WEBVTT - US Unveils Fresh Sanctions on Russia After Navalny’s Death 0:00:00.120 --> 0:00:07.680 Bloomberg Audio Studios, Podcasts, radio news. 0:00:08.600 --> 0:00:12.920 This is Bloomberg Business Wait inside from the reporters and 0:00:13.119 --> 0:00:16.720 editors who bring you America's most trusted business magazine, plus 0:00:16.760 --> 0:00:20.919 global business, finance and tech news. The Bloomberg Business Week 0:00:20.960 --> 0:00:26.079 podcast with Carol Messer and Tim Stenebek from Bloomberg Radio. 0:00:27.320 --> 0:00:27.480 Well. 0:00:27.520 --> 0:00:30.040 Tomorrow will mark the beginning of the third year of 0:00:30.080 --> 0:00:32.800 the Russian invasion in war with Ukraine. On this cusp 0:00:32.840 --> 0:00:36.520 of another year of war potentially between the two. Likely 0:00:36.600 --> 0:00:39.720 between the two, the US unveiling its biggest one day 0:00:39.720 --> 0:00:43.600 sanctions paction package excuse me against Russia since the invasion 0:00:43.640 --> 0:00:47.000 of Ukraine. They targeted more than five hundred people in entities. 0:00:47.240 --> 0:00:49.600 It's a fresh bid to squeeze the country's economy, the 0:00:49.680 --> 0:00:52.479 Russian economy, and send a message over the death of 0:00:52.560 --> 0:00:54.200 dissident Alexei Navalni. 0:00:54.440 --> 0:00:58.160 Here's US Treasury's Deputy Secretary Wally Idayamo addressing the new 0:00:58.240 --> 0:01:00.000 sanctions earlier on Bloomberg Survey. 0:01:00.520 --> 0:01:03.320 Important to remember that our objective remains the same, going 0:01:03.360 --> 0:01:06.440 after Russia's military and Dutch sized complex and their ability 0:01:06.480 --> 0:01:09.080 to earn money to prop up their economy and buy 0:01:09.080 --> 0:01:11.000 the goods they need to fight the war they want. 0:01:11.400 --> 0:01:14.160 What we're doing today is we are furthering those actions 0:01:14.240 --> 0:01:16.959 by going after companies in Russia that are helping to 0:01:17.000 --> 0:01:18.280 build military equipment. 0:01:18.800 --> 0:01:23.440 That's US Treasury Deputy Secretary Waliadiyamo earlier on Bloomberg to 0:01:23.520 --> 0:01:26.600 understand the strategy and endgame of Russia and for President 0:01:26.640 --> 0:01:29.320 and President Putin, Carol, let's get to the interview. 0:01:29.400 --> 0:01:31.720 YEP back with us a favorite informed voice on Russia 0:01:31.800 --> 0:01:35.040 and President Putin. Angela Stent, Senior Fellow at Brookings Institution, 0:01:35.440 --> 0:01:37.880 author of Putin's World, Russia Against the West and With 0:01:38.000 --> 0:01:41.039 the Rest. A former National Intelligence officer for Russia and 0:01:41.080 --> 0:01:44.039 Eurasia at the National Intelligence Council. Also served in the 0:01:44.040 --> 0:01:46.800 Office of Policy Planning at the US State Department. This 0:01:46.880 --> 0:01:49.160 is why she's a favorite voice to go to. She's 0:01:49.200 --> 0:01:52.559 in Washington, d C. Angela, welcome back. I have loved 0:01:52.560 --> 0:01:54.760 our conversations over the past two years, but I have 0:01:54.840 --> 0:01:56.960 been sad that we've had to keep having them because 0:01:57.000 --> 0:02:00.280 the war continues on. Here we are about tomorrow the 0:02:00.320 --> 0:02:03.800 third year of war. Are the sanctions These latest sanctions 0:02:03.800 --> 0:02:06.280 by the United States, and your view largely symbolic and 0:02:06.480 --> 0:02:10.520 unlikely to impact Russia and its crusade against Ukraine. 0:02:11.639 --> 0:02:13.640 Well, we'll have to see. So far, all of the 0:02:13.680 --> 0:02:17.000 sanctions that were imposed by the US and its allies, 0:02:17.600 --> 0:02:20.840 they've certainly dented the Russian economy to some extent, but 0:02:20.880 --> 0:02:24.119 they haven't changed Putin's course. And right now Putin thinks 0:02:24.120 --> 0:02:27.200 that Russia is winning. He appears to be very self confident. 