Speaker 1: This is Bloomberg Business Week. I'm Charle Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovik. We're here every day bringing
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Speaker 1: Eastern Time on the Bloomberg Radio or watch us on
Speaker 1: YouTube search Bloomberg Global News. And we've been watching a
Speaker 1: couple of the names. When it comes to their results.
Speaker 1: Chippy Morgan is down one point three percent, and a
Speaker 1: quick check on Goldman Sacks again it is down just
Speaker 1: about half percent off its loads of the days. Yeah,
Speaker 1: let's get right into it with Alison at william Senior
Speaker 1: Global Banks Analysts for Bloomberg Intelligence. Okay, so here, we
Speaker 1: are not quite halfway through a big bank earnings. Allison,
Speaker 1: how would you summarize what we know so far based
Speaker 1: on the two banks that reported today? So I think
Speaker 1: no big surprises, but really a sort of a continuation
Speaker 1: of the trend in terms of some of the key
Speaker 1: concerns around that interesting income and higher expenses. So the
Speaker 1: the key for investors that are really focusing on is
Speaker 1: the potential for loan growth to return in the second half.
Speaker 1: Banks really need that to help loose their net interest income.
Speaker 1: Trading was very good in the quarter on the equity
Speaker 1: side of things. Fixed income down as we expected. We
Speaker 1: expect further normalization in the second half. The big surprise
Speaker 1: out of the investment banking arm of the businesses was
Speaker 1: U merger and advisory. We expect that, excuse me, mergers
Speaker 1: and acquisitions. The advised business we expect to continue to
Speaker 1: be strong in the second half UM. But but that's
Speaker 1: a small piece of it. And so in general we
Speaker 1: have the big capital markets piece normalizing. We have UM
Speaker 1: not interesting income a little bit disappointment. Disappointing just because
Speaker 1: consumers are not borrowing. Corporations are using cash to buy companies,
Speaker 1: consumers are using cash to fund their spending. Where well,
Speaker 1: it's interesting. Well when it comes to borrowing, Uh, is
Speaker 1: it just consumers and businesses aren't interested, or is it
Speaker 1: that the banks are picky about who they give loans
Speaker 1: to it's really more about the cash that corporations and
Speaker 1: consumers have on their balancy. For consumers, it's really UM.
Speaker 1: It's been fueled by the stimulus, so UM. Our Economics
Speaker 1: Department of UM Bloomberg and Economics department has calculated over
Speaker 1: two trillion dollars UM. And what we've seen with all
Speaker 1: the stimulants payments that have come so far is consumers
Speaker 1: have used that money to pay down debt. So that's
Speaker 1: healthy UM but UM and they're spending, but they're just
Speaker 1: paying that out of savings. And then on the corporate
Speaker 1: side of things UM. As you recall a year ago,
Speaker 1: in the pandemic took hold, corporations drew down on their
Speaker 1: credit lines banks. However, when the capital markets opened up,
Speaker 1: especially the large corporates, UM tapped those capital markets. So
Speaker 1: we've seen very strong debt issuance UM over the past
Speaker 1: year and effect in the most recent quarter, very strong
Speaker 1: high yield issuance UM. So they're continuing to to raise
Speaker 1: funds UM. And then what you know on the commercial
Speaker 1: side of things, UM, it's really that UM again, we
Speaker 1: we need the demand side to pick up. So it's
Speaker 1: not the banks are out there, they have tons of deposits,
Speaker 1: tons of liquidity. They want to make lens, but the
Speaker 1: demand is just not there yet. So I wonder what
Speaker 1: what was expected from from shareholders and if their expectations
Speaker 1: were not met, especially when it comes to JP Morgan,
Speaker 1: because shares down by more than one point three percent,
Speaker 1: it doesn't sound like there wasn't that much that was surprising. Well, yes,
Speaker 1: so I would keep in mind it was a very
Speaker 1: strong quarter, but most of the strength that we saw
Speaker 1: were things that UM had been expected. We had a
Speaker 1: huge reserve release UM. Again, that's something that investors are
Speaker 1: expecting that I guess the new news and again that
Speaker 1: interest in come disappointing, but we had sort of, you know,
Speaker 1: been trending that way over the last several quarters. But
Speaker 1: the new news in terms of expenses and expenses I
Speaker 1: think are something we're going to continue to be focusing
Speaker 1: on this week. Across the banks. JP Morgan got into
Speaker 1: sixty eight billion of expenses in January. That's gone up
Speaker 1: UM to sixty nine, to seventy and now today seventy
Speaker 1: one billion. And I do think that, you know, part
Speaker 1: of it is because the revenue is better, but part
Speaker 1: of it is they're investing. And I think that even
Speaker 1: though investors might be disappointed today, JP Morgan has shown
Speaker 1: over the last several years UM this ability to fund
Speaker 1: what we call the virtuous cycle. So they're spending more UM,
Speaker 1: but that's helping them to make more right, it's longer
Speaker 1: term investments. It's you know, we all want management to
Speaker 1: think long term, and so I think we need to
Speaker 1: think long term along with them. And and with the
Speaker 1: incredible trading that we've had over the last couple of years,
Speaker 1: we think it's actually healthy UM that the banks are
Speaker 1: investing this, especially with all the talk about fintech, all
Speaker 1: the competition from fintech UM and everything going on on
Speaker 1: that front. Well exactly, we just talked about city groups specifically, right, like,
Speaker 1: you know, looking at fintech, I mean they're all staring
Speaker 1: at down city city debuting that no fee retail trading
Speaker 1: to compete with you know, others. So a little bit
Speaker 1: of an opener for the rest of the big banks too.
