1 00:00:00,840 --> 00:00:04,000 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 2 00:00:04,040 --> 00:00:05,240 Speaker 1: my co host Matt Miller. 3 00:00:05,640 --> 00:00:09,600 Speaker 2: Every business day, we bring you interviews from CEOs, market pros, 4 00:00:09,720 --> 00:00:13,600 Speaker 2: and Bloomberg experts, along with essential market moving news. 5 00:00:14,160 --> 00:00:17,279 Speaker 1: Find the Bloomberg Markets Podcast on Apple Podcasts or wherever 6 00:00:17,400 --> 00:00:20,520 Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast. 7 00:00:21,200 --> 00:00:23,680 Speaker 1: Ukraine Russia. Boy, we did not see this coming over 8 00:00:23,680 --> 00:00:25,800 Speaker 1: the weekend, or at least I didn't. We need to 9 00:00:25,800 --> 00:00:28,040 Speaker 1: figure out what's happening over there, so we asked to 10 00:00:28,040 --> 00:00:30,720 Speaker 1: get two of our smarter voices over in that part 11 00:00:30,720 --> 00:00:34,200 Speaker 1: of the world. Maria Today, European correspondent for Bloomberg Knows, 12 00:00:34,479 --> 00:00:38,440 Speaker 1: and Leonid Brashitski, calumnist with Bloomberg Opinion. Maria, thanks so 13 00:00:38,479 --> 00:00:40,880 Speaker 1: much for taking the time. I know you're extremely busy today. 14 00:00:41,240 --> 00:00:44,199 Speaker 1: I tell you, it feels like the world knows almost 15 00:00:44,240 --> 00:00:47,440 Speaker 1: nothing about what did happen over the weekend. What is happening? 16 00:00:47,680 --> 00:00:51,120 Speaker 1: What's the latest reporting about what's going on in Russia? 17 00:00:51,600 --> 00:00:54,880 Speaker 3: Yes, and it's very difficult to tell because well, the Kremlin, 18 00:00:54,920 --> 00:00:59,320 Speaker 3: on the one hand, has gone radio silent since Saturday morning. 19 00:00:59,400 --> 00:01:01,840 Speaker 3: That's the last time we saw from Vladimir put And 20 00:01:02,160 --> 00:01:05,640 Speaker 3: talk about this situation. It was interesting that at the 21 00:01:05,720 --> 00:01:09,920 Speaker 3: time the language that he used he basically said Pegasian 22 00:01:10,040 --> 00:01:12,480 Speaker 3: was carrying out with his treason. At one point he 23 00:01:12,480 --> 00:01:15,000 Speaker 3: didn't mention him by name, but he did say it 24 00:01:15,080 --> 00:01:18,520 Speaker 3: echoed nineteen seventeen, which obviously is a crucial date for 25 00:01:18,680 --> 00:01:19,520 Speaker 3: Russian history. 26 00:01:19,640 --> 00:01:21,880 Speaker 4: Today, we have seen the Kremlin to. 27 00:01:21,840 --> 00:01:24,000 Speaker 3: Some extent, trying to take back as some of the 28 00:01:24,080 --> 00:01:27,000 Speaker 3: narrative we did see Vladimir Putin, but almost and a 29 00:01:27,080 --> 00:01:32,400 Speaker 3: topic completely unrelated to this, almost suggesting it's business as usual. 30 00:01:32,480 --> 00:01:36,679 Speaker 3: We had also some tape video footage from the Russian 31 00:01:36,680 --> 00:01:39,120 Speaker 3: Defense Minister Sergei Shoigu. I mean, a lot of the 32 00:01:39,200 --> 00:01:43,560 Speaker 3: tensions with Pegashiin and Wagner had stamped because of his 33 00:01:43,680 --> 00:01:45,840 Speaker 3: criticism in terms of the way that the Russian mod 34 00:01:46,240 --> 00:01:49,440 Speaker 3: was carrying out were operations. So the message would be 35 00:01:49,520 --> 00:01:52,800 Speaker 3: that sure was still in his job and it continues 36 00:01:52,880 --> 00:01:55,640 Speaker 3: to do his job. But again the question is, how 37 00:01:55,640 --> 00:01:58,080 Speaker 3: do we know if this footage was filmed today? This 38 00:01:58,000 --> 00:02:00,480 Speaker 3: is all happening today, And of course I've seen that 39 00:02:00,560 --> 00:02:03,960 Speaker 3: in the past Russia can be very good at just 40 00:02:04,000 --> 00:02:07,000 Speaker 3: putting out a message on tape and footage and comments, 41 00:02:07,040 --> 00:02:09,600 Speaker 3: pictures of things that are not happening in the moment 42 00:02:09,639 --> 00:02:10,880 Speaker 3: but are already pre recorded. 43 00:02:10,880 --> 00:02:13,280 Speaker 4: They just put the map because it suits a narrative 44 00:02:13,320 --> 00:02:13,519 Speaker 4: to me. 45 00:02:13,639 --> 00:02:17,480 Speaker 3: The real takeaway, however, is that today you see Russian's 46 00:02:18,080 --> 00:02:22,040 Speaker 3: state media suggesting that this idea that there would be amnesty, 47 00:02:22,120 --> 00:02:26,040 Speaker 3: that there would be no charges into Prigotten or even Wagner, 48 00:02:26,080 --> 00:02:27,760 Speaker 3: that a lot of that had been part. 49 00:02:27,639 --> 00:02:29,720 Speaker 4: Of a deal broker by Alexander Rokashenka. 50 00:02:29,840 --> 00:02:33,239 Speaker 3: Remember he's the head of Belarus who the international community 51 00:02:33,320 --> 00:02:36,360 Speaker 3: doesn't really recognize because they say he rigged the twenty 52 00:02:36,400 --> 00:02:40,720 Speaker 3: twenty election, but nonetheless remains an ally, a transactional ally. 53 00:02:40,760 --> 00:02:43,280 Speaker 3: I would say to Russia again, the terms of that 54 00:02:43,400 --> 00:02:46,480 Speaker 3: deal that was brokeer to diffuse the situation now are 55 00:02:46,480 --> 00:02:48,520 Speaker 3: being called into question. And there's a lot of questions 56 00:02:48,560 --> 00:02:51,240 Speaker 3: too in terms of what is going to happen to Wagner, 57 00:02:51,280 --> 00:02:52,960 Speaker 3: but also where is Pregauson. 58 00:02:53,200 --> 00:02:54,680 Speaker 4: The idea is that he would be. 59 00:02:54,639 --> 00:02:57,280 Speaker 3: On his way to Belarus, but we've had no indication 60 00:02:57,400 --> 00:02:58,600 Speaker 3: that he's arrived here. 61 00:02:59,120 --> 00:03:01,960 Speaker 5: All right, well, let's bring lean it into the conversation here. 62 00:03:02,120 --> 00:03:04,639 Speaker 5: Leanid Burshitski, Thanks for getting on a call with us. 63 00:03:04,960 --> 00:03:08,160 Speaker 5: Talk to me about what this tells us about Putin's 64 00:03:08,639 --> 00:03:12,840 Speaker 5: control and specifically his popularity with the Russian people. 65 00:03:14,760 --> 00:03:21,840 Speaker 6: Well, his control is not really in question. If there's 66 00:03:21,919 --> 00:03:27,000 Speaker 6: actually a deal with pre version, such a deal could 67 00:03:27,080 --> 00:03:31,960 Speaker 6: not have been engineered without Puttin's consent, Putting's permission, or 68 00:03:32,160 --> 00:03:37,200 Speaker 6: putting participation somehow in the like deciding what should happen. 69 00:03:39,440 --> 00:03:46,760 Speaker 6: His actual power isn't question though, because when you ask, 70 00:03:46,840 --> 00:03:52,240 Speaker 6: the mutiny unfolded, nobody really made a serious move to 71 00:03:52,320 --> 00:03:59,400 Speaker 6: defemp Putting and to stop the mutineers. A lot of 72 00:03:59,400 --> 00:04:03,400 Speaker 6: people prefer loyalty, but nobody actually do anything to stop them. 73 00:04:03,800 --> 00:04:08,440 Speaker 6: So it's a twofold situation in terms of, you know, 74 00:04:08,480 --> 00:04:12,680 Speaker 6: whether whether Putting is still in control or not. He's 75 00:04:12,720 --> 00:04:17,680 Speaker 6: still able to engineer deals. You know, people, the bureaucracy, 76 00:04:17,800 --> 00:04:22,800 Speaker 6: the government apparatus still abasing, clearly, but nobody will go 77 00:04:22,920 --> 00:04:26,159 Speaker 6: out of their way to send them against an armed threat. 78 00:04:26,880 --> 00:04:29,360 Speaker 1: Maria, Is there any feeling or consensus building after the 79 00:04:29,640 --> 00:04:32,880 Speaker 1: weekend about what this may mean for the actual war 80 00:04:32,960 --> 00:04:36,560 Speaker 1: on the ground in Ukraine? Does this strengthen at all 81 00:04:36,600 --> 00:04:39,520 Speaker 1: the Ukrainian position well. 82 00:04:39,320 --> 00:04:41,800 Speaker 3: Actually, we just heard from the head of Nature of 83 00:04:41,800 --> 00:04:44,919 Speaker 3: the Secretary General Staltenberg, who had what is to me 84 00:04:45,279 --> 00:04:47,400 Speaker 3: a subtle maybe not even a subtle dick, but just 85 00:04:47,440 --> 00:04:51,760 Speaker 3: criticism the operation in Russian just seeing the chaos that 86 00:04:51,760 --> 00:04:53,760 Speaker 3: we saw play out over the past for eight hours. 87 00:04:53,760 --> 00:04:57,240 Speaker 3: This is exactly what happens when you hire mercenaries, the 88 00:04:57,279 --> 00:05:00,320 Speaker 3: people that will fight for money to fight you war. 89 00:05:00,400 --> 00:05:03,039 Speaker 3: And again he said, this pointed to weakness in the 90 00:05:03,040 --> 00:05:05,760 Speaker 3: way that Russia has conducted this operation. 91 00:05:05,400 --> 00:05:08,280 Speaker 4: And this idea that the war would be easy to win. 92 00:05:08,360 --> 00:05:11,039 Speaker 3: It's obviously by no means the reality now we've seen 93 00:05:11,040 --> 00:05:12,600 Speaker 3: a play out for more than a year and a half. 94 00:05:13,120 --> 00:05:16,880 Speaker 3: Anything that is chaos internally for Russia, the Ukrainians would 95 00:05:16,880 --> 00:05:19,400 Speaker 3: perceive it as good for them. But again, one of 96 00:05:19,400 --> 00:05:22,360 Speaker 3: the things that I would stress, however, is that for 97 00:05:22,520 --> 00:05:24,640 Speaker 3: a lot of the European officials, especially the ones that 98 00:05:24,880 --> 00:05:27,839 Speaker 3: I was on the phone with yesterday, what they say 99 00:05:27,880 --> 00:05:30,039 Speaker 3: is that you have to be very clear here, precaussion 100 00:05:30,200 --> 00:05:32,560 Speaker 3: is not an ally to the West. It's not again, 101 00:05:32,600 --> 00:05:35,680 Speaker 3: if there had been a coup or put had been overthrown, 102 00:05:36,000 --> 00:05:38,200 Speaker 3: that things of Russia would be better. If anything, you 103 00:05:38,200 --> 00:05:41,159 Speaker 3: could argue there could be more hardliners that could come 104 00:05:41,160 --> 00:05:43,320 Speaker 3: in and the situation could become even more destable. 105 00:05:43,320 --> 00:05:46,160 Speaker 4: And this is a country that still holds nuclear weapons. 