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Speaker 1: This is Bloomberg Business. Wait inside from the reporters and

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Speaker 1: editors who bring you America's most trusted business magazine, plus

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Speaker 1: global business, finance and tech news. The Bloomberg Business Week

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Speaker 1: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.

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Speaker 2: Let's get into it because we did hear from Jays Powell,

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Speaker 2: and we've got a great twosome to talk about it.

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Speaker 2: Bloomberg News International Economics and Policy correspondent and deadhead Michael McKee.

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Speaker 3: He's got his ticket.

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Speaker 4: On his phone.

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Speaker 3: I saw him walk in. He's here.

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Speaker 4: I walked in listening to last year's concert.

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Speaker 3: Oh did you realize you reading?

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Speaker 4: Yeah? The opening song? Do you remember that?

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Speaker 5: I heard? I heard I didn't go to last year's concert.

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Speaker 5: It was a mistake, and I heard it was amazing.

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Speaker 4: What was the quest? The opening song was playing in

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Speaker 4: the band.

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Speaker 5: I just hope there's no welcoming in the rain tonight

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Speaker 5: or tomorrow.

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Speaker 4: Okay, tomorrow is the problem.

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Speaker 3: Yeah, all right, guys, let's focus focus kids.

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Speaker 2: All right, Let's get Bloomberg News Economics editor Molly Smith.

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Speaker 2: She's also here in our Bloomberg Interactive Broker studio.

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Speaker 3: So Mike, let's start with you.

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Speaker 2: I did take a kind of peek into TV and

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Speaker 2: we basically got the same thing from JP.

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Speaker 4: Yeah.

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Speaker 6: Well, his opening statement was exactly the same, almost word

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Speaker 6: for word. They just moved a few paragraphs around, but

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Speaker 6: they didn't change any of the language to keep it

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Speaker 6: as we got from his opening statement last Wednesday. So

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Speaker 6: I think he walked in there going I'm not going

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Speaker 6: to make news, and he generally succeeded, other than perhaps

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Speaker 6: on the Grateful Dead or Dead in Company.

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Speaker 3: But that was pretty funny.

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Speaker 4: But he did he did. Uh yeah, you know.

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Speaker 6: I talked to some people at the FED who were

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Speaker 6: very disappointed that I and Steve Leisman from CNBC, the

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Speaker 6: two big dead heads of the FED Press Corps, did

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Speaker 6: not ask him at the press conference.

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Speaker 5: I can't believe you guys didn't either. Leasman plays in

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Speaker 5: like a dead cover band.

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Speaker 3: Yes, and for me to do it or why.

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Speaker 6: It just didn't seem like the the right atmosphere at

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Speaker 6: the time when I got called on.

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Speaker 4: I mean, Matt and I had worked on questions.

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Speaker 6: That would I know, what would incorporate the lyrics, but

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Speaker 6: we didn't get a chance.

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Speaker 2: But you got to kind of know the room and

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Speaker 2: if he's not in the mood for it, right, like

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Speaker 2: you just kind of pass on it.

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Speaker 3: Okay, So nothing new, Molly, come on in on this.

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Speaker 3: Are you a deadhead? Have you ever been to a

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Speaker 3: dead concert?

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Speaker 4: I have not, and we can remedy that we would.

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Speaker 7: Yeah, tonight, I'll hear my schedule.

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Speaker 3: I'm gonna tell you it would be quite an experience

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Speaker 3: knowing who's going. Okay, So what did you take away

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Speaker 3: from j Powell?

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Speaker 7: Yeah, pretty boring today, honestly, which I think is Yeah,

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Speaker 7: to Mike's point, mission accomplished on that. He really did

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Speaker 7: get grilled a lot on both sides about the Fed's

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Speaker 7: response to the banking failures in March, and I was

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Speaker 7: kind of surprised, thinking, you know, we just had last

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Speaker 7: week's FED meeting and that was like a couple you know,

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Speaker 7: the big surprise sing like there are another two rate

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Speaker 7: hikes possibly to come this year and that should be

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Speaker 7: top of mind for most lawmakers, and that inflation is still,

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Speaker 7: you know, pretty rampant and affecting their constituents pretty seriously

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Speaker 7: right now.

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Speaker 3: But they really just went hard on the banking stuff.

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Speaker 7: And I think Jay generally give us a whole lot

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Speaker 7: to work with on that would often defer to a

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Speaker 7: Vice Chair of Supervision, Michael Barr, who prepared a report

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Speaker 7: and the aftermath of SPVs collapse and also deflected some

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Speaker 7: other questions to the FDIC, which has handled some of

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Speaker 7: these banks that have since failed.

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Speaker 5: The bank failures actually was pointed out to me in

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Speaker 5: a note today by Veronique de Rugid. You know, she's

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Speaker 5: an economist at Mercadis, and you know from her perspective

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Speaker 5: the fact that the FED isn't and again this is

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Speaker 5: from her perspective, the fact that the FED hasn't been

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Speaker 5: straight with the American people about this. The condition of

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Speaker 5: the US banking system is part of the reason that

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Speaker 5: they don't have credibility with the market.

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Speaker 7: How has he not been straight with them?

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Speaker 5: Because they say the banking system in this country is

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Speaker 5: sound and resilient, and she points out that there are

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Speaker 5: some examples that clearly show it's not sound and resilient.

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Speaker 7: Yeah, but those are to be fair, would you say

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Speaker 7: those are more the exception than the rule?

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Speaker 5: Well, you asking me, or Vernique, because.

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Speaker 7: Asking you you're an intelligent guimet.

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Speaker 5: Yeah, of course, because we've only seen a couple of

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Speaker 5: bank failures and they are what six thousand banks in America.

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Speaker 7: Yeah, No, there's no systemic risk really from any of them.

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Speaker 7: It doesn't seem.

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Speaker 1: Yeah, as J.

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Speaker 4: Powell pointed out, there's some bad bank managers out there.

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Speaker 1: Yeah, you know.

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Speaker 7: He kept saying like, yeah, like overwhelmingly banks have handled

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Speaker 7: interest rate risk well that there are a few of

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Speaker 7: them that did not.

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Speaker 5: But what I'm trying to get at is why does

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Speaker 5: the FED have such little credibility. We had guests on

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Speaker 5: the cheap economists from the biggest banks on surveillance last week,

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Speaker 5: one after the other said they don't believe the Fed's

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Speaker 5: going to continue to raise rates. They think it's over history.

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Speaker 6: I mean, that's just learned behavior. The FED has always

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Speaker 6: stepped in when markets get bad. And you have a

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Speaker 6: whole generation of traders who grew up with no idea

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Speaker 6: of what it's like to have the FED on the sideline.

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Speaker 6: And you talk to the people in the old bond

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Speaker 6: vigilante days who were many years before Carol and I,

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Speaker 6: and they they knew. But the modern day folks, I mean,

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Speaker 6: the Fed's been in the markets for twenty.

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Speaker 2: Years now, but like you look at the warp function,

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Speaker 2: I mean, traders are still betting on a cut this year.

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Speaker 5: To listeners, right, warp is the world function on the

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Speaker 5: Bloomberg terminal that shows.

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Speaker 6: Expects, and they're not betting on a cut anymore this year.

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Speaker 6: As a matter of fact, they still have rates.

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Speaker 3: Not in December.

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Speaker 4: Nope, nope, not in December.

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Speaker 7: Most of those are fully priced out.

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Speaker 4: Here's here's the confusion.

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Speaker 6: And this is a I run under this a lot

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Speaker 6: because people don't understand how WARP works.

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Speaker 5: Yeah, because I agree with Carrol, look at me, like

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Speaker 5: there's gonna be one.

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Speaker 6: Carrol applied rate. It goes up to a high in

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Speaker 6: November of five point three to two percent hike together,

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Speaker 6: and then it gets and then it gets cut down

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Speaker 6: back to where we are now. So in essence, it's

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Speaker 6: not cutting rates from where we are now. And it

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Speaker 6: presumes that you get up there also.

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Speaker 5: I get I get you, Carol.

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Speaker 3: I know, all right, get this boy out of here.

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Speaker 3: You're out of here. Not Matt, Mike, Okay.

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Speaker 2: But the point is, and Remy made the point too

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Speaker 2: in our simulcast, that markets look at where yields have

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Speaker 2: kind of eased from the movement up higher earlier. So

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Speaker 2: it does feel like within the trade investors see something

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Speaker 2: different versus what the FEDS.

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Speaker 4: Well, the interesting thing is, and I've asked a lot.

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Speaker 3: Of used to like you, Mike, I'm just gonna put

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Speaker 3: it out there.

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Speaker 4: Always loved juice, sweetie.

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Speaker 6: I've asked a lot of strategists about this, and basically

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Speaker 6: what you have is the general belief among strategists at

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Speaker 6: all the major banks and everywhere else is that the

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Speaker 6: FED is not going to cut rates. They're basing their

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Speaker 6: buying strategy in the markets on the idea the FED

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Speaker 6: is not going to cut rates. But if inflation comes

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Speaker 6: down fast, either because the FED does a super job

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Speaker 6: or because we have a recession, then the FED would

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Speaker 6: be cutting rates. And that is a possibility. So you

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Speaker 6: put some money in options on that possibility. You take

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Speaker 6: out an option on a FED rate cut in December. Yeah,

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Speaker 6: I mean, Ira Jersey's really good on this. If you

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Speaker 6: if you have him on, he's really good at how

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Speaker 6: this is not really real?

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Speaker 3: Also, a man's blane warped me.

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Speaker 2: I can't, I can't, can I so respect Mike?

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Speaker 7: Can you know?

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Speaker 3: I would have the.

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Speaker 5: Money, by the way, and said, what the FED is

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Speaker 5: doing right now is essentially passive tightening. That's the phrase

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Speaker 5: he used, right, So I to your point. Right, if

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Speaker 5: inflation comes down and they don't that they just leave

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Speaker 5: them where they are. That's passive tightening. And I wonder

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Speaker 5: if some members of the Fed things that think that's

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Speaker 5: what they should be doing right now.

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Speaker 7: Well, Jay did today then again say that not only

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Speaker 7: is this not a skip, which he said last week,

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Speaker 7: but then today he said it's not a pause. So

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Speaker 7: I don't really know what what the terminology is. But

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Speaker 7: either way, they did not hike rates last week, and

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Speaker 7: the idea right now is we're going to see all

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Speaker 7: the data, how it comes in and make our next

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Speaker 7: move based off of that. So yeah, I like that

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Speaker 7: passively tightening phrase as well, and that does seem to

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Speaker 7: be what they have been communicating to us.

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Speaker 3: Do you feel like Jape Halmke has been pretty clear.

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Speaker 3: I mean, I feel like they're data dependent. I believe that.

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Speaker 6: Yeah, I mean they've they've been clear to a point.

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Speaker 6: I mean, they're no longer trying to give straight guidance

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Speaker 6: We're going to do X on such and such a date.

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Speaker 6: They don't want the markets to price and cuts, so

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Speaker 6: they put in the high dot plot and they talk

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Speaker 6: about the fact that we're going to raise rates more.

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Speaker 4: But they're not putting a date on it. They're not

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Speaker 4: putting conditions on it.

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Speaker 6: What they need to see, anything's possible, which is a

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Speaker 6: very unusual condition for people on Wall Street, let alone.

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Speaker 4: You know, whatever age they are, however long they've been around.

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Speaker 3: Might he just get this right?

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Speaker 4: Oh sure, there's a chance they can get it right.

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Speaker 6: And everybody will be gobsmacked by that and say that's

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Speaker 6: never happened before, which is why they don't think they'll

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Speaker 6: accomplish it, because it's never happened before.

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Speaker 5: Someday they'll write books about nineteen ninety four. They sort

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Speaker 5: of did, but they have that was the only other

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Speaker 5: soft land. Well, yeah, they didn't have a big inflation.

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Speaker 5: They were trying to get out in front of inflation,

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Speaker 5: and they did and they raise rates and they destroyed

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Speaker 5: the bond market, but they did not destroy the economy.

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Speaker 3: So passive tightening is that what we're calling it?

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Speaker 5: What was it? That's what Raphael Bostic said, tightening, passive tightening.

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Speaker 5: I mean they don't actually raise rates, but the real

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Speaker 5: rate goes higher as inflation comes down.

