Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Lee.
Speaker 1: We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
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Speaker 1: Book of the Summer. His name is Robin Roger. If
Speaker 1: you do not know him, he is a Nodding acquaintance
Speaker 1: with India as a former RBI governor, but also a
Speaker 1: dynamo at the University of Chicago. And I can't say
Speaker 1: enough about the Third Pillar. It's March and it's already
Speaker 1: my book of the summer. Rockgoo, congratulations on the third Pillar.
Speaker 1: And throughout your book on community as a discussion of education,
Speaker 1: seamlessly throughout four hundred pages. Let me cut to the chase.
Speaker 1: Your Chicago is so lead. These parents out on the
Speaker 1: West Coast weren't even trying to get their kids and
Speaker 1: the professor Roger and Chicago. They were looking at other
Speaker 1: lower schools like that one in Cambridge in Massachusetts as well.
Speaker 1: Ruggle just simply your thoughts on the desperation to buy
Speaker 1: academics in America. Well, this is very worrisome, right because
Speaker 1: on the one hand, we already have isquing of opportunities.
Speaker 1: You have to go to the elite schools to get
Speaker 1: those elite jobs and and then you get you know, zillions,
Speaker 1: But for most of us out there, it's very hard
Speaker 1: to even take the first step. And then you read
Speaker 1: that it's not just about legacies, it's not just about
Speaker 1: preparation schools, which helps you prepare your applications, but it's
Speaker 1: about buying your way in illegally through corruption. That that
Speaker 1: that's really a blow to the system and we need
Speaker 1: to clean this up as quickly as possible. It's not
Speaker 1: happening you for us. Are you had the most interesting
Speaker 1: childhood in India. I won't go into it all, but
Speaker 1: like many others, you traveled around the world with your
Speaker 1: father and diplomacy and enforcement for India as well, and
Speaker 1: you are acculiar ware of the path for you through
Speaker 1: university in India and then onto your acclaimed world excellence.
Speaker 1: Is the place those students took. Is it a place
Speaker 1: from someone in the middle class or is it a
Speaker 1: place of someone who just went below that level of
Speaker 1: whatever school and they just eaked out not going to
Speaker 1: that fancy school. Well, I think it is a concern
Speaker 1: that so many people don't get a chance to really
Speaker 1: get into these school schools. First, you need a level
Speaker 1: of ambition in some of these schools outside the big cities,
Speaker 1: which tells you really the way to progress is to
Speaker 1: go to these high these ivy League schools, and from
Speaker 1: there get those wonderful jobs. Many students don't even have
Speaker 1: the ambition because they don't have access to good college
Speaker 1: counselors who tell them that's out there waiting for you.
Speaker 1: There are lots of scholarships, please do apply. And even
Speaker 1: if they they do, hear that the next step of
Speaker 1: doing the college tests, of writing the good applications, of
Speaker 1: getting past those hurdles is very difficult. So when you
Speaker 1: hear that there are separate tracks here, I think it
Speaker 1: creates a whole lot of new anxiety over and above
Speaker 1: what we already have. Professor, Does this feed populism? Do
Speaker 1: these kind of scandals the idea that actually the elite
Speaker 1: and the rich and get whatever they want will lead
Speaker 1: to people voting to more extreme parties, of course, because
Speaker 1: I think the sense that the system is cued, even
Speaker 1: before you add on corruption to it, is already there
Speaker 1: that the elite look after themselves. I call it the UH.
Speaker 1: We have a meritocracy, but it's a hereditary meritocracy. Only
Speaker 1: the children of the successful get a chance at being
Speaker 1: successful because of the extreme importance of a really good education.
