Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Jason Kelly. We're right here every day bringing you the
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Speaker 1: Week on iTunes, SoundCloud, bl Bloomberg dot com. You can
Speaker 1: also listen to our radio show at two pm Eastern
Speaker 1: on Bloomberg Radio every weekday, or watch us on YouTube
Speaker 1: by searching Bloomberg Global News. The US labor market, as
Speaker 1: you've been hearing from Charlie and others right here at
Speaker 1: Bloomberg continuing to regain some ground in July was at
Speaker 1: a slower pace, indicating the economic rebound still making headway,
Speaker 1: depue a surge in coronavirus infections. Larry Cudlow, the President's
Speaker 1: Chief Economic advisor, ahead of the National Economic Council, weighing
Speaker 1: about the report earlier on Bloomberg Radio and Bloomberg TV.
Speaker 1: This was a hot spot report. This is July eighteen,
Speaker 1: and the surging hotspots in the south and West and
Speaker 1: some other places began in the back end of June
Speaker 1: and lasted through July. You know, there was some pullback
Speaker 1: of reopenings and so forth, and yet and yet we
Speaker 1: still got one point eight million, with a big decline,
Speaker 1: almost a full percentage point drop in the unemployment rate,
Speaker 1: which will move to single digits easily in the summer
Speaker 1: and fall. It seems like just about anybody looking at
Speaker 1: this had the end Yet regardless of what you made
Speaker 1: of it. Let's put it to Chris Lew, Senior fellow
Speaker 1: at University of Virginia's Miller Center. He, of course, is
Speaker 1: former Deputy Secretary of Labor under President Obama. He joins
Speaker 1: us on the phone from in and around the nation's capital. So, Chris,
Speaker 1: as you've had a little bit of time, a few
Speaker 1: hours to digest this, and you know the mechanics of
Speaker 1: this better than anyone. What should we take away from
Speaker 1: this specific jobs report? Well, look, I think the top
Speaker 1: line number one eight million, as well as the drop
Speaker 1: in unemployment or both positive signs. But I think when
Speaker 1: you look beneath this, you know you also have to
Speaker 1: consider the context that we lost about twenty two million
Speaker 1: jobs in the spring, We've are still down about thirteen
Speaker 1: million jobs. Uh, and it and it's pretty obvious that
Speaker 1: the economy or the economic recovery is slowing pretty dramatically
Speaker 1: from what we saw two or three months ago. Um.
Speaker 1: So there are a couple of things that I look at.
Speaker 1: I look at, uh, you know, the five million people
Speaker 1: that have left the workforce. Obviously, we saw yesterday that
Speaker 1: about thirty one million people are unemployment, So we're still
Speaker 1: in a pretty big hole. And you know, again, I
Speaker 1: mean this sort of confirms what we've always known, which
Speaker 1: is we're never going to have a sustained recovery until
Speaker 1: we get our arms around this virus. And you know,
Speaker 1: every time this kind of breaks out in a different
Speaker 1: part of the country, we have these reopenings being paused
Speaker 1: or rolled back again. And that's just a really off
Speaker 1: environment for this economy to get any legs in. So
Speaker 1: then what kind of visibility would you think you might
Speaker 1: be able to feel comfortable talking about Chris in terms
Speaker 1: of the types of labor reports that maybe we should
Speaker 1: all get ready for over the next few months as
Speaker 1: a society, because we know the vaccines coming, but the
Speaker 1: dates are maybe the end of the year, maybe early
Speaker 1: next year. Well, look, I think I think we're going
Speaker 1: to continue to kind of climb out of this hole.
Speaker 1: But I would take issue with where Larry Cudlow is
Speaker 1: as to whether you know, this is really kind of
Speaker 1: a hotspot or a v shape recovery. I think it's
Speaker 1: kind of crawling out of this. And I think what
Speaker 1: we see in among the different data that we've seen
Speaker 1: over the last couple of weeks, you know, some concerns
Speaker 1: whether temporary layoffs or what we thought were temporary are
Speaker 1: now going to become permanent. Um, we continue to have
Speaker 1: this issue about UH state and local government employees and
Speaker 1: whether they're going to faith layoffs if there's no relief
Speaker 1: from Washington as well, and the other thing I just
Speaker 1: started look in this number, I mean, two thirds of
Speaker 1: the gains in these report we're from basically leisure, hospitality, restaurants,
Speaker 1: and retail, and we know that those are kind of
Speaker 1: the industries where it really there's a lot of face
Speaker 1: to face interaction with people, and you do wonder if
Speaker 1: we can't get our arms around this pandemic, um, whether
Speaker 1: the gains just sort of stop at that point, and
Speaker 1: whether people are just going to permanently change their spending habits. Um.
