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Speaker 1: President Donald Trump is getting ready to renounce some auto
Speaker 1: tariffs that is expected to come at four pm today.
Speaker 1: We heard that from the White House spokesperson. This would
Speaker 1: be a move that would certainly escalate his fight with
Speaker 1: global trading partners ahead of a broader tariff push next week.
Speaker 3: We're expecting comments from the White House at four o'clock.
Speaker 3: We will bring the President's comments to you live as
Speaker 3: we do get them. In the meantime, US tariffs on
Speaker 3: copper imports could be coming within several weeks, months earlier
Speaker 3: than the deadline for a decision. Also, according to people
Speaker 3: familiar with the matter, coppor trading in New York rose
Speaker 3: to a record as a result with a tariff round up.
Speaker 3: Back with US is Bloomberg News. Medals and Mining, heavy
Speaker 3: Machinery reporter Jodo who joins us here in the studio.
Speaker 3: Usually I have this little chart Joe that keeps me
Speaker 3: up to date with the tariffs, the who, the what,
Speaker 3: the where and the when. Yeah, but fortunately we got
Speaker 3: you in the studio today, and that's much better than
Speaker 3: my little cheat sheet.
Speaker 4: It's it's a lot, right, And it's like even like
Speaker 4: if you're on the weekends hanging out with like friends
Speaker 4: who don't care about markets, they're like, oh, tariffs, do
Speaker 4: you want to talk about the tariffs? I mean that's
Speaker 4: how it's just become like part of the conversation in
Speaker 4: the US right is like one thing everybody knows is happening,
Speaker 4: you know, beyond the signal story that happened the other
Speaker 4: day is terroriffs.
Speaker 3: Well to that point, we see it hit consumer sentiment.
Speaker 3: And when you see consumers cite this stuff as the
Speaker 3: reason that they're concerned, you know, it's reaching a level
Speaker 3: that typically financial news doesn't reach when it comes to
Speaker 3: everyday people.
Speaker 4: Yeah, and I think, listen, this is where or it's
Speaker 4: important for us when we're doing these stories to kind
Speaker 4: of keep in mind, like what is the consumer impact
Speaker 4: so Copper, for example, this this report that we had
Speaker 4: last night we've been working on now for a little bit.
Speaker 4: We had started hearing, Wow, actually, these these tariffs might
Speaker 4: be coming sooner than expected. Now to put that into
Speaker 4: context is a little wonky. When we got steel and
Speaker 4: aluminum terraffs in twenty eighteen, the President of the United
Speaker 4: States announced in twenty seventeen that he was doing the
Speaker 4: so called Section two thirty two investigations to put tariffs
Speaker 4: on steel and aluminum imports because they had feared that
Speaker 4: the import market was impacting national security. At the time,
Speaker 4: like nobody had heard of this. Like when we first
Speaker 4: talked about this, you guys might not remember it.
Speaker 2: I do.
Speaker 4: It was like, what is section two thirty two, and
Speaker 4: how can we claim this thing? Well, now it's very
Speaker 4: well known and the markets know it very well, and
Speaker 4: Donald Trump knows it very well. And what Donald Trump
Speaker 4: knows is that Section two thirty two is not only
Speaker 4: an executive power that he has, but one that he
Speaker 4: implemented and one that was tried by the courts, and
Speaker 4: the courts said last time around, Yeah, all of this
Speaker 4: is legal. This is exactly the power that he has.
Speaker 4: We talked about this when he re implemented the Section
Speaker 4: two thirty two aluminum and steal tarriffs just last month
Speaker 4: when he put the twenty five percent on or earlier
Speaker 4: this month, and that brings us to copper. Copper was
Speaker 4: not among any of the investigations in the first term.
Speaker 4: And when Trump brought up that he wanted to do
Speaker 4: copper taroffs, he said it. He said it when he
Speaker 4: was talking about the Canada Mexico stuff. I know we're
Speaker 4: getting into it, but he said it in his quote
Speaker 4: unquote State of the Union address where he said we're
Speaker 4: going to do copper as well. It was a weird
Speaker 4: one because he had just announced an investigation in Section
Speaker 4: two thirty two on copper, but he said in the conversation, well,
Speaker 4: we're going to do these terrorists.
Speaker 5: Look, oh, he did.
Speaker 4: He did right, which was a bit of a slip
Speaker 4: of the tongue because he still needs to wait for
Speaker 4: his Commerce department to do the investigation. The investigation goes
Speaker 4: two hundred and seventy days long. But we've learned from
Speaker 4: our sources that the market should expect this to come
Speaker 4: much sooner. In fact, what our sources were telling us
Speaker 4: was you're going to hear some sort of decision within weeks,
Speaker 4: not months the market was expecting months. What month exactly unclear,
Speaker 4: but Goldman Sachs had been saying we expect a twenty
Speaker 4: five percent tariff on copper sometime at the end of
Speaker 4: the year. Is kind of how they phrased it in
Speaker 4: notes to their clients earlier this week.
Speaker 5: Well, it's a lot earlier.
Speaker 4: It's going to be a lot earlier according to our sources.
Speaker 1: So what's the impact of that, And remind us, forgive us,
Speaker 1: because I know you're so good at like reminding everybody
Speaker 1: for this in this example, like what the copper market is,
Speaker 1: what's the US exposure to what we do? Remind us,
Speaker 1: so what it is and what impact it might so have.