Speaker 1: So given that, when you add on to that corruption
Speaker 1: and after all, what is populism, it's ultimately the corruption
Speaker 1: of the elite. They're not working for us, they're working
Speaker 1: for themselves. It leads to a significant amount of distrust
Speaker 1: in the system. So my sense is this is one
Speaker 1: of those scandals which is which has to be cleaned
Speaker 1: up very very quickly. Professor, again, congratulations on your book,
Speaker 1: which is fantastic, which is both tom and ized book
Speaker 1: of the year. When you look actually at central banks,
Speaker 1: and you said this in the past that you don't
Speaker 1: believe central banks should do any more, Quei if there
Speaker 1: was a downturn around the corner, what do you think
Speaker 1: they should do instead? Well, certainly the the US Central Bank,
Speaker 1: the FED, and UH and and China still have some
Speaker 1: room to cut interest rates. I think part of the
Speaker 1: normalization was in a sense to create some of that buffer.
Speaker 1: Of course, the problem with both the CB and the
Speaker 1: Bank of Japan, is they already into negative interest rates.
Speaker 1: As far as Quee goes, They've pretty much done what
Speaker 1: they could and whatever modest effect is that it has had,
Speaker 1: it's pretty much out there. There's very little more ammunition
Speaker 1: in the central bank tank, and so my guess is
Speaker 1: we have to look for other instruments in those countries.
Speaker 1: I mean, Professor, this is extraordinary. If you look at
Speaker 1: a college like Carleton College in Minnesota, this is an
Speaker 1: acclaim liberal arts institution of the Midwest, just like you're
Speaker 1: in Chicago. Brian Levitt joins us in the early morning
Speaker 1: down here Oppenheimer Severia investment strategies. Brian, let's start that
Speaker 1: which treasuries, Yeldner, it's an nineteen loves. What's driving things,
Speaker 1: what's driving the lower rates is just to slow down
Speaker 1: in global economic activity. Um, you know this was sort
Speaker 1: of we preordain, We sort of expected this. I mean,
Speaker 1: you had a lot of stimulus last year, drove rates
Speaker 1: to three five, FED raised rates a couple of times,
Speaker 1: and that starts to slow down economic activity. You see
Speaker 1: rates back down. We've been in the low for long
Speaker 1: camp for a while now. We believe interest rates are
Speaker 1: going to remain low. For a very long period of time.
Speaker 1: That's what happens in a world where there were just
Speaker 1: growth stars. So so does equities dovetail in the lower
Speaker 1: rates or does a dovetail into slow g d P,
Speaker 1: which means lousy earnings. So earnings are likely to be
Speaker 1: good enough. UM growth is likely to be good enough
Speaker 1: to support corporate earnings. But we're still in an environment
Speaker 1: where rates are so low that stocks are very cheap
Speaker 1: to bonds, and I expect that with modest earnings growth,
Speaker 1: some multiple expansion equity market should continue to do. This
Speaker 1: is really important, fo Brian, you and I've done this before.
Speaker 1: Let's walk to it again. When a process stocks are
Speaker 1: cheap to bonds, what does that mean on dividend versus
Speaker 1: yield on PE multiple? I mean take that right back
Speaker 1: to Lewis Ruth Kaiser one oh one. I think an
Speaker 1: easy way to do it is to just flip the
Speaker 1: price earnings ratio over and look at the earnings. He
Speaker 1: has a price to earnings ratio of ten using a
Speaker 1: round number ten divided by one. Right, flip it one
Speaker 1: divided by ten compared to a two, and so one
Speaker 1: divided by ten compared to a two and a half
Speaker 1: percent treasury rate and you're gonna you're gonna look pretty attractive.
Speaker 1: So the SMP earnings gilts probably close to around five
Speaker 1: percent compared to two six to seven on treasuries. Was
Speaker 1: that too much math now thought that was? That was
Speaker 1: a great stop. Let's let Tom enjoy his food. I
Speaker 1: think there's something that front strates a lot of people
Speaker 1: on Wall straights when people turn around and say, the
Speaker 1: bond market is telling me something. Is there a sinister
Speaker 1: message in the bond market the equity market doesn't know about.
