Speaker 1: This is Bloomberg Business Week. I'm Carole Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovik. We're here every day bringing
Speaker 1: you the latest news from the world to business and finance,
Speaker 1: plus technology, politics, economics, all purtnising the power of Business
Speaker 1: Week reporters and editors, not to mention our journalists and
Speaker 1: analyst in more than one twenty countries. You can download
Speaker 1: Bloomberg Business Weekend iTunes, SoundCloud, or Bloomberg dot com. You
Speaker 1: can also listen to our radio show at two pm
Speaker 1: Eastern Time on the Bloomberg Radio or watch us on
Speaker 1: YouTube search Bloomberg clovel News. Well, a story on the
Speaker 1: Bloomberg about the omicron variant being much deadlier than the
Speaker 1: seasonal flu, why that's important to remember, and also why
Speaker 1: it's also important to remember that there will be a
Speaker 1: next pandemic. It's the subject of a new book by
Speaker 1: Bill Gates, by the way, and that's something that's highlight
Speaker 1: in the Pursuit section of the current new issue Bloomberg
Speaker 1: Business Week Magazine. We talked about it with Chris Rouser.
Speaker 1: That will be in our weekend show. Well. Dr Andy
Speaker 1: Pecos is professor of molecular microbiology and immunology at the
Speaker 1: Johns Hopkins University Bloomberg School of Public Health. The Bloomberg
Speaker 1: School of Public Health is supported Michael R. Bloomberg, founder
Speaker 1: of Bloomberg LP and Bloomberg Philanthropies. Dr Pekosh joins us
Speaker 1: once again on the phone from Baltimore. Dr Pekosh, How
Speaker 1: are you doing well? How are you all? We're doing well.
Speaker 1: Carol and I were talking earlier about the mass mandates
Speaker 1: being lifted in different parts of the country, and indeed
Speaker 1: it's something that's gonna be happening in New York. Friends
Speaker 1: texting me in the last few days that their students, theirs,
Speaker 1: their kids are no longer masked at school, and my
Speaker 1: friends are pretty appreciative of that. Um. When you take
Speaker 1: a look at where the United States is, how would
Speaker 1: you describe it? Well, you know, we're we're. Everything is
Speaker 1: trending in the really good directions. In some parts of
Speaker 1: the country, case numbers are still a little bit higher
Speaker 1: from my taste, at least to be able to relieve
Speaker 1: a lot of the public health interventions. But everything is
Speaker 1: looking like it's moving in the right direction. No new
Speaker 1: variants that are of high concern are coming down the
Speaker 1: pipeline at least immediately. So I think we're in a
Speaker 1: really good place right now for most of the population,
Speaker 1: I guess I would say the exception would be, you know,
Speaker 1: the people who are highly susceptible to severe COVID, the elderly,
Speaker 1: those with OFMS immune systems. Those are populations we still
Speaker 1: need to monitor carefully because COVID can be such a
Speaker 1: severe disease in those populations. But for most people, things
Speaker 1: are trending in the right direction, but we do need
Speaker 1: to I'm sorry, ahead, well, I was just wondering. You know,
Speaker 1: you said case numbers are still too high for you
Speaker 1: to be comfortable. What is that number that you'll that
Speaker 1: you'd like to see for for you to say, Okay,
Speaker 1: wait a second, We're no longer in a pandemic. This
Speaker 1: is now endemic because we are still seeing tons of
Speaker 1: thousands of new cases every day exactly. And I think
Speaker 1: you have to look locally to see how your spread
Speaker 1: is locally. Um one good parameter rate is if your
Speaker 1: positive test positivity rate is about two per cent or so,
Speaker 1: that really tells you that two things are going on.
Speaker 1: Case numbers are low and you've got enough testing going
Speaker 1: on to really be confident that you're detecting a lot
Speaker 1: of the cases out there. Uh. What's interesting too is
Speaker 1: and I do think about this. As I said, I
Speaker 1: was like perplexed landing in Chicago Tuesday night, getting into
Speaker 1: a hotel outside of Chicago, and nobody had masks on
Speaker 1: because they just pulled the mask mandate And to say
Speaker 1: Dr peckash, I was like, you know what to do?
Speaker 1: I had my mask on, I left it on. I
Speaker 1: felt awkward. People were like, oh, keep mask like and
Speaker 1: nobody else had a mask on. Um, but I I
Speaker 1: have to rely on my community to do the right thing,
Speaker 1: and we know that that unfortunately, our community hasn't. So
Speaker 1: what's your advice to us increasingly as we go forward
Speaker 1: with this and and what are the numbers that you're
Speaker 1: gonna be watching that we don't. Is it just a
Speaker 1: case of an uptick of cases that will remind us
Speaker 1: that you know, it's still not completely safe. Well, you know,
Speaker 1: the CDC recently updated their guidance from mask wearing, which
Speaker 1: is what really uh precipitated all of these mandates being relieved.
