Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Jason Kelly. We're right here every day bringing you the
Speaker 1: latest news from the world's of business and finance, plus technology, politics, economics,
Speaker 1: all harnessing the power of Business Week reporters and editors.
Speaker 1: And of course Carol that's part of a team of
Speaker 1: twenty seven hundred journalists and analysts more than a hundred
Speaker 1: and twenty countries and Jason. You can download Bloomberg Business
Speaker 1: Week on iTunes, SoundCloud, bl Bloomberg dot com. You can
Speaker 1: also listen to our radio show at two pm Eastern
Speaker 1: on Bloomberg Radio every weekday, or watch us on YouTube
Speaker 1: by searching Bloomberg Global News. Well, let's set the business
Speaker 1: week agenda, understand what investors may be thinking going into
Speaker 1: this week. Gina Martin Adams with this, chief equity strategist
Speaker 1: for Bloomberg Intelligence, joining us on the phone from New Jersey. So, Gina,
Speaker 1: nice to have you with us. A little bit of
Speaker 1: a different tone. What are investors thinking about today? Yeah, Well, first,
Speaker 1: thank you for having me. It's always good to join
Speaker 1: you guys on a Monday afternoon. In terms of what
Speaker 1: investors are thinking, I think it's all actually started um
Speaker 1: as if Thursday's trade. We noticed in our chart book
Speaker 1: last week that some of the stocks that really got
Speaker 1: us into this mess, namely the technology, communications, consumer discretionaries,
Speaker 1: some of those really high flyers over the summer had
Speaker 1: finally reached some signals of stabilization. As of Thursday's trades.
Speaker 1: We started to see a little bit of recovery in
Speaker 1: the broad market on Friday, and I think this is
Speaker 1: a lot of follow through of that recovery. Though I
Speaker 1: think it's really notable that it's not tech that's leading,
Speaker 1: and this has been part of our strategy really since
Speaker 1: the beginning of September. Our sector scorecards suggested that we
Speaker 1: were moving into a new phase of the market where
Speaker 1: the leadership would have to rotate to the sectors where
Speaker 1: we're exposed to experience the biggest economic recovery into one eventually,
Speaker 1: and that means not the tech COVID sort of safety plays,
Speaker 1: but more value cyclical type of stocks like the industrials
Speaker 1: and materials and energy in the world and even energy.
Speaker 1: So I think that what's happening is a bit of
Speaker 1: rotation and finally you get the tech sector stabilizing. So
Speaker 1: your primary source of downdraft in stocks is stable, and
Speaker 1: that allows for the sectors that have actually been performing
Speaker 1: reasonably well, like industrials and materials, to perform um and
Speaker 1: to continue to show that leadership well. And I do
Speaker 1: wonder Gina, and first of all, we love having you,
Speaker 1: so it's a great way for us to start off
Speaker 1: our week. Um is, do you think you're getting more
Speaker 1: visibility at all from CEOs? Jason and I talked to
Speaker 1: a lot of CEOs, and I still feel like there's
Speaker 1: still that like, yeah, we don't quite know what's going
Speaker 1: you know one. But do you feel like you're starting
Speaker 1: to get a little bit more guidance? Uh, certainly when
Speaker 1: it comes to earnings and earnings growth. Yeah, I think
Speaker 1: you're getting guidance on some things, but not on others.
Speaker 1: I think I think CEO they're picking and choosing very
Speaker 1: carefully where they can provide visibility, they will. For instance,
Speaker 1: you know, if you flashback six months ago, there was
Speaker 1: no visibility because there were companies were scrambling to such
Speaker 1: an extent that they were just working to survive, let
Speaker 1: alone thurrive. And I think that the converse that is
Speaker 1: slowly shifting to how do we thrive. How do we
Speaker 1: do well in an environment where we do have a
Speaker 1: lot of people still working from home. There are still
Speaker 1: a lot of unemployed, but there is incremental improvement in
Speaker 1: the economy. How do we navigate an economy that's partially
Speaker 1: open but operating in a different way than economy. It's
Speaker 1: certainly not the crisis mode that we were in in
Speaker 1: the fall, but I do think that there is a
Speaker 1: little bit more forward looking commentary, more focus on how
Speaker 1: to grow rather than just how to survive. Now that
Speaker 1: we've gotten past the peak of the crisis period, it's
Speaker 1: about how do we navigate this new recovery Either. That said,
Speaker 1: nobody has fantastic visibility into what the economy is going
Speaker 1: to look like, obviously, but there are some signs of light.
Speaker 1: There are some signs of improvement. There are the CEOs
Speaker 1: that have had the experience of recovery in China and
Speaker 1: can kind of take that story of Asian recovery and
Speaker 1: and place it on in the Western world and say, well,
Speaker 1: where could we go from here and what does our
Speaker 1: outlook look like in a post COVID environment. Yeah, it's
Speaker 1: also interesting, Gina, And I know this is a loaded
Speaker 1: word when it comes to two markets, but there's almost
Speaker 1: this sense of capitulation or maybe resignation that, Listen, the
Speaker 1: virus is going to be with us for for some
Speaker 1: amount of time, and maybe longer than we certainly thought
Speaker 1: in March or April, but we're learning to live with
Speaker 1: it in a certain way. Obviously, the next few months
Speaker 1: are going to be um difficult and and and we
Speaker 1: don't know what to expect, but investors sort of living
Speaker 1: with it to some extent and getting and maybe understanding
Speaker 1: that the new normal is a new normal with the virus,
Speaker 1: not a new normal post virus in some ways. Yeah,
Speaker 1: I think that. I think that's absolutely spought on correct
Speaker 1: is and that's the change in the language. Right If
Speaker 1: you think six months ago, it was okay, well this
Speaker 1: might go away soon, and then it was okay, that's
Speaker 1: never going to go away, and now it's well, we're
Speaker 1: going to make incremental progress to improvement. But the reality
Speaker 1: is we're not going to go back to anytime soon.
Speaker 1: It's not going to just completely go away, but it
Speaker 1: also is not going to be crisis mode forever. So
Speaker 1: I think we're trying to kind of trying to find
Speaker 1: that middle ground. It's a little bit more about realism
Speaker 1: and assessing where the realistic outlook is. At the same time,
Speaker 1: there obviously is a lot of fireworks coming out of Washington.