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Speaker 7: And Jay also did say today too, he doesn't really

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Speaker 7: know where the terminal rate is going to be like

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Speaker 7: what that rate is that accomplishes getting maximum employment plus

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Speaker 7: price stability? So who the heck? I we could have

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Speaker 7: two more hikes, we could have two cuts, we could

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Speaker 7: have nothing.

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Speaker 5: So by the way, we should have more hikes from

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Speaker 5: the BOE and the ECB because their rates will still

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Speaker 5: well on to watch.

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Speaker 6: That's tune in tomorrow as our friends at the Bank

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Speaker 6: of England have their media.

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Speaker 3: They are having a tough fight there when it comes

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Speaker 3: to inflation. All right, love you both.

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Speaker 2: Michael McKey, international economics and Policy correspondent at Bloomberg News.

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Speaker 2: Off to a dead concert. Molly Smith, Economics editor at

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Speaker 2: Bloomberg News. Not off to a dead concert, that is.

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Speaker 3: Too This is Bloomberg.

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Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us

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Speaker 1: live weekday afternoons from three to six Eastern Listen on

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Speaker 1: Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business App,

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Speaker 1: or watch us live on YouTube right now.

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Speaker 3: It's not too right.

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Speaker 5: What are incredible musicians?

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Speaker 3: But do you love the Daryl Hall with Daryl I

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Speaker 3: mean with the long hair.

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Speaker 5: Yeah, yeah, me too for sure.

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Speaker 3: But then he got a cut.

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Speaker 5: It was a little bit of a mullet. I like that.

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Speaker 3: Yeah I can. Yeah, I don't like mullets. All right.

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Speaker 2: So, Matt, we talked yesterday about a story that concerns

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Speaker 2: have been highlighted when it comes to the private credit world,

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Speaker 2: pressures of higher interest.

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Speaker 3: Rates, what it means for those borers floating rates. As

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Speaker 3: you said, Oh my gosh.

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Speaker 5: Safe to say that you and I are both pretty

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Speaker 5: well obsessed with private credit and I am.

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Speaker 2: I am anywhere where I feel like I don't have

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Speaker 2: a total handle on it, and everybody's.

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Speaker 3: Like, don't worry, it's going to be okay.

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Speaker 2: So let's get into the private world, which includes of

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Speaker 2: course private equity with us. As Kate Ambrose, CEO of

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Speaker 2: the Global Private Capital Association, it's a nonprofit, nonprofit, independent

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Speaker 2: membership organization representing private capital investors who manage some two

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Speaker 2: trillion in assets globally. We're talking about a KKR, We're

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Speaker 2: talking about Bill and Melinda Gates Cousters, we're talking about

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Speaker 2: the former Silicon Valley Bank, academic institutions, and more so

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Speaker 2: looking forward to our conversation and she's here in our

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Speaker 2: Bloomberg interaction.

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Speaker 5: Is this essentially a lobbying group or when I see

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Speaker 5: nonprofit together with private equity, like alarm bells go off?

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Speaker 5: Why does private equity need a nonprofit?

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Speaker 4: Right?

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Speaker 8: Love that question, love it. We are a very unique organization.

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Speaker 8: The organization was founded as the Emerging Markets Private Equity

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Speaker 8: Association by the IFC of the World Bank over twenty

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Speaker 8: years ago.

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Speaker 3: Oh my god.

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Speaker 8: It was founded by the first LPs in funds in

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Speaker 8: emerging markets and grew to some prominence at the period

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Speaker 8: of time that there was this idea that emerging markets

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Speaker 8: was going to be an asset class in and of itself,

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Speaker 8: that was going to be faster demograph younger demographics, faster growth,

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Speaker 8: that would be a rising time that would lift all boats,

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Speaker 8: and grew to some significant size. I joined in twenty

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Speaker 8: nineteen as CEO and really to reposition the organization for

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Speaker 8: the future, to reflect what's going on in the world today.

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Speaker 8: The terminology emerging markets is forty years out of date.

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Speaker 8: You know, it's forty years old. It's just completely outdated.

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Speaker 8: China's the world's second lard economy, so many of the opportunities

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Speaker 8: is so much capital flows from these places in the world.

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Speaker 8: So we are now the Global Private Capital Association. The

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Speaker 8: regions that we cover our Asia, Latin America, Africa, Central

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Speaker 8: and Eastern Europe, and the Middle East. But our board

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Speaker 8: includes for example Bill Ford of General Atlantic, one of

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Speaker 8: the world's largest private equity firms as you mentioned KKR.

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Speaker 8: Others are members. We have for example Tamasek, the Singapore

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Speaker 8: sovereign from their chief Investment.

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Speaker 5: Office are fascinating. So essentially it was the organization was

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Speaker 5: started to kind of shepherd growth through private equity in

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Speaker 5: these markets exactly.

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Speaker 3: And the reposition so nonprofit, is that wrong?

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Speaker 8: We are So we are the same structure as a

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Speaker 8: national Venture capital Association in the US or a private

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Speaker 8: equity council, which indeeder lobby groups. The beauty, and this

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Speaker 8: is why we use the word independent, is that because

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Speaker 8: we cover all of these markets, we're not there to

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Speaker 8: lobby on behalf of lower tax rates for or preferential

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Speaker 8: regulatory treatment for our members. We're really there to evangelize

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Speaker 8: capital and educate on the opportunities across global markets. And

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Speaker 8: the last thing I'll say is we are not a

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Speaker 8: US lobby group. We are truly a global organization. Again,

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Speaker 8: our board includes the leading fund managers from India, Africa,

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Speaker 8: Latin America, both global firms.

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Speaker 3: And local So where's your funding come from?

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Speaker 8: Membership dues? So over three hundred member firms pay dues

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Speaker 8: to be members of the organization. We have a very

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Speaker 8: dynamic research platform. I can throw some data off the

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Speaker 8: top of my head in terms of fundraising and trends

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Speaker 8: and as I private exit.

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Speaker 5: But so, but what I'm getting is that the World

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Speaker 5: Bank said we need to shepherd growth through this mechanism

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Speaker 5: private equity, and a good way to do that just

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Speaker 5: put together an organization to support it. I guess what.

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Speaker 8: So the IFC is the International Finance Corporation and they

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Speaker 8: were limited partners in funds, so they actually put money

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Speaker 8: into funds.

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Speaker 5: See.

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Speaker 8: And there's a whole universe of development finance institutions, including

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Speaker 8: the US DFC, which is what the US uses to

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Speaker 8: compete with China. Frankly around the world putting money into funds.

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Speaker 8: It really it's more commercial than sort of what we're describing.

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Speaker 8: But we are a nonprofit organization.

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Speaker 2: YESDFC, the Development Finance Corporation. Okay, so if you had

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Speaker 2: to say your top priority in your organization, number one,

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Speaker 2: just one?

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Speaker 3: What is it?

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Speaker 9: Wow?

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Speaker 5: That's tough.

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Speaker 8: There's kind of twins, so I may cheat. One is

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Speaker 8: to just re educate the world on the opportunities and

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Speaker 8: the realities and the risks of investing in these markets.

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Speaker 8: And the second would be to influence capital towards greater

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Speaker 8: long term, inclusive growth and environmental private capital, yes, crivate capital.

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Speaker 3: I am obsessed, Matt, We're both obsessed.

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Speaker 2: And I feel like I keep saying this last couple

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Speaker 2: of times I've been at Milka and we've done broadcasts.

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Speaker 2: Doesn't seem like anybody cares about the public markets. It's

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Speaker 2: all about the private markets, private credit, private.

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Speaker 5: Equall those people you're hanging around the wrong people public

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Speaker 5: But well, yes.

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Speaker 2: Yes, but there's also right but so but I mean,

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Speaker 2: tell us about from your perspective, because I think there's

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Speaker 2: some nervousness in terms of the private capital world, especially

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Speaker 2: as we see rates going out that you know, there

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Speaker 2: doesn't feel like there's as much transparency and that that

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Speaker 2: could be problematic interesting transancy.

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Speaker 8: But well, okay, great, I mean absolutely, the scale of

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Speaker 8: capital is remarkable, and this is sort of private capital,

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Speaker 8: private capital exactly. For example, last year alone one point

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Speaker 8: three trillion, you know, it's one point two one point

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Speaker 8: three but critically, that's just what's raised by fund managers.

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Speaker 8: You've got to throw in there all the Canadian pension plans.

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Speaker 8: By the way, CPP is also on our board of

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Speaker 8: directors as his future fund from Australia. It's trillions and

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Speaker 8: trillions of dollars of liquidity. It's just so that the

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Speaker 8: scale of money that is availa. You've got all the

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Speaker 8: Chinese billionaires, you've got family offices.

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Speaker 5: You know, there's so much everybody wants in right now.

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Speaker 5: Because the thing is, there's also so much talk of

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Speaker 5: the opportunity in private credit. It's become uh, kind of

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Speaker 5: the darling of investors really from retail up now.

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Speaker 8: Right Well, I was speaking across all private private capital

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Speaker 8: strategies in private equity, venture capital, infrastructure, real assets. So

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Speaker 8: there's a lot in there.

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Speaker 3: What's really hot right now.

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Speaker 8: So the two Well, you're mentioning private credit, which absolutely

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Speaker 8: is a huge driver. So if I had to say

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Speaker 8: a strategy that's going really quickly, I'd say private credit.

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Speaker 8: And there was fourteen billion dollars in private credit fundraising

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Speaker 8: last year. KKR had a big Asia private credit fund,

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Speaker 8: Apollo had a big private credit fund, big manager in

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Speaker 8: India's raising one point six billion for their private credit

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Speaker 8: fund just focused on India. Then the other I would

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Speaker 8: highlight two other big drivers particularly in our markets, climate

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Speaker 8: and everything anything sustainability focused, huge driver.

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Speaker 3: Seriously absolutely different from the ESG.

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Speaker 8: Absolutely absolutely huge driver. And I would make this critical

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Speaker 8: distinction ESG. It's kind of like the working with terminology

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Speaker 8: like emerging markets. It can mean anything, right, what is he?

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Speaker 8: What is impact? I mean, the definitions.

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Speaker 5: Really are there. There's a lot of resulais.

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Speaker 8: Particularly it's funny when you say, you know transparency. I

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Speaker 8: believe that there's actually a greater opportunity for transparency and

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Speaker 8: private capital strategies because you can see what's in portfolios.

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Speaker 8: You can see you can look at the portfolio company.

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Speaker 3: Level, not every portfolio.

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Speaker 8: Well, in the I guess I would say in the

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Speaker 8: markets that we represent going in.

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Speaker 2: But if you're a pension fund, you can look at it, right, Yeah,

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Speaker 2: I mean.

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Speaker 7: Good.

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Speaker 8: So I'm speaking specifically to the markets that we're in,

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Speaker 8: and in the markets that we're in, you know governance,

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Speaker 8: governance and transparency and you know going in and cleaning

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Speaker 8: up that type of stuff from the outset, and there's

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Speaker 8: so much leverage. So I don't know, when you're thinking

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Speaker 8: from a risk perspective, you're thinking about the amount of

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Speaker 8: leverage that's been put on.

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Speaker 2: If KKR Apollo has a fun I don't necessarily know

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Speaker 2: everything that's in it.

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Speaker 8: You know, here's another driver, ID would point right though, Yeah,

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Speaker 8: I honestly can't answer that.

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Speaker 1: No.

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Speaker 5: I think Carol and I both have been grappling with

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Speaker 5: UH trying to value the entire size of the private

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Speaker 5: credit market, for example, and that data is difficult for us.

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Speaker 8: Private credit is going to be a much less transparent

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Speaker 8: than private equity. Correct, yes, because in private equity you're

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Speaker 8: talking about typically investments and so. But private credit is

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Speaker 8: absolutely less private equity.

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Speaker 2: If you're not if you're getting into private firms, I

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Speaker 2: guess there's announcements.

