1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm Pim Fox. 2 00:00:08,760 --> 00:00:11,520 Speaker 1: Along with my co host Lisa Bramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg P M L 6 00:00:20,840 --> 00:00:32,320 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Are 7 00:00:32,320 --> 00:00:35,839 Speaker 1: we seeing the beginnings of perhaps a dollar rebound? Here? 8 00:00:35,880 --> 00:00:39,240 Speaker 1: To talk about? That is Mark Chandler, Global head of 9 00:00:39,280 --> 00:00:42,800 Speaker 1: Currency Strategy at Brown Brothers Harriman. And Mark, you join 10 00:00:42,960 --> 00:00:45,239 Speaker 1: us on a great day because we're finally getting a 11 00:00:45,280 --> 00:00:49,000 Speaker 1: breather from the great weakening of the green back. We're 12 00:00:49,000 --> 00:00:52,200 Speaker 1: seeing a little bit of a rebound against comparable currencies. 13 00:00:52,280 --> 00:00:56,080 Speaker 1: Do you think this signals the beginning of a larger turnaround? 14 00:00:57,240 --> 00:00:59,000 Speaker 1: At least I wish it did, but I'm afraid it 15 00:00:59,040 --> 00:01:01,560 Speaker 1: probably doesn't. So far are the dollars bounce here has 16 00:01:01,600 --> 00:01:04,520 Speaker 1: been fairly shallow, and it comes after it, like you say, 17 00:01:04,560 --> 00:01:07,119 Speaker 1: after several days that little hammering, you know, the dollars 18 00:01:07,120 --> 00:01:11,320 Speaker 1: and falling quite sharply, Uh, not quite, but almost uninterrupted 19 00:01:11,319 --> 00:01:13,200 Speaker 1: since the middle of December. And so I think today 20 00:01:13,240 --> 00:01:16,040 Speaker 1: we're seeing just you know, we had followed through dollars 21 00:01:16,040 --> 00:01:20,039 Speaker 1: selling yesterday when the US markets are closed, if done incentrating, 22 00:01:20,040 --> 00:01:21,280 Speaker 1: and I think that this is just sort of what 23 00:01:21,319 --> 00:01:24,360 Speaker 1: I call it, maybe even a dead cat bound. So Mark, 24 00:01:24,400 --> 00:01:26,720 Speaker 1: can you just give us a sense of what's driven 25 00:01:26,800 --> 00:01:29,320 Speaker 1: in the dollar, what's driving the dollar weakness? I mean 26 00:01:29,319 --> 00:01:32,759 Speaker 1: that you have certainly the euro strength, you have global growth, 27 00:01:32,840 --> 00:01:35,959 Speaker 1: it's accelerated in other regions more than in the US. 28 00:01:36,120 --> 00:01:39,920 Speaker 1: But what's the main factor of people should be looking at. Yeah, 29 00:01:39,959 --> 00:01:42,399 Speaker 1: Lucy asked me the two million dollar question, because Frank 30 00:01:42,520 --> 00:01:45,160 Speaker 1: I was in the camp that thought that wider interest 31 00:01:45,240 --> 00:01:48,080 Speaker 1: rate differentials with the FED tightening, the tax cuts in 32 00:01:48,120 --> 00:01:51,120 Speaker 1: the US, UH, the attractiveness that through the de regulation, 33 00:01:51,200 --> 00:01:54,160 Speaker 1: attractiveness of the US as a point for investment. We've 34 00:01:54,200 --> 00:01:56,680 Speaker 1: got inflation expectations driving all these things that I think 35 00:01:56,760 --> 00:01:59,280 Speaker 1: should be good for the dollar. And if not. And 36 00:01:59,360 --> 00:02:00,920 Speaker 1: so when I talk of people and trying to listen 37 00:02:00,960 --> 00:02:02,920 Speaker 1: to why they are saying that they think the euro 38 00:02:03,040 --> 00:02:06,320 Speaker 1: is going up, primarily is it more the Euro going 39 00:02:06,400 --> 00:02:09,880 Speaker 1: up than perhaps other currencies going up? And they say 40 00:02:09,919 --> 00:02:13,480 Speaker 1: that many people think that the ECB is close to 41 00:02:13,720 --> 00:02:17,440 Speaker 1: exiting its monetary policy, and as you know, the ECB's 42 00:02:17,480 --> 00:02:20,080 Speaker 1: papering this year, it went down from sixty billion a 43 00:02:20,160 --> 00:02:24,200 Speaker 1: month asset purchases in the last nine months of last year, 44 00:02:24,440 --> 00:02:27,680 Speaker 1: claim them a half to thirty billion months this year. 45 00:02:28,240 --> 00:02:30,840 Speaker 1: And some other officials talking over the weekends sound kind 46 00:02:30,880 --> 00:02:33,400 Speaker 1: of hawkish, talking about the sequence of events and maybe 47 00:02:33,480 --> 00:02:38,480 Speaker 1: raising interest rates before the market previously anticipated. Mark Chandler, 48 00:02:38,720 --> 00:02:42,840 Speaker 1: is a lower value US dollar better for US equities. 49 00:02:44,800 --> 00:02:46,359 Speaker 1: I hear what you're saying to him. I know a 50 00:02:46,400 --> 00:02:48,359 Speaker 1: lot of people think so because they think that the 51 00:02:48,400 --> 00:02:51,320 Speaker 1: logical on something like this, Uh, the weaker dollar means 52 00:02:51,360 --> 00:02:54,720 Speaker 1: that US can export more, and when the US exports more, 53 00:02:54,919 --> 00:02:58,480 Speaker 1: those foreign currency it gets can then be translated into 54 00:02:58,520 --> 00:03:02,280 Speaker 1: greater dollars boost earn And it sounds all reasonable and everything. 55 00:03:02,280 --> 00:03:04,160 Speaker 1: But I think they'll find plenty of time when the 56 00:03:04,240 --> 00:03:07,720 Speaker 1: US dollar was strong and corporate America was still reporting 57 00:03:07,840 --> 00:03:11,240 Speaker 1: record profits. You know, the corporate earning seasons kicking off 58 00:03:11,240 --> 00:03:14,960 Speaker 1: formerly this week, and people are expecting strong earnings. Last year, 59 00:03:15,320 --> 00:03:18,400 Speaker 1: the dollar fell and corporate earnings look to be up, 60 00:03:18,560 --> 00:03:22,440 Speaker 1: say something like twelve year over year. When the bigger picture, 61 00:03:22,440 --> 00:03:24,400 Speaker 1: I think that for me, the reason I'm not fully 62 00:03:24,400 --> 00:03:28,240 Speaker 1: aboard that kind of view. Is that the US is 63 00:03:28,280 --> 00:03:32,960 Speaker 1: not service foreign markets primarily by exportings. Building