Speaker 1: This is Bloomberg Business Wait inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: global business, finance and tech news. The Bloomberg Business Week
Speaker 1: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2: I'm Carol Master at the Lookin Institute Global Conference in
Speaker 2: Beverly Hills, and we do have an all star lineup
Speaker 2: this hour, and our next guest has a front row
Speaker 2: seat on today's financial markets and so much more. Jim
Speaker 2: Crowley is CEO of B and Y Mellon Pershing, and
Speaker 2: he joins me here on site.
Speaker 3: How are you well, It's great to see you.
Speaker 2: It's great to see you having me well, thank you
Speaker 2: for being here. I feel like you guys see so
Speaker 2: much the environment. How does it feel right now?
Speaker 3: I would say cautiously optimistic. Obviously there's quite a bit
Speaker 3: of news going on, particularly today.
Speaker 2: What did you make of the banking news because it
Speaker 2: does feel like things come down and then we still
Speaker 2: got to deal with some SI.
Speaker 3: I think the news today was really important for the marketplace.
Speaker 3: I think it was, as most people have said, stabilizing,
Speaker 3: and what investors don't like is uncertainty. Markets don't like uncertainty.
Speaker 3: So the story today with JP, I think really was
Speaker 3: stabilizing for the marketplace, and I think that's what you know,
Speaker 3: we're sort of seeing in the market today.
Speaker 2: So it does feel like it's like put that behind.
Speaker 2: Do you think that's it, though, Jim or it's hard.
Speaker 3: To say, well, hard to say, right, of course, whenever
Speaker 3: you sort of think that it's it, there's always another
Speaker 3: shoot a drop. So I think that I think it's
Speaker 3: wise of us all to take a breath, be grateful
Speaker 3: for the stabilization that we have today and stay tuned.
Speaker 3: I think that, you know, whether it's interest rates or
Speaker 3: commercial real estate or whatever, the next thing might be right,
Speaker 3: there could be another surprise, but I think that we
Speaker 3: should just all stay well prepared.
Speaker 2: You know, it's interesting because I did a panel this
Speaker 2: morning about commercial real estate, and yeah, there's a concerns,
Speaker 2: whether it's the middle market or you know, they're going
Speaker 2: to be some more problems. But I didn't feel like
Speaker 2: it was Okay, this is going to be, you know,
Speaker 2: a gigantic shoot a drop. Again, I am curious, do
Speaker 2: you feel like it's too early to really figure out
Speaker 2: what will be the longer term repercussions of exchange in
Speaker 2: rates and the impact of it.
Speaker 3: Well, I'm a bit of a Jeremy Seguel kind of guy.
Speaker 3: Right stocks for the long ride, and if we stay calm,
Speaker 3: stay invested, it usually works out. Well, We've seen it
Speaker 3: over and over history does repeat itself that if we
Speaker 3: just stay invested in, stay calm, will be Okay.
Speaker 2: What are you hearing from your investment community?
Speaker 3: Oh, great question. So clients, clients really interested in how
Speaker 3: they can scale their businesses, how they can grow their businesses,
Speaker 3: how we can help them simplify what is a really
Speaker 3: complex operating environment.
Speaker 2: So so kind of business as usual moving ahead are No.
Speaker 3: I'd say it is be a you from most of
Speaker 3: our clients. But I think that there's more focus, more
Speaker 3: intentionally on growth than there ever has been in the past.
Speaker 3: And we're seeing it every week where there's another transaction
Speaker 3: that is announced where people are either doing a transaction
Speaker 3: just to acquire more scale, to acquire geography, to acquire talent,
Speaker 3: to acquire a technology, right something.
Speaker 4: It's a positive, it's a positive thing.
Speaker 3: More and more investment seems to be coming into the marketplace,
Speaker 3: particularly the wealth marketplace, and so we see it as
Speaker 3: a very positive thing. We're very bullish on the wealth marketplace.
Speaker 3: And in fact, you know you've were at Insight last
Speaker 3: year when we did the big sort of announcement with
Speaker 3: Pershing X and launching this new advisory technology platform, and
Speaker 3: hopefully we'll see you there again wanting to be there
Speaker 3: in a few weeks and you're going to hear more
Speaker 3: about what we're doing there.
Speaker 2: Well, what's the impact of all of that?