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Speaker 8: There has to be, like to say that the deal

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Speaker 8: portfolio is on the website. And I would make another point,

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Speaker 8: which is one of the things that I find really

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Speaker 8: exciting about what I do in the opportunity. The way

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Speaker 8: the industry is changing just in the space of the

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Speaker 8: last five years. The level of accountability and the shift

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Speaker 8: in thinking in private capital globally is remarkable. You look

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Speaker 8: at you know, the examples of is being pushed out

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Speaker 8: because even a hint of impropriety, there is so much

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Speaker 8: more focus on long term reputation because let's face it,

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Speaker 8: you know one bad step reputationally is you know, it

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Speaker 8: has a major impact and look at exactly and then

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Speaker 8: but I do wonder about private equity concentration and fields

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Speaker 8: and we've talked about it with healthcare or you know,

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Speaker 8: in vet service.

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Speaker 3: I mean there's a lot of concentration.

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Speaker 8: Well, I got to say, just not in the markets

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Speaker 8: that I focus on. So this is our platform, which

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Speaker 8: is basically that there is such a scale of capital

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Speaker 8: availability invested, the leverage ratios, there's virtually no leverage in

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Speaker 8: the markets we represent. Each is a huge Again, you know,

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Speaker 8: there's very little leverage, and you're investing in rather than

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Speaker 8: sort of trading portfolio company important to manager to manager,

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Speaker 8: You're investing in things from the bottom.

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Speaker 3: Come back soon.

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Speaker 2: Kate Ambrose, CEO at the Global Private Capital Association, Here

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Speaker 2: in studio.

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Speaker 1: Right here on Bloomberg, you're listening to the Bloomberg Business

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00:20:57,600 --> 00:21:01,480
Speaker 1: Week podcast. Catch us live afternoons from three to six

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Speaker 1: Eastern on Bloomberg Radio, the Bloomberg Business app, and YouTube.

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445
00:21:08,640 --> 00:21:13,480
Speaker 1: flagship New York station, Just say Alexa playing Bloomberg eleven thirty.

446
00:21:14,880 --> 00:21:15,080
Speaker 3: Hey.

447
00:21:15,119 --> 00:21:17,800
Speaker 2: Earlier this year, Jeff Green we caught up with and

448
00:21:17,800 --> 00:21:20,600
Speaker 2: he's been reporting how women gained thirty four seats on

449
00:21:20,640 --> 00:21:22,320
Speaker 2: the boards of S and P five hundred companies in

450
00:21:22,359 --> 00:21:23,720
Speaker 2: the first two months of the year. It was the

451
00:21:23,760 --> 00:21:26,359
Speaker 2: strongest start since at least twenty nineteen, bolstered by the

452
00:21:26,440 --> 00:21:30,000
Speaker 2: naming of three female chief executive officers officers. Matt I

453
00:21:30,040 --> 00:21:32,000
Speaker 2: will say, I will be so happy when we stop

454
00:21:32,080 --> 00:21:35,280
Speaker 2: counting women on boards, CEOs and all that good stuff.

455
00:21:35,320 --> 00:21:39,639
Speaker 5: Well, I'll be happy when the market punishes you for

456
00:21:39,800 --> 00:21:42,119
Speaker 5: not having the diversity that you need, right, because the

457
00:21:42,160 --> 00:21:45,359
Speaker 5: idea is that if you increase diversity on your board

458
00:21:45,440 --> 00:21:49,320
Speaker 5: in your company, then you will grow your revenues and

459
00:21:49,480 --> 00:21:52,159
Speaker 5: also make you more money and profits.

460
00:21:52,280 --> 00:21:54,679
Speaker 3: Diversity means financial So at.

461
00:21:54,560 --> 00:21:59,120
Speaker 5: Some point, you know, assuming that that's true, good companies

462
00:21:59,119 --> 00:22:01,280
Speaker 5: will have diverse boards words and those that don't have

463
00:22:01,320 --> 00:22:04,000
Speaker 5: diverse boards won't do as well. Ask the idea, right,

464
00:22:04,000 --> 00:22:04,480
Speaker 5: So let's.

465
00:22:04,320 --> 00:22:06,000
Speaker 3: See what our next guest has to say. She's got

466
00:22:06,040 --> 00:22:07,879
Speaker 3: a front row to a front row seat to all

467
00:22:07,920 --> 00:22:08,080
Speaker 3: of this.

468
00:22:08,359 --> 00:22:11,840
Speaker 2: Heather Spielsberry is chief operating officer at Fifty to Fifty

469
00:22:11,920 --> 00:22:15,160
Speaker 2: Women on Boards. It's a nonprofit committed to quote, integrating

470
00:22:15,200 --> 00:22:17,879
Speaker 2: diversity and inclusion into the fabric of corporate governance. I've

471
00:22:17,880 --> 00:22:20,280
Speaker 2: got that from their website. She's with us on zoom

472
00:22:20,320 --> 00:22:23,480
Speaker 2: from LA. Sorry about the frivolity, it's just one of

473
00:22:23,480 --> 00:22:24,200
Speaker 2: those days, Heather.

474
00:22:24,280 --> 00:22:25,320
Speaker 3: Good to have you here.

475
00:22:25,440 --> 00:22:28,159
Speaker 2: It's not frivolous when we talk about the importance of

476
00:22:28,200 --> 00:22:31,239
Speaker 2: diversity on boards direct companies. Tell us a little bit

477
00:22:31,240 --> 00:22:35,920
Speaker 2: about your organization and whether or not we're making progress here.

478
00:22:37,119 --> 00:22:37,439
Speaker 10: Sure.

479
00:22:37,520 --> 00:22:39,440
Speaker 11: Well, first of all, thank you so much for having

480
00:22:39,480 --> 00:22:41,560
Speaker 11: me and for having fifty to fifty Women on Boards.

481
00:22:41,560 --> 00:22:44,359
Speaker 11: It's great to be here with you today and appreciate

482
00:22:44,400 --> 00:22:48,399
Speaker 11: that introduction. That was fantastic. So we're a nonprofit organization that,

483
00:22:48,520 --> 00:22:50,560
Speaker 11: like you said, helps elevate women in the pipeline to

484
00:22:50,600 --> 00:22:53,879
Speaker 11: corporate board service. And we do this through educational programs

485
00:22:54,200 --> 00:22:57,119
Speaker 11: for corporations to ensure that they understand the importance of

486
00:22:57,160 --> 00:22:59,000
Speaker 11: having a diverse board and what it means for them

487
00:22:59,119 --> 00:23:03,800
Speaker 11: from profitability standpoint, productivity, and also workforce engagement. And then

488
00:23:03,840 --> 00:23:06,640
Speaker 11: we also invite companies to then bring their women employees

489
00:23:06,680 --> 00:23:09,480
Speaker 11: and clients into the fold and our in person strategic

490
00:23:09,520 --> 00:23:12,480
Speaker 11: networking events that are held throughout the year across the

491
00:23:12,520 --> 00:23:17,760
Speaker 11: globe in the United States, Mexico, Canada, Europe, Athens, Greece,

492
00:23:17,960 --> 00:23:21,960
Speaker 11: and Tokyo, Japan. So that's our way of making sure

493
00:23:22,000 --> 00:23:25,000
Speaker 11: that people understand what it means to have a diverse

494
00:23:25,040 --> 00:23:27,840
Speaker 11: board and why it's so important. And to your point earlier,

495
00:23:27,880 --> 00:23:30,280
Speaker 11: I heard you talking, but it is sad that we're

496
00:23:30,320 --> 00:23:33,840
Speaker 11: still talking about gender. But until we get there, I

497
00:23:33,840 --> 00:23:36,679
Speaker 11: think we have to reinforce why it's so important to have.

498
00:23:36,800 --> 00:23:40,080
Speaker 2: But as Bad says, if we you know we McKinley's

499
00:23:40,119 --> 00:23:42,520
Speaker 2: been doing research for years. I mean I think I

500
00:23:42,520 --> 00:23:44,320
Speaker 2: have a child as old as do you know what's

501
00:23:44,320 --> 00:23:44,960
Speaker 2: been doing research.

502
00:23:45,000 --> 00:23:47,200
Speaker 5: I'll go back. Funny, Carol and I have been working

503
00:23:47,200 --> 00:23:50,480
Speaker 5: together for twenty years, and about twenty years ago, Mindy

504
00:23:50,520 --> 00:23:53,080
Speaker 5: Grossman I think told us both this story about when

505
00:23:53,080 --> 00:23:54,959
Speaker 5: she was on the board at Nike and they were like,

506
00:23:55,280 --> 00:23:57,199
Speaker 5: we need to sell more shoes to women, and she

507
00:23:57,280 --> 00:23:59,520
Speaker 5: looked around the room and she was the only female

508
00:23:59,520 --> 00:24:01,440
Speaker 5: there and she's like, well, maybe if you get more

509
00:24:01,440 --> 00:24:04,040
Speaker 5: of me, you could sell more shoes to these women.

510
00:24:04,280 --> 00:24:07,439
Speaker 5: So that reinforced my idea, that made me into a

511
00:24:07,520 --> 00:24:10,760
Speaker 5: kind of gender diversity evangelist. I've been saying since then,

512
00:24:10,960 --> 00:24:13,400
Speaker 5: if you want to sell more shoes to women, put

513
00:24:13,400 --> 00:24:14,520
Speaker 5: more women on your board.

514
00:24:14,640 --> 00:24:16,359
Speaker 11: Right, Is that true?

515
00:24:16,600 --> 00:24:19,439
Speaker 5: Is that proving to be true? Is it proving to work?

516
00:24:20,840 --> 00:24:21,080
Speaker 12: Yeah?

517
00:24:21,119 --> 00:24:24,840
Speaker 11: It is, And it's important to note that it's we

518
00:24:25,000 --> 00:24:27,960
Speaker 11: start with women because women are still lacking on corporate boards,

519
00:24:27,960 --> 00:24:31,159
Speaker 11: and women of color of course, so once we can

520
00:24:31,200 --> 00:24:34,040
Speaker 11: get there, then we can talk about other underrepresented groups.

521
00:24:34,240 --> 00:24:36,320
Speaker 11: We're not even there yet, So I think our point

522
00:24:36,359 --> 00:24:38,679
Speaker 11: is really to elevate women in the pipeline because women

523
00:24:38,800 --> 00:24:41,520
Speaker 11: tend to bring diversity as well with them, so they'll

524
00:24:41,520 --> 00:24:44,800
Speaker 11: bring diverse candidates into the fold from a leadership standpoint

525
00:24:44,800 --> 00:24:47,840
Speaker 11: and also a board service standpoint. So I think that's

526
00:24:48,080 --> 00:24:50,520
Speaker 11: the goal. And what she was trying to say was

527
00:24:50,520 --> 00:24:52,520
Speaker 11: it can't just be her in the room. And she's right.

528
00:24:53,080 --> 00:24:56,200
Speaker 11: We know from our research and we look at the

529
00:24:56,200 --> 00:24:59,800
Speaker 11: wrustle three thousand companies, but there's still sixty companies that

530
00:24:59,840 --> 00:25:02,200
Speaker 11: have zero women, and there's still three hundred and sixty

531
00:25:02,200 --> 00:25:04,800
Speaker 11: four that only have one woman. And that's not a cohort.

532
00:25:04,960 --> 00:25:06,080
Speaker 11: That's not enough to help.

533
00:25:06,200 --> 00:25:07,840
Speaker 3: Why why Heather, Why?

534
00:25:07,880 --> 00:25:10,520
Speaker 2: And going back to the point if the research has

535
00:25:10,560 --> 00:25:13,880
Speaker 2: been there for such a long time about the importance

536
00:25:13,880 --> 00:25:17,200
Speaker 2: of diversity and what it can mean financially. I mean,

537
00:25:17,240 --> 00:25:20,359
Speaker 2: I've always feel like, follow the money. Everybody follows the money,

538
00:25:20,400 --> 00:25:22,560
Speaker 2: So why aren't we following the money if it really

539
00:25:22,720 --> 00:25:24,359
Speaker 2: has a financial impact.

540
00:25:25,000 --> 00:25:27,199
Speaker 11: The thing we hear time and time again is that

541
00:25:27,280 --> 00:25:30,840
Speaker 11: companies cannot find diverse candidates or can't find women candidates

542
00:25:30,840 --> 00:25:32,680
Speaker 11: to fit the exact.

543
00:25:33,440 --> 00:25:36,880
Speaker 3: Is that true, expertise or it's.

544
00:25:36,760 --> 00:25:39,600
Speaker 11: Not true, But here's what happens, And it's like anything.

