Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovk. We're here every day bringing
Speaker 1: you the latest news from the world of business and finance,
Speaker 1: plus technology, politics, economics, all partnising the power of Business
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Speaker 1: You can also listen to our radio show at two
Speaker 1: pm Eastern Time on Bloomberg Radio, or watch us on
Speaker 1: YouTube search Bloomberg Global News her company. You might recall
Speaker 1: a Business Week cover story back in November about how
Speaker 1: twenty three and Me wants to use its customers genetic
Speaker 1: data to beat cancer. It was a fascinating story when
Speaker 1: we think about innovation disruption when it comes to treatments,
Speaker 1: especially when it comes to cancer. We've got with us
Speaker 1: and Wichiski, the co founder and the CEO of twenty
Speaker 1: three and Me and joins us this afternoon via zoom
Speaker 1: from Las Gatos, California. And how are you. I'm good?
Speaker 1: Are you? We're doing well? Thanks, it's really good to
Speaker 1: have you with us. I want to get into everything
Speaker 1: that you're understanding when it comes to COVID and long
Speaker 1: covid via twenty three and me. But first I want
Speaker 1: to just get your get your thoughts on what we're
Speaker 1: seeing with the macro environment, with the volatility in the
Speaker 1: stock market. We should note a year to date shares
Speaker 1: of twenty three and me. Uh, down about give us
Speaker 1: your take. Oh well, that's that's that's a big question. UM.
Speaker 1: I mean, look, the markets are definitely complicated right now,
Speaker 1: and I think that you know, it's as coming from
Speaker 1: the Wall Street world and now being the CEO of
Speaker 1: a publicly traded company, UM, it is. You know, it's
Speaker 1: it's interesting that twenty three continues to execute UM. I'm
Speaker 1: incredibly proud of the team. UM. We continue to move
Speaker 1: programs through the pipeline. UM, you know, make drug discovery.
Speaker 1: UM continue to UM you know, engage our customers on
Speaker 1: you know, genomic medicine and where we can go with that.
Speaker 1: We recently acquired a company called Lemonade, so it gives
Speaker 1: us the ability to offer UM care to our customers
Speaker 1: both through pharmacy as well as to access to care providers.
Speaker 1: So UM the company has just continued to execute. But
Speaker 1: obviously market conditions are are challenging. So we're very mindful
Speaker 1: of the fact that market conditions have changed, and um,
Speaker 1: you know, the future is more than certain. So we
Speaker 1: take all that into consideration now and we want to
Speaker 1: talk to more about what you're doing, because I feel
Speaker 1: like we just came back from a conference it was
Speaker 1: all about the financial world. Um. I was involved in
Speaker 1: a panel that specifically about what the future of money is,
Speaker 1: reimagining it, and I think when it comes to things
Speaker 1: like financial services and certainly healthcare, it does feel like
Speaker 1: we're on the cusp of doing things so different, especially
Speaker 1: when it comes to treatment modalities. Having said that, I
Speaker 1: just want to go back to the market environment because
Speaker 1: we're asking all of our leaders this. I mean, when
Speaker 1: you do have a stock that is down more than six,
Speaker 1: I mean, what kind of pressure does that put on
Speaker 1: you and your team who are working on things that
Speaker 1: are going to take some time. Yeah, you know, I
Speaker 1: was investing back in sort of when the market crash
Speaker 1: back in two thousand, um, you know, two thousand one um,
Speaker 1: and it took a long time to recover. And I
Speaker 1: think that there's the way we approach this is really
Speaker 1: about making sure that we're doing things that are going
Speaker 1: to um, you know, see see value within near term
Speaker 1: and you know probably have to to you know, minimize
Speaker 1: some of the projects that are going to focus on
Speaker 1: some of the longer term initiatives, but really focus on
Speaker 1: priorities and and you know, also making sure that you're
Speaker 1: using cash and the wisest way, so um, all kinds
Speaker 1: of things that we start to you know, reevaluate. But
Speaker 1: you know, it's it's really about making sure that you
Speaker 1: we you know, we have a very strong balanciet right
Speaker 1: now and making sure that we um, you know, extend
Speaker 1: that runway as long as possible, and making sure that
Speaker 1: all the programs that we're focused on are really essential. Uh.