locally, selling 64 00:03:32,960 --> 00:03:34,960 Speaker 1: locally is really the key, and so a lot of 65 00:03:35,040 --> 00:03:38,600 Speaker 1: US businesses are the export and build locally. They also 66 00:03:38,640 --> 00:03:41,840 Speaker 1: when they build locally, incur local costs, so they'll have 67 00:03:41,880 --> 00:03:44,600 Speaker 1: to pay those German workers higher wages or those check 68 00:03:44,640 --> 00:03:48,360 Speaker 1: workers higher wages, and so that offset some of the 69 00:03:48,760 --> 00:03:51,720 Speaker 1: beneficial impact I think. But in general, I think the 70 00:03:51,760 --> 00:03:54,960 Speaker 1: best level for the dollar actually attend. It turns out 71 00:03:54,960 --> 00:03:57,120 Speaker 1: that a strong dollar that is backed by a strong 72 00:03:57,160 --> 00:04:00,640 Speaker 1: economy is actually good for corporate America. It so, having 73 00:04:00,680 --> 00:04:03,320 Speaker 1: said that, should we look for higher prices for energy 74 00:04:03,360 --> 00:04:07,840 Speaker 1: and commodities such as gold. Yeah, I hear what you're 75 00:04:07,880 --> 00:04:09,400 Speaker 1: saying there, and I do think that because a lot 76 00:04:09,400 --> 00:04:11,800 Speaker 1: of these commands are price in dollars, like gold or oil. 77 00:04:12,200 --> 00:04:13,960 Speaker 1: When the dollar was falling out of bed over the 78 00:04:14,040 --> 00:04:17,400 Speaker 1: last several weeks, we did see upward pressure on commodities, 79 00:04:17,600 --> 00:04:20,520 Speaker 1: and today, of course it's the opposite. Softer dollar, softer gold, 80 00:04:20,560 --> 00:04:24,320 Speaker 1: softer iron ore, softer base metals, softer oil. I'm just 81 00:04:24,400 --> 00:04:26,480 Speaker 1: not sure that that is some of the hanguans hat 82 00:04:26,560 --> 00:04:28,240 Speaker 1: On I think if you think the dollar is going 83 00:04:28,279 --> 00:04:31,559 Speaker 1: to fall, should be short to dollar in various times 84 00:04:31,560 --> 00:04:35,160 Speaker 1: a way long point equities, for example, are long foreign bonds. 85 00:04:35,200 --> 00:04:36,640 Speaker 1: But if you think that, if you if you have 86 00:04:36,680 --> 00:04:38,680 Speaker 1: a view on commodities, I would trade that. I think 87 00:04:38,680 --> 00:04:40,560 Speaker 1: it were best served by training as close to our 88 00:04:40,640 --> 00:04:45,359 Speaker 1: views as possible. Mark. You know, it seems increasingly like 89 00:04:45,520 --> 00:04:49,080 Speaker 1: the consensus trade the dollar will weaken more, and I'm wondering, 90 00:04:49,400 --> 00:04:54,520 Speaker 1: what's the risk scenario that upends that. Yeah, well, the 91 00:04:54,600 --> 00:04:56,360 Speaker 1: risk scenario is really what I've been still counting on, 92 00:04:56,440 --> 00:04:59,240 Speaker 1: and that that is that continued to interest rate increases 93 00:04:59,240 --> 00:05:02,520 Speaker 1: by the Stuttlers. And by that I mean it's it's 94 00:05:02,560 --> 00:05:05,279 Speaker 1: kind of interesting what happens. So if you are a 95 00:05:05,839 --> 00:05:08,320 Speaker 1: that that interest rate differential, I think is the incentive 96 00:05:08,360 --> 00:05:12,839 Speaker 1: structure that investors monitor closely, and with the incentive structure 97 00:05:12,880 --> 00:05:16,360 Speaker 1: telling you is that you're paid to be long U 98 00:05:16,400 --> 00:05:19,120 Speaker 1: S dollars by an increasing amount. And I don't think 99 00:05:19,160 --> 00:05:21,800 Speaker 1: that the ECB raises interest rates this year. I don't 100 00:05:21,839 --> 00:05:23,760 Speaker 1: think the b o J raises interest rates this year. 101 00:05:23,800 --> 00:05:26,560 Speaker 1: I think they were still at least a year, perhaps 102 00:05:26,720 --> 00:05:28,599 Speaker 1: maybe a year and a half to two years away 103 00:05:28,640 --> 00:05:31,680 Speaker 1: from this divergence peaking, and so I would still say 104 00:05:31,720 --> 00:05:33,640 Speaker 1: the federal reserves, like the raised interest rates, it's going 105 00:05:33,720 --> 00:05:36,480 Speaker 1: to cost people an increasing amount to be short of 106 00:05:36,560 --> 00:05:39,840 Speaker 1: the US dollar mark. Chandler, can you give us your 107 00:05:39,880 --> 00:05:42,080 Speaker 1: thoughts on the value of the Chinese you want to 108 00:05:42,120 --> 00:05:46,280 Speaker 1: remember and what the Chinese government's long term plan is 109 00:05:46,320 --> 00:05:49,240 Speaker 1: for the currency. Well, I don't know if I can 110 00:05:49,279 --> 00:05:51,080 Speaker 1: tell you what the government's long term planet. I know 111 00:05:51,120 --> 00:05:53,240 Speaker 1: they want to be more international, but I think that 112 00:05:53,320 --> 00:05:54,960 Speaker 1: they have a lot of stumbling blocks. So the big 113 00:05:55,000 --> 00:05:57,880 Speaker 1: news over the weekend realier yesterday was when the Bundesbank 114 00:05:58,200 --> 00:06:01,400 Speaker 1: official indicated that the them in Central Bank had put 115 00:06:01,600 --> 00:06:04,800 Speaker 1: R and B in reserves, and the shortly thereafter the 116 00:06:04,920 --> 00:06:07,000 Speaker 1: French announces that they had already done the same thing. 117 00:06:07,400 --> 00:06:11,080 Speaker 1: It's not so surprising. About about six months ago or so, 118 00:06:11,200 --> 00:06:14,960 Speaker 1: June of last year, the ECB itself announced that they 119 00:06:15,000 --> 00:06:18,240 Speaker 1: had bought about five million euros worth of Chinese R 120 00:06:18,320 --> 00:06:22,440 Speaker 1: and B to put in reserves, and interestingly interestingly they 121 00:06:22,480 --> 00:06:25,240 Speaker 1: said that they reduced their dollar holdings to buy China. 122 00:06:25,400 --> 00:06:28,080 Speaker 1: But we gotta keep this in perspective. There are something 123 00:06:28,200 --> 00:06:32,880 Speaker 1: on the magnitude of eleven point four tillion dollars of reserves, 124 00:06:33,560 --> 00:06:37,600 Speaker 1: the Chinese juan makes up about about a hundred and 125 00:06:37,680 --> 00:06:41,400 Speaker 1: seven million dollars excuse me, a hundred and seven billion 126 00:06:41,440 --> 00:06:46,000 Speaker 1: dollars very small, it's it's about one percent of global reserves. 