Speaker 1: I mean, you've got everything from what It's amazing how
Speaker 1: much we are contending with in terms of just political
Speaker 1: volatility right now in the midst of this virus environment.
Speaker 1: And so I think that companies are going to have
Speaker 1: to address that in the post election period when we
Speaker 1: know who the players are in Washington, right and we
Speaker 1: don't even know when we're going to know at this point,
Speaker 1: so that even that is up for a speculation, all right,
Speaker 1: Gina Martin Adams, thank you so much. Great way to
Speaker 1: start the week, Chief Equity Strategies for Blueberg Intelligence. Joining
Speaker 1: us on the phone from Jersey. This is Bloomberg Business
Speaker 1: Week with Carol Masser and Jason Kelly on Bloomberg Radio.
Speaker 1: Well Global COVID nineteen cases topping thirty three million as
Speaker 1: infections in India reached the six million mark, the official
Speaker 1: death toll nearing one million worldwide. The experts say the
Speaker 1: real tally maybe almost double that. Let's get back to
Speaker 1: someone it's been one of our he has been one
Speaker 1: of our go to voices. During the COVID nineteen pandemic.
Speaker 1: Dr Sandra Galia is back with us. Diana, professor at
Speaker 1: Boston University School of Public Health, author of Pained Uncomfortable
Speaker 1: Conversations about the public's health, and he joins us once
Speaker 1: again on the phone from Boston UM. Dr Galia, so
Speaker 1: nice to have you back with Jason and myself. How
Speaker 1: are you, how's this school? Tell us how things are going? Hi? Gerald,
Speaker 1: Hi Jason, Thank you for having me again. You know
Speaker 1: it has been there has been a challenging month. I
Speaker 1: think it's a challenging month for everybody who is part
Speaker 1: of an institution that is trying to balance the risks
Speaker 1: of the moment we are. We are a university have
Speaker 1: been reopening cautiously, carefully with a lot of testing, a
Speaker 1: lot of contact, tracing, a lot of isolation as needed,
Speaker 1: and really working hard to keep the community safe. We'll
Speaker 1: also working on our mission and continuing teaching and containing
Speaker 1: our research. And it's a tough balance. I think it's
Speaker 1: a tough balance for everybody, and and it's part of
Speaker 1: I think a broader societal place where we are at,
Speaker 1: where we are recognizing that we are living with COVID
Speaker 1: for some time now and uh, and we cannot afford
Speaker 1: to keep our world slow down because there are important
Speaker 1: things that we have to do. And so give us
Speaker 1: a sense of that balance, Dr Galia, like, what is
Speaker 1: something where you feel like you've found it in terms
Speaker 1: of either staffing or class size or doing labs, Like,
Speaker 1: give us an example of where you feel like, Okay,
Speaker 1: well this this feels about as good as we can get. Well, Jason,
Speaker 1: I think, uh, I don't think I feel confident telling
Speaker 1: you anything as good as at the camp. I think
Speaker 1: I think everything is a working progress. Don't. Let's talk
Speaker 1: about what we're doing. So we as a university are
Speaker 1: testing people extensively. We have about five to six thousand
Speaker 1: tests a day happening, so students are tested in multiple
Speaker 1: times a week. We have a lot of people who
Speaker 1: are involved bought in the testing, but then also somebody
Speaker 1: tests positive and the contact racing to see who they've
Speaker 1: been in contact with. Right, So the idea is, and
Speaker 1: we had discussed this before in our previous conversations, the
Speaker 1: idea with testing is that you catch a case early
Speaker 1: so that it does not become a cluster that does
Speaker 1: not then continue the epidemic. So you find the case,
Speaker 1: you do contact tracing, you find the people around that case,
Speaker 1: you quarantine those people, and you isolate the case. And
Speaker 1: of course all of that is superimposed over a very
Speaker 1: strict regiment of building hygiene, and by that I mean
Speaker 1: ventilation and the building wiping down surfaces, a very strong
Speaker 1: public campaign for people to remain safe, wearing masks, making
Speaker 1: sure that people are not in if they're sick, and
Speaker 1: everyday doing symptoms screens for everybody. So it really is
Speaker 1: a fairly comprehensive effort, and it is in some respects
Speaker 1: I think the challenges that it's a comprehensive effort that
Speaker 1: has to happen now and has to keep happening really
Speaker 1: for weeks and months until there is a definitive vaccine
Speaker 1: for COVID. Talk to me about contact tracing, because I
Speaker 1: feel like we are getting very mixed results, mixed reviews
Speaker 1: in terms of people essentially saying yep, I'm not going
Speaker 1: to cooperate. It's voluntary, and I'm not going to tell
Speaker 1: you either I don't want to get in trouble because
Speaker 1: I was at a party, or I feel like it's
Speaker 1: an invasion of my privacy. How do you manage that well.
Speaker 1: In some respects, I think it's easier to manage that
Speaker 1: within a closed system of one institution versus in the
Speaker 1: general population. Right, So in our in our system, in
Speaker 1: our system, we have been very clear that this is
Speaker 1: part of the cost of citizenship. If you're if you're
Speaker 1: going to be part of the community, you have responsibility
Speaker 1: to work towards keeping others safe. And part of that
Speaker 1: responsibility is if you test positive, is that you talk
Speaker 1: to the contact tracers and you told them who you've
Speaker 1: been in contact with, so that they can reach out
Speaker 1: to those people and make sure we keep them safe
Speaker 1: as well. It's harder to do that in the general population.
Speaker 1: There's not a lot of reports about fifty people in
Speaker 1: general population answer and talk to contact traitors. That's that's
Speaker 1: in the general population where I think there isn't as
Speaker 1: much of a sense of shared responsibility for one another
Speaker 1: there should be. I'm just reflecting on probably what's going
Speaker 1: out there. Yeah, now that's a big part of it.
Speaker 1: I mean, Jason and I've talked about it. I know,
Speaker 1: when my daughter got together with some classmates at the
Speaker 1: end of the summer and we had kind of quarantined
Speaker 1: her for months. You know, we as families went into
Speaker 1: it saying Okay, what have you been doing? Who's getting tested?