Speaker 1: Can we just clear that up right now? Well, the
Speaker 1: bond market is telling you that we're going back to
Speaker 1: an environment of very modest growth but modest inflation, and
Speaker 1: we see that in the inflation numbers, and paradoxically, that's
Speaker 1: actually in a better environment for equity. Jonathan. If you
Speaker 1: remember last year, very good growth, but what we would
Speaker 1: call bad policy, federal reserve raising interest rates, the administration
Speaker 1: fighting a trade war. This year, what the market is
Speaker 1: focused on is slower growth, but better policy. The federal
Speaker 1: reserve is backed off, We're hoping to get some clarity
Speaker 1: on trade, and the market is enthused by that. This
Speaker 1: is a theme for Oppenheimer coming into I've heard it
Speaker 1: from you, I've heard it from Christian and multiple times,
Speaker 1: and I've had it now for several months. What I
Speaker 1: haven't seen yet is the better policy for the markets
Speaker 1: at least work for the economy. I haven't seen the
Speaker 1: bottoming bottom AUP process come through in China in a
Speaker 1: clear weight right yet. Do you see it? Well, you're
Speaker 1: starting to see stabilization in Chinese growth, so you're starting
Speaker 1: to see some credit growth. You have a purchasing manager's
Speaker 1: index that's hovering around forty nine and a half, so
Speaker 1: we're getting closer to that expansion territory perhaps of recent
Speaker 1: turn and industrial production. So it looks like we're getting
Speaker 1: to stabilization and Chinese growth back to my trend level.
Speaker 1: But remember policy moves take some time to work through
Speaker 1: the economy, so we would expect to see that second half.
Speaker 1: This is why, quite frankly, the US is slowing. We
Speaker 1: raised rates and that's working its way through the system.
Speaker 1: When John trades, it's like a three day trade as
Speaker 1: a long term trade, and I would suggest here Lappenheimer funds,
Speaker 1: you know a long term trade is like five years
Speaker 1: or even ten years. In two months we're up eleven
Speaker 1: point four s. How do you Christian and the rest
Speaker 1: of your team, how do you answer the question? Wait
Speaker 1: a minute, I'm up double digit go to cash? Well, look,
Speaker 1: first of all, we had a very difficult fall in winter,
Speaker 1: so we've been recovering ground from what was a pretty
Speaker 1: nasty correction. You're gonna take to do your compare and
Speaker 1: contress well, right, And the reality is, I mean, investors
Speaker 1: can try and trade, they can try to move into cash,
Speaker 1: but they've got to make multiple decisions, right, They've got
Speaker 1: to know when to get into cash. They got to
Speaker 1: know when to get out of cash. The realities, I
Speaker 1: believe we're in a secular bowl market. I've I've been
Speaker 1: told you get three secular bull markets in your life.
Speaker 1: The first one I was too young, the next one
Speaker 1: I'm likely to be. I'm just saying we've got a
Speaker 1: live audience here, and everyone's face is just We're like,
Speaker 1: what is he talking about? It's sort of like imus,
Speaker 1: you know, it's like it's a hotel full of people
Speaker 1: here right now. It's a beautiful thing. It's it's just
Speaker 1: I'm happy to have it. Car. Does that make me Bernard? Yes?
Speaker 1: So so anyway, um, this is the one. This is
Speaker 1: the middle secular bull market in my life, at least
Speaker 1: as I view it. And you know, secular bull markets
Speaker 1: are ultimately going to end with either extreme excess in
Speaker 1: the system, valuations that are incredibly excessive, or a policy mistake,
Speaker 1: and none of those seem apparent. Let's talk about your
Speaker 1: regional bus right now. What would it be? Well, I
Speaker 1: would favor in the United States, I would favor true growth.
Speaker 1: I'm favoring Cleveland this morning. Can we can we wait?
Speaker 1: Can we wait? Region? Because let's just wait. We've got
Speaker 1: a bit of time later today this Can I just
Speaker 1: say that my eleven year old daughter that Mr what's
Speaker 1: his name? Beckham Beckham jam Jr. Not the soccer player
Speaker 1: football moved from Giants to Brown's. Everyone is shocked, continued
Speaker 1: his daughter devastated. But Jabrill Peppers, Michigan guy coming in
Speaker 1: New York. So she gonna change her Giants tattoo to
Speaker 1: a Brown's tattoo. She did ask for Beckham Brown's jersey
Speaker 1: for a birthday. What did the Giants get in return?
