Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 1: Tim Stenebek on Bloomberg Radio.
Speaker 2: So we recently reported on how the US Supreme Court
Speaker 2: is near decisions on the use of affirmative action at
Speaker 2: colleges and university. It's something US businesses are watching very closely.
Speaker 2: So by the end of this month, I mean there's
Speaker 2: only a few days left, matt Leal experts predict that
Speaker 2: the US Supreme Court will ban race based admissions in
Speaker 2: higher education. You and I have talked about this, Yeah.
Speaker 3: We have.
Speaker 4: And you know, it's a very interesting and controversial issue,
Speaker 4: right because a lot of people are for it, and
Speaker 4: they think we need affirmative action to make strides that
Speaker 4: we clearly haven't yet by market means. And there are
Speaker 4: those who say this is just using discrimination to reverse
Speaker 4: the ills of discrimination.
Speaker 2: So yeah, and Business Week did actually talk to different
Speaker 2: individuals about it, and some said, yep, I definitely benefited.
Speaker 2: Some said, you know what, I don't think it's a
Speaker 2: good thing. And these are people who you know, had
Speaker 2: access to affirmative action programs that actually did something for them.
Speaker 2: So I'm curious nixt's guess has to say and how
Speaker 2: it kind of plays into the financial arena. Let's head
Speaker 2: to Oakland, California, where we find a lumin Capital managing partner,
Speaker 2: Darren Dotson on zoom from Oakland. Darren, Nice to have
Speaker 2: you back with us. I do want to start with
Speaker 2: those Supreme Court decisions because it does feel like there's
Speaker 2: a wave making its way through the country. What do
Speaker 2: you think about this because companies are watching too, because
Speaker 2: they are caught in the crossfire of all of this,
Speaker 2: their initiatives that they put into place, and yet you
Speaker 2: see kind of from a legal perspective, the winds are changing.
Speaker 5: Yeah.
Speaker 6: Thanks, it's great. It's great to be back. And what
Speaker 6: I would say is that from our standpoint at a
Speaker 6: looming capital, a lot of the elements that we're looking
Speaker 6: at in terms of the waves of change within the
Speaker 6: country result back to the asset management business and the
Speaker 6: fact that only one point four percent of eighty two
Speaker 6: two trillion dollars in capital or managed by women and
Speaker 6: people of color. So we think that that's well believed.
Speaker 4: To repeat that's dat because I think a lot of
Speaker 4: people will be like, what that sounds crazy, but it's
Speaker 4: it's true true, So say it again.
Speaker 6: Percent of eighty two trillion dollars in capital managed by
Speaker 6: women and people of color. And you know, there's for
Speaker 6: those of us that love statistical analysis and market based strategies,
Speaker 6: that's in the context of massive, growing and multi trillion
Speaker 6: dollar black and Latin X buying power in the United States,
Speaker 6: and we've seen that there's an incredible opportunity to invest
Speaker 6: in companies and that one strange thing that we found
Speaker 6: in our research with Stanford was that the higher black
Speaker 6: managers performed, the less capital they get. People are more
Speaker 6: willing to leave money on the table the higher they perform.
Speaker 6: So I think there's some real deep analysis needed.
Speaker 2: What's up that? Is the world just racist?
Speaker 4: You know?
Speaker 6: I think that within the biases that asset allocators sign
Speaker 6: up for their fiduciary duty, but biases keep them from
Speaker 6: fulfilling their fiduciary duty to make the most money for
Speaker 6: their clients. And in this case, going past high performing
Speaker 6: black fund managers to invest in people that are familiar
Speaker 6: is a violation of their fiduciary duty, which is another
Speaker 6: legal requirement that those that manage money are supposed to
Speaker 6: live up to every day, and it happens if they
Speaker 6: don't work on these biases towards black people, women, Latin
Speaker 6: X people, then they're really not serving their investors in
Speaker 6: ways that they're signing up legally to do.
Speaker 4: Yeah, it's interesting. I'll never forget a phrase that Marcus
Speaker 4: Shaw on this program shared with us, you need to
Speaker 4: let your greed overcome your bias. His point was that
Speaker 4: you know, if you increase diversity, you're going to be
Speaker 4: able to increase your revenue and your your profits as well.
