Speaker 1: This is Bloomberg Business Week. I'm Carrol Masser and I'm
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Speaker 1: pm Eastern Time on Bloomberg Radio, or watch us on
Speaker 1: YouTube search Bloomberg Global News Present, Biden saying it's gonna
Speaker 1: be a tough call on whether it order U. S.
Speaker 1: Troops to get vaccinated. It's funny, Tim, I actually thought
Speaker 1: the military was already getting vaccinated. But that's not the case. No,
Speaker 1: it's not. And look, I think this is something that
Speaker 1: a lot of organizations are struggling with right now. To
Speaker 1: what extent can you actually mandate of vaccination? Yeah, exactly.
Speaker 1: So we've got that going on. We've got global cases
Speaker 1: of the virus topping a hundred and fifty million India
Speaker 1: remaining at the epicenter of the pandemic. They reported record
Speaker 1: new infections today. There's a lot going on. Let's get
Speaker 1: to it with Dr Ian LUs Bader, as we always
Speaker 1: do on our Friday's clotl a professor of medicine at
Speaker 1: n y U Land, going on the phone in Michigan
Speaker 1: on this Friday. Dr LUs Bade, are nice to have
Speaker 1: you back with us. How are you good? Good? Always
Speaker 1: a pleasure, Happy Friday, guys. Oh my god, this has
Speaker 1: been I guess it's been a hard week. Um helped
Speaker 1: me out here because we did have a headline to
Speaker 1: Reuter's reporting that the president is set to ban most
Speaker 1: travel to the US from India. So I was having
Speaker 1: a conversation with someone and it's like, look, we're doing
Speaker 1: so great, and he's like, my wife, she's from India.
Speaker 1: We're not doing so great. The world is still having
Speaker 1: a tough time, and we don't get through it, all
Speaker 1: of us until everybody gets through it. UM. I know
Speaker 1: we talked to you about this kind of almost every
Speaker 1: week at this point, but give me your thoughts on this,
Speaker 1: especially as we watch what's going on in Indian some
Speaker 1: other parts of the world. So as we talked about
Speaker 1: last week and really we're at the head of the curve.
Speaker 1: We knew that India was erupting, and uh, I don't
Speaker 1: think we've anywhere near seeing the top. You know, we're
Speaker 1: estimating a hundred and fifty million global case, says. I
Speaker 1: think all of these are really gross underestimates. I think
Speaker 1: the ability for many countries to track the real number
Speaker 1: of cases is flawed. In Night and the Spanish Blue,
Speaker 1: it was estimated about a third of the world's population
Speaker 1: came down with a Spanish flu, higher higher mortality than
Speaker 1: we're seeing now. Uh, and that was before air travel
Speaker 1: was really widespread. So I think this is really sort
Speaker 1: of the tip of the spirit of the tip of
Speaker 1: the iceberg as what we're seeing. And I do think,
Speaker 1: even though it maybe politically incorrect, I think a travel ban,
Speaker 1: even though that's very imperfect, is probably very reasonable to
Speaker 1: do based on what we're seeing in India. Why is
Speaker 1: that is that because of variants? Yes, so, I think
Speaker 1: India has a number of problems. One, you know, for
Speaker 1: the skeptics of public health measures, this is really an
Speaker 1: example of what happens when there's really a systemic failure
Speaker 1: of public health measures. So one very low vaccination rate
Speaker 1: under ten percent to us uper spread or events that
Speaker 1: were really sanctioned by the government. And three perhaps maybe cremation,
Speaker 1: you know, when you're burning particulate matter, would smoke varions.
Speaker 1: We know that there's higher complications in areas of pollution
Speaker 1: or smoke, so it's possible that may also be playing
Speaker 1: a role. But I think the key thing is lack
Speaker 1: of vaccination, and there will ques solution to that. My
Speaker 1: question also though, it has to do with why a
Speaker 1: travel ban would be the right thing for the United
Speaker 1: States right now, given that we do have have COVID
Speaker 1: running rampant through the U s as well. Is it
Speaker 1: is the variance element, the concern that there could be
Speaker 1: a different strain of COVID brought over from another country.
Speaker 1: Oh for sure. Now we already have here in Michigan
Speaker 1: where I am at a college graduation h to be
Speaker 1: one six one seven variant. We've seen some cases in California.
Speaker 1: That is one of the dominant strains in India, and
Speaker 1: the problem is it may be somewhat resistant to the
Speaker 1: Fiser vaccine. That's unclear. We're getting some data on that.
Speaker 1: And it also seems to be more infectious that it
Speaker 1: spreads more easily. So there are a lot of you know,
Speaker 1: potential issues here and uh, you know, some of those
Speaker 1: cases are also being seen in China. So we're nowhere
Speaker 1: done with what's going on. So how does it potentially
Speaker 1: impact the United States? Well, you know, I think the
Speaker 1: United States we're going to be okay. You know, we
Speaker 1: we unfortunately about of adults under thirty five had declined
Speaker 1: the vaccine. They have vaccine hesitancy, so we we have
Speaker 1: to do a little bit better there. One of the reasons,
Speaker 1: for example, we can't mandate scenes generally is the feeling
Speaker 1: that it's under an emergency use authorization not FDA approved.
