Speaker 1: This is Bloomberg Business Wait inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: global business, finance and tech news. The Bloomberg Business Week
Speaker 1: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2: Now in our weekend broadcast that will air this Saturday,
Speaker 2: Matt and I talked with Marcus Shaw, presidency at ALLT Finance,
Speaker 2: on increasing the presence of HBCU students working in the
Speaker 2: ALLT Finance world. We talk a lot about diversity, Matt,
Speaker 2: in all walks of finance and business and more.
Speaker 3: And so do you executives.
Speaker 2: I feel like, certainly coming off the pandemics, certainly coming
Speaker 2: off of George Floyd, diversity, inclusion, belonging has been top
Speaker 2: of mind.
Speaker 4: Yeah, yeah, absolutely, And as it is Asian, American and
Speaker 4: Pacific Islanders a month, we're focused in on that aspect
Speaker 4: of it. But of course we're always watching and doing
Speaker 4: our best to promote gender equit and racial equity as well.
Speaker 3: All Right, We've got a great guest on that. LENEA.
Speaker 2: Irvin is CEO of Cokequill, a global nonprofit think tank
Speaker 2: advisory group founded back in four really to address bias
Speaker 2: and uncover barriers to advancement for underrepresented populations in the workplace,
Speaker 2: and we talk about it a lot. We still have
Speaker 2: a lot of progress to make. Lenaia, thank you so
Speaker 2: much for being with us. Tell us attle bit more
Speaker 2: about your organization specifically. You know, I got that from
Speaker 2: your website. I'm not gonna lie full transparency, but a
Speaker 2: lot of people and organizations are working on diversity. There's
Speaker 2: a lot of conversations and yet we're making progress, but
Speaker 2: it's pretty slow. So tell us a little bit about
Speaker 2: what you do on a daily basis.
Speaker 5: Yeah, I know, a coke cool. So we're a global
Speaker 5: think tank and we've been around nearly twenty years and
Speaker 5: we'll be do as conduct research. So we have a
Speaker 5: great team of PhDs and quants and you know, storytellers.
Speaker 5: We use data to tell stories of bias and barriers
Speaker 5: that talent face in the workplace. How are the stories
Speaker 5: you know, some of them are. You know, they're challenging,
Speaker 5: but they present opportunity. We have a task force of
Speaker 5: over one hundred of the world's largest companies, large multinationals,
Speaker 5: and we advise them on you know, diversity, equity, inclusion,
Speaker 5: best practices. We spend time with their leadership teams as
Speaker 5: they think about cultural transformation and how they can actually
Speaker 5: create the conditions for talent to thrive.
Speaker 3: Right, Yeah, I want to go back. How are the stories?
Speaker 2: You guys are doing the data and you're checking it
Speaker 2: and then you're obviously presenting it to these big companies
Speaker 2: that you're working with. Just set the stage for us
Speaker 2: because I think it's a good reality check in terms.
Speaker 5: Of where we are right So, you know, we're here
Speaker 5: obviously we're focused on Asian, Asian, American and Pacific islanders
Speaker 5: this month, and you know, the stories that we hear
Speaker 5: when we look across talent, across lines of difference. You know,
Speaker 5: there's there's just this persistent set of barriers that often
Speaker 5: go unseen by leaders in the work environment, often go
Speaker 5: unseen by you know, colleagues for example. So we just
Speaker 5: launched to study strangers at home, and you know, the
Speaker 5: study really does fill a gap in existing research, at
Speaker 5: least we believe as it relates to Asian, Asian, American
Speaker 5: and Pacific islanders, and we give a little bit of
Speaker 5: horror historical context, but then we bring visibility into the
Speaker 5: ways anti Asian violence has impacted this talent in the workplace.
Speaker 5: Outside of the workplace, we.
Speaker 3: Have colleagues here that's certainly coming off a.
Speaker 4: Worse over the past few years, Asian American violence against
Speaker 4: Asian Americans.
Speaker 5: I think we've all witnessed a pronounced increase. And what
Speaker 5: we find in the data is because.
Speaker 2: The pandemic specifically right and then it was coming from Asia.
Speaker 2: We have colleagues here that they had their spouse is
Speaker 2: picking them up because they didn't want them on public transportation.
Speaker 5: Absolutely, sixty two percent of our respondents said that the
Speaker 5: increase in violence, you know, COVID nineteen has cautioned them
Speaker 5: and they're commute to work right, you know, nearly two thirds,
Speaker 5: nearly two thirds of Asian professionals say that this ongoing
Speaker 5: violence has impacted their their mental health. More than half
Speaker 5: say that it actually impacts their their ability to be
Speaker 5: productive at work, their ability to focus at work, their
Speaker 5: their relationships with their managers and colleagues, who you know,
Speaker 5: they're bringing this trauma in and they're surrounded by colleagues
Speaker 5: and perhaps leaders that don't really know how to support them.
Speaker 5: And so just imagine you know, the the near term
Speaker 5: and longer term career impacts that could have.
Speaker 4: Right, So what's the answer in terms of I guess
Speaker 4: education and policy. What should we do specifically?
Speaker 2: I'm most sure, like curious about what moves the needle
Speaker 2: because we have so many conversations we all do, like
Speaker 2: you know, planning or are we do you know, certain
Speaker 2: training sessions and stuff to make it all better?
Speaker 3: But what really moves the needle?
Speaker 5: Yeah, you know, it's a it's a combination of things.
Speaker 5: We often put forth a framework. It's simple audit awaken act.
