WEBVTT - Bank CEO Hearings Put Spotlight On Forced Arbitration 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Panel podcast. I'm Paul swing you 0:00:05.360 --> 0:00:07.760 along with my co host Lisa Brahmas. Each day we 0:00:07.880 --> 0:00:10.399 bring you the most noteworthy and useful interviews for you 0:00:10.520 --> 0:00:12.640 and your money, whether at the grocery store or the 0:00:12.640 --> 0:00:15.960 trading floor. Find a Bloomberg penl podcast on Apple podcast 0:00:16.120 --> 0:00:18.040 or wherever you listen to podcasts, as well as at 0:00:18.079 --> 0:00:22.560 Bloomberg dot com. Let's bring in Max Abel, centrefinance reporter 0:00:22.680 --> 0:00:25.040 for us here at Bloomberg, to give a sense of 0:00:25.079 --> 0:00:28.560 what his big takeaway has been so far from the hearing. 0:00:28.680 --> 0:00:32.600 So Max, well, look, I have to say, these executives 0:00:32.680 --> 0:00:35.919 look confident, they look unrattled. I don't know a few 0:00:35.960 --> 0:00:38.120 folks are watching, but it opened. The hearing is opened 0:00:38.320 --> 0:00:41.760 with Maxine Waters trying to sort of like rabbit tat tat, 0:00:41.840 --> 0:00:44.400 go through a lightning round, a lightning round. That's right, 0:00:44.680 --> 0:00:47.800 it was a lightning round. She was um interrupting them. 0:00:47.840 --> 0:00:50.120 They were sort of interrupting each other, she was plowing 0:00:50.159 --> 0:00:52.479 through questions. I mean it was fascinating and as a 0:00:52.560 --> 0:00:55.120 viewer and a live blogger here for the Bloomber Terminal, 0:00:55.160 --> 0:00:59.000 I mean, honestly, it was exciting. But there has not 0:00:59.240 --> 0:01:02.920 been um and there have not been any bombshells there. 0:01:02.960 --> 0:01:05.759 There hasn't been anything scandalous and exciting. There hasn't even 0:01:05.800 --> 0:01:10.720 been a moment as um shocking as when Manuchin told 0:01:10.800 --> 0:01:13.400 Maxine Waters just in the last forty eight hours, you 0:01:13.480 --> 0:01:15.399 know that she had to bang her gabble as as 0:01:15.640 --> 0:01:19.280 the Treasury Secretary told her um not long ago. You know, 0:01:19.520 --> 0:01:24.320 the reality is it's been um relatively predictable, nothing crazy. 0:01:24.480 --> 0:01:28.120 So Max, what would be a successful day here for 0:01:28.280 --> 0:01:32.559 these CEOs sitting in front of the Congress people, Well, 0:01:32.640 --> 0:01:36.000 remember what this hearing is. It's it's about accountability, and 0:01:36.040 --> 0:01:40.479 if they can leave today giving Congress a sense that 0:01:40.680 --> 0:01:47.000 you know, these banks are manageable, they're relatively ethical, and 0:01:47.200 --> 0:01:49.880 you know that what they're trying to do is help 0:01:49.960 --> 0:01:52.520 the country and helps the economy rather than trying to 0:01:52.600 --> 0:01:54.440 hurt the country and hurt the economy, which was I 0:01:54.440 --> 0:01:56.880 think it's fair to say, is a picture that that 0:01:56.960 --> 0:01:59.200 critics had in their mind, you know, not long ago, 0:01:59.320 --> 0:02:01.560 in the wake of the fine into crisis, that that 0:02:01.600 --> 0:02:04.400 counts as his success. But you know, it's also possible 0:02:04.480 --> 0:02:07.880 that Congress members will get in somebody blows over things 0:02:07.920 --> 0:02:12.480 like investments in guns or forced arbitration, or by the way, 0:02:12.520 --> 0:02:14.800 a lack of diversity. What we're seeing is, you know, 0:02:15.200 --> 0:02:17.520 seven white men standing in a row, just like in 0:02:17.520 --> 0:02:19.960 the tobacco hearings in the nineties. I'm wondering if that's 0:02:19.960 --> 0:02:22.400 going to come up later today. It's interesting Lloyd Blank 0:02:22.400 --> 0:02:26.200 find the former chief executive of Goldman Sachs just tweeting out, boy, 0:02:26.240 --> 0:02:29.560 I really missed my old job. Exclamation point, exclamation point, 0:02:29.560 --> 0:02:32.880 exclamation point, and he was he was quoting a tweet 0:02:32.919 --> 0:02:35.360 from the New York Post of lawmakers grilling Wall Street 0:02:35.360 --> 0:02:37.600 big wigs over risks to the U S economy. It 0:02:37.639 --> 0:02:40.560 does sort of highlight how being the CEO of a 0:02:40.600 --> 0:02:43.360 major Wall Street bank is increasingly political, and it is 0:02:43.400 --> 0:02:45.560 a political role. And it is interesting to note this 0:02:45.639 --> 0:02:48.760 at a time when Wells Fargo is looking for another 0:02:48.960 --> 0:02:51.760 head and you know, what is that role at this point? 