545
00:25:39,640 --> 00:25:42,399
Speaker 11: I equate it to looking for a new employee, or

546
00:25:42,440 --> 00:25:44,600
Speaker 11: even when you're looking for a restaurant right when you're

547
00:25:44,600 --> 00:25:47,399
Speaker 11: so hungry you can't find anything or you don't know

548
00:25:47,440 --> 00:25:50,240
Speaker 11: where to go, because it's an automatic need and a

549
00:25:50,280 --> 00:25:53,439
Speaker 11: position to fill. But what you need to do is

550
00:25:53,480 --> 00:25:56,400
Speaker 11: to develop your board and your board governance to say, hey,

551
00:25:56,480 --> 00:26:00,040
Speaker 11: we need to develop succession planning and programming that so

552
00:26:00,080 --> 00:26:03,800
Speaker 11: and so and so is timed out or his time

553
00:26:03,880 --> 00:26:05,639
Speaker 11: serving on the board or her time serving on the

554
00:26:05,640 --> 00:26:08,000
Speaker 11: board is done. We have someone else in the pipeline

555
00:26:08,000 --> 00:26:10,440
Speaker 11: where we're going to elevate based on the expertise and

556
00:26:10,480 --> 00:26:13,200
Speaker 11: skills we're looking for, and so that way it makes

557
00:26:13,240 --> 00:26:16,119
Speaker 11: finding a candidate that much easier. It's also one of

558
00:26:16,160 --> 00:26:18,560
Speaker 11: the reasons we launched fifty Women to Watch for boards

559
00:26:18,560 --> 00:26:20,720
Speaker 11: this year was because we were tired of hearing that

560
00:26:20,800 --> 00:26:24,679
Speaker 11: excuse of we can't find qualified candidates or women of

561
00:26:24,720 --> 00:26:27,560
Speaker 11: color who fit this exact mold, and it's like they're there,

562
00:26:27,680 --> 00:26:31,520
Speaker 11: they exist. There is a list that we've launched yesterday

563
00:26:31,560 --> 00:26:35,640
Speaker 11: where you can search by primary expertise, industry, race, and ethnicity.

564
00:26:36,160 --> 00:26:38,000
Speaker 11: It's all there for you to search to be able

565
00:26:38,040 --> 00:26:40,960
Speaker 11: to find these vetted to candidates that we're hoping that

566
00:26:41,040 --> 00:26:44,200
Speaker 11: these corporations that still are lacking women can tap into

567
00:26:44,320 --> 00:26:46,360
Speaker 11: and use it as opposed to saying we can't find

568
00:26:46,400 --> 00:26:47,200
Speaker 11: the right candidates.

569
00:26:48,119 --> 00:26:50,359
Speaker 5: So are you talking to corporations and showing that I mean,

570
00:26:50,400 --> 00:26:53,440
Speaker 5: obviously we're talking about your your list here, but are

571
00:26:53,480 --> 00:26:57,840
Speaker 5: you have you emailed the heads of hr every fortune

572
00:26:57,880 --> 00:26:59,399
Speaker 5: five hundred company here's the list.

573
00:27:00,200 --> 00:27:03,480
Speaker 11: Yeah, yeah, we're doing that outreach. It's tough to reach

574
00:27:03,520 --> 00:27:05,720
Speaker 11: out to every chro so sometimes you have to do

575
00:27:05,760 --> 00:27:10,080
Speaker 11: it through public listings, including their investment relations team, and

576
00:27:10,359 --> 00:27:12,960
Speaker 11: send them notes to ensure that they're aware that we're

577
00:27:13,000 --> 00:27:15,880
Speaker 11: asking them to add more women to their boards. It's

578
00:27:15,960 --> 00:27:19,400
Speaker 11: really it's an effort. It takes not only our organization,

579
00:27:19,480 --> 00:27:21,600
Speaker 11: but other organizations who are on a mission to do

580
00:27:21,640 --> 00:27:24,200
Speaker 11: the same thing, to say, hey, here's a list you

581
00:27:24,240 --> 00:27:26,359
Speaker 11: can tap into, or here's my members that you can

582
00:27:26,400 --> 00:27:29,600
Speaker 11: tap into, and collectively we've all decided that this is

583
00:27:29,640 --> 00:27:31,439
Speaker 11: the mission that we're after, and this is how we're

584
00:27:31,480 --> 00:27:34,199
Speaker 11: going to go and approach companies and encourage them to

585
00:27:34,200 --> 00:27:37,240
Speaker 11: add women and why it's so important for their business.

586
00:27:37,240 --> 00:27:39,960
Speaker 11: But again, to your point, it's an educational process, and

587
00:27:40,000 --> 00:27:43,120
Speaker 11: then part of that process is saying, here's vetted candidates

588
00:27:43,160 --> 00:27:45,480
Speaker 11: you can tap into. So, yes, that's part of the goal.

589
00:27:45,640 --> 00:27:49,480
Speaker 2: Hey, real quickly, thirty seconds, here are female CEOs or

590
00:27:49,520 --> 00:27:53,400
Speaker 2: maybe minority CEOs more likely to put women on their board?

591
00:27:53,480 --> 00:27:54,280
Speaker 3: Just very quickly.

592
00:27:54,880 --> 00:27:57,000
Speaker 11: They are, And we have research to back that up

593
00:27:57,040 --> 00:27:59,240
Speaker 11: in our when women lead research. But it is true

594
00:27:59,280 --> 00:28:01,240
Speaker 11: that when a women is the CEO, the board is

595
00:28:01,280 --> 00:28:03,879
Speaker 11: more diverse, and the workplace culture is more diverse, and

596
00:28:03,880 --> 00:28:06,880
Speaker 11: they're more apps to bringing more women up with them

597
00:28:06,880 --> 00:28:10,040
Speaker 11: in the fold and diverse candidates and underrepresented groups.

598
00:28:10,080 --> 00:28:12,480
Speaker 2: Well, really cool to check in with you so appreciate it.

599
00:28:12,880 --> 00:28:15,760
Speaker 2: Heather Spilsbery. She's chief operating officer at fifty to fifty

600
00:28:15,800 --> 00:28:18,920
Speaker 2: Women on Boards, joining us on Zoom from Los Angeles.

601
00:28:18,960 --> 00:28:21,040
Speaker 2: As we said, it's a nonprofit and they are all

602
00:28:21,040 --> 00:28:23,800
Speaker 2: about diversity inclusion when it comes to corporate governors. I

603
00:28:23,800 --> 00:28:25,960
Speaker 2: mean on board, you can measure it. You know exactly

604
00:28:25,960 --> 00:28:27,960
Speaker 2: who's on a corporate board. If you're a publicly held

605
00:28:28,080 --> 00:28:30,399
Speaker 2: entity or even most entities, right you can check out

606
00:28:30,440 --> 00:28:32,199
Speaker 2: the board and get an idea if it's diverse.

607
00:28:32,440 --> 00:28:33,080
Speaker 5: Absolutely.

608
00:28:34,720 --> 00:28:38,320
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us

609
00:28:38,360 --> 00:28:42,360
Speaker 1: live weekday afternoons from three to six Easter on Bloomberg Radio,

610
00:28:42,560 --> 00:28:45,840
Speaker 1: the Bloomberg Business App and YouTube. You can also listen

611
00:28:45,960 --> 00:28:49,040
Speaker 1: live on Amazon Alexa from our flagship New York station,

612
00:28:49,480 --> 00:28:52,280
Speaker 1: Just say Alexa, play Bloomberg eleven thirty.

613
00:28:54,400 --> 00:29:03,040
Speaker 5: Say you on a rebel? No, we all want to

614
00:29:03,160 --> 00:29:05,160
Speaker 5: change the world. See a little bit of a Can

615
00:29:05,160 --> 00:29:05,600
Speaker 5: we play this?

616
00:29:06,240 --> 00:29:06,680
Speaker 7: What do you mean?

617
00:29:06,800 --> 00:29:08,920
Speaker 5: I feel like you don't we have to pay somebody

618
00:29:08,960 --> 00:29:11,080
Speaker 5: if we play this. I don't know why. It's specifically

619
00:29:11,080 --> 00:29:13,880
Speaker 5: the Beatles, but I feel like it's expensive to play

620
00:29:13,920 --> 00:29:14,280
Speaker 5: the Beatles.

621
00:29:14,280 --> 00:29:15,960
Speaker 3: I think you're allot to play a certain amount.

622
00:29:15,920 --> 00:29:17,280
Speaker 5: Like less than thirty seconds.

623
00:29:17,040 --> 00:29:18,520
Speaker 3: So you know what's really important. We're going to talk

624
00:29:18,520 --> 00:29:19,800
Speaker 3: about a revolution that's going on.

625
00:29:20,040 --> 00:29:23,040
Speaker 5: Yeah, I've I've been on Reddit lately. I know what's

626
00:29:23,080 --> 00:29:23,480
Speaker 5: going on.

627
00:29:24,080 --> 00:29:26,720
Speaker 2: So let's get to it, because this story it has

628
00:29:26,760 --> 00:29:29,480
Speaker 2: to do with really kind of a changing world, whether

629
00:29:29,560 --> 00:29:33,200
Speaker 2: it's the ad market online, whether it's AI.

630
00:29:33,360 --> 00:29:34,800
Speaker 3: There's a lot of stuff.

631
00:29:34,720 --> 00:29:36,640
Speaker 2: That we're trying to figure out in a very new

632
00:29:36,720 --> 00:29:40,640
Speaker 2: environment for the social media world. And our Joshua Brustin

633
00:29:40,680 --> 00:29:43,400
Speaker 2: gets into it in the new upcoming issue of Bloomberg

634
00:29:43,440 --> 00:29:44,400
Speaker 2: business Week magazine.

635
00:29:44,400 --> 00:29:45,160
Speaker 3: So let's get to it.

636
00:29:45,640 --> 00:29:48,320
Speaker 2: Joshua of course here with us along with the editor

637
00:29:48,360 --> 00:29:50,959
Speaker 2: of Bloomberg business Week magazine, Jil Whatever. Joshua, by the way,

638
00:29:51,000 --> 00:29:54,680
Speaker 2: is Bloomberg business Week Technology Editor. So the story is

639
00:29:54,760 --> 00:29:56,760
Speaker 2: very telling, right as we talk so much about AI

640
00:29:56,880 --> 00:29:59,320
Speaker 2: Joel and trying to understand.

641
00:29:58,840 --> 00:30:01,240
Speaker 3: The importance of data going forward. It's important to AI

642
00:30:02,440 --> 00:30:03,200
Speaker 3: generative AI.

643
00:30:03,800 --> 00:30:06,800
Speaker 10: Yeah, and then there's Reddit, which is just I think,

644
00:30:06,960 --> 00:30:08,800
Speaker 10: you know, for the past couple of years, become the

645
00:30:08,840 --> 00:30:12,360
Speaker 10: great hope of the Internet. It is, you know, as

646
00:30:12,440 --> 00:30:13,160
Speaker 10: we've seen.

647
00:30:13,000 --> 00:30:15,520
Speaker 5: Weird so weird. I remember it is no one's hope.

648
00:30:16,040 --> 00:30:18,880
Speaker 10: You know what the genius of Reddit though, was that

649
00:30:18,960 --> 00:30:22,120
Speaker 10: it reminded us of how great the Internet was, like

650
00:30:22,320 --> 00:30:25,040
Speaker 10: in two thousand and two, before there were social networks

651
00:30:25,040 --> 00:30:27,520
Speaker 10: and stuff, and it just was it's so basic, you know,

652
00:30:27,560 --> 00:30:29,040
Speaker 10: it just puts it all out there.

653
00:30:29,200 --> 00:30:29,520
Speaker 3: Yeah.

654
00:30:29,920 --> 00:30:34,240
Speaker 5: I learned everything I know about crypto originally on Reddit,

655
00:30:34,280 --> 00:30:37,440
Speaker 5: like before anyone before it was one thousand dollars bitcoin.

656
00:30:38,160 --> 00:30:40,720
Speaker 5: I went on Reddit, I joined the subreddit, I got

657
00:30:40,720 --> 00:30:43,680
Speaker 5: to know people. I bought my first bitcoin through the subreddit,

658
00:30:43,720 --> 00:30:45,000
Speaker 5: you know, for six hundred bucks.

