1 00:00:00,800 --> 00:00:04,040 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 2 00:00:04,040 --> 00:00:06,920 Speaker 1: my co host Matt Miller. Every business day, we bring 3 00:00:06,960 --> 00:00:11,520 Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along 4 00:00:11,560 --> 00:00:15,600 Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast 5 00:00:15,640 --> 00:00:18,479 Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:22,120 Speaker 1: at Bloomberg dot com slash podcast. All right, let's take 7 00:00:22,160 --> 00:00:24,239 Speaker 1: a look at the smart home. And she met. You know, 8 00:00:24,280 --> 00:00:27,040 Speaker 1: I recently sold my house and I'm only built it 9 00:00:27,120 --> 00:00:30,200 Speaker 1: seventeen years ago. But apparently it's not smart enough because 10 00:00:30,200 --> 00:00:33,320 Speaker 1: the new buyer had his tech guy come by to 11 00:00:33,400 --> 00:00:35,479 Speaker 1: do an assessment. I think they're gonna be a big upgrade. 12 00:00:35,520 --> 00:00:37,159 Speaker 1: I don't have a tech guy, but apparently a lot 13 00:00:37,159 --> 00:00:39,040 Speaker 1: of people have a tech guy. You need a tech 14 00:00:39,040 --> 00:00:42,159 Speaker 1: guy for your house. Aaron Amy, tech guy, co founder 15 00:00:42,240 --> 00:00:45,800 Speaker 1: and CEO of Brilliant Home Technology. Aaron, thanks so much 16 00:00:45,840 --> 00:00:49,519 Speaker 1: for joining us here. I guess the smart home, I 17 00:00:49,600 --> 00:00:51,559 Speaker 1: know it's a big thing. Give us a sense of 18 00:00:51,600 --> 00:00:54,200 Speaker 1: how big it is, how fast it's growing. What are 19 00:00:54,200 --> 00:00:56,960 Speaker 1: people doing to their homes these days? Yeah, I mean 20 00:00:57,160 --> 00:01:00,080 Speaker 1: it's it's the next great platform. Because technology advance is 21 00:01:00,120 --> 00:01:02,720 Speaker 1: in a series of platform wars, and we've seen that 22 00:01:02,720 --> 00:01:06,600 Speaker 1: happen with personal computers, Internet and then mobile. Uh. Smart 23 00:01:06,600 --> 00:01:09,240 Speaker 1: home has is the next great platform and it has 24 00:01:09,360 --> 00:01:13,240 Speaker 1: rapidly grown to more than seventy five billion dollars and 25 00:01:13,400 --> 00:01:16,680 Speaker 1: is taking over every home. But so what is it? 26 00:01:16,720 --> 00:01:19,480 Speaker 1: I mean? Is this where like the lights turn on 27 00:01:19,560 --> 00:01:21,480 Speaker 1: and off when you walk in and out of rooms, 28 00:01:21,600 --> 00:01:27,040 Speaker 1: does your stereo, like your playlist follow you around? Um? 29 00:01:27,080 --> 00:01:30,520 Speaker 1: You know, does it adjust the thermos stat I don't 30 00:01:30,520 --> 00:01:33,720 Speaker 1: get it. It does all of those things, and it 31 00:01:33,800 --> 00:01:37,039 Speaker 1: basically personalizes your home, so it does what you wanted 32 00:01:37,120 --> 00:01:38,880 Speaker 1: to do with a minimum of us and bother and 33 00:01:38,920 --> 00:01:41,920 Speaker 1: it opens up new kinds of possibilities. So when someone's 34 00:01:41,959 --> 00:01:43,720 Speaker 1: at the door, you see who it is and you 35 00:01:43,760 --> 00:01:46,319 Speaker 1: can talk to them. You can give people permission to 36 00:01:46,360 --> 00:01:48,440 Speaker 1: come into your home without having to make a key 37 00:01:48,480 --> 00:01:51,760 Speaker 1: for them and the security risks that that entails. And 38 00:01:51,800 --> 00:01:54,400 Speaker 1: then you can automate functions. So when you're gonna watch 39 00:01:54,400 --> 00:01:56,080 Speaker 1: a movie or you're gonna go to bed, all of 40 00:01:56,080 --> 00:01:58,920 Speaker 1: the different things that need to happen, whether it's temperature, 41 00:01:59,120 --> 00:02:02,080 Speaker 1: whether it's light, whether it's locks and so on, can 42 00:02:02,120 --> 00:02:05,680 Speaker 1: all happen automatically. So what are some of the most 43 00:02:05,680 --> 00:02:11,959 Speaker 1: popular functionality that I guess people are asking for these days. Yeah, 44 00:02:11,960 --> 00:02:15,200 Speaker 1: I mean smart locks has been a really important category 45 00:02:15,240 --> 00:02:18,160 Speaker 1: of access control because there are a lot of security 46 00:02:18,200 --> 00:02:23,160 Speaker 1: benefits uh to to being able to control access remotely. UH. 47 00:02:23,240 --> 00:02:27,040 Speaker 1: Security has been a big area where where you have 48 00:02:27,120 --> 00:02:29,800 Speaker 1: you have peace of mind that your home is secure. Uh. 49 00:02:30,000 --> 00:02:35,000 Speaker 1: Lighting is a very important area. Smart music is another. 50 00:02:35,200 --> 00:02:38,280 Speaker 1: Is another big one. Smart climate control both saves a 51 00:02:38,280 --> 00:02:41,200 Speaker 1: lot of energy and makes homes more comfortable. So all 52 00:02:41,200 --> 00:02:44,760 Speaker 1: of these categories have already proven themselves to be very significantly. 