Speaker 4: We consume one point eight million tons of copper per
Speaker 4: year in the United States. That copper is one of
Speaker 4: the most ubigulous metals. It's used in everything your iPhones,
Speaker 4: your laptops, these microphones, the wiring in your house, the
Speaker 4: wiring in your car. It's everywhere you touch copper at
Speaker 4: some point every day in your life. So in terms
Speaker 4: of tonnage, it's not the size of steel that it
Speaker 4: is quite important. So it's one point eight million tons.
Speaker 4: Half of that we import, so it's about nine hundred
Speaker 4: thousand tons we require to import. What really happened in
Speaker 4: the market is you need to remember demand across the
Speaker 4: economy is lackluster. So it's not like we're having this
Speaker 4: big explosion demand in the United States for appliances, for cars, like,
Speaker 4: everything's just kind of there. But we have seen a
Speaker 4: trade happening in the market. The rest of the world
Speaker 4: understands that there could be a twenty five percent tariff
Speaker 4: put on copper in the United States. Well, there's copper
Speaker 4: all over the world. So traders have been playing this
Speaker 4: by saying the copper price in the United States is
Speaker 4: about eleven five hundred dollars per ton. In London it's
Speaker 4: about ten thousand dollars per ton, So why wouldn't you
Speaker 4: just take that physical metal, ship it into the United
Speaker 4: States and catch the ARB window. And that has been
Speaker 4: the story now for weeks. Well now everybody's realizing that
Speaker 4: there might be an earlier end date for when you
Speaker 4: need to get in under the terrace. And that's what
Speaker 4: a lot of the bank analysts were reporting on today
Speaker 4: was listen, if there's a shorter timeline for when President
Speaker 4: Trump expects to announce the tariff, then that ARB should
Speaker 4: eventually close, right, Like if the ARB is at like
Speaker 4: nineteen percent spread, right, then eventually twenty five percent is
Speaker 4: what the spread would be, and then the ARB is done.
Speaker 3: Joe, you said, forgive me. You said, half of the
Speaker 3: copper that we use in the US we import, We
Speaker 3: get half of it from the US.
Speaker 4: Yeah, so about half of what we consume is produced
Speaker 4: US ethnic domestic exactly, and then the other half comes
Speaker 4: from abroad.
Speaker 3: So is there enough copper supply in the US. No,
Speaker 3: to satisfy it. Want to satisfy the needs absolutely. The
Speaker 3: reason I ask is because the whole idea with these tariffs,
Speaker 3: at least from the President's perspective, is to bring commerce
Speaker 3: into the United States back to the United States. In
Speaker 3: this case, it's not like you can start producing more
Speaker 3: or extracting more copper from the US to nicate the
Speaker 3: need port copper, right. It doesn't seem like it has
Speaker 3: the same mechanisms that some of the other tariffs that
Speaker 3: he's implemented or talked about implementing.
Speaker 4: Have Yeah, it's a bit of a weird one. And
Speaker 4: we asked this question too, is like why has Trump
Speaker 4: focused on copper and you know, One of the things
Speaker 4: is like copper is technically kind of the make America
Speaker 4: great again umbrella. Right, Like copper we were a great
Speaker 4: we have been, we still are a great copper producing country,
Speaker 4: but we used to be larger. The question becomes, can
Speaker 4: you get the minds up and running and can you
Speaker 4: get the processing facilities to a scale that you'd be
Speaker 4: talking about to offset it. Honestly, I don't think the
Speaker 4: discussion has been, oh well, let's just like completely, you know,
Speaker 4: change the way production is in the United States. The
Speaker 4: conversation has more just been let's do this because we should.
Speaker 4: And listen, you know, Freeport mcmaran, Rio Tinto, like, there
Speaker 4: are big names that operate in this inside this country,
Speaker 4: and sure they'd probably be more than happy to start
Speaker 4: doing a little more production, mine production, more processing production.
Speaker 4: But you know, like at the same time, they're also
Speaker 4: shipping into the United States.
Speaker 5: All Right, I know there's going to be more to come.
Speaker 1: We know we could probably talk an hour with you,
Speaker 1: but you're just going to have to hopefully come.
Speaker 5: Back tomorrow or something.
Speaker 1: Jojo, thank you, because it certainly is top of mind
Speaker 1: for us. On this Wednesday, Bloomberg News, Metals and Mining
Speaker 1: Heavy Machinery reporter Jojoe joining us here in studio.
Speaker 2: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 1: Borers are piling into the global bond market, and what
Speaker 1: they're looking to do is get some deals done ahead
Speaker 1: of US President Donald Trump's plans to impose global tariffs
Speaker 1: on April second. You know, tariffs have been top of
Speaker 1: mine once again today, so global bond investors really kind
Speaker 1: of looking to take advantage of this week's relative calm
Speaker 1: in the market for today.
Speaker 5: I was kind of like, I was thinking about this
Speaker 5: when a relative, Tom Carrol, I know exactly. It was
Speaker 5: kind of mellow for a while.
Speaker 3: But the bomb market's mellow today.
Speaker 5: Yeah, I guess I guess you could say I feel
Speaker 5: like tik tik tik. We're waiting to see what's next.
Speaker 3: We's with more. We got Rejief Sharma with us, managing
Speaker 3: director of fixed Income Investments over at Key Private Bank.