Speaker 1: You know, I think number one, you should always go
Speaker 1: with how you feel and your conscience and if you're
Speaker 1: not feeling comfortable going out without masks, please mask up.
Speaker 1: I still mask up when I go out, uh to
Speaker 1: two groceries, shopping in other places as well too. I
Speaker 1: think there's nothing wrong with masking up. Um, Wearing a
Speaker 1: mask for yourself is still good for protecting you, and
Speaker 1: I think that's something everybody should feel comfortable doing if
Speaker 1: they want to. Um, you know, I'm hoping that that
Speaker 1: that what we're going to see now is that COVID
Speaker 1: becomes a bit more seasonal, So as we get to
Speaker 1: warmer weather, it will be less and less likely that
Speaker 1: we see significant surges of cases. So that will really
Speaker 1: be in a period of time now where we can
Speaker 1: be a little bit more um comfortable that conditions won't
Speaker 1: be right for large surges of cases. So okay, well
Speaker 1: let's talk about those conditions. Um. You know. Carol mentioned
Speaker 1: Bill Gates's new book that's reviewed in the upcoming issue
Speaker 1: of Bloomberg Business Week magazine. We've talked a lot about
Speaker 1: the idea of the next pandemic, But before we get
Speaker 1: to the next pandemic, I want to think about the
Speaker 1: next variant, and I wanted us to have a realistic
Speaker 1: set of expectations, because I remember how I felt in
Speaker 1: June of one when I went to a wedding and
Speaker 1: it seemed like COVID was absolutely gone and we had
Speaker 1: turned this corner. And then you know, a few days later, boom,
Speaker 1: delta variant. We get out of the delta variant. Boom,
Speaker 1: it's the omicron variant. Um, how should we be? How
Speaker 1: should we be planning for our own future? It's just
Speaker 1: just in terms of risk taking and and and setting expectations.
Speaker 1: So you know, I'm not slapped across the face again, right, Yeah.
Speaker 1: I think what stars KVID two has shown us is
Speaker 1: when it entered the population two years ago, it was
Speaker 1: a virus that could spread well, but it really wasn't
Speaker 1: optimal for infecting people. And what you've seen now, maybe
Speaker 1: with a macron as the pinnacle, is this virus really
Speaker 1: adapt to be able to infect and spread the human population.
Speaker 1: So it will be here. We will see continuing variants
Speaker 1: emerge because um, that's what viruses do. They mutate, and
Speaker 1: if they mutate in the way that makes them better
Speaker 1: at infecting people, then they will become the dominant virus.
Speaker 1: But the most important thing is we have now vaccines
Speaker 1: that induce population immunity. Now that's different from her immunity.
Speaker 1: Population immunity just means that we're gonna dampen disease severity.
Speaker 1: We're gonna damp in numbers of cases a bit, and
Speaker 1: we're gonna be able to reach an area where we
Speaker 1: can control the numbers of cases through vaccination and treatments
Speaker 1: and avoid those severe cases. And that's where I hope
Speaker 1: we're going to be, particularly in a few months, because
Speaker 1: as more treatments come on board, UM, as people get
Speaker 1: us hopefully little bit more comfortable with vaccines UM and
Speaker 1: taking them UM, we will be able to get all
Speaker 1: of this population immunity together. That's going to really minimize
Speaker 1: the threat of severe COVID for most of us. You're
Speaker 1: listening to Bloomberg Business Week with Carol Messer and Bloomberg
Speaker 1: Quick Takes Tim Stinovic on Bloomberg Radio. Well, as we
Speaker 1: just talked about the world increasingly sanctioning Russia following that
Speaker 1: invasion of Ukraine. We just talked about the US adding
Speaker 1: sanctions to Vladimir Putin's press secretary, limiting the travel of
Speaker 1: nineteen others in terms of Russians and forty seven of
Speaker 1: their families. So the news continues to flow. Bloomberg's Nick
Speaker 1: Boddam writing about how the crackdown on Russia's economy that
Speaker 1: could have consequences that last decades. Nick Wadham's Bloomberg News
Speaker 1: foreign policy reporter, he'd us on the phone from Washington,
Speaker 1: d C. Nick, you know, the headlines continue to come
Speaker 1: in terms of moves by the US, UH and other
Speaker 1: nations around the world going against Russia. At this point,
Speaker 1: tell us about your reporting and why this may stay
Speaker 1: with us much longer than we all anticipate. Well, I
Speaker 1: think the concern I heard from folks on the outside
Speaker 1: and also a couple of people on on the inside
Speaker 1: of the administration is essentially that the US is ramping
Speaker 1: up so hard and fast on Russia right now, um,
Speaker 1: in response to the invasion that they fear there's not
Speaker 1: really like a longer term plan for Okay, then, what
Speaker 1: like if you if you sanction all the folks around
