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Speaker 1: Let's get to one of the key data points really
Speaker 1: before next week's FED meeting. I feel like Tim, we
Speaker 1: just keep counting down, you know, jobs report, inflation reports,
Speaker 1: just different things.
Speaker 3: We kept kind of making our way through.
Speaker 4: T minus seven days.
Speaker 3: Welllock, I'm kind of excited.
Speaker 1: What we got this morning, though, was another readout inflation
Speaker 1: data that showed underlying US inflation unexpectedly picked up in
Speaker 1: the month of August, higher prices.
Speaker 3: For housing and travel.
Speaker 1: So maybe that fifty basis point rate cut that some
Speaker 1: have been banking on not going to happen.
Speaker 4: Let's ask Bloomberg News International Economics and Policy correspondent Michael McKee.
Speaker 5: He's here in the studio, So.
Speaker 4: Headline numbers, Mike, what everyone is talking about the so
Speaker 4: called CPI. Does it rule out fifty basis points come
Speaker 4: next week?
Speaker 6: No, it doesn't rule it out, But I think the
Speaker 6: fatas default position was always twenty five basis points and
Speaker 6: the fifty with sort of a wish on Wall Street
Speaker 6: that they.
Speaker 7: Are now ruling out for themselves.
Speaker 6: If you look at the overall numbers, we saw the
Speaker 6: headline CPI come down to two and a half percent,
Speaker 6: and we saw the core at three point two percent,
Speaker 6: But those include twelve months ago. Well, it's an annual
Speaker 6: rate and that's irrelevant.
Speaker 7: Now. If you look at it on a six month.
Speaker 6: Basis, the headline is at one point nine percent and
Speaker 6: the core is at one point eight percent. If you
Speaker 6: look at it at a three month basis, the three
Speaker 6: most recent months, you're at one point one five percent
Speaker 6: for the headline and two point four percent for the core,
Speaker 6: So you're you'd be especially on the headline, thinking well,
Speaker 6: maybe we're too low.
Speaker 1: So you know, with the Fed think it's too low.
Speaker 6: Do they look at that a month or I don't
Speaker 6: think they would look at it that way, but they are.
Speaker 6: If they wanted to do fifty, there would be an
Speaker 6: excuse in that they could say that the economy may
Speaker 6: be slowing too.
Speaker 1: Do they need to do fifty? Mic In your view,
Speaker 1: when you look at the rest.
Speaker 6: Of and I think That's why the consensus has merged
Speaker 6: around the idea of twenty five is because the economy
Speaker 6: is not falling apart. We're still seeing strong consumer spending
Speaker 6: and we're seeing jobs reasonable. We didn't get quite as
Speaker 6: many last week.
Speaker 7: But we saw the unemployment rate fall.
Speaker 6: So there's not a flashing red light out there that
Speaker 6: says we got to move quickly.
Speaker 4: There is a flashing red headline that I do want
Speaker 4: to bring to your attention. It's kind of perfect that
Speaker 4: we have you in here. The Fed Inspector General releases
Speaker 4: a report on Bostic's investments. The Fed Inspector General didn't
Speaker 4: find evidence that Bostick traded on confidential information. Mike remind
Speaker 4: everyone what was going on here.
Speaker 6: Well, it's kind of a an offshoot of the earlier
Speaker 6: FED issues about whether they properly properly disclosed.
Speaker 7: It was a Boston Fed and the Dallas Fed. Even J.
Speaker 7: Powell got caught up in it.
Speaker 6: I had forgotten that did they disclose accurately what trades
Speaker 6: had been done? And so the FED, after the initial round,
Speaker 6: tightened the rules. And the way this story went there
Speaker 6: was Bostick had to refile his financial forms because it
Speaker 6: turned out that he had that there had been trades
Speaker 6: made during a time period when there shouldn't have been
Speaker 6: trades made, which brought up the question of whether there
Speaker 6: was a confidential conflict of interest. And what Bostick said
Speaker 6: at the time was that this was a mistake by
Speaker 6: his trustee who's running his keeping track of his money
Speaker 6: because they didn't realize that the rules had changed. And
Speaker 6: I guess the Inspector General says, yes, you know, the
Speaker 6: trades created the appearance of the conflict of interest, but
Speaker 6: it wasn't him doing something based on confidential information.
Speaker 1: So just remind us going forward, and then we'll go
Speaker 1: back to the inflation data. So things though have changed
Speaker 1: in terms of oversight of FED officials in terms of trading.
Speaker 3: Is it what we came out of all of this.
Speaker 6: Well, they completely changed the disclosure rules and they have
Speaker 6: to disclose any trades. They can't make trades at certain
Speaker 6: times now, and there are some things that.
Speaker 7: Are not allowed to trade.
Speaker 6: So it's a much tighter regime and we get the
Speaker 6: financial disclosure forms every year and they haven't suggested anything
Speaker 6: bad in a while.
Speaker 1: All right, all right, good to know, because you're right,
Speaker 1: it's been a while since we've got a headline.
Speaker 7: I mean, reporters just pour over those.
Speaker 1: As we do, and as we also pour over, you know,
Speaker 1: these economic data points, especially because we've got a FED
Speaker 1: meeting next week and we know this is going to
Speaker 1: be probably a big one right where the Fed actually
Speaker 1: starts to cut rates. Having said that, the economic risks
Speaker 1: right now, Mike, in the US economy, is it more
Speaker 1: on the labor market side of things?
Speaker 3: Like where are the risks?