0:02:52.120 --> 0:02:54.120 I mean, can you talk a little bit about that. 0:02:54.840 --> 0:02:57.680 Well the reason that Wells Fargo is looking for a 0:02:57.680 --> 0:03:00.880 new chief executive officer is because the last one did 0:03:01.080 --> 0:03:03.800 a pretty infamous job when he was hauled before Congress 0:03:03.880 --> 0:03:08.000 not too long ago. Politics are a part of of 0:03:08.000 --> 0:03:10.239 of Wall Street and Wall Street is a part of politics. 0:03:10.280 --> 0:03:11.919 One thing that we've been tracking on the live blog 0:03:12.400 --> 0:03:15.560 is that, um, even Democrats like Caroline Maloney and and 0:03:15.760 --> 0:03:19.280 especially Republicans, some of their top donors, in some cases, 0:03:19.360 --> 0:03:22.160 their literal top donors over their political careers are banks 0:03:22.320 --> 0:03:25.520 or a bank lobbying group. You know, politics and finance 0:03:25.560 --> 0:03:28.239 are really intertwined in the United States, and I think 0:03:28.240 --> 0:03:30.640 the starkest reminder of that is that some of these 0:03:30.639 --> 0:03:32.640 ceo s, you know, some some of the banks that 0:03:32.680 --> 0:03:35.400 they worked for, would not be functioning companies if it 0:03:35.440 --> 0:03:37.880 hadn't been for the bailout. Um, and now it's now, 0:03:37.880 --> 0:03:39.840 oh my gosh, it's eleven years ago, it's more than 0:03:39.880 --> 0:03:43.720 decade ago. So politics are it's just a crucial part 0:03:43.720 --> 0:03:45.960 of of of what happens on Wall Street. But so far, 0:03:46.080 --> 0:03:51.320 it feels like that, um, these executives have the upper hand. 0:03:51.360 --> 0:03:54.240 They they sort of um, they just seem relatively calm 0:03:54.240 --> 0:03:56.520 and comfortable. So Max, let's let's take a look at 0:03:56.560 --> 0:03:58.560 Jamie Diamond. It seems like a lot of the questions 0:03:58.600 --> 0:04:01.720 are going to him. He's taking in some cases the 0:04:01.840 --> 0:04:04.360 lead here. How do you think his performance has been 0:04:04.400 --> 0:04:06.240 so far? Well, First of all, you also have to 0:04:06.240 --> 0:04:09.000 give a shout out to Maxine Waters performance. She opened 0:04:09.000 --> 0:04:12.400 this by saying, I've read that you all you executives 0:04:12.400 --> 0:04:14.760 are going to try to rely on Jamie Diamond taking 0:04:14.760 --> 0:04:17.240 the microphone, and I'm not going to allow that. So 0:04:17.320 --> 0:04:20.800 she she preempted Diamond was feeling the spotlight for too long, 0:04:20.800 --> 0:04:22.120 which you know, I just have to say I thought 0:04:22.120 --> 0:04:25.200 was fascinating. Diamond is such an important influential character on 0:04:25.240 --> 0:04:26.880 Wall Street. I mean, first of all, all of the 0:04:26.960 --> 0:04:30.239 executives here are essentially, you know, pups compared to Jamie Diamond. 0:04:30.480 --> 0:04:34.159 We have you know, Solomon who took his job you know, 0:04:34.240 --> 0:04:37.279 months ago. We have Charlie Sharf up on up on 0:04:38.600 --> 0:04:41.320 sitting sitting a couple of seats away. Sharf was basically 0:04:41.360 --> 0:04:44.679 Diamond's protege at JP Morgan um and then he lost 0:04:44.680 --> 0:04:47.360 his job and and and ended up an executive elsewhere 0:04:47.600 --> 0:04:51.200 at Wells Fargo. By the way, um My, my excellent 0:04:51.200 --> 0:04:54.039 colleague Hannah did did a rundown of all the people 0:04:54.080 --> 0:04:56.159 who might take over the CEO spot it Wells Fargo, 0:04:56.320 --> 0:04:58.320 and a couple of them are people who now work 0:04:58.440 --> 0:05:01.040 or have worked for Jamie Diamond. So he's just such 0:05:01.080 --> 0:05:03.800 a powerful, such an influential figure. You know, he's also 0:05:04.080 --> 0:05:06.400 just in a superficial sense, he's just also a really 0:05:06.440 --> 0:05:09.440 magnetic guy. You know, he captures the attention of the room, 0:05:09.760 --> 0:05:14.320 which is why I want to listeners that, well, why 0:05:14.400 --> 0:05:17.160 is a complicated question, but I want to warrant folks that, um, 0:05:17.360 --> 0:05:20.840 Michelle Davis and I wrote about a really interesting sort 0:05:20.880 --> 0:05:24.080 of ecosystem of protesters who've been following Jamie Diamond around. 