53 00:02:45,840 --> 00:02:49,359 Speaker 1: So where do consumers get hold of all this? I mean, 54 00:02:49,400 --> 00:02:52,760 Speaker 1: Paul's HomeBuyer had a tech guy. I don't even know 55 00:02:52,800 --> 00:02:55,840 Speaker 1: where I would go to get one. Yeah, so there 56 00:02:55,919 --> 00:02:59,320 Speaker 1: certainly are some, you know, some tech guys that you 57 00:02:59,320 --> 00:03:01,720 Speaker 1: can get in so on. Increasingly, what we're seeing a 58 00:03:01,800 --> 00:03:05,679 Speaker 1: brilliant is new homes being built with technology in them 59 00:03:05,720 --> 00:03:07,880 Speaker 1: as well. So you can buy it yourself and you 60 00:03:07,880 --> 00:03:09,959 Speaker 1: can install it yourself. You can have it a tech 61 00:03:10,000 --> 00:03:11,760 Speaker 1: guy do it if you're not that is that chech 62 00:03:11,840 --> 00:03:15,520 Speaker 1: forward yourself, or it simply comes when you get a 63 00:03:15,560 --> 00:03:18,120 Speaker 1: new house or or you move into a new apartment. 64 00:03:18,200 --> 00:03:23,200 Speaker 1: Because the developers are increasingly building homes as smart homes. 65 00:03:23,200 --> 00:03:25,320 Speaker 1: So one of the things I'm concerned about. All right, 66 00:03:25,320 --> 00:03:27,800 Speaker 1: what I've noticed, I guess, is that the technology changes 67 00:03:27,880 --> 00:03:30,120 Speaker 1: so quickly. So whatever tech you put into your house, 68 00:03:30,840 --> 00:03:33,720 Speaker 1: it's out of date, you know, five years later. It 69 00:03:33,800 --> 00:03:36,880 Speaker 1: seems like it's got to be super super flexible to 70 00:03:36,960 --> 00:03:40,720 Speaker 1: be adaptable going forward. It is, um, it is, and 71 00:03:41,000 --> 00:03:42,960 Speaker 1: that's one of the changes. Uh. And one of the 72 00:03:42,960 --> 00:03:45,800 Speaker 1: things that companies like Brilliant are doing is making sure 73 00:03:45,920 --> 00:03:48,920 Speaker 1: that what we're doing is extensible. So for example, we're 74 00:03:49,000 --> 00:03:51,920 Speaker 1: updating our software every two weeks, and the software is 75 00:03:51,960 --> 00:03:55,640 Speaker 1: really the heart of the system. UM. So your home 76 00:03:55,720 --> 00:03:58,480 Speaker 1: actually gets better as you as you live in it. 77 00:03:58,520 --> 00:04:00,800 Speaker 1: And we've already seen this in other rbunus, like if 78 00:04:00,840 --> 00:04:03,400 Speaker 1: you have a Tesla car, for example, you know they're 79 00:04:03,440 --> 00:04:06,120 Speaker 1: always software updates, and and you know, one day your 80 00:04:06,120 --> 00:04:08,760 Speaker 1: car can parallel park itself. One day it can send 81 00:04:08,760 --> 00:04:12,000 Speaker 1: the autonomously drive. Uh. And that happens without having to 82 00:04:12,080 --> 00:04:16,160 Speaker 1: update the underlying hardware platform. Are you worried about these 83 00:04:16,200 --> 00:04:19,600 Speaker 1: devices getting hacked? I mean, I wouldn't want, for example, 84 00:04:19,680 --> 00:04:23,720 Speaker 1: somebody to be watching me through my refrigerator or whatever 85 00:04:24,200 --> 00:04:27,600 Speaker 1: you know, watching through the refrigerator. Note this is this 86 00:04:27,640 --> 00:04:30,200 Speaker 1: is a really important topic. And uh and yes, you know, 87 00:04:30,360 --> 00:04:34,360 Speaker 1: the the responsible companies in this field are very very 88 00:04:34,360 --> 00:04:39,400 Speaker 1: careful about about security and actually bring additional security to 89 00:04:39,720 --> 00:04:43,680 Speaker 1: uh to bear. I myself have a background in cybersecurity. UM. 90 00:04:43,960 --> 00:04:47,039 Speaker 1: And you know, I think that we have the ability 91 00:04:47,120 --> 00:04:49,760 Speaker 1: to offer much better security. For example, you don't have 92 00:04:49,839 --> 00:04:51,960 Speaker 1: to leave your key under the welcome matter at a 93 00:04:52,000 --> 00:04:53,839 Speaker 1: fake rock in the garden that everyone knows what it 94 00:04:53,839 --> 00:04:56,479 Speaker 1: looks like. Uh. If it's to give people access to 95 00:04:56,520 --> 00:05:00,440 Speaker 1: your house, all right, I guess that's that's where we're own, Matt. 96 00:05:00,520 --> 00:05:02,719 Speaker 1: So when you, you know, buy your I'm happy to 97 00:05:02,800 --> 00:05:05,479 Speaker 1: go there. I just want someone to do it for me. Yeah, 98 00:05:05,520 --> 00:05:07,200 Speaker 1: you got a guy. We'll find you a guy. All right, 99 00:05:07,360 --> 00:05:09,520 Speaker 1: maybe Aaron, Maybe we'll do that for Aaron. Amy, co 100 00:05:09,640 --> 00:05:13,240 Speaker 1: founder CEO Brilliant Home Technology, is talking about upgrading the 101 00:05:13,240 --> 00:05:16,640 Speaker 1: homes to technology. UM and again you know again, what 102 00:05:16,680 --> 00:05:19,640 Speaker 1: I've noticed is the technology changes so quickly. So you 103 00:05:20,040 --> 00:05:22,320 Speaker 1: look at some of those houses where they have like panels, 104 00:05:22,720 --> 00:05:25,039 Speaker 1: you know, kind of in the wall, and they don't 105 00:05:25,080 --> 00:05:27,160 Speaker 1: use them anymore. The intercom all that kind of stuff. 