Speaker 1: And I want to get to the research that you've
Speaker 1: recently found at twenty three and me some really interesting
Speaker 1: stuff when it comes to long COVID and I think,
Speaker 1: you know, we're at the point in the pandemic where
Speaker 1: Caroline I traveling yesterday, at some points I felt like
Speaker 1: I was the only one wearing a mask on some
Speaker 1: of those flights in the airport and even at this
Speaker 1: conference that we were at. But Long CODE have my
Speaker 1: mask go back you did too, Yeah, but but we
Speaker 1: were it was like, yeah, that was it. Um, we
Speaker 1: were in Texas to be fair, But I do want
Speaker 1: to know and what you found when it comes to
Speaker 1: long COVID, because that's something that I think about a
Speaker 1: lot and one of the reasons why I don't want
Speaker 1: to get COVID. Yeah. So there's a couple of things
Speaker 1: that are really interesting thing for me about this. So
Speaker 1: first and foremost, you know, the way part of what
Speaker 1: we conceptualize when we started twenty three and me, and
Speaker 1: it goes back to some of your earlier questions, was
Speaker 1: really a whole new way of doing research, Like how
Speaker 1: is it you can have millions and millions of people
Speaker 1: engaged on a single platform with phenotypic data, with their
Speaker 1: genetic information, and be able to go back to them
Speaker 1: very quickly, easily ask more questions and make insights. And
Speaker 1: so this long COVID research that we've done is really
Speaker 1: a good example of how the twenty three model works.
Speaker 1: That we could put out a survey to our customers,
Speaker 1: collect a lot of information and make really interesting and
Speaker 1: meaningful findings. So one of the things a couple of
Speaker 1: things here that are are interesting and again being female.
Speaker 1: It's obviously top of my mond mind. UM. Over seventy
Speaker 1: eight percent of those diagnosed with long COVID were women,
Speaker 1: so clearly disproportionately impacting women. UM. People with depression diagnosed
Speaker 1: depression and anxiety are more than twice as likely uh
Speaker 1: to have it, so twice twice increasing their risk. UM.
Speaker 1: Half of those people are UM, you know, having persistent
Speaker 1: symptoms for over six months UM, and about ten percent
Speaker 1: or having it for over a year. UM. So it's
Speaker 1: you know, all this data comes from about a hundred
Speaker 1: thousand customers who reported that they had COVID, over twenty
Speaker 1: six thousand that said that they had long COVID. So
Speaker 1: we have a lot of data here, and it's definitely
Speaker 1: concerning that it's again impact so many women. UM. Anxiety
Speaker 1: being a risk factor is obviously quite interesting to to
Speaker 1: follow up further on, and the fact that it's so persistent,
Speaker 1: so similar to you and what you just said. I
Speaker 1: was recently at Lego Land and nobody was wearing a
Speaker 1: mask but me and I am. I'm sticking to my
Speaker 1: mask quite quite of my yeah pay airport yesterday, Carols,
Speaker 1: I've wear this duck mask around and and all our listeners,
Speaker 1: and this guy at the airport was like, what is
Speaker 1: that mask? And I had to explain, this thing is
Speaker 1: actually pretty comfortable. It's go ahead there. I love it.
Speaker 1: I love it. No, I think it's just it's it's
Speaker 1: just clear that there's you know, I this this clear
Speaker 1: like long term impacts here and so understanding it. There's
Speaker 1: a lot more to be followed up on with respect
Speaker 1: to long COVID. We kept saying that milk and we're
Speaker 1: at the Milk and Institute in April. Um, nobody had
Speaker 1: masks on and what is the head of Mayo Clinic
Speaker 1: comes up, comes up, and who's an m D. And
Speaker 1: he was the only one having a mask, and he
Speaker 1: kept it on to the interview, took it off for
Speaker 1: the interview, and put it right back on. He's like,
Speaker 1: why wouldn't I wear a mask? At this point? UM,
Speaker 1: so much more to talk, Please come back soon. We
Speaker 1: love to hear about the work you're doing because I
Speaker 1: think it's so relevant to where we are going in
Speaker 1: the world. Uh. And Sky she's co founder, chief executive
Speaker 1: officer twenty three and me via Zoom from Los Gatos, California.
Speaker 1: I did have a mask, and I also I do
Speaker 1: like to wear it on the plane too, because it
Speaker 1: keeps me warm. And then there was somebody like coughing
Speaker 1: like crazy, and I was like, yeah, but when I
Speaker 1: was hanging out by the pool, I wasn't wearing it.