Speaker 1: Putin and all these companies, what are the what are
Speaker 1: the conditions under which you actually unwind these sanctions and
Speaker 1: what are they actually trying to achieve? Is it just
Speaker 1: purely about punishment or is it trying to induce some
Speaker 1: sort of behavior, and the problem sanctions theorists will tell
Speaker 1: you is that if you're trying to duce behavior with
Speaker 1: crushing sanctions like this and often only just has the
Speaker 1: opposite effects. So it's a concern about not really understanding
Speaker 1: or thinking through what the consequences of all these sanctions
Speaker 1: might end up be. Right, we understand the means in
Speaker 1: terms of going after Vladimir Putin in Russia, Right, we
Speaker 1: see that with the sanctions we don't necessarily know what
Speaker 1: the end game is here, certainly when it comes to
Speaker 1: the US UH and NATO allies. What are some of
Speaker 1: the things that are being talked about that maybe need
Speaker 1: to be put before President Putin is saying here's what
Speaker 1: we need you to do. Well, I mean, this is
Speaker 1: a great challenge because, of course, obviously the first thing
Speaker 1: they would say is, okay, what we need you to
Speaker 1: do is reverse the invasion, which he's obviously showing no
Speaker 1: signs that he's going to do. So at that level,
Speaker 1: you know, it does feel like we're caught in this
Speaker 1: bind of wanting to do something, wanting to respond in
Speaker 1: some way, but then you know there's this concern that
Speaker 1: actually the response doesn't achieve the desired end. But the
Speaker 1: question that I'm really trying to dive into now is,
Speaker 1: you know, these lower level folks, so the oligarchs around Putin,
Speaker 1: you know what what needs to happen with them? What
Speaker 1: do they need to do that it do they need
Speaker 1: to publicly disavow Putin does? What are the things that
Speaker 1: they can do that are actually in their control to
Speaker 1: get these sanctions lifted? And so far I haven't seen
Speaker 1: a clear articulation of what the US actually wants from them,
Speaker 1: And I think you're going to start to see that
Speaker 1: over the next little while, a better articulation of of
Speaker 1: what they're actually going to need to do. But at
Speaker 1: the moment, the administration is not saying what it's asking
Speaker 1: them to do. If anything, Nick, one of the things
Speaker 1: that jumped out for me and your latest reporting, and
Speaker 1: I think about this when we're dealing with UM leaders
Speaker 1: of countries, UM that especially in more troubled areas of
Speaker 1: the world, that there that we need to think about
Speaker 1: face saving measures that that is important to them in
Speaker 1: terms of their position. How do we need to think
Speaker 1: about that when it comes to President Putin specifically. Well,
Speaker 1: it was interesting because Jen suck he was actually asked
Speaker 1: about that very issue today at the briefing. You know,
Speaker 1: is there some sort of face saving measure that Russia
Speaker 1: could could do? Uh? And her suggestion was, you know,
Speaker 1: it's way too early to talk about face saving measures
Speaker 1: because this this military campaign is so intense. But but
Speaker 1: the impression I get from speaking to folks on the
Speaker 1: inside of the administration is that yes, they are going
Speaker 1: to or they say they are going to start doing
Speaker 1: that at some point. The question is whether Vladimir Putin
Speaker 1: will see these US actions as something that gives him
Speaker 1: the opportunity to do that. I mean, I mean, the
Speaker 1: US is saying, listen, we're not going to commit troops
Speaker 1: on the ground. But you know, Vladimir Putin doesn't see
Speaker 1: this as a substitute for war. He sees it as
Speaker 1: an element for war. So then that provokes the bigger question. Okay,
Speaker 1: he may respond, not necessarily with financial retaliation or whatever
Speaker 1: it might be, but something more kinetic. And I think
Speaker 1: I think you're starting to see a sense that that
Speaker 1: the US is going to need to prepare for that. Well,
Speaker 1: that's what I was curious too, And I'm thinking about
Speaker 1: sanctions in general. I mean, the world has ramped up especially.
Speaker 1: I feel like this week in terms of financial sanctioning
Speaker 1: UM and whether it's stocks, the Russian market, the rouble
Speaker 1: the oligarchs, um, are we getting to the end of
Speaker 1: that In terms of financial sanctioning, well, I think there
Speaker 1: is more they can do. I mean, the question of
Speaker 1: whether it works or not, that's one thing. I mean,
Speaker 1: a lot of the oligarchs are the folks who were
Speaker 1: named today had previously been sanctions, So it's not like
Speaker 1: it's going to have any real new impact on them
Speaker 1: unless the U S is it's promised, really goes after
Speaker 1: their assets in a way that it hasn't done before.
