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Speaker 1: Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene

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Speaker 1: Jay Lee. We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course on the Bloomberg here

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Speaker 1: in New York. I'm really pleased to say that joining

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Speaker 1: us now is Jeff Dennis Ubs, head of Global Emerging

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Speaker 1: Markets equity strategist, and he joins us on the phone. Jeff,

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Speaker 1: great to catch up with you, sir. Some confidence and

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Speaker 1: some optimism that you have in em Tell me how

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Speaker 1: you convince the investor right now who has shifting investments

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Speaker 1: towards the United States to shift back international. I think

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Speaker 1: there's a couple there's a couple of things that really

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Speaker 1: highlight this. First of all, um our view is that

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Speaker 1: apart from one or two countries, actually three countries were Turkey,

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Speaker 1: South Africa and Brazil, you have not really seen a

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Speaker 1: deterioration in a key deterioration e M. Fundamentals during the

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Speaker 1: course of this year. Those three countries you have seen

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Speaker 1: that deterioration, and that means once you get to see

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Speaker 1: global financial markets settled down, and for us that means

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Speaker 1: the dollar stops going up and starts to go down again.

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Speaker 1: I think money will come back into the emerging markets.

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Speaker 1: So it's a mixture of reasonably sound fundamentals and in

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Speaker 1: most of the emerging market countries combined with our view

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Speaker 1: the dollars going lower of the course of the rest

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Speaker 1: of this year and into two thousand and nineteen, and

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Speaker 1: what that will do is pull money back towards the

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Speaker 1: emerging markets. Jeff, is dollar witness a prerequisite for EM

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Speaker 1: equity to start performing again? That is that is my view.

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Speaker 1: For sure, we do. I mean, at the very least

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Speaker 1: you need dollar stability. But you you pose the question

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Speaker 1: right at the beginning by saying what gets people to

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Speaker 1: move out of the US and look for emerging markets?

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Speaker 1: I think the weaker dollar is part of that. And

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Speaker 1: if I was sitting here in the house view was

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Speaker 1: the dollar was going a lot stronger, it would be

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Speaker 1: just very hard to be optimistic about a EM. So

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Speaker 1: in my view, yes, it is absolutely critical to our

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Speaker 1: to the view that you'll get some gains in them

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Speaker 1: over the rest of you. I think it's going to

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Speaker 1: be a blowout or anything like that, but we expect

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Speaker 1: marks to be hired by the end of the buy

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Speaker 1: around seven from current levels dollars. Key to that from

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Speaker 1: a thirty five thousand feet view, the regional shift has

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Speaker 1: been quite remarkable over the last six months away from

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Speaker 1: international into the United States. If you are thinking about

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Speaker 1: shaping things to pivot back, Jeff, there's some countries out

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Speaker 1: there that have aggressively high interest rates, including countries like

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Speaker 1: Turkey and Argentina. Let's break em down a little bit more.

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Speaker 1: Where are you looking well? As I say, I think

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Speaker 1: that for example, if you if we look at Turkey,

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Speaker 1: Turkey has done some dramatic things on interest rates recently,

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Speaker 1: although it was obviously very much delayed, and they've still

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Speaker 1: got very large fundamental issues, which is a huge current

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Speaker 1: account deficit, which makes them vulnerable to any any hiccup

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Speaker 1: in terms of global financial conditions, we think you should

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Speaker 1: be more looking at the countries that have responded well

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Speaker 1: in terms of monetary policy to the pressures of recent months,

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Speaker 1: where we think in a week of dollar environment you

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Speaker 1: will get some some flows coming back in. A very

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Speaker 1: good example of that is Indonesia, which has been hit

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Speaker 1: very badly this year. We think the fundamentals are frankly

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Speaker 1: perfectly okay, Okay, They've got a modest current account deficit,

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Speaker 1: but in a week of dollar environment, I think that

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Speaker 1: goes away as a concern. So Indonesia is a place

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Speaker 1: we look. We look at career, which is a very

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Speaker 1: cheap market. Once again, of course there I guess the

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Speaker 1: risk and careers people being concerned about what the trade war,

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Speaker 1: which I guess is what we have to call up

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Speaker 1: between the U S and China, what that could do

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Speaker 1: for Chinese growth, and therefore a follow one for Korean exports.

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Speaker 1: But the market is very cheap, and I'll give you one.

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Speaker 1: In Latin America, we like Mexico a lot. We think

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Speaker 1: the currency is very oversold. Still we think that then

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Speaker 1: after whatever we're gonna call it in future is going

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Speaker 1: to get redone and the economy continues to tick along,

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Speaker 1: you know, not very strong, but some perfectly okay. So

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Speaker 1: those are some examples of markets we take a look at.

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Speaker 1: Markets are their banking and their finance. Is that the

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Speaker 1: opportunity to buy the established banks. We do have to

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Speaker 1: be overweight financials, and we do think that is a

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Speaker 1: good way to to go back into these markets for

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Speaker 1: the for the medium to long term um. Your listeners

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Speaker 1: may not be aware, but basically fifty of the ms

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Speaker 1: c I Emerging Market Index now is technology and banks.

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Speaker 1: The text a bit banks are a bit less than

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Speaker 1: so you've got to go one one to the other.