Speaker 1: So to make people take something that's not FDA approved
Speaker 1: does potentially cause a problem. So that may be one
Speaker 1: reason why we can't mandate it, although I will have
Speaker 1: to see what happens with that. But I think in
Speaker 1: the US we have about forty going on of adults vaccinated.
Speaker 1: I think we're going to be okay, but I'm not
Speaker 1: sure globally that's going to be the same case. Hey,
Speaker 1: Dr les Bader, I'm I'm wondering about if we're going
Speaker 1: to just continue to see you know, a few weeks
Speaker 1: ago we were talking about what was happening in Brazil.
Speaker 1: Now we're talking about what's happening in India. Is this
Speaker 1: just going to keep going from one country to another
Speaker 1: country because of so many countries aren't vaccinated right now?
Speaker 1: Is this how the pandemic plays out over the next year? Absolutely,
Speaker 1: you know, this is exactly what happened, well not exactly,
Speaker 1: but very similar to what happened in the Night Spanish flu. Basically,
Speaker 1: it went around the country exactly as it did in
Speaker 1: the United States. You know, we saw New York a
Speaker 1: year ago as the epicenter and people in the Midwest that, oh,
Speaker 1: we're safe now. It hit both coasts and the in
Speaker 1: the Midwest. Uh, and then it went from country to country.
Speaker 1: That was primarily in World War Two with the troops,
Speaker 1: ships going to Europe and so forth. That probably helped
Speaker 1: spread it. But I think we're going to see continued
Speaker 1: multiple waves and unfortunately without vaccination, when you get mutation,
Speaker 1: and with mutation you can get resistant viruses, right, which
Speaker 1: is why. Yeah, and we're also talking about booster shots
Speaker 1: and something we maybe we'll get into in the next block.
Speaker 1: Ian Sit tight for a second and we'll come back
Speaker 1: to you in just a moment. We are talking with
Speaker 1: Dr Ian lust bed Or, Clinical Professor of Medicine and
Speaker 1: why you lend go Medical Center on the phone up
Speaker 1: from Michigan. But I do wonder, like, does it ultimately
Speaker 1: if we don't have enough vaccinated, does it come back
Speaker 1: to us? I know Dr leus Padre saying we should
Speaker 1: be okay, but I do wonder. I do wonder too,
Speaker 1: especially with all the hesitancy that we're seeing. Right the
Speaker 1: people who wanted to get vaccinated have already gotten vaccinated.
Speaker 1: And I'm having a lot of conversations with people are like,
Speaker 1: I'm not going to do I'm not, You're not I am.
Speaker 1: I am like a uh in different walks in my life,
Speaker 1: and and I'm respecting it because everybody has to make
Speaker 1: the decision they feel comfortable with. But um, it makes
Speaker 1: sense when he gives me under age of thirty five
Speaker 1: declining vaccine, I get it. I get that number right.
Speaker 1: It makes sense. Well, let's get right back to it
Speaker 1: with Dr Ian lust Betaor, clinical professor of medicine and
Speaker 1: why you land going to medical center? Joining us now
Speaker 1: on the phone from Michigan. Dr LUs Bader, I want
Speaker 1: to just talk about reaction to the vaccine, because it's
Speaker 1: a question that Carol and I have been talking about
Speaker 1: a lot, and it's a question we've been asking, and
Speaker 1: I know a lot of people have been asking each other, Hey,
Speaker 1: what was your reaction to the vaccine? Why are some
Speaker 1: people having such significant reactions to their second shot or
Speaker 1: even their first shot and others aren't. And I'll share
Speaker 1: the example of my wife. She got them more dinner shot.
Speaker 1: After the second shot, she was really sick for you know,
Speaker 1: about twelve hours and like nausea, vomiting, And I got
Speaker 1: the visor shot and after my second shot, I was
Speaker 1: I was a key, but it really went away after
Speaker 1: about thirty six hours. So Charlie Pellent as usual, right
Speaker 1: right on the money, and you as well, Kim uh So.
Speaker 1: That scenes and people's responses um not only do the
Speaker 1: vaccines but to the COVID infection itself are very complex
Speaker 1: and I don't have a simple answer for you. There's
Speaker 1: some data UM that people who have had the virus
Speaker 1: and then get vaccinated, you know, there's a fair number
Speaker 1: of people who have a symptomatic COVID may have a
Speaker 1: more dramatic response UM and the composition of these vaccines
Speaker 1: as somewhat complex. You do have this RNA that's at
Speaker 1: least for the MODERNA and the pleasure vaccines surrounded by
Speaker 1: what's called the liposome or or a lipid coat, and
Speaker 1: people any vaccine, mumps, MUSS, rebel at, tetanus, singles, vaccine,
Speaker 1: all of these vaccines that we give people typically do
Speaker 1: cause achiness at the site and fever. I mean, you're
Speaker 1: you're recognizing a foreign object, of foreign response to an invader,
Speaker 1: and of course the body has a variable response to it.
