Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Jason Kelly. We're right here every day bringing you the
Speaker 1: latest news from the world's of business and finance, plus technology, politics, economics,
Speaker 1: all harnessing the power of Business Week reporters and editors.
Speaker 1: And of course Carol that's part of a team of
Speaker 1: twenty seven hundred journalists and analysts the more than a
Speaker 1: hundred and twenty countries and Jason. You can download Bloomberg
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Speaker 1: can also listen to our radio show at two pm
Speaker 1: Eastern on Bloomberg Radio every weekday, or watch us on
Speaker 1: YouTube by searching Bloomberg Global News. Jina Martin Adams back
Speaker 1: with us. She is Bloomberg Intelligence Chief Equity Strategists, alongside
Speaker 1: Dave Wilson, Bloomberg Stock Editor, of course, the author of
Speaker 1: the chart and Stock of the Day. Dave, let me
Speaker 1: start briefly with you, what's the most important thing we
Speaker 1: need to understand about this market today. Well, it looks
Speaker 1: like the headline about the travel is getting at least
Speaker 1: a little bit of attention from stock investors. The S
Speaker 1: and P five is at its higher the day. Now
Speaker 1: you're talking up three tents and or percent. So that's
Speaker 1: just the kind of day it's been, not a whole
Speaker 1: lot of direction. And you look at the eleven main
Speaker 1: industry groups, you see communications services as a standout, and
Speaker 1: that's really Facebook in large measures. Shares are up six
Speaker 1: percent at the moment, so people are getting a little
Speaker 1: bit excited about that company. And then beyond that, Viacom
Speaker 1: CVS they had results out and they went over pretty well,
Speaker 1: unlike the figures that we saw from some of the
Speaker 1: company's media appears, uh Fox and Discovery Communications notably, those
Speaker 1: shares were down yesterday in the wake of their results.
Speaker 1: Viacom getting a much better reception. The shares are up
Speaker 1: three the moment, and from what I understand to the
Speaker 1: airlines are moving as well. On that news. American Airlines
Speaker 1: now up about four percent UM, so we're definitely seeing
Speaker 1: some reaction, no doubt about it, in that group as well.
Speaker 1: Delta's up about two point three percent. Hey, Gina, come
Speaker 1: on in on this conversation. I am curious to get
Speaker 1: your perspective because I feel like um increasingly so much
Speaker 1: of the Wall Street investment community is commenting on things
Speaker 1: like the elections, commenting on a vaccine approval and what
Speaker 1: it could mean for the financial markets. What's your analysis
Speaker 1: on this? Those are the things that are likely driving stacks.
Speaker 1: I mean, it's it's odd to be in the midst
Speaker 1: of earning season, the second heaviest reporting week in earning season,
Speaker 1: and see reactions to earnings as muted as they've seen
Speaker 1: so far. When we look at the earning season as
Speaker 1: a whole, we've had more than of SMP companies b
Speaker 1: reporting day earnings estimate targets. That's the best we've seen
Speaker 1: on record, our record since and yet the one day
Speaker 1: price action in excess of the index in response to
Speaker 1: those earning speeds is about half of average. So it
Speaker 1: does seem that, you know, even though we're beating expectations,
Speaker 1: even though we've honestly seen forward estimates start to move
Speaker 1: higher as well as we clearly had baked in maybe
Speaker 1: a little too much economic constraint in the earnings outlook,
Speaker 1: it doesn't seem that earnings are actually driving driving stocks. Um.
Speaker 1: I think it fits and starts that's been the case,
Speaker 1: But I do think that that's the reason why many
Speaker 1: analysts have started to focus on things like the upcoming
Speaker 1: election focus on the perspentage chances of getting a vaccine
Speaker 1: anytime soon. Uh. Certainly the fiscal policy efforts underway in
Speaker 1: Washington or are a huge question mark, but the market
Speaker 1: does seem to be anticipating some resolution to that in
Speaker 1: the positive sometime soon. So there does appear to be
Speaker 1: a lot of other things that are really driving stocks
Speaker 1: right now, even though we're in the midst of a
Speaker 1: really important earning season. Frank right right, Well, and this
Speaker 1: data dump that we're seeing, I mean, this is typical.
Speaker 1: It was all scheduled around. Uh. Employment also seems to
Speaker 1: be very front of mind. You. Yeah, I think that
Speaker 1: the economic numbers are are interesting as well, especially the
Speaker 1: initial claims numbers. I'm not surprised to see the market
Speaker 1: kind of thinking, well, what do we really make of
Speaker 1: these initial claims numbers in the midst of all this
Speaker 1: turmoil around fiscal policy claims? So is that merely just
Speaker 1: sort of gaming the system with respect to the fiscal
Speaker 1: policy expiration or the the extended unemployment claims expiration. And
Speaker 1: I do think to the markets sort of waffling around
Speaker 1: here trying to figure out, you know, where do we
Speaker 1: really go from here? And frankly, for the last couple
Speaker 1: of months, we've we've had to price in better economic data.
Speaker 1: So the sort of the impetus that the economic data
Speaker 1: is able to give the market at this stage, you
Speaker 1: have to have a really, really strong be to expectation
Speaker 1: in order for the market to really absorb that and
Speaker 1: move higher. All right, Jina Martin Adams, thank you so much,
Speaker 1: Chief Equity Strategies for Boom Re Intelligence. This is the
Speaker 1: busiest time of the quarter for you. We know because
Speaker 1: of all those earnings that you mentioned, Because regardless of
Speaker 1: whether investors are swinging one way or the other, you
Speaker 1: guys are doing a huge amount of work on it.
Speaker 1: So we really appreciate you taking sometime. Dave Wilson are
Speaker 1: thanks to you as well. Looking forward to the chart
Speaker 1: of the day, I've been looking at it, Carolin, trying
Speaker 1: to figure out like that there's a king element to it.
Speaker 1: So it could it be a Tom Petty situation, could
Speaker 1: be Elvis? Could it be Elvis. We're gonna see, We're
Speaker 1: going to see, could it be the Lion King? Continue?
Speaker 1: You are Disney exactly. We are a little Disney obsessed
Speaker 1: these days, and by we I mean me. You're listening
Speaker 1: to Bloomberg Business Week with Carol Masser and Jason Kelly
Speaker 1: on Bloomberg Radio. I gotta say, Jason and I always
Speaker 1: look forward to this next guest because he's definitely one
Speaker 1: of the voices we look forward to when it comes
Speaker 1: to talking about COVID. Nineteam Back with Us is Dr
Speaker 1: William Hazeltine. He is chairman and president of Access Health International.
Speaker 1: It's a nonprofit think tape. It's all about improving access
Speaker 1: to high quality and affordable health care for people everywhere.
