WEBVTT - Day Three From Milken Global Conference 0:00:01.800 --> 0:00:04.400 This is Bloomberg Business Week. I'm Carole Masser and I'm 0:00:04.440 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanibek. We're here every day bringing 0:00:07.280 --> 0:00:09.760 you the latest news from the world of business and finance, 0:00:09.840 --> 0:00:13.600 plus technology, politics, economics, all furnishing the power of Business 0:00:13.640 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.120 --> 0:00:20.000 analyst in more than one twenty countries. You can download 0:00:20.000 --> 0:00:23.439 Bloomberg Business Weekend iTunes, SoundCloud, or Bloomberg dot Com. You 0:00:23.480 --> 0:00:25.400 can also listen to our radio show at two pm 0:00:25.440 --> 0:00:28.360 Eastern Time on Bloomberg Radio, or watch us on YouTube 0:00:28.400 --> 0:00:32.280 search Bloomberg Global News. One of the feature conversations at 0:00:32.320 --> 0:00:35.600 the Milken Institute this year was Kathy Wood, founder CEO 0:00:35.720 --> 0:00:38.360 and ce IO of Ark and Vesh Ganner Company. About 0:00:38.360 --> 0:00:42.440 seven years ago, she gave Bloomberg Radio the first interview. 0:00:42.880 --> 0:00:45.800 She gave you the first interview myself in pim Fox. 0:00:46.080 --> 0:00:48.839 Uh and uh. I remember it really well and I 0:00:48.920 --> 0:00:50.920 gotta keep you know. We point out that she beat 0:00:51.040 --> 0:00:53.640 just about every stock picker. She did, beat actually every 0:00:53.640 --> 0:00:57.760 stock picker in she bet on the innovators in DNA development. 0:00:57.920 --> 0:01:00.760 I mean, just an outperformance this year. We know it's 0:01:00.800 --> 0:01:03.600 been tougher one of her names though, uh, you know 0:01:03.680 --> 0:01:05.479 that she's been in We know Tesla. We'll talk about 0:01:05.480 --> 0:01:07.640 that later, but she's also been in and out of 0:01:07.840 --> 0:01:10.000 China in terms of her exposure. There so so much 0:01:10.040 --> 0:01:12.120 to get into, and here's a little excerpt where we 0:01:12.160 --> 0:01:15.240 talked about her investment strategy in China. Our first move 0:01:15.240 --> 0:01:18.840 away from China was when China was you had a 0:01:18.920 --> 0:01:22.600 very strong move and you know, the innovation there was 0:01:23.160 --> 0:01:25.959 being deeply appreciated while ours was not. So that was 0:01:26.040 --> 0:01:29.920 that kind of move um. The second time we moved 0:01:30.680 --> 0:01:33.959 or then then we moved in why we saw the 0:01:34.000 --> 0:01:37.560 reaction to COVID and we got more interested because it 0:01:37.680 --> 0:01:40.959 was the most disciplined country in terms of both monetary 0:01:41.000 --> 0:01:45.400 and fiscal policy, uh during the crisis, and I thought 0:01:45.840 --> 0:01:50.640 that China had the possibility of becoming the Germany and 0:01:50.720 --> 0:01:54.320 Switzerland of the world, you know, in terms of discipline 0:01:54.400 --> 0:01:59.920 monetary um. As soon as jack Ma was banished effect 0:02:00.040 --> 0:02:04.760 of Lee last November, we started pulling back because what 0:02:04.760 --> 0:02:08.839 we're doing, and especially during February through May, where our 0:02:08.919 --> 0:02:11.600 strategy just to give you a sense how volatile it is. 0:02:11.680 --> 0:02:15.160 Our strategy from mid February through mid May. Most people 0:02:15.200 --> 0:02:18.760 wouldn't admit this maybe, but this this is how volatile 0:02:19.520 --> 0:02:25.480 transparency was down thirty peak to trough. So we have 0:02:25.680 --> 0:02:30.720 come back. But during that period, what we do, as 0:02:30.760 --> 0:02:34.680 we always do, we concentrated our portfolio towards our highest 0:02:34.680 --> 0:02:38.800 conviction names. China was moving away because almost every week 0:02:38.880 --> 0:02:43.320 and month there was a new regulatory move, crackdown and 0:02:43.680 --> 0:02:46.440 uh so, so it was easy to do that. It 0:02:46.440 --> 0:02:48.880 was great because I'm always scrambling looking for cash during 0:02:48.880 --> 0:02:52.960 a correction. Okay, where is the confidence lower? Where? Where 0:02:53.040 --> 0:02:58.600 where less buy into our favorites here? Uh now common prosperity? 