Speaker 1: But there is obviously the energy sector, and that is
Speaker 1: the big sort of untouched area where the US has
Speaker 1: has so far decided it is not going to to
Speaker 1: sanction Russia because of the fear about the blowback on
Speaker 1: the US market. But based on conversation I and some
Speaker 1: of my colleagues are having with officials and folks on
Speaker 1: the outside, it does appeal here that there's a growing
Speaker 1: movement towards figuring out some way to squeeze the Russian
Speaker 1: energy sector to really try to break the back of
Speaker 1: Vladimir Putin's calculs again will it work. There's not a
Speaker 1: lot of evidence. I mean you've looked Lebron, Syria, Cuba.
Speaker 1: There's no real evidence that their behavior has changed. But
Speaker 1: this is what the administration. Hey just got Nick, about
Speaker 1: thirty seconds left here. So as you lay out, you know,
Speaker 1: we've got to be you know, tell President Booten kinda
Speaker 1: what we need him to do. Are those conversations of
Speaker 1: going on inside the White House are among the President's cabinet.
Speaker 1: I mean we're just you know, played back some sound
Speaker 1: he's meeting with them right now earlier from conversations is no,
Speaker 1: they are not at that point yet of telling Bloodin
Speaker 1: what he needs to do beyond all team the invasion.
Speaker 1: Hopefully we'll get a better sense of the next few days.
Speaker 1: All right, Well, really appreciate the update. Nick Waddams. He
Speaker 1: is our foreign policy reporter at Bloomberg News. This is
Speaker 1: Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes
Speaker 1: Tim Stenovic on Bloomberg Radio. In this week's new issue
Speaker 1: of Bloomberg Business Week magazine, it's a special report. By
Speaker 1: the way, the magazine it's all about the war in Ukraine,
Speaker 1: and the magazine specifically taking a deep dive into the
Speaker 1: tactic of using finance as a weapon. So let's get
Speaker 1: to it. Bloomberg News Financial Investigation senior writer Stephanie Baker
Speaker 1: on the phone from London along with Business Week editor
Speaker 1: Joe Weber here in our Bloomberg Interactor Broker studio in
Speaker 1: New York. UM. I talked to Stephanie earlier. I've already
Speaker 1: said this is Tim and I were saying favorite story
Speaker 1: of the week. It is a really good one and
Speaker 1: one of those ones where you know, you just are
Speaker 1: thankful for having colleagues who have been around and covering
Speaker 1: things for for a bit because, um, as she writes
Speaker 1: the story, Stephanie has been a close watcher of Russia
Speaker 1: for for decades now. Um. And to rewind the clock here,
Speaker 1: you know, coming out of the wall coming down, all
Speaker 1: of arcs amassed a whole bunch of of of assets basically,
Speaker 1: and we're able to basically become billionaires in the process.
Speaker 1: And we've long seen the repercussions of that. And a
Speaker 1: key way that sort of the the US and the
Speaker 1: UK and the EU are attempting to sort of fight
Speaker 1: back to Putin's aggression is by targeting some of those
Speaker 1: um olive arcs UM. So, so stephaniely walk us through
Speaker 1: how that's played out so far and how how it
Speaker 1: could play out yet. Well, the sanctions keep coming fast
Speaker 1: and furious. The UK and the US just announced additional
Speaker 1: aligarcs UM that have been sanctioned. The UK UM targeting
Speaker 1: to prominent Russians UM billionaire Alisher Usmanoff and um uh
Speaker 1: Igor Shuvalov, who is a former government official but he
Speaker 1: hEDS the state he's the chairman of the State Bank
Speaker 1: bb UM. And then the US did the same, sanctioning
Speaker 1: Usmanoff and a string of others, including their family members
Speaker 1: in many cases. So UM, the US going further trying
Speaker 1: to put pressure on them UM. And you know, I
Speaker 1: think we're to just see more coming UM as they
Speaker 1: work their way through UM the list and try to
Speaker 1: figure out, you know what, what's the best way to
Speaker 1: continue to put pressure on Putin. There are many more
Speaker 1: on the list, you know, people billionaires who for instance,
Speaker 1: met with Vladimir Putin when he called them in last week. UM.
Speaker 1: So I would expect further steps from both the UK,
Speaker 1: from both London and Washington. So London is an interesting
Speaker 1: one here because London Grad long been a nickname and
Speaker 1: UK been a little slower on on targeting and sanctioning
Speaker 1: them than than the EU and US. Um. And what
Speaker 1: do you make of that coming from London? Yeah, it's
Speaker 1: it's been a real um. You know, they talk a
Speaker 1: tough game the UK, but they've just failed to follow through. Um.
Speaker 1: And I think you know, as you said, it's been
Speaker 1: nicknamed London Grad because so many Russians love to come
Speaker 1: here and buy mansions and send their kids to schools here. Um.
