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Speaker 1: Hi, everyone, Welcome to the Bloomberg Business Wee Weekend podcast
Speaker 1: Top of Mine. This past week, we saw Nvidia at
Speaker 1: one point top Microsoft and Apple as the world's most
Speaker 1: valuable company, reaching a new record. It's since fallen back
Speaker 1: behind Microsoft and now along with Apple, the three are
Speaker 1: pretty much neck and neck. When it comes to market
Speaker 1: cap it's pretty close still and Vidia up around eight
Speaker 1: hundred percent since the beginning of twenty twenty three.
Speaker 3: And speaking of records, the S and P five hundred
Speaker 3: and the NASDAC notching all time highs. This past week
Speaker 3: has more Wall Street firms piled on the bullish equity call,
Speaker 3: and as make of America's institutional clients piled into US
Speaker 3: equities for the second week in a row, were on
Speaker 3: the market An investing environment from two individuals whose firms
Speaker 3: oversee trillions of dollars in assets and client money.
Speaker 1: Plus the alt MBA with the CEO of Ability and
Speaker 1: the CEO of ALT Finance on helping HBCU students explore
Speaker 1: a future in the world of private equity.
Speaker 3: Also, he had a front row seat to the AIDS
Speaker 3: crisis and the pandemic. What the nation's top infectious disease
Speaker 3: doctor says about being on call and advising seven presidents
Speaker 3: through it all. We're talking about doctor Anthony Fauci, and
Speaker 3: we reflect on the complicated journey of acceptance for the
Speaker 3: LGBTQ community with the CEO of Glad.
Speaker 1: All of that to come, we begin with the world
Speaker 1: of asset management. I was in Nashville earlier this month
Speaker 1: for bny Mel and Pershing Insight twenty twenty four. It's
Speaker 1: a gathering for the wealth management industry, and at it
Speaker 1: I moderated a keynote with two senior execs in the
Speaker 1: asset management business who see so much and who shared
Speaker 1: their outlook and views on everything from AI and ALTS
Speaker 1: to debt, deglobalization, demographic cinjia politics, and I'm going to
Speaker 1: say a lot more.
Speaker 3: Han Caryl's panel, Jenny Johnson, President and CEO at Franklin
Speaker 3: Templeton and Hanika SMI's senior executive vice president and global
Speaker 3: head of Investment Management at bny Mellon. The conversation began
Speaker 3: with what is top of mind when it comes to
Speaker 3: the macro environment.
Speaker 4: Everybody's talking about kind of the whether you have five
Speaker 4: or three or six d's, but I'll start with the d's. Look,
Speaker 4: demographics is going to be key, and it's going to
Speaker 4: be develop economies have aging demographics and or developed economies
Speaker 4: have aging demographics, and developing tend to have younger demographics
Speaker 4: except for China obviously, and it's going to have.
Speaker 5: An impact on investing.
Speaker 4: There's going to be opportunities, but it's also going to
Speaker 4: drag down economies as a younger smaller workforce has to
Speaker 4: support the folks that are older, and then those economies
Speaker 4: that are developing with it, like India. Fifty six percent
Speaker 4: of the population of India one point four trillion people
Speaker 4: is under the age of twenty five. So as long
Speaker 4: as they can educate them right, they can be participating
Speaker 4: in it. So demographics is important. Obviously, I'll call it disinflation,
Speaker 4: so we can say r d's. Obviously, where the interest
Speaker 4: rate environment goes, you know, the supply chain. Sort of
Speaker 4: reorienting supply chains is going to be I think opportunity
Speaker 4: from an investment standpoint. It's also inflationary. There's a reason
Speaker 4: we were in China, the China plus one story. You
Speaker 4: were in China because it was cheap. Right, So as
Speaker 4: soon as you start to decouple and you know, change
Speaker 4: your supply chain, you're going to end up adding some
Speaker 4: costs to that, not to mention tariffs and others from
Speaker 4: geopolitical decarbonization, right.
Speaker 6: You know.
Speaker 4: Unfortunately in the US it is a it's become this
Speaker 4: red and blue state conversation. You know, obviously, Honkey, you're
Speaker 4: based in London. You go to Europe, it is still
Speaker 4: a huge focus and the reality is over ninety percent
Speaker 4: of the world's you know, governments that could ninety percent
Speaker 4: of the world GDP have committed to net zero. Whether
Speaker 4: they get there or not as irrelevant, but they're focused
Speaker 4: on investing on that. And then finally, I'll call it
Speaker 4: digitization is just this. We're living in a massive technological
Speaker 4: advanced age with AI things like blockchain and those are
Speaker 4: going to drive investment results.
Speaker 5: And then I got to throw in US debt.
Speaker 4: I don't think we're talking enough about the longer term
Speaker 4: impact of US debt.
Speaker 1: I feel like it's safe to say that all of
Speaker 1: us have spent our careers a few years ago, a
Speaker 1: few decades ago, where it came up in every market conversation,
Speaker 1: then it went away.
Speaker 7: It is back, and I feel like with a vengeance.
Speaker 1: All right, Hanaga, let's go to you in terms of
Speaker 1: the global macro.
Speaker 6: Yeah, so Jenny summed up, summed it up very well,
Speaker 6: and we're sort of seeing the same trends. I was
Speaker 6: actually quite interested to see that the audience here, so
Speaker 6: you know, you think about the trends actually feel optimistic
Speaker 6: about investing.
Speaker 7: Are you surprised?
Speaker 6: Well, yes and no. And I would say the ones
Speaker 6: that you know, we take a step back and think
Speaker 6: about these trends trans create uncertainty, but trends can Those
Speaker 6: trends and uncertainty can also create opportunities, right, because when
Speaker 6: there's more volatility in markets and in responses, people will
Speaker 6: respond differently, have different needs, and that can create investment opportunities. Now,
Speaker 6: having said that, in this world of what appears to
Speaker 6: be this inflation, although there's some conflicting data sort of
Speaker 6: coming out where of course all keenly watching what the
Speaker 6: various central banks around the world are going to do.
Speaker 6: I think the ECB is coming out tomorrow, the FAT
Speaker 6: next week. We have an expectation that generally we're still
Speaker 6: at rates higher for longer, but we are expecting, with
Speaker 6: the information that is starting to come out tighter sort
Speaker 6: of lower tighter employment, that we are expecting to see
Speaker 6: some cuts later in the year. But we're not going
Speaker 6: to go back as low as where we've come from.
Speaker 6: And I do think we're going to get back to
Speaker 6: an environment we're having higher interest rates is more to
Speaker 6: norm than the environment we've come out of.
Speaker 1: One thing I want to ask you, and I think
Speaker 1: you know, we have the conversation that hey, folks, it
Speaker 1: was the low rate environment or zero rate environment that
Speaker 1: was the abnormality. Yes, right, that what we're doing right
Speaker 1: now is getting back to normal. Having said that, you
Speaker 1: have a generation of investors advisors who were used.
Speaker 7: To this disinflationary environment.
Speaker 1: How does that let me come back to you first,
Speaker 1: you know, how do we need to kind.
Speaker 7: Of address that.
Speaker 1: How do we have the smart conversation around that, you know,
Speaker 1: in terms of investing in what it needs.
Speaker 6: So it's two ways, right, to sort of how we
Speaker 6: deal with it's in our own organizations. We do. I'm
Speaker 6: sure you have it as well, Jenny. In our own organizations,
Speaker 6: people who have only been investing trained investors this side
Speaker 6: of the GFC. I'm of the generation that was also investing. Well,
Speaker 6: good for all.
Speaker 5: It's a lot of ideas.
Speaker 6: And actually I call it these investor management is actually,
Speaker 6: thankfully an sector in which experience really matters, and you
Speaker 6: sort of do realize that they're is such a thing
Speaker 6: as cycles. But it does mean that we need to
Speaker 6: educate not only our own investors, but also our end
Speaker 6: clients in terms of what this type of environment seat
Speaker 6: of having positive interest rates, let's call it that means
Speaker 6: for investors, and what it means for asset allocation. So
Speaker 6: we're spending a lot of time educating our end client,
Speaker 6: our advisors, but also our own our own workforce.
Speaker 4: Jenny, your thoughts on that, well, I mean, the reality is,
Speaker 4: I think we're getting into what historically is a more
Speaker 4: normal interest rate environment, and if you look at it,
Speaker 4: you know the economy has actually been able to absorb
Speaker 4: or the rates increases pretty.
Speaker 7: Well, uh, pretty agressive in the last year, right.
Speaker 5: Yeah, very aggressive.
Speaker 4: I mean I described to people as like, you know,
Speaker 4: of course you're going to see it slowing down data.
Speaker 4: They jammed on the brakes, right, you know exactly, it's whiplash.
Speaker 5: But we're also in.
Speaker 4: The camp and I caveat it with that Franklin Templeton.
Speaker 4: So we're one point six trillion, but we have we
Speaker 4: have five different UH CIOs who have slightly different views.
Speaker 4: I macro economic CIOs out of a slightly different views.
Speaker 4: So I'm gonna it's a little bit like debate there, Oh,
Speaker 4: huge debate that matter of fact, that is insisted that,
Speaker 4: especially the ones that are the furthest apart to make
Speaker 4: sure that at least having an internal debate on it.
Speaker 4: But you know I tend to and and it's obviously
Speaker 4: converged over time, but you know, rates are higher for longer. Uh.
Speaker 4: The economy has definitely absorbed it pretty well.
Speaker 5: Uh.
Speaker 4: And you know, if we if I were to guess,
Speaker 4: I think it's maybe just one rate increase this year,
Speaker 4: and if I had to take a second gas, I'd say.
Speaker 5: It could even be zero.
Speaker 4: You know that it's more towards inflation being a little
Speaker 4: bit stickier and harder for the FED to truly get
Speaker 4: under control than probably, and I know there's some weaker
Speaker 4: data coming out, but.
Speaker 7: It has some services today pretty strong.
Speaker 6: Yeah, but I think you're right because they're also to
Speaker 6: your earlier point. There continues to be inflationary pressure from
Speaker 6: animating from the supply chain as well. Right, So you
Speaker 6: look at also the conflicts around the world, which is
Speaker 6: putting pressure. Certainly we've seen its being based in London
Speaker 6: on our doorstep. We've seen it an energy price, We've
Speaker 6: seen it in food prices. It's coming down a bit.
Speaker 6: We're seeing that the Middle East conflict at the moment
Speaker 6: is also putting pressure on supply chain. You and I
Speaker 6: were talking earlier about aviation, Carol and flights. I mean,
Speaker 6: you can't just simply fly where. Airlines can't have to
Speaker 6: reroot where they go. My flight, you know, anytime I
Speaker 6: go to Japan from long and we're now the flight
Speaker 6: is taking an extra toon half hours because we're not
Speaker 6: going over Russia. So think about the costs of the time,
Speaker 6: the cost of fuel, and you know those costs will
Speaker 6: have to get passed on in the price of goods.
Speaker 6: So it's it's that inflationary pressure I think is still there.
Speaker 5: These big go ahead, I just go uf.
Speaker 4: I was gonna say, one of the advantages that all
Speaker 4: you have is you're from all different places in the US,
Speaker 4: because you know, sometimes you get I always say my
Speaker 4: mother was a doctor, and she said one thing that
Speaker 4: always bothered her as about doctors is sometimes they didn't
Speaker 4: just look at what was in front of them. They
Speaker 4: always had to be proven through research. And sometimes it's
Speaker 4: obvious in front of you if you talk about the
Speaker 4: environment around you. I bought a truck for the farm
Speaker 4: this weekend. And I used to finance. I ran a
Speaker 4: financing company of autos, and so whenever I bought a car,
Speaker 4: I go into the dealership and say, show me your
Speaker 4: invoice and we'll start there and work our way up.
