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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business

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Speaker 1: Week with Carol Masser and Tim Steneveek on Bloomberg Radio.

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Speaker 2: Well, today's probably a pretty good day. Where's good day?

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Speaker 2: As ever? To talk about leadership, we saw here in

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Speaker 2: the US this week the inauguration of a new president

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Speaker 2: and administration. Carol, you and I twenty four hours ago,

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Speaker 2: we're covering that. We're still covering the president's first full day.

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Speaker 2: We do wait to hear from him as he plans

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Speaker 2: to speak with tech executives to make a big infrastructre

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Speaker 2: announcement at the White House. We'll bringing those comments as

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Speaker 2: we do get them. Leadership, though, and different types of

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Speaker 2: leaders and what makes a good leader is Adam Glinski's world.

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Speaker 2: He's Paul Collello, Professor of Leadership and Ethics at Columbia

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Speaker 2: Business School. He's got a brand new book out, Inspire,

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Speaker 2: The Universal Path for Leading Yourself and Others. Professor Glinski

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Speaker 2: joins us here in the Bloomberg Interactive at Brokers Studio.

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Speaker 2: Before we get into what you write about this inspiring,

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Speaker 2: infuriating continuum, the different types of leaders that were out there,

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Speaker 2: I want to hear from you how this book came

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Speaker 2: together because you essentially created a class at Columbia Business

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Speaker 2: School that every person who goes to Columbia is required

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Speaker 2: to take.

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Speaker 3: Yeah. So I've been studying leadership and teaching leadership since

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Speaker 3: two thousand and two. Originally I was at the calleg

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Speaker 3: School of Management TAD at Berkeley and then at Columbia,

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Speaker 3: and around two thousand and six I was actually teaching

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Speaker 3: the FBI, the Federal Bureau of Investigation. We had a

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Speaker 3: program at Kellogg for agents to come in, about sixty

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Speaker 3: agents at the time, and one of them just started

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Speaker 3: talking about a leader that inspired them, and I was

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Speaker 3: really struck immediately by the transformation in physical transformation. His

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Speaker 3: eyes lit up right, he almost looked smiled, he got expressive,

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Speaker 3: his voice spoke really quickly with a little higher pitch,

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Speaker 3: and it was clearly that he had been fundamentally affected

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Speaker 3: and impacted by this leader. Then the next year, a

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Speaker 3: different FBI agent, ironically enough, started saying, I want to

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Speaker 3: talk about an inspiring person. I want to tell you

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Speaker 3: about all the infuriating leaders I had. And then so

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Speaker 3: I started asking hundreds and thousands and probably tens of

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Speaker 3: thousands of people across the globe. A very simple question.

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Speaker 3: Tell me about a leader that inspired you, and tell

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Speaker 3: me about a leader that infuriated you. And notice both

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Speaker 3: both types of leaders transform you inside. Right, one is

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Speaker 3: like a well spring, the other is, you know, a

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Speaker 3: seething cauldron. And one of the things I realized really

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Speaker 3: quickly is that they're basically mirror images of each other.

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Speaker 3: So the inspiring leader, right has that optimistic, big, big vision.

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Speaker 3: The infuritying leader is a pessimist, pedantic, right, you know,

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Speaker 3: the inspiring leader's courageous, infering leaders cowardly inspiring leader is

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Speaker 3: elevates people and friendly leader diminishes people. And so you

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Speaker 3: can start to understand that this happened. The second really

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Speaker 3: fascinating thing about this research is I started asking people

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Speaker 3: all over the world, so every continent that you can

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Speaker 3: think of, you know, dozens of countries, And what I

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Speaker 3: discovered was there was a single inspiring or in feruiting

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Speaker 3: characteristic that wasn't mentioned in every single country in the world.

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Speaker 3: So there's something universal in the very tapestrying fabric of

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Speaker 3: the human mind that really captures.

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Speaker 4: This anything between men and women differences.

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Speaker 3: I have not found any It's a great question, you know,

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Speaker 3: that's That's another one, which is that you know, you know,

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Speaker 3: women find you know, courageous, big picture, you know, generous

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Speaker 3: people inspiring, you know, and so do men. And it

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Speaker 3: doesn't really vary that much by It doesn't vary by gender,

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Speaker 3: by ethnicity, by country, by culture. There's something really fundamental

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Speaker 3: about about that. I think there's some variations sometimes in

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Speaker 3: like you can see Democrats and Republicans right where Democrats

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Speaker 3: put a little bit more emphasis, let's say, on the

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Speaker 3: empathy side, and Republicans might put a little bit more

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Speaker 3: emphasis on the strength side of the equation.

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Speaker 2: Well to that point, and I want to jump right

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Speaker 2: into it because I want to go we do want

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Speaker 2: to go over some leaders at a certain point, and

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Speaker 2: you know, whether they're inspiring or infuriating. But I think

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Speaker 2: to myself, here you are telling us about these different

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Speaker 2: leadership qualities or the way that people view leaders that

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Speaker 2: they've encountered in their lives. I think of somebody's top

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Speaker 2: of mind. President Trump to many people, to more than

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Speaker 2: seventy million voters, he's an inspiring leader to many people

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Speaker 2: who didn't vote for him, and even some people who've

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Speaker 2: worked in previous administrations. In his previous administration, he's not.

