turn. I guess one

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Speaker 1: question though for you, is inflation under control? I mean,

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Speaker 1: we've had rate cuts from the ECP, from the Bank

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Speaker 1: of England and obviously from the FED. You know, are

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Speaker 1: they pretty much done? Is inflation under control at the moment? No?

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Speaker 1: But in the future who knows? And that's really the

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Speaker 1: issue with all those banking sector stress is you just

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Speaker 1: don't know what the impact is going to be. Um.

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Speaker 1: I mean, I think we can we can pretty clearly

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Speaker 1: say it's not a two thousand and eight situation because

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Speaker 1: there's not all this toxic you know, toxic waste on

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Speaker 1: bank balance sheets. There's other kinds of waste, which is

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Speaker 1: you know, which is government issued or government guaranteed UH

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Speaker 1: debt UM. But that's a slightly ket different kind of

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Speaker 1: fish because it's held in holding maturity UM buckets, and

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Speaker 1: there are liquidity uh measures in place so that banks

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Speaker 1: can can obviously meet the needs of depositors UM who

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Speaker 1: want their money. But I think the issue that mister

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Speaker 1: Powell raised on Wednesday is the right one, which is

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Speaker 1: that if we get this sort of significant tightening and

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Speaker 1: credit conditions that seems likely as a result of all

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Speaker 1: of this banking kerfuffle, and essentially it's going to take

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Speaker 1: the place of r of rate hikes in in in UM,

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Speaker 1: restraining the growth of credit and ultimately UM ultimately demand.

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Speaker 1: So it does make sense that the Fed has kind

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Speaker 1: of shifted its perspective UM. The market, I think is

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Speaker 1: sort of obviously leaning very very very very heavily towards

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Speaker 1: this is a big deal uh, and the economy is

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Speaker 1: going to enter a recession sort of post haste UM,

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Speaker 1: which then raises the question of why the equity market

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Speaker 1: hasn't done more poorly on on a broader basis UH.

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Speaker 1: And then we get to a more philosophical question. Yeah,

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Speaker 1: philosophical question of you know, who's who's at the vanguard

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Speaker 1: of economic analysis and who's sort of in the caboose um.

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Speaker 1: You know, i'd remind you and listeners that the stock

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Speaker 1: market reached new highs after the FED first cut rates

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Speaker 1: in two thousand and seven, um, and that obviously went

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Speaker 1: pretty horridly wrong in the end. Even you know what,

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Speaker 1: the provider that this is not a sort of a

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Speaker 1: two thousand and eight situation. And Cameron on the recession discussion,

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Speaker 1: I have a hard time kind of getting to a recession,

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Speaker 1: like a lot of folks are talking about. I've got,

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Speaker 1: you know, still pretty darn your full employment. We had

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Speaker 1: a good jobs print today still this week below two

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Speaker 1: hundred thousand. We get the pm I numbers today coming

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Speaker 1: in much stronger than expected. I don't know, I kind

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Speaker 1: of feel like we can soft land this thing. What

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Speaker 1: do you think. I think it's become a lot more

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Speaker 1: difficult given the stress in the banking sector. Okay, I

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Speaker 1: think what we're probably going to see. And again this

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Speaker 1: is something I've written, I think Powell alluded to it

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Speaker 1: on Wednesday, is some of the cumuloultive impact of tightening

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Speaker 1: generally and credit tightening in particular, is nonlinear. It kind

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Speaker 1: of has no impact, no impact, no impact. And then

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Speaker 1: an animal falls on your foot. It's I can use

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Speaker 1: sort of a Warner Brothers well, a wily coyote type

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Speaker 1: metaphor there, And I think that's the It's certainly he

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Speaker 1: looks like there's an enhanced risk that that's what's going

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Speaker 1: to happen. Um, we don't know, uh, And so I

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Speaker 1: think it makes sense to keep one's options open and

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Speaker 1: maintain analytical flexibility and not be dogmatic about what the

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Speaker 1: future looks like, have a little humility about the outlook. Um. Well,

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Speaker 1: I think we can say though, is that the market,

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Speaker 1: the market pricing as it stands now in the sixth

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Speaker 1: income market is one that is not a stable equilibriate.

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Speaker 1: Either the Fed's going to have to deliver rate cuts

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Speaker 1: um and short rates are going to drop fairly soon,

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Speaker 1: or the market's going to have to recalibrate the yield

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Speaker 1: curve UM and the two year yield's gonna have to

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Speaker 1: go quite a bit higher again because this sort of

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Speaker 1: spread between the very short rate and the two year

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Speaker 1: treasury is just not somewhere that it can can it

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Speaker 1: can last for very long um For no other reason

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Speaker 1: that leverage owners of the two year yield have to

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Speaker 1: pay the shorts, you have to pay the REPO rate

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Speaker 1: to finance their positions, and that's a big negative carry trade.

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Speaker 1: And the one thing we know about fixed income operators

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Speaker 1: is there's nothing they hate more than negative care to

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Speaker 1: one thing, though, I mean, you've made the point about

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Speaker 1: you know, you've got the FED tightening conditions as well,

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Speaker 1: but I mean you go back to banks tightening conditions,

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Speaker 1: and so I look ahead to the second half of

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Speaker 1: the year, you can see these two paths kind of

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Speaker 1: diverging or converging rather onto the American spender, and then

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Speaker 1: there's going to be a lot of reason for people

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Speaker 1: to pull back their purse strings, not to mention the

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Speaker 1: fact that the employment market could start looking really, very

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Speaker 1: very tricky. So I mean, looking ahead to that, do

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Speaker 1: you see that you know there's a substantial potential for

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Speaker 1: things to be a lot tougher and for fixingtom to

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Speaker 1: get a lot more expensive later on. Yeah, absolutely, there's

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Speaker 1: the potential for things to get a lot tougher. And

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Speaker 1: if that happens, then yeah, the pricing that's already in

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Speaker 1: placent in the yield curve will come to pass. But

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Speaker 1: then you have to ask the question of what's the

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Speaker 1: you know, what's the stock markets still doing? Up on

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Speaker 1: the air? Um, you know, in an environment where things

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Speaker 1: are bad enough and people sort of retrench quickly enough

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Speaker 1: that these rate cuts that are in the price are merited.

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Speaker 1: That's not a situation where the earnings outlook is anything

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Speaker 1: but awful. Would I would think, So there is this

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Speaker 1: sort of dissonance between what's being priced across various aspects

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Speaker 1: of you know, of the financial market universe. Cameras spent

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Speaker 1: thirty seconds and how concerned are you about the US

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Speaker 1: banking system? A lot more so than a couple of

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Speaker 1: weeks ago. I think if everyone agrees that it's healthy,

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Speaker 1: then it's healthy. But if everyone thinks that it's in trouble,

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Speaker 1: then the nature of facts fractional reserve banking means that

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Speaker 1: it kind of almost becomes a self fulfilling prophecy, particularly

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Speaker 1: in this environment of social media where people can sort

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Speaker 1: of fan the flames of fear without facts really intruding

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Speaker 1: on then earth. Okay, camera christ Macro Strategy, Bloomberg News

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Speaker 1: and most notably on his CV. He's a graduate of

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Speaker 1: Duke University. What happened to our hoops team this year? Dude?

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Speaker 1: You're listening to the Team Cancer Live program Bloomberg Markets

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Speaker 1: weekdays at ten am easting on Bloomberg dot Com, the

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Speaker 1: I Heard Radio app, and the Bloomberg Business app. We're

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Speaker 1: listening on demand wherever you get your podcast block. Obviously.

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Speaker 1: In the news this week, Hindenburg Research out with a

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Speaker 1: short seller report on this company. The company vows to fight.

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Speaker 1: I need the latest on this name and do that.

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Speaker 1: We turn to Jenny Sreen, finance reporter with Bloomberg News.

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Speaker 1: I believe she's in London somewhere. I'm not really sure

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Speaker 1: she's over there. Jennifer During Thanks, Yeah, okay, all right,

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Speaker 1: so Jenny Sreen, thanks, So what for joining us? Give

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Speaker 1: us the latest here? Because Block Jack Dorsey all that

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Speaker 1: kind of stuff. They're going to fight this thing, aren't they. Yeah, No,

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Speaker 1: that's exactly right. They're out with I mean a relatively

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Speaker 1: concise statement, given the length of the Hindenburg Research report

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Speaker 1: that was put out on them. But yeah, they've vowed

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Speaker 1: to fight it. They've said they'll work with the SEC

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Speaker 1: to do so, and they seem pretty ready to dispute

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Speaker 1: the claims that we're brought against them. Can you just

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Speaker 1: summarize for us what are the claims. What's the thesis

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Speaker 1: of this short? Yeah, absolutely, So, you know, it's interesting.

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Speaker 1: I think there was a lot of stuff that the

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Speaker 1: investors likely already knew in the report, and so I

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Speaker 1: think the biggest new piece was really just the idea

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Speaker 1: that a lot of fraud and a lot of criminal

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Speaker 1: activity could be going over the cash app network specifically.

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Speaker 1: So this is like a person to person payments app

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Speaker 1: that you know, rivals the likes of Venmo or Zell

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Speaker 1: and Hindenburg, and you know, a bunch of public records

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Speaker 1: requests and a lot of other deep dive research says

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Speaker 1: that they've found evidence of a widespread fraud on this network.

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Speaker 1: And so that that's really I think when investors are

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Speaker 1: worried about and really keying in on. I mean, the

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Speaker 1: thing I really want to know about this is where

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Speaker 1: the regulators are on this, and what they're thinking is

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Speaker 1: because you know, we've certainly seen concerns raised about Zell

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Speaker 1: for example, and you know, you wonder if these these

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Speaker 1: new payment systems, these new ways of transferring money super

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Speaker 1: quickly from one to another. It's they've been around for

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Speaker 1: a little while. So I feel like the regulators really

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Speaker 1: have gotten a bit flat footed on this. Yeah, it's

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Speaker 1: interesting because I think, um, you know, with sell, a

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Speaker 1: lot of the complaints and consumer criticism is that UM

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Speaker 1: fraudsters have seized it and convinced consumers to send money

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Speaker 1: to the wrong person essentially, and so in that instance,

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Speaker 1: you know, it's really UM a fraudster says, hey, you know,

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Speaker 1: send me this, and a person might think it's their

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Speaker 1: aunt or their uncle or their friend, and and it

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Speaker 1: turns out to be a scammer. So that's one area, UM.