Speaker 4: It was let's start at manufacturers suggested retail price, and
Speaker 4: we'll tell you what fees we added. And it took
Speaker 4: me three months of walking out. I finally asked, somebody
Speaker 4: in California, can you see what.
Speaker 5: You can get there?
Speaker 4: I was not going to buy a car for above MSRP.
Speaker 4: And you know what, in the end, I ended up
Speaker 4: doing that. Really, it has changed so much. And so
Speaker 4: you walk into a restaurant, are they still pretty full?
Speaker 5: You guys.
Speaker 4: You know, again, you only see where you're going. But
Speaker 4: as you ask each other around, it feels like it's
Speaker 4: still pretty robust out there.
Speaker 7: It doesn't feel like I want to bring in a question.
Speaker 7: These are great questions, so thank you.
Speaker 1: What concerns do you have regarding the rise of nationalism
Speaker 1: and populism pushing us away from globalization and its effect
Speaker 1: on those emerging markets like what you folks are talking
Speaker 1: about feels like not going away anytime.
Speaker 5: Soon, agreed.
Speaker 7: And that's inflationary and that's inflataty it is no.
Speaker 6: I agree as well. I mean it's been a concern
Speaker 6: of mine and of ours for some time, this rise
Speaker 6: of nationalism, and also to benefit so our generation has
Speaker 6: already benefited from what I would call the piece and
Speaker 6: right following sort of the Second World's War, and it
Speaker 6: was all about globalization. We all read the book The
Speaker 6: World Is Flat that came out, didn't you, Jenny, Yes,
Speaker 6: I did. I read it some twenty years ago. But
Speaker 6: that is changing. We're all Jenny was talking about earlier,
Speaker 6: we were all moving manufacturing to China. That is no
Speaker 6: longer happening in sort of reshoring, and that is adding
Speaker 6: to cost as well, so it's some mix of nationalism
Speaker 6: than a much more tense geopolitical environment as well. You
Speaker 6: throw that into the mix, and it is making for
Speaker 6: a much more combustible environment that I think will provide
Speaker 6: a challenge for corporates over the long term, notwithstanding what
Speaker 6: we're seeing today.
Speaker 3: That was Hanikah Smit's and Jenny Johnson in conversation with
Speaker 3: Carol from their panel at BNY Mel and Pershing Insight
Speaker 3: earlier this month. That was in Nashville, Tennessee.
Speaker 1: Coming up more from the conversation, including the dreaded D
Speaker 1: word debt, ballooning US federal debt, the impact and what
Speaker 1: to do.
Speaker 3: You're listening to Bloomberg BusinessWeek. This is Bloomberg.
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Speaker 1: This past week, the non partisan Congressional Budget Office ramped
Speaker 1: up its estimate for this year's US budget deficit by
Speaker 1: twenty seven percent to almost two trillion dollars, sounding a
Speaker 1: fresh alarm about an unprecedented trajectory for federal borrowing. The
Speaker 1: CBO sees the deficit reaching one point nine two trillion
Speaker 1: dollars in twenty twenty four this year, up from one
Speaker 1: point six y nine trillion in twenty twenty three. Longer term,
Speaker 1: US national debt set to top fifty six trillion dollars
Speaker 1: by twenty thirty four as rising spending and interest expenses
Speaker 1: outpaced tax revenues. A lot of numbers throwing in at everybody,
Speaker 1: The bottom line is US federal debt.
Speaker 3: It's growing, yeah, and I think for many people they
Speaker 3: would argue that it's becoming a crisis. On that, we
Speaker 3: continue with Jenny Johnson, president and CEO at Franklin Templeton,
Speaker 3: and Hanikah Smith's senior executive VP and Global head of
Speaker 3: Investment Management at BNY Mellon, who sat down with Carol
Speaker 3: at the recent BNY melon Pershing Insight Conference in Nashville, Tennessee.
Speaker 4: We are not at thread of not being the reserve currency.
Speaker 4: We're going to continue to be to reserve currency because
Speaker 4: there's nowhere else and anybody's going to go. The question
Speaker 4: is you still need buyers of debt and seventy percent
Speaker 4: of US debt is going to come in the next
Speaker 4: six years is going to turn over. Unfortunately, what we
Speaker 4: didn't do is lock in long term US treasuries when
Speaker 4: rates were really low, and right now that six that
Speaker 4: seventy percent, we're paid about two point four percent interest
Speaker 4: on it. The US Budget Office predicts the next ten
Speaker 4: years in debt the cost of interest is three point
Speaker 4: five percent. Okay, that probably one percent difference crowds out
Speaker 4: so much spending. We're already this year will spend more
Speaker 4: on interest than we will on defense spending. So the
Speaker 4: question for all of you is to think about, well,
Speaker 4: where does that money come from? And has to come
Speaker 4: from corporations, mutual funds, insurance companies, or it comes from
Speaker 4: the Fed right and the Fed quietly they were reducing
Speaker 4: their balance sheet ownership of treasuries ninety five billion a month.
Speaker 5: They quietly moved that down.
Speaker 4: To retiring sixty billion, and now they're down to twenty
Speaker 4: five billion rate. It's because they worry about the Treasury mark,
Speaker 4: and so it's it just becomes a crowding out of
Speaker 4: other investments. And so you have to ask yourself out,
Speaker 4: what price does somebody say I'm not going to invest here,
Speaker 4: I'm going to go buy treasures.
Speaker 7: I love that you do it.
Speaker 1: We had a story on Bloomberg recently and I talked
Speaker 1: about longevity and the need for government to issue more debt,
Speaker 1: will need to higher rates, the impact we'll have on
Speaker 1: investors seeking out more productive ways to fund their penton
Speaker 1: liabilities and so on. So basically, you know, fewer bonds,
Speaker 1: more stocks and commodities. Hanneka come on in on this
Speaker 1: issue of debt and how that impacts perhaps you know,
Speaker 1: investment portfolios, retail institutional over the longer term.
Speaker 6: Well generally, helping clients understand how to manage for retirement
Speaker 6: is of course a very big topic. I'm sure it's
Speaker 6: a very big topic that is keeping everyone here in
Speaker 6: the coming days very very occupied. Right. The funding gap
Speaker 6: that exists both as an individual level and also at
Speaker 6: a state level that governments around the world can't really fund,
Speaker 6: is well understood. It's then what we do about it, right,
Speaker 6: and how we as investment managers offer better solutions to
Speaker 6: the advisors to work with their clients so they can
Speaker 6: actually have retire well with income. And with that, you
Speaker 6: have to have a portfolio that doesn't consist of securities
Speaker 6: but also provides income and has an opportunity for growth
Speaker 6: as well, which gets you into a combination of equity
Speaker 6: investing and possibly alternative investing, which is of course the
Speaker 6: strength that's been long underway and as a manage, but
Speaker 6: you need to have a more holistic view in terms
Speaker 6: of what you want to achieve as you move into
Speaker 6: a retirement and how you're going to meet effectively your
Speaker 6: liabilities once you're in retirement.
Speaker 1: Well, it makes me bring up kind of the debate
Speaker 1: over active versus passive. Right, It's been so easy, it
Speaker 1: feels like, for so long to just kind of buy
Speaker 1: the market by the index, right, But it does feel
Speaker 1: like with some of these big the de's that you
Speaker 1: laid out the big issues that you're going to have
Speaker 1: to be more selective in terms of reaching those retirement goals.
Speaker 7: Is that fair well?
Speaker 6: Active and passive is about costs and about outperformance. Right.
Speaker 6: So when you're in active, which we both are, but
Speaker 6: we also have be in my run, we also offer
Speaker 6: indexing products. So it's about how you both deliver outperformance
Speaker 6: and outperformance relative to market to clients, which is the
Speaker 6: active piece, but also how you combine it with passive
Speaker 6: so you can do it in a cost effective manner.
Speaker 6: So I think there's a room for both in client
Speaker 6: portfolio and it's really important to have those. But once
Speaker 6: you look at active, we also see that not that
Speaker 6: the majority of active managers underperform, right, It's really important
Speaker 6: to focus on performance. We're pleased to say that on
Speaker 6: the whole, our equity focused managers and fixed income managers
Speaker 6: do outperform over the long term, and that's critical.
Speaker 7: I mean, but I think what we.
Speaker 1: Have a guest on and forgive me, but like I'll
Speaker 1: look at someone's performance, I'm like, why are we talking
Speaker 1: to this person? They've underperformed for the past five years.
Speaker 4: Yes, all right, but all of you guys are responsible
Speaker 4: for risk adjusted returns because actually what happens the average
Speaker 4: investor is they love to be able to get the
Speaker 4: ride up. What kills them is the downside gas. And
Speaker 4: if you look at and this is where look, passive
Speaker 4: is inevitably going to outperform in lumpy markets like the
Speaker 4: Magnificent seven and momentum markets right where the more you
Speaker 4: put into the same stocks they go up.
Speaker 5: It's going to tend to outperform.
Speaker 4: Because a conscious risk adjusted manager is going to look
Speaker 4: at the magnificent seven in twenty twenty three and say, ooh,
Speaker 4: I think I should underweight these because I'm worried. And
Speaker 4: by the way, if you did, it ended up being
Speaker 4: a really good trade.
Speaker 5: You were underperforming.
Speaker 4: But now you're performing well because there.
Speaker 5: Was a flip.
Speaker 4: And if you look at the I think the market
Speaker 4: is healthier now than it was in twenty twenty three.
Speaker 4: It's broadening out. Their earnings are broadening out. You know,
Speaker 4: in twenty twenty three, it was rarely the Magnificent seven
Speaker 4: that was having earning growth and everything else was actually
Speaker 4: negative earnings. Now you've seen that come down dramatically, and
Speaker 4: it's the rest and you know, the rest of the
Speaker 4: four hundred and ninety three that have had positive earnings.
Speaker 4: And then if you look at the Russell two thousand,
Speaker 4: that earnings projects is like up thirteen percent this year
Speaker 4: and in twenty twenty five it's projected to go up
Speaker 4: to thirty one percent. We had to check the data twice, right,
Speaker 4: that's on the Rustle two thousand companies.
Speaker 1: I've heard more people talk about the Russell But because.
Speaker 4: You've had this underperformance in small cap, because everybody's been
Speaker 4: so focused on the big, you know, and the video
Speaker 4: is probably the only one in that group that's actually
Speaker 4: predicting continued growth, big growth in earnings. The other one's
Speaker 4: expansion has mostly been by market cap. So you know,
Speaker 4: again the active passive your job is risk adjusted returns
Speaker 4: for the experience of the you know, the entire trip.
Speaker 4: And I always say it's a little bit akin to
Speaker 4: if you were buying a car. I don't know why
Speaker 4: I've got two car analysis, but you know, if somebody
Speaker 4: said to you, drive down this road at the cheapest
Speaker 4: per mile, it's flat, it's straight, and it's well paved,
Speaker 4: you'd go with a car without any safety features. But
Speaker 4: if your journey of life takes you over the mountain
Speaker 4: in a snowstorm, you're gonna wish you had those safety features.
Speaker 4: And that's what looking at concentration risk, you know, sector versification,
Speaker 4: public privates. You know, that's the lifetime experience of investing,
Speaker 4: and that's what the active advisor and the active manager
Speaker 4: has to bring you.
Speaker 6: The tab No, I agree with you, but I also
Speaker 6: it's not about just one thing, right, So it's to
Speaker 6: combinate how you bring those active and passive solutions together
Speaker 6: to both manage to cost as well as all the
Speaker 6: factors that you were just setting.