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Speaker 2: He's an infuriating leader. How can one single person be

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Speaker 2: both of those things to different people?

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Speaker 3: So I'll say three things about that. The first is

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Speaker 3: that one of the things that I think my research

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Speaker 3: has discovered is that there's these three universal factors, and

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Speaker 3: I'll sort of go through them talking about Trump in

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Speaker 3: a second. But it also tells us something fundamental. We're

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Speaker 3: not inspiring infuriating born that way, and we're not forever

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Speaker 3: that way. We can be inspiring today and inferating tomorrow,

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Speaker 3: and we can be inspiring on some dimensions and inferuit

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Speaker 3: in other dimensions. So in some ways you can say

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Speaker 3: all of us, every one of us is both inspiring

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Speaker 3: and inferuiting, or has the potential to be both at

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Speaker 3: different time, right. And So I think that's one thing.

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Speaker 3: The second thing I would say is that there's two

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Speaker 3: things about Trump that I think everyone would agree with.

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Speaker 3: One is that he has a simple, compelling visual vision

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Speaker 3: that people everyone can understand. Right, make America great again.

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Speaker 3: It's even an acronym. Right. And the second thing is

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Speaker 3: that no one will contend with the fact that he

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Speaker 3: presents himself as a strong and courageous protector and two

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Speaker 3: is that he comes across as authentically passionate. And so

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Speaker 3: those two are to the fundamental of like how we

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Speaker 3: are in the world, this exemplar thing. And so he

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Speaker 3: has this very clear vision and he is very clear

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Speaker 3: presents himself as this strong, courageous, passionate you know, protector.

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Speaker 3: Now where he falls on the infurity in side is

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Speaker 3: I think two things. Some people find the vision itself

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Speaker 3: to be infuriating, like exclusionary it only includes a certain

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Speaker 3: category of Americans, for example, and find it to be

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Speaker 3: maybe harsh. And then the second thing is I don't

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Speaker 3: think any person would argue with the fact that the

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Speaker 3: third fact, so the three universal factors are being visionary,

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Speaker 3: how we see the world, being an exemplar how we

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Speaker 3: are in the world. And then the final one is

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Speaker 3: mentor how we treat people in the world. And I

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Speaker 3: don't think anyone would argue with the fact that Trump

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Speaker 3: doesn't treat people very well. Right. You know, he had

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Speaker 3: more turnover in his first term than any other president

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Speaker 3: in terms of you know, the main leaders within his administration.

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Speaker 3: He is notorious, right for throwing people under the bus, right,

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Speaker 3: And when I ask people around the world, you know,

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Speaker 3: describe an inspiring leader, it's always someone who share success

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Speaker 3: but takes on blame and burden. But with Trump, right,

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Speaker 3: he forever steals success. It's me, me, me, me me

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Speaker 3: when things go well, and it's you you u uu

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Speaker 3: when it goes bad.

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Speaker 4: Well and you know, And yet step back for a second,

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Speaker 4: and whether he took accountability for this or or said that,

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Speaker 4: you know, in some of the policies that he implemented

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Speaker 4: or had people implement, whether it's tariffs on China, many

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Speaker 4: would say this was long and coming, Like there are

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Speaker 4: certain things he's done that actually people applaud him for. Right,

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Speaker 4: and those terriffs with China and push back on China

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Speaker 4: carried over to the Biden administration. Now we're like getting

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Speaker 4: ready for kind of what comes next. But I'm just

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Speaker 4: saying that, is it only inspiring leaders that actually get

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Speaker 4: some stuff done? Is it infuriating leaders also, and you

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Speaker 4: know or leaders that maybe you know, people don't want

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Speaker 4: to be around that still bring about some changes.

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Speaker 3: Absolutely. I mean, I think if you look at some

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Speaker 3: of the most famous leaders in our world, you know,

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Speaker 3: for example, Steve Jobs right, even in some ways Elon

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Speaker 3: Musk right, that they fit that mold right, being sort

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Speaker 3: of you know, very clear vision, you know, authentic and passionate,

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Speaker 3: but not always treating people very well. Right, And so

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Speaker 3: those people might be great top of the top leaders,

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Speaker 3: but they wouldn't be very good managers, for example, you know.

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Speaker 3: And I think that really makes the difference. One thing

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Speaker 3: I'll say about Trump, though, is that the things that

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Speaker 3: he's concerned, he's very good at recognizing what other people's

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Speaker 3: concerns and fears are, right, and so he's able then

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Speaker 3: to package those in a way like I think everyone

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Speaker 3: would agree we need to have a very clear immigration

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Speaker 3: policy to have an effective United States. Now we may

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Speaker 3: disagree with some of those elements, but he's very good

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Speaker 3: at simplifying it, right, Like we need to shut our

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Speaker 3: border down, you know, to figure out what's going on,

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Speaker 3: and we could maybe then sensibly reopen it at a

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Speaker 3: later point. And I think you see that the trans

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Speaker 3: issue is another one that he really expertly understood, which

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Speaker 3: is that people are concerned about fairness and athletics. They're

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Speaker 3: concerned about could someone show open a bathroom that would

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Speaker 3: make me you know, could a man schopen a woman's bathroom?