0:02:58.680 --> 0:03:02.400 So what have we done? No China in our flagship. 0:03:03.200 --> 0:03:06.560 We do own some China in UM. A few of 0:03:06.560 --> 0:03:13.519 our portfolio is the ones focused on autonomous UH technology 0:03:13.520 --> 0:03:18.160 and robotics. But we're very particular, very low margin companies 0:03:18.200 --> 0:03:22.040 because margin is clearly not appreciated by the government anymore. 0:03:22.360 --> 0:03:27.639 Common prosperity UH and UH and very beneficially beneficial to 0:03:27.800 --> 0:03:31.040 Tier three, tier four cities Common prosperity. So j D 0:03:31.200 --> 0:03:34.639 Logistics JD dot Com can do. Does it stay this way? 0:03:34.639 --> 0:03:36.960 Do you think in China for a while? Well, it's 0:03:36.960 --> 0:03:39.960 hard to say. But China is certainly country. When they 0:03:40.000 --> 0:03:43.200 make a decision, it's long longer term, it's longer term 0:03:43.200 --> 0:03:45.720 planning right to President g certainly seems to be on 0:03:45.760 --> 0:03:49.480 this mission, and I think he's very unsettled that the 0:03:49.560 --> 0:03:55.400 three child policy is not working, and so there's a 0:03:55.480 --> 0:03:58.720 big social engineering um. And by the way, this is 0:03:58.760 --> 0:04:02.720 all very forecastable. I mean demographics. You know, they knew 0:04:02.800 --> 0:04:05.640 fifty years ago what was going to happen, right, So 0:04:05.800 --> 0:04:10.040 I think that that's part of it. And uh, you know, 0:04:10.120 --> 0:04:13.800 there there is, there is, There are the haves and 0:04:13.840 --> 0:04:17.840 the have not in China like there are like there 0:04:17.920 --> 0:04:20.719 is around the world. I think China is taking it 0:04:20.800 --> 0:04:23.560 more seriously because there's probably more social unrest than we 0:04:23.560 --> 0:04:26.400 now appreciate. What I don't want to understand is they're 0:04:26.440 --> 0:04:30.360 going after real estate, which is seventy of the consumer 0:04:30.440 --> 0:04:35.159 savings in China, individual in China. And if if yes, 0:04:35.240 --> 0:04:40.159 individual saving, if if the prices are going down, which 0:04:40.160 --> 0:04:43.520 they have been, um, I think that could really hurt 0:04:44.360 --> 0:04:48.000 consumer confidence. I think it already is. And then last weekend, 0:04:48.120 --> 0:04:53.039 the weekend before the government, the national government went after 0:04:53.120 --> 0:04:56.960 the regulators, regulators who had focused on the financial industry 0:04:57.279 --> 0:05:00.200 as well as the financial institutions. And I'm just saying, Wow, 0:05:00.240 --> 0:05:02.960 they're playing with fire the movie. Yeah, and talk about 0:05:02.960 --> 0:05:06.120 a cyclical risk out there, think about that if we 0:05:06.160 --> 0:05:09.760 lose China. At the margin, China has been responsible for 0:05:09.800 --> 0:05:14.719 a tremendous amount of cyclical growth, right and commodity price inflation. Okay, 0:05:14.720 --> 0:05:17.520 And that of course was Cathy Wood, founder CEO, chief 0:05:17.560 --> 0:05:20.880 investment officer of ARC invest. So much to talk about, 0:05:20.920 --> 0:05:24.080 but it is interesting to have watched her investments in 0:05:24.160 --> 0:05:27.320 China specifically because she was in and then quickly got 0:05:27.360 --> 0:05:29.159 out and it was you know, you and I have 0:05:29.160 --> 0:05:31.800 had conversations with her on air too about just her 0:05:32.200 --> 0:05:34.360 back and forth with it. But she's very much watching 0:05:34.360 --> 0:05:36.040 what president she is up to. What I found really 0:05:36.080 --> 0:05:38.520 fascinating about that is the signal that she saw when 0:05:38.600 --> 0:05:40.800 jack Ma was um. I think she used the term 0:05:40.839 --> 0:05:43.479 benched or at least pushed the travel. Did you see 0:05:43.480 --> 0:05:44.840 the story There was a story in the Bloomberg I 0:05:44.880 --> 0:05:47.599 think he traveled for the first time today, maybe out 0:05:47.600 --> 0:05:49.919 of China, and that was to her a signal of 0:05:50.000 --> 0:05:52.000 what was to come in China. And certainly