127 00:06:46,000 --> 00:06:49,280 Speaker 1: This is not the beginning of the Chinese want replacing 128 00:06:49,320 --> 00:06:52,960 Speaker 1: the dollar. Chinese officials themselves recognize that, and they seem 129 00:06:52,960 --> 00:06:56,800 Speaker 1: to be more circumspect about the role of China, and 130 00:06:57,000 --> 00:06:58,920 Speaker 1: they have really more strategic view. While I hear a 131 00:06:58,960 --> 00:07:01,640 Speaker 1: lot of people talking about about China and the end 132 00:07:01,680 --> 00:07:03,880 Speaker 1: of the petro dollar at the beginning of a petro 133 00:07:04,160 --> 00:07:07,760 Speaker 1: R and B the launching, eventually they stay of a 134 00:07:08,520 --> 00:07:11,440 Speaker 1: of an R and B denominated oil contract. People are 135 00:07:11,760 --> 00:07:13,760 Speaker 1: people in the private sector in the market. I talked 136 00:07:13,760 --> 00:07:16,320 Speaker 1: about the dollar is gonna be replaced, but I find 137 00:07:16,360 --> 00:07:19,520 Speaker 1: that sometimes a price action influenced the news, and sometimes 138 00:07:19,520 --> 00:07:21,960 Speaker 1: the news impacts the price action. This is one of 139 00:07:21,960 --> 00:07:24,720 Speaker 1: the times I think a following dollar is getting all 140 00:07:24,720 --> 00:07:28,120 Speaker 1: these kind of like conspiracy series and how the dollar 141 00:07:28,160 --> 00:07:30,960 Speaker 1: is going to be dethroned out of the woodwork these ideas, 142 00:07:31,040 --> 00:07:33,040 Speaker 1: and I think that the R and B is nowhere close. 143 00:07:33,080 --> 00:07:35,360 Speaker 1: The dollar makes up about sixty three percent of the 144 00:07:35,360 --> 00:07:37,680 Speaker 1: world reserves, the R and B a little bit more 145 00:07:37,680 --> 00:07:40,120 Speaker 1: than one percent. All right, thanks for putting it into 146 00:07:40,200 --> 00:07:42,480 Speaker 1: perspective for us. Mark Chandler is the global head of 147 00:07:42,520 --> 00:08:00,440 Speaker 1: Currency Strategy at Brown Brothers Harriman. The question of need, 148 00:08:00,480 --> 00:08:03,080 Speaker 1: does anyone really need an suv that goes from zero 149 00:08:03,120 --> 00:08:05,480 Speaker 1: to sixty and three point six seconds or can do 150 00:08:05,520 --> 00:08:08,200 Speaker 1: a hundred and ninety miles per hour? Does anyone need 151 00:08:08,280 --> 00:08:12,960 Speaker 1: six hundred and forty one horses streaming behind them? It 152 00:08:13,120 --> 00:08:15,320 Speaker 1: is in yellow or and can be in yellow, and 153 00:08:15,520 --> 00:08:19,200 Speaker 1: it is the new Lamborghini suv. It is called the 154 00:08:19,360 --> 00:08:23,040 Speaker 1: Rusts and it joined now by the global Chief Executive 155 00:08:23,120 --> 00:08:27,560 Speaker 1: of Automobile Lamborghini is Stefano Domenicali. Thank you for being 156 00:08:27,560 --> 00:08:30,840 Speaker 1: here in our studio as much appreciated. What was the 157 00:08:31,160 --> 00:08:36,079 Speaker 1: thinking behind the creation of the auras, Because there are 158 00:08:36,200 --> 00:08:42,160 Speaker 1: already a variety of high luxury SUVs, even from the 159 00:08:42,240 --> 00:08:46,000 Speaker 1: likes of Bentley and the likes of Audi and so on, 160 00:08:46,080 --> 00:08:49,720 Speaker 1: that you could call luxury. What inspired the Lamborghini brand 161 00:08:49,760 --> 00:08:52,400 Speaker 1: to want to make their mark in this market? Well, 162 00:08:52,440 --> 00:08:55,160 Speaker 1: I would say that the inspiration came from the knowledge 163 00:08:55,160 --> 00:08:58,679 Speaker 1: of the market. We as Lamborghini had a superspore brand 164 00:08:58,720 --> 00:09:01,760 Speaker 1: and that's pretty clear and that will be always in 165 00:09:01,800 --> 00:09:04,680 Speaker 1: the future. But we reckoned that the market in the 166 00:09:05,120 --> 00:09:08,440 Speaker 1: suv segment is rowing all around the world and there 167 00:09:08,480 --> 00:09:12,200 Speaker 1: was a perfect occasion to enlarge the portfolio offer to 168 00:09:12,280 --> 00:09:14,200 Speaker 1: the customer because the end of the day, we were 169 00:09:14,200 --> 00:09:18,000 Speaker 1: talking about product or cars or looks really good at 170 00:09:18,040 --> 00:09:22,880 Speaker 1: are not necessary to have. It's a status. It's something 171 00:09:22,920 --> 00:09:24,880 Speaker 1: that you want to have because you want position yourself 172 00:09:24,880 --> 00:09:27,520 Speaker 1: in a certain way. So we saw the potential will 173 00:09:27,559 --> 00:09:29,800 Speaker 1: be different also in this segment. That's the reason why 174 00:09:30,040 --> 00:09:32,520 Speaker 1: we start this kind of a new project. Okay, so 175 00:09:32,559 --> 00:09:37,240 Speaker 1: when we talk about necessity, how much as cost in 176 00:09:37,240 --> 00:09:39,839 Speaker 1: in in hearing other states will be around two hundred 177 00:09:40,559 --> 00:09:43,760 Speaker 1: dollars and and then of course the least price is 178 00:09:43,840 --> 00:09:46,800 Speaker 1: a discussion because I know the market of the United 179 00:09:46,840 --> 00:09:49,280 Speaker 1: States is mainly working on that, and I think we're 180 00:09:49,280 --> 00:09:51,480 Speaker 1: gonna have a great offer. I get it to portune 181 00:09:51,480 --> 00:09:54,960 Speaker 1: to give to our customer. Here, which country or where 182 00:09:54,960 --> 00:09:57,440 Speaker 1: where do you think that most of the customers for 183 00:09:57,520 --> 00:10:02,080 Speaker 1: this particular vehicle will come from? We say they the 184 00:10:02,200 --> 00:10:04,760 Speaker 1: success of this after the first couple of weeks, when 185 00:10:04,760 --> 00:10:07,240 Speaker 1: we launch, the car is normals all around the world. 