WEBVTT - Consumer Price Index Continues To Climb 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.560 with essential market moving news. Find the Bloomberg Markets podcast 0:00:15.560 --> 0:00:18.479 called Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.800 at Bloomberg dot com slash podcast. Just get over to 0:00:22.880 --> 0:00:25.160 David Kats right now. He is the president and c 0:00:25.480 --> 0:00:30.280 i O at Matrix Asset Advisers affirmed that he uh 0:00:30.320 --> 0:00:33.800 co founded as well. Um, David, I wonder what you 0:00:33.840 --> 0:00:36.880 think about the inflation number. Obviously that's probably our top 0:00:36.920 --> 0:00:39.720 headline today. Six point eight percent year over year is 0:00:39.760 --> 0:00:42.680 a big, hefty number. But as I can't remember his 0:00:42.680 --> 0:00:44.600 Critty or Chinale, one of them was telling us earlier 0:00:44.600 --> 0:00:48.120 the month over month number was a little softer than 0:00:48.200 --> 0:00:50.800 maybe we expected. And also bad news. Looks like it's 0:00:50.800 --> 0:00:54.640 pretty good news for this market. Well, right now, all 0:00:54.760 --> 0:00:57.920 the news is good for this market. It's looking through 0:00:57.960 --> 0:01:00.320 a lot of things. You know, today's action a little 0:01:00.360 --> 0:01:03.120 bit surprising in terms of yields going lower, in stocks 0:01:03.120 --> 0:01:07.800 going higher on the worst inflation numbers since nine two. Um, 0:01:07.920 --> 0:01:10.240 we think what's happening is the market is looking through 0:01:10.280 --> 0:01:14.920 the current higher inflation. It was not worse than expectations, 0:01:15.000 --> 0:01:17.399 so people don't think it's going to cause the FED 0:01:17.440 --> 0:01:21.000 to change course. And from our perspective, while we do 0:01:21.160 --> 0:01:23.640 worry a lot about inflation, we think that it is 0:01:23.680 --> 0:01:27.600 going to calm down by next spring or summer under 0:01:27.640 --> 0:01:29.720 the three and a half percent level, so we don't 0:01:29.760 --> 0:01:33.400 think it derails the economy. Uh and interest rates will 0:01:33.440 --> 0:01:36.640 still say relatively low, so that's an okay environment for stocks. 0:01:36.680 --> 0:01:39.280 It's interesting that you say that any news is good 0:01:39.280 --> 0:01:42.000 news because I'm wondering if you could speak to the 0:01:42.080 --> 0:01:47.319 fear and the caution that still underpins this market. Well, 0:01:47.400 --> 0:01:50.120 you know, the market has been more volatile since September. 0:01:50.160 --> 0:01:52.680 You've had to five percent corrections, and that's more normal, 0:01:52.720 --> 0:01:54.720 and we think that's going to continue for some time. 0:01:55.080 --> 0:01:57.440 But at the moment, the market is looking through the 0:01:57.480 --> 0:02:00.640 negatives and focusing on the positives, and and the positives 0:02:00.640 --> 0:02:03.160 are pretty good. The economy is in very good shape, 0:02:03.840 --> 0:02:06.560 businesses are doing very well, Corporate earnings are coming in 0:02:06.720 --> 0:02:10.560 very nicely, and we think a significant driver of the 0:02:10.600 --> 0:02:13.919 stock market is there's just this enormous liquidity out there. 0:02:13.919 --> 0:02:16.680 There's just so much cash floating around, and as people 0:02:16.760 --> 0:02:19.720 throw that into stocks, that's just driving prices higher. So 0:02:20.080 --> 0:02:22.920 the key here from an investment perspective is not to 0:02:23.040 --> 0:02:26.400 chase the rallies. You know, we suggest putting money to 0:02:26.440 --> 0:02:28.440 work when you have these sell offs like you had 0:02:28.480 --> 0:02:31.440 in September or in the last month, rather than trying 0:02:31.520 --> 0:02:36.160 to throw money in after things have risen. Is do 0:02:36.360 --> 0:02:39.320 valuations not concern you here? Because we seem to be 0:02:39.960 --> 0:02:43.799 at a level where any little thing. For example, um, 0:02:44.280 --> 0:02:46.600 I think it was last Monday, we got a headline 0:02:46.680 --> 0:02:50.000 saying that an omicron case have been found in California, 0:02:50.120 --> 0:02:53.000 after we all knew that, oh Macron was out in 0:02:53.040 --> 0:02:55.160 the US. It wasn't a surprised and yet the market 0:02:55.200 --> 0:02:58.960 sold off. Right. The market is going to be pretty volatile. 