Speaker 1: We're gonna get here from what city group we've got,
Speaker 1: what Bank of America we've got Wales, UM, tell us
Speaker 1: what you're watching out for. So with city group UM,
Speaker 1: they had actually already got into a higher expenses for
Speaker 1: this particular quarter. We're going to be listening to see
Speaker 1: what the guidance is for the full year. We think
Speaker 1: the expense story there is a little bit more negative
Speaker 1: because a lot of the driver there is that they
Speaker 1: have to spend more UM to get sort of their
Speaker 1: systems and compliance, so they have some regulatory concerns and issues,
Speaker 1: So that UM expense spending where it's not generating revenue
Speaker 1: is a little bit less positive to us, but that
Speaker 1: that's the main thing we're looking for them. Bank America similarly,
Speaker 1: they last quarter guided up expenses for the full year,
Speaker 1: whilst Fargo already has had out of it expenses. We're
Speaker 1: hoping them to come down. For all those banks, we're
Speaker 1: going to be looking in terms of again what is
Speaker 1: the loan growth outlook, what is the nut interesting some outlook,
Speaker 1: and then one thing we didn't touch on quickly, prime
Speaker 1: brokerage business very strong. Will Bank America and City Group
Speaker 1: also show some strength. They're gaining some share in the
Speaker 1: week of start see is pulled back. You did it.
Speaker 1: You cover the universe. You're incredible, Alison, Thank you, thank you.
Speaker 1: Bloomberg Intelligence Senior Global Banks analyst, Allison Williams. This is
Speaker 1: a busy week for her. We know that she's joining
Speaker 1: us on the phone and now earning is often running.
Speaker 1: This is Bloomberg. This story among our most read on
Speaker 1: the Bloomberg about Barry Stern Licks investment firm and given
Speaker 1: up on malls. Yes, Starward Capital Group they owned a
Speaker 1: thirty mills before the COVID nineteen pandemic. It is now
Speaker 1: down to eight. That is a massive decline. Yeah, so
Speaker 1: let's find out what's going on. John Getleson is it
Speaker 1: with us real Estate and Investing Report at Bloomberg News
Speaker 1: on the phone in l a Hey, John, nice to
Speaker 1: have you here with Tim and me. First of all,
Speaker 1: I mean Barrastone looks really well known to our audience.
Speaker 1: I mean this is a guy who is big time
Speaker 1: in different types of commercial real estate. That's right, Yeah,
Speaker 1: I mean Starwood Hotels now part of Marriott anyway, that
Speaker 1: was his original you know, branding opportunity. Um. But yeah,
Speaker 1: he started out and distressed real estate, and uh around
Speaker 1: twelve he started buying up malls. He thought, you know,
Speaker 1: I can get a good deal on these and I
Speaker 1: could make money on him. Uh. But basically the market
Speaker 1: was changing fast and then COVID hit and things got
Speaker 1: even worse. So he got caught basically underwater with a
Speaker 1: lot of these properties, and rather than pay and try
Speaker 1: and revive them, it didn't make sense to him. It
Speaker 1: made more sense essentially, self for loss or walk away
Speaker 1: and look, two billion dollars sounds like a lot of
Speaker 1: money to for most things. But this is a relatively
Speaker 1: small part of star Wars portfolio, right, Well, yeah, I
Speaker 1: mean about five of Star Wars portfolio was in what
Speaker 1: it was is known as Starwood Retail Partners, So um, yeah,
Speaker 1: it's it's I mean, imagine your stock portfolio and you
Speaker 1: have a bunch of companies that you're like, I'm just
Speaker 1: going to get rid of them and focus my energy
Speaker 1: my resources on other opportunities out there that have more upside.
Speaker 1: It's a lot of work to deal with these malls.
Speaker 1: If you want to redevelop them, you take time, patient
Speaker 1: skill sets that maybe, if I'm very stern lick, I'd
Speaker 1: rather be spending my time on something that I can
Speaker 1: make money on faster. Is this someone who's cutting their
Speaker 1: losses before they get worse? Like seeing the writing on
Speaker 1: the wall. Let me think what other little cool phrases,
Speaker 1: pity phrases. Can I say, but you know what I'm saying,
Speaker 1: like saying, this is just not a good commercial space anymore.
Speaker 1: And does it speak to a bigger larger story here, John, Well,
Speaker 1: it's definitely a bigger larger story. I mean we've all
Speaker 1: seen ghost malls have been developing for decades now, um,
Speaker 1: and it's accelerated since COVID, since you know, e commerce,
Speaker 1: um and and since shopping habits changed, Like Carol you
Speaker 1: were saying earlier, you haven't been to a mall in
Speaker 1: a while. Malls were built around department stores, and department
Speaker 1: stores are like the biggest casualties you know of shoppers
Speaker 1: who can go to Amazon or go to Walmart and
Speaker 1: all those other kind of things. But John, I do
Speaker 1: you always wonder and forgive me because I do feel
Speaker 1: like the coasts, you know, especially in New York, were like,
Speaker 1: all right, I'm just shop online constantly. But if I
Speaker 1: go across the country and I've been in different states
Speaker 1: where I'm traveling and you do go to a mall
Speaker 1: or you have to go to a store for like
Speaker 1: you just you shop different? Is that true the case?
