Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanobek. We're here every day bringing
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Speaker 1: You can also listen to our radio show at two
Speaker 1: pm Eastern Time on Bloomberg Radio, or watch us on
Speaker 1: YouTube search Bloomberg Global News Listen. We've already talked about
Speaker 1: it a lot, and rightfully so, because this too is
Speaker 1: among our most right on the Bloomberg. It's all over
Speaker 1: social media as well, and we're talking about bitcoin. We're
Speaker 1: talking about Elon Musk, and Tim we're talking about Tesla.
Speaker 1: It's been hovering out about ten percent higher all day today.
Speaker 1: Since about seven thirty this morning, when we learned that
Speaker 1: Tesla had make it at one point five billion dollar
Speaker 1: investment in bitcoin and also said, hey, we're going to
Speaker 1: start accepting bitcoin for Tesla's caught our attention. To right
Speaker 1: in the news room. Hey, let's get into it with
Speaker 1: Bloomberg News Markets editor Joe Wise and all co host
Speaker 1: of Big Amiss, Coming your Way at four thirty pm
Speaker 1: Wall Street Time on Bloomberg TV. Joe is socially distanced
Speaker 1: on the phone in our New York here. Hey, Joe
Speaker 1: was in thought. Good to have you here. I mean,
Speaker 1: it's a Bitcoin story, but it's also a testless story.
Speaker 1: How do you see this? Like when you heard the
Speaker 1: news this morning, I mean I wasn't really surprised. It's
Speaker 1: interesting because I feel like in this market environment, Tesla
Speaker 1: and Bitcoin have been like coleinked, even when they weren't
Speaker 1: officially linked, if you know what I mean. It's like
Speaker 1: their charts look similar, the stories look similar, something that
Speaker 1: seems completely different than the sort of mainstream, sort of iconoclastic.
Speaker 1: So I feel like there was something like inevitable, like
Speaker 1: only a matter of time. But I'm sure like be
Speaker 1: like the crossover of like Bitcoin holders and Elon fanboys
Speaker 1: is a you know, it was a Venn diagram would
Speaker 1: be very close to a circle, and so it almost
Speaker 1: feels like perfect now that like this makes it a
Speaker 1: this makes the marriage official. Well, you said something really
Speaker 1: interesting on our Quick Take livestream this morning, um that
Speaker 1: I hadn't thought of, but it was this idea when
Speaker 1: a company starts to accept bitcoin, like Tesla announced today,
Speaker 1: it's actually not that big of a deal. Why is that?
Speaker 1: I think? You know, like in the end, it's like
Speaker 1: when when when Tesla is telling a car for like
Speaker 1: forty dollars, say, or fifty dollars as you can buy
Speaker 1: this in bitcoin. All that's really happening is they're letting
Speaker 1: you enter in money into a sort of like bitcoin
Speaker 1: transaction processor then converted into dollars or vice versa, or
Speaker 1: the other way around. So it's as if they're saying, okay,
Speaker 1: we accepted in euros and then somewhere in the background
Speaker 1: they do a conversion. I thought, really that powerful. What's
Speaker 1: powerful in fury and we haven't seen this is when
Speaker 1: we started to see transactions that are really denominated in bitcoin.
Speaker 1: And so in other words of a company like say
Speaker 1: Tesla word to say, here's our car and for the
Speaker 1: next year is going to be priced one bit coin
Speaker 1: each or two bitcoin each, and then if the price
Speaker 1: of bitcoin fluctuates, it's still priceding that bitcoin. And so
Speaker 1: that Therefore, let's say even bigcoin were to fall in half,
Speaker 1: which is very possible because if very volatile, then you
Speaker 1: would still be able to buy it for one bitcoin.
Speaker 1: Then you start to see a system of uh um
Speaker 1: obligations and payments that are truly denominated in bitcoin as
Speaker 1: it is. It's more like a dollar transaction that's converted.
Speaker 1: So it's kind of cool, it's kind of fun, but
Speaker 1: it doesn't really mean that the item is priced in
Speaker 1: bigcoin as such. Bitcoin. Is it really then a unit
Speaker 1: of account? All right, Joe, but you can and you
Speaker 1: can buy other things in bitcoin. We know that. But
Speaker 1: it's Elon musk and and and it's Tesla doing it.
Speaker 1: Because is there something we should read into it in
Speaker 1: terms of the company that's doing it in the brand?