186 00:10:07,480 --> 00:10:10,880 Speaker 1: What is incredible is to see that the real question 187 00:10:10,880 --> 00:10:13,880 Speaker 1: that we need to answer is how many non Lamborghinea 188 00:10:13,920 --> 00:10:16,200 Speaker 1: customs we're gonna buy the new U s V Because, 189 00:10:16,200 --> 00:10:19,560 Speaker 1: of course, as you know today, the our normal customer, 190 00:10:19,600 --> 00:10:22,560 Speaker 1: if I may say normal, don't use that car every day. 191 00:10:22,600 --> 00:10:24,720 Speaker 1: But with the new supers, they're going to use that 192 00:10:24,800 --> 00:10:28,240 Speaker 1: Carla therefore is not only having the add that the 193 00:10:28,400 --> 00:10:32,120 Speaker 1: one by one customer that are already in the Lamborghini family, 194 00:10:32,280 --> 00:10:34,400 Speaker 1: but that the interesting thing will be to see how 195 00:10:34,440 --> 00:10:39,679 Speaker 1: many potential customers will come from other branch because it 196 00:10:39,720 --> 00:10:42,480 Speaker 1: would be may be interested to see our car. They 197 00:10:42,520 --> 00:10:45,240 Speaker 1: love our design, they love our performance, they love to 198 00:10:45,240 --> 00:10:48,360 Speaker 1: be connected with the Lamborghinia families. So the real question 199 00:10:48,400 --> 00:10:51,120 Speaker 1: would be how many process we're gonna be able to 200 00:10:51,160 --> 00:10:53,160 Speaker 1: catch in the future. And this is something that at 201 00:10:53,240 --> 00:10:56,000 Speaker 1: least for after the first couple of weeks of the 202 00:10:56,040 --> 00:10:58,560 Speaker 1: first launch around the world, we see there is a 203 00:10:58,600 --> 00:11:02,680 Speaker 1: lot of attention. I note that you can customize this 204 00:11:03,120 --> 00:11:06,840 Speaker 1: almost every way you can imagine, right, fourteen exterior colors 205 00:11:06,880 --> 00:11:11,240 Speaker 1: to choose from, fifteen interior leather options, head rest you 206 00:11:11,280 --> 00:11:14,160 Speaker 1: can get them embossed with the raging bull logo. I mean, 207 00:11:14,559 --> 00:11:18,560 Speaker 1: just customization seems to be the real The real deal 208 00:11:18,640 --> 00:11:23,240 Speaker 1: here is um UH is the factory that is building 209 00:11:23,240 --> 00:11:27,280 Speaker 1: these in san Agata. Is that fact You're going to 210 00:11:27,360 --> 00:11:29,600 Speaker 1: do all the customization or does that get farmed out? 211 00:11:30,080 --> 00:11:32,720 Speaker 1: It will be done all in Santega the Bolognese in Italy. 212 00:11:32,720 --> 00:11:35,280 Speaker 1: We were close to Bologna. There was a big challenge 213 00:11:35,320 --> 00:11:38,160 Speaker 1: because in one year, just one year, we built a 214 00:11:38,240 --> 00:11:41,320 Speaker 1: completely new line of assembly. We double the dimension of 215 00:11:41,360 --> 00:11:43,800 Speaker 1: a factor. We hired more of a hundred people to 216 00:11:43,880 --> 00:11:46,040 Speaker 1: make sure that this was possible to do it. That 217 00:11:46,040 --> 00:11:48,439 Speaker 1: that is why we we use the claim since we 218 00:11:48,520 --> 00:11:51,040 Speaker 1: made it possible for the launch of this vehicle. Because 219 00:11:51,080 --> 00:11:53,240 Speaker 1: you know, if you think what was Lamborghini just a 220 00:11:53,240 --> 00:11:55,000 Speaker 1: couple of years ago, No, when I would have thought 221 00:11:55,040 --> 00:11:58,720 Speaker 1: it was possible. Therefore, the personalization is a very important 222 00:11:58,720 --> 00:12:00,640 Speaker 1: item for our custom and that will be done by us. 223 00:12:00,840 --> 00:12:04,160 Speaker 1: So I'm seeing a headline crossing the Bloomberg today that Ferrari, 224 00:12:04,400 --> 00:12:09,000 Speaker 1: a competitor of yours, is planning to make an electric supercar. 225 00:12:09,360 --> 00:12:14,640 Speaker 1: Um I'm wondering is that in your future? Well, in Uh, 226 00:12:14,679 --> 00:12:17,520 Speaker 1: I would say September, we launched the third Millennium Project. 227 00:12:17,760 --> 00:12:20,400 Speaker 1: It was a car that we presented together with the 228 00:12:20,559 --> 00:12:23,320 Speaker 1: m I T in Boston. Because we have our research 229 00:12:23,480 --> 00:12:26,520 Speaker 1: that is making sure that we are also ahead in 230 00:12:26,559 --> 00:12:29,000 Speaker 1: that respect. So we have already launched that idea on 231 00:12:29,000 --> 00:12:32,160 Speaker 1: our side, and I think that is natural, that is 232 00:12:32,200 --> 00:12:35,480 Speaker 1: logical to also to be a trend setter in the 233 00:12:35,679 --> 00:12:38,160 Speaker 1: in this in this new dimension. But when could that 234 00:12:38,280 --> 00:12:42,280 Speaker 1: car actually be marketed, I would say, realistically speaking after 235 00:12:42,720 --> 00:12:46,640 Speaker 1: in the second part of the two in that range 236 00:12:46,679 --> 00:12:48,400 Speaker 1: will be ready, I think, because we need to be 237 00:12:48,520 --> 00:12:52,079 Speaker 1: current with a couple of elements in that respect. First 238 00:12:52,080 --> 00:12:56,760 Speaker 1: of all, the performance of a supersport car has to 239 00:12:56,800 --> 00:12:59,520 Speaker 1: be there. We need to consider the usual our car 240 00:13:00,080 --> 00:13:02,760 Speaker 1: cost of it. Of course, the affordability of this technology 241 00:13:02,960 --> 00:13:06,199 Speaker 1: is another element that is very important, and we're gonna 242 00:13:06,240 --> 00:13:08,679 Speaker 1: be there as a second step. We don't have to 243 00:13:08,720 --> 00:13:12,600 Speaker 1: forget today we are, let's say, using the normal combustion engine. 244 00:13:12,880 --> 00:13:16,480 Speaker 1: We're gonna be using the abrilization as a second step 245 00:13:16,520 --> 00:13:19,360 Speaker 1: before arriving through dilectrification. So there is still a lot 246 00:13:19,400 --> 00:13:21,320 Speaker 1: of rooms to do, a lot of work to be done, 247 00:13:21,440 --> 00:13:23,520 Speaker 1: but for sure the trend is there. And we're gonna 248 00:13:23,800 --> 00:13:27,680 Speaker 1: be there for the future superspokeer models with the aabrilization model. 