Speaker 1: He also has this great living e book that came
Speaker 1: out this year. It's written to address questions about the
Speaker 1: virus from the perspective of different age groups. It's living
Speaker 1: because it's constantly being updated with new information. It's called
Speaker 1: a Family Guide to COVID. And that our Hazeltine joining
Speaker 1: us once again and on the phone. Um, nice to
Speaker 1: have you back with us. Um, where should we start? Like,
Speaker 1: tell me what you think is most important when we
Speaker 1: look at what's going on with the virus in the
Speaker 1: US globally and also the race to find some treatments
Speaker 1: and a cure, not a cure, bit a vaccine. Well
Speaker 1: that's a lot. Thank you. Very much. And let me
Speaker 1: mention that a new book, a new living e book
Speaker 1: has just arrived. It will be up later today. It's
Speaker 1: a COVID um. I got a COVID guide to school,
Speaker 1: back to school, a COVID Guide to back to school.
Speaker 1: And uh I mentioned it because that is the topic
Speaker 1: on Americans minds. Every parent and I'm a grandparent, and
Speaker 1: grandparents are absolutely upset, concerned, worried about what to do
Speaker 1: with their children going back to school. The preschoolers, the
Speaker 1: K through six and the sixth through twelve, and all
Speaker 1: those are very difficult in different issues. Not to mention
Speaker 1: college aid students too. And the shocking thing is is
Speaker 1: that we don't have guidance nationally and we don't have
Speaker 1: any consistent way of thinking about it. So what I've
Speaker 1: tried to do is think through how to give people
Speaker 1: just the basics for how to make a decision. We
Speaker 1: just don't have that. It's it's really shocking. The CDC
Speaker 1: doesn't give any good guidance. I've given you something that
Speaker 1: really surprised me. Our National Academy of Sciences, which is
Speaker 1: a National Academy of Medicine, of engineering. Every academy that
Speaker 1: we've got put together a panel. They looked at it,
Speaker 1: and the most shocking thing about that report, as they said,
Speaker 1: we just don't know and we don't have guidance about
Speaker 1: what to do. That was our national Academy. It is
Speaker 1: really upset it. And so what's the first what's the
Speaker 1: first couple of questions we should be asking as parents?
Speaker 1: Bill Well, I think the way to look at it
Speaker 1: is is to try to figure out what your risk is.
Speaker 1: And the first ratification for risk is how much infection?
Speaker 1: How much? How likely or do you run into somebody
Speaker 1: who's contagious. That's you know, people say transmission, it's really contagious.
Speaker 1: That's the word you should use. And how likely are
Speaker 1: you going to run into you or your child going
Speaker 1: to run into somebody contagious. And we give a guideline
Speaker 1: whether you're in green, yellow, orange, or red by how
Speaker 1: many people for a hundred thousand or in your zip
Speaker 1: code and the zip codes that they come from to
Speaker 1: work in your school, and that gives you a guideline
Speaker 1: of whether you're in a hurricane you should stay home
Speaker 1: in the basement, whether you're in a thunderstorm and you
Speaker 1: can stay home and not go out of the rain
Speaker 1: storm if you go out, if you're heavily equipped, uh,
Speaker 1: or it's a light rain and you really have to
Speaker 1: know where you're going and how well you'll be protected,
Speaker 1: or if you were lucky enough and there's nowhere in
Speaker 1: the country, we're really lucky enough. You have to be
Speaker 1: on a sunny day. If you're on a sunny day,
Speaker 1: And so that's the first thing. The second thing is
Speaker 1: know your personal risk. Aren't there any health issues? First
Speaker 1: of all, your child has like diabetes, like serious asthma,
Speaker 1: like obesity, or that you have that the child brings
Speaker 1: it back, or anybody living with you, like your parents,
Speaker 1: or they're grand the child's grandparents. And the third and
Speaker 1: this is a lot harder to judge what that school
Speaker 1: is doing. And for that you as a parent have
Speaker 1: to take the initiative and go out and look at
Speaker 1: what that school is doing. Do you really have confidence
Speaker 1: in the people there? What is the plant like is
Speaker 1: an old, broken down facility as a brand new facility.
Speaker 1: What's the are handling like? What are they telling you?
Speaker 1: Are they dividing the kids up into small groups? Do
Speaker 1: they have face mass protection? Do they separate the children adequately?
Speaker 1: Those are things you as a parent have a responsibility
Speaker 1: to do before you said, you're killed out there, because
Speaker 1: no matter what you're hearing from national news, kids do
Speaker 1: get infected. There's something that else that I think we
Speaker 1: have to demystify about the virus. This is a cold virus.
Speaker 1: It does a lot more damage than most cold viruses.
Speaker 1: But it's just like the colds you get every season.
Speaker 1: In fact, one third of the colds you get a coronaviruses.
Speaker 1: We know how you get a cold. You send your
Speaker 1: kid to school when it comes back with a cold.
Speaker 1: That's not new. This is and one of those colds,
Speaker 1: one of the three colds you get every year, is
Speaker 1: a coronavirus called So that's I think that's basically the
Speaker 1: story of this book is just trying to give people
Speaker 1: simple guidance of how to imagine what their risk is
Speaker 1: and then if the risk is too high, you just
Speaker 1: don't send your kid to school. Right you are listening
Speaker 1: to Bloomberg Business Week, Jason Kelly, Carol Master. Let's get
Speaker 1: right back to our conversation with Dr William Haseltine. He
Speaker 1: is chairing president of Access Health International, author of a
Speaker 1: couple living e books. They are out there and being
Speaker 1: updated practically hour by hour, it feels like because that's
Speaker 1: how fast this is moving to your point. Carol One
Speaker 1: is a Family Guide to COVID Questions and Answers for parents, grandparents,
Speaker 1: and children, and newly released as of today, a COVID
Speaker 1: Back to School Guide Questions and Answers for parents and students. So, Bill,
Speaker 1: we could talk all day about back to school, but
Speaker 1: I do want to ask you about, you know, maybe
Speaker 1: back to work if I can, because these are intertwined.
Speaker 1: Of course, we need kids to go back to school,
Speaker 1: we need them to be learning in some form or fashion.
Speaker 1: But what have you learned is you talk to people
Speaker 1: about what it's going to take for people to feel
Speaker 1: good about going back to the office. You know, it's
Speaker 1: really surprising that it's almost exactly the same questions that
Speaker 1: you would ask about sending of your kid to school.
Speaker 1: You're more concerned about the kid because you think you
Speaker 1: yourself have more control, but in fact, when you really
Speaker 1: think about it, you really don't have control of whom
Speaker 1: you meet. You have control of what you can do
Speaker 1: to protect yourself, but you don't know who that other
Speaker 1: person is, and therefore the same kind of rules apply,
Speaker 1: which is how much is the infection in your area,
Speaker 1: what is your personal risk and the risk of those
Speaker 1: you live with, and then how much is your business
Speaker 1: doing what it must do given the conditions that there is.
Speaker 1: I would say there's one area that is driving this epidemic.
Speaker 1: There is three or four, but one that I'd like
Speaker 1: to focus on for just a minute. Is there a
Speaker 1: lot of people who have to go to work, either
Speaker 1: their essential workers or they don't. Can't put food on
Speaker 1: the table if they don't go to work, and they
Speaker 1: don't have that choice of making the decision that you
Speaker 1: or I might have about I'm going to stay home,
Speaker 1: I'm not going to go to work, or have to
Speaker 1: do this. For those people, it's so important to make
Speaker 1: sure their work environment is safe. That's the responsibility of
Speaker 1: the organization that they work for to make sure that
Speaker 1: the people that have to work there are safe and
Speaker 1: that is enforced. I think uh, let's put it say,
Speaker 1: uh irreproducible across the country. There are some places that
Speaker 1: are going to be good about that and other places
Speaker 1: that aren't, and that is going to keep driving the infection.