106 00:05:27,200 --> 00:05:29,000 Speaker 1: I gotta say, I I first heard about all this 107 00:05:29,000 --> 00:05:33,280 Speaker 1: stuff when Bill Gates Um built Zanna Do two point 108 00:05:33,320 --> 00:05:36,800 Speaker 1: oh like twenty years ago. So now regular people are 109 00:05:36,839 --> 00:05:43,960 Speaker 1: getting what exactly Let's get to the vaccine mandate for 110 00:05:44,000 --> 00:05:46,760 Speaker 1: federal employees. It looks like President Biden is set to 111 00:05:46,839 --> 00:05:50,400 Speaker 1: announce a vaccine mandate, and we have Josh wynd Grove 112 00:05:50,480 --> 00:05:52,880 Speaker 1: who's broken the story. Josh, what are we looking for? 113 00:05:53,680 --> 00:05:56,279 Speaker 1: You know, we're gonna hear from five PM, probably probably 114 00:05:56,279 --> 00:05:59,599 Speaker 1: gonna get some more details beforehand. But to rewind to 115 00:05:59,720 --> 00:06:01,520 Speaker 1: Jill Live, they said a rule he had to be 116 00:06:01,600 --> 00:06:04,479 Speaker 1: vaccinated or you had an option to sort of do 117 00:06:04,560 --> 00:06:07,200 Speaker 1: testing and masking and that sort of thing. Now he's 118 00:06:07,240 --> 00:06:09,719 Speaker 1: expanding it, sort of taking away that option B so 119 00:06:09,800 --> 00:06:13,200 Speaker 1: you have to be vaccinated, and he's expanding the number 120 00:06:13,320 --> 00:06:17,359 Speaker 1: or the scope of the federal contract workforce that it 121 00:06:17,400 --> 00:06:20,720 Speaker 1: applies to. Also previously was aimed at on site, so 122 00:06:20,839 --> 00:06:25,600 Speaker 1: essentially more people being covered by this without an option 123 00:06:25,640 --> 00:06:29,120 Speaker 1: to instead of get a vaccine, get regular testing and masking. 124 00:06:29,200 --> 00:06:32,320 Speaker 1: So you know, obviously many details still TPD. You would 125 00:06:32,320 --> 00:06:35,520 Speaker 1: expect pushback or legal challenges potentially to this. We don't 126 00:06:35,520 --> 00:06:38,400 Speaker 1: know when this would take effect. We don't know what 127 00:06:38,400 --> 00:06:40,320 Speaker 1: it would mean for let's say, a federal worker who 128 00:06:40,360 --> 00:06:43,960 Speaker 1: showed up on that day without being able to demonstrate vaccination. 129 00:06:44,120 --> 00:06:46,680 Speaker 1: So definitely moving target on this one, but a substantial 130 00:06:46,720 --> 00:06:50,359 Speaker 1: expansion of the vaccine requirement and for federal workers. You know, 131 00:06:50,360 --> 00:06:52,720 Speaker 1: it's interesting, Josh, you know roughly how many people were 132 00:06:52,720 --> 00:06:55,440 Speaker 1: talking about here, Like it's not all federal employees, just 133 00:06:55,520 --> 00:06:59,760 Speaker 1: executive branch employees plus federal contractors. That still sounds like 134 00:06:59,800 --> 00:07:01,360 Speaker 1: a lot of people to make. Yeah, I mean, I 135 00:07:01,400 --> 00:07:03,880 Speaker 1: think we're talking millions of people, but the exact member, 136 00:07:04,360 --> 00:07:06,400 Speaker 1: you know, we don't know. And I think the question 137 00:07:06,720 --> 00:07:09,120 Speaker 1: that I have right now is is, you know, why 138 00:07:09,120 --> 00:07:10,960 Speaker 1: are we going to see push back from labor groups. 139 00:07:11,000 --> 00:07:14,640 Speaker 1: Are they're going to be legal challenges or arbitration, you know, grievances, 140 00:07:14,720 --> 00:07:17,600 Speaker 1: these kinds of things filed, you know, potentially, but the 141 00:07:17,600 --> 00:07:21,720 Speaker 1: White House broadly abews these sort of you know, Alkhart mandates. 142 00:07:21,760 --> 00:07:23,800 Speaker 1: Pretty big one for them is the ctereral government. But 143 00:07:23,800 --> 00:07:25,960 Speaker 1: you know, for smaller companies are doing the same thing 144 00:07:26,400 --> 00:07:29,560 Speaker 1: as a good way to sort of spur vaccination rates 145 00:07:29,600 --> 00:07:31,760 Speaker 1: people sort of you know, I don't want to be 146 00:07:31,920 --> 00:07:34,680 Speaker 1: ordered by the government to do it overall. But if 147 00:07:34,720 --> 00:07:37,480 Speaker 1: your employer requires that, there's there's evidence of that leads 148 00:07:37,480 --> 00:07:40,640 Speaker 1: to enough tick in vaccinations. But you know, of course, 149 00:07:40,680 --> 00:07:42,320 Speaker 1: the concern on the flip side is that it might 150 00:07:42,400 --> 00:07:45,600 Speaker 1: generate blowback or you know, get people's backed up, you know, 151 00:07:45,720 --> 00:07:48,040 Speaker 1: that kind of thing. So, you know, broad a lot 152 00:07:48,080 --> 00:07:50,640 Speaker 1: of moving parts in this especially it's almost like they're 153 00:07:50,680 --> 00:07:55,960 Speaker 1: trying to antagonize, um, the Trumpian anti vaxers. We know 154 00:07:56,080 --> 00:08:02,600 Speaker 1: that percent maybe more are valy opposed, right, Uh yeah. 155 00:08:02,960 --> 00:08:04,960 Speaker 1: I mean there's different camps where you've got hardcore anti 156 00:08:05,000 --> 00:08:06,920 Speaker 1: vax people. You've got people that can be bothered, you 157 00:08:06,960 --> 00:08:09,000 Speaker 1: have people that have barriers, like they don't have paid 158 00:08:09,040 --> 00:08:10,600 Speaker 1: time off to go get it, that sort of thing. 159 00:08:10,640 --> 00:08:12,680 Speaker 1: You know. I think it's worth noting that vaccine has 160 00:08:12,680 --> 00:08:16,080 Speaker 1: a nancy has been declining in the US, not maybe 161 00:08:16,080 --> 00:08:18,000 Speaker 1: as fast as other countries, but it's been going down. 162 00:08:18,000 --> 00:08:22,239 Speaker 1: And we now have you know, seventy of US adults 163 00:08:22,280 --> 00:08:24,840 Speaker 1: with at least one shot. That's a fairly big number. 