Speaker 3: It's a division of the publicly held eighteen billion dollar
Speaker 3: market cap bank Key Corp. Sixty billion dollars in assets
Speaker 3: under management for Key Private Bank. Ree chief joins us
Speaker 3: in the Bloomberg BusinessWeek studio. The fixed income market, we
Speaker 3: know lots of moving parts. The headlines though, the developments
Speaker 3: that you're following the most closely. What is it?
Speaker 6: You know, there's been so much uncertainty in the market.
Speaker 6: There's been this big push for you know, are we
Speaker 6: having a growth scare? Is there going to be a
Speaker 6: slow down in the economy? And what we're really looking
Speaker 6: at here is this is the opportunity right now for
Speaker 6: investors to look at asset allocation, how their portfolios look.
Speaker 6: And that's where fixed income comes into play. When you
Speaker 6: start seeing all this vola toady in the market, you
Speaker 6: see most of them the equity side. We haven't seen
Speaker 6: that level of voltodio on the fixed income side. So
Speaker 6: it gives us a good all right.
Speaker 1: So in terms of specific metrics though, that you keep
Speaker 1: an eye on, and I understand the low ball that
Speaker 1: you're saying, or the different volatility we're seeing in the
Speaker 1: fixed income market. Is it though, FED policy, is it
Speaker 1: tariff policy, Washington policy?
Speaker 7: What is it?
Speaker 1: Like?
Speaker 5: Top of mind? You get up in the morning and
Speaker 5: you're like, tell me what's going on.
Speaker 6: It truly is all of the ebove because what ends
Speaker 6: up happening is you get the tariff headline policy, which
Speaker 6: is almost on a daily basis, that does spoof the market.
Speaker 6: It causes a lot of uncertainty in the market. You
Speaker 6: start seeing the effects in equities. What's really been interesting
Speaker 6: is the credit markets. If you look at credit spreads,
Speaker 6: they have been very well behaved, right, so they're not
Speaker 6: screaming any signs of recession. They're not any sides of
Speaker 6: a slowdown. That has actually become a nice barometer for
Speaker 6: other investors' equity investors who look at as long as
Speaker 6: there's nothing wrong in the credit markets, we should be
Speaker 6: okay in the equity market.
Speaker 3: My instant Bloomberg is blowing up with people who want
Speaker 3: to ask questions about fixed income to you, first one coming,
Speaker 3: do you anticipate swelling from fixed income and that money
Speaker 3: then going into equities?
Speaker 6: I think right now, what we've seen in the past
Speaker 6: is the money market funds have done very well when
Speaker 6: they're getting good rates, and everybody expected that money to
Speaker 6: go to the equity market, right, that didn't happen.
Speaker 3: It's still money put that money still out there. It's
Speaker 3: still out there. Do you see more coming from the
Speaker 3: selling of fixed income or do you see it more
Speaker 3: as like that cash and money market accounts is going
Speaker 3: to move, So I.
Speaker 6: Think it would be the cash of money markets accounts.
Speaker 3: Where do you think it's going to go.
Speaker 6: It'll probably go lockstep into fixed income first because right
Speaker 6: now you're still getting corporate bonds that are very nice yields.
Speaker 6: Right now you're getting blue chip companies that are trading
Speaker 6: at very good income levels. So it makes a lot
Speaker 6: of sense really because you can sleep at night without
Speaker 6: worrying about it's just going to blow up my portfolio.
Speaker 1: So is it corporates that you think see the flows
Speaker 1: going into more so than sovereign or.
Speaker 6: A lot of investment grade corporate bonds do extremely well
Speaker 6: in this type of alto environment. What's really been happening?
Speaker 6: These are really big, liquid, blue chip companies that offer
Speaker 6: you quite a bit of income with their coupons. So
Speaker 6: you're not talking how ye, we're not talking hy yo, okay,
Speaker 6: talk high yield. I'd be very particular about what sectors
Speaker 6: I want to invest in high yield. It would have
Speaker 6: to align with the America first, agenda, So you would
Speaker 6: look at maybe manufacturing or energy being very advantageous in
Speaker 6: high yield.
Speaker 5: All right, but among the blue chips, where would you got.
Speaker 6: The blue chicks. You look blue chips, you look at
Speaker 6: consumer staples, you're looking at energy, you're looking industrials, You're
Speaker 6: looking at anything that promotes the initiatives of the Trump
Speaker 6: organ Trump administration about getting growth America first, trying to
Speaker 6: look at maybe deregulation, which will be very helpful for financials.
Speaker 3: In terms of what your clients care about. Are they
Speaker 3: more focused on yield or do they care about credit spreads?
Speaker 6: Our clients care a lot more about yield as long
Speaker 6: as you're getting yield. I think every investor has gotten
Speaker 6: really accustomed at being in an environment years ago when
Speaker 6: you weren't getting any yield and fixed income. Now you're
Speaker 6: getting yield again, and you want your client the clients
Speaker 6: really want that yield again. What's very interesting, however, is
Speaker 6: you can get that yield in very high quality securities now,
Speaker 6: so you don't really have to go down the credit
Speaker 6: rating spectrum to achieve that kind of yield.