0:02:59.000 --> 0:03:02.560 It's taking its cuse whether it's COVID news or FED 0:03:02.639 --> 0:03:06.120 news or government news. Either the market loves things or 0:03:06.160 --> 0:03:08.840 it hates things. So the key to being investor is 0:03:08.880 --> 0:03:12.160 just look beyond the day to day fluctuations. In terms 0:03:12.160 --> 0:03:15.680 of valuation, we think the overall market is modestly overvalued. 0:03:16.200 --> 0:03:20.040 We think many growth stocks are very significantly overvalued, and 0:03:20.120 --> 0:03:22.440 that's the area that we worry a lot about. The 0:03:22.480 --> 0:03:24.000 flip side is we think there are a lot of 0:03:24.040 --> 0:03:26.800 places that you can buy now and you should do 0:03:26.840 --> 0:03:28.640 well over the next twelve months, or a lot of 0:03:28.720 --> 0:03:33.280 areas like media, telecom, healthcare that have not done a lot. 0:03:33.400 --> 0:03:37.120 The businesses are doing well. Stocks are twelve thirteen times earnings. 0:03:37.360 --> 0:03:39.040 We think that's going to be the next place to 0:03:39.080 --> 0:03:41.880 make good money and do it in a lower risk way. 0:03:42.000 --> 0:03:44.760 You know, it's interesting. I was with Scott Minor yesterday 0:03:45.000 --> 0:03:48.320 who is the CEO of Guggenheim big bond investor, and 0:03:48.360 --> 0:03:50.600 he was saying that I need to brag about it. 0:03:50.680 --> 0:03:53.040 We know who Scott Minor. It is. Well, you know 0:03:53.240 --> 0:03:55.360 one interesting thing he said to me, and we'll hear 0:03:55.400 --> 0:03:57.760 more about this next week, is that he thinks that 0:03:57.840 --> 0:04:00.920 the market is telling us that there are afraid of 0:04:00.960 --> 0:04:03.640 a policy mistake when it comes to the Federal Reserve. 0:04:04.120 --> 0:04:07.160 What do you think that really means, David? And do 0:04:07.240 --> 0:04:11.520 you agree with that? Well, I think the market, while 0:04:11.560 --> 0:04:14.240 it might be afraid, it's truly not acting that way 0:04:14.280 --> 0:04:17.400 in terms of bonds or stock. So I think the 0:04:17.400 --> 0:04:20.800 fet has actually done a very good job inflation is 0:04:20.920 --> 0:04:23.760 much hotter than they had originally anticipated. We think a 0:04:23.760 --> 0:04:26.200 lot of that is coming from the labor market and 0:04:26.240 --> 0:04:29.279 from the logistics problems caused by COVID, and we think 0:04:29.320 --> 0:04:31.520 both of those are going to come under better control 0:04:32.160 --> 0:04:35.120 in the next six months or so. So you know, 0:04:35.520 --> 0:04:37.680 we're in the camp where we really like what the 0:04:37.720 --> 0:04:40.040 FET is doing. Yes, they probably are a little bit 0:04:40.120 --> 0:04:43.280 late to starting to taper um, but we don't think 0:04:43.279 --> 0:04:45.680 it's going to derail the economy, and we think they 0:04:45.680 --> 0:04:48.080 should be given a lot of credit for navigating a 0:04:48.240 --> 0:04:52.359 really difficult economic environment over the last two years. Almost 0:04:52.400 --> 0:04:54.880 seemed like they had to be right. Pal was super 0:04:55.000 --> 0:05:00.440 devish until he was reconfirmed and and then he and 0:05:00.480 --> 0:05:02.440 then he was like, actually, you know what, I don't 0:05:02.440 --> 0:05:06.200 think it's going to be transits all right, Um, all right, 0:05:06.240 --> 0:05:08.280 So what do you like here, David? I mean, if 0:05:08.520 --> 0:05:09.960 when you wake up in the morning, what do you 0:05:10.000 --> 0:05:12.400 get pumped about? Or if you're if your best friend 0:05:12.440 --> 0:05:14.800 asked you at the bar, um you know where he 0:05:14.800 --> 0:05:18.440 should be investing? What do you tell him? So we like, 0:05:18.560 --> 0:05:22.600 as I'd mentioned, the media, telecom, healthcare financials. Probably our 0:05:22.680 --> 0:05:26.320 favorite two stocks right now would be Comcast, which was 0:05:26.360 --> 0:05:30.040 off this week on what we think was a misunderstanding 0:05:30.040 --> 0:05:32.960 of the company communications. Uh, it's gonna have very nice 0:05:33.000 --> 0:05:34.840 earnings in the next year. It sells a thirteen and 0:05:34.880 --> 0:05:37.960 a half times earnings, great long term business, so we 0:05:38.040 --> 0:05:41.839 like that here Viacom is doing all of the right things. 