Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business
Speaker 1: Week with Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 2: Well, today's probably a pretty good day. Where's good day?
Speaker 2: As ever? To talk about leadership, we saw here in
Speaker 2: the US this week the inauguration of a new president
Speaker 2: and administration. Carol, you and I twenty four hours ago,
Speaker 2: we're covering that. We're still covering the president's first full day.
Speaker 2: We do wait to hear from him as he plans
Speaker 2: to speak with tech executives to make a big infrastructre
Speaker 2: announcement at the White House. We'll bringing those comments as
Speaker 2: we do get them. Leadership, though, and different types of
Speaker 2: leaders and what makes a good leader is Adam Glinski's world.
Speaker 2: He's Paul Collello, Professor of Leadership and Ethics at Columbia
Speaker 2: Business School. He's got a brand new book out, Inspire,
Speaker 2: The Universal Path for Leading Yourself and Others. Professor Glinski
Speaker 2: joins us here in the Bloomberg Interactive at Brokers Studio.
Speaker 2: Before we get into what you write about this inspiring,
Speaker 2: infuriating continuum, the different types of leaders that were out there,
Speaker 2: I want to hear from you how this book came
Speaker 2: together because you essentially created a class at Columbia Business
Speaker 2: School that every person who goes to Columbia is required
Speaker 2: to take.
Speaker 3: Yeah. So I've been studying leadership and teaching leadership since
Speaker 3: two thousand and two. Originally I was at the calleg
Speaker 3: School of Management TAD at Berkeley and then at Columbia,
Speaker 3: and around two thousand and six I was actually teaching
Speaker 3: the FBI, the Federal Bureau of Investigation. We had a
Speaker 3: program at Kellogg for agents to come in, about sixty
Speaker 3: agents at the time, and one of them just started
Speaker 3: talking about a leader that inspired them, and I was
Speaker 3: really struck immediately by the transformation in physical transformation. His
Speaker 3: eyes lit up right, he almost looked smiled, he got expressive,
Speaker 3: his voice spoke really quickly with a little higher pitch,
Speaker 3: and it was clearly that he had been fundamentally affected
Speaker 3: and impacted by this leader. Then the next year, a
Speaker 3: different FBI agent, ironically enough, started saying, I want to
Speaker 3: talk about an inspiring person. I want to tell you
Speaker 3: about all the infuriating leaders I had. And then so
Speaker 3: I started asking hundreds and thousands and probably tens of
Speaker 3: thousands of people across the globe. A very simple question.
Speaker 3: Tell me about a leader that inspired you, and tell
Speaker 3: me about a leader that infuriated you. And notice both
Speaker 3: both types of leaders transform you inside. Right, one is
Speaker 3: like a well spring, the other is, you know, a
Speaker 3: seething cauldron. And one of the things I realized really
Speaker 3: quickly is that they're basically mirror images of each other.
Speaker 3: So the inspiring leader, right has that optimistic, big, big vision.
Speaker 3: The infuritying leader is a pessimist, pedantic, right, you know,
Speaker 3: the inspiring leader's courageous, infering leaders cowardly inspiring leader is
Speaker 3: elevates people and friendly leader diminishes people. And so you
Speaker 3: can start to understand that this happened. The second really
Speaker 3: fascinating thing about this research is I started asking people
Speaker 3: all over the world, so every continent that you can
Speaker 3: think of, you know, dozens of countries, And what I
Speaker 3: discovered was there was a single inspiring or in feruiting
Speaker 3: characteristic that wasn't mentioned in every single country in the world.
Speaker 3: So there's something universal in the very tapestrying fabric of
Speaker 3: the human mind that really captures.
Speaker 4: This anything between men and women differences.
Speaker 3: I have not found any It's a great question, you know,
Speaker 3: that's That's another one, which is that you know, you know,
Speaker 3: women find you know, courageous, big picture, you know, generous
Speaker 3: people inspiring, you know, and so do men. And it
Speaker 3: doesn't really vary that much by It doesn't vary by gender,
Speaker 3: by ethnicity, by country, by culture. There's something really fundamental
Speaker 3: about about that. I think there's some variations sometimes in
Speaker 3: like you can see Democrats and Republicans right where Democrats
Speaker 3: put a little bit more emphasis, let's say, on the
Speaker 3: empathy side, and Republicans might put a little bit more
Speaker 3: emphasis on the strength side of the equation.