164 00:08:25,080 --> 00:08:27,480 Speaker 1: And you know they had shot for seventy in July, 165 00:08:27,560 --> 00:08:30,000 Speaker 1: they hit it in August and now seventy five. The 166 00:08:30,000 --> 00:08:31,920 Speaker 1: problem of courses with delta you might need to get 167 00:08:32,320 --> 00:08:34,120 Speaker 1: quite a bit higher than that when you And of 168 00:08:34,160 --> 00:08:36,240 Speaker 1: course there's the whole segment of the population those under 169 00:08:36,240 --> 00:08:38,199 Speaker 1: twelve that aren't eligible for a vaccine and are probably 170 00:08:38,200 --> 00:08:41,800 Speaker 1: weeks or months away from being eligible. So you know 171 00:08:41,920 --> 00:08:44,760 Speaker 1: the yeah, absolutely, you know, if you're die hard anti 172 00:08:44,800 --> 00:08:47,760 Speaker 1: vax or, this is probably not going to change your mind. 173 00:08:47,840 --> 00:08:50,040 Speaker 1: But there's there's folks in the middle essentially that aren't 174 00:08:50,080 --> 00:08:52,640 Speaker 1: vaccinated to have questions. Maybe I haven't gotten around to 175 00:08:52,679 --> 00:08:55,280 Speaker 1: it that that I think they're sort of hoping the 176 00:08:56,040 --> 00:08:58,200 Speaker 1: mandates at the employer level in other with your job 177 00:08:58,280 --> 00:09:00,199 Speaker 1: making you do it. Well, we'll have it if you 178 00:09:00,240 --> 00:09:02,640 Speaker 1: have a difference. Yeah, Josh, it's you know, the big 179 00:09:02,640 --> 00:09:04,880 Speaker 1: take story of the day that Matt and I had 180 00:09:05,280 --> 00:09:08,080 Speaker 1: we were talking about this morning, focused on, you know, 181 00:09:08,240 --> 00:09:12,640 Speaker 1: corporate mandates. Um, does a White House hope or anticipate 182 00:09:12,760 --> 00:09:16,520 Speaker 1: that by taking this aggressive federal policy that they will 183 00:09:16,640 --> 00:09:19,600 Speaker 1: you know, maybe coax or urge or prod some big 184 00:09:19,600 --> 00:09:23,280 Speaker 1: corporations to kind of follow suit with vaccine and dates. Yeah. Absolutely, 185 00:09:23,280 --> 00:09:25,640 Speaker 1: you know they're sort of hoping that people joined the 186 00:09:25,679 --> 00:09:28,960 Speaker 1: parade behind them in this big wave started. You recall 187 00:09:29,080 --> 00:09:32,120 Speaker 1: with the approval of Fiser's vaccine, remember from montsore reason, 188 00:09:32,120 --> 00:09:36,000 Speaker 1: and only on an emergency authorization. When the FDA gave 189 00:09:36,040 --> 00:09:39,360 Speaker 1: full approval, Biden's administration took that as a real sort 190 00:09:39,360 --> 00:09:43,080 Speaker 1: of turning point to start saying, Okay, you know, corporate America, look, 191 00:09:43,200 --> 00:09:45,440 Speaker 1: you know, you know it's not an emergency authorized vaccine, 192 00:09:45,600 --> 00:09:49,120 Speaker 1: is now an approved vaccine. So you're on stronger footing 193 00:09:49,240 --> 00:09:52,440 Speaker 1: morally legally what have you to be able to require vaccination? 194 00:09:52,480 --> 00:09:53,840 Speaker 1: So I think we're going to expect to hear him 195 00:09:54,000 --> 00:09:56,280 Speaker 1: call for that this evening, beat that drum. We also 196 00:09:56,360 --> 00:09:59,360 Speaker 1: expect him to give an update on boosters. Remember they 197 00:09:59,360 --> 00:10:01,840 Speaker 1: planned to start sister shots in a week from Monday. 198 00:10:02,200 --> 00:10:05,280 Speaker 1: Maybe more on testing, a couple other elements on schools. 199 00:10:05,400 --> 00:10:07,800 Speaker 1: There could be some you know, news if you will, 200 00:10:07,960 --> 00:10:10,240 Speaker 1: in this speech, But broadly, I think he just wants 201 00:10:10,240 --> 00:10:11,720 Speaker 1: to kind of sweep together what they've been doing over 202 00:10:11,760 --> 00:10:13,319 Speaker 1: the summer to try to curb this thing as those 203 00:10:13,360 --> 00:10:16,040 Speaker 1: cases rose. But so far, as far as we know, 204 00:10:16,080 --> 00:10:20,040 Speaker 1: this is only a requirement for the two two vaccine shots, 205 00:10:20,120 --> 00:10:24,000 Speaker 1: or is it? Will they require three? Now that's a 206 00:10:24,040 --> 00:10:26,400 Speaker 1: good question right now that they consider too to be 207 00:10:26,440 --> 00:10:29,640 Speaker 1: fully vaccinated, so that but that's that's as of now, 208 00:10:29,800 --> 00:10:32,319 Speaker 1: so presumably that may change. But that is a huge 209 00:10:32,320 --> 00:10:34,680 Speaker 1: open question right now among researchers about what will happen. 210 00:10:34,720 --> 00:10:36,599 Speaker 1: And of course those folks have got that Johnson and 211 00:10:36,679 --> 00:10:39,640 Speaker 1: Johnson shot something fourteen million of people in the US. 212 00:10:39,960 --> 00:10:41,760 Speaker 1: They don't know what they're going to do for booster shots, 213 00:10:41,800 --> 00:10:44,240 Speaker 1: and you know they're considered fully vaccinated after one shot, 214 00:10:44,360 --> 00:10:46,920 Speaker 1: so you know, this, uh, a lot of questions still 215 00:10:46,960 --> 00:10:49,000 Speaker 1: to be answered. We expect to have some clarity in 216 00:10:49,559 --> 00:10:52,400 Speaker 1: you know, the afternoon, either around the speech, perhaps before 217 00:10:53,320 --> 00:10:56,360 Speaker 1: the speech, on on what exactly they're proposing. And as 218 00:10:56,400 --> 00:10:58,360 Speaker 1: I say, I'm expecting a bit of a wave of 219 00:10:58,440 --> 00:11:01,240 Speaker 1: statements from labor groups and what have you saying you know, 220 00:11:01,320 --> 00:11:04,559 Speaker 1: responding to this, you know, about their members potentially being 221 00:11:04,600 --> 00:11:06,280 Speaker 1: forced to do this, and we just simply don't know 222 00:11:06,360 --> 00:11:09,800 Speaker 1: the what you know, what if kind of factor? If 223 00:11:09,840 --> 00:11:12,400 Speaker 1: someone shows up? Are they fired? Are they furloughed? Are 224 00:11:12,440 --> 00:11:14,440 Speaker 1: they sent home? Are they you know, work from home? Like, 225 00:11:14,480 --> 00:11:16,600 Speaker 1: what is the deal? We don't know. It's gonna be fascinatorry. 