Speaker 1: Because I do feel like with this political election, the
Speaker 1: economy is still front and center. I was away and
Speaker 1: I was talking to somebody and I was making a
Speaker 1: purchase and it was under a hundred dollars, and I said,
Speaker 1: oh my god, it's so nice to make a purchase
Speaker 1: that's under a hundred dollars because it doesn't feel like
Speaker 1: you get away with groceries or was it food at home?
Speaker 4: It was the things we're going to talk to Mike
Speaker 4: about in thirty seconds.
Speaker 1: It was not baking our food. But what she said
Speaker 1: to me is, you know, I get my paycheck, I
Speaker 1: deposit it and it's gone right away. And it just
Speaker 1: speaks to how many Americans are struggling right now.
Speaker 6: I think you probably would have heard that prior to
Speaker 6: the pandemic too. What people tend to forget the idea that, yes,
Speaker 6: the price level's gone up for a lot of things.
Speaker 6: Input prices went up and so that fed through and
Speaker 6: now they've basically sort of stopped rising, but the level
Speaker 6: of prices is higher than it was. The one thing
Speaker 6: everybody leaves out when they come out with those statistics, though,
Speaker 6: is the level of incomes has also risen and in
Speaker 6: the last year been higher than the inflation rate. So
Speaker 6: you're really still ahead of inflation. But what sticks in
Speaker 6: your head is when you go to the grocery store
Speaker 6: and the price is higher, You're not thinking about, well,
Speaker 6: I made a little bit more of my paycheck this month,
Speaker 6: because that was me. I'm so great, I get more money.
Speaker 6: But I'm getting screwed because the prices.
Speaker 7: Have gone up.
Speaker 4: But as you reminded us on Bloomberg TV this morning,
Speaker 4: some prices are actually coming down, including grocery prices.
Speaker 5: This came up.
Speaker 6: Last night the day yeah they asked me about the
Speaker 6: financial aspects of the debate. Last night, I pointed out
Speaker 6: that grocery prices were a big deal. They were down
Speaker 6: where they were flat this month, they were down by
Speaker 6: a tenth last month, and basically they've been flat for
Speaker 6: a couple of months.
Speaker 7: And I think Trump brought up bacon.
Speaker 6: Bacon prices have been down big for two months now,
Speaker 6: down one point seven percent this past month. And then
Speaker 6: I noted that if you had to replace a pet,
Speaker 6: pet prices were lower, you had.
Speaker 8: To go there.
Speaker 7: Huh, had to go there.
Speaker 3: And if you don't understand that, just you know, Google,
Speaker 3: watch the boot.
Speaker 1: Just watch the debate, which you all shid as good Americans.
Speaker 3: Mike, thank you so much.
Speaker 1: As always, Bloomberg News International Economics and Policy correspondent.
Speaker 2: You're listening to the Bloomberg Business Week podcast. Catch US
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Speaker 3: Continuing their coverage of last night's debate.
Speaker 1: As you know, Democratic Vice President Kamala Harris and Republican
Speaker 1: Donald Trump former president Donald Trump's barring through their first
Speaker 1: debate with the former president, often on the defensive of
Speaker 1: abortion rights, the January sixth Insurrection, on foreign policy and
Speaker 1: sometimes trade.
Speaker 8: Well, let's be clear that the Trump administration resulted in
Speaker 8: a trade deficit, one of the highest we've ever seen
Speaker 8: in the history of America. He invited trade wars. You
Speaker 8: want to talk about his deal with China. What he
Speaker 8: ended up doing is under Donald Trump's presidency, he ended
Speaker 8: up selling American chips to China to help them improve
Speaker 8: and modernize their military.
Speaker 1: And that, of course was Vice President Kamala Harris talking
Speaker 1: trade with former President Donald Trump. Her views on the
Speaker 1: Trump trade policy. Let's get more on the debate in
Speaker 1: the political conversation that is, and that maybe needs to
Speaker 1: be back with us. A Stefan sila Key has worked
Speaker 1: in leadership roles in both the private and public sectors,
Speaker 1: including a nearly thirty year on Wall Street. Former Undersecretary
Speaker 1: of Commerce for International Trade at the US Department of Commerce.
Speaker 1: During the Obama administration, he also headed the International Trade Administration.
Speaker 1: His background is so rich, which is why we lean
Speaker 1: on him a lot. He is also managing partner and
Speaker 1: founder Bridge Park Advisors, the financing advisory firm. He's back
Speaker 1: here in our Bloomberg Interactive Broker studio. He also, last
Speaker 1: time he was on with Us, said that President Biden
Speaker 1: would step down from the race. So first of all
Speaker 1: congratulations and will you buy me a lottery ticket? Why
Speaker 1: did you think that so much? Because he had no choice?
Speaker 3: Remind us?
Speaker 1: And why you were thinking about that because it was
Speaker 1: before he did it obviously.
Speaker 7: Yeah.
Speaker 9: I mean, if you recall, Carol, this was right after
Speaker 9: the former president was shot, and I thought that, you know,
Speaker 9: that opportunity for him to look so presidential frankly, was
Speaker 9: going to give him a real bump, and I thought
Speaker 9: it was going to force President Biden's hand. And fundamentally,
Speaker 9: what I told you is when I believe that when
Speaker 9: he was convinced and his closest advisors and confidence was
Speaker 9: were convinced that he was going to lose, he was
Speaker 9: going to do the right thing and be a patriot
Speaker 9: and do the right thing for the country and for
Speaker 9: the party.
Speaker 5: And that's ended up being he did. That's what he did.
Speaker 1: So your thoughts on last night and what the race
Speaker 1: is now? Did we get enough when it comes to
Speaker 1: economics and policy and things that Americans care about?