106 00:05:46,200 --> 00:05:49,080 Speaker 3: I think at this point, does it help the Ukrainians 107 00:05:49,440 --> 00:05:51,720 Speaker 3: in terms of the symbolic nature of this for them? 108 00:05:51,760 --> 00:05:54,159 Speaker 3: They say yes, because again it goes back to this 109 00:05:54,240 --> 00:05:57,280 Speaker 3: idea that Latimer Putting is not invincible, that this myth 110 00:05:57,360 --> 00:06:00,880 Speaker 3: that the KJB man is a myth extent, but will 111 00:06:00,880 --> 00:06:04,040 Speaker 3: play out on the battlefield, and will they help them logistically? 112 00:06:04,080 --> 00:06:06,120 Speaker 4: I think that is very very early to tell. And 113 00:06:06,160 --> 00:06:06,680 Speaker 4: again when I. 114 00:06:06,680 --> 00:06:09,200 Speaker 3: Spoke to the Ukraine and Prime Minister last week, he 115 00:06:09,240 --> 00:06:11,880 Speaker 3: did say to me, look, this is not a Hollywood movie. 116 00:06:11,880 --> 00:06:13,960 Speaker 3: It's not that things happen and changed from one day 117 00:06:14,000 --> 00:06:18,800 Speaker 3: to another. A counter offensive counts with many different operations. 118 00:06:18,839 --> 00:06:22,200 Speaker 3: Will it change something substantially on the battlefield ass of today? 119 00:06:22,240 --> 00:06:25,680 Speaker 4: I think that's overly or an overly stretch. But again 120 00:06:25,720 --> 00:06:27,920 Speaker 4: it goes back to this idea, at least. 121 00:06:27,920 --> 00:06:32,080 Speaker 3: For NATO today, reinforcing this message that whatever happens internally 122 00:06:32,400 --> 00:06:35,920 Speaker 3: in Russia, for NATO you have to help Ukraine. That's 123 00:06:35,960 --> 00:06:39,279 Speaker 3: what Stottenburg said, and at this point maintain that support. 124 00:06:39,720 --> 00:06:42,400 Speaker 5: Well, leonet on that I wonder to what extent you 125 00:06:42,440 --> 00:06:46,800 Speaker 5: feel that Putin's authority had already been undermined based on 126 00:06:47,279 --> 00:06:51,880 Speaker 5: his performance and conduct within the Ukraine invasion. 127 00:06:53,800 --> 00:06:57,039 Speaker 6: Well, it's clear that his authority has been undermined by this, 128 00:06:57,880 --> 00:07:02,320 Speaker 6: but by having to actually make a deal with people 129 00:07:02,400 --> 00:07:08,960 Speaker 6: who are station open revolt. But whether that affects the 130 00:07:09,000 --> 00:07:13,880 Speaker 6: events on the battlefield is another a different matter. The 131 00:07:14,000 --> 00:07:20,720 Speaker 6: Russian generals coordinating the Russian resistance to the Ukrainian Culter 132 00:07:20,840 --> 00:07:25,440 Speaker 6: offensive out of the headquarters in Rostov actually continued as 133 00:07:25,520 --> 00:07:30,440 Speaker 6: if nothing had happened, even as the Wagner fighters were 134 00:07:30,480 --> 00:07:34,960 Speaker 6: patrolling the perimeter. So it's not as if some sort 135 00:07:34,960 --> 00:07:40,200 Speaker 6: of anti war force threatened to overthrow Putting. The Precaussian 136 00:07:40,280 --> 00:07:43,080 Speaker 6: is firmly in the pro war camp, even if he 137 00:07:43,200 --> 00:07:46,400 Speaker 6: questions the motives that led to the war being started, 138 00:07:47,120 --> 00:07:51,440 Speaker 6: Like whatever happens to Putting personally, whether that ends the 139 00:07:51,480 --> 00:07:53,520 Speaker 6: war is an open question. 140 00:07:54,240 --> 00:07:58,200 Speaker 1: Lean, what do you expect I guess the next thing 141 00:07:58,200 --> 00:08:00,640 Speaker 1: we will hear from mister Putin? What do you expect 142 00:08:00,800 --> 00:08:01,840 Speaker 1: him to do next? 143 00:08:04,120 --> 00:08:06,360 Speaker 6: What do I expect Putin to do? He hasn't really 144 00:08:06,360 --> 00:08:13,080 Speaker 6: been doing much lately, he's kind of been weighing in 145 00:08:13,120 --> 00:08:18,679 Speaker 6: wait on letting the letting the military do their job. 146 00:08:19,200 --> 00:08:23,440 Speaker 6: He really has kept out of the action to such 147 00:08:23,480 --> 00:08:27,000 Speaker 6: a degree that the sort of the ultra nationalist contingent 148 00:08:27,040 --> 00:08:31,040 Speaker 6: in Russia is questioning whether he's still around or you know, 149 00:08:31,120 --> 00:08:34,400 Speaker 6: the Kremlin is being run by a double So what's 150 00:08:34,440 --> 00:08:36,360 Speaker 6: she gonna what's she gonna do next? Nothing? 151 00:08:37,400 --> 00:08:41,120 Speaker 1: Okay? H and Maria just so quickly, mister Pregosian doing 152 00:08:41,160 --> 00:08:44,400 Speaker 1: what do we know about him? His whereabouts? 153 00:08:44,600 --> 00:08:47,760 Speaker 4: And yeah, sorry, at this point it's not clear. It's 154 00:08:47,800 --> 00:08:48,800 Speaker 4: not clear at all. 155 00:08:48,840 --> 00:08:50,920 Speaker 3: And and in fact, this morning on the show, we 156 00:08:51,000 --> 00:08:55,480 Speaker 3: spoke with Spilan, who was the again. Remember she challenged 157 00:08:55,920 --> 00:09:00,000 Speaker 3: uh in the twenty twenty election, again which the Internet 158 00:09:00,320 --> 00:09:03,920 Speaker 3: community says was rigged, and that lukashenk A rigged in 159 00:09:03,960 --> 00:09:06,200 Speaker 3: twenty twenty four himself so that he was a winner. 160 00:09:06,320 --> 00:09:09,240 Speaker 4: The one thing she said is that frankly, this should 161 00:09:09,280 --> 00:09:09,559 Speaker 4: not be. 162 00:09:09,520 --> 00:09:11,760 Speaker 3: A problem for Belarus to deal with, that this is 163 00:09:11,800 --> 00:09:14,319 Speaker 3: an independent of sovereign country and theory and they should 164 00:09:14,360 --> 00:09:17,000 Speaker 3: not be dealing with which she said or quote sucks. 165 00:09:17,040 --> 00:09:19,439 Speaker 3: But of course a lot of the focus will now 166 00:09:19,480 --> 00:09:21,600 Speaker 3: be unaware, is he But also what kind of reception 167 00:09:21,679 --> 00:09:24,440 Speaker 3: and treatment will he get from Lukashenka. One of the 168 00:09:24,440 --> 00:09:27,360 Speaker 3: things that I thought was interesting from Tigeroskaya is that 169 00:09:27,440 --> 00:09:28,920 Speaker 3: she said he's not. 170 00:09:29,000 --> 00:09:30,000 Speaker 4: Really been a mediator. 171 00:09:30,000 --> 00:09:32,240 Speaker 3: He probably just passed on a message for Vladimir Putting 172 00:09:32,240 --> 00:09:35,160 Speaker 3: and he will treat and do with Privashin whatever Button 173 00:09:35,200 --> 00:09:36,920 Speaker 3: tells him he needs to do next. 174 00:09:37,000 --> 00:09:39,160 Speaker 1: All right, Maria, thank you so much for joining us. 175 00:09:39,200 --> 00:09:43,000 Speaker 1: We know you're busy. Maria today European correspondent for Bloomberg 176 00:09:43,040 --> 00:09:46,440 Speaker 1: News and lead in Brashitski. He's a calmnist for Bloomberg Opinion, 177 00:09:46,480 --> 00:09:48,559 Speaker 1: spent a lot of time in Moscow. He's done a 178 00:09:48,600 --> 00:09:52,199 Speaker 1: lot of work with in Ukraine as well, So really informed. 179 00:09:52,320 --> 00:09:54,760 Speaker 1: A couple of voices there, and Maddie, I guess you know, 180 00:09:55,000 --> 00:09:56,520 Speaker 1: we're like the rest of the world, just kind of 181 00:09:56,840 --> 00:09:58,560 Speaker 1: waiting to see what kind of news or what kind 182 00:09:58,559 --> 00:10:02,160 Speaker 1: of information will be disclosed about what really happened over 183 00:10:02,400 --> 00:10:06,280 Speaker 1: the weekend and what it means for mister Putin going forward. 184 00:10:06,360 --> 00:10:09,079 Speaker 1: So but again we had two very very good voices here, 185 00:10:09,080 --> 00:10:11,120 Speaker 1: well informed to give us a little bit of perspective here, 186 00:10:11,160 --> 00:10:13,640 Speaker 1: but again a lot more needs to be learned here. 187 00:10:15,320 --> 00:10:18,720 Speaker 7: You're listening to the team Ken's are live program Bloomberg 188 00:10:18,800 --> 00:10:22,120 Speaker 7: Markets weekdays at ten am Eastern on Bloomberg dot com, 189 00:10:22,240 --> 00:10:25,360 Speaker 7: the iHeartRadio app and the Bloomberg Business App, or listen 190 00:10:25,440 --> 00:10:27,559 Speaker 7: on demand wherever you get your podcasts. 191 00:10:29,880 --> 00:10:32,680 Speaker 1: Joining us here in our Bloomberg Interactive Broker Studio, which 192 00:10:32,720 --> 00:10:35,840 Speaker 1: means he's live on YouTube as well, because you know 193 00:10:35,880 --> 00:10:39,679 Speaker 1: we YouTube stream this thing. Oh yeahs if you can 194 00:10:39,679 --> 00:10:41,760 Speaker 1: go to you cross platform, thank you. That's a good 195 00:10:41,800 --> 00:10:44,080 Speaker 1: like multimedia thing. Yeah, you just have to go to 196 00:10:44,120 --> 00:10:46,880 Speaker 1: YouTube and search Bloomberg Global News you and you'll get 197 00:10:46,880 --> 00:10:50,319 Speaker 1: that stream. David, thanks so much for joining us here. Again. 198 00:10:50,480 --> 00:10:54,240 Speaker 1: Kind of a markets year to date that hasn't The 199 00:10:54,280 --> 00:10:57,040 Speaker 1: indexes look good. The numbers kind of look good, but 200 00:10:57,120 --> 00:10:59,920 Speaker 1: if you didn't own a handful of stocks, you're you're lagging. 201 00:11:00,200 --> 00:11:02,679 Speaker 1: How do you think about the first half and kind 202 00:11:02,679 --> 00:11:04,600 Speaker 1: of how the market performed, and what do you think 203 00:11:04,600 --> 00:11:05,800 Speaker 1: about for second half of the year. 204 00:11:06,120 --> 00:11:07,000 Speaker 8: Yeah, there's only. 205 00:11:06,880 --> 00:11:10,240 Speaker 9: Two precedents where I've seen it where the cap weighted 206 00:11:10,280 --> 00:11:13,720 Speaker 9: index was so good from such a few amount of companies, 207 00:11:13,760 --> 00:11:15,920 Speaker 9: and that was in nineteen ninety nine. In that period 208 00:11:15,920 --> 00:11:19,280 Speaker 9: in twenty twenty and it never ever ever ends. Well, 209 00:11:20,240 --> 00:11:22,920 Speaker 9: you look at the equal weighted S and P on 210 00:11:22,960 --> 00:11:25,719 Speaker 9: the year, it's a totally different story. Now people can say, 211 00:11:25,760 --> 00:11:27,679 Speaker 9: I don't care, I don't ownly equal weighted S and P. 212 00:11:27,880 --> 00:11:30,360 Speaker 9: So as long if it's six companies carrying the index 213 00:11:30,360 --> 00:11:32,560 Speaker 9: and I own the index, I'm fine. But the problem 214 00:11:32,600 --> 00:11:35,920 Speaker 9: with that, of course, is it's unsustainable. Markets are mean 215 00:11:36,240 --> 00:11:39,320 Speaker 9: reverting things. This will revert to the mean. You will 216 00:11:39,320 --> 00:11:41,920 Speaker 9: need more participation to see a broader market movement. 