Speaker 4: Let's talk about building back Black Wall Street, the revitalization
Speaker 4: of Black Wall Street as opposed to starting a new
Speaker 4: one Black Wall Street, black banks. This is something that
Speaker 4: at one point had a lot of momentum and was destroyed.
Speaker 6: Yes, in terms of building black back Black Wall streets.
Speaker 6: More generally, there were a number of thriving communities across
Speaker 6: the country that were wealthy Black communities that were targeted
Speaker 6: with either interventions that were government focused in or revente
Speaker 6: in terms of building highways through communities, or targeted by
Speaker 6: racial violence, like in Tulsa a little more than one
Speaker 6: hundred years ago. But I think what I'd like to
Speaker 6: share is the idea of Black Wall Street as an
Speaker 6: idea and the tearing down of Black Wall Street as
Speaker 6: an idea, because I think that it's too easy to
Speaker 6: forget that those that built Wall Street were literally enslaved
Speaker 6: black folks, that New York, Boston and other areas of
Speaker 6: the country benefited from the financial system of slavery over time.
Speaker 6: And as we look at what Wall Street can do,
Speaker 6: we look at that stark number of one point four
Speaker 6: percent of eighty two trillion dollars in capital, despite women
Speaker 6: and people of color making up half of the country
Speaker 6: and magnificant amounts and growing amounts of the country, and
Speaker 6: we have to ask the question, why isn't the statistical
Speaker 6: probability that women in black people would be represented in
Speaker 6: the leadership of asset management, business or ownership that sort
Speaker 6: of represented as it might be statistically. So that's part
Speaker 6: of the questions that we ask with our research partners
Speaker 6: at Stanford Spark, who are some of the top folks
Speaker 6: in the world in social psychology professors at Stanford and
Speaker 6: those that are running with many firms around the country
Speaker 6: statistical analysis on portfolio construction.
Speaker 2: So Matt and I've talked about this a lot, and
Speaker 2: it's above and beyond the right thing to do, and
Speaker 2: I just but sometimes.
Speaker 4: You know, increasing gender and racial diversity.
Speaker 2: Correct, But returns often speak volumes and what can you
Speaker 2: share with us about pursuit doing this type of investing
Speaker 2: and what you guys are doing and what kind of
Speaker 2: returns you get for your investors.
Speaker 6: Yeah, what I'd say from a return perspective is that
Speaker 6: you know and this isn't new information. In fact, doctor
Speaker 6: Lisa Cook the only black woman in the one hundred
Speaker 6: and eight year history of the Federal Reserve Board. Her
Speaker 6: area of research as a professor is on terror and
Speaker 6: black value creation. She studies patents in black communities and
Speaker 6: equates the eleven hundred lost patents because of racial terror
Speaker 6: between nineteen hundred and roughly twenty ten as the value
Speaker 6: of a small European economy and lost GDP. So, I
Speaker 6: think the real message here is that so many in
Speaker 6: the asset management business are missing such value in a
Speaker 6: system that is pushing people away that could equate to
Speaker 6: returns or increase value in the magnitude of a small
Speaker 6: European country, boost to the GDP, which, certainly as inflation
Speaker 6: increases and we have lots of different challenges around interest
Speaker 6: rates in the United States, could be a large benefit
Speaker 6: to lift all boats.
Speaker 4: So what do you do, Darren on the ground in
Speaker 4: order to increase gender and racial diversity.
Speaker 6: Oh, we partner with the funds that we work with
Speaker 6: over a ten year period and we focus on giving
Speaker 6: them the tools to address bias within their hiring, promotion,
Speaker 6: retention and attraction of talent processes, within their board selection processes,
Speaker 6: and then within their investment decision making processes. And what
Speaker 6: we want them to do is find the best people
Speaker 6: in the world. I think to us that includes women
Speaker 6: and people of color or whereas to much of the
Speaker 6: financial markets, often high performing or better performing women people
Speaker 6: of color are left out of the conversation when it
Speaker 6: comes to hiring, which again results in one point four
Speaker 6: percent of eighty two trillion dollars in capital managed by
Speaker 6: women and people of color collectively. So something is going
Speaker 6: on beyond looking at financial decision making is certainly our thesis.