Speaker 2: Well to that point, and I want to jump right
Speaker 2: into it because I want to go we do want
Speaker 2: to go over some leaders at a certain point, and
Speaker 2: you know, whether they're inspiring or infuriating. But I think
Speaker 2: to myself, here you are telling us about these different
Speaker 2: leadership qualities or the way that people view leaders that
Speaker 2: they've encountered in their lives. I think of somebody's top
Speaker 2: of mind. President Trump to many people, to more than
Speaker 2: seventy million voters, he's an inspiring leader to many people
Speaker 2: who didn't vote for him, and even some people who've
Speaker 2: worked in previous administrations. In his previous administration, he's not.
Speaker 2: He's an infuriating leader. How can one single person be
Speaker 2: both of those things to different people?
Speaker 3: So I'll say three things about that. The first is
Speaker 3: that one of the things that I think my research
Speaker 3: has discovered is that there's these three universal factors, and
Speaker 3: I'll sort of go through them talking about Trump in
Speaker 3: a second. But it also tells us something fundamental. We're
Speaker 3: not inspiring infuriating born that way, and we're not forever
Speaker 3: that way. We can be inspiring today and inferating tomorrow,
Speaker 3: and we can be inspiring on some dimensions and inferuit
Speaker 3: in other dimensions. So in some ways you can say
Speaker 3: all of us, every one of us is both inspiring
Speaker 3: and inferuiting, or has the potential to be both at
Speaker 3: different time, right. And So I think that's one thing.
Speaker 3: The second thing I would say is that there's two
Speaker 3: things about Trump that I think everyone would agree with.
Speaker 3: One is that he has a simple, compelling visual vision
Speaker 3: that people everyone can understand. Right, make America great again.
Speaker 3: It's even an acronym. Right. And the second thing is
Speaker 3: that no one will contend with the fact that he
Speaker 3: presents himself as a strong and courageous protector and two
Speaker 3: is that he comes across as authentically passionate. And so
Speaker 3: those two are to the fundamental of like how we
Speaker 3: are in the world, this exemplar thing. And so he
Speaker 3: has this very clear vision and he is very clear
Speaker 3: presents himself as this strong, courageous, passionate you know, protector.
Speaker 3: Now where he falls on the infurity in side is
Speaker 3: I think two things. Some people find the vision itself
Speaker 3: to be infuriating, like exclusionary it only includes a certain
Speaker 3: category of Americans, for example, and find it to be
Speaker 3: maybe harsh. And then the second thing is I don't
Speaker 3: think any person would argue with the fact that the
Speaker 3: third fact, so the three universal factors are being visionary,
Speaker 3: how we see the world, being an exemplar how we
Speaker 3: are in the world. And then the final one is
Speaker 3: mentor how we treat people in the world. And I
Speaker 3: don't think anyone would argue with the fact that Trump
Speaker 3: doesn't treat people very well. Right. You know, he had
Speaker 3: more turnover in his first term than any other president
Speaker 3: in terms of you know, the main leaders within his administration.
Speaker 3: He is notorious, right for throwing people under the bus, right,
Speaker 3: And when I ask people around the world, you know,
Speaker 3: describe an inspiring leader, it's always someone who share success
Speaker 3: but takes on blame and burden. But with Trump, right,
Speaker 3: he forever steals success. It's me, me, me, me me
Speaker 3: when things go well, and it's you you u uu
Speaker 3: when it goes bad.
Speaker 4: Well and you know, And yet step back for a second,
Speaker 4: and whether he took accountability for this or or said that,
Speaker 4: you know, in some of the policies that he implemented
Speaker 4: or had people implement, whether it's tariffs on China, many
Speaker 4: would say this was long and coming, Like there are
Speaker 4: certain things he's done that actually people applaud him for. Right,
Speaker 4: and those terriffs with China and push back on China
Speaker 4: carried over to the Biden administration. Now we're like getting
Speaker 4: ready for kind of what comes next. But I'm just
Speaker 4: saying that, is it only inspiring leaders that actually get
Speaker 4: some stuff done? Is it infuriating leaders also, and you
Speaker 4: know or leaders that maybe you know, people don't want
Speaker 4: to be around that still bring about some changes.