Speaker 1: I mean, I would say this, Why would think if
Speaker 1: you look at a lot of like bitcoin holders, they're
Speaker 1: very reluctant to spend their bitcoin because they all think
Speaker 1: it's gonna go way higher in the future, and so
Speaker 1: no matter what it is, even if it's available, they're
Speaker 1: probably not going to do it. On the other hand,
Speaker 1: they might make an exception for Tesla because Elen is cool,
Speaker 1: because he's made a point of putting some of the
Speaker 1: company's treasury into um into bitcoin itself, then that could
Speaker 1: be the kind of thing where it's like I could
Speaker 1: imagine some small subset of the bitcoin holding population that's like,
Speaker 1: you know what, I always said, I wasn't going to
Speaker 1: spend my bitcoin until you know, bitcoin was the new
Speaker 1: global unit of account, or until bitcoin is worth more
Speaker 1: than gold. But for Elan in this case, because I
Speaker 1: get to be part of the story, because I get
Speaker 1: to be part of validating someone who's, you know, the
Speaker 1: richest guy in the world, maybe I'll buy a bitcoin
Speaker 1: with my Tesla and I suspect some people will do that,
Speaker 1: even if they sort of don't really feel like they
Speaker 1: should be spending it. A billion and a half dollars.
Speaker 1: It's it's not actually that much money for Tesla or
Speaker 1: of course Elon Musk either. What do you make of
Speaker 1: the figure that they announced this morning. I mean, that's
Speaker 1: the thing, it's not like even that much really, so like,
Speaker 1: given Tesla's market cab, given that Elan the richest person
Speaker 1: in the world, UM, it's not that much. On the
Speaker 1: other hand, you know, it's like as big as Big
Speaker 1: Point is, and I think like the total value is
Speaker 1: something like three quarters of a trillion dollars. You know,
Speaker 1: you still can't make that big purchases without making waves. So,
Speaker 1: you know, I think it's like, I think what I
Speaker 1: said this morning is like, I think Ellen is having
Speaker 1: a lot of fun right now, and I think when
Speaker 1: it's not exactly so we're in the stage. We're part
Speaker 1: of having fun. If you're like a rich billionaire is
Speaker 1: having fun with like cryptocurrencies, and this is his way
Speaker 1: of doing it. It's not a huge risk for Tesla's
Speaker 1: balance sheet one way or another, but it's kind of
Speaker 1: like him being part of the story. And Tesla has
Speaker 1: got cars, and he's got rockets, and now he's got cryptocurrencies,
Speaker 1: and it's all part of the it's all part of
Speaker 1: the fun. Having said that, you know, and we've been
Speaker 1: talking with you about bitcoin for a while and several years,
Speaker 1: I feel like at this point, but is there something
Speaker 1: different about kind of the conversation and the stories that
Speaker 1: we're seeing surrounding bitcoin at this point, does it feel
Speaker 1: like it's becoming a little bit more legit? I think so.
Speaker 1: I think so. I mean, look, you definitely have institutions
Speaker 1: that are willing to put at least some small allocation
Speaker 1: of their wealth into it. We think a lot of
Speaker 1: the story of was this idea of like bitcoin emerging
Speaker 1: as a as a store of wealth. And that's sort
Speaker 1: of like the new meme, which is that it's a
Speaker 1: savings vehicle, kind of like gold is. It's like, yes,
Speaker 1: it's not really great for spending, but just like goal
Speaker 1: is not great for spending. But bitcoin kind of is
Speaker 1: a sort of, uh, you know, a save sort of
Speaker 1: wealth type of vehicle. So then naturally you have a
Speaker 1: few institutions at ultimately very small levels like dipping their
Speaker 1: toe in from that perspective, Alright, good stuff, always good,
Speaker 1: Thank you so much. And you've got a busy day,
Speaker 1: busy afternoon. Joe Wizenthal markets that are at Bloomberg News,
Speaker 1: co host of which miss come in your way at
Speaker 1: four thirty pm Wall Street Tom on Bloomberg TV. So
Speaker 1: be sure to check him out. He's always got smartcast,
Speaker 1: smart conversations. Uh, and you've got to I always read
Speaker 1: this Five things to read that You've got to know.
Speaker 1: Who does the morning? I know, right, it's just like bam,
Speaker 1: bam bam everything I need to know. This is Bloomberg
Speaker 1: Business Week with Carol Messer and Bloomberg Quick takes Tim
Speaker 1: Stinovich from Bloomberg Radio. So a bunch of things going
Speaker 1: on when it comes to the virus and vaccine too.
Speaker 1: Mentioned about Astra Zenica South Africa temporary halting the rollout there.
Speaker 1: New York City indoor dining is going to resume on Friday,
Speaker 1: two days earlier than plan. And we are seeing tim
Speaker 1: coronavirus infections continuing to slow across the globe. India though,
Speaker 1: um some good news reporting fewer than a hundred fatalities
Speaker 1: for the third day in a row, and I know
Speaker 1: they've been struggling. Yeah, and even more locally here in
Speaker 1: New York. Indoor dining is going to resume Friday at capacity.
Speaker 1: In middle schools are going to reopen on February, which
Speaker 1: is really really good. I know a lot of parents
Speaker 1: have been hoping kids could get back to school. Global
Speaker 1: cases though exceeding a hundred and six million deaths, passing
Speaker 1: two point three million, more than a hundred and thirty
Speaker 1: one million shots that have been given around the globe.