Speaker 1: You know, like there was this sense of community to
Speaker 1: make sure everybody stayed safe. And I feel like, you know,
Speaker 1: there not everybody's on the same page with that. Also,
Speaker 1: to be fair and Dr Glaire, you understand that's not
Speaker 1: everybody can be on the same page. There are some
Speaker 1: people that you know, if they don't go to work,
Speaker 1: they don't get paid in it, they're in a tougher predicament.
Speaker 1: And I just you know, I just well, I think,
Speaker 1: I mean, this is why, this is why Carol, I
Speaker 1: think the reopening is so important. I think it's a
Speaker 1: The data are very clear, for example, that your chances
Speaker 1: of being able to work from home are much higher
Speaker 1: if you're in the top quartile of income. So people
Speaker 1: who are who are who have to go to work
Speaker 1: are people who are already making less income. We know
Speaker 1: that it overlaps with race, right. We know that the
Speaker 1: disproportionate burn of COVID in many respects was because we
Speaker 1: expose people that low income people of color often to
Speaker 1: work before we understood how COVID works. But the the
Speaker 1: economic shutdown, I feel like the public conversation about the
Speaker 1: economic slowdown hasn't been fair because, to be to be frank,
Speaker 1: it's been there. It's been directed by people whose livelihoods
Speaker 1: that's not really at risk from economic slowdown because they
Speaker 1: can work from home. But the fact that more than
Speaker 1: half the population cannot work from home. So if we
Speaker 1: if we if we say, if we take the premise
Speaker 1: that well, we should reduce risk of COVID at all costs, well,
Speaker 1: do we really mean at all costs or do we
Speaker 1: mean at all costs to somebody else? I think we
Speaker 1: need to be honest with that, and and and and
Speaker 1: economic slowdowns hurt people who are already at the low
Speaker 1: end of making income, and that is something that we
Speaker 1: as a society have a responsibility to try to avoid
Speaker 1: as much as possible. To get back to our conversation
Speaker 1: with Dr Sandro Galia, dean at the Boston University School
Speaker 1: of Public Health, also the author of the book Pained
Speaker 1: Uncomfortable Conversations about the Public's Health. So let's talk about
Speaker 1: the public's health. Dr Galia, What can we be doing
Speaker 1: before we get to the other side of this? What
Speaker 1: should we be doing to ensure that we don't lose
Speaker 1: sight of these inequalities that have been laid bare by
Speaker 1: this pandemic. And Jason, I think what the pandemic has
Speaker 1: shown us, and I like your use of the term
Speaker 1: laid bare. It has shown us the inequalities that existed
Speaker 1: already before the pandemic. The country is really shaped by
Speaker 1: deep socio economic and equalities and deep racial inequalities. And
Speaker 1: those inequalities have helped analogus. Just like we have have
Speaker 1: the have not, we have held haves and have not
Speaker 1: around those two acts. Now, the the pandemic revealed that
Speaker 1: we have Black Americans have two and a half times
Speaker 1: greater risk of dying during COVID than white Americans, and
Speaker 1: that is largely due to the double whammy of one
Speaker 1: greater burden of disease among the black Americans had convered
Speaker 1: the white Americans, and number two that a disproportionate number
Speaker 1: of them work in what we came to call sort
Speaker 1: of essential work, frontline work, work that exposed them to
Speaker 1: get in COVID. So to my mind, what COVID is
Speaker 1: now letting us see what was already there for us
Speaker 1: to see had we looked for it. So the question
Speaker 1: you ask is, how do we not forget this, and
Speaker 1: I think we do not forget this frankly, by continue
Speaker 1: to have the conversation and and saying to ourselves the
Speaker 1: time to fix these inequities by socioconomic class, by by
Speaker 1: race is not when we're under dress room pandemic. It's
Speaker 1: when the pandemic is over, before the next pandemic. So
Speaker 1: I really think that there's going to be and there
Speaker 1: should be a reckoning with what are the forces in
Speaker 1: our society economic forces to social forces that we need
Speaker 1: to realign once the pandemic is over. You know, the
Speaker 1: metaphor that keeps running through my mind is you're on
Speaker 1: a ship going through a storm, right, and the ship
Speaker 1: going through a storm, and the ship is not doing
Speaker 1: well because it's leaking or because the sailors don't know
Speaker 1: what they're doing well. While you're going through the storm,
Speaker 1: the best you can do is try to patch up
Speaker 1: the patch, patch up the prow, and get your sailors
Speaker 1: to do something that's not too terrible. But really, the
Speaker 1: time when you should be fixing the ship is when
Speaker 1: you're past the storm, So you should be getting the
Speaker 1: ship ready to face the next storm. And we as
Speaker 1: a country have ignored this for for decades, so it
Speaker 1: is if one were to be silver lining inclined, this
Speaker 1: could be a good time for reflection for us once
Speaker 1: we get past this pandemic and say, what are the
Speaker 1: structures we want to build to make the country healthier
Speaker 1: and ready for the next time. What would be the
Speaker 1: structures you would build? Well, I think the big mistake
Speaker 1: carel that we've been making is we con late healthcare
Speaker 1: with health We spend more on healthcare than any the
Speaker 1: country in the world by a lot, by about more
Speaker 1: than any other country in the world, and yet compared
Speaker 1: to other high income countries, which is really only fair comparison,
Speaker 1: we have the worst health indicators compared to you know,
Speaker 1: we we have lower life expectancy, we have higher heart disease,
Speaker 1: we have higher cancer mortality rates. Now why is that?
Speaker 1: The reason that is is very simple. It's because all
Speaker 1: our money goes into high tech medicine that's there to
Speaker 1: cure us when we all least sick. What we need
Speaker 1: to do is we need to prevent disease before it starts.
Speaker 1: And the way to do that is by having livable wages,
Speaker 1: safe housing, availability of nutritious food, gender equity, less violence,
Speaker 1: and unless we invest in those forces, we are going
Speaker 1: to keep pumping money into healthcare and our health is
Speaker 1: still going to light behind. So that's at the fundamental level.