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Speaker 1: We're not pushing technology dramatically, although you know we we

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Speaker 1: wouldn't be underweight text shares at this point in the end,

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Speaker 1: but we think the better way to play it is

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Speaker 1: through financials, and there's reasons for that. You're getting credit

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Speaker 1: cycles in certain economies, but you are seeing a bit

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Speaker 1: of margin improvement as interest rates have gone up around

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Speaker 1: the world. And frankly, our analysts four e M banks

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Speaker 1: also things. A lot of banks in EM and everything

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Speaker 1: different plays as well. But Jeff, you've been doing this

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Speaker 1: since time began. And where John it used to be

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Speaker 1: like an act of God. You put ten percent of

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Speaker 1: your money and e M and never more because it

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Speaker 1: was too risky. How much do you put in EM

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Speaker 1: within a blended portfolio? Is U b s saying that

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Speaker 1: the developed country and particularly the United States market is

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Speaker 1: so rich that you load the boat on e M.

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Speaker 1: How do you grade that? Definitely, No, you don't load

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Speaker 1: the boat on the M because unfortunately, so much of

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Speaker 1: how EM behaves will be determined not by what e

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Speaker 1: M itself is doing, but by what global financial markets

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Speaker 1: overall are doing. And that of course means fair bond deals,

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Speaker 1: UM and the dollar itself. So if we could time

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Speaker 1: this right, we'd all be very much richer than we are.

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Speaker 1: The problem is timing it is difficult, and so e

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Speaker 1: M is about now of the of the global benchmark,

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Speaker 1: and and I don't think it makes a lot of

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Speaker 1: sense for investors to be putting much more than that

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Speaker 1: amount of money into EM unless they're smarter than me

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Speaker 1: in terms of trying to time it. I think we

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Speaker 1: we still like the U S market. Are u S

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Speaker 1: strategies put out of note yesterday. We think that the

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Speaker 1: high trade war could give you a short term pullback,

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Speaker 1: but we're still looking at SMP at the end of

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Speaker 1: the year. So actually, I think the US will be

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Speaker 1: you know, a competitive place to put money of four

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Speaker 1: emerging markets over the rest of the year. So I'm

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Speaker 1: not sure you're going to see huge out performance, but

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Speaker 1: I certainly think the time when you want to be

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Speaker 1: major underway. Tom which of course would have been the

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Speaker 1: call for the first nine months of this year. I

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Speaker 1: think that that time is probably beginning to come to

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Speaker 1: an end now, Jeff, I just want to get to

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Speaker 1: find a word and what's coming out of China at

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Speaker 1: the moment. They've promised this morning not to weaponize the currency,

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Speaker 1: but the data in the last tie y four hours

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Speaker 1: showing their trimming their treasury holdings, now there's going to

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Speaker 1: be some big conspiracy theories out there, so please dismiss

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Speaker 1: them if you can give us the reality check what's

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Speaker 1: happening with China. We certainly think they're not going to

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Speaker 1: use the devaluation of the currency too as a response.

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Speaker 1: On the trade side, we also don't think they're going

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Speaker 1: to shared if you like their um their treasury holdings.

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Speaker 1: But I think it's a question of stocks versus flows.

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Speaker 1: We think what is quite lightly as China will not

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Speaker 1: buy as much you stebt at the margin going forward,

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Speaker 1: so I buy as much as they've done in the past, um,

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Speaker 1: but when we don't believe they're going to sell less

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Speaker 1: stock of debt they've already got, so I think Chinese

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Speaker 1: demanded the margin may come down, but you know, for

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Speaker 1: them to actually start selling aggressively what they own will

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Speaker 1: just make things worse for themselves because they'll they'll have

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Speaker 1: to sell into a falling market. So weaponizing either bonds

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Speaker 1: or the dollar is still or the currency, I should say,

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Speaker 1: is still very unlikely. We think what China is still

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Speaker 1: trying to do is to be constructive as much as possible,

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Speaker 1: um considered responses to what's going on in the US

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Speaker 1: and see how this plays out. Because at the end

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Speaker 1: of the day, a major, major breakdown of economic relationships

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Speaker 1: between China and the US is dangerous for China because

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Speaker 1: it puts the economy under more pressures. So I think cautious,

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Speaker 1: considered responses by the Chinese will continue to be the

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Speaker 1: most likely thing to expect. Here's Jeff Dners, thank you

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Speaker 1: so much with us Life from the Bloomberg Interactive Broker Studios.

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Speaker 1: I'm really pleased to say the former GE vice chair

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Speaker 1: has dropped by Beth Comstock, author now of Imagine It Forward, Courage, Creativity,

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Speaker 1: and the Power of Change. Beth, good morning to you,

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Speaker 1: Good morning, Thanks for having me. Can we just start

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Speaker 1: by talking about the time when you you turned down

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Speaker 1: Steve Jobs. It gets on the phone and gives you

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Speaker 1: a call out of nowhere and you say no. Eventually,

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Speaker 1: how does that work. Yeah, well, I was at NBC

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Speaker 1: at the time, leading did the digital in the Digital Future,

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Speaker 1: and it was a tough assignment. And I got to

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Speaker 1: work with Apple and they'd reached out to me about

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Speaker 1: a job. At first it was in the iTunes area

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Speaker 1: and I get a call one day and it's like

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Speaker 1: Steve Jobs sort of lobbying. Hey, I'd like just want

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Speaker 1: to say, we'd love to have you here, and he

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Speaker 1: said something uh with the iPhone hadn't been introduced, and

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Speaker 1: he said things are going to get really big here

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Speaker 1: and uh. And it just didn't seem like the right

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Speaker 1: job for me at the time, so I said no. Um.