0:02:27.560 --> 0:02:32.280 So we have sanctioned and you know, industries that are 0:02:32.720 --> 0:02:37.639 feeding the military industrial complex. We've sanctioned individuals. We're still 0:02:37.680 --> 0:02:41.760 trying to go out after energy companies in Russia's energy 0:02:41.800 --> 0:02:44.640 exports and trying to persuade those who are helping Russia 0:02:44.680 --> 0:02:47.919 to evade those energy sanctions in fact to implement them. 0:02:48.440 --> 0:02:51.320 But a lot of this, I fear is symbolic. I mean, 0:02:51.360 --> 0:02:54.480 we've sanctioned the people who are involved in Navani's death 0:02:54.840 --> 0:02:58.200 in the prison camp where he was, but they're not 0:02:58.320 --> 0:03:00.320 likely to want to come to the United States, nor 0:03:00.360 --> 0:03:02.600 do I think that they have any bank accounts here. 0:03:03.200 --> 0:03:05.200 So I think there could be more of what we 0:03:05.240 --> 0:03:07.520 would be doing and that we haven't done, and that 0:03:07.760 --> 0:03:11.440 is taking the frozen Russian assets, or at least the 0:03:11.520 --> 0:03:15.680 interest on them, and using that to help support Ukraine, 0:03:16.120 --> 0:03:19.079 and we could do more in the energy realm. It's 0:03:19.160 --> 0:03:24.000 unfortunate that the Biden administration now says that USLNG exports 0:03:24.120 --> 0:03:26.960 going should cease after a few years, when we should 0:03:27.000 --> 0:03:30.639 be exporting more LNG, say to Europe, so that they 0:03:30.639 --> 0:03:32.520 don't keep importing Russian LLERG. 0:03:33.160 --> 0:03:35.880 Why do you think the sanctions have been so ineffective 0:03:35.920 --> 0:03:39.160 at crippling Russia's economy, Because over the last two years, 0:03:39.280 --> 0:03:41.520 doctor Sten, we have a lot of people on their 0:03:41.560 --> 0:03:43.800 program who said, you know, especially at the beginning of 0:03:43.840 --> 0:03:46.840 the war, given the sanctions that the US and a 0:03:46.840 --> 0:03:49.240 lot of the West is putting on the country, the 0:03:49.320 --> 0:03:51.400 economy is going to be taken to its knees, and 0:03:51.440 --> 0:03:53.960 that absolutely has not happened over the last two years. 0:03:55.120 --> 0:03:57.680 It hasn't happened because what Russia has done is it's 0:03:57.720 --> 0:04:01.680 taken its economy to a wharf footing, so it's now 0:04:01.720 --> 0:04:05.880 really a war economy and the defense industries working over time. 0:04:06.160 --> 0:04:09.840 Russia had a GDP growth rate last year of zero 0:04:09.880 --> 0:04:13.080 point three percent, which was higher than any one thought 0:04:13.080 --> 0:04:15.800 and higher than a lot of European countries given the 0:04:15.840 --> 0:04:19.800 situation that we're in, So I think we have miscalculated 0:04:20.320 --> 0:04:23.320 the Russian's ability to deal with these sanctions, and then 0:04:23.360 --> 0:04:26.080 I have to say, you know, there's a lot of sanctions, 0:04:26.120 --> 0:04:31.080 invasion evasion. A number of countries are helping Russia these sanctions, 0:04:31.080 --> 0:04:34.240 including some of its neighbors in Central Asia. We know 0:04:34.320 --> 0:04:38.479 the Chinese are to some extent. So it's very hard 0:04:38.480 --> 0:04:41.359 for these kind of sanctions to succeed if you don't 0:04:41.400 --> 0:04:45.280 have really global agreement on them. And it's really only 0:04:45.360 --> 0:04:48.359 the US and its European and Asian allies that have 0:04:48.440 --> 0:04:50.320 been implementing these sanctions. 0:04:49.920 --> 0:04:52.520 Angela, Will we be having a different conversation if China 0:04:52.600 --> 0:04:55.920 was more on the side of Europe and the United 0:04:55.920 --> 0:04:56.480 States in. 0:04:56.440 --> 0:05:00.240 This, I think we might because even though so that 0:05:00.400 --> 0:05:03.760 you know, the president Jijinping warned Putin about the use 0:05:03.800 --> 0:05:06.559 of nuclear weapons, and we haven't heard Putin talk about 0:05:06.600 --> 0:05:10.039 that for a long time, although some of his colleagues have. 0:05:11.000 --> 0:05:14.080 The Chinese they're not really neutral in this. I mean 0:05:14.120 --> 0:05:17.440 they are exporting components to the Russians that are being 0:05:17.560 --> 0:05:21.880 used in weapons and for other industrial uses. They haven't 0:05:21.880 --> 0:05:25.479 really put any pressure on the Russians to wind down 0:05:25.520 --> 0:05:29.359 this war, and even though they attended a couple of 0:05:29.400 --> 0:05:32.520 the first meetings with a number of different countries about 0:05:32.520 --> 0:05:35.599 the Ukrainian peace plan. They did not attend the meeting 0:05:35.640 --> 0:05:38.599 in Davos or the one that was held in December. 