217 00:11:42,320 --> 00:11:45,840 Speaker 5: So what about what you're looking at next? I'm stealing 218 00:11:45,880 --> 00:11:48,160 Speaker 5: this from Abigail Do a little from earlier in the show. 219 00:11:48,240 --> 00:11:50,040 Speaker 5: She was saying that markets are going to be moving 220 00:11:50,080 --> 00:11:53,400 Speaker 5: more on earnings than FED moves in the next couple 221 00:11:53,440 --> 00:11:54,560 Speaker 5: of months. Do you agree. 222 00:11:54,760 --> 00:11:57,920 Speaker 9: I think markets always move off of earnings, other than 223 00:11:57,960 --> 00:12:01,600 Speaker 9: sometimes in a couple of months or weeks days. Ultimately, 224 00:12:01,640 --> 00:12:04,240 Speaker 9: this is a Ben Graham one oh one. Markets moved 225 00:12:04,280 --> 00:12:06,560 Speaker 9: by earnings. And I think that you will get better 226 00:12:06,600 --> 00:12:11,120 Speaker 9: cash flow growth outside of AI and big tech, and 227 00:12:11,160 --> 00:12:14,520 Speaker 9: that the idea of people anticipating the FED or trying 228 00:12:14,559 --> 00:12:17,120 Speaker 9: to gain what the FED will do. The fed's role 229 00:12:17,200 --> 00:12:20,080 Speaker 9: in market movements is way too high, and it's only 230 00:12:20,080 --> 00:12:22,839 Speaker 9: a matter of when not if that reverts to more 231 00:12:22,880 --> 00:12:24,560 Speaker 9: normal wing of market movement. 232 00:12:24,960 --> 00:12:26,600 Speaker 1: Looking at some of your stock pics here, I see 233 00:12:26,600 --> 00:12:29,360 Speaker 1: some financial services. So let's start off just kind of 234 00:12:29,360 --> 00:12:32,960 Speaker 1: how you're viewing financial services. I guess that many little 235 00:12:33,160 --> 00:12:35,120 Speaker 1: crisis we had in some of the regional banks that 236 00:12:35,160 --> 00:12:36,600 Speaker 1: didn't scare you away from the sector. 237 00:12:37,040 --> 00:12:40,600 Speaker 9: Well, we only like a couple names, and Truest is 238 00:12:40,640 --> 00:12:43,000 Speaker 9: the big regional we own. But it wasn't because we 239 00:12:43,000 --> 00:12:44,760 Speaker 9: weren't afraid of what happened. It's because we didn't think 240 00:12:44,800 --> 00:12:46,640 Speaker 9: what happened affected Truest. 241 00:12:46,800 --> 00:12:48,520 Speaker 1: Now Truest is the old Remember. 242 00:12:48,400 --> 00:12:52,280 Speaker 9: BB and T and Sunrine merge together, and that's a 243 00:12:52,440 --> 00:12:55,080 Speaker 9: super regional by any definition of the word. It's only 244 00:12:55,120 --> 00:12:57,880 Speaker 9: a little smaller than some of those kind of cities 245 00:12:57,920 --> 00:13:00,480 Speaker 9: and Bank of Americas, and it's a lot bigger than 246 00:13:00,520 --> 00:13:02,800 Speaker 9: the Silicon Valleys and First Republic. So it's kind of 247 00:13:02,800 --> 00:13:05,200 Speaker 9: in this no man's land, but it was being treated 248 00:13:05,280 --> 00:13:07,719 Speaker 9: as a regional. It's interesting we remember when they put 249 00:13:07,720 --> 00:13:11,839 Speaker 9: the deposit together to help out First Republic. Truis was 250 00:13:11,880 --> 00:13:13,760 Speaker 9: one of the banks that did that. They put a 251 00:13:13,800 --> 00:13:16,680 Speaker 9: billion dollars into that. They weren't in need of deposit money, 252 00:13:16,679 --> 00:13:19,400 Speaker 9: they were giving deposit money. So we think truest was 253 00:13:19,440 --> 00:13:22,000 Speaker 9: misunderstood in the market. Has great cash flows to get 254 00:13:22,000 --> 00:13:23,320 Speaker 9: through this tough period. 255 00:13:23,440 --> 00:13:26,040 Speaker 5: So I've noticed in your stock pigs none of them 256 00:13:26,200 --> 00:13:30,640 Speaker 5: are super AI related at all. What do you say 257 00:13:30,679 --> 00:13:33,280 Speaker 5: to clients then, who are calling in and saying, why 258 00:13:33,280 --> 00:13:35,080 Speaker 5: are we not getting in on the AI rally? 259 00:13:35,360 --> 00:13:37,400 Speaker 9: So I believe that the way we're investing in AI 260 00:13:37,480 --> 00:13:39,440 Speaker 9: is the only way people should be invested in it, 261 00:13:39,440 --> 00:13:42,880 Speaker 9: and that's with companies that actually already have incumbent businesses 262 00:13:42,920 --> 00:13:46,520 Speaker 9: that make a ton of money. Broadcom, Cisco, and IBM. 263 00:13:46,600 --> 00:13:49,359 Speaker 9: We own all three. Broad comes the most AI adjacent, 264 00:13:49,600 --> 00:13:52,520 Speaker 9: but it's not relying on AI. Like if something were 265 00:13:52,559 --> 00:13:55,400 Speaker 9: to happen that moves with AI, the whole sentiment changed 266 00:13:55,440 --> 00:13:59,400 Speaker 9: and VIDIA could drop fifty percent in one day. Broadcom 267 00:13:59,480 --> 00:14:02,400 Speaker 9: is far less reliant on that and yet really does 268 00:14:02,520 --> 00:14:06,360 Speaker 9: have fundamental exposures. So we like the idea of hedging 269 00:14:06,679 --> 00:14:09,240 Speaker 9: with cash flow with a balance sheet with a real business, 270 00:14:09,640 --> 00:14:14,080 Speaker 9: and there is an AI component in oldline businesses like 271 00:14:14,120 --> 00:14:17,080 Speaker 9: IBM and Cisco. It's not the most leverage, it's obviously 272 00:14:17,080 --> 00:14:19,280 Speaker 9: not the most beta, but we think it's a safer 273 00:14:19,280 --> 00:14:20,760 Speaker 9: way to still be exposed to AI. 274 00:14:21,480 --> 00:14:23,720 Speaker 1: So we are coming up on earnings in a couple 275 00:14:23,720 --> 00:14:25,640 Speaker 1: of weeks, we get the big banks kicking us off. Here, 276 00:14:25,720 --> 00:14:27,280 Speaker 1: I'm looking at the S and P five hundred, the 277 00:14:27,280 --> 00:14:29,440 Speaker 1: bottoms up numbers like two hundred and twenty bucks per 278 00:14:29,480 --> 00:14:33,360 Speaker 1: share EPs. I've heard people, I guess not recently, but 279 00:14:33,360 --> 00:14:35,120 Speaker 1: they were talking about this thing could be two hundred 280 00:14:35,120 --> 00:14:37,440 Speaker 1: bucks something like that. I mean, do you still see 281 00:14:37,480 --> 00:14:39,280 Speaker 1: some meaningful earnings risk in this market? 282 00:14:39,880 --> 00:14:42,280 Speaker 9: I believe that if you're going to have a severe recession, 283 00:14:42,320 --> 00:14:45,040 Speaker 9: it's inevitable. In fact, it's sort of a tautology. There 284 00:14:45,120 --> 00:14:47,720 Speaker 9: is no recession if earnings stay at two twenty. Like 285 00:14:47,760 --> 00:14:51,880 Speaker 9: by definition, a recession means corporate profits drop, and at 286 00:14:51,920 --> 00:14:55,280 Speaker 9: two hundred, that would be about a reasonable expectation. I 287 00:14:55,280 --> 00:14:57,680 Speaker 9: think the market priced a lot of that expectation in 288 00:14:57,760 --> 00:15:00,760 Speaker 9: last year. Remember we were at one point looking forward 289 00:15:00,840 --> 00:15:03,760 Speaker 9: at what's two fifty or so, and so I don't 290 00:15:03,800 --> 00:15:06,520 Speaker 9: think that it is the most likely scenario to happen. 291 00:15:06,520 --> 00:15:09,160 Speaker 9: I think there's been a lot of earnings resilience, But 292 00:15:09,720 --> 00:15:11,760 Speaker 9: the problem is the way the market's set up now, 293 00:15:11,760 --> 00:15:14,840 Speaker 9: it's really dependent on one or two sectors and you 294 00:15:14,920 --> 00:15:18,320 Speaker 9: could have earnings an aggregate that hold in there, but 295 00:15:18,480 --> 00:15:21,080 Speaker 9: the impact sector by sector is very different. 296 00:15:21,520 --> 00:15:24,800 Speaker 5: What needs to happen to change that, to change that 297 00:15:24,960 --> 00:15:28,080 Speaker 5: dynamic of just the narrow rally that we've seen in 298 00:15:28,120 --> 00:15:28,520 Speaker 5: the S and P. 299 00:15:28,960 --> 00:15:31,480 Speaker 9: Yeah, it's inevitable, it happened, but it's going to be 300 00:15:31,480 --> 00:15:33,520 Speaker 9: when the FED is not our number one story, when 301 00:15:33,520 --> 00:15:36,160 Speaker 9: everyone isn't just sitting around waiting on the words of 302 00:15:36,200 --> 00:15:40,160 Speaker 9: a press conference with Jpal, that'll ultimately be what changes it. 303 00:15:40,200 --> 00:15:42,640 Speaker 9: And you know, I don't think it's good for index 304 00:15:42,680 --> 00:15:45,800 Speaker 9: investors if we go into the next phase nineteen or 305 00:15:45,800 --> 00:15:48,920 Speaker 9: twenty times forward earnings. You'd rather be at sixteen or 306 00:15:48,960 --> 00:15:52,240 Speaker 9: seventeen forward and even that's not cheap. But to go 307 00:15:52,440 --> 00:15:56,760 Speaker 9: into the next phase already above average valuation, I think 308 00:15:56,760 --> 00:15:59,440 Speaker 9: it would be a difficult place to start at. We 309 00:15:59,560 --> 00:16:01,680 Speaker 9: just prefer be much more selective and we run a 310 00:16:01,720 --> 00:16:03,200 Speaker 9: really concentrated portfolio. 311 00:16:03,800 --> 00:16:07,000 Speaker 1: Are you so concentrate portfolio? Define what that means for you? 312 00:16:07,040 --> 00:16:07,320 Speaker 7: Guys? 313 00:16:07,400 --> 00:16:09,400 Speaker 9: We have right now thirty three stocks. I've never had 314 00:16:09,480 --> 00:16:11,640 Speaker 9: less than twenty five. I've never had more than thirty five. 315 00:16:11,760 --> 00:16:14,560 Speaker 9: But that's not by design. If we had fifty companies 316 00:16:14,640 --> 00:16:16,800 Speaker 9: that met our criteria, we may own fifty, but it's 317 00:16:16,800 --> 00:16:17,720 Speaker 9: always right around third. 