Speaker 1: I just don't want to be so East Coast centric
Speaker 1: or is it? I mean, yeah, are they breaking down
Speaker 1: kind of all over the country. I would say it's
Speaker 1: all over the country. I mean because these malls that
Speaker 1: Barry Sternly gones, they're sort of like secondary malls and
Speaker 1: secondary markets. If you have a good mall. I live
Speaker 1: in southern California, in Beverly Hills, UH in Orange County,
Speaker 1: UH in the right parts of you know, the San
Speaker 1: Francisco Bay Area, Silicon Valley outside Seattle. Those those are
Speaker 1: doing great and people are still going to them, and
Speaker 1: they're now eating outside, They're going to movies, they're starting
Speaker 1: to do all of the other kind of activities on
Speaker 1: top of buying clothes that used to do it a mall,
Speaker 1: but there's so many malls in the United States. We
Speaker 1: are overstored, over retailed compared everywhere else and on Earth's
Speaker 1: And then there are places that are really easy to
Speaker 1: get to. I mean a Walmart or It's Target is
Speaker 1: like a mall in one place for a lot of people,
Speaker 1: and they're really you know, discount good prices and easy
Speaker 1: and easy out. Hey, John, just in the last thirty
Speaker 1: seconds we have with you, who's buying these malls and
Speaker 1: what are they doing with them? Well, basically, people who
Speaker 1: are getting them are getting them at very low cost,
Speaker 1: And it really depends on the location. You can take
Speaker 1: out a department store, turn it into an apartment, You
Speaker 1: can turn it into maybe an office. You can turn
Speaker 1: it into a medical office or a school, or you
Speaker 1: could turn it into a sort of last mild distribution place.
Speaker 1: But you have to get the cost of the property
Speaker 1: down and an owner who has patient money so that
Speaker 1: they could take time because it takes a long time
Speaker 1: to get all the approvals that are involved with re
Speaker 1: purposing a mall like this, right, It's it's not so
Speaker 1: easy to just make a quick quick stetch. What what
Speaker 1: are you thinking? Yeah, it's just like such a small
Speaker 1: portion of the portfolio, It's crazy. Yeah, And I do
Speaker 1: think there's something to be like top tier versus secondary tier.
Speaker 1: I think that's a good point that John made. Um
Speaker 1: John kittleson Thank You so Much, real estate and investing
Speaker 1: reporter at Bloomberg News from l A, joined him on
Speaker 1: Twitter at John gitt This is Bloomberg Business Week with
Speaker 1: Carol Messer and Bloomberg Quick Takes. Tim Stinovich from Bloomberg Radio.
Speaker 1: We are highlighting another one of our most read stories
Speaker 1: on the Bloomberg Today, This one about the NFL player
Speaker 1: turn lawmaker that was a rising star in the Republican
Speaker 1: Party tim until he wasn't. It's in the upcoming issue
Speaker 1: of the magazine. It's written by Josh Green, National correspondent
Speaker 1: for Bloomberg Business Week. Joel Weber is joining us as
Speaker 1: well editor for Bloomberg Business Leeak. He's with us in
Speaker 1: the Interactive Broker studio in New York. Josh is joining
Speaker 1: us on the phone from Washington. D c Um, who
Speaker 1: is Anthony Gonzolison? Why why isn't he a national name? Well,
Speaker 1: he is a national name, I think, um, And I
Speaker 1: guess it's well, I guess in the Cheney I guess
Speaker 1: I would say, well, he's he's actually kind of purposely
Speaker 1: kept his profile slightly lower, I think, than than Cheney did.
Speaker 1: And you know, Cheney obviously it's like pretty prominent position
Speaker 1: in the GOP. But I think what's really interesting about
Speaker 1: Josh's story is there were people pre January six who
Speaker 1: who really kind of looked like the future of the
Speaker 1: of the GOP right, and and Gonzalez was one of those.
Speaker 1: And now he finds himself in a very difficult role
Speaker 1: of being a kind of once future leader of GOP,
Speaker 1: potentially a rising star, but mired by what has become
Speaker 1: from the Trump Um supporting GOP. Uh and and Josh's
Speaker 1: brtting you in a little bit to talk about that.