Speaker 3: Absolutely. I mean, I think if you look at some
Speaker 3: of the most famous leaders in our world, you know,
Speaker 3: for example, Steve Jobs right, even in some ways Elon
Speaker 3: Musk right, that they fit that mold right, being sort
Speaker 3: of you know, very clear vision, you know, authentic and passionate,
Speaker 3: but not always treating people very well. Right, And so
Speaker 3: those people might be great top of the top leaders,
Speaker 3: but they wouldn't be very good managers, for example, you know.
Speaker 3: And I think that really makes the difference. One thing
Speaker 3: I'll say about Trump, though, is that the things that
Speaker 3: he's concerned, he's very good at recognizing what other people's
Speaker 3: concerns and fears are, right, and so he's able then
Speaker 3: to package those in a way like I think everyone
Speaker 3: would agree we need to have a very clear immigration
Speaker 3: policy to have an effective United States. Now we may
Speaker 3: disagree with some of those elements, but he's very good
Speaker 3: at simplifying it, right, Like we need to shut our
Speaker 3: border down, you know, to figure out what's going on,
Speaker 3: and we could maybe then sensibly reopen it at a
Speaker 3: later point. And I think you see that the trans
Speaker 3: issue is another one that he really expertly understood, which
Speaker 3: is that people are concerned about fairness and athletics. They're
Speaker 3: concerned about could someone show open a bathroom that would
Speaker 3: make me you know, could a man schopen a woman's bathroom?
Speaker 3: You know? Using this issue as a ruse, and so
Speaker 3: he understood people's fears around that and was able to
Speaker 3: articulate them.
Speaker 4: Well, what do you think corporate leaders need to do
Speaker 4: going forward? Because often they'll have their employees say listen,
Speaker 4: I'm uncomfortable. I don't think of our you know, employee
Speaker 4: base as male or female. I think there's other choices.
Speaker 4: What do you think is going to how this is
Speaker 4: going to play out in corporate America?
Speaker 3: I mean, that's a great question. I mean, I'll say
Speaker 3: the first thing I'll say is, I do think that
Speaker 3: one of the reasons why Kamala Harris lost the election
Speaker 3: was two things that are on vision. She never articulated
Speaker 3: the true state of the economy, which was that it
Speaker 3: was much better than.
Speaker 4: The economy stupid, right, Like, yeah, there's a reason why
Speaker 4: people say that she.
Speaker 3: Didn't defend it. She didn't come out and say, yeah,
Speaker 3: prices are higher than they should be. But like she
Speaker 3: should have said every single day about djob growth. That's
Speaker 3: what Trump would have done, right every single day. And
Speaker 3: the second thing is she never articulated at any point
Speaker 3: what her vision around let's say, gender identity was, Like
Speaker 3: I have no idea, Like I know that she generally
Speaker 3: supports the rights, but like, are there limits to that?
Speaker 3: Like what is the fabric of that? Like Trump was
Speaker 3: very clear and when when you look at some of
Speaker 3: the exit polling, you see two things. People at accurate
Speaker 3: information on the economy voted for Biden and they voted
Speaker 3: for Trump if they didn't, and if they're concerned about
Speaker 3: the trans issue, they voted for Trump. And so I
Speaker 3: think those are two things. What should corporate leader.
Speaker 2: Well, I was just going to say, we have plenty
Speaker 2: of time at least until we start to hear from
Speaker 2: the president, and we are awaiting that at the White House.
Speaker 2: I do want to ask, because your book it's not
Speaker 2: just about leaders on the international stage and leaders in
Speaker 2: the border. I mean you talk about parenting and being
Speaker 2: a leader in the home. What are some takeaways that
Speaker 2: people who are not necessarily in managerial positions right now
Speaker 2: can take from the book.