Speaker 3: It is It gets back to what I said just
Speaker 3: a moment ago, is how can we help our clients
Speaker 3: maneuver through this very challenging environment so they can scale
Speaker 3: and grow their business. So if it's technology as an example,
Speaker 3: for an advisor to put together all the different pieces
Speaker 3: of technology that they need to run their business and
Speaker 3: put it all together and have the data move across
Speaker 3: those different technology pieces without being stuck in the sort
Speaker 3: of swivel chair environment, that's something that a business like
Speaker 3: being on maleimpursion. With the scale and the investments that
Speaker 3: we're making, we can solve for I.
Speaker 2: Am curious how AI artificial intelligence has started to creep
Speaker 2: into your world and the advisors that work with you guys,
Speaker 2: because it's it's certainly everywhere I feel like in our
Speaker 2: world right.
Speaker 3: Now, Yeah, certainly to be determined.
Speaker 1: Right.
Speaker 3: We work in an environment that is very, very highly regulated,
Speaker 3: and so I think that there's going to be a good,
Speaker 3: healthy skepticism about AI, but clearly it will play a
Speaker 3: part in you seem cautious, of course, Okay, I'm cautious
Speaker 3: about it, but certainly I'm optimistic. At the same time,
Speaker 3: I think that there will be application for AI in
Speaker 3: our business to help, you know, teams be more effective,
Speaker 3: to help investors become more knowledgeable about the business. And
Speaker 3: so I just think it's going to be the proper
Speaker 3: application of AI that will have to sort of sort
Speaker 3: that all out in the months and years ahead.
Speaker 2: Well, I do wonder too, And you talk about, you know,
Speaker 2: certainly the wealth management side of the business, but I
Speaker 2: do wonder, you know, coming off the pandemic, and we
Speaker 2: talk about a lot those that are financially underserved, and
Speaker 2: I do wonder how like technology or AI continues to
Speaker 2: kind of help in that area.
Speaker 3: Yeah. I almost fall back though, Carol too, that this
Speaker 3: is a relationship business, and people's money is very very
Speaker 3: or even still even still, and it doesn't matter if
Speaker 3: you have five thousand dollars that you're saving for your
Speaker 3: retirement and you're just out of school or you're trying
Speaker 3: to save for a retirement. It doesn't matter what end
Speaker 3: of the spectrum that you're on. I think that whether
Speaker 3: it's AI or technology, it will take you so far
Speaker 3: in the process. But there's a point in time when
Speaker 3: you really do need the human interaction to really understand
Speaker 3: what the investors are thinking and how best to.
Speaker 2: Achieve their goal that hasn't gone away.
Speaker 3: Hasn't gone away.
Speaker 2: And you hear that from your advisors.
Speaker 3: Hear it all the time, Yeah, hear it all the time.
Speaker 2: So when it comes to you know where the growth
Speaker 2: opportunities you talk about, you know, technology and helping your
Speaker 2: certainly those who are you're working with your clients that
Speaker 2: they're looking for growth. What else do you look at
Speaker 2: that you think, I don't know, six months from now,
Speaker 2: twelve months from now, will be something that continues to
Speaker 2: be a big part of your world that you look
Speaker 2: to grow into. Well, I guess I'm thinking, like you know, evolution, disruption, innovation.
Speaker 3: Yeah, so I already mentioned pershing X right, A bit
Speaker 3: innovative on the technology side. I would also say and
Speaker 3: This is going to sound like I'm speaking at both
Speaker 3: sides of my mouth here, because I love.
Speaker 2: When you say technology and yet people are important.
Speaker 3: Yes, that's exactly where I'm headed. I still think that
Speaker 3: there's still great opportunities for digital interfaces with investors, and
Speaker 3: maybe it's advisor assisted, but we're seeing a lot of
Speaker 3: activity with many of the fintech wealth tech companies who
Speaker 3: still want to be disruptive and still believe that there's
Speaker 3: a market to be served and there is a market
Speaker 3: to be served by technology and the advice that these
Speaker 3: organizations can provide. As an example, we just did an
Speaker 3: establish a relationship with a firm called art of Financial,
Speaker 3: which is a family office wealth tech organization and it's
Speaker 3: a bunch of ex Googlers who came out of the
Speaker 3: marketplace engineers who really put together what they believe is
Speaker 3: a very very credible, valuable offer to family offices and
Speaker 3: so very different than the marketplace that we would traditionally
Speaker 3: think of. Right that would be attracted to a technology.