Speaker 1: Let's get back to UH. A guest, someone who has
Speaker 1: come to us several times throughout the pandemic is dr
Speaker 1: Iman Abuse ag is CEO and co founder at Incredible
Speaker 1: Health h and her company, Just a Reminder, connects hospitals
Speaker 1: with nurses and other healthcare worker. She is with us
Speaker 1: once again on the phone in San Francisco. Doctor abuzaid,
Speaker 1: nice to have you back here on Bloomberg. How are you?
Speaker 1: And tell me what you're seeing from day to day
Speaker 1: when it comes to the virus and cases and hospitalizations,
Speaker 1: and then what you're seeing in terms of the vaccine rollout.
Speaker 1: Have have most of the folks UM that you've seen
Speaker 1: that our healthcare workers gotten vaccinated? Yeah? I'm doing well.
Speaker 1: Thank you so much for having me. Yeah. So what
Speaker 1: we're seeing in our in our data and with you know,
Speaker 1: interacting with our customers. Uh. You know, over three hundred
Speaker 1: hospitals and health systems use our software to hire nurses
Speaker 1: and permanent roles UM across the country. And what we
Speaker 1: seem is actually the majority over seventy you know, over
Speaker 1: seventy of the nurses in these permanent roles have already
Speaker 1: been vaccinated, which is great news. But the real question
Speaker 1: is like, how come I haven't been yet? Right, Because
Speaker 1: that's what we really need to get to UM, and
Speaker 1: it's me two factors. One is a supply shortage that
Speaker 1: your team has already had has just mentioned. The second factor,
Speaker 1: which is a little bit more um nuanced, is there
Speaker 1: is still some fear among healthcare workers about taking the
Speaker 1: vaccine UM. A lot of that has to has to
Speaker 1: do with you know, quite a quite a lot of
Speaker 1: distrust has built up between healthcare workers and their employers
Speaker 1: and healthcare workers in the government when it comes to
Speaker 1: management of the pandemic. Um there's still a subset of
Speaker 1: workers that are pretty resistant to mandates and um there's
Speaker 1: just some distrust out there. And so I think probably
Speaker 1: the biggest factor we can do over the next few
Speaker 1: weeks is explaining clearly the research behind the vaccine um,
Speaker 1: just kind of just a little bit more detail on
Speaker 1: it to get more healthcare workers comfortable with it so
Speaker 1: we can get to be of them vaccinated. How are
Speaker 1: the nurses doing in terms of of workload? And we
Speaker 1: heard so much early on in the pandemic about so
Speaker 1: many of these health care workers just being over worked
Speaker 1: and exhausted, and there were so many stories about that.
Speaker 1: Has that eased up as as hospitals have, I don't
Speaker 1: want to say, you know, gotten better, because in different
Speaker 1: parts of the country. At any given moment, different hospitals
Speaker 1: are experiencing different things. But as the pandemic has worn on, Yeah, no, unfortunately,
Speaker 1: that has not gotten better anything more widespread throughout the country. UM.
Speaker 1: In the beginning of the pandemic, you know, March last year,
Speaker 1: you know, the emphasis was really on the on the northeast.
Speaker 1: But now at this point, you know, we're talking February,
Speaker 1: the pandemic is widespread throughout many states, and so every
Speaker 1: single hospital and help us and we work with is
Speaker 1: reporting staff shortages that your staff shortages, difficulties and getting
Speaker 1: enough staff um to fill these units because you know,
Speaker 1: there's a high, very high patient demand that's been caused
Speaker 1: by the pandemic. Uh. And then what nurses are reporting
Speaker 1: is like you know, over two thirds of them are
Speaker 1: reporting high anxiety, high stress related to the pandemic and
Speaker 1: related to being overworked. UM. So unfortunately, and it has
Speaker 1: not eased up yet. But hopefully have cases go down
Speaker 1: and a number of hostilizations go down over the next
Speaker 1: few months. You know, we're hopeful that things will get
Speaker 1: a little bit better. Are you feeling just kind about
Speaker 1: twenty five seconds left that you are you feeling like
Speaker 1: maybe by summer things start to feel quote unquote more normal. UM.
Speaker 1: That really that really just depends on how the you know,
Speaker 1: community um reacts to the vaccine and and and how
Speaker 1: quickly the vaccine rollout can be UM. Right now, there
Speaker 1: is a lot of frustration from healthcare workers towards their
Speaker 1: local communities who are not necessarily following guidelines, UM, you know, mandates, maths,
Speaker 1: so on, and it's just putting more healthcare workers at risk.