Speaker 3: Yeah, well, you know, I coined a phrase that I
Speaker 3: use in the book called the leader amplification effect. And
Speaker 3: the leader amplification effect is that when you're a leader,
Speaker 3: you're essentially on stage. Eyes are on you. And one
Speaker 3: of the things we know from cognitive psychology, and I
Speaker 3: know you've had a lot of cognitive psychologists on this
Speaker 3: show is that attention amplifies signals and then those also
Speaker 3: intensify reactions. So when you're on stage, your signals, whatever
Speaker 3: they could be verbal, nonverbal, good, bad, small, big, are
Speaker 3: going to get amplified, and then people's reactions are going
Speaker 3: to be intensified. And so what is a leader, Well,
Speaker 3: a leader is someone who has power and status. Those
Speaker 3: are two of the things I've studied the most in
Speaker 3: my career social hierarchy for twenty years. And essentially it's
Speaker 3: someone with some authority, right, and also people look up
Speaker 3: to that person. Guess what parents are, right? Parents are
Speaker 3: They have authority over their kids, and their kids generally
Speaker 3: look up to them or at least look to them
Speaker 3: for information. And so I have coined a phrase that
Speaker 3: I call the parent amplification effect, a corollary of the leadership,
Speaker 3: which is like they pick up on things. I'll tell
Speaker 3: you a very short story about this that I really
Speaker 3: love about a former doctoral student at Columbia who worked
Speaker 3: with some people you've had on like Sondra Mats. But
Speaker 3: when she was twelve years old, she overheard her mom
Speaker 3: say to someone else, both girls are great at piano.
Speaker 3: But I can't remember right now. Her sister's they know
Speaker 3: has a real knack for it. Abby. I think it
Speaker 3: was their sister Abby has a real knack for it.
Speaker 3: And she was so incensed she never played piano again.
Speaker 3: She was like, you know, basically, f you, mom. You
Speaker 3: think she's got better thing. And you know, I saw
Speaker 3: her mom. And this is what's great about the leader
Speaker 3: amplification effect is that we can be totally unaware that
Speaker 3: we're we're we're having this impact. And you know, you know,
Speaker 3: I told her mom the story. She's like, I had
Speaker 3: no idea why she quit PIATO, Like that happened like
Speaker 3: twenty years earlier. And Barry Salzburg, who is a he
Speaker 3: was CEO of Global Deloitte. About six months after being CEO,
Speaker 3: he noticed there was bananas at every meeting. He's like, huh,
Speaker 3: like banana is an important symbol of Deloitte. I've been
Speaker 3: here thirty years or someone else?
Speaker 2: Did he bring to a media No.
Speaker 3: No, what happened was is his first meeting he went to.
Speaker 3: He picked up a banana with a little bit of enthusiasm,
Speaker 3: and his the executive assistant, was like, have bananas at
Speaker 3: every meeting Barry's at you know, he didn't even say
Speaker 3: anything right, and so you know, whether it's your parent,
Speaker 3: whether it's you know. And that's why I always say
Speaker 3: it's not about a position of leadership. It's like whenever
Speaker 3: you matter to someone else, right, it could be a
Speaker 3: So it could be in the dating relationship when you
Speaker 3: care about the opinion of another person, right, all of
Speaker 3: their expressions and could you're paying attention right intentions? Really
Speaker 3: that currency.
Speaker 4: Well with kids, I think about that a lot. We've
Speaker 4: talked about this, how kids can be branded as well,
Speaker 4: you're a math kid or you're really not a math kid,
Speaker 4: and they just kind of get it in their head
Speaker 4: and and kind of go that route. We want to
Speaker 4: ask you about a couple of different leaders. You have
Speaker 4: mentioned Elon Musk. You know, it's interesting. We're just coming
Speaker 4: off the inauguration. We saw these big tech ceo so
Speaker 4: they're kind of top of mind for me when you
Speaker 4: think of Elon, when you think of Jeff Bezos, Mark Zuckerberg,
Speaker 4: Sundar Pitchai of Alphabet, I don't know, inspira inspiring leaders,
Speaker 4: infuriating leaders.