since then 0:05:52.040 --> 0:05:54.640 we've seen the government crackdown on nearly every industry. But 0:05:54.680 --> 0:05:56.600 as she mentioned, she's not out of the country, she's 0:05:56.640 --> 0:05:59.520 thinking about it differently in these different different cities that 0:05:59.520 --> 0:06:03.200 aren't necessarily getting the headlines very specific investments. I did 0:06:03.240 --> 0:06:05.360 think it was fascinating to what she said. She found 0:06:05.400 --> 0:06:08.719 it surprising for President g to be targeting real estate 0:06:08.760 --> 0:06:14.200 because so much of wealth Chinese individuals have bought property 0:06:14.360 --> 0:06:15.920 and that's really a big part of their wealth, so 0:06:15.960 --> 0:06:19.040 that if he is increasing oversight of it and reduces 0:06:19.080 --> 0:06:22.000 the value that will hit into their wealth, and then 0:06:22.120 --> 0:06:24.599 it kind of goes against the common prosperity idea that 0:06:24.640 --> 0:06:27.440 he's on, right, because prosperity in the country is so 0:06:27.600 --> 0:06:31.440 tied to real estate right, much more so, you would say, 0:06:31.440 --> 0:06:33.200 than the U S, where we are much more involved 0:06:33.200 --> 0:06:37.040 individuals in the equity market. This is Bloomberg Business Week 0:06:37.200 --> 0:06:41.200 with Carol Masser and Bloomberg Quick Takes Tim Stinovic on 0:06:41.320 --> 0:06:45.080 Bloomberg Radio. Kathy would, as we've mentioned, founder CEO CEO 0:06:45.160 --> 0:06:47.320 of ARC invest, one of the featured speakers here at 0:06:47.360 --> 0:06:50.560 Milk and she's been a long time investor in Tesla, 0:06:50.800 --> 0:06:52.640 and that's one of the things we talked about. Check 0:06:52.680 --> 0:06:57.520 it out and kind of thought we were behaving like 0:06:57.800 --> 0:07:02.760 a value manager, long term time horizon and looking for 0:07:02.839 --> 0:07:06.960 extreme values. Well, value investors are using price to book 0:07:07.080 --> 0:07:10.720 and dividend yield and that sort of thing. We're using growth, 0:07:11.280 --> 0:07:14.600 you know, we're using spectacular growth rates that no one 0:07:14.720 --> 0:07:19.320 is expecting. And Tesla was our first proof of concept, 0:07:19.360 --> 0:07:22.679 I would say, a very visible one where people are saying, 0:07:22.880 --> 0:07:25.960 what are they talking about? And all we had done 0:07:26.120 --> 0:07:30.480 was used rights law, which is the centerpiece of our 0:07:30.520 --> 0:07:34.440 our research, to try and figure out how quickly cost 0:07:34.520 --> 0:07:41.440 would decline in battery pack systems and therefore how how 0:07:41.520 --> 0:07:45.040 much prices would fall for electric vehicles and how quickly 0:07:45.080 --> 0:07:47.760 the uptake would be. And we saw, you know, on 0:07:47.880 --> 0:07:50.360 Musk magnificent things happening in too. But it wasn't so 0:07:50.440 --> 0:07:54.160 easy to be invested in Tesla early on. For us, 0:07:54.200 --> 0:07:57.560 it was easy because you just believe the story or 0:07:58.040 --> 0:08:01.679 we well, for the most porton call that we made 0:08:01.920 --> 0:08:08.800 initially with Tesla was alright. Tesla's battery technology is unlike 0:08:08.880 --> 0:08:15.600 any other auto manufacturers battery technology. Tesla was riding down 0:08:15.640 --> 0:08:20.680 the cost curve of the consumer electronics industry. So laptop 0:08:20.800 --> 0:08:24.520 cell phones image volumes, right, And when you get a 0:08:24.640 --> 0:08:28.240 scaling like that, costs come down. It's called a learning 0:08:28.280 --> 0:08:32.000 curve in in the tech industry. So, Ellen, you had 0:08:32.040 --> 0:08:38.000 auto manufacturers and auto analysts laughing at him. Ellen is 0:08:38.040 --> 0:08:41.000 building his car on top of cell phone batteries, Isn't 0:08:41.080 --> 0:08:45.040 that funny? And what they didn't believe was that the 0:08:45.120 --> 0:08:50.120 engineering was possible. So there was a It wasn't that, 0:08:50.240 --> 0:08:53.680 they just didn't think it was possible, and he did. Uh. 0:08:53.720 --> 0:08:59.440 And so even today, Uh, these cylindrical batteries that he's 0:08:59.480 --> 