Speaker 2: Platform, but it's another way of getting into it, right.
Speaker 3: It's another way getting into it.
Speaker 2: It's fascinating, it's.
Speaker 3: A very fascinating. So that that's one area that we're
Speaker 3: really excited about going forward.
Speaker 2: I am curious to the last year. It's so funny,
Speaker 2: like I always feel like there's a catchphrase or something.
Speaker 2: You know, a year ago, we might have talked a
Speaker 2: lot about crypto.
Speaker 1: Yeah, this year.
Speaker 2: We're talking a lot about AI.
Speaker 1: Yeah.
Speaker 2: You know you said about your clients, you know, or
Speaker 2: the folks that you're working with, you know, a lot
Speaker 2: of it's how to grow their business. Is there anything
Speaker 2: else that kind of comes up that they're like, these
Speaker 2: are things we're hearing from investors that we want to
Speaker 2: make sure that we're involved in.
Speaker 3: Well, I think that there are different asset classes that
Speaker 3: people are interested in.
Speaker 5: It.
Speaker 2: I I'm always blown away by the private market here.
Speaker 4: Exactly all the time, exactly wherever's going. So whether it's
Speaker 4: the private markets or digital assets and the digitization of
Speaker 4: those assets still still different than crypto.
Speaker 3: But that's something that if you're sort of looking out
Speaker 3: on the horizon, I think has got a lot of
Speaker 3: room to run and something that we being one all
Speaker 3: are very interested in supporting the marketplace, and you know,
Speaker 3: as the world's largest Cristodian, we're going to need to
Speaker 3: sort of play in the.
Speaker 2: Space in terms of the mood here. What are you
Speaker 2: hearing some of the conversations that you're having with folks.
Speaker 3: I've been meeting with clients all morning, very positive. As
Speaker 3: you and I were talking before I came on, great buzz,
Speaker 3: great energy here, excitement for the marketplace, and you know,
Speaker 3: I think, right, you know, the future is pretty bright
Speaker 3: for us.
Speaker 2: It's kind of funny in a week where you know,
Speaker 2: it's just been an interesting you know, you've got a
Speaker 2: FED meeting, how much of that comes up in terms
Speaker 2: of the concerns. You know that raids are going to
Speaker 2: still go higher, They're going to stay higher for longer.
Speaker 3: Yeah, So this is the way that we think about it.
Speaker 3: We've been in business for two hundred and thirty nine years,
Speaker 3: through all.
Speaker 2: Cycles, right, We've seen a lot of cycles.
Speaker 3: We've seen a lot of cycles. I've seen a lot
Speaker 3: of cycles, and so I think what the mood is
Speaker 3: going to be is, as I said earlier, if we
Speaker 3: can just sort of see through all of this, rates
Speaker 3: are going to be higher for longer.
Speaker 2: Yeah, But it's manageable.
Speaker 3: It's manageable, and if people just take the long view,
Speaker 3: they'll be Okay.
Speaker 2: I'm going to leave it on that note, because I
Speaker 2: really think, you know, what it's been somewhat comforting is
Speaker 2: to hear people because of the headlines. Can be a
Speaker 2: little bit nerve racking, but it does feel like kind
Speaker 2: of steady and kind of maintaining the course at this point.
Speaker 3: Yeah. So disruption well obviously bring opportunity for some and
Speaker 3: we've saw today, But if we stay calm and we
Speaker 3: looked at the longer term, I think.
Speaker 2: Would be great. No chat, g ept stuff happening.
Speaker 3: No no chat gee.
Speaker 2: I'm going to leave it there, looking forward to Pershing Inside.
Speaker 2: It's always fun. I have to say. I always feel
Speaker 2: like I get so much out of talking to individual
Speaker 2: financial advisors in terms of what they're doing, what's top
Speaker 2: of mine, And sometimes we get so caught up in
Speaker 2: the big headlines, but they are It's about investors trying
Speaker 2: to figure out how to retire, how to pay for things.
Speaker 2: It's really down to earth type of advice. So I'm
Speaker 2: looking forward to it.
Speaker 3: Well, look forward to having you.