Speaker 1: It's on all of us to put the pressure on
Speaker 1: our local governments to make sure that all workplaces are safe,
Speaker 1: even those places where people have to go to work,
Speaker 1: like the fire department, despite the fact that there is
Speaker 1: an epidemic raging. So that's something we all have to
Speaker 1: work with because it's protecting ourselves. Protecting them is protecting us. Yeah,
Speaker 1: it goes back to I feel like Bill such a
Speaker 1: big thing that I guess maybe we're all realizing the
Speaker 1: importance of community. Right. It's not just about us as individuals,
Speaker 1: but it's about taking care of really our community at large,
Speaker 1: and that's what we need to be thinking about. I
Speaker 1: have to ask you, though, I am still kind of
Speaker 1: struck by Governor Cuomo on Monday. I was away for
Speaker 1: a week, came back and he was very strident, very critical,
Speaker 1: talking about the potential of basically the federal governments. You
Speaker 1: need to come out and say we made a mistake,
Speaker 1: we need to do a redo, we need to shut
Speaker 1: down again. Do you would you be in favor of
Speaker 1: shutting down the country as a whole, like we saw
Speaker 1: in other countries where they have seemed to get ahead
Speaker 1: of the virus better than the US. Would you be
Speaker 1: in favor of that. I'm not in favor of shotting
Speaker 1: down the whole country, but I would be in favor
Speaker 1: of showing a place like Houston and most of Texas down,
Speaker 1: or most of Florida town, or most of California Lesa
Speaker 1: southern half of California town. You have to be aware
Speaker 1: of what's going on, and if you aren't in control,
Speaker 1: which we're not in control of rising epidemics around the country,
Speaker 1: you've got to shut things down for five to six weeks.
Speaker 1: But that's not enough. You have to take a leaf
Speaker 1: out of what we learned from the Chinese. You know,
Speaker 1: when there are sixty thousand people a day being infected
Speaker 1: in America, there are fifty people a day being infected
Speaker 1: in China. Let me say that again, sixty thousand Americans
Speaker 1: get infected on some days and fifty people in China.
Speaker 1: It can be done, and it's not just shutting things down.
Speaker 1: It's making sure you contact Grace and then mandatory isolation
Speaker 1: for all those exposed, not even infected exposed. How to
Speaker 1: do it. It's not magic. We don't do anything like that,
Speaker 1: nor does any European country. And that's why when you
Speaker 1: look at Europe, they haven't controlled this. You can blow
Speaker 1: out of control, just like it did here at any
Speaker 1: moment all throughout all right, Well, always good to catch
Speaker 1: up with you, and you're totally right. We're learning more
Speaker 1: and there are some simpler solutions to this, UH, and
Speaker 1: a lot of it comes down to how we're acting
Speaker 1: with each other and as a community, as you said, Carol.
Speaker 1: Dr William Hasl teen, Chair President of Access Health International.
Speaker 1: Check out his books, a COVID Back to School Guide,
Speaker 1: it's out today, Questions and answers for parents and students.
Speaker 1: You're listening to Bloomberg Business Week with Carol Masser and
Speaker 1: Jason Kelly on Bloomberg Radio. This is a story that
Speaker 1: brings so many things that we're interested in together, Carol,
Speaker 1: totally state of healthcare, private equity, big money, and so
Speaker 1: many more and not the least of which great journalism
Speaker 1: and Bloomberg Business Week we're happy to have with us.
Speaker 1: Bloomberg News Senior editor John Heckinger on this story along
Speaker 1: with Bloomberg Business Week under Joel Weber. So Joel t
Speaker 1: this up for us, so John Um and Sabrina Vener,
Speaker 1: who wrote the story together. Um UH serviced a little
Speaker 1: bit ago UM about a network of hospitals for profit
Speaker 1: hospitals UH primarily in Massachusetts called Steward and when UM
Speaker 1: they kind of started doing some reporting. But it was
Speaker 1: kind of interesting to me for a lot of the
Speaker 1: reasons that you said, Jason, the one big one being that, um,
Speaker 1: you know, pretty noteworthy UM uh private equity shop a
Speaker 1: Cerberusts got involved about a decade ago and what what
Speaker 1: what what the hospitals look like before and after? That
Speaker 1: has been pretty remarkable. And obviously the backdrop to all
Speaker 1: of this is there's a pandemic raging UM and John,
Speaker 1: so what what what did your reporting reveal? Well, as
Speaker 1: as he was saying, these hospitals were struggling back in
Speaker 1: two thousand and ten when Cerberus, the private equity for
Speaker 1: bought them UM and what we what we found is
Speaker 1: that UM, the the for profit chain, did invest a
Speaker 1: fair amount of money and sort of sprucing up the hospitals,
Speaker 1: but that many of the workers say that they were
Speaker 1: kind of short changed on staffing and maintenance and UM
Speaker 1: so once the pandemic hit, UM, they felt like they were,
Speaker 1: you know, even more exposed because they were just so
Speaker 1: so many patients and not enough nurses. UM. So we
Speaker 1: talked about the mouth role. That's right, Well, the story
Speaker 1: begins on morning of May tenth, when a mouse wandered
Speaker 1: into a transformer and shorted out the electricity and left
Speaker 1: UM a building largely in the dark, and the nurses
Speaker 1: it kind of represented kind of the sort of penny
Speaker 1: pinching ways of the company that had bought their beloved
Speaker 1: hospital UM. And so that's kind of became a symbol
Speaker 1: for many of them about why they were so concerned.
Speaker 1: And it wasn't just a building, Like keep in mind,
Speaker 1: this is early maze. The pandemic is happening. What happened
Speaker 1: to be there happened to be COVID patients throughout the hospital,
Speaker 1: and what ensued from there, well, what happened is that
Speaker 1: because there was no backup power in sort of this
Speaker 1: uh one unit where they were caring for patients, kind
Speaker 1: of keeping them separate from the COVID nineteen patients there
Speaker 1: just had to move those patients, the uninfected patients up
Speaker 1: into a into an IC that was packed with COVID patients.
Speaker 1: And as one nurse told us, they they sort of
Speaker 1: found it really kind of terrifying, and you know, they
Speaker 1: felt that I could potentially patients at risk. So I
Speaker 1: guess what I want to ask you, is, should we
Speaker 1: blame Servius for all of this? Did they not kind
Speaker 1: of make the changes, make the investments that one might
Speaker 1: have expected or hoped for. Well, I mean, to me,
Speaker 1: the main sort of one of the themes of the
Speaker 1: store is is kind of the magic of private equity
Speaker 1: did um Basically the way it was set up is
Speaker 1: that Cerberus very early on kind of guaranteed that it
Speaker 1: would make several times the amount of money that it invested.