0:05:24.080 --> 0:05:26.279 You know, he's magnetic not only in the sense that 0:05:26.320 --> 0:05:29.560 he attracts um you know, fans, he's magnetic in the 0:05:29.640 --> 0:05:32.479 sense that he also attracts critics. And we we wrote 0:05:32.480 --> 0:05:34.320 about critics who have been falling around the United States, 0:05:34.320 --> 0:05:36.080 which is why I think it's fair to say that 0:05:36.160 --> 0:05:39.159 later this afternoon, it's totally possible we're going to hear 0:05:39.200 --> 0:05:42.839 from from Chase critics. Um in in hearing itself. All right, 0:05:42.920 --> 0:05:45.000 So let's switch gears a little bit, because this all 0:05:45.080 --> 0:05:47.960 comes ahead of bank earnings, and that'll get kicked off 0:05:47.960 --> 0:05:50.560 talking about Jamie Diamond, JP Morgan. It will be among 0:05:50.600 --> 0:05:53.200 the first to report alongside Walls Fargo, and I'm just 0:05:53.240 --> 0:05:57.520 wondering how that backdrop complicates these hearings, the fact that 0:05:57.640 --> 0:06:01.640 banks are expected to report uh subdued numbers at best, 0:06:01.760 --> 0:06:04.720 especially due to a lack of volumes in fixed income 0:06:04.760 --> 0:06:09.600 trading and just in general feeling of malaise in markets 0:06:09.680 --> 0:06:12.600 during the first quarter. How does that affect these hearings? 0:06:13.000 --> 0:06:16.160 You know, I think that you can't take your eye 0:06:16.200 --> 0:06:18.480 off the ball of of the big picture, which is 0:06:18.520 --> 0:06:23.440 that the banks um are still so remarkably profitable. You know, 0:06:23.480 --> 0:06:27.480 over the last um a few years, they've gotten, they've 0:06:27.480 --> 0:06:32.080 gotten bigger, they've they've they've quite literally made more money 0:06:32.120 --> 0:06:35.000 than they've ever made before. And I think that it 0:06:35.040 --> 0:06:38.960 will be hard for Wall Street to plead um tough 0:06:39.000 --> 0:06:43.600 times or to focus on fear um when just I 0:06:43.960 --> 0:06:46.320 think that it would be easy for ban critics just 0:06:46.400 --> 0:06:49.160 to point out just just a simple scale of how 0:06:49.200 --> 0:06:52.880 big they've gotten and and how and how lucrative their 0:06:53.160 --> 0:06:56.640 businesses have been, even if the short term outlook might 0:06:56.720 --> 0:06:59.560 might look starker than I'd like. So, Max, where do 0:06:59.560 --> 0:07:02.360 you think, and you've mentioned that this morning session was 0:07:02.400 --> 0:07:05.640 relatively a tame where do you think, uh, some of 0:07:05.640 --> 0:07:08.919 these banks CEOs could be exposed here in front of 0:07:08.920 --> 0:07:11.920 the committee. Well, you know, one change we've seen recently, 0:07:11.920 --> 0:07:14.120 after after Michelle Davis and I wrote wrote that story 0:07:14.160 --> 0:07:16.720 that I mentioned about the ecosystem of skers, is that 0:07:16.960 --> 0:07:19.480 UM JP Morgan came out and they said, you know, 0:07:19.520 --> 0:07:22.200 actually we're no longer going to do business. We're no 0:07:22.240 --> 0:07:25.040 longer going to fund private prisons. UM. And you know, 0:07:25.080 --> 0:07:27.880 I have to say, as a journalist who had written 0:07:27.880 --> 0:07:30.000 about the subject only a few months earlier, I was 0:07:30.080 --> 0:07:33.200 really surprised. It was sort of amazing to see UM 0:07:33.240 --> 0:07:36.800 the powerful kind of change their ways thanks to the 0:07:36.840 --> 0:07:40.680 actions of of of relatively powerless critics that JP Morgan 0:07:40.760 --> 0:07:43.400 