Speaker 2: Jim. Thank you so much. Jim Crowley, CEO of B
Speaker 2: and Y Melon, Pershing, thank you so much.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: Live Weekday afternoons from three to six Eastern Listen on
Speaker 1: Bloomberg dot com, the iHeartRadio app and the Bloomberg Business app,
Speaker 1: or watch us live on YouTube Highlight for us right now.
Speaker 2: Some are well known to the Bloomberg audience. We're talking
Speaker 2: about David President, CEO of the Massive Global Asset Manager PGM.
Speaker 2: They've got one point two trillion of assets under management.
Speaker 2: One hundred and sixty two of the largest three hundred
Speaker 2: global pens and funds are clients. You see a lot.
Speaker 6: Hello, we do kind of is so nice to be
Speaker 6: with you. Thank you for having me, David.
Speaker 2: It's nice to have you here. So when you talk
Speaker 2: with your clients, you hear their concerns. What is top
Speaker 2: of mind for that?
Speaker 6: I would say that, you know, although the media likes
Speaker 6: to cover are we going to have a recession of
Speaker 6: soft landing or hard landing? In general, our institutional clients
Speaker 6: believe that the market is pretty good at pricing in
Speaker 6: those risks, and as more information comes, the kind of
Speaker 6: giant avacus will actually reprice the markets a bit. What
Speaker 6: they worry about is the things that the market doesn't
Speaker 6: price very well, and those are things which have lower probability.
Speaker 6: But if they happen, actually are quite damaging, and they
Speaker 6: also in general are things where kind of you know,
Speaker 6: the market relies on the rational man school of thought
Speaker 6: that people will at the end of the day be reasonable.
Speaker 6: But what it happen And the two biggest ones that
Speaker 6: our clients are worried about right now is one, what
Speaker 6: will happen if Putin increasingly feels like he's backed into
Speaker 6: a corner? And what if he does decide that he
Speaker 6: is really going to escalate things? And are we going
Speaker 6: to have the backing in that case of a lot
Speaker 6: of the non aligned countries who have been waffling more
Speaker 6: recently on a lot of these topics.
Speaker 2: That's that's one to put that out there, but anyway,
Speaker 2: go ahead.
Speaker 6: And the second one comes more from our delightful hometown
Speaker 6: of Washington, d C. Where the market at the moment
Speaker 6: would say, you know, any rational person will assume that
Speaker 6: these nice people will actually reach an agreement on this,
Speaker 6: and it may take till eleven fifty nine, right before
Speaker 6: the deadline, but ultimately they'll come to another group. And
Speaker 6: that is in fact what's happened.
Speaker 5: In the past.
Speaker 6: But what if that doesn't happen? What if the political
Speaker 6: calculations now in Washington have changed, and don't we need
Speaker 6: to be thinking about what is the implication of that,
Speaker 6: what's the volatility that will lead in that on behalf
Speaker 6: of our clients. And so I would say those are
Speaker 6: the kinds of kind of scenario based work that we're
Speaker 6: doing with clients, almost beyond the classic market cycles which
Speaker 6: the market prices in pretty well.
Speaker 2: So David, take us there factor those in. Let's start
Speaker 2: with who factor that in? What would be the implications
Speaker 2: potentially for global financial markets?
Speaker 6: Well, I think that you have to start with the
Speaker 6: obvious things there, which is that you know, we'd have
Speaker 6: energy prices that would probably really begin to rise up.
Speaker 6: You know, you would absolutely have a much bigger shift
Speaker 6: than we've had now on you know, who is actually
Speaker 6: going to align with NATO and who won't. So you know,
Speaker 6: for the most part, NATO has been I think, done
Speaker 6: a good job of staying very aligned. But they haven't
Speaker 6: brought in a lot of the global South. They haven't
Speaker 6: parted along India. There's a whole variety of people that
Speaker 6: you know, China has played this very you know, clever
Speaker 6: in some ways, and you know, to what extent if
Speaker 6: putin really escalates, things will that no longer become acceptable,
Speaker 6: and we will actually have more of a bipolar world
Speaker 6: than we do today, and that would fragment trade, it
Speaker 6: would fragment technology. So all of those implications are the
Speaker 6: kinds of things that we're beginning to kind of game
Speaker 6: theory our way through today.