0:05:41.880 --> 0:05:44.280 They are going to become a streaming force of stock 0:05:44.360 --> 0:05:47.440 sales at under nine times earnings. The CEO and the 0:05:47.520 --> 0:05:50.440 chairwoman just bought a great deal of stock, yet it 0:05:50.520 --> 0:05:54.599 sells at year lows at a great price, three percent yield, 0:05:54.839 --> 0:05:57.440 So things like that are pretty interesting. On the banking side, 0:05:57.480 --> 0:06:01.159 we like MMT Bank in US Bank Corps. In the 0:06:01.240 --> 0:06:04.799 healthcare side, we like Amgen and zimmer which makes knee 0:06:04.800 --> 0:06:08.160 and him replacements, has done pretty poorly of late. We 0:06:08.200 --> 0:06:12.200 think as COVID normalizes, as the world gets back to normal, 0:06:12.279 --> 0:06:15.960 that stock easily is sixty company. You're buying it at 0:06:16.000 --> 0:06:18.839 a hundred twenty five today. All those companies that I 0:06:18.880 --> 0:06:22.120 mentioned are selling well below market multiple, so you're not 0:06:22.240 --> 0:06:25.560 paying twenty and twenty five times earnings for these good businesses. 0:06:25.920 --> 0:06:28.600 All right, David Um, great to get some time with you. 0:06:28.640 --> 0:06:32.280 Really appreciate your insight. Thanks very much. David Kax As 0:06:32.279 --> 0:06:36.920 the President and chief investment officer at Matrix Asset Advisers 0:06:36.960 --> 0:06:41.400 talking to us about the markets, the Fed, and inflation. 0:06:45.480 --> 0:06:47.920 Jeffrey Cleveland coming up now. We promised that we would 0:06:47.960 --> 0:06:52.400 talk about inflation again and he is the director and 0:06:52.480 --> 0:06:54.719 chief economist for Peyton and Right, Gal, Jeffrey, thank you 0:06:54.720 --> 0:06:59.080 so much for joining us. What is your expectation for 0:06:59.279 --> 0:07:02.919 next week given this elevated inflation number we have, I 0:07:02.960 --> 0:07:05.000 know it is in line with estimates, but it is 0:07:05.000 --> 0:07:09.560 still high. Yeah, it's the tricky it's a very tricky 0:07:09.560 --> 0:07:12.920 situation for the fom C. I think very high inflation, 0:07:13.680 --> 0:07:17.360 higher than you know, policy makers they expected for the year. Also, 0:07:17.400 --> 0:07:19.400 I have to issue a medical book much higher than 0:07:19.440 --> 0:07:21.960 I had anticipated for the year. So we were also 0:07:22.080 --> 0:07:25.680 wrong in our forecast. Um, But in recent months looks 0:07:25.720 --> 0:07:28.480 like the market you know, expected higher inflation, was set 0:07:28.520 --> 0:07:30.320 up for that. So perhaps that's why you see the 0:07:30.360 --> 0:07:32.720 rally today. The taff for the Fed though, which is 0:07:32.760 --> 0:07:36.960 your question? They you know, they've delivered very explicit guidance 0:07:37.240 --> 0:07:41.600 on when they might lift off, right they say maximum employment, 0:07:42.080 --> 0:07:46.680 so um, with inflation very very high. Question is are 0:07:46.720 --> 0:07:50.760 they going to relax or somehow alter how they define 0:07:51.200 --> 0:07:53.880 maximum employment to say that, you know, we are much 0:07:53.880 --> 0:07:56.640 closer to it with you know, quit rates very high, 0:07:56.640 --> 0:07:58.560 with job opening is very high, with the unemployment rate 0:07:58.560 --> 0:08:02.560 at four? Is that close enough to open the door 0:08:02.680 --> 0:08:06.040 for liftoff? Um. That's that's the thing that they have 0:08:06.080 --> 0:08:08.680 to wrestle with. It's the key thing in my mind. Um. 0:08:08.800 --> 0:08:11.240 I I still think we're not at full employment or 0:08:11.320 --> 0:08:15.040 close to maximum employment in my view, what given where 0:08:15.040 --> 0:08:17.800 inflation is, maybe they adjust that their their take. I mean, 0:08:17.800 --> 0:08:21.000 if we're not at maximum employment, how is it that 0:08:21.080 --> 0:08:25.720 we saw fewer jobless claims UM this week than any 0:08:25.760 --> 0:08:30.920 time since Richard Nixon was president? Yeah? I think it 0:08:30.960 --> 0:08:32.920 all depends on how you define maximum right, which they 0:08:33.160 --> 0:08:37.000 did not give us an explicit, uh no numerical definition. 