0:05:39.000 --> 0:05:42.840 So I would say that they have neutrality but leaning 0:05:42.880 --> 0:05:46.280 toward Russia. And Jijinping just said again, you know how 0:05:46.320 --> 0:05:48.839 great the relationship was. So I think if the Chinese 0:05:48.880 --> 0:05:51.640 had acted differently, it wouldn't have been as easy for 0:05:51.680 --> 0:05:54.400 the Russians to be at the point where they are now. 0:05:55.279 --> 0:05:59.640 Angela, we saw Senate my majority leader Chuck Schumer make 0:05:59.680 --> 0:06:03.120 us a prize visit to Ukraine in part well in 0:06:03.160 --> 0:06:06.800 a big part to try to reassure Volodimir Zelenski that 0:06:06.920 --> 0:06:10.120 the US will make good on its next round of 0:06:10.160 --> 0:06:13.600 aid even though it faces obstacles in Congress. What would 0:06:13.640 --> 0:06:17.599 your message be to lawmakers right now who oppose an 0:06:17.600 --> 0:06:18.960 aid package to Ukraine. 0:06:20.120 --> 0:06:22.839 I think the message to them is if you do not, 0:06:23.120 --> 0:06:25.520 if we do not send the sixty billion dollars to 0:06:25.640 --> 0:06:29.560 Ukraine and more weapons, the kind of sophisticated weapons they need, 0:06:29.960 --> 0:06:32.360 it's going to be very hard for them to prevail 0:06:32.440 --> 0:06:35.120 against Russia. And I think these people have to think, 0:06:35.200 --> 0:06:37.800 do you really want Russia to win this war. Do 0:06:37.880 --> 0:06:41.560 you know what it might mean going forward? It will 0:06:41.600 --> 0:06:46.280 then reinforce the aggressive tendencies of the Russian regime, and 0:06:46.480 --> 0:06:49.400 that does not make the US any safer. It certainly 0:06:49.640 --> 0:06:52.560 makes our allies a lot less safe. And do we 0:06:52.640 --> 0:06:56.080 want to be drawn back into a broader European conflict 0:06:56.120 --> 0:06:58.719 as we were twice in the twentieth century. I think 0:06:58.760 --> 0:07:00.760 those are the kinds of things they should think about. 0:07:00.960 --> 0:07:03.600 And also that a lot of this money that we 0:07:03.680 --> 0:07:07.359 would be allocating to Ukraine goes to US defense companies, 0:07:07.600 --> 0:07:11.600 so it's money that's being earned and staying in America. 0:07:11.960 --> 0:07:17.200 Ukrainian President Zelenski is pressing for NATO membership. Many say 0:07:17.240 --> 0:07:20.480 that that's unlikely before this war ends. But I do 0:07:20.560 --> 0:07:24.239 think about the risk in this now third year whether 0:07:24.320 --> 0:07:30.640 or not Ukraine gets just enough support to continue fighting 0:07:30.880 --> 0:07:34.640 and resisting, but not sufficient enough to defeat Russia. And 0:07:34.720 --> 0:07:37.040 ultimately that's how it plays out. Do you have any 0:07:37.080 --> 0:07:39.640 idea or I don't know how you see maybe what 0:07:39.760 --> 0:07:41.120 happens here in this third year. 0:07:41.960 --> 0:07:44.360 So I think in this third year the war will continue. 0:07:44.880 --> 0:07:47.400 Putin is waiting to see what happens in our elections. 0:07:47.400 --> 0:07:50.840 In November, and he's hoping that if President Trump is 0:07:50.840 --> 0:07:54.920 reelected that that then the US will cease supporting Ukraine 0:07:54.960 --> 0:07:59.520 and so it'll be over and Russia will win. And 0:08:00.080 --> 0:08:02.440 you know, I think that we, you know, we really 0:08:02.480 --> 0:08:06.600 need to think very carefully about what we're doing going 0:08:06.640 --> 0:08:09.200 forward in terms of supporting Ukraine. And as it is, 0:08:09.520 --> 0:08:12.400 even if that sixty billion dollars does go to Ukraine, 0:08:12.680 --> 0:08:15.160 as you said, it will be enough for the Ukrainians 0:08:14.760 --> 0:08:18.040 to continue to push back, but not to win. 0:08:19.680 --> 0:08:22.720 Ultimately. And I think about the nuclear ambitions we talked 0:08:22.720 --> 0:08:26.920 about a little bit earlier this week. I believe President 0:08:26.960 --> 0:08:29.880 Putin he denied it, that that was in his intentions. 