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Speaker 1: But really what this report shows is UM that there

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Speaker 1: was UM, you know, use of this network by UM

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Speaker 1: sexual traffickers and and just all sorts of really a

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Speaker 1: criminal CD underbelly that that's really being alleged here. And

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Speaker 1: so I think there's very different kinds of fraud and

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Speaker 1: mouthfee sense that could be occurring. And regulators, I have

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Speaker 1: to imagine, are are looking closely at this and kind

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Speaker 1: of um taking a closer look because I think, um,

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Speaker 1: you know a lot of these FinTechs have popped up

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Speaker 1: and you know, and unfortunately oftentimes see bad actors really

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Speaker 1: looking to see a lot of new technologies. Have we

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Speaker 1: heard from any big shareholders for block here, because the

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Speaker 1: stock has obviously been under significant pressure since this report

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Speaker 1: came out. That's actually a good point. We haven't um

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Speaker 1: no one has swept into their defense just yet. You know,

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Speaker 1: I think a lot of the analyst community, at the

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Speaker 1: very least, they're really trying to draw lines between what

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Speaker 1: is a known issue and what block has been publicly

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Speaker 1: out there trying to fix. You know, they're one of

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Speaker 1: many payment providers that have seen a slowdown in volumes,

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Speaker 1: for instance, and then they've got different strategies in place

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Speaker 1: to fix that, and then what is the new stuff?

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Speaker 1: And I think a lot of this, you know, potential

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Speaker 1: criminal activity and then the allegations there. That's really what

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Speaker 1: I think analysts and in the investor community more broadly

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Speaker 1: I'm just looking at the a n R functional on

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Speaker 1: the Bloomberg terminal for analyst rating recommendations forty buys, eleven

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Speaker 1: holds and two cells, which it looks like they're still

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Speaker 1: kind of supporting the name. Yeah, they haven't got the

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Speaker 1: news yet maybe or are they so? Jenny? I mean,

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Speaker 1: I guess what are next steps here for the company?

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Speaker 1: I mean, I imagine that we um I guess we

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Speaker 1: hope we've reached out for additional comment and really had

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Speaker 1: to have them address some of these allegations more directly.

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Speaker 1: The statement that we got last night was really, I

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Speaker 1: would say, you know, obviously very forceful in terms of

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Speaker 1: promising legal action and then really trying to take a

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Speaker 1: stand against it, but not really addressing the specific claims.

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Speaker 1: And I think you know, in the cases in the

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Speaker 1: past where you've seen these big short Siller reports, you

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Speaker 1: often do see company responses that are you know, tens

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Speaker 1: of pages long and very detailed, and so I feel

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Speaker 1: like that's we hope that's what we'll get, you know.

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Speaker 1: Notwithstanding that, I think they have earnings coming up in

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Speaker 1: a couple of weeks and they'll absolutely have to address

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Speaker 1: it then. So you know, I think we're just going

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Speaker 1: to have to wait and see how the company wants

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Speaker 1: to respond from here. Do you see any other knock

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Speaker 1: on impact into any other sectors of the financial services

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Speaker 1: industry from this? I definitely think, you know, especially with

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Speaker 1: players like Sell and Venmo, this just ratchets up the

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Speaker 1: scrutiny on those guys even more because I think, you know,

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Speaker 1: there's always a concern that would you know, where there's

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Speaker 1: one issue, there's many, and so you'll probably see regulators

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Speaker 1: looking more closely at all of these e money providers

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Speaker 1: and looking for ways that they can make sure that

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Speaker 1: you know, there is criminal activity, that they can catch

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Speaker 1: it and tamp down on it, and that these providers

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Speaker 1: do have systems in place to catch it. You know, Jenny,

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Speaker 1: we don't read too much about short selling in successful

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Speaker 1: short saying bad I guess we have. Recently, these Hindenburg

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Speaker 1: folks have been kind of busy. They I guess the

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Speaker 1: most notable short report and short action they've taken this

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Speaker 1: against Adani an Indian companies. So can you tell us

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Speaker 1: a little about Hindenburg Research and kind of what their

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Speaker 1: business is. Yeah, I mean, I think it's it's exactly

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Speaker 1: like you said. They usually write these really big reports

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Speaker 1: and then use social media and other ways to kind

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Speaker 1: of distribute them and promote their ideas. But they're betting

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Speaker 1: against the stocks fall, so you have to kind of

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Speaker 1: keep that in mind as you're reporting on them and

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Speaker 1: reading these research that they definitely have an angle and

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Speaker 1: have a financial incentive to cause this type of decline

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Speaker 1: that we've seen in blocks stock this week. But You're

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Speaker 1: absolutely right, Donnie. Was their other big report that they

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Speaker 1: did this year. A couple of years ago they had

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Speaker 1: went out on Lordstown. They had a lot on the

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Speaker 1: ev market just a few years ago. So I think,

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Speaker 1: you know, they're relatively new player, but definitely have caused

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Speaker 1: quite a stir every time they do take one of

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Speaker 1: these very public formal positions. I'm very interested in your

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Speaker 1: point that you know they're putting this all out on

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Speaker 1: social media. It seems like these kinds of the kinds

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Speaker 1: of angles on these stories move very very quickly. I mean,

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Speaker 1: do you have a sense that it moves a little

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Speaker 1: bit too quickly? Um? I mean I think, Um, I

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Speaker 1: guess as a journalist, you know, we cover the stocks

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Speaker 1: drop and try to explain that for readers. But yeah,

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Speaker 1: I mean, I think everybody reading any research, you know,

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Speaker 1: even if it's a you know, someone who's not a

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Speaker 1: short seller, sometimes there's folks who of uh invested in

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Speaker 1: the stock who put out their ideas and they want

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Speaker 1: to see the stock go up, so they would have

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Speaker 1: a bias too in some ways. So um, yeah, I

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Speaker 1: think it's important whenever we're reading any research to kind

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Speaker 1: of take into account what financial incentives the author might have.

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Speaker 1: And Jenny following up on that, how's the track record

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Speaker 1: of Hindenburg Research been? I mean, I you know, they

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Speaker 1: were relatively unknown to me until the Donnie news broke,

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Speaker 1: because I was always think of Carson Block at whatever

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Speaker 1: firm he's at as a prominent short seller. Um, what's

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Speaker 1: the track record for Hindenburg? Um, it's a good question.

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Speaker 1: I mean, I feel like, especially with something like a Donnie,

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Speaker 1: I guess, you know, obviously they want to see the

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Speaker 1: stock drop and then the Donni case, it absolutely dropped

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Speaker 1: in the days and weeks following that report. Um, but

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Speaker 1: I think and ultimately it depends on when Endiburg decides

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Speaker 1: to sell their position and how much they're really hoping

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Speaker 1: to net and so. UM. You know, it's always a

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Speaker 1: long term, you know discussion, like if if Donnie seems

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Speaker 1: to turn things around or is able to back back

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Speaker 1: these allegations sufficiently. Um, it'll be I'm interested to see

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Speaker 1: if I think it's still probably too a little bit

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Speaker 1: too early to tell. All Right, Jenny, thank you so much.

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Speaker 1: We appreciate that. Jenny Serene she is a financial reporter

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Speaker 1: for Bloomberg News. Checking her out, She's based in New York,

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Speaker 1: but she's spent in a few months over in the

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Speaker 1: London studio. You're listening to the tape cans are our

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Speaker 1: live program Bloomberg Markets weekdays at ten am Eastern on

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Speaker 1: Bloomberg Radio, the tune in app, Bloomberg dot Com, and

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Speaker 1: the Bloomberg Business App. You can also listen live on

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Speaker 1: Amazon Alexa from our flagship New York station. Just say

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Speaker 1: Alexa play Bloomberg eleven thirty. All right, let's get the

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Speaker 1: kind of an overlay. What's you know? What are the

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Speaker 1: stock pickers thinking these days? I mean, good luck to them.

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Speaker 1: Scott Harrison, he does this stuff for a living. He's

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Speaker 1: a portfolio manager for Argent Capital Management. Scott Harrison, you

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Speaker 1: sit out there, You've got a lot of cross currents

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Speaker 1: out there. We just finished up earnings, waft some more

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Speaker 1: earnings kicking off in a few weeks. He got that

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Speaker 1: earnings probably at risk, and you got central bankers whippin'

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Speaker 1: rates all over the place, and then you out a

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Speaker 1: little bit of a bank. I'm not going to call

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Speaker 1: it a crisis, but some angst out there about the

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Speaker 1: global banking space. Your portfolio management, you get paid to

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Speaker 1: put money to work. How do you put it all together? Yeah,

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Speaker 1: thank you. I appreciate that, and I think the word

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Speaker 1: you use their angst is very appropriate for what we're

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Speaker 1: seeing in the market today. And for us, we start

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Speaker 1: thinking about crisis well before it, so we think about

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Speaker 1: risk and our portfolio is a constant part of our

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Speaker 1: investment process. But what I like to remind investors is

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Speaker 1: that while the financial sector is getting all the attention

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Speaker 1: for the right reasons, if the stock market itself goes down,

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Speaker 1: there might be opportunities outside of financials that really we

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Speaker 1: should be looking for. And ultimately, regardless of what's going

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Speaker 1: on in the environment, there are going to be companies

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Speaker 1: that can continue to compound cash flows and that come

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Speaker 1: out of whatever is going on today come out in

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Speaker 1: a stronger position going forward. So that's really what we're doing.