Speaker 1: So hopefully the public health messaging will get better and
Speaker 1: we'll be accepted by by communities. And that's really what
Speaker 1: this is going to hinge on. All right, Gon, I'll
Speaker 1: leave it on that note. Hey, Emon, nice to have
Speaker 1: you back with us. Dr Iman Abuse, aid CEO and
Speaker 1: co founder at Incredible Health joining us on the phone
Speaker 1: from San Francisco. You know, it definitely feels like we're
Speaker 1: making progress and but yeah, it was really surprising for
Speaker 1: me to hear that it hasn't the workload hasn't het
Speaker 1: up heased up for these healthcare workers. Yeah, it's still
Speaker 1: pretty tough on them. This is Bloomberg Business Week with
Speaker 1: Carol Masser and Bloomberg Quick Takes Tim Stinovic from Bloomberg Radio.
Speaker 1: It's a real world illustration of a venture capitalist fantasy
Speaker 1: about the future of media. We're talking about the tiny
Speaker 1: tech startups sub stack that's reaching existential scale in the
Speaker 1: media industry. So writes Ellen Hewett. This story is really interesting.
Speaker 1: I didn't know about them, You didn't know about it.
Speaker 1: It's it's We're gonna let Ellen and Joel talk about it.
Speaker 1: But yeah, it's mind blowing. How much some of these
Speaker 1: writers make over a million dollars a year. Pretty remarkable.
Speaker 1: So she writes about it for Bloomberg business Week. Let's
Speaker 1: get into her story. She has startups reporter Ellen Hewett
Speaker 1: on the phone in San Francisco, along a Bloomberg Business
Speaker 1: Week nitor Jill Weber on the access line in Brooklyn.
Speaker 1: First of all, how did I mean, how did this
Speaker 1: come to your attention or how did you guys think
Speaker 1: about you wanted to put this in the magazine. Well,
Speaker 1: it's been a business that has really caught a lot
Speaker 1: of people, a lot of people's attention very quickly. Um
Speaker 1: in part because of those numbers that you just mentioned,
Speaker 1: because of the disruptive potential. Um And this is you
Speaker 1: know what I like love about it? Is that it's
Speaker 1: this company that's effectively invisible UM. And that was one
Speaker 1: that we sort of just asked Ellen to kind of
Speaker 1: take a look at, and her, she being the amazing
Speaker 1: reporter that she has, like came back to us with
Speaker 1: like a fully realized idea. You know, which is the
Speaker 1: best part about working with people like Ellen and Bloomberg UM.
Speaker 1: But the thing that you know has really struck everyone
Speaker 1: with it is like, you know, this invisible company that
Speaker 1: is basically taking over the software that generates a lot
Speaker 1: of the emails that you probably receive UM without even
Speaker 1: realizing that they're really the company underpinning at all. Uh So,
Speaker 1: so Ellen like rewind the clock. What was the opportunity
Speaker 1: that that sub stack saw and and set out to capture. Yeah,
Speaker 1: they launched in seen and it's been actually kind of
Speaker 1: a really slow growth until I would say early twenty
Speaker 1: or EGN mid They did exactly what you were explaining.
Speaker 1: They saw that there were some a few independent writers
Speaker 1: out there, including a guy named Ben Thompson runs a
Speaker 1: very popular UM tech strategy analysis blog, who were doing
Speaker 1: writing UM independently, and they had an audience as people
Speaker 1: who were willing to pay for access to you know
Speaker 1: this writing, so really prescribing to individual rather writers rather
Speaker 1: than subscribing to like the Washington Post or to Bloomberg.
Speaker 1: And they thought, okay, well, if we just make the
Speaker 1: tools to build these sorts of individual independent writer mini businesses, UM,
Speaker 1: we can make it easier for any writer to make
Speaker 1: that jump, and then we'll just take ten percent. So
Speaker 1: it's really simple. And then basically what they've had to
Speaker 1: do since then it's recruiting. They've been, um, in some
Speaker 1: cases aggressively recruiting some of these top writers who have um,
Speaker 1: you know, kind of distinct and very engaged followings and
Speaker 1: trying to convince them, hey, you should leave your cushy
Speaker 1: magazine job and come right for subject for your own boss,
Speaker 1: run your own newsletter, and and you can make a
Speaker 1: lot of money, and in some cases from these writers
Speaker 1: are doing so, although in my estimation many are also
Speaker 1: not going to make that much money doing it. But
Speaker 1: but it is this very interesting kind of unbundling of writers,
Speaker 1: individual writers and bylines that you might follow away from
Speaker 1: the legacy publications that they might work at. So Ellen,
Speaker 1: as you note in your story, uh, other companies have
Speaker 1: taken note of of sub stack and are trying to
Speaker 1: do what sub stack is doing. Twitter bought Review recently.
Speaker 1: We learned recently that Facebook is working on newsletter tools.