Speaker 7: Out its goals, its costs, it's a lot of things.
Speaker 6: Yeah, but it's also concentration and risk management because clients
Speaker 6: hate nothing more than actually losing money, and they rather
Speaker 6: forego some upsides than losing money.
Speaker 1: Use that's something interesting to me in the back, and
Speaker 1: I was talking like knowing when to sell is also
Speaker 1: an important aspect a portfolio management.
Speaker 7: Yes, and I know, like everybodys at market.
Speaker 8: Time do it.
Speaker 1: I get that, But there is a point where you
Speaker 1: say good gains, maybe.
Speaker 7: I lock it in, yes, right, yes, And that's a
Speaker 7: part of it.
Speaker 6: It's the heart. It's one of the harder things to do.
Speaker 6: And I think I mentioned to here there was an
Speaker 6: interesting artic and the economist I don't know if you saw,
Speaker 6: Jenny that came at this weekend, which was showing talking
Speaker 6: about some research how hard it is for active managers
Speaker 6: to sell. So as a sort of sector, we're very
Speaker 6: good in making the case to buy, we're not always
Speaker 6: as disciplined when it comes to making the case to sell.
Speaker 6: And I think you should all our view is you
Speaker 6: should always look at a moment in time and determine
Speaker 6: where they're continuing to own a security will still generate
Speaker 6: upside from that moment in time, rather than look at
Speaker 6: the cumulative return or bank It comes perhaps a little
Speaker 6: bit from my own background in private markets, where you
Speaker 6: really tend to only have very rare opportunities to sell
Speaker 6: and generally the experience once you're better of selling early
Speaker 6: than holding on selling.
Speaker 7: Late too late.
Speaker 1: Question, have we hit a point of mania in the market,
Speaker 1: getting closing all the optimistic outlooks in the room?
Speaker 4: You know, if you look at the ratio of the
Speaker 4: non mag seven, it's still higher than average, right, So
Speaker 4: that would indicate that the market's pretty fully priced, except
Speaker 4: that you have earnings revision. I mean, earnings projections have
Speaker 4: been pretty good, and earnings revisions up is actually higher
Speaker 4: than average.
Speaker 5: You see things like productivity games.
Speaker 1: All the time ties on the markets, chasing all tied
Speaker 1: ties with the well.
Speaker 4: That's where again like i'd probably underweight that what has
Speaker 4: traditionally been the big winners And look at these other
Speaker 4: sectors and that's why you hear like small cap mid
Speaker 4: cap you know, kind of that technology that's not those
Speaker 4: big MAG seven type. So I think there's opportunities that.
Speaker 5: Are still there.
Speaker 4: And then I think when you go think about international, Uh,
Speaker 4: it's markets that are benefiting from this deglobalization of this,
Speaker 4: you know, decoupling the supply chain. So there's definitely it's
Speaker 4: it's about where you choose. And honestly, you know, like
Speaker 4: things like China.
Speaker 5: I actually think you're starting to see some green shoots
Speaker 5: in China.
Speaker 4: Finally, yeah, finally, and and you know they're pretty focused
Speaker 4: on when they want to do something, you know, to
Speaker 4: be able to do it, so you know there could
Speaker 4: there could even be opportunities open up there. And if
Speaker 4: you look at India which has had a huge run
Speaker 4: and what a surprise with the relection, So you know,
Speaker 4: again I think it's going.
Speaker 5: To be chopping. It's about where you choose.
Speaker 7: Market mania. What are you thinking?
Speaker 6: I think Jenny just explained it. Well, it is always
Speaker 6: going to There is mania in certain sectors, but it's
Speaker 6: not everywhere. It's been very much underpinned by the Magnificent
Speaker 6: Seven that we're very well aware of, so we focus
Speaker 6: very much away from that. But it's been hard. We've
Speaker 6: seen it in our portfolio. Is because those seven, when
Speaker 6: you look at twenty three, have really driven the upside
Speaker 6: and that is what investors on the whole have been chasing.
Speaker 6: But I think I think I'm with Jenny. I think
Speaker 6: it's going to turn to me. Some of it brought
Speaker 6: me back to the nineties. I used to come to
Speaker 6: New York and I always thought, you know, the symptom
Speaker 6: of mark and mania. I was sitting in those days,
Speaker 6: not in an uber Rickneyello and the cab driver asking
Speaker 6: me about Internet. So, oh, you're an investor, one about
Speaker 6: right and that stops right and you think online were
Speaker 6: We really are in a bubble. But we thought that
Speaker 6: for a long time, and I was part of an
Speaker 6: organization at the time which was focused on value. Is very,
Speaker 6: very hard. It's not this similar when your clients are
Speaker 6: chasing growth, so you have to keep looking at underlying fundamentals.
Speaker 3: That was Honikah Smith's and Jenny Johnson in conversation with
Speaker 3: Carol from their panel at bny Melon Pershing Insite conference
Speaker 3: in Nashville, Tennessee.
Speaker 1: Still had more of the conversation as we tackle the
Speaker 1: future of asset management, everything from tokenization to artificial intelligence,
Speaker 1: and how investment advisors are adjusting to all of these disruptions.
Speaker 3: More on Bloomberg Business Week.
Speaker 2: This is Bloomberg you're listening to the Bloomberg Business Week podcast.
Speaker 2: Listen live each weekday starting at two pm Eastern Apple
Speaker 2: Car Play and Royd Auto with the Bloomberg Business and You,
Speaker 2: and also listen live on Amazon Alexa from our flagship
Speaker 2: New York station, Just Say Alexa Play Bloomberg eleven thirty.
Speaker 1: Goodbye sixty forty Portfolio, Hello, sneakers and rare cars. The
Speaker 1: new rich are trading long standing investing tactics for more
Speaker 1: crypto heavy portfolios and a passion for collectibles. Roughly ninety
Speaker 1: four percent of gen Z and millennial investors are interested
Speaker 1: in collecting items such as watches, rare cars, and sneakers.
Speaker 1: That's according to a new survey of wealthy Americans by
Speaker 1: Bank of America.
Speaker 3: As we wrap Carol's conversation at the bny Mellon Pershing
Speaker 3: Insight Summit with Jenny Johnson, president and CEO at Franklin
Speaker 3: Templeton and Hanikah Smitt's, Senior Executive vice president and Global
Speaker 3: head of Investment Management at bny Mellan, we hear more
Speaker 3: on how things are changing and what investors are demanding.
Speaker 1: Talk a little bit more about what investors are really
Speaker 1: interested in today. We talk about a portfolio has a
Speaker 1: lot of moving parts credit, growth, value, income, all the assets. Jenny, right,
Speaker 1: there's lots of pieces to this.
Speaker 4: Well, when we talk about the maybe secular trends that
Speaker 4: I think are happening that are then informing sort of
Speaker 4: what your investments. I mean, in the ends, we as
Speaker 4: an industry talk about our benchmarks and this, and clients
Speaker 4: like do I have enough money to retire? Can I
Speaker 4: help my kids pay for their colleagues?
Speaker 6: Right?
Speaker 4: I mean that they have very specific goals, right, But
Speaker 4: you look at the big secular trends. One is private
Speaker 4: credit is here to stay. Banks are just because of
Speaker 4: the capital requirements that have been imposed on banks, they're
Speaker 4: not lending like they used to lend, and the private
Speaker 4: market has stepped in. And I don't have the same
Speaker 4: worry of this concept of shadow banking that you often
Speaker 4: hear about that because it's not like it's such a massive,
Speaker 4: bigger number. It's just it's moved from banks balance sheets
Speaker 4: into really funds that are you know, the investor knows
Speaker 4: their ill liquid so you don't have to worry about
Speaker 4: a run on it.
Speaker 5: So private credits here to stay.
Speaker 4: Private equity, I mean the fact is companies are just
Speaker 4: not going public as quickly. If you can remain as
Speaker 4: a private company and monetize you know, holdings for your
Speaker 4: employees and things, which is what's been able to happen.
Speaker 4: You see it in the data there. Just there's half
Speaker 4: the number of public companies and six times the number.
Speaker 7: Of about entrepreneurs.
Speaker 5: They're like, why would I go public?
Speaker 4: Why do I have to go do my earnings report
Speaker 4: every quarter when I need to invest in technology that
Speaker 4: may not pay off for three to five years. I'd
Speaker 4: rather be private to be able to do that. So
Speaker 4: I think those are the big trends, and now it's
Speaker 4: about managers figuring out how do they deliver that in
Speaker 4: a full portfolio, understanding the various characteristics of these kind
Speaker 4: of new segments and bring together a full portfolio too too.
Speaker 6: Sorry if I had jump in here, because now you're
Speaker 6: really looking at the trade offs between risk on risk
Speaker 6: managements and liquidity. Right, that is the biggest I've been
Speaker 6: on both sides, public and private, and we oversee like
Speaker 6: Jenny does, but today's worlds as well, both public and
Speaker 6: private investments. And by the way, it's not just that
Speaker 6: fewer companies are going public, there's also been the dlisting trends,
Speaker 6: so generally there's fewer public securities available today while the
Speaker 6: market caps are larger, so in a portfolio sense, you
Speaker 6: can still achieve your goals. The opportunities available to public
Speaker 6: investors are fewer, that's just the fact. So you have
Speaker 6: to increase your exposure to the to the real economy
Speaker 6: outside of public markets as well. It's really how you
Speaker 6: do it. And this is where the liquidity or access
Speaker 6: to liquidity comes in.
Speaker 1: It's a different liquidity, it's a very different you're a
Speaker 1: plane vanilla.
Speaker 6: It's an organized market, it's not a it's obviously not
Speaker 6: a liquid market. So you can create liquidity, but that
Speaker 6: might not always be the right thing when there's a crisis,
Speaker 6: because you end up being a forced seller and you
Speaker 6: may not achieve the right results for your client. So
Speaker 6: for us, in our roles, it's all about making sure
Speaker 6: our end clients understand is that we work with the
Speaker 6: advisors and all of you and the audience here to
Speaker 6: educate you so you can optimally allocate to the underlying
Speaker 6: asset classes. And the exciting part is they are available
Speaker 6: to the end clients, which wasn't really the case ten
Speaker 6: to fifteen years ago if we've been set here.
Speaker 4: Just to add to what Hanka said, you know, I
Speaker 4: think that the next phase of this private markets right
Speaker 4: now you kind of get it delivered in model portfolios
Speaker 4: with allocations and sleeves.
Speaker 5: There are vehicles.
Speaker 9: You know.
Speaker 4: The forty AC mutual fund, for example, allows up to
Speaker 4: fifteen percent illiquids because the sleeves still require somebody to
Speaker 4: be a qualified investor.
Speaker 5: Our Franklin Growth equity.
Speaker 4: Team has been investing in late stage venture in their
Speaker 4: mutual funds because they basically were running the numbers are like,
Speaker 4: we don't get the old IPO allocations that we used
Speaker 4: to get, and so they started to do because they're
Speaker 4: based in Silicon Valley, started to do these investments there.
Speaker 4: I think you're going to see more of that trend,
Speaker 4: and I think you're going to start to potentially see
Speaker 4: people use think what is it the thirty three Act
Speaker 4: or something where it was commodities. It's what the original
Speaker 4: gray scale bitcoin was in, but you have more flexibil
Speaker 4: I think you're going to start to see those types
Speaker 4: of vehicles where you're going to see a combination. So
Speaker 4: it's a one ticket, but it has a combination of
Speaker 4: ill liquid and liquid.