Speaker 1: Now you weren't. I don't wear it out, Can I
Speaker 1: tell you? He looks so California. I wish I had
Speaker 1: taken a picture. All right, lots more to come right
Speaker 1: here on Bloomberg Radio. You're listening to Bloomberg Business Week
Speaker 1: with Carol Messer and Bloomberg Quick Takes Tim Stinovic on
Speaker 1: Bloomberg Radio. So this story is among the most right
Speaker 1: on the Bloomberg Today. It's also on the Bloomberg Big Take.
Speaker 1: It is an excerpt from a new book that's also
Speaker 1: featured in the new issue of Bloomberg Business Week, which
Speaker 1: is out on newsstands. You can find it online at
Speaker 1: Bloomberg dot com, slash Business Weekend on the Bloomberg terminal.
Speaker 1: It is riveting. I read it in this week's issue
Speaker 1: of Bloomberg Business Week. The story by Michael Smith and
Speaker 1: Jonathan Franklin. It's an excerpt from the new book Cabin Fever,
Speaker 1: and it describes the panic and despair aboard Holland America's
Speaker 1: MS Zandem as COVID ripped through passengers and crew. Michael
Speaker 1: Smith's Projects and investigations reporter for Bloomberg Business Week. He
Speaker 1: joins us viasume from Miami. Joel Webber is the editor
Speaker 1: of Bloomberg Business Week. He joins us on the access
Speaker 1: line from Brooklyn. Joel, I gotta tell you reading this,
Speaker 1: I felt like I was on the ship and I'm
Speaker 1: I mean, there's no other way to put that. It
Speaker 1: brought me back two years ago and just the terror
Speaker 1: and horror these passengers felt, oh man, those early days
Speaker 1: of the pandemic. And it still associates with the crew,
Speaker 1: the story of the cruise industry and and Carnival and
Speaker 1: especially the MS um zend MP. And you know this,
Speaker 1: this book, which were so proud of Mike about Cavin Fever,
Speaker 1: really began with a Business Week story. But when we
Speaker 1: got to do the excerpt, we wanted him to to
Speaker 1: revisit it and come up with something special. So so
Speaker 1: Mike tell us about the book and and also the excerpt. Yeah,
Speaker 1: like you said it, Um, it started with basically covering
Speaker 1: this story. I was I was just fascinated by and
Speaker 1: horrified by it as an unfolded um, you know, in
Speaker 1: the news and on our screens, and then it turned
Speaker 1: into the excellent UM feature story we did for Business Week,
Speaker 1: and that basically led to uh, my friend Jonathan Franklin's
Speaker 1: who I've known for a long time. His agent called
Speaker 1: me up when he saw the story and he said,
Speaker 1: you have to write a book about this. It's you know,
Speaker 1: it's just an amazing story. It's it's it's COVID, but
Speaker 1: it's also sort of a story of human survival on
Speaker 1: the high seas, and it's filmk and all this stuff.
Speaker 1: So he kind of convinced me to to go for it.
Speaker 1: And luckily, uh, you know, I had Bloomberg behind me,
Speaker 1: and they really accommodated me, starting with Joe Weber. Um,
Speaker 1: So you know, it started with that, and I just
Speaker 1: found it to be, uh a sort of a way
Speaker 1: to tell the story of what we all went through
Speaker 1: with COVID, but just to the extreme, because that's exactly
Speaker 1: what it was. Um. You know, this particular ship left
Speaker 1: South America on March eight, and about forty five minutes
Speaker 1: before it left port in Buenos Aires, South America, UM,
Speaker 1: the State Department put out a warning saying people, especially
Speaker 1: older people, should not take cruises, and they left port
Speaker 1: any and the world just started shutting down around them.
Speaker 1: And then they discovered COVID was actually on the ship,
Speaker 1: and we're just stuck out on the high seas as
Speaker 1: far away as you can imagine from for most of
Speaker 1: the world as this disease just started picking people off
Speaker 1: one by one. Um and uh, and it's just it's
Speaker 1: just really incredible the more we dug into the what happened, UM,
Speaker 1: just the individual stories of heroism and part of these
Speaker 1: crew members on this ship that are underpaid, overworked, and
Speaker 1: we're really just risking their lives to take care of
Speaker 1: what is basically like a shipload of everybody's grand grandparents,
Speaker 1: you know, like really just vulnerable people, especially then, UM,
Speaker 1: who were just stuck in their cabins, terrified and just
Speaker 1: waiting for this disease to come in and kill them
Speaker 1: by some unknown way. Well, Michael, Michael, let me jump
Speaker 1: in for a second, because I think what is always
Speaker 1: so good and it sounds like in your book, the
Speaker 1: very the specificity and the individuals telling their accounts what
Speaker 1: they saw, and and this one excerpt that's in the book, Uh,
Speaker 1: And in the magazine, I should say, you talk about
Speaker 1: this individual George walking into the pack kitchen of the
Speaker 1: cruise ship and asking a booming voice, what do you need?