Speaker 1: You know, it's hard to imagine kind of the travel
Speaker 1: and toursm industry going back to normal anytime soon. Alright, So, Chris,
Speaker 1: you mentioned help coming from Washington, and that's where I
Speaker 1: want to go next, because I feel like everyday, folks,
Speaker 1: and I would put myself in that category, even knowing
Speaker 1: enough to be dangerous looking at Washington, think, hold on
Speaker 1: a second, Like there's a clear need here. Why can't
Speaker 1: these guys get together and agree on something what's going
Speaker 1: on here? I mean, help us understand what the stalemate
Speaker 1: is and what you thing may happen given that you
Speaker 1: know how Congress works, you've worked there, Yeah, I mean, look,
Speaker 1: the lesson we learned from the Great Recession is that
Speaker 1: if you come to the table with two little stimulus
Speaker 1: or you end it too quickly, uh, it means the
Speaker 1: downturn goes on longer. You know. During in two thousand nine,
Speaker 1: the Obama Administration's got an eight hundred billion dollars stimulus
Speaker 1: package path and that was it. And you know, we're
Speaker 1: now talking trillions of dollars that have already spent we're
Speaker 1: talking about, you know, a House Democratic proposal about three trillion,
Speaker 1: and then the White House coming in at about a
Speaker 1: trillion right now, And so I applaud them for saying
Speaker 1: more money needs to go in, UM, but it's very
Speaker 1: clear when you look at things like enhanced unemployment benefits,
Speaker 1: whether you look at kind of assistance to state and
Speaker 1: local governments, particularly assistance to schools that are trying to
Speaker 1: reopen up, there is a real financial need around the
Speaker 1: country right now. UM. And I guess the only question
Speaker 1: is is can they compromise in the middle. I think
Speaker 1: that they probably win, ill Um, but but I do
Speaker 1: wonder about, you know, all of those people trying to
Speaker 1: figure out, hey, how do I make my rent payment?
Speaker 1: How do I buy groceries? While Congress is kind of
Speaker 1: diithering over all of this. Well, and we're going to
Speaker 1: continue this conversation because Chris, I want to ask you
Speaker 1: about a tweet that the President UM put out yesterday
Speaker 1: about working on executive orders when it comes to payrell
Speaker 1: tax cuts, of fviction protections, unemployment extensions, and student loan
Speaker 1: repayment options. Because we are trying to understand exactly what
Speaker 1: authority the president has to has to do with this. Chris,
Speaker 1: we talked about President Trump his tweet yesterday, how we
Speaker 1: talked about working on these executive order when it comes
Speaker 1: to apparel, tax cut, of viction protections, unemployment extensions, and
Speaker 1: student loan repayment options executive orders. My understanding is some
Speaker 1: things he might be able to do, some things are dicier.
Speaker 1: I think that's exactly right. I think when you talk
Speaker 1: about uh, mortgage or rent relief to the extent that
Speaker 1: the mortgages are backed by the federal government or or
Speaker 1: you know, it's it's it's someone who's in federal public housing,
Speaker 1: I think that's certainly possible. I think obviously student loans
Speaker 1: since a lot of them are backed by the federal government. Um,
Speaker 1: some kind of extension of the mortoring is possible. The
Speaker 1: wholesale shifting of money to provide enhance unemployment, I'm pretty
Speaker 1: dubious that you can do this. You know, it's a
Speaker 1: cardinal rule of appropriations law that appropriated funds can only
Speaker 1: be used for appropriated or purposes, So you can't just
Speaker 1: kind of move pots of money around. And what it
Speaker 1: appears that he's doing is that there's money that was
Speaker 1: in the Cares Act that they think has not been
Speaker 1: spent that they want to shuffle around, And the truth
Speaker 1: of it is that while it's not been spent, it's
Speaker 1: already been allocated, and a lot of that has already
Speaker 1: been allocated to to state and local government. So all
Speaker 1: you're doing is basically robbing one pot for another part,
Speaker 1: even if you could do it so um, he might
Speaker 1: be able to do some things, but he can't. He
Speaker 1: can't do everything that is being discussed right now in
Speaker 1: cong Us. So speaking of some of the president's actions, Chris,
Speaker 1: I got to ask you about what's been going on
Speaker 1: with the president and China and TikTok and bite tens
Speaker 1: and tens and h what do you make of that
Speaker 1: from the perspective of someone who understands global trade policy
Speaker 1: and US China relationships, Like, what are we to make
Speaker 1: of this and what's most likely to happen next in
Speaker 1: your estimation? Yes, so there there, Look, there is a
Speaker 1: legitimate issue when we're talking about TikTok and wheat Chat
Speaker 1: in terms of data being shared with the Chinese government,
Speaker 1: data about US users or the censorship that's on the
Speaker 1: wheat Chat platform, which we don't talk about enough, but
Speaker 1: it's a pretty big platform here in the United States
Speaker 1: among Chinese Americans. Um. So there is a legitimate issue,
Speaker 1: and there's a bipartisan concern about it. It's the reason
Speaker 1: why if you're a Department of Defense of show you
Speaker 1: you're you're instructed not to have TikTok on your phone.