249 00:13:27,920 --> 00:13:31,000 Speaker 1: What's the trend for Lamborghini any chance of spinning it 250 00:13:31,040 --> 00:13:35,360 Speaker 1: off from VW But currently you have you have a cousin, right, 251 00:13:35,360 --> 00:13:37,040 Speaker 1: I mean, how do you could call like a cousin 252 00:13:37,600 --> 00:13:40,400 Speaker 1: using their V eight in this new uh in this 253 00:13:40,520 --> 00:13:43,720 Speaker 1: new SUV spin off in the works. Maybe something that 254 00:13:43,760 --> 00:13:45,920 Speaker 1: I cannot answer to be honest, because it's not me. 255 00:13:46,040 --> 00:13:49,760 Speaker 1: That's I'm I need to report to our shareholders, my 256 00:13:49,880 --> 00:13:51,720 Speaker 1: duty or our uses will make sure that we are 257 00:13:51,760 --> 00:13:53,880 Speaker 1: bringing up the brand in the right way that we can. 258 00:13:54,280 --> 00:13:56,400 Speaker 1: We are growing, we need to make sure that we 259 00:13:56,240 --> 00:13:58,440 Speaker 1: are we are profitable enough. We need to make sure 260 00:13:58,480 --> 00:14:01,160 Speaker 1: that we have we are strong enough with good product 261 00:14:01,200 --> 00:14:03,440 Speaker 1: portfolio in the future, and then the show will make 262 00:14:03,440 --> 00:14:05,760 Speaker 1: their decision. I'm pretty sure that they are proud of 263 00:14:05,800 --> 00:14:08,839 Speaker 1: having us in their in their portfolio together. But this 264 00:14:08,920 --> 00:14:10,839 Speaker 1: is you know, what we have to do, make sure 265 00:14:10,880 --> 00:14:14,320 Speaker 1: that we are doing a good job. Stefano Domenicali thank 266 00:14:14,320 --> 00:14:16,560 Speaker 1: you so much for joining us, his global chief executive 267 00:14:16,559 --> 00:14:21,920 Speaker 1: officer of automobile Lamborghini based in Bologna, Italy. Thank you 268 00:14:21,920 --> 00:14:24,120 Speaker 1: so much. For being with us and uh we look 269 00:14:24,160 --> 00:14:28,119 Speaker 1: forward to uh each getting our own personal suv Lamborghini 270 00:14:28,200 --> 00:14:45,200 Speaker 1: in the Maile. Now kidding right now, it seems like 271 00:14:45,480 --> 00:14:49,200 Speaker 1: kind of a tenuous time in US government pond markets. 272 00:14:49,240 --> 00:14:53,000 Speaker 1: You have a government deficit in the United States is 273 00:14:53,000 --> 00:14:56,280 Speaker 1: expected to blossom over the next few years. You have 274 00:14:56,680 --> 00:15:01,160 Speaker 1: a potential government shutdown, and yet yields are actually dipping lower. 275 00:15:01,200 --> 00:15:03,600 Speaker 1: Today here to talk about what's going on and how 276 00:15:03,640 --> 00:15:07,600 Speaker 1: investorship position is. Ira Jersey, chief US interest rate strategist 277 00:15:07,680 --> 00:15:11,320 Speaker 1: for Bloomberg Intelligence. I want to just start with a 278 00:15:11,440 --> 00:15:16,120 Speaker 1: question about the government shutdown. Why our markets completely ignoring 279 00:15:16,160 --> 00:15:19,680 Speaker 1: this even as the rhetoric gets amped up yet again 280 00:15:19,840 --> 00:15:22,160 Speaker 1: that Congress will not come to a deal. Well, I 281 00:15:22,360 --> 00:15:24,920 Speaker 1: think there's a few things about government shutdowns that kind 282 00:15:24,920 --> 00:15:27,720 Speaker 1: of get misconstrued by the general public. I mean, the 283 00:15:27,760 --> 00:15:30,680 Speaker 1: first is that a short term government shutdown, someone that 284 00:15:30,840 --> 00:15:32,560 Speaker 1: lasts just a couple of days or even a week 285 00:15:33,040 --> 00:15:36,760 Speaker 1: um really does not have any significant economic implications. And 286 00:15:36,840 --> 00:15:38,960 Speaker 1: there are a lot of portions of the government that's 287 00:15:39,000 --> 00:15:41,440 Speaker 1: still stay open. So for example, the bondmark, it's not 288 00:15:41,480 --> 00:15:44,680 Speaker 1: going to care about it because UM government securities are 289 00:15:44,680 --> 00:15:46,680 Speaker 1: still going to get paid. Coupon payments are still going 290 00:15:46,720 --> 00:15:48,200 Speaker 1: to be made. Things like that, the I R. S 291 00:15:48,200 --> 00:15:51,920 Speaker 1: stays open, so income still comes in the Federal Reserve, 292 00:15:51,920 --> 00:15:54,240 Speaker 1: and the Treasury Department or portions of the Treasury Department 293 00:15:54,240 --> 00:15:57,160 Speaker 1: remain open, so coupons get paid. So this isn't a 294 00:15:57,400 --> 00:16:00,800 Speaker 1: kind of debt Eventum, a very long term government shutdowns, 295 00:16:00,840 --> 00:16:03,200 Speaker 1: so one that lasts several weeks or a month that 296 00:16:03,280 --> 00:16:05,760 Speaker 1: could have some economic implications because of the lack of 297 00:16:05,800 --> 00:16:09,080 Speaker 1: government spending and the like, um, that that could occur. 298 00:16:09,160 --> 00:16:11,280 Speaker 1: So you do see that when when in a few 299 00:16:11,280 --> 00:16:13,240 Speaker 1: periods that you've had long term government shutdowns, you have 300 00:16:13,280 --> 00:16:17,200 Speaker 1: seen little blips that that affect the um, that affect 301 00:16:17,320 --> 00:16:20,640 Speaker 1: the growth. But um, you know, we're not expecting necessarily 302 00:16:20,640 --> 00:16:23,280 Speaker 1: a long one now, So I think that um, any 303 00:16:23,280 --> 00:16:24,960 Speaker 1: government shutdown in this case is just going to be 304 00:16:25,040 --> 00:16:27,920 Speaker 1: completely ignored by most markets. All right, right, can you 305 00:16:27,960 --> 00:16:32,280 Speaker 1: speak about treasury inflation protected securities and their use in 306 00:16:32,400 --> 00:16:37,520 Speaker 1: people's portfolios. Yeah. I think for for a lot of investors, 307 00:16:37,560 --> 00:16:41,440 Speaker 1: the ideas is that okay, inflation might be higher than 308 00:16:41,920 --> 00:16:44,520 Speaker 1: UM in the in the future, and because of that, 309 00:16:44,560 --> 00:16:47,240 Speaker 1: I'd like to get some some hedges and protections for that, 310 00:16:47,320 --> 00:16:51,080 Speaker 1: so they buy treasury inflation protected securities. The problem with 311 00:16:51,400 --> 00:16:54,640 Speaker 1: just going out and buying UM tips, whether it's a 312 00:16:54,680 --> 00:16:58,720 Speaker 1: thousand dollars or a couple of ten thousand dollars, doesn't matter. M. 313 00:16:58,880 --> 00:17:00,880 Speaker 1: The problem is is that you're you're still have a 314 00:17:00,880 --> 00:17:03,680 Speaker 1: lot of interest rate risk that are embedded in these instruments. 