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Speaker 1: And then he came back a couple of months later,

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Speaker 1: he was looking for something a new sort of innovation role,

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Speaker 1: certainly around clean tech, and I said no again. And

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Speaker 1: I did regret it for for a while for a

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Speaker 1: couple of reasons. I mean one, I remember sitting at

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Speaker 1: the kitchen table with my husband. We were going through

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Speaker 1: the financials, going how big could this stock ever be? Really?

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Speaker 1: I mean really, um, So clearly I didn't imagine that

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Speaker 1: forward um and UM. And I think I partly it

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Speaker 1: was I didn't want I didn't I saw them as

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Speaker 1: a technology company. I was in media, wanted to do content,

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Speaker 1: so I had a clear strategic reason for not wanting

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Speaker 1: to do it. But sure I regretted it. Apple went

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Speaker 1: on to become this amazing jug or not. I think

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Speaker 1: I could have learned to be better. I think jobs

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Speaker 1: and that team would have pushed me to be better.

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Speaker 1: I regretted that, and maybe there was a bit of

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Speaker 1: fear and not taking it, and I sort of regretted that.

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Speaker 1: But in the end, I was very loyal to my company.

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Speaker 1: I had good reasons for not wanting to move my

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Speaker 1: family and taking that on a lot of people. David

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Speaker 1: Brooks has been great about this. The smooth people and

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Speaker 1: and and Masters of Business Administration NBA. People always have

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Speaker 1: a zeitgeist of the moment, the present MBA zeitgeist. What

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Speaker 1: do they get wrong about the realities of managing? Yeah?

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Speaker 1: I love that question, I I yeah, No, it's around.

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Speaker 1: You're good. I m I Phara. I recruited at Gee.

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Speaker 1: I would recruit up too hundred and fifty nbas every

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Speaker 1: year for about a decade. So I got to work.

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Speaker 1: I didn't go to business school. You've heard every line

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Speaker 1: I've and why we recruited them and why I was

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Speaker 1: attracted to NBA's as they come with an amazing toolkit.

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Speaker 1: What NBA's are not trained to do is to be

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Speaker 1: entrepreneurial or encouraged to be entrepreneurial and put in those

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Speaker 1: situations of figuring it out. And the argument I'm making

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Speaker 1: in my book is that we're just in such a

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Speaker 1: time of such disruptive change that there is no tool

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Speaker 1: kit for that. And what's great John about her book

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Speaker 1: as they fight like cats and dogs. I mean she's

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Speaker 1: you know, like page two, there's four people in the

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Speaker 1: room screaming at everybody. Here's a big question that would

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Speaker 1: never happen on surveillance. Now that that happens in a

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Speaker 1: commercial breaks like pretty, I'm pretty sure our audience can

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Speaker 1: work that out for themselves best. This year, two big

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Speaker 1: corporate stories, perhaps defined by mismanagement, Facebook, Mark Zuckerberg, Tesla

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Speaker 1: Elon Musk with a big question that I know that

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Speaker 1: you can answer. Can you be an entrepreneur in a

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Speaker 1: company as big as Facebook, as big as Tesla? I were?

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Speaker 1: I wonder, I I wonder. I think this is a

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Speaker 1: challenge for every company and investors to think about. We

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Speaker 1: have these few amazing leaders who seemingly do it. But

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Speaker 1: there is also a time when you need, maybe need

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Speaker 1: have a different kind of role. I'm not suggesting Mark

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Speaker 1: zucker Book should should step aside, but does he have

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Speaker 1: enough people around him that can help him think through Really?

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Speaker 1: In this case, to me, Facebook was and imagine it

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Speaker 1: forward challenge, right? Were they thinking ahead of those unintended

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Speaker 1: consequences that could have happened? I would say maybe there

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Speaker 1: would be a need for more strategic thinking there. Elon

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Speaker 1: Musk seems to me to be a good case of

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Speaker 1: needing a great to old culture and a great team.

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Speaker 1: And you can't expect the leader to do everything, and

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Speaker 1: maybe he's signed up to do more than he should.

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Speaker 1: How difficult is it, though, to change a culture when

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Speaker 1: the culture is defined by the entrepreneur who found at

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Speaker 1: the company. Yeah, well, I think that is the big challenge.

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Speaker 1: We expect them to be superhuman, these these business gods,

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Speaker 1: and they are not. Well, then the business gods is

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Speaker 1: They've got to delegate at some point, and so much

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Speaker 1: of it is succession, so much of it is just

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Speaker 1: the day to day grind of delegating. How do you

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Speaker 1: delegate constructively and do it with courage, creativity and truly

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Speaker 1: have power to change. I mean that's the issue, isn't it. Yeah,

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Speaker 1: we'll look at look at Musk and Tesla. I mean,

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Speaker 1: I only know what I read, but a lot of

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Speaker 1: people have left in the past six months. Obviously it's

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Speaker 1: a stressful situation. But if you put the investment into

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Speaker 1: the team and delegating and things, I don't know. He

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Speaker 1: needs to say, I don't have all the answers. I

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Speaker 1: need you to figure it out. Here's where we're going.

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Speaker 1: You help us. I gotta squeeze in this question because

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Speaker 1: John's only working like a thirty eight hour week with

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Speaker 1: his four properties. Are we working too long of weeks?

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Speaker 1: Our parent didn't do this, did they? Well, I would say,

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Speaker 1: I don't know. I think we're working maybe on the

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Speaker 1: wrong things too long. I'm big on getting out and discovering,

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Speaker 1: get out and seeing where trends are. And I think

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Speaker 1: we're in the Yeah. That are you in the same

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Speaker 1: leadings too often having the same discussions? You probably shouldn't

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Speaker 1: do that. No, but just the whole you got twenty

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Speaker 1: percent of the population working, and do they are they working? Smart?