Speaker 5: So we encourage companies and leaders to really kind of
Speaker 5: audit the current state of talent within their their ecosystem,
Speaker 5: within their work environment, and then awakened to some of
Speaker 5: the barriers you know, talent are facing. When we embarked
Speaker 5: on this study around Asian Asian Americans and Pacific Islanders,
Speaker 5: you know, the experiences of microaggressions that are unique to
Speaker 5: Asian talent really surfaced, and I think it's important for
Speaker 5: you know, everyone to kind of understand. So there's this
Speaker 5: experience in two sets. You know, there's this experience of
Speaker 5: being made to feel the perpetual foreigner, right, so you know,
Speaker 5: having colleagues assume that you're not born in the US,
Speaker 5: or when you say I'm born in the US, they
Speaker 5: don't know where are you really from, right, Or they're
Speaker 5: telling you that your English is good, right, the assumption
Speaker 5: is that English is not your first language. So they
Speaker 5: have this constant othering. And then on the flip side, right,
Speaker 5: a counter to that, which it's kind of derived from
Speaker 5: the model minority myth our research kind of frames as
Speaker 5: over validation, right. And again it's it's in the way
Speaker 5: that shows up is the assumption that, Okay, their colleagues
Speaker 5: think Asian Asian Americans are they work harder, right from
Speaker 5: a stereotype, they're naturally smarter because of their race, they're
Speaker 5: perhaps only good at math or science, and so they
Speaker 5: feel pigeonholed. A lot of Asian professionals, you know this, Look,
Speaker 5: we can be considered subject matter experts, but they're not
Speaker 5: considering us for leadership, right, So they're kind of dealing
Speaker 5: with and you initially people like, oh, that might be
Speaker 5: a tail when they think you're smarter, but the harm
Speaker 5: comes in limiting your ability and can I.
Speaker 3: Ask you something?
Speaker 4: Is it?
Speaker 2: You know in terms of as we all try to
Speaker 2: get smarter on all of this and be more inclusive
Speaker 2: and make more people feel belong like they belong in environments.
Speaker 3: Is it different in.
Speaker 2: Terms of the exclusion that Asian Americans feel versus Black
Speaker 2: Americans versus I don't know, LGBTQ community. I am curious
Speaker 2: about in your conversations with big corporations how they do
Speaker 2: they put all diversity and inclusion in one bucket Because
Speaker 2: I have a hard time too when we have like
Speaker 2: different groups for different people.
Speaker 3: Because if we're trying to be inclusive, if we.
Speaker 2: Keep branching everything out, that to me is exclusive rather
Speaker 2: than inclusive idolic.
Speaker 3: So I can't get my head around it.
Speaker 5: Yeah, no, so we do. We do encourage when you
Speaker 5: look at data, for example, within an organization, disaggregating the
Speaker 5: data data does help you to see where there might
Speaker 5: be varied experiences for smaller groups right in way of representation,
Speaker 5: you know. But what we encourage, you know, companies to
Speaker 5: do is really consider who might not be given the
Speaker 5: same opportunities for advancement or development just by virtue of
Speaker 5: perhaps not being seen right. You know, we think about
Speaker 5: whether it's representation of women in the c suite or
Speaker 5: representation of LGBTQ talent or black talent, you know, thinking
Speaker 5: about Okay, how can you be not only great allies
Speaker 5: but sponsors to these communities across lines of difference, Because
Speaker 5: I agree, you know there's there are limits to saying,
Speaker 5: well this group, we target this group and only support
Speaker 5: this group, we target that group, only support this group.
Speaker 5: I think where we win is look at the data,
Speaker 5: Look where there are we look where there are barriers, right,
Speaker 5: look where there is retention and advancement gaps, and say
Speaker 5: how can we better deliver for that particular cohort and
Speaker 5: make sure that it's something that's top of mind for
Speaker 5: all leaders.
Speaker 4: Right, So in terms I mean, you're not just someone
Speaker 4: who runs a think tank. You've also worked in corporate America.
Speaker 4: You've been on the street, yes, at Bank America, leading
Speaker 4: a huge organization there. Do you think that we're making
Speaker 4: progress on this on the diversity inclusion issues in general
Speaker 4: as a society, And I wonder what your take is
Speaker 4: in terms of is Wall Street doing any better or
Speaker 4: worse than the rest of the industry.
Speaker 5: You know what, I will say progress is being made.
Speaker 5: I'm sure there are many that would say that it's
Speaker 5: not being made fast enough. I might be in that camp,
Speaker 5: but I know what the desk looked like twenty years ago.
Speaker 5: I know what it's like to be the only black woman,
Speaker 5: you know, in that particular business, the only.
Speaker 2: Marcus said the same thing when we had him on
Speaker 2: when he was you know, in his first financial firm.
Speaker 5: Absolutely, and so you know those experiences and you build
Speaker 5: allyship and and you know with with folks there. But
Speaker 5: I do, I do believe that Wall Street is unrecognizable
Speaker 5: to what it was a couple decades ago. You know,
Speaker 5: there are there are not only c suite but CEOs
Speaker 5: at these firms who truly believe that, you know, the
Speaker 5: diversity within their ranks.
Speaker 2: Groups, yes, Black Americans, Asian Americans, LGBTK.
Speaker 3: It is it is.
Speaker 5: Not only is it important and it is the right
Speaker 5: thing to do and align with values, but it's also
Speaker 5: a competitive necessity. We are living in a world of disruption,
Speaker 5: right You've got to be able to activate talent if
Speaker 5: you're going to compete. You know, it's an the exponential age.
Speaker 4: We don't know, Marcus said, You've got to let your
Speaker 4: greed overcome your bias.
Speaker 5: Absolutely. Absolutely, You're a number on the street before you're
Speaker 5: you know, a face or anything else.
Speaker 2: Well, great to check in with you and appreciate you
Speaker 2: stopping by. Lenaia Irvin, CEO of Coke Will joining us.
Speaker 2: You're in studio.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from three to six Eastern Listen on
Speaker 1: Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business App,
Speaker 1: or watch us live on YouTube.
Speaker 2: So a tense appeals court hearing yesterday over the FDA's
Speaker 2: approval of the abortion pill force the agency and the
Speaker 2: myth of pro stones forgive me brand new manufacturer to
Speaker 2: clarify confusion over the agency's authority.
Speaker 3: And regulatory processes.
Speaker 2: We know that this has been going on meantime. Also
Speaker 2: this week, Matt, we had North Carolina's Republican dominated legislature
Speaker 2: upheld a bill banning the most abortions after twelve weeks.
Speaker 2: So there's a lot going on when it comes to
Speaker 2: women's reproductive rights.
Speaker 4: Yeah, I mean, this is a huge issue and it's
Speaker 4: going to be name done yet it's going to be
Speaker 4: a big issue I think in the upcoming election, and
Speaker 4: the kind of thing that I wouldn't normally want to
Speaker 4: touch with a ten foot poll. So it surprises me
Speaker 4: to see Republicans getting so involved.