0:08:37.360 --> 0:08:38.800 But for me, you know, I look at I look 0:08:38.840 --> 0:08:40.959 at that, and it's great. We have very few layoffs, 0:08:40.960 --> 0:08:44.440 so that's good news. We have a labor force participation, 0:08:44.520 --> 0:08:47.920 right though, Matt, that's sixty one eight. We were on 0:08:48.040 --> 0:08:53.760 labor force participation over sixty three UM pre COVID. So yeah, 0:08:53.800 --> 0:08:56.240 some of those people probably retired early, but not all 0:08:56.280 --> 0:08:57.800 of those folks. You know, when you look at that 0:08:57.880 --> 0:09:00.560 chart of labor force. What is your view, Jeffrey of 0:09:00.640 --> 0:09:05.800 the great resignation? Um, I've We've written a story about it. 0:09:06.240 --> 0:09:09.400 Every major media outlet has has tried to figure out 0:09:09.480 --> 0:09:12.440 what's going on here. So many people are telling me, 0:09:12.520 --> 0:09:15.600 you know what, the kids are just uh fed up. 0:09:16.280 --> 0:09:18.440 They're just not getting paid enough to keep up with 0:09:18.559 --> 0:09:21.800 rising prices and they just are quitting. Is that how 0:09:21.880 --> 0:09:24.760 you see it? Too? Well? Where do you see a 0:09:24.760 --> 0:09:27.200 lot of the quicks in the data? Okay, it's it 0:09:27.280 --> 0:09:30.400 tends to be in some of the lower wage industries, 0:09:30.960 --> 0:09:34.720 so things like food service, bars and restaurants. So that 0:09:34.960 --> 0:09:37.880 could be just a situation where there are some better 0:09:37.920 --> 0:09:40.920 wage options that um, you know different employers and people 0:09:40.960 --> 0:09:43.160 are making the jump, like to be something like that. 0:09:43.559 --> 0:09:46.400 We looked yesterday, you know at the job openings data. 0:09:46.559 --> 0:09:48.800 Where are all the job openings available that that people 0:09:48.840 --> 0:09:52.920 can jump to the biggest increase in job openings since 0:09:53.040 --> 0:09:57.040 COVID began. You've got you know the reason on hospitality, 0:09:57.360 --> 0:09:59.400 which is of course where we saw the most job losses. 0:09:59.440 --> 0:10:01.600 So if we are coming out of this pandemic, it's 0:10:01.640 --> 0:10:05.000 not that unusual to see those job openings rise, but 0:10:05.040 --> 0:10:09.920 then also matt, manufacturing, trade, warehouse, all those areas that 0:10:09.920 --> 0:10:13.200 are tied in very closely to meeting the demand for 0:10:13.280 --> 0:10:16.679 goods that we've seen. We've seen this huge surge from 0:10:16.720 --> 0:10:19.200 consumers in the last eighteen months in demand for goods, 0:10:19.480 --> 0:10:21.480 and there's there's been a lot of job openings and 0:10:21.559 --> 0:10:25.079 hiring in that area. To me, though, that's really pandemic, 0:10:25.200 --> 0:10:29.760 unique to the pandemic. Once consumer spending normalizes, people go 0:10:29.800 --> 0:10:32.120 back to spending more on services less on goods. I mean, 0:10:32.480 --> 0:10:35.120 how many how many home jims do you need? Matt, 0:10:35.720 --> 0:10:39.719 The spending patterns will change, and then maybe demanding those 0:10:39.720 --> 0:10:42.360 industries will change, job openings will come down, So it 0:10:42.360 --> 0:10:45.080 could be some noise in the quits data and also 0:10:45.120 --> 0:10:48.040 in the job opening to right. I'm really curious here 0:10:48.080 --> 0:10:51.400 about labor as well, because we did see that news 0:10:51.440 --> 0:10:54.360 coming out of Starbucks