659
00:30:45,120 --> 00:30:46,280
Speaker 10: Yeah, what's your handle?

660
00:30:46,320 --> 00:30:46,400
Speaker 11: Like?

661
00:30:46,480 --> 00:30:49,120
Speaker 10: Leather jacket? I can't tell you. No inside joke there

662
00:30:49,120 --> 00:30:52,960
Speaker 10: from yesterday. What struck me about this though?

663
00:30:53,200 --> 00:30:54,440
Speaker 5: Podcast Also, if.

664
00:30:54,360 --> 00:30:57,880
Speaker 10: You were going to swallow the internet, Reddit would be

665
00:30:57,880 --> 00:30:59,920
Speaker 10: a pretty great place to start, and that sort of

666
00:31:00,080 --> 00:31:05,200
Speaker 10: it's kicked off this current controversy and reminder Reddits still

667
00:31:05,280 --> 00:31:07,920
Speaker 10: not a publicly traded company, which has also been part

668
00:31:07,920 --> 00:31:08,080
Speaker 10: of this.

669
00:31:08,200 --> 00:31:12,880
Speaker 9: So, Josh, what happened, Well, what happened started in April

670
00:31:12,960 --> 00:31:14,920
Speaker 9: when Reddit said it was going to start charging for

671
00:31:15,000 --> 00:31:20,520
Speaker 9: API usage. This is basically how you would systemically ingest

672
00:31:20,600 --> 00:31:24,360
Speaker 9: Reddit data for your own for your own programs and

673
00:31:24,920 --> 00:31:27,840
Speaker 9: As you mentioned, one big use of the Reddit API

674
00:31:28,160 --> 00:31:32,000
Speaker 9: is to take data and use it to train AI models.

675
00:31:32,080 --> 00:31:34,240
Speaker 9: It's part of the model that is used to train

676
00:31:34,360 --> 00:31:37,280
Speaker 9: chat GPT. I think Google's model uses it as well.

677
00:31:37,800 --> 00:31:42,080
Speaker 9: And it's just this big data set of people talking.

678
00:31:42,120 --> 00:31:43,720
Speaker 9: And if you want to teach a computer to talk

679
00:31:43,800 --> 00:31:46,080
Speaker 9: like a person, Reddit it's one place to start.

680
00:31:47,040 --> 00:31:49,680
Speaker 10: So Reddit wants to make sure smart.

681
00:31:49,880 --> 00:31:52,760
Speaker 5: I guess start training with Reddit. I mean, actually, my

682
00:31:52,800 --> 00:31:56,320
Speaker 5: wife works for a company I won't name it that

683
00:31:56,880 --> 00:32:00,360
Speaker 5: scrapes places like Twitter and Reddit for data. They do

684
00:32:00,440 --> 00:32:04,040
Speaker 5: that for corporations, so that for example, this is not

685
00:32:04,120 --> 00:32:06,920
Speaker 5: a client. I'm just using it. If PEPSI wants to know,

686
00:32:07,400 --> 00:32:10,800
Speaker 5: you know, how people on Twitter feel about them. This

687
00:32:10,880 --> 00:32:14,080
Speaker 5: company goes and uses the Twitter API and scrapes all

688
00:32:14,120 --> 00:32:16,200
Speaker 5: the mentions and figures out you know, which are positive,

689
00:32:16,200 --> 00:32:17,800
Speaker 5: which are negative, and which are neutral.

690
00:32:17,880 --> 00:32:21,280
Speaker 10: So yeah, yeah, that's actually learning a lot about Matt.

691
00:32:21,320 --> 00:32:24,800
Speaker 10: You know, I'm glad that the revolution was hinted at

692
00:32:24,840 --> 00:32:27,000
Speaker 10: the beginning because yeah, you know, and.

693
00:32:27,000 --> 00:32:29,160
Speaker 9: What Reddit wants to do is make your wife's company

694
00:32:29,200 --> 00:32:31,880
Speaker 9: pay for that, yes, because they're exactly some commercial use

695
00:32:31,880 --> 00:32:36,840
Speaker 9: from this. And at first the announcement was made in April.

696
00:32:37,080 --> 00:32:39,520
Speaker 9: You know, people said, huh, that's an interesting look at

697
00:32:39,520 --> 00:32:41,920
Speaker 9: like what might happen with AI in the future. And

698
00:32:41,960 --> 00:32:44,640
Speaker 9: then it became clear that this was also going to

699
00:32:44,680 --> 00:32:47,880
Speaker 9: impact a lot of developers that make apps on Reddit

700
00:32:47,920 --> 00:32:52,360
Speaker 9: that Reddit users really like today and Reddit users really

701
00:32:52,360 --> 00:32:56,720
Speaker 9: didn't like that, And after some negotiations, if you can

702
00:32:56,760 --> 00:32:59,600
Speaker 9: call it that, with the company, the company refused to

703
00:32:59,680 --> 00:33:03,200
Speaker 9: change its policies, and the entire site or big parts

704
00:33:03,240 --> 00:33:06,040
Speaker 9: of the site went dark last week.

705
00:33:06,360 --> 00:33:09,560
Speaker 5: So I mean, for example, Carol uses Twitter, not through

706
00:33:10,040 --> 00:33:13,440
Speaker 5: Twitter dot com, but she has some third party tweet

707
00:33:13,480 --> 00:33:16,040
Speaker 5: deck that she uses, and tweet Deck I guess would

708
00:33:16,080 --> 00:33:18,080
Speaker 5: hook up to Twitter with an API as well. And

709
00:33:18,120 --> 00:33:22,360
Speaker 5: you're talking about people using Reddit with such third party apps, right.

710
00:33:22,480 --> 00:33:25,520
Speaker 9: Yeah, exactly. There are some very popular Reddit readers that

711
00:33:25,880 --> 00:33:28,440
Speaker 9: ingest threadit and give you a better or give you

712
00:33:28,440 --> 00:33:32,960
Speaker 9: a different user interface. Those apps run ads that they

713
00:33:33,000 --> 00:33:35,880
Speaker 9: don't share the revenue with Reddit, so Reddit wants some

714
00:33:35,920 --> 00:33:39,400
Speaker 9: of that revenue. But also the API is used to

715
00:33:39,480 --> 00:33:43,760
Speaker 9: build tools that things like the volunteer moderators that make

716
00:33:43,840 --> 00:33:47,440
Speaker 9: Reddit run use just in their day to day use.

717
00:33:47,480 --> 00:33:50,440
Speaker 9: And that was really kind of what moderators said, if

718
00:33:50,440 --> 00:33:52,160
Speaker 9: you take this away from us, we can't do our

719
00:33:52,280 --> 00:33:54,480
Speaker 9: jobs and we're giving you free labor.

720
00:33:54,600 --> 00:33:57,960
Speaker 10: So, which is key part theree just rights, but Reddit

721
00:33:57,960 --> 00:33:59,800
Speaker 10: power users or something else using the site in the

722
00:33:59,840 --> 00:34:03,240
Speaker 10: way that seems more like employment than leisure, except for

723
00:34:03,280 --> 00:34:05,800
Speaker 10: the getting paid part. Like this is one of the

724
00:34:05,840 --> 00:34:08,520
Speaker 10: amazing things about the Internet. You find a community people

725
00:34:08,520 --> 00:34:12,120
Speaker 10: who care and they will do all that work for free. Yeah, right,

726
00:34:12,800 --> 00:34:15,400
Speaker 10: which also is I'm sure part of but you know,

727
00:34:15,480 --> 00:34:17,960
Speaker 10: the AI swallowing it all likes.

728
00:34:18,280 --> 00:34:20,240
Speaker 9: Yeah, at the heart of it, this is a conflict

729
00:34:20,239 --> 00:34:22,879
Speaker 9: between two groups of people who said, I don't want

730
00:34:22,880 --> 00:34:24,920
Speaker 9: to do something without getting paid for it or getting

731
00:34:25,080 --> 00:34:26,640
Speaker 9: you know, I don't want to do something for free.

732
00:34:26,680 --> 00:34:29,719
Speaker 9: If you're going to exploit me. The moderator is being exploited.

733
00:34:29,440 --> 00:34:32,040
Speaker 3: By everybody else is going to get paid and being.

734
00:34:31,800 --> 00:34:35,000
Speaker 9: Exploited by the AI companies, the or the third party

735
00:34:35,000 --> 00:34:36,040
Speaker 9: app companies or whoever.

736
00:34:36,200 --> 00:34:36,440
Speaker 6: I love.

737
00:34:36,480 --> 00:34:39,080
Speaker 2: There's a quote in the professor at the Institute for

738
00:34:39,120 --> 00:34:42,239
Speaker 2: Advanced Study, and I guess was in the Biden Administration's

739
00:34:42,239 --> 00:34:44,880
Speaker 2: Office for Technology and Science Policy. People are anticipating that

740
00:34:44,920 --> 00:34:47,080
Speaker 2: there's a change in the economy of the internet company, right,

741
00:34:47,480 --> 00:34:50,799
Speaker 2: we're finding the ad model can just go so far, right,

742
00:34:50,840 --> 00:34:53,960
Speaker 2: and now we're increasingly we knew data was worth something, right,

743
00:34:54,000 --> 00:34:57,279
Speaker 2: We've all been trying to figure out who ultimately benefits

744
00:34:57,440 --> 00:34:59,680
Speaker 2: from all that data collection, right, and now we're kind

745
00:34:59,719 --> 00:35:02,440
Speaker 2: of getting to a whole new level of it because

746
00:35:02,440 --> 00:35:06,080
Speaker 2: it's needed to make generative AI so much smarter, right,

747
00:35:06,520 --> 00:35:08,240
Speaker 2: And that's kind of what it gets into on a bigger,

748
00:35:08,239 --> 00:35:08,920
Speaker 2: broader level.

749
00:35:09,280 --> 00:35:09,560
Speaker 4: Yeah.

750
00:35:09,600 --> 00:35:11,800
Speaker 9: Absolutely, I think a lot of people are very nervous

751
00:35:11,800 --> 00:35:15,120
Speaker 9: about the changes coming in the Internet, and there's a

752
00:35:15,200 --> 00:35:19,560
Speaker 9: question about who creates value online and who is going

753
00:35:19,600 --> 00:35:21,920
Speaker 9: to be compensated for that value and how.

754
00:35:22,560 --> 00:35:25,759
Speaker 10: Okay, so what does this mean for that IPO that

755
00:35:25,800 --> 00:35:26,760
Speaker 10: never quite happened.

756
00:35:27,840 --> 00:35:30,319
Speaker 9: Well, I think it's fair to say, although Reddit will

757
00:35:30,320 --> 00:35:33,920
Speaker 9: not say that part of the initial reason to do

758
00:35:34,239 --> 00:35:37,480
Speaker 9: the changes were to shore up its business as it

759
00:35:37,640 --> 00:35:42,360
Speaker 9: looks ahead to this IPO, and I think how it

760
00:35:42,440 --> 00:35:44,919
Speaker 9: impacts it really depends on the outcome of this. There's

761
00:35:45,320 --> 00:35:48,680
Speaker 9: real concern out there that if the moderators continue to

762
00:35:48,719 --> 00:35:51,319
Speaker 9: be in revolt, that Reddit won't work as well and

763
00:35:51,480 --> 00:35:53,879
Speaker 9: might not be as good of a business going forward.

764
00:35:53,920 --> 00:35:56,320
Speaker 9: It might kind of fail to function as a service.

765
00:35:56,680 --> 00:35:58,920
Speaker 10: What it reminds me of a little bit is the

766
00:35:59,040 --> 00:36:01,600
Speaker 10: Dungeons and Dragon cover story that we did not so

767
00:36:01,640 --> 00:36:06,960
Speaker 10: long ago. Because has Bro also tweaked the licensing agreement

768
00:36:07,239 --> 00:36:11,719
Speaker 10: before the big blockbuster came out right and the nerds

769
00:36:11,760 --> 00:36:15,600
Speaker 10: did not like that. There was a revolt online. Then

770
00:36:15,640 --> 00:36:18,360
Speaker 10: Hasbru ultimately had to back down, but there was so

771
00:36:18,480 --> 00:36:22,200
Speaker 10: much money at stake, and here we are again. I

772
00:36:22,239 --> 00:36:23,960
Speaker 10: won't call Reddit users nerds.