Speaker 3: What's been on their platform for a long time, and
Speaker 3: they but.
Speaker 4: They haven't been as as they haven't been as loud
Speaker 4: about it, you know, and I think they run the
Speaker 4: risk of alienating a lot of people and then just
Speaker 4: carrying the thirty percent that they always care no matter what.
Speaker 3: So that's the political side.
Speaker 2: So let's actually just get an update a little bit
Speaker 2: more with Bloomberg News equality reporter Kelsey Butler.
Speaker 3: She's on the phone in New York City.
Speaker 2: So Kelsey, I just gave some of the headlines, but
Speaker 2: gets up to speed and kind of where we are
Speaker 2: in this and kind of the trend that we continue
Speaker 2: to see when it comes to women's reproductive rights.
Speaker 6: Well, we're definitely seeing a continued erosion of abortion access
Speaker 6: across the country. I just had a story out last
Speaker 6: week and since then there have been other restrictions that
Speaker 6: have passed. In North Carolina, there is now a twelve
Speaker 6: week band that will be going into a fact soon.
Speaker 6: So it's things are moving at a breakneck speed and
Speaker 6: evolving really day to day. And what we're really seeing
Speaker 6: is now really the south of the country, the Midwest.
Speaker 6: There are large regions where there's really no abortion access
Speaker 6: for patients.
Speaker 4: So, Kelsey, does that go hand in hand with support?
Speaker 4: I mean, you know, on the pro life side of things,
Speaker 4: they want women to have these babies, so I'm assuming
Speaker 4: they're also providing a lot more support in terms of daycare,
Speaker 4: a lot more support in terms of helping mothers raise
Speaker 4: these children. Are we seeing that?
Speaker 6: We're definitely not seeing that. I mean, the US is
Speaker 6: far behind when it comes to maternal health, has one
Speaker 6: of the worst maternal mortality rates in the developed world,
Speaker 6: and we know that there is a childcare crisis in
Speaker 6: this country as well. These are all things that our
Speaker 6: team writes about a lot, so we're not really seeing
Speaker 6: in a lot of these places. They also rank really
Speaker 6: low on things like childcare supports for new moms pregnant
Speaker 6: people as well, So it's just compounded really bad situation.
Speaker 2: Hey, Kelsey, last question here, what else is on the
Speaker 2: docket that we need to be kind of keep on
Speaker 2: our radar here?
Speaker 6: I think the biggest thing is the current litigation on
Speaker 6: the abortion pill is the most common method of ending
Speaker 6: pregnancies right now in the US, and any limiting access
Speaker 6: to that will certainly have ramifications for patients. Across the country.
Speaker 2: All right, really appreciate the update, because there's been a
Speaker 2: lot going on, certainly on this front. Bloomberg News Equality
Speaker 2: reporter Kelsey Butler on the phone in New York City. Well,
Speaker 2: the wrangling definitely continuing over women's reproductive rights, so too
Speaker 2: often a debate between breastfeeding and baby formula. Our next
Speaker 2: guest has some thoughts on that. Let's get to Cecilia
Speaker 2: to Maury, Associate professor at the Johns Hopkins School of
Speaker 2: Nursing in the Bloomberg School of Public Health, Department of Population,
Speaker 2: Family and Reproductive Health, of course, the Bloomberg School of
Speaker 2: Public Health, supported by Michael our Bloomberg, founder of Bloomberg
Speaker 2: LP and Bloomberg Philanthropies. Cecilia joining us on Zoom from Baltimore, Maryland. Cecilia,
Speaker 2: I can't tell you how much we have been talking
Speaker 2: about this in the newsroom.
Speaker 3: Matt scot a young daughter. I had a daughter, she's
Speaker 3: now twenty.
Speaker 2: But you know, the debate between breastfeeding and formula, there's
Speaker 2: so much. Tell us kind of what's top of mind
Speaker 2: for you here?
Speaker 7: Sure? I mean, I don't you know, I don't think
Speaker 7: it needs to be a debate I think that would
Speaker 7: be my first point. So, as an expert in the field,
Speaker 7: I think what we need to be thinking about is
Speaker 7: how do we enable people to be able to thrive,
Speaker 7: to parent, and to be able to feed their babies responsively,
Speaker 7: and to enable people to breastfeed if they desire for
Speaker 7: as long as they wish.
Speaker 4: Isn't it advisable? And I know this sort of throws
Speaker 4: me into the debate in a sense, but isn't it
Speaker 4: advisable to breastfeed if you can it? Doesn't it provide
Speaker 4: the child with a massive advantage in terms of health
Speaker 4: and development?
Speaker 1: Yes?
Speaker 7: Absolutely. I think that the best way to think about
Speaker 7: this is that this is the feeding norm for human beings.
Speaker 7: We are part of the group of mammals. This is
Speaker 7: a very ancient evolutionary adaptation and so it is set
Speaker 7: up to essentially provide a series of protect and protective
Speaker 7: benefits from infectious disease to noncommunicable diseases, and it basically
Speaker 7: has implications for the entire life course. What I think
Speaker 7: is lesser known is that there are significant implications for
Speaker 7: mothers as well, for ovarian cancer, for breast cancer, as
Speaker 7: well as for metabolic diseases. So it really is a
Speaker 7: system with many, many different components and with effects over
Speaker 7: the entire life course socily.
Speaker 2: To be fair, Matt and I've been talking also, and
Speaker 2: his wife had some difficulties. I had some difficulties early on.
Speaker 4: My way, which, by the way, I didn't expect. No
Speaker 4: one prepared us for the fact that it's hard, might
Speaker 4: be tough for the baby to latch, It could be
Speaker 4: very it could be painful to very painful, and we
Speaker 4: could eventually had problems like mastitis. She had fevers of
Speaker 4: one hundred and four degrees. We were back in the
Speaker 4: hospital two or three times. I had no idea this
Speaker 4: was going to happen.
Speaker 2: And for women and for first time moms, there's enough
Speaker 2: going on with your hormones and there's a lot of pressure,
Speaker 2: So how do you kind of think about that, because
Speaker 2: it can be very.