0:08:29.920 --> 0:08:32.800 Do you think that that's potentially, in terms of Russia's 0:08:32.840 --> 0:08:36.440 nuclear ambitions, a real threat of something being put up 0:08:36.440 --> 0:08:38.720 in space against the United States and others. 0:08:39.679 --> 0:08:42.880 I mean, it's possible. It's of course against the treaties 0:08:42.920 --> 0:08:46.360 that we have signed with the Visions and other countries too. 0:08:47.160 --> 0:08:49.680 I wouldn't put it past him. I think at the 0:08:49.720 --> 0:08:53.120 moment he wants us to believe that he might do 0:08:53.200 --> 0:08:57.080 it and to deter us from doing certain things. I mean, 0:08:57.120 --> 0:08:59.400 the main aim at the moment is just to spread 0:08:59.480 --> 0:09:03.840 fear both in Russia's neighbors and in the West about 0:09:04.240 --> 0:09:06.760 what Russia might do. But I think we have to 0:09:06.760 --> 0:09:10.280 watch this very carefully, and obviously our intelligence agencies are 0:09:10.360 --> 0:09:10.640 doing that. 0:09:10.800 --> 0:09:13.640 Do you think that's working, that he's successively spreading fear 0:09:13.679 --> 0:09:16.000 about what Russia is doing and what Russia could do. 0:09:17.360 --> 0:09:21.120 He certainly had succeeded in some European countries, in some 0:09:21.160 --> 0:09:23.480 of Russia's neighbors, and I think that people in the 0:09:23.600 --> 0:09:26.680 United States as well, who think, you know, we're so 0:09:27.040 --> 0:09:29.840 concerned about what Russia will do. We have to be careful. 0:09:30.040 --> 0:09:33.040 And I think the White House has been deterred from 0:09:33.200 --> 0:09:36.880 sending some weapons to Ukraine which could hit really into 0:09:37.480 --> 0:09:41.080 the heart of Russia, because they do fear escalation, not 0:09:41.160 --> 0:09:46.319 necessarily the space escalation, but certainly escalation that could go 0:09:46.440 --> 0:09:49.120 to the potential use of a tactical nuclear weapon. 0:09:49.320 --> 0:09:53.319 Angela thirty seconds left here. If President Putin and Russia 0:09:53.480 --> 0:09:56.240 succeed for a second time here in Ukraine, what's the 0:09:56.280 --> 0:09:59.000 next target? Because I would assume there will be another one, 0:09:59.080 --> 0:10:01.040 or is that wrong? And just quickly? 0:10:01.160 --> 0:10:03.480 I think ultimately there's another one, but I think not 0:10:03.600 --> 0:10:06.920 immediately because clearly the Russian armed forces would have to, 0:10:07.360 --> 0:10:11.880 you know, regrow and refurbish themselves. It could be the 0:10:11.920 --> 0:10:15.000 Baltic States, one of the Baltic States which did used 0:10:15.000 --> 0:10:17.400 to be part of the Soviet Union, and that's what 0:10:17.559 --> 0:10:20.319 you know, who has lamented the collapse of the Soviet Union, 0:10:20.600 --> 0:10:23.600 or potentially Poland that's certainly what the polls think. 0:10:24.200 --> 0:10:26.280 All right, kind of leave it there as always so 0:10:26.400 --> 0:10:30.760 much appreciation. Angela doctor Angela Stent joining us there in Washington, 0:10:31.200 --> 0:10:33.599 as we said, author of Putin's World, Russia against the 0:10:33.640 --> 0:10:36.160 West and with the Rest. She's a senior fellow at 0:10:36.200 --> 0:10:39.959 Brookings Institution, former National Intelligence officer for Russia and Eurasia 0:10:40.000 --> 0:10:43.320 at the National Intelligence Council. Just a great voice when 0:10:43.320 --> 0:10:45.160 it comes to what's going on and trying to figure 0:10:45.160 --> 0:10:45.760 out what's next. 0:10:45.840 --> 0:10:47.440 It's just hard to believe that we're already going to 0:10:47.440 --> 0:10:49.000 be in your three So manytime. 