Speaker 1: What did they get? Mr? Mannigan returned? So they get
Speaker 1: the number seventeen pick in this draft, The number pick
Speaker 1: in this draft and Jabrill Peppers, the safety who came
Speaker 1: out of Michigan Patterson Catholic High School. But it's interesting,
Speaker 1: and is it really would you suggest that, folks, this
Speaker 1: really goes to all the sports, including John we'll talk
Speaker 1: about Juventus, Juve, Juventus, we'll talk about there when yesterday.
Speaker 1: But Brian, it goes to the management trying to call
Speaker 1: a locker room and they think they're gonna do that
Speaker 1: by moving this gifted wide receiver. Well, I suspect that's
Speaker 1: that's what they're thinking. Um, it's also a check on
Speaker 1: the surveillance locker room. I suppose it's a team that
Speaker 1: thinks they need to rebuild, and so that's this is
Speaker 1: talking about Blimberg surveillance giants. I'm just trying to work
Speaker 1: that we talk about a real sport. Can we talk
Speaker 1: about Uventus a real sport. Christian Christiano Ronaldo needs to
Speaker 1: score three goals. That's exactly what he does. Juventus wins.
Speaker 1: They can to score three goals and win three nil.
Speaker 1: Ronaldo scores all three stunning comeback over in Turin in Italy.
Speaker 1: The stock this morning Juventus up sixteen percent, just up
Speaker 1: sixteen percent, just off that win. And the market can
Speaker 1: move off the back of it the equivalent of two
Speaker 1: times what the club paid for him. Two times what
Speaker 1: the club paid for him, We're up about two d
Speaker 1: forty million euros in market cap on the day. Does
Speaker 1: Manchester City have the same dynamics with a year they're
Speaker 1: having so Manchester City and events, I think probably the
Speaker 1: vor it's for the for the tournament. Now an outside
Speaker 1: Barcelona like to Cleveland Browns. What can I tell you
Speaker 1: my regional view? Now? Can you seconds? Thirty seconds? Week?
Speaker 1: We're very favorable on the emerging markets. Last year was
Speaker 1: the US above trend, China below, China stabilizing US slowing
Speaker 1: policy accommodative around the world. That should be supportive for Nocoba.
Speaker 1: This is really important. We'll come back and talk about
Speaker 1: the international expertise of Oppenheimer Funds and Brian Levitt's view
Speaker 1: on emerging markets as well. It is a joy to
Speaker 1: be at Oppenheimer Funds with our expertise in the international investment.
Speaker 1: Of course, those of us have a certain vintage. Remember
Speaker 1: Oppenheimer Funds from a few years ago with definitive equity
Speaker 1: and particularly growth equity at work as well and hosting
Speaker 1: is today Christian MoManI, head of the shop here. Wonderful
Speaker 1: day have you here, and you get surveillance yeoman's duty today.
Speaker 1: We're gonna give that to Francis like wa freezing on
Speaker 1: the green at Westminster. I think for our audience we
Speaker 1: sort of perceive New York to Istanbul, which is not
Speaker 1: quite as far as New York to Buenos series. You
Speaker 1: just flew in from Argentina and you had a brilliant insight.
Speaker 1: Christians always their bankrupt pastos at forty two and the
Speaker 1: hotels are packed. How can that be? Well? So, I
Speaker 1: think that's very interesting. That is they have a crisis,
Speaker 1: and it was a crisis created by the Machrie government
Speaker 1: by depending too much to fund the fiscal deficit from
Speaker 1: external sources. Beyond that, I think there is the draw
Speaker 1: down in the economy is relatively modest. If Makri can
Speaker 1: win the win the election, and there's decent chance for
Speaker 1: that despite the economic debacco, he can implement lots of
Speaker 1: structural changes. The most in instinct thing that I observed
Speaker 1: there is Argentina uses Venezuela more than anybody else. I
Speaker 1: think that is one of the REASONSOS know what they're
Speaker 1: saying is well, if Christina comes back, Kush Nurse come back,
Speaker 1: then we will be another Venezuela as well. So that
Speaker 1: is a that is a good election platform. Bottom line is,
Speaker 1: you know the country is going through an adjustment. They
Speaker 1: are in a sort of a recession. But I don't
Speaker 1: think the recession is as deep as people suspect. Is
Speaker 1: there opportunity there for traditional investors or is it the
Speaker 1: prevailance a fancy alternative fund people that know more than
Speaker 1: I do. No. I think the companies are dirt cheap.