315 00:17:03,720 --> 00:17:06,960 Speaker 1: So when you buy a tip security, you're receiving what's 316 00:17:06,960 --> 00:17:08,880 Speaker 1: called the real yield, so the yield on the tip 317 00:17:09,240 --> 00:17:12,879 Speaker 1: plus inflation. Now, the problem is is that when inflation 318 00:17:12,960 --> 00:17:17,440 Speaker 1: goes up, then yields usually go up much faster than 319 00:17:17,880 --> 00:17:21,680 Speaker 1: um UH than inflation. So let's imagine a situation where 320 00:17:21,920 --> 00:17:24,159 Speaker 1: suddenly we think inflation next year is going to be 321 00:17:24,160 --> 00:17:27,920 Speaker 1: five percent from say two percent today. UM you say, okay, 322 00:17:27,920 --> 00:17:29,640 Speaker 1: well let me buy tips because I'm going to get 323 00:17:29,640 --> 00:17:32,640 Speaker 1: three percent. The problem is is that an environment like that, 324 00:17:33,520 --> 00:17:35,960 Speaker 1: yields might sell off a hundred basis points and then 325 00:17:36,000 --> 00:17:39,600 Speaker 1: there's UH interest rate risk embedded in these securities, and 326 00:17:39,760 --> 00:17:43,080 Speaker 1: that's what we call duration. So that's the effect on 327 00:17:43,359 --> 00:17:46,600 Speaker 1: price by changes and yield. So a hundred basis point 328 00:17:46,640 --> 00:17:49,680 Speaker 1: increase in UH in yields on a ten year tip, 329 00:17:49,960 --> 00:17:53,119 Speaker 1: you wind up losing eight percent of your of your 330 00:17:53,160 --> 00:17:55,680 Speaker 1: dollar value of that of that tip. So if you 331 00:17:55,760 --> 00:17:58,280 Speaker 1: just do that math, eight percent minus three percent means 332 00:17:58,280 --> 00:18:02,600 Speaker 1: you lose five percent, even with inflation increasing quite a lot. 333 00:18:02,680 --> 00:18:04,719 Speaker 1: So so there's a lot of interest rate risk embedded 334 00:18:04,720 --> 00:18:07,600 Speaker 1: in this. So the way that you really hedge inflation 335 00:18:07,800 --> 00:18:10,160 Speaker 1: is by buying a tip and then hedging out your 336 00:18:10,240 --> 00:18:13,399 Speaker 1: interest rate risk. So I'm looking right now at the 337 00:18:13,480 --> 00:18:16,160 Speaker 1: I shares Tips E t F and I'm just looking 338 00:18:16,160 --> 00:18:19,159 Speaker 1: at the total assets it has increased since the end 339 00:18:19,160 --> 00:18:23,600 Speaker 1: of about I don't know, three million dollars or so 340 00:18:24,160 --> 00:18:27,320 Speaker 1: with respect to assets under management. So a lot of 341 00:18:27,320 --> 00:18:30,960 Speaker 1: people have been going into tips as a proxy for 342 00:18:31,320 --> 00:18:35,000 Speaker 1: hedging against inflation. And I'm just wondering, do you think 343 00:18:35,160 --> 00:18:38,760 Speaker 1: that all the people buying these securities understand the rate 344 00:18:38,840 --> 00:18:41,639 Speaker 1: risk that they're assuming. Well, I'm not convinced that all 345 00:18:41,680 --> 00:18:43,440 Speaker 1: of them do. And that's one of the reasons why 346 00:18:43,440 --> 00:18:46,600 Speaker 1: I think it's important to understand the interest rate risk 347 00:18:46,680 --> 00:18:49,879 Speaker 1: that you're taking by buying tips. Um. Now that being said, 348 00:18:50,040 --> 00:18:52,520 Speaker 1: if you if you're buying tips because you think yields 349 00:18:52,520 --> 00:18:55,640 Speaker 1: are too high and yields might go down, but you're 350 00:18:56,080 --> 00:18:57,320 Speaker 1: you know, but you think that there might be a 351 00:18:57,320 --> 00:18:59,840 Speaker 1: little bit of of inflation along the way than than 352 00:19:00,040 --> 00:19:03,080 Speaker 1: maybe there's a place in your portfolio for that. But um. 353 00:19:03,200 --> 00:19:06,000 Speaker 1: But I think in general people think, oh, Treasury inflation 354 00:19:06,000 --> 00:19:09,840 Speaker 1: protected securities, inflation goes up there for you know, I'll 355 00:19:09,880 --> 00:19:12,320 Speaker 1: make money in this. That's not necessarily the case in 356 00:19:12,359 --> 00:19:14,440 Speaker 1: the in the short term. If you buy a tip 357 00:19:14,480 --> 00:19:17,719 Speaker 1: today and you hold it to maturity, you'll make fifty 358 00:19:17,720 --> 00:19:19,880 Speaker 1: basis points like a ten on a ten year tip 359 00:19:20,119 --> 00:19:23,359 Speaker 1: fifty basis points plus inflation um. But if you don't 360 00:19:23,400 --> 00:19:26,760 Speaker 1: hold it to maturity, or you hold a constant maturity 361 00:19:26,840 --> 00:19:29,920 Speaker 1: instrument like an et F for like a mutual fund 362 00:19:29,960 --> 00:19:33,120 Speaker 1: that that tracks tips um, you do take a lot 363 00:19:33,160 --> 00:19:35,359 Speaker 1: of interest rate exposure and risk, and I think that 364 00:19:35,359 --> 00:19:37,679 Speaker 1: that's something that you might see unwind if you do 365 00:19:37,840 --> 00:19:40,240 Speaker 1: get a very big sell off in in rates. We're 366 00:19:40,240 --> 00:19:42,040 Speaker 1: not expecting that, but at the same time, that's a 367 00:19:42,200 --> 00:19:45,080 Speaker 1: that's definitely a risk that you're taking. Are maybe talk 368 00:19:45,160 --> 00:19:49,000 Speaker 1: about risk, but have it related