Speaker 9: You know, I was actually surprised about how little of
Speaker 9: the debate actually covered economic topics. Where you look at
Speaker 9: all of the polling, it says economic issues are the
Speaker 9: most important things that are going to drive undecided voters
Speaker 9: votes in the election. One is the economy, and two
Speaker 9: is inflation. I'm not sure not part of the economy.
Speaker 9: But I think we got, you know, far less of
Speaker 9: a real substance of dialogue on those topics, and I
Speaker 9: would have hoped and expected. And I also thought that,
Speaker 9: you know, there was really very peripheral conversation around China,
Speaker 9: which I also might have expected given the important issues
Speaker 9: that our country faces with its greatest competitor.
Speaker 4: We did get some conversation on tariffs, and Donald Trump
Speaker 4: did push back on what we heard from Kamala Harris
Speaker 4: in that clip just now by saying that the Biden
Speaker 4: administration did leave attack some of the tariffs that the
Speaker 4: Trump and ggustration had put on China. What are your
Speaker 4: thoughts around those types of protectionist trade policies.
Speaker 9: You know, it's interesting, Tim, actually both parties are really
Speaker 9: largely aligned on tariffs and trade. Actually, there are, of
Speaker 9: course some nuances. Former President Trump is doubling down on
Speaker 9: his reasonably aggressive, you know, trade stance. What he's said
Speaker 9: at least was he would implement tariffs of ten to
Speaker 9: twenty percent across the board and sixty percent of goods
Speaker 9: coming in from China with a broad brush. I don't
Speaker 9: think that's particularly effective. You know, to be sure, tariffs
Speaker 9: have a important place to protect industry, US industry, where
Speaker 9: those industries are critical to our national security interest. But
Speaker 9: when you do it on a broad brushed basis, at least,
Speaker 9: it's my view that the light's not worth the candle
Speaker 9: because clearly it's inflationary. I think it actually costs you
Speaker 9: more jobs than it saves you, and costs get passed
Speaker 9: on to the consumer. And frankly, there are a lot
Speaker 9: of industries where we are just not competing effectively on
Speaker 9: a global basis, and as a result, taxing those goods
Speaker 9: coming in is just you know, bad for US consumers
Speaker 9: and is inflation.
Speaker 1: So it's not apples to apples in terms of what
Speaker 1: Donald Trump is proposing now stuff in terms of more
Speaker 1: Chinese goods that are coming in versus what we've seen
Speaker 1: during the Trump administration, what continued into the Biden administration,
Speaker 1: specifically on high tech and chips in particular.
Speaker 3: So it's not the same thing.
Speaker 9: Well, the tariffs, I mean, let's separate. One of the
Speaker 9: things the Biden administration did was export controls as it
Speaker 9: relates to chips and critical technology, but specifically as it
Speaker 9: relates to tariffs. You know, this started with steel production
Speaker 9: and the issue around state owned enterprises in China, which
Speaker 9: controls steel production and now are by far the leading
Speaker 9: producer of steel around the world and have flooded the market.
Speaker 9: The fact is President Trump put on tariffs for imported
Speaker 9: steel from China. The fact is the Biden administration kept
Speaker 9: those tariffs. But the fact is China's behavior has not changed,
Speaker 9: and so the question always should become in these circumstances,
Speaker 9: was it effective and at least so far in changing
Speaker 9: Chinese behavior as it relates to steel. It hasn't been effective,
Speaker 9: and in fact it's gotten in many ways worse because
Speaker 9: the Chinese economy has slowed and as a result, their
Speaker 9: domestic consumption of steel has gone down. And what's happened
Speaker 9: to all that steel that continues to be produced. It's
Speaker 9: being sent overseas, driving down prices and creating real global
Speaker 9: instability in that steel in the steel market.
Speaker 4: You did mention the economy and inflation, two things that
Speaker 4: we know thanks to pull after pollar on the top
Speaker 4: of mind for voters, we learned a little bit more
Speaker 4: about Kamala Harris last night. But still, since she's relatively
Speaker 4: new as a candidate and it doesn't have a full
Speaker 4: policy position out there, we don't know everything about how
Speaker 4: she feels about this stuff. Some of her other policies
Speaker 4: that she's unveiled in recent weeks include not no taxing
Speaker 4: tips she's come out with that first time home buyers
Speaker 4: getting some sort of home buying credit, expansion of the
Speaker 4: child tax credit, supporting small businesses we learned in recent
Speaker 4: weeks with tax cuts there. But let's go through a
Speaker 4: couple of those tips when you talk specifically about the
Speaker 4: home the home buying, the home buying.
Speaker 9: One, to me is interesting, and you didn't mention, obviously
Speaker 9: the whole price gouging price issue that she raised, because
Speaker 9: you know, to me, these both reflect a fundamental misunderstanding
Speaker 9: of reasonably simple economics, right, which is, if you give
Speaker 9: somebody twenty five thousand dollars to go buy a first home,
Speaker 9: and there is frankly a not a demand issue, but
Speaker 9: a supply issue, let me tell you what's going to
Speaker 9: happen that curve goes up and houses are going to
Speaker 9: cost twenty five thousand dollars.
Speaker 5: More basic economics.
Speaker 9: Basic economics I just don't see how that works and
Speaker 9: does what she wants to do, which is to actually
Speaker 9: assist new home buyers in affording their first terms. What
Speaker 9: it's going to do is just increase the prices of
Speaker 9: homes and so to me, this is very similar with
Speaker 9: the whole price gouging issue which you talked about in
Speaker 9: groceries and in food retail. As we all know, when
Speaker 9: you don't let the market set prices, let that leads
Speaker 9: to inefficiencies and in this particular case, would lead to
Speaker 9: shortages in certain goods. You know, again, the supply and
Speaker 9: demand does Carol suggested, it sets prices, and when government
Speaker 9: artificially sets prices, you lose the signaling impact of what
Speaker 9: supply and demand leads to and as a result, you
Speaker 9: get market inefficiencies, which is going to be bad ultimately
Speaker 9: for consumers because when they go buy macaroni and cheese,
Speaker 9: it it's not going to be on the shelf because
Speaker 9: companies aren't going to be able to make enough money.