226 00:11:16,600 --> 00:11:18,559 Speaker 1: We're gonna get more details coming throughout the day. You'll 227 00:11:18,600 --> 00:11:21,280 Speaker 1: have and your team, lots of reporting there, I am sure. 228 00:11:21,360 --> 00:11:24,760 Speaker 1: Josh wind Grove, White House, correspondent for Bloomberg News, joinings 229 00:11:24,760 --> 00:11:30,480 Speaker 1: on the phone from Washington, d C. Again green on 230 00:11:30,520 --> 00:11:33,600 Speaker 1: the screen, yet again at or near all time highs. 231 00:11:33,640 --> 00:11:35,840 Speaker 1: As we continue to hear that from Greg jard and 232 00:11:35,920 --> 00:11:38,880 Speaker 1: his reporting seemingly on a daily basis. It's just for 233 00:11:38,880 --> 00:11:40,719 Speaker 1: a lot of folks, this feels like a market and 234 00:11:40,840 --> 00:11:43,559 Speaker 1: looks like a market that is priced to perfection and 235 00:11:43,640 --> 00:11:46,920 Speaker 1: might have some vulnerability into it, but that's not stopping 236 00:11:47,120 --> 00:11:49,160 Speaker 1: this market. Let's check in with an expert who knows 237 00:11:49,200 --> 00:11:53,360 Speaker 1: this stuff. Lisa Chalotte, chief investment officer for wealth management 238 00:11:53,360 --> 00:11:56,360 Speaker 1: at Morgan Stanley. They have one point five trillion with 239 00:11:56,400 --> 00:11:59,720 Speaker 1: a t UH and assets under management. Lisa, thanks so 240 00:11:59,800 --> 00:12:03,199 Speaker 1: much for joining us here today. I guess I'll start 241 00:12:03,200 --> 00:12:05,880 Speaker 1: with kind of the wall of worry, uh kind of 242 00:12:06,200 --> 00:12:10,320 Speaker 1: question or topic here. How concerned are you about this 243 00:12:10,400 --> 00:12:14,080 Speaker 1: market given some of the headwinds that you know, folks 244 00:12:14,160 --> 00:12:17,000 Speaker 1: rightfully point out, whether it's rising interest rates tapering and 245 00:12:17,160 --> 00:12:19,880 Speaker 1: you know, just the delta variant. How do you view 246 00:12:19,880 --> 00:12:23,800 Speaker 1: this market right here? Uh? So, look, you know we've 247 00:12:23,840 --> 00:12:27,120 Speaker 1: been on the record, um, you know, to say that 248 00:12:27,200 --> 00:12:30,520 Speaker 1: this is a market that for the most part, while 249 00:12:30,559 --> 00:12:33,120 Speaker 1: I can claim that it's climbing the wall of worry 250 00:12:33,280 --> 00:12:37,600 Speaker 1: and and certainly positioning uh in you know, the megacap 251 00:12:37,679 --> 00:12:43,040 Speaker 1: tex sox, it's suggests an element of defensiveness. UM. You know, 252 00:12:43,120 --> 00:12:45,480 Speaker 1: our sense has been that that this is a market 253 00:12:46,240 --> 00:12:50,000 Speaker 1: uh you know that is shrugging off most of the concerns, 254 00:12:50,760 --> 00:12:54,880 Speaker 1: whether it is um you know, disruptions coming from delta variant, 255 00:12:55,000 --> 00:12:58,240 Speaker 1: whether it's you know, supply chain concerns, whether it's been 256 00:12:58,280 --> 00:13:03,880 Speaker 1: the China regulator or uh crackdown, or you know, shifts 257 00:13:03,920 --> 00:13:07,960 Speaker 1: in policy um from the Fed. UM. Nothing really has 258 00:13:08,040 --> 00:13:11,360 Speaker 1: gotten in the way of this market. You know. It's 259 00:13:11,360 --> 00:13:16,520 Speaker 1: it's notable. I think uh that uh for for much 260 00:13:16,559 --> 00:13:19,920 Speaker 1: of the period, uh you know, after the first quarter, 261 00:13:20,400 --> 00:13:23,120 Speaker 1: many folks were saying that the market was rallying because 262 00:13:23,160 --> 00:13:26,600 Speaker 1: interest rates were falling. Uh. You know, really, over the 263 00:13:26,679 --> 00:13:30,240 Speaker 1: last month or so, we've seen the ten year back 264 00:13:30,320 --> 00:13:32,920 Speaker 1: up from its ultimate lows on the ten year of 265 00:13:33,320 --> 00:13:36,920 Speaker 1: one seventeen. We're back up here, uh into the mid 266 00:13:36,960 --> 00:13:40,640 Speaker 1: one thirties on the ten yere Uh And and even 267 00:13:40,679 --> 00:13:45,319 Speaker 1: that has not uh you know, interrupted this this grind 268 00:13:45,480 --> 00:13:49,280 Speaker 1: higher UM in markets. So you but you expect a 269 00:13:49,360 --> 00:13:52,319 Speaker 1: pullback right least, so you expect to ten to correction 270 00:13:52,800 --> 00:13:55,680 Speaker 1: before the end of the year. Yeah, we do, and 271 00:13:55,679 --> 00:13:59,040 Speaker 1: and and um. The reason for that is essentially two fold. 272 00:13:59,160 --> 00:14:02,680 Speaker 1: So with that move in rates, we ultimately think that 273 00:14:02,840 --> 00:14:08,559 Speaker 1: price earnings ratios, especially on those most expensive stocks, should compress. 