Speaker 1: And whatever happened, whether the hospitals, you know, we're struggling
Speaker 1: or whether they were succeeding wildly, Um, they would no
Speaker 1: matter what, make their make their money. And so it's
Speaker 1: kind of that's really what we were looking at. I mean,
Speaker 1: there's no question that that Serbers and Stewart did make
Speaker 1: investments in the hospital, but at this time, even before
Speaker 1: the pandemic, they were struggling financially. So you have this
Speaker 1: contrast between how the hospitals are operating and how much
Speaker 1: how much their investors have profited. You know, John, I
Speaker 1: feel like this is such terrific reporting by you and Sabrina,
Speaker 1: and it really cuts to the core of one of
Speaker 1: the biggest issues I feel like we are facing when
Speaker 1: it comes to Wall Street, when it comes to private equity,
Speaker 1: when it comes to corporate responsibility in many ways, and
Speaker 1: I think it's brought to the FORO so much more
Speaker 1: because of this pandemic that we're living in, which is
Speaker 1: essentially at what cost are you making your profit? And
Speaker 1: I think that's it feels especially true in the healthcare
Speaker 1: arena because based on reporting you've done, and Sabrina Wilmer,
Speaker 1: your co author has done, and Heather Prolberg on the
Speaker 1: private equity team, I mean this is a theme that
Speaker 1: carries throughout the American healthcare system, which is, you know,
Speaker 1: private equity sort of coming in and seeing the ability
Speaker 1: to make money by cutting costs, and in some cases
Speaker 1: it feels like cutting corners. And one of the other
Speaker 1: issues is that, you know, there was there was concern
Speaker 1: that private equity backed companies were getting a bailout money
Speaker 1: right and and that and did did in fact happen
Speaker 1: to hospitals that were backed by private equity, including including
Speaker 1: Stewart Um. They got something like four hundred million dollars
Speaker 1: in loans from the package, another hundred million dollars in grants.
Speaker 1: And so I think the you know, the question now
Speaker 1: that sort of Congress is looking at is um you know,
Speaker 1: you know Wall Street was supposed to be a source
Speaker 1: of money for you know, for private equity, and should
Speaker 1: all these companies be getting beginning taxpayer bailouts? John, you know,
Speaker 1: one thing I just want to kind of bring it
Speaker 1: back to is ultimately um uh Cerberus was able to
Speaker 1: to kind of exit uh somewhat and and walk away
Speaker 1: with what what the where do things stand and how
Speaker 1: could things develop um in the months and years to come? Well,
Speaker 1: Serbs put in about a quarter of a billion dollars
Speaker 1: and all told, um Cerberuss investors tripled um tripled their money.
Speaker 1: And over the last in May, um Cerberus sort of
Speaker 1: started backing away from the investment and gave control to
Speaker 1: the doctors who are running the company. But they still
Speaker 1: have they own a three hundred and fifty million dollar
Speaker 1: bond UM, so they're getting interest on this on this
Speaker 1: payment and if in five years when it comes to
Speaker 1: they could potentially make another three d and fifty million
Speaker 1: dollars if if the company you know, continues operating, and
Speaker 1: if the company, uh, the company thrives and does you
Speaker 1: know the wholes in size, they could make much more
Speaker 1: than that, so, Um, they basically have already made triple
Speaker 1: their money. They could make several times more of that,
Speaker 1: and as you say, Steward's still remains on a financial
Speaker 1: knife edge, so their financial situation is still tricky. Um.
Speaker 1: It's a great read, it's great reporting, as Jason mentioned, Um,
Speaker 1: and we'll we'll put that out on Twitter two so
Speaker 1: that we can share it a little bit more with
Speaker 1: our listeners. John, thank you so much. John Heck and
Speaker 1: Jerry's senior editor at Bloomberg News. Really a phenomenal story,
Speaker 1: joining us on the phone from Boston along with Bloomberg
Speaker 1: Business Week editor Joe Weber on the phone in Massachusetts.
Speaker 1: What I mean, you know these guys a lot like
Speaker 1: the healthcare aspect of this I think is one of
Speaker 1: the most fascinating because it calls into question, I think,
Speaker 1: so much of what we talk about about private equity,
Speaker 1: but also beyond, which is what our company's responsibilities and
Speaker 1: they are not just two shareholders. And I think we're
Speaker 1: coming around to that, but it is slow and it
Speaker 1: is painful, especially when it comes to the healthcare business.
Speaker 1: And check out that story. Check out all of Heather
Speaker 1: prole birds work as well. She's done some phenomenal work.
Speaker 1: This is Bloomberg Business Week with Carol Masser and Jason
Speaker 1: Kelly on Bloomberg Radio. All right, let's do a little
Speaker 1: business Week economics now, Carol, if we can, because, as
Speaker 1: we mentioned with Gina Martin Adams at the top of
Speaker 1: the show, a lot of echo to her this week,
Speaker 1: some this morning, some yesterday, and a big day tomorrow
Speaker 1: with that monthly jobs report. We're gonna break it down
Speaker 1: with Francis Donald, Global chief Economist, head of macro economic
Speaker 1: strategy for Many Life Investment Management, joining us on the
Speaker 1: phone from Toronto. First of all, Francis, how are you.
Speaker 1: What's going on? What's life like up there? I? Actually
Speaker 1: I believe you're in Montreal? Right? Do I get that wrong?
Speaker 1: That's correct? I am correct. I am in Montreal. I
Speaker 1: am an economist in the middle of the largest economic
Speaker 1: crisis of our time. So it is both extremely exciting
Speaker 1: and what we were born to do, and also very
Speaker 1: overwhelming and a lot of new things to have to
Speaker 1: think about, things that we've never thought about before in
Speaker 1: this profession. Really yeah. And one of which, and we've
Speaker 1: mentioned this on this program before, one of which is
Speaker 1: we didn't think about weekly jobless claims very much at
Speaker 1: all for a long time. And now we literally like
Speaker 1: have an alarm set on every Thursday morning to look
Speaker 1: at this number. Tell us what you saw in that
Speaker 1: number and what it may portend as we you know,
Speaker 1: that's that's closer to real time data, or it's it's
Speaker 1: a lesser lag than work what we're going to see tomorrow.
Speaker 1: What does it tell us about the employment picture? Well,
Speaker 1: the headlines I saw on my Bloomberg terminal is that
Speaker 1: you know, we have the best the best initial jobless
Speaker 1: claimed since the pandemic started, that we had this beat
Speaker 1: you know, um and and this to me just was
Speaker 1: fairly shocking interpretation given that we still have over a
Speaker 1: million Americans a week who are filing for the first
Speaker 1: time for unemployment insurance for claim this messaging to me
Speaker 1: is very concerning because it isn't really the number of
Speaker 1: jobless claims or even tomorrow what non farm payroll to
Speaker 1: figure is that matters as much as the composition of
Speaker 1: it underneath. And in some ways, these initial jobless claimed,
Speaker 1: these million every week, are more concerning to me than
Speaker 1: the multiples of that that we saw in March and April.