0:10:48.920 --> 0:10:50.640 We said, do you think it's another six months? Do 0:10:50.679 --> 0:10:53.160 we think it's another year? And here we are start 0:10:53.160 --> 0:10:53.760 the third year. 0:10:55.200 --> 0:10:58.680 You're listening to the Bloomberg Business Week podcast. Catch us 0:10:58.760 --> 0:11:02.000 live weekday afternoon from two to five pm Eastern Listen 0:11:02.080 --> 0:11:05.080 on Applecarplay and and brout auto with a Bloomberg business 0:11:05.160 --> 0:11:08.439 app or wanting us live on YouTube. 0:11:10.000 --> 0:11:11.880 Well, one of my most read stories on the Bloomberg 0:11:11.920 --> 0:11:15.360 today is about a Fidelity International money manager that dumped 0:11:15.440 --> 0:11:18.280 nearly all of his positions in US treasuries from friends 0:11:18.640 --> 0:11:22.000 he oversees. His expectations are that the world's biggest economy, 0:11:22.080 --> 0:11:25.319 the US economy, still has room to expand. Check it out. 0:11:25.360 --> 0:11:27.840 It's a great read on the Bloomberg terminal on at 0:11:27.880 --> 0:11:29.360 Bloomberg dot Com. It's just kind of one of the 0:11:29.360 --> 0:11:30.520 resets we continue to see. 0:11:30.559 --> 0:11:32.680 Tim Yeah, on that reset. I want to bring in 0:11:32.720 --> 0:11:36.600 Maddi Destner, head of Global Asset Class Services at Capital Group. 0:11:36.760 --> 0:11:39.719 It's global investment and management organization manages more than two 0:11:39.720 --> 0:11:43.520 point five trillion dollars. Maddie joining us from Los Angeles 0:11:43.600 --> 0:11:45.880 right now. Maddie, good to have you with us. The 0:11:45.920 --> 0:11:48.600 reason you're on is because Capital Group is out with 0:11:48.679 --> 0:11:52.800 its twenty year Capital Markets Assumptions Report. It sets out 0:11:52.880 --> 0:11:56.040 some pretty clear expectations about where you all at Capitol 0:11:56.120 --> 0:11:58.520 Group think the market is going. And when we say market, 0:11:58.520 --> 0:12:03.079 we're talking macroeconomics, equities, fixed income, and FX market performance 0:12:03.120 --> 0:12:05.280 over the next twenty years. Carol and I were talking 0:12:05.280 --> 0:12:07.360 about this. You do this, yeah, I mean, how clear 0:12:07.440 --> 0:12:09.560 is your crystal ball to be able to help us 0:12:09.640 --> 0:12:11.880 understand what US equity markets are going to do over 0:12:11.920 --> 0:12:14.440 the next twenty years and what emerging market equities are 0:12:14.440 --> 0:12:15.720 going to do over the next twenty years. 0:12:17.320 --> 0:12:20.120 Well, it's a great question, Tim and Caryl, and thanks 0:12:20.120 --> 0:12:22.880 so much for having me on. When we think about 0:12:22.880 --> 0:12:26.479 the long term, you have to consider what is directional, 0:12:26.640 --> 0:12:30.400 what you know is about to occur, and then what 0:12:30.440 --> 0:12:33.120 you can assume for the long term. So, really, what 0:12:33.200 --> 0:12:37.120 our expectations are our inputs to ensure that our clients 0:12:37.160 --> 0:12:39.840 are set up for success for the long term, and 0:12:39.880 --> 0:12:42.280 our expectation as we look forward is that they are. 0:12:42.480 --> 0:12:47.240 Actually our broad expectation for a sixty to forty portfolio 0:12:47.280 --> 0:12:51.319 is about six percent annualized over twenty years. And when 0:12:51.360 --> 0:12:54.480 we look through the asset classes, we've changed things a 0:12:54.520 --> 0:12:56.960 bit as we've seen action in the markets over the 0:12:57.000 --> 0:13:00.640 last couple of years. Actually brought down our equity assumptions 0:13:00.720 --> 0:13:03.560 just by a bit, about six point nine percent for 0:13:03.720 --> 0:13:06.800 US equities given the evaluation. 0:13:06.640 --> 0:13:08.360 Change that we saw over the last year. 0:13:08.600 --> 0:13:11.880 Not extreme, but our expectations are that valuations are a 0:13:11.960 --> 0:13:14.720 little less attractive, and then for a fixed income we've 0:13:14.720 --> 0:13:18.600 actually brought up our expectations. You're seeing some equity like 0:13:18.640 --> 0:13:22.760 returns out of fixed income sectors, particularly some of those 0:13:23.120 --> 0:13:26.839 extended sectors. So we really feel good about the puts 0:13:26.880 --> 0:13:29.720 in takes of the long term expectations and the fact 0:13:29.720 --> 0:13:32.440 that investors will be set up for success as long 0:13:32.480 --> 0:13:33.400 as they stay invested. 