Speaker 3: I mean I think there, you know, they can be
Speaker 3: a little bit of both. Right, and some of them,
Speaker 3: you know, clearly. Any you know, one of the things
Speaker 3: that we are inspired by is people who do amazing
Speaker 3: things right, right, Like think of Steph Curry, Like, how
Speaker 3: many people are you know? I Steph Curry is my
Speaker 3: favorite player, right, he can just do things that no
Speaker 3: one else can do. Josh Allen on the football field, right,
Speaker 3: is the same way. And so you know, people who
Speaker 3: create things are always going to hold, you know, a
Speaker 3: big attention in the world. And that's true and throughout
Speaker 3: history of the United States, you know, you go back
Speaker 3: to you know, some of the famous people in eighteen hundreds,
Speaker 3: you know, And and so I think that there's a
Speaker 3: way that we really get captivated by that that vision
Speaker 3: and that super competence. But also they can start veering
Speaker 3: off into the wrong vision, right, and they can also
Speaker 3: start not really paying attention to other people. So one
Speaker 3: of the problems of the leader and amplification effect is
Speaker 3: sometimes we aren't aware of the impact. Right. That's exactly
Speaker 3: what happened with Erica's mother. She had no idea this
Speaker 3: all in comment would have that impact.
Speaker 4: And so you know, so those employee surveys about your
Speaker 4: bosses are really good.
Speaker 3: Yeah, I mean, I think they're really good. I think so.
Speaker 3: I mean, I'm a huge fan of three sixty feedback, right,
Speaker 3: And I think it's you know, I created, I actually
Speaker 3: created a thing called, you know, an are you and
Speaker 3: am I inspiring scale that people can sort of measure.
Speaker 3: But the best way to use it is to take
Speaker 3: it yourself and then have other people take it, and
Speaker 3: then you can say, I might think I'm visionary, but
Speaker 3: they don't see me as visionary. And that's the you know,
Speaker 3: that's what we want, is we want accurate understanding of
Speaker 3: how other people perceive us.
Speaker 2: So I'm thinking about other leaders out there who are
Speaker 2: in our world. We talked about Elon Musk, we talked
Speaker 2: about some of the other tech leaders. We just celebrated
Speaker 2: the life of Jimmy Carter and a lot of people
Speaker 2: in remembering Jimmy Carter talked about how he had these
Speaker 2: qualities that you know, really inspired people around him, but
Speaker 2: he was an ineffective president because he was a micromanager
Speaker 2: and he didn't play the politics game. How do you
Speaker 2: balance where do you balance on this continue to be effective?
Speaker 3: Yeah? I think that's right. I think, Well, if we
Speaker 3: just got you know, the last chapter of the book
Speaker 3: talks about actually the connection between Jimmy Carter and Donald Trump.
Speaker 3: They both lost reelection, you know, and you know, fortunely
Speaker 3: was able to get in a couple of paragraphs at
Speaker 3: Donald Trump becoming president again, you know after that. But
Speaker 3: you know, they lost because I think different different parts
Speaker 3: of what I call the VEM diagram of inspiring leadership, visionary,
Speaker 3: exemplar and mentor Donald Trump. Sorry, Jimmy Carter was clearly
Speaker 3: he was deficient on the visionary end, right. He never
Speaker 3: articulated a clear vision first presidency. And there's an amazing
Speaker 3: quote by I can't remember exactly what it was, but
Speaker 3: it was about even cabinet secretaries need a vision in
Speaker 3: order to execute within their departments, and Jimmy Carter never
Speaker 3: gave him that vision, so they couldn't execute effectively. And
Speaker 3: the micromanagement, you know, the famous story of Jimmy Carter
Speaker 3: approving the tennis schedule everything, you know, you know, it's
Speaker 3: unclear whether it's actually true or what role played, but
Speaker 3: it fit the image of who he was, which was
Speaker 3: someone who was lost in the weeds, a micromanager couldn't
Speaker 3: see the thing. But all those other qualities right, his
Speaker 3: his courage, his calmness, his humanity, the those shown brightly
Speaker 3: outside of the Oval office, and so in many ways,
Speaker 3: right his entire image was rehabilitated in that process. And
Speaker 3: you know, Donald Trump, you know, really benefited from the
Speaker 3: fact that distance left him. He lost because he was
Speaker 3: a poor mentor, but the distance allowed people to forget
Speaker 3: how he treated people well.
Speaker 4: So much in this book you cover a lot of ground, Adam,
Speaker 4: Thank you so much, Adam Galinsky. Paul Colillo, Professor of
Speaker 4: Leadership and Ethics at the Columbia Business schal His new
Speaker 4: book Inspire, The Universal Path for Leading yourself and others.