Speaker 1: What's the risk goouls be President of the Chicago Fed
Speaker 1: telling the Financial Times in an interview, the FED is
Speaker 1: no longer on the golden path witnessed in twenty twenty
Speaker 1: three and twenty twenty four. Fedead now entered a different
Speaker 1: chapter where there's a lot of dust in the air,
Speaker 1: and he says he believes burn costs would be a
Speaker 1: fair bit lower in twelve to eighteen months from now,
Speaker 1: cautions it may take longer than anticipated for the next
Speaker 1: cut because of economic uncertainty. How does maybe it being
Speaker 1: a lot of dust in the air, like you said,
Speaker 1: there's a lot of things every morning, how does it
Speaker 1: complicate things and how do you ultimately figure out when
Speaker 1: to kind of, you know, push the button on an investment.
Speaker 5: Right now, the.
Speaker 6: Markets have been generally thinking about the mantra you don't
Speaker 6: fight the Fed, and right now the FED is in
Speaker 6: a wait and see approach. They're not looking to cut
Speaker 6: rates right now. They have the luxury of waiting, so
Speaker 6: they're deciding right now, we're going to wait for more data.
Speaker 6: We're going to find out what the fiscal policy is
Speaker 6: before we start cutting rates. The market, however, is once
Speaker 6: again trying to dictate terms. If the FED came out
Speaker 6: last week and said we'll have two rate cuts for
Speaker 6: twenty twenty five. The market is leaning towards three, so
Speaker 6: that dislocation is one of the worries, worry signals for
Speaker 6: us because that has to resolve itself, and that's going
Speaker 6: to resolve itself, but we go through vold Tody to
Speaker 6: get there.
Speaker 3: So what is your outlook on the rate path for
Speaker 3: the next twelve to eighteen months.
Speaker 6: I do think that we will have a continued rate
Speaker 6: cutting cycle, but I think it's going to be later
Speaker 6: in the later part of this year. We probably will
Speaker 6: get one rate cut this year, but what will have
Speaker 6: to line up will have to be a lot more
Speaker 6: clarity on tariffs. You'll have to see a lot more
Speaker 6: inflation data that kind of supports the trend towards a
Speaker 6: two percent goal, and you need to make sure the
Speaker 6: jobs market stay stable.
Speaker 3: Are you concerned that the tariffs are inflationary?
Speaker 6: Yes, I am. Tariffs are generally inflationary. It was interesting
Speaker 6: to see Fetcher Powell note that in his FMC meeting
Speaker 6: press conference. So everybody knows that tariffs could be inflation stoking,
Speaker 6: but he did come out and say that he thinks
Speaker 6: it's going to be a short lived inflation.
Speaker 3: I believe the term he used was transitory.
Speaker 6: I didn't want to use Okay, I know, don't say it.
Speaker 3: Don't say it.
Speaker 1: Do you buy that the president will ultimately get to
Speaker 1: growth later this year and the idea being tariffs first
Speaker 1: and then a cut in taxes an easying regulatory oversight
Speaker 1: later in the year. His Commerce secretor has talked about
Speaker 1: growth later this year, a dynamic perhaps economy maybe not
Speaker 1: his word, maybe my word, but just a stronger growth
Speaker 1: in the United States.
Speaker 5: Do you believe in that?
Speaker 6: It's a very good question. I think there's certain things
Speaker 6: that need to happen to get to the growth prerogative
Speaker 6: that he had set for himself that he ran on
Speaker 6: his campaign for. But I think that's kind of getting
Speaker 6: muddled right now. I think it's going to take more
Speaker 6: time to get there than it was earlier anticipated.
Speaker 3: Well, what do you think is the catalyst for that?
Speaker 3: Is it tax cuts? Is it manufacturing coming back to
Speaker 3: the US. What's the realistic part in your view?
Speaker 6: I really feel like the tax cuts need to happen.
Speaker 6: I think that was the number one priority when everybody
Speaker 6: thought that was a number one priority when he was running.
Speaker 6: That's now become almost a third priority. And with that
Speaker 6: I think growth gets his step back.
Speaker 1: Well, last question, it definitely relates to Trump policy. Maybe
Speaker 1: less federal money going to the states at this point.
Speaker 1: What does it mean for municipalities states in terms of
Speaker 1: their fiscal finances?
Speaker 5: Is it more issuance or is it more trouble.
Speaker 6: I really feel like municipal securities is a great area
Speaker 6: to invest in fixed income. I think there'll be more
Speaker 6: issuance if we have infrastructure spending. And these are those
Speaker 6: kinds of securities that do not get you rich, but
Speaker 6: they keep you rich.
Speaker 3: What about ending tax breaks for munis? Is that on
Speaker 3: your radar?
Speaker 6: It's on my radar. Those kind of conversations creep up
Speaker 6: every now and then, they don't really go anywhere. There's
Speaker 6: a big, strong lobby for munichs to not lose that,
Speaker 6: so I bet shocking they are writing for their conversation
Speaker 6: for radio.
Speaker 1: People love their tax remmunis. Just ask some of the
Speaker 1: folks around here. All right, we're going to leave it.
Speaker 5: There, Razeeve, thank you so much.
Speaker 1: Ajeeb Sharma, Managing director of Fixed Income Investments, are at
Speaker 1: Key Private Bank, joining us here in studio.
Speaker 2: This is the Bloomberg Business Week Podcast. Listen live each
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Speaker 2: New York station. Say Alexa played Bloomberg eleven thirty. This
Speaker 2: sounds like a big, big, big story.
Speaker 3: Yeah, Bailey lipschultzen'strem Gafari out with some details. When it
Speaker 3: comes to open AI's finances, the company expects to more
Speaker 3: than triple its revenue this year to twelve point seven
Speaker 3: billion dollars.