773
00:36:23,640 --> 00:36:24,400
Speaker 5: But they are nerds.

774
00:36:24,440 --> 00:36:27,920
Speaker 10: Okay, well you said it, but it basically creates this

775
00:36:28,000 --> 00:36:32,440
Speaker 10: moment where you've got, you know, a platform that everyone

776
00:36:32,480 --> 00:36:34,560
Speaker 10: has turned to. I mean, this is the hope of

777
00:36:34,600 --> 00:36:37,279
Speaker 10: what it was, back to the future, bet that the

778
00:36:37,280 --> 00:36:39,480
Speaker 10: future of the Internet actually maybe looked more like Reddit,

779
00:36:39,719 --> 00:36:42,239
Speaker 10: and all of a sudden, the underlying value proposition is

780
00:36:42,280 --> 00:36:45,640
Speaker 10: the thing that is at risk. It is pretty crazy,

781
00:36:45,680 --> 00:36:46,120
Speaker 10: Mike Drop.

782
00:36:48,640 --> 00:36:49,719
Speaker 3: It's really kind of right.

783
00:36:49,800 --> 00:36:53,240
Speaker 2: It's kind of heavy thinking of like how this moves forward.

784
00:36:53,400 --> 00:36:58,000
Speaker 5: Well, AI is the the you know, the dawn of

785
00:36:58,080 --> 00:37:01,920
Speaker 5: generative AI had made us all realize, oh, Reddit is

786
00:37:02,000 --> 00:37:02,800
Speaker 5: worth something.

787
00:37:03,040 --> 00:37:06,040
Speaker 10: I mean, if there's real value there, highly entertaining, right.

788
00:37:06,080 --> 00:37:09,120
Speaker 5: Yeah, I mean I've loved Reddit for over a decade.

789
00:37:09,719 --> 00:37:10,480
Speaker 3: You still use it.

790
00:37:10,560 --> 00:37:13,279
Speaker 5: I use it all the time, like literally every day

791
00:37:13,360 --> 00:37:17,719
Speaker 5: on multiple devices. But I always thought it was I

792
00:37:17,719 --> 00:37:21,399
Speaker 5: always thought it was fairly worthless. Although I guess now

793
00:37:21,400 --> 00:37:23,400
Speaker 5: that I think about it, it need answers for me,

794
00:37:23,520 --> 00:37:24,240
Speaker 5: so many questions.

795
00:37:24,520 --> 00:37:27,200
Speaker 10: Time your your eyeballs, think about how much that's worth?

796
00:37:27,440 --> 00:37:28,120
Speaker 1: Right? Yeah?

797
00:37:29,120 --> 00:37:32,799
Speaker 3: What is Reddit thinking? Joshua? Inside? Internally as they work

798
00:37:32,840 --> 00:37:33,200
Speaker 3: this way?

799
00:37:33,520 --> 00:37:36,480
Speaker 9: This through well, Reddit has said there have been some

800
00:37:36,520 --> 00:37:38,800
Speaker 9: memos that have come out from inside the company where

801
00:37:39,120 --> 00:37:42,439
Speaker 9: the executives said, you know, this is these flaps happen

802
00:37:42,480 --> 00:37:45,240
Speaker 9: every once in a while. Reddit is a very restive community,

803
00:37:45,560 --> 00:37:47,880
Speaker 9: and the idea is let's keep it. Let's keep our

804
00:37:47,920 --> 00:37:51,239
Speaker 9: heads down, you know, we'll take our lumps and a

805
00:37:51,280 --> 00:37:53,719
Speaker 9: month from now everything will be back to normal and

806
00:37:53,760 --> 00:37:56,120
Speaker 9: we can, you know, move forward with this plan. The

807
00:37:56,160 --> 00:37:59,879
Speaker 9: economics will be better and problem solved or at least,

808
00:37:59,920 --> 00:38:01,720
Speaker 9: you know, problem lessened.

809
00:38:02,320 --> 00:38:05,520
Speaker 5: Wait, wait, who are the evil overlords that run Reddit?

810
00:38:06,080 --> 00:38:08,440
Speaker 5: Like Alexis Ohanian is gone right now, He's like a

811
00:38:08,480 --> 00:38:12,799
Speaker 5: women's soccer guy. So who who are the bosses? Who's

812
00:38:12,840 --> 00:38:14,520
Speaker 5: the corporate face of Reddit?

813
00:38:14,880 --> 00:38:18,279
Speaker 9: So the CEO of Reddit is is Steve Huffman. The

814
00:38:18,320 --> 00:38:21,680
Speaker 9: other co founder and Reddit, as you might remember, was

815
00:38:21,719 --> 00:38:25,080
Speaker 9: bought by Conde Nass soon after it was founded, and

816
00:38:25,120 --> 00:38:28,040
Speaker 9: it is now an independent subsidiary or it is it

817
00:38:28,080 --> 00:38:31,760
Speaker 9: is Its majority owner remains Advanced Publications, which is Conde's

818
00:38:31,800 --> 00:38:32,440
Speaker 9: parent company.

819
00:38:33,080 --> 00:38:37,400
Speaker 10: Cool, So how do we think they might attempt to

820
00:38:37,520 --> 00:38:40,480
Speaker 10: navigate this, Josh? Like, what are their options really? And

821
00:38:40,640 --> 00:38:43,239
Speaker 10: they You're right, they have gone through this before. I'm

822
00:38:43,239 --> 00:38:46,799
Speaker 10: thinking of remember the anti work kerfuffle where like the

823
00:38:46,840 --> 00:38:52,160
Speaker 10: community sort of ousted the moderator that it had, right, Like,

824
00:38:52,440 --> 00:38:55,279
Speaker 10: there's been tensions like this that have simmered before. But

825
00:38:56,000 --> 00:38:57,680
Speaker 10: how do you think they go about navigating this?

826
00:38:57,800 --> 00:39:00,200
Speaker 9: Yeah, this this thing, this kind of thing happened from

827
00:39:00,200 --> 00:39:01,920
Speaker 9: time to time. And I think that's what Reddit is

828
00:39:02,040 --> 00:39:05,440
Speaker 9: betting on. And Reddit says it's going to build a

829
00:39:05,440 --> 00:39:08,520
Speaker 9: lot of moderator tools or has already released some that

830
00:39:08,560 --> 00:39:11,760
Speaker 9: will replace some of these some of these third party

831
00:39:11,800 --> 00:39:13,880
Speaker 9: tools that might not be able to function if they

832
00:39:13,880 --> 00:39:16,359
Speaker 9: have to pay for the APIs. And I think that

833
00:39:16,360 --> 00:39:18,839
Speaker 9: they'll hope that moderators will find out that, oh, these

834
00:39:18,880 --> 00:39:21,919
Speaker 9: things work. Okay, maybe this isn't such a big deal

835
00:39:21,960 --> 00:39:25,560
Speaker 9: after all. You know, I love Reddit, and I turns

836
00:39:25,560 --> 00:39:27,799
Speaker 9: out I can continue to do my job, and you know,

837
00:39:27,960 --> 00:39:30,400
Speaker 9: and they got mad and then they get better and

838
00:39:30,760 --> 00:39:32,560
Speaker 9: things calmed down for a little while until the next

839
00:39:32,600 --> 00:39:33,359
Speaker 9: time they get mad.

840
00:39:33,520 --> 00:39:37,359
Speaker 10: And what about for the AI companies that are at

841
00:39:37,360 --> 00:39:39,080
Speaker 10: their attempting to swallow the Internet?

842
00:39:39,200 --> 00:39:41,239
Speaker 3: Like, what will they pay up?

843
00:39:41,640 --> 00:39:43,200
Speaker 10: What do you think that dialogue looks like?

844
00:39:43,880 --> 00:39:47,759
Speaker 9: It certainly seems like the AI companies are preparing to

845
00:39:48,080 --> 00:39:52,680
Speaker 9: pay in some way. You know, Reddit is not the

846
00:39:52,800 --> 00:39:56,359
Speaker 9: number one source of material, but there may be some

847
00:39:56,440 --> 00:39:58,640
Speaker 9: licensing deals worked out, and I don't think I think

848
00:39:58,640 --> 00:40:00,000
Speaker 9: the economics that are.

849
00:40:00,040 --> 00:40:03,319
Speaker 5: I would provide it. That's no, You've just provided you

850
00:40:03,360 --> 00:40:06,000
Speaker 5: with another question. What is the number one source of material?

851
00:40:06,160 --> 00:40:06,840
Speaker 5: If not Reddit?

852
00:40:07,600 --> 00:40:09,440
Speaker 10: Basically wonder like where do these lives come from?

853
00:40:10,960 --> 00:40:12,160
Speaker 3: Would be going?

854
00:40:12,560 --> 00:40:16,040
Speaker 5: Is Wikipedia a better source? I mean, what are these

855
00:40:16,280 --> 00:40:17,320
Speaker 5: AI models?

856
00:40:17,400 --> 00:40:19,839
Speaker 10: Just all of it?

857
00:40:19,920 --> 00:40:20,600
Speaker 5: No hierarchy.

858
00:40:21,280 --> 00:40:23,640
Speaker 9: Yeah, it's it's an immense it's a large range. I

859
00:40:23,719 --> 00:40:25,040
Speaker 9: actually don't know off the top of my head what

860
00:40:25,080 --> 00:40:28,600
Speaker 9: the number one is number one sources. But there's you know,

861
00:40:28,680 --> 00:40:31,680
Speaker 9: there's like thousands of websites that it's scraping and you know,

862
00:40:31,760 --> 00:40:33,200
Speaker 9: putting together sure millions.

863
00:40:33,239 --> 00:40:35,360
Speaker 2: Even what does this mean for Elon and Twitter, potentially

864
00:40:36,719 --> 00:40:38,279
Speaker 2: you're trying to figure it out too well.

865
00:40:38,600 --> 00:40:42,000
Speaker 9: One thing that this shows is that you know, Reddit

866
00:40:42,080 --> 00:40:45,480
Speaker 9: users have some power over the site, whereas Twitter users don't. Really.

867
00:40:45,600 --> 00:40:47,600
Speaker 9: I mean, people are mad at Elon, and Elon's like, well,

868
00:40:47,680 --> 00:40:50,359
Speaker 9: go go ahead, you can leave if you want, but

869
00:40:50,440 --> 00:40:52,200
Speaker 9: they can't shut Twitter down and.

870
00:40:52,160 --> 00:40:54,880
Speaker 5: They don't leave. By the way, if you look at

871
00:40:54,880 --> 00:40:57,080
Speaker 5: the data, actually use to increase.

872
00:40:57,160 --> 00:40:59,080
Speaker 3: Everybody lost their checks and we're like, okay.

873
00:40:58,920 --> 00:41:02,279
Speaker 5: Everybody said, like when when Trump got elected, people are like,

874
00:41:02,320 --> 00:41:04,400
Speaker 5: I'm gonna move out of this country if Trump gets elected,

875
00:41:04,840 --> 00:41:07,800
Speaker 5: fast forward, nobody moved out. Same thing about with Twitter.

876
00:41:07,800 --> 00:41:09,759
Speaker 5: You know, they said I'm gonna quit Twitter if Elon

877
00:41:09,840 --> 00:41:11,399
Speaker 5: must take They're all still there.

878
00:41:12,280 --> 00:41:15,920
Speaker 10: I'm genuine curious here when you go to Reddit, like

879
00:41:15,960 --> 00:41:18,000
Speaker 10: what are the sub threads that you traffic in?

880
00:41:18,760 --> 00:41:21,400
Speaker 5: I feel like that's such a private question, which is

881
00:41:21,440 --> 00:41:24,200
Speaker 5: why I won't even tell you my handle. Like the

882
00:41:24,280 --> 00:41:26,520
Speaker 5: last thing in the world I want is for anybody

883
00:41:26,600 --> 00:41:27,959
Speaker 5: to see my money.

884
00:41:28,480 --> 00:41:30,839
Speaker 2: I've worked with Matt for so long and he said

885
00:41:30,880 --> 00:41:33,440
Speaker 2: something earlier, and I'm like, you still surprised me twenty

886
00:41:33,480 --> 00:41:34,480
Speaker 2: plus years in coming.