Speaker 1: And we obviously find out, as you detail, they needed
Speaker 1: a lot. What was it in terms of the specifics
Speaker 1: that really just jumped out for you, Well, what jumped
Speaker 1: out for me was in that in that particular scene,
Speaker 1: if you will, which is all real um, is that
Speaker 1: he uh, was one of about a dozen volunteers who
Speaker 1: were working on other ships and they put out a call, uh,
Speaker 1: you know, we need people to come and help really
Speaker 1: relieve this overworked and ever sickening crew on this other
Speaker 1: ship and just helped him on the ship because if not,
Speaker 1: it's just going to be a disaster and the ship
Speaker 1: will not be able to function. And so he was
Speaker 1: one of the ones who he did the call very courageously.
Speaker 1: He knew or he suspected that he was getting into
Speaker 1: a situation where there's covid although he didn't really know.
Speaker 1: I think he sort of hoped it wasn't covid um,
Speaker 1: but he just went for it. And it's quite remarkable
Speaker 1: and the fact that the reason people sort of were
Speaker 1: just sort of overwhelmed by joy when he came in
Speaker 1: and said, what you need, UM, is that they were
Speaker 1: at a point of desperation. I'm talking about the people
Speaker 1: who are working on the zan Dam had been fighting
Speaker 1: this for for you know, for for many days by then, UM,
Speaker 1: and the fact that someone from the outside world was
Speaker 1: actually coming on board a great risk to help them
Speaker 1: was just emotionally more than any of them could take. UM.
Speaker 1: And of course when he got on and realized how
Speaker 1: bad it was, he started saying, you know, I should
Speaker 1: have listened to my wife because his wife, he's from Romania.
Speaker 1: His job on this other ship called Austro Dam was
Speaker 1: to run the shops on board, you know, like selling
Speaker 1: jewelry and overpriced uh you know, scarves and stuff, and
Speaker 1: he has, you know, has he has his little kids
Speaker 1: at home back in Romania, and his wife said, are
Speaker 1: you crazy? Why are you doing this? And he's like,
Speaker 1: I just got to do it. And so, you know,
Speaker 1: one of the first things he thought of when he
Speaker 1: realized how bad it was was I should listen to
Speaker 1: my wife. But but he stuck with it, UM. And
Speaker 1: that's just that's what's so striking about the story to
Speaker 1: me is that UM, you had so many people like
Speaker 1: that who were working that ship, who really risked their lives,
Speaker 1: and we're you know, we just plunge themselves into a
Speaker 1: chaotic um situation that was COVID at that time in
Speaker 1: the world. You know, we were all going through this,
Speaker 1: you know, I what I what I think. One thing,
Speaker 1: the reason I think that the book sort of resonates
Speaker 1: with almost everybody, is that it takes you back to
Speaker 1: those days when you were like scrubbing your groceries with
Speaker 1: with you know, with antiseptic wipes, or like you know,
Speaker 1: putting him the garage for a couple of days, which
Speaker 1: you're afraid you would get COVID from the you know,
Speaker 1: your your box cereal or something. UM. It says, which
Speaker 1: now seems almost ridiculous because we kind of we know
Speaker 1: so much now and we were all vaccinated or most
Speaker 1: of us are. UM. But to me, it just like
Speaker 1: it was like that at on Turbo Charged. You know,
Speaker 1: it just takes you back to that time and how
Speaker 1: dangerous things were, but it also takes you to a
Speaker 1: place where you're really happy you survived UM. And that's
Speaker 1: the way, Mike. You know. The other element that I
Speaker 1: just want to touch on because it's so central to
Speaker 1: the excerpt, and it sort of last question here we
Speaker 1: wrap up and only have a few more seconds. But
Speaker 1: you know, really the penultimate tension here is is Panama, right,
Speaker 1: like the ship makes it all an all the way
Speaker 1: around uh south South America, and then uh, you know
Speaker 1: it culminates with this idea of the canal, right, and
Speaker 1: and how did that play out quickly? Well, if you're right,
Speaker 1: the Panama did not want to let the ship through because, uh,
Speaker 1: when they publicly announced that there was COVID a board,
Speaker 1: which is in this in this exert um, that triggered
Speaker 1: a basically prohibition on any ship going through the canal
Speaker 1: with the COVID case on board, because the Panamenians were
Speaker 1: rightfully worried that um, you know, the disease with somehow
Speaker 1: ump off the ship onto land or more critically, the
Speaker 1: canal pilots, which there are only a few that have
Speaker 1: to take every ship through the canal, would all get
Speaker 1: sick and they would have to shut down the Panama
Speaker 1: Canal with Mike, we gotta run. This is a great read.