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Speaker 3: You know? Using this issue as a ruse, and so

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Speaker 3: he understood people's fears around that and was able to

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Speaker 3: articulate them.

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Speaker 4: Well, what do you think corporate leaders need to do

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Speaker 4: going forward? Because often they'll have their employees say listen,

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Speaker 4: I'm uncomfortable. I don't think of our you know, employee

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Speaker 4: base as male or female. I think there's other choices.

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Speaker 4: What do you think is going to how this is

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Speaker 4: going to play out in corporate America?

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Speaker 3: I mean, that's a great question. I mean, I'll say

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Speaker 3: the first thing I'll say is, I do think that

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Speaker 3: one of the reasons why Kamala Harris lost the election

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Speaker 3: was two things that are on vision. She never articulated

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Speaker 3: the true state of the economy, which was that it

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Speaker 3: was much better than.

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Speaker 4: The economy stupid, right, Like, yeah, there's a reason why

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Speaker 4: people say that she.

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Speaker 3: Didn't defend it. She didn't come out and say, yeah,

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Speaker 3: prices are higher than they should be. But like she

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Speaker 3: should have said every single day about djob growth. That's

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Speaker 3: what Trump would have done, right every single day. And

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Speaker 3: the second thing is she never articulated at any point

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Speaker 3: what her vision around let's say, gender identity was, Like

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Speaker 3: I have no idea, Like I know that she generally

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Speaker 3: supports the rights, but like, are there limits to that?

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Speaker 3: Like what is the fabric of that? Like Trump was

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Speaker 3: very clear and when when you look at some of

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Speaker 3: the exit polling, you see two things. People at accurate

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Speaker 3: information on the economy voted for Biden and they voted

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Speaker 3: for Trump if they didn't, and if they're concerned about

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Speaker 3: the trans issue, they voted for Trump. And so I

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Speaker 3: think those are two things. What should corporate leader.

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Speaker 2: Well, I was just going to say, we have plenty

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Speaker 2: of time at least until we start to hear from

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Speaker 2: the president, and we are awaiting that at the White House.

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Speaker 2: I do want to ask, because your book it's not

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Speaker 2: just about leaders on the international stage and leaders in

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Speaker 2: the border. I mean you talk about parenting and being

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Speaker 2: a leader in the home. What are some takeaways that

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Speaker 2: people who are not necessarily in managerial positions right now

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Speaker 2: can take from the book.

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Speaker 3: Yeah, well, you know, I coined a phrase that I

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Speaker 3: use in the book called the leader amplification effect. And

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Speaker 3: the leader amplification effect is that when you're a leader,

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Speaker 3: you're essentially on stage. Eyes are on you. And one

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Speaker 3: of the things we know from cognitive psychology, and I

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Speaker 3: know you've had a lot of cognitive psychologists on this

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Speaker 3: show is that attention amplifies signals and then those also

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Speaker 3: intensify reactions. So when you're on stage, your signals, whatever

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Speaker 3: they could be verbal, nonverbal, good, bad, small, big, are

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Speaker 3: going to get amplified, and then people's reactions are going

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Speaker 3: to be intensified. And so what is a leader, Well,

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Speaker 3: a leader is someone who has power and status. Those

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Speaker 3: are two of the things I've studied the most in

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Speaker 3: my career social hierarchy for twenty years. And essentially it's

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Speaker 3: someone with some authority, right, and also people look up

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Speaker 3: to that person. Guess what parents are, right? Parents are

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Speaker 3: They have authority over their kids, and their kids generally

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Speaker 3: look up to them or at least look to them

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Speaker 3: for information. And so I have coined a phrase that

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Speaker 3: I call the parent amplification effect, a corollary of the leadership,

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Speaker 3: which is like they pick up on things. I'll tell

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Speaker 3: you a very short story about this that I really

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Speaker 3: love about a former doctoral student at Columbia who worked

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Speaker 3: with some people you've had on like Sondra Mats. But

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Speaker 3: when she was twelve years old, she overheard her mom

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Speaker 3: say to someone else, both girls are great at piano.

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Speaker 3: But I can't remember right now. Her sister's they know

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Speaker 3: has a real knack for it. Abby. I think it

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Speaker 3: was their sister Abby has a real knack for it.

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Speaker 3: And she was so incensed she never played piano again.

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Speaker 3: She was like, you know, basically, f you, mom. You

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Speaker 3: think she's got better thing. And you know, I saw

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Speaker 3: her mom. And this is what's great about the leader

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Speaker 3: amplification effect is that we can be totally unaware that

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Speaker 3: we're we're we're having this impact. And you know, you know,

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Speaker 3: I told her mom the story. She's like, I had

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Speaker 3: no idea why she quit PIATO, Like that happened like

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Speaker 3: twenty years earlier. And Barry Salzburg, who is a he

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Speaker 3: was CEO of Global Deloitte. About six months after being CEO,

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Speaker 3: he noticed there was bananas at every meeting. He's like, huh,

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Speaker 3: like banana is an important symbol of Deloitte. I've been

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Speaker 3: here thirty years or someone else?