Speaker 4: It is out and really gives you a lot of
Speaker 4: things to think about in terms of leadership.
Speaker 1: Today you're listening to Bloomberg BusinessWeek with Carol Masser and
Speaker 1: Tim Steneveek on Bloomberg Radio.
Speaker 2: Well, speaking of the president just today and his presidency.
Speaker 2: Investors are closely watching further moves from Donald Trump to
Speaker 2: assess their effect on markets. JP Morgan Chase, for example,
Speaker 2: is establishing a war room just for this purpose. Exactly
Speaker 2: how policy proposals will play out is not clear yet.
Speaker 2: For example, shares of companies with tariff risks largely shrugged
Speaker 2: off the threats, at least for now. Today, in response
Speaker 2: to what was reported yesterday. For an idea though of opportunities,
Speaker 2: we bring in Christi Acolian. She's head of I Shares
Speaker 2: investment strategy over at Blackrock. She joined us from San Francisco.
Speaker 2: Let's talk themes for this administration. Christy, where are you bullish?
Speaker 1: Yeah?
Speaker 5: Absolutely, And Simon Carrol, thanks for having me. It's great
Speaker 5: to be here. You know, I think that the broad
Speaker 5: theme of the investment outlook that we just put out
Speaker 5: for twenty twenty five is really that we're risk on,
Speaker 5: so we are overweight US equities. We still see really
Speaker 5: strong you know translation from that strong economic growth that
Speaker 5: we're seeing all the way down to strong corporate profitability.
Speaker 5: We're most bullish right now on large caps. We're really
Speaker 5: preferring to stay up in quality, even though on a
Speaker 5: day like today, I know we saw small caps pop
Speaker 5: a lot. Something like qua L, which is our I
Speaker 5: Shares quality ETF is where we see the best opportunity
Speaker 5: because we think that the fundamentals matter just as much
Speaker 5: too as some of the narratives that we're getting, and
Speaker 5: from a fundamental perspective, we see the strongest earning growth
Speaker 5: coming from the highest quality companies. So that's the number
Speaker 5: one area we're bullish right now.
Speaker 4: In terms of you know, christ is. Of course, this
Speaker 4: is the first full day of President Trump in the
Speaker 4: White House. We're watching various policies start to come out,
Speaker 4: or at least indications of ones, and tariff's in particular.
Speaker 4: I think there are some concerns. We talked with our
Speaker 4: Gina Martin Adams earlier of our Bloomberg intelligence team that targets,
Speaker 4: you know, tariffs at target economies usually impact companies, you know,
Speaker 4: so if you target something like Canada, which the President
Speaker 4: seems to be you know, indicating or possibly talking about
Speaker 4: US auto companies, you're going to feel it. All of
Speaker 4: this then ultimately impacts the companies, maybe impacts operating margins.
Speaker 4: So how do you roll that into your optimistic view.
Speaker 5: Yeah, I mean, you know, our optimistic view is certainly
Speaker 5: not without risk. So we're certainly focusing on trade policy
Speaker 5: as one source of unknowns, immigration policy as another, and
Speaker 5: then potential for deregulation. So I think it's a little
Speaker 5: bit of a mixed bag in terms of the direction
Speaker 5: that that can have of economic growth. You know, if
Speaker 5: we look at kind of again kind of back to
Speaker 5: the macro here, we're focused on fundamentals, even though the
Speaker 5: headlines are going to move us around quite a bit
Speaker 5: this year. What we've seen in terms of inflation looks benign.