Speaker 1: Check out the magazine. Check out the book. Michael Smith
Speaker 1: and Joel Weber a Bloomer Business Week. This is Bloomberg
Speaker 1: Business Week with Carol Messer and Bloomberg Quick Takes Tim
Speaker 1: Stinovic on Bloomberg Radio. We've been covering a lot of
Speaker 1: the crypto headlines as well our own ogre career, writing
Speaker 1: about how crypto traders are turney against each other, Tim
Speaker 1: in a collapsing market. Yeah, we mentioned the challenges that
Speaker 1: the crypto community said this week when it comes to Celsius,
Speaker 1: we got three arrows as well, Babel, as Movie Shan
Speaker 1: wrote for the Bloomberg Terminal. Let's get to someone in
Speaker 1: the crypto community who can help shed some light on this.
Speaker 1: Noah Buxton as a partner in practice leader of blockchain
Speaker 1: and digital assets at Armanino. He joins us on the
Speaker 1: phone from San Francisco. It's good to have you with us.
Speaker 1: No uh I mentioned some of the big headlines just
Speaker 1: from the last few days. At this point, not to
Speaker 1: mention coin base layoffs close of the firm. My question
Speaker 1: for you is about adoption. When consumers who haven't dipped
Speaker 1: their toes into crypto see stories like these, and then
Speaker 1: consumers who have gotten burned on crypto with declining asset prices,
Speaker 1: what does that do for widespread adoption of the of
Speaker 1: the digital asset. Yeah, Tim, thanks with a question, and Carol,
Speaker 1: thanks for having me. Yes, certainly, Uh this this puts
Speaker 1: caution right in people's minds. It puts additional skepticism as well.
Speaker 1: The headlines right now are certainly not great. If you're
Speaker 1: thinking about, hey, what is this new technology? How do
Speaker 1: I get my mind around it? What are the investment
Speaker 1: of potentials or opportunities in here? And then then all
Speaker 1: you hear is bad things? Right, So of course it
Speaker 1: puts puts a temper. You know, it chills the market
Speaker 1: when it comes to new entrance, that's for sure, UM.
Speaker 1: And and that happens in every crypto downturn. Right, we
Speaker 1: have sort of the new entrance, the wheat is separated
Speaker 1: from the chaff, and UM. You know, unfortunately, yes, some
Speaker 1: people get hurt in these investments. UM. But what we see,
Speaker 1: is what I see on a daily basis, is a
Speaker 1: core set of UM companies that are innovating, that are
Speaker 1: truly doing UM good work in terms of democratizing finance,
Speaker 1: opening up additional opportunities, interesting financial products that I think
Speaker 1: will be important for our future UM. And so there's
Speaker 1: a lot of good innovation that's still happening behind the scenes,
Speaker 1: and self to say nasent innovation, I mean for the
Speaker 1: folks that we keep talking to. And I mentioned a
Speaker 1: crypto panel I did out at b and Y malon
Speaker 1: Pershing Inside this week with two individuals who are very
Speaker 1: well versed in the crypto space and being very realistic
Speaker 1: that this is like the early early days of the Internet,
Speaker 1: and that the timeline on this and there's going to
Speaker 1: be a lot of fallout, which we're seeing right now
Speaker 1: that Noah, the timeline is probably a lot longer than
Speaker 1: we all realize. When there comes to the credibility. Sure, yeah,
Speaker 1: I don't think that's an unfair assessment by any means, right.