274 00:14:08,679 --> 00:14:13,000 Speaker 1: We've seen PE multiple compression uh in many many other 275 00:14:13,120 --> 00:14:16,360 Speaker 1: parts of the market, whether you're talking about international stocks, 276 00:14:16,400 --> 00:14:20,720 Speaker 1: you're talking about value stocks, more cyclical stocks, you're talking 277 00:14:20,800 --> 00:14:23,680 Speaker 1: about the small caps. Uh. This is the one area 278 00:14:23,680 --> 00:14:27,480 Speaker 1: of the market that has remained immune so far. Uh. 279 00:14:27,480 --> 00:14:30,160 Speaker 1: And there's just no precedent for that. Uh. You know, 280 00:14:30,280 --> 00:14:34,200 Speaker 1: historically when rates go up, ultimately PE ratios um do 281 00:14:34,400 --> 00:14:36,560 Speaker 1: come down. So we we see that as a risk. 282 00:14:36,600 --> 00:14:40,200 Speaker 1: In secondarily, Uh, you know, we're seeing folks talk about 283 00:14:40,200 --> 00:14:43,440 Speaker 1: the growth scare. We're seeing people downgrade their estimates for 284 00:14:43,520 --> 00:14:48,240 Speaker 1: third quarter GDP growth. Even at Morgan Stanley ellen Ventner 285 00:14:48,360 --> 00:14:51,160 Speaker 1: has cut her third quarter number from six point five 286 00:14:51,240 --> 00:14:55,240 Speaker 1: percent annualized growth rates to a two point nine percent. 287 00:14:55,360 --> 00:14:59,600 Speaker 1: That's a pretty big cut. Uh. And yet folks, uh, 288 00:14:59,640 --> 00:15:03,080 Speaker 1: you know, don't think that's going to harm earnings in 289 00:15:03,120 --> 00:15:05,240 Speaker 1: the third quarter. And we think that that could be 290 00:15:05,280 --> 00:15:09,080 Speaker 1: another negative catalysts. So, you know, lower PE ratios and 291 00:15:09,160 --> 00:15:15,000 Speaker 1: potentially earnings disappointments or or fewer positive earnings or visions 292 00:15:15,000 --> 00:15:17,720 Speaker 1: are the two catalysts that that might unleash that ten 293 00:15:17,840 --> 00:15:21,400 Speaker 1: fiercent correction. So with that type of correction between now 294 00:15:21,400 --> 00:15:23,800 Speaker 1: and the end of the end of the year possible, 295 00:15:24,080 --> 00:15:26,640 Speaker 1: are you suggesting people raise cash? Are you suggesting they 296 00:15:26,760 --> 00:15:30,720 Speaker 1: rotate into uh, just maybe more cyclical names. How do 297 00:15:30,760 --> 00:15:34,960 Speaker 1: you think people should position themselves for that? Yeah, so 298 00:15:35,000 --> 00:15:38,240 Speaker 1: we're we're in the camp that says this is about 299 00:15:38,680 --> 00:15:42,840 Speaker 1: UH rotating and actively managing UM. So we are buyers 300 00:15:43,720 --> 00:15:47,760 Speaker 1: of consumer services, of financials, of some of the uh 301 00:15:47,960 --> 00:15:53,320 Speaker 1: industrial cyclicals, from some you know, safer healthcare names and 302 00:15:53,440 --> 00:15:57,080 Speaker 1: some staples. UM. It's just really some of these long 303 00:15:57,240 --> 00:16:02,040 Speaker 1: duration oriented UM secular growth stocks that that we just 304 00:16:02,080 --> 00:16:04,440 Speaker 1: think are long in the tooth and need to kind 305 00:16:04,440 --> 00:16:09,080 Speaker 1: of take their hit. So we're rotating here. Uh no 306 00:16:09,200 --> 00:16:12,800 Speaker 1: need to panic and go to cash and get paid nothing, 307 00:16:13,160 --> 00:16:17,280 Speaker 1: uh and even negative returns after inflation. But we do 308 00:16:17,360 --> 00:16:19,720 Speaker 1: think that we're in a bull market. It's just a 309 00:16:19,800 --> 00:16:24,160 Speaker 1: bull market in things other than the SMP depth. How 310 00:16:24,160 --> 00:16:27,960 Speaker 1: important is the infrastructure bill or how important is um 311 00:16:28,000 --> 00:16:35,040 Speaker 1: fiscal Uh you know, trillions of dollars in continued fiscal support. UM. 312 00:16:35,480 --> 00:16:37,960 Speaker 1: You know. Our perspective is that it's not so much 313 00:16:38,040 --> 00:16:42,440 Speaker 1: the dollars, because what people forget is that a lot 314 00:16:42,480 --> 00:16:44,520 Speaker 1: of this is going to be spent over you know, 315 00:16:44,920 --> 00:16:48,920 Speaker 1: multiple years, if not, if not a decade, uh, and 316 00:16:49,000 --> 00:16:53,160 Speaker 1: so on any annual basis, it's it's it's fractions of 317 00:16:53,840 --> 00:16:58,160 Speaker 1: percentage points of growth. UM. But it's really the the 318 00:16:59,080 --> 00:17:03,680 Speaker 1: shift in mind that uh, that we are in a 319 00:17:03,000 --> 00:17:08,840 Speaker 1: m in a more fiscally active environment and and um, 320 00:17:08,880 --> 00:17:12,199 Speaker 1: you know that is growth oriented. Uh. And so you 321 00:17:12,240 --> 00:17:16,879 Speaker 1: know we are constructive broadly. I don't know, um you 322 00:17:16,880 --> 00:17:20,960 Speaker 1: know exactly what the form of final legislation is going 323 00:17:21,000 --> 00:17:23,040 Speaker 1: to take, given all the puts and takes of this, 324 00:17:23,880 --> 00:17:26,520 Speaker 1: but we do think we're going to get something, uh. 325 00:17:26,560 --> 00:17:32,160 Speaker 1: And that's something on the margin. Is helpful. Lisa, great 326 00:17:32,240 --> 00:17:34,879 Speaker 1: to get your take. Thank you so much for joining us. 327 00:17:34,880 --> 00:17:37,600 Speaker 1: Hope we can get you back on soon. Lisa Shallatt 328 00:17:37,720 --> 00:17:42,280 Speaker 1: is the chief investment Officer for wealth Management at Morgan Stanley. 