Speaker 1: What what has been his his tactic to date and
Speaker 1: and how does that put him um with his constituents,
Speaker 1: you know, I mean, what's passing about Gonzalez is that
Speaker 1: he is every he embodies everything the Republican Party has
Speaker 1: wanted itself to be for the last twenty five years. Uh,
Speaker 1: he's young, he has the son of a Cuban immigrant,
Speaker 1: he was the first round draft pick of the Indianpolis
Speaker 1: called he's got a business school degree, you know, serious
Speaker 1: young hip, all that kind of stuff. Clearly marked as
Speaker 1: a rising star. And then Trump came along and and
Speaker 1: Gonzalez became one of the ten people who had voted
Speaker 1: who voted to impeach him, and practically overnight, that's sort
Speaker 1: of eclipsed everything else there is about Anthony Gonzalez and
Speaker 1: the reason I picked this race as as somebody said earlier,
Speaker 1: he's not as prominent as Liz Cheney, who also voted
Speaker 1: doing peach Trump and has made that the entire like
Speaker 1: centerpiece of her political life. Uh, he's just a guy
Speaker 1: who who voted on his conscious voted in peach Trump,
Speaker 1: but is still a conservative congressman with what he thinks
Speaker 1: of a successful record. So what it sets up is
Speaker 1: this wonderful test case. It's almost like a laboratory experiment
Speaker 1: in whether a serious Republican conservative can get reelected after
Speaker 1: voting for Donald Trump. And and what what's so interesting
Speaker 1: about this is that it's not just Republicans. The Democrats
Speaker 1: too are fascinated by this race because we think it's
Speaker 1: going to be a sort of a gauge about how
Speaker 1: strong Trump's influence continues to be. One of my consultants,
Speaker 1: i quote in Peace, likened it to groundhog Day. That
Speaker 1: you know, if if if the Trump challenger to Gonzalez's wins,
Speaker 1: then we know it's gonna be another season of Trump
Speaker 1: dominating Republican Party. But if Gonzalez manages to hold onto
Speaker 1: his seat, then maybe spring has arrived and we've begun
Speaker 1: to move beyond Donald Trump and who's he gonna be
Speaker 1: in a showdown with who's the lukie at their faces?
Speaker 1: So his main challenge has got named Max Miller, who
Speaker 1: is a former Trump aide um from the local area.
Speaker 1: Immediately one Trump's endorsement as soon as he jumped in
Speaker 1: the race. Because Trump, as we all know, revels in
Speaker 1: punishing his enemies, especially Republicans, and has gone after Gonzalez
Speaker 1: with Avenger. It's his first big rally. Trump's post election.
Speaker 1: At the end of June, he flew to Ohio, right
Speaker 1: outside gonzalez district to trash him and tell Republicans to
Speaker 1: vote against him. So that's a bit of a millstone
Speaker 1: if you're a Republican congressman running for re election. But
Speaker 1: that's what Gonzalez has to deal with. I love that
Speaker 1: you write in your story that he Gonzalez appears to
Speaker 1: have a healthy relationship with his own political mortality. So
Speaker 1: he understands. He's a football player. Sometimes you win, sometimes
Speaker 1: you lose. Sometimes you're gonna play and be a star player,
Speaker 1: and sometimes you're gonna have another career after it tell
Speaker 1: us a little bit about his his kind of approach. Yeah, well,
Speaker 1: I mean, what's what's been so I think disconcerting to
Speaker 1: a lot of you know, Republicans and just just sort
Speaker 1: of Americans general. I think is is the the number
Speaker 1: of Republicans who have kind of truckled to Trump and
Speaker 1: gone along with, you know, whatever the conspiracy theory or
Speaker 1: why is that that he's sort of pushing. One name
Speaker 1: that gets mentioned a lot as South Carolina Senator Lindsey Graham,
Speaker 1: who who sort of reinvents himself according to whatever politics necessitates.
Speaker 1: And Gonzalez is adamant that he's not going to do that. Um,
Speaker 1: and I think the impeachment vote backs that up. But
Speaker 1: as he put it to me, I mean, he was
Speaker 1: a first round draft pick with a great NFL career going. Uh,
Speaker 1: he tore up his knee, that that career ended abruptly,
Speaker 1: but he was able to reinvent himself, went to business school,
Speaker 1: got elected as a congressman. So he doesn't fear his
Speaker 1: own political mortality and quite the way I think a
Speaker 1: lot of other UH politicians do, and that makes him interesting.
Speaker 1: He's willing to kind of speak the truth, stand up
Speaker 1: for what he believes in, and let the chips fall
Speaker 1: where they may. You also make the point, Josh, that
Speaker 1: he's set out to do and he's actually getting done
Speaker 1: exactly what he set out to do, from infrastructure to
Speaker 1: to COVID relief, to vaccines. And also he's had a
Speaker 1: pretty good couple of quarters of fundraising, so he's been
Speaker 1: pretty successful thus far. Yeah. I mean the other fast
Speaker 1: thing you think about this is like back in the
Speaker 1: times before Trump, Um, you know, congressman used to get
Speaker 1: measured for re election on hey did you do what
Speaker 1: your campaigned and and said you had set out to do?
Speaker 1: The two two big components of of Gonzalz's last race
Speaker 1: where he said, look, we want to produce vaccine and
Speaker 1: distribute to everybody who wants it. That's obviously happening now.
Speaker 1: And I want to push for a big bipartisan infrastructure bill. Uh.
Speaker 1: You know, and in a couple of weeks ago, Biden
Speaker 1: came out and announced big bipartisan infrastructure agreement the Gonzals
Speaker 1: had had a hand in negotiating. So, you know, by
Speaker 1: the old measure of whether or not you're you're an
Speaker 1: effective congressman, Gonzalas has a really good case to make
Speaker 1: and he is a believer. Not everybody is, but he
Speaker 1: is a believer that that will still count for something
Speaker 1: with the Republican voters when primary time comes next spring.