Speaker 2: Well, it's so good to check in with you once
Speaker 2: again and look forward to doing so in the future. Darren,
Speaker 2: Thank you so much and hearing about the work you
Speaker 2: guys are doing. Darren Dots and managing partner at a
Speaker 2: lumin And Capital on Zoom from Oakland, California, Oakland, its
Speaker 2: own city with you know, revitalization, going through a lot
Speaker 2: and coming around.
Speaker 4: Yeah, no, absolutely. It is interesting to see people like
Speaker 4: Darren who are investing in this and trying to make
Speaker 4: a difference with the money that they put into the market.
Speaker 4: You know, we talk with so many people who come
Speaker 4: on here with studies and the results of studies and
Speaker 4: we's actually doing are bad. A need to be changed,
Speaker 4: and he's actually putting his money where his mouth is.
Speaker 2: No, exactly and can see the payoff in certainly in
Speaker 2: terms of increasing and creating communities.
Speaker 1: This is Bloomberg Business Week with Carol Messer and Tim
Speaker 1: Stenebeck on Bloomberg Radio.
Speaker 2: Top of Mind continues to be what's going on inside Russia.
Speaker 2: We've talked about it from a couple of different angles,
Speaker 2: and we know President Vladimir Putin spoke for about six
Speaker 2: minutes a very short address to his nation, condemning leaders
Speaker 2: of the Wagner Mercenary Group as traders to Russia in
Speaker 2: a late night speech to his nation. Those were his
Speaker 2: first public comments since the mutiny that posed the most
Speaker 2: serious threat to his nearly quarter century rule. So let's
Speaker 2: get to it a little bit more analysis. Andy Brown,
Speaker 2: his partner at Brunswick Group. Former editorial director at Bloomberg
Speaker 2: New Economy. He spent three decades in Asias both China
Speaker 2: editor and a columnist for The Wall Street Journal. Today
Speaker 2: he leads the China Hub as a partner at Brunswick Group,
Speaker 2: and he is joining us on Zoom in New York City. Andy,
Speaker 2: good to have you here. Also with us is Mick mulroy,
Speaker 2: co founder of the Lobo Institute. They advise, consult teach
Speaker 2: on current and future conflicts and how to end them
Speaker 2: and really how to prevent them from happening again in
Speaker 2: the future. Andy, is, I've forgive me Mick is on
Speaker 2: Zoom on the phone. Excuse me for Montana. I'll get
Speaker 2: my zooms and phones right, Andy, Mick, thank you for
Speaker 2: being with Matt and me. I'm curious, Andy, what kind
Speaker 2: of calls you are getting, specifically on what's going on
Speaker 2: in Russia.
Speaker 5: Well, it's great to be here, Carole, Matt. Yes.
Speaker 7: So the hot off the press, Putin has come up
Speaker 7: with angry comments calling Pregosian and his mutiny as traitors
Speaker 7: and saying that the whole of Russian society has rallied
Speaker 7: against them, and saying that they only made their move
Speaker 7: to cover up battlefield failures and pray, all of which,
Speaker 7: of course is complete nonsense, demonstrated such by television pictures
Speaker 7: that Russians indeed the whole world, or over the weekend
Speaker 7: where we saw Wagner fights being enthusiastic we received in
Speaker 7: Rostal and almost no opposition. Has several of his columns
Speaker 7: swept north do within almost one hundred miles of the
Speaker 7: gates of Moscow.
Speaker 4: Yeah, I mean they were lined up to take selfies
Speaker 4: with Pregosi. Clearly this guy has serious support in Russia,
Speaker 4: at least in the areas that he occupied. Mick mulvaney,
Speaker 4: let me bring you in, mc mulroy, let me bring
Speaker 4: you into this and ask you.