0:09:03.080 been using, relative to lithium my own pouch lower cost 0:09:03.280 --> 0:09:06.559 and will remain lower cost for at least three years, 0:09:06.559 --> 0:09:10.440 we think, which means that any other auto manufacturer who 0:09:10.440 --> 0:09:14.520 wants the same performance and the same range at the 0:09:14.559 --> 0:09:17.200 same price, we'll have to lose money on every car sold. 0:09:19.640 --> 0:09:22.440 So it keeps him in a really great position. And 0:09:22.480 --> 0:09:25.560 that's only one of four, barring one entry. Well, but 0:09:25.640 --> 0:09:27.679 that was the first call we had to make, so 0:09:28.800 --> 0:09:31.760 elon Musk and Tesla. So there is a point that 0:09:31.800 --> 0:09:34.120 you would get out. I know there's a story you've 0:09:34.120 --> 0:09:36.160 talked about. You've put a mark on the stock price. 0:09:36.200 --> 0:09:38.599 I think it was three thousand, Yeah, three thousand is 0:09:38.600 --> 0:09:40.800 our base case, not our bull case, but our base case. 0:09:40.920 --> 0:09:43.040 So we've talked Tesla, we've talked a little bit. Tell 0:09:43.080 --> 0:09:45.200 me a bit more about bitcoin and where you see 0:09:45.240 --> 0:09:48.079 I mean, I've never seen anything so debated. Obviously, we're 0:09:48.080 --> 0:09:51.640 seeing more legitimization as we see regulators, certainly in the 0:09:51.720 --> 0:09:53.880 US and around the world moving forward. Today was a 0:09:53.880 --> 0:09:57.400 big day. Um, what is the long term play when 0:09:57.440 --> 0:10:02.080 it comes to something like cryptocurrencies in bitcoin? So bitcoin specifically, Um, 0:10:04.080 --> 0:10:06.320 we we got involved when it was a six billion 0:10:06.360 --> 0:10:09.920 dollar market cap and here's Art Laugher again in in 0:10:10.240 --> 0:10:13.840 My Life and in arts life. Um, it was a 0:10:13.880 --> 0:10:16.760 six billion dollar cap. Fan. Now it's over a trillion, 0:10:16.840 --> 0:10:20.040 which is But we were asking the question this was 0:10:20.080 --> 0:10:24.280 two thousand fifteen. Could bitcoin serve the three rolls of money? 0:10:24.720 --> 0:10:27.079 And we came to the conclusion that it was possible. 0:10:27.480 --> 0:10:32.200 Art Laugher collaborated. He tore our original paper up and 0:10:32.240 --> 0:10:35.480 as we were going through it, he said, this is 0:10:35.520 --> 0:10:40.640 the first this is the rules based monus monetary system 0:10:40.720 --> 0:10:46.719 I've been waiting for since we left the gold exchange standards, right, 0:10:47.120 --> 0:10:50.640 And I said to him, oh, how big could this be? 0:10:51.160 --> 0:10:53.720 And he said, well, how big is the U S 0:10:53.760 --> 0:10:57.120 monetary base? And back then, remember this is six billion 0:10:57.160 --> 0:10:59.160 dollar cap. Back then it was a four and a 0:10:59.200 --> 0:11:02.040 half trillion all our monetary base today where they'd and 0:11:02.120 --> 0:11:04.240 half trillion? All right? That was Kathy Would of course 0:11:04.280 --> 0:11:08.200 of our invest CEO ce IO founder Tesla, which reports 0:11:08.240 --> 0:11:11.000 after the clothes that stocks up just fractually. Bitcoin though 0:11:11.600 --> 0:11:14.720 surging today right here, record high. Uh, And these are 0:11:14.760 --> 0:11:17.959 things that she is very optimistic about. For more of 0:11:18.000 --> 0:11:20.000 that interview, check it out at the Bloomberg and of 0:11:20.000 --> 0:11:23.960 course on Bloomberg dot com. You're listening to Bloomberg Business 0:11:24.040 --> 0:11:27.880 Week with Carol Messer and Bloomberg Quick Takes Tim Stenovich 0:11:28.360 --> 0:11:31.440 on Bloomberg Radio. Well, here at the Milk and Institute 0:11:31.440 --> 0:11:35.200 Global Conference, talking a lot about investors investing to make 0:11:35.280 --> 0:11:37.160 things in a world better. It all falls under the 0:11:37.240 --> 0:11:39.720 umbrella vs G and impact investing for the most part. 0:11:40.120 --> 0:11:41.920 And on part with that is the story online of 0:11:41.960 --> 0:11:44.679 Bloomberg Business Week. Yeah, it's by Mark Champion, and it's 0:11:44.720 --> 0:11:48.800 about retrofitting buildings in the unsexy climate fix that