318 00:16:17,760 --> 00:16:19,360 Speaker 1: How much cash do you have right now? 319 00:16:19,360 --> 00:16:21,320 Speaker 9: We have about three percent. We don't usually like to 320 00:16:21,400 --> 00:16:24,080 Speaker 9: run more, clients pay us to get them risk premia, 321 00:16:24,200 --> 00:16:26,080 Speaker 9: but we have cash right now just from a sale 322 00:16:26,120 --> 00:16:27,880 Speaker 9: position that we haven't replaced. 323 00:16:28,440 --> 00:16:31,280 Speaker 5: And how many tech names would you say are in 324 00:16:31,320 --> 00:16:31,840 Speaker 5: there right now? 325 00:16:31,880 --> 00:16:33,880 Speaker 9: See, I don't think that the cool kids would consider 326 00:16:33,920 --> 00:16:36,800 Speaker 9: these tech names, but Cisco, Broadcom, I do. 327 00:16:37,640 --> 00:16:38,640 Speaker 1: Those are tech names. 328 00:16:38,680 --> 00:16:41,920 Speaker 9: But if it's not a dividend growing, cash flow generative name, 329 00:16:41,960 --> 00:16:45,080 Speaker 9: which takes out Fang, it takes out Nvidia, AI, the 330 00:16:45,400 --> 00:16:48,240 Speaker 9: Big six seven, even Microsoft, they just quit growing the 331 00:16:48,280 --> 00:16:50,880 Speaker 9: divid in relative to the valuation they had, so we 332 00:16:50,960 --> 00:16:54,160 Speaker 9: sold that years ago. So whether it's new tech or 333 00:16:54,160 --> 00:16:57,240 Speaker 9: even some of those old tech names, Apple and Microsoft 334 00:16:57,280 --> 00:16:59,120 Speaker 9: both should be two of the biggest divid and growing 335 00:16:59,200 --> 00:16:59,880 Speaker 9: names in history. 336 00:17:00,040 --> 00:17:02,200 Speaker 1: That's what I've been saying. I mean, like Apple, and 337 00:17:02,240 --> 00:17:03,960 Speaker 1: I say this to all the tech investors and they 338 00:17:03,960 --> 00:17:06,199 Speaker 1: push back on me, But I mean they have a 339 00:17:06,240 --> 00:17:08,520 Speaker 1: yield less than one percent in dividend. You'll you know, 340 00:17:08,560 --> 00:17:10,600 Speaker 1: they got a gajillion dollars with a cash said ninety 341 00:17:10,600 --> 00:17:13,159 Speaker 1: two hundred million dollars of free cash. So yes, I 342 00:17:13,240 --> 00:17:15,400 Speaker 1: know they buy back stock, but a lot of that's 343 00:17:15,440 --> 00:17:17,560 Speaker 1: just just to cover the options that that that you're issuing. 344 00:17:17,800 --> 00:17:19,359 Speaker 1: Why do you think they don't have a three three 345 00:17:19,400 --> 00:17:20,560 Speaker 1: and a half percent dividend yield? 346 00:17:20,680 --> 00:17:20,840 Speaker 7: Oh? 347 00:17:20,880 --> 00:17:23,360 Speaker 9: I think it is purely an ego issue in silicon 348 00:17:23,440 --> 00:17:25,960 Speaker 9: value where they believe, like the reason people push back 349 00:17:25,960 --> 00:17:28,639 Speaker 9: with you is tech investors believe that they can invest 350 00:17:28,640 --> 00:17:30,439 Speaker 9: the money better than we can, and they can do 351 00:17:30,520 --> 00:17:33,320 Speaker 9: a point, but there's a diminishing return. That's why diving 352 00:17:33,359 --> 00:17:35,600 Speaker 9: and growth is so important for shareholders. At some point, 353 00:17:35,640 --> 00:17:38,760 Speaker 9: the c suite starts doing dumb things. Now, Apple makes 354 00:17:38,760 --> 00:17:41,040 Speaker 9: so much money they got away with it. My example 355 00:17:41,119 --> 00:17:43,800 Speaker 9: years ago is they bought doctor Dre's headphone company for 356 00:17:43,840 --> 00:17:47,480 Speaker 9: three billion dollars. It wasn't worth eight hundred million, soaking wet. 357 00:17:47,720 --> 00:17:49,639 Speaker 9: Now for a normal company to throw two two and 358 00:17:49,680 --> 00:17:51,879 Speaker 9: a half billion in the trash can, that'd be a problem. 359 00:17:52,000 --> 00:17:54,280 Speaker 9: For Apple, it didn't matter. But that's the kind of 360 00:17:54,400 --> 00:17:57,240 Speaker 9: bad deals companies do when they're not returning cash. 361 00:17:57,320 --> 00:17:59,000 Speaker 1: So give me a name in your portfolio that is 362 00:17:59,040 --> 00:18:01,680 Speaker 1: a good dividing growth story that you guys own. 363 00:18:01,520 --> 00:18:04,320 Speaker 9: For all thirty three days at our portfolio, good dividend 364 00:18:04,320 --> 00:18:07,120 Speaker 9: growing names. But you look at the consumer staples, You're 365 00:18:07,200 --> 00:18:11,160 Speaker 9: Johnson Johnson's, Procter Gambles, Pepsi's Coreox. They could bore people 366 00:18:11,160 --> 00:18:13,560 Speaker 9: to death. They've had the best pricing power of any 367 00:18:13,560 --> 00:18:17,840 Speaker 9: sector through this period of time. Their top line sales 368 00:18:17,840 --> 00:18:20,000 Speaker 9: have either come down or stayed flat, and yet profits 369 00:18:20,000 --> 00:18:22,919 Speaker 9: are up anywhere from seven to fifteen percent. You have 370 00:18:23,080 --> 00:18:25,520 Speaker 9: a lot of dividend growth embedded in that sector. And 371 00:18:25,520 --> 00:18:29,840 Speaker 9: then energy, the midstream pipelines are growing dividends double digits 372 00:18:29,920 --> 00:18:32,520 Speaker 9: and they're less levered now than they were when they started. 373 00:18:32,920 --> 00:18:35,800 Speaker 9: So we really like that midstream energy for divid and growth. 374 00:18:36,160 --> 00:18:39,600 Speaker 5: Any discretionary names in our final couple of seconds together. 375 00:18:39,440 --> 00:18:41,400 Speaker 9: See this is a funny thing is I've only owned 376 00:18:41,440 --> 00:18:44,200 Speaker 9: what I consider one consumer discretionary name my whole career, 377 00:18:44,240 --> 00:18:45,159 Speaker 9: and it's McDonald's. 378 00:18:45,160 --> 00:18:45,800 Speaker 5: But I'm not sure. 379 00:18:46,000 --> 00:18:48,280 Speaker 9: I'm not sure it's really a consumer dissive. I think 380 00:18:48,320 --> 00:18:50,240 Speaker 9: it's a staatepoint. I think you have to own those 381 00:18:50,440 --> 00:18:52,720 Speaker 9: you have to buy those French fries, and it's really 382 00:18:52,760 --> 00:18:53,719 Speaker 9: a real estate company. 383 00:18:53,720 --> 00:18:54,760 Speaker 10: At the end of the day. 384 00:18:54,400 --> 00:18:57,320 Speaker 1: Oh yeah, exactly. And I learned that from watching the movie. 385 00:18:57,560 --> 00:18:59,560 Speaker 1: Oh yeah, yeah, that's I learned. I didn't know that. 386 00:18:59,600 --> 00:19:01,119 Speaker 1: It made it a ton of sense. You're not in 387 00:19:01,119 --> 00:19:03,760 Speaker 1: the hamburger business, You're in the real estate. So go 388 00:19:03,800 --> 00:19:05,959 Speaker 1: all right, David, thanks so much for joining us. David Boston, 389 00:19:06,000 --> 00:19:09,119 Speaker 1: he's the CIO of the Boson Group. I like the 390 00:19:09,119 --> 00:19:13,480 Speaker 1: strategy of you know, consolidated portfolio and looking at dividends. 391 00:19:13,520 --> 00:19:15,439 Speaker 1: I mean, that's something you can get your head around. 392 00:19:16,240 --> 00:19:17,720 Speaker 1: Where do that takes you? I don't know, but it 393 00:19:17,760 --> 00:19:19,760 Speaker 1: takes you to some of those big staples as well. 394 00:19:20,240 --> 00:19:23,359 Speaker 7: You're listening to the tape. Cat's are live program Bloomberg 395 00:19:23,400 --> 00:19:27,000 Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio, the 396 00:19:27,080 --> 00:19:30,280 Speaker 7: tune in app, Bloomberg dot Com, and the Bloomberg Business App. 397 00:19:30,320 --> 00:19:33,160 Speaker 7: You can also listen live on Amazon Alexa from our 398 00:19:33,160 --> 00:19:39,240 Speaker 7: flagship New York station, Just say Alexa, play Bloomberg eleven thirty. 399 00:19:39,320 --> 00:19:41,800 Speaker 1: Madison Olds, and Paul Smitty here in our Bloomberg Interactive 400 00:19:41,840 --> 00:19:45,440 Speaker 1: Broker's studio. You can check out the live stream on YouTube. 401 00:19:45,480 --> 00:19:49,200 Speaker 1: Just go to YouTube and search Bloomberg Global News. A 402 00:19:49,200 --> 00:19:51,399 Speaker 1: little Bit of a Merger Monday. Here, Maddie. I mean, 403 00:19:51,440 --> 00:19:53,240 Speaker 1: not a big deal, but it's in tech, so it 404 00:19:53,280 --> 00:19:56,840 Speaker 1: kind of got my attention. It's IBM there buying app 405 00:19:56,880 --> 00:19:59,760 Speaker 1: to you for four point six billion dollars in an 406 00:19:59,760 --> 00:20:02,600 Speaker 1: Audi nation. Push here, but just give you some perspective. 407 00:20:02,880 --> 00:20:04,800 Speaker 1: IBM's got a market cap about one hundred and twenty 408 00:20:04,800 --> 00:20:06,560 Speaker 1: billion dollars, so not a huge deal. But let's get 409 00:20:06,600 --> 00:20:09,440 Speaker 1: see what it means for our good friends in Armack, 410 00:20:09,480 --> 00:20:11,320 Speaker 1: New York, if that's even where they still are located. 411 00:20:11,320 --> 00:20:13,560 Speaker 1: Ana rog Rana, I know where he is. He's in 412 00:20:13,560 --> 00:20:17,560 Speaker 1: Bloomberg Chicago office, Happy camper in Chicago. He's a tech 413 00:20:17,640 --> 00:20:20,199 Speaker 1: on als for Bloomberg Intelligence. He's been covering IBM and 414 00:20:20,240 --> 00:20:23,000 Speaker 1: this space for a long time. Anurak, thanks for joining 415 00:20:23,040 --> 00:20:25,640 Speaker 1: us here. What is IBM buying here? 416 00:20:26,560 --> 00:20:29,400 Speaker 10: Yeah, this is a very small company. I think from 417 00:20:29,480 --> 00:20:32,800 Speaker 10: a logical point of view, IBM make a very big 418 00:20:32,840 --> 00:20:36,119 Speaker 10: push on hybrid cloud with the acquisition of red Hat 419 00:20:36,359 --> 00:20:39,720 Speaker 10: many years ago. This product kind of goes along with it. 420 00:20:40,080 --> 00:20:42,240 Speaker 10: If you are a company, let's say you Pepsi and 421 00:20:42,240 --> 00:20:46,280 Speaker 10: Coca Cola, you have a very old IT architecture, which 422 00:20:46,320 --> 00:20:49,040 Speaker 10: is all your products or workloads are on premise and 423 00:20:49,080 --> 00:20:50,840 Speaker 10: you want to move some of them to the cloud. 