Speaker 1: But how you're going about this is odd and I think, um,
Speaker 1: you know, unconventional. Um to use an executive order under
Speaker 1: the guys in national security probably stresses, stretches the bounds
Speaker 1: of what I can consider appropriate. And I think what
Speaker 1: the president is doing with respected TikTok and trying to
Speaker 1: force a transaction. Uh. And then you know this thing
Speaker 1: he throughout the other day saying hey, and the federal
Speaker 1: government should take a cut of that. Um. You know,
Speaker 1: I think against stretches. I think what Democrats and Republicans
Speaker 1: would would say is acceptable behavior of the federal government
Speaker 1: towards the business. Um. And so look, I think the
Speaker 1: aim um is probably right in trying to rain them in,
Speaker 1: but I have some serious questions about how he's going
Speaker 1: about doing this in terms of the U. S. China relationship. Chris,
Speaker 1: you know, I'm curious about some of the conversations you
Speaker 1: guys had in the Obama White House. I mean, are
Speaker 1: you surprised at how contentious is it has become and
Speaker 1: kind of how this tech war between the two nations
Speaker 1: has progressed. Do you think we would have gotten there ultimately?
Speaker 1: Maybe in a different way, But you know, China is
Speaker 1: a much more developed nation. It's much more important to
Speaker 1: the global economy. It's not like it was ten years ago, right,
Speaker 1: And I would argue that if you wanted to counter China,
Speaker 1: the one thing we should have done, um, was to
Speaker 1: pass to be part of the Transpacific Partnership, which I
Speaker 1: would have put the US in a trading relationship with
Speaker 1: a lot of the other countries in Asia. So I
Speaker 1: think that was a huge missed opportunity by this administration.
Speaker 1: And then obviously we've had, you know, a trade war
Speaker 1: for the better part of the Trump administration, which is
Speaker 1: now morphed into kind of a war over the you know,
Speaker 1: cause of coronavirus and and how forthcoming they've been, which
Speaker 1: is now morphed into kind of a tech trade war
Speaker 1: as well. UM. I don't think this is good, um,
Speaker 1: but I think we need to recognize, you know, the
Speaker 1: U S. China relationship is a complicated one. Uh. There
Speaker 1: are certainly areas where we need to find a way
Speaker 1: to collaborate with them on something like um climate change
Speaker 1: being the most important one. But there are obviously tensions.
Speaker 1: I mean they are a rival economically and increasingly militarily.
Speaker 1: So I think we need to look at this in
Speaker 1: a in a holistic way. And and my concern is
Speaker 1: that too much of these are kind of one off
Speaker 1: battles between the US and China without engaging our allies,
Speaker 1: and I think without having a clear understanding of two, three,
Speaker 1: four steps down the road. Absolutely all right, great context
Speaker 1: is always timely and insightful. We love catching up with you.
Speaker 1: Chris Lew down at University of Virginia's Miller Center, of course,
Speaker 1: a former member of the Obama administration. Great to get
Speaker 1: his insight. We're listening to Bloomberg Business Week, Jason Kelly,
Speaker 1: Carroll Masser, and you know, as we look to wrap
Speaker 1: up the first hour of the show, Carol, I think
Speaker 1: it's worth dwelling a bit if we can on our
Speaker 1: conversation with Chris Lew only because you know, you and
Speaker 1: I were messaging to each other back and forth towards
Speaker 1: the end of that interview. He's really become a go
Speaker 1: to guy for us and and I think one of
Speaker 1: the most important things to remember about him, and he
Speaker 1: really demons rate in that conversation, was that he has
Speaker 1: worked across the various branches of government. Because we didn't
Speaker 1: get to talk about Supreme Court, he worked in the
Speaker 1: judiciary system as well, so he knows all the levers
Speaker 1: and so his perspective one what the executive branch can
Speaker 1: and can't do, I think is critical right now in
Speaker 1: terms of figuring out what happens next. Yeah, totally. And
Speaker 1: that's why I love, you know, talking to him, because
Speaker 1: he really does understand how government works, as you said,
Speaker 1: from the three branches of government. I put it out
Speaker 1: on Twitter. I put the link out for our Apple
Speaker 1: podcast feed, um, so that folks can It'll be uploaded
Speaker 1: a little bit later on, but definitely check it out.