Speaker 5: Just a lot.
Speaker 3: I'm not paying for it, but I use it.
Speaker 5: No, I'm not either. But there is a paid version.
Speaker 3: Paid version twenty bucks a month. There's only two hundred both.
Speaker 1: But there's a lot of companies right that are talking.
Speaker 3: Yeah, yeah, this is corner A person familiar with the matter.
Speaker 3: The company generated three point seven billion dollars in annual
Speaker 3: revenue last year, and they expect revenue to continue growing
Speaker 3: out a fast club, more than doubling next year to
Speaker 3: twenty nine point four billion dollars. Curious what Ruth fox
Speaker 3: Blader has to say about all this. She's founder of
Speaker 3: managing partner at Fox Capital. It's an early stage VC firm.
Speaker 3: That she launched last year. She joins us from France. Ruth,
Speaker 3: good to have you with us. Have you invested in
Speaker 3: any of these LM companies like Athropic open AI.
Speaker 8: You know, I haven't, and that's partly because the fund
Speaker 8: that I run is not a multi billion dollar platform.
Speaker 8: I think that if you're getting involved with actually building
Speaker 8: large language models, you really need to be able and
Speaker 8: willing to deploy massive amounts of venture capital into these projects.
Speaker 8: And as we've seen, you know, there are some really
Speaker 8: big incumbent tech players with enormous balance sheets who are
Speaker 8: also investing in these projects. Right but certainly, pretty much
Speaker 8: every startup in my portfolio is moving at systems to
Speaker 8: run in some way on these lms, and there are
Speaker 8: an enormous amount of new projects that are coming to
Speaker 8: the fore and pretty much every industry which will be
Speaker 8: based on these technologies.
Speaker 3: Does it feel like a disadvantage though, to not have
Speaker 3: the dry powder to be able to invest in some
Speaker 3: of these rounds or do you see opportunity bigger, earlier
Speaker 3: and smaller.
Speaker 8: That's amazing is that what these technologies are doing is
Speaker 8: really offering a new platform for reshaping the entire economy
Speaker 8: and probably, you know, reshaping our society if we're honest
Speaker 8: about it. So the enabling technologies and that sort of
Speaker 8: critical infrastructure needs to be built, and sometimes it'll be
Speaker 8: built by you know, massive government investment, big technology companies
Speaker 8: with big balance sheets investing the biggest VC funds in
Speaker 8: the world. But there is so much and just such
Speaker 8: an enormous it's it's hard to describe how much opportunity
Speaker 8: there will be to use these technologies to really reshape
Speaker 8: every industry imaginable. And so there's more than enough opportunity
Speaker 8: for investors of all sizes. We certainly have dry powder
Speaker 8: we're actively investing, but not in the models themselves.
Speaker 1: Well, let's talk about some of the areas that either
Speaker 1: coming across the pitches, coming across your desk or in
Speaker 1: your inbox that are you know, connected to AI artificial intelligence.
Speaker 5: Walk us through ruths, some of the things.
Speaker 1: That are coming across that you are like, Wow, this
Speaker 1: is going to be potentially a significant trend maybe in
Speaker 1: the years to come.
Speaker 8: Yeah, we've seen a lot of early activity and early
Speaker 8: integration of artificial intelligence into the places where large language
Speaker 8: models really have a lot to say, and that's you know,
Speaker 8: things to do with language. So we're seeing a lot
Speaker 8: of activity in the legal tech area. A lot of
Speaker 8: companies are deploying large language models actively to do programming.
Speaker 8: So it's no surprise that the early adopters of technology
Speaker 8: would be technologists. And we're seeing just this tremendous ability
Speaker 8: to build companies that are much smaller. So a lot
Speaker 8: of the startups, even the early stage businesses that I'm seeing,
Speaker 8: it's just shocking how the size of company that you
Speaker 8: need to have from a full time employee perspective to
Speaker 8: get to critical revenue is dramatically smaller than it was
Speaker 8: even a couple.
Speaker 7: Of years ago.
Speaker 3: How's the fundraising environment right now? From the perspective of
Speaker 3: a venture capitalist? Is it difficult out there to raise.
Speaker 8: Money so as a fund or as a startup?
Speaker 3: As a fund.
Speaker 8: The environment I'm not currently raising capital, but you know,
Speaker 8: I have lots of friends, and you know.
Speaker 3: The environment venture capitalists always raising capital.
Speaker 8: Yes, and actually it would be probably indiscreet to, you know,
Speaker 8: acknowledge anything around actual capital raises. But I am, you know,
Speaker 8: not as actively in market as I've been in the past,
Speaker 8: and we'll be in the future. So what I'd say
Speaker 8: is you know, there there are big platforms, as I said,
Speaker 8: which are really well known, which really have no difficulty
Speaker 8: raising capital. Actually raising capital is a fund is very
Speaker 8: similar to the experience of raising capital as a startup.
Speaker 8: Venture is a game of exceptions and there are absolutely
Speaker 8: no rules. So you know, we've talked about big dips
Speaker 8: in startup financing in particular sectors. You know, in twenty
Speaker 8: twenty three, twenty twenty four, we'll see what happens this year,
Speaker 8: but then we'll also see these absolutely huge mega rounds.