to perhaps hedges on 369 00:19:49,200 --> 00:19:53,040 Speaker 1: Fannie May and the Freddie mac paper. Yeah. So one 370 00:19:53,080 --> 00:19:55,400 Speaker 1: of the things that that we've noted in the rates 371 00:19:55,440 --> 00:19:57,800 Speaker 1: market over the last over the last couple of months 372 00:19:57,800 --> 00:20:01,320 Speaker 1: is just like the VIX being at at multi year lows. 373 00:20:01,359 --> 00:20:04,720 Speaker 1: So is interest rate volatility. Applied volatility on options on 374 00:20:04,800 --> 00:20:08,600 Speaker 1: different interest rate products is exceptionally low, and I think 375 00:20:08,640 --> 00:20:12,000 Speaker 1: a part of that, at least uh UM. A portion 376 00:20:12,040 --> 00:20:14,000 Speaker 1: of the reason for that is that Fannie Mae and 377 00:20:14,040 --> 00:20:16,720 Speaker 1: Freddie Max's portfolios, which used to be one point for 378 00:20:17,000 --> 00:20:21,080 Speaker 1: trillion dollars are are about a third of that today, 379 00:20:21,480 --> 00:20:25,520 Speaker 1: And because they're UM because they are no longer hedging 380 00:20:25,920 --> 00:20:29,160 Speaker 1: things like prepayment risks of people repaying their mortgages early 381 00:20:29,200 --> 00:20:31,480 Speaker 1: and things like that. They used to do that with 382 00:20:31,600 --> 00:20:34,119 Speaker 1: options on interest rate products and they no longer have 383 00:20:34,240 --> 00:20:36,840 Speaker 1: to do that in the same size that they did UM. 384 00:20:36,880 --> 00:20:39,800 Speaker 1: So because of that, I think interest rate UM volatility 385 00:20:39,880 --> 00:20:42,280 Speaker 1: is much lower than it would be normally UM. And 386 00:20:42,320 --> 00:20:44,880 Speaker 1: also that the FED now has picked up a lot 387 00:20:44,880 --> 00:20:47,000 Speaker 1: of that ownership and the FED doesn't hedge at all. 388 00:20:47,400 --> 00:20:50,919 Speaker 1: But as the FED unwinds their portfolio, it's very likely 389 00:20:51,000 --> 00:20:55,200 Speaker 1: that banks and other other buyers of mortgages might actually 390 00:20:55,200 --> 00:20:57,919 Speaker 1: start to buy volatility a little bit more. Thank you 391 00:20:58,040 --> 00:21:01,200 Speaker 1: very much. I read Jersey very interesting interest rate strategist 392 00:21:01,240 --> 00:21:06,360 Speaker 1: for Bloomberg Intelligence, giving us some details about treasury inflation 393 00:21:06,440 --> 00:21:10,240 Speaker 1: protected securities and the lack of hedging that seems to 394 00:21:10,280 --> 00:21:12,199 Speaker 1: be going on at least when it comes to Fannie 395 00:21:12,200 --> 00:21:29,479 Speaker 1: Mae and Freddie mac that's agency back paper right now. 396 00:21:29,520 --> 00:21:32,199 Speaker 1: I want to turn our attention to a letter that 397 00:21:32,359 --> 00:21:36,760 Speaker 1: black Rock sent to a number of corporate executives today. 398 00:21:37,000 --> 00:21:40,919 Speaker 1: This according to the New York Times Deal Book uh section. 399 00:21:41,000 --> 00:21:44,439 Speaker 1: It's sort of interesting and highlights how black Rock is 400 00:21:44,480 --> 00:21:49,280 Speaker 1: increasingly aware of the actions of corporations that they invest 401 00:21:49,320 --> 00:21:52,240 Speaker 1: in and whether they are good for society or not. 402 00:21:52,720 --> 00:21:55,720 Speaker 1: Here to talk about this fuzzy designation. What does it 403 00:21:55,840 --> 00:21:59,800 Speaker 1: mean to be responsible? Is Greg Elders, who senior Environmental, 404 00:21:59,840 --> 00:22:04,200 Speaker 1: social and governance analyst for Bloomberg News. Greg I thought 405 00:22:04,200 --> 00:22:06,800 Speaker 1: this was really interesting because this comes on the heels 406 00:22:06,840 --> 00:22:12,160 Speaker 1: of Calisters and Janna Partners going after Apple for the 407 00:22:12,320 --> 00:22:16,000 Speaker 1: use of iPhones by kids and requesting that they study 408 00:22:16,119 --> 00:22:20,119 Speaker 1: the effects on children of long term use of smartphones. 409 00:22:20,840 --> 00:22:23,720 Speaker 1: What does it mean for black Rock to get more 410 00:22:23,840 --> 00:22:28,560 Speaker 1: aggressive with making sure companies act responsibly? Yeah, I mean 411 00:22:28,600 --> 00:22:31,080 Speaker 1: this is something that I mean to that end. There's 412 00:22:31,160 --> 00:22:33,600 Speaker 1: growth in this space, so Jenna, they launched their Impact 413 00:22:33,680 --> 00:22:37,280 Speaker 1: Investing Fund black Rock. So Larry Think two years ago 414 00:22:37,720 --> 00:22:42,439 Speaker 1: in his letter mentioned that company's CEO should focus on environmental, social, 415 00:22:42,520 --> 00:22:47,200 Speaker 1: and corporate governance issues. Last year it voted against management 416 00:22:47,359 --> 00:22:52,000 Speaker 1: at Exxonmobile and Occidental Petroleum, and also Vanguard similarly voted 417 00:22:52,040 --> 00:22:54,720 Speaker 1: against them. Um, so you know it's coming around in 418 00:22:54,800 --> 00:22:57,919 Speaker 1: terms of investors no longer just being passive but actually 419 00:22:57,960 --> 00:23:00,120 Speaker 1: having an active stance at the end of the day, 420 00:23:00,119 --> 00:23:03,960 Speaker 1: it's because investors are demanding that their clients, both institutional 421 00:23:04,280 --> 00:23:08,960 Speaker 1: and retail, want to see more active social engagement. Now, 422 00:23:09,119 --> 00:23:13,680 Speaker 1: is there a way in which investors will be uh, 423 00:23:13,880 --> 00:23:16,760 Speaker 1: sort of not necessarily happy about this if the market 424 00:23:16,800 --> 00:23:19,879 Speaker 1: turns south for them? I mean, it's great when stock 425 00:23:19,920 --> 00:23:23,159 Speaker 1: prices are rising, and black Rock, of course a big 426 00:23:23,560 --> 00:23:26,919 Speaker 1: E T F provider. It's wonderful when you're making money. 