Speaker 2: Interesting, So go all right, So game theory is through
Speaker 2: the debt in the worst case scenario.
Speaker 6: So that's particularly fascinating one because as long as the
Speaker 6: as the market basically thinks that the politicians will solve this,
Speaker 6: the politicians don't actually have any real incentive to solve it,
Speaker 6: so there's no pressure on that. The only way pressure
Speaker 6: begins to build on them is to the extent that
Speaker 6: we start to see some volatility and we start to
Speaker 6: see the market saying, wow, now maybe this doesn't get solved.
Speaker 6: And so I do think you will see and you
Speaker 6: saw Yellen's comments today about a June you know, kind.
Speaker 2: Of getting out of cash.
Speaker 6: So we are going to see in May the beginnings
Speaker 6: of that discussion involved. So let you'll see it covered
Speaker 6: a lot more fundamentally, and you're going to have to
Speaker 6: see some of the game theory elements of well if
Speaker 6: we don't reach an agreement, what are the range of
Speaker 6: things that the government will have to start scaling back
Speaker 6: line and what will their priorities.
Speaker 2: In orders be. So, if you're doing game or game
Speaker 2: theory right now, when do you know just to pull
Speaker 2: the trigger and putting those theories into.
Speaker 6: You don't And I think that's one of the really
Speaker 6: you start to do it now, Well, you don't know
Speaker 6: which of them is going to happen, which is why
Speaker 6: you need to build in some real flexibility into your
Speaker 6: strategies and in and into and into your portfolios, because
Speaker 6: I don't think anybody here can predict how this is
Speaker 6: going to come out.
Speaker 2: I didn't really hear you talk about the FED. So
Speaker 2: where how does that factor in or do you feel
Speaker 2: like that's all factored into the markets already?
Speaker 6: Well, our internal view is that the market is not
Speaker 6: pricing the Fed incorrectly. Our view is that marks are
Speaker 6: too optimistic at the moment that the US economy is
Speaker 6: stronger than the markets realize. That's going to cause the
Speaker 6: FED to need to keep rates higher for longer than
Speaker 6: the markets realized. I mean, remember the markets think, you know,
Speaker 6: we're going to have actually carey thoughts this year. You
Speaker 6: think that's quite unlinkely. So our view would be that
Speaker 6: markets are too optimistic for that. But as I said before,
Speaker 6: those are things that the market will read price as
Speaker 6: it gets better and more information, as opposed to some
Speaker 6: of these other risks which actually the market really struggles
Speaker 6: with pricing well at all.
Speaker 2: David, you've seen a lot of market cycles. I'm not
Speaker 2: aging you. You've just seen I've seen a lot of
Speaker 2: market cycles too, But I do wonder, you know, the
Speaker 2: last year, who would have predicted, right, the war in Ukraine,
Speaker 2: the crypto collapse, what we're you know, bank runs? Who
Speaker 2: would have thunk? If you will? And you just laid
Speaker 2: out two significant things that could certainly change things dramatically.
Speaker 2: Is there something I don't know? You know, it does
Speaker 2: make you're doing game theory, but it's challenging for investors.
Speaker 2: So how do they protect themselves or what do you Yeah.
Speaker 6: No, it's very challenging and obviously the great protection in
Speaker 6: a world where.
Speaker 2: We where do you find that protection? When we even
Speaker 2: started to question treasuries?
Speaker 6: So the place that you find it is in diversification.
Speaker 6: And so you know, we've really been great believers that
Speaker 6: the most diversified institutional portfolios are the ones that are
Speaker 6: best positioned for resiliency in these kinds of things. So's diverse.
Speaker 2: What does diversification mean?
Speaker 6: So, if you went back twenty five years, most institutional
Speaker 6: investors would be in public stocks and bonds, and then
Speaker 6: along came this rather strange thing called private equity, which
Speaker 6: people were a little worried about in the beginning, and
Speaker 6: then ultimately sort of became an asset class. And now
Speaker 6: we're actually seeing private alternatives more broadly really coming into
Speaker 6: their own. So private alternatives, which are in addition to
Speaker 6: private equity but includes the state and private credit, I
Speaker 6: think importantly have been for US and for many others,
Speaker 6: you know, really our fastest growing businesses. So we manage
Speaker 6: about three hundred billion in private alternatives. And our view
Speaker 6: is as the banking system continues to be very capital constrained,
Speaker 6: and I think they're going to get some new regulations
Speaker 6: on top of what they've already got that's even going
Speaker 6: to constrain their credit to supply more. That is going
Speaker 6: to mean more and more companies are going to look
Speaker 6: to non bank lenders such as US to meet their needs.