Speaker 8: There's there's there tends to be enormous bifurcation in the
Speaker 8: venture market, and you know, some people have it really
Speaker 8: easy and some people find it to be a grind,
Speaker 8: even in the most excessive of capital environments. Right now,
Speaker 8: there has been I think a little bit of an
Speaker 8: overhang from the venture capital bubble that we saw during
Speaker 8: COVID zero interest rate moments when people were kind of
Speaker 8: running into the private markets and really there was quite
Speaker 8: a lot of capital running into all markets. And there's
Speaker 8: been a slight correction, but I think that there's still
Speaker 8: you know, there's still capital out there for interesting projects.
Speaker 1: Ruth.
Speaker 5: What you know, I know, when.
Speaker 1: You share notes and thoughts with our producer Paul Brennan.
Speaker 1: You know, part of the conversation, I think we've touched
Speaker 1: upon it, but this idea of a generational technology revolution
Speaker 1: with artificial intelligence, what exactly does that mean? What's the
Speaker 1: generational generational technology revolution you anticipate is coming our way
Speaker 1: as a result of AI, which has been around for
Speaker 1: a long time. But you know, obviously we're talking about
Speaker 1: generative AI, large language models, things that could really potentially
Speaker 1: already are and even more so.
Speaker 5: Change kind of how we do things in the future.
Speaker 7: Yeah, we're what.
Speaker 8: We're seeing is something really probably on the scale of
Speaker 8: the commercial Internet itself. So the Internet was around for
Speaker 8: a long time and then you know, people started using
Speaker 8: it and it just had this enormous impact on the
Speaker 8: way people do everything, the way they think, the way
Speaker 8: they research, the way they read, the way they shop,
Speaker 8: the way they interact with each other. And you know,
Speaker 8: we saw kind of the mobile replatforming and a lot
Speaker 8: of those same sort of large shifts happening and moving
Speaker 8: onto mobile here. I think that what we're seeing is
Speaker 8: not only the prospect of really changing unit costs. So
Speaker 8: what we were talking about previously where you can just
Speaker 8: do a lot with fewer human beings organization, but that
Speaker 8: you know, potential to impact the revenue profile of companies.
Speaker 8: So definitely something that will change, certainly how we value
Speaker 8: businesses and maybe the value that businesses are able to create.
Speaker 8: But it's also a social you know, it's a big
Speaker 8: social shift. And it's not just like, oh, are people
Speaker 8: using Perplexity instead of Google to search? It's really where
Speaker 8: are people getting information? And how are they comfortable communicating
Speaker 8: with machines? And I really see this not only amongst
Speaker 8: kind of people who are in the tech world, but
Speaker 8: even you know, folks and other parts of society who
Speaker 8: are actually asking chat GPT for personal advice and you
Speaker 8: know things that were inconceivable really like Revenge of the Nerds,
Speaker 8: like having a relationship with a robot.
Speaker 3: But you know, well you said no judgment, I said,
Speaker 3: not great. I know.
Speaker 5: Well I have to tell you.
Speaker 1: You know, we were talking about you coming on in
Speaker 1: the newsroom and we were just talking as every day
Speaker 1: it feels like we have conversations around our I've got
Speaker 1: to yeah, cc H our producer we were talking with,
Speaker 1: and we kind of came to like, we really want
Speaker 1: to ask you this question. We're just going to go
Speaker 1: for it. I'm going to just go for it. How
Speaker 1: do we avoid creating a future generation of idiots or
Speaker 1: at least individuals who can't write and think if we're
Speaker 1: constantly going now and I understand having played with chat chipe,
Speaker 1: do you have to think and like how to get
Speaker 1: like different question?
Speaker 3: You mean, like okay, college students Carol using it to
Speaker 3: write term papers and stuff.
Speaker 1: Exactly like people who don't write or at least get
Speaker 1: something started with something, so you know, with a chat
Speaker 1: device or something like what does that mean?
Speaker 2: What does that looks like?
Speaker 8: I can't you know, I can't say that that. I
Speaker 8: think it's a stupid question. And I think this is
Speaker 8: what what you know, when I think about this technology,
Speaker 8: it's not only so impactful on the stock market, and
Speaker 8: you know, in terms of uh sort of geeky tech innovation,
Speaker 8: I really do think that it is going to massively
Speaker 8: have a huge social impact. And you know, even when
Speaker 8: we think about are we going to lose skills that
Speaker 8: we consider sort of near and dear to our hearts,
Speaker 8: like you know, writing and sort of thinking in the
Speaker 8: written word and communicating or even just doing work unassisted
Speaker 8: without sort of the the the kind of long arc
Speaker 8: of history in our in our computer that we can
Speaker 8: kind of tap into at a moment's notice. And there
Speaker 8: are those same conversations happening when the commercial internet came around,
Speaker 8: and you know, the kind of dumbing down and the
Speaker 8: social crutch. But I think that these are questions that
Speaker 8: are really critical to ask. And you know, you can
Speaker 8: take the point of view that technology is neutral and
Speaker 8: it's what we do with it, but we know that
Speaker 8: these new technologies dramatically shape our behaviors. And there have
Speaker 8: been enormous numbers of studies that have been done about
Speaker 8: the impact of social media on youth or you know,
Speaker 8: regarding impression, and I see it with my own kids,
Speaker 8: just you know, the behavioral habits and the behavioral changes
Speaker 8: that have happened, and you know, just a couple of
Speaker 8: generations are really quite crazy. And so there will be
Speaker 8: people who use these technologies to get even smarter and
Speaker 8: to do even more interesting things. But I think that
Speaker 8: this is a really big question, is what are we
Speaker 8: going to do if we end up creating technology which
Speaker 8: is so powerful that fewer people need employment in a
Speaker 8: world where there are you know, more people every year,
Speaker 8: and how are we going to really hold our critical
Speaker 8: values or continue to transmit values that we consider critical.