Speaker 1: I think us, those of us that work in this
Speaker 1: every day had gotten pretty comfortable being at a you know,
Speaker 1: two and three trillion dollar market gap. Hey, we feel
Speaker 1: like a real market now. Look at you know, look
Speaker 1: at look at us UM and bitcoin itself was a
Speaker 1: trillion dollar asset class, you know, and we saw institutional
Speaker 1: players in the space, you know, start to treat it
Speaker 1: that way, right, this is an institutional quality asset. It's
Speaker 1: a digital commodity um and you know, when that value
Speaker 1: is stripped out very quickly. Um. Yes, you realize that, Wow,
Speaker 1: we actually have a very very shallow market. Um. And
Speaker 1: so uh, these things move very quickly. And also the
Speaker 1: credit moves differently in crypto as as compared to traditional markets.
Speaker 1: And so that's why we see these these very very
Speaker 1: fast bottoming outs that can happen. Yeah, I want to
Speaker 1: I want to build on that a little bit because
Speaker 1: I think about what our markets, bloomer markets, uh. Alice
Speaker 1: have a guilty little said earlier today about the idea
Speaker 1: of seeing looking to bitcoin is a sign of capitulation,
Speaker 1: and it reminds me of what Scott minded Over Kugenheim
Speaker 1: said on Bloomberg TV just a few days ago after
Speaker 1: fed here J Powell uh spoke the idea that cryptos
Speaker 1: canary in the coal mine for risk assets like equities. No,
Speaker 1: and I'm wondering what the crypto market can tell us
Speaker 1: about the way that other asset classes are going to move. Yeah,
Speaker 1: that's an interesting perspective. I do see cryptos are very
Speaker 1: free market. Honestly. I think that, Um, yeah, when we
Speaker 1: see uh, as I just mentioned the for instance of
Speaker 1: credit credit tightening quickly, So I do think that there's
Speaker 1: a canary in the coal mine aspect. And I think
Speaker 1: it's also fair to to look at the you know,
Speaker 1: equities markets today and say, wow, look at the ratios.
Speaker 1: This seems a bit disconnected from reality. Um but why
Speaker 1: does that move slower? Why are we not seeing downturns?
Speaker 1: There are many reasons, of course, but I do think
Speaker 1: that some of those reasons are there's um an infrastructure
Speaker 1: of credit facilities, there's a lender of last resort. There's
Speaker 1: a whole infrastructure of sort of trust and transparency in
Speaker 1: those markets. Right public companies do reporting, um you know,
Speaker 1: there's a rich market of analysts that that analyze all
Speaker 1: that data and keep markets comfortable and informed, and so
Speaker 1: that that leads to fair, orderly markets ultimately with good
Speaker 1: price discovery um A. You know, and liquidity injection for
Speaker 1: for traditional markets doesn't hurt either, But we don't have
Speaker 1: that in crypto markets, you know. So I think, you know,
Speaker 1: the other thing that the other point that I'd like
Speaker 1: to make I see on the daily basis is that,
Speaker 1: you know, I have a pretty sober view of this.
Speaker 1: I think that there are certainly trusted players in the space,
Speaker 1: and there are certainly those um that have a lot
Speaker 1: more work to do, and I think that we can
Speaker 1: see real differentiations. So one of the things I work
Speaker 1: on every day is providing that trust and transparency. Right,
Speaker 1: We're a large cp A firm and and we see
Speaker 1: this differentiation on the daily right. So what we see
Speaker 1: happening with Celsius, what's happening it's uh, well, it's really
Speaker 1: a lack of customer trust. It's a lack of reporting
Speaker 1: from the company to an engender that trust and give
Speaker 1: customers what they need to trust those services and see
Speaker 1: that their assets are adequately backed or reserved. Um. You know,
Speaker 1: you can contrast that with the well and I would
Speaker 1: jump in no, no, and just say because we're unning
Speaker 1: out of time here. But that's why people respect something
Speaker 1: like the US dollar, like there is something behind it
Speaker 1: and there's credibility and respect. And I will say on
Speaker 1: my panel, folks were calling said, we do need some
Speaker 1: regulatory oversight that that will give it, certainly the crypto
Speaker 1: markets some credibility. No buxed in from our our money.
Speaker 1: No joining us on the phone from San Francisco. This
Speaker 1: is Bloomberg. I'm a journal Yeah, but you let me
Speaker 1: drive Oh no, no, no, no, please, I want to drive.
Speaker 1: Good question, dri drive to the close bloom Bird Radio.