Speaker 1: According to the New York Times, can substack survive that
Speaker 1: kind of competition, Well, it's a great question. And and yes,
Speaker 1: there were even rumors in the fall that Twitter was
Speaker 1: maybe going to buy a sub stack, and substack co
Speaker 1: founders were like, that's not true at all, and then
Speaker 1: of course they bought the competitor, and and as mentioned,
Speaker 1: Facebook looking into this and and look, this this isn't
Speaker 1: um this isn't that hard to wrap. Okay, Like what
Speaker 1: substact is selling is the convenience. They're saying, basically, just
Speaker 1: come to us, give us ten percent, but we'll make
Speaker 1: it so easy for you to set this up and
Speaker 1: maybe we'll send you know, some new readers your way.
Speaker 1: But that that part hasn't really been realized yet. So
Speaker 1: they're big concern as I imagine they think about all
Speaker 1: the time, is that if you run a news letter
Speaker 1: on sub stack and you have, you know, tons of
Speaker 1: followers who are paying you money, at some point you're
Speaker 1: gonna stop and think, like, man, there are three versions
Speaker 1: of this out there that require more work to set up,
Speaker 1: then I would get that last ten percent for myself
Speaker 1: rather than handing it over to a platform. So they're
Speaker 1: going to have to make sure that they make it
Speaker 1: valuable enough that people are going to stay, especially when
Speaker 1: their following is get really big. So what what's what
Speaker 1: to me is most interesting about the sub stect story
Speaker 1: is not only you know, suddenly it was like a
Speaker 1: business model that like was in the right place at
Speaker 1: the exact right time, and here we are in the
Speaker 1: pandemic and and they're able to monetize and scale really quickly.
Speaker 1: But also I mean it's a little bit of a
Speaker 1: throwback we're talking about mel and newsletters, like is email
Speaker 1: really the future of media? Because that's effectively what sub
Speaker 1: spects that is. Yeah, and they have this very interesting
Speaker 1: take on all this, which is there if you look
Speaker 1: at the way that they present their business, they're very
Speaker 1: anti engagement. They feel like the reason that we have
Speaker 1: all this horrible like misinformation polarization, um like like horrible
Speaker 1: strift division in our country from you know that's expanded
Speaker 1: on the internet is because of the social network desire
Speaker 1: for engagement that they're always looking for people who are
Speaker 1: going to engage more with content and that most engaging
Speaker 1: content is divisive or misleading or anything like that. And
Speaker 1: they're like, look, we're kind of like the Zen Quiet alternative,
Speaker 1: like you just pay for quality. No part of our
Speaker 1: algorithm that's based on engagement. You're just signing up for
Speaker 1: these writers. And so so I think they would probably
Speaker 1: embrace this idea that they're going back to something older,
Speaker 1: because in many ways they're trying to position themselves as
Speaker 1: different from what has led, um, you know, what has
Speaker 1: led to our our current climate. So when they said,
Speaker 1: when they saw that Facebook and Twitter, we're dipping their
Speaker 1: toes into the newsletter business. Um. You know, one of
Speaker 1: the co founders, Hamish Mackenzie, who we kind of profile
Speaker 1: in the story, he said, you know, this is kind
Speaker 1: of like Shell trying to say that they're going to
Speaker 1: build um, you know, like renewable energy plants, or they're
Speaker 1: just saying he's just trying to say that it's not
Speaker 1: in their DNA to build something that's doesn't rely on engagement.
Speaker 1: And so so my guess is they would actually kind
Speaker 1: of embrace, embrace sex characterization. I don't know if people
Speaker 1: are ready to have their inbox the the place where
Speaker 1: they're getting all this news and in fact, um my
Speaker 1: understanding is that one of the features that people really
Speaker 1: want from subtext is actually a way to read your
Speaker 1: sub sect newsletters not in your inbox because you're used
Speaker 1: to using your inbox for like to do items and
Speaker 1: annoying emails that you don't want to look at. Maybe
Speaker 1: a bundle of a publication. That's what I love about.
Speaker 1: Just one of the people I interviewed, there's a woman
Speaker 1: named Anne Helen Peterson, very mus writer, and she just
Speaker 1: this is going to end up looking at like because
Speaker 1: I want to hire him an editor and so old
Speaker 1: media of them good stuff. As always, Ellen Hewittt, thank
Speaker 1: you so much startups. Reporter of Bloomberg News, Del Weber,
Speaker 1: or thanks to you as well, editor of Bloomberg Business
Speaker 1: Week as well. This is Bloomberg Business Week with Carol
Speaker 1: Masser and Bloomberg Quick Takes Tim Stinovich from Bloomberg Radio
Speaker 1: earlier today. Red sticky, as we like to refer to
Speaker 1: at Bloomberg when an important headline crosses the Bloomberg well.
Speaker 1: That happened earlier this morning when me and Moore imposed
Speaker 1: martial law in its biggest cities following a third day
Speaker 1: of massive street protests opposing the February one military coup.