Speaker 1: What I would say, though, is that most of these
Speaker 1: are really relatively minor limited usually to a day or
Speaker 1: two or less, and that even people who are on
Speaker 1: some you know suppression, you know, rumantroid arthritis, crones disease,
Speaker 1: other medications of course, talked to your doctor, seemed to
Speaker 1: do well with it. So my answer would really be
Speaker 1: individual variation the component of the vaccine. And just like
Speaker 1: a variable response to COVID to do very well, one
Speaker 1: percent do not. And in some ways it's hard to
Speaker 1: predict exactly why. Part of it is genetics, but part
Speaker 1: of it is expected. Any vaccine, any foreign substance, you
Speaker 1: usually get some immune response, and that's good. You want
Speaker 1: an immune response. But does it mean anything if you
Speaker 1: don't have some kind of response to a vaccine, if
Speaker 1: you don't kind of feel anything, does that mean something
Speaker 1: different in terms of your ability to fight off COVID
Speaker 1: or something some other kind of virus. No, not necessarily
Speaker 1: send people breathe right through it. I send patients of
Speaker 1: afterbout doing testing after. We don't really recommend that. We
Speaker 1: don't really do that. Most of the gum covid exposure
Speaker 1: shows nuclear capsid antibodies, which means the infection you can
Speaker 1: and some people, if they're really concerned, check antibodies for
Speaker 1: spike protein. All the patients I've seen has had the
Speaker 1: vaccine do show spike protein. We don't do it routinely.
Speaker 1: So again, I think the data is very good. As
Speaker 1: we said, out have two hundred million shots, only about
Speaker 1: five cases of people after either both shots or the
Speaker 1: single shot J and J that is, but the two
Speaker 1: RNA shots have come down with covid, so pretty effective.
Speaker 1: Is there any data up to now that shows a
Speaker 1: different reaction or different reactions in general following five or
Speaker 1: versus moderna because there is that anecdotal sort of thing
Speaker 1: that people say, right, Oh, I hear you know this
Speaker 1: shot is worse than the other shot, but is there
Speaker 1: any data to back that up, not that I'm aware of.
Speaker 1: You know, they're they're very similar technology, the messenger urn
Speaker 1: technology with encased in in the liposome. And really, what
Speaker 1: I would say is, because it's so unpredictable, we should
Speaker 1: not really be asking for one or the other. They're
Speaker 1: all really quite effective. As you have pointed out correctly,
Speaker 1: don't don't get de lax. In other words, we really
Speaker 1: need two shots, either three or four weeks support for
Speaker 1: maximal immunity. And that's even a week or two after
Speaker 1: the second shot. You know, J and J somewhat different.
Speaker 1: You still have to wait for that. Um, But no,
Speaker 1: having your fever chills, uh does not necessarily make a difference.
Speaker 1: There are some people who just don't FORMANTABOUDI should we
Speaker 1: see this with hepatitis be actually moms, minsils rebella. You
Speaker 1: can get people several shots and some people just don't
Speaker 1: forman about It's not quite clear why that is all right,
Speaker 1: good to know, UM, congratulations on the graduation. Thinking it
Speaker 1: might be your son, but I hope you well. Congratulations engineering,
Speaker 1: thanks so much, really impressive. Yeah, you have a great weekend.
Speaker 1: Stay safe, of course. Dr Ian ls Beta, clinical professor
Speaker 1: of Medicine at n y U Land. Going on the
Speaker 1: phone in Michigan today always kind of provides clarification. Also,
Speaker 1: good to know he's traveling. He is. Yeah, yeah, he's vaccinated.
Speaker 1: We're hearing that from we are. This is Bloomberg Business
Speaker 1: Week with Carol Masser and Bloomberg Quick Takes Tim Stinovic
Speaker 1: from Bloomberg Radio. Another one of our most read stories
Speaker 1: on the Bloomberg. It's about how President Binds proposed tax
Speaker 1: hikes are creating a wealth advisor frenzy is getting a
Speaker 1: little money out there, Tim. It is, especially if you
Speaker 1: have a ton of money. Joel Weber is editor at
Speaker 1: Bloomberg Business Week, and he joins us on the remote
Speaker 1: from Brooklyn. Laura Davison is a Congressional tax reporter for
Speaker 1: Bloomberg News on the phone from Washington, d C. Joel,
Speaker 1: nothing has been you know, put into policy yet, Nothing
Speaker 1: has has been made law yet, but that hasn't stopped
Speaker 1: people from freaking out and from advisors from playing therapist.