887
00:41:34,600 --> 00:41:37,719
Speaker 9: He's surprises you don't maintain multiple Twitter or redd it

888
00:41:37,760 --> 00:41:42,560
Speaker 9: had I do have, I do have family friendly.

889
00:41:44,640 --> 00:41:47,160
Speaker 5: I mean, so I look at so I look and

890
00:41:47,640 --> 00:41:50,120
Speaker 5: I look at like a leather jackets thing. Although for

891
00:41:50,160 --> 00:41:54,160
Speaker 5: that I use even more embarrassing forums than Reddit, like, uh.

892
00:41:53,920 --> 00:41:55,360
Speaker 10: We learned yesterday, Matt.

893
00:41:56,080 --> 00:41:58,839
Speaker 5: I'm kind of obsessed with leather jackets. I'm also kind

894
00:41:58,880 --> 00:42:01,239
Speaker 5: of obsessed with leather boots and shoes, and Reddit has

895
00:42:01,239 --> 00:42:03,080
Speaker 5: a very good forum for for boots.

896
00:42:03,640 --> 00:42:06,319
Speaker 10: So we actually didn't ask you about this yesterday. In

897
00:42:06,440 --> 00:42:11,960
Speaker 10: video CEO Jensen very very much one owns the leather jacket.

898
00:42:12,200 --> 00:42:14,680
Speaker 10: Where do you rank his leather jacket like critique?

899
00:42:14,840 --> 00:42:17,600
Speaker 5: I don't get more than one though exactly so I

900
00:42:17,640 --> 00:42:20,359
Speaker 5: don't They didn't look so amazing. I don't think he's

901
00:42:20,360 --> 00:42:23,880
Speaker 5: getting them from like the best shinky horse hide tanneries

902
00:42:23,920 --> 00:42:24,400
Speaker 5: in Japan.

903
00:42:24,560 --> 00:42:25,399
Speaker 10: You should reach out.

904
00:42:25,640 --> 00:42:27,280
Speaker 9: I think that was he on the Reddit forum.

905
00:42:27,440 --> 00:42:30,040
Speaker 5: Could the thing is for jackets, You've got to go

906
00:42:30,120 --> 00:42:32,880
Speaker 5: to the Fedora lounge, which is even worse.

907
00:42:34,080 --> 00:42:37,040
Speaker 10: I think I think there needs to be uh, you know,

908
00:42:37,320 --> 00:42:41,120
Speaker 10: fashion consulting with with Matt, I'll reach out to and video.

909
00:42:41,200 --> 00:42:43,359
Speaker 3: How come somebody put chaps in our ib chat? Did

910
00:42:43,440 --> 00:42:46,600
Speaker 3: you say chaps, chaps, chaps, I don't know.

911
00:42:47,320 --> 00:42:50,160
Speaker 5: Leather pants is what he's asking about. I have a

912
00:42:50,160 --> 00:42:50,960
Speaker 5: few pairs.

913
00:42:50,680 --> 00:42:53,799
Speaker 3: Of chips, you know, but that's for riding your motorcycle.

914
00:42:53,960 --> 00:42:54,640
Speaker 1: And we're good.

915
00:42:54,640 --> 00:42:58,400
Speaker 3: Are you all right? Maybe not? Okay? Talk about a revolution.

916
00:42:58,600 --> 00:42:59,319
Speaker 3: We just had one.

917
00:43:00,160 --> 00:43:02,480
Speaker 2: That's a wrap, guys, Thank you so much. Josha Brustin,

918
00:43:02,680 --> 00:43:04,600
Speaker 2: Tech editor at Bloomberg Business Week.

919
00:43:04,600 --> 00:43:06,239
Speaker 3: Here in studio long Till Webber.

920
00:43:06,280 --> 00:43:08,200
Speaker 2: The editor of Bloomberg Business Week, is Story and the

921
00:43:08,200 --> 00:43:11,920
Speaker 2: new issue a BusinessWeek magazine on newstands tomorrow, online at

922
00:43:11,920 --> 00:43:14,480
Speaker 2: Bloomberg dot com, slash business Weekend on the Bloomberg and

923
00:43:14,560 --> 00:43:15,360
Speaker 2: on leather chaps.

924
00:43:15,960 --> 00:43:21,320
Speaker 3: We're taking a break. This is Bloomberg, Um, brother Marco.

925
00:43:22,719 --> 00:43:23,440
Speaker 4: A journal.

926
00:43:24,440 --> 00:43:26,919
Speaker 5: How about you let me drived? No, no, no no, who's

927
00:43:26,960 --> 00:43:31,000
Speaker 5: going to drug honey? Please? I'll do the driving gravel.

928
00:43:31,600 --> 00:43:34,960
Speaker 3: Let's mate, I want to try it.

929
00:43:35,239 --> 00:43:37,120
Speaker 5: It's a good question time.

930
00:43:39,920 --> 00:43:42,520
Speaker 1: This is the drive to the Globe dot com.

931
00:43:42,920 --> 00:43:44,640
Speaker 4: I think we'll buy around yother.

932
00:43:44,520 --> 00:43:46,279
Speaker 1: Don on Bloomberg Radio.

933
00:43:46,320 --> 00:43:47,600
Speaker 3: All right, let's get to it, folks.

934
00:43:47,719 --> 00:43:50,400
Speaker 2: Just about eighteen minutes left in today's trading session. Bouncing

935
00:43:50,400 --> 00:43:52,719
Speaker 2: around on the equity side, another leg down, off our

936
00:43:52,800 --> 00:43:55,760
Speaker 2: highs of the session, down the most on the Nawdack

937
00:43:55,760 --> 00:43:58,360
Speaker 2: because you just heard from Charlie and Bill uh In

938
00:43:58,400 --> 00:44:00,880
Speaker 2: the meantime, we've seen rates also bout and around following

939
00:44:01,200 --> 00:44:03,320
Speaker 2: that first day of testimony from Fetcher J.

940
00:44:03,440 --> 00:44:04,480
Speaker 3: Powell up on Capitol Hill.

941
00:44:04,680 --> 00:44:06,920
Speaker 2: We get more testimony tomorrow mat but it's usually kind

942
00:44:06,920 --> 00:44:08,000
Speaker 2: of like the same old movie.

943
00:44:08,200 --> 00:44:13,440
Speaker 5: Yeah, it's always interesting to me, you know, because I

944
00:44:13,440 --> 00:44:17,720
Speaker 5: guess I love it the questions that they ask sometimes,

945
00:44:18,360 --> 00:44:21,279
Speaker 5: and I'm sure they are the most educated and well

946
00:44:21,280 --> 00:44:24,839
Speaker 5: informed people in the country, but sometimes make me lose

947
00:44:24,880 --> 00:44:27,399
Speaker 5: faith in our leaders just for a brief moment.

948
00:44:27,680 --> 00:44:31,040
Speaker 2: I used to work with who would be like really,

949
00:44:31,400 --> 00:44:34,680
Speaker 2: now I do feel like it's very political and very grandstanding, right, like, of.

950
00:44:34,560 --> 00:44:36,960
Speaker 5: Course, what I'm doing for you folks, that's an understatement.

951
00:44:37,080 --> 00:44:37,279
Speaker 3: Yeah.

952
00:44:37,320 --> 00:44:39,840
Speaker 5: The interesting thing this time is that you have so

953
00:44:39,920 --> 00:44:42,720
Speaker 5: many people out there who don't believe that the FED

954
00:44:42,880 --> 00:44:45,759
Speaker 5: is going to raise rates again, who think that this

955
00:44:45,800 --> 00:44:48,759
Speaker 5: cycle is over, even though the dot plot showed us

956
00:44:48,800 --> 00:44:51,279
Speaker 5: two more increases and pal said at the last meeting

957
00:44:51,360 --> 00:44:53,360
Speaker 5: that they were going to raise rates again. Now he

958
00:44:53,440 --> 00:44:56,800
Speaker 5: comes back and says once again that they are going

959
00:44:57,200 --> 00:45:00,479
Speaker 5: to raise rates, so they.

960
00:45:00,520 --> 00:45:01,760
Speaker 3: Like, folks, let me draw you a picture.

961
00:45:01,920 --> 00:45:04,759
Speaker 2: Yeah, let's see what the market picture is. According to

962
00:45:04,760 --> 00:45:06,719
Speaker 2: our next guest, our drive to the Closed guest on

963
00:45:06,760 --> 00:45:10,560
Speaker 2: this Wednesday is Phil Taves. He's CEO portfolio manager also

964
00:45:10,600 --> 00:45:14,239
Speaker 2: at Tave's Asset Management, also the founder of Behavioral Investing Institute,

965
00:45:14,280 --> 00:45:18,000
Speaker 2: which is an organization organization excuse me, devoted to helping

966
00:45:18,000 --> 00:45:21,360
Speaker 2: advisors manage investor behavior through market challenges, which is I

967
00:45:21,360 --> 00:45:23,920
Speaker 2: would say, a really timely thing and useful thing.

968
00:45:24,000 --> 00:45:25,840
Speaker 3: Right now. He's on Zoom in New York City.

969
00:45:26,320 --> 00:45:29,160
Speaker 2: Feel nice to have you here with Matt and myself

970
00:45:29,239 --> 00:45:33,960
Speaker 2: on business week. This market environment a lot of momentum

971
00:45:34,000 --> 00:45:37,839
Speaker 2: to the upside despite the huge short position that's out there.

972
00:45:37,840 --> 00:45:39,840
Speaker 2: When it comes to the s and P five hundred,

973
00:45:40,440 --> 00:45:43,080
Speaker 2: what would you bet more to the upside, more to

974
00:45:43,120 --> 00:45:44,640
Speaker 2: the downside? How do you see it?

975
00:45:45,480 --> 00:45:46,880
Speaker 12: Well, I don't want to ruin by the way, it's

976
00:45:46,920 --> 00:45:49,319
Speaker 12: a pleasure to be with you again always. I don't

977
00:45:49,360 --> 00:45:52,080
Speaker 12: want to ruin my reputation as a doom and gloomer,

978
00:45:52,120 --> 00:45:55,560
Speaker 12: but I guess I don't want to spoil that. But

979
00:45:55,600 --> 00:45:57,880
Speaker 12: the reality is that sometimes you just have to embrace

980
00:45:57,920 --> 00:46:00,520
Speaker 12: the boom. And I think at the moment, you know

981
00:46:00,880 --> 00:46:03,560
Speaker 12: you're right. Last couple of days we've seen a move down,

982
00:46:03,960 --> 00:46:06,920
Speaker 12: but we have such a huge rally before that, and

983
00:46:07,400 --> 00:46:09,440
Speaker 12: there's just so much money on the sidelines. I feel

984
00:46:09,440 --> 00:46:12,000
Speaker 12: like I almost bet on momentum at this moment.

985
00:46:12,080 --> 00:46:14,520
Speaker 2: Yes, sometimes I embrace a second or third glass of wine.

986
00:46:14,560 --> 00:46:17,200
Speaker 2: It's not always the best thing for me. So I'm

987
00:46:17,280 --> 00:46:19,680
Speaker 2: just curious, like, if you embrace it, is it?

988
00:46:19,719 --> 00:46:21,160
Speaker 3: Are you just writing the momentum?

989
00:46:21,280 --> 00:46:24,759
Speaker 2: It doesn't mean that fundamentally that supports that momentum.