Speaker 1: So that just happened about a week ago. So we're
Speaker 1: continuing to watch this situation, as does Bloomberg New Economy
Speaker 1: editorial director Andy Brown, who in his weekly column writes
Speaker 1: that after insurrectionists stormed the US capital, it shouldn't be
Speaker 1: a surprise at the General's and me and Moore decided
Speaker 1: to stage a coup. Let's bring in Andy for more,
Speaker 1: He joins us on the phone in New Hamps. You're Andy,
Speaker 1: happy Monday. Nice to have you here. Make the connection, um,
Speaker 1: because I know you say it's not a causal link,
Speaker 1: but nonetheless, what were you thinking about when you put
Speaker 1: this column together? And what was the connection here between
Speaker 1: what happened in the capital and what what happened in Myanmar. Yes, so,
Speaker 1: as I say that there is no causal link, the
Speaker 1: connection is that democracy all over the world is in
Speaker 1: full retreat. Last year was just a shocking year for
Speaker 1: democracy everywhere, and hardly it's because of the way the
Speaker 1: government's responded to the coronavirus pandemic UM using high tech
Speaker 1: surveillance techniques UM limiting travel, basically poking and prodding around
Speaker 1: into the personal lives of their citizens, which is you
Speaker 1: know what authoritarian regimes have been doing in response to
Speaker 1: public health crisis now, um, for hundreds of years. Uh.
Speaker 1: It's not the high tech bit, but certainly UM, the
Speaker 1: power of the state advances with epidemics. UM. There is
Speaker 1: a link between those two. And you know, as I
Speaker 1: say so, so the the the the coup in in
Speaker 1: in Myanma didn't come out of nowhere. We're seeing this
Speaker 1: in the Middle East, We're seeing it in Africa, and
Speaker 1: of course we're seeing it in in Western countries which
Speaker 1: pride themselves as being these bastions of of of liberal
Speaker 1: democracy and freedoms. That's kind of a dismal thing to
Speaker 1: hear that over the last year we've seen democracies in retreat.
Speaker 1: Is this the direction that things will continue or or
Speaker 1: are there indications that this can be reversed? Um? Look,
Speaker 1: this is the the Economist Intelligence unit which comes up
Speaker 1: with this Democracy Index has been tracking UM the advance
Speaker 1: of authoritarianism and the retreat of democracy since two thousand
Speaker 1: and six, and last year was the worst year on record.
Speaker 1: Only eight point four percent of the global population, they say,
Speaker 1: now live in what they call a full fledged democracy,
Speaker 1: about one third living authoritarian regimes. The US is deemed
Speaker 1: under this index a flawed democracy. And the worst of
Speaker 1: it is, they don't really see a way back to
Speaker 1: full democracy because of the way that society has fragmented.
Speaker 1: They don't see the social solidarity there that is necessary
Speaker 1: to rebuild a full democracy in the United States. Well,
Speaker 1: and that's what complicates it, right Andy, because you know,
Speaker 1: the US, you know, it's hard to be an arbiter
Speaker 1: of good democracy when your own democracy is flawed, right
Speaker 1: and if you're trying to kind of help other places
Speaker 1: around the world that are struggling with democracy, it doesn't
Speaker 1: put the US in a great leadership role right now. Well,
Speaker 1: that's exactly right. So, you know, President Biden has has
Speaker 1: of course denounced the coup has Um, demanded a return
Speaker 1: to democracy, and has said that he wants to work
Speaker 1: with like minded democracies around the world to put pressure
Speaker 1: on the two leaders in Myanmar to uh to reverse themselves. Well,
Speaker 1: the problem, the problem is that right now the United
Speaker 1: States is not in a position, um to lead a
Speaker 1: a a democratic comeback in Myama, given that its own
Speaker 1: democracy is right now so so flawed. Um, you know,
Speaker 1: so the the you know, the the generals in Myanmar
Speaker 1: essentially taking all this in their in their stride and
Speaker 1: and you know, have every reason to believe that they're
Speaker 1: going to get away with it. And to the extent
Speaker 1: that that Biden and allies managed to punish the generals,
Speaker 1: it will only push them further into into the arms
Speaker 1: of of of China, thus advancing China's great strategy, which
Speaker 1: of course is to make the world safe for the
Speaker 1: kind of authoritarian regime that it is very much become.
Speaker 1: And as you were reporting on this story, what has
Speaker 1: to change the United States? For what did you learn
Speaker 1: about what has to change in the United States? For
Speaker 1: you know, the social cohesion here needed to get closer
Speaker 1: to a full democracy and not a flawed democracy. Yeah,
Speaker 1: you know, um, the the the the the the prescriptions
Speaker 1: uh from at least from from the index, um really
Speaker 1: are quite nebulous on on what America has to do. Um.