Speaker 1: So next spring still feels like a long way away.
Speaker 1: When when are we going to start to get a
Speaker 1: sense of what even the polls might suggest in this
Speaker 1: case study, Josh, I don't think we're gonna note for
Speaker 1: a long time. By the early measures Gonzalaz is doing, okay.
Speaker 1: I mean, his favorability ratings are strong, as you mentioned,
Speaker 1: you know, he had He's had two quarters very strong fundraising.
Speaker 1: But he also has the loudest, most important voice in
Speaker 1: the Repulican Party, Donald Trump's going against him. So I
Speaker 1: think part of it will depend, you know, is Trump
Speaker 1: as powerful and influenced, you know, nine months from now
Speaker 1: as he is today. If so, I think Gonzalas is
Speaker 1: gonna have a tough time getting reelected. But a lot
Speaker 1: can happen between now and then, and Gonzalas has enough
Speaker 1: money to make a good case for himself publicly. So
Speaker 1: you know, we're going to get just what I said,
Speaker 1: We're going to get into this piece, which is a
Speaker 1: measure of Trump's effectiveness. Um. And I think that's why
Speaker 1: everybody in the country is gonna be looking at this
Speaker 1: race come next spring. Yeah. I did also think, as
Speaker 1: you pointed out, that it's he's had some strong fundraising
Speaker 1: kind of the strongest that he's ever seen, and maybe
Speaker 1: it's an early indication. Hey, Josh, thank you so much.
Speaker 1: Josh Green, National correspondent, Bloomberg Business Week on the phone
Speaker 1: from Washington, d C. Joel Da have a last thought. Well,
Speaker 1: I'm also you know, this is one of many races
Speaker 1: where there were people who voted again for impeachment, and
Speaker 1: I just am also going to be very curious to
Speaker 1: what happens in all those other districts and do they
Speaker 1: go one way or is it like half and half
Speaker 1: or something? You know, Yeah, it'll be really telling in
Speaker 1: terms of what it means for how much just Trump
Speaker 1: hit the road ahead of that too. Yeah, well, I'm
Speaker 1: guessing a lot. You're listening to Bloomberg Business Week with
Speaker 1: Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg
Speaker 1: Radio on the Wall. I couldn't wait to get to
Speaker 1: our next This is what's so great about having everyone
Speaker 1: come back to work. We can like talk during the breaks.
Speaker 1: I love it all right, so let's get to it.
Speaker 1: She is in our studio with Tim and myself. It's
Speaker 1: one of our most read stories about those that are
Speaker 1: speaking out pushing for more aggressive government policies to address
Speaker 1: societal problems. Let's get more on the X E s
Speaker 1: G insiders who are dissing and dismissing corporate cream goals
Speaker 1: as hype on this story. Bloomberg NEWSSG reporter Sagel Kashan,
Speaker 1: she is with us in our Interactor Broker studio. I
Speaker 1: do love this story, So tell us about the individual.
Speaker 1: Um Tarik Fancy. Yeah, well, he was well in the
Speaker 1: hospital the b so to speak. He should be at
Speaker 1: Black Rock, the world's biggest black cute UM. And as
Speaker 1: you remember last year, Life Fink came out and said
Speaker 1: he was going to put climate at the center of
Speaker 1: its investments and its investment strategy. Um Tarret was actually there.
Speaker 1: He actually left before black really ramped up. But you know,
Speaker 1: he talked about his experiences and it wasn't so much
Speaker 1: about being at Black Rocket. His experiences were more broadly
Speaker 1: directed at the sort of the sustainable investment of investing world. UM.
Speaker 1: And yeah, he talked about how it's great having all
Speaker 1: these like low carbon funds, these climate friendly friends E
Speaker 1: s g. E. T f s and exchange traded funds,
Speaker 1: but they're not really enough to move the needle when
Speaker 1: we're dealing with the climate crisis because it is a crisis.
Speaker 1: That's what the scientists are saying. So what more needs
Speaker 1: to be done? I mean, what are these ex SG
Speaker 1: insiders saying, isn't going far enough? Yeah? I mean, look,
Speaker 1: they all say corporate sustainability efforts have been good. It's
Speaker 1: not like it's been a waste of time, but there
Speaker 1: needs to be more aggressive government. Well okay, So I'm
Speaker 1: glad you brought that up because when I when I
Speaker 1: read your piece, I was again reminded of the lofty
Speaker 1: goals that we hear from companies. And these are companies
Speaker 1: that say, Okay, in three decades we will be carbon
Speaker 1: neutral or net zero emissions. And I'm thinking to myself, Okay,
Speaker 1: is anyone listening to this right now or involved in
Speaker 1: what they're saying going to be involved in this company
Speaker 1: three decades from now? Like these are goals that are
Speaker 1: are so far away now, absolutely, And I think that's
Speaker 1: what I mean. What we've seen just this year, with
Speaker 1: just in the last last week week before, with the
Speaker 1: heats in the Northwest and Texas earlier this year, like
Speaker 1: this is a you know, we're seeing the effects of
Speaker 1: climate change as we speak. You know, this is not
Speaker 1: something that's going to happen in fifty years on. We're
Speaker 1: already there. Well, you know, because we have the Sustainable
Speaker 1: Business Summit Global going on right now by Bloomberg. It's
Speaker 1: a couple of days of programming. I you know, and
Speaker 1: we'll hear a little bit of my conversation with the
Speaker 1: CFO of ab InBev and also the Chief Sustainability Officer,
Speaker 1: and you know, we talked about this and I think
Speaker 1: they would agree that it's not perfect, but it's a journey.