Speaker 1: And that's because we know the people being laid off
Speaker 1: now are not being laid off because of temporary closures
Speaker 1: of coffee shops and movie theaters, though they're being laid
Speaker 1: off in a more permanent sense. So these job losses
Speaker 1: are much more sinister and necessarious for the economy than
Speaker 1: what we experienced in April. The fact that we have
Speaker 1: a million people a week who are going unemployed should
Speaker 1: be something that weighs on us heavily. And while we
Speaker 1: may have beat the economist expectation, that is missing the
Speaker 1: forest for the trees here, you know, and I do
Speaker 1: under Francis Man, these numbers are already staggering right when
Speaker 1: they come out, as you said, one million a week.
Speaker 1: But I do wonder are you anticipating that we get
Speaker 1: kind of another drop down. I don't know whether it's
Speaker 1: in a few months, whether it's the beginning of next year.
Speaker 1: You know, when companies really have to say there's just
Speaker 1: no demand out there for our services are certainly not
Speaker 1: like it was, and we've just got to let go
Speaker 1: more workers. Well, a lot of what the data is,
Speaker 1: Michelle says, I don't think a lot of our charts
Speaker 1: is going to show a double dip or a double
Speaker 1: you type of environment. But what I do anticipated that
Speaker 1: we're going to see a stalling out of the momentum,
Speaker 1: and actually a lot of our high frequency indicators showed
Speaker 1: us that that started in early July, and even initial
Speaker 1: jobless claims are showing us a similar story, which is
Speaker 1: that we still incrementally recover off of the depression that
Speaker 1: was March and April, but we certainly don't go back
Speaker 1: to streed called at levels. What I find interesting is
Speaker 1: we were to stabilize, for example, at minus five ton GDP,
Speaker 1: we might see headlines telling us that's an improvement over
Speaker 1: the thirty percent drop with SAW on Q two, but
Speaker 1: it would still be some of the if not the
Speaker 1: worst economic data that we've seen outside of this pandemic.
Speaker 1: So we are moving from depression to recession. And if
Speaker 1: you're a second derivative type gal like I am, of
Speaker 1: course that's good and markets to react to that as well.
Speaker 1: But the fundamental story or is that we are a
Speaker 1: long way out of the wood, and actually the nature
Speaker 1: of this recession is going to change quite a bit
Speaker 1: in the next coming months, particularly if we do not
Speaker 1: get an extension on unemployment insurance. Top of very very soon.
Speaker 1: If we don't get that, then August and September is
Speaker 1: going to be a real tough period for a lot
Speaker 1: of economic data and for a lot of people too.
Speaker 1: I'm gonna pause for a second so that Carol Messer
Speaker 1: can add that to her list of T shirt names,
Speaker 1: because I want you to wear a T shirt that
Speaker 1: says I'm a second derivative kind of gal, because that's brilliant.
Speaker 1: I love it. Um So Francis. You know, when we
Speaker 1: think about what's going on in Washington, you know that's
Speaker 1: another thing that investors are really reacting to, is alright, Congress,
Speaker 1: maybe they're going to get their act together, maybe the
Speaker 1: President is going to sweep in with some executive action.
Speaker 1: How much can you do you sort of model in
Speaker 1: a fiscal solution here, given that something we hope is
Speaker 1: going to get across the finish line, it's the only solution.
Speaker 1: The Seederal Reserve is preventing a credit crisis and insuring
Speaker 1: we have plenty of liquidity in the system, but they
Speaker 1: cannot help everyday Americans get food on the table when
Speaker 1: we're in the largest employment shocks of our time. So
Speaker 1: right now, the big challenges we know April and May
Speaker 1: and June were substantially bolsters by this bridge created by
Speaker 1: the Unemployment Insurance top up and other additional forms of support.
Speaker 1: But that rug is being pulled out from under us.
Speaker 1: I think when I look at that City Surprise Index
Speaker 1: that shows us the largest spread between next economic data
Speaker 1: UM expectations and the actual data. The reason that we
Speaker 1: have been overly pessimistic in general as a profession is
Speaker 1: that we've underappreciated just how sizeable those fiscal transfers have been.
Speaker 1: And I know there are some who are going to
Speaker 1: say yes, but the extent of fiscal has disincentivized hiring
Speaker 1: activity or disincentivized people looking for jobs. But there simply
Speaker 1: isn't enough hiring activity. As much as we've got initial
Speaker 1: job exclaims. This morning, we also saw a five hundred
Speaker 1: and seventy six percent year over year increase in job cuts,
Speaker 1: five hundred and seventy six percent increase in challenger job cuts.
Speaker 1: So there is not a lot of hiring activity happening here.
Speaker 1: And if we do not have some additional support for
Speaker 1: Americans UM, even if it's applied retroactively, it takes a
Speaker 1: couple of weeks to work us way through the system.
Speaker 1: I think August is going to be a very challenging
Speaker 1: my pike, I call August an air pocket where we
Speaker 1: actually see probably a lot of really difficult, strange distortions
Speaker 1: in our data. Hopefully they've correct themselves in September and October,
Speaker 1: but August I think might be one of the toughest
Speaker 1: months in this recession, even more tough than than the
Speaker 1: initial shock of April. Well, a lot of uncertainty out there,
Speaker 1: but one thing for certain, Frances, I know we're going
Speaker 1: to be coming back to you a lot because your
Speaker 1: analysis is just fascinating to hear. And uh, like we said,
Speaker 1: we're adding you to our T shirt list. We have
Speaker 1: just a T shirt list of really smart saying so
Speaker 1: we're gonna keep doing like some of them, like we
Speaker 1: have the j Pal Lending not Spending Tour of twenty
Speaker 1: Like I feel like you could pull that one off, Francis.
Speaker 1: All right, our thanks to Francis Donald up in many
Speaker 1: Life asset management really one of our good two voices here,
Speaker 1: and I always look forward to catching up with her. Carol,
Speaker 1: and I do want to be a secondary derivative kind
Speaker 1: of gal, like I feel like you are just studied economics.
Speaker 1: You're you're a burgeoning Uh that would be an economist
Speaker 1: in a different life. I think I would. I would
Speaker 1: be Francis Donald, only in my dreams. You're listening to
Speaker 1: Bloomberg Business Week with Carol Masser and Jason Kelly on
Speaker 1: Bloomberg Radio. We do to talk a little bit about
Speaker 1: the E t F world. Ed Rosenberg is back with us,
Speaker 1: head of ETF that American Century investments ninety billion in
Speaker 1: assets under management joining us, I believe on the phone
Speaker 1: from Chicago. Ed. Good to have you back with us. UM,
Speaker 1: I gotta ask you. Are you in Chicago right now?
Speaker 1: I am? Yes? Okay, Well, good to know how Chicago going.
Speaker 1: Chicago's great. I mean it's perfect weather. It's better than
Speaker 1: when I used to live on the East Coast. I
Speaker 1: don't get any of those storms. Tell me about it.
Speaker 1: Oh god, you don't. You don't know the half of it.