Speaker 9: I would also observe that it's not like the food
Speaker 9: retailing industry is such a profitable business. I mean, at
Speaker 9: the height of the pandemic, the best grossers were making
Speaker 9: what five ish percent margins, right, And so as a
Speaker 9: result of that, the notion that they're price gouging is
Speaker 9: a little bit of a head scratcher.
Speaker 1: One thing that's stuck with me, or stayed with me
Speaker 1: from our last conversation is, you know, the stock market
Speaker 1: isn't Main Street, right, and so there are a lot
Speaker 1: of Americans that are struggling. So I'm trying to understand
Speaker 1: because you know, this race is a close one no
Speaker 1: matter what, and these are two people who stand for
Speaker 1: very different things and a very different candidate. Why is
Speaker 1: it in such a rich country and in a market
Speaker 1: where companies seem to get richer and richer, that we're
Speaker 1: not able to pass that wealth on to more workers.
Speaker 1: I know wages are starting to go up, but how
Speaker 1: do we fix that?
Speaker 9: Well, look, I mean they're that's a big one. That
Speaker 9: is a big one, and it's you know, it relates,
Speaker 9: at least in my view, to education to opportunity, which
Speaker 9: you know, which touches a whole host of policies. But
Speaker 9: I think very narrowly as it relates to what is
Speaker 9: causing the dissatisfaction with the economy today, it is because
Speaker 9: prices are elevated and prices are elevated because of what
Speaker 9: happened in COVID and what's happened after where both administrations, frankly,
Speaker 9: you know, have a lot to answer for because of
Speaker 9: the increase in the deficits, in the deficit that both
Speaker 9: parties policies caused, and until they tackle that, I think
Speaker 9: the conversation about the stock market is high, interest rates
Speaker 9: are low, inflation is under control, is fine. But as
Speaker 9: your last guest or commentator suggested, inflation is interesting, but
Speaker 9: it's a point to point measure. It has nothing to
Speaker 9: do with prices.
Speaker 3: Prices are high, right, right, and come down.
Speaker 4: With I think the problem is Americans, whom most of
Speaker 4: whom have not experienced inflation, don't understand that about inflation.
Speaker 4: They think of inflation as what they pay at the
Speaker 4: gas pump, and they see those prices fluctuate, So they
Speaker 4: do see gas prices come down, and maybe that's what
Speaker 4: they expect, other.
Speaker 9: Than gas prices are now at a three or low.
Speaker 9: Former President Trump is very fixated on oil and gas
Speaker 9: and gas prices because he thinks there's a direct linkage
Speaker 9: between gas and prices and inflation. I don't get that
Speaker 9: economics either. In fact, you know there is no more
Speaker 9: of a global commodity than oil and gas, and those
Speaker 9: prices are not set narrowly based on US production. And
Speaker 9: so I think that's another example of especially given the
Speaker 9: importance of energy in Pennsylvania, another example of campaign rhetoric
Speaker 9: as opposed to you know, real economics and real math.
Speaker 1: Every time we wrap up with you, I'm like, wait,
Speaker 1: I have a million more questions, so you have to
Speaker 1: come back again.
Speaker 5: We're always happy to join you guys.
Speaker 3: So we so much appreciated.
Speaker 1: I'm Stefan Seek, Thank you so much, maaging partner over
Speaker 1: at Bridge Park Advisors, as we say, former Undersecretary of
Speaker 1: Commerce for International Trade at the used Department of Commerce
Speaker 1: that was during the Obama administration, but really looks at
Speaker 1: things from, as we say, the public and private sectors.
Speaker 1: All right, folks, you are listening and watching Bloomberg Business Week.
Speaker 2: You're listening to the Bloomberg Business Week podcast. Listen live
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Speaker 3: Jennie Brook is the founder of Genoa Ventures.
Speaker 1: It's a venture capital firm that invests in, as she says,
Speaker 1: the quote, next generation of companies at the convergence of
Speaker 1: technology and biology. Jenny Rook has invested in such companies
Speaker 1: as Entabio.
Speaker 3: I'm saying it correctly.
Speaker 4: You got a lot of on the list, right spec
Speaker 4: I will say, biotech is not easy when it comes
Speaker 4: to the can we.
Speaker 5: Just talk deal with that?
Speaker 1: Where's the consultant to say, all right, let's just call
Speaker 1: them Smith and Company or something?
Speaker 10: Well, then they would all be called Smith and Company.
Speaker 3: All right, But you know what I mean.
Speaker 1: I mean, I guess they do do a lot of
Speaker 1: work and there's something connect connected with it. We said,
Speaker 1: you're from the Bay Area. You're here in our studio,
Speaker 1: so welcome, welcome.
Speaker 10: Thanks for having me.
Speaker 1: Tell us a little bit about first of all, your sailor, right,
Speaker 1: I am a hence the name of your company.
Speaker 10: That's true. When I found at Genoa almost seven years ago,
Speaker 10: it was really important to me if I was going
Speaker 10: to start yet another venture firm, that we were known
Speaker 10: for something distinctive, and I wanted that to be about
Speaker 10: our culture of really supporting founders. And part of the
Speaker 10: way we recognize that is recognizing we're not the captains
Speaker 10: of the ship. It's not our show. Yeah, the captains,
Speaker 10: we're not even the boat. At most, we're the sale.