427 00:23:27,320 --> 00:23:28,920 Speaker 1: I mean, but that's the whole point. So it's letter 428 00:23:29,000 --> 00:23:31,720 Speaker 1: two years ago. I mean, he said to have long 429 00:23:31,840 --> 00:23:34,800 Speaker 1: term value creation and again in this letter, according to 430 00:23:34,800 --> 00:23:37,919 Speaker 1: the New York Times, So this is absolutely about growth 431 00:23:38,040 --> 00:23:42,280 Speaker 1: and profitability. It's not about the social environmental side, except 432 00:23:42,320 --> 00:23:46,359 Speaker 1: that it actually goes towards that whole financial performance area. Okay, 433 00:23:46,400 --> 00:23:48,240 Speaker 1: so how do we parse this out. I mean, this 434 00:23:48,280 --> 00:23:49,919 Speaker 1: is this is a thing that really makes me scratch 435 00:23:50,000 --> 00:23:52,120 Speaker 1: my head. You know, on one hand, if you say 436 00:23:52,160 --> 00:23:55,720 Speaker 1: to Apple, okay, study the effects of iPhones on children, 437 00:23:56,160 --> 00:23:58,679 Speaker 1: I understand the purpose of that. From sort of a 438 00:23:58,760 --> 00:24:04,160 Speaker 1: social responsive ability standpoint. From a profitability standpoint not so much. 439 00:24:04,520 --> 00:24:06,520 Speaker 1: So how do you parse out the difference here? It 440 00:24:06,520 --> 00:24:10,400 Speaker 1: seems like a pretty uh, pretty fuzzy line. It can 441 00:24:10,440 --> 00:24:12,320 Speaker 1: be a fuzzy line. I mean, going back to the 442 00:24:12,400 --> 00:24:16,440 Speaker 1: Exxon and Occidental examples, so the shareholder resolutions that black 443 00:24:16,560 --> 00:24:20,440 Speaker 1: Rock backed there were specifically around the two oil companies 444 00:24:20,720 --> 00:24:23,480 Speaker 1: thinking about what's going to happen in a low carbon world. 445 00:24:23,720 --> 00:24:26,239 Speaker 1: So if we shift away from fossil fuels, right, if 446 00:24:26,280 --> 00:24:28,840 Speaker 1: you have more electric cars, what does that mean for 447 00:24:28,880 --> 00:24:31,560 Speaker 1: their business and how do they position themselves? So very 448 00:24:31,640 --> 00:24:35,840 Speaker 1: much a fundamental business issue. Now with the example of 449 00:24:35,840 --> 00:24:38,439 Speaker 1: of Apple, I mean I agree that that varies a 450 00:24:38,480 --> 00:24:41,399 Speaker 1: bit more. And the question is, you know, maybe regulators 451 00:24:41,440 --> 00:24:43,639 Speaker 1: come along, and obviously the text space has been very 452 00:24:43,760 --> 00:24:48,080 Speaker 1: much in the focus of regulators around Facebook, um, Twitter, 453 00:24:48,359 --> 00:24:50,880 Speaker 1: that kind of thing. So yeah, I mean, it's fundamentally 454 00:24:50,880 --> 00:24:52,960 Speaker 1: what is their long term business? Well, and then there's 455 00:24:52,960 --> 00:24:57,000 Speaker 1: another question of equality or diversity or some of these 456 00:24:57,040 --> 00:25:01,400 Speaker 1: other values that a lot of corporate rations espoused that 457 00:25:01,680 --> 00:25:06,320 Speaker 1: might not be held by all of the investors in 458 00:25:06,359 --> 00:25:08,280 Speaker 1: their base. I mean, in other words, how vocal do 459 00:25:08,320 --> 00:25:11,320 Speaker 1: they get on issues that are increasingly viewed as political. 460 00:25:12,119 --> 00:25:15,000 Speaker 1: I mean, I think very clearly that Larry Fink black 461 00:25:15,080 --> 00:25:17,320 Speaker 1: Rock says that they have to because again it's going 462 00:25:17,359 --> 00:25:21,840 Speaker 1: towards financial performance. Today's City Group released data on their 463 00:25:21,840 --> 00:25:25,960 Speaker 1: pay gap between women and men. After shareholder resolution shareholder 464 00:25:26,000 --> 00:25:28,800 Speaker 1: pressure in the UK, companies are gonna be required to 465 00:25:28,840 --> 00:25:31,439 Speaker 1: do this by the end of this quarter. So now, 466 00:25:31,600 --> 00:25:34,760 Speaker 1: again this is very much an issue about driving performance. 467 00:25:35,040 --> 00:25:37,679 Speaker 1: So it all comes back to that, and I think no, 468 00:25:37,800 --> 00:25:40,359 Speaker 1: gender issues social issues are very much about that as well. 469 00:25:40,760 --> 00:25:42,879 Speaker 1: But this is not Just to be clear, this is 470 00:25:42,920 --> 00:25:45,520 Speaker 1: not black Rock's money. This is the money that they 471 00:25:45,560 --> 00:25:49,600 Speaker 1: manage on behalf of investors, correct, but they want to 472 00:25:49,640 --> 00:25:52,680 Speaker 1: maximize return. No, completely understand, But just to be clear, 473 00:25:52,800 --> 00:25:55,720 Speaker 1: this is not black Rock money. This is they're saying 474 00:25:55,760 --> 00:25:57,879 Speaker 1: this on behalf of their investors, saying that this is 475 00:25:57,920 --> 00:26:00,560 Speaker 1: what investors would like to see happen. Well, it's what 476 00:26:00,760 --> 00:26:03,520 Speaker 1: they think needs to happen, so they can have the 477 00:26:03,600 --> 00:26:07,280 Speaker 1: best returns for their clients. Got it all right, well done, 478 00:26:07,320 --> 00:26:10,440 Speaker 1: Thank you very much. Gregory Elders is our senior Environmental, 479 00:26:10,840 --> 00:26:14,359 Speaker 1: Social and Governance analyst for Bloomberg News, and of course 480 00:26:14,400 --> 00:26:17,280 Speaker 1: this is a topic will be following for quite a while. 481 00:26:17,640 --> 00:26:20,640 Speaker 1: Larry Fink, head of Black Rock, writing a letter making 482 00:26:20,720 --> 00:26:25,960 Speaker 1: that clear to all investors. Thanks for listening to the 483 00:26:26,000 --> 00:26:29,120 Speaker 1: Bloomberg P and L podcast. You can subscribe and listen 484 00:26:29,119 --> 00:26:33,280 Speaker 1: to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform 485 00:26:33,320 --> 00:26:37,240 Speaker 1: you prefer. I'm pim Fox. I'm on Twitter at pim Fox. 486 00:26:37,560 --> 00:26:41,080 Speaker 1: I'm on Twitter at Lisa Abramo. It's one before the podcast. 487 00:26:41,119 --> 00:26:43,720 Speaker 1: You can always catch us worldwide on Bloomberg Radio.