Speaker 7: Absolutely that is actually the point. So the work that
Speaker 7: we've been doing on the Lens of Breastfeeding series that
Speaker 7: came out in February and that was launched in April
Speaker 7: and the United States is exactly about this. So the
Speaker 7: argument that we're making is that it's not up to
Speaker 7: individuals to address systemic failures. It's actually a societal, whole
Speaker 7: society of responsibility to enact policies that support people much
Speaker 7: much better than these experiences that you have just shared
Speaker 7: with me, which are very common and part of the reasons.
Speaker 3: Why what do the work we do? What do you
Speaker 3: mean in terms of policies.
Speaker 7: So a whole series of recommendations that we made, so
Speaker 7: we really are thinking about this as a systems kind
Speaker 7: of approach. So this is multiple systems coming together the
Speaker 7: health system, so implementing a series of steps that we
Speaker 7: know work to actually support people within the health system,
Speaker 7: from the Baby Friendly Hospital initiative, to skilled support to communities,
Speaker 7: steps that follow people postpartum, to workplace policies, which I
Speaker 7: think we need to mention and highlight because as the
Speaker 7: previous reporter also mentioned, we are extremely far behind among
Speaker 7: even wealthy countries. We are the only OECD nation that
Speaker 7: lacks federal paid leave and has minimal supports for people
Speaker 7: at the workplace when they do return to work. So
Speaker 7: many people are returns.
Speaker 4: So insane considering you have, you know, a large group
Speaker 4: of people in this country that are so opposed to
Speaker 4: abortion and yet they don't back any kind of support
Speaker 4: for the resultant babies and The other thing that really
Speaker 4: grinds my gears, Cecilia, is that, oh, if a man
Speaker 4: and men had these problems like mass titis, which most
Speaker 4: men have no.
Speaker 3: Idea about it, that babies, we wouldn't be.
Speaker 4: Se and doctors would research and treat the problems better. Right.
Speaker 4: I would look back into the after my wife came
Speaker 4: down with this for the second or third time, I
Speaker 4: looked back into the research and found the only reason
Speaker 4: that doctors started looking into it at all was because
Speaker 4: cows weren't producing enough milk. It's truly unbelievable.
Speaker 7: Erry It's an appalling situation, and that's one of the
Speaker 7: things that we actually call for is much more attention
Speaker 7: for healthcare providers in their training on lactation and interlinked
Speaker 7: to that, also, we call for regulations on the marketing
Speaker 7: from commercial milk formula makers who have been aggressively marketing
Speaker 7: products and undermining breastfeeding using a series of very sophisticated
Speaker 7: and far reaching tactics. So what we're calling for is
Speaker 7: actually a whole societal policy approach that puts together all
Speaker 7: these systems, so the houses stem to the workplace, to
Speaker 7: marketing regulations, so all of this together to actually provide
Speaker 7: the suppurtse to enable people to breastfeed. So that's a
Speaker 7: very different kind of argument than I think the debates
Speaker 7: on social media, you know, suggest that is not at
Speaker 7: all what we are talking about. We're not talking about
Speaker 7: individuals solving societal problems. We're calling for systemic change.
Speaker 2: I got to say here at Bloomberg, they were very
Speaker 2: good and there was a place where you could come
Speaker 2: to work after I came back to work after Aggie
Speaker 2: was born, and you know, you could pump if you
Speaker 2: needed to, and made it possible to kind of continue breastfeeding,
Speaker 2: which was a really plus for me.
Speaker 3: Cecilia, thank you so much.
Speaker 2: Feel like we don't talk about this enough and feel
Speaker 2: like this was just a conversation that needed to be had.
Speaker 2: Cecilia Tomory, Associate Professor the Johns Hopkins School of Nursing
Speaker 2: and the Bloomberg School of Public Health, Department of Population,
Speaker 2: Family and Reproductive Health.
Speaker 3: On Zoom from Baltimore, Maryland. Any final thoughts there.
Speaker 4: I just think it's a good conversation to have, and
Speaker 4: we need to keep talking about it until we treat
Speaker 4: it like a real health issue and real support.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 1: Just Say Alexa play Bloomberg eleven.
Speaker 2: Thirty well as the debt ceiling and budget negotiations continue
Speaker 2: in the US this week. In the new issue of
Speaker 2: Bloomberg Business Week, out on newsstands, online at Bloomberg dot com,
Speaker 2: slash BusinessWeek, and of course, on the Bloomberg Terminal, the
Speaker 2: cover story is this week's remarks. It's about king dollar
Speaker 2: and how the crown is slipping on the US green
Speaker 2: back and dollar denominated assets thanks to a few things
Speaker 2: going on, including that debt sealing standoff, regional bank failures,
Speaker 2: and a few other things. So let's get into it
Speaker 2: and to explain really the implications of America's self inflicted
Speaker 2: policy wounds with US. Is Bloomberg News Global Economy Reporter
Speaker 2: endacurrent on cam in our DC bureau. BusinessWeek Global Economics
Speaker 2: editor Christiane Lynblad to my left and the editor of
Speaker 2: Bloomberg BusinessWeek Magazine, Joel Weber to my right, both in
Speaker 2: our Bloomberg Interactive Brokers Studio Jiel. I feel like the
Speaker 2: mighty US dollar. It's still rained supreme, but it's getting
Speaker 2: a bit tattered.
Speaker 1: Yeah.
Speaker 8: And as we were kind of talking about this story,
Speaker 8: it was like, wow, you just start to think about
Speaker 8: all the things that are poised to go wrong in
Speaker 8: the US. And I told my art department, I was like,
Speaker 8: just imagine this house where the floorboards are coming in,
Speaker 8: the walls are caving in, the debt ceiling, the ceiling
Speaker 8: caving in. Sounds like Matt Miller's house, right, And uh
Speaker 8: that led us to, you know, take a look at
Speaker 8: this story from from uh Celeia Mosen and the Current,
Speaker 8: and boy, it just felt very of the moment as
Speaker 8: all eyes continue to kind of like go towards DC.
Speaker 8: And you know, this debt thing Matt is is bad, yes,
Speaker 8: and there's no resolution yet.
Speaker 4: It's got to be worry worrisome to our allies.
Speaker 8: And when you do this again and again and again,
Speaker 8: it makes I think a lot of people around the
Speaker 8: world go, you know, maybe this America thing isn't what
Speaker 8: we need as the gold standard here.