Speaker 10: So the Genua, as you know, Carol, because you're a sailor,
Speaker 10: is a sale, and that's where we take our name from.
Speaker 3: It's really I love it. I love it.
Speaker 1: So wait, how does that also then? Think about you know,
Speaker 1: there are so many startup companies out there right, especially
Speaker 1: you know, ones at the very early stage.
Speaker 10: And fewer in the current environment.
Speaker 1: Well, because there hasn't been as much money, right, it's correct,
Speaker 1: all right, So how do you pick and choose that? Well,
Speaker 1: first of all, that's interesting. If it's not as many
Speaker 1: out there, is that more frustrating for you? Or is
Speaker 1: it that then the companies that are actually getting the
Speaker 1: money are pure and kind of more ready to go.
Speaker 10: I think that's what we're going to see coming out
Speaker 10: of this sort of crucible of the last couple of years,
Speaker 10: is clearing out a lot of the chaff from the
Speaker 10: hype of twenty twenty.
Speaker 3: And twenty twenty one.
Speaker 10: Now we go really early at Genoa, and so we
Speaker 10: had the I would say advantage of picking our bets
Speaker 10: and being really disciplined about pricing. I think it was
Speaker 10: a little harder for later stage investors who were just
Speaker 10: had a deluge of a lot of companies that maybe
Speaker 10: were not particularly selected. Well, there wasn't a lot of
Speaker 10: selection pressure. So coming out of that, I think this
Speaker 10: is a healthy reset. It's obviously very difficult for a
Speaker 10: lot of people, and I don't want to trivialize that.
Speaker 10: But as far as kind of the math, how the
Speaker 10: math works and venture, yeah, you need to have a
Speaker 10: little bit more balance between who gets the money and
Speaker 10: who gets to keep going.
Speaker 4: But is the math inventure different than this than say,
Speaker 4: like a consumer tech company, or like the or like
Speaker 4: consumer tech sector or ad tech for example. It's hard
Speaker 4: to talk about this in the context of what's going
Speaker 4: on in tech because there are just a small number
Speaker 4: of really huge companies that control so many of these spaces.
Speaker 4: But with biotech, is the bet different?
Speaker 10: I love this question. We think it is, particularly our biotech.
Speaker 10: So often when people say biotech, you're thinking about drug companies, Yeah,
Speaker 10: which are very important and have been have demonstrated that
Speaker 10: you can invest in fundamental innovation and biology and not
Speaker 10: only change the world would make a lot of money.
Speaker 10: So we think that's true much more broadly with biology
Speaker 10: based companies that include other ways to participate in healthcare
Speaker 10: like diagnostics, precision medicine, but also other bio based verticals
Speaker 10: that aren't even about healthcare, like what did you eat
Speaker 10: this morning? That was biology?
Speaker 4: Right, Carol, You weren't here for this, and hopefully you
Speaker 4: weren't paying attention because you're on vacation. But Apple unveil
Speaker 4: this new suite of devices end of Monday, and one
Speaker 4: thing that interested me was the focus on health. What
Speaker 4: did you make of their move into hearing health with
Speaker 4: this idea of using air air pods as a hearing aid,
Speaker 4: and then also the sleep apnea stuff with the Apple Watch.
Speaker 5: What's your view on that.
Speaker 10: I think the broad theme is exactly what we're saying,
Speaker 10: which is companies coming from tech and investors coming from
Speaker 10: tech are seeing that it's very important to get information
Speaker 10: about what's going on with a person before they become
Speaker 10: a patient, right, and that's where we can really intervene
Speaker 10: in better wellness outcomes. Now, Genoa invests in more really
Speaker 10: fundamental biology with the understanding that you probably can't get
Speaker 10: everything you need to know about say cancer or drug
Speaker 10: selection from sound, So you are going to have to
Speaker 10: take a biological sample. You are going to have to
Speaker 10: analyze that one way. That's where we get into genomics
Speaker 10: and proteomics in those kinds of terms to get kind
Speaker 10: of the advanced information that's going to help patients and doctors.
Speaker 1: What would you think I'm thinking about the Bloomberg and
Speaker 1: audience who's listening In terms of biotech? What aren't we
Speaker 1: talking about a lot?
Speaker 3: You know what I mean?
Speaker 1: Like, I feel like when it comes to we think
Speaker 1: about technology and healthcare space or something, it's like, all right,
Speaker 1: so I don't have to go in and fill out
Speaker 1: the forms anymore.
Speaker 3: But what are you seeing?
Speaker 1: That's just kind of really innovation next step when it
Speaker 1: comes to biotech.
Speaker 10: I love this question because we think it comes down
Speaker 10: to broadening the definition of technology. And you already kind
Speaker 10: of alluded to it because it included in your example
Speaker 10: the hardware. So sometimes when people say tech, they're thinking
Speaker 10: about software so data AI. Yes, lots of great stuff
Speaker 10: going on there.
Speaker 3: I'm tired of counting my steps. I've like got back
Speaker 3: to your normal lives.
Speaker 4: You count yourself you know, their devices.
Speaker 1: I kind of know at the end of the day,
Speaker 1: have I walked, I helped you right exctly?
Speaker 3: Sorry, But if you.
Speaker 10: Get improvements in those kind of hardware innovations and chemistry
Speaker 10: and things that we can't even see, like at the
Speaker 10: microscopic level, it can really change how you think about
Speaker 10: impacting healthcare in a way that goes well beyond the
Speaker 10: current tech.
Speaker 1: So carry it out for us. So tell me, like
Speaker 1: in five years, you know, I don't know, tell us
Speaker 1: where this might all go.