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Speaker 2: Did he bring to a media No.

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Speaker 3: No, what happened was is his first meeting he went to.

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Speaker 3: He picked up a banana with a little bit of enthusiasm,

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Speaker 3: and his the executive assistant, was like, have bananas at

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Speaker 3: every meeting Barry's at you know, he didn't even say

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Speaker 3: anything right, and so you know, whether it's your parent,

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Speaker 3: whether it's you know. And that's why I always say

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Speaker 3: it's not about a position of leadership. It's like whenever

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Speaker 3: you matter to someone else, right, it could be a

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Speaker 3: So it could be in the dating relationship when you

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Speaker 3: care about the opinion of another person, right, all of

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Speaker 3: their expressions and could you're paying attention right intentions? Really

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Speaker 3: that currency.

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Speaker 4: Well with kids, I think about that a lot. We've

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Speaker 4: talked about this, how kids can be branded as well,

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Speaker 4: you're a math kid or you're really not a math kid,

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Speaker 4: and they just kind of get it in their head

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Speaker 4: and and kind of go that route. We want to

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Speaker 4: ask you about a couple of different leaders. You have

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Speaker 4: mentioned Elon Musk. You know, it's interesting. We're just coming

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Speaker 4: off the inauguration. We saw these big tech ceo so

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Speaker 4: they're kind of top of mind for me when you

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Speaker 4: think of Elon, when you think of Jeff Bezos, Mark Zuckerberg,

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Speaker 4: Sundar Pitchai of Alphabet, I don't know, inspira inspiring leaders,

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Speaker 4: infuriating leaders.

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Speaker 3: I mean I think there, you know, they can be

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Speaker 3: a little bit of both. Right, and some of them,

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Speaker 3: you know, clearly. Any you know, one of the things

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Speaker 3: that we are inspired by is people who do amazing

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Speaker 3: things right, right, Like think of Steph Curry, Like, how

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Speaker 3: many people are you know? I Steph Curry is my

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Speaker 3: favorite player, right, he can just do things that no

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Speaker 3: one else can do. Josh Allen on the football field, right,

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Speaker 3: is the same way. And so you know, people who

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Speaker 3: create things are always going to hold, you know, a

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Speaker 3: big attention in the world. And that's true and throughout

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Speaker 3: history of the United States, you know, you go back

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Speaker 3: to you know, some of the famous people in eighteen hundreds,

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Speaker 3: you know, And and so I think that there's a

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Speaker 3: way that we really get captivated by that that vision

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Speaker 3: and that super competence. But also they can start veering

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Speaker 3: off into the wrong vision, right, and they can also

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Speaker 3: start not really paying attention to other people. So one

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Speaker 3: of the problems of the leader and amplification effect is

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Speaker 3: sometimes we aren't aware of the impact. Right. That's exactly

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Speaker 3: what happened with Erica's mother. She had no idea this

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Speaker 3: all in comment would have that impact.

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Speaker 4: And so you know, so those employee surveys about your

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Speaker 4: bosses are really good.

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Speaker 3: Yeah, I mean, I think they're really good. I think so.

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Speaker 3: I mean, I'm a huge fan of three sixty feedback, right,

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Speaker 3: And I think it's you know, I created, I actually

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Speaker 3: created a thing called, you know, an are you and

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Speaker 3: am I inspiring scale that people can sort of measure.

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Speaker 3: But the best way to use it is to take

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Speaker 3: it yourself and then have other people take it, and

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Speaker 3: then you can say, I might think I'm visionary, but

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Speaker 3: they don't see me as visionary. And that's the you know,

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Speaker 3: that's what we want, is we want accurate understanding of

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Speaker 3: how other people perceive us.

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Speaker 2: So I'm thinking about other leaders out there who are

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Speaker 2: in our world. We talked about Elon Musk, we talked

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Speaker 2: about some of the other tech leaders. We just celebrated

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Speaker 2: the life of Jimmy Carter and a lot of people

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Speaker 2: in remembering Jimmy Carter talked about how he had these

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Speaker 2: qualities that you know, really inspired people around him, but

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Speaker 2: he was an ineffective president because he was a micromanager

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Speaker 2: and he didn't play the politics game. How do you

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Speaker 2: balance where do you balance on this continue to be effective?

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Speaker 3: Yeah? I think that's right. I think, Well, if we

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Speaker 3: just got you know, the last chapter of the book

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Speaker 3: talks about actually the connection between Jimmy Carter and Donald Trump.