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Speaker 1: I think that's the question. Maybe if it's seventy hours

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Speaker 1: and ten percent of it's out and discovering trends in

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Speaker 1: the future, I'd say that's worth it. Beth Conto, thank

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Speaker 1: you so much. The book has imagined it forward, courage,

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Speaker 1: creativity and the power of change. And what's glorious about it,

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Speaker 1: I'll be direct, is all of you that are fed

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Speaker 1: up with thought leaders. This is the anti thought leader

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Speaker 1: book that sounds like it is. I'm so sick I

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Speaker 1: thought leadership. What does that even mean? It doesn't mean anything.

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Speaker 1: And you know there's a lot of yelling and screaming

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Speaker 1: and people or you know, they try to come to

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Speaker 1: decisions that are constructive, like her brilliant decision not to

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Speaker 1: load the boat on it will stock it fourth not alone.

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Speaker 1: Thank you. So it's always good to speak to a

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Speaker 1: gentleman of the legislative branch, but even better to speak

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Speaker 1: to someone who actually understands executive capabilities more important than anything.

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Speaker 1: He's a former mayor of Dayton, Ohio, holding court in

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Speaker 1: the tenth district of Ohio South. I'm gonna call it

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Speaker 1: Southwest of Columbus. Uh. Michael Turner joins us this morning Congressman,

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Speaker 1: thrilled to have you with us. What did you learn,

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Speaker 1: Congressman about the special election to your northeast, the twelfth

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Speaker 1: Congressional district. How do you guys get Republican turnout for

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Speaker 1: the mid term election? Well, thank you, appreciate you have

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Speaker 1: me this morning, and UM for you know, focusing on Ohio.

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Speaker 1: I think the issue probably for most people is is

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Speaker 1: getting out to vote coming up this this November. I

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Speaker 1: think that if you look across the country, people see

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Speaker 1: that the economy is proving. They see that UM, the

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Speaker 1: outlook is bright. You know, Ohio frequently UM leads in

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Speaker 1: recession and lags in recovery. Right now, OHI always strong.

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Speaker 1: Do we know that the economy is strong? Um? You know,

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Speaker 1: special elections always have different turnouts in general elections because

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Speaker 1: they're scheduled at irregular times, which is what the Kurd

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Speaker 1: in Columbus um for the best congressional race. I think

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Speaker 1: pretty much everyone knows that the election is coming up

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Speaker 1: in November is the one that's important that they need

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Speaker 1: to turn out for. And I think that's the one

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Speaker 1: that UM where people are going to voice their opinion

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Speaker 1: that the economy is strong. UM, we need to continue

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Speaker 1: the direction we're going to build jobs. It's just one

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Speaker 1: more question in the politics before we get to a

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Speaker 1: year important abilities and armed services and intelligence and that

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Speaker 1: is and I don't mean you and the tenth district,

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Speaker 1: but as a general statement, do you want the president

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Speaker 1: to show up? I mean is he helping mainstream Republicans

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Speaker 1: like you right now? Well? You know, um, I think

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Speaker 1: the president in in focusing on the economy is probably

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Speaker 1: the best place that we need him to be UM.

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Speaker 1: And that's where um he's he's making headway. We can

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Speaker 1: see it with the renegotiated NaSTA with Mexico. We can

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Speaker 1: see it with the job reports. I think he's focused there.

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Speaker 1: I think it's probably the one that resonates with the people, um,

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Speaker 1: you know, at their kitchen tables and what's happening in

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Speaker 1: their household. And that's where his voice is probably most important.

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Speaker 1: Let's talk about your abilities coming as out of mayor

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Speaker 1: of dating of course with Roy Patterson there, you've always

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Speaker 1: looked at armed services and protecting protection of our air

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Speaker 1: force assets. Right now, there is a dialogue with Russia.

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Speaker 1: Do we risk with all the back and forth of

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Speaker 1: the Russia probe and all that, do we risk giving

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Speaker 1: up intelligence secrets, you know, I this is this is

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Speaker 1: important debate I think with respect to overall our democracy

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Speaker 1: and is there you know, three real important issues for

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Speaker 1: us to address here. One obviously is Russian meddling. Um.

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Speaker 1: We need to make certainly identify the ways in which

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Speaker 1: they're attempting to do that. They've done it in Europe,

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Speaker 1: They've done it, you know in the Baltics. Um specifically,

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Speaker 1: they're they're trying to interstere there in the politics. We

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Speaker 1: saw even a mccrone's election at France. Getting an understanding

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Speaker 1: of what they have undertaken to try to affect public

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Speaker 1: opinion and democracies and dabble in our democracies and elections

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Speaker 1: is incredibly important. The second, of course, is the the

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Speaker 1: issue with respect to the presidents himself and his campaign

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Speaker 1: and I think Hillary Clinton's campaign and the and the

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Speaker 1: and the give a Credit National Committee. That's an important

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Speaker 1: dialogue to have, um. And you know what occurred there,

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Speaker 1: I mean the fact that Hillary Clinton's campaign, the Democratic

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Speaker 1: National Committee, funded a former British spy to go to

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Speaker 1: the Russians define dirt on their opponents is certainly I

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Speaker 1: think equally as important of an issue's review. And then

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Speaker 1: then thirdly this this issue of what was happening in

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Speaker 1: the Department of Justice in our intelligence community. It clearly