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Speaker 1: We're a fundamental invest we are looking at company fundamentals,

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Speaker 1: We're rolling up our sleeves, and we're really looking for

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Speaker 1: those opportunities today that can compound cash flows as we

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Speaker 1: look out over the next three to five years. So

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Speaker 1: what are your favorite sectors now at this point? Sure,

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Speaker 1: I look at last year and the two hardest hit

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Speaker 1: areas of the stock market last year, consumer discretion and

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Speaker 1: information technology. I view the weakness of last year is

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Speaker 1: potentially presenting opportunities today. So semiconductors, for instance, we're one

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Speaker 1: of the hardest hit areas in technology last year, and

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Speaker 1: that's an area that we've been increasing our exposure to

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Speaker 1: this year. In a company like Texas Instruments, for instance,

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Speaker 1: is a name recently that's correct, and you know we've

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Speaker 1: we've added to that to our investment strategy over the

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Speaker 1: last several months. And ultimately, what we're looking for all

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Speaker 1: those companies that can offer attractive dividends, that can compound

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Speaker 1: cash flows over time, and that management to speaks our language.

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Speaker 1: They believe that growing free cash flow per share is

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Speaker 1: the best way to create value for shareholders, and that's

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Speaker 1: exactly what we believe in. So there are opportunities like

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Speaker 1: Texas Instruments tractor supply company. I'm guessing the company is

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Speaker 1: basically what the name says it is, but I don't

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Speaker 1: think we have any tractor supply stores here in Manhattan.

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Speaker 1: Tell us about this company, okay? Sure that that's another

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Speaker 1: great opportunity and that that fits in the consumer discretionary

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Speaker 1: sector that I mentioned earlier, Tractor Supply actually started around

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Speaker 1: a great depression in the thirties and they started out

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Speaker 1: offering exactly what the name says, supplies for tractors. But

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Speaker 1: it's evolved into a leading retailer and today about half

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Speaker 1: of the company's business comes from livestock or pets. More

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Speaker 1: than eighty percent of the sales of the company has

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Speaker 1: to do with immediate use products, and they are the

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Speaker 1: dominant leader in rural markets. So we can think of

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Speaker 1: home depot and lows and those types of retailers and

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Speaker 1: urban markets. Tractor Supply is the equivalent for the rural

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Speaker 1: community and they have a strong following. They supply and

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Speaker 1: really target the rancher community, and there is no company

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Speaker 1: that comes close to them in terms of market share

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Speaker 1: and what they're able to do. Scott, I got to

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Speaker 1: get out in New York City more often. This is

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Speaker 1: a twenty five billion dollar market cap stock, and you

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Speaker 1: put it up on the comp functional in the Bloomberg Trauma,

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Speaker 1: I get a five year look at this stock. Over

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Speaker 1: five years, this stock has compounded thirty two percent a

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Speaker 1: year versus S ANDP of eleven percent. Scott, how about that,

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Speaker 1: I've never heard of this thing? Well, that's you know,

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Speaker 1: you just said our favorite word there, which was compounding.

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Speaker 1: We believe the compounding cash flows is the greatest forces investing,

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Speaker 1: and Tractor Supply has done just that through the pandemic.

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Speaker 1: Alan They've increased sales by over seventy percent. There is

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Speaker 1: no competitor that's close to them in their markets. Strong barriers,

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Speaker 1: strong brand, and just a company that continues to execute

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Speaker 1: um and just the hallmark to them. While other retailers

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Speaker 1: have struggled coming out of the pandemic and dealing with

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Speaker 1: that transition, they have just executed phenomenally and continue to

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Speaker 1: target that high single digit growth rate. And compounding is

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Speaker 1: exactly the right word that I would use when I

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Speaker 1: think of Tractor Supply, I think the closest one Jennifer

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Speaker 1: to hear, I'm looking at it Middletown, New Jersey. John.

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Speaker 1: I have been in that store numerous times, so I'm like,

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Speaker 1: are you like a hobby farmer dude? Um? No, I

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Speaker 1: mean they have dog food and stuff like that. I

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Speaker 1: needed supplies for my chainsaw. Of course, who doesn't need supplies?

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Speaker 1: I mean the Tractors Supply would describe it's sort of

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Speaker 1: like a less crowded home depot lights. Okay, I'm gonna

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Speaker 1: check it out this weekend, all right, But with the

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Speaker 1: with the hobby farmers, this is the question that fascinates

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Speaker 1: me because genuine question and food inflation in this country

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Speaker 1: pretty out of hand, I mean, egg prices. So my

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Speaker 1: question to Scott is do you see that there's a

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Speaker 1: upticking interest in the products of this company with company

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Speaker 1: with people saying, you know, I think I'm going to

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Speaker 1: start growing my own food. Um, you know, that's a

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Speaker 1: great question, and you're exactly right. An interesting fact about

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Speaker 1: Trackers supply about twenty percent of their customers own chickens,

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Speaker 1: and so we certainly have witnessed inflation when it comes

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Speaker 1: to eggs. And so this is what started out is

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Speaker 1: a niche market many years ago is taking on greater

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Speaker 1: and greater importance. And that's just one example of where

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Speaker 1: it's showing up. All right, the over under on tom

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Speaker 1: Keene ever being within one hundred miles of a tractor

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Speaker 1: supply company store. I'm gonna take take taking the undernet

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Speaker 1: real quick, thirty seconds. Garment, they were the leaders in

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Speaker 1: that mapping thing back in the day, but now I

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Speaker 1: got Google Maps. Garment still thing, that's right, m You're

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Speaker 1: exactly right. Garment has transitioned itself completely different company than

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Speaker 1: the one that we would have known from ten years ago.

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Speaker 1: R and D has increased from ten percent of sales

430
00:23:06,640 --> 00:23:10,120
Speaker 1: to twenty percent, and they have products ranging from everything

431
00:23:10,240 --> 00:23:15,840
Speaker 1: from your smart watches, so your auto infotainment, but even

432
00:23:15,880 --> 00:23:19,640
Speaker 1: into the cockpits of airplanes. Garment is just a dominant

433
00:23:19,680 --> 00:23:22,080
Speaker 1: leader there. R and D is second to none, and

434
00:23:22,200 --> 00:23:25,120
Speaker 1: it's another one of those great companies. Three percent dividend

435
00:23:25,200 --> 00:23:29,800
Speaker 1: yield compounding annually and for shareholders, this is a company

436
00:23:29,840 --> 00:23:32,679
Speaker 1: that offers attractive returns that we can own for the

437
00:23:32,720 --> 00:23:35,399
Speaker 1: long term thirteen percent compounded and your return over the

438
00:23:35,480 --> 00:23:38,200
Speaker 1: last five years again, S ANDP about ten ten point six.

439
00:23:38,200 --> 00:23:41,480
Speaker 1: So another APT performer. There's Scott great stuff. Really appreciate

440
00:23:41,520 --> 00:23:43,600
Speaker 1: you throwing out some names. There's some really interesting one.

441
00:23:43,640 --> 00:23:47,280
Speaker 1: Scott Harrison, portfolio manager, Argent Capital Management. I'm going to

442
00:23:47,359 --> 00:23:49,840
Speaker 1: this tractor supply store. It's on Root thirty five in Middletown.

443
00:23:49,880 --> 00:23:51,760
Speaker 1: I can I can hit that. Yeah, I'll see what

444
00:23:51,760 --> 00:23:53,520
Speaker 1: they got in there. That's the staples. I think, do

445
00:23:53,560 --> 00:23:56,840
Speaker 1: a little store walk down there. You're listening to the

446
00:23:56,880 --> 00:24:00,840
Speaker 1: team Ken's are live program, Bloomberg Markets, Jayson ten Am

447
00:24:01,040 --> 00:24:04,199
Speaker 1: staring Bloomberg dot Com, the I Heard Radio app, and

448
00:24:04,200 --> 00:24:07,119
Speaker 1: the Bloomberg Business App. We're listening on demand wherever you

449
00:24:07,160 --> 00:24:13,280
Speaker 1: get your podcast. We only have some banking turmoil out

450
00:24:13,320 --> 00:24:15,600
Speaker 1: there in the marketplace. I'm not calling a crisis, but

451
00:24:15,680 --> 00:24:19,040
Speaker 1: clearly there's some turmoil punctuated by you know, small number

452
00:24:19,040 --> 00:24:22,399
Speaker 1: of banks actually failing. Um, you know, most notably probably

453
00:24:22,480 --> 00:24:25,480
Speaker 1: a Silicon Valley bank, And of course that raises questions about,

454
00:24:26,400 --> 00:24:30,560
Speaker 1: you know, the availability of capital for companies and growing

455
00:24:30,560 --> 00:24:32,720
Speaker 1: companies and get a sense of what that all means

456
00:24:32,720 --> 00:24:34,239
Speaker 1: and how that might play out. We check to our

457
00:24:34,320 --> 00:24:37,640
Speaker 1: next guest, Rania set Home, managing partner of the set

458
00:24:37,680 --> 00:24:41,159
Speaker 1: Home Law Group. Rania, thanks so much for joining us here. Um,

459
00:24:41,440 --> 00:24:43,760
Speaker 1: there's a I guess a growing concern out there as

460
00:24:43,800 --> 00:24:46,480
Speaker 1: we see some of the stress and the banking system

461
00:24:46,560 --> 00:24:50,640
Speaker 1: that the availability of capital and maybe the cost of capital,

462
00:24:50,920 --> 00:24:54,040
Speaker 1: is it going to become more difficult, particularly for smaller companies.

463
00:24:54,160 --> 00:24:57,520
Speaker 1: What are you hearing from your clients. I mean, everyone

464
00:24:57,600 --> 00:25:00,280
Speaker 1: has a concern about it, and most concerns are valid.