Speaker 1: I mean that really swept through here. I'd live in
Speaker 1: Westchester and it knocked out power. I mean it was
Speaker 1: it was second only to Hurricane Sandy, a distant second,
Speaker 1: but in terms of knocking everything else. So any kiss,
Speaker 1: how's the virus situation there? I'm sorry, what did you say,
Speaker 1: the virus situation. I mean, you know, in Chicago, I
Speaker 1: know it's it's pretty rough with what's been going on
Speaker 1: in but it hasn't from my understand, I haven't grown
Speaker 1: that much where I live, which as a small town
Speaker 1: just west of the city, it's really it's quiet here
Speaker 1: for that um so, I mean, everyone's wearing their masks,
Speaker 1: doing the right thing, but it's still the spread overall.
Speaker 1: In the six months that will call it that's been
Speaker 1: really around, my town has only had a hundred and
Speaker 1: thirty two cases, So it's been relatively quiet on that front,
Speaker 1: which is good. Everyone's really doing the right thing in
Speaker 1: the town and keeping it from really spreading. And it
Speaker 1: is interesting to sort of see that play out on
Speaker 1: an almost micro level, right, I mean in this sense
Speaker 1: that when you do see a group of people doing
Speaker 1: you know, what are now widely considered by medical experts
Speaker 1: to be the right things, mass social distancing, washing your
Speaker 1: hands and all that, it does tend to work. But
Speaker 1: I digress. Uh, you are the head of exchange traded
Speaker 1: funds ets, as Carol mentioned, talk to us about this moment,
Speaker 1: especially for E s G. Because it feels like we're
Speaker 1: in a moment that has only accelerated over the course
Speaker 1: of fair to say, has been a little bit of
Speaker 1: a funky year. But but what are you seeing in
Speaker 1: terms of flows and even just in terms of general interest.
Speaker 1: So let's start with the general interests with E s G.
Speaker 1: I mean, I think it's it's picked up. What's been
Speaker 1: interesting about this year is companies that are considered more
Speaker 1: E s G have performed better. Now there's different approaches
Speaker 1: to e s G. You know, there's there's exclusionary, which
Speaker 1: tends to be a little bit different, there's impact, and
Speaker 1: then there's really sort of digging in and finding those
Speaker 1: companies that are environmental, social, and governance. And I think
Speaker 1: when you do the second and third aspect of it,
Speaker 1: you're really able to find companies that are starting to
Speaker 1: be considered quality across the board. And quality in the
Speaker 1: year like this, when there's been so much volatility, has
Speaker 1: definitely been rewarded in a lot of ways because if
Speaker 1: earnings are going to continue, I know, listening to the
Speaker 1: update of what's driving the Dow, we're driving the stocks today,
Speaker 1: the companies that were talked about were definitely quality companies
Speaker 1: and so I think that's really helping E G. As
Speaker 1: they become more quality and more top of mind for people,
Speaker 1: it's going to become more popular as an investment theme.
Speaker 1: And a company like American Century, you know, just to
Speaker 1: add this to it being owned by the Star Wars
Speaker 1: Institute for Medical Research. I mean, we really have a
Speaker 1: unique understanding of B S G and how we apply
Speaker 1: it across our board. So one thing I'm curious about
Speaker 1: ED is where investors are committing money new money right now?
Speaker 1: What are the flows that you guys have seen in
Speaker 1: and out of American Century, And I'm curious if the
Speaker 1: flows how they have changed kind of as we've moved
Speaker 1: our way um through for many of us, you know,
Speaker 1: this work from home, stay at home environment and the
Speaker 1: impact of the virus. So it's interesting from an overall
Speaker 1: perspective from ets in general and then American Century. What
Speaker 1: you saw was you saw a lot of international investing
Speaker 1: the first part of the year and that has substantially
Speaker 1: faded and gone to negative. So money has flown out
Speaker 1: of that. And where you've seen in money going is
Speaker 1: I don't want to it's not what I would call
Speaker 1: a flight to safety, but it's flight to some higher
Speaker 1: yielding bonds who corporates across the board as well as
Speaker 1: some area, but the US. It's really been focused specifically
Speaker 1: on the US market. And then if you look specifically,
Speaker 1: it's what you've been what you guys I'm sure have
Speaker 1: been talking about, which is technology, right, whether it's you know,
Speaker 1: from fang stocks across the board, people are going into
Speaker 1: that and even some of our ETFs. We launched a
Speaker 1: new ETF earlier this year in the middle of the
Speaker 1: pandemic um just focused dynamic growth, which has some of
Speaker 1: that technology exposure. I mean, it's been gathering assets fairly
Speaker 1: quickly for a new product and quite frankly, it's a
Speaker 1: new structure for you guys. It's a semi transparent structure,
Speaker 1: which was the first of its kind just to get
Speaker 1: out there, and people are drawing interest to that more
Speaker 1: than anything else that I've launched in a long time.
Speaker 1: What does that mean? Semi transparent? So, as you know,
Speaker 1: with with ets, holdings generally are displayed daily through a function,
Speaker 1: whether it's called the basket, shows you all the holdings.
Speaker 1: These semi transparent structures do not show the holdings daily.
Speaker 1: That is the only difference. And so what that means
Speaker 1: basically is the only time the investor can see what's
Speaker 1: in the fund is either on a monthly basis with
Speaker 1: the top ten holdings, or from us when we released
Speaker 1: the quarterly holdings fifteen days after quarter in, they'll see
Speaker 1: exactly what's in it just quickly thirty seconds. Why would
Speaker 1: I want that over a fully transparent Well, if you're
Speaker 1: really looking for something that has the portfolio manager's best
Speaker 1: ideas without the fear of front running, so they can
Speaker 1: really offer potentially an alpha generating portfolio similar to what
Speaker 1: you'd get in the mutual fund, which you can't get.
Speaker 1: An Yes, that's exactly why you'd want it. Interesting, Interesting,
Speaker 1: all right, Ed Rosenberg, thank you so much. Really good
Speaker 1: to catch up with you get a view of what's
Speaker 1: happening there on the ground just outside Chicago. Ed Rosenberg,
Speaker 1: head of exchange traded funds for American Century Investments. I mean,
Speaker 1: look this, that corner. I was going to call it
Speaker 1: the quarter of the mark, Like that side of the
Speaker 1: market has just exploded when it comes to ets, I
Speaker 1: was reminded about of that when you were out and
Speaker 1: hanging out with his scarlet food. When she was with me.
Speaker 1: She knows so much about if somebody was treating me like,
Speaker 1: when are you gonna bring it back? What's it coming back? Scarlett?
Speaker 1: I know that's her show. It's her show, ma'am. Hopefully
Speaker 1: soon I'm roam journal. Yeah, but you let me drive?
Speaker 1: Oh no, no, no, no home honey, please, I'll do
Speaker 1: the riding drivel. I want to drive all just drive baby,
Speaker 1: the question trying can this is the drive to the globe. Thanks,
Speaker 1: We'll drying up on Bloomberg Radio in this time for
Speaker 1: the Drive to the clothes. Happy to have back with this.