Speaker 1: Oh man, the freak out has has really begun. Um
Speaker 1: And yeah, I think everyone is just itching to understand like,
Speaker 1: what could happen, what might happen, what the odds are,
Speaker 1: what they should be doing now, And if you have
Speaker 1: enough money to have a financial advisor, um, you are
Speaker 1: calling them, maybe maybe multiple times. And so Laura had
Speaker 1: the great idea to talk to a couple of financial
Speaker 1: advisors and get their advice for clients right now, and
Speaker 1: Laura tell us what you learned. So basically what advisors
Speaker 1: are saying is, you know, hurry up, let's make a plan,
Speaker 1: and then we've got to wait and see what Congress
Speaker 1: actually does. This plan that Biden put up the speak
Speaker 1: is going to go over a bunch of revisions, a
Speaker 1: bunch of negotiations, and probably is not going to look
Speaker 1: exactly like what the President proposed. So they're looking to
Speaker 1: pass some sort of plan, you know, September October, but
Speaker 1: that could slip. So really it is only going to
Speaker 1: be a couple of months at the end of the
Speaker 1: year before these tax increases likely take effects. So wealth
Speaker 1: advisors are saying, look, if you are going to have
Speaker 1: to uh sell any assets, take any capital gains, and
Speaker 1: pay taxes on those games, let's do that now versus
Speaker 1: waiting for the next couple of years because that capital
Speaker 1: gains rate, you know, it will likely increase in its
Speaker 1: now Biden has proposed almost so they're saying, hey, you know,
Speaker 1: if you've got some shares that you're gonna sell, let's
Speaker 1: sell them now, pay the pay the tax at the
Speaker 1: lower rate, or even saying, if you have some some
Speaker 1: assets that have really appreciated something you think, like Tesla stock,
Speaker 1: the bitcoin, go ahead, sell those, buy it back, and
Speaker 1: then you've locked in those games at the lower rate,
Speaker 1: because who knows what the future beholds. But it does
Speaker 1: still seem like, Laura, there is even uncertainty in doing
Speaker 1: that because you and are calling Ben's spend Steverman in
Speaker 1: the piece raised the possibility if there could be even
Speaker 1: retroactive changes. Correct, So this is the risk here. You know,
Speaker 1: Congress could say this is totally within their purview. You know, hey,
Speaker 1: the tax increases already took effect January one, which would
Speaker 1: mean any sort of planning would would essentially be moot
Speaker 1: at this point, and you could actually end up hurting
Speaker 1: yourself here. Both Biden advisors as well as congressional Democratic
Speaker 1: advisors have said that they don't like doing this, but
Speaker 1: this isn't their plan. But you know, there's always that
Speaker 1: risk out there until until the bill is signed. The
Speaker 1: thing I think is interesting is what about the I
Speaker 1: R S. Uh putting more scrutiny on the wealthy when
Speaker 1: it comes to their taxes kind of taken maybe a
Speaker 1: deeper luck. President Biden has proposed eight billion for the
Speaker 1: I R S to strength and enforcement in the coming decade.
Speaker 1: How word are they about that, Laura? This could be
Speaker 1: a huge sea change thee the wealthy, and really taxpayers
Speaker 1: at every level have seen audits drop precipitously really in
Speaker 1: the past decade as the I R S has had
Speaker 1: its budget cut. Um they're basically proposing to double or
Speaker 1: even triple the i r S enforcement budget, bringing new auditors,
Speaker 1: bringing new data tools to find fraud. And also one
Speaker 1: thing is interesting is having for for bank accounts, having
Speaker 1: some of the inflows and outflows from bank accounts reported
Speaker 1: to the I r S, so they have a little
Speaker 1: bit more visibility on how much money investors should be reporting.
Speaker 1: This would really be a sea change. And uh, you know,
Speaker 1: if you have a wealth advisor's probably also a good
Speaker 1: idea to make sure you have a good account into
Speaker 1: at tax lawyer on hand as well. Right, make sure
Speaker 1: he's doing the right And all those people right now
Speaker 1: are just like the financial advisors like, great, I haven't
Speaker 1: heard from you forever. Thanks for picking up the phone
Speaker 1: and calling me. We'll come up with a plan now, jerk,
Speaker 1: But so so Laura, I want to have a better
Speaker 1: understanding of this. So that's a hurry hurry weight strategy
Speaker 1: that they're basically um advising. And and are there rainy
Speaker 1: day implicated sations to this, Like are they saying like
Speaker 1: don't invest right now, like hold off until we know
Speaker 1: what's going on, like take us through the various ways
Speaker 1: that they're actually trying to coach people. So basically they're
Speaker 1: telling people, you know, continue as you were if you
Speaker 1: had a you know, a plan, uh, you know, continue
Speaker 1: with that plan. But if you're looking to sell something,
Speaker 1: you know, let's do it sooner rather than later. Get
Speaker 1: the deal structured so that it can happen by New
Speaker 1: Year's Eve if you want to go ahead and execute
Speaker 1: on that. Um, you know, there's there's really so much
Speaker 1: uncertainty right now. Basically everyone every adviser saying, you know,
Speaker 1: don't do anything yet, let's just you know, make create
Speaker 1: some options for ourselves. Look, at different different planning tools
Speaker 1: and then we can make a decision once we kind
Speaker 1: of have a sense of what Congress is going to
Speaker 1: do here. Okay, So I want to also understand, like
Speaker 1: another element, and this part isn't in your current reporting,
Speaker 1: but I'd like to understand, like, you know, a state
Speaker 1: tax was was potentially part of this first phase of talking.