Speaker 1: It requires understanding what what produces health and invested in
Speaker 1: what produces health, not just investing in healthcare. Yeah, that's
Speaker 1: a really Dr Sandragolia, thank you so much. Really nice
Speaker 1: to have you back with us. We look forward to
Speaker 1: next time for sure. Dean of Boston University's School of
Speaker 1: Public Health also the author of Pained Uncomfortable Conversations about
Speaker 1: the Public's Health, and it's such an important point. Carol
Speaker 1: and I had never really heard it distilled down like
Speaker 1: that we separate healthcare from health. We do think we
Speaker 1: think about it when we talk about it from an
Speaker 1: investment perspective. It's the health care industry. But all of
Speaker 1: those things that he talked about, and education, I feel
Speaker 1: like there's a pretty clear um path too. But nutrition,
Speaker 1: I feel like sometimes food we separate from health. We
Speaker 1: totally do. But I thought what he said about livable wages,
Speaker 1: safe housing, you wouldn't necessarily correlate that right with better
Speaker 1: health either. But it's all intertwined. You need all of
Speaker 1: a total steps that that whole last thing, how he
Speaker 1: tied it up, I thought was just brilliant. That's a
Speaker 1: T shirt all on its own. That's that's like a
Speaker 1: jogging suit plus socks and sneaks. I'm just going to say,
Speaker 1: courtesy of Dr Sandrew Galleia, this is Bloomberg Business Week
Speaker 1: with Carol Messer and Jason Kelly on Bloomberg Radio. Well,
Speaker 1: I'm really excited to talk about this next story because
Speaker 1: it's just in such the Bloomberg wheelhouse and so appropriate
Speaker 1: for a time when we're talking so much about it
Speaker 1: could be a Netflix series two and how it's managed.
Speaker 1: I know, it's so great. Neil Weinberg, one of our
Speaker 1: favorite reporters here are senior projects and an investigations reporter
Speaker 1: for Bloomberg. Johnny is on the phone from New York
Speaker 1: along with Joel Webber, the editor of Bloomberg Business Week.
Speaker 1: He joins us from Massachusetts, and Joel, I feel like
Speaker 1: this is also one of these stories that's so in
Speaker 1: the Joel Webber wheelhouse too, because you were the editor
Speaker 1: of Bloomberg Markets before you became theater of Bloomberg Business Week,
Speaker 1: so you understand all the intricacies of this world. Set
Speaker 1: this up for us. It's funny. It actually makes me
Speaker 1: remember a very similar story that Neil did for me
Speaker 1: once upon a time that actually goes to some similar places.
Speaker 1: And this is the story that Neil spent a lot
Speaker 1: of time on and it's a really interesting one because
Speaker 1: all rich people in their bankers UM and if that
Speaker 1: doesn't get your attention, I don't know what does, especially
Speaker 1: here in September right exactly. So, So Neil, let's let's
Speaker 1: talk about this, because it's not a story that UM
Speaker 1: goes particularly well for the rich guy, or at least
Speaker 1: it hasn't so far. What's what are we talking about? No,
Speaker 1: I guess the sort of conceit of the of the
Speaker 1: story is the idea that when you're talking about private banking,
Speaker 1: the banking for the super rich, you're talking about the
Speaker 1: service that you don't get walking into your local branch office.
Speaker 1: And this goes obviously to things like investing and putting
Speaker 1: your money in savings accounts, but it also goes to
Speaker 1: things that can include outside investments or sports tickets or
Speaker 1: dinner reservations or private planes or you name it, and
Speaker 1: they'll arrange it for you. And the question in the
Speaker 1: story is, at what point does it stop becoming banking
Speaker 1: and become something else. At what point are the clients
Speaker 1: lulled into sort of a sense of comfort with their
Speaker 1: bankers where they're not exactly trusting but verifying. Yeah, who
Speaker 1: are the characters that you're talking about here, Neil? In
Speaker 1: this case, we're talking about a extremely wealthy young Mexican
Speaker 1: gentleman named Moises Coco Spinosa. He inherited a lot of money,
Speaker 1: went at a very young age, when he was in
Speaker 1: his teens. Among his holdings is a buildings fifty nine
Speaker 1: stories on the corner of Fifth Avenue and forty two Street,
Speaker 1: across from the New York Public Library, to name one.
Speaker 1: Uh So, he had a lot of money at a
Speaker 1: very young age, and he was introduced to a pretty
Speaker 1: young banker banker who at the time was in his twenties,
Speaker 1: and they struck up a relationship which from our reporting
Speaker 1: indicates that it was professional, it was also social and
Speaker 1: uh it sort of gets into the story, gets into
Speaker 1: of the dark corners of you know, what is trust
Speaker 1: and what is appropriate uh in in banking and beyond. Well,
Speaker 1: I also feel, like you know, Neil, that it raises
Speaker 1: questions like are these relationships usually mutually beneficial. I mean,
Speaker 1: there's fees that the banker gets for doing transactions and
Speaker 1: so on and so forth. But I do wonder there's
Speaker 1: a balance, right, and I feel like this story gets
Speaker 1: too Did the bankers go you know, over the line
Speaker 1: in terms of what they did? Absolutely, And obviously you're
Speaker 1: always going to have attention in a sales environment, whether
Speaker 1: you're selling cards or computers or banking services, where the
Speaker 1: more revenue you generate for your employer probably means you'll
Speaker 1: get paid more too, which was the case here. And
Speaker 1: on the other hand, obviously it's a good deal for
Speaker 1: a client to get a good deal, so you have
Speaker 1: to sort of strike a balance. And in this case,
Speaker 1: after many years where the banker and the client we're
Speaker 1: working together, the client came to the conclusion that no,
Speaker 1: he wasn't getting good service, he was getting ripped off Neil.
Speaker 1: Another UM element that it kind of stands out here
Speaker 1: is that the banker in question, who obviously UM has
Speaker 1: disputed the allegations UM, wasn't like he stuck at one bank, right,
Speaker 1: He actually moved around and brought the client with him.