424 00:20:51,280 --> 00:20:53,960 Speaker 10: This product helps you figure out, you know, whether some 425 00:20:54,040 --> 00:20:56,520 Speaker 10: products are better off you keep it in house, and 426 00:20:56,560 --> 00:20:59,240 Speaker 10: whether some workloads are better if you So it's like 427 00:20:59,280 --> 00:21:03,760 Speaker 10: a cost stoppization product. And in this market where every 428 00:21:03,880 --> 00:21:08,000 Speaker 10: every company wants to save more costs on technology, this 429 00:21:08,080 --> 00:21:10,719 Speaker 10: is this is you know, that fits right in with that. 430 00:21:11,160 --> 00:21:13,560 Speaker 5: And Ana, we've talked a lot about the challenges of 431 00:21:13,600 --> 00:21:17,800 Speaker 5: getting any deals done right now. Why is IBM one 432 00:21:17,840 --> 00:21:21,880 Speaker 5: of the few tech companies that's been able to get 433 00:21:21,920 --> 00:21:23,280 Speaker 5: a deal done in this environment? 434 00:21:24,200 --> 00:21:26,159 Speaker 10: Yeah, I mean we have been writing about this for 435 00:21:26,280 --> 00:21:28,280 Speaker 10: some time that we think they are only a handful 436 00:21:28,280 --> 00:21:31,800 Speaker 10: of public companies who can make some deals. And you know, 437 00:21:31,880 --> 00:21:35,240 Speaker 10: IBM being such a small compare to like the likes 438 00:21:35,280 --> 00:21:38,560 Speaker 10: of Microsoft or Google or Apple or Facebook. I mean, 439 00:21:38,600 --> 00:21:40,199 Speaker 10: this is this is a you know, this is the 440 00:21:40,240 --> 00:21:42,560 Speaker 10: only one that can make a deal right now other 441 00:21:42,600 --> 00:21:44,840 Speaker 10: than private equity firms. I mean, they're really having a 442 00:21:44,880 --> 00:21:47,680 Speaker 10: ball out there with you know, chief funding as well 443 00:21:47,720 --> 00:21:51,159 Speaker 10: as valuations in the software world going down. So IBM 444 00:21:51,280 --> 00:21:52,679 Speaker 10: is one of the few ones I can do it. 445 00:21:52,720 --> 00:21:54,880 Speaker 10: And then and as Paul mentioned, you know four point 446 00:21:54,960 --> 00:21:57,000 Speaker 10: six billion dollars is not a whole lot of money. 447 00:21:58,240 --> 00:22:01,199 Speaker 10: The company didn't divulge there financials, but we think the 448 00:22:01,280 --> 00:22:04,080 Speaker 10: revenue run rate would be somewhere between four hundred to 449 00:22:04,080 --> 00:22:06,959 Speaker 10: five hundred million, given that apt Yeo was public three 450 00:22:07,040 --> 00:22:09,840 Speaker 10: years ago, so if you extrapolate that, so from that point, 451 00:22:09,920 --> 00:22:11,680 Speaker 10: it's you know, it's going to be less than one 452 00:22:11,680 --> 00:22:14,840 Speaker 10: percent of IBM's sales from a contribution point of view, 453 00:22:14,960 --> 00:22:16,399 Speaker 10: so it's a very small deal, frankly. 454 00:22:16,880 --> 00:22:19,520 Speaker 1: So I'm looking at the stock of IBM here on 455 00:22:19,680 --> 00:22:21,240 Speaker 1: Rock I see the stocks down about seven and a 456 00:22:21,280 --> 00:22:23,880 Speaker 1: half percent year today, So it's clearly not getting the 457 00:22:23,920 --> 00:22:26,560 Speaker 1: AI love a lot that a lot of other tech 458 00:22:26,720 --> 00:22:30,040 Speaker 1: names have. Why is that because they're not an AI 459 00:22:30,200 --> 00:22:32,480 Speaker 1: play or how does a company kind of try to 460 00:22:32,520 --> 00:22:33,560 Speaker 1: position itself there. 461 00:22:34,320 --> 00:22:36,879 Speaker 10: Yeah, I'm a bit surprised that they haven't been you know, 462 00:22:36,880 --> 00:22:39,159 Speaker 10: they haven't gotten any love where a lot of company 463 00:22:39,280 --> 00:22:41,399 Speaker 10: like C three AI have seen their stock go up 464 00:22:41,440 --> 00:22:43,119 Speaker 10: I don't know, two hundred three hundred percent or so. 465 00:22:43,840 --> 00:22:45,840 Speaker 10: IBM actually is one of the first ones to come 466 00:22:45,920 --> 00:22:48,119 Speaker 10: up with AI products with the Watson suite over the 467 00:22:48,160 --> 00:22:51,440 Speaker 10: last ten years, and you know, it really was difficult 468 00:22:51,480 --> 00:22:54,600 Speaker 10: to commercialize some of those products because of the difficulty 469 00:22:54,640 --> 00:22:57,560 Speaker 10: in you know, implementing those in the enterprise or the 470 00:22:57,600 --> 00:23:00,920 Speaker 10: corporate world. And then I'm sorry price that they haven't 471 00:23:00,920 --> 00:23:03,560 Speaker 10: gotten any left. Those products are still there. People are 472 00:23:03,560 --> 00:23:06,080 Speaker 10: going to use them as they come up with their 473 00:23:06,320 --> 00:23:10,320 Speaker 10: AI strategy. It also has a good consulting arm, which 474 00:23:10,359 --> 00:23:13,280 Speaker 10: is very required. I think they really need to market 475 00:23:13,280 --> 00:23:15,840 Speaker 10: themselves a little bit better over the next twelve months 476 00:23:16,359 --> 00:23:18,800 Speaker 10: with some of the products that they have and perhaps 477 00:23:19,000 --> 00:23:21,959 Speaker 10: you know, people will look at as them as another 478 00:23:22,000 --> 00:23:22,920 Speaker 10: player in the market. 479 00:23:23,200 --> 00:23:27,320 Speaker 5: Do you think within that marketing they need to have 480 00:23:27,400 --> 00:23:30,119 Speaker 5: a certain number of AI word counts. 481 00:23:30,160 --> 00:23:34,800 Speaker 10: Basically, I think they already you know, kind of used 482 00:23:34,840 --> 00:23:36,880 Speaker 10: all of that in the last ten years with Watson, 483 00:23:37,000 --> 00:23:39,159 Speaker 10: and since nothing came out of it, people are not 484 00:23:39,400 --> 00:23:42,320 Speaker 10: People don't believe that they can do anything in that area. 485 00:23:42,359 --> 00:23:45,120 Speaker 10: And I don't really believe that because they have very 486 00:23:45,160 --> 00:23:48,680 Speaker 10: good They work with almost every major company out there, 487 00:23:48,840 --> 00:23:51,040 Speaker 10: so if you want to try something new, I mean, 488 00:23:51,080 --> 00:23:52,800 Speaker 10: you're going to give it a try. With their products 489 00:23:52,800 --> 00:23:57,119 Speaker 10: as well, I think I think there is a lot 490 00:23:57,240 --> 00:24:00,720 Speaker 10: of consumer use that's easy to figure out, and IBM 491 00:24:00,800 --> 00:24:03,000 Speaker 10: is not a consumer play, frankly, and that's partially the 492 00:24:03,040 --> 00:24:06,280 Speaker 10: reason why you get more visibility from the likes of 493 00:24:06,320 --> 00:24:10,000 Speaker 10: Microsoft and what it's doing with bing or Excel and 494 00:24:10,440 --> 00:24:12,879 Speaker 10: you know, Google and others, rather than you know, the 495 00:24:13,040 --> 00:24:13,680 Speaker 10: likes of IBM. 496 00:24:14,440 --> 00:24:17,280 Speaker 1: So anag you and men Deep Singh lead our global 497 00:24:17,320 --> 00:24:20,199 Speaker 1: technology coverage for Bloomberg Intelligence. And of course one of 498 00:24:20,240 --> 00:24:24,080 Speaker 1: the biggest issues out there for investors is a I 499 00:24:24,160 --> 00:24:28,280 Speaker 1: how are you and the technology team at BI suggesting 500 00:24:28,320 --> 00:24:30,400 Speaker 1: investors really play this at this stage. 501 00:24:31,280 --> 00:24:33,159 Speaker 10: See I think over the next twelve months it's going 502 00:24:33,200 --> 00:24:34,840 Speaker 10: to be a lot of weight and watch things. I 503 00:24:34,840 --> 00:24:37,240 Speaker 10: think the first applications, as I said, would be more 504 00:24:37,240 --> 00:24:39,520 Speaker 10: on the search side. We're going to really see what 505 00:24:39,600 --> 00:24:43,000 Speaker 10: Microsoft does with you know, getting some search market share 506 00:24:43,080 --> 00:24:45,680 Speaker 10: over the next twelve months. That's really that I think 507 00:24:45,720 --> 00:24:48,080 Speaker 10: the first area that we have to see. Then you 508 00:24:48,119 --> 00:24:51,280 Speaker 10: have cloud investments going in. Companies are going to do 509 00:24:51,440 --> 00:24:55,240 Speaker 10: test environments in you know, one of the larger cloud providers, 510 00:24:55,280 --> 00:24:58,560 Speaker 10: whether that's Microsoft, Amazon or Google, to come up with 511 00:24:58,680 --> 00:25:01,960 Speaker 10: new applications. So it's going to be a steady progress. 512 00:25:02,040 --> 00:25:04,440 Speaker 10: But this is this is one place I think over 513 00:25:04,480 --> 00:25:07,360 Speaker 10: then and then you know, moniep and I have done 514 00:25:07,400 --> 00:25:09,399 Speaker 10: some work on it. We have published a big report 515 00:25:09,440 --> 00:25:11,560 Speaker 10: on this topic. We think this is really going to 516 00:25:12,200 --> 00:25:15,040 Speaker 10: support very strong tech spending over the next decade. 517 00:25:15,840 --> 00:25:17,600 Speaker 5: What is that tech spending looking like? 518 00:25:19,000 --> 00:25:21,560 Speaker 10: I think, you know, if you go back historically, technology 519 00:25:21,600 --> 00:25:25,000 Speaker 10: spending has you know, been somewhere around five to seven percent, 520 00:25:25,320 --> 00:25:27,760 Speaker 10: with software being the bigger portion of it with ten 521 00:25:27,800 --> 00:25:30,920 Speaker 10: to twelve percent. But we think, you know, this thing 522 00:25:31,160 --> 00:25:34,439 Speaker 10: supports that level of growth with more spending going towards 523 00:25:34,440 --> 00:25:38,359 Speaker 10: software and less on the you could say services side 524 00:25:38,359 --> 00:25:40,320 Speaker 10: of it or some of the other areas. 