465
00:25:00,440 --> 00:25:03,840
Speaker 1: Interest rates are increasing, they're inching higher. They were just

466
00:25:04,080 --> 00:25:06,960
Speaker 1: raised this week in fact, and I think there will

467
00:25:07,000 --> 00:25:10,600
Speaker 1: continue to be raised. So everything is more expensive, and

468
00:25:11,119 --> 00:25:15,880
Speaker 1: it's causing the clients to burn through their money even

469
00:25:15,960 --> 00:25:19,439
Speaker 1: quicker than anticipated. I mean, what do you see is

470
00:25:19,480 --> 00:25:21,919
Speaker 1: the next likely move for a startup that's looking to

471
00:25:22,000 --> 00:25:25,439
Speaker 1: raise some money. I think they're going to have to

472
00:25:25,480 --> 00:25:32,240
Speaker 1: go searching for debt financing with companies that have relationships

473
00:25:32,280 --> 00:25:36,879
Speaker 1: with multiple banks and trying their best. I mean, I

474
00:25:36,920 --> 00:25:39,560
Speaker 1: think banks aren't going to be as aggressive as they

475
00:25:39,560 --> 00:25:41,159
Speaker 1: were in the past. I was just speaking to a

476
00:25:41,160 --> 00:25:44,160
Speaker 1: couple of banks. I can't, you know, say their names

477
00:25:44,400 --> 00:25:47,520
Speaker 1: on the radio, but they said they're putting all debt

478
00:25:47,560 --> 00:25:51,000
Speaker 1: financing on hold right now. So some banks are out

479
00:25:51,000 --> 00:25:55,240
Speaker 1: of that game, the smaller regional ones. So I guess

480
00:25:55,280 --> 00:25:57,879
Speaker 1: the issue for you know, we've seen a lot of

481
00:25:58,000 --> 00:26:00,240
Speaker 1: depositors just pull the money on put it into money

482
00:26:00,240 --> 00:26:02,000
Speaker 1: market funds. But that doesn't do me any good if

483
00:26:02,040 --> 00:26:05,000
Speaker 1: I'm looking to open up a new store or start

484
00:26:05,000 --> 00:26:09,439
Speaker 1: a new business. Do you think this could become a

485
00:26:09,560 --> 00:26:13,520
Speaker 1: real issue or is this something that maybe you know

486
00:26:13,960 --> 00:26:17,480
Speaker 1: is kind of specific to a handful of banks. No.

487
00:26:17,640 --> 00:26:19,760
Speaker 1: I think this is a real issue. I mean, one

488
00:26:19,760 --> 00:26:22,960
Speaker 1: of the problems that startup space is not. When they

489
00:26:23,000 --> 00:26:26,280
Speaker 1: do look for funding through banks like SVB or any

490
00:26:26,320 --> 00:26:29,160
Speaker 1: other banks, they're required to maintain a majority of their

491
00:26:30,280 --> 00:26:34,160
Speaker 1: money with that bank. It's sort of like collateral. It's

492
00:26:34,160 --> 00:26:37,200
Speaker 1: not exactly a collateral, but it's like collateral. And then

493
00:26:37,400 --> 00:26:40,080
Speaker 1: they're left putting all their eggs in one basket. And

494
00:26:40,119 --> 00:26:43,520
Speaker 1: so what I've been suggesting is to work with a

495
00:26:43,560 --> 00:26:48,080
Speaker 1: bank that can offer you an insured cash slop or

496
00:26:48,240 --> 00:26:51,000
Speaker 1: an insured bank deposit. And what that allows you to

497
00:26:51,040 --> 00:26:55,560
Speaker 1: do is have a single bank relationship, but that bank

498
00:26:55,640 --> 00:26:59,600
Speaker 1: then moves your money around to various banks within the network,

499
00:27:00,040 --> 00:27:03,639
Speaker 1: so that no single bank is holding more than the

500
00:27:03,760 --> 00:27:07,800
Speaker 1: FDIC insurance maximum. But I believe that maximum needs to

501
00:27:07,840 --> 00:27:10,560
Speaker 1: go up. Two hundred and fifty thousand dollars maybe a

502
00:27:10,600 --> 00:27:14,320
Speaker 1: lot for the average person, but it's not for a startup,

503
00:27:14,320 --> 00:27:16,520
Speaker 1: and it's not for an average business. Do you have

504
00:27:16,640 --> 00:27:19,960
Speaker 1: a sense that regulators would you take your advice and

505
00:27:20,119 --> 00:27:24,200
Speaker 1: start looking at raising that If regulators took my advice,

506
00:27:24,280 --> 00:27:26,280
Speaker 1: the world to be a very different place. I don't

507
00:27:26,280 --> 00:27:29,879
Speaker 1: think they're going to take my advice right now. You know,

508
00:27:29,920 --> 00:27:32,720
Speaker 1: the government has been spending a lot of money since

509
00:27:33,560 --> 00:27:37,360
Speaker 1: twenty twenty the world and the global economy was essentially

510
00:27:37,440 --> 00:27:40,359
Speaker 1: shut down. And we can all argue about whether or

511
00:27:40,359 --> 00:27:44,200
Speaker 1: not that was a good idea, But when you stop

512
00:27:44,280 --> 00:27:48,240
Speaker 1: the economy from working and then put an influx of

513
00:27:48,280 --> 00:27:52,520
Speaker 1: money into the world so people can survive, it's sort

514
00:27:52,560 --> 00:27:54,880
Speaker 1: of like an IOU that's coming due. And I think

515
00:27:54,920 --> 00:27:59,520
Speaker 1: that's what we're finding. And there was really no information

516
00:27:59,560 --> 00:28:03,200
Speaker 1: available to the banks about the increase of the interest

517
00:28:03,280 --> 00:28:07,119
Speaker 1: rates until it was close in time, and so banks

518
00:28:07,160 --> 00:28:10,399
Speaker 1: like SBB that purchased you know, long term bonds with

519
00:28:10,520 --> 00:28:13,400
Speaker 1: low interest rates, they were in a lot of hurt.

520
00:28:14,440 --> 00:28:15,840
Speaker 1: They had to sell it at a loss and that

521
00:28:16,240 --> 00:28:20,000
Speaker 1: you know, accelerated their demise. The ones that didn't hedge

522
00:28:20,040 --> 00:28:23,280
Speaker 1: well and ones that didn't manage the duration are in trouble.

523
00:28:23,320 --> 00:28:27,719
Speaker 1: But so RNIA. If you have a client who's making

524
00:28:27,760 --> 00:28:31,199
Speaker 1: a small business and maybe they're feeling, you know, a

525
00:28:31,200 --> 00:28:34,800
Speaker 1: little bit of angst about kind of access to capital,

526
00:28:34,840 --> 00:28:37,359
Speaker 1: cost of capital, what are you telling them to do

527
00:28:37,440 --> 00:28:42,600
Speaker 1: during these times? I'm telling them to work with wealth

528
00:28:42,680 --> 00:28:47,240
Speaker 1: managers that have relationships at institutions that they may not

529
00:28:48,000 --> 00:28:52,800
Speaker 1: even know about. You know, some you know, venture capital

530
00:28:52,840 --> 00:28:55,800
Speaker 1: firms that may not be famous in their space, because

531
00:28:56,480 --> 00:28:58,920
Speaker 1: you know, you look at places like why Combinator, and

532
00:28:59,440 --> 00:29:02,920
Speaker 1: I think they shut down an entire division. So a

533
00:29:02,920 --> 00:29:05,920
Speaker 1: lot of what's happening also is all of these companies

534
00:29:05,960 --> 00:29:08,920
Speaker 1: are going to the same let's say ten players, and

535
00:29:09,080 --> 00:29:12,520
Speaker 1: those ten players are exhausted now they have no cash

536
00:29:12,720 --> 00:29:16,000
Speaker 1: and they can't support the demand. So you have to

537
00:29:16,040 --> 00:29:20,880
Speaker 1: diversify not just with her banking relationships by using these

538
00:29:20,920 --> 00:29:25,880
Speaker 1: i CSS, but also diversify your relationships with banking professionals

539
00:29:26,160 --> 00:29:30,800
Speaker 1: so you have access to capital from other companies. One

540
00:29:30,840 --> 00:29:33,680
Speaker 1: thing I wonder is you know a startup can consider

541
00:29:33,720 --> 00:29:36,360
Speaker 1: a new strategy bit do you have any insight in

542
00:29:36,480 --> 00:29:38,960
Speaker 1: how easy it is for a startup to execute a

543
00:29:39,000 --> 00:29:42,720
Speaker 1: new funding strategy? For example, you know around the real

544
00:29:43,480 --> 00:29:46,720
Speaker 1: worries about SVB, when we saw lines of customers out

545
00:29:46,720 --> 00:29:49,560
Speaker 1: on the streets. You know, we were hearing that banks

546
00:29:49,600 --> 00:29:52,320
Speaker 1: weren't able to take phone calls from their wire transfer

547
00:29:52,360 --> 00:29:55,440
Speaker 1: departments because they were just so completely overloaded. Have you

548
00:29:55,480 --> 00:29:58,400
Speaker 1: seen the mechanics of the banking system ease up a

549
00:29:58,400 --> 00:30:00,840
Speaker 1: little bit or are you still hearing there's a bunch

550
00:30:00,880 --> 00:30:04,920
Speaker 1: of strain. I think it's still strained. Everybody is being

551
00:30:05,160 --> 00:30:09,240
Speaker 1: extremely reactive. I mean, who can blame them, but reactivity

552
00:30:09,360 --> 00:30:13,320
Speaker 1: never works in anybody's favor. And it looks like, at

553
00:30:13,360 --> 00:30:17,280
Speaker 1: least in the short term, the large institutional banks that

554
00:30:17,320 --> 00:30:20,440
Speaker 1: we all know, the ones that have a bank on

555
00:30:20,480 --> 00:30:23,160
Speaker 1: every block or every other block, are the safe that's

556
00:30:23,320 --> 00:30:25,960
Speaker 1: right now. And in fact, some of them, you know,

557
00:30:26,000 --> 00:30:29,240
Speaker 1: are purchasing parts of these banks that are that have

558
00:30:29,280 --> 00:30:33,320
Speaker 1: gone under. So, Rinia, you know, we've heard about some

559
00:30:33,360 --> 00:30:36,520
Speaker 1: of the challenges out on the West Coast and Silicon

560
00:30:36,600 --> 00:30:39,520
Speaker 1: Valley with some of those funds, some of those VC

561
00:30:39,640 --> 00:30:43,080
Speaker 1: funded companies and their relationships with SUVVVB. Do you think

562
00:30:43,080 --> 00:30:45,920
Speaker 1: there's similar kind of exposure here on the East Coast

563
00:30:45,920 --> 00:30:48,200
Speaker 1: and other parts of the country that have a big

564
00:30:48,280 --> 00:30:52,200
Speaker 1: VC community. I think yeah. I think this is a

565
00:30:52,240 --> 00:30:56,080
Speaker 1: problem nationwide, and in some cases some of the banks

566
00:30:56,080 --> 00:31:00,440
Speaker 1: that I think collapsed, like Signature, it was also due

567
00:31:00,440 --> 00:31:05,240
Speaker 1: to their investment portfolios. They invested differently, but it was

568
00:31:05,280 --> 00:31:10,040
Speaker 1: still the investment portfolio that brought them to this place.