Speaker 8: And I'm sure that some of those values will go away.
Speaker 8: I mean, I think this is we're on the cusp
Speaker 8: of a really big social change too.
Speaker 3: Yeah, it's a tricky territory, I think, especially as a
Speaker 3: parent in thinking about this technology for kids. Ruth the
Speaker 3: Fox at Blader, founder and managing partner at Fox Capital,
Speaker 3: the early stage VC firm she launched it last year.
Speaker 3: I've been playing a little bit with Lily the dual
Speaker 3: lingo chat Bob and well, my son loves it and
Speaker 3: he's six, and like, I don't want him to think that,
Speaker 3: like this is real life. It's pretty cool, though, it
Speaker 3: is pretty cool.
Speaker 5: I yeah, I don't know. Time will tell, right, this
Speaker 5: is Bloomberg Business Week Daily.
Speaker 1: Rubmcle I'll bet you let me drive.
Speaker 2: Oh no, no, no no, this is not a twenty's going.
Speaker 4: To drive, honey, please, I'll do the gravels.
Speaker 1: Let's wait, I want to drive.
Speaker 2: It's a good question.
Speaker 3: This is the drive to the.
Speaker 2: Clothes plums for me.
Speaker 5: I think.
Speaker 9: Well.
Speaker 2: By John and Don on Bloomberg Radio.
Speaker 1: All right, everybody, we are just about eighteen minutes away
Speaker 1: from the closing bell on this Wednesday, Carol Master, along
Speaker 1: with Tim Stanwick, life here in our Bloomberg Interactor Broker
Speaker 1: studio here on Bloomberg Business Week Daily. H As Charlie
Speaker 1: just mentioned, we are kind of bouncing around our loads
Speaker 1: of the session. So down about seventy one points on
Speaker 1: the S and P five hundred, down more than a
Speaker 1: point full percentage point, about one and a quarter percent
Speaker 1: to be Zach and down Tim just about two percent
Speaker 1: on the nasdaque. We've been talking about some of these
Speaker 1: big megacap tech names putting some pressure once again. But
Speaker 1: I think it's safe to say we're taking our cues
Speaker 1: constantly out of Washington concerns about more tariffs. What it means,
Speaker 1: what it means specifically.
Speaker 3: Well, let's see what Sevesty Bilofis has to say. She's
Speaker 3: CEO at Golvest Advisory. She's back with us. They've got
Speaker 3: about six hundred million dollars in assets under management, She
Speaker 3: joins us here in our Bloomberg Interactive Broker's studio. How
Speaker 3: are you positioning portfolios right now? Are you? Are you
Speaker 3: overweight cash because of uncertainty? What's going on?
Speaker 9: Okay, so we're not overweight cash.
Speaker 7: But for people that have cash.
Speaker 9: On the sidelines, new clients that have come in and
Speaker 9: they've had a liquidity event and they have cash, we
Speaker 9: are being slow. Our normal build out process would be
Speaker 9: ten to twelve weeks. We're pausing on that. We're looking
Speaker 9: at five to six months in terms of deployment. So
Speaker 9: we're not rushing with cash right now.
Speaker 5: But for people so leaving it in lee hash.
Speaker 9: Well, okay, so giving it in cash or T bills
Speaker 9: or going into things like private credit which have a
Speaker 9: lower volatility, or going into some structured notes alternative investments,
Speaker 9: which we like and we can talk about, but not
Speaker 9: rushing into equity. So the equities part of the portfolio
Speaker 9: taking a lot longer to deploy that cast.
Speaker 1: So the private credit part of the portfolio is something
Speaker 1: you would have done anyway, and you're like, it doesn't
Speaker 1: matter because we just talked about a story about how
Speaker 1: the private equity guys really want to tap into the
Speaker 1: four oh one K plans. But the thinking is it's
Speaker 1: going to sit there for several years, so it's okay
Speaker 1: to put it to work now.
Speaker 9: Absolutely the private credit. A couple of things on the
Speaker 9: private credit lower volatility and we do think even with
Speaker 9: all of this noise and uncertainty and a slow down
Speaker 9: that we think is coming, we don't think it will
Speaker 9: be a hard landing, severe recession that we end up seeing.
Speaker 9: And so in that environment where default rates and private
Speaker 9: credit are not expected to be high, I like private credit.
Speaker 9: It's a slow and any clip that we end up getting.
Speaker 9: So that's one thing. But you bring up a very
Speaker 9: good point with in private markets, investors have a long
Speaker 9: term time horizon, for one case being one example. But
Speaker 9: even with taxable dollars, a lot of our investors have
Speaker 9: a long term time horizon. They aren't planning on touching
Speaker 9: that cash for at least ten to fifteen years out.
Speaker 9: For some part of the portfolio time, having private credit
Speaker 9: and private equity is certainly appropriate.
Speaker 3: Okay, that's a small part of the portfolio for most people.
Speaker 3: What's typical right now in terms of asset allocation, because
Speaker 3: there's been a lot of talk this year of concerns
Speaker 3: around this idea of American exceptionalism and then also our
Speaker 3: performance in Europe.