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Speaker 1: appears that there were abuses. There are certainly in the

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Speaker 1: baser courts where um, politically funded opposition materials were used

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Speaker 1: and as evidence in a court for the purposes of

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Speaker 1: getting surveillance on a presidential campaign. Um, you know, all

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Speaker 1: of those things I think are incredibly important for us

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Speaker 1: to get within the day to day grind of you

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Speaker 1: doing this in the legislative offices? Are we naive about

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Speaker 1: the Russians? To me that whatever the Republican or Democrats,

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Speaker 1: Secretary Clinton, President Trump, whatever the dirt is of the moment,

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Speaker 1: are we just naive about the Russia impulse into our

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Speaker 1: domestic affairs? Well? I think, Um, I think perhaps the

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Speaker 1: whole West is, including United States and our European allies,

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Speaker 1: because we we you know, we saw even after the

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Speaker 1: Berlin Waltz fell, a sense of you know, there are

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Speaker 1: partner NATO declaring that we don't even have Russia as

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Speaker 1: an adversary. Um, you know, adversary self select and Russia

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Speaker 1: certainly has self selected that they see both in meddling

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Speaker 1: in our democracies and their aggressive invasion of Georgia Ukraine,

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Speaker 1: their military build up, their monorization of the nuclear weapons,

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Speaker 1: their self declaration of what their trigger is using nuclear weapons.

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Speaker 1: They are our adversary, Carson, in the time that we've

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Speaker 1: got left, I really want to turn back to something

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Speaker 1: I think Americans are remarkably naive about, and that we

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Speaker 1: look at the Wright Brothers is being down in the

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Speaker 1: Carolinas in the iconic photo of the plane and the beach,

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Speaker 1: and yet your district is the heart of our original

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Speaker 1: aviation at district, you're no doubt a supporter of Right Patterson,

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Speaker 1: which was the Wilbur right Field of the nineteen twenties,

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Speaker 1: and all that tell us about the need that we

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Speaker 1: have to husband our air force assets in a time

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Speaker 1: of peace. It always slips away, doesn't it. And what

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Speaker 1: is right Paterson Air Force based doing to keep that

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Speaker 1: energy going? And particularly I look at the air base wing.

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Speaker 1: What's the forward motion in a time of peace? And

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Speaker 1: that's a that's a great point. And I appreciate that

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Speaker 1: the you know, with the Right Brothers and our innovation,

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Speaker 1: you know where they uh built and did all their

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Speaker 1: their research in data Ohio and as you mentioned in

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Speaker 1: What's North Carolina achieved the first flight came back to

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Speaker 1: the right path from that point through stealth. Our engineers

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Speaker 1: and scientists have tried to advance us with ingenuity. What

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Speaker 1: happens frequently is we cut our budgets and we stopped

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Speaker 1: that that learning, that that advancement of ingenuity until we

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Speaker 1: have an adversary who goes past us. And we're staying

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Speaker 1: that with China with what they've done and dealing our

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Speaker 1: technology for the U thirty five, but we're now looking

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Speaker 1: to modernize the five instead of us challenging our engineer

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Speaker 1: and scientists and saying, let's know, let's reach as far

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Speaker 1: as we can, but we always say, well, let's just

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Speaker 1: reach just a you know, smidgen past where our advastaries

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Speaker 1: are doing. And that created So I'm at a rotary

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Speaker 1: outside Washington Crossing and I'm listening to you go on

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Speaker 1: about this. I'm like, yeah, yeah, yeah, yeah, what about

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Speaker 1: the wrench the costs of thousand dollars? Are we anywhere

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Speaker 1: near better efficiency of budgets for the Pentagon? Absolutely? Um.

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Speaker 1: We We've we've instituted um auditing. We've also in studed

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Speaker 1: perform in acquisition and I think we're doing probably the

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Speaker 1: probably the most important thing, and that is we're reaching

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Speaker 1: past are large uh industrial defense industrial base too small

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Speaker 1: companies that have innovation and being able to pull that forward.

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Speaker 1: The ability for them to be able to work with

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Speaker 1: the federal government, with the Department of Defense and bring

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Speaker 1: that ingenuity to the table is probably where we've not

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Speaker 1: only see savings, but advancement and technology. Oh, Congress, and

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Speaker 1: let's save their Michael Turner loved to talk to you

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Speaker 1: always out of Dayton, Ohio, the former mayor of Dayton,

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Speaker 1: of course, representing the tenth Congressional district. I said this yesterday, folks,

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Speaker 1: and I really mean it, and that all the years

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Speaker 1: of Bloomberg, this is maybe the best one hour interview

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Speaker 1: I've seen. It is with a gentleman who is misunderstood

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Speaker 1: in a great mystery to so many within investment finance

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Speaker 1: economics of America and within our corporate experiment. And that

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Speaker 1: would be Jeffrey Bezos of Amazon. That must mean and

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Speaker 1: always mean David Rubinstein, The David Rubinstein Show. Peer to

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Speaker 1: peer conversations of course, uh an our conversation between Mr

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Speaker 1: Rubinstein and Jeff Bezos and David Rubinstein joins us. Now, David,

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Speaker 1: a kid out of New Mexico, goes to Princeton, just

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Speaker 1: absolutely excels and achieves, and it's remarkable. In your conversation,

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00:23:00,040 --> 00:23:04,840
Speaker 1: Nation is the set of many failures he had on

432
00:23:04,920 --> 00:23:09,240
Speaker 1: the path to success. Congratulations on what I would suggest

433
00:23:09,359 --> 00:23:13,399
Speaker 1: is the interview of the year. Well, thank you, m Jeff.