Speaker 1: Talk to us about that element exactly. Uh, this was
Speaker 1: a banker who started in his twenties after he had
Speaker 1: skied in the Olympics of all things. M a fellow
Speaker 1: Mexican UH, he joined City Bank. He then moved for
Speaker 1: a larger pay package to credit suee and ultimately ended
Speaker 1: up at Morgan Stanley in Miami, where he was part
Speaker 1: of the Latin American practice. UH. The client, Moises Coco,
Speaker 1: followed him from one bank to the next, set up
Speaker 1: a family office along the way, and UH he and
Speaker 1: he hired to run his family the office another banker
Speaker 1: who was very familiar to both the banker and the client,
Speaker 1: which raised questions about UH conflicts of interest and whether
Speaker 1: the the relationship was too cozy for comfort, or at
Speaker 1: least too cozy to work appropriately well. So, I wonder
Speaker 1: if the problems are because the investments didn't pay off
Speaker 1: and that's why we had lawsuits, because I feel like
Speaker 1: these cozy relationships maybe would be okay if everything went
Speaker 1: along fine. Is that is it a case that things
Speaker 1: didn't go so well and that's why we have lawsuits?
Speaker 1: I mean, I guess this is what we're trying to
Speaker 1: figure out. Well, it's important to say in this case
Speaker 1: it's a hotly disputed legal dispute at this point. But
Speaker 1: what the client is alleging in a lawsuit and in
Speaker 1: a private arbitration before finra UH is that the bankers,
Speaker 1: he says, stepped way over the line and they were
Speaker 1: doing transactions inside the bank. In this case, the bank
Speaker 1: he is pointing UH finger at is credit SUEEE, and
Speaker 1: he is saying that the bankers were doing transactions purely
Speaker 1: to profit themselves and their employer. In addition, he's alleging
Speaker 1: that they encouraged him to get involved in outside investment
Speaker 1: sort of private private equity or private placement type of
Speaker 1: deals where they say there was a lot of self
Speaker 1: He says, there was a lot of self dealing going on.
Speaker 1: The bankers, the one who was inside the bank and
Speaker 1: the one who was running the family office, have vehemently
Speaker 1: denied the allegations. Yeah, it's interesting. I mean, you talk
Speaker 1: about in this story where you know that the lines
Speaker 1: blur in part because these are not always traditional straight
Speaker 1: ahead investments, and so it's hard, especially if you're not
Speaker 1: well versed in this area, to even know sort of
Speaker 1: what's cool and what is not cool exactly. And the
Speaker 1: other question is at what point should a client who
Speaker 1: is UH in control at a young age of ten's
Speaker 1: or hundreds of millions of dollars or potentially more. How
Speaker 1: much attention should they pay? Should they have advisors to
Speaker 1: keep an eye on their advisors in this case? Uh?
Speaker 1: You know exactly what happens depends on which side you ask,
Speaker 1: but clearly the relationship went way off the rails. Well.
Speaker 1: Not surprisingly, it is one of the most read stories
Speaker 1: on the Bloomberg and will continue to be. I have
Speaker 1: to imagine a lot of our wealthier and maybe not
Speaker 1: so wealthy customers are sending this to the banker being like,
Speaker 1: call tomorrow, can we check in? Can we check in?
Speaker 1: All right, Neil Weinberg, terrific piece of reporting. Thank you
Speaker 1: so much, senior Projects and Investigation supporter for Bloomberg. Check
Speaker 1: that story out online and on the Bloomberg Ard thinks
Speaker 1: as well. To Joel Webber, Carroll, it's like you got
Speaker 1: to read it too, because there's just some great detail exactly,
Speaker 1: Its just the way it starts. It's just wonderful. This
Speaker 1: is Bloomberg Business Week with Carol Masser and Jason Kelly
Speaker 1: on Bloomberg Radio. All right, let's do a little business
Speaker 1: Week economics. Now, our pal Andy Brown is back with us,
Speaker 1: editorial director for Bloomberg New Economy, joins us on the
Speaker 1: phone from New Hampshire. So I am really into this reason.
Speaker 1: Tell him that you wrote, Andy, because it really brings
Speaker 1: to the forest something that I think is dare I say,
Speaker 1: sort of hiding in plain sight when it comes to China,
Speaker 1: which is around climate change. Tell us what you took on. Yeah. So,
Speaker 1: so the central point is that when it comes to
Speaker 1: climate change, China is at war with itself. Um. You know,
Speaker 1: on the one hand, it's a global superpower when it
Speaker 1: comes to renewable energy batteries, soul wind. On the other hand, Um,
Speaker 1: you know, it minds and burns half the world's coal.
Speaker 1: And right now it has in its development pipeline power
Speaker 1: stations with a either approved or about to get the
Speaker 1: green light, with the capacity equal to the entire installed
Speaker 1: coal capacity of the European Union. So you know, in
Speaker 1: a sense, it hardly matters what the rest of the
Speaker 1: world does, um, because China is going to swamp all
Speaker 1: of those efforts. And this is why she Campings announcement
Speaker 1: last week that China was to go is to go
Speaker 1: common neutral by two thousand and sixty. Why it is
Speaker 1: potentially potentially so important. Well, and I wonder Andy, I mean,
Speaker 1: I love what you wrote, this whole idea of two
Speaker 1: Titanic forces, one clean one dirty that are at constant war.
Speaker 1: In China fractures domestic economy. I mean, like it or not,
Speaker 1: they still use so much coal and have to write
Speaker 1: as being you know, kind of the manufacturer to the world.
Speaker 1: They've got a lot to power. I mean, they needed
Speaker 1: to keep their economy growing. But at the same time,
Speaker 1: China is increasingly I feel like, you know, stepping or
Speaker 1: as you right, stepping into a void that the US
Speaker 1: has stepped out of when it comes to hey, world,
Speaker 1: let's all work together to protect the climate exactly. So,
Speaker 1: so coal is shrinking in the rest of the world,
Speaker 1: and it's it's rising dramatically in China, particularly now that
Speaker 1: China wants to jump start its economy from the COVID lockdowns.
Speaker 1: Fire up, fire up the boilers. But here's the thing,
Speaker 1: China doesn't actually need all the capacity it's building. Um.
Speaker 1: You know, these these power plants that that that that
Speaker 1: that it's cranking out, um, add to a fleet that
Speaker 1: is in massive overcapacity about fifty So what's happening is
Speaker 1: that China is exporting its self lest capacity to countries
Speaker 1: along its Belt and Road infrastructure megaproject, including Turkey, places
Speaker 1: like Pakistan, Indonesia, and worse than that, the technology that
Speaker 1: is exporting is its most basic, most polluting duty is technology.