made a decision that they were going to change. It 0:07:43.400 --> 0:07:45.880 would be fascinating if private prisons come up again. It'll 0:07:45.880 --> 0:07:49.400 be fascinating to see how much UM attention climate change 0:07:49.840 --> 0:07:53.320 Cole uh Guns get. We saw David Solomon talk about 0:07:53.720 --> 0:07:57.680 not funding I believe, you know, bum bumber stock. You know, 0:07:57.760 --> 0:08:00.560 any of these things could become big, big, big attention 0:08:00.600 --> 0:08:04.360 grabbing headlines, even even a relatively boring subject that's close 0:08:04.400 --> 0:08:05.880 to my heart because I've been reporting on it here 0:08:05.880 --> 0:08:09.679 at Bloomberg News. Arbitration force arbitration that came up once. 0:08:09.880 --> 0:08:12.120 You know, it's totally possible that that will get some 0:08:12.120 --> 0:08:14.640 more oxygen. Again, I think the question is, though you 0:08:14.640 --> 0:08:17.880 know how how long the oxygen lasts? Just real quick here, 0:08:17.920 --> 0:08:19.520 can you tell us the sort of nuts and bolts 0:08:19.560 --> 0:08:22.680 of what's at stake with the arbitration issue. Yeah, honestly, 0:08:22.680 --> 0:08:25.680 I'm strilled that you would ask so force arbutration was 0:08:25.760 --> 0:08:28.920 basically a subject that no one really cared about only 0:08:28.960 --> 0:08:32.760 a few years ago. Even though arbitration, which if if 0:08:32.800 --> 0:08:35.280 listeners don't know, it's basically kind of like a parallel 0:08:35.360 --> 0:08:37.760 shadow system. You know, it's separate from courts, it's a 0:08:37.800 --> 0:08:41.600 privatized justice system, and it essentially was just kind of 0:08:41.720 --> 0:08:45.559 tiny only a few decades ago, but it's it's now gigantic. 0:08:45.559 --> 0:08:46.800 You know, if you're listening to this and you have 0:08:46.800 --> 0:08:48.600 a job, the chances are you have also signed an 0:08:48.640 --> 0:08:51.200 arbitration agreement that means you can't see your boss, and 0:08:51.280 --> 0:08:53.840 certainly if you're a customer of these banks, there's also 0:08:53.840 --> 0:08:56.000 a good chance you've also signed an arbitration agreement, which 0:08:56.000 --> 0:08:58.120 which would mean that you won't be able to sue 0:08:58.320 --> 0:09:02.199 these firms. And that caused a great amount of consternation 0:09:02.240 --> 0:09:06.880 among critics um who care about both employees and consumers. Now, 0:09:06.880 --> 0:09:09.400 the banks will say, or employers will say, arbitration is, 0:09:09.440 --> 0:09:12.359 you know, affair system. It's cheaper. It's kind of less embarrassing, 0:09:12.400 --> 0:09:14.800 you know, because if someone has a has a claim, 0:09:14.840 --> 0:09:16.280 you know, it doesn't have to go into court. You 0:09:16.280 --> 0:09:19.079 can sort of keep it, keep it relatively quiet. The 0:09:19.400 --> 0:09:22.119 rub there is it in the ME two era. Arbitration 0:09:22.240 --> 0:09:27.080 helps explain why you haven't seen as many harassment claims. Um, 0:09:27.120 --> 0:09:29.480 you don't fall under the spotlight because as you might otherwise, 0:09:29.480 --> 0:09:31.719 because they get trapped in the arbitration system. That's the 0:09:31.800 --> 0:09:33.920 kind of thing I'll be looking forward to seeing. We'll 0:09:33.920 --> 0:09:36.439 be looking forward to reading. Max Abelson. We're gonna have 0:09:36.440 --> 0:09:38.240 to stop it there. Thank you so much for joining 0:09:38.280 --> 0:09:40.920 us on short notice. We appreciate it. Max Abelson from 0:09:41.000 --> 0:09:57.959 Bloomberg News covering all things financials. Our next guest has 0:09:58.200 --> 0:10:01.199 a very interesting theory how we can be come better investors. 