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Speaker 3: They both lost reelection, you know, and you know, fortunely

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Speaker 3: was able to get in a couple of paragraphs at

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Speaker 3: Donald Trump becoming president again, you know after that. But

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Speaker 3: you know, they lost because I think different different parts

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Speaker 3: of what I call the VEM diagram of inspiring leadership, visionary,

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Speaker 3: exemplar and mentor Donald Trump. Sorry, Jimmy Carter was clearly

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Speaker 3: he was deficient on the visionary end, right. He never

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Speaker 3: articulated a clear vision first presidency. And there's an amazing

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Speaker 3: quote by I can't remember exactly what it was, but

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Speaker 3: it was about even cabinet secretaries need a vision in

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Speaker 3: order to execute within their departments, and Jimmy Carter never

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Speaker 3: gave him that vision, so they couldn't execute effectively. And

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Speaker 3: the micromanagement, you know, the famous story of Jimmy Carter

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Speaker 3: approving the tennis schedule everything, you know, you know, it's

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Speaker 3: unclear whether it's actually true or what role played, but

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Speaker 3: it fit the image of who he was, which was

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Speaker 3: someone who was lost in the weeds, a micromanager couldn't

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Speaker 3: see the thing. But all those other qualities right, his

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Speaker 3: his courage, his calmness, his humanity, the those shown brightly

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Speaker 3: outside of the Oval office, and so in many ways,

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Speaker 3: right his entire image was rehabilitated in that process. And

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Speaker 3: you know, Donald Trump, you know, really benefited from the

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Speaker 3: fact that distance left him. He lost because he was

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Speaker 3: a poor mentor, but the distance allowed people to forget

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Speaker 3: how he treated people well.

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Speaker 4: So much in this book you cover a lot of ground, Adam,

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Speaker 4: Thank you so much, Adam Galinsky. Paul Colillo, Professor of

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Speaker 4: Leadership and Ethics at the Columbia Business schal His new

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Speaker 4: book Inspire, The Universal Path for Leading yourself and others.

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Speaker 4: It is out and really gives you a lot of

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Speaker 4: things to think about in terms of leadership.

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Speaker 1: Today you're listening to Bloomberg BusinessWeek with Carol Masser and

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Speaker 1: Tim Steneveek on Bloomberg Radio.

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Speaker 2: Well, speaking of the president just today and his presidency.

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Speaker 2: Investors are closely watching further moves from Donald Trump to

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Speaker 2: assess their effect on markets. JP Morgan Chase, for example,

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Speaker 2: is establishing a war room just for this purpose. Exactly

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Speaker 2: how policy proposals will play out is not clear yet.

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Speaker 2: For example, shares of companies with tariff risks largely shrugged

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Speaker 2: off the threats, at least for now. Today, in response

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Speaker 2: to what was reported yesterday. For an idea though of opportunities,

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Speaker 2: we bring in Christi Acolian. She's head of I Shares

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Speaker 2: investment strategy over at Blackrock. She joined us from San Francisco.

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Speaker 2: Let's talk themes for this administration. Christy, where are you bullish?

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Speaker 1: Yeah?

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Speaker 5: Absolutely, And Simon Carrol, thanks for having me. It's great

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Speaker 5: to be here. You know, I think that the broad

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Speaker 5: theme of the investment outlook that we just put out

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Speaker 5: for twenty twenty five is really that we're risk on,

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Speaker 5: so we are overweight US equities. We still see really

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Speaker 5: strong you know translation from that strong economic growth that

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Speaker 5: we're seeing all the way down to strong corporate profitability.

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Speaker 5: We're most bullish right now on large caps. We're really

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Speaker 5: preferring to stay up in quality, even though on a

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Speaker 5: day like today, I know we saw small caps pop

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Speaker 5: a lot. Something like qua L, which is our I

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Speaker 5: Shares quality ETF is where we see the best opportunity

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Speaker 5: because we think that the fundamentals matter just as much

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Speaker 5: too as some of the narratives that we're getting, and

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Speaker 5: from a fundamental perspective, we see the strongest earning growth

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Speaker 5: coming from the highest quality companies. So that's the number

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Speaker 5: one area we're bullish right now.

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Speaker 4: In terms of you know, christ is. Of course, this

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Speaker 4: is the first full day of President Trump in the

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Speaker 4: White House. We're watching various policies start to come out,

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Speaker 4: or at least indications of ones, and tariff's in particular.

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Speaker 4: I think there are some concerns. We talked with our

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Speaker 4: Gina Martin Adams earlier of our Bloomberg intelligence team that targets,

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Speaker 4: you know, tariffs at target economies usually impact companies, you know,

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Speaker 4: so if you target something like Canada, which the President

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Speaker 4: seems to be you know, indicating or possibly talking about

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Speaker 4: US auto companies, you're going to feel it. All of

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Speaker 4: this then ultimately impacts the companies, maybe impacts operating margins.

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Speaker 4: So how do you roll that into your optimistic view.

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Speaker 5: Yeah, I mean, you know, our optimistic view is certainly

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Speaker 5: not without risk. So we're certainly focusing on trade policy

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Speaker 5: as one source of unknowns, immigration policy as another, and

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Speaker 5: then potential for deregulation. So I think it's a little

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Speaker 5: bit of a mixed bag in terms of the direction

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Speaker 5: that that can have of economic growth. You know, if

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Speaker 5: we look at kind of again kind of back to

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Speaker 5: the macro here, we're focused on fundamentals, even though the

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Speaker 5: headlines are going to move us around quite a bit

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Speaker 5: this year. What we've seen in terms of inflation looks benign.