and the union vote, and I'm 0:10:54.400 --> 0:10:58.120 wondering if we're going to see more like this. Are 0:10:58.120 --> 0:11:01.360 we going to see more unionization, more strikes, more people 0:11:01.400 --> 0:11:08.760 that are asking for more um as this labor market changes. Yeah. 0:11:08.800 --> 0:11:10.600 I mean, one thing we've learned over the years is 0:11:10.600 --> 0:11:13.079 when when the labor market gets hotter, Right, when you 0:11:13.080 --> 0:11:15.760 get the unemployment rate falls below five down to four. 0:11:16.080 --> 0:11:18.400 We think the unemployment rate will get to three point 0:11:18.520 --> 0:11:22.600 five next year. That's great for labor. That is usually 0:11:22.640 --> 0:11:26.720 great for the broad swath labor market. Um, so it 0:11:26.800 --> 0:11:29.520 does tip the scales if you will more in in 0:11:29.760 --> 0:11:33.160 favor of labor over over capital, which which as an 0:11:33.160 --> 0:11:37.200 employee I won't complain about. It just dawned on me that, 0:11:38.440 --> 0:11:40.720 I mean, mindset matters, right, You're the kind of person, 0:11:40.800 --> 0:11:44.520 Jeffrey who doesn't quit. You don't ever give up, as 0:11:45.120 --> 0:11:47.320 is obvious by the fact that you swam across the 0:11:47.360 --> 0:11:50.840 English Channel, the Catalina Channel, and around the island of Manhattan. 0:11:51.320 --> 0:11:54.280 But I wonder if there's a generation of kids now 0:11:54.320 --> 0:11:57.400 that has just said I can't I have had enough, 0:11:57.520 --> 0:12:01.080 I can't keep up. Yeah, or know there's there are 0:12:01.080 --> 0:12:04.920 other options available. So I think one interesting data series 0:12:05.000 --> 0:12:07.200 worth taking a look at, you know, of late is 0:12:07.880 --> 0:12:10.920 new business applications. So one of the predictions I think 0:12:11.000 --> 0:12:15.560 pre COVID was that capital wouldn't be available and then businesses, 0:12:15.720 --> 0:12:17.760 you know, would really suffer. But we've seen sort of 0:12:17.760 --> 0:12:21.600 a flourishing in new business applications through the COVID period. 0:12:21.600 --> 0:12:24.920 And even after here, So it could be that the 0:12:25.160 --> 0:12:28.240 entrepreneurial spirit in the US is alive and well and 0:12:28.559 --> 0:12:32.480 instead of working for the firm, you know, people can 0:12:32.520 --> 0:12:34.839 branch out and start their own operations, So that that 0:12:34.880 --> 0:12:36.720 could be a positive spin on this whole development. It's 0:12:36.720 --> 0:12:40.240 not necessarily a bad thing. Also a great point, Jeffrey, 0:12:40.240 --> 0:12:42.160 I love having you on. Thanks so much for joining us. 0:12:42.480 --> 0:12:45.520 Jeff Cleveland there is the director and chief economist over 0:12:45.559 --> 0:12:52.439 at Paydon and Regal. Next up, we have Marianne Miller. 0:12:52.640 --> 0:12:55.920 She's the vice president of Client Experience, vice president over 0:12:55.960 --> 0:13:00.840 Approve and she has the latest on cyber secure already 0:13:00.880 --> 0:13:04.200 amid this holiday shopping season, as we know that a 0:13:04.240 --> 0:13:07.080 lot of it is being done online. Marianne, thank you 0:13:07.160 --> 0:13:09.400 so much for joining us. What are some of the 0:13:09.520 --> 0:13:13.480 issues that you're most concerned about the season, Yes, a 0:13:13.600 --> 0:13:15.480 great UM, thank you, and it's great to be here 0:13:15.520 --> 0:13:18.920 with you and your audience today. UM. This holiday season 0:13:19.080 --> 0:13:23.000 is proving to be challenging for retailers, and I predict 0:13:23.040 --> 0:13:25.320 that I'm going to go on record here on your show, 0:13:25.760 --> 0:13:28.000 it's going to be the toughest here in history for 0:13:28.080 --> 0:13:33.319 retail loss prevention. UM. The pandemic really moved consumers to 0:13:33.480 --> 0:13:38.400 online retailers. We see continued other factors that are kind 0:13:38.400 --> 0:13:41.440 of continuing this trend this year. As this year closes 0:13:41.760 --> 0:13:45.240 and we're moving into um many of the factors that 