Speaker 1: If we've met an agricum company and they generated almost
Speaker 1: ninety million dollars in free cash flow in dollar terms,
Speaker 1: because they exports its dollars trading at seven hundred seven
Speaker 1: hundred seventy million dollars in market cap, that's a ashaan
Speaker 1: cash yield, which is significantly, significantly cheaper than anywhere else
Speaker 1: in the world. So how do you think about Latin
Speaker 1: American in general? I mean, do you really need to
Speaker 1: break it down country by country, company by company, or
Speaker 1: do you have a macro view of Latin America that
Speaker 1: you need to be longer or unexposed. I think the
Speaker 1: thing in Latin America is important, but the larger context
Speaker 1: is emerging markets. Valuations in emerging markets, as Argentina and
Speaker 1: other places show valuations and emerging markets are very cheap
Speaker 1: relative to the developed work, especially the US, and that's
Speaker 1: the primary reason why we want to be in in
Speaker 1: emerging markets. And as as the company that I was
Speaker 1: talking about, it's really not about Argentina as much as
Speaker 1: it is about a dollar exporter in Argentina who has
Speaker 1: significant cost advantages. So emerging market investing for US has
Speaker 1: always been about companies rather than geographies or countries. How
Speaker 1: about also in the context of your emerging mark CA thesis,
Speaker 1: as you just stated, how concern are you bout just
Speaker 1: slowing global economy something specifically China, and then also you
Speaker 1: know Europe as well, Um, how is that impacting kind
Speaker 1: of your view of emerging markets. Well, so global economy
Speaker 1: is slowing down for sure, I mean US is slowing down,
Speaker 1: China will slow down, Europe has definitely slowed down. Having
Speaker 1: said that, the slowdown is not catastrophic, So China is
Speaker 1: not going to go to four percent, It's gonna be
Speaker 1: still be higher than six percent, and Europe hopefully stabilizes
Speaker 1: around you know, for the whole year around one percent
Speaker 1: US probably too. So the global economy is slowing down,
Speaker 1: but it is not slowing down catastrophically. Policy, on the
Speaker 1: other hand, is going to be meaningfully more supportive in
Speaker 1: two thousand nineteen than it had it was in two
Speaker 1: thousand and eighteen, and that's what gets the markets higher
Speaker 1: very quickly. My idea of international investment used to be
Speaker 1: to buy a case of Molson Golden Nail out of Canada.
Speaker 1: It's changed a little bit. Christian say the least, do
Speaker 1: you just go into e M now and let you
Speaker 1: guys allocate, or you have to be supple and go
Speaker 1: in and out. So you missed two thousand eighteen and
Speaker 1: try to get two thou well. So I think if
Speaker 1: you are a long term investor and you're looking for
Speaker 1: growth in your portfolio for the next two or three decades,
Speaker 1: which is a lot of people need, the real growth
Speaker 1: in the world is only going to come from emerging market.