Speaker 1: Well, that's what I want to ask you the democratization
Speaker 1: of assets. Do you think in terms of private credit
Speaker 1: all assets, we need to increase the access for astor set.
Speaker 4: I actually think that you potentially. I know my teams
Speaker 4: internally probably don't love this, but I think potentially you're
Speaker 4: going to start to see fixed income teams the research
Speaker 4: for traditional fixed income and private credit to probably be combined.
Speaker 5: I don't know that it's that different. Interesting at the research.
Speaker 6: At and that's the same for equities too, right, Traditionally
Speaker 6: we're all students of companies ultimately, so you can you
Speaker 6: can own a company through a listed security and fixed
Speaker 6: or or the equity markets or through the private route.
Speaker 6: But how do we deliver that to the clients is
Speaker 6: what Jenny is talking about is different, But I think
Speaker 6: what he really wanted to get to in terms of
Speaker 6: the democratization of assets, this is also a technology story
Speaker 6: because this is also about organization, right, which is going
Speaker 6: to be really helpful in delivering that.
Speaker 1: So talk to us about in terms of changes to
Speaker 1: the asset management business and what you guys are doing
Speaker 1: to help advisors play with those two.
Speaker 6: Yeah, so a big change that we started to talk
Speaker 6: about is general technology right and AI, and that's also
Speaker 6: been a trend that's been long on the way, but
Speaker 6: it has been I think turbocharged to some extent in
Speaker 6: the pandemic as well, because we all really had to
Speaker 6: think how we were engaging with clients and invest much
Speaker 6: more in technology and digital digital delivery, so how we
Speaker 6: deliver our advice is much more powered by technology. How
Speaker 6: the product wrappers have changed. I know was your grandfather
Speaker 6: who was at the start of the mutual fund industry. Unfortunately,
Speaker 6: mutual funds are no longer and that's an industry trends.
Speaker 7: Which which shocks me.
Speaker 1: My first job in business news was a mutual fund
Speaker 1: show and teaching investors about mutual funds. I'm not that old,
Speaker 1: but I am amazed that the repetitive, the rapid.
Speaker 7: Cycles that were.
Speaker 6: But it's nowts cfs and SMAs and our mas and
Speaker 6: you know, our colleagues in Pershing are the are the
Speaker 6: second largest managed account provider and we're so One of
Speaker 6: the things we're doing and even was talking about is
Speaker 6: earlier and I think you might have heard Stephanie talk
Speaker 6: about it as well, is working with Purshing on what
Speaker 6: we call being more for our clients by bringing together
Speaker 6: the technology that exists on the both platforms, simplifying the
Speaker 6: life of the advisors. It is technology enabled but also
Speaker 6: bringing in investment management capabilities and doing that in a
Speaker 6: very cost effective manner. And the more that all of
Speaker 6: you end up doing for your clients with us, actually
Speaker 6: the more cost efficient it is going to be to
Speaker 6: the order of sort of forty percent discount. And I
Speaker 6: think that's very very meaningful. But a lot of that
Speaker 6: is really powered by technology and it's simplifying the advisor's life.
Speaker 6: And what it means is that the news advisors can
Speaker 6: actually spend more time with your end clients, which we
Speaker 6: know is really important.
Speaker 1: Which begs the question that came up on the call
Speaker 1: with one of you guys, the next generation, next gen advisor,
Speaker 1: is it even human?
Speaker 4: You know, money is emotional to people, and you probably
Speaker 4: have a lot of clients that are actually capable of
Speaker 4: managing their own money. But the more money you get,
Speaker 4: the more you realize it is it's not a part
Speaker 4: time job. Number one, and number two, the individual in
Speaker 4: the end wants assurances and there's an emotional component of it.
Speaker 4: So in nineteen ninety seven, the cover of Business Weeks
Speaker 4: said the Internet was going to be the death of
Speaker 4: the broker, and everybody's been calling the death of the.
Speaker 7: Pipers boom our Business Week.
Speaker 5: Anyway, I go ahead, you know, I just I don't
Speaker 5: see it. I don't think you know.
Speaker 4: And I always say, quantum investing works until it doesn't.
Speaker 4: You know, historical data of the last ten years works
Speaker 4: until the FED changes their mind and does something different,
Speaker 4: and then it affects it, and so you need it's
Speaker 4: that hybrid. It becomes a tool, and in the end,
Speaker 4: I think the client wants to be serviced. What the
Speaker 4: advisor is doing today is a lot more than they
Speaker 4: had to do in the past. They used to be
Speaker 4: just investment advisors. Now you're all really life planners for people.
Speaker 4: They probably have some clients that ask you to educate
Speaker 4: their next generation and engage with the next generation. You
Speaker 4: do a financial plan, so all those things still require
Speaker 4: that kind of human touch.
Speaker 1: Is that the smart conversation around AI, I mean AI
Speaker 1: correct into every conversation, not new generative AI, LMS, machine learning.
Speaker 1: It does take things to a different level. I mean,
Speaker 1: what is the smart kind of thought that these folks.
Speaker 6: Investments subject to us. It is about how you use it.
Speaker 6: It is very very smart where where we are using
Speaker 6: it and testing it and being my melon as well.
Speaker 6: I have my co pilot, but I also see with
Speaker 6: that that I need to train my co pilot for
Speaker 6: it to actually improve. It's still about pattern recognition.
Speaker 1: You actually spend time with your head of AI right
Speaker 1: to really understand this.
Speaker 5: Yeah, no, I was so.
Speaker 4: I ran the technology group for a while, so I
Speaker 4: have a decent background in technology, so I wanted to
Speaker 4: learn more about AI. And after I'd spent about an
Speaker 4: hour every two weeks going through it, and I finally
Speaker 4: got to the point I was like, okay, I got
Speaker 4: the machine learning. It's kind of regression analysis. I can
Speaker 4: understand a little bit on large language models and how
Speaker 4: you group these words.
Speaker 5: This and that.
Speaker 4: And then we finally got into a certain level and
Speaker 4: I said, I have reached the maximum capacity of my brain.
Speaker 4: I think that I am not smart enough to go
Speaker 4: to the next level. But what I will say is,
Speaker 4: if you look in history on technological advances, the first
Speaker 4: thing that has done is that you optimize what you
Speaker 4: do today. That's the stage we're in. We're all figuring out,
Speaker 4: you know, this spot can do this. It's that next line.
Speaker 4: And by the way, most of the investment returns in
Speaker 4: AI have been around the picks and shovels, the videos,
Speaker 4: the Microsoft c Amazon's those who are surrounding to be
Speaker 4: supportive of the tool. What's going to happen is the
Speaker 4: companies in various sectors who really figure out how to
Speaker 4: leverage AI as a competitive advantage in their business are
Speaker 4: going to be the winners, and others are going to
Speaker 4: fall off because they're not going to keep up. But
Speaker 4: the problem is just we're like at that stage where
Speaker 4: you got your iPhone and you said, oh, it's pretty cool.
Speaker 4: I've got, you know, a flashlight and a phone and
Speaker 4: music and a camera. But what we didn't all appreciate
Speaker 4: is that Apple was unlocking the creativity of the people, right,
Speaker 4: but it took time for people to understand how to
Speaker 4: use it to You didn't even know all the apps
Speaker 4: that you needed that you need today, that you actually
Speaker 4: needed when it first came out. That's where we are
Speaker 4: with AI. We don't yet know when you start to
Speaker 4: combine models, because a large language model takes a whole
Speaker 4: different programming team than an AI that's looking at images
Speaker 4: or an AI that's doing quantitative You know the chat
Speaker 4: GPT is great at language, it's terrible at maths. Right,
Speaker 4: That's tough technology problem to solve.
Speaker 3: Our thanks to Jenny Johnson, president and CEO at Franklin
Speaker 3: Templeton and Anika Smith's Senior Executive VP and Global Head
Speaker 3: of Investment Management at bny Mellon. That from Carrol's panel
Speaker 3: at the bny Mellon Pershing Insight earlier this month in Nashville.
Speaker 3: Catch the full chat at bnymellon dot com.
Speaker 2: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 2: live weekday afternoons from two to five pm. Easter Listen
Speaker 2: on Applecardplay and then Broun Auto with a Bloomberg Business
Speaker 2: act or watch us live on YouTube.
Speaker 1: Plenty. A head in our second hour of the weekend
Speaker 1: edition of Bloomberg Business Week, including acceptance of the LGBTQ
Speaker 1: plus community with the president and CEO of GLAD and
Speaker 1: how this year's Pride Month festivities come at a complicated time.
Speaker 3: Plus the doctor who's been on call through some of
Speaker 3: the US's toughest health crises and on call for seven presidents,
Speaker 3: Doctor Anthony Fauci, will be with us.
Speaker 1: First up this hour, we like to talk about alternatives
Speaker 1: here at Bloomberg and as Bloomberg BusinessWeek contributor Rob Mandelbaum
Speaker 1: recently wrote in a story for Bloomberg Business Week, the
Speaker 1: development of alternative and online MBA programs is in vogue
Speaker 1: today as traditional business schools simultaneously grow more expensive and
Speaker 1: less popular.
Speaker 3: One company offering such a program is the corporate training
Speaker 3: firm Ability, which has a comprehensive business skills course that
Speaker 3: stylized as a twelve week MBA. The program is built
Speaker 3: around simulations of real life business and management decision making.
Speaker 3: For more on this alternative NBA, we're joined by Bloomberg
Speaker 3: New Senior editor Dimitro Cassanides and the CEO Ability Beyond,
Speaker 3: Bill Hart.
Speaker 10: The truth is there in the US right now, one
Speaker 10: hundred and fifty thousand new MBAs every year and over
Speaker 10: a million new management positions. So close to ninety percent
Speaker 10: of new managers never set foot in a MBA in
Speaker 10: the Hollard Halls of Harvard or other NBA schools, and
Speaker 10: so there's this huge gap of people that have an
Speaker 10: undergraduate degree in history and biology but are moving into
Speaker 10: corporate jobs and need to understand what an statement, what
Speaker 10: a balance she looks like. As they become a leader
Speaker 10: of people, they need to understand how to manage others.
Speaker 10: They need to understand how to collaborate in cross functional projects.
Speaker 10: And so there's this need where ninety percent of the
Speaker 10: people moving into these leadership roles don't have the time,
Speaker 10: don't have the energy to get it to be your
Speaker 10: heea perhaps or the money exactly, Demeter, I want.
Speaker 1: To bring you into it when this came across your
Speaker 1: desk when you're talking to Rob, what is it that
Speaker 1: you wanted to know about in kind of what is
Speaker 1: going on? And what do you want to ask our guests?
Speaker 11: Yeah, I mean the first question was what are you
Speaker 11: intending to do because you're calling it the twelve week MBA,
Speaker 11: But beyond that, it was really to get a better
Speaker 11: sense of what can you reasonably teach in that period
Speaker 11: of time and.
Speaker 5: How can you do it?
Speaker 11: They're doing it, you know, largely online. You know, what
Speaker 11: are we going to see in the way of these programs,
Speaker 11: because I think there is It's not just the number
Speaker 11: of positions that jorn mentions, there's the interest and the
Speaker 11: desire to move into those positions. Because of the potential
Speaker 11: that they offer for earnings and more. And yet business
Speaker 11: schools are incredibly expect so you know, what can you
Speaker 11: actually train for in the way that you're training and
Speaker 11: is that really going to make a difference when they
Speaker 11: land in that job? Is it actually going to serve them?
Speaker 10: Great question, And the truth is in twelve weeks, it's
Speaker 10: also not just twelve weeks. It's part it's part time,
Speaker 10: and it's virtual. So it is a very short certificate program.