0:10:01.559 --> 0:10:04.320 We could become better investors not by playing the cards 0:10:04.320 --> 0:10:07.679 were dealt any harder, but by playing the other players 0:10:07.720 --> 0:10:11.120 at the table a lot smarter. Ben Hunt, co founder, 0:10:11.160 --> 0:10:14.240 chief investment officer of Second Foundation Partners, joins us. He's 0:10:14.280 --> 0:10:17.719 also creator an author of Epsilon theory joins us from 0:10:17.720 --> 0:10:20.920 reading Connecticut. Ben, thanks so much for joining us. Start 0:10:20.960 --> 0:10:23.960 off by just giving us your theory about how we 0:10:24.080 --> 0:10:28.120 can become better investors. You bet, Paul great, great to 0:10:28.160 --> 0:10:30.320 be on with you and Lisa. You know what I 0:10:30.360 --> 0:10:32.360 mean when I say that we need to play the 0:10:32.400 --> 0:10:35.240 players rather than just play the cards. Is I think 0:10:35.240 --> 0:10:37.920 it's really important again, whether you're playing poker or you're 0:10:37.920 --> 0:10:42.319 playing the markets, to step back and and understand what 0:10:42.320 --> 0:10:46.079 what are the stories that at the poker table people 0:10:46.080 --> 0:10:48.480 are telling you with their bets and their bluffs, and 0:10:48.520 --> 0:10:51.240 in markets? What are the stories that we are reading 0:10:51.240 --> 0:10:54.120 in the financial media? What what? What are the what 0:10:54.640 --> 0:10:57.120 are the drums that Wall Street is beating? And I 0:10:57.160 --> 0:10:59.080 think if you step back and you try to look 0:10:59.080 --> 0:11:01.480 at that, you can give you a real edge up 0:11:01.520 --> 0:11:03.840 and understanding where markets are going and how you can 0:11:03.840 --> 0:11:06.000 play a better game. So give us a sense of 0:11:06.040 --> 0:11:07.959 what that means today. I mean, what is the drum 0:11:08.040 --> 0:11:11.600 that Wall Street is beating right now? It's the narrative? Sure, sure, well, 0:11:11.679 --> 0:11:14.040 let me start with the drums that aren't beating, because 0:11:14.160 --> 0:11:17.520 last year this time last year, we had strong drum beating, 0:11:17.559 --> 0:11:22.000 a strong narrative that inflation was back and rearing its head, 0:11:22.280 --> 0:11:25.360 that there were concerns about that that coming back. And 0:11:25.440 --> 0:11:27.680 then at the end of the spring, going into the 0:11:27.679 --> 0:11:30.920 summer and certainly last fall, you had the the trade 0:11:30.960 --> 0:11:33.920 war narrative that uh, you know, we're on the verge 0:11:33.960 --> 0:11:38.679 of of of a real global economic slow down, if 0:11:38.679 --> 0:11:43.200 not collapse, and leading to the sharp decline you saw 0:11:43.240 --> 0:11:48.199 in risk assets last fall and then culminating in December. 0:11:48.800 --> 0:11:51.600 But what you saw in December was a resurgence of 0:11:51.600 --> 0:11:54.760 our old friend, the narrative that central banks are large 0:11:54.800 --> 0:11:57.200 and in charge, the narrative that central banks have got 0:11:57.240 --> 0:12:00.040 your back. And so far this year in tooth I 0:12:00.120 --> 0:12:03.720 was in nineteen, that has absolutely been that dominant narrative 0:12:04.120 --> 0:12:08.000 that whatever happens in the world right, whatever happens around Brexit, 0:12:08.160 --> 0:12:11.920 or whatever happens with China, or whatever happens anywhere, that 0:12:12.040 --> 0:12:15.280 the Fed, the ECB, the central banks of the world, 0:12:15.280 --> 0:12:18.840 that they've got your back. So, Ben, what as you 0:12:18.920 --> 0:12:20.640 take a look at the other players at the table 0:12:20.760 --> 0:12:24.040 right now, what are you learning? What are you thinking about? 0:12:24.040 --> 0:12:29.040 Where you I think opportunities lie? Yeah, Well, what's interesting 0:12:29.120 --> 0:12:30.959 is that is that while the you know, the central 0:12:30.960 --> 0:12:34.520 bank narrative. The this this this idea that that the 0:12:34.600 --> 0:12:38.000 FED and foremost of all of them, has got your back. 0:12:38.559 --> 0:12:40.719 You know, this isn't new, right, We've been we've been 0:12:40.880 --> 0:12:46.280 We've seeing the promotion this narrative and the reality of it, frankly, 0:12:46.360 --> 0:12:48.520 but but it is a lot of the narrative here, 0:12:48.559 --> 0:12:52.000 the belief that the FED is there to to support markets. 