Speaker 4: Absolutely. I also wonder about something like the Russian invasion
Speaker 4: of Ukraine and the resultant American sanctions, you know, and
Speaker 4: the demands that we put on our allies and our
Speaker 4: other trading partners. Christina, how important is that because I
Speaker 4: noticed right around the time that started, the Saudis started
Speaker 4: selling their oil to China in un and so you know,
Speaker 4: for example, I talk about the Bloomberg Dollar index, that's
Speaker 4: probably not the deciding factor, right, the actual value of
Speaker 4: the currency, but what people choose to use in transactions
Speaker 4: is far more important.
Speaker 9: Yeah, there's been a big push since the invasion for
Speaker 9: some countries, you know, to start using more of their
Speaker 9: own currencies or the currencies of their trading partners. And
Speaker 9: I think it is definitely a result of the US
Speaker 9: trying to weaponize its leadership. It's basically, it's fingerprints are
Speaker 9: all over the world financial system, not just the use
Speaker 9: of the dollar, but the way it was designed, going
Speaker 9: back to Breton Woods, right, And I think you know, well, Russia,
Speaker 9: this was the first time a central bank was targeted directly,
Speaker 9: which with sanctions, So you know, Russia central bank, it's
Speaker 9: offshore reserves were cut off. And I think other countries
Speaker 9: looked at this and said, oh no, you know, we
Speaker 9: don't want to be in a similar situation, but aside
Speaker 9: from de dollarization and the aspirations other countries have about
Speaker 9: their own currencies, I mean, I think it's it's it's
Speaker 9: the self inflicted wounds that we really wanted to focus on, right,
Speaker 9: Like even small things that add up, like the improprieties
Speaker 9: with stocked trating amongst you know, central bank officials, you know,
Speaker 9: ethics questions in the Supreme Court. People sort of seem
Speaker 9: to think, oh, you can brush these things off, but
Speaker 9: they start adding up to the idea that you know,
Speaker 9: the US has this prestige right, and it's wearing down.
Speaker 1: So into you.
Speaker 8: You you're uniquely capable having been in Hong Kong for
Speaker 8: a while, and now you're on this side of the pond.
Speaker 8: What does it bring that international perspective to this? How
Speaker 8: vulnerable is US prestige in the American down So.
Speaker 10: Even if a dead ceiling agreement is reached over the
Speaker 10: next week or so, the optics of this are just
Speaker 10: horrible for the US economy globally, and for US leadership
Speaker 10: and for US influence. And you know, one side subplot
Speaker 10: from this death ceiling drama was that President Biden couldn't
Speaker 10: go to Port Moresby and Papua New Guinea for an
Speaker 10: unprecedented meeting with Pacific Island leaders. That might not send
Speaker 10: much to person on the street in the US, but
Speaker 10: those Pacific Islands are one of the fault lines for
Speaker 10: the tussle between China and US for influencing that part
Speaker 10: of the world.
Speaker 6: Right.
Speaker 4: It's Asian American Pacific Islanders.
Speaker 10: Month, right, and they have a summer going on for Moresby,
Speaker 10: and the US President couldn't go there, and that's the
Speaker 10: direct result of what's going on. The other point is
Speaker 10: I have never seen a frenzy like we've seen over
Speaker 10: the past few weeks about talk of d dollar rization,
Speaker 10: both from the investment community, the academic community, and the
Speaker 10: policy world. And we all know the obvious counterpoint as well,
Speaker 10: there's no alternative. Everybody knows there's no alternative for the moment.
Speaker 10: But I can tell you it's a talking point like
Speaker 10: it never has been before. And that reflects, I think,
Speaker 10: on the internalist function that we're seeing in US policy making.
Speaker 2: I have to say, and you know, you know, go back.
Speaker 2: I don't know how many years, or I feel like
Speaker 2: even a year ago that the thought of the US
Speaker 2: really defaulting on their debt like that was just non existent.
Speaker 2: But it does feel like that there's a lot more
Speaker 2: momentum based on kind of these self inflicted wounds that
Speaker 2: we keep seeing that you just wonder what the heck
Speaker 2: is going on in this country.
Speaker 10: Yeah, and by the way, if you just go back
Speaker 10: a few steps the blame game over inflation. There are
Speaker 10: rights and wrongst that story, but the point is the
Speaker 10: US missed the development inflation, and of course that spread
Speaker 10: globally because US monitor policy goes globally because the dollar
Speaker 10: is what's used to buy and paid for stuff all
Speaker 10: around the world. So there was US inflation. Secondly, there
Speaker 10: was the US banking shop, the biggest shock since the
Speaker 10: financial crisis that toppled one of the world biggest banks
Speaker 10: over in Switzerland, Credit Sweet. And now of course we
Speaker 10: have this row over the debt ceiling where the US
Speaker 10: government is having to come out and tell people, actually,
Speaker 10: we're not going to default something. Really you never thought
Speaker 10: you'd have to hear them say so. As we try
Speaker 10: to articulate in the piece, nobody's arguing that there will
Speaker 10: be a default. Nobody's saying that it is the end
Speaker 10: of the dollar. But you'd have to say the optics
Speaker 10: of this are not good at all.
Speaker 7: Yeah.
Speaker 8: The quote from Sarah House of Wells Fargo definitely caught
Speaker 8: my attention because she says, you don't even need to
Speaker 8: actually default in the debt for there to be real
Speaker 8: damage to the economy. So walk through that, because, like
Speaker 8: I mean, obviously, the worst case in here here is
Speaker 8: that somehow we do default, the US does default. But
Speaker 8: even if we don't, all of this could be really bad, right,
Speaker 8: and maybe worth mentioning some of the Bloomberg economics data
Speaker 8: that you guys were able to incorporate into the story too.
Speaker 10: Yeah, I mean, obviously, at the very least, will prompt
Speaker 10: governments and central banks around the world to look for
Speaker 10: alternatives in terms of managing their investments. It might start
Speaker 10: to look away from US government bonds, and that itself
Speaker 10: might start to drive up US boring costs over time,
Speaker 10: and as we discussed earlier, it might start to accelerate
Speaker 10: the use of alternatives, pushing other trading partners into other camps.