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Speaker 5: Right We got CPI data last week that was the

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Speaker 5: lowest core reading month over months since July. The path

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Speaker 5: that the economy is on right now feels good, so

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Speaker 5: that underpins a lot of our bullish outlook. But the

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Speaker 5: risks in terms of how those those policy changes might

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Speaker 5: be implemented are are worth watching this year. So I

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Speaker 5: think that you brought up tearff policy. Trade policy is

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Speaker 5: obviously incredibly important. If that does reignite or reaccelerate immigration,

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Speaker 5: then we think that there's some portfolio adjustments that you

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Speaker 5: might need to make. We're talking about some thematic exposures

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Speaker 5: right now, something like made great ticker for made in

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Speaker 5: the USA that really focuses on domestic manufacturing if we

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Speaker 5: do see those widespread tariffs put into place, or something

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Speaker 5: like technology independence. I think both of those thematic ideas

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Speaker 5: have a place in a portfolio, especially if you're concerned about,

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Speaker 5: you know, trade policy. Even though maybe what we saw

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Speaker 5: from from President Trump yesterday was a little bit more

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Speaker 5: benign than markets weren't anticipating. So I think we did

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Speaker 5: see a bit of a relief rally that the tariff

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Speaker 5: potential was not quite as high as as investers maybe

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Speaker 5: had thought maybe what was priced into markets coming in.

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Speaker 4: It's still early, Yeah, okay, So what about when it

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Speaker 4: comes to international Obviously, you know you're bullish on US.

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Speaker 2: That's that's not a contrarian position right now, we hear

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Speaker 2: I've lost track of the number of times, Carol, people

430
00:21:43,119 --> 00:21:46,440
Speaker 2: talk about US exceptionalism in recent months. It's certainly the

431
00:21:46,520 --> 00:21:51,040
Speaker 2: theme for the year. International equities, though they are less

432
00:21:51,040 --> 00:21:55,440
Speaker 2: expensive relative to their US counterparts, what's the opportunity there?

433
00:21:56,800 --> 00:21:59,040
Speaker 5: Yeah, absolutely so we you know, we think that you

434
00:21:59,160 --> 00:22:02,600
Speaker 5: need international exposure in your portfolio for diversification. They're just

435
00:22:02,680 --> 00:22:05,760
Speaker 5: different sources of risk and return, and that is important,

436
00:22:06,119 --> 00:22:09,280
Speaker 5: especially to your point in this environment where we're overweight,

437
00:22:09,359 --> 00:22:11,840
Speaker 5: and you know, we're enthusiastic about the opportunity set in

438
00:22:11,840 --> 00:22:14,360
Speaker 5: the US, but so is everyone else. So I think

439
00:22:14,359 --> 00:22:17,040
Speaker 5: that the benefit you get from adding to international is

440
00:22:17,080 --> 00:22:19,879
Speaker 5: those lower evaluations in terms of the way that we

441
00:22:19,960 --> 00:22:22,840
Speaker 5: think it's sort of best expressed right now, again kind

442
00:22:22,840 --> 00:22:26,040
Speaker 5: of leaning into that quality notion. But internationally, we like

443
00:22:26,119 --> 00:22:29,639
Speaker 5: international dividend payers, so companies you know that screen a

444
00:22:29,680 --> 00:22:32,359
Speaker 5: little bit higher quality that can can pay that dividend

445
00:22:32,400 --> 00:22:35,040
Speaker 5: and a steady dividend over time. We also think it's

446
00:22:35,080 --> 00:22:38,440
Speaker 5: an opportunity for active management because it is a environment

447
00:22:38,480 --> 00:22:41,159
Speaker 5: that is changing quickly and in on a path of

448
00:22:41,320 --> 00:22:44,800
Speaker 5: global divergence. In terms of global growth, I think you

449
00:22:44,840 --> 00:22:46,879
Speaker 5: need to have sort of high conviction in some of

450
00:22:46,920 --> 00:22:49,920
Speaker 5: the areas of opportunity that you see. So we do

451
00:22:50,000 --> 00:22:52,520
Speaker 5: like international, even though we're overweight the US, but I

452
00:22:52,520 --> 00:22:55,240
Speaker 5: think the best opportunity there leans and screening a little

453
00:22:55,240 --> 00:22:57,919
Speaker 5: bit higher quality and dividends is an interesting way to

454
00:22:57,960 --> 00:23:01,280
Speaker 5: do that. Something like BIDD, which is are active international

455
00:23:01,320 --> 00:23:03,520
Speaker 5: dividend fund that we just launched. I think that's going

456
00:23:03,560 --> 00:23:04,920
Speaker 5: to be a really interesting one for this year.

457
00:23:05,040 --> 00:23:05,320
Speaker 3: Christy.

458
00:23:05,440 --> 00:23:07,479
Speaker 4: You know, you get to see right the big picture,

459
00:23:07,600 --> 00:23:09,480
Speaker 4: right in terms of what's going on in the ETF

460
00:23:09,560 --> 00:23:12,760
Speaker 4: industry and specifically in terms of black rock flows, I

461
00:23:12,800 --> 00:23:16,280
Speaker 4: mean the industry. The ETF industry saw a record flow

462
00:23:16,320 --> 00:23:22,440
Speaker 4: of about a trillion dollars into ETFs in twenty twenty four.