Speaker 9: Yes, yes, so we are looking at we've previously had
Speaker 9: an underweight to equities and it's to excuse me, let
Speaker 9: me correct that European equities, and so we've been neutral
Speaker 9: weight equities and more of our portfolios invested in US equities,
Speaker 9: and that's been the case for a long time.
Speaker 7: So certainly this year you've seen a.
Speaker 9: Versu all of that, and European equities do look more attractive,
Speaker 9: But we are not overweighting European equities.
Speaker 1: Why is why we were that was stereo.
Speaker 7: Its exactly a couple of things.
Speaker 9: I think the reasons why so European equities have had
Speaker 9: low relative valuations compared to US for a long time.
Speaker 9: They've had lower valuations for a reason. Reasons why we
Speaker 9: didn't prefer European equities.
Speaker 7: Six months ago.
Speaker 9: Are still there things around demographics, for example, or things
Speaker 9: like regulation being more onerous in Europe versus in the US.
Speaker 5: State like Germany said about the Spans, we love that.
Speaker 9: We love that, like Germany, Germany and Europe overall. I
Speaker 9: do think that we'll see more spending. There's been this
Speaker 9: aha moment where all of a sudden, Europe collectively realizes
Speaker 9: we need to spend more, and so I do think
Speaker 9: that will happen. But at the same time, and I
Speaker 9: do want exposure, and we are adding to our under
Speaker 9: weight that we had in European equities. We are adding
Speaker 9: to it, but I still don't think that European equities
Speaker 9: are going to outperform the US equities over the long run.
Speaker 7: Now that's it.
Speaker 1: You know, at the game, I'm table, you're not all in,
Speaker 1: not all in. So when you say you add in,
Speaker 1: I always been curious about percentages, right, like how much?
Speaker 1: So how much is typical for Europe?
Speaker 5: And have you done?
Speaker 7: Okay?
Speaker 9: So we so typically the benchmark waiting for European equities
Speaker 9: or international developed equities, I should say, is about thirty percent.
Speaker 9: So if we think of a one hundred percent equity portfolio,
Speaker 9: about thirty percent is the benchmark weight towards Europe. We've
Speaker 9: been less than ten percent in our one hundred percent
Speaker 9: equity waiting. We're closer now to about eight percent in
Speaker 9: Europe in international development. So we're still underweight, but we've
Speaker 9: increased our equity allocations. Equities, yes, and the one hundred
Speaker 9: percent yes, so some in private markets, a lot in
Speaker 9: public markets, but the other area we like somewhere. Yes,
Speaker 9: in private markets.
Speaker 3: Equities U S equaries have worked really well for the
Speaker 3: last dozen years.
Speaker 7: They have. They haven't especially tech. But what we're seeing now.
Speaker 9: And this is also another area that we're investing in,
Speaker 9: So market s and P is down year to date,
Speaker 9: and it's certainly like since the peak Feb nineteen or
Speaker 9: so it's been, it's down. If you look at dividend
Speaker 9: stocks though for example, they're actually up. So there are
Speaker 9: plenty of areas for sectors in the US markets that
Speaker 9: there's still opportunity there and I feel more comfortable investing in.
Speaker 5: So you're all in on the US US equities.
Speaker 1: It's interesting, right, So the idea of like, you know,
Speaker 1: we've had a lot of conversations about American exceptionalism. Do
Speaker 1: you think that ultimately policies out of Washington will settle down.
Speaker 9: I think we've been hit with a lot of bad
Speaker 9: news first in terms of you know, when the President
Speaker 9: got elected, there was a lot of talk of and
Speaker 9: you saw an increase in performance because of talk on deregulation,
Speaker 9: pro growth, tax cuts that will be extended. We've started
Speaker 9: now with we saw a lot of policy and shake
Speaker 9: ups and alliances, and I think we've started with some
Speaker 9: bad news, so tariff certainly being one of them, because
Speaker 9: they have caused a lot of this uncertainty, and it
Speaker 9: will continue until we have things figured out. But I'm
Speaker 9: excited to see about the tax cuts that get extended,
Speaker 9: and maybe there's more of them. There's more, there's more
Speaker 9: that will come in the second half of the year
Speaker 9: that I think will be more positive. Once the uncertainty
Speaker 9: around tariffs goes away.
Speaker 3: We're basically exactly where we were election day, yes, right now,
Speaker 3: five hundred yes.
Speaker 9: So it was a lot of enthusiasm of what will happen.
Speaker 9: The agenda comes out, it's about you know, immigration and deportation,
Speaker 9: and then about the tariffs, and we don't know from
Speaker 9: one day to the next what to focus on. You know,
Speaker 9: we were talking about Liberation day April second, and all
Speaker 9: of a sudden, it's auto tariffs today. So once this
Speaker 9: calms down, there's more more clarity around the tariffs, we
Speaker 9: can move forward and talk about the more exciting pro
Speaker 9: growth parts that will help the US market.
Speaker 1: Really cool stuff, always interesting, especially in contrast to some
Speaker 1: of the stuff we've had as of late.
Speaker 3: Sevesti Belafas, CEO at Goldvest Advisory, back with us here
Speaker 3: and are Bloomberg Interactive Brokers Studio Sevesti always good to
Speaker 3: see you, thank you. Thanks so much for coming in too.
Speaker 1: Thank you.
Speaker 3: Here.
Speaker 2: This is the Bloomberg Business Week podcast, available on Apple, Spotify,
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