Speaker 1: They seems like they've tabled that, Like what what are
Speaker 1: these financial advisors? What do they have to say about
Speaker 1: this the likelihood of a potential of state tax down
Speaker 1: the down the road. Yeah, so the state tax right
Speaker 1: now doesn't kick in until you know you have eleven
Speaker 1: point seven million dollars at death or twice that if
Speaker 1: you're if you're married. Um, Biden left that out of
Speaker 1: the plan. Um likely because there's some Democrats in the
Speaker 1: Senate who would not support lowering that threshold. But he
Speaker 1: did campaign on bringing that threshold down to three and
Speaker 1: a half a million dollars, so a lot more people
Speaker 1: would be affected by that. That is one of those
Speaker 1: elements where you could see, you know, if if moderates
Speaker 1: and and progressives are negotiating over different elements, that's one
Speaker 1: area right that progressive and say, hey, we really want
Speaker 1: to get this in here. It raises a bunch of money.
Speaker 1: It would help Biden pay for a lot of his
Speaker 1: spending proposals. So that's one area that's still in play.
Speaker 1: The Tax Law Jobs Act, of seen the Trump tax cuts,
Speaker 1: those are still pretty fresh. So what did advisors say
Speaker 1: to to you about the idea of people just kind
Speaker 1: of doing nothing and perhaps even if there are changes,
Speaker 1: doing nothing and maybe even waiting for a new administration
Speaker 1: to to revert to rules back to today. So says
Speaker 1: it will be other thing that that advisors are really
Speaker 1: looking at is, you know, if Republicans sweep in, you know,
Speaker 1: do we basically just have a sea change back in
Speaker 1: the other direction, which as we've seen, you know, with
Speaker 1: the use of reconciliation, this partisan tool to get built
Speaker 1: through Congress. You know, if we keep having the pendulum
Speaker 1: swing one way or another, uh, we could see policy
Speaker 1: changes on tax and anything, you know, every four years
Speaker 1: changing significantly. Um. And this is something that you know,
Speaker 1: really has frustrated tax lawyers for enable. They're just finally
Speaker 1: getting all the details from the Tax Cuts and Jobs
Speaker 1: Act into place, and now they basically have to totally
Speaker 1: undo them and all the advice they had given their
Speaker 1: clients totally goes out the window. It's it's very, very
Speaker 1: confusing and hectic. Well, the freak at the Frenzy says
Speaker 1: to me, Laura that the wealthy do expect some change,
Speaker 1: even if the political process may be tough, they ultimately
Speaker 1: do expect they're going to be paying more taxes. Is
Speaker 1: that a fair assessment? Taxes? Uh, more likely than not
Speaker 1: are going to go up, Which which taxes? How much?
Speaker 1: Who's going to be affected? That's what's going to be
Speaker 1: negotiated over the next several months. And you know who
Speaker 1: makes money? Long wait, the financial advisors, right, and the
Speaker 1: lawyers too. Listen. It's a great story. And I feel like,
Speaker 1: you know, Jelly put taxes in a story here on
Speaker 1: Bloomberg and like everybody wants to read it. Yeah. The
Speaker 1: I think the amount of information that we're going to
Speaker 1: be consuming on this, like we're we were all armchair
Speaker 1: quarterbacks for the pandemic, you know, on everything about the virus,
Speaker 1: about vaccines, and now we're entering this new phase where
Speaker 1: you know, now we have a new administration, new stuff,
Speaker 1: and I think, you know, step up in basis is
Speaker 1: going to be like this thing that everyone is gonna
Speaker 1: want to know about. So we're just gonna be watching
Speaker 1: this so closely. It is such a core competency story
Speaker 1: at Bloomberg and was owned this for the months to
Speaker 1: come such and I'm sure we'll be reading more more
Speaker 1: from Laurada like every day. Just keep it coming, Laura
Speaker 1: explaining it all to us. Laura Davison, thank you so much,
Speaker 1: Congressional tax reporter at Bloomberg News. She's with us on
Speaker 1: the phone in DC. Chill Weber, Editor Bloomberg Business Week,
Speaker 1: have a great week, and on the remote act Sass
Speaker 1: from Brooklyn. This is Bloomberg Business Week with Carol Messer
Speaker 1: and Bloomberg Quick Takes. Tim Stinovic from Bloomberg Radio the
Speaker 1: Bloomberg Big Take Today it's a Bloomberg exclusive that you
Speaker 1: kind of need to be focusing on, and it's a
Speaker 1: story that only we have and today it's about the
Speaker 1: seemingly NonStop behind the scenes drama between Apollo Global Management's
Speaker 1: billionaire co founders and what it means for investors. Heather
Speaker 1: pearl Burg is a private equity reporter at Bloomberg News.