434
00:23:13,720 --> 00:23:16,320
Speaker 1: There's somebody I've known for quite a while, and in fact,

435
00:23:16,560 --> 00:23:19,400
Speaker 1: when he was getting company started, UH, one of my companies,

436
00:23:19,760 --> 00:23:22,879
Speaker 1: Carlisle was was involved a little bit. We got some stock,

437
00:23:22,960 --> 00:23:24,960
Speaker 1: but we didn't think it would be that successful, so

438
00:23:25,000 --> 00:23:27,840
Speaker 1: we sold it too soon. It's probably worth five billion

439
00:23:27,880 --> 00:23:30,600
Speaker 1: dollars a day or so. Today. I pointed it out

440
00:23:30,640 --> 00:23:34,280
Speaker 1: to him. Jeff is an extremely smart person who doesn't

441
00:23:34,359 --> 00:23:36,560
Speaker 1: really want to be called the richest man in the world,

442
00:23:36,600 --> 00:23:39,560
Speaker 1: which is what he now is. But because Amazon has

443
00:23:39,560 --> 00:23:42,600
Speaker 1: done so well this year, the stock is up. He

444
00:23:42,720 --> 00:23:44,680
Speaker 1: is now by far the richest man the world, with

445
00:23:44,720 --> 00:23:47,160
Speaker 1: a net worth of a hundred and sixty billion dollars

446
00:23:47,359 --> 00:23:49,399
Speaker 1: or so. On the day that I interviewed him, in

447
00:23:49,400 --> 00:23:52,760
Speaker 1: front of about two thousand people from the Washington business community, UM,

448
00:23:52,760 --> 00:23:56,159
Speaker 1: he announced a two billion dollar gift UH part of

449
00:23:56,160 --> 00:23:59,240
Speaker 1: a philanthropy effort that he's beginning, but his main focus

450
00:23:59,240 --> 00:24:02,840
Speaker 1: in philanthropy has really been his Blue Origin, which he

451
00:24:02,880 --> 00:24:05,600
Speaker 1: regards as a philanthropic effort to kind of improve our

452
00:24:05,640 --> 00:24:08,760
Speaker 1: ability to travel on outer space. The company has been

453
00:24:08,800 --> 00:24:12,680
Speaker 1: done spectacularly well over the years, but he has been private.

454
00:24:12,760 --> 00:24:16,600
Speaker 1: Among the movers and shakers, David I would suggest he's

455
00:24:16,680 --> 00:24:19,840
Speaker 1: the one that we, as in a collective America, know

456
00:24:20,040 --> 00:24:24,720
Speaker 1: the least about. What is the management method of Jeff Bezos?

457
00:24:24,800 --> 00:24:28,840
Speaker 1: What's the day to day method that he uses well?

458
00:24:28,960 --> 00:24:32,000
Speaker 1: He would say that his style is somewhat different than others.

459
00:24:32,080 --> 00:24:34,960
Speaker 1: He doesn't like to have meetings before ten am. Um.

460
00:24:35,000 --> 00:24:36,800
Speaker 1: He likes to get eight hours of sleep, and most

461
00:24:36,920 --> 00:24:39,480
Speaker 1: macho CEOs don't want to admit they need eight hours

462
00:24:39,480 --> 00:24:42,160
Speaker 1: of sleep or want to get eight hours of sleep. Um.

463
00:24:42,240 --> 00:24:45,080
Speaker 1: He doesn't like power point presentations in his band them.

464
00:24:45,119 --> 00:24:48,359
Speaker 1: He likes memos instead of power point presentations. He likes

465
00:24:48,400 --> 00:24:50,159
Speaker 1: to spend a lot of time with his family and

466
00:24:50,160 --> 00:24:52,880
Speaker 1: his kids. But also he is a person who says

467
00:24:52,960 --> 00:24:55,840
Speaker 1: he makes most of his good decisions by intuition, not

468
00:24:56,000 --> 00:25:00,760
Speaker 1: by detailed analysis and strategic kind of memos. He intuition

469
00:25:00,800 --> 00:25:02,720
Speaker 1: that's what he said. It really has helped him. He

470
00:25:02,800 --> 00:25:05,920
Speaker 1: said his best decisions are made by intuition. I asked

471
00:25:06,000 --> 00:25:08,240
Speaker 1: him what his intuition wasn't where he was going to

472
00:25:08,280 --> 00:25:11,439
Speaker 1: place the second headquarters, and he was laughed. He has

473
00:25:11,440 --> 00:25:14,320
Speaker 1: a very famous laugh. But he demured and said that

474
00:25:14,320 --> 00:25:16,560
Speaker 1: he wouldn't make that announcement until the end of the year,

475
00:25:16,880 --> 00:25:18,600
Speaker 1: and no one really knows what he's going to do

476
00:25:18,800 --> 00:25:20,800
Speaker 1: is outside the company. You know, one thing that I'm

477
00:25:20,840 --> 00:25:24,359
Speaker 1: struck by with the two billion dollar philanthropy announcement that

478
00:25:24,400 --> 00:25:26,760
Speaker 1: he made was how long it took for him to

479
00:25:26,840 --> 00:25:30,040
Speaker 1: make this move and just the scope of what he

480
00:25:30,080 --> 00:25:33,480
Speaker 1: could potentially do with his riches. Did you get a

481
00:25:33,560 --> 00:25:35,920
Speaker 1: sense of why he waited so long and whether he's