Speaker 1: But I think what you're saying to me is, you know,
Speaker 1: there's those slow, meandering walks that we take through the
Speaker 1: park and then there's like I gotta get to work, bam.
Speaker 1: That's where we are. We from what you're hearing is
Speaker 1: that we need to be more aggressive about the steps exactly.
Speaker 1: I mean, this is what all of these executives or
Speaker 1: former executives have said, is that you know, we're in
Speaker 1: a crisis mode. So yeah, all of these efforts are great,
Speaker 1: all the corporate saying ability efforts are good, Um, but
Speaker 1: we are in a climate crisis. So they're saying that
Speaker 1: the government needs to come in and implement things like
Speaker 1: carbon taxes and the like and more aggressive ones, more
Speaker 1: penalties to some right impunitive actions that if you don't
Speaker 1: abide more quickly, right, you're going to pay unfortunately, But
Speaker 1: we are so entangled with the phiosophial industry using you know, oh,
Speaker 1: existence is all the fueling emissions. So we really need
Speaker 1: to sort of like change things around if we're going
Speaker 1: to meet any of these targets that companies are setting.
Speaker 1: Someone who spoke to you said, the problem with greenwashing
Speaker 1: is green wishing. What does that mean? Great quote? Yeah,
Speaker 1: um so he used to work Duk duncan Astin used
Speaker 1: to work at out Goals investment firm. And you know,
Speaker 1: there's always this talk about greenwashing, which is where companies
Speaker 1: or groups are exaggerating their environmental sort of credentials. But
Speaker 1: he's saying, like green wishing, thinking that we're doing better
Speaker 1: than what we what we really are is even more
Speaker 1: harmful because it's this sort of like false sense of security. Well,
Speaker 1: it's interesting. I do feel like the EU is leading
Speaker 1: the way, especially with the government involvement, and they are
Speaker 1: putting metrics and money um to that is that the model,
Speaker 1: but just a more aggressive form of what you know,
Speaker 1: what is I'm always like caught up in this specifics
Speaker 1: of what more we need to do to make it different.
Speaker 1: I'm on the same the same page as you on
Speaker 1: that one. I mean, there are lots of things going on.
Speaker 1: I mean the SEC is looking at a raft of
Speaker 1: you know, potential moves and yeah, those debates going on
Speaker 1: and be anything from like disclosing like things like you know, E,
Speaker 1: s G metro And that's part of the problem, right,
Speaker 1: I know, even the A, B and guys are like,
Speaker 1: you know, the metrics between you know, when you're defining
Speaker 1: E or S or T, some of them are easier
Speaker 1: than others. Absolutely, Yes, it seems to be the sort
Speaker 1: of the sticking point where there's just a lack of
Speaker 1: data compared with the E where there is emissions data
Speaker 1: or wor to usage data and the like. So it's
Speaker 1: a it's a working motion. Yeah. We hear from companies
Speaker 1: that that have s G products that investors are demanding these.
Speaker 1: What do we know about actual investor demand for for
Speaker 1: products that provide more than just a return? Yeah, no, absolutely,
Speaker 1: I mean you know we've got like the country's biggest
Speaker 1: pension plans like Calsters, Cowper's new York City who are
Speaker 1: And so in New York States, sorry, who are really
Speaker 1: ramping up. They've set their own like net zero goals
Speaker 1: on the East Coast here, So it's all in line
Speaker 1: of sort of like divesting, ramping up and putting sort
Speaker 1: of channeling capsule to sort of cleaner technologies and the like.
Speaker 1: That's going to help us all meet these goals. But
Speaker 1: yes to investing, I mean this as part of the problem,
Speaker 1: Like you can have a company that's working on it,
Speaker 1: but it is still really hurting the environment. But people
Speaker 1: say you can be in the e s G Fund
Speaker 1: because you're working on it. So so as an investor,
Speaker 1: it's like, wait a minute, is really my money going
Speaker 1: to support you know, the better end outcome? I mean
Speaker 1: what somebody has says has said to me, it's really
Speaker 1: difficult to be a purist here, Like we're all entangled
Speaker 1: in this. So it is a working motion. Unfortunately, which
Speaker 1: government is most aggressive right now. I mean, well the
Speaker 1: e USE, as Carol said that, they are way ahead,
Speaker 1: but I mean the US is fast catching up. And
Speaker 1: and again it's like a geopolitical thing as well, like
Speaker 1: he wants to own this space, he wants to own
Speaker 1: clean technologies. He wants to be sort of at the
Speaker 1: forefront of this sort of like transition to a low
Speaker 1: carbon existence. But if the pandemic taught us anything, it's
Speaker 1: so just a reminder that, you know, things like a
Speaker 1: health crisis or things like climate change really no no borders.