569
00:31:10,080 --> 00:31:13,480
Speaker 1: And it's all about lack of diversification really when you

570
00:31:13,520 --> 00:31:16,240
Speaker 1: get down to it. Okay, Rinia set Home, thanks so

571
00:31:16,320 --> 00:31:18,600
Speaker 1: much for joining us. Rinia set Home managing partner set

572
00:31:18,640 --> 00:31:21,760
Speaker 1: Home Law Group. You're listening to the tape cancer our

573
00:31:21,760 --> 00:31:25,520
Speaker 1: live program Bloomberg Markets weekdays at ten am Eastern on

574
00:31:25,560 --> 00:31:28,760
Speaker 1: Bloomberg Radio, tune in app, Bloomberg dot Com, and the

575
00:31:28,800 --> 00:31:31,960
Speaker 1: Bloomberg Business App. You can also listen live on Amazon

576
00:31:32,040 --> 00:31:35,360
Speaker 1: Alexa from our flagship New York station, Just say Alexa

577
00:31:35,600 --> 00:31:39,840
Speaker 1: play Bloomberg eleven thirty. A lot of my friends been

578
00:31:39,840 --> 00:31:43,560
Speaker 1: telling me the next ten years is the decade for India,

579
00:31:43,600 --> 00:31:45,560
Speaker 1: and that kind of came into focus a little bit

580
00:31:46,160 --> 00:31:48,240
Speaker 1: when we saw China just kind of shut down and

581
00:31:48,280 --> 00:31:50,960
Speaker 1: then not really figure out their COVID policy Jennifer So

582
00:31:51,360 --> 00:31:53,479
Speaker 1: amongst other reasons. But that just kind of came into

583
00:31:53,520 --> 00:31:55,520
Speaker 1: focus when China kind of shut down a little bit.

584
00:31:55,960 --> 00:31:58,120
Speaker 1: And we are very fortunate today to have a wonderful

585
00:31:58,160 --> 00:32:01,320
Speaker 1: voice to kind of get us to that story. Sunji Sanyo.

586
00:32:01,440 --> 00:32:04,040
Speaker 1: He's an economist, he's an author, and he's a principal

587
00:32:04,080 --> 00:32:07,720
Speaker 1: economic advisor to the Indian government and Prime Minister Mody

588
00:32:08,360 --> 00:32:11,240
Speaker 1: and he joins us here in a Bloomberg Interactive Broker studio. Sunjie,

589
00:32:11,280 --> 00:32:13,960
Speaker 1: thanks so much for joining us. We appreciate you coming in.

590
00:32:14,480 --> 00:32:19,160
Speaker 1: If you were to give me the elevator pitch for India. Okay,

591
00:32:19,400 --> 00:32:23,200
Speaker 1: what would it be? Well, it's by some margin, the

592
00:32:23,320 --> 00:32:27,440
Speaker 1: fastest growing major economy in the world. It's financial system

593
00:32:27,760 --> 00:32:29,560
Speaker 1: and like what's happening in much of the world is

594
00:32:29,760 --> 00:32:35,000
Speaker 1: rock solid. And you know, if the world was not

595
00:32:35,120 --> 00:32:36,960
Speaker 1: going through so much stone oil, it could easily be

596
00:32:37,040 --> 00:32:40,960
Speaker 1: growing at eight percent plus. I guess one thing I'm

597
00:32:41,040 --> 00:32:44,240
Speaker 1: very interested to hear you talk about is India's manufacturing policy,

598
00:32:44,280 --> 00:32:46,040
Speaker 1: because this has been a very big focus for a

599
00:32:46,120 --> 00:32:49,040
Speaker 1: very long time. Do you feel that you're getting to

600
00:32:49,080 --> 00:32:50,480
Speaker 1: where you need to be with that? I think you

601
00:32:50,560 --> 00:32:53,040
Speaker 1: were targeting twenty five percent of GDP. Do I have

602
00:32:53,120 --> 00:32:57,200
Speaker 1: that right? Well, if you take if you're looking at manufacturing,

603
00:32:58,160 --> 00:33:00,760
Speaker 1: we would be looking at something in the early twenties, guests.

604
00:33:00,960 --> 00:33:03,000
Speaker 1: But I think rather than take the percentage, the problem

605
00:33:03,120 --> 00:33:06,880
Speaker 1: here is the following. India has an extremely competitive services sector,

606
00:33:07,320 --> 00:33:10,200
Speaker 1: and we probably the first economy ever which has gone

607
00:33:10,240 --> 00:33:14,440
Speaker 1: directly from agriculture to services in the sense that almost

608
00:33:14,480 --> 00:33:19,880
Speaker 1: sixty plus percent of their economy is services more our

609
00:33:19,960 --> 00:33:22,680
Speaker 1: exports and are more than half of it is services.

610
00:33:22,680 --> 00:33:25,360
Speaker 1: Probably the only developing country in the world where that

611
00:33:25,480 --> 00:33:28,720
Speaker 1: is the case. So we are very oriented towards services,

612
00:33:28,920 --> 00:33:32,760
Speaker 1: very competitive technology of various kinds, but other things as well.

613
00:33:34,520 --> 00:33:37,320
Speaker 1: What's happening is that that creates a disbalance in our

614
00:33:37,360 --> 00:33:41,040
Speaker 1: economy in that you have a decent sized manufacturing sector

615
00:33:41,480 --> 00:33:45,640
Speaker 1: but has while it has transformed itself over the last decade.

616
00:33:45,960 --> 00:33:48,440
Speaker 1: And we do have some areas where we are very competitive,

617
00:33:48,520 --> 00:33:52,680
Speaker 1: like automobiles, pharmaceuticals. Many of the farm generic pharmaceuticals are

618
00:33:52,680 --> 00:33:56,160
Speaker 1: bar here are from India. But in a general principle

619
00:33:56,560 --> 00:34:00,000
Speaker 1: we have not been as visible in the supply chains

620
00:34:00,080 --> 00:34:02,960
Speaker 1: as say China is, and so we want to correct

621
00:34:03,040 --> 00:34:06,200
Speaker 1: this imbalance. You know, a large economy needs to have

622
00:34:06,240 --> 00:34:11,200
Speaker 1: all cylinders firing, and manufacturing hasn't quite been an area

623
00:34:11,239 --> 00:34:14,240
Speaker 1: that's done quite so well. What are the major areas

624
00:34:14,239 --> 00:34:17,120
Speaker 1: of focus for development for India from this government? What

625
00:34:17,640 --> 00:34:20,200
Speaker 1: is it really focusing on over the next over the

626
00:34:20,239 --> 00:34:24,640
Speaker 1: longer term. So the first thing is, given the turbulence,

627
00:34:25,080 --> 00:34:28,279
Speaker 1: make sure there's no macroeconomic stress on the system. So

628
00:34:28,719 --> 00:34:32,239
Speaker 1: we are conservative or macroeconomic stress. You know, we can

629
00:34:32,280 --> 00:34:34,440
Speaker 1: easily grow this economy at eight percent. We'd be quite

630
00:34:34,480 --> 00:34:36,359
Speaker 1: happy with six and a half right now, given what's

631
00:34:36,400 --> 00:34:40,239
Speaker 1: going on in the world. Meanwhile, we are building out,

632
00:34:40,320 --> 00:34:43,880
Speaker 1: doing a massive build out of infrastructure. We did not

633
00:34:44,040 --> 00:34:48,560
Speaker 1: blow out our budgets during the COVID crisis. We're quite restrained.

634
00:34:49,040 --> 00:34:56,040
Speaker 1: But since then we have dramatically expanded out our infrastructure budgets.

635
00:34:56,080 --> 00:34:58,200
Speaker 1: This year we are going to see a thirty three

636
00:34:58,239 --> 00:35:02,120
Speaker 1: percent increase in our structure spending, and this is on

637
00:35:02,120 --> 00:35:05,920
Speaker 1: top of several years or increase. What type of infrastructure

638
00:35:05,920 --> 00:35:08,640
Speaker 1: are you focusing on a lot of physical infrastructure, so

639
00:35:08,840 --> 00:35:12,920
Speaker 1: roads and highways, airports, stuff like that. If you take

640
00:35:13,000 --> 00:35:16,759
Speaker 1: Mumbai for example, it's probably right now the largest concentration

641
00:35:16,800 --> 00:35:20,600
Speaker 1: of cranes in the world. It's basically a construction site.