Speaker 10: I mean, chinae seems to be out there every day
Speaker 10: of the week offering swap lines and trying to get
Speaker 10: people to buy and sell in their currency, for example.
Speaker 10: So the fact that we're in this space at all
Speaker 10: is just corrosive and eroodes the US includents that we're
Speaker 10: talking about.
Speaker 2: So where do they go though, because in your story
Speaker 2: you talk about treasuries, right, twenty four trillion dollar market,
Speaker 2: You talk about central banks their official currency reserves still
Speaker 2: sixty percent. It's down certainly from a peak, but there's
Speaker 2: still so much that's you know, in demand when it
Speaker 2: comes to dollar denominated assets, and specifically.
Speaker 4: Get what happen eleven when we had our credit rating. Yeah,
Speaker 4: cut everyone.
Speaker 3: Poorting that treasure exactly.
Speaker 9: And we actually pointed that out in the story because
Speaker 9: there was a Bloomberg survey that came out this week
Speaker 9: that said, like, you know, I think they asked people where,
Speaker 9: you know, after gold I think it was like, treasure
Speaker 9: is worth the number I mean, and that is this
Speaker 9: irony right like that it's it's still the safe haven.
Speaker 9: But we were looking in the story at the long
Speaker 9: sweep of history too, and there was this great Golden
Speaker 9: Report that looked at how the British pound lost its reign,
Speaker 9: you know, and it talked about how there are these
Speaker 9: dynamics where one country over takes another in economic size
Speaker 9: that doesn't automatically cause, like you know, for it to
Speaker 9: lose its status if it already has sort of world
Speaker 9: dominant status as its currency. Then but Alon can come
Speaker 9: a financial crisis, Alon can come a world war, and
Speaker 9: that can be enough. So yeah, I think we're saying
Speaker 9: is you know, there is nothing right now as an alternative,
Speaker 9: But I don't the US should not be complacent. There
Speaker 9: are many many people who are actively engaged in wanting
Speaker 9: to find alter.
Speaker 4: What do you think an alternative could be? You know, China,
Speaker 4: the Chinese one has talked about often. I'm not sure
Speaker 4: how likely that is because when it comes to censorship
Speaker 4: of currencies, you know, China would be right there with
Speaker 4: the US. Is it possible that a decentralized currency, uh
Speaker 4: would ever actually be a contender?
Speaker 9: Well, I think more than that, we could go back
Speaker 9: to a system before Bretton Woods, where there was many
Speaker 9: many different currencies, right, yes, right, it's like Maynard, you know,
Speaker 9: John Maynard Keynes had won the debate, like you know,
Speaker 9: you know, so there, maybe we don't have a dominant
Speaker 9: currency anymore, but we have a more you know, sort
Speaker 9: of evenly spread, you know, And to come.
Speaker 2: On in on this, right, you do have this great
Speaker 2: global perspective, and you've been overseas in Asia. I mean,
Speaker 2: the US economy is still larger than China's, and I
Speaker 2: do wonder what the thinking is realistically about who could be,
Speaker 2: you know, could relay replace the US as kind of
Speaker 2: the world's currency.
Speaker 10: Look, it's going to be a long road for the
Speaker 10: YU one. That's because China has really strict rules on
Speaker 10: moving money into and out of China. They've got like
Speaker 10: a closed capital count that's very different to the US.
Speaker 10: It's obviously there's got a long way to go on
Speaker 10: that respect. But nonetheless, every like I said, every day
Speaker 10: we get announcements by Ladesh, countries in Central Europe, Argentina
Speaker 10: talking about using either sloop lines or other facilities to
Speaker 10: trade and use the one for settlement. That doesn't mean
Speaker 10: the dollar will be toppled overnight, but it starts to
Speaker 10: add to Chana's influence over the global trading system and
Speaker 10: the global economy. And that's of course coming at a
Speaker 10: critical time when the US is very pushing back right
Speaker 10: against that influence. So the One doesn't have to become
Speaker 10: the world's number one currency overnight for China to gain
Speaker 10: more influence over the global trading system.
Speaker 8: But the fact that we're even having this conversation is
Speaker 8: part of what's insane about this, right, Like, the US
Speaker 8: has put itself in a situation where people are willing
Speaker 8: to like start having other conversations, and that all goes
Speaker 8: back to how America has not been able to kind
Speaker 8: of shore up its act.
Speaker 4: Time and time again.
Speaker 10: Yeah, and by the way, if I could just say ironically,
Speaker 10: the US has a very strong economy at the month.
Speaker 10: I mean, again, you can argue about it. Is there
Speaker 10: is there a slow downcoming or not. But we had
Speaker 10: another piece of Business Week this week with Reid, Picker
Speaker 10: and mccullague making the point that all these economis keep
Speaker 10: calling your sessions, but every time the data comes out
Speaker 10: every month, they're pushing those session calls back. So the
Speaker 10: US is in a position of strength right now, but
Speaker 10: they're just pushing these wounds.
Speaker 4: Because of our world currency reserve status. Right, It's pretty
Speaker 4: easy to have a strong economy if you run trillion
Speaker 4: dollar deficits. I could do it myself. But let's talk
Speaker 4: about what's at stake here, Christina. What benefit do we
Speaker 4: get by having the world reserve currency?
Speaker 9: Well, right, we have a twenty four trillion dollar market
Speaker 9: of debt that everybody wants to buy, and that is
Speaker 9: the biggest thing we can finance, you know. I mean
Speaker 9: if you look at the you know, deficits forever and
Speaker 9: up to recently, the calculus was like that was okay
Speaker 9: because actually, even going into the pandemic, our service our
Speaker 9: debt service costs were falling, right, so we were like
Speaker 9: we had I mean, sorry, after the pandemic, we have
Speaker 9: this huge increase in debt, like and the debt servicing
Speaker 9: costs were falling. It would not take a much of
Speaker 9: an increase in those costs, this financing costs, you know,
Speaker 9: to go up for us to be completely different dynamics
Speaker 9: in this country and talk about austerity, which is something we.
Speaker 1: Have right now.
Speaker 4: I think the way that average cost is about two
Speaker 4: and a half percent, But as long as we have
Speaker 4: nominal growth of seven that's cool.