525 00:25:41,200 --> 00:25:43,160 Speaker 1: So on our give us a sense here just kind 526 00:25:43,200 --> 00:25:45,520 Speaker 1: of overall tech spend out there. I feel like it's 527 00:25:45,560 --> 00:25:48,119 Speaker 1: you know, it's been a obviously such a great secular 528 00:25:48,160 --> 00:25:51,840 Speaker 1: growth story for decades. Now where are we in that now? 529 00:25:51,840 --> 00:25:53,520 Speaker 1: I mean, I know people are talking about a recession 530 00:25:53,520 --> 00:25:55,760 Speaker 1: and concerns about that. Where are we in just overall 531 00:25:55,760 --> 00:25:57,720 Speaker 1: tech spend so the near. 532 00:25:57,600 --> 00:25:59,239 Speaker 10: Time we have a problem, I mean, we are not 533 00:25:59,280 --> 00:26:02,399 Speaker 10: seeing that level of spending. We saw some fairly neutral 534 00:26:02,440 --> 00:26:06,160 Speaker 10: to i would say bearish results from Accentia last week, 535 00:26:06,200 --> 00:26:08,639 Speaker 10: and they are the biggest I T services companies in 536 00:26:08,680 --> 00:26:11,960 Speaker 10: the world. They're saying their consulting bookings were down, which 537 00:26:12,000 --> 00:26:15,200 Speaker 10: is a third consecutive quarter. So I would say as 538 00:26:15,240 --> 00:26:17,560 Speaker 10: it comes to the second half or even the results 539 00:26:17,640 --> 00:26:20,000 Speaker 10: we're going to see in July, we are not very 540 00:26:20,040 --> 00:26:22,760 Speaker 10: optimistic that we're going to see some massive positive bump 541 00:26:22,920 --> 00:26:25,000 Speaker 10: coming out because of all the AI rush that we 542 00:26:25,040 --> 00:26:27,760 Speaker 10: are seeing now. Having said that, I think they will 543 00:26:27,760 --> 00:26:30,880 Speaker 10: indicate a lot of new product launches and new things happening. 544 00:26:31,040 --> 00:26:32,840 Speaker 10: And with that in mind, I think, you know, things 545 00:26:32,840 --> 00:26:36,119 Speaker 10: could change in the latter half of the year with 546 00:26:36,200 --> 00:26:39,040 Speaker 10: bookings improving, and then you know, twenty twenty four year 547 00:26:39,119 --> 00:26:40,920 Speaker 10: could be where we see some rebound. 548 00:26:41,840 --> 00:26:44,080 Speaker 1: All right, Honrod, thanks so much for joining us. Really 549 00:26:44,080 --> 00:26:47,280 Speaker 1: appreciate it. Honor rog Rana, he's the senior technology analyst 550 00:26:47,280 --> 00:26:50,199 Speaker 1: for Bloomberg Intelligence based out in our Chicago office. Just 551 00:26:50,200 --> 00:26:52,760 Speaker 1: giving us some color here in another little m and 552 00:26:52,840 --> 00:26:57,120 Speaker 1: a trade here in the tech space, IBM buying app 553 00:26:57,119 --> 00:26:59,040 Speaker 1: deal for four point six billion dollars. 554 00:27:00,840 --> 00:27:04,200 Speaker 7: You're listening to the Team Ken's are Live program Bloomberg 555 00:27:04,320 --> 00:27:07,679 Speaker 7: Markets weekdays at ten am Eastern on Bloomberg dot com, 556 00:27:07,760 --> 00:27:10,920 Speaker 7: the iHeartRadio app, and the Bloomberg Business app, or listen 557 00:27:10,960 --> 00:27:13,080 Speaker 7: on demand wherever you get your podcasts. 558 00:27:15,040 --> 00:27:17,400 Speaker 1: What a treat it is to welcome our next guest, 559 00:27:17,440 --> 00:27:20,920 Speaker 1: Jack Divine. He's a president and founding partner of Arcan Group. 560 00:27:21,760 --> 00:27:24,199 Speaker 1: But we love talking to Jack because he is a 561 00:27:24,320 --> 00:27:29,440 Speaker 1: thirty two year veteran of the Central Intelligence Agency. Folks 562 00:27:29,520 --> 00:27:32,679 Speaker 1: that know call it CIA, not the CIA, It's just 563 00:27:32,800 --> 00:27:35,359 Speaker 1: CIA and folks. His resume is way too long to 564 00:27:35,400 --> 00:27:36,680 Speaker 1: go over. But he was in Europe, he was in 565 00:27:36,720 --> 00:27:39,359 Speaker 1: Latin America. He was pretty much everywhere and probably places 566 00:27:39,440 --> 00:27:41,240 Speaker 1: we don't know about and we're not supposed to know about. 567 00:27:41,280 --> 00:27:43,399 Speaker 1: But he's going to give some good perspective here on 568 00:27:43,440 --> 00:27:46,240 Speaker 1: what's happening in the world. Jack, it was a crazy 569 00:27:46,280 --> 00:27:50,480 Speaker 1: weekend this weekend. Can you give us your thoughts here 570 00:27:50,480 --> 00:27:54,159 Speaker 1: as we try to process what happened in Russia? 571 00:27:54,280 --> 00:27:57,199 Speaker 8: Well, that's a big question, Paul. I was splanning on 572 00:27:57,280 --> 00:27:59,720 Speaker 8: doing a lot of things this weekend, but right away 573 00:28:00,080 --> 00:28:04,679 Speaker 8: and pull myself away. You know, back in March of 574 00:28:04,840 --> 00:28:07,040 Speaker 8: twenty twenty two, I put an outbed in the Wall 575 00:28:07,040 --> 00:28:13,480 Speaker 8: Street Journal saying that Putin's invasion of Ukraine ensured his demise. 576 00:28:13,760 --> 00:28:16,639 Speaker 8: I didn't say next week, right, this isn't quite what 577 00:28:16,720 --> 00:28:19,040 Speaker 8: I had in mind. But you could see this building 578 00:28:19,080 --> 00:28:23,080 Speaker 8: that something had to give between the Wagner group, the 579 00:28:23,119 --> 00:28:25,840 Speaker 8: military and Putin. It just couldn't go on the way 580 00:28:25,880 --> 00:28:28,439 Speaker 8: it was. Was I expecting that they were going to 581 00:28:28,480 --> 00:28:30,719 Speaker 8: march up the highway the Moscow and that they'd have 582 00:28:30,760 --> 00:28:34,720 Speaker 8: a get as far as they could. A bit of 583 00:28:34,760 --> 00:28:39,200 Speaker 8: a surprise. I think this is not this is really important. 584 00:28:39,240 --> 00:28:44,600 Speaker 8: It has damaged Putin significantly. It's changed the world's perception 585 00:28:44,720 --> 00:28:47,720 Speaker 8: of him and internally, but this isn't what I had 586 00:28:47,720 --> 00:28:49,600 Speaker 8: in mind, and that he won't endure. I think it's 587 00:28:49,640 --> 00:28:55,960 Speaker 8: a bit longer coming. I think that precusion moving back 588 00:28:56,080 --> 00:28:58,200 Speaker 8: was part of their strategy to just get him to 589 00:28:58,240 --> 00:29:00,959 Speaker 8: stop and head back, and I think it was good move. However, 590 00:29:01,000 --> 00:29:05,600 Speaker 8: they sold it, and so I think prokosion days are gone. 591 00:29:06,760 --> 00:29:10,840 Speaker 8: Now Putin has the job of trying to patch it up, 592 00:29:11,000 --> 00:29:13,360 Speaker 8: and this is where I think the troubles begin. I 593 00:29:13,400 --> 00:29:17,080 Speaker 8: was actually expecting to begin after the second offensive, but 594 00:29:17,640 --> 00:29:20,360 Speaker 8: right now I think he's got his hands full regaining 595 00:29:20,400 --> 00:29:21,600 Speaker 8: the control he needs. 596 00:29:22,040 --> 00:29:24,840 Speaker 5: What do you think is going on in Ukraine right now? 597 00:29:25,040 --> 00:29:28,680 Speaker 5: And do you think that Ukrainian officials are feeling like 598 00:29:29,200 --> 00:29:31,160 Speaker 5: this is going to be a moment for them to 599 00:29:31,440 --> 00:29:32,760 Speaker 5: finally come out on top. 600 00:29:33,120 --> 00:29:35,880 Speaker 8: Well, I think they broke out the champagne. Yeah, maybe 601 00:29:35,960 --> 00:29:39,200 Speaker 8: they shouldn't use it. All saved for later. But I 602 00:29:39,200 --> 00:29:42,800 Speaker 8: think it's a very positive development because I think it 603 00:29:42,920 --> 00:29:49,440 Speaker 8: weakens Putin's arguments, both internally and externally about why he's there. 604 00:29:51,280 --> 00:29:55,440 Speaker 8: I think the battlefield will continue looking the way it 605 00:29:55,520 --> 00:30:00,520 Speaker 8: has recently. Everyone was expecting the big counter offensive. I'm saying, 606 00:30:01,360 --> 00:30:04,320 Speaker 8: it's David Goliath. If he's just holding goliathal of this 607 00:30:04,400 --> 00:30:08,400 Speaker 8: is really good. So I think expecting too much from 608 00:30:08,440 --> 00:30:12,720 Speaker 8: the second from the counter offensive was not realistic. I 609 00:30:12,760 --> 00:30:15,440 Speaker 8: think they will make progress, they will continue. This helps 610 00:30:15,480 --> 00:30:18,440 Speaker 8: them because I think the forces on the ground are 611 00:30:18,480 --> 00:30:20,840 Speaker 8: going to be demoralized in trying to sort out where 612 00:30:20,880 --> 00:30:23,080 Speaker 8: they are and why they're shooting why are they being 613 00:30:23,120 --> 00:30:27,360 Speaker 8: shot at. But it's a tough, tough, tough haul. So 614 00:30:29,080 --> 00:30:31,280 Speaker 8: I think the bigger picture is the long game, and 615 00:30:31,320 --> 00:30:35,880 Speaker 8: the Ukrainians should be upbeat about that part of it. 616 00:30:36,160 --> 00:30:38,800 Speaker 1: So Jack, if there is going to be some challenge 617 00:30:38,840 --> 00:30:42,480 Speaker 1: to Putin and his authority within Russia, and maybe the 618 00:30:42,480 --> 00:30:44,400 Speaker 1: events over the weekend will serve as a catalyst to 619 00:30:44,400 --> 00:30:46,800 Speaker 1: maybe accelerate that. Where do you think it will actually 620 00:30:46,840 --> 00:30:48,760 Speaker 1: come from. Will it come from the military, will it 621 00:30:48,800 --> 00:30:51,720 Speaker 1: come from other political factions? What are your sources kind 622 00:30:51,720 --> 00:30:52,440 Speaker 1: of telling you. 623 00:30:52,960 --> 00:30:56,600 Speaker 8: Well, first of all, I didn't think you would see 624 00:30:56,600 --> 00:30:58,680 Speaker 8: a coupe, in other words, the Army, Navy, Air Force 625 00:30:58,760 --> 00:31:01,880 Speaker 8: yankeing them out. I didn't think he'd lose an election. 626 00:31:02,360 --> 00:31:06,960 Speaker 8: I didn't think the mass demonstrations in the streets would 627 00:31:08,600 --> 00:31:12,280 Speaker 8: push him out. I think when he becomes a liability 628 00:31:12,680 --> 00:31:15,160 Speaker 8: to the elites and the establishment. Now we can spend 629 00:31:15,160 --> 00:31:18,480 Speaker 8: a lot of time defining that, and it's an amorphous group. 