Speaker 6: And so that is going to be a business which
Speaker 6: will also help diversify institutional portfolios away from the treasury
Speaker 6: problems and other things that we started our conversational.
Speaker 2: Well, it's interesting, you know, in terms of your institutional
Speaker 2: and global pension funds that you guys are that are
Speaker 2: investing with you, what kind of managing are you having
Speaker 2: to do of performance or not because you're not feeling
Speaker 2: any kind of performance hits in this environment by firms
Speaker 2: you mean defaults or not even defaults, but just expectations
Speaker 2: in terms of returns.
Speaker 6: So return expectations you know, I would say for private
Speaker 6: equity have come down a little bit. Yeah, in private
Speaker 6: credit actually because much of that, particularly direct lending, is
Speaker 6: floating rate, the returns are actually going up and have
Speaker 6: been actually quite robust, and I think that's one of
Speaker 6: the reasons that many institutional investors have been looking to
Speaker 6: add that to their portfolio because that's actually returning better
Speaker 6: than it did and they're in some ways using that
Speaker 6: as opposed to real estate that which they liked the
Speaker 6: income from but now where is a little bit riskier
Speaker 6: and they're liking the direct lending piece better.
Speaker 2: Have you seen an uptick in terms of your private
Speaker 2: credit demand because of what's happened in the bank and
Speaker 2: we we have.
Speaker 6: And that's obviously a long term trend. I mean, ever
Speaker 6: since the GFC, the banks have been lending at a
Speaker 6: much less rate because of all the new regulation that
Speaker 6: came on. But in the last four five months, as
Speaker 6: people have had questions about banks and people began to
Speaker 6: think that rates we're going to go up, we've seem
Speaker 6: very robust demand from middle market companies for borrowing, for.
Speaker 2: Sure, And that's where it's middle market companies in particular.
Speaker 2: They don't really see you expect that to continue?
Speaker 6: I do, I do, and I think that'll be true,
Speaker 6: particularly as these regional lenders find that they aren't really
Speaker 6: able to continue to expand their lending.
Speaker 2: Yeah, it's interesting. When we were talking about global real estate,
Speaker 2: the real concerns are about the middle market because they're
Speaker 2: just not able. The banks aren't there for them, right,
Speaker 2: So interesting you feel comfortable mid market real estate lending?
Speaker 6: To our our view is first of all, everybody talks
Speaker 6: about real estate, but actually what they mean is office. Yeah,
Speaker 6: but remember real estate has got a lot of food
Speaker 6: groups in it, and some of them are doing just great.
Speaker 6: So broadly, are we comfortable with our real estate portfolio.
Speaker 6: It's positioned for a recession and we're very comfortable with it.
Speaker 2: Covered a lot of ground, David hen thank you so much.
Speaker 2: David Haunt, President and CEO of p JIM joining us
Speaker 2: here at Bloomberg.
Speaker 1: You're listening to the Bloomberg Business Week Podcast. Catch us
Speaker 1: live weekday afternoons from three to six Easter on Bloomberg Radio,
Speaker 1: the Bloomberg Business App, and YouTube. You can also listen
Speaker 1: live on Amazon Alexa from our flagship New York station,
Speaker 1: Just Say Alexa playing Bloomberg eleven thirty.
Speaker 2: We are live and getting ready to wrap up our
Speaker 2: first day at the Milk and Institute Global Conference here
Speaker 2: in Beverly Hills. Something that seems so relevant today and
Speaker 2: the uncertainty about I feel like many things, including our outlook.
Speaker 2: So let's get to it. We'll explain it in a moment.
Speaker 2: Lisa Donahue is co head of the Americas and Asian
Speaker 2: Alex Partners. They're a financial advisory and global consulting from
Speaker 2: known for their work on turnarounds, some legendary ones including
Speaker 2: Rieorg's of General Motors kmart and then taking us way
Speaker 2: back to and Ron. Nice to have you here. Welcome,
Speaker 2: Thank you, It's great to be here. So is this
Speaker 2: a good environment for turnarounds? If you only think it is?