Speaker 5: Right We got CPI data last week that was the
Speaker 5: lowest core reading month over months since July. The path
Speaker 5: that the economy is on right now feels good, so
Speaker 5: that underpins a lot of our bullish outlook. But the
Speaker 5: risks in terms of how those those policy changes might
Speaker 5: be implemented are are worth watching this year. So I
Speaker 5: think that you brought up tearff policy. Trade policy is
Speaker 5: obviously incredibly important. If that does reignite or reaccelerate immigration,
Speaker 5: then we think that there's some portfolio adjustments that you
Speaker 5: might need to make. We're talking about some thematic exposures
Speaker 5: right now, something like made great ticker for made in
Speaker 5: the USA that really focuses on domestic manufacturing if we
Speaker 5: do see those widespread tariffs put into place, or something
Speaker 5: like technology independence. I think both of those thematic ideas
Speaker 5: have a place in a portfolio, especially if you're concerned about,
Speaker 5: you know, trade policy. Even though maybe what we saw
Speaker 5: from from President Trump yesterday was a little bit more
Speaker 5: benign than markets weren't anticipating. So I think we did
Speaker 5: see a bit of a relief rally that the tariff
Speaker 5: potential was not quite as high as as investers maybe
Speaker 5: had thought maybe what was priced into markets coming in.
Speaker 4: It's still early, Yeah, okay, So what about when it
Speaker 4: comes to international Obviously, you know you're bullish on US.
Speaker 2: That's that's not a contrarian position right now, we hear
Speaker 2: I've lost track of the number of times, Carol, people
Speaker 2: talk about US exceptionalism in recent months. It's certainly the
Speaker 2: theme for the year. International equities, though they are less
Speaker 2: expensive relative to their US counterparts, what's the opportunity there?
Speaker 5: Yeah, absolutely so we you know, we think that you
Speaker 5: need international exposure in your portfolio for diversification. They're just
Speaker 5: different sources of risk and return, and that is important,
Speaker 5: especially to your point in this environment where we're overweight,
Speaker 5: and you know, we're enthusiastic about the opportunity set in
Speaker 5: the US, but so is everyone else. So I think
Speaker 5: that the benefit you get from adding to international is
Speaker 5: those lower evaluations in terms of the way that we
Speaker 5: think it's sort of best expressed right now, again kind
Speaker 5: of leaning into that quality notion. But internationally, we like
Speaker 5: international dividend payers, so companies you know that screen a
Speaker 5: little bit higher quality that can can pay that dividend
Speaker 5: and a steady dividend over time. We also think it's
Speaker 5: an opportunity for active management because it is a environment
Speaker 5: that is changing quickly and in on a path of
Speaker 5: global divergence. In terms of global growth, I think you
Speaker 5: need to have sort of high conviction in some of
Speaker 5: the areas of opportunity that you see. So we do
Speaker 5: like international, even though we're overweight the US, but I
Speaker 5: think the best opportunity there leans and screening a little
Speaker 5: bit higher quality and dividends is an interesting way to
Speaker 5: do that. Something like BIDD, which is are active international
Speaker 5: dividend fund that we just launched. I think that's going
Speaker 5: to be a really interesting one for this year.
Speaker 3: Christy.
Speaker 4: You know, you get to see right the big picture,
Speaker 4: right in terms of what's going on in the ETF
Speaker 4: industry and specifically in terms of black rock flows, I
Speaker 4: mean the industry. The ETF industry saw a record flow
Speaker 4: of about a trillion dollars into ETFs in twenty twenty four.
Speaker 4: What are you seeing in terms of flow so far
Speaker 4: here in twenty twenty five, Where is the money going?
Speaker 4: Where's the money maybe flowing out of Yeah?
Speaker 5: Absolutely so to your point, the first trillion dollar year
Speaker 5: for US ETFs, which is just a huge milestone, So
Speaker 5: I think that's really interesting. A big part of that
Speaker 5: was driven by newer asset classes and newer exposures. So obviously,
Speaker 5: you know cryptocurrencies and spot bitcoin ETFs that were launched
Speaker 5: the last January just about a year ago, took up
Speaker 5: a lot of the attention and took up a lot
Speaker 5: of the flows. But I also think that you know
Speaker 5: what we're seeing right now in this environment that is
Speaker 5: overall strong, but not without risks. We're seeing investors lean
Speaker 5: into some more niche areas of the market, something like
Speaker 5: outcome products and outcome ETFs. I think that's an area
Speaker 5: of focus where we've seen some flows. We tend to
Speaker 5: see flows follow performance. You certainly saw that in the
Speaker 5: last quarter of twenty twenty four and Q three as well.