Speaker 2: I know that was a flash in the past, well
Speaker 2: not so far, I know, I know.
Speaker 4: So Nick mulroy a very different person than McK mulvaney.
Speaker 4: Let me ask you your take on this in terms
Speaker 4: of how does Putin do without the Wagner group If
Speaker 4: they're responsible for pretty much everything that the Russians have
Speaker 4: gotten right in Ukraine, you know, from their perspective, if
Speaker 4: you were just up to the Russian army, you know,
Speaker 4: Ukraine may have pushed them out already. So can he
Speaker 4: do without them?
Speaker 3: So great to be with you guys, and certainly a
Speaker 3: lot going on today. That is a good question because
Speaker 3: from President Putin's speech two things really stuck out to me.
Speaker 3: One he acknowledged that they were a colossal threat, something
Speaker 3: that most totalitarian regimes don't like to admit. And two,
Speaker 3: he didn't really have any of the concessions that we
Speaker 3: thought he might based on whatever deal he made with Progotion.
Speaker 3: He did not announce that he would remove the Administra
Speaker 3: of Defense Shoigu or the Chief of Staff Grossamov, and
Speaker 3: he did reiterate that he wants Wagner or he insists
Speaker 3: that Wagner either lay down their arms or join the
Speaker 3: mod That is good for Ukraine and all those that
Speaker 3: support him. It is not necessarily good for Russian efforts
Speaker 3: in Ukraine because although it's composed mostly of war criminals,
Speaker 3: quite frankly, they are one of the few Russian forces
Speaker 3: that is willing to go on the offensive and has
Speaker 3: taken some of the more key terrain that Russians have
Speaker 3: taken within the last six months. So that is going
Speaker 3: to be to be determined of just what the fate
Speaker 3: of Progosion and the Wagner Group is at the end
Speaker 3: of it.
Speaker 4: So clearly Putin has to do something to sort of
Speaker 4: re cement his place and power. A lot of people
Speaker 4: are saying Progosion doesn't have long to live. But on
Speaker 4: the other hand, Progosian seems to be in a pretty
Speaker 4: good place, specifically if he goes rather than to Belarus,
Speaker 4: back to Rostov, which is a key way to maintain
Speaker 4: his leverage. Right it's the logistics hub for the fight
Speaker 4: in Ukraine that he's already shown he can occupy. What
Speaker 4: do you think his next move.
Speaker 3: Is, So that's a good question. I do think he
Speaker 3: should be looking over his shoulders and probably haven't. Somebody
Speaker 3: tastes his soup before he does. He has. He has
Speaker 3: definitely provoked the Russian establishment all the way to the top.
Speaker 3: Whether he is essentially under guardianship in Belarus is to
Speaker 3: be determined. But another factor to consider is the Wagner
Speaker 3: Group obviously operates in more places than Ukraine. There are
Speaker 3: throughout Africa, especially Sub Saharan Africa, and they make quite
Speaker 3: a lot of money, and I would assume the regime
Speaker 3: gets a portion of that. I don't know, but I
Speaker 3: would assume that is in direct cooperation with the regime.
Speaker 3: So it might be that he is precluded from potentially
Speaker 3: leaving Belarus for operating in Ukraine, but they might want
Speaker 3: him to keep his operations going in Central African Republic
Speaker 3: and now in Sudan, and maybe in other places where
Speaker 3: they not only operate, but they operate potentially at a profit.
Speaker 4: Incredibly profitably. Actually, Mick Matt brings up a question I
Speaker 4: want to throw to Andy. If Progosion is making reportedly
Speaker 4: he's making over a billion dollars in you know, just
Speaker 4: a few properties in Africa. I mean, the grand total
Speaker 4: may be much more than that, but he can't put
Speaker 4: that in a US bank or even keep it offshore anymore.
Speaker 4: What does a Russian criminal who uh you know isn't
Speaker 4: allowed to move around financially in the Western world do
Speaker 4: with his wealth? Does he have to, you know, kiss
Speaker 4: the ring of Vladimir Putin? Can he bring it to China?
Speaker 4: Can he bring it to India?