Speaker 10: It's not a full MBA. Of course, it is not
Speaker 10: meant to be. The truth is though, that most people
Speaker 10: don't need all of the things that you learn in
Speaker 10: a two year program in business. This is not like
Speaker 10: law school or medical school, where you don't want a lawyer,
Speaker 10: you don't want a doctor operating on you without a
Speaker 10: full degree. It is very clear that there are a
Speaker 10: lot of business leaders that are extremely successful without ever
Speaker 10: having had an MBA. So unlike those other professional certificates,
Speaker 10: there isn't necessarily the need to learn two years worth
Speaker 10: of study. And so for many people who don't have
Speaker 10: the luxury of going back to an MBA, there's an alternative.
Speaker 1: To build a one to meet you said that These
Speaker 1: are people that aren't going to be CEO, but are
Speaker 1: going to be other type of managers. Like, who is
Speaker 1: this for?
Speaker 10: It's for anyone that is moving into leadership roles in companies,
Speaker 10: always planning to move into leadership roles over the next
Speaker 10: five ten years.
Speaker 1: Or is it like an executive you know program?
Speaker 10: It's like that, but it's not for executives, right, So
Speaker 10: the executive MBAs are very expensive. They're twenty thousand and
Speaker 10: thirty thousand dollars. Sometimes this program is two thousand dollars,
Speaker 10: so it's a it's the price of a conference that
Speaker 10: someone can go to. So it's meant for people that
Speaker 10: are not at the executive's level level, at the executive
Speaker 10: level yet, but that are thinking about maybe becoming a
Speaker 10: team manager or are starting to manage others, starting to
Speaker 10: get into leadership roles where understanding and income statement balance
Speaker 10: sheet is becoming more important.
Speaker 6: Right.
Speaker 3: I do want to know about the content of the courses,
Speaker 3: because one thing that I found so interesting about Rob's piece,
Speaker 3: Bjorn is the gamification here and the idea that you're
Speaker 3: sort of competing with other folks and AI is kind
Speaker 3: of the backdrop here. Explain what the course work is
Speaker 3: because it's it's not necessarily what you'd find in a
Speaker 3: quote unquote traditional business school.
Speaker 10: Yeah, and I think that's the other disruption that I
Speaker 10: think is happening now. So the in the twelve week NBA,
Speaker 10: there are no lectures, there are no power points, there
Speaker 10: is no e learning. In those twelve weeks, you're actually
Speaker 10: in a simulated environment where you become CEO of a company.
Speaker 10: You have to compete with others and virtual teams, and
Speaker 10: it's super fun, super engaging and allows you to see
Speaker 10: business from different vantage points vantage point CEO, vantage point
Speaker 10: of VP of sales operations and learn by doing, learn
Speaker 10: by making mistakes and then having a facilitator who comes
Speaker 10: in and points out what mistakes were made as the
Speaker 10: teams competed with each other.
Speaker 3: Facilitator being another person or is this like another part
Speaker 3: of AI.
Speaker 10: No, there's actually real These are not AI facilitators. It's
Speaker 10: actually real facilities. We actually have a lot of business
Speaker 10: school professors as well as retired executives that teach in
Speaker 10: the curricular.
Speaker 11: But everything is all entirely online and remote. I mean,
Speaker 11: are they missing something by not having that sort of
Speaker 11: in person human element. I mean even schools today that
Speaker 11: have had very successful online programs, they're trying to find
Speaker 11: a way to incorporate something where the people are coming together.
Speaker 10: You know, it's a fantastic question. And we actually started
Speaker 10: the twelve week MBA as an in person program and
Speaker 10: then when the pandemic hit, we didn't have a choice
Speaker 10: of moving online, but was really interesting and fascinating. This fall,
Speaker 10: we're actually moving part of it back into the classroom,
Speaker 10: so we're going to have a capstone experience that people
Speaker 10: can fly into based in Austin, Texas. So it's going
Speaker 10: to be an Austin at least the first one, but
Speaker 10: we're going to actually slightly modify the curriculum from an
Speaker 10: all online curriculum to have at least one weekend where
Speaker 10: people get together and have that in person experience.
Speaker 11: And that was based on was it feedback, I mean again,
Speaker 11: a feeling that there's something that they're missing out on
Speaker 11: when they're not in person, and there's an aspect of
Speaker 11: this education that really does need to you need to
Speaker 11: connect with people.
Speaker 10: Yeah, I think so much of education is social. It's
Speaker 10: a difference between knowledge transfer and education is actually that
Speaker 10: social environment. And there's some of it that you can
Speaker 10: recreate online, and I think we've done a pretty good
Speaker 10: job creating some of these virtual simulations and competitions, but
Speaker 10: there's something that is so important about this human element
Speaker 10: when you're in person, when you're at the bar after
Speaker 10: the competition, and you can debrief with your peer, and
Speaker 10: so we want to bring that.
Speaker 3: Back our Thanks to beor Bill Hart, CEO of Ability,
Speaker 3: and Dimitro Cassinid's Bloomberg News Senior editor.
Speaker 2: You're listening to the Bloomberg Business Week podcast. Listen live
Speaker 2: each weekday starting at two pm Eastern Dot applecar Play
Speaker 2: and Android Auto with the Bloomberg Business ad. You can
Speaker 2: also listen live on Amazon Alexa from our flagship New
Speaker 2: York station, Just Say Alexa Play Bloomberg eleven thirty from.
Speaker 1: An alternative NBA program to All Finance, the nonprofit which
Speaker 1: is also helping to train the next generation of professional
Speaker 1: financial investors by working with students at historically black colorges
Speaker 1: in universities, also known as HBCUs.
Speaker 3: Marcus Shaw's president and CEO at All Finance, which has
Speaker 3: a ten year, ninety million dollar commitment to reduce the
Speaker 3: underrepresentation of people of color in the world of private equity.
Speaker 9: So All Finance is a nonprofit that was seeded by
Speaker 9: areas oak Tree and Apollo really to address what we
Speaker 9: believe are unfortunate underrepresentation in the alternative investment industry. That's
Speaker 9: private equity, private credit, real estate, infrastructure, all of your
Speaker 9: non traditional investment asset classes. And so those three companies
Speaker 9: decided that in the wake of George Floyd and a
Speaker 9: lot of the racial conversations that were happening back in
Speaker 9: twenty twenty one, that they wanted to actually commit to
Speaker 9: solving the problem by developing a broader pool of talent
Speaker 9: from historically black colleges and universities.
Speaker 3: So I'm so glad you brought up the history here
Speaker 3: because we spent a lot of time on our program
Speaker 3: and here at Bloomberg News as well, going through the
Speaker 3: promises that companies made in the wake of the twenty
Speaker 3: twenty protests after the murder of George Floyd, and also
Speaker 3: the pushback, especially in recent months to these DEI efforts
Speaker 3: as well, which have been well documented according to changes
Speaker 3: in company filings as well. I'm wondering if you're still
Speaker 3: seeing the same support from these companies that you were
Speaker 3: seeing four years ago.
Speaker 9: So absolutely. We're continuing to see that support, not only
Speaker 9: in terms of dollars, but in support in terms of
Speaker 9: commitment from the professionals that work there. And from my perspective,
Speaker 9: this is really about talent. No matter what business you're in,
Speaker 9: whether you're in the news business, you're in tennis, you're
Speaker 9: an athlete, no matter what you are, what you want
Speaker 9: to see is the best talent. And so if we
Speaker 9: can do that in sports, which is the ultimate meritocracy,
Speaker 9: why shouldn't we do it in other arenas?
Speaker 7: And do they stay in the industry?
Speaker 12: Do you have like you know some can you share
Speaker 12: with us, like how their careers progress, and like you
Speaker 12: know what's like the uh I guess attrition so speak?
Speaker 9: Yeah, so you know, we have early signals. We graduated
Speaker 9: our first class last year. We had fourteen seniors graduated.
Speaker 9: All of those seniors are still working in and around
Speaker 9: the industry. They're finding early success to their firms. I
Speaker 9: think one thing that we all know is the first
Speaker 9: year of being an analyst in financial services is very,
Speaker 9: very tough, right, you know, I think it's equivalent to
Speaker 9: being a resident in medical school, or maybe you know,
Speaker 9: your first week at boot camp in the armed forces.
Speaker 9: It's it's tough whether no matter what your background is.
Speaker 9: So I think what we're seeing is success because students
Speaker 9: feel more comfortable, They've built relationships, they have understanding of
Speaker 9: what the workplace looks like, and so we've been able
Speaker 9: to galvanize some of the risk that students normally would
Speaker 9: experience by building this incredible network around them.
Speaker 3: Okay, speaking of backgrounds, a little more about you. You
Speaker 3: spent twenty years in nonprofit. In finance, you were at
Speaker 3: Height Analytics, Piedmont Investor Advisors, Bank of America's Securities. I
Speaker 3: want to know why alternatives of all parts of the
Speaker 3: finance ecosystem, all parts of Wall Street, why is private
Speaker 3: equity and alternative investments place you wanted to focus on
Speaker 3: for all finances.
Speaker 9: It's a great question, and I think, as with other things,
Speaker 9: the evolution of an industry breeds interests and breeds innovation.
Speaker 9: When I came out of business school, sales and trading
Speaker 9: cash sales and trading inequities was incredibly important. I mean,
Speaker 9: you saw people coming out of business school that wanted
Speaker 9: to be a trader on a cash equities desk. You
Speaker 9: saw people that were traditional fixed income roles. You fast
Speaker 9: forward twenty or twenty five years to where we are now.
Speaker 9: The most interesting, the most erudite people on Earth are
Speaker 9: working in alternatives. They're working in private equity, they're working
Speaker 9: in private credit. Private credit is an industry, a subsector
Speaker 9: of alternatives that we've seen incredible growth in just three
Speaker 9: years from the beginning of this organization to where we
Speaker 9: are now. We have students that are going into private
Speaker 9: equity direct and landing private market deals in the credit
Speaker 9: space that didn't know about it when they started college.
Speaker 12: You know, talk about as well, how much this even
Speaker 12: just affects you know more like not in the alternative space,
Speaker 12: but just you know, right Wall Street banks, and like
Speaker 12: what if anything, if you have a relationship with increasing
Speaker 12: diversity at mainstream, more mainstream financial.
Speaker 9: Firms, It's all part of the ecosystem. And traditionally, in alternatives,
Speaker 9: folks would go through analyst programs at a traditional bulgracket bank,
Speaker 9: they go through associate recruiting, and they would then find
Speaker 9: their way into a private equity firm or a private
Speaker 9: creaditut real estate or infrastructure. What we're seeing now, and
Speaker 9: some of this is just a supply and demand dynamic.
Speaker 9: Some of this is the growth of the industry that
Speaker 9: many alternative investment firms are starting their own analysts programs
Speaker 9: because they need talent earlier. Or Again, this is not
Speaker 9: strictly about diversity. This is about talent. It's you know,
Speaker 9: I use the analogy of sports a lot, because they're
Speaker 9: wins and losses. In sports, it's ones and zero. It's
Speaker 9: fairly binary. If we look at success in the business
Speaker 9: world the same way, we'll recognize that bring talent from
Speaker 9: all corners of the earth, from all experiences will increase
Speaker 9: our outcomes. And so for banks, I think I think
Speaker 9: they started to see this early on, but as their
Speaker 9: clients right, some of these alternative investment shops are doubling
Speaker 9: down on that. I think banks are encouraged to do
Speaker 9: the same.
Speaker 3: Marcus, I want to talk about your background and then
Speaker 3: how it plays into what you're doing at ALT Finance.