0:13:45.320 --> 0:13:50.160 contributed to fraud during the pandemic. Importantly, the challenge of 0:13:50.640 --> 0:13:55.440 digital identity proofing are affecting re killers as well. But 0:13:55.559 --> 0:13:58.520 we also have some top headline fraud issues as well. 0:13:59.160 --> 0:14:03.320 And I'll yeah, I actually just got an email. I'm 0:14:03.320 --> 0:14:04.640 trying to sell a car here, and it's got an 0:14:04.679 --> 0:14:08.360 email from a captain in the U. S. Military. He's 0:14:08.400 --> 0:14:10.640 serving in Syria right now. He and his buddies just 0:14:10.640 --> 0:14:14.240 found six point two million dollars that they decided to 0:14:14.320 --> 0:14:16.000 keep instead, and now they're going to put it in 0:14:16.000 --> 0:14:19.640 a red cross box and send it to me. In return, 0:14:19.840 --> 0:14:22.200 I get fifteen percent, and all I need to do 0:14:22.240 --> 0:14:24.160 is send them a copy of my I D and 0:14:24.200 --> 0:14:27.440 my bank account details. It seems like a great deal. 0:14:27.440 --> 0:14:28.960 I don't want to miss out on it. Is there 0:14:28.960 --> 0:14:32.600 anything I should be concerned about? Yes, there's definitely things 0:14:32.600 --> 0:14:35.000 you should be concerned about. And that definitely sounds like 0:14:35.040 --> 0:14:37.840 a scam, and we know I gotta tell you Marian, 0:14:38.040 --> 0:14:41.840 I've had two two people saying that they found millions 0:14:41.840 --> 0:14:43.680 of dollars in boxes and wanted to send it to 0:14:43.720 --> 0:14:45.560 me by a Red Cross. This isn't the new like 0:14:45.760 --> 0:14:49.240 African Prince scam. I think, right, well, you know, when 0:14:49.280 --> 0:14:51.080 it's too good to be true, it's too good to 0:14:51.080 --> 0:14:53.600 be true. And and you know, if you look at 0:14:53.680 --> 0:14:55.560 some of the challenges that you see out there for 0:14:55.600 --> 0:14:58.680 consumers as well as retailers UM and you know a 0:14:58.720 --> 0:15:01.120 couple of things that we really want to focus on 0:15:01.280 --> 0:15:03.920 is UM. You know, the supply chain shortages are going 0:15:03.960 --> 0:15:07.560 to make fraud more prevalent. So fraudsters like to take 0:15:07.600 --> 0:15:11.200 advantage of you know, panicked online buying and setting up 0:15:11.280 --> 0:15:16.240 bake fishing sites to collect customers personal information and credit 0:15:16.280 --> 0:15:19.440 and debit card information. So just like you're experiencing Matt, 0:15:19.680 --> 0:15:23.040 there's just these you know, constant fishing attacks and these 0:15:23.080 --> 0:15:26.680 attacks of scamming are are are bringing consumers into the 0:15:26.760 --> 0:15:30.520 into the mix. And second, UM, the retailers have always 0:15:30.520 --> 0:15:35.200 had an element of shoplifting increased during the holiday, but recently, 0:15:35.400 --> 0:15:38.280 you know, the highly publicized sharp spikes and organized retail 0:15:38.360 --> 0:15:42.440 depth is putting stress on businesses. So this is increasing 0:15:42.480 --> 0:15:46.000 the cost of physical security insurance and and moves more 0:15:46.040 --> 0:15:50.400 shopping online and as retailers UM, you know, move more 0:15:50.440 --> 0:15:53.360 things off the shelves and in certain locations and move 0:15:53.440 --> 0:15:55.800 things online. And that's when we start to see the scams, 0:15:55.840 --> 0:15:59.200 Like you're starting to see an experience so and some 0:15:59.440 --> 0:16:02.680 so these UM law Enforcement task force have been set up, 0:16:02.760 --> 0:16:06.080 just a set up and retaining these activities. You know, Mary, 0:16:06.160 --> 0:16:07.920 unless look a couple of years into the future here 0:16:07.960 --> 0:16:11.560 real quick, because I'm wondering, if crypto continues to take off, 0:16:12.200 --> 0:16:19.120 does that make cybercrime easier or harder? Because in theory, yeah, 0:16:19.240 --> 0:16:21.360 I mean you know, how does that really end up 0:16:21.360 --> 0:16:25.560 playing out? Well, you know, any time that there's something 0:16:25.640 --> 0:16:28.440 and you