Speaker 1: The the real focus is, you know, the consequences of
Speaker 1: failure to revive a full democracy, which is that the
Speaker 1: United States won't be able to you know, be the
Speaker 1: shining beacon on the hill as it you know, the
Speaker 1: shining city on the hill, the beacon of democracy that
Speaker 1: has dolvanized democratic forces all over the world. And East
Speaker 1: Asia of course, is where liberal democracy as advanced by
Speaker 1: the United States its World War two has recorded some
Speaker 1: of its greatest successes, from the Philippines to Indonesia, and
Speaker 1: of course South Korea, Japan and and and and so on.
Speaker 1: And it's really tragic to see the United States position
Speaker 1: now in these countries so much, very much in in
Speaker 1: in retreat. Yeah, and it just you also get into
Speaker 1: just the difficult positions that whether it's Tokyo, whether it's Singapore,
Speaker 1: whether it's India, it's just gotten a lot more complicated
Speaker 1: as um. You know, these countries have gotten involved two
Speaker 1: more in uh ME and more so it's it's interesting, Andy, Um,
Speaker 1: thank you so much. I think this is an important
Speaker 1: story that we've got to keep a watch on uh
Speaker 1: in terms of what's going on there and what might
Speaker 1: happen next. Andy Brown is editorial director at Bloomberg New Economy.
Speaker 1: Check out all of their work in Andy's work at
Speaker 1: new econ Forum that you can find on Twitter, and
Speaker 1: of course Andy joining us on the phone from New
Speaker 1: Hampshire Road Journal. Yeah, but you let me drive, no, no, no,
Speaker 1: who's going drug home. Honey, please, I'll do the riding
Speaker 1: revel lets me. I want to drive, just drive baby,
Speaker 1: question try this is the drive to the globe. Comm thanks,
Speaker 1: we'll drying us Dawn on Bloomberg Radio ALR. I get
Speaker 1: ready to wrap up the first trading day of the week.
Speaker 1: Let's get to the drive to the close. Larry Pittkowski
Speaker 1: is back with us co founder, or i should say,
Speaker 1: managing partner in portfolio manager good Haven Capital Management. They've
Speaker 1: got roughly a hundred and sixty million in assets under management,
Speaker 1: based in Milburn, New Jersey, and that's where we find
Speaker 1: Larry on this Monday. Good to have you here. How
Speaker 1: are you, Carol? I'm doing okay. How are you doing
Speaker 1: all right? Hanging in there. It's a little cold, there's
Speaker 1: a lot of snow on the ground, but yeah, it's
Speaker 1: a lot of snow. Um. I don't know, how do
Speaker 1: you feel about this market environment right now? You know, Carol,
Speaker 1: I think it's very important in investing to know where
Speaker 1: your circle of competence begins and ends. And I don't
Speaker 1: think you know, making macro predictions or you know, having
Speaker 1: a strongly held view about the level of the market
Speaker 1: and where it's going is within mind. But you know,
Speaker 1: clearly we have pockets of a lot of speculation. You
Speaker 1: have the market's overall selling it, uh, you know, higher
Speaker 1: than average multiples, and you know, but you can either
Speaker 1: sit around and and philosophies about that all day, or
Speaker 1: as I said recently in writing to uh, you know,
Speaker 1: to my investors, I can get up a little earlier
Speaker 1: and go to bed a little bit later in search
Speaker 1: of mispriced securities for us, rather than sitting around and
Speaker 1: ranting about what are obvious excesses in certain areas. And
Speaker 1: so that's how I choose to spend the day. Okay,
Speaker 1: so what are some of those miss of securities that
Speaker 1: you're finding? Well, a couple of a couple of areas
Speaker 1: that we have found as of late. Uh. First of all,
Speaker 1: you know, I also recently wrote a bit over the
Speaker 1: last year or so about how I've I think the
Speaker 1: terms valuing growth and value investing have been somewhat misused,
Speaker 1: and so I've over the last year or so wrote
Speaker 1: a bit about how being a value investor, UH, does
Speaker 1: not mean you can't own good quality, growing companies. It
Speaker 1: does not mean you have to have a draconian negative
Speaker 1: view of the future, and it does not mean you
Speaker 1: need to own crummy, shrinking businesses and those things. And
Speaker 1: I think growth is a part of value, and I
Speaker 1: think that's all gone a little bit uh misused from
Speaker 1: a nomenclature standpoint in the past, and I've tried to
Speaker 1: address it, and you know, I think it's important. In
Speaker 1: the past, I have written about how I thought there
Speaker 1: were some interesting opportunities in the property and casualty insurance area,
Speaker 1: which was a sector that I thought had some tail winds.