0:12:52.200 --> 0:12:53.760 You know, we've been seeing this for the better part 0:12:53.760 --> 0:12:57.040 of the decade. Now. What's what's interesting to me is 0:12:57.040 --> 0:12:59.840 is not that that narrative shows any sign of weakening, 0:13:00.120 --> 0:13:03.280 because it's it's not, if anything, when you look at 0:13:04.080 --> 0:13:06.240 what the White House is saying and in you know, 0:13:06.280 --> 0:13:08.840 in terms of really trying to push the FED to 0:13:08.880 --> 0:13:12.920 do more to stimulate right, to do more easing rather 0:13:12.960 --> 0:13:16.040 than tightening. You know, I don't think that this, this 0:13:16.160 --> 0:13:18.240 drum beating, whether it's from the White House or from 0:13:18.240 --> 0:13:20.280 the Wall Street, is going to go away at all. 0:13:20.920 --> 0:13:22.840 But I'll tell you this, I do see it changing. 0:13:23.240 --> 0:13:25.680 And then the way I see it evolving is away 0:13:25.760 --> 0:13:29.120 from all central banks linking arms and doing this together. 0:13:29.679 --> 0:13:32.199 And more and more you're seeing stories in the narrative 0:13:32.240 --> 0:13:36.400 about a competition, particularly around currencies, particularly between the US 0:13:36.440 --> 0:13:40.360 and Europe. So practically, what does this mean in terms 0:13:40.360 --> 0:13:42.720 of it Practically, it means that that that both the 0:13:42.720 --> 0:13:45.679 ECB and the FED are going to take steps to 0:13:45.840 --> 0:13:49.959 weaken their currencies. As an investor, like what should investor 0:13:50.000 --> 0:13:54.520 to do well? For investors, it depends way what aspect 0:13:54.559 --> 0:13:57.240 you're you're thinking about investing. So if you're looking the 0:13:57.240 --> 0:13:59.760 fixed income market, I think you've got a real chance 0:13:59.760 --> 0:14:03.160 here that, uh, the the inflation narrative will start to 0:14:03.200 --> 0:14:06.120 pick up again because the U s economy is frankly strong, 0:14:06.640 --> 0:14:09.079 and the FED is going to do more to weaken, 0:14:09.520 --> 0:14:13.160 not to tighten. So that's if you're if you're looking 0:14:13.160 --> 0:14:15.679 at anything that's going to be inflation sensitive, and if 0:14:15.720 --> 0:14:18.240 you're looking at stuff that's right sensitive, especially on the 0:14:18.280 --> 0:14:21.320 long end, you know that's that's a that's a negative 0:14:21.360 --> 0:14:24.160 thing to happen. But if you're looking for stocks, look, 0:14:24.160 --> 0:14:26.600 I mean both in the Europe and and and here 0:14:26.640 --> 0:14:28.920 in the States, both central banks are going to do 0:14:29.160 --> 0:14:32.080 more of what they've been doing, which is very supportive 0:14:32.080 --> 0:14:34.880 for equity markets. So Ben just kind of going back 0:14:34.920 --> 0:14:36.240 to your theory a little bit, is it, And I'm 0:14:36.240 --> 0:14:37.520 just kind of reading through a little bit is this 0:14:37.600 --> 0:14:39.800 kind of a a new way to kind of look 0:14:39.840 --> 0:14:42.360 at money flows. You know, I want to go, I 0:14:42.360 --> 0:14:45.280 want to hit more. They ain't kind of thing. Well, 0:14:45.400 --> 0:14:48.120 it's it's it's an old idea, really, I mean the 0:14:48.560 --> 0:14:51.400 it's it's the old idea that and this goes back to, 0:14:51.760 --> 0:14:54.960 you know, how people played the game of markets back 0:14:54.960 --> 0:14:56.960 in the thirties and the forties and the fifties and 0:14:57.000 --> 0:15:00.760 the sixties. It's really looking at where is the money going? 0:15:00.880 --> 0:15:04.120 Who are the other players on Wall Street? Including who 0:15:04.160 --> 0:15:06.120 are the players like at the FED and the White 0:15:06.120 --> 0:15:09.760 House and the like. And frankly, it's not looking less 0:15:09.760 --> 0:15:13.000 at fundamentals, but realizing that in this sort of world, 0:15:13.480 --> 0:15:16.760 the fundamentals mean less and these money flows mean a 0:15:16.760 --> 0:15:20.720 lot more. So how do you factor in the algos, 0:15:20.840 --> 0:15:23.640 the quantitative funds that are doing ostensibly a lot of 0:15:23.680 --> 0:15:27.240 the trading and equities and frankly increasingly even in the 0:15:27.280 --> 0:15:30.000 bond markets. I just have to wonder, you know, people 0:15:30.120 --> 0:15:32.800 when there's price action that doesn't make sense or seems 0:15:33.120 --> 0:15:35.480 you know, overly need jerk, people just said, you know, say, oh, 0:15:35.520 --> 0:15:37.760 it's the algals. How do you how do you work 0:15:37.760 --> 0:15:42.080 with them? Playing poker? Against you. Well, yeah, that's right. 