Speaker 1: You just have to lean and say, you know, you'll
Speaker 1: have the five year period that we have had over
Speaker 1: the last five years, it's been a very subpar, but
Speaker 1: that's not the context. The context is you want to
Speaker 1: be in this market for the long term growth we're
Speaker 1: gonna come back. He's got so many frequent flyer miles
Speaker 1: on the surveillance credit card that we're gonna bring Christian
Speaker 1: money back just in fluent from Buenos Aires. That doesn't
Speaker 1: doesn't failed at that, you know, House Democrats. Uh, Now
Speaker 1: they're obviously back in control of the House, and they're
Speaker 1: actually taking another stab at legislation protecting young undocumented immigrants,
Speaker 1: while at the same time expending those protections to immigrants
Speaker 1: that are covered by other programs. To help us kind
Speaker 1: of breakdown this story, we're joined by Laura Francis, Laura's
Speaker 1: Bloomberg Law senior legal editor. Laura, thanks so much for
Speaker 1: joining us. Um What is the status of this latest
Speaker 1: iteration of immigration legislation. So it was just introduced yesterday,
Speaker 1: there was a lot of fanfare by the Democrats, so
Speaker 1: we'll have to see kind of where it's going to
Speaker 1: go from here. I would imagine that with the Democrats
Speaker 1: and control of the House, they're really going to make
Speaker 1: a push to get this bill through committee and onto
Speaker 1: the House floor. Is there any Republican support either in
Speaker 1: the House or the Senate for this There has not
Speaker 1: been vocalized publican support. I think there are some Republicans
Speaker 1: who are willing to work with the Democrats to expand
Speaker 1: this bill and kind of add some provisions that maybe
Speaker 1: include border security, interior enforcement, that kind of thing. They're
Speaker 1: not willing to throw it out, but I don't think
Speaker 1: they want to see it pass in its current form.
Speaker 1: But but okay, I get that. But essentially anything the
Speaker 1: House proposes is dead on a rival, right, I mean,
Speaker 1: this is the definition of grid luck. It can be
Speaker 1: especially with immigration. Any immigration bill introduced by either party
Speaker 1: and either side of Congress, it faces an uphill battle.
Speaker 1: So how do you handle that every day? Do you
Speaker 1: medicate every morning before you go into the land of
Speaker 1: grid luck? I can't speak from members of Congress, UM,
Speaker 1: it's it's a perpetual challenge with any immigration legislation UM,
Speaker 1: because immigration bills have not moved in Congress in so
Speaker 1: many years. Anything that gets introduced is mired in all
Speaker 1: these complicated factors. Is the bill going to be too small?
Speaker 1: Is the bill going to be too big? And it
Speaker 1: kind of puts everyone at a standstill until something finally
Speaker 1: kind of breaks that political logjam. So so, Laura, is
Speaker 1: is there some middle road here where we could uh
Speaker 1: or the Congress kid bringing some you know, some money, uh,
Speaker 1: some language about border security, about a wall or just
Speaker 1: border security broadly defined, to help push this legislation through.
Speaker 1: Is there any middle ground there? I think there could
Speaker 1: be this time around. In past congresses, Republicans have insisted
Speaker 1: on we need enforcement first before we provide any kind
Speaker 1: of legalization to undocumented immigrants. This time there they change
Speaker 1: your tune a little bit where they're saying, we still
Speaker 1: need that enforcement, but we are willing to attach it
Speaker 1: to legalization. So I think that may be a ground
Speaker 1: for them to work together on, not this exact bill,
Speaker 1: but maybe using this as a jumping point to something
Speaker 1: more comprehensive. To a grizzled pro like you. When you
Speaker 1: see a new number eight point six jillion dollars to
Speaker 1: build another X feed of wall, translate that for the
Speaker 1: jaded on Capitol Hill, what does that actually mean? So,
Speaker 1: what what you're seeing is the president's budget proposal, and
Speaker 1: that's really just kind of his wish list for what
Speaker 1: he wants to see happen. It's very rare that Congress
Speaker 1: gives him anything that close to what he's asking for,
Speaker 1: and especially with the wall, which has already been the
Speaker 1: subject of so much contention. Um, it's it's highly unlikely
Speaker 1: that that's actually going to pass through Congress. Laura Francis,
Speaker 1: thank you so much, greatly appreciate the budget wish list
Speaker 1: conversation in Washington. Paul Swunian, time king with Oppenheimer Funds.
Speaker 1: We do this once a year and it is spectacular.
Speaker 1: We thank them for their hospitality and a good food.