630 00:31:18,600 --> 00:31:25,200 Speaker 8: It's elements within the intelligence services, within the security apparatus, 631 00:31:25,240 --> 00:31:30,320 Speaker 8: within the military, but then the money people. So I 632 00:31:30,400 --> 00:31:34,600 Speaker 8: think he's more of a liability today, but he's not 633 00:31:34,760 --> 00:31:37,760 Speaker 8: enough of a liability for them to act. This is 634 00:31:37,840 --> 00:31:40,000 Speaker 8: bad news what they're looking at. If you're in the 635 00:31:40,040 --> 00:31:43,720 Speaker 8: military and you're looking at your armed forces, you're having 636 00:31:43,760 --> 00:31:47,760 Speaker 8: a bad day and you want this to end. I 637 00:31:47,800 --> 00:31:50,360 Speaker 8: think there's more sentiment about trying to figure out how 638 00:31:50,360 --> 00:31:52,120 Speaker 8: to get out of Ukraine. It doesn't mean a deal. 639 00:31:52,160 --> 00:31:55,200 Speaker 8: I don't see a deal in the cards. So I 640 00:31:55,240 --> 00:31:57,600 Speaker 8: think if anything happens, and I thought this in March 641 00:31:57,600 --> 00:32:01,000 Speaker 8: of twenty twenty two. It'll be when he fails in 642 00:32:01,040 --> 00:32:04,760 Speaker 8: the offensive and the Ukrainians sort of stabilize where they 643 00:32:04,800 --> 00:32:10,960 Speaker 8: are and it becomes a liability, and at that point 644 00:32:11,520 --> 00:32:14,920 Speaker 8: a conspiracy develops and it's not as I said, It 645 00:32:15,000 --> 00:32:18,200 Speaker 8: might be something like a palace coup, and we will 646 00:32:18,240 --> 00:32:21,000 Speaker 8: be surprised some morning we wake up that suddenly he's 647 00:32:21,040 --> 00:32:23,160 Speaker 8: walked to the door or carried to the door. That's 648 00:32:23,160 --> 00:32:26,680 Speaker 8: what I anticipated, but it's not an eminent in my view, 649 00:32:27,040 --> 00:32:28,600 Speaker 8: not eminent, Okay, I guess. 650 00:32:28,600 --> 00:32:31,880 Speaker 5: I wonder then it feels like in some ways he's 651 00:32:31,920 --> 00:32:39,240 Speaker 5: already hit that definition of a liability. What changes that dynamic? 652 00:32:39,320 --> 00:32:39,520 Speaker 3: Then? 653 00:32:39,680 --> 00:32:42,200 Speaker 5: What is the thing that he has to mess up? 654 00:32:42,280 --> 00:32:43,240 Speaker 5: The single biggest thing? 655 00:32:43,440 --> 00:32:45,760 Speaker 8: So I think Progrosion is now out of the game. 656 00:32:45,800 --> 00:32:48,800 Speaker 8: That doesn't mean he can't cause a major problem tomorrow morning, 657 00:32:48,920 --> 00:32:52,120 Speaker 8: but his ability to remove Putin, and I don't think 658 00:32:52,120 --> 00:32:55,640 Speaker 8: that was his original objective or maybe never, but I 659 00:32:55,680 --> 00:32:59,680 Speaker 8: think the real challenge now is Putin has given a 660 00:32:59,720 --> 00:33:03,440 Speaker 8: bit of a breather and a chance to crack down 661 00:33:03,840 --> 00:33:08,760 Speaker 8: solidify his position. So I believe the old KGB and 662 00:33:09,360 --> 00:33:13,360 Speaker 8: their running around doing everything can to figure out test everybody. 663 00:33:13,920 --> 00:33:15,800 Speaker 8: But this is a delicate thing. He doesn't have an 664 00:33:15,800 --> 00:33:18,280 Speaker 8: iron hand anymore. He may be holding a clay hand, 665 00:33:18,280 --> 00:33:20,280 Speaker 8: and that's what we're going to find out. How a 666 00:33:20,440 --> 00:33:24,640 Speaker 8: depth is he doing this, because if you start doing it, 667 00:33:24,720 --> 00:33:28,480 Speaker 8: you may then trigger elements within that elite that I 668 00:33:28,520 --> 00:33:31,240 Speaker 8: talked about to decide to take action. So I think 669 00:33:31,280 --> 00:33:35,040 Speaker 8: he's got a very tricky hand to play. I used 670 00:33:35,040 --> 00:33:37,480 Speaker 8: to say it was very good tactically, but not very 671 00:33:37,480 --> 00:33:40,200 Speaker 8: good strategically. I'm not sure he's good at either anymore, 672 00:33:40,440 --> 00:33:42,840 Speaker 8: just like we're not so sure if the Russian military 673 00:33:42,920 --> 00:33:46,080 Speaker 8: is how good it is. So I'm not optimistic that 674 00:33:46,160 --> 00:33:48,320 Speaker 8: he's going to be able to handle it over the 675 00:33:48,360 --> 00:33:50,280 Speaker 8: long run. But I wouldn't count him out of the 676 00:33:50,320 --> 00:33:54,360 Speaker 8: game now. Despite what I'm saying, I think he's insured 677 00:33:54,400 --> 00:33:57,440 Speaker 8: his demise, but it isn't I don't see that as 678 00:33:57,480 --> 00:33:58,560 Speaker 8: being an eminent issue. 679 00:33:58,720 --> 00:34:03,480 Speaker 1: President Jiji, King of China, I guess tacitly has been 680 00:34:03,520 --> 00:34:08,960 Speaker 1: supporting Russia. Mister She's probably gonna be saying, who did 681 00:34:08,960 --> 00:34:10,680 Speaker 1: I get into bed with? I mean, who's this guy? 682 00:34:10,920 --> 00:34:12,840 Speaker 1: And he can't even take care of his own country? 683 00:34:13,160 --> 00:34:14,680 Speaker 1: Where do you think? How do you think China is 684 00:34:14,719 --> 00:34:15,239 Speaker 1: viewing all this. 685 00:34:15,560 --> 00:34:19,200 Speaker 8: I think they see Putin has a liability, but not 686 00:34:19,600 --> 00:34:21,400 Speaker 8: enough of a liability. No, there is, it can be 687 00:34:21,400 --> 00:34:24,479 Speaker 8: a liability. It's a question of where is that pressure point, 688 00:34:24,520 --> 00:34:28,839 Speaker 8: and that burns burns slower. But the embrace. It's very 689 00:34:28,960 --> 00:34:33,399 Speaker 8: important that China and Russia, from China's point of view, 690 00:34:33,440 --> 00:34:38,759 Speaker 8: remain together because together they represent a counter block to 691 00:34:38,840 --> 00:34:44,040 Speaker 8: the Democratic nations. Right, So even though Russia is a 692 00:34:44,080 --> 00:34:48,640 Speaker 8: weaker partner, it's an important alliance. So they wanted to stay, 693 00:34:48,800 --> 00:34:51,279 Speaker 8: but they haven't embraced that. It's not a bear hug. 694 00:34:51,320 --> 00:34:56,120 Speaker 8: I mean there's some deep issues between Russians and Chinese historically, 695 00:34:57,000 --> 00:35:00,440 Speaker 8: but I won't go back into my days and the 696 00:35:00,440 --> 00:35:01,800 Speaker 8: the effort in Afghanistan. 697 00:35:01,960 --> 00:35:04,359 Speaker 1: Yes, exactly, Jack, I mean one of the things I'm 698 00:35:04,400 --> 00:35:07,239 Speaker 1: also thinking about is Mattie and I were talking about it. 699 00:35:07,360 --> 00:35:13,160 Speaker 1: I mean, Putin, he's totally irrelevant to the world's leaders, right, 700 00:35:13,200 --> 00:35:18,279 Speaker 1: he has no standing with a Biden, She the European Union, 701 00:35:18,360 --> 00:35:20,280 Speaker 1: he doesn't. He doesn't get invited to the G sevens 702 00:35:20,360 --> 00:35:21,839 Speaker 1: or G twenties or any of those types of things, 703 00:35:21,840 --> 00:35:22,320 Speaker 1: does he. 704 00:35:22,320 --> 00:35:24,880 Speaker 8: He can't come back, can't come back there's no roadback. 705 00:35:24,920 --> 00:35:27,840 Speaker 8: That's what I was saying before. There's no way in Russia. 706 00:35:27,880 --> 00:35:28,920 Speaker 1: I can't have that, can I? 707 00:35:29,200 --> 00:35:32,160 Speaker 8: And that's at the point where at what point does 708 00:35:32,200 --> 00:35:37,200 Speaker 8: that become intolerable for what mix of people and do 709 00:35:37,239 --> 00:35:39,919 Speaker 8: they have and how hard can he? How hard can 710 00:35:39,960 --> 00:35:44,040 Speaker 8: he be? So I think we just have to wait 711 00:35:44,120 --> 00:35:47,520 Speaker 8: and see how that plays out. It's interesting that Erdowan 712 00:35:47,920 --> 00:35:52,399 Speaker 8: called him among the first. Now, remember they tried to ask, right, 713 00:35:52,680 --> 00:35:56,000 Speaker 8: So if I were guessing this is Jack's guess that 714 00:35:56,120 --> 00:35:58,040 Speaker 8: he gave him a couple of tips that when they 715 00:35:58,080 --> 00:36:01,120 Speaker 8: try and push you out, these are a couple of 716 00:36:01,120 --> 00:36:04,319 Speaker 8: things from and one of them is get any deal going, 717 00:36:04,360 --> 00:36:06,280 Speaker 8: so they back off and then you get a breathe 718 00:36:06,880 --> 00:36:10,800 Speaker 8: and then make sure your count knows this interesting? 719 00:36:11,160 --> 00:36:12,920 Speaker 1: All right, Jack, thanks so much for joining us. Really 720 00:36:13,000 --> 00:36:15,560 Speaker 1: appreciate you coming here. Jack Divine, he's a president and 721 00:36:15,560 --> 00:36:18,239 Speaker 1: founding partner of the ARC and Group, joining us live 722 00:36:18,360 --> 00:36:20,840 Speaker 1: in the Bloomberg Interactive Brokers to do no phoning it 723 00:36:20,880 --> 00:36:22,040 Speaker 1: in for Jack Divine. 724 00:36:22,280 --> 00:36:25,400 Speaker 7: You're listening to the tape Cat's are Live program Bloomberg 725 00:36:25,440 --> 00:36:29,040 Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio. The 726 00:36:29,080 --> 00:36:32,319 Speaker 7: tune in app, Bloomberg dot Com and the Bloomberg Business App. 727 00:36:32,360 --> 00:36:35,200 Speaker 7: You can also listen live on Amazon Alexa from our 728 00:36:35,200 --> 00:36:39,600 Speaker 7: flagship New York station. Just say Alexa play Bloomberg eleven thirty. 729 00:36:41,239 --> 00:36:45,719 Speaker 1: Let's talk venture capital investing. I wonder how how that 730 00:36:45,760 --> 00:36:48,240 Speaker 1: market is reacting to a market where you've got rising 731 00:36:48,239 --> 00:36:51,839 Speaker 1: interest rates. We've got potentially a recession on the horizon. 732 00:36:52,400 --> 00:36:54,880 Speaker 1: What's that mean for the folks in the VC buz 733 00:36:54,960 --> 00:36:58,200 Speaker 1: Zoe Peden joins us. She's a VC partner at Ananda 734 00:36:58,360 --> 00:37:01,399 Speaker 1: Impact Ventures. Zoey, thanks so much for joining us here 735 00:37:01,480 --> 00:37:03,879 Speaker 1: via zoom. Talk to us about what you guys do 736 00:37:04,000 --> 00:37:07,760 Speaker 1: at Anando. How's your what is your angle on venture 737 00:37:07,760 --> 00:37:08,520 Speaker 1: capital investing? 738 00:37:10,040 --> 00:37:14,440 Speaker 11: Thanks Paul. Yes, so, Ananda's impact focused bench capital fund 739 00:37:14,719 --> 00:37:18,080 Speaker 11: based in Europe. We invest in sustainable solutions to the 740 00:37:18,160 --> 00:37:24,480 Speaker 11: world's most pressing ecological and social challenges across biodiversity, climate, health, 741 00:37:24,640 --> 00:37:28,879 Speaker 11: education and employment. So two hundred million euros across four 742 00:37:29,040 --> 00:37:33,280 Speaker 11: impact funds and we've got an active portfolio of thirty 743 00:37:33,320 --> 00:37:34,640 Speaker 11: three investments. 