Speaker 3: You have a dual degree from Georgia Tech, but also
Speaker 3: an HBCU Morehouse, Yes, in electrical engineering and mathematics mathematics,
Speaker 3: and then you went off and got an MBA over
Speaker 3: at Duke. Talk a little bit about HBCUs and why
Speaker 3: you're focused on HBCUs as the pipeline for all finance.
Speaker 9: So HBCUs are an important part of the fabric of
Speaker 9: this country. They have produced leaders in this country for
Speaker 9: the past one hundred and fifty years. And I mean
Speaker 9: the and when you're talking about diversity and bringing talent,
Speaker 9: about defining a strategy specifically around HBCUs, this critical pool
Speaker 9: to success. In fact, HBCUs it's a federal designation under
Speaker 9: the Civil Act, right, So this is about identifying students
Speaker 9: at schools that have historically produced leaders and bringing them
Speaker 9: into the economy. One of the things that I experienced
Speaker 9: in Morehouse and you know, my time there was something
Speaker 9: that I look upon as the finest years of my life,
Speaker 9: is that really you go to that school to be
Speaker 9: bred as a leader. That's the focus. If you want
Speaker 9: to be a great warfighter, you go to the Service Academy.
Speaker 9: You want to be a great physician, you go to
Speaker 9: John Hopkins. You want to be a great tech leader,
Speaker 9: you go to Stanford or you know wherever. But if
Speaker 9: you really want to learn how to lead, Morehouse was
Speaker 9: a great school for me. And so I look at
Speaker 9: that school and my time there as really development in
Speaker 9: leadership and not just leadership of people that look like me.
Speaker 9: The leadership of all people because it creates an opportunity
Speaker 9: for you.
Speaker 3: Did you feel like when you were getting your MBA
Speaker 3: and you were around a bunch of people who were
Speaker 3: basically in school to become leaders, you were a step
Speaker 3: ahead of them.
Speaker 9: Yeah. I mean I think for me it was because
Speaker 9: of the experiences, the lived experiences that I had morehouse
Speaker 9: with part of that, but the human element, right, My
Speaker 9: background traditionally was engineering as an engineer, and went to
Speaker 9: business school and fell into finance and financial assets. For
Speaker 9: what we covered for a long time, it's what you
Speaker 9: guys talk about in earnings. But the more complicated and
Speaker 9: honestly the more important asset is humans. Why do humans
Speaker 9: do what they do? How do they make decisions? How
Speaker 9: do they think about risk? And ultimately everything else is
Speaker 9: a derivative of that. Being able to bring that experience
Speaker 9: to Duke to the future school of business, having some
Speaker 9: of that developed at Morehouse, having some of that developed
Speaker 9: my parents. My father was a military officer, my mother
Speaker 9: was a school teacher. It's basically eighteen years of a
Speaker 9: lesson in how to deal with people. I went to
Speaker 9: a Quaker school how to deal with people peacefully? Right,
Speaker 9: It really creates a pathway for you to think about
Speaker 9: how to solve big problems like what we're doing at
Speaker 9: all Finance.
Speaker 12: So tell us then, if you're right now a student
Speaker 12: at an HBCU, how do you get involved with All Finance,
Speaker 12: Like where is the connection?
Speaker 8: You know?
Speaker 12: At what level of your studies and is this going
Speaker 12: to help you also get.
Speaker 6: An internship for a job? Like how does the process work?
Speaker 9: Yeah, so All Finance Number one, I would point everybody
Speaker 9: to our website allfinance dot com. That's l FI n
Speaker 9: A n CE dot com. There you can learn more
Speaker 9: about our program. So we have two programs that we
Speaker 9: run and really put our focus on today. One is
Speaker 9: our Fellowship, which is a multi year program focused on
Speaker 9: students at eight of our partner HBCUs, Clark Atlanta University,
Speaker 9: Morehouse College, Spelman College, Howard University, North Carolina, and t FAMU,
Speaker 9: Hampton University, and Morgan State.
Speaker 12: So that was eight accounted eight got it?
Speaker 2: Got them?
Speaker 9: Yeah, got them. So we have eight schools that we
Speaker 9: work with directly. Our program has quickly become one of
Speaker 9: the standout co curricular programs at those schools and so
Speaker 9: students apply to that. We just went for our fourth
Speaker 9: round or our fourth cohort, and we have fifty seven
Speaker 9: incredible students from all eight of those schools that are
Speaker 9: joining our platform. But if you're at one of the
Speaker 9: other one hundred or ninety four, HBC use that exists,
Speaker 9: or they're one hundred and foards of ninety six, I'm sorry,
Speaker 9: HBC use that exists. We have a platform called the
Speaker 9: All Finance Institute, which we partnered with the Warden School
Speaker 9: of Business at the University of Pennsylvania to develop a
Speaker 9: co curricular digital platform that gives students access to both
Speaker 9: non academic and academic content supporting their development in finance,
Speaker 9: investments and alternative investments.
Speaker 3: Are you getting gender diversity because there's a challenge on
Speaker 3: Wall Street, Yes, when it comes to the balance of
Speaker 3: men and women, And I'm wondering if you see that
Speaker 3: in private equity as well outside of your program.
Speaker 9: So that does exist outside of our program. They're fantastic
Speaker 9: organizations like Girls who Invest incredible shout outs to the
Speaker 9: work that they're doing. We actually have a few Girls
Speaker 9: who Invest fellows also in our program. So doesn't need
Speaker 9: to be competition amongst groups that are trying to increase
Speaker 9: the talent pool right.
Speaker 12: Instern sectionality, as we say.
Speaker 9: The intersectionality Molly, great word, thank you. Intersectionality is really
Speaker 9: where the recipe for success can be multiplied, right in
Speaker 9: terms of what All Finance is doing, and this is
Speaker 9: a byproduct of working with HBCUs where there is an
Speaker 9: over representation of women and on HBCU campuses. Black women
Speaker 9: are one of the highest and fastest educated group of
Speaker 9: people in the United States, and so the fact that
Speaker 9: they show up on HBCU campuses is really a win win.
Speaker 9: Forty five percent of the women in our program or
Speaker 9: forty five percent of the fellows in our program are women,
Speaker 9: which I would put that number up against any financial
Speaker 9: services firm.
Speaker 12: I wouldn't think it's anywhere near fifty to fifty.
Speaker 9: Right, And so by working with an organization like All Finance,
Speaker 9: not only are you getting incredible diverse talent, but you're
Speaker 9: also making sure that you're getting well trained women.
Speaker 6: Totally.
Speaker 12: Yeah, I mean what are I mean, what do you
Speaker 12: hear specifically from the women? Then as far as their
Speaker 12: feedback and coming into some of these workplace settings.
Speaker 9: It's a challenge, right. I think that you know, number one,
Speaker 9: being a minority, but also being a gender minority or
Speaker 9: being a woman not a gender minority in the grand scheme,
Speaker 9: because I think there's there is are challenges, and a
Speaker 9: lot of those challenges are culture driven, right, and the
Speaker 9: firms aren't a monolith. Some firms have really really strong
Speaker 9: inclusive cultures. I like to think that our partners areas
Speaker 9: Oaksture and Apollo have incredibly inclusive cultures and have done
Speaker 9: very very well and continue to do well in welcoming
Speaker 9: women into the workplace. But the industry in and of
Speaker 9: itself has had challenges.
Speaker 3: Why do you think that you've been so successful when
Speaker 3: it comes to the gender balance with the with the
Speaker 3: fellows compared to the recruiting at some of these firms.
Speaker 9: We're very intentional about it. I mean, if something, if
Speaker 9: there is a pool and I see that we don't
Speaker 9: have what I believe is a representative number of women
Speaker 9: in the pool, we put more effort into recruiting really
Speaker 9: great women into our program. Right. Then once you're in
Speaker 9: the program, we put a lot of effort into making
Speaker 9: sure that everybody has the shared time to grow and develop. Right,
Speaker 9: that we don't let time. We try not to let
Speaker 9: people dominate time, right, We try not to let the
Speaker 9: natural inertia of a male dominated industry filter its way
Speaker 9: into our program.
Speaker 4: Right.
Speaker 9: We believe that our program is a position of growth
Speaker 9: for men and for women, for sophomores, for juniors and seniors,
Speaker 9: and that in order for us to maximize the total
Speaker 9: output of what we're trying to do, we have to
Speaker 9: make sure that we allow maximum opportunity for everybody that's involved.
Speaker 12: Last thirty here for you, Marcus. So this marks year
Speaker 12: four of the initial ten year commitment by those three
Speaker 12: founding firms. What do we look at for the next
Speaker 12: ten years they sign up for more.
Speaker 9: Look, I think they appreciate what we're doing, but the
Speaker 9: reality is the burden of what we're doing should not
Speaker 9: follow on three firms. There are thousands of firms that
Speaker 9: are doing this across the globe. We'd love to have
Speaker 9: global reach, but they're firms right here in New York City,
Speaker 9: right around this office that would benefit from a partnership
Speaker 9: with all Finance.
Speaker 3: And you'd accept that partnership right away. Very are you
Speaker 3: getting incoming?
Speaker 9: We are getting incoming. The proof is in the putting,
Speaker 9: as one of our HBCU presidents said, and I thought
Speaker 9: I might get that tattooed on me. But he said,
Speaker 9: you've proven the concept, right. We've proven the thesis. We
Speaker 9: get a significant amount of inbound calls with people interested
Speaker 9: about how to work with our fellows. But I think
Speaker 9: the reality is the returnal investment is happening for the
Speaker 9: firms that made the commitment. You cannot do this for free,
Speaker 9: and so we want other firms to make a commitment
Speaker 9: as well.
Speaker 3: And I imagine next time you're with us, we might
Speaker 3: have some more firms who have signed on. Marcus Shaw,
Speaker 3: President and CEO over at Halt Finance.
Speaker 2: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 2: live weekday afternoons from two to five pm Eastern Listen
Speaker 2: on Apple, card Play and The brout Otto with a
Speaker 2: Bloomberg Business act or warned us live on YouTube.
Speaker 1: Doctor Anthony Fauci became a household name during the COVID pandemic. However,
Speaker 1: his journey to becoming at the top infectious disease doctor
Speaker 1: in the United States started decades before, and really to
Speaker 1: his childhood back in Brooklyn, New York and living with
Speaker 1: his family above his dad's pharmacy, the Fauci Pharmacy.
Speaker 3: He was a basketball player in high school, went on
Speaker 3: to become a doctor and then spent fifty four years
Speaker 3: at the National Institutes of Health, thirty eight of them
Speaker 3: as the Director of the National Institutes of Allergy and
Speaker 3: Infectious Diseases. During that time, he advised seven presidents on
Speaker 3: various diseases, including AIDS, Ebola, SARS, COVID nineteen and more.
Speaker 3: Doctor Fauci writes about it all in his new memoir
Speaker 3: On Call, a Doctor's Journey in Public Service.
Speaker 1: You kept a lot of notes, and I'm curious, we
Speaker 1: are curious what it was like going through that those notes,
Speaker 1: putting this book together, going back to your notes of
Speaker 1: the AIDS crisis, or STARS or COVID for that matter,
Speaker 1: anything anytime in particular that made you stop, that really
Speaker 1: took you back in a big way.