Speaker 1: Bill Smee, chief investment Officer, Smead Capital Management. He joins
Speaker 1: us from the West coast, the Pacific Northwest, the Seattle
Speaker 1: area to be a little more precise. So, Bill, you know,
Speaker 1: I listened to Charlie Pellett all day every day, and
Speaker 1: he pops into our show and he tells us what's
Speaker 1: going on in the market, and he is increasingly and
Speaker 1: has been for a while. I guess using the word
Speaker 1: record to talk about the SMP and certainly to talk
Speaker 1: about the NASDAC. Let's talk about the NAZAC if we can.
Speaker 1: Let's talk about tech stocks, because what a run they've had,
Speaker 1: and it just defies gravity in many cases, and I
Speaker 1: wonder what you make of it. Well, Uh, I'm forty
Speaker 1: years into being in this industry. And uh. You know,
Speaker 1: when when you are a long time veteran, you try
Speaker 1: to train yourself to be excited about meritorious things and
Speaker 1: wonderful companies that are in the wrong part of their
Speaker 1: business cycle, uh for one reason or another, and you
Speaker 1: try to avoid kept getting involved in very strong momentum
Speaker 1: and popularity among things that are near the top of
Speaker 1: their particular industry business cycle. And the COVID thing, obviously
Speaker 1: has uh exacerbated the misery of some people that were
Speaker 1: in down cycles, and it has caused an whole layer
Speaker 1: of additional momentum to those things that were already popular
Speaker 1: but are benefiting from the kind of voluntary prison that
Speaker 1: we operate in. All Right, is that your way of saying,
Speaker 1: it's tough being a value guy right now? Testing is
Speaker 1: not the right word now it You know, it was
Speaker 1: rough and nine that was rough because your next door
Speaker 1: neighbor was doubling their money on an I p O uh,
Speaker 1: you know, twice a month, and and you know wondered
Speaker 1: why you couldn't get them any shares? Uh. And this time,
Speaker 1: I mean it's literally it's the businesses that virtually everybody
Speaker 1: is forced to interact with on a daily basis. And
Speaker 1: the problem is that it would be a lot like
Speaker 1: nineteen seventy two, where you you were a Coca Cola
Speaker 1: drinker and you you recognized how addictive and wonderful of
Speaker 1: a business that Coca Cola was, and then you bought
Speaker 1: a bunch of it in nineteen seventy two at about
Speaker 1: you know, eighty times earnings, and then you woke up
Speaker 1: ten years later and you you you lost money for
Speaker 1: ten years, Uh quite a bit, as a matter of fact,
Speaker 1: and and you got into a different part of the
Speaker 1: cycle for stocks and a different part of the cycle
Speaker 1: for for their particular industry. And uh, it's just hard
Speaker 1: to visualize that stuff right now. We I, you know,
Speaker 1: I have swallowed so much Humble Pie that I literally
Speaker 1: could start a Humble Pie chain. Yeah. It's tough out there,
Speaker 1: for sure in many ways. And yet the market you know,
Speaker 1: you know, continues continues to grind in many ways. So
Speaker 1: where do you find opportunity here then, especially given all
Speaker 1: these different headlines coming out as that are part health crisis,
Speaker 1: part economic crisis, part trade tensions, like all of it
Speaker 1: seems to be coming at us from every direction every day. Yeah. So,
Speaker 1: so first off, uh and I love the question. I
Speaker 1: love your premise there. You're just looking for great long
Speaker 1: term risk reward relationships when you're us. So I don't
Speaker 1: want to mope too much. Uh. I think if you
Speaker 1: look back at the last ten years, I think we've
Speaker 1: made something like compounded net of costs for our end investors. Right.
Speaker 1: So it's like, you know, uh, I'm not here at moment.
Speaker 1: It's been a great era, and ironically we're fully invested,
Speaker 1: right We're We're We're not We're not one of these
Speaker 1: groups that's sitting in cash waiting for armagedd to come. Uh.
Speaker 1: Uh So, so we're you know, we're not there. But
Speaker 1: back to your point, uh, the production of oil in
Speaker 1: the United States has fallen off a cliff and the
Speaker 1: rigs are shut down, and it just appears that at
Speaker 1: some point a year or year and a half from now,
Speaker 1: that if we get back to of the economy when
Speaker 1: that lack of supply runs into actual demand, if we're
Speaker 1: at forty a barrel or forty two of barrel right now,
Speaker 1: where are we going to be when some kind of
Speaker 1: demand normalization comes up in a year and a half
Speaker 1: or two years, and therefore that looks attractive when Warren
Speaker 1: Buffett is backing up the truck on Bank America, which
Speaker 1: is a stock that we've owned since two thousand and
Speaker 1: twelve and and done extremely well on even though it's
Speaker 1: corrected sharply and not come back from the from the
Speaker 1: COVID debacle. Uh Buffett was mortified may one, right. I mean,
Speaker 1: if you watched the Virtual Annual meeting, he was mortified.
Speaker 1: And and uh so do you have to ask him
Speaker 1: the question why did you buy Dominion Energy and why
Speaker 1: you're buying Bank America? And and the answer to that
Speaker 1: would be that a lot of the uncertainties that that
Speaker 1: that he couldn't really get his arms wrapped around may one,
Speaker 1: He's more comfortable wrapping his arms around them. Now. You know,
Speaker 1: we've been talking this week, and I was talking with
Speaker 1: a bunch of CEOs about scenario planning. Right. This is
Speaker 1: something that Shall really created back in the seventies where
Speaker 1: you start to think through those wild scenarios and then
Speaker 1: kind of plan your business around that as an investor.
Speaker 1: What's the scenario planning um bill that we need to
Speaker 1: be doing right now. I just got about forty seconds.
Speaker 1: One of our scenarios is playing out, and actually COVID
Speaker 1: nineteen has been the positive catalyst, which is we talked
Speaker 1: to people at dr Heart in a day, people under
Speaker 1: thirty four bought the new homes they built in the
Speaker 1: last couple of months. And that is something that most
Speaker 1: people were not expecting, which is that the millennials would
Speaker 1: buy houses like prior generations. They're just doing it five
Speaker 1: to seven years later. Very cool, very interesting. Um, thank
Speaker 1: you so much for them. You're right, and we've been
Speaker 1: watching that housing sector talking a lot about kind of
Speaker 1: what we're seeing, and those trends have been, you know,
Speaker 1: really really interesting to follow. Bill Smith, They you so
Speaker 1: much meat capital market. Bill has really seen a lot
Speaker 1: of market cycles over his forty years, investing about two
Speaker 1: point two billion in assets under management, joining us on
Speaker 1: the phone from Seattle. Yeah, it's a great perspective and
Speaker 1: listen that long term view. It's really important to keep
Speaker 1: in mind because it's easy to get caught up in
Speaker 1: a minute to minute to take by ticks, certainly in
Speaker 1: a market like this. Well, we do want to talk
Speaker 1: a little bit about the E t F world ed
Speaker 1: Rosenberg is back with US, head of ETF that American
Speaker 1: Century UH investments ninety billion in assets under management joining US,
Speaker 1: I believe on the phone from Chicago, Ed, good to
Speaker 1: have you back with US. Um, I gotta ask you.