know, in the fraud community, we always look 0:16:28.480 --> 0:16:32.200 at any time there's something new UM and and fraudsters 0:16:32.320 --> 0:16:35.680 love that. Actors love a new product or something new, 0:16:35.760 --> 0:16:39.920 and they're definitely taking advantage of the crypto environment and 0:16:40.000 --> 0:16:43.800 you know, the the crypto exchanges and we know that 0:16:43.960 --> 0:16:47.200 UM there's a lot of focus on getting new signals 0:16:47.560 --> 0:16:51.280 in those environments to make them safer. UM like device 0:16:51.360 --> 0:16:56.360 intelligence and phone identity signals, biometrics, machine learning, all of 0:16:56.400 --> 0:16:59.480 that's really important, you know, to make you known environment 0:16:59.480 --> 0:17:03.200 where it's better lost controls. Marianne, thank you so much 0:17:03.240 --> 0:17:04.760 for joining us on this. It's going to be a 0:17:04.760 --> 0:17:11.120 scary holiday season in some regards. This is the Big Take, 0:17:11.280 --> 0:17:15.080 the best of Bloomberg's in depth, original reporting from around 0:17:15.119 --> 0:17:17.760 the globe. We're running on a financial system that's running 0:17:17.760 --> 0:17:22.159 on old technology. We're seeing prices reach fresh recordized. What 0:17:22.320 --> 0:17:24.600 unfolds in mid terms, we will no doubt see again 0:17:25.040 --> 0:17:29.240 in the next presidential election. The Big Take on Bloomberg Radio. 0:17:31.119 --> 0:17:33.679 All right, let's get to our Big Take story of 0:17:33.800 --> 0:17:36.080 the day. Paul and I love these stories, but I'm 0:17:36.080 --> 0:17:41.119 sure Sheinali does as well. They are deeply reported long 0:17:41.240 --> 0:17:44.359 reads that we have for you on the Bloomberg terminal, 0:17:44.400 --> 0:17:48.080 but are also available often in Bloomberg Business Week. Today. 0:17:48.160 --> 0:17:50.880 Cam Simpson joins us. He wrote a story about well, 0:17:50.920 --> 0:17:53.760 the title is the E. S. G Mirage, and it's 0:17:53.800 --> 0:17:55.879 about M S C. I can you say it's a 0:17:55.920 --> 0:18:00.200 bland Wall Street company, But I have always uh loved 0:18:00.320 --> 0:18:03.480 MSDU because they helped me um so easily sort through 0:18:03.520 --> 0:18:07.080 a number of different verticals in the market. Of course, 0:18:07.119 --> 0:18:09.600 I've been reporting on markets for twenty years. I've been 0:18:09.680 --> 0:18:12.840 using it for a long time. What's the link between 0:18:12.880 --> 0:18:16.520 this company and E s G. Yeah, that's that's right. Thanks, 0:18:16.680 --> 0:18:19.159 it's you know, but this is kind of like a 0:18:19.200 --> 0:18:21.719 back office function on Wall Street that nobody it's not 0:18:21.800 --> 0:18:25.320 like a really terribly sexy stock That's what we've and 0:18:25.400 --> 0:18:28.960 then the CEO of the company rebranded it around their 0:18:29.080 --> 0:18:33.480 E s G business. They aren't by far the dominant 0:18:34.320 --> 0:18:38.359 ratings provided for E s G investing, which as you know, 0:18:38.440 --> 0:18:44.800 has become a multi trillion dollar excuse me business and 0:18:44.840 --> 0:18:47.720 the and the fastest growing segment of the global financial 0:18:47.760 --> 0:18:50.880 services industry in just the past few years. And these 0:18:50.880 --> 0:18:53.720 guys in terms of retail funds that people are able 0:18:53.720 --> 0:18:59.560 to invest in their ratings probably or underneath at least 0:19:00.000 --> 0:19:01.760 and the money and retail funds. I mean, it's not 0:19:01.800 --> 0:19:06.040 even close between them and their next competitor. They just 0:19:06.119 --> 0:19:08.960 completely dominate the space. So he rebranded the company in 0:19:09.000 --> 0:19:11.400 two thousand nineteen, at the beginning of two nineteen when 0:19:11.440 --> 0:19:15.159 he saw this taking off under you know, a new motto, 0:19:15.240 --> 0:19:18.160 which was either better investments for a better world are 0:19:18.200 --> 0:19:21.199 better portfolios for a better world? Really trying to hammer 0:19:21.240 --> 0:19:25.840 on this idea that