329 00:17:42,359 --> 00:17:47,320 Speaker 1: Obviously very important for you to get so always good 330 00:17:47,359 --> 00:17:49,960 Speaker 1: to to hear from Lisa. You know, we are seeing 331 00:17:49,960 --> 00:17:53,800 Speaker 1: continued gains in the markets right now, and as we 332 00:17:53,920 --> 00:18:00,359 Speaker 1: heard earlier from UM from Dave Wilson, we see the 333 00:18:00,520 --> 00:18:06,240 Speaker 1: SMP five lead by energy, financials and materials. This is Bloomberg. 334 00:18:09,840 --> 00:18:11,639 Speaker 1: Now let's get over to Nathan Chetty. I told you 335 00:18:11,640 --> 00:18:13,080 Speaker 1: we're going to be joined by the head of multi 336 00:18:13,119 --> 00:18:16,360 Speaker 1: asset at now ven they've got one point two trillion 337 00:18:16,440 --> 00:18:19,639 Speaker 1: dollars in assets under management. We're gonna talk about the 338 00:18:20,000 --> 00:18:26,720 Speaker 1: opportunities and risks in private markets. Where do you start when? Um, uh, Nathan, 339 00:18:26,760 --> 00:18:32,359 Speaker 1: when analyzing such a huge universe, Thanks uh, Matt Paul 340 00:18:32,440 --> 00:18:35,160 Speaker 1: for having me on. It is indeed a massive universe, 341 00:18:35,200 --> 00:18:39,720 Speaker 1: and I think, um, it's only growing. We've seen a 342 00:18:39,800 --> 00:18:42,480 Speaker 1: ton of interest in in private markets, and I think 343 00:18:42,480 --> 00:18:47,080 Speaker 1: this has been driven really by two phenomenon. The first 344 00:18:47,240 --> 00:18:50,560 Speaker 1: is this lower expected return environment at least on a 345 00:18:50,600 --> 00:18:52,960 Speaker 1: go for a basis, and I I'd argue the second 346 00:18:53,000 --> 00:18:57,639 Speaker 1: one is partly driven by the volatility we're seeing in 347 00:18:57,720 --> 00:19:01,800 Speaker 1: economic variables and brought broad indicator. So investors are moving 348 00:19:01,880 --> 00:19:05,360 Speaker 1: to private markets in order to incorporate them in their 349 00:19:05,400 --> 00:19:09,120 Speaker 1: portfolios for more diversification. They're trying to eat out every 350 00:19:09,160 --> 00:19:11,840 Speaker 1: basis point of return that they can, and that liquidity 351 00:19:11,880 --> 00:19:16,480 Speaker 1: premium UM is certainly one place to source it. So 352 00:19:16,880 --> 00:19:19,960 Speaker 1: it's interesting, Nathan, we hear a little bit more I 353 00:19:19,960 --> 00:19:22,119 Speaker 1: guess really over the last several weeks and months about 354 00:19:22,600 --> 00:19:25,400 Speaker 1: private credit, and I guess that's simply, you know, investors 355 00:19:25,520 --> 00:19:29,040 Speaker 1: looking anywhere they can for yield. Give us kind of 356 00:19:29,080 --> 00:19:32,280 Speaker 1: the risk return profile as you know, you guys got 357 00:19:32,359 --> 00:19:34,760 Speaker 1: to go out from you know, maybe you know, looking 358 00:19:34,760 --> 00:19:38,440 Speaker 1: at treasuries, are looking at public corporates to to going 359 00:19:38,440 --> 00:19:40,440 Speaker 1: out into the private credit market. Give us a sense 360 00:19:40,480 --> 00:19:43,840 Speaker 1: of the risk return that you guys think about. Yeah, 361 00:19:43,920 --> 00:19:47,560 Speaker 1: private credit has just absolutely exploded, and and part of 362 00:19:47,600 --> 00:19:51,359 Speaker 1: that is due to UM, you know, some of the 363 00:19:51,359 --> 00:19:56,560 Speaker 1: bank rag et cetera, and ultimately UM syndicated loans haven't 364 00:19:56,600 --> 00:19:58,480 Speaker 1: had the same levels of plot that we was seen 365 00:19:58,520 --> 00:20:02,520 Speaker 1: in the past. So the credits stepped in there UM 366 00:20:02,560 --> 00:20:07,960 Speaker 1: and really have a risk return profile that's not dissimilar 367 00:20:08,040 --> 00:20:12,440 Speaker 1: to their public cousins, meaning syndicated loans, but at least 368 00:20:12,480 --> 00:20:15,680 Speaker 1: on the middle market lending or senior secured side, we're 369 00:20:15,720 --> 00:20:19,879 Speaker 1: looking at high single digits and uh, you know, a 370 00:20:19,920 --> 00:20:22,720 Speaker 1: lower risk profile than you'd see in public markets, and 371 00:20:22,760 --> 00:20:25,760 Speaker 1: again part of that is due to that illiquidity risk 372 00:20:25,800 --> 00:20:29,760 Speaker 1: premium that you're getting UM. I think another reason why 373 00:20:29,800 --> 00:20:33,280 Speaker 1: private credit is of such interest is you're sitting higher 374 00:20:33,320 --> 00:20:35,840 Speaker 1: in the cap structure. Private equity or VC has always 375 00:20:35,880 --> 00:20:39,160 Speaker 1: been part of UH portfolios, but with private credit, you're 376 00:20:39,160 --> 00:20:41,720 Speaker 1: sitting higher up in that cap structure, have to deploy 377 00:20:41,840 --> 00:20:45,480 Speaker 1: less risk, but again a very attractive risk return profile, 378 00:20:45,560 --> 00:20:55,000 Speaker 1: particularly UM for income oriented investors. So how much does 379 00:20:56,000 --> 00:20:59,160 Speaker 1: how much do things like FED policy matter to private markets? 