Speaker 1: Are you in Chicago right now? I am? Yes? Okay, Well,
Speaker 1: good to know how Chicago going. Chicago is great. I
Speaker 1: mean it's perfect weather. It's better than when I used
Speaker 1: to live on the East Coast. I don't get any
Speaker 1: of those storms. Tell me about it. Oh god, you
Speaker 1: don't know the half of it. I mean that really
Speaker 1: swept through here. I live in Westchester and it knocked
Speaker 1: out power. I mean it was it was second only
Speaker 1: the Hurricane Sandy, a distant second, but in terms of
Speaker 1: knocking everything out. So any kiss, that's the virus situation there.
Speaker 1: I'm sorry, what did you say, the virus situation? I mean,
Speaker 1: you know in Chicago, I know it's it's pretty rough
Speaker 1: with what's been going on in but it hasn't from
Speaker 1: my understand and grown that much. Where I live, which
Speaker 1: is a small town just west of the city, it's
Speaker 1: really it's quiet here for that um. So, I mean
Speaker 1: everyone's wearing their masks, doing the right thing. But it's
Speaker 1: still the spread overall. In the six months that we'll
Speaker 1: call it that's been really around, my town has only
Speaker 1: had a hundred and thirty two cases. So it's been
Speaker 1: relatively quiet on that front, which is good. Everyone's really
Speaker 1: doing the right thing in the town and keeping it
Speaker 1: from really spreading. And it is interesting to sort of
Speaker 1: see that play out on an almost micro level, right,
Speaker 1: I mean in this sense that when you do see
Speaker 1: a group of people doing you know, what are now
Speaker 1: widely considered by medical experts to be the right things,
Speaker 1: mass social distancing, washing your hands and all that, it
Speaker 1: does tend to work. But I digress. Uh, you are
Speaker 1: the head of exchange traded funds e TS, as Carol mentioned,
Speaker 1: talk to us about this moment, especially for e s G,
Speaker 1: because it feels like we're in a moment that has
Speaker 1: only accelerated over the course of fair to say, has
Speaker 1: been a little bit of a funky year. But but
Speaker 1: what are you seeing in terms of flows and even
Speaker 1: just in terms of general interest. So let's start with
Speaker 1: the general interest with E s G. I mean, I
Speaker 1: think it's it's picked off. What's been interesting about this
Speaker 1: year is companies that are considered more e s G
Speaker 1: have performed better. Now. There's different approaches to e s G.
Speaker 1: You know, there's there's exclusionary, which tends to be a
Speaker 1: little bit different, there's impact, and then there's really sort
Speaker 1: of digging in and finding those companies that are environmental, social,
Speaker 1: and governance. And I think when you do the second
Speaker 1: and third aspect of it, you're really able to find
Speaker 1: companies that are starting to be considered quality across the board.
Speaker 1: And quality in the year like this, when there's been
Speaker 1: so much volatility, has definitely been rewarded in a lot
Speaker 1: of ways because if earnings are going to continue, I know,
Speaker 1: listening to the update of what's driving the Dow or
Speaker 1: driving the stocks today, the companies that were talked about
Speaker 1: were definitely quality companies, and so I think that's really
Speaker 1: helping e s G. As they become more quality and
Speaker 1: more top of mind for people, it's going to become
Speaker 1: more popular as an investment theme. And a company like
Speaker 1: American Century, you know, just to add this to it
Speaker 1: being owned by the Star Wars Institute for Medical Research,
Speaker 1: I mean, we really have a unique understanding of e
Speaker 1: s G and how we apply it across our board.
Speaker 1: So one thing I'm curious about ed is where investors
Speaker 1: are committing money new money right now? What are the
Speaker 1: flows that you guys have seen in and out of
Speaker 1: American Century And I'm curious if the flows how they
Speaker 1: have changed kind of as we've moved our way um
Speaker 1: through for many of us, you know, this work from home,
Speaker 1: stay at home environment and the impact of the virus.
Speaker 1: So it's interesting from an overall perspective from ETFs in
Speaker 1: general and that American century. What you saw was you
Speaker 1: saw a lot of international investing the first part of
Speaker 1: the year and that has substantially faded and gone to negative.
Speaker 1: So money's flown out of that. And where you've seen
Speaker 1: money going is I don't want to it's not what
Speaker 1: I would call a flight to safety, but it's flight
Speaker 1: to some higher yielding bonds who corporates across the board,
Speaker 1: as well as some aggregate but the US it's really
Speaker 1: been focused specifically on the US market. And then if
Speaker 1: you look specifically, it's what you've been what you guys
Speaker 1: I'm sure have been talking about, which is technology, right,
Speaker 1: whether it's you know, from fang stocks across the board,
Speaker 1: people are going into that and even some of our
Speaker 1: ETFs we launched a new ETF earlier this year in
Speaker 1: the middle of the pandemic um just focused dynamic growth,
Speaker 1: which has some of that technology exposure. I mean, it's
Speaker 1: been gathering assets fairly quickly for a new product, and
Speaker 1: quite frankly, it's a new structure for you guys. It's
Speaker 1: a semi transparent structure, which was the first of its
Speaker 1: kind just to get out there, and people are drawing
Speaker 1: interest to that more than anything else that I've launched
Speaker 1: in a long time. What does that mean? Semi transparent? So,
Speaker 1: as you know, with with ets, holdings generally or displayed
Speaker 1: daily or a function whether it's called the basket, which
Speaker 1: shows you all the holdings. These semi transparent structures do
Speaker 1: not show the holdings daily. That is the only difference.
Speaker 1: And so what that means basically is the only time
Speaker 1: the investor can see what's in the fund is either
Speaker 1: on a monthly basis with the top ten holdings or
Speaker 1: from us when we release the quarterly holdings fifteen days
Speaker 1: after quarter in tell they'll see exactly what's in it
Speaker 1: just quickly thirty seconds. Why would I want that over
Speaker 1: a fully transparent well, if you're really looking for something
Speaker 1: that has the portfolio manager's best ideas without the fear
Speaker 1: of front running, so they can really offer potentially an
Speaker 1: alpha generating portfolio similar to what you'd get in a
Speaker 1: mutual fund, which you can't get an Yeah, that's exactly
Speaker 1: why you'd want it. Okay, interesting, interesting, all right, Ed Rosenberg,
Speaker 1: thank you so much. Really good to catch up with
Speaker 1: you get a view of what's happening there on the
Speaker 1: ground just outside Chicago. Ed Rosenberg, head of exchange traded
Speaker 1: funds for American Century Investments. I mean, look this that
Speaker 1: corner I was going to call at the corner of
Speaker 1: the market, like that side of the market has just
Speaker 1: exploded when it comes to et s, I was reminded
Speaker 1: about of that when you were out and hanging out
Speaker 1: with miss Scarlett food. When she was with me, she
Speaker 1: knows so much about Somebody was treating me like, when
Speaker 1: are you gonna bring it back? It coming back? Scarlett?
Speaker 1: I know that's her show. It's her show, ma'am. Hopefully soon.
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