Speaker 1: But you know, the legal climate is making it I
Speaker 1: think a little bit more complicated and difficult, particularly post
Speaker 1: Brexit um for the UK government to move. And it's
Speaker 1: surprising that they didn't have a lot of this prepared
Speaker 1: because they had been warning for so long about this
Speaker 1: invasion that they hadn't done the ground mark beforehand to
Speaker 1: try to target some of these oligarchs. Um. You know
Speaker 1: the moves that they announced just tonight. Um. Okay, there
Speaker 1: are two additional oligarchs that everyone has been saying, why
Speaker 1: aren't these guys sanctioned? Um? But that's a still a
Speaker 1: small step compared to what the European Union has done,
Speaker 1: which has been much more aggressive UM and sanctioning, you know,
Speaker 1: triple the number that the UK has, and seizing yachts um.
Speaker 1: You know it's the French seized the yachts of the
Speaker 1: CEO of Rossness State, the state backed oil company UM
Speaker 1: today and um uh usman Off, the billionaire who was
Speaker 1: sanctioned by both the UK and the US today. His
Speaker 1: yacht was sanctioned by the Germans in Hamburg. So UM.
Speaker 1: You know, Europe has been a surprise player here in
Speaker 1: terms of its aggressive moves. Stephanie, you what's great about
Speaker 1: talking to you is that and you write this in
Speaker 1: your story that you witness the collapse of the Soviet
Speaker 1: Union back you were in Prague. You are a college
Speaker 1: or recent college graduate. Um. What is it that maybe
Speaker 1: we've misread um as a world because there was so
Speaker 1: much hope there, you know, hope at that time. But
Speaker 1: here we are today. Yeah, I mean, you know, thirty
Speaker 1: years a sort of as a business journalist, I reported
Speaker 1: on it Western companies trying to get into Russia. UM.
Speaker 1: You know, obviously there's a whole sordid story of you know,
Speaker 1: how the Russian state went about privatization and created all
Speaker 1: of these oligarchs to begin with, and you know, huge
Speaker 1: problems in the way that we've done. UM. But you
Speaker 1: know now what you have is and I think it's
Speaker 1: really sad, um that there are a lot of you know, UM,
Speaker 1: all this all this effort to try to integrate Russia
Speaker 1: and the global economy and create a sort of functioning
Speaker 1: business sector has been completely destroyed, you know, in a
Speaker 1: in a week, um, because of the actions of Putin.
Speaker 1: And you know it'll be very hard to recover that, UM,
Speaker 1: But it's the only way, you know, because the NATO
Speaker 1: does not want to be engaging in a direct war
Speaker 1: with another nuclear power, they have to use these sanctions
Speaker 1: as their only tool, um, really to try to force
Speaker 1: Putin to stand down, to try to isolate him starving
Speaker 1: of the funds he needs to wage this war. All Right,
Speaker 1: We're gonna leave it on that note. UM. There's so
Speaker 1: much in this story, and there's so much in the
Speaker 1: coverage in the magazine this week, and Stephanie, we know
Speaker 1: you've been really busy, so thank you for for finding
Speaker 1: time for us once again. Stephanie Baker, she's financial investigation
Speaker 1: senior writer at Bloomberg News. On the phone from London.
Speaker 1: Check out her story and the other stories that are
Speaker 1: in the magazine this week. You can find it on
Speaker 1: the Bloomberg at Bloomberg dot com and on newsstands and
Speaker 1: our thanks to Joe Webber, editor a Business Week. You're
Speaker 1: listening to Bloomberg Business Week with Carol Messer and Bloomberg
Speaker 1: Quick Takes Tim Stinovic on Bloomberg Radio. So another of
Speaker 1: our most read stories on the Bloomberg Today, how has
Speaker 1: to do with indexing major index providers officially cutting Russian
Speaker 1: assets from their engauges. So really ratcheting up the pressure
Speaker 1: on exchange traded fund industry already facing an extraordinary stress test.
Speaker 1: We know what happens? Then. Carolina Wilson is senior Emerging
Speaker 1: markets reporter for Bloomberg News. She joins us on the
Speaker 1: phone from New York. Carolina, how does it? How does
Speaker 1: it work when you actually drop a company or a
Speaker 1: group of companies this in this case a region from
Speaker 1: an index fund? How is that done? Yeah? Hi, and
Speaker 1: thanks for having me. You know, it depends, It depends
Speaker 1: on the phone that we're talking about. These bigger indexes
Speaker 1: by MSCI insle Do Russell, they're tracked by broader emerging
Speaker 1: market ets, those that cover the global complex a bit
Speaker 1: more generally, and those have a pretty small explosure to Russia,
Speaker 1: maybe three to four percent of the fund holding. So
Speaker 1: the bigger stress questioned question and question here is what
Speaker 1: does this mean for those single country e T s
Speaker 1: holding Russian assets a bit more exclusively? And while some
Speaker 1: of it is a way to see game, we know
Speaker 1: that many of these funds will have difficulty actually selling
Speaker 1: those underlying Russian assets to either comply with these index
Speaker 1: changes or in response to investors trying to their position.