Speaker 1: Joins us on the phone from Washington, d C. Heather,
Speaker 1: this is quite a read. I can see why it
Speaker 1: is the big take today. What has been happening behind
Speaker 1: the scenes as Leon Black has been has exited Apollo
Speaker 1: well Land. Black is sort of a known classicist, I
Speaker 1: mean named the firm Apollo, and it's really starting to
Speaker 1: look a lot like a classic Breek tragedy. I mean,
Speaker 1: you have the drama, the revenge, the power grab, and
Speaker 1: that's the center of it. Is this you know, four
Speaker 1: hundred and fifty five billion dollar investing powerhouse, UM that's
Speaker 1: really had a tumultuous year or so, and Leon Black
Speaker 1: was just um really sort of scathe, scrutinized for his
Speaker 1: ties to Jeffrey Epstein for most of last year moving
Speaker 1: into this year, eventually sort of forced to step aside,
Speaker 1: and you had his two potential successors, Mark Rowan and
Speaker 1: Josh Harris. And Mark Rowan took the reins. Harris had
Speaker 1: this sort of failed bid to become CEO, and since
Speaker 1: then he's really been sidelined and at a bare knuckle
Speaker 1: firm like Apollo. That doesn't look good, is it? It
Speaker 1: sounds a little surprising too, is it. Well? You had
Speaker 1: these three men who were sort of leading different parts
Speaker 1: of the business, Josh Harris was always in charge of
Speaker 1: private equity. Now Apollo made this grab for at seeing
Speaker 1: the huge insurance company that has made it sort of
Speaker 1: the envy of Wall Street for getting such huge fees,
Speaker 1: and private equity is certainly a smaller part of their business.
Speaker 1: Um and and Harris was just being kind of slowly
Speaker 1: relinquished of duty. Is shopping for a place in Florida
Speaker 1: for aman who was sort of a known workaholic and
Speaker 1: really um micromanage into the nitty gritty of deals in
Speaker 1: the New York office. He wouldn't be moving to Florida
Speaker 1: if he really had his pulse on the business. What
Speaker 1: do employees who work under Harris or have worked under
Speaker 1: Harris think of that, because there are some pretty jarring
Speaker 1: anecdotes in here about what they think. Well, he wasn't
Speaker 1: known to be an easy man to work for, and
Speaker 1: that's been sort of widely reported in the past. But yeah,
Speaker 1: we did. We did. Hear some pales of his underlings
Speaker 1: humming ding dong the witch is dead from the Wizard
Speaker 1: of Oz. So I guess they were relieved. That's a
Speaker 1: little harsh to say, right right, yeah, exactly exactly when
Speaker 1: you think about it. As you you write and report,
Speaker 1: you know, I mean this is an individual, Harris, that is,
Speaker 1: who has spent you report years positioning himself and becoming
Speaker 1: a more public face of the company at conferences and
Speaker 1: in the media, you know, kind of setting the stage.
Speaker 1: And it's interesting to see how things play out. UM.
Speaker 1: And and Leon Black, we know has taken a big
Speaker 1: step back. But what is his involvement? What are you
Speaker 1: hearing as things change and evolve? Well, he really is
Speaker 1: not supposed to be involved in any investing activity anymore.
Speaker 1: You know, he cited health issues. He did there was
Speaker 1: a story that he had kind of called into one
Speaker 1: meeting UM that was quickly reported by the media. And
Speaker 1: I think, Um, there's just so much scrutiny over his
Speaker 1: involvements that he'll probably stay out of it for a
Speaker 1: little while. I mean, there's some speculation that he might
Speaker 1: come back eventually, but nobody really knows in what form
Speaker 1: or what that would look like. I always think about
Speaker 1: all of the stories that you and your team and
Speaker 1: others have report up Bloomberg. You know, there's key senior people.
Speaker 1: They are often crucial when it comes to raising new funds,
Speaker 1: creating new funds. The relationships that they've had for years
Speaker 1: that allow them to raise new money to invest. So
Speaker 1: how does Harris having a much smaller role and maybe
Speaker 1: potentially new role at some point, how does that impact
Speaker 1: the firm which is a publicly traded firm at some
Speaker 1: point um you will see how that shakes out. I mean,
Speaker 1: he definitely has a relationships with big limited partners, just
Speaker 1: like all of the founders will have their own relationships
Speaker 1: with people, and and Josh Harris is still a key
Speaker 1: man on the largest ever private equity funds that Apollo
Speaker 1: had raised, which you know they haven't finished investing yet.
Speaker 1: So if you were to leave, which you know people
Speaker 1: are speculating he will in the next year, So that
Speaker 1: would trigger a big problem for Apollo. I mean, investors
Speaker 1: would essentially have to sign off on the fund continuing
Speaker 1: to do deals, so investing would pause or maybe even stop.
Speaker 1: And I Apolo certainly doesn't want that to happen, So
Speaker 1: does have a little bit of leverage at the moment too. Yeah,
Speaker 1: Stacks after that this year, Hey, Heather, what did you
Speaker 1: learn specifically about what Harris is doing in Florida and
Speaker 1: has been doing during the pandemic and indications just in
Speaker 1: about thirty seconds or so that he's thinking about making
Speaker 1: more permanent routes there. Um, he's a spot of a
Speaker 1: lot of different nice restaurants riding his bike around town
Speaker 1: and the Phone Beach area. Um, you know, I think
Speaker 1: there's a lot of people who have sort of fled
Speaker 1: New York City in the pandemic. And um, you know,
Speaker 1: we had definitely heard that he's looking to buy a
Speaker 1: place down there. Apollo's opening offices down there, So it
Speaker 1: isn't the craziest thing along with other firms to kind
Speaker 1: of help retain talent um. But for someone like Josh,
Speaker 1: you know, this would be a sign that if he
Speaker 1: wanted to sell down Apollo shares, taxes wouldn't be as
Speaker 1: much as of an issue as they were in New York.