Speaker 1: You know, there aren't that many advantages to not being
Speaker 1: twenty five years old, but one of them is you've
Speaker 1: seen a bunch of different cycles and this to me
Speaker 1: looks like one of those periods in property and casual
Speaker 1: the insurance where it's a hard market. As they say,
Speaker 1: prices and terms are rising to favor the insurance and
Speaker 1: I think that vodes well for well run companies in
Speaker 1: that sector. And so we have some exposure there and
Speaker 1: we recently added chub, which has been well run by
Speaker 1: Evan Greenberg for many years and had some very solid
Speaker 1: earnings recently, and I think they should benefit from what
Speaker 1: looks like a healthy environment for the next couple of years.
Speaker 1: So you know, when in the context of of property
Speaker 1: and casualty insurance, a lot of people like to talk
Speaker 1: about the disruptor Lemonade um is that do you see
Speaker 1: that as competition to chub or or you know in
Speaker 1: that sense, I think it's important. You know, I have
Speaker 1: read the Lemonade stuff. I think it is important to
Speaker 1: look at some of the new companies which have in
Speaker 1: many as is. You know, there's there's often an underlying
Speaker 1: you know, reinsurance company underneath the surface who's taking on
Speaker 1: a lot of the risk. But I think digitization is
Speaker 1: important in especially you know insurance and you know the
Speaker 1: primaries who faced the consumer. I think it's very important.
Speaker 1: Another holding we have in the sector's Progressive insurance, which
Speaker 1: has been one of the you know, I think leaders
Speaker 1: and using big data to price well and auto insurance.
Speaker 1: Those auto insurance is seeing not seeing the same positive
Speaker 1: pricing momentum you're seeing in a lot of other lines
Speaker 1: of property and casualty insurance. But I think it's important
Speaker 1: to pay attention. If you're a business analyst like I
Speaker 1: consider myself to any new entrant in any new form
Speaker 1: of technology and decide if you think it could be
Speaker 1: materially disruptive or if you think the companies that you're
Speaker 1: invested in can also harness technology to their benefits. So
Speaker 1: I'm comfortable with our companies and how they're awake to
Speaker 1: some of the friends that are changing. But I'm always
Speaker 1: looking at everybody, knew, who shows up that I am
Speaker 1: aware of. Yeah, interesting, Um, I know. And like you said,
Speaker 1: I think the price increases is a key right because
Speaker 1: there's been year after year of kind of fierce industry
Speaker 1: wide price competition. So if that's changing that that fundamentally
Speaker 1: then maybe changes the prospect and outlook for CHAP. Correct.
Speaker 1: I think it does, and I think, you know, we'll
Speaker 1: see how long it lasts. But I think you are seeing,
Speaker 1: you know, you look at the results from you know,
Speaker 1: across UH that sector, and you're seeing much better results
Speaker 1: than you've seen over the last couple of years. That
Speaker 1: they still have claims to deal with from you know,
Speaker 1: natural disasters and the COVID claims. But I think the
Speaker 1: well run ones, which are the ones that we own,
Speaker 1: should be able to do just fine for a while,
Speaker 1: to say the least. Okay, so you guys recently bought
Speaker 1: p G and E, which is a surprising thing for
Speaker 1: for me to read. Um, it's filed Chapter eleven bankruptcy
Speaker 1: twice because of exposure to wildfire uh abilities. Um, what's
Speaker 1: the argument there, T. G and E is I think
Speaker 1: a remade company now that it has come out of bankruptcy,
Speaker 1: there is a wildfire fund. They have articulated they think
Speaker 1: earnings are going to be about a buck and then
Speaker 1: grow back ten per cent a year on a go
Speaker 1: forward basis. I think there had been terrible mismanagement in
Speaker 1: the past from a standpoint of how to think about safety,
Speaker 1: and I think they have done their best to try
Speaker 1: and wipe the slate clean and start over with some
Speaker 1: real protection from a liability perspective and with a go
Speaker 1: forward earnings growth profile that looks decent, and with a
Speaker 1: share price most importantly that looked very undervalued compared to
Speaker 1: where the peers trade. And they were also searching at
Speaker 1: the time that we bought it for new management. And
Speaker 1: it turns out they hired the very well respected Patty
Speaker 1: Poppy who came from CMS Energy, and then just recently
Speaker 1: hired Adam right Away from Berkshire Hathaway Energies. Those are
Speaker 1: really credible and impressive leaders that should be able to
Speaker 1: I hope, over time return the company to really good
Speaker 1: standing in the growth profile over in your term looks
Speaker 1: above average and the share price looks much cheaper than
Speaker 1: the peers. Yeah, a whole new risk modeling and fire
Speaker 1: spread technology that they've been deploying and laying out to
Speaker 1: further reduce wildfire risk, among other things. Um, Larry good
Speaker 1: to check in with you. Stay, stay warm and take care.
Speaker 1: Larry Pitkowski, he's managing partner portfolio manager at good Haven
Speaker 1: Capital Management. On the phone from Bilbourg, New Jersey. Thanks
Speaker 1: for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud,
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