744 00:37:35,000 --> 00:37:38,960 Speaker 5: So talk to us about how your portfolio and your 745 00:37:39,000 --> 00:37:43,120 Speaker 5: work day to day has changed given the higher interest 746 00:37:43,200 --> 00:37:46,560 Speaker 5: rates that we're experiencing. That Paul mentioned earlier, how is 747 00:37:46,600 --> 00:37:48,680 Speaker 5: a higher interest rate environment impacting you? 748 00:37:50,640 --> 00:37:57,239 Speaker 11: So it's out of a higher interest rate environment the companies, Well, 749 00:37:57,239 --> 00:38:00,440 Speaker 11: the advice that you see in media and reading in 750 00:38:00,480 --> 00:38:05,040 Speaker 11: the papers is quite conflicting. Sometimes. Many of the companies 751 00:38:05,560 --> 00:38:10,520 Speaker 11: before the interest rates were really growing really fast, and 752 00:38:10,600 --> 00:38:13,040 Speaker 11: I think a lot of the advice that we're giving 753 00:38:13,040 --> 00:38:16,759 Speaker 11: them now is to look at the areas where they're 754 00:38:16,800 --> 00:38:20,080 Speaker 11: growing fast. If they're working in different industries, to focus 755 00:38:20,160 --> 00:38:23,600 Speaker 11: on those ones rather than new ones that might be 756 00:38:24,000 --> 00:38:27,200 Speaker 11: a few years away yet, and then cutting back. If 757 00:38:27,200 --> 00:38:31,040 Speaker 11: there's anything that they can trim, they will trim. And 758 00:38:31,239 --> 00:38:33,360 Speaker 11: if they can put up those prices too, if that 759 00:38:33,480 --> 00:38:35,680 Speaker 11: market is elastic enough to be able to do that, 760 00:38:35,680 --> 00:38:38,520 Speaker 11: then now's the time to put those prices up. But 761 00:38:38,560 --> 00:38:42,240 Speaker 11: they're strong, they're faced, they're faced at the things before 762 00:38:42,440 --> 00:38:46,400 Speaker 11: they We're all used to working in difficult environments. So yes, 763 00:38:47,400 --> 00:38:49,040 Speaker 11: it's an interesting time for sure. 764 00:38:49,239 --> 00:38:50,960 Speaker 1: Hey, so we give us an example of maybe a 765 00:38:50,960 --> 00:38:53,400 Speaker 1: recent investment you guys made. You know, what attracted you 766 00:38:53,440 --> 00:38:56,040 Speaker 1: to that investment, What are some analysis you did and 767 00:38:56,320 --> 00:38:58,440 Speaker 1: why did you actually end up investing? 768 00:38:59,239 --> 00:39:03,000 Speaker 11: Okay, yes, so this is quite related to the challenges 769 00:39:03,040 --> 00:39:05,600 Speaker 11: of hand, which you ask a company to cut back. 770 00:39:05,680 --> 00:39:08,120 Speaker 11: Because one of the recent investments we did is a 771 00:39:08,160 --> 00:39:12,360 Speaker 11: company called Nature Metrics, and this is the world's leading 772 00:39:12,560 --> 00:39:16,279 Speaker 11: environmental DNA company. And what I mean by that is 773 00:39:16,360 --> 00:39:22,680 Speaker 11: they're using the measuring biodiversity to be able to help enterprises, 774 00:39:22,760 --> 00:39:26,680 Speaker 11: very large enterprises, become nature positive. So we're talking about 775 00:39:26,680 --> 00:39:34,160 Speaker 11: all the regulated industries such as extracted marine water utilities, 776 00:39:34,400 --> 00:39:39,640 Speaker 11: as well as non regulated industries looking at nature and 777 00:39:39,760 --> 00:39:43,240 Speaker 11: a lot of climate finances starting to look at nature 778 00:39:43,320 --> 00:39:47,120 Speaker 11: and start to build bonds and loans around these metrics 779 00:39:47,480 --> 00:39:53,480 Speaker 11: to be able to offer large industries banks special loans 780 00:39:53,520 --> 00:39:57,000 Speaker 11: based on these metrics. So for us to start saying 781 00:39:57,040 --> 00:39:59,120 Speaker 11: to this company, I think it's time that you need 782 00:39:59,160 --> 00:40:02,960 Speaker 11: to be watching your finances. This is such a cutting 783 00:40:03,080 --> 00:40:08,480 Speaker 11: edge area that's in such high demand. So for us, 784 00:40:08,560 --> 00:40:12,960 Speaker 11: the analysis around it, it's you know, this is nature 785 00:40:13,080 --> 00:40:17,319 Speaker 11: is the new carbon. So you've got carbon credits. I 786 00:40:17,360 --> 00:40:20,160 Speaker 11: believe biodiversity credits are the next thing coming up. 787 00:40:20,920 --> 00:40:23,600 Speaker 5: So talk to me about how you measure the impact 788 00:40:23,960 --> 00:40:29,040 Speaker 5: of these companies over time. We talk a lot about, 789 00:40:29,160 --> 00:40:33,960 Speaker 5: you know, the obsession and interest in ESG investing and 790 00:40:34,000 --> 00:40:37,560 Speaker 5: impact driven investing, but how how do you specifically measure 791 00:40:37,600 --> 00:40:39,279 Speaker 5: the success of those initiatives. 792 00:40:40,360 --> 00:40:44,560 Speaker 11: Well, I's something to really be conscious of here. It's 793 00:40:44,600 --> 00:40:47,880 Speaker 11: around terminology. There's a lot of confusion in the market 794 00:40:48,239 --> 00:40:51,880 Speaker 11: around impact and ESG, and I think a great resource 795 00:40:52,080 --> 00:40:55,440 Speaker 11: that your listeners might be intoed by Tideline at tideline 796 00:40:55,440 --> 00:41:00,239 Speaker 11: dot com, New York Agency outlines real simple difference between 797 00:41:00,440 --> 00:41:03,319 Speaker 11: ESG and impact. So first of all, it's important to 798 00:41:03,360 --> 00:41:07,440 Speaker 11: get the terminology correct. And impact is around intention is 799 00:41:07,560 --> 00:41:11,960 Speaker 11: outcomes focus, whereas ESG is more around inputs and is 800 00:41:12,000 --> 00:41:16,120 Speaker 11: more risk management focused. So the way we go about 801 00:41:16,160 --> 00:41:18,840 Speaker 11: it is we will look at a company and start 802 00:41:18,880 --> 00:41:23,200 Speaker 11: to ask the founders intent what their intentions are for 803 00:41:23,280 --> 00:41:26,320 Speaker 11: their end goal. So look at their theory of change. 804 00:41:26,520 --> 00:41:29,040 Speaker 11: This is very outcomes focused, what do they want to 805 00:41:29,160 --> 00:41:32,279 Speaker 11: change in the world. And then looking over this could 806 00:41:32,320 --> 00:41:35,480 Speaker 11: be ten year horizon, but looking at what is going 807 00:41:35,520 --> 00:41:37,239 Speaker 11: to happen over the next two to three years, what 808 00:41:37,320 --> 00:41:40,960 Speaker 11: are those outputs? So maybe two to three KPIs that 809 00:41:41,040 --> 00:41:45,560 Speaker 11: we can measure. So with nature metrics, it might be 810 00:41:45,640 --> 00:41:49,640 Speaker 11: around the kilometer the hector spread of the area that 811 00:41:49,640 --> 00:41:52,880 Speaker 11: they're able to measure on the planet. With environmental DNA 812 00:41:52,960 --> 00:41:56,040 Speaker 11: when they're collecting that, and we also might be around 813 00:41:56,280 --> 00:42:01,359 Speaker 11: the number of red listed IUCN endangered species that are 814 00:42:01,400 --> 00:42:04,360 Speaker 11: able to collect too, so we're able to demonstrate the 815 00:42:04,480 --> 00:42:08,480 Speaker 11: growth and their efficacy. So their business drivers as well 816 00:42:08,520 --> 00:42:10,799 Speaker 11: as impact drivers, and we have two to three of those. 817 00:42:10,840 --> 00:42:13,560 Speaker 11: It's of the earlier stage ones and a few more 818 00:42:13,800 --> 00:42:17,160 Speaker 11: when they get later stage. And is it possible for 819 00:42:17,200 --> 00:42:20,560 Speaker 11: me to mention about our impact carry in the in 820 00:42:20,600 --> 00:42:23,280 Speaker 11: the turn sheet that we have. I think that's quite 821 00:42:23,280 --> 00:42:27,000 Speaker 11: exciting actually. So something that really demonstrates, you know, what 822 00:42:27,080 --> 00:42:29,960 Speaker 11: an impact investor is from maybe someone who calls themselves 823 00:42:30,239 --> 00:42:34,680 Speaker 11: ESG or a mainstream impact investor, is the fact that 824 00:42:34,920 --> 00:42:38,240 Speaker 11: we have this impact turnsheet and we have a carry model. 825 00:42:38,560 --> 00:42:41,239 Speaker 11: So as you know, vcs always talk about, you know, 826 00:42:41,239 --> 00:42:43,560 Speaker 11: they have their basic salaries, but there's the carry that 827 00:42:43,600 --> 00:42:47,239 Speaker 11: we get so often it's beyond a certain hurd also 828 00:42:47,320 --> 00:42:49,680 Speaker 11: two or three or sometimes five times and then they 829 00:42:49,680 --> 00:42:54,719 Speaker 11: get twenty percent of the extra above that is their carry. Now, Fernanda, 830 00:42:55,680 --> 00:42:59,400 Speaker 11: we wrote alongside the European Investment funds the carry model 831 00:42:59,719 --> 00:43:05,160 Speaker 11: where it's integrated, so we do not see our carrie 832 00:43:05,280 --> 00:43:09,080 Speaker 11: as investors unless we've met certain impact hurdles as well 833 00:43:09,120 --> 00:43:12,239 Speaker 11: as the financial hurdles. So that's kind of that you 834 00:43:12,280 --> 00:43:14,480 Speaker 11: get all values aligned with the impact then, and it's 835 00:43:14,560 --> 00:43:16,720 Speaker 11: not just about the finances. 836 00:43:17,160 --> 00:43:19,239 Speaker 1: Hey, Zoey, thanks so much for taking the time to 837 00:43:19,320 --> 00:43:21,440 Speaker 1: speak with us here. Talk to us a little bit 838 00:43:21,440 --> 00:43:24,319 Speaker 1: about impact investing and maybe some of the differences with 839 00:43:24,560 --> 00:43:28,640 Speaker 1: ESG and how investors can invest in the impact space. 840 00:43:28,719 --> 00:43:34,440 Speaker 1: Zoe Pedan, VC partner for Ananda Impact Ventures. 841 00:43:36,360 --> 00:43:39,440 Speaker 2: Thanks for listening to the Bloomberg Markets podcasts. You can 842 00:43:39,480 --> 00:43:43,240 Speaker 2: subscribe and listen to interviews at Apple Podcasts or whatever 843 00:43:43,320 --> 00:43:47,040 Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter 844 00:43:47,280 --> 00:43:49,200 Speaker 2: at Matt Miller nineteen seventy three. 845 00:43:49,640 --> 00:43:52,000 Speaker 1: And I'm Fall Sweeney. I'm on Twitter at pt Sweeney. 846 00:43:52,120 --> 00:43:54,799 Speaker 1: Before the podcast, you can always catch us worldwide at 847 00:43:54,800 --> 00:43:56,560 Speaker 1: Bloomberg Radio.