380 00:20:59,359 --> 00:21:04,120 Speaker 1: How quickly you see follow through? I mean, look, FED 381 00:21:04,200 --> 00:21:07,960 Speaker 1: policy matters for all markets, public or private, and it 382 00:21:08,000 --> 00:21:10,600 Speaker 1: depends on the private market we're talking about. Some are 383 00:21:10,640 --> 00:21:14,960 Speaker 1: going to UM transmit or or reverberate in in those 384 00:21:14,960 --> 00:21:18,960 Speaker 1: private markets quicker than others, particularly those that are sensitive 385 00:21:19,000 --> 00:21:22,679 Speaker 1: to fixed income. We're just talking about private credit. Most 386 00:21:22,880 --> 00:21:27,560 Speaker 1: of private credit is in UM live or plus type 387 00:21:27,640 --> 00:21:31,560 Speaker 1: landing or floating rate structures. So UM you have some 388 00:21:32,640 --> 00:21:36,160 Speaker 1: UH some ability to manage that rates duration risk, which 389 00:21:36,200 --> 00:21:39,560 Speaker 1: is really going to reflect FED policy much more so 390 00:21:39,640 --> 00:21:42,639 Speaker 1: than you would with public market rate sensitive assets, and 391 00:21:42,680 --> 00:21:46,119 Speaker 1: those are obviously going to be reflected UM immediately in 392 00:21:46,160 --> 00:21:50,800 Speaker 1: the private real assets space. UM, not dis similar funding rates, 393 00:21:51,240 --> 00:21:53,680 Speaker 1: credit spreads. They all are going to have an impact 394 00:21:53,760 --> 00:21:58,479 Speaker 1: on UH demand and and ultimately debility to to purchase 395 00:21:58,560 --> 00:22:02,399 Speaker 1: and supply in the real asset space. But but but 396 00:22:02,600 --> 00:22:06,960 Speaker 1: the the implications and that transmission from shifts in FED 397 00:22:07,080 --> 00:22:09,639 Speaker 1: policy are going to take some time. They're going to 398 00:22:09,720 --> 00:22:14,680 Speaker 1: take UM multiple quarters, and ultimately I guess that goes 399 00:22:14,720 --> 00:22:17,320 Speaker 1: back to why we've seen such a huge uptake in 400 00:22:17,359 --> 00:22:21,680 Speaker 1: demand and interest is to mitigate some of that volatility 401 00:22:21,720 --> 00:22:28,160 Speaker 1: around UM, you know, economic variables, and that volatility around 402 00:22:28,480 --> 00:22:33,600 Speaker 1: policy uncertainty gives it time to digest UM and ultimately 403 00:22:34,960 --> 00:22:41,080 Speaker 1: reflect more fundamentals going forward. Nathan, we're presumably heading into UH. 404 00:22:41,240 --> 00:22:44,560 Speaker 1: You know, there is inflation in this economy, Nathan, the discussion, 405 00:22:44,600 --> 00:22:46,760 Speaker 1: I guess the debate is whether it's transitory and there's 406 00:22:46,760 --> 00:22:51,920 Speaker 1: something more longer term. How does your portfolio, a portfolio 407 00:22:52,000 --> 00:22:54,880 Speaker 1: that has a lot of you know, alternative assets, private 408 00:22:54,920 --> 00:22:58,480 Speaker 1: market investments, private credit investments, how does that typically fair 409 00:22:58,760 --> 00:23:05,400 Speaker 1: in you know, a inflationary perhaps rising rate environment. UM. 410 00:23:05,400 --> 00:23:10,280 Speaker 1: Thanks for the question, And obviously inflation is is top 411 00:23:10,320 --> 00:23:13,440 Speaker 1: of mind for all investors right now, it's re entered 412 00:23:13,480 --> 00:23:17,240 Speaker 1: the conversation. It does exist. There's supply chain issues, and 413 00:23:17,280 --> 00:23:21,960 Speaker 1: we can argue UM round and round about its transitory nature. 414 00:23:22,359 --> 00:23:25,440 Speaker 1: We do believe that it's going to settle UM at 415 00:23:25,480 --> 00:23:28,679 Speaker 1: a at a level that's higher than we've seen in 416 00:23:28,720 --> 00:23:35,520 Speaker 1: the past decade, this disinflationary decades. So UM in a 417 00:23:35,600 --> 00:23:39,439 Speaker 1: portfolio the size of ours and a portfolio that is 418 00:23:39,560 --> 00:23:45,040 Speaker 1: highly diversified traversing public and private markets. The big area 419 00:23:45,160 --> 00:23:51,440 Speaker 1: where UM, say an uptakeing inflation is going to influence 420 00:23:51,480 --> 00:23:56,960 Speaker 1: the portfolios in the bond equity correlation. I mean people 421 00:23:57,040 --> 00:24:01,800 Speaker 1: hold bonds in their portfolio as a diversified against equities. 422 00:24:01,800 --> 00:24:06,360 Speaker 1: When we enter higher inflation regimes, we see that correlation 423 00:24:06,520 --> 00:24:09,960 Speaker 1: tends to flip. I mean this this dynamic of correlation 424 00:24:10,200 --> 00:24:14,840 Speaker 1: that's thirty years ago it was positively correlated. So UM 425 00:24:14,960 --> 00:24:19,080 Speaker 1: for us very much about finding diversification. You need to 426 00:24:19,080 --> 00:24:23,160 Speaker 1: find divertification real assets, UM and private assets to provide 427 00:24:23,160 --> 00:24:26,399 Speaker 1: that diversification that we're seeking in those environments. All right, Nathan, 428 00:24:26,400 --> 00:24:28,440 Speaker 1: thank you so much for joining us. For really appreciation 429 00:24:28,560 --> 00:24:32,240 Speaker 1: appreciate it. Nathan Chetty, head of Multi Asset at Nuvine, 430 00:24:32,280 --> 00:24:35,840 Speaker 1: talking to us about the private market alternatives in a portfolio. 431 00:24:36,080 --> 00:24:40,000 Speaker 1: This is Bloomberg. Thanks for listening to the Bloomberg Markets podcast. 432 00:24:40,359 --> 00:24:43,600 Speaker 1: You can subscribe and listen to interviews with Apple Podcasts 433 00:24:43,720 --> 00:24:47,600 Speaker 1: or whatever podcast platform you prefer. I'm Matt Miller. I'm 434 00:24:47,640 --> 00:24:51,840 Speaker 1: on Twitter at Matt Miller. Yet on boul Sweeney. I'm 435 00:24:51,840 --> 00:24:54,520 Speaker 1: on Twitter at pt Sweeney Before the podcast. You can 436 00:24:54,520 --> 00:24:56,720 Speaker 1: always catch us worldwide at Bloomberg Radio.