Speaker 1: It's a great thing for I was going to say
Speaker 1: the ride home, but your home probably already exactly. Maybe
Speaker 1: you could have a glass of one at the end
Speaker 1: of the danes. I listened a lot of podcasts doing dishes,
Speaker 1: all right, U. Joe Weber the editor of Bloomberg Business Week.
Speaker 1: He is joining us from Massachusetts to talk about a
Speaker 1: really interesting story. Uh it's a out Italy. It's about bicycles,
Speaker 1: and it really is a window into how we are
Speaker 1: recovering very unevenly, shall we say, from everything that's going
Speaker 1: on right now. Joel tell us about this story by
Speaker 1: Vernon silver Well, on its face, it sounds like a
Speaker 1: great program, right, Uh, the bicycle bailout that it came
Speaker 1: up with, And that was what really um intrigued me
Speaker 1: about it because, uh, you know, here, here's a here's
Speaker 1: a country known for bicycles and known for cycling, and
Speaker 1: um and also goes to say, like, you know, let's
Speaker 1: have fewer automobiles on the road. Um As this program
Speaker 1: is sort of attempting to do, but at the same
Speaker 1: time it risks alienating um, large portions of the country
Speaker 1: who can't even afford to buy a bike in the
Speaker 1: first place. Right. So what's ironic about this is that
Speaker 1: one of the ways that governments are attempting to stimulate
Speaker 1: the economy is to give consumers a break. But then
Speaker 1: there's so many people who have fallen on hard times
Speaker 1: during the pandemic that what's really going to happen here
Speaker 1: is that we're gonna have inequality being exacerbated. Yeah, I mean,
Speaker 1: I love I love this story, and I love what
Speaker 1: m Vernon and the team, right you know, Joel that
Speaker 1: they talk about, you know, these trillions of dollars. We're
Speaker 1: just talking about it with Chris lou who was in
Speaker 1: the Obama administration. You know, trillions of dollars that are
Speaker 1: going for everything, and by everything that sometimes means you know,
Speaker 1: like a really expensive bicycle. And you're right, it's it's
Speaker 1: helping to kind of widen ultimately, the income gaps that
Speaker 1: are already laid bay are by the virus. Um, let's
Speaker 1: bring Vernon Silver into the conversation as well. He joins
Speaker 1: us right now, and he is UH Projects and Investigations Report,
Speaker 1: and he joins us on the phone I believe from Rome.
Speaker 1: So Vernon talked to us about this story. Um, because
Speaker 1: it really is a great read, but it also kind
Speaker 1: of makes you stop for a moment and realize, you know,
Speaker 1: the inequal qualities that are out there. Yeah, honestly, it's
Speaker 1: this thing starts with the moment that Italy comes out
Speaker 1: of the beginnings of of this lockdown, and one of
Speaker 1: the most noticeable things on the streets where the piles
Speaker 1: of boxes of bicycles and the crowds of people in
Speaker 1: front of the bike shop. Um, because when you are
Speaker 1: giving people essentially the ability to get a bike of
Speaker 1: up to a value of a thousand dollars at six off,
Speaker 1: people are gonna grab it. But those people are not,
Speaker 1: you know, the delivery bicycle guys. It's people like people.
Speaker 1: You know that. We saw an interview which is, you know,
Speaker 1: someone who needs a couple a couple of folding bicycles
Speaker 1: to take to their beach house in Tuscany so vernon
Speaker 1: how expensive were the bikes that that you bought? Okay,
Speaker 1: this is you got me out. I was saying, we
Speaker 1: have not discussed this, and I was gonna save it
Speaker 1: for the end, but I had to try, right, I mean, um,
Speaker 1: so here's here, and this is interesting because this is
Speaker 1: also about inequality. Um. I've sprung for a three hundred
Speaker 1: euro bipe. It's a mint green number with a brown
Speaker 1: seed It's really nice. Um. But I did not go
Speaker 1: for the super expensive one because the decree that announced
Speaker 1: this thing said resident citizens in Italy of large of
Speaker 1: cities could get this, and I'm not an Italian citizen,
Speaker 1: so I had no guarantee that I was going to
Speaker 1: get the rebate, and they're like, tonight, literally tonight, the
Speaker 1: government is working on finalizing the wording of who exactly
Speaker 1: gets it, and I won't know yet if I get it.