482
00:25:35,920 --> 00:25:39,040
Speaker 1: about to unleash the floodgates of his cash or whether

483
00:25:39,119 --> 00:25:44,240
Speaker 1: this is just basically the final act here. Well, remember,

484
00:25:44,320 --> 00:25:45,960
Speaker 1: a lot of the wealth has coming this in the

485
00:25:46,040 --> 00:25:48,359
Speaker 1: last year or so. The stock is up so much

486
00:25:48,400 --> 00:25:51,399
Speaker 1: this year that it's not nearly it's nearly doubled his

487
00:25:51,520 --> 00:25:53,000
Speaker 1: net worth in the last that's a year and a

488
00:25:53,040 --> 00:25:55,880
Speaker 1: half or so. So he's always wealthy in the last

489
00:25:56,200 --> 00:25:59,879
Speaker 1: fifteen years. But now that the money is staggering. A second,

490
00:26:00,200 --> 00:26:03,760
Speaker 1: he has been unlike many people who built these great companies. Um,

491
00:26:03,760 --> 00:26:07,239
Speaker 1: he's still the CEO. Many people who are very, very

492
00:26:07,280 --> 00:26:09,719
Speaker 1: wealthy at this level stepped down by the time they

493
00:26:09,720 --> 00:26:12,000
Speaker 1: reach his age. But he's still focused on running the company.

494
00:26:12,000 --> 00:26:14,000
Speaker 1: So that's taken a lot of his time and energy.

495
00:26:14,280 --> 00:26:18,080
Speaker 1: And Third, he regards his Blue Origin effort as philanthropy. Um.

496
00:26:18,119 --> 00:26:20,159
Speaker 1: He puts in over a billion dollars a year in it,

497
00:26:20,400 --> 00:26:22,840
Speaker 1: and he would regard that as philanthropy. But I sense

498
00:26:22,960 --> 00:26:24,920
Speaker 1: that he's going to spend more and more time on

499
00:26:25,040 --> 00:26:28,399
Speaker 1: philanthropic efforts. He made a two billion dollar announcement and

500
00:26:28,400 --> 00:26:30,520
Speaker 1: it got a fair amount of attention. But you know,

501
00:26:30,560 --> 00:26:32,960
Speaker 1: in the old days, two billion dollars philanthropic gift would

502
00:26:32,960 --> 00:26:35,760
Speaker 1: be staggering. Today it's not seen as his staggering when

503
00:26:35,760 --> 00:26:37,800
Speaker 1: you consider the kind of wealth that has been given

504
00:26:37,800 --> 00:26:40,000
Speaker 1: away by Bill Gates or Warren Buffett. But I do

505
00:26:40,080 --> 00:26:43,240
Speaker 1: think that he will be increasing his efforts there. I'm

506
00:26:43,600 --> 00:26:46,359
Speaker 1: afraid to ask when an all hands on meeting is

507
00:26:46,440 --> 00:26:49,000
Speaker 1: like at Carlyle, have you ever done that? David? Have

508
00:26:49,119 --> 00:26:51,720
Speaker 1: you ever gotten so upset that you walked out on

509
00:26:51,720 --> 00:26:53,720
Speaker 1: the floor and said Hey, all you smart guys, get

510
00:26:53,760 --> 00:26:56,160
Speaker 1: over here. We are now having have you ever done

511
00:26:56,400 --> 00:26:59,520
Speaker 1: in all hands meeting? Uh? Well, we have people all

512
00:26:59,520 --> 00:27:01,359
Speaker 1: over the world, hard to do all together. But we

513
00:27:01,440 --> 00:27:04,439
Speaker 1: just had our annual investor conference and we had got

514
00:27:04,440 --> 00:27:06,800
Speaker 1: a couple of hundred people from our firm here. But look,

515
00:27:06,880 --> 00:27:09,919
Speaker 1: Jeff Bezos is obviously in a different level than I

516
00:27:10,000 --> 00:27:12,560
Speaker 1: am in terms of his intellect, his ability to build

517
00:27:12,560 --> 00:27:14,840
Speaker 1: a company and to build something that's gonna last forever.

518
00:27:15,640 --> 00:27:17,719
Speaker 1: I think my company is very, very good. Jeff has

519
00:27:17,760 --> 00:27:21,120
Speaker 1: built something that is obviously the most global phenomenon we've

520
00:27:21,160 --> 00:27:24,280
Speaker 1: ever seen, and he's really reshaped so many different businesses.

521
00:27:24,600 --> 00:27:27,720
Speaker 1: I think the interview is really well, we're all worth watching.

522
00:27:27,760 --> 00:27:30,520
Speaker 1: And normally our show is about a half hour, but

523
00:27:30,640 --> 00:27:33,280
Speaker 1: because it was so many good things in it, it's

524
00:27:33,280 --> 00:27:35,560
Speaker 1: going to be a full hour show on Bloomberg. Well

525
00:27:36,119 --> 00:27:38,680
Speaker 1: was saying, let's listen to Jeffrey Bezos on the all

526
00:27:38,760 --> 00:27:43,640
Speaker 1: hands meeting. Your stunk is actually up seventy this year. Um,

527
00:27:43,680 --> 00:27:45,800
Speaker 1: is there one thing that you think is responsible for

528
00:27:45,800 --> 00:27:50,080
Speaker 1: that is several things? Because is pretty good? Now I

529
00:27:50,280 --> 00:27:55,119
Speaker 1: am it's a you know, Uh, I have been lecturing