Speaker 1: So if we don't figure out something globally the situation,
Speaker 1: it's already very difficult for certain parts of the world.
Speaker 1: I love, love, love this story. It's a most read
Speaker 1: and I'll be bringing it up with some of my
Speaker 1: panels at the Sustainable Business Summit. Um Sachel, thank you.
Speaker 1: I really appreciate you coming by. Sachel. Um is e
Speaker 1: s G. Report of Bloomberg News in or Bloomberg Interactive
Speaker 1: Broker Studio. Yeah, a great, great piece. Check it out
Speaker 1: Bloomberg dot Com in on the terminal. I'm somebody who
Speaker 1: likes metrics and how do you you know, UM measure something?
Speaker 1: And I think it's really tricky right now, we don't know,
Speaker 1: we don't know, it's not exact. I'm bro a journal Yeah,
Speaker 1: but you let me drive No, no, honey, please, I'll
Speaker 1: do I want to drive strive the question. Yeah, thanks,
Speaker 1: we'll try us down. Bloomberg Radio all right, just about
Speaker 1: ten and a half minutes left. Its trade flies, Carol,
Speaker 1: when you're having fun. It has been a busy two days.
Speaker 1: Luck going on, and equity is definitely off their has
Speaker 1: of the session. Charlie breaking down. Those numbers were down
Speaker 1: across the board, just about point three percent down on
Speaker 1: those major equity averages. Let's get to with Anna Barton.
Speaker 1: She is co director of Global of Growth Equities at
Speaker 1: Eaton Vanced, Co director of Growth Equities. Let's get it
Speaker 1: right at Eaton Vance on the phone from Boston. Um, yeah,
Speaker 1: nice to have you here with us. How are you
Speaker 1: I'm doing great, good afternoon. Good to be with you
Speaker 1: guys again. Yeah, good to have you here. It's a
Speaker 1: funny day. Bank earnings. I don't know what what is
Speaker 1: it that you think we should be focusing on in
Speaker 1: today's trade. Well, there's a lot that is coming at investors,
Speaker 1: and I think the market is reacting to uh, pretty
Speaker 1: much a little bit for everyone. I think, you know,
Speaker 1: when you think about the marketplaces a balance sheet, there
Speaker 1: are plenty of assets and liabilities. On the plus side,
Speaker 1: I think we've got a ton of confirmation that economic
Speaker 1: recovery is with us, a very positive comments from Jamie
Speaker 1: Diamond and the rest on the consumer spending and the sentiment.
Speaker 1: But on the flip side, obviously, the the million dollar
Speaker 1: question on the stickiness of the inflationary pressures and whether
Speaker 1: it remains with us for years to come or just
Speaker 1: a couple of months. Is um kind of confirmation of
Speaker 1: the fact that inflation is heading higher, But I would
Speaker 1: say it's heading higher alongside higher growth rate. So uh,
Speaker 1: that equation if holes is okay for now, well, is
Speaker 1: it heading higher though permanently, or is it heading higher
Speaker 1: in a way that that lumber prices headed higher Because
Speaker 1: if we look and we talked about this with Carl
Speaker 1: Ricdona from Bloomberg Intelligence Bloomberg Economics earlier in the day today,
Speaker 1: and he pointed out that the prices for used cars
Speaker 1: and trucks they jumped ten point five but that was
Speaker 1: responsible for a third of the rise of the index. Yeah,
Speaker 1: that's a fair appoint him. And I think, um, I
Speaker 1: think many of your guests previous to me stated correctly,
Speaker 1: which is some of these pressures are truly going to
Speaker 1: be transitory and some are not. Lumber is a perfect
Speaker 1: example where um it was transitory and now where something
Speaker 1: like off where we were just even a couple of
Speaker 1: months ago. UM wages, for example, you can't give somebody
Speaker 1: a raise and then take it away. UM. So I
Speaker 1: think the the answer to the question ultimately pricing power.
Speaker 1: That's something that we've talked about. Companies that haven't you
Speaker 1: can pass it on UM. You know, Pepsi being a
Speaker 1: perfect example of that, will not see as much a
Speaker 1: destrimental sort of impact to the margins as companies that
Speaker 1: have to eat the higher input costs. So UM. Again,
Speaker 1: it's a little bit of everything, and we just have
Speaker 1: to be contient and watch what the market is giving us.
Speaker 1: So you're not worried about runaway inflation, not yet, uh
Speaker 1: not yet. But I think I think what what what
Speaker 1: we are worried about is going after sort of those
Speaker 1: theme that was taking a hold in the beginning of
Speaker 1: the year, which is this reopening trade, this value trade,
Speaker 1: irrespective of you know, legitimacy and sustain sustainability of that
Speaker 1: trend and that growth rate. And I think the most
Speaker 1: important thing for investors to focus on is a balance
Speaker 1: diversified approach in in stories that are stock specific meanings,
Speaker 1: secular growth stories with addressable market that is disrupting along
Speaker 1: alongside stable growth opportunities like apochescy for example, UM and
Speaker 1: others that provide that sort of buoyancy and provide that
Speaker 1: UM eligibility to kind of play in both sides of
Speaker 1: the trade. What are some other of those stocks that
Speaker 1: you're betting on? So some other ones interesting enough? You
Speaker 1: know where I would go is with laggers. I mean,
Speaker 1: that's one area of the market. Unfortunately, we've got something
Speaker 1: like six areas of the market that have lagged the
Speaker 1: S and P five hundreds. So I would go where
Speaker 1: the price performance and the valuation has already been reset.