Speaker 1: But if they keep it with just citizens, talk about inequality.
Speaker 1: Who are the people who are coming to Italy who
Speaker 1: need to do the jobs that might require a bicycle,
Speaker 1: Immigrants from Africa, from the Middle East, from you know,
Speaker 1: Filipino delivery men. Right, if you if you only give
Speaker 1: it to Italian citizens, you're cutting out like all the
Speaker 1: people who you can see on a daily basis who
Speaker 1: need a bicycle. So I might not qualify as somebody
Speaker 1: who's not an Italian citizen for a second. For a
Speaker 1: second there say who really needs bikes? Hard working award
Speaker 1: winning journalists. So but and then we might have shot
Speaker 1: off your mic. I'm just gonna tell you, um no.
Speaker 1: But it really reminds us, right, these programs, I mean,
Speaker 1: I don't know, are we supposed to say it's not
Speaker 1: going to be perfect. We get it and there are
Speaker 1: ways to hopefully fix it. I mean, I don't know
Speaker 1: what's the takeaway from this reporting that you did? I mean,
Speaker 1: what's interesting is we made a global right. We put
Speaker 1: out the call to reporters around the world and came
Speaker 1: up with amazing stuff. You can get an electric car
Speaker 1: for free in Germany, but you have to have you know,
Speaker 1: over ten thousand euros to spend on the electric car
Speaker 1: in the first place. You can get dollars Australian back
Speaker 1: for renovating your house in the suburbs of Melbourne, but
Speaker 1: you have to own a house. You have to have
Speaker 1: the money to put up to the renovation. Right, these
Speaker 1: are these are people with means. This is not getting
Speaker 1: the money to everybody. What we from the economists, what
Speaker 1: we got was really interesting is you can deploy as
Speaker 1: a government the money in better ways, whether it's through
Speaker 1: paying everybody a living wage no matter what you know,
Speaker 1: whether they're out of work or not. Um, you know,
Speaker 1: cutting everybody's payroll tax, just pumping money directly into the
Speaker 1: economy rather than doing it piecemeal in ways that might
Speaker 1: be less equal. So I mean that really brings it
Speaker 1: to a head, right Vernon, like you can either do
Speaker 1: these bailout programs that help consumers for for purchases of
Speaker 1: luxury items, let's call them. What in practice is anybody
Speaker 1: got the other thing dialed yet No, it's it's I mean, essentially,
Speaker 1: once you're spending trillions, you might as well throw it
Speaker 1: it at everybody. I mean, on the other end, there
Speaker 1: are the richest families in countries like Italy that were
Speaker 1: able to borrow billions of dollars that they might not
Speaker 1: even need, hey back to run their companies. Maybe that's good.
Speaker 1: Maybe you know, they don't have to fireworkers, but they are.
Speaker 1: They are benefiting at the top end. People are benefiting
Speaker 1: at the middle. But you know, if you have a
Speaker 1: fire hose of trillions, why not just spread everywhere? Is
Speaker 1: the reply that we got. Yeah, interesting, Well it is
Speaker 1: a sort of force of reporting. And I'm glad you
Speaker 1: mentioned sort of the call that went out to the Empire,
Speaker 1: because it is a really nice effort that you put together.
Speaker 1: As always. Vernon Silver joining us from Rome H, one
Speaker 1: of our senior writers at Bloomberg, just love, love, love
Speaker 1: his work, and it's a way to tell the story
Speaker 1: that we don't always here. Earlier in the week, yesterday,
Speaker 1: in fact, was the Bloomberg Equality S of the latest edition,
Speaker 1: and it was all about race on Wall Street trying
Speaker 1: to make some significant changes, and I was fortunate to
Speaker 1: catch up with Henrykravis. He is the co chairman, co CEO,
Speaker 1: co founder at kk ARE, the private equity firm been
Speaker 1: around for forty plus years. It bears his name and
Speaker 1: that of his cousin George Roberts and Jerome Colberg, their
Speaker 1: fellow founding partner, also was joined by William Goodlow. He's
Speaker 1: the president and CEO of s EO. That is a
Speaker 1: group that works with people like Henry Kravis, who is
Speaker 1: the chairman of that group. Two basically prepare folks who
Speaker 1: come from more diverse backgrounds to work on Wall Street.