the 0:11:48.840 --> 0:11:51.319 world needs, installation in HVAC. Well, they don't get a 0:11:51.360 --> 0:11:54.040 lot of hype, but making buildings energy efficient on a 0:11:54.120 --> 0:11:57.960 large scale could slash carbon emissions. Joining us now lie 0:11:58.000 --> 0:12:01.000 from the Bloomberg Interactive Broker Studios in New York is 0:12:01.120 --> 0:12:04.079 Joel Webber, editor at Bloomberg Business Week. Joel, when we 0:12:04.080 --> 0:12:08.200 think about climate change, we oftentimes think about industries and 0:12:08.320 --> 0:12:10.400 governments and what they need to do in order to 0:12:10.400 --> 0:12:12.640 curb emissions. What we don't often talk about are the 0:12:12.679 --> 0:12:15.680 buildings that already exist in our built world, or even 0:12:15.720 --> 0:12:18.920 buildings in general. Right, I think it's much more seductive 0:12:18.960 --> 0:12:22.960 to think about, you know, an vehicle transformation, right and 0:12:23.000 --> 0:12:26.199 like switching to electric vehicles, which you know sounds pretty 0:12:26.200 --> 0:12:28.280 good because you get a new car, but you know, 0:12:28.320 --> 0:12:33.400 living in an old building is actually uh potentially um 0:12:33.520 --> 0:12:36.760 worldwide a thing that you know, if we if we 0:12:36.760 --> 0:12:43.800 were able to optimize it, it it might have even larger impacts. Yeah, 0:12:43.840 --> 0:12:46.280 it's really fascinating. It's funny. We caught up with um 0:12:46.320 --> 0:12:49.080 the CEO of Siemens Us, and she's talked about, you know, 0:12:49.120 --> 0:12:52.240 what they are doing in terms of air purification, like 0:12:52.240 --> 0:12:53.920 this is a big part of their business, like coming 0:12:53.960 --> 0:12:57.800 out of COVID and you do think about not sexy, right, 0:12:57.840 --> 0:12:59.840 I mean, we all are focusing so much an alternative 0:13:00.040 --> 0:13:02.280 energy and new methods and so on and so forth, 0:13:02.440 --> 0:13:04.480 but there's some really basic things that we could be 0:13:04.520 --> 0:13:06.520 doing that would make a difference. Job. So so to 0:13:06.559 --> 0:13:10.480 bring it back to um mark champions story UM and 0:13:10.480 --> 0:13:13.160 and also you know, to even step back further, we're 0:13:13.160 --> 0:13:15.680 gonna hear a lot more about climate change in the 0:13:15.720 --> 0:13:18.000 coming days and weeks because of what's gonna happen in 0:13:18.080 --> 0:13:21.280 Glasgow with copy and so this is uh, you know, 0:13:21.320 --> 0:13:23.120 a version of a story that kind of sets this 0:13:23.200 --> 0:13:26.360 stage for that. UM. But what he talks about, UM, 0:13:26.400 --> 0:13:28.720 I thought this was just a fascinating statistic, which is, 0:13:29.240 --> 0:13:34.040 if we think out to fifty of the buildings that 0:13:34.080 --> 0:13:37.520 are currently in existence will still be here in so 0:13:37.880 --> 0:13:42.640 for us to make a transformative, a transformative societal and 0:13:42.720 --> 0:13:46.079 global change in that time, we have to look at 0:13:46.160 --> 0:13:49.920 what's existing and basically deal with it right and and 0:13:49.960 --> 0:13:52.360 buildings are the epitome of that, because like how often 0:13:52.440 --> 0:13:56.520 do you rip open walls and actually reinsulate, which would 0:13:56.559 --> 0:14:01.640 maybe help you use less uh propane to heat your house, which, 0:14:01.760 --> 0:14:04.839 by the way, that's going to have pretty interesting winter 0:14:05.000 --> 0:14:08.319 coming as we kind of suddenly have temperatures cooled down 0:14:08.360 --> 0:14:10.160 I know that, you know, being out in California, you 0:14:10.200 --> 0:14:11.880 probably don't have to think about that so much right now. 0:14:11.880 --> 0:14:15.960 But we're gonna stay here. Actually gonna say, it's been 0:14:16.000 --> 0:14:21.240 a little chilly at night. It's getting brisk here here 0:14:21.280 --> 0:14:23.560 in New York. It definitely feels like it's it's we're 0:14:23.600 --> 0:14:27.640 rounding that corner. So, you know, how do you incentivize homeowners, 0:14:27.760 --> 0:14:31.840 contractors in a bigger way, you know, commercial buildings to 0:14:31.880 --> 0:14:35.280 actually deal with this, uh and incentivize them. And that's 0:14:35.280 --> 0:14:38.920 something that like, you know, we haven't really wrestled with yet. 0:14:38.960 --> 0:14:41.840 So it usually comes down to governments and countries, but 0:14:41.880 --> 0:14:45.240 it doesn't trickle down below that. Well, how do you 0:14:45.240 --> 0:14:47.120 do that? Is it? Is it tax incentives? Is it? 0:14:47.240 --> 0:14:49.560 Is it telling homeowners, Hey, if you replace these windows 0:14:49.600 --> 0:14:52.280 that were installed on your on your in your apartment 0:14:52.280 --> 0:14:55.000 building in the nineteen seventies, you will get a tax 0:14:55.040 --> 0:14:57.200 break because you'll not only save energy, but you will 0:14:57.200 --> 0:15:00.880 be doing good for the climate. That's right in our Yeah, 0:15:00.920 --> 0:15:02.760 and you know a lot of that stuff already exists. 0:15:02.800 --> 0:15:04.720 But now it's like, how do you even sweeten the 0:15:04.760 --> 0:15:07.480 pot more and turn up the volume on it so 0:15:07.520 --> 0:15:11.040 that there's it becomes like a now just such a 0:15:11.080 --> 0:15:13.960 no brainer. And then obviously, like you know, there's gonna 0:15:14.000 --> 0:15:16.360 be new construction too, and so making sure that new 0:15:16.400 --> 0:15:20.320 construction is uh, you know, completely up to stuff is 0:15:20.360 --> 0:15:21.960 going to be part of that part of that game too, 0:15:22.040 --> 0:15:25.720 and some of that has been rather lack still. Yeah, 0:15:25.760 --> 0:15:27.200 I'm just going to it. I know you mentioned some 0:15:27.200 --> 0:15:29.920 of these data points. Construction and operation of buildings accounts 0:15:29.920 --> 0:15:33.000 for thirty of the world's energy use and of all 0:15:33.040 --> 0:15:36.960 carbon emissions, according to the edition of the Global Status 0:15:36.960 --> 0:15:39.440 Report for Buildings and Construction. I mean these are I 0:15:39.480 --> 0:15:42.440 guess what some would say, Joel, you know, low hanging fruit, right, 0:15:42.480 --> 0:15:45.280 and the technologies are there to make the difference that 0:15:45.320 --> 0:15:48.240 will make these buildings, whether it's new or old, more 0:15:48.360 --> 0:15:51.000 energy efficient. Yeah. You know. Another one that Mark talks 0:15:51.040 --> 0:15:55.160 about in the story um takes us to Italy where 0:15:55.200 --> 0:15:58.680 they introduced a credit called the super Bonus, and so 0:15:58.800 --> 0:16:01.760 homeowners get to claim hun of the cost of an 0:16:01.840 --> 0:16:05.360 energy retrofit and gets their taxes over a five year period. 0:16:05.680 --> 0:16:08.200 So it's basically like, you know, you have to dumb 0:16:08.240 --> 0:16:11.040 this down in order to make it work. I think 0:16:11.040 --> 0:16:13.800 it's it's not just you can't. You can't just lean 0:16:13.880 --> 0:16:17.520 on people from an altruistic standpoint. You have to actually 0:16:17.560 --> 0:16:20.640 incentivize them. And I think that ten percent of the 0:16:20.680 --> 0:16:24.280 cost of an energy regimic gets there because it's basically 0:16:24.320 --> 0:16:26.880 like you're you're you're making it so easy that you 0:16:27.000 --> 0:16:30.280 can't not do it. And when you think back to 0:16:30.320 --> 0:16:32.640 that that stand of nine percent in the buildings were 0:16:33.080 --> 0:16:35.640 inhabiting are basically gonna be the same ones that we 0:16:35.680 --> 0:16:38.760 have in That's the kind of thing that could maybe 0:16:38.800 --> 0:16:42.680 move that needle. Well. Homeowners are certainly a big part 0:16:42.680 --> 0:16:44.960 of this discussion, but what's happening here at Melcoln too. 0:16:45.080 --> 0:16:47.000 We're talking a lot about the return to office and 0:16:47.040 --> 0:16:50.320 the way that executives are grappling with getting their employees 0:16:50.360 --> 0:16:52.160 back to offices. So what about when it comes to 0:16:52.480 --> 0:16:55.280 corporations and the buildings that they occupy in order to 0:16:55.280 --> 0:16:57.440 make sure that those are energy efficient. And I will say, 0:16:57.480 --> 0:16:59.520 just based on my own experience in New York, it 0:16:59.640 --> 0:17:03.640 does seem like, uh, commercial buildings are pretty far ahead. 