Speaker 1: So Andy, you mentioned President Hijimping earlier in the conversation,
Speaker 1: what is his role in all of this? Because more
Speaker 1: so it feels like than any world leader, he has
Speaker 1: not just a massive economy that he's responsible for, but
Speaker 1: he has control of that economy in a way that
Speaker 1: few world leaders do well. That is, that is that
Speaker 1: is somewhat true. But I mean if even Ji Jim
Speaker 1: ping um is subject to forces that are beyond his
Speaker 1: control um and and this is this sort of both
Speaker 1: positive negative. So so if you think about why is
Speaker 1: China cranking out all these power plants, well, provincial governments
Speaker 1: need growth um and the easiest way they find to
Speaker 1: promote growth is by by by manufacturing uh, you know,
Speaker 1: coal gear. On the other hand, he's under huge domestic
Speaker 1: pressure to do something about the environment. So the legitimacy
Speaker 1: of his party state derives and has done for the
Speaker 1: past forty years from rapid economic growth. Increasingly people in
Speaker 1: China to say, we want you to prioritize clean air,
Speaker 1: clean water. So that's on the sort of the public
Speaker 1: opinion side. There's also in a more positive vein this
Speaker 1: idea that China could actually use renewable or green technologies
Speaker 1: to become a world economic leader, industrial leader. We've already
Speaker 1: talked about batteries and coal and so on. There are
Speaker 1: all these carbon capture and storage technologies that have yet
Speaker 1: to be develop Look, China could actually become a the
Speaker 1: the leader in these technologies of the future. So there
Speaker 1: is there is big incentive on the negative side. And
Speaker 1: and and this is very important to him. You know,
Speaker 1: China stuff as massive drought in the north, it has
Speaker 1: bloods in the south, the Yanks. The Yanks River has
Speaker 1: has been has been swelling. There's putting huge pressure on
Speaker 1: the three gorgeous damn huge parts of coastal China's manufacturing
Speaker 1: could disappear if if you get rising sea levels. So
Speaker 1: it does have a great incentive to tackle climate. So
Speaker 1: will it This is the question. So a lot of
Speaker 1: people say, well, you know, easy to say, right, climate
Speaker 1: neutral by two thousand and sixty forty years away. You know,
Speaker 1: that's long after g J being himself is gonna will
Speaker 1: have will have gone to meet marks. As they say,
Speaker 1: um so so so we said we'll talk is cheap.
Speaker 1: We will, however, find out whether there is some substance
Speaker 1: to what he said by looking at the details in
Speaker 1: the next five year plan right to thousand and one
Speaker 1: to two. Those will be coming out in the next
Speaker 1: few months, probably early next year, so we'll see. Um.
Speaker 1: You know, it's it's I don't think we should be
Speaker 1: we should we shouldn't take this at face value, but
Speaker 1: nor I think should we be too skeptical? Right? All right, Well,
Speaker 1: it's very smart, as always, great context for us to consider.
Speaker 1: Andy Brown, editorial director for Bloomberg New Economy. Check out
Speaker 1: his latest column, China has a big climate change paradox.
Speaker 1: Just massive numbers, massive influence, but the scale of both
Speaker 1: the opportunity but also the challenge. He really laid them
Speaker 1: out nicely there. But I do feel like anytime we
Speaker 1: talk to anybody in the alternative energy space or the
Speaker 1: e V space, they bring up China as being able.
Speaker 1: You know, that's a huge market and their way ahead
Speaker 1: in many ways. We do want to mention a headline
Speaker 1: crossing the Trump administration considering fresh sanctions to sever Iran's
Speaker 1: economy from the outside world, except in limited circumstance, says
Speaker 1: by targeting more than a dozen banks and labeling the
Speaker 1: entire financial sector off limits. Is according to three people
Speaker 1: familiar with the matter. Our team at a d C
Speaker 1: reporting this. This is Bloomberg Business Week with Carol Masser
Speaker 1: and Jason Kelly on Bloomberg Radio. The story, I think
Speaker 1: it's fair to say that just about everyone who looks
Speaker 1: at the world of politics and taxes for that matter,
Speaker 1: was really talking about was the blockbuster report in the
Speaker 1: New York Times all about President Trump's taxes over the
Speaker 1: past two decades, what he paid, what he didn't pay,
Speaker 1: maybe most importantly going forward, the debt that is coming
Speaker 1: to As we were reading this, we thought, who could
Speaker 1: tell us what this actually means? And we came up
Speaker 1: with a perfect solution as a team. Laura Davison, Congressional
Speaker 1: tax reporter for Bloomberg, She joins us on the phone
Speaker 1: from d C. All right, so, Laura d words in
Speaker 1: the main story, A lot of us read it all.
Speaker 1: You read it though with me, be a different eye
Speaker 1: than someone who's just like, oh, what are the politics
Speaker 1: of this tell us what jumped out at you here.
Speaker 1: So some of the things that it talked about, the
Speaker 1: business losses, those are sort of ordinary uses of the
Speaker 1: tax code. But in case, speaking with a bunch of
Speaker 1: tax layers all morning, there's a bunch of things that
Speaker 1: they said that looks a little bit funky, um, particularly
Speaker 1: the consulting fees those so high and going to employees
Speaker 1: like Ivanka Trump as the as the report detailed, they
Speaker 1: say that is highly unusual and and probably potentially could
Speaker 1: run against some some i r S rules. Other things
Speaker 1: like the Seven Springs estate in Westchester County. Uh, he
Speaker 1: has two different ways that he's sort of generating tax
Speaker 1: breaks off of that. One is through this conservation easement
Speaker 1: deal where who's able to generate a really big charitable
Speaker 1: tax deduction. There lots of questions about whether the property
Speaker 1: was really valued correctly. The i r S has identified
Speaker 1: that sort of transaction is one that's ripe for abuse.