0:15:42.200 --> 0:15:44.560 Well I'll say two things. So, so, most most of 0:15:44.600 --> 0:15:47.200 the algos that are out there are not what i'll 0:15:47.200 --> 0:15:52.480 call fast twitch investors. They're they're they're barges, right, so 0:15:52.520 --> 0:15:56.720 they can rebalance monthly, they rebalance slowly, and so there 0:15:56.720 --> 0:15:59.360 they really are like a barge and they follow along. 0:16:00.040 --> 0:16:02.560 I'm trying to say is that at the margins, it 0:16:02.600 --> 0:16:06.840 actually makes the importance of discretionary investors, people who listen 0:16:06.880 --> 0:16:09.360 to this radio show and do something, people who are 0:16:09.840 --> 0:16:13.440 you know, managing a discretionary fund. When you when you're 0:16:13.480 --> 0:16:15.560 when you're when you're in the river with a lot 0:16:15.600 --> 0:16:18.560 of barges, it actually provides a lot more room for 0:16:18.880 --> 0:16:23.720 the the speedboats to to to make an impact. Right. 0:16:23.800 --> 0:16:26.480 So it's it's it's interesting that you're right that that 0:16:26.680 --> 0:16:30.280 more of the dollar volume, more of the money flows 0:16:30.320 --> 0:16:33.800 in terms of absolute amounts, is handled with these i'll 0:16:33.800 --> 0:16:37.760 call them kind of barge like algorithms, but they follow along. 0:16:38.520 --> 0:16:41.480 And so it really is is it's interesting to me, 0:16:41.800 --> 0:16:46.240 is that the human money, I think, can actually make 0:16:46.320 --> 0:16:48.400 more of a difference. And so what I'm trying to 0:16:48.440 --> 0:16:50.880 look at is is what is the human money doing 0:16:51.200 --> 0:16:54.760 and what is the behavior of investors. That's where I 0:16:54.760 --> 0:16:56.720 think you need to go in terms of playing the player. 0:16:57.640 --> 0:17:00.760 So Ben, you know, one of the things that's interesting 0:17:00.880 --> 0:17:03.160 for active investors over the last several years the impact 0:17:03.160 --> 0:17:06.119 of social media as a way to kind of track 0:17:06.240 --> 0:17:10.480 investors sentiment, who's paying attention to what stocks, to what stories? 0:17:10.560 --> 0:17:12.919 And Bloomberg has a lot of functionality on the terminal 0:17:13.240 --> 0:17:15.639 to help terminal users kind of track that is that 0:17:15.720 --> 0:17:19.640 kind of a twenty one century way or an analogy 0:17:19.760 --> 0:17:22.360 to kind of money flows or reading the tape from 0:17:22.440 --> 0:17:26.280 days of viewer. It's similar. But I'll but I'll tell 0:17:26.320 --> 0:17:28.280 you this when you're looking at social media. You know, 0:17:28.320 --> 0:17:33.359 we talked about influencers a lot, right, and and that 0:17:33.359 --> 0:17:36.760 that corollary for markets is it's not how many people 0:17:36.800 --> 0:17:39.680 are talking about something, whether we're you know, whether it's 0:17:39.680 --> 0:17:44.240 social media or or it's uh, you know, television or newspaper, 0:17:44.600 --> 0:17:47.960 it's who is talking about it. So it's it's it's 0:17:48.000 --> 0:17:52.600 really I think much more important to follow the influencers because, 0:17:52.920 --> 0:17:56.320 as the name implies, they really do have an influence. 