Speaker 1: Here is what Henry Kravis had to say. We're behind
Speaker 1: Wall Streets, behind, the c suite is behind. We've all
Speaker 1: been slow and recognizing the problem and doing something about it.
Speaker 1: I really believe that maybe now for a change, we
Speaker 1: have the opportunity to make a big difference the There's
Speaker 1: no question the numbers are bleak. You can look anywhere.
Speaker 1: There's no way that the UH corporations and Wall Street
Speaker 1: firms have not hired the diverse candidates. Eat will to
Speaker 1: or an access of the percentage of the black population
Speaker 1: in America. None of us have that. But we have
Speaker 1: a long way to go and I really believe that
Speaker 1: we will. But let me just say, it starts at
Speaker 1: the top. If the CEO of any company, whether it
Speaker 1: be Wall Street or c Suite, has made a decision
Speaker 1: that they're going to make a change, and they really
Speaker 1: are going to now make a difference, it will happen.
Speaker 1: We all have to overcome, in my view, the unconscious
Speaker 1: bias nous that exists everywhere. You know, if you think
Speaker 1: about what we all go through every day, the slight
Speaker 1: injustices that minorities face every day is incredible. These slight
Speaker 1: injustices white the executives don't face. And so we've got
Speaker 1: to be patient. We've got to make a decision that
Speaker 1: we're going to change this. And it starts maybe not
Speaker 1: only with the CEO, but it starts with boards of directors.
Speaker 1: So if the board of directors is a diverse board
Speaker 1: of directors for any company, you'll start to have a change.
Speaker 1: Let me give you an example, Okay. At KKR, we
Speaker 1: made a decision about two years ago that we were
Speaker 1: going to change, uh the makeup of the boards of
Speaker 1: all the companies that we controlled, and we had a
Speaker 1: goal to get to over a hundred diverse board members
Speaker 1: in our portfolio companies, and I'm happy to say we
Speaker 1: got there. So now what we have to do. We've
Speaker 1: got to increase the hiring. It's it's not just the hiring,
Speaker 1: but it's the training. It's being patient and working with
Speaker 1: diverse candidates that come in. So we have a long
Speaker 1: way to go. But if you make up your mind
Speaker 1: that you can do it, you'll do it. You'll get
Speaker 1: it done. So let's talk about getting it done. And
Speaker 1: William Goodlow, you are the CEO of s e O.
Speaker 1: And for anyone who's been paying attention to Bloomberg this week,
Speaker 1: the cover story of Bloomberg Markets featured an incredibly powerful
Speaker 1: series of conversations. And as I talk to people about
Speaker 1: those conversations, there are a number of alumni of your
Speaker 1: organization there, William talking about their experiences, talking about them
Speaker 1: in a very honest way. Help us understand what SEO does,
Speaker 1: especially when it comes to changing the face of Wall Street.
Speaker 1: It goes back to SEO founding in n with founded
Speaker 1: with a mission to create a more equitable society, and
Speaker 1: that's at every level, including the highest economic levels of society.
Speaker 1: Because we know that talent is widely distributed and yet
Speaker 1: it's unevenly developed. And if there's one takeaway we hope
Speaker 1: your audience UH takes is that s c O is
Speaker 1: in the talent development business and we've been doing it
Speaker 1: for fifty seven years. Um. You know. Unfortunately, the murder
Speaker 1: of George Floyd brought more attention to some of the
Speaker 1: inequities in society, and we needed the protests to bring
Speaker 1: that attention to it. But the real change will come
Speaker 1: when we change the systems and the structures, and that's
Speaker 1: what SCO has been doing. Each year, we serve over
Speaker 1: four thousand young people, overwhelmingly Black and Latin x uh,
Speaker 1: and we address systemic and equities through four different programs.