0:17:03.920 --> 0:17:08.000 Again just anecdotally speaking in New York of residential well, 0:17:08.280 --> 0:17:11.720 the scale of it. I think you have capital and 0:17:11.720 --> 0:17:15.240 and you have often publicly traded companies that can come 0:17:15.240 --> 0:17:19.320 in and and retrofit at at scale. And you know, 0:17:19.480 --> 0:17:21.240 often when you're thinking about this on a on a 0:17:21.320 --> 0:17:24.520 private matter, on a on a local level, you know, 0:17:24.560 --> 0:17:27.600 that becomes a much more difficult proposition when you're dealing 0:17:27.600 --> 0:17:31.720 with individual homeowners or apartment buildings or you know, New 0:17:31.800 --> 0:17:34.200 York co ops. But you know, I think I think 0:17:34.280 --> 0:17:36.560 one thing that's going to be interesting is is and 0:17:36.600 --> 0:17:38.639 this I think goes to commercial as well as well 0:17:38.640 --> 0:17:44.560 as residential. Is like as existing buildings have ongoing maintenance 0:17:44.600 --> 0:17:48.840 and thing like having roofs redone that kind of stuff, 0:17:49.080 --> 0:17:52.080 you're gonna you're gonna end up with moments that there 0:17:52.119 --> 0:17:55.159 can be capital and fusion sort of organically and you know, 0:17:55.200 --> 0:17:58.520 people maybe redoing a roof and then financing to get 0:17:58.560 --> 0:18:01.520 solar on top of it, right or battery storages that 0:18:01.600 --> 0:18:05.440 comes online. So you're gonna see organically moments in time 0:18:05.480 --> 0:18:08.879 in the life cycle of of home, you know, residential 0:18:09.080 --> 0:18:13.640 ownership or commercial ownership that incentivizes people to actually think 0:18:13.680 --> 0:18:15.880 about how do you take this to the next level 0:18:16.200 --> 0:18:18.600 and and do that retrofitting that you know you may 0:18:18.920 --> 0:18:22.960 may have put off. Yeah, and Mark Star also gets 0:18:22.960 --> 0:18:26.440 into making sure. Here we are with supplies, chain constraints, 0:18:26.560 --> 0:18:30.280 labor constraints, and one of the individuals he interviewed for 0:18:30.359 --> 0:18:32.880 a story, Uh, he says, how will we make enough 0:18:32.880 --> 0:18:35.919 materials and skills capacity? Because if these things aren't fitted right, 0:18:35.960 --> 0:18:37.679 it will be for nothing. So they've got to make 0:18:37.680 --> 0:18:39.639 sure that the people have the right skills to do 0:18:39.680 --> 0:18:43.240 these things differently. Uh and so yeah, and you know, 0:18:43.320 --> 0:18:50.080 just good luck finding people right. Something. Just almost everybody 0:18:50.080 --> 0:18:52.160 we've talked to here just says we can't get enough 0:18:52.160 --> 0:18:55.479 workers and jobs right. But yet here we see an 0:18:55.480 --> 0:19:01.720 opportunity with you know, potentially you know, high earning jobs 0:19:01.880 --> 0:19:03.959 in a in a field that seems like I might 0:19:03.960 --> 0:19:05.919 have growth potential. So you start connecting these things and 0:19:05.920 --> 0:19:08.679 I think a lot of businesses we'll see the opportunity 0:19:08.720 --> 0:19:12.160 that might lie in front of them. Here. Check out 0:19:12.200 --> 0:19:14.520 marks story. It's on the Bloomberg and at Bloomberg dot com, 0:19:14.520 --> 0:19:17.159 Slash business Week. Joel Webber, editor at Bloomberg Business Week 0:19:17.200 --> 0:19:20.680 from the Bloomberg Interactor Broker Studios in New York. Joe Webber, 0:19:20.800 --> 0:19:22.520 thank you so much. This is Bloomber Business Week and 0:19:22.560 --> 0:19:30.600 this is Bloomberg Radio. You're listening to Bloomberg Business Week 0:19:30.760 --> 0:19:34.639 with Carol Masser and Bloomberg Quick Takes Tim Stinovic on 0:19:34.760 --> 0:19:40.240 Bloomberg Radio. So yes, day three at the Milk and 0:19:40.280 --> 0:19:43.720 Institute Global Conference, talking with a lot of investors when 0:19:43.720 --> 0:19:46.240 it comes to various aspects of the financial market. Yeah, 0:19:46.240 --> 0:19:48.000 one of those investors we spoke to earlier this week 0:19:48.040 --> 