Speaker 7: I think that to we be smile or is that well,
Speaker 7: it depends on your perspective, right, Okay, Whenever there is
Speaker 7: risk and uncertainty, there's also opportunity, Right, So I think
Speaker 7: you can be smiling because I think that, Yes, I
Speaker 7: think we're in for turbulent times.
Speaker 5: Yes, I think that there's a lot of disruption out there.
Speaker 5: But the good news is the smart CEOs that we're
Speaker 5: working with are thinking proactively. They're not waiting to be disrupted.
Speaker 5: They're trying to be the disruptors or to read the
Speaker 5: tea leaves and figure out how they can make their
Speaker 5: organizations fit for purpose.
Speaker 2: Lisa, what are the tea leaves that are like kind
Speaker 2: of front and center for some of your clients and
Speaker 2: your executives you're working with thinking about it on the
Speaker 2: disruption theme as we kind of started to.
Speaker 5: If you think about it, things are moving so fast
Speaker 5: and from a financial environment, we've got high interest rates,
Speaker 5: we've got a.
Speaker 2: Tighter liquidity pool.
Speaker 5: From a disruption perspective, we have very fast paced technology change.
Speaker 2: We've got geopolitical uncertainty.
Speaker 5: We've got still in some areas dealing with some of
Speaker 5: the after effects of the global shutdown for COVID right,
Speaker 5: and having to deal with supply chain disruptions, And what
Speaker 5: does that mean for on shoring, offshoring, redundant supply chains.
Speaker 5: I think, if anything, what that showed us is that
Speaker 5: surety of product is at least as important as cost.
Speaker 2: So does that mean a lot more on shoring. Is
Speaker 2: that what we're seeing? I mean, I've certainly had talked
Speaker 2: to CEOs and they definitely are thinking about it and
Speaker 2: doing it. It's not just conversations, they're changing how they
Speaker 2: do it. I think supply to it. I think that's right.
Speaker 5: I don't let me make sure I'm clear though, I
Speaker 5: don't believe that means the end of globalization. However, I
Speaker 5: do think what it means is moving things closer to clients,
Speaker 5: closer to customers, so.
Speaker 2: That you have more of a shorty and.
Speaker 5: You're comfortable with your ability to continue to deliver your product.
Speaker 5: But I do think that smart CEOs that we're working
Speaker 5: with are really rethinking their business models, and that includes
Speaker 5: the supply chain, that includes on where they're buying their
Speaker 5: parts that includes you know, should they be thinking about
Speaker 5: moving away from China maybe to Japan, maybe to Mexico,
Speaker 5: maybe to the Caribbean. And I think it depends on
Speaker 5: where the end product is going.
Speaker 2: Is it all industries that are kind of coming to you? Yes? Yes,
Speaker 2: not an you know a certain sector that is kind
Speaker 2: of dominating it. I'm just curious.
Speaker 5: Well, you know, it depends on what they're trying to solve.
Speaker 5: You know, folks come to us when they want results.
Speaker 2: They come to us. Is it when growth is stagnating?
Speaker 5: Or yeah, it could be growth, it could be strategy,
Speaker 5: it could be We're doing a lot of kind of
Speaker 5: business model, operational model, re engineering and reimagining. Now where
Speaker 5: folks are saying, look, I need to.
Speaker 2: Make sure I'm fit for purpose.
Speaker 5: I need to make sure that I have the nimbleness
Speaker 5: within each of my different business units. And you know,
Speaker 5: maybe we've gotten too big, Maybe we need to get
Speaker 5: back to basics.
Speaker 2: What is it that Mark Zuckerberg says the year of efficiencies?
Speaker 2: But I do wonder if I think there are companies
Speaker 2: that got a little fat in terms of management and right,
Speaker 2: is that what you're saying, like streamliney or is it
Speaker 2: or processes.
Speaker 5: I think it's both actually, and I think it's all
Speaker 5: of the above, and I don't know if it's if
Speaker 5: it's fat.
Speaker 7: But we were really.