Speaker 7: First of all, I think he's interested probably right now,
Speaker 7: I'm all concerned about his life rather than preserving his wealth.
Speaker 5: He's a marked He's a marked man. He has punched
Speaker 5: Putin's or invincibility.
Speaker 7: Putin is no longer the strong man that he wants was,
Speaker 7: and everybody can see that. Here you have Pregosion who's
Speaker 7: challenged the Krambling, and he's not exactly got off scot free,
Speaker 7: but Putin appears on the weekend to have sort of
Speaker 7: led him off the hope.
Speaker 5: We don't know where he is. He may or may
Speaker 5: not be in yellar Us. Certainly the deal was broken
Speaker 5: by Lushenko.
Speaker 7: Uh and we don't actually know what the status quo
Speaker 7: is of his heavily battle hardened Wagner forces.
Speaker 5: They certainly haven't demobilized.
Speaker 7: In fact, all of the reports that I've been reading
Speaker 7: out of Russia day is that his recruitment centers across
Speaker 7: the country are still operating normally. So the the reason
Speaker 7: that Pregosian gave for launching them munity was that he
Speaker 7: said that the Russian military wanted to disband the Wagner forces.
Speaker 5: Clearly that has not happened.
Speaker 2: Andy our Bloomberg Big Take, which is our story that
Speaker 2: our editorial team deems that the world should read on
Speaker 2: the Bloomberg and at Bloomberg dot com. But it talks
Speaker 2: about the Russian president and basically facing this historic threat
Speaker 2: to his absolute grip on power in Russia. Do you
Speaker 2: think his years or his term is coming to an
Speaker 2: end as a result of this?
Speaker 7: You know, it's hard, it's it's hard to predict where
Speaker 7: it's where this is going to go. These are early days,
Speaker 7: and everything is very confused right now. Uh but certain
Speaker 7: but certainly, as I say, his aura of power has
Speaker 7: been has been badly damaged. Let's see what happens to
Speaker 7: Let's see what happens to progression. The other very interesting
Speaker 7: thing about the weekend, uh puncture to what Poutings said
Speaker 7: about the whole country rallying against him when this thing
Speaker 7: first started, and remember, we didn't know that if it
Speaker 7: was a mutiny, whether it was a coup, and nobody
Speaker 7: in Russia knew that either. And the Russian elites, the
Speaker 7: ones that are closest to Putin, failed.
Speaker 5: To speak up for it. They held their silence.
Speaker 7: They were waiting to see very clearly which way the
Speaker 7: winds were going to blow, whether the mutiny as it
Speaker 7: was back then, a whop as it seemed to be,
Speaker 7: would be successful or not.
Speaker 5: So he's clearly Putin has.
Speaker 7: Clearly lost a lot of his support, or at least
Speaker 7: perceptions of support, in parts of Russian society and the
Speaker 7: security forces that really matter.
Speaker 2: Make you agree in terms of President Putin's standing in his.
Speaker 3: Country, yes, I do. I would add also that it's
Speaker 3: become very clear that his decision to invade Ukraine was
Speaker 3: a significant strategic mistake. And you have Progosion, one of
Speaker 3: the main fighters there, acknowledging and he can't unring that
Speaker 3: bell that the Russian people relied to there was no
Speaker 3: NATO expansion there is now, but there wasn't before, and
Speaker 3: that there was no threat to ethnic Russians in Ukraine.
Speaker 3: He already said that, And I think the Russian people
Speaker 3: are going to hear that, and they're going to hear
Speaker 3: it more often. And I think that and the fact
Speaker 3: that that Russia is in effect losing what they wanted
Speaker 3: to do in Ukraine, and most dictators cannot survive a
Speaker 3: loss like that, and certainly when he looks as weak
Speaker 3: as he does, acknowledging that this was a colossal, colossal
Speaker 3: threat to him from the Bogner group.