Speaker 1: All right, we've got just about ten and happen it's
Speaker 1: left in today's trading session. What a week it's been.
Speaker 1: We have seen a significant selling. Are these numbers right?
Speaker 1: Are we down about seventeen percent in the daw for
Speaker 1: the week? No, not for the week? No, on the
Speaker 1: dow wear'd down four point six percent for the week.
Speaker 1: These numbers I'm looking at. I got to check these. Oh,
Speaker 1: year to date forgive me. That's year to day and
Speaker 1: down about three percent. I told you I'm only going
Speaker 1: on three hours of sleep, so bear with me. Thank
Speaker 1: you Tim for keeping me on. Yeah, any time, Carol.
Speaker 1: Five point seven percent for the week, but so very
Speaker 1: man selling. So let's see if our next guest thanks
Speaker 1: capitulation or not. Larry Pokowski is managing partner and portfolio
Speaker 1: manager at good Haven a Capital Management. Larry joining us
Speaker 1: this afternoon on the phone from Milbourne, New Jersey. So, Larry,
Speaker 1: I'm gonna just give you Carol's question, capitulation. Are we close?
Speaker 1: You know, Tim, it's you never really know if this
Speaker 1: is the bottom. I would say there are two very
Speaker 1: important things I keep on my desk in handy. One
Speaker 1: is by Sir Winston Churchill, which has never let a
Speaker 1: crisis go to waste and for though that for us
Speaker 1: at good Haven, that means using volatility to try and
Speaker 1: continuously look for better companies to invest in, to upgrade
Speaker 1: the portfolio, and to use the volatility to try and
Speaker 1: for the advantage of our clients and shareholders. And the
Speaker 1: other one I keep handy is by Rick mere is
Speaker 1: a very famous indiecar racer, which was to finish first,
Speaker 1: You must first finish, which means, you know, we try
Speaker 1: and uh make sure we always have some cash around.
Speaker 1: We are not running levered portfolios because in a crisis
Speaker 1: those things uh really are very important, more important than
Speaker 1: ever before. And so all I can tell you is
Speaker 1: we have found plenty of to look at. We like
Speaker 1: what we own and you know, uh there are more
Speaker 1: potential bargains than there were six months ago. So wait
Speaker 1: to finish first, You must first finish. So how do
Speaker 1: you apply that to this market? Well, I think the
Speaker 1: point of the saying is if you are over levered
Speaker 1: or you have no resources, uh, you may have some
Speaker 1: interesting ideas, but you may not get to see it through.
Speaker 1: So I think as a portfolio manager. What it means is, uh,
Speaker 1: you know, being unlevered and having some cash allows you
Speaker 1: to control your own destiny and try and take advantage
Speaker 1: of the volatility that's going on out there. Is supposed
Speaker 1: to the volatility taking advantage of you. Okay, so let's
Speaker 1: talk about opportunities here and where you're seeing them right now. Um,
Speaker 1: you guys are still bullish on energy despite the fact
Speaker 1: that this week has been brutal. I mean, look, it's
Speaker 1: the best performing sector in the sp THOT founder this
Speaker 1: year and last year it was. Um. Why still bullish
Speaker 1: on energy even if there could be a recession which
Speaker 1: could really crimp demand around the world. Well, Tim, it's
Speaker 1: very good question. I'd like to answer it by reminiscing
Speaker 1: a little bit with Carol. Carol con we remin us
Speaker 1: just a little bit on this part. June June seen
Speaker 1: I was on the show and we were talking mostly
Speaker 1: about energy, and we were talking about one of our
Speaker 1: bigger holdings at the time, which was w p X Energy.
Speaker 1: Oil was forty five bucks. Not many people thought it
Speaker 1: was an interesting industry to be invested in. The stock
Speaker 1: was with w PX was ten bucks. Oil was forty
Speaker 1: five it was a very unpopular area, and I thought
Speaker 1: it was interesting. I know you thought it was interesting,
Speaker 1: and here we are. Devon then acquired w p X.
Speaker 1: It is still an important holding for us. It has
Speaker 1: gone up substantially since then. But I think today when
Speaker 1: you look at what Devon has done over the years,
Speaker 1: you have a very material dividend policy. They really were.