0:17:56.359 --> 0:17:59.600 We really are hardwired to respond to this stuff. And 0:17:59.640 --> 0:18:02.560 that's true if you're you know, a Twitter follower, or 0:18:02.800 --> 0:18:06.040 on or on Instagram and you're following an influencer, or 0:18:06.040 --> 0:18:09.000 if you're listening to this show or two to end 0:18:09.040 --> 0:18:13.240 the financial media, and you know J Powell decides to 0:18:13.240 --> 0:18:15.440 come out and say something. So I'll say this, when 0:18:15.440 --> 0:18:18.159 we're looking at media and we're looking at these signals 0:18:18.160 --> 0:18:21.359 that come out of the narrative, it's less important to 0:18:21.400 --> 0:18:24.440 see how many people are saying something, and much more 0:18:24.440 --> 0:18:27.880 important to say who is saying something. Ben Hunt, thank 0:18:27.880 --> 0:18:29.720 you so much for being with us. Ben Hunt, co 0:18:29.880 --> 0:18:49.960 founder and chief investment officer of Second Foundation Partners. Well, 0:18:49.960 --> 0:18:52.360 the right hailing business is going to get even more 0:18:52.400 --> 0:18:55.360 crowded in the US public apprigity markets. First we had 0:18:55.440 --> 0:18:57.960 Lift going public, and now news is coming out that 0:18:58.119 --> 0:19:00.760 Uber is right behind like a a file in the 0:19:00.800 --> 0:19:03.080 next day or two. But as I look at Lift here, 0:19:03.359 --> 0:19:06.119 the stock is down six point two percent today to 0:19:06.240 --> 0:19:09.639 sixty three dollars to share. Notable that it is well 0:19:09.680 --> 0:19:12.600 below it's seventy two I p O price. So at 0:19:12.640 --> 0:19:15.800 least the first right sharing investors are not feeling the love. 0:19:16.040 --> 0:19:17.960 Let's talk about the space in general. It's a lot 0:19:18.000 --> 0:19:20.440 going on. We welcome Man Deep sing Man Deep is 0:19:20.440 --> 0:19:24.040 a senior tech industry annalys for Bloomberg Intelligence. He ran 0:19:24.200 --> 0:19:26.640 literally ran to see us here in a Bloomberg Interactive 0:19:26.640 --> 0:19:30.960 broker studio. He did take a car. Okay, sorry, I'll 0:19:31.200 --> 0:19:34.119 be all week. So man, Deep, let's start with what 0:19:34.200 --> 0:19:36.880 we'll get to Uber. But let's start with Lift. It's 0:19:36.880 --> 0:19:38.639 not the I p O they were looking for, right 0:19:38.680 --> 0:19:40.080 what do what do you think is going on here? 0:19:40.640 --> 0:19:44.280 I think and I compare Lift to Uber. Uber is 0:19:44.359 --> 0:19:48.800 definitely the iconic brand, you know, with scale that's probably 0:19:48.920 --> 0:19:52.080 more brand value than you know, anybody else out there 0:19:52.080 --> 0:19:55.439 in the right sharing space. So it really reflects the 0:19:55.560 --> 0:19:58.760 pressure you know, as an investor, as a right sharing investor, 0:20:00.080 --> 0:20:02.560 which one would you pick? And my guess is, you know, 0:20:02.720 --> 0:20:07.600 given of Uber is much more diversified, it has got 0:20:07.680 --> 0:20:11.560 a lot more value generation potential than Lift. Now, the 0:20:11.600 --> 0:20:13.960 difference between Lift and Uber is, you know, when you 0:20:14.080 --> 0:20:19.040 look at take rates or average revenue provider, Lift is 0:20:19.240 --> 0:20:21.840 probably going to be better because of its niche focus. 0:20:21.920 --> 0:20:24.520 But that's not what investors are going to focus on 0:20:24.600 --> 0:20:27.399 because this space is not profitable at all. So it 0:20:27.440 --> 0:20:32.399 doesn't matter, you know, even if Lift, it just doesn't 0:20:32.440 --> 0:20:35.840 matter money you're baking it? Who cares? I love this 0:20:35.960 --> 0:20:38.000 image of Lift coming out and putting their I p 0:20:38.119 --> 0:20:40.399 O on the market, getting their thing, and then Uber 0:20:40.480 --> 0:20:43.280 coming in with you know, two big guns, like shooting 0:20:43.320 --> 0:20:45.880 at the sky, being like here we come. I'm wondering. 0:20:45.960 --> 0:20:48.119 So the estimate is that they're going to get about 0:20:48.119 --> 0:20:51.320 ten billion dollars in the year's biggest ip O. Do 0:20:51.320 --> 0:20:53.600 you think it's gonna be over under? Do you think 0:20:53.600 --> 0:20:56.320 it seems like it's being fairly valued? How do we 0:20:56.440 --> 0:20:58.800 even assess the value of a company that makes no 0:20:58.880 --> 0:21:01.720 money and has so in this case, from what we 0:21:01.760 --> 0:21:06.119 have learned so far, Uber is about five times bigger 0:21:06.160 --> 0:21:09.440 than Lift in terms of bookings, in terms of revenue. 0:21:10.000 --> 0:21:13.200 So the fact that they're trying to raise ten billion 0:21:13.320 --> 0:21:17.560