Speaker 10: Yeah, Well, one of the things I would say Genoa
Speaker 10: were very early stage investors. We like to be that
Speaker 10: first round capital partner in venture. So we're thinking seven
Speaker 10: to ten years at the earliest, and then kind of
Speaker 10: the one hundred year thesis about how can biology change
Speaker 10: all of our lives again, not just tell health care,
Speaker 10: but the food that we eat, the things that we make,
Speaker 10: that chemicals, the manufacturing, How can we do that in
Speaker 10: a way that's more sustainable and beneficial to the planet.
Speaker 3: So get so go where does it go?
Speaker 10: So it goes to more efficient uses of inputs to
Speaker 10: make better crops that people want to eat, that are
Speaker 10: healthy for them and healthy for the planet. That's also biotech.
Speaker 3: Does it get rid of plastics.
Speaker 10: Ultimately or turns them into something that isn't a dirty.
Speaker 3: Word such as.
Speaker 10: Bioplastics would be the kind of the immediate next step.
Speaker 10: Can we make the materials that we associate with plastics,
Speaker 10: like your water bottle, something that isn't It doesn't come
Speaker 10: from those same chemicals, but does the same job.
Speaker 4: What's a concept to you that's most exciting about the future.
Speaker 4: What's the world that you imagine that realistically we could
Speaker 4: be living in.
Speaker 10: Yeah, So what I've seen I got my phon genetics
Speaker 10: in the late nineties, and what I've seen in just
Speaker 10: a couple of decades is we've gone from knowing that
Speaker 10: DNA is important to being able to read it and
Speaker 10: now write it and also change it. So the things
Speaker 10: that we can do in software, we can actually write
Speaker 10: programs that do things for us with the data. We're
Speaker 10: going to maybe not over our lifetimes. It's hard. It's
Speaker 10: going to take time. Have more and more of those
Speaker 10: same capabilities when it comes to reading and understanding the
Speaker 10: book of life, and how do we use that irresponsible
Speaker 10: ways to make the products that we need for day
Speaker 10: to day.
Speaker 1: Why has the DNA, like I, you know, go to DNA.
Speaker 4: Yet for Jurassic Park, there is o go on, can
Speaker 4: we do this?
Speaker 10: Yeah? I mean that little I love that little video
Speaker 10: of mister DNA.
Speaker 8: Right.
Speaker 4: Yeah, it's not wrong.
Speaker 10: You can get smaller and smaller samples of DNA and
Speaker 10: find out what was going on in there, and not
Speaker 10: only that, actually start to use that information more and
Speaker 10: more to program say cells or other things.
Speaker 3: Less directors just around the court.
Speaker 10: But let's not make the loss ractors.
Speaker 5: Yeah, but I do.
Speaker 1: Think about DNA and the mapping and how much time
Speaker 1: and money was spent, and I remember, you know, reporting
Speaker 1: like okay, we just you know, we get this and
Speaker 1: there'd be a finding and so on and so forth.
Speaker 1: But in terms of figuring out how to make us
Speaker 1: healthier or deal with ailments and catch them and change
Speaker 1: them and alter the deal like that seems to be
Speaker 1: still a bit elusive or longer term.
Speaker 10: I do think it's important to set expectations correctly. I
Speaker 10: think we can get wrapped up in the potential, but
Speaker 10: then need to recognize that it does take a long
Speaker 10: time to figure out how to do it well and
Speaker 10: safely and responsibly. So that's part of what's going on
Speaker 10: is let's let's not make velociraptors as we go on
Speaker 10: the path the things that actually help humankind.
Speaker 4: Hey, Jenny, I got a question coming from a member
Speaker 4: of our audience who is curious about how small investors,
Speaker 4: people who aren't necessarily venture capitalists, can can play in
Speaker 4: this space.
Speaker 10: Yeah. Yeah, I think that that's an interesting opportunity as well.
Speaker 10: It's obviously the private markets and the accessibility of private
Speaker 10: market investing is a place where you know better than
Speaker 10: I do. There's been some really interesting innovations, and so
Speaker 10: you have areas like angel lists or why Combinator, other
Speaker 10: kind of platforms. It's possible to access those kinds of innovations,
Speaker 10: but it can be really challenging, I think for the
Speaker 10: individual investor because to your point, this takes a lot
Speaker 10: of expertise to do well. So I think finding managers
Speaker 10: who have that expertise kind of in their particular areas,
Speaker 10: and then matching that to things like some groups or
Speaker 10: investors who try to make those connections. You have wonderful
Speaker 10: groups like Rays and the Bridge who are elevating emerging
Speaker 10: managers in specific sectors that can help connect them to
Speaker 10: individual investors.
Speaker 1: So your companies, as you say, seven to ten year runways.
Speaker 10: Just like venture. We're just like venture reinvent venture here
Speaker 10: trying to use best practices.
Speaker 1: And in terms of attracting new money to put to work.
Speaker 3: What's that environment like just before we go?
Speaker 10: It's always been challenging too, Well, it's just challenging to
Speaker 10: attract money to early stage startups, right, it kind of
Speaker 10: should be, right, It's challenging, and part of why I
Speaker 10: started Genua is I saw that it was particularly difficult
Speaker 10: to do it for these companies that are biotech but
Speaker 10: not quote biotech, not drugs, and yet so much explosive
Speaker 10: opportunity fueling innovation in the spaces. What's exciting to see
Speaker 10: is more and more, i would say, later stage investors
Speaker 10: getting excited about the opportunities there and being interested in
Speaker 10: funding these companies when they get to, for example, revenues
Speaker 10: or profitability. But there's still an opportunity in the earliest
Speaker 10: stages for that kind of technology and product development investing.