investing in the SG funds is 0:19:25.880 --> 0:19:29.400 going to help save the planet from climate change. And 0:19:29.480 --> 0:19:34.240 you know, this really took off when you know, it 0:19:34.280 --> 0:19:38.639 was marketed around the social justice movement and that was 0:19:38.680 --> 0:19:41.879 happening in America on the streets and also the pandemic 0:19:42.000 --> 0:19:46.120 and dire warnings about the climate crisis, and so uh, 0:19:46.160 --> 0:19:50.680 they're they're really MSCI is at the foundation of this 0:19:50.760 --> 0:19:55.879 whole boom in in in sustainable funds in America through 0:19:56.080 --> 0:19:59.480 and globally through through their ratings. Yeam, it's so interesting. 0:19:59.480 --> 0:20:01.240 And you know one fact, m sc I used to 0:20:01.280 --> 0:20:03.680 be a part of Morgan Stanley back in the day. 0:20:03.720 --> 0:20:06.080 They have gotten a lot of heat from fund managers 0:20:06.520 --> 0:20:11.080 for not doing more. What is the issue at play 0:20:11.200 --> 0:20:14.560 here between M s c I and it's E s 0:20:14.640 --> 0:20:19.960 G push or you know the lack thereof in summers regards. Well, 0:20:20.000 --> 0:20:21.520 I think I think you know the issue is that 0:20:21.720 --> 0:20:26.240 that E s G is pretty much exactly the opposite 0:20:26.240 --> 0:20:28.520 of what Wall Street marketing has led people to believe 0:20:28.560 --> 0:20:30.920 that it is right. So E s G ratings, M 0:20:31.000 --> 0:20:32.920 s c I, G s G ratings are particular, They're 0:20:32.920 --> 0:20:36.960 all different, they're all different brands of magic and they're 0:20:36.960 --> 0:20:39.880 not regulated, and they all every s g rader produces 0:20:39.920 --> 0:20:43.240 completely different results on like a credit rating. You know, 0:20:43.440 --> 0:20:46.159 m SCI uses the credit rating standards of triple A, a 0:20:46.040 --> 0:20:49.120 a trouble bb junk, the stuff that Wall Street knows 0:20:49.160 --> 0:20:51.520 and recognizes the only ones to keep that and they 0:20:51.600 --> 0:20:55.000 get in order of credibility from that um that that 0:20:55.040 --> 0:20:59.080 nobody else gets. But instead they're looking at is not 0:20:59.280 --> 0:21:01.439 like what it's going to make a better world. The 0:21:01.520 --> 0:21:04.199 lens that they're looking at specifically is what matters to 0:21:04.240 --> 0:21:06.800 the bottom line. It's not the impact of the company 0:21:06.800 --> 0:21:09.520 on the world, it's the impact of the world on 0:21:09.560 --> 0:21:12.399 the company. So when you look at climate change, you 0:21:12.400 --> 0:21:15.840 could be a massive producer of greenhouse gases, and unless 0:21:15.880 --> 0:21:18.760 you're in a business that's going to be regulated for 0:21:18.840 --> 0:21:21.880 greenhouse gases, which is pretty much just the utility industry, 0:21:21.960 --> 0:21:25.600 these won't even really impact your your bottom line in 0:21:25.680 --> 0:21:27.840 any in any near kind of way, and so they're 0:21:27.880 --> 0:21:32.040 not even considered your rating. McDonald's had greenhouse gas emissions 0:21:32.359 --> 0:21:35.400 equal to Portugal or Hungary and its supply chain, which 0:21:35.440 --> 0:21:37.280 is where most of that comes from, because it's one 0:21:37.320 --> 0:21:41.160 of the biggest beef purchasers in the world, and it 0:21:41.320 --> 0:21:44.119 weighs zero percent in in M s c I E 0:21:44.280 --> 0:21:46.600 s G rating of them, they got into s G rating. 0:21:46.840 --> 0:21:48.760 They're going in the s G upgrade when there are 0:21:48.760 --> 0:21:53.440 emissions going up significantly and and M s c I 0:21:53.520 --> 0:21:57.119 recalculated its environment scored to remove emissions completely. So what 0:21:57.160 --> 0:21:59.800 we did was we went through like all the upgrades 0:21:59.800 --> 0:22:02.679 in the S and P during this heery period of 0:22:02.800 --> 0:22:05.879 record growth for sustainable industy, and we looked at what 0:22:05.960 --> 0:22:10.119 was actually underneathy upgrades. We both bespoke database to really 0:22:10.160 --> 0:22:12.000