0:19:50.720 was Mark Jenkins, head of Global Credit at Carlisle. We 0:19:50.760 --> 0:19:52.680 spoke to him just a couple of days ago, and 0:19:52.760 --> 0:19:55.520 this excerpt of our interview. Jenkins talked all about his 0:19:55.560 --> 0:19:58.960 outlook for credit markets and also how yes G factors 0:19:58.960 --> 0:20:01.240 in check it out think what we've seen in the markets, 0:20:01.240 --> 0:20:04.240 and and by the way, like we cover over credits 0:20:04.320 --> 0:20:07.520 in our clos and you know, hundreds of credits in 0:20:07.520 --> 0:20:09.480 our private books, so we have a good insight into 0:20:09.480 --> 0:20:11.960 what's going on right now. You know, we still see 0:20:12.080 --> 0:20:15.639 relatively strong revenue growth and we've seen very good um 0:20:15.680 --> 0:20:18.840 you know, cost containment. You know, absently inflationary pressures we're 0:20:18.840 --> 0:20:20.879 seeing right now. So as the numbers come in, we're 0:20:20.920 --> 0:20:23.320 sure that's going to change. But generally the health of 0:20:23.359 --> 0:20:26.800 our portfolios is quite good. UM. So you know, despite 0:20:26.800 --> 0:20:29.520 everything you see, everything you read and the volatility in 0:20:29.560 --> 0:20:31.679 the market, I would say in the private markets the 0:20:31.720 --> 0:20:34.199 companies that we're dealing with, you know, there's some wage 0:20:34.240 --> 0:20:37.639 and inflationary pressure for sure, but generally speaking, there in 0:20:37.760 --> 0:20:39.679 very good shake. Well, and let me just follow up, 0:20:39.720 --> 0:20:42.560 because I think in the environment we've been, you've had 0:20:42.880 --> 0:20:46.880 interest rate starved investors, right, You've had an economy that's 0:20:46.920 --> 0:20:50.120 been reopening, and credits are cheap that pretty much any 0:20:50.119 --> 0:20:52.840 company that wanted to could tack the credit markets. So 0:20:52.880 --> 0:20:56.119 what happens as we reopen we move along, if those 0:20:56.240 --> 0:20:59.480 underlying premises that were pretty optimistic don't pan out, what 0:20:59.520 --> 0:21:01.560 happens that d of mind. Well, here's a good thing 0:21:01.640 --> 0:21:03.960 as a credit investor which I always like to point out, 0:21:04.000 --> 0:21:07.760 which is what's happened in the past eighteen to twenty months, 0:21:07.840 --> 0:21:10.359 is that the actual equity cushion that we have in 0:21:10.400 --> 0:21:14.440 a lot of our investments is actually wider now or thicker, 0:21:14.480 --> 0:21:18.240 if you will, than pre pandemic. So from a from 0:21:18.240 --> 0:21:21.560 a marginal safety perspective, when you think about that, yes, 0:21:21.680 --> 0:21:23.879 we worry about where the economy is going, to the 0:21:24.359 --> 0:21:27.320 macro all those effects, but we really look to what's 0:21:27.320 --> 0:21:29.919 that margin of safety today? And even if things go 0:21:29.960 --> 0:21:32.399 down dramatically, how much of a margin's safety do we 0:21:32.480 --> 0:21:35.520 still have? So when you look at debt to even daw, 0:21:35.600 --> 0:21:38.119 it's quite high from historic level people talk to But 0:21:38.160 --> 0:21:40.720 if you actually look at Eva Duck coverage ratios, they're 0:21:40.720 --> 0:21:45.200 actually high from a historical perspective on a broad aggregate basis. Right, 0:21:45.240 --> 0:21:48.080 it depends where you go, obviously, So all those things 0:21:48.119 --> 0:21:51.520 together it makes us feel very comfortable with the environment 0:21:51.520 --> 0:21:53.520 we're in. But we have to be more thoughtful with 0:21:53.520 --> 0:21:55.760 respect to the under rights that we did. Carol brought 0:21:55.840 --> 0:21:58.479 up sectors. You gotta ask what sectors you think are 0:21:58.520 --> 0:22:01.399 particularly exciting to you right now? Well, we like, you know, 0:22:02.000 --> 0:22:04.400 I think we're slightly different than on the equity side, 0:22:04.400 --> 0:22:06.080 where we can drive a lot of value creations. So 0:22:06.119 --> 0:22:08.720 what we look at our companies that allow that a 0:22:08.960 --> 0:22:12.119 can be part of that um part of the value 0:22:12.200 --> 0:22:14.520