530
00:27:55,480 --> 00:27:59,040
Speaker 1: we have all hands meetings at Amazon, and for twenty years,

531
00:27:59,040 --> 00:28:04,000
Speaker 1: ever since we've been twenty one years now, um, every

532
00:28:04,080 --> 00:28:07,120
Speaker 1: at almost every all hands meeting, I said, look, when

533
00:28:07,119 --> 00:28:12,320
Speaker 1: the stock is up in a month, don't feel smarter,

534
00:28:13,560 --> 00:28:17,320
Speaker 1: because when the stock is down in a month, it's

535
00:28:17,359 --> 00:28:21,240
Speaker 1: not going to feel so good to feel dumber. And

536
00:28:21,680 --> 00:28:24,399
Speaker 1: that's what happens. Never spend any time thinking about the

537
00:28:24,480 --> 00:28:28,240
Speaker 1: daily stock price. I don't Jeff Bezos, Lisa Brand was

538
00:28:28,280 --> 00:28:30,440
Speaker 1: just interesting. Why don't you pick it up with Mr Rubenstein?

539
00:28:30,760 --> 00:28:32,840
Speaker 1: Mr Rubenstein, One thing that I'm struck by is what

540
00:28:32,920 --> 00:28:35,199
Speaker 1: you said, which is most people of his wealth and

541
00:28:35,320 --> 00:28:39,440
Speaker 1: his point in life would step down as CEO. How

542
00:28:39,600 --> 00:28:43,880
Speaker 1: integral is Jeff Bezos to the whole zeitgeist of Amazon,

543
00:28:43,920 --> 00:28:48,560
Speaker 1: the whole future, the dynamism of this behemoth. Well, uh,

544
00:28:49,040 --> 00:28:52,320
Speaker 1: I think he's pretty important to it because I don't

545
00:28:52,360 --> 00:28:55,200
Speaker 1: know that there's somebody that couldmorrow could easily replace him.

546
00:28:55,200 --> 00:28:58,000
Speaker 1: I mean, you know, as cemeteries are filled with indispensable people,

547
00:28:58,000 --> 00:29:00,720
Speaker 1: of course, but in the end, Jeff so central to

548
00:29:00,760 --> 00:29:03,080
Speaker 1: that company. I don't think he's playing a step down

549
00:29:03,120 --> 00:29:06,560
Speaker 1: anytime soon. In earlier interviews I've kind of into I

550
00:29:06,960 --> 00:29:08,520
Speaker 1: got the sense from him that he intended to do

551
00:29:08,560 --> 00:29:12,760
Speaker 1: this for another eight to ten years. So I'm wondering

552
00:29:12,800 --> 00:29:15,560
Speaker 1: what was the one thing that stuck out to you

553
00:29:15,920 --> 00:29:18,760
Speaker 1: about him and about sort of what drives him and

554
00:29:18,800 --> 00:29:23,520
Speaker 1: what allowed him to create such an incredible company. He's

555
00:29:23,680 --> 00:29:27,360
Speaker 1: very smart, very driven. Um. He doesn't pay attention to

556
00:29:27,360 --> 00:29:29,760
Speaker 1: what other people are saying sometimes, and you may remember

557
00:29:29,760 --> 00:29:31,960
Speaker 1: stock analysts kept saying you don't have any profit, you're

558
00:29:31,960 --> 00:29:34,440
Speaker 1: not worrying about profit, And of course all those people

559
00:29:34,720 --> 00:29:37,720
Speaker 1: are now um, regretting that they didn't recognize how great

560
00:29:37,720 --> 00:29:39,680
Speaker 1: the company was going to be. He was focused on

561
00:29:39,760 --> 00:29:43,320
Speaker 1: building customers. He's very focused on customers being the most

562
00:29:43,360 --> 00:29:46,840
Speaker 1: important thing in his company, and he puts customers first.

563
00:29:47,840 --> 00:29:51,640
Speaker 1: Unlike some extremely wealthy people. He doesn't show arrogance in

564
00:29:51,680 --> 00:29:54,120
Speaker 1: my view at least I certainly haven't seen it. Uh.

565
00:29:54,200 --> 00:29:57,280
Speaker 1: He's very modest relative to what his accomplishments are. And

566
00:29:57,320 --> 00:29:59,480
Speaker 1: I said, most people that we know who built something

567
00:29:59,520 --> 00:30:01,640
Speaker 1: like that not be able to be so modest about

568
00:30:01,640 --> 00:30:03,400
Speaker 1: what he's thought it or have such a good sense

569
00:30:03,440 --> 00:30:07,840
Speaker 1: of humor about himself. David, thank you so much in congratulations.

570
00:30:07,880 --> 00:30:10,440
Speaker 1: It's just a tour to force this. Of course, is

571
00:30:10,480 --> 00:30:14,040
Speaker 1: that David Rubinston Show Peer to Peer Conversations, an hour

572
00:30:14,240 --> 00:30:24,040
Speaker 1: long conversation with Mr Bezos of Amazon. Thanks for listening

573
00:30:24,080 --> 00:30:28,640
Speaker 1: to the Bloomberg Surveillance Podcast. Subscribe and listen to interviews

574
00:30:28,640 --> 00:30:33,880
Speaker 1: on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer.

575
00:30:34,440 --> 00:30:37,800
Speaker 1: I'm on Twitter at Tom Keane before the podcast. You

576
00:30:37,800 --> 00:30:41,200
Speaker 1: can always catch us worldwide. I'm Bloomberg Radio