Speaker 1: We'll see if we see him a lot more at
Speaker 1: sports events too, as that opens up, because of course
Speaker 1: he's got Harris Blitzer Sports and Entertainment that he's set
Speaker 1: up with Blackstones David Blitzer. Hey, great reporting as always,
Speaker 1: and that of course is the big take story. You
Speaker 1: can find out more at Bloomberg and Bloomberg dot com.
Speaker 1: I'm roc journal Yeah, but you let me drive. Oh no, no, no, no,
Speaker 1: who's honey, Please, I'll do the right rivel. I want
Speaker 1: to drive, Just drive, baby, it's the questions drying. This
Speaker 1: is the drive to the Globe un Radio. Just about
Speaker 1: ten minutes left in today's trading session. Charlie Pellett putting
Speaker 1: it so perfectly a late day fade here on this Friday.
Speaker 1: We are definitely off our best levels of the session
Speaker 1: and definitely off record highs for the broader market. Let's
Speaker 1: get to it with James Chuck Mark. He is back
Speaker 1: with us, partner in portfolio analyst. He focuses on tech
Speaker 1: stocks at the asset management from Clockwise Capital. He's back
Speaker 1: with us on the phone in Miami. James, good to
Speaker 1: have you back with us. What a week tech stocks,
Speaker 1: This is your world. I'm guessing you might not have
Speaker 1: gotten too much sleep this week, but sum it up
Speaker 1: for us if you would. If there is kind of
Speaker 1: a big overarching theme from some of the names that
Speaker 1: reported this week, yeah, thanks for having me. So. We
Speaker 1: saw all the big companies reporting this week, Amazon, Apple, Facebook, Microsoft,
Speaker 1: and I think the big overarching takeaway from those is
Speaker 1: that these companies are proving to be increasingly essential to
Speaker 1: the world, and the results certainly approved that that not
Speaker 1: only are they essential way businesses operate and consumers, but
Speaker 1: they're essentially the new utilities, and that essential infrastructure that
Speaker 1: they've built is something that's going to be virtually impossible
Speaker 1: to derail for the foreseeable future. And the new companies
Speaker 1: that are coming into the market UM are are predicated
Speaker 1: on leveraging the infrastructure of those companies have built. So
Speaker 1: no matter what, you know, they're here to stay and
Speaker 1: very little they can stop their momentum. That said, James,
Speaker 1: it does seem like it was kind of the tale
Speaker 1: of two different types of companies, the big tech companies
Speaker 1: versus the small tech companies. I mean, you saw what
Speaker 1: happened with Facebook's report and Alphabets report, Microsoft's report, and
Speaker 1: then of course Amazon's report, and at the same time
Speaker 1: what happened to Spotify, to Pinterest into Twitter. So so
Speaker 1: where's the divergence there? What's going on? Yeah, what we're
Speaker 1: seeing right now, I mean the market has gone absolutely
Speaker 1: straight up for over the last year. Every single thing
Speaker 1: that was thrown at investors was dismissed, you know, depressed
Speaker 1: earnings for UM, regulatory risks, the election uncertainty. You know,
Speaker 1: we had a couple of blips here and there, but
Speaker 1: it's essentially gone straight up. And then now you tack
Speaker 1: on inflation concerns as we look into the coming weeks
Speaker 1: and months. Obviously, some of those stocks that you just named,
Speaker 1: you know, they're higher multiple stocks and more sensitive. But ultimately,
Speaker 1: when you do look at the underlying performance of those companies,
Speaker 1: particularly spot you know, Spotify, that's one that we actually
Speaker 1: added to on the pull back because of their audio
Speaker 1: platforms that they're building and and positioning we think, you know,
Speaker 1: relative to Apple Music. Um, but the results clearly are strong.