Speaker 5: Lucky in unprecedented, you know times, and when there were
Speaker 5: some bumps, we had quantitative easing, we had government intervention,
Speaker 5: there were lots of different things that could happen. And
Speaker 5: I think now we're at the point where smart CEOs
Speaker 5: are thinking, you know what, I don't know if there's
Speaker 5: going to be a recession or not, but I do
Speaker 5: know my consumer and my customers behaving differently. So I
Speaker 5: do know that I have to be clear on my
Speaker 5: value add clear on my cost to deliver, make sure
Speaker 5: that the value equation is still there.
Speaker 2: How did the bank collapses change things? Did it at
Speaker 2: all impact your world? Well?
Speaker 5: It did initially because you know, we have a very
Speaker 5: we've got a big TMT technology practice. And if you
Speaker 5: think about that first time period when before things got
Speaker 5: stabilized and before the xsality jumped in, I'm thinking the
Speaker 5: best v B exactly, and before the FDIC jumped in
Speaker 5: and said, oh it's not limited to just two hundred
Speaker 5: and fifty K, there was a period of aside from
Speaker 5: over that weekend, probably another two to three days before
Speaker 5: there was certainty, and that had customer panicked because you
Speaker 5: think about the whole venture community, right, and they were
Speaker 5: a huge lender to the venture community, so our tech
Speaker 5: customers were a little unsettled. But I would say that
Speaker 5: was again a blip because if you think about what
Speaker 5: actually happened is the government came in again and those assets,
Speaker 5: I mean, the estate is running through a bankruptcy, but
Speaker 5: the actual asset it's moved right, They're solid. So a
Speaker 5: little bit of a blip, not too much.
Speaker 2: I always think about the Bloomberg audience when we're talking
Speaker 2: to somebody like you, like, how should what should investors be?
Speaker 2: Kind of taking away from what you are saying and
Speaker 2: what it means, I don't know in terms of opportunities
Speaker 2: or the environment.
Speaker 5: Well, I think you know, as we said at the beginning,
Speaker 5: and you said, you know, should we be smiling? Should
Speaker 5: we not be smiling?
Speaker 2: I believe you said Catholic school I think we caught on,
Speaker 2: but we'll explain that later. Folks we were talking about
Speaker 2: it was all good.
Speaker 5: I feel like all my interviews, starting in with Catholic schools,
Speaker 5: there's usually nuns thrown in there somewhere too.
Speaker 2: But what should they take away if they're listening to
Speaker 2: what you're saying, So what does it mean?
Speaker 5: I think I think they can take away that there's
Speaker 5: lots of opportunities because as you said, there's there's going
Speaker 5: to be folks that are reimagining what they do best
Speaker 5: and are their non core assets that they should be
Speaker 5: shedding and does it fit better for somebody else? And
Speaker 5: I think that they should be looking. You know, if
Speaker 5: you're a private equity investor, you should be looking at
Speaker 5: your portfolios and making sure that you're CEOs are like
Speaker 5: the smart ones we're working with and are thinking proactively
Speaker 5: and thinking nimbly and thinking about how to be financially
Speaker 5: fit and operationally fit right as we kind of continue
Speaker 5: to navigate these times because you know, the interest rate
Speaker 5: environment alone makes it makes it a bit challenging.
Speaker 2: Yeah, it's being, like you said, preemptive about things and
Speaker 2: not kind of waiting for maybe another shoot to drop,
Speaker 2: if you will, really fascinating. Thank you so much, all right,
Speaker 2: fifteen seconds to people ask you about AI A lot.
Speaker 5: People do and we were talking, Yeah, and we have
Speaker 5: a huge digital practice where we're super on top of
Speaker 5: it and the things that are coming forward, and the
Speaker 5: amazing technological advances and how much more efficient and how
Speaker 5: fast we can be. Yeah, it's exciting stuff.
Speaker 2: This was so much fun. I hope we can catch
Speaker 2: up again in the future at Leasta. Dona Hue over
Speaker 2: at alex Partners, joining us here at Milgan. This is
Speaker 2: Bloomberg Radio.
Speaker 1: This is the Bloomberg Business Week podcast, available on Apple, Spotify,
Speaker 1: and anywhere else you get your podcasts. Listen live weekday
Speaker 1: afternoons from three to six Eastern on Bloomberg dot com,
Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business App.
Speaker 1: You can also watch us live every weekday on YouTube
Speaker 1: and always on the Bloomberg terminal