642
00:35:21,239 --> 00:35:23,839
Speaker 1: Not a pleasant place to live, right, I can assure you,

643
00:35:23,880 --> 00:35:26,400
Speaker 1: because everything is dug up. But in a couple of

644
00:35:26,480 --> 00:35:30,279
Speaker 1: years time, it will have a completely brand new metro system,

645
00:35:30,440 --> 00:35:34,960
Speaker 1: it will have a completely new airport, links to the mainland,

646
00:35:35,760 --> 00:35:38,959
Speaker 1: coastal road, blah blah blah. And that's happening to many

647
00:35:38,960 --> 00:35:42,000
Speaker 1: other cities in India as well. One thing I'm wondering

648
00:35:42,000 --> 00:35:44,480
Speaker 1: about this great construction push that you have, in this

649
00:35:44,560 --> 00:35:47,759
Speaker 1: great infrastructure push, is how much of that are you

650
00:35:47,800 --> 00:35:51,400
Speaker 1: looking towards the outside world for investment. How much inward

651
00:35:51,440 --> 00:35:53,680
Speaker 1: investment are you looking for? And one thing I want

652
00:35:53,719 --> 00:35:56,000
Speaker 1: you to talk particularly about if you don't mind, is

653
00:35:56,040 --> 00:35:59,600
Speaker 1: also the semiconductor push that has been a great feature

654
00:35:59,600 --> 00:36:03,920
Speaker 1: of talks between India and the US. So the infrastructures

655
00:36:04,320 --> 00:36:07,680
Speaker 1: push itself is largely domestically driven. Of course, we do

656
00:36:07,760 --> 00:36:11,800
Speaker 1: have large investors from the rest of the world, especially

657
00:36:11,840 --> 00:36:15,520
Speaker 1: sovereign wealth funds investing into it, but mostly funded domestically

658
00:36:15,560 --> 00:36:19,880
Speaker 1: and executed domestically. We have the engineering capacities large companies

659
00:36:19,880 --> 00:36:22,239
Speaker 1: like Large and two bro etc. Which can do it.

660
00:36:22,320 --> 00:36:26,080
Speaker 1: So this is not where we are really looking at

661
00:36:26,080 --> 00:36:30,759
Speaker 1: the foreign companies coming in. We really want, as I said,

662
00:36:30,880 --> 00:36:35,520
Speaker 1: to insert ourselves into the global supply chains. And many

663
00:36:35,560 --> 00:36:39,400
Speaker 1: of the companies, large international companies already have something in India,

664
00:36:39,560 --> 00:36:42,759
Speaker 1: partly for the domestic market or because they have the

665
00:36:42,840 --> 00:36:46,680
Speaker 1: services outsourcing where it's a design or their accounts department,

666
00:36:46,680 --> 00:36:49,839
Speaker 1: et cetera. They're already in India. So what we want

667
00:36:49,880 --> 00:36:52,759
Speaker 1: them to do is now to add their manufacturing bit.

668
00:36:52,840 --> 00:36:54,920
Speaker 1: And that's the point we are making earlier, is to

669
00:36:54,920 --> 00:36:57,320
Speaker 1: come and do that in India. So we design the chips.

670
00:36:57,320 --> 00:37:01,319
Speaker 1: Whether you don't actually manufacture them. So we want that

671
00:37:01,360 --> 00:37:03,680
Speaker 1: to move now. Of course, for a variety of reasons.

672
00:37:03,680 --> 00:37:05,680
Speaker 1: Some of it is moving out of China. We want

673
00:37:05,680 --> 00:37:08,080
Speaker 1: some of it to come to India. One because it

674
00:37:08,160 --> 00:37:10,279
Speaker 1: puts US in the map, in the supply chain, but

675
00:37:10,360 --> 00:37:13,360
Speaker 1: it also for another reason. One of the things we

676
00:37:13,400 --> 00:37:17,640
Speaker 1: discovered during the COVID crisis is that if you rely

677
00:37:17,960 --> 00:37:22,160
Speaker 1: entirely on a single foreign source, it can suddenly shut

678
00:37:22,200 --> 00:37:24,840
Speaker 1: down for all kinds of reasons. It could be a pandemic,

679
00:37:24,880 --> 00:37:27,799
Speaker 1: it could be geopolitical reasons, whatever it is, you've got

680
00:37:27,800 --> 00:37:30,120
Speaker 1: to be careful about this. And so we are very

681
00:37:30,239 --> 00:37:33,400
Speaker 1: keen that at least some basic things like chips do

682
00:37:33,480 --> 00:37:37,560
Speaker 1: get manufactured in India. For example, in twenty twenty one,

683
00:37:38,160 --> 00:37:41,759
Speaker 1: we discovered we have this huge automobiles industry, very competitive,

684
00:37:42,040 --> 00:37:46,040
Speaker 1: but can't get chips, so the whole thing shuts down effectively.

685
00:37:46,440 --> 00:37:50,120
Speaker 1: So we think that at least some basic things, some

686
00:37:50,680 --> 00:37:53,879
Speaker 1: basic chemicals, basic things like chips, they have we have

687
00:37:53,920 --> 00:37:56,359
Speaker 1: to have some capacity on shore. I believe the US

688
00:37:56,480 --> 00:37:59,680
Speaker 1: is doing something similar as well, with because of similar reasons,

689
00:37:59,719 --> 00:38:02,800
Speaker 1: not geopolitical, but just from a resilience perspective, makes sense.

690
00:38:03,840 --> 00:38:07,480
Speaker 1: What are the major challenges that India has and the

691
00:38:07,520 --> 00:38:11,640
Speaker 1: government has been executing their growth plan. You've always had

692
00:38:12,360 --> 00:38:15,040
Speaker 1: one of the world's largest populationship that population is for

693
00:38:15,080 --> 00:38:18,239
Speaker 1: the longest time been very young and educating. You've had

694
00:38:18,280 --> 00:38:20,600
Speaker 1: a lot of wind at your back. What's held India

695
00:38:20,640 --> 00:38:22,680
Speaker 1: back if you believe it has been held back or

696
00:38:22,760 --> 00:38:24,239
Speaker 1: and what are some of the challenges going for? So

697
00:38:24,239 --> 00:38:26,560
Speaker 1: the wind on our back is really taking off. So yes,

698
00:38:27,040 --> 00:38:29,600
Speaker 1: we have just I think this months gone past China

699
00:38:29,640 --> 00:38:32,680
Speaker 1: as the world's largest population. But do remember the average

700
00:38:32,680 --> 00:38:36,279
Speaker 1: Indian is some twenty eight years old, and so it's

701
00:38:36,320 --> 00:38:39,960
Speaker 1: only now that we are seeing the proportion of population

702
00:38:39,960 --> 00:38:42,879
Speaker 1: of working age exploding out. And we are still far

703
00:38:42,920 --> 00:38:45,200
Speaker 1: away from the time when we go into the aging phase.

704
00:38:45,600 --> 00:38:48,720
Speaker 1: So we have now about twenty five thirty years where

705
00:38:48,960 --> 00:38:52,120
Speaker 1: a very significant and growing proportion of our population will

706
00:38:52,160 --> 00:38:55,560
Speaker 1: be a working age And unlike China, which had a

707
00:38:55,680 --> 00:38:58,480
Speaker 1: very spiky demographic, because the one child policy, ours is

708
00:38:58,560 --> 00:39:02,279
Speaker 1: much smoother, we will take a good leisurely thirty years

709
00:39:02,280 --> 00:39:05,440
Speaker 1: over this. So this is an opportunity. It's not a

710
00:39:05,480 --> 00:39:09,120
Speaker 1: sufficient reason to be to see high growth, but it

711
00:39:09,239 --> 00:39:11,879
Speaker 1: certainly is a necessary condition for seeing you know, year

712
00:39:11,920 --> 00:39:15,480
Speaker 1: on year growth without labor market tightening. So we are

713
00:39:15,520 --> 00:39:17,640
Speaker 1: in that place. We will be there for twenty five

714
00:39:17,640 --> 00:39:20,560
Speaker 1: thirty years. But what we now need to do is

715
00:39:20,560 --> 00:39:22,799
Speaker 1: to make sure, as I said, the infrastructure is there.

716
00:39:22,800 --> 00:39:26,480
Speaker 1: The physical infrastructure. Also, another thing that India is doing

717
00:39:26,520 --> 00:39:29,919
Speaker 1: somewhat differently from others is because we are going through

718
00:39:29,920 --> 00:39:34,200
Speaker 1: this transition in the post digital world. Remember everybody else,

719
00:39:34,280 --> 00:39:39,360
Speaker 1: including the US or China more recently, etc. Happened during

720
00:39:39,560 --> 00:39:43,120
Speaker 1: or before the digital age. We are going through this

721
00:39:43,239 --> 00:39:46,840
Speaker 1: in the digital age, so far more than many other countries.

722
00:39:46,880 --> 00:39:50,560
Speaker 1: We are actually putting everything online in multiple ways. For example,

723
00:39:50,600 --> 00:39:53,680
Speaker 1: every Indian has got an Adhar number, which is like

724
00:39:53,719 --> 00:39:56,319
Speaker 1: a social security number, but it is much more sophisticated

725
00:39:56,360 --> 00:39:58,960
Speaker 1: than that. I mean, you can use your thumbering face

726
00:39:59,040 --> 00:40:02,320
Speaker 1: recognition et C. Now this means that you can basically

727
00:40:02,440 --> 00:40:06,120
Speaker 1: use this to get bank accounts, get social security, pay

728
00:40:06,120 --> 00:40:10,319
Speaker 1: out insurance very quickly. We might even allow you to

729
00:40:10,320 --> 00:40:13,520
Speaker 1: go through airports using it and so on. So there

730
00:40:13,520 --> 00:40:16,720
Speaker 1: are many, many such things that we are creating public

731
00:40:16,880 --> 00:40:21,200
Speaker 1: digital public goods, which allows many people to do things

732
00:40:21,239 --> 00:40:23,840
Speaker 1: that would have been done up with a country a

733
00:40:24,000 --> 00:40:28,279
Speaker 1: much later phase on their development. One question. A tailwind

734
00:40:28,640 --> 00:40:31,680
Speaker 1: in interest in India has been the closing in China,

735
00:40:32,000 --> 00:40:35,880
Speaker 1: the COVID policy, the pressure on the technology industry as

736
00:40:35,920 --> 00:40:38,760
Speaker 1: that eases. What do you think that does to interest

737
00:40:38,840 --> 00:40:43,600
Speaker 1: in India? Well, I mean the issues which about China,

738
00:40:43,680 --> 00:40:47,160
Speaker 1: and not know about just the closures at that point

739
00:40:47,160 --> 00:40:50,160
Speaker 1: in time. There are far wider issues relating of course

740
00:40:50,200 --> 00:40:55,120
Speaker 1: to geostrategic issues, but also to what has been understood

741
00:40:55,120 --> 00:40:59,359
Speaker 1: I think by many people that you know, there's no