Speaker 1: To say the least. I'm a little shaky right now, Paul,
Speaker 1: after the avocado toast, I mean, after the second tray
Speaker 1: of it. I think this is the interview of the
Speaker 1: day for about all this investment stuff. Christina Boris with
Speaker 1: this head of client research at Oppenheimer Funds, which means
Speaker 1: know your client, which is actually go out and talk
Speaker 1: to people about their fears. Now, we could rip up
Speaker 1: the script and spend the entire uh interview talking about
Speaker 1: how to get into college. But that'll be a theme
Speaker 1: maybe for another time with you. I'm sure people walking
Speaker 1: to go I gotta get my kid into slippery rocket?
Speaker 1: What do I do? But forget about that. What's the
Speaker 1: biggest fear right now of high net worth people? Okay, fear, um,
Speaker 1: I would say, just uncertainty. About the current political environment.
Speaker 1: That's something we actually asked about last year. And yes,
Speaker 1: what about the idea of I've got you mean the
Speaker 1: masks says I've got to put this amount of money
Speaker 1: on because I mean, Paul's too young to remember this,
Speaker 1: But there's the idea of if I don't make I
Speaker 1: can't get it forward and the hurdle rates come down
Speaker 1: and return over the years. Is there a panic among
Speaker 1: the people you interview in sight, a true panic that
Speaker 1: that we're in an area where we've got to put
Speaker 1: aside a lot more money than we ever thought we
Speaker 1: had to. Well not. In terms of the latest survey results,
Speaker 1: which we just wrapped up last month. UM, what we
Speaker 1: found is that high net worth investors are really focused
Speaker 1: on the long term. Even in the week of the
Speaker 1: recent market volatility in the back half of many investors
Speaker 1: said they actually didn't do anything. They didn't make any
Speaker 1: changes to their investment portfolios. They stay, they kept calm
Speaker 1: and carried on. That seems to be the Yeah, I
Speaker 1: was whipping a portfolio trying to catch the last So
Speaker 1: you know, it's it's interesting. What we've heard from UM
Speaker 1: a lot of asset managers is that their clients, are
Speaker 1: you know, asking more about E s G and which
Speaker 1: is environmental sustainability and governance? I guess and those are
Speaker 1: becoming more important issues. Is that we find in your
Speaker 1: survey work as well. Yes, absolutely, we do ask that
Speaker 1: in the survey, and we do see that E s
Speaker 1: G investing is on the rise with high net worth
Speaker 1: investors UM. As of this latest survey, almost of those
Speaker 1: who are invested in sustainable and E s G UM,
Speaker 1: almost half of their portfolio is made up of those
Speaker 1: types of investments. And what we're also seeing is that
Speaker 1: there's an opportunity for advisors to really help their clients
Speaker 1: design their portfolios around the causes that are near and
Speaker 1: dear to. Okay, fine, I mean I I get the
Speaker 1: immediacy of the causes in E s G. What percentage
Speaker 1: of stocks are precluded from E s G. If I
Speaker 1: if I walk in and say I want to do
Speaker 1: E s G with OT, but I'm er funds or
Speaker 1: any other major institutional house, what percent of the market
Speaker 1: am I walking away from by doing E s G.