Speaker 1: That's the old founding program. The Scholars program serves high
Speaker 1: school and college students two thousand from New York City
Speaker 1: Public school the loan from grades nine through twelve. Students
Speaker 1: attend several hundred hours of intense s CEO academic classes
Speaker 1: while still attending their public schools. By twelfth grade, students
Speaker 1: are truly academically prepared for college level work. But s
Speaker 1: CEO doesn't stop there. We provide comprehensive support for students
Speaker 1: throughout college and earned a college degree first for similar
Speaker 1: students from low income backgrounds nationally, and that is William Goodlow,
Speaker 1: the CEO of s c O, joined by Henry Crevice,
Speaker 1: of course, the co founder, co chairman and co CEO
Speaker 1: of KKR. Carol. Yeah, great conversation. I think the more
Speaker 1: and more that we talk about this and we hear
Speaker 1: from the likes of someone like Henry Cravis or William Goodlow,
Speaker 1: we get an idea of what's going on. We also
Speaker 1: get an idea of what the problems are and what
Speaker 1: still needs to be done. But I think we've got
Speaker 1: to make sure that this conversation continues to happen. Jason, Well,
Speaker 1: and it starts as at the top as Henry said.
Speaker 1: And that board of director's piece, I think is really
Speaker 1: important because the governance of companies it's got to change. Brother, journal. Yeah,
Speaker 1: but you let me drive. Oh no, no, no no, no,
Speaker 1: he's going to drive, honey, please, I'll do the riding drivel.
Speaker 1: I want to drive. Just drive, baby, good questions trying.
Speaker 1: This is the drive to the globe. Give me thanks,
Speaker 1: We'll drying us down on Bluebird Radio. All right, it
Speaker 1: is a time before the drive to the clothes on
Speaker 1: this Friday to wrap up the trading week. Let's break
Speaker 1: it down with Jim Lowell, chief investment officer of Advisor Investments.
Speaker 1: They're looking after a little more than five billion dollars.
Speaker 1: Joining us on the phone from Nita Massachu, says Jim,
Speaker 1: how are you? How are things up in the Greater
Speaker 1: Austin area. They're doing just fine. Obviously we live in
Speaker 1: crazy times, not just in terms of COVID nineteen, but
Speaker 1: obviously in an election year and with a market that's
Speaker 1: probably a way ahead of the medical facts. We think
Speaker 1: now it's a very good time to stay rational, calm, collected,
Speaker 1: and of course disciplined. That is a great place to start.
Speaker 1: What does rational mean then? Does it mean gold which
Speaker 1: has been on a tear? Does it mean cash? And
Speaker 1: you know under the mattress? What does it really mean Jim, Well,
Speaker 1: you certainly could have some cash on hand. We think
Speaker 1: it's was both as a buffer for what we suspect
Speaker 1: will be increased volatility as we get closer to the election,
Speaker 1: but also as some dry powder for opportunities that may
Speaker 1: manifest themselves along the way. If, of course, we get
Speaker 1: a vaccine, all bets are suddenly going to be on
Speaker 1: the economy being able to whether the storm of the
Speaker 1: COVID storm is better than it than it will without it.
Speaker 1: But we also have been noticing gold. Certainly, our tactical
Speaker 1: models have been picking up on the on the gold trend. UM.
Speaker 1: Our view is that gold is a very poor long
Speaker 1: term hold, but there are periods where it can give
Speaker 1: investors not just emotional comfort but even tactical return advantage. UM.
Speaker 1: Gold of course occupies that paradoxical space where investors tend
Speaker 1: to like it when they think the economy is going
Speaker 1: to heck, and they also tend to like it when
Speaker 1: they think the economy is overheating. UM. We think we're
Speaker 1: probably between those two two moments. And while we do
Speaker 1: think gold may have a little bit of room to run,
Speaker 1: uh maybe even into next year, we would be very
Speaker 1: cautious about recommending it to anyone other than is a speculative.
Speaker 1: Best Jim, talk to me about China, because we talked
Speaker 1: a lot about it this week. It's sort of a
Speaker 1: I was gonna say, tactical way, but in a very
Speaker 1: specific way as it relates to TikTok and now more
Speaker 1: recently what's going on with ten cent, and I mean
Speaker 1: the rhetoric is certainly being amplified, but these are some
Speaker 1: real actions potentially that are being taken. How does that
Speaker 1: give you pause when you think about any exposure to China?
Speaker 1: How do you figure that into an investment thesis. So
Speaker 1: it's an excellent question, and we have been cautiously moving
Speaker 1: our games onto China, actually having a small take in
Speaker 1: some some China oriented positions inside of the actively managed
Speaker 1: funds that we own. We think that the rhetoric is
Speaker 1: likely never going to die down. But the major trends
Speaker 1: I think is that in my life style I'm sixty
Speaker 1: years old, we've moved from an outright belief in a
Speaker 1: global economy to really a duopolate US China with every
Speaker 1: other country effectively playing second or third fiddle, some not
Speaker 1: even making it to band camp. So we think you
Speaker 1: want to have some China exposure, you want to have
Speaker 1: US exposure. But we suspect that there will be clashes
Speaker 1: along along the road in any given year, whether it's
Speaker 1: an election year, whether it's a Republican or democratic president.