Speaker 1: Tarlie and I remember a time when the fun industry
Speaker 1: was starting right in those big countries. Single country funds
Speaker 1: were massive, and that's how investors would often you know,
Speaker 1: look to get exposure, especially when it comes to an
Speaker 1: emerging market like Russia. Um, but I'm curious how much
Speaker 1: money are we talking? What kind of you know, fund
Speaker 1: flows have we been seeing in these specific type of funds. Sure,
Speaker 1: so when we look at sort of the globally listed
Speaker 1: e T s tracking Russian assets a bit more exclusively
Speaker 1: as a closed yesterday, that was about I believe one
Speaker 1: point seven billion US dollars. And you're right careful, you know,
Speaker 1: part of the beauty or attraction at ets is that
Speaker 1: they promise you this access to this otherwise kind of
Speaker 1: tough to invest in parts of the market. So even
Speaker 1: if the funds are having trouble washing their hands of
Speaker 1: these underlying rush for now, a lot of these trading
Speaker 1: in the secondary market. Okay, So let's go from that
Speaker 1: index conversation to more the E t F conversation and
Speaker 1: speak a little bit about what's happening in these in
Speaker 1: these funds right now on the actual fund level. So
Speaker 1: because we've seen you know, a lot of activity with RSX,
Speaker 1: for example, the van neck uh one with e t
Speaker 1: F with exposure to to Russia. Um, how does trading
Speaker 1: work there if if the funds are being removed from
Speaker 1: the index, and if you know, they're not creating new
Speaker 1: shares or like taking in new money, but it's still
Speaker 1: being traded on the secondary market, because there this is
Speaker 1: something that people can still act, says, using their trading
Speaker 1: their like retail investors can still access using their trading platforms.
Speaker 1: That's right. It sort of looks like a master ring,
Speaker 1: like at the surface level. So if the underlying local
Speaker 1: Moscow exchange is shattered, there will be a massive price
Speaker 1: dislocation between the funds trading price and it's net active
Speaker 1: value or the value of those underlying securities. But it
Speaker 1: does allow the fund to act as a sort of
Speaker 1: price discovery vehicle. And that's what a lot of people
Speaker 1: in this market will say, you know, for an otherwise
Speaker 1: untradeable market, here's kind of a look at what investors
Speaker 1: feel like it should be priced at. And it's something
Speaker 1: that we've seen in the past. You know. The story
Speaker 1: talks about how the industry has been tested in this
Speaker 1: way before, back in fifteen when the Greek stock exchange
Speaker 1: closed during the country's government debt crisis. The Greek specific
Speaker 1: ETS was available to investors during the arid spring when
Speaker 1: the Egyptian stock market closed, that Veneck epdts continued to trade,
Speaker 1: and in both events there was a big gap between
Speaker 1: the ETS price and it's n a V. And in
Speaker 1: both situations, the fund act as price discovery vehicles while
Speaker 1: those securities couldn't trade in the underlying markets. I mean,
Speaker 1: it's part of what's tricky now, is I mean, could
Speaker 1: we potentially if the situation if this war, let's let's
Speaker 1: be honest about what it is, this Russian war against Ukraine.
Speaker 1: You know, fingers crossed resolves itself sooner rather than later.
Speaker 1: Could all of this just come and done very quickly,
Speaker 1: or it doesn't. Necessarily we shouldn't assume it's going to
Speaker 1: happen that way, right. It absolutely has to do with
Speaker 1: timing here, right, So depending on how long we see
Speaker 1: this war ongoing, depending on how long these sanctions remain
Speaker 1: sort of firm. Um, if it's too long, I could
Speaker 1: foresee some of these funds happening having to close down.
Speaker 1: We've already seen one liquidate, We've seen several mentions sort
Speaker 1: of halt to their creation. Um, you know, so depending
Speaker 1: on timing here, these things could sort of pop back
Speaker 1: up and continue to create, or we may see some
Speaker 1: more closures in the market. I mean, this might not
Speaker 1: be something you can speak to, Carolina, but it's something
Speaker 1: that Caroline I've been been talking about. Is is depending
Speaker 1: on what happens. You know, these sanctions might not be
Speaker 1: lifted for a really long time, right, And even if
Speaker 1: they are, what is the appetite for actually doing business
Speaker 1: in the in this area of the world, given what's
Speaker 1: happening right now, like that might not continue? Am I not?