Speaker 1: But the multiples attributed to these stocks maybe pricing in
Speaker 1: and increased discount factor. As you know, we have some
Speaker 1: outstanding risks as we look full of So I'm gonna
Speaker 1: go through a quick laundry list. Apple. Did you add
Speaker 1: to the position, did you reduce? What's your take there? Well,
Speaker 1: I'll tell you the what we did. What when we
Speaker 1: turned into the the new year. One of the things
Speaker 1: that we did was we knew that the market was
Speaker 1: going into a rotation trade, you know, going into the
Speaker 1: travel space and airlines and things of that nature. But
Speaker 1: those businesses we didn't think are sustainable. So what we
Speaker 1: did was we sized up our highest conviction names like Apple,
Speaker 1: like a Whirlpool, like an Amazon, like a Facebook. You know,
Speaker 1: gross them up to tensive position, so huge sizable weights
Speaker 1: within the portfolio given our conviction of those names. So
Speaker 1: we haven't sold any, but they remained super concentrated as
Speaker 1: part of the book. So that's so, that's true. So
Speaker 1: that's Apple, Amazon, who else? Basebook, Whirlpool top four. Yeah,
Speaker 1: it's an over ten percent weights teature. Okay, how does
Speaker 1: the rest of the year look like? I mean, here
Speaker 1: we are at a point where equity markets are just
Speaker 1: blowing past expectations that analysts sat at the beginning of
Speaker 1: the year are already. Um these are high expectations that
Speaker 1: these that these companies have to deliver on. Are they
Speaker 1: gonna be able to do it? I think these short
Speaker 1: answers to that is yes, because technology can and will
Speaker 1: always move forward. So no matter what type of market
Speaker 1: clips that we see the move. The world is moving
Speaker 1: towards the cloud, and the world is moving towards flexibility
Speaker 1: and and enhance productivity, and any businesses that allow you
Speaker 1: to augment and optimize um that productivity and flexibility by
Speaker 1: via companies that either build the cloud or leverage the
Speaker 1: cloud will continue to benefit. But uh, you know, from
Speaker 1: a macro sense, you know we do have calls for concern.
Speaker 1: You know when you whenever you open up the economy,
Speaker 1: when you shut it down and open it up with
Speaker 1: a flip of a switch, you know there is going
Speaker 1: to be a huge bottleneck on the supply side, so inflation.
Speaker 1: Even though the companies that we are investing are deflation deflationary,
Speaker 1: which gives us confidence in them, but we will have
Speaker 1: likely have you know, inflationary risks in your term and
Speaker 1: some of these stocks you know that do have high growth,
Speaker 1: super high growth and high multiples associated with them could
Speaker 1: certainly be under pressure. You know. The analogy we make
Speaker 1: is kind of like a traffic accident. Um. You know,
Speaker 1: even though you clear the accident, you know it will
Speaker 1: still take a lot of time for the the traffic
Speaker 1: to clear up. Um. And that's kind of how we're
Speaker 1: thinking about the supply constraints of the world and what
Speaker 1: the implications on pricing and and inflation and associated interest rate.
Speaker 1: Hey James, how do you make sense of kind of
Speaker 1: old economy new economy forward versus tesla or you know,
Speaker 1: WORL Pole that's in old economy, but they definitely benefited
Speaker 1: during the pandemic. We've talked with the CEO on air
Speaker 1: and he says folks have been at home, cooking and
Speaker 1: spending more time at home. He doesn't anticipate that's going
Speaker 1: to change anytime soon, that consumer habits don't change that quickly.
Speaker 1: But it's an old economy company versus you know, an
Speaker 1: Amazon where we can shop online and do things differently.
Speaker 1: How do you make sense? How do you make investment
Speaker 1: decisions because you've got a little bit of both in
Speaker 1: your portfolios. Yeah, it's it's uh, you know, Whirlpool Like
Speaker 1: it's interesting. It's not really a tech company per se
Speaker 1: in the traditional sense, but it's a savior in my
Speaker 1: house if I've got a dishwasher though and washing machine. Well,
Speaker 1: the changes they are making on the production side, you know,
Speaker 1: they're getting much more efficient in their manufacturing capabilities and
Speaker 1: and they have been the low cost uh manufacturer of
Speaker 1: appliances and and the more efficiencies are able to drive
Speaker 1: on that, they only be able to improve their efforts
Speaker 1: turnover and in turn, um, the appreciation of machines and
Speaker 1: you've been seeing that. But as far as a new
Speaker 1: economy versus old really boiled. The way we look at
Speaker 1: it as boils down to their d n A. You know,
Speaker 1: are they willing to make the sacrifices that may cause
Speaker 1: near term pain in terms of margin and growth, you know,
Speaker 1: to to be able to adapt or um are they
Speaker 1: going to be stuck in their own ways and and
Speaker 1: and trying to peek out as much cash flow as possible.
Speaker 1: You know, a company like Intel, for example, they're actually
Speaker 1: trying to rip the band aid off and become something
Speaker 1: new UM a manufacturing company that could ultimately hurt their
Speaker 1: profit performance over the near term. So it really boils
Speaker 1: down to are if it is a legacy company, are
Speaker 1: they willing to adapt. If the answer is no, then
Speaker 1: they're out. If the answer is yes, then we'll take
Speaker 1: a look. And as far as the new company is though,
Speaker 1: it's are they aligned to take advantage of the cloud
Speaker 1: and be able to you know, grow their customer base
Speaker 1: independent of geodication and and and continue to um pass
Speaker 1: on ultimately consumer surplus and in the in the and
Speaker 1: with respect to time savings, because ultimately, anything that saves
Speaker 1: you time. So if you look at any company that
Speaker 1: is succeeding right now, they save businesses or Constoomer's time
Speaker 1: in some way, shape or form Alright, we're gonna leave
Speaker 1: it on that note, James, nice to check in with
Speaker 1: You have a wonderful weekend. James Chuck, Marky's partner and
Speaker 1: technology analyst at Clockwise Capital, on the phone from Miami.
Speaker 1: Thanks for listening to Bloomberg Business Week. Download the podcast
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