Speaker 1: I think the first at the pick called the fix
Speaker 1: plus the variable dividend. The stock has been weak lately. Uh,
Speaker 1: it is still materially up from you know, our cost,
Speaker 1: which is a single digit number. But if you look
Speaker 1: at it today, you're looking at a potential dividend yield
Speaker 1: of probably almost yeah, I would say north of a
Speaker 1: percent to be conservative. Even if oil were to come
Speaker 1: back to let's call it, you know, on the back
Speaker 1: of an envelope eighty bucks oil, five fifty gas, they
Speaker 1: should still be able to generate six and a half
Speaker 1: bucks of free cash flow. Uh. So, you know, we
Speaker 1: think it's interesting. It's been a holding for a while,
Speaker 1: but it's interesting again today. And you know, I think
Speaker 1: Devon and their brethren, to the credit of Rick Moncree
Speaker 1: for runs the show there and to some of their
Speaker 1: brethren too, have really become uh focused on moderate production
Speaker 1: growth and using the enormous profitability to benefit you know,
Speaker 1: all of their constituents, including their shareholders and bondholders. So
Speaker 1: I mean what you're saying in this energy play, though, too,
Speaker 1: to me is and first of all, I love reminiscing.
Speaker 1: And I went back and I was on the Bloomberg
Speaker 1: and I'm like, oh my god, yeah, they were required.
Speaker 1: It's interesting. And I do also feel like you are
Speaker 1: part of a theme and trend that I keep seeing
Speaker 1: Larry from people saying, look at some of the stocks
Speaker 1: that pay dividends in an uncertain environment. You know, there's
Speaker 1: kind of a certainty to it if you're looking for
Speaker 1: some performance. But going back to your energy play, even
Speaker 1: though we are moving to an alternative energy world, renewables increasingly,
Speaker 1: we've all got to be realistic about this timeline, especially
Speaker 1: with the war in Ukraine, Like this is not going
Speaker 1: to happen overnight, so energy is going to provide some performance.
Speaker 1: I think that all makes perfect sense. Kell, And you know,
Speaker 1: I think from our perspective, these things that are now
Speaker 1: front page items, energy prices, higher interest rates, inflation, they're
Speaker 1: all front page items. To use that a phrase today,
Speaker 1: But we have been trying to think about them, We've
Speaker 1: written about them when we've had exposure to these areas
Speaker 1: for a long time. And I think that's the idea
Speaker 1: to try and you know, be ahead of what might
Speaker 1: be a trend. Now. Having said that, we like to
Speaker 1: own primarily, you know, good quality, growing companies that are
Speaker 1: not very levered, but the devon of today, we're willing
Speaker 1: to still have it as a material holding because we
Speaker 1: think they're current policies, uh, you know, really fit in well,
Speaker 1: you know, appropriately sized for you know how I think
Speaker 1: about the portfolio. Yeah, okay, Larry, we have another minute
Speaker 1: with you, and I just want to get your take
Speaker 1: on where you're seeing the FED right now. Do we
Speaker 1: see seventy five basis points at the next meeting? And
Speaker 1: you know, you know, first of all, I'm sorry sorry
Speaker 1: to have to disappoint you and tell you that I
Speaker 1: don't know, but I will I will say that higher
Speaker 1: interest rate or something or something that we've thought about
Speaker 1: for a long time, and we have a bunch of
Speaker 1: companies that will benefit from higher interest rates. And Chair
Speaker 1: Powell seems quite determined, uh, you know, to not let
Speaker 1: inflation get out of control. And we had something in
Speaker 1: the financial sector, which was Allegheny, which was a property
Speaker 1: casualty insurance company, which the type of thing that will
Speaker 1: benefit from higher interest rates, which Mr Buffett and Omaha
Speaker 1: is buying out from us very shortly. So we've thought
Speaker 1: about this for a while. There are ways to try
Speaker 1: and look for companies that might benefit from higher interest rates.
Speaker 1: As far as a prediction on the FED, I'm sorry
Speaker 1: to disappoint you. I don't have it. We'll just try
Speaker 1: and take stocks and worry about risk. Oh, it's actually
Speaker 1: a really important perspective, right. There's just so much you
Speaker 1: can or cannot control when it comes to macro, and
Speaker 1: so you've gotta deep into the digg into the fundamentals
Speaker 1: of specific names and make investment decisions based on that.
Speaker 1: Larry Pittkowski fund to reminisce managing partner and portfolio manager
Speaker 1: Goodhaven Capital Management. Have a good and safe weekend. Joining
Speaker 1: us on the phone from millburgn New Jersey. Thanks for
Speaker 1: listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud,
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