Speaker 1: And it's it's all about risk. It's risk appetite, right,
Speaker 1: And so also if we see some of these investors
Speaker 1: who like these single country et s and have liked
Speaker 1: this Russia exposure for a certain aspect of the risk portfolio,
Speaker 1: you know, the question is where will they turn to
Speaker 1: for that for that risk appetite? Where will they turn
Speaker 1: to for that yield? And so that's sort of why
Speaker 1: we continue to monitor flows and see, you know, follow
Speaker 1: where that money will go, right, Becaud, do you know
Speaker 1: emerging markets? We know risky and sometimes that's where bottom
Speaker 1: feeders come in. But nonetheless we'll keep an eye on it. Carolina,
Speaker 1: Thank you so much. Carolina Wilson. She's senior Emerging markets
Speaker 1: reporter at Bloomberg News. Her story among the most read
Speaker 1: on the Bloomberg terminal road. Yeah but you let me drive?
Speaker 1: Oh no, no, no, all right, please the D level.
Speaker 1: I don't want to drive. Good question. This is the
Speaker 1: drive to the clothes on Bloomberg Radio. And just about
Speaker 1: tennis left in today's trading session. In a session where
Speaker 1: we're seeing those major equity averages bouncing around, we're pretty
Speaker 1: much at our loads of the session. As we just
Speaker 1: heard from Charlie on that Nastac really taking tim the
Speaker 1: biggest hit on a percentage basis, it's down, yeah, really
Speaker 1: being dragged down by names like Amazon, Tesla, Microsoft in Video, Facebook, Apple, Google,
Speaker 1: a MD and more. That list certainly goes on. One
Speaker 1: person who we love to have on talking about a
Speaker 1: lot of those names and more is Sylvia Jablonski, chief
Speaker 1: investment officer at Defiance ETS. Sylvia joins us on the
Speaker 1: phone from New York City. Sylvia, it's great to have
Speaker 1: you with us. I want to start with some of
Speaker 1: these tech names and the way that you know that
Speaker 1: tech is really underperforming as a whole today. Um. I
Speaker 1: know because I know that you know. You and I
Speaker 1: spoke earlier this week on Quick take Stock and you
Speaker 1: you told us that you know, tech was really an
Speaker 1: area of interest for you guys and where you saw
Speaker 1: opportunity for investors to go in and and buy the
Speaker 1: dip hi. Yes, good, good afternoon, and great to be
Speaker 1: with you again today. Um, you actually listed off a
Speaker 1: lot of my shopping list. So interesting, So definitely definitely
Speaker 1: a great conversation I have. So you know, my my
Speaker 1: sense of this is really that, um, you know, although
Speaker 1: the geopolitical situation Russian Ukraine is obviously dominating the news
Speaker 1: headlights everywhere right now and is a major you know,
Speaker 1: humanitarian issue very obviously, UM, and it is impacting markets.
Speaker 1: You know, I think that even prior to that, sort
Speaker 1: of the FED and the sphere and and volatility in
Speaker 1: the market had had taken some of the froth off
Speaker 1: of what was thought to be overvalued megacap tech names
Speaker 1: UM some of the ones which which you've listed, and
Speaker 1: you know, when I look at some of those names
Speaker 1: like Apple, UM, you know, Google, Amazon, Microsoft, to name
Speaker 1: a few, if you look at some of the earnings
Speaker 1: information and kind of look back to a cloud for example,
Speaker 1: Cloud for a lot of those companies grew thirty UM.
Speaker 1: You know, Google is going to have add growth with
Speaker 1: with the sort of reopen trade on top of that,
Speaker 1: you know, cloud growth. There apples involved in automented reality,
Speaker 1: potentially the feature of Web THREEO, the metaverse, you know,
Speaker 1: plus um subscribers, streaming products and you name it. So
Speaker 1: I think these companies all have sort of diversified business lines.
Speaker 1: They have a lot of cash UM catfaxes is strong,
Speaker 1: you know, some of them, Microsoft in particular, giving back
Speaker 1: a lot of cash to investors. And I just think
Speaker 1: that they remain resilient. So when I look at them,
Speaker 1: you know, a NAZAC more than fifteen percent high, it's
Speaker 1: you know, given today's market um activity anyway, and and
Speaker 1: some of these names off of their all time high
Speaker 1: with with multiple pulling back. I really like it in here,
Speaker 1: and I think that this is going to be a
Speaker 1: a Poco trade. What did your thing too? And and
Speaker 1: talk to me a little bit about your investments that
Speaker 1: you've got your you know, you invest in hotel, airline
Speaker 1: and cruise. It's traditional and that that your e t
Speaker 1: F has down about two percent this year, but you
Speaker 1: really do tap into the changing world, the innovative world,
Speaker 1: and your digital revolution equity e t F down so
Speaker 1: far this year. You definance um next gen H two
Speaker 1: down about seventeen that's energy hydrogen next gen fuel, which
Speaker 1: we are talking about so much in the context of
Speaker 1: the Russian invasion Ukraine and the world rethinking how it
Speaker 1: gets its energy. Your next gen SPAC, you know, SPACs
Speaker 1: have been having a tough time down eighteen percent. How
Speaker 1: difficult though is this And for you guys and for
Speaker 1: you specifically this environment, you know, it's it's it's difficult
Speaker 1: right when you when you see those performance members and whatnot.