Speaker 3: That we're doing at GENERA onon pent foods.
Speaker 10: Fond pet foods is an interesting exams pet food It's
Speaker 10: a way to use technologies that already exist to make
Speaker 10: the things that we eat like we use yeasts to
Speaker 10: make beer and bread, for example, but to put into
Speaker 10: it the nutrients that you might want in your.
Speaker 1: Pet food feed my dog's carrots.
Speaker 3: I'm just gonna say, why not.
Speaker 7: I'm coming over for dinner.
Speaker 1: One over, Jenny Rock, Thank you so much, Look forward
Speaker 1: to next time. Already, founder and managing director at Genoadventures
Speaker 1: joining us right here in our interactive Brokers studio.
Speaker 7: I'm brother Marco, a journal How about you let me drive?
Speaker 11: Oh no, no, no, no, honey, please, I'll do the gravel
Speaker 11: LEAs mate.
Speaker 12: I want to try it.
Speaker 10: It's a good question.
Speaker 5: This is the drive to the globe.
Speaker 11: Doing well, Young Don on Bloomberg Radio.
Speaker 1: All right, everybody got about eighteen minutes left in today's
Speaker 1: trading session. Carol Masser along with Tim Stanevik life here
Speaker 1: on Bloomberg busin this week. Man, you know we're up
Speaker 1: on the Nasdaq, as you just heard from Charlie breaking
Speaker 1: down those numbers one point seven percent, so well off
Speaker 1: our lows of the session, and we are just at
Speaker 1: our highs.
Speaker 5: Well, let's up.
Speaker 4: See what Jimmy Lee thinks about. He's founder and CEO
Speaker 4: of the Wealth Consulting Group, joining us from Minnesota, not
Speaker 4: from Las Vegas. No, not from the Bloomberg Interactive Broker's
Speaker 4: studio where we found out.
Speaker 1: Do you minnesot What are you doing on the road?
Speaker 12: I am on the road.
Speaker 11: I do a quarterly business coaching meeting, and this is
Speaker 11: where the meeting is this time.
Speaker 1: What's on the mind of you know, you know, when
Speaker 1: you think about when you talk to business owners, what
Speaker 1: is top of mind? I think it's kind of interesting
Speaker 1: coming off the debate last night. We got a little
Speaker 1: bit on policy, a little bit on the economy, But
Speaker 1: what are you hearing?
Speaker 5: You know?
Speaker 11: I think I think some of it is just interest rates,
Speaker 11: access to capital, looking forward to possibly rates going down,
Speaker 11: maybe maybe being able to borrow money to do deals
Speaker 11: at a lower interest rates, which will make you know,
Speaker 11: those products look better, performing better. Also looking forward to,
Speaker 11: you know, what's going to happen in the election here,
Speaker 11: because we could have some, you know, fairly substantial changes
Speaker 11: in the text policy depending on who gets in and
Speaker 11: how the Congress sets up. So I think business own
Speaker 11: are a little bit anxious to see what happens there.
Speaker 12: But overall I'd say.
Speaker 11: That, you know, most most people I talk to are
Speaker 11: still fairly optimistic about what's going on, and with lower
Speaker 11: rates and the FED cutting rates here soon, I think
Speaker 11: that's a you know, they have signed, they have something
Speaker 11: to look forward to in terms of optimism.
Speaker 1: So, in terms of investing at this point, would you
Speaker 1: suggest investors commit money to the equity market, and if so,
Speaker 1: where would you do so? What about on the fixed
Speaker 1: income side of things? As we are just about a
Speaker 1: week away from the next FED meeting and that FED
Speaker 1: decision where we are expected to get a quarter of
Speaker 1: a point cut, what's your advice?
Speaker 11: Well, Carol, you know, I still believe that we've got
Speaker 11: some upside inequities. Even though we came into this week
Speaker 11: with S and P five hundred up over twenty two percent.
Speaker 11: That is a very good year so far for the
Speaker 11: index anyways, and so a correction of five to ten
Speaker 11: percent is something that would be very typical or normal
Speaker 11: for me after a run up of that of that.
Speaker 12: You know magnitude so quickly.
Speaker 11: And so I think if we get some volatility, I
Speaker 11: would put cash to work on those dips into equities.
Speaker 11: But if you want to have a safer play, I
Speaker 11: think bonds represent a nice opportunity for investors, right now
Speaker 11: with yields definitely coming down, bond investors will will get
Speaker 11: a nice coupon from the interest that the bonds pay,
Speaker 11: but also maybe a little bit of a pickup on
Speaker 11: the ascid value of those bonds as rates come down.
Speaker 11: And so I think you'd be you know, in a
Speaker 11: diverse sied portfolio as as many people on both stocks
Speaker 11: and bonds and do well going into the end of
Speaker 11: the year and beyond, and as we start to focus
Speaker 11: on next year, of course, we have the election ahead
Speaker 11: of us to really, you know, help help I think
Speaker 11: investors decide how aggresive they want to be.
Speaker 4: Jimmy, which bonds are you talking about? I mean, were
Speaker 4: you we're on the curve, are you talking about or
Speaker 4: are you talking about? I don't know, Muni's what do
Speaker 4: you what do you think that?
Speaker 3: Yeah?
Speaker 12: Well, I like a little bit duration.