742
00:40:59,440 --> 00:41:01,920
Speaker 1: rule of law as far as, for example, the treatment

743
00:41:02,040 --> 00:41:05,120
Speaker 1: of large businesses is concerned what happened to Ali Baba

744
00:41:05,160 --> 00:41:07,880
Speaker 1: for example, and so on. So you have to understand

745
00:41:07,920 --> 00:41:10,640
Speaker 1: that we therefore are much more in sync with the

746
00:41:10,760 --> 00:41:14,640
Speaker 1: rule of law approach. We are world's largest democracy, much

747
00:41:14,680 --> 00:41:18,040
Speaker 1: more transparent. May look more messy, but in the longer

748
00:41:18,120 --> 00:41:21,759
Speaker 1: run you get what you see, ye, And so I

749
00:41:21,800 --> 00:41:26,239
Speaker 1: think this fascination for an authoritararian system has I think

750
00:41:26,280 --> 00:41:29,560
Speaker 1: somewhat eased off in our sense. This is our opportunity

751
00:41:29,600 --> 00:41:33,080
Speaker 1: to build on top of that, and that to some

752
00:41:33,160 --> 00:41:35,120
Speaker 1: extent is happening. We are a member of something called

753
00:41:35,120 --> 00:41:37,560
Speaker 1: the Quad. You may be aware of that, where there's

754
00:41:37,600 --> 00:41:42,200
Speaker 1: an alliance between Japan Australia, India, in the US and

755
00:41:42,280 --> 00:41:46,719
Speaker 1: that is building out to the Indo Pacific area and

756
00:41:46,800 --> 00:41:50,360
Speaker 1: in the West Asia. There's another group called I to

757
00:41:50,520 --> 00:41:54,600
Speaker 1: YouTube between India, US, Israel and the UAE. So there

758
00:41:54,640 --> 00:41:58,239
Speaker 1: are new geostrategic configurations that are emerging out of this

759
00:41:58,640 --> 00:42:01,440
Speaker 1: and we intend to play on important role in that. Lastly,

760
00:42:01,480 --> 00:42:03,800
Speaker 1: before we let you go, I think people all around

761
00:42:03,840 --> 00:42:07,279
Speaker 1: the world learned a lot about their healthcare system during

762
00:42:07,280 --> 00:42:11,560
Speaker 1: this whole COVID issue. What did India learn about its

763
00:42:11,640 --> 00:42:14,080
Speaker 1: healthcare system? What are the challenges and what are the opportunities?

764
00:42:14,080 --> 00:42:19,239
Speaker 1: I guess well, um, obviously, like everybody else, COVID hit

765
00:42:19,320 --> 00:42:22,560
Speaker 1: us hard, particularly in the second Delta wave. But on

766
00:42:22,600 --> 00:42:26,000
Speaker 1: the other hand, we also demonstrated that we could create

767
00:42:26,000 --> 00:42:28,440
Speaker 1: our own vaccines and we could go out and then

768
00:42:28,520 --> 00:42:31,920
Speaker 1: one point four billion people, that's about a billion of

769
00:42:31,960 --> 00:42:36,440
Speaker 1: them were eligible they're old enough to get vaccinated, and

770
00:42:36,520 --> 00:42:40,719
Speaker 1: we delivered a billion vaccines and did it again with

771
00:42:40,880 --> 00:42:46,200
Speaker 1: the boosters. So you know, we have global level capacities

772
00:42:46,480 --> 00:42:48,680
Speaker 1: both in terms of production of vaccines but also to

773
00:42:48,760 --> 00:42:53,759
Speaker 1: delivering it. And importantly we know exactly which day, which

774
00:42:53,840 --> 00:42:56,120
Speaker 1: particular vaccine was given to everybody because the whole thing is,

775
00:42:56,160 --> 00:42:59,440
Speaker 1: as I said, is digitally set up, so you don't

776
00:42:59,440 --> 00:43:05,040
Speaker 1: have those sort of non phone and it's literally written handed.

777
00:43:05,200 --> 00:43:07,080
Speaker 1: Don't get me started. But anyway, we got it done.

778
00:43:07,160 --> 00:43:09,719
Speaker 1: We have a digital footed out. We all figured it out.

779
00:43:10,120 --> 00:43:12,120
Speaker 1: Send Ji San, y'all, thank you so much for joining us.

780
00:43:12,440 --> 00:43:15,560
Speaker 1: You're listening to the tape cancer our live program Bloomberg

781
00:43:15,640 --> 00:43:19,160
Speaker 1: Markets weekdays at ten am Eastern on Bloomberg Radio, the

782
00:43:19,280 --> 00:43:22,439
Speaker 1: tune in app, Bloomberg dot Com, and the Bloomberg Business App.

783
00:43:22,560 --> 00:43:25,359
Speaker 1: You can also listen live on Amazon Alexa from our

784
00:43:25,360 --> 00:43:30,520
Speaker 1: flagship New York station. Just say Alexa play Bloomberg eleven thirty.

785
00:43:31,560 --> 00:43:33,600
Speaker 1: Let's get right to our next guest, Ali er Month,

786
00:43:34,080 --> 00:43:39,040
Speaker 1: genomic revolution analyst at our investment Not Ali, I've been

787
00:43:39,040 --> 00:43:41,560
Speaker 1: in research business for more than thirty years. I've managed

788
00:43:41,719 --> 00:43:44,600
Speaker 1: research departments. I don't think I've ever seen the term

789
00:43:44,800 --> 00:43:49,040
Speaker 1: genomic revolution analyst. Let's just start there. What do you do? Following?

790
00:43:50,360 --> 00:43:52,319
Speaker 1: Thanks so much and thanks for having me on. So

791
00:43:52,520 --> 00:43:57,600
Speaker 1: genomics is really an interdisciplinary approach. It's basically a field

792
00:43:57,600 --> 00:44:00,960
Speaker 1: of biology and we think about the structure, you know,

793
00:44:01,000 --> 00:44:05,200
Speaker 1: the evolution and different mappings of how we edit genomes.

794
00:44:05,239 --> 00:44:08,560
Speaker 1: And I think what's really interesting about ARC is that

795
00:44:08,880 --> 00:44:13,480
Speaker 1: we have analysts that focus on specific areas of expertise

796
00:44:13,760 --> 00:44:17,800
Speaker 1: rather than strong financial backgrounds. So I can say for myself,

797
00:44:17,920 --> 00:44:21,840
Speaker 1: I previously conducted cancer research at Sloan Country and Cancer

798
00:44:21,920 --> 00:44:25,680
Speaker 1: Center and Monteer Medical Center. I then became really interested

799
00:44:25,880 --> 00:44:30,040
Speaker 1: in the intersection between AI and medicine, and so I

800
00:44:30,080 --> 00:44:33,680
Speaker 1: went to IBM Watson Health And so being able to

801
00:44:33,719 --> 00:44:37,360
Speaker 1: have all of this sort of previous knowledge on cancer

802
00:44:37,480 --> 00:44:41,839
Speaker 1: epidemiology by statistics and artificial intelligence and how those things

803
00:44:41,840 --> 00:44:46,720
Speaker 1: will propel and change medicine makes me really able to

804
00:44:46,760 --> 00:44:50,040
Speaker 1: look at companies and decipher sort of which ones maybe

805
00:44:50,600 --> 00:44:54,880
Speaker 1: win or loser situations within the marketplace. This is fascinating

806
00:44:54,880 --> 00:44:56,799
Speaker 1: and I have hundreds of questions, but I'm just going

807
00:44:56,880 --> 00:44:59,319
Speaker 1: to start with one. Going back to what you were

808
00:44:59,320 --> 00:45:03,319
Speaker 1: saying about your involvement with artificial intelligence, Can you look

809
00:45:03,360 --> 00:45:05,279
Speaker 1: ahead a little bit for us, What kind of new

810
00:45:05,440 --> 00:45:10,960
Speaker 1: breakthroughs is AI making possible here? Yeah? So, actually, this

811
00:45:11,040 --> 00:45:12,440
Speaker 1: is going to be a topic that Kathy and I

812
00:45:12,640 --> 00:45:15,279
Speaker 1: will be speaking about at a Forbes Women's summit soon.

813
00:45:15,800 --> 00:45:18,960
Speaker 1: It's a really important topic that you're bringing up. We

814
00:45:19,040 --> 00:45:21,360
Speaker 1: think that several tools are going to be really important

815
00:45:21,400 --> 00:45:24,879
Speaker 1: to accelerate drug discovery, and I think AI is really

816
00:45:24,880 --> 00:45:27,480
Speaker 1: primed to be one of them. So one example that

817
00:45:27,520 --> 00:45:29,719
Speaker 1: we're seeing now and I think we'll only get better

818
00:45:29,760 --> 00:45:32,840
Speaker 1: and better with time, so that would be like neural

819
00:45:32,880 --> 00:45:36,040
Speaker 1: network based algorithms. So that would be things like alpha

820
00:45:36,040 --> 00:45:38,640
Speaker 1: fold that was announced if you remember a while ago,

821
00:45:38,680 --> 00:45:42,120
Speaker 1: by alphabet which is a subsidiary of deep Mind, and

822
00:45:42,160 --> 00:45:46,680
Speaker 1: that can actually predict protein folding, so that was very exciting.

823
00:45:46,760 --> 00:45:49,880
Speaker 1: It also had an open source database of protein structures

824
00:45:49,920 --> 00:45:53,440
Speaker 1: that was powered by alpha fol two and based on

825
00:45:53,480 --> 00:45:56,919
Speaker 1: their amino acid sequences, the database can predict the three

826
00:45:56,960 --> 00:46:01,160
Speaker 1: dstructor of about you know, almost all all known human proteins.