Speaker 1: So a lot of questions they're also sort of on
Speaker 1: that same property Trump has has as an investment property
Speaker 1: for for business purposes, for tax purposes, but also publicly
Speaker 1: in the Trumps suns and set, oh, this is our
Speaker 1: family compound. On the Trump Organization website, it's listed as
Speaker 1: a family or treat There's some discrepancies there about how
Speaker 1: how it's being viewed kind of in the eyes of
Speaker 1: of the tax code, and then how they're actually treating it,
Speaker 1: which were things that would really raise red flags for
Speaker 1: I R. S auditors. One thing that jumps out is
Speaker 1: um it also said he earned seventy three million dollars
Speaker 1: abroad in his first two years in the White House,
Speaker 1: including from authoritarian leaning countries as you point out in
Speaker 1: your story, such as the Philippines and Turkey, despite a
Speaker 1: pledge that he would pursue no new foreign deals while president.
Speaker 1: That's a big no no. Yeah, And this is one
Speaker 1: thing that Democrats in particular are leaning in really hard things.
Speaker 1: Is why we need to see, you know, more of
Speaker 1: you know, the full extent of at tax returns. We
Speaker 1: need to have more financial disclosures. Uh. They're really pointing
Speaker 1: that is to you know, something that could be an issue. Um.
Speaker 1: There's also you know, some saying, look, this could be
Speaker 1: an issue for Trump in terms of him leaving office.
Speaker 1: He has all these can actions. You know, There's been
Speaker 1: a lot of kind of confusion and questions thrown into
Speaker 1: you know, kind of will there be a peaceful transfer
Speaker 1: of power? And this sort of adds another layer of
Speaker 1: sort of confusion and murkiness around that about what Trumps
Speaker 1: ties maybe to the presidency, to his businesses, and to
Speaker 1: why kind of the stake he has in as staying
Speaker 1: in the Oval office. So, Laura, as you were talking
Speaker 1: to tax experts today and I guess you were texting
Speaker 1: with them last night as we all were, you know,
Speaker 1: trying to sort of figure out what what this all means.
Speaker 1: As you had those conversations, how much of a tone
Speaker 1: of there was like, look, this is what rich guys do.
Speaker 1: They hire a bunch of lawyers, they hire a bunch
Speaker 1: of accountants, They pay as little tax as possible. And
Speaker 1: this is just kind of an extreme example of this.
Speaker 1: I think it's a little bit more than than an
Speaker 1: extreme example of you know, they're sort of you know,
Speaker 1: really using a tax code, uh, you know, to your advantage.
Speaker 1: And then there's maybe crossing some lines. Here is the
Speaker 1: is the Times articles details several things that that tax
Speaker 1: lawyer said, Hey, look this is really beyond what I
Speaker 1: would advise my clients to do. But kind of in
Speaker 1: the in the bigger picture here. This really is a
Speaker 1: demonstration of how there are sort of parallel tax codes,
Speaker 1: one for sort of just you know, quote average people
Speaker 1: who earn salaries versus if you have uh, you know
Speaker 1: a lot of different businesses and lots of different entities,
Speaker 1: and you know, can employ some smart tax people, you
Speaker 1: can really save a lot more and pay a lot
Speaker 1: lower rate than someone who is you know, just filing
Speaker 1: with H and R block. But these are his actual
Speaker 1: tax forms, because it's interesting in your story, you knowe
Speaker 1: that a lawyer for the Trump organization tell the Times
Speaker 1: that quote most if not all, of the facts appear
Speaker 1: to be inaccurate. I mean they are reporting off of
Speaker 1: his tax forms. Yes, they didn't validate the forms with
Speaker 1: the Trump organization. They decided to protect their sources to
Speaker 1: keep those um in house. But they detailed you know,
Speaker 1: all the all the different information that was that was
Speaker 1: listed on those tax forms. So there seems to be
Speaker 1: a discrepancy that I'm not proven to you between the
Speaker 1: Trump organization and the Times. But the Time says that
Speaker 1: they obtained the forms uh from a source that legally
Speaker 1: had access to them, and then you know, they verified
Speaker 1: the numbers um. You know, through reporting on their own.
Speaker 1: What about the three million dollars in loans um obligations
Speaker 1: for which the president is personally responsible that are going
Speaker 1: to come do I think in the next couple of years.
Speaker 1: What do we know about that? So there's a lot
Speaker 1: of questions there about where those loans are tied to.
Speaker 1: Nancy Pelosi raised that today, Um how speaker in as
Speaker 1: one of her concerns if you know, you who has
Speaker 1: those obligations and and how might he be beholden to
Speaker 1: to those debtors um. The other thing, too, is just
Speaker 1: sort of bigger picture. You look at Trump has a
Speaker 1: potentially very precarious financial situation going forward. He has these
Speaker 1: loans that will come do he potentially could have a
Speaker 1: very big tax bill from the I R. S Uh.
Speaker 1: There's lots of questions about sort of his financial situation
Speaker 1: and sort of you know, particularly if he's still in
Speaker 1: the government, Uh, you know, what incentives he might have
Speaker 1: to to make sure that he uh you know, he
Speaker 1: does it full he doesn't have to file for bankruptcy,
Speaker 1: right exactly, all right, Laura David's in great context. Thank
Speaker 1: you so much. Congressional tax reporter for Bloomberg. Joonius on
Speaker 1: the phone from the nation's capital, every one trying to
Speaker 1: break down what it all means, what it means going forward.
Speaker 1: Carol as I couldn't get any more strata. Just wait.
Speaker 1: We've got the days to go. But he's still plenty
Speaker 1: of time. We got a little ele plenty of time,
Speaker 1: plenty of time for some more shenanigans. Don't you worry,
Speaker 1: don't you worry? You're a pretty little heads. I knew
Speaker 1: where that was going. I didn't say it, didn't say it.
Speaker 1: I thought. This is Bloomberg Business Week with Carol Masser
Speaker 1: and Jason Kelly on Bloomberg Radio. Let's get to the
Speaker 1: drive to the close. Happy to have back with this,
Speaker 1: Deepak Poory. He is c IO of the America's at
Speaker 1: Deutsche Bank Wealth Management. Johnny on the phone, tepack. Really
Speaker 1: nice to have you back with us. Great, thank you, Jason,
Speaker 1: good to be back. So what are you saying out
Speaker 1: there these days? We had a few kind of rough
Speaker 1: weeks and certainly a few rough days on the market
Speaker 1: last week, but a little more optimism today. It looks
Speaker 1: like we're going to close in the green, and we've
Speaker 1: had a couple of experts ahead of you come in
Speaker 1: and say, well, some of it is just some rebalancing
Speaker 1: that's going on, some of it is optimism about the virus,
Speaker 1: some of it is optimism about banks. What do you think.