Speaker 1: China has been a hard country to bring to the
Speaker 1: bargaining cable in any real way. All that said and done,
Speaker 1: it has grown its own economy better and better over
Speaker 1: the past decade to the point where we think there
Speaker 1: are some attractive opportunities are well, we definitely think that
Speaker 1: if you're looking inside of China and you want to
Speaker 1: look at brands that Chinese consumers tend to want to own,
Speaker 1: we we are first interest in China was really from
Speaker 1: an investment angle was parked by Apple and wondering whether
Speaker 1: or not brand America products We're going to get hurt
Speaker 1: by China's UH social ranking system based on consumer interesting behavior,
Speaker 1: and what we saw was an opportunity in brand China
Speaker 1: for the Chinese consumers. So we like, we like technology
Speaker 1: and consumer related sectors inside of China's economy. Here at home,
Speaker 1: we could see to love the battleship balance sheets of
Speaker 1: bootship dividend growers UH and health care remains a significant
Speaker 1: overweight in our portfolios. Talk to me more about health
Speaker 1: care because obviously so much focus on so many aspects
Speaker 1: of that, But healthcare is a big bucket. Drill down
Speaker 1: a level if you can. Health Care is effectively twenty
Speaker 1: plus percent of our economy, So you're right, it is.
Speaker 1: It is the biggest bucket in our economy. And when
Speaker 1: you look at the demographics demand from our aging population,
Speaker 1: that of Japan, that of Europe. There's obviously a necessary
Speaker 1: demand for more and less invasive ways to treat a
Speaker 1: whole host of of illnesses for an aging population. But
Speaker 1: then you also have emerging market demand where consumers are
Speaker 1: finally able to demand first any healthcare, and then more
Speaker 1: are in better ways to treat themselves through healthcare. So
Speaker 1: we think that it is a sector that has uh
Speaker 1: long term benefits. It's risk adjusted return profile is stellar.
Speaker 1: I would also say that when you look at health care,
Speaker 1: it is increasingly correlated to what's going on in the
Speaker 1: innovation side of the technology hub, which we also like,
Speaker 1: and so inside of healthcare you get a great risk
Speaker 1: adjusted necessary demands story with some real innovation. Hey, you know,
Speaker 1: on the health care side, Jim, Jason and I have
Speaker 1: had conversations with a lot of as you would expect
Speaker 1: because of the virus, healthcare professionals, people who are running
Speaker 1: you know, massive health care systems. One of the things
Speaker 1: they say is that we are increasingly a need to
Speaker 1: but already slowly starting to move towards a system that's
Speaker 1: more about keeping folks well. We've talked about it a lot.
Speaker 1: We still have a long way to go, rather than
Speaker 1: you know, people coming in when everything's wrong, but rather
Speaker 1: you know this folk is I'm keeping everybody well. Is
Speaker 1: that an investment play that you're thinking about seriously and
Speaker 1: making bets on or you're kind of waiting to see
Speaker 1: how it works out? Well, I would say it's it's
Speaker 1: kind of like thinking about investing in solar. If you
Speaker 1: own the major oils, you own a big stakes of
Speaker 1: solar power inside of their holdings. If you look at
Speaker 1: the h MOS people, the insurance companies, they're really trying
Speaker 1: to figure out ways too, as you say, help us
Speaker 1: live more healthfully. Not because they want us all necessary
Speaker 1: to live more healthily, but it's typically better for their
Speaker 1: bottom line. And of course, you know, tragically inside of
Speaker 1: COVID ninety what we see is just take the simple
Speaker 1: issue of obesity having a higher morbidity rate with regard
Speaker 1: to COVID nineteen. So I think as a culture, um,
Speaker 1: this may be a this may be a turning point
Speaker 1: where we really all do look to live more helpfully.
Speaker 1: But yeah, don't tell that the Kraft mac and cheese
Speaker 1: yea oreos. We've gone, We've gone long oreos during this
Speaker 1: pain endemic all right. Jim Little, chief investment officer for
Speaker 1: Advisor Investments, joining us on the phone from Niedham, Massachusetts.
Speaker 1: Thanks so much for listening to Bloomberg Business Week. Download
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