827
00:46:01,160 --> 00:46:03,879
Speaker 1: So that's it at three hundred and fifty thousand. So

828
00:46:03,920 --> 00:46:07,120
Speaker 1: our research really suggests that these neural network based algorithms

829
00:46:07,160 --> 00:46:10,440
Speaker 1: could reduce these research and development costs, which get very

830
00:46:10,520 --> 00:46:12,919
Speaker 1: high for our companies, and we know in different macro

831
00:46:13,160 --> 00:46:16,560
Speaker 1: and difficult macro environment conditions right now and when it's

832
00:46:16,600 --> 00:46:19,640
Speaker 1: a little bit harder to raise keeping those costs low,

833
00:46:19,960 --> 00:46:23,360
Speaker 1: but increasing efficiency is really important, so we think that

834
00:46:23,400 --> 00:46:26,360
Speaker 1: this could increase the value of clinical trial assets we

835
00:46:26,440 --> 00:46:30,520
Speaker 1: think it could increase the probability of clinical trials phase transition. So,

836
00:46:30,719 --> 00:46:33,560
Speaker 1: you know, a tactical example of this maybe is that

837
00:46:34,080 --> 00:46:38,000
Speaker 1: so enabling this technology could probably shorten the average time

838
00:46:38,040 --> 00:46:42,600
Speaker 1: spend in preclinical experimentation. And so the duration typically in

839
00:46:42,640 --> 00:46:46,640
Speaker 1: preclinical testing from discovery to phase one is about four years,

840
00:46:47,040 --> 00:46:49,400
Speaker 1: and based on our model assumptions, that number is going

841
00:46:49,520 --> 00:46:52,640
Speaker 1: to drop to three years, and then with these sort

842
00:46:52,640 --> 00:46:55,439
Speaker 1: of AI neural network based algorithms that could drop even

843
00:46:55,520 --> 00:46:58,600
Speaker 1: further to two years. So we think that would be

844
00:46:58,800 --> 00:47:03,080
Speaker 1: you know, a major cost and really increase efficiency. Alex,

845
00:47:03,200 --> 00:47:06,080
Speaker 1: what are some of the companies or types of companies

846
00:47:06,120 --> 00:47:11,680
Speaker 1: in your ETF and why are they there? Yeah, So

847
00:47:11,719 --> 00:47:14,160
Speaker 1: one of the things that we focus on, and a

848
00:47:14,200 --> 00:47:16,279
Speaker 1: lot of the things that I cover are things that

849
00:47:16,320 --> 00:47:20,440
Speaker 1: are going to be called precision therapies. So precision therapies

850
00:47:20,520 --> 00:47:24,720
Speaker 1: are these very disruptive novel medicines that are we focus

851
00:47:24,800 --> 00:47:28,800
Speaker 1: on disruptive innovation, so no real surprise there. We believe

852
00:47:28,880 --> 00:47:31,239
Speaker 1: that these type of companies are going to impact the

853
00:47:31,239 --> 00:47:34,799
Speaker 1: way we practice medicine. So one interesting change that I'd

854
00:47:34,800 --> 00:47:38,640
Speaker 1: love to highlight is that previously before the Human Genome

855
00:47:38,680 --> 00:47:42,600
Speaker 1: Project before we understood more sort of of our body's mechanics,

856
00:47:42,920 --> 00:47:46,680
Speaker 1: we focused on creating these chronic therapies, right, so therapies

857
00:47:46,719 --> 00:47:49,920
Speaker 1: that we would need to continuously take to manage symptoms,

858
00:47:50,239 --> 00:47:53,600
Speaker 1: but we didn't actually address the specific cause of disease.

859
00:47:54,239 --> 00:47:57,600
Speaker 1: So with things like one example would be gene editing,

860
00:47:57,600 --> 00:48:02,319
Speaker 1: where you actually change, modify, add delete some form of

861
00:48:02,360 --> 00:48:05,960
Speaker 1: your DNA. So gene editing then could address the underlying

862
00:48:06,040 --> 00:48:08,839
Speaker 1: causes of those diseases, and then it can also be

863
00:48:08,960 --> 00:48:11,600
Speaker 1: used in the future, sort of like in the changing

864
00:48:11,600 --> 00:48:14,759
Speaker 1: our healthcare approach, So in an upstream approach, whereas now

865
00:48:14,800 --> 00:48:17,680
Speaker 1: we have a downstream approach, meaning that you get cancer,

866
00:48:17,760 --> 00:48:20,600
Speaker 1: we treat your cancer. In an upstream approach, it would

867
00:48:20,600 --> 00:48:23,439
Speaker 1: mean that before you get cancer, we look to see

868
00:48:23,520 --> 00:48:26,160
Speaker 1: what genes you have that may cause cancer and how

869
00:48:26,200 --> 00:48:29,280
Speaker 1: we can address them before you actually even get the cancer.

870
00:48:29,800 --> 00:48:32,680
Speaker 1: So we also see that, you know, these therapies are

871
00:48:32,680 --> 00:48:35,000
Speaker 1: being tested more and more in the clinic, so we're

872
00:48:35,000 --> 00:48:39,400
Speaker 1: seeing that gene editing clinical trials are basically trickling. We

873
00:48:39,440 --> 00:48:41,360
Speaker 1: think that would happen by the end of the decade,

874
00:48:41,360 --> 00:48:45,000
Speaker 1: which shows sort of the way medicine is moving. That

875
00:48:45,000 --> 00:48:48,239
Speaker 1: would also accelerate probably first approvals, and we think that

876
00:48:48,520 --> 00:48:50,840
Speaker 1: it's possible that the first approval could even come as

877
00:48:50,880 --> 00:48:54,080
Speaker 1: soon as this year. When you look at where these

878
00:48:54,239 --> 00:48:56,840
Speaker 1: innovations are coming from, do you have a sense that

879
00:48:56,960 --> 00:48:59,440
Speaker 1: it comes from big farmers? It more a story for

880
00:48:59,440 --> 00:49:04,720
Speaker 1: a little We think there's room in both in our

881
00:49:04,800 --> 00:49:07,560
Speaker 1: portfolio and air KG. We actually do have large cap

882
00:49:07,600 --> 00:49:11,279
Speaker 1: format as well as these smaller cap companies. We have

883
00:49:11,280 --> 00:49:13,480
Speaker 1: a long term approach, and so we look at the

884
00:49:13,520 --> 00:49:16,440
Speaker 1: companies that are most likely to be able to capitalize

885
00:49:16,760 --> 00:49:20,200
Speaker 1: and create these therapeutics, whether they're a large cap or

886
00:49:20,280 --> 00:49:22,920
Speaker 1: small caps. One of the ways we do that is

887
00:49:22,960 --> 00:49:26,359
Speaker 1: we have a fifteen percent cager or hurdle, so all

888
00:49:26,400 --> 00:49:28,759
Speaker 1: of our companies really had a lot of room to grow.

889
00:49:29,080 --> 00:49:32,960
Speaker 1: We also have a very rigorous sort of company modeling

890
00:49:32,960 --> 00:49:36,200
Speaker 1: and frameworks for analyzing our companies. So we focus on

891
00:49:36,239 --> 00:49:39,080
Speaker 1: this sort of bottoms up in top Stone research process.

892
00:49:39,160 --> 00:49:41,759
Speaker 1: So all of our research is actually open sourced. We

893
00:49:41,800 --> 00:49:43,440
Speaker 1: give it away for free, so if you ever want

894
00:49:43,440 --> 00:49:45,759
Speaker 1: to check out any of our research, you can just

895
00:49:45,880 --> 00:49:49,080
Speaker 1: go on to ardashonvest dot com. We also do a

896
00:49:49,080 --> 00:49:52,280
Speaker 1: big ideas deck every year, which is sort of our

897
00:49:52,320 --> 00:49:55,600
Speaker 1: best ideas of this year, and this year we focused

898
00:49:55,600 --> 00:49:59,239
Speaker 1: on precision therapies and molecular diagnostics from a healthcare perspective.

899
00:50:00,320 --> 00:50:02,560
Speaker 1: But going back to our framework that we look at

900
00:50:02,600 --> 00:50:05,640
Speaker 1: a particular market segment and we figure out we typically

901
00:50:05,760 --> 00:50:08,799
Speaker 1: use like a right Law cost decline curve and we

902
00:50:08,840 --> 00:50:11,560
Speaker 1: try to figure out, Okay, how is this company or

903
00:50:11,560 --> 00:50:15,000
Speaker 1: how is this segment going to decrease costs but still

904
00:50:15,080 --> 00:50:18,319
Speaker 1: increase productivity, and then we really find the companies that

905
00:50:18,360 --> 00:50:20,680
Speaker 1: we think are most likely to change the world with

906
00:50:20,760 --> 00:50:23,560
Speaker 1: the progress. And then we of course always have our

907
00:50:23,600 --> 00:50:26,000
Speaker 1: score for the companies that we have a framework for

908
00:50:26,040 --> 00:50:29,040
Speaker 1: that where we look at things like mote, product leadership,

909
00:50:30,200 --> 00:50:36,240
Speaker 1: you execution, people, management, and culture, etc. Fascinating, fascinating stuff,

910
00:50:36,239 --> 00:50:38,200
Speaker 1: Ali Erman, thank you so much for joining us. Really

911
00:50:38,239 --> 00:50:42,320
Speaker 1: appreciate getting your thoughts on this complex issue, but a

912
00:50:42,360 --> 00:50:46,279
Speaker 1: fascinating issue and certainly an opportunity for investors to do

913
00:50:46,320 --> 00:50:49,239
Speaker 1: what you can do with the AARKG which is the

914
00:50:49,360 --> 00:50:54,200
Speaker 1: ARC Fund. There. Thanks for listening to the Bloomberg Markets podcast.

915
00:50:54,600 --> 00:50:57,800
Speaker 1: You can subscribe and listen to interviews with Apple Podcasts

916
00:50:57,920 --> 00:51:01,879
Speaker 1: or whatever podcast platform you for. I'm Matt Miller. I'm

917
00:51:01,880 --> 00:51:05,359
Speaker 1: on Twitter at Matt Miller nineteen seventy three, and I'm

918
00:51:05,360 --> 00:51:08,440
Speaker 1: fall Sweeney. I'm on Twitter at pt Sweeney. Before the podcast,

919
00:51:08,480 --> 00:51:11,000
Speaker 1: you can always catch us worldwide at Bloomberg Radio