990
00:46:24,960 --> 00:46:27,560
Speaker 12: No, I think fundamentally it doesn't support it. There's a

991
00:46:27,560 --> 00:46:31,120
Speaker 12: great word that John Kenneth Galbreath came up with, which

992
00:46:31,120 --> 00:46:34,920
Speaker 12: is bezel, from the word embezzlement, and the way Charlie

993
00:46:34,960 --> 00:46:37,440
Speaker 12: Munger uses it is the difference between the price we're

994
00:46:37,440 --> 00:46:39,799
Speaker 12: paying for assets and fundamental value. So if you ask

995
00:46:39,960 --> 00:46:42,880
Speaker 12: that question that way, then no, we don't deserve to

996
00:46:42,880 --> 00:46:45,400
Speaker 12: continue to rally because we're, you know, above where we

997
00:46:45,440 --> 00:46:48,600
Speaker 12: should be. The huge thing that I think, if historical

998
00:46:48,640 --> 00:46:51,319
Speaker 12: precedent matters, and I guess to some like maybe quarts

999
00:46:51,400 --> 00:46:56,040
Speaker 12: it doesn't, But if historical precedent matters, interest rate trends

1000
00:46:56,080 --> 00:46:59,480
Speaker 12: are really long term things. So you know, twenty five

1001
00:46:59,560 --> 00:47:02,160
Speaker 12: years latter half of the nineteenth century, and then it's

1002
00:47:02,200 --> 00:47:05,200
Speaker 12: like twenty year chunk, twenty year chunk, you know, between

1003
00:47:05,280 --> 00:47:07,440
Speaker 12: nineteen forty five and nineteen eighty one rates where we're

1004
00:47:07,440 --> 00:47:11,479
Speaker 12: going moving higher and you know, been down for forty years,

1005
00:47:11,480 --> 00:47:13,360
Speaker 12: and so why do we think that rates are just

1006
00:47:13,400 --> 00:47:16,120
Speaker 12: going to move up for eighteen months and then it's

1007
00:47:16,160 --> 00:47:18,800
Speaker 12: going to end. And also the history of inflation is different.

1008
00:47:18,840 --> 00:47:21,400
Speaker 12: The history of inflation is that inflation goes up between

1009
00:47:21,440 --> 00:47:24,120
Speaker 12: four and nine years, not eighteen months. So I think

1010
00:47:24,160 --> 00:47:26,560
Speaker 12: the longer term we're going to be probably higher for

1011
00:47:26,719 --> 00:47:28,800
Speaker 12: longer than we would want to be with rates. I

1012
00:47:28,840 --> 00:47:32,000
Speaker 12: think longer term that is a negative for potential for stocks,

1013
00:47:32,000 --> 00:47:35,280
Speaker 12: at least based on current valuations. So but ride the momentum.

1014
00:47:35,400 --> 00:47:37,800
Speaker 12: Let's go with it. There's so much cash on the sideline.

1015
00:47:37,840 --> 00:47:40,080
Speaker 5: Yeah, you're not alone.

1016
00:47:40,080 --> 00:47:42,200
Speaker 12: By the way, stop talking for sex game stax.

1017
00:47:42,320 --> 00:47:47,040
Speaker 5: Well you're not alone. I noticed today that KKR chief

1018
00:47:47,040 --> 00:47:52,280
Speaker 5: macro strategist Henry McVeigh said investors are poorly positioned for growth,

1019
00:47:52,360 --> 00:47:55,799
Speaker 5: maybe unexpected growth that's going to be stronger than the

1020
00:47:55,840 --> 00:48:00,280
Speaker 5: market thinks this year and McVeigh also said inflation maybe

1021
00:48:00,320 --> 00:48:03,759
Speaker 5: tamer than the markets expect this year, only a little bit.

1022
00:48:04,320 --> 00:48:09,120
Speaker 5: But he said that KKR is going to embrace more risk,

1023
00:48:09,200 --> 00:48:13,240
Speaker 5: at least right now in the short term. They are

1024
00:48:13,680 --> 00:48:18,560
Speaker 5: looking at more opportunities, and but I feel like there's

1025
00:48:18,600 --> 00:48:21,160
Speaker 5: a limit right to the amount of risk that you

1026
00:48:21,200 --> 00:48:25,920
Speaker 5: want to embrace. And our producer, when he was preparing

1027
00:48:26,000 --> 00:48:29,760
Speaker 5: us for today's show, said that you like Kathy Woods

1028
00:48:29,920 --> 00:48:35,160
Speaker 5: arc and I thought, that's just nuts. Is that are

1029
00:48:35,200 --> 00:48:37,680
Speaker 5: you advising people? Because that seems like, you know, putting

1030
00:48:37,719 --> 00:48:38,759
Speaker 5: it all on black twenty one.

1031
00:48:38,880 --> 00:48:40,680
Speaker 3: There's a lot of investors who don't think it's nuts

1032
00:48:40,719 --> 00:48:41,560
Speaker 3: because they've been port.

1033
00:48:41,880 --> 00:48:43,319
Speaker 4: So I did not say that.

1034
00:48:43,400 --> 00:48:45,880
Speaker 12: So anyway, what I said is that the graph for

1035
00:48:46,000 --> 00:48:47,759
Speaker 12: end video looks a lot like the graph of an

1036
00:48:48,000 --> 00:48:50,400
Speaker 12: rc ETF did back at the end of twenty twenty

1037
00:48:50,440 --> 00:48:53,080
Speaker 12: one when it was just parabolic up and then we've

1038
00:48:53,200 --> 00:48:55,839
Speaker 12: know what happened parabolic down after that. So that tends

1039
00:48:55,880 --> 00:48:57,640
Speaker 12: to me what's supporting the market right now? You've got

1040
00:48:57,760 --> 00:49:00,360
Speaker 12: just a handful of stocks up hugely, and that's what

1041
00:49:00,480 --> 00:49:01,800
Speaker 12: we all know. That's all the games of the s

1042
00:49:01,840 --> 00:49:04,000
Speaker 12: and P five hundred, So it wouldn't take much much

1043
00:49:04,040 --> 00:49:06,919
Speaker 12: to tip us lower. But you know, we actually come

1044
00:49:06,960 --> 00:49:09,360
Speaker 12: with a fully baked solution. I think what's important for

1045
00:49:09,360 --> 00:49:12,760
Speaker 12: investors is that they maintain their full equity allocation right now,

1046
00:49:13,200 --> 00:49:15,040
Speaker 12: but do it in a way that makes sense and

1047
00:49:15,080 --> 00:49:17,239
Speaker 12: addresses contingency. Take half of it and put it in

1048
00:49:17,280 --> 00:49:20,759
Speaker 12: hedge equity funds, stuff that has options underneath it that

1049
00:49:20,800 --> 00:49:23,719
Speaker 12: can appreciate if the market moves lower. So that way

1050
00:49:23,760 --> 00:49:26,319
Speaker 12: you need you're there with stock over the long haul.

1051
00:49:26,400 --> 00:49:30,680
Speaker 12: During periods of inflation, historically, stocks have done reasonably well,

1052
00:49:30,680 --> 00:49:33,120
Speaker 12: at least they've kept up with inflation much better than

1053
00:49:33,160 --> 00:49:35,400
Speaker 12: bonds have. So I think get your bond allocation, or

1054
00:49:35,440 --> 00:49:37,920
Speaker 12: get your stock allocation done if you've been avoiding doing

1055
00:49:37,960 --> 00:49:40,480
Speaker 12: it because Mike Wilson persuaded you not to just get

1056
00:49:40,480 --> 00:49:42,920
Speaker 12: your allocation done, but but do with hedge equity funds.

1057
00:49:42,960 --> 00:49:46,440
Speaker 3: Wow, smackdowns. You don't want smackdowns here? Wow, you're going

1058
00:49:46,480 --> 00:49:49,760
Speaker 3: to lock your door there, buddy, Well it's interesting.

1059
00:49:49,800 --> 00:49:53,040
Speaker 2: So then where would you put money to work in

1060
00:49:53,040 --> 00:49:54,560
Speaker 2: this market environment?

1061
00:49:55,520 --> 00:49:59,160
Speaker 5: You just buy the cues have outperformed every active asset

1062
00:49:59,239 --> 00:50:01,440
Speaker 5: manager for the last fifteen years.

1063
00:50:02,160 --> 00:50:03,480
Speaker 12: Yeah, I mean, I think it would be nice to

1064
00:50:03,480 --> 00:50:07,000
Speaker 12: have some there. One of our funds, thhlg X, has

1065
00:50:07,040 --> 00:50:10,200
Speaker 12: a seventy percent allocation SMP and thirty for thirty percent

1066
00:50:10,239 --> 00:50:13,040
Speaker 12: allocation of triple cues. But it all has options underneath it,

1067
00:50:13,120 --> 00:50:14,919
Speaker 12: and we can trend follow out of that into cash

1068
00:50:14,920 --> 00:50:16,839
Speaker 12: positions if you need to be so. I think it's

1069
00:50:16,880 --> 00:50:18,680
Speaker 12: great to have growth right now. You know, if you're

1070
00:50:18,719 --> 00:50:21,600
Speaker 12: just on small and mid has disappointed on a relative basis,

1071
00:50:21,600 --> 00:50:23,719
Speaker 12: although part of that could be returned to the mean.

1072
00:50:24,200 --> 00:50:26,000
Speaker 12: You know, after what we saw about a month ago,

1073
00:50:26,400 --> 00:50:29,920
Speaker 12: part of that small cap deterioration was built of regional banks.

1074
00:50:29,880 --> 00:50:31,840
Speaker 12: So if we can see a recovery there, you know,

1075
00:50:32,080 --> 00:50:35,720
Speaker 12: I think it's probably being allocated across the diversified equity portfolio.

1076
00:50:35,760 --> 00:50:37,040
Speaker 12: Isn't a terrible idea right now.

1077
00:50:37,400 --> 00:50:40,680
Speaker 5: I'm just looking at th h lg X and I

1078
00:50:40,760 --> 00:50:46,239
Speaker 5: see or I wonder what you can tell us about

1079
00:50:46,239 --> 00:50:49,360
Speaker 5: the top holdings. What do you have in THHLGX, And

1080
00:50:49,440 --> 00:50:50,080
Speaker 5: just got about.

1081
00:50:51,320 --> 00:50:53,800
Speaker 12: It's just a hedged index strategy. So we own s

1082
00:50:53,880 --> 00:50:57,360
Speaker 12: and P five hundred index positions through futures contracts, and

1083
00:50:57,400 --> 00:50:58,880
Speaker 12: the same thing with triple ques. We just owned the

1084
00:50:58,880 --> 00:51:02,040
Speaker 12: futures contracts in there. But the way that works is

1085
00:51:02,040 --> 00:51:04,879
Speaker 12: if it trust. If markets start to roll over, they

1086
00:51:04,920 --> 00:51:07,759
Speaker 12: move the lower target exit level, we move to the

1087
00:51:07,760 --> 00:51:09,439
Speaker 12: sideline so we can be in treasury bills.

1088
00:51:09,480 --> 00:51:10,160
Speaker 4: If that happens.

1089
00:51:10,160 --> 00:51:14,000
Speaker 12: We spend most of twenty twenty two in t bills

1090
00:51:14,040 --> 00:51:16,080
Speaker 12: in that fund. The other thing we have, though, is,

1091
00:51:16,360 --> 00:51:20,480
Speaker 12: you know, options protection is so cheap right now later

1092
00:51:20,960 --> 00:51:24,719
Speaker 12: about twelve percent below market for full notional so it

1093
00:51:24,760 --> 00:51:25,680
Speaker 12: costs almost nothing.

1094
00:51:25,800 --> 00:51:29,040
Speaker 2: So right it up and just be ready to bail

1095
00:51:29,120 --> 00:51:30,319
Speaker 2: and find another way out.

1096
00:51:30,480 --> 00:51:34,440
Speaker 3: It sounds like Phil really fun Phil Taves, CEO at

1097
00:51:34,480 --> 00:51:37,000
Speaker 3: TAS Asset Management on zoomerm, New York. So he's looking

1098
00:51:37,000 --> 00:51:37,600
Speaker 3: over your shoulder.

1099
00:51:37,640 --> 00:51:41,000
Speaker 5: Now, is Mike Wilson coming exactly?

1100
00:51:41,120 --> 00:51:41,839
Speaker 10: This is Blue Worth.

1101
00:51:42,960 --> 00:51:47,600
Speaker 1: This is the Bloomberg Business Week podcast. I'll available on Apple, Spotify,

1102
00:51:47,760 --> 00:51:50,960
Speaker 1: and anywhere else you can get your podcast. Listen live

1103
00:51:51,040 --> 00:51:55,040
Speaker 1: weekday afternoons from three to six Eastern on Bloomberg dot Com,

1104
00:51:55,160 --> 00:51:58,439
Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business App.

1105
00:51:58,520 --> 00:52:01,440
Speaker 1: You can also watch us live every weekday on YouTube

1106
00:52:01,680 --> 00:52:03,720
Speaker 1: and always on the Bloomberg terminal.

1107
00:52:04,320 --> 00:52:10,480
Speaker 7: Mm hmm