Speaker 8: When you remember things in your mind forty years down
Speaker 8: the pike and you go back over some of the
Speaker 8: notes that you made back in very stressful times, like
Speaker 8: those terrible early years of HIV, when I was spending
Speaker 8: most of my time taking care of desperately ill, mostly young,
Speaker 8: otherwise previously healthy gay men who were suffering terribly and
Speaker 8: then almost inevitably dying. It really brings back. What I've described,
Speaker 8: and I mean that honestly is almost a post traumatic
Speaker 8: stress feeling of my goodness. I went through that, and
Speaker 8: I had to suppress all of those feelings. And then
Speaker 8: when you start to write your memoir, in order to
Speaker 8: write it properly, you have to go back and re
Speaker 8: examine those experiences and re examine those feelings. So we
Speaker 8: you know, what I went through was a journey, but
Speaker 8: writing the memoir was itself a journey for me.
Speaker 9: You know.
Speaker 3: I want to stay on this topic here because I
Speaker 3: think it's fair to say there's a generation out there
Speaker 3: that really has no idea about the AIDS health crisis,
Speaker 3: and we should remind people there have been more than
Speaker 3: eighty six million HIV infections throughout the world forty million deaths.
Speaker 3: There's a part in your book where you write about
Speaker 3: a visit to the White House in nineteen ninety six,
Speaker 3: nearly thirty years ago, when then President Clinton asked you
Speaker 3: why there was no HIV vaccine. Why is an HIV
Speaker 3: vaccine still so elusive.
Speaker 8: Well, it's a very unusual virus in which the body,
Speaker 8: for reasons we still don't completely understand, does not make
Speaker 8: an adequate immune response to protect from or even clear
Speaker 8: the virus from the body. Most every other pathogen that
Speaker 8: we get infected with mankind civilization, even things that have
Speaker 8: a fair degree of more teen like smallpox and measles
Speaker 8: and the crippling effect of polio. At the end of
Speaker 8: the day, most people clear those viruses from the body,
Speaker 8: and the body's immune response serves as a model for
Speaker 8: how you should make a vaccine to protect a person
Speaker 8: who's uninfected from getting infected. But we don't have that
Speaker 8: kind of a situation with HIV because once a person's infected,
Speaker 8: there are virtually no instances that are documented of someone
Speaker 8: who's actually spontaneously cleared the virus. There's a very small
Speaker 8: percentage of elite controllers who can control the virus, but
Speaker 8: there's no real evidence of anyone actually on their own,
Speaker 8: through their own immune system, clearing the virus. That's a
Speaker 8: very high bar for a vaccine to be able to do,
Speaker 8: because you want to do better than what even natural
Speaker 8: infection does. And that's the reason why, among all the
Speaker 8: difficult diseases, we just don't yet. I think we may
Speaker 8: get it because science will figure out a way to
Speaker 8: do it, but it's been very difficult because of the
Speaker 8: unique nature of HIV.
Speaker 1: I'm always amazed at doctors who are in very difficult
Speaker 1: situations and then but stay very level headed and stay cool,
Speaker 1: and you have to, I would assume, But I do
Speaker 1: think about your time with HIV and AIDS victims ultimately,
Speaker 1: you know, because you write your book, you think of
Speaker 1: the years from eighty two into the late nineteen eighties
Speaker 1: as the dark years of your medical career. I mean,
Speaker 1: you got to know a lot of these patients. How
Speaker 1: I just can't even imagine how difficult it was.
Speaker 8: Well, it was terribly difficult, I mean, and it was
Speaker 8: even made more difficult by the contrast with what I
Speaker 8: had been doing in the prior nine years before we
Speaker 8: started seeing individuals with HIV, before it was even known
Speaker 8: to be HIV in nineteen eighty one. My career had
Speaker 8: been quite successful, you know, parenthetically in developing therapies for
Speaker 8: inflammatory diseases and order immune diseases, and we developed some
Speaker 8: protocols that had diseases that were formally fatal have ninety
Speaker 8: ninety three ninety five percent remission rates. So we were
Speaker 8: on a real high, as it were, for accomplishments, and
Speaker 8: then all of a sudden you devote the rest of
Speaker 8: your medical career of taking individuals taking care of individuals
Speaker 8: to a disease. For the first several years, essentially all
Speaker 8: of our patients died with very very few exceptions. And
Speaker 8: you're right, you do get to know them, you develop
Speaker 8: a really good patient physician relationship, and you really care
Speaker 8: about them. I mean, you know, part of the art
Speaker 8: of the art and science of medicine is to care
Speaker 8: for your patients, not only care for their medical issues,
Speaker 8: but to care about them. And that was very tough,
Speaker 8: and it was several years because remember we started I
Speaker 8: did started taking care of persons with HIV in the
Speaker 8: fall of nineteen eighty one, very soon after the first
Speaker 8: cases were recognized, and then we did not get truly
Speaker 8: addic with therapy until nineteen ninety six. We got the
Speaker 8: beginnings of some therapy which kind of slowed the disease
Speaker 8: down starting in nineteen eighty seven with AZT, but it
Speaker 8: wasn't until the triple combination cocktail that showed that you
Speaker 8: could durably suppress virus to below detective level, but that
Speaker 8: wasn't until nineteen ninety six, so those were really difficult times.
Speaker 3: We're speaking with doctor Anthony Fauci, who's now a distinguished
Speaker 3: University professor at Georgetown. His new book out now. It's
Speaker 3: called On Call, A Doctor's Journey in Public Service.
Speaker 1: Doctor Fauci. In the book, you write about how former
Speaker 1: President Donald Trump way ask maybe after a tense moment
Speaker 1: or maybe an argument, are we okay?
Speaker 7: You know, and would mess it.
Speaker 1: You know, messaging would come back from his team or
Speaker 1: even Vice President Mike Pensis team too, that they love
Speaker 1: you, you know again, after maybe some tense moments. You've served
Speaker 1: seven presidents during your tenure, starting with Ronald Reagans all
Speaker 1: the way to President Biden. Are all presidential relationships complicated
Speaker 1: or was just that one in particular?
Speaker 8: No? No, this was a very and as I mentioned
Speaker 8: explicitly in the memoir, this was a complicated relationship, very
Speaker 8: unique relationship when you compare it with the relationship with
Speaker 8: other presidents, because we did in the beginning. I mean,
Speaker 8: even though right now the people who are in the
Speaker 8: Trump camp, you know, are very hostile to me, I
Speaker 8: had a very good relationship with President Trump, and we
Speaker 8: related well to each other. I describe it in the memoir.
Speaker 8: I don't know whether it was the rapport that two people,
Speaker 8: you know, who grew up in New York City to
Speaker 8: me in Brooklyn, and him and Queens had that kind
Speaker 8: of New York swagger relationship with each other, and it
Speaker 8: really was fine until I had to because of the
Speaker 8: fact that he was starting to say things that were
Speaker 8: just not correct from a public health and a scientific
Speaker 8: and medical standpoint. And I was put in a very
Speaker 8: difficult position, which I did not like, but I had
Speaker 8: to do it to preserve my own integrity as well
Speaker 8: as fulfill my responsibilities to the general public. To have
Speaker 8: to contradict him in a public way when I was
Speaker 8: asked publicly, is it going to go away like magic?
Speaker 8: And does hydroxychlorican work? Which it doesn't and it can
Speaker 8: actually harm you. That's when the relationship started to fray.
Speaker 8: And even when it did start to fray, I don't
Speaker 8: think that he wanted to have conflict with me, nor
Speaker 8: did I want to have conflict within.
Speaker 3: Well of conflict for better or for worse. You've become
Speaker 3: certainly a lightning rod in the dialogue about public health
Speaker 3: and in the dialogue about COVID, and I'm wondering if
Speaker 3: you have any regrets about your time at the as
Speaker 3: the nation's top doctor in recommendations, in recommending school closures,
Speaker 3: anything like that in hindsight, given what we know.
Speaker 8: Now well, first thing, that we were dealing with a
Speaker 8: historic catastrophic pandemic that ultimately killed one point two million
Speaker 8: Americans and more than seven million and probably closer to
Speaker 8: twenty million worldwide at the time, that we had to
Speaker 8: have that physical distancing and that's slowing down it. We
Speaker 8: used to call it flattened the curve when the recommendations,
Speaker 8: and you know, most people, because I was the communicator
Speaker 8: of that, because I had been communicating with the public
Speaker 8: for four decades about outbreaks that I was communicating with
Speaker 8: the public, there was the misinterpretation, understandably that I was
Speaker 8: making all the policy about doing things like shutting down
Speaker 8: and having physical distancing. I think at the time, when
Speaker 8: you make those decisions, you do it because you want
Speaker 8: to save lives. What the perfect decisions? No, would you
Speaker 8: like to have done a better job. Of course none
Speaker 8: of us did it perfectly, But the idea about at
Speaker 8: least slowing down and closing things for a while was
Speaker 8: the right decision. With masks, with shutting down with schools,
Speaker 8: the issue that we need to re examine importantly is
Speaker 8: how long you did that? And I think that's what
Speaker 8: we need to re examine because if you look back,
Speaker 8: I was the one that said we should open the
Speaker 8: schools as quickly and safely as we possibly could, because
Speaker 8: there is collateral damage when you keep schools closed for
Speaker 8: a long period of time.
Speaker 1: I am curious what you think the next big health
Speaker 1: crime this will be the US Surgeon General is warning about,
Speaker 1: you know, or what's put a warning on social media?
Speaker 1: For example, you know we're talking about flesh eating bacteria
Speaker 1: in Japan. What do you think is the next big
Speaker 1: health crisis and are we prepared for it?
Speaker 8: Well, you know, there are health crisises that are infectious diseases,
Speaker 8: which is my lane. I still think that we have
Speaker 8: to be very careful to be prepared better and prepared
Speaker 8: to respond to the inevitability of another pandemic of an
Speaker 8: infectious diseases because history has taught us that we've had
Speaker 8: pandemics since before recorded history, and we've had it in
Speaker 8: our own lifetime with COVID and one hundred years ago
Speaker 8: we had it with the nineteen eighteen pandemic of influenzas.
Speaker 8: So my feeling is that the thing that would be
Speaker 8: most abrupt and surprising would be another pandemic. But you
Speaker 8: can't predict that because pandemics are not predictable. But there
Speaker 8: are a lot of other health crises, some of which
Speaker 8: you mentioned yourself. I mean, I think the epidemic of
Speaker 8: OBCD in this country. I think the mental health crises,
Speaker 8: the issue with fentenol and other narcotics that are killing
Speaker 8: so many people. Yeah, those are the things that we
Speaker 8: need to address.
Speaker 1: Well, doctor Fauci, I appreciate getting some time with you.
Speaker 1: Thank you so much, Doctor Anthony Fauci. His new memoir
Speaker 1: on call, A Doctor's Journey in Public Service. Not new,
Speaker 1: it's his memoir.
Speaker 5: It is just out.
Speaker 2: You're listening to the Bloomberg Business Week podcast. Listen live
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Speaker 2: York station, Just say Alexa Play Bloomberg eleven thirty tim.
Speaker 1: As you know, June is Pride month, and all across
Speaker 1: the world, millions are dotting their rainbow flag to celebrate
Speaker 1: the culture of the LGBTQ plus community.
Speaker 3: And though in the US there's been plenty of progress
Speaker 3: in the pursuit of equality, justice, and inclusion, it's also
Speaker 3: been complicated time for LGBTQ Americans as companies continue to
Speaker 3: walk a tightrope with Pride out of fear of conservative backlash.
Speaker 1: Politically, there where five hundred anti LGBTQ bills introduced this year,
Speaker 1: with restrictions on gender affirming care for transgender youth being
Speaker 1: the most common. For her take on Pride's progress and
Speaker 1: setbacks is Sarah Kate ellis President and CEO of the
Speaker 1: Gay and Lesbian Alliance Against Defamation, commonly known as GLAD.