Speaker 1: I'm not really an expert on that. I'm not sure
Speaker 1: you could pretend to be it all the time. We
Speaker 1: do it all the time. If you don't know the answers,
Speaker 1: just bluff your way through. It'll be great. Okay, you
Speaker 1: don't you don't know, okay the answers, Paul, I'm going
Speaker 1: to take a reach here. Philip Morris isn't on the
Speaker 1: exactly exactly. I'm a good stray with that anyway. So
Speaker 1: but when I go into when I think about a
Speaker 1: financial advisor, you know, and I'm selecting a financial advisor,
Speaker 1: at the end of the day, all I really care
Speaker 1: about is performance? UM is that changing? Not really for
Speaker 1: the high net worth investor? We ask that. So we
Speaker 1: ask you know, when you're looking to work with an advisor,
Speaker 1: what are the top qualities that you're seeking? And by
Speaker 1: far and away, UM good absolute performance, absolute performance and
Speaker 1: working with an advisor who really understands their long term goals,
Speaker 1: meaning like what they ultimately we want to achieve with
Speaker 1: their wealth and their money are the top two things
Speaker 1: that investors are looking for. And that hasn't changed here
Speaker 1: over year. What does give us an example of E
Speaker 1: S G investment? I mean I think of like somebody
Speaker 1: comes in and says, I don't want any dairy products,
Speaker 1: I only want almond milk. Let's go right, that's not
Speaker 1: what it is, right, right, right. So we in the survey,
Speaker 1: you know, we ask first of all, are you UM
Speaker 1: investing in E s G type investments? And if they
Speaker 1: say yes, then we give them a whole list of
Speaker 1: different categories like clean energy, clean technology, gender equity, UM
Speaker 1: and you know, healthcare, pharmaceuticals, and we asked them to
Speaker 1: select which categories subcategories they're invested in, and we also
Speaker 1: ask them which ones they're interested in, so that we
Speaker 1: can kind of get a read on maybe future investment
Speaker 1: in different areas. It's interesting E s G you know,
Speaker 1: just you know, on the Bloomberg terminal, there's more and
Speaker 1: more E s G data being put on the Bloomberg terminal,
Speaker 1: more and more because our Bloomberg customers are asking for there,
Speaker 1: they're they're demanding it. So that's kind of reflective of
Speaker 1: what you're seeing. Is there a sense of how E
Speaker 1: s G. If I'm I don't know, if I'm do
Speaker 1: I go in and say I'm overweight s G or
Speaker 1: if I just want to representative percentage of my portfolio
Speaker 1: and s G type investments, how's the performance of those
Speaker 1: types of investments you get? What's the Appenheimer data show UM. Well,
Speaker 1: the e t F that we the E s G
Speaker 1: E t F that we have UM. The way we
Speaker 1: look at it is we want to invest in companies
Speaker 1: that have exceptional and UM environmental, social and governance standards
Speaker 1: UM and our E t F fund actually UM invest
Speaker 1: in companies that have superior scores as described or defined
Speaker 1: by sustain analytics. So that's one way that we look
Speaker 1: at it. You also deal with I would guess something.
Speaker 1: You get to these high net worth families and there's
Speaker 1: personal issues. I mean, the advisors have to deal with
Speaker 1: all of that stuff when in addition to just putting
Speaker 1: up good performance. Yes, well, we do ask about money
Speaker 1: related conflicts in the family, just trying to understand, like
Speaker 1: what are the biggest conflicts that families are dealing with
Speaker 1: around money and to advisors. So it's like a high
Speaker 1: net worth question, would we do I need the third
Speaker 1: lacrosse stick? Is that like part Well, what we found
Speaker 1: this year is that discretionary spending has bubbled up to
Speaker 1: the top. Is the top money related conflicts? Break? This
Speaker 1: is too important? So how do you respond to the
Speaker 1: the afterthought that says I need a third lacrosse tack.
Speaker 1: What do you say a Appenheimer, Well, I mean it's difficult.
Speaker 1: I guess it just depends on how, um, you know,
Speaker 1: how the family is feeling, you know, especially with you know,
Speaker 1: if you're seeing losses in your investment portfolio and you's
Speaker 1: learned about the economy, maybe you know, I think investors
Speaker 1: might be thinking about pulling back a little bit on spending.
Speaker 1: You know. Les dot Com was laughing at me as
Speaker 1: I bought the next Brian I think it was under
Speaker 1: what's it called from Baltimore under Armour? Under Armour brought
Speaker 1: an under Armour lacrosse stick in yellow. There you go.
Speaker 1: Yellow was a key thing and he probably did you
Speaker 1: bite on Amazon have delivered an hour. You had to
Speaker 1: go to a specialist like cross Place so that you
Speaker 1: can kill me on the shipp Okay, that's the kind
Speaker 1: of thing you do. This has been wonderful Christina Boors,
Speaker 1: thank you so much, greatly appreciate it with really important research.
Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and
Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast
Speaker 1: platform you prefer. I'm on Twitter at Tom Keane. Before
Speaker 1: the podcast, you can always catch us worldwide. I'm Bloomberg Radio.