Speaker 1: I think it's a combination of these things that you
Speaker 1: just mentioned. But I just would like to have your
Speaker 1: listeners go to the month of August, where the markets
Speaker 1: had a very significant rally, you know, in some cases
Speaker 1: low double digits. So I think September looks like we're
Speaker 1: going to be still down for the month. Um, you know,
Speaker 1: warrants that there was some profit taking in the month
Speaker 1: of September, which is not too out of for ordinary
Speaker 1: given it's an election year. And um and I do
Speaker 1: feel that the nastac pullback that we saw is somewhat
Speaker 1: healthy because some of the front especially in the megacaf
Speaker 1: tech name, that has been really driving not just a
Speaker 1: naspact also FMP, you know, would make some money on
Speaker 1: the sideline, make it a better, more appealing investment for
Speaker 1: the long run. And I don't know, Jason, did you
Speaker 1: mention this the portfolio rebalancing? I know, Okay, so yeah,
Speaker 1: so I know our Vinceagnerella had shared some some insight
Speaker 1: with both of us earlier and and talked about this,
Speaker 1: you know, month end quarter and portfolio rebalancing. I mean
Speaker 1: we I mean it's technical, but it happens, right, I mean,
Speaker 1: deep back, that's what we see kind of at the
Speaker 1: end of a month or end of a quarter, and
Speaker 1: we could be seeing you know, some investors, you know,
Speaker 1: kind of doing some rebalancing and bringing their asset allocations
Speaker 1: back in line. Yes, indeed, and I think you know,
Speaker 1: one should also keep in mind that the entire attacks
Speaker 1: regime might also be in course for a change if
Speaker 1: there's a change in the White House, especially if there
Speaker 1: is a Blue Way. You know, I don't necessarily expect
Speaker 1: that to be the first course of order, but that's
Speaker 1: can potentially happen. The Biden you know, manifesto holds for
Speaker 1: an increase of taxes on both the long term tabital
Speaker 1: gains in ordinary dividends. So I think might be you know,
Speaker 1: this time around, it's a normal rebalancing quarter end, but
Speaker 1: I think end of the rebalancing this particularly, it might
Speaker 1: be even more severe than what we are used to
Speaker 1: in other years. So when you think about sort of
Speaker 1: writing out this period, you know, we're getting closer and
Speaker 1: closer to thirty days out from the election, and you
Speaker 1: alluded to some of the different plans. Do you just
Speaker 1: kind of stay still here if you're an investor and
Speaker 1: wait for it to play out? I mean, how do
Speaker 1: you uh anticipate or how difficult is it gonna be
Speaker 1: to just kind of do that given all the at
Speaker 1: least political and rhetorical volatility we expect to see. Yeah,
Speaker 1: I think this has been such a unique here, Jason,
Speaker 1: and I don't think it's going to really abate anytime soon.
Speaker 1: I think we're entering this heightened period of volatility. Normally
Speaker 1: in a general election year, that volatility tends to go
Speaker 1: down post election. I'm not sure that this time around
Speaker 1: that happens. You know, we've already seen this rhetoric in
Speaker 1: terms of a contested election, and that might prolong the volatility.
Speaker 1: Case in point, if you look back to another contested
Speaker 1: election two thousand, you know, the SMP drop five percent
Speaker 1: from the date of the election to the time the
Speaker 1: courts made their judgment. So, you know, what are what
Speaker 1: is most concerning to me this time around is that,
Speaker 1: you know, I think of a couple of months ahead,
Speaker 1: you have a court deciding the outcome of the election,
Speaker 1: and the Senate races on top of that, somehow you
Speaker 1: get the second wave within infections, and there's still no
Speaker 1: tangible movement on the next COVID relief package from the
Speaker 1: Congress because everyone is so sort of focused on what's
Speaker 1: happening on the election outcome. And that's sort of a
Speaker 1: cocktail could be quite negative for the for the risky assets.
Speaker 1: Now that I wouldn't say that's our base case scenario,
Speaker 1: but the probability of that scenario has definitely gone up
Speaker 1: over the last month or so. Okay, So in terms
Speaker 1: of portfolios, fixed income, equity, how do you see it? What?
Speaker 1: What's what's your ideal portfolio right now? To be honest,
Speaker 1: it changes on a um you know, on a quite
Speaker 1: frequent basis. It hasn't, but given so much stuff happening
Speaker 1: in the market, I think ideally it's it's a case
Speaker 1: by case study, as you can imagine, Carol. So there's
Speaker 1: no one size fits all. You have to look at
Speaker 1: your time horizon and what you're comfortable with in terms
Speaker 1: of drawdowns. What I would say is that the you know,
Speaker 1: the tailwind of this massive fiscal and monetary stimulus. And
Speaker 1: then I mentioned I think physical stimulus needs to again
Speaker 1: make a comeback, but it's just massive on a global scale.
Speaker 1: And now that you have this optimism surrounding to the vaccine,
Speaker 1: I think that adds on to the to the positiveness
Speaker 1: that you know, equities represent. And in this kind of
Speaker 1: environment where everyone is going down to zero, you know,
Speaker 1: you want to be with long dated assets, and there's
Speaker 1: nothing more long dated than you know, quality equity names.
Speaker 1: So hence one of the reasons why I feel equity still,
Speaker 1: you know, once we get over the next couple of months,
Speaker 1: because almost everything that is concerned right now to me
Speaker 1: seems to have a calendar date of expiry, you know,
Speaker 1: so you look at um you know the second way,
Speaker 1: for example, it is going to be are going to
Speaker 1: know in the next couple of that we are having Yeah, yeah, exactly. Well,
Speaker 1: sorry to U, Sorry to wrap you there, Deepac really
Speaker 1: appreciate your time. Deepat Pury is chief investment officer for
Speaker 1: the America's at Jotscha Bank Wealth Management. Journing us on
Speaker 1: the phone from New York City, Takes a Bunch are
Speaker 1: listening to Bloomberg Business Week. Download the podcast on iTunes, Southcloud,
Speaker 1: Bloomberg dot Com, or wherever you get your podcasts, and
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