0:13:33.440 --> 0:13:36.680 All right, what's how do you figure it out? Like 0:13:36.720 --> 0:13:39.839 we said, your crystal ball, But what are these assumptions 0:13:39.920 --> 0:13:42.520 based on. I'm always interesting in how do you make 0:13:42.520 --> 0:13:45.480 the sausage here in terms of investing? So what is 0:13:45.480 --> 0:13:47.880 it that these are based on in terms of kind 0:13:47.880 --> 0:13:50.720 of reducing your equity assumptions over the next twenty years, 0:13:50.760 --> 0:13:53.760 but maybe raising your fixed income assumptions. 0:13:55.080 --> 0:13:59.280 Yeah, So we actually decompose the returns into building blocks. 0:13:59.280 --> 0:14:02.000 So as you start to pick apart the pieces, you 0:14:02.000 --> 0:14:05.160 can think about what will change in those building box. 0:14:05.280 --> 0:14:07.160 So we think about economic. 0:14:06.720 --> 0:14:10.480 Growth, what does that look like over the next twenty years, productivity, 0:14:10.800 --> 0:14:14.360 what happens to the labor force, inputs into demographics, how 0:14:14.440 --> 0:14:16.920 that picture will change over the next twenty years. 0:14:17.000 --> 0:14:18.360 These are knowable things. 0:14:18.920 --> 0:14:23.720 Our expectation of changing technology and the productivity of the workforce. 0:14:24.000 --> 0:14:26.760 We think that has a big impact on the expectations. 0:14:27.080 --> 0:14:31.440 And then of course currency, certainly for US based investors 0:14:31.440 --> 0:14:35.960 of international assets, both developed as well as emerging, our 0:14:36.040 --> 0:14:39.680 expectations for the dollar and other currencies, how that impact 0:14:40.520 --> 0:14:44.120 the supply demand dynamics and the balance of trade. And 0:14:44.160 --> 0:14:47.280 then of course the expectation of the change in share count. 0:14:47.360 --> 0:14:50.720 There's been quite a lot of buybacks and that has 0:14:50.800 --> 0:14:55.400 changed the expectation for earnings for companies for individual shareholders. 0:14:55.800 --> 0:14:58.240 And then the last thing is yield, both on the 0:14:58.240 --> 0:15:00.960 fixed income and the equity side. Are expectation is that 0:15:01.160 --> 0:15:04.720 you're going to start to see healthier dividend yields, particularly 0:15:04.760 --> 0:15:08.440 in the international space, less so in the US, and that, 0:15:08.560 --> 0:15:11.480 as I said before, starting yield and fixed income are 0:15:11.560 --> 0:15:12.120 much higher. 0:15:12.400 --> 0:15:14.600 So as we look at each of these building blocks, 0:15:14.600 --> 0:15:15.120 we sort of. 0:15:15.040 --> 0:15:18.880 Build up the elements from the bottoms up perspective and 0:15:18.920 --> 0:15:21.920 then look top down and ask ourselves how realistic are 0:15:21.920 --> 0:15:22.360 these numbers? 0:15:22.480 --> 0:15:24.640 Hey, Madie, I want to dig into the equities research 0:15:24.720 --> 0:15:26.760 that you and the team over a Capitol Group have done, 0:15:26.800 --> 0:15:28.880 because I was pretty surprised to see that over the 0:15:28.960 --> 0:15:33.040 next twenty years, you expect emerging market equities to outperform 0:15:33.240 --> 0:15:37.720 US equities pretty significantly given and that surprised me given 0:15:37.720 --> 0:15:41.160 the out performance we've seen from US equities over the 0:15:41.240 --> 0:15:42.520 last ten to fifteen years. 0:15:42.520 --> 0:15:47.600 At this point, Yeah, our expectation is that there are 0:15:47.640 --> 0:15:51.840 both cyclical and secular changes going on in emerging markets. 0:15:52.120 --> 0:15:55.040 So if we just frankly look at the inflation picture 0:15:55.080 --> 0:15:59.920 within emerging markets, inflation accelerated early on. Central banks start 0:16:00.240 --> 0:16:03.240 to ease or tighten pretty quickly, and now they're in 0:16:03.280 --> 0:16:06.120 the path of easing policy, so they're a bit ahead 0:16:06.160 --> 0:16:07.360 of us in that cycle. 