463
00:23:22,600 --> 00:23:26,200
Speaker 4: What are you seeing in terms of flow so far

464
00:23:27,000 --> 00:23:30,920
Speaker 4: here in twenty twenty five, Where is the money going?

465
00:23:30,960 --> 00:23:34,040
Speaker 4: Where's the money maybe flowing out of Yeah?

466
00:23:34,080 --> 00:23:37,480
Speaker 5: Absolutely so to your point, the first trillion dollar year

467
00:23:37,560 --> 00:23:40,159
Speaker 5: for US ETFs, which is just a huge milestone, So

468
00:23:40,200 --> 00:23:42,600
Speaker 5: I think that's really interesting. A big part of that

469
00:23:42,760 --> 00:23:47,200
Speaker 5: was driven by newer asset classes and newer exposures. So obviously,

470
00:23:47,240 --> 00:23:50,600
Speaker 5: you know cryptocurrencies and spot bitcoin ETFs that were launched

471
00:23:50,640 --> 00:23:53,320
Speaker 5: the last January just about a year ago, took up

472
00:23:53,520 --> 00:23:55,160
Speaker 5: a lot of the attention and took up a lot

473
00:23:55,160 --> 00:23:57,280
Speaker 5: of the flows. But I also think that you know

474
00:23:57,320 --> 00:23:59,840
Speaker 5: what we're seeing right now in this environment that is

475
00:24:00,160 --> 00:24:03,720
Speaker 5: overall strong, but not without risks. We're seeing investors lean

476
00:24:03,800 --> 00:24:06,439
Speaker 5: into some more niche areas of the market, something like

477
00:24:06,600 --> 00:24:10,959
Speaker 5: outcome products and outcome ETFs. I think that's an area

478
00:24:11,000 --> 00:24:13,720
Speaker 5: of focus where we've seen some flows. We tend to

479
00:24:13,760 --> 00:24:17,399
Speaker 5: see flows follow performance. You certainly saw that in the

480
00:24:17,480 --> 00:24:21,440
Speaker 5: last quarter of twenty twenty four and Q three as well.

481
00:24:21,440 --> 00:24:23,960
Speaker 5: In terms of small cap you saw large inflows to

482
00:24:24,000 --> 00:24:26,080
Speaker 5: small caps. Some of that has reversed and we've seen

483
00:24:26,080 --> 00:24:28,639
Speaker 5: that continue to reverse a little bit more. It really

484
00:24:28,760 --> 00:24:31,680
Speaker 5: is underscored by our preference for being up in quality

485
00:24:31,720 --> 00:24:33,920
Speaker 5: and large cap that we think the fundamentals can catch

486
00:24:33,960 --> 00:24:36,200
Speaker 5: up to some of those smaller cap names where we're

487
00:24:36,200 --> 00:24:38,280
Speaker 5: seeing investors maybe get out over take profits.

488
00:24:38,320 --> 00:24:40,520
Speaker 4: When you talk about outcome ets, just to clarify for

489
00:24:40,520 --> 00:24:41,800
Speaker 4: those who may not be in the note, that's when

490
00:24:41,800 --> 00:24:44,520
Speaker 4: you kind of use options right to achieve various goals.

491
00:24:45,359 --> 00:24:48,119
Speaker 5: Yeah, absolutely so, you know, we have different forms of

492
00:24:48,160 --> 00:24:51,000
Speaker 5: buffered products. I think it's probably the most the most

493
00:24:51,000 --> 00:24:53,840
Speaker 5: popular there. So whether you want to you know, protect

494
00:24:53,880 --> 00:24:56,240
Speaker 5: yourself to the downside of a five, a ten, or

495
00:24:56,280 --> 00:24:59,840
Speaker 5: twenty percent draw down, the being able to use options

496
00:24:59,880 --> 00:25:01,320
Speaker 5: to to be able to trade away some of your

497
00:25:01,400 --> 00:25:05,320
Speaker 5: upside potential in exchange for really locking and more certainty

498
00:25:05,359 --> 00:25:07,760
Speaker 5: of outcome on the downside. I think that's been a

499
00:25:07,800 --> 00:25:12,000
Speaker 5: really interesting conversation with investors, especially in this world where

500
00:25:12,000 --> 00:25:15,479
Speaker 5: we're not seeing the same diversification benefits from bonds. So

501
00:25:15,520 --> 00:25:18,520
Speaker 5: if you love equities and your overweight equities, which you

502
00:25:18,600 --> 00:25:21,160
Speaker 5: know we are right now, but at the same time

503
00:25:21,200 --> 00:25:24,399
Speaker 5: you're not getting that same ballast or diversification from longer

504
00:25:24,480 --> 00:25:27,600
Speaker 5: term bonds, how are you constructing a portfolio that can

505
00:25:27,680 --> 00:25:29,920
Speaker 5: weather a variety of different environments, and I think those

506
00:25:30,000 --> 00:25:32,680
Speaker 5: outcomes that having that certainty of outcome has been really

507
00:25:32,680 --> 00:25:33,960
Speaker 5: important for investors too.