Speaker 5: In terms of small cap you saw large inflows to
Speaker 5: small caps. Some of that has reversed and we've seen
Speaker 5: that continue to reverse a little bit more. It really
Speaker 5: is underscored by our preference for being up in quality
Speaker 5: and large cap that we think the fundamentals can catch
Speaker 5: up to some of those smaller cap names where we're
Speaker 5: seeing investors maybe get out over take profits.
Speaker 4: When you talk about outcome ets, just to clarify for
Speaker 4: those who may not be in the note, that's when
Speaker 4: you kind of use options right to achieve various goals.
Speaker 5: Yeah, absolutely so, you know, we have different forms of
Speaker 5: buffered products. I think it's probably the most the most
Speaker 5: popular there. So whether you want to you know, protect
Speaker 5: yourself to the downside of a five, a ten, or
Speaker 5: twenty percent draw down, the being able to use options
Speaker 5: to to be able to trade away some of your
Speaker 5: upside potential in exchange for really locking and more certainty
Speaker 5: of outcome on the downside. I think that's been a
Speaker 5: really interesting conversation with investors, especially in this world where
Speaker 5: we're not seeing the same diversification benefits from bonds. So
Speaker 5: if you love equities and your overweight equities, which you
Speaker 5: know we are right now, but at the same time
Speaker 5: you're not getting that same ballast or diversification from longer
Speaker 5: term bonds, how are you constructing a portfolio that can
Speaker 5: weather a variety of different environments, and I think those
Speaker 5: outcomes that having that certainty of outcome has been really
Speaker 5: important for investors too.
Speaker 2: Christy, how should people think about overlap with the S
Speaker 2: and P five hundred in an ETF with the the
Speaker 2: USA Quality Factory TF. The QUAL is the ticker, because
Speaker 2: if I look at the holdings there, Apple's the biggest holding.
Speaker 2: You got Microsoft and Vidia, Visa, MasterCard, Meta Platforms, Eli,
Speaker 2: Lilly Alphabet, United Health, TJX companies. How should investors think
Speaker 2: about that compared to just buying an index fund with
Speaker 2: the S and P five hundred.
Speaker 5: Yeah, a couple of different things. I think quality is
Speaker 5: as much about what you don't own as what you do.
Speaker 5: So QUAL is a little bit more concentrated, and you're
Speaker 5: gonna see some similar exposures to just the broad based index,
Speaker 5: but they're held at different weights and they're really screening
Speaker 5: out some of those lower quality companies. So I think
Speaker 5: that's the important thing. The other thing, too, though, is
Speaker 5: just when you look at a different at an ETF,
Speaker 5: it's really important to know what you own. The way
Speaker 5: that we construct our factory TF, so quality is one
Speaker 5: of them is sector constrained. So it's giving you a
Speaker 5: representative slice of the market.
Speaker 3: It's not just.
Speaker 5: Giving you an entirely technology fund, because technology stocks screen
Speaker 5: high quality. Really importantly, it's giving you the highest quality
Speaker 5: companies within each sector. So I think knowing whether it's
Speaker 5: a substitute for an S ANDPI founder at augmenting it
Speaker 5: is important, and the way that it is constructed is
Speaker 5: meant to be sort of a quiry.
Speaker 4: Chris, you just got about a minute left here. A
Speaker 4: story that we've been looking at in the world Raymond
Speaker 4: James Financial entering the ETF market through its asset manager division.
Speaker 4: They have a vast network of financial advisors who up
Speaker 4: to this point we're probably offering things like black Rocky tfs.
Speaker 4: We are increasingly seeing others get into the ETF industry,
Speaker 4: and especially those with their own financial advisor network. We're competition.
Speaker 4: Does that make it a little bit tougher for you guys, Well.
Speaker 5: I mean, I think the general trend that we saw
Speaker 5: in terms of the one trillion dollars of flows just
Speaker 5: means that the overall pie is getting bigger. So, you know,
Speaker 5: competition is not bad. You know, we lean a lot
Speaker 5: into our reputation and brand and the really full suite
Speaker 5: of product offerings that we have, so really feeling very
Speaker 5: confident about ETF flows this year as well.
Speaker 4: All Right, cool, Steph, great overview. Christy Aculi and she's
Speaker 4: head of I shares Investment strategy at Blackrock, joining us
Speaker 4: on this Tuesday from San Francisco