Speaker 4: Yeah, certainly, you think you'd think that Russian mothers will
Speaker 4: consider pregosians word when they hear that their sons have died,
Speaker 4: and how many you know? Now, I think more than
Speaker 4: a couple of hundred thousand Russians have died in Ukraine. Mick,
Speaker 4: you you know, from your years at the CIA, from
Speaker 4: your years at the Department of Defense, what do you
Speaker 4: think we are hoping for? What do you think America
Speaker 4: is hoping for in terms of a coup, Because it
Speaker 4: seemed on Friday like, oh, coup, that would be great.
Speaker 4: We want Putin out of power, but we it seems
Speaker 4: now like, well, we definitely don't want pregotion in power.
Speaker 4: So let's who else is out there that could challenge
Speaker 4: Vladimir Putin?
Speaker 3: So to start with, I do not think and I
Speaker 3: don't know. I'm out of government, but I do not
Speaker 3: think the US had anything to do with this. I
Speaker 3: don't see a logical reason why they would want to replace,
Speaker 3: you know, Vladimir Putin with progosion. Progosion is actively called
Speaker 3: for the use of tactical nuclear weapons in Ukraine in
Speaker 3: the past, and he's quite frankly, very unstable. So I
Speaker 3: don't see that I would agree with the White House
Speaker 3: position that they would not have any reason to promote that.
Speaker 3: Who would be a suitable alternative to Putin? I don't
Speaker 3: know right now, but I guarantee you. The intelligence community
Speaker 3: is assessing just that and trying to find out who
Speaker 3: may not that we would push for any of them,
Speaker 3: because we're not. Our policy is not regime change is Rasia,
Speaker 3: but to be able to get ahead of anybody who
Speaker 3: may potentially take a run at Putin. I just don't
Speaker 3: know who that person would be.
Speaker 2: Andy, come on in on this if you have any
Speaker 2: thoughts about who might take over for Putin. But I
Speaker 2: also want to throw China into this. This is something
Speaker 2: you know, you know so much about China and how
Speaker 2: they lead. We've kind of laughed, but not laughed a
Speaker 2: little bit about the Chinese Foreign Ministry coming out with
Speaker 2: a statement describing the weekends events in Russia as Moscow's
Speaker 2: internal affairs, something they often say about their own internal affairs.
Speaker 7: But how do you.
Speaker 2: Think about the role of China and what happens here
Speaker 2: in Russia specifically, what do we kind of need to
Speaker 2: kind of have top of mind here?
Speaker 4: Well?
Speaker 7: I think that the Chinese are looking at this with
Speaker 7: a mixture of alarm, but also a certain amount of
Speaker 7: small self satisfaction and the alarm because they're worried, They're
Speaker 7: concerned that they have made a very bad bet on
Speaker 7: gladymir Putin. Putin is to Jim King's quote unquote best friend.
Speaker 7: They've met forty odd times, and you know, they're quite
Speaker 7: similar figures in a way. They both promote a resentful
Speaker 7: form of nationalism. They're both on a mission to revive
Speaker 7: the historic glories of their respective countries, and they believe
Speaker 7: that the United States stands in the way.
Speaker 5: And they formed an axis, an east.
Speaker 7: West axis to push back against US power and to
Speaker 7: revise the US led global order. And the anchor of
Speaker 7: that western axis of Vladimir Putin is looking decidedly shapy
Speaker 7: right now, and the project to push back against US
Speaker 7: power is becoming bobbed down in the bloodstot battlefields of Ukraine.
Speaker 7: Smart self satisfaction, because I think such thing is looking
Speaker 7: at this and saying this would never happen in China.
Speaker 7: We would never I would never allow control of China
Speaker 7: to slip away in this way.
Speaker 5: In fact, the.
Speaker 7: First thing that she doing did when he came to
Speaker 7: power in twenty thirteen was a purge in the military,
Speaker 7: and he put hisself voyalists in charge.
Speaker 2: Well, so happy to have the two of you here,
Speaker 2: Thank you so much, Really, appreciate it. Andy Brown, partner
Speaker 2: over at Brunswick Group. Mick mulroy, co founder of Lobo Institute,
Speaker 2: really smart and insight and coming at it from a
Speaker 2: couple different angles there. We so appreciate it. Be well
Speaker 2: to both of you.