Speaker 1: Technology is actually a perfect place for that. I think
Speaker 1: we're undergoing that right now, particularly in the Hardware and
Speaker 1: Equipment UM area of the market. UM SMPI is up
Speaker 1: something like seventeen and a half percentage points, but tech
Speaker 1: well definitely regained some leadership, is still lagging. Another interesting
Speaker 1: area is chemicals. Believe it or not, While materials UM
Speaker 1: is underperforming interesting enough, chemicals is trading at a discount
Speaker 1: to the market, casually yield and accessible percentage points and
Speaker 1: has growth rate that is double digits. So that's another area. Hey,
Speaker 1: I'm gonna ask you, you're eating vans growth opportunities fun.
Speaker 1: It's up about in the last twelve months. I also
Speaker 1: beating most of its peers, UH in that category, the
Speaker 1: top names Amazon, Microsoft, Alphabet. I mean, these are a
Speaker 1: bunch of your big growth names. So are you guys
Speaker 1: still all in on this? Yeah? I think UM. Just
Speaker 1: as a note, I'm actually no longer a PM of
Speaker 1: that strategy, but I have a ton of a ton
Speaker 1: of my own personal investment associated with that strategy. I
Speaker 1: think growth is a place where you want to be
Speaker 1: right now, UM, and the names that you mentioned have
Speaker 1: more cash on hand, have more top line growth, and
Speaker 1: I would argue more pricing power than many of the
Speaker 1: companies UM that we talked about. So I think growth
Speaker 1: at a reasonable prices where you want to be in
Speaker 1: many of those names, to be honest with your trading,
Speaker 1: at a discount to their growth rate. So that's interesting
Speaker 1: because I was gonna say, Dave Wilson was talking about
Speaker 1: technology in particular being a little hot in terms of
Speaker 1: valuation and kind of making the comparison to what we
Speaker 1: saw in the tech bubble, and so I did wonder
Speaker 1: if are you comfortable letting some of these names run
Speaker 1: a little bit hot because of who they are and
Speaker 1: their growth opportunities and possibilities and potentials versus maybe some
Speaker 1: other names. That's fair. I think tech is one of
Speaker 1: those areas of the market, like industrials, where you have
Speaker 1: a ton of different industries. So there's definitely a lot
Speaker 1: of enablers and software plays that have UM had tremendous
Speaker 1: price appreciation. But if you take a step back and
Speaker 1: you think about all the things that we've been talking about, identity,
Speaker 1: governance and cyber attacks and all of those things, UM,
Speaker 1: there is still this wallet share that is transitioning, and
Speaker 1: there's still not enough money being spent on the most
Speaker 1: important things right now, and that's infrastructure as we think
Speaker 1: about sort of the digital world and digital economy that
Speaker 1: we're part of. So I think we just have a
Speaker 1: lot of investment that is still yet to take hold.
Speaker 1: When we think about the overall I T spend is
Speaker 1: being in trillions of dollars in less than time, percent
Speaker 1: being spent on security, UM or other sort of enabling things.
Speaker 1: And I want to jump back to something that you
Speaker 1: said earlier in our conversation. You said you're not concerned,
Speaker 1: and this is because this is what the market is
Speaker 1: doing today. This is what it's thinking about. Um, you're
Speaker 1: not concerned about inflation yet, when will you be? I think,
Speaker 1: you know, statsulation was the most um, I think, most
Speaker 1: heated word in economics, which is when you just don't
Speaker 1: have enough growth to offset these taxes to your to
Speaker 1: your bottom line. And what we need to be mindful of.
Speaker 1: And this is why I think, you know, investors will
Speaker 1: benefit from being active in the market and responding to
Speaker 1: what the market is telling us right now. What it's
Speaker 1: telling us exactly what you mentioned is that if you
Speaker 1: sort of decipher where the inflationary pressures are coming from,
Speaker 1: a third of it is is driven by you know,
Speaker 1: demand and supply um dynamics that we believe are going
Speaker 1: to be transitory, some supply chain dynamics that we also
Speaker 1: there might be more lingering that we'd like them to be,
Speaker 1: but should be transitory. So I think what you need
Speaker 1: to be mindful of is cause and effect and understanding
Speaker 1: what are the sources of the inflationary pressures and how
Speaker 1: the company sort of offset them for the longer term.
Speaker 1: And that's why I go back to the big guys
Speaker 1: that do have the price and power and can do
Speaker 1: well irrespective of the inflation um levels that we're living with,
Speaker 1: and I do under when do we respect the bond market?
Speaker 1: Do we resk backed it? You know? Sometimes we blow
Speaker 1: it off when it gets too low. Thing, well, that
Speaker 1: can't be real um. And then when it goes up,
Speaker 1: we're like, go, wait, that's real. So it's interesting kind
Speaker 1: of investor perspective on all of this. U Jana Barton,
Speaker 1: thank you so much, co director of Growth Equities at
Speaker 1: EAT Advance, joining us once again on the phone from Boston.
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