Speaker 13: It has been a roller coaster ride for the past
Speaker 13: ten years. Before I started, we were headed into and
Speaker 13: really did have the winds that are back at that
Speaker 13: point on marriage equality, and then we saw a real
Speaker 13: sharp backlash to that. What we do at GLAD is
Speaker 13: we do an annual KPI or measurement tool that we
Speaker 13: have called Accelerating Acceptance, and it's a piece of research
Speaker 13: that measures culture and society to understand how accepting or
Speaker 13: not accepting it is for LGBTQ people in America. Once
Speaker 13: we have marriage equality, we really saw a jump in
Speaker 13: acceptance in America. But then once we saw the twenty
Speaker 13: sixteen election, we saw it dip down acceptance for LGBTQ Americans,
Speaker 13: and ever since we've seen it continually dip down as
Speaker 13: opposed to increase. However, what we haven't seen change and
Speaker 13: has stayed the same, and it's incredibly powerful for the
Speaker 13: past ten years, is that over ninety percent of Americans
Speaker 13: believe in equality and acceptance for the LGBTQ community. So
Speaker 13: we haven't seen that ever flow, but we have seen
Speaker 13: culture ebb and flow over the past ten years.
Speaker 3: Sarah Kate, are you surprised that it hasn't been more linear?
Speaker 13: You know, honestly, after marriage equality, we really felt like, Wow,
Speaker 13: we're making so much progress. The wind is at our backs,
Speaker 13: like I said, so it was shocking, honestly, But when
Speaker 13: you look at change in in the trajectory and over
Speaker 13: long periods of time, it does ebb and flow. So
Speaker 13: I shouldn't have been surprised. But I really got caught up, honestly,
Speaker 13: in the power of progress that was happening at that time,
Speaker 13: and it was palpable in the culture acceptance for the
Speaker 13: LGBTQ community, and my wife and I were able to
Speaker 13: get married. Our kids were at our wedding, you know,
Speaker 13: so it was like it was really it felt so good,
Speaker 13: like felt as though we were finally making headway. And
Speaker 13: we have made tremendous headway. But we have seen a backlash.
Speaker 1: All right, So we have made headway. As you said,
Speaker 1: ninety percent of Americans acceptance of the LGBTQ community. Why
Speaker 1: are then we seeing five hundred anti LGBTQ bills introduced
Speaker 1: in twenty twenty four If there's such a high acceptance level,
Speaker 1: I mean, I think about all the political polling, there's
Speaker 1: nothing it feels like that's ninety percent, and yet there's
Speaker 1: all this anti LGBTQ bills being introduced.
Speaker 7: Why is that?
Speaker 13: Well, you know, I think it's the continued disconnect between
Speaker 13: a handful of politicians and the American will and want Right,
Speaker 13: a lot of politicians today don't actually stand up for
Speaker 13: the majority of Americans and where they see America going.
Speaker 13: So this is a handful of politicians who are vehemently
Speaker 13: anti LGBTQ, and these bills have been sweeping across America. Now,
Speaker 13: the great news is that I think out of the
Speaker 13: five hundred, thirty seven have passed, which is not a
Speaker 13: lot unless you live in that state and then it's
Speaker 13: you know, it's life changing for you. But the damage
Speaker 13: is done when they're proposed, and that's why we're seeing
Speaker 13: the backslide in acceptance because these bills are defining who
Speaker 13: we are as an LGBTQ community because they're being talked
Speaker 13: about in the news media by anti lgbt TQ politicians
Speaker 13: and they're especially targeting the transgender and gender non conforming communities,
Speaker 13: and that's super dangerous because it's a small community within
Speaker 13: our community. They don't have a big voice, and that's
Speaker 13: why so many of us in the community are using
Speaker 13: whenever we get a chance to talk about are talking
Speaker 13: about the trans and gender non conforming community because they've
Speaker 13: been politically used by anti LGBTQ political activists.
Speaker 9: Sir Kay.
Speaker 3: One thing that's been really surprising to me, and we're
Speaker 3: bloomberg so we go, you know, companies is the economics
Speaker 3: and businesses the lens that we look through so frequently
Speaker 3: is what's happened with companies that they had fully accepted
Speaker 3: the idea of selling pride merchandise. I'm talking about Target
Speaker 3: for examples. It's now walking this tightrope because of fear
Speaker 3: they could face backlash like they did last year.
Speaker 13: So there, you know, thank you for bringing this up,
Speaker 13: because I think there's a lot of false narratives around this.
Speaker 13: I want to say that that a couple of things.
Speaker 13: One is that what I've seen out of last year, Yes,
Speaker 13: bud Light and Target were targeted by a handful of
Speaker 13: anti LGBTQ activists that did an outsize social media campaign
Speaker 13: and it did cause some issues in the marketplace. And
Speaker 13: if you look at the latest Gravity research, the majority
Speaker 13: of corporate executives and Fortune five hundred leaders are not
Speaker 13: backing down from Pride, from their pride strategy or what
Speaker 13: they are doing. And this is something that we've always
Speaker 13: asked for and Target is doing. This is actually making
Speaker 13: it Pride three hundred and sixty five and not putting
Speaker 13: all their eggs in one pride basket, so to speak.
Speaker 13: Brands are really stepping up, they're not stepping down. And
Speaker 13: I'll tell you why. The reason is is because CEOs
Speaker 13: and boards know that thirty percent of gen g are
Speaker 13: LGBTQ and eighty percent our allies. And they're not just
Speaker 13: allies for the sake of allies. They are very active allies.
Speaker 13: And so the future generation of employees and of consumers
Speaker 13: are highly attuned to the LGBTQ community, and in order
Speaker 13: to appeal to them, you have to stand up for
Speaker 13: the community. So we work with over two hundred brands
Speaker 13: at GLAD and none of them have been backing down.
Speaker 13: So I think that there was a lot of headlines
Speaker 13: at that moment in time, but nobody really dug into
Speaker 13: the story. And when you look at the story, we
Speaker 13: haven't seen a movement from forty to five hundred companies.
Speaker 1: You have certainly played a role in media in terms
Speaker 1: of for the LGBTQ community and being aware of it.
Speaker 1: And I am curious how media has either helped or
Speaker 1: hurt in terms of acceptance and understanding by the broader public.
Speaker 13: We now refer to ourselves as a culture change because
Speaker 13: media is everywhere right and people have platforms that have
Speaker 13: never had platforms before. It's both a curse and a blessing.
Speaker 13: We've seen media really accelerate acceptance for the LGBTQ community.
Speaker 13: You know, President Biden once said that Will and Grace
Speaker 13: did more for marriage equality than anything else, And I
Speaker 13: think do you agree with that? Oh? Yeah, I mean
Speaker 13: I think in terms of when you're thinking about folks
Speaker 13: who don't know LGBTQ people and opening hearts and minds
Speaker 13: coming into your personal living At that time, it was
Speaker 13: like on TVs you didn't have phones coming into your
Speaker 13: personal living room or your personal space and laughing with
Speaker 13: you and crying with you. There's nothing that replaces that
Speaker 13: to move hearts and minds and to humanize people. And
Speaker 13: it's quite frankly, you know, we're running three ad campaigns
Speaker 13: right now, and because we understand that only thirty percent
Speaker 13: of Americans know someone who's trans, so the rest of
Speaker 13: the seventy percent of people in America are learning about
Speaker 13: transgender people through media. We have this Here we Are
Speaker 13: Now campaign, we have Protect this Kid campaign, we have
Speaker 13: all these media campaigns that we're running to introduce people
Speaker 13: in America to trans folks and humanize them.
Speaker 1: Yeah, and I do wonder how that impacts, certainly the
Speaker 1: world more broadly, that if you have that experience, you're
Speaker 1: more accepting versus maybe if you don't.
Speaker 3: I don't know, well, Sarah, Sarah Kate. That actually brings
Speaker 3: up a good point, and it's the idea that this
Speaker 3: is we're not talking about a monolith here and I'm
Speaker 3: wondering if what we're seeing right now in terms of
Speaker 3: what we were describing earlier, with the path to progress
Speaker 3: not being linear, are we seeing more resistance to the
Speaker 3: trans part of LGBTQ right now than the lesbian and
Speaker 3: gay part of it.
Speaker 13: I would say categorically yes, and that because ninety percent
Speaker 13: of Americans say they know someone who's lesbian or gay,
Speaker 13: and only thirty percent. As I said, more Americans report
Speaker 13: seeing a ghost than knowing a trans person. So I
Speaker 13: do think that because people don't know trans people that
Speaker 13: they are being targeted, and they're definitely being targeted by politicians.
Speaker 13: Most of those five hundred anti LGBTQ bills that you
Speaker 13: spoke of earlier are targeting the trans community, and for
Speaker 13: no good reason. Trans people have always been here. They
Speaker 13: have gained more visibility than ever before the trans community,
Speaker 13: and with that visibility comes fear because people don't know
Speaker 13: who they are. They're trying to understand. But once you
Speaker 13: know someone, it's really once you know someone's story, once
Speaker 13: you meet somebody, it's really hard to hate them.
Speaker 1: How do you think about the investment universe, our world
Speaker 1: that we talk about so much money. Money can bring
Speaker 1: attention to something can move the needles on things. The
Speaker 1: investing world can too, So I just I'm curious how
Speaker 1: you think about that, if there's something to connect there
Speaker 1: or not.
Speaker 13: Well, you know, I think about our disposable income right
Speaker 13: as a community is I think one point one trillion,
Speaker 13: And I think about companies understand you know a lot
Speaker 13: of times it used to be called the pink dollar.
Speaker 13: I think companies understand that there is a lot of
Speaker 13: opportunity with the LGBTQ community on every level in investment,
Speaker 13: in consumer goods, in all of it. And so I
Speaker 13: think that helps our community along the way because from
Speaker 13: early on it's been our community has been positioned mainly
Speaker 13: because the people at the forefront of our community that
Speaker 13: had their platforms were gay, white men, and they could
Speaker 13: oftentimes hide who they were in the workplace rise into
Speaker 13: great positions that enabled them to have quite a bit
Speaker 13: of income. And that has been very helpful for our
Speaker 13: community in building our economic power and political power.
Speaker 3: What's the conversation you and I are having with Carol
Speaker 3: five years from now.
Speaker 13: I think we're going to see great acceptance. We're going
Speaker 13: to see seventy percent of Americans know someone who's trans
Speaker 13: versus thirty percent, and we're going to have a more accepting,
Speaker 13: kinder society. I know we have to get there, and
Speaker 13: I know that we're in a little bit of a
Speaker 13: culture war now, but I think on the other side
Speaker 13: of it, we're all about moving forward, building, dreaming, and
Speaker 13: that is about tomorrow.
Speaker 3: You know, it's funny that I didn't hear people introduce
Speaker 3: themselves with pronouns until I went to my little brother's
Speaker 3: college graduation to show and you know, I'm forty. Yeah,
Speaker 3: wasn't done when we were in when I was in college, Like,
Speaker 3: things have changed quickly.
Speaker 1: Yeah, there's been a lot that has actually happened. I
Speaker 1: feel like in the last couple of years you left
Speaker 1: us with some hope heading you to the weekend. And
Speaker 1: I really really appreciate that. I think our audience does too.
Speaker 1: Sarah Kate, thank you so much. Really appreciate it. Sara
Speaker 1: Kate Ellis, she's Brosident and chief executive officer of GLAD
Speaker 1: joining us here in New York City. Yeah, I love that. Right,
Speaker 1: change do us happen? Right, And if you think about it,
Speaker 1: right the pronouns was a great example of right. We
Speaker 1: weren't talking about.
Speaker 3: It wasn't even on my It wasn't even on my radar.
Speaker 7: I should say, all right, everybody.
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