508
00:25:34,480 --> 00:25:37,639
Speaker 2: Christy, how should people think about overlap with the S

509
00:25:37,640 --> 00:25:43,120
Speaker 2: and P five hundred in an ETF with the the

510
00:25:43,200 --> 00:25:47,160
Speaker 2: USA Quality Factory TF. The QUAL is the ticker, because

511
00:25:47,160 --> 00:25:50,280
Speaker 2: if I look at the holdings there, Apple's the biggest holding.

512
00:25:50,320 --> 00:25:54,680
Speaker 2: You got Microsoft and Vidia, Visa, MasterCard, Meta Platforms, Eli,

513
00:25:54,760 --> 00:25:59,639
Speaker 2: Lilly Alphabet, United Health, TJX companies. How should investors think

514
00:25:59,640 --> 00:26:01,919
Speaker 2: about that compared to just buying an index fund with

515
00:26:01,920 --> 00:26:02,920
Speaker 2: the S and P five hundred.

516
00:26:03,960 --> 00:26:06,440
Speaker 5: Yeah, a couple of different things. I think quality is

517
00:26:06,480 --> 00:26:09,120
Speaker 5: as much about what you don't own as what you do.

518
00:26:09,480 --> 00:26:12,440
Speaker 5: So QUAL is a little bit more concentrated, and you're

519
00:26:12,480 --> 00:26:15,560
Speaker 5: gonna see some similar exposures to just the broad based index,

520
00:26:15,560 --> 00:26:18,400
Speaker 5: but they're held at different weights and they're really screening

521
00:26:18,440 --> 00:26:20,400
Speaker 5: out some of those lower quality companies. So I think

522
00:26:20,400 --> 00:26:22,920
Speaker 5: that's the important thing. The other thing, too, though, is

523
00:26:23,200 --> 00:26:25,240
Speaker 5: just when you look at a different at an ETF,

524
00:26:25,240 --> 00:26:27,800
Speaker 5: it's really important to know what you own. The way

525
00:26:27,840 --> 00:26:30,400
Speaker 5: that we construct our factory TF, so quality is one

526
00:26:30,440 --> 00:26:33,560
Speaker 5: of them is sector constrained. So it's giving you a

527
00:26:33,640 --> 00:26:35,800
Speaker 5: representative slice of the market.

528
00:26:35,920 --> 00:26:36,840
Speaker 3: It's not just.

529
00:26:36,880 --> 00:26:40,960
Speaker 5: Giving you an entirely technology fund, because technology stocks screen

530
00:26:41,000 --> 00:26:44,120
Speaker 5: high quality. Really importantly, it's giving you the highest quality

531
00:26:44,119 --> 00:26:47,200
Speaker 5: companies within each sector. So I think knowing whether it's

532
00:26:47,240 --> 00:26:50,840
Speaker 5: a substitute for an S ANDPI founder at augmenting it

533
00:26:50,880 --> 00:26:53,280
Speaker 5: is important, and the way that it is constructed is

534
00:26:53,320 --> 00:26:54,439
Speaker 5: meant to be sort of a quiry.

535
00:26:54,640 --> 00:26:57,080
Speaker 4: Chris, you just got about a minute left here. A

536
00:26:57,119 --> 00:27:01,000
Speaker 4: story that we've been looking at in the world Raymond

537
00:27:01,080 --> 00:27:04,800
Speaker 4: James Financial entering the ETF market through its asset manager division.

538
00:27:05,920 --> 00:27:09,320
Speaker 4: They have a vast network of financial advisors who up

539
00:27:09,359 --> 00:27:12,879
Speaker 4: to this point we're probably offering things like black Rocky tfs.

540
00:27:13,200 --> 00:27:17,399
Speaker 4: We are increasingly seeing others get into the ETF industry,

541
00:27:17,480 --> 00:27:22,280
Speaker 4: and especially those with their own financial advisor network. We're competition.

542
00:27:22,440 --> 00:27:25,760
Speaker 4: Does that make it a little bit tougher for you guys, Well.

543
00:27:25,560 --> 00:27:27,440
Speaker 5: I mean, I think the general trend that we saw

544
00:27:27,480 --> 00:27:30,280
Speaker 5: in terms of the one trillion dollars of flows just

545
00:27:30,359 --> 00:27:33,359
Speaker 5: means that the overall pie is getting bigger. So, you know,

546
00:27:33,440 --> 00:27:35,560
Speaker 5: competition is not bad. You know, we lean a lot

547
00:27:35,600 --> 00:27:39,480
Speaker 5: into our reputation and brand and the really full suite

548
00:27:39,480 --> 00:27:42,199
Speaker 5: of product offerings that we have, so really feeling very

549
00:27:42,200 --> 00:27:43,960
Speaker 5: confident about ETF flows this year as well.

550
00:27:44,080 --> 00:27:47,400
Speaker 4: All Right, cool, Steph, great overview. Christy Aculi and she's

551
00:27:47,440 --> 00:27:50,360
Speaker 4: head of I shares Investment strategy at Blackrock, joining us

552
00:27:50,440 --> 00:27:52,280
Speaker 4: on this Tuesday from San Francisco