Speaker 9: Yeah, we can still carry it. Right, But you know,
Speaker 9: if this was another country to have the current account
Speaker 9: deficit that we have to have, like the like the
Speaker 9: net balance that we have, the investment position that we had,
Speaker 9: you know, investment investors with be going bonkers, you know
Speaker 9: and saying, oh my god, you know, this is a
Speaker 9: thing that's waiting to blow.
Speaker 3: And what are the implications. So let's play it out here.
Speaker 2: So let's say the dollar is no longer the world's
Speaker 2: reserve currency. What are the implications because I think about
Speaker 2: our investor audience and what they're thinking.
Speaker 10: Yeah, well, so Christina Lea, it will make things more
Speaker 10: expensive for the US in the globe. But also, by
Speaker 10: the way it perversely, it would be a knock to
Speaker 10: emerging economies as well, because even though they complain about
Speaker 10: the US dollar, the US dollar is a channel for
Speaker 10: them to raise finance. Because if there are a lot
Speaker 10: of emerging governments around the world, who if they went
Speaker 10: out to the public bond market to sell a bond
Speaker 10: in their own currency, nobody would touch it. But when
Speaker 10: they go to the global market and selling dollars, they
Speaker 10: can raise financing. So there is by the way, I
Speaker 10: just perverse angle to all of this that there's obviously
Speaker 10: a nock to US influence. There could be a direct
Speaker 10: hit US funding costs by extension and the economic impact
Speaker 10: of that. But you know, perversely, I think some of
Speaker 10: those emerging economies around the world you can't boor in
Speaker 10: their own currency and need investors to trade dollars with them.
Speaker 10: They would also get a knock from this.
Speaker 9: But if you want to know what the real near
Speaker 9: term implications would be, you look at what happened in
Speaker 9: the UK when Teresa May proposed a budget that was unfounded, unfunded.
Speaker 3: How that right for you?
Speaker 9: That is the kind of freak out moment that we
Speaker 9: risk having if people do not want to buy, you know,
Speaker 9: if they lose some of their appetite for US treasures
Speaker 9: jump in.
Speaker 8: Interest and you know, as long as you're talking about
Speaker 8: the UK, one of the things I was telling Christina
Speaker 8: was like, like, let's not forget like Brexit shows what
Speaker 8: a real self inflicted wound.
Speaker 1: Can look like.
Speaker 8: And the US keep doing this like, you know, can
Speaker 8: show you what what the worst case scenario yanks.
Speaker 2: All right, guys, that is a wrap, so appreciate it. It
Speaker 2: is the cover story of the new issue of Bloomberg
Speaker 2: Business Week. As we said, add on newsstands, on the
Speaker 2: Bloomberg terminal at Bloomberg dot com, slash business Week. Our
Speaker 2: thanks to end a current global economy reporter at Bloomberg
Speaker 2: News in our DC bureau, and Christina Limblack, global economics
Speaker 2: editor at Bloomberg BusinessWeek here in studio along with Jill Weber,
Speaker 2: the editor of Bloomberg Business Week, here in our interactive
Speaker 2: broker studio Umbromarco.
Speaker 8: Journal.
Speaker 7: How about you let me drive?
Speaker 10: No, no, no, no, who's going to run?
Speaker 6: Honey?
Speaker 1: Please, I'll do the driving. Gravels.
Speaker 7: Let's mate, I want to try it.
Speaker 10: It's good question time.
Speaker 1: This is the drive to the Globe dot com Com.
Speaker 6: I think we'll buy around Hilda.
Speaker 1: Don on Bloomberg Radio.
Speaker 2: All right, everybody, we've got just under eighteen minutes left
Speaker 2: in today's trading session.
Speaker 3: Time for the drive to the cloone on this Thursday.
Speaker 2: We've got equities up pretty much at their best levels
Speaker 2: of the session. We've seen yields also move up. I'm
Speaker 2: taking a look at a two year note with a
Speaker 2: yield of four point twenty five, just rolling over, but
Speaker 2: nonetheless certainly bump up.
Speaker 10: There.
Speaker 3: Let's get to it, though, and check in with Jeff Schwaber.
Speaker 2: He's CEEO at the institutional all Asset Management Manager excuse me,
Speaker 2: Blue Raw Capital Markets. He joins us on Zoom from
Speaker 2: Newport Beach, California. Hey, Jeff, good to have you here
Speaker 2: on Bloomberg.
Speaker 3: How are you.
Speaker 11: I'm doing great, good to see. It's an up day
Speaker 11: and real pleasure to be here. Thank you for having me.
Speaker 2: It does feel like there's some enthusiasm, maybe some calming down,
Speaker 2: but it's kind of been wacky when if you think
Speaker 2: about where their markets are thinking rates are going to go,
Speaker 2: it just kind of changes what it feels like from
Speaker 2: day to day, week to week. Having said that, you
Speaker 2: play a lot in the real estate space, and I'm
Speaker 2: curious about what you are seeing specifically in terms of
Speaker 2: opportunities or signs of caution.
Speaker 11: Yeah. Sure, well, I'll tell you. It's been a tale
Speaker 11: of two cities.
Speaker 12: We had a little bit of a draw down and
Speaker 12: necessary correction in real estate as the Fed went into
Speaker 12: a really aggressive hawkish cycle, but it was really expected.
Speaker 12: If you look at institutional real estate, the average cap
Speaker 12: rate is probably around four percent and the riskless rate ten.
Speaker 12: Your treasuries we're covering at one or two for years
Speaker 12: and years, and then after all the hikes, riskless rate
Speaker 12: went up to four percent. So you almost had to
Speaker 12: have a decompression to create a necessary return premium for
Speaker 12: something that has greater risks than something backed by the
Speaker 12: full faith and credit of the federal government. So that's occurred,
Speaker 12: and we're really setting up for a nice little bullish
Speaker 12: scenario here.
Speaker 2: We believe, well, as you know better than most real estate,
Speaker 2: it's not all the same bag, if you will. I mean,
Speaker 2: there's residential, there's office. You know, the worries on the
Speaker 2: office space. We're thinking a lot about real estate. I
Speaker 2: think about Sam Zell, what a player in terms of that,
Speaker 2: and of course his passing today. But we've been talking
Speaker 2: a lot about real estate generally when you break it
Speaker 2: down logistics, warehousing, multi apartment dwellings, if you will, single
Speaker 2: family homes. I mean, where is it that you guys
Speaker 2: are seeing some of the opportunities. I mean, if I
Speaker 2: look at your blue rock total income and real estate
Speaker 2: fun you guys have been beating most of your peers
Speaker 2: on an average basis annually over the last five years.