0:16:07.480 --> 0:16:10.040 We expect to see an upturn. From that perspective. 0:16:10.840 --> 0:16:14.360 There's certainly a benefit from a continued weakness of the dollar, which. 0:16:14.160 --> 0:16:16.000 We expect to see over the long term. 0:16:16.400 --> 0:16:19.360 And then one of the most important things about emerging 0:16:19.360 --> 0:16:23.040 markets is the change in supply chains that we expect 0:16:23.040 --> 0:16:25.280 to see over the long term. So we know that 0:16:25.600 --> 0:16:29.280 Chinese growth is slowing due to demographic impacts as well 0:16:29.320 --> 0:16:33.120 as less than friendly market reforms. But what's happening is 0:16:33.160 --> 0:16:36.320 companies are starting to remove their supply chain exposure to 0:16:36.520 --> 0:16:40.760 China and going to places like India, like Mexico, like 0:16:40.880 --> 0:16:46.200 Southeast Asia, so we really do expect a resumption of 0:16:46.360 --> 0:16:49.280 manufacturing centers in those areas. 0:16:49.280 --> 0:16:50.880 And then the last thing I'll point to is. 0:16:50.800 --> 0:16:54.960 That from an emerging markets perspective, the demographic picture, the 0:16:55.360 --> 0:16:58.320 age of the workforce looks a lot healthier than in 0:16:58.360 --> 0:16:59.520 some other areas of the world. 0:17:00.000 --> 0:17:02.120 That makes a lot of sense. I'm also curious, you know, 0:17:02.160 --> 0:17:03.760 here we are coming off a week where we were 0:17:03.800 --> 0:17:07.680 all agog over Nvidia, right, its result, its outlook, its 0:17:07.720 --> 0:17:10.639 impact on the trade continues to play out today. You 0:17:10.680 --> 0:17:13.240 guys did look at as one of your key criteria 0:17:13.320 --> 0:17:16.560 the changing technology on workforce. Talk to us a little 0:17:16.560 --> 0:17:19.520 bit about what's the changing technology that you focused on 0:17:19.840 --> 0:17:21.040 and its impact. 0:17:22.160 --> 0:17:25.040 Yeah, it's a number of things, Carol, It's not just one. 0:17:25.200 --> 0:17:28.600 If we think about the impact of you know, how 0:17:28.600 --> 0:17:31.359 productive is every single worker, if everybody was doing the 0:17:31.359 --> 0:17:33.840 same jobs that they did in nineteen fifty versus today, 0:17:34.119 --> 0:17:37.400 how much more can they build, how many more patients 0:17:37.400 --> 0:17:43.320 can they see, How long is the expectations for life 0:17:43.359 --> 0:17:47.520 expectancy and how that's changing. So things like artificial intelligence 0:17:47.560 --> 0:17:50.639 and how that's helping us do our jobs, cloud computing 0:17:50.680 --> 0:17:53.439 and how that's helping us be more efficient, and even 0:17:53.480 --> 0:17:57.320 some of the innovations in healthcare, whether it's gene therapies 0:17:57.520 --> 0:18:02.520 or immunizations, these will impact our longevity and frankly, our 0:18:02.560 --> 0:18:07.000 health as a nation and as a world society. So 0:18:07.600 --> 0:18:12.240 all of these things are incorporated together, from our perspective, 0:18:12.840 --> 0:18:18.600 significantly increase the productivity of each hour work from individuals. 0:18:18.600 --> 0:18:21.720 So it's a bit of a give back to the 0:18:21.760 --> 0:18:24.439 giveaway that we have from demographics, because we know that 0:18:24.480 --> 0:18:27.480 this is an aging nation for aging all over the world, 0:18:27.480 --> 0:18:28.800 and that will impact. 0:18:28.680 --> 0:18:30.639 We talked about that a lot here on the program, 0:18:30.640 --> 0:18:32.280 Matt It We only have thirty seconds left, but we 0:18:32.320 --> 0:18:35.200 got to talk politics and how you factor politics into 0:18:35.200 --> 0:18:36.960 your analysis here, not just here in the US, but 0:18:37.040 --> 0:18:38.600 around the world. Just thirty seconds left. 0:18:39.480 --> 0:18:45.359 Yeah, exogynous factors hard to incorporate into the actual analysis, 0:18:45.560 --> 0:18:47.399 so we really do try to look through that and 0:18:47.440 --> 0:18:48.320 think long term. 0:18:48.520 --> 0:18:49.359 From our perspective. 