Speaker 1: And if you kind of like look at what is
Speaker 1: in our et F, most of it is disruptive technology
Speaker 1: and um, you know, so that's what's being hit the
Speaker 1: harness right now. And and you know, not not far
Speaker 1: behind than AZDAC, but you know, it's all of those trades.
Speaker 1: So the reopen trade prior to things sort of heating
Speaker 1: up and intensifying to the level that they're at, which
Speaker 1: is you know, even just a week ago, um, Marriott, Hilton,
Speaker 1: Southwest Airlines, Delta United, Um, you know, sort of sort
Speaker 1: of pick the travel reopened name, Royal Caribbean, We're um,
Speaker 1: we're we're well, you know, more than out performing sp
Speaker 1: and SMP five at that point, down eight percent, and
Speaker 1: these names were all up you know, seven eight nine,
Speaker 1: so um and and really the tensions kind of through
Speaker 1: that back and now that's down two percent. But once
Speaker 1: they sort of get past this, I expect to see,
Speaker 1: you know, part of the healthy economy and reopen trade,
Speaker 1: a lot of growth there. And in terms of the
Speaker 1: other names, you know, hydrogen I think is part of
Speaker 1: the conversation. You know, we're talking about climate change and
Speaker 1: and you know, now here we are and there's a
Speaker 1: big debate about whether, well, maybe we should be drilling
Speaker 1: for more oil because look at this sort of situation.
Speaker 1: But I don't think that we're going to go that direction.
Speaker 1: I think, uh, you know, another way to look at
Speaker 1: it is maybe we should continue to invest in things
Speaker 1: like fuel cell technology and hydrogen um, you know, solar
Speaker 1: and green metals so that we don't need to rely
Speaker 1: on um you know, some of these environmental um types
Speaker 1: of commodities that that are you know, sort of holding
Speaker 1: us housage a little bit right now. And Sylvia, we
Speaker 1: spoke to the CEO of of plug Power yesterday. Is
Speaker 1: that a company that you guys think of your it is?
Speaker 1: It is, it is. It's one of the top holdings
Speaker 1: in the hydrogen ts and I think what they're doing
Speaker 1: is great. I mean, they're they're creating this this sort
Speaker 1: of situation and are huge asset for for for the
Speaker 1: future use of of you know, hydrogen and fuel cell
Speaker 1: cell technology to power everything from crane, buses, bicycles, cars,
Speaker 1: you know, um, an airline. So it's a huge trend
Speaker 1: for the future. And you know, the same thing with
Speaker 1: with the quantum and the five G. I mean, there's
Speaker 1: just no doubt in my mind that that the world
Speaker 1: is going to change and if we're going to have
Speaker 1: electric vehicles, augmented reality about three point all these things
Speaker 1: happen without you know, semi conductors by g and and
Speaker 1: some of those disruptive technologies are just getting hammered right now.
Speaker 1: So new money somebody has to commit. I mean, how
Speaker 1: much new money is coming in right now for you?
Speaker 1: Or is it a little bit? Is it not happening?
Speaker 1: You know? And in all honesty, I think that, um,
Speaker 1: we see a lot of investors sitting on the sideline,
Speaker 1: so we're actually not really losing much, which is great.
Speaker 1: You know, a lot of the depreciation it's from pricing,
Speaker 1: right because the stocks to show down markets down from
Speaker 1: nats are down. So it's good to see that the
Speaker 1: shares outstanding remains strong. And we're seeing a lot of
Speaker 1: slow actually into hydrogen and into cruise that travel related
Speaker 1: to ETF right now and everything else. I mean, as
Speaker 1: you would suspect, I think that there's enough fear out there.
Speaker 1: But um, it's like, um, you know, March, it's sort
Speaker 1: of another last year, but for a different reason. And
Speaker 1: I think when we look back on this, we'll see
Speaker 1: you know, I can't call the bottom here, right, but
Speaker 1: I certainly think this is a good dollar cross averaging
Speaker 1: type of you know, week and month. Yeah, And I
Speaker 1: thought that's telling what you said, you can't you don't
Speaker 1: see the or you can't see the bottom yet. It's
Speaker 1: it's very tricky, and we certainly hear that from lots
Speaker 1: of other folks who are watching this market environment. Hey, Sylvia,
Speaker 1: thank you so much. Sylvia Jablonsky, she's chief investment officer
Speaker 1: at Definance CTF with us on the phone in New
Speaker 1: York City. Thanks for listening to Bloomberg Business Week. Download
Speaker 1: the podcast on iTunes, SoundCloud, or Bloomberg dot com. And
Speaker 1: you can also listen to our radio show at two
Speaker 1: pm Eastern on Bloomberg Radio, or watch us on YouTube
Speaker 1: search Bloomberg Global News