Speaker 2: So I'm curious where you are putting new money to work.
Speaker 2: Where are you holding back on?
Speaker 11: Yeah, no, that's the smartest question you could ask.
Speaker 12: You're right, the devil's always in the details, and you
Speaker 12: can't throw a blanket over something as diversus real estate
Speaker 12: and make generalizations. We are extremely underweight office and retail,
Speaker 12: and our highest conviction sectors are the industrial sector, multifamily
Speaker 12: and single family rentals, as well as some debt in
Speaker 12: that space with Freddie Mack et cetera, and also some
Speaker 12: specialty sectors like life sciences and data storage. With regard
Speaker 12: to industrial, for example, it's been probably the hottest sector
Speaker 12: for the past five or ten years, and we think
Speaker 12: it will be for the next five or ten and
Speaker 12: it's really fueled by the parabolic growth in e commerce.
Speaker 12: We probably need a billion or two additional square feed
Speaker 12: in the next four or five years of industrial real
Speaker 12: estate to satisfy the demand.
Speaker 11: And frankly, you can't build it.
Speaker 12: You can't build it fast enough, and rental bumps are
Speaker 12: probably five x the historic norm of two or three
Speaker 12: percent right now.
Speaker 3: I am curious too.
Speaker 2: You know this all that age, you know, location, location, location,
Speaker 2: so on something like industrial, and we're seeing it pop
Speaker 2: up around the country. But is there an geographical play
Speaker 2: or I'm assuming when they're building industrial they're going to
Speaker 2: put it in places that make sense in terms of
Speaker 2: serving the e commerce market, so that maybe location isn't such.
Speaker 3: A big thing.
Speaker 11: Yeah, No, you hit the hit the former certainly.
Speaker 12: So in real estate, there's this there's this whole expression
Speaker 12: that and they refer to it as the smile markets,
Speaker 12: and so picture a map of the United States and
Speaker 12: draw smiles. So you go from Washington State, you know,
Speaker 12: down the West coast and then across the Sun Belt
Speaker 12: and then up the Eastern seaboard, and e commerce and
Speaker 12: multi family are really driven by demographic in migration and
Speaker 12: that is by far excelling most in the Sunmelt, you know,
Speaker 12: probably from the Phoenix area over to Florida, Texas, Florida,
Speaker 12: up the Eastern seaboard to maybe the Carolinas, et cetera.
Speaker 12: And it's really almost a two to three x growth
Speaker 12: curve and people who have focused there, like Blue Rock,
Speaker 12: have have significantly outperformed.
Speaker 2: What about in terms of the raid environment, how do
Speaker 2: you think about that specifically and the impact you know,
Speaker 2: we certainly have seen it initially really kind of drag
Speaker 2: down the residential space, certainly the single family homes.
Speaker 3: It feels like we're kind of working our way through it,
Speaker 3: if you will. But what about for you all overall?
Speaker 12: Yeah, it's a couple of things to consider. The first
Speaker 12: is if you're utilizing leverage. We do, but rather conservatively
Speaker 12: we're probably twenty nine percent levern in our institutional fund
Speaker 12: that is exposed to like three hundred and ninety billion
Speaker 12: of real estate. It's the largest real estate and interval
Speaker 12: fund out there. But so obviously the the lower your leverage,
Speaker 12: the higher you're spread, and the more positive leverage you
Speaker 12: can bring to the table. So you're not juicing your
Speaker 12: yields significantly right now when you look at the spreads
Speaker 12: between debt and cap rates, and as net operating income
Speaker 12: increases occur and that spread increases, you'll see more dynamic
Speaker 12: features in that regard. But with regard to a rising
Speaker 12: rate environment, if you go back to nineteen seventy eight,
Speaker 12: for example, when the private Institutional index was incepted, we've
Speaker 12: had nine rising rate and inflationary periods, and in nine
Speaker 12: of nine in the following three to five years, because
Speaker 12: real estate is the hedge against inflation, classically, you've seen
Speaker 12: outperformance from the average returns of nine and a half
Speaker 12: or ten percent by somewhere between twenty and fifty percent up.
Speaker 12: You generally get twelve to fourteen percent coming out of
Speaker 12: that rising rate cycle after the cap rate decompression. So
Speaker 12: we're hunkered down in positioning for what we believe is
Speaker 12: going to be a significant leg up over the next
Speaker 12: few years.
Speaker 2: You said, you're extremely underweight office, extremely underweight retail office.
Speaker 2: I recently was out there on the West coast at
Speaker 2: Milkin and moderated a panel that was specifically on real estate,
Speaker 2: and we talked a lot about office. The theme that
Speaker 2: seemed to come away from it was that if you
Speaker 2: are in top tier properties, you're going to be fine
Speaker 2: in office, but if you're in you know, lower tier
Speaker 2: locations geographically or just lower types of properties, it's going
Speaker 2: to be tougher for you. How are you seeing the
Speaker 2: office play and is there at some point though an
Speaker 2: entry point for you? And just got about forty five seconds.
Speaker 11: Yes, sir, I think you hit it again.
Speaker 12: Office comes in so many forms of CBD, central business district,
Speaker 12: multi tenant office, downtown, skyline, suburbia, et cetera.
Speaker 2: It is, it is.
Speaker 12: It's like a stock pickers market, it's a building pickers market.
Speaker 12: You have to be, like you said, in the in
Speaker 12: the high gateway msas and in higher occupancy areas. But
Speaker 12: we do believe anytime anybody said office is going to
Speaker 12: be is going to be dead.
Speaker 11: It's been misproven.
Speaker 12: So there will be entries, but we're staying our hand
Speaker 12: as we see right now.
Speaker 2: All right, well, this was fun. Come back soon, love
Speaker 2: to continue the conversation. Joining us Jeff Schwaber, you see
Speaker 2: you at the institutional all asset manager, blue Rock Capital Markets.
Speaker 2: Joining us from the West Coast on Zoom from Newport Beach, California.
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