Speaker 11: So as you guys know, we've had a duration to
Speaker 11: our bond portfolios, so somewhere between like the seven to
Speaker 11: ten year type maturities, even just the ag I think
Speaker 11: represents a good opportunity for a lot of investors today
Speaker 11: as yields come down. So I would expect that the
Speaker 11: tenure treasury yields come down, as I've been saying, closer
Speaker 11: to three and a half percent. I think it's three
Speaker 11: point six five ish today, kind of we're hovering around,
Speaker 11: and so we're getting close to that already before we
Speaker 11: even have a rate cut, And I think today's a
Speaker 11: CPI number kind of makes it a fairly high certainty,
Speaker 11: now high probability that we're going to get a twenty
Speaker 11: five basis point cut this month, which I think is
Speaker 11: fine to get started, but I think the FED really
Speaker 11: needs to keep a eye on inflation and on the
Speaker 11: economy and make sure that if we see, you know,
Speaker 11: signs of a weakening economy more than expected after this
Speaker 11: huge adjustment in the you know, jobs numbers this year,
Speaker 11: you know, I think the FED could be more aggressive
Speaker 11: down the road here.
Speaker 1: Jimmy, you shared some notes with our producer Paul Brennan,
Speaker 1: and you say, my biggest piece of advice is for
Speaker 1: investors who are in indexing into the S and P
Speaker 1: five one hundred are loaded up in their mutual funds
Speaker 1: and the big tech names is to remember twenty twenty two,
Speaker 1: and you talk about whether it was Meta or Netflix
Speaker 1: and some of the other big fang stocks and how
Speaker 1: much they were down.
Speaker 3: Why is it important to remember that?
Speaker 11: Well, you know, the top ten companies and S and
Speaker 11: P five hundred now represent well over thirty percent of
Speaker 11: that index, and so a lot of investors buy index products,
Speaker 11: and so that'suld be five hundred if you think you're
Speaker 11: diversified across five hundred of the largest companies evenly, that's
Speaker 11: just not the way it is, right because of the
Speaker 11: market cap weighted index that it is. And so investors
Speaker 11: could suffer some pretty large declines if you have, you know,
Speaker 11: your money tied up in a lot of the index products,
Speaker 11: maybe more than you think concentrated in those few names.
Speaker 11: And so, and we also have a lot of investors
Speaker 11: that are loaded up in the names that have gone
Speaker 11: up the most. We're having a nice rally in tech today,
Speaker 11: but right now, Carol, we're underweight tech, and we're overweight
Speaker 11: to the cyclical sectors. We're overweight some of the sectors
Speaker 11: we think will do well when rates go down, like
Speaker 11: real estate, you know, dividend paying sectors. We've seen a
Speaker 11: nice reversal in some of these areas over the last
Speaker 11: thirty days, seen a trend starting to perform to form
Speaker 11: in areas like staples healthcare, some dividends. I'm sorry, defensive
Speaker 11: type sectors that pay dividends, but you know, bracing for
Speaker 11: rates coming down.
Speaker 4: Jimmy, I know you're underweight tech. You just told us that.
Speaker 4: But where do you want not want to be? What
Speaker 4: do you want to avoid?
Speaker 11: Well, I just don't, Tim, I think you don't don't
Speaker 11: want too much money in those high growth names that
Speaker 11: have gone up so much so quickly.
Speaker 4: Are you saying.
Speaker 11: I really don't want to I really want to throw
Speaker 11: those out there, but we all know which ones they are.
Speaker 11: If you've gone over you know fifty percent returns or
Speaker 11: to date, you know who you are, and so I
Speaker 11: just be careful not to get too greedy, and you know,
Speaker 11: we could see some fairly steep declines. I mean, I
Speaker 11: thought that Navidia earning support, for example, was fantastic, but
Speaker 11: a stock went down. It's up today a lot, but
Speaker 11: when down a lot after that, So that means to
Speaker 11: me there's a lot of investors in names like that
Speaker 11: that are momentum investors.
Speaker 12: Maybe even the shorter term traders.
Speaker 11: And so when companies stock price is price for perfection,
Speaker 11: I think it's to be careful. Although I think that
Speaker 11: that specific company, you could be a buyer on the dips.
Speaker 11: I think there's some more opportunity there, But just make
Speaker 11: sure that your portfolio doesn't have too much of it
Speaker 11: as a percentage, and just try to not be too greedy.
Speaker 1: Hey, before we go, I think we'd be remiss if
Speaker 1: not asking you about the debate last night. Just got
Speaker 1: about forty seconds left here. Anything of note for you
Speaker 1: in terms of what we are getting from the candidates.
Speaker 1: Be it last night that make you think I don't
Speaker 1: know something when it comes to the investment environment going forward,
Speaker 1: or that is making you adjust some of your strategy
Speaker 1: as a result.
Speaker 11: Well, I'm not really sure about adjusting our strategies. And
Speaker 11: I would really caution investors to not get too focused
Speaker 11: on the rhetoric because what they're campaigning on might not
Speaker 11: be exactly what ends up happening. Really, what happens in
Speaker 11: congresses is what I think matters as well, And so
Speaker 11: you know, I think investors like a split government so
Speaker 11: that you've got some checks and balances there. I thought
Speaker 11: last night's debate was very interesting. I thought that the
Speaker 11: moderators seem like they were kind of gigging up on
Speaker 11: the one candidate, and so I don't know.
Speaker 12: I hope to see another debate.
Speaker 5: I would.
Speaker 11: I'd love to see another one, and you know, continue
Speaker 11: to focus on the issues and see where policy really
Speaker 11: changes for people that are concerned about the economy in
Speaker 11: the market.
Speaker 1: Well, and Don Trumpess said you would participate in a
Speaker 1: second debate on either NBC or Fox, so we'll see
Speaker 1: what happens. Jimmy Lee, thank you so much, Founder and
Speaker 1: chief executive officer, Wealth Consulting Group from Minnesota.
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