0:18:49.400 --> 0:18:52.879 Though, as we look at the last twenty three election cycles, 0:18:53.280 --> 0:18:56.560 what we notice is that markets trend up on average 0:18:56.600 --> 0:19:00.000 every single time. There's lots of volatility around the primary environment. 0:19:00.560 --> 0:19:03.159 But once we have regardless of who sits in the 0:19:03.200 --> 0:19:07.720 administrative chairs, we tend to see upmarkets in that election 0:19:07.880 --> 0:19:10.440 cycle more so than a non election year. 0:19:10.480 --> 0:19:11.600 So we're pretty constructive. 0:19:12.040 --> 0:19:14.760 All right, Really appreciate this and look forward. Hopefully we 0:19:14.760 --> 0:19:17.360 can get you back real soon. Mattie Destner, she's head 0:19:17.359 --> 0:19:19.960 of Global Asset class Services over at Capital Group, a 0:19:19.960 --> 0:19:23.320 global investment management group managing more than two and a 0:19:23.320 --> 0:19:27.440 half Truly and Matty of course joining us from Los Angeles. 0:19:28.560 --> 0:19:32.400 You're listening to the Bloomberg Business Week podcast. Listen live 0:19:32.520 --> 0:19:35.320 each weekday starting at two pm Eastern on Apple car 0:19:35.440 --> 0:19:38.399 Play and Android Auto with the Bloomberg Business app. You 0:19:38.440 --> 0:19:41.720 can also listen live on Amazon Alexa from our flagship 0:19:41.760 --> 0:19:45.560 New York station, just say Alexa playing Bloomberg eleven thirty. 0:19:47.600 --> 0:19:50.320 All right, Well, the US Bitcoin ETFs that debuted back 0:19:50.359 --> 0:19:53.400 on January eleventh and the Grayscale Bitcoin Trust that converted 0:19:53.480 --> 0:19:56.520 into an ETF that same day have as of Tuesday, 0:19:56.960 --> 0:20:00.000 brought in about a net five billion dollars of investment. 0:20:00.119 --> 0:20:02.480 Your inflows so far, so money coming in, tim. 0:20:02.400 --> 0:20:04.760 Yeah, that's real money. The anticipation and roll out of 0:20:04.760 --> 0:20:07.760 the products, by the way, stoking a doubling in bitcoin's 0:20:07.800 --> 0:20:10.119 price over the past twelve months. For more on the 0:20:10.119 --> 0:20:13.000 Space and the opportunities that he sees. Let's bring in 0:20:13.200 --> 0:20:16.760 Dave Donnelley, managing director at Spider Rock Advisors. It's a 0:20:16.840 --> 0:20:20.360 Chicago based asset management firm that specializes in, in their 0:20:20.359 --> 0:20:24.840 own words, providing customized option overlay strategies to investors. By 0:20:24.880 --> 0:20:26.919 the way, they've got about four point five billion dollars 0:20:26.920 --> 0:20:29.440 in assets under management. Dave, good to have you with 0:20:29.520 --> 0:20:32.640 us for a weekly crypto segment this afternoon. You don't 0:20:32.640 --> 0:20:34.879 have a spot bitcoin ETF. Rather, you were going to 0:20:34.920 --> 0:20:39.600 introduce an option's overlay strategy on the ETF. Explain what 0:20:39.760 --> 0:20:41.840 exactly this is for people who aren't familiar with the 0:20:41.880 --> 0:20:45.440 strategy and what that gives for clients. 0:20:46.680 --> 0:20:49.720 Sure, thanks for having me. Really a couple thoughts here. 0:20:50.520 --> 0:20:52.800 You know, you've got, as you just stated, billions of 0:20:52.800 --> 0:20:57.920 dollars in inflows into these ETFs. We're not an ETF manufacturer. Instead, 0:20:57.960 --> 0:21:01.840 we're an advisor who tries to help intermediaries and clients 0:21:02.200 --> 0:21:05.560 hedge the existing positions that they have. So, you know, 0:21:05.600 --> 0:21:08.200 while you've got five or so billion dollars in these 0:21:08.200 --> 0:21:12.400 ETFs already, you've got a trillion dollars worth of bitcoin 0:21:12.440 --> 0:21:15.919 out there owned in the more traditional way, you know, 0:21:16.000 --> 0:21:18.600 with hot wallets and cold storage. You know, we think 0:21:18.640 --> 0:21:22.119 these ETFs make it so much easier for normal investors 0:21:22.160 --> 0:21:27.280