1 00:00:00,120 --> 00:00:04,360 Speaker 1: Bloomberg is now on your dashboard with Apple CarPlay and 2 00:00:04,360 --> 00:00:08,160 Speaker 1: Android Auto. It gives you access to every Bloomberg podcast, 3 00:00:08,280 --> 00:00:11,560 Speaker 1: live audio feeds from Bloomberg Radio, print stories from Bloomberg 4 00:00:11,640 --> 00:00:14,920 Speaker 1: News in audio form, and the latest headlines of the 5 00:00:14,920 --> 00:00:18,640 Speaker 1: click of a button with Bloomberg News. Now it's free 6 00:00:18,680 --> 00:00:21,439 Speaker 1: with the latest version of the Bloomberg Business App. That's 7 00:00:21,680 --> 00:00:24,400 Speaker 1: the Bloomberg Business App. Get it on your phone in 8 00:00:24,440 --> 00:00:27,760 Speaker 1: the Apple App Store or on Google Play. Just download 9 00:00:27,800 --> 00:00:30,560 Speaker 1: the app, connect your phone to your car and get started. 10 00:00:30,960 --> 00:00:34,400 Speaker 1: And it's all presented by our sponsor, Interactive Brokers. 11 00:00:35,400 --> 00:00:38,600 Speaker 2: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 12 00:00:38,640 --> 00:00:39,800 Speaker 2: my co host Matt Miller. 13 00:00:40,200 --> 00:00:44,159 Speaker 1: Every business day we bring you interviews from CEOs, market pros, 14 00:00:44,320 --> 00:00:48,160 Speaker 1: and Bloomberg experts, along with essential market movin news. 15 00:00:48,720 --> 00:00:51,839 Speaker 2: I'm the Bloomberg Markets podcast called Apple Podcasts or wherever 16 00:00:51,960 --> 00:00:55,080 Speaker 2: you listen to podcasts, and at Bloomberg dot com slash podcast, 17 00:00:55,360 --> 00:00:57,520 Speaker 2: Matt Miller Paul Sweeney live here in our Bloomberg Interactive 18 00:00:57,520 --> 00:01:00,520 Speaker 2: Broker studio or also streaming live on that YouTube thing. 19 00:01:00,560 --> 00:01:01,400 Speaker 3: I think that's the Internet. 20 00:01:01,760 --> 00:01:03,720 Speaker 2: So go over to YouTube dot com and search Bloomberg Radio. 21 00:01:03,800 --> 00:01:07,400 Speaker 2: Sean Scalon Joints is here comptroller for the state of Connecticut. 22 00:01:07,640 --> 00:01:09,400 Speaker 2: I live in Jersey. MAT's in New York. So we said, 23 00:01:09,440 --> 00:01:12,000 Speaker 2: let's bring a guy in from Connecticut tri state exactly 24 00:01:12,080 --> 00:01:15,080 Speaker 2: here we go, say Harriett, Sean, what does. 25 00:01:14,959 --> 00:01:20,399 Speaker 4: A comptroller do? The question I get a lot is controller? 26 00:01:20,760 --> 00:01:24,759 Speaker 4: Just actually just actually google it comptroller. So I'm essentially 27 00:01:24,800 --> 00:01:27,679 Speaker 4: the chief financial officer of state. We are the accountant. 28 00:01:27,720 --> 00:01:30,319 Speaker 4: We pay all the bills, pay all the employees. I 29 00:01:30,400 --> 00:01:32,920 Speaker 4: procure health care for two hundred and fifty thousand people. 30 00:01:33,560 --> 00:01:35,320 Speaker 4: We do a lot of random things, but I guess 31 00:01:35,360 --> 00:01:37,400 Speaker 4: CFO is probably the easiest way to explain it. 32 00:01:37,560 --> 00:01:41,520 Speaker 2: Okay, that being said, give us the state of finances 33 00:01:41,560 --> 00:01:42,560 Speaker 2: in Connecticut. 34 00:01:42,800 --> 00:01:46,080 Speaker 5: Yeah, Well, after a long time of people saying Connecticut's 35 00:01:46,120 --> 00:01:48,440 Speaker 5: you know best stays are behind them, we've actually seen 36 00:01:48,560 --> 00:01:51,360 Speaker 5: some big turnarounds and our governor and Ed Lamont deserves 37 00:01:51,360 --> 00:01:52,680 Speaker 5: a lot of credit for that. He came in in 38 00:01:52,720 --> 00:01:55,760 Speaker 5: twenty eighteen. We passed a bipartisan budget the year before 39 00:01:55,760 --> 00:01:58,720 Speaker 5: he got there that has basically set up some fiscal 40 00:01:58,720 --> 00:02:01,320 Speaker 5: controls that are right now now bearing a lot of 41 00:02:01,320 --> 00:02:04,080 Speaker 5: fruit in the sense that We've had five years of 42 00:02:04,320 --> 00:02:07,200 Speaker 5: consecutive budget stover pluses. We've paid off almost eight billion 43 00:02:07,240 --> 00:02:09,160 Speaker 5: of our forty billion dollars a pension debt just in 44 00:02:09,160 --> 00:02:11,480 Speaker 5: the last four years, and we've got a full raindy 45 00:02:11,520 --> 00:02:13,120 Speaker 5: day fund for the first time in the history of 46 00:02:13,160 --> 00:02:15,240 Speaker 5: the state. And a lot of that is due to 47 00:02:15,320 --> 00:02:18,120 Speaker 5: us just staying with these fiscal controls that are obviously 48 00:02:18,200 --> 00:02:19,160 Speaker 5: bearing fruit right now. 49 00:02:19,200 --> 00:02:21,880 Speaker 2: And before you were a comptroller, you starting twenty fourteen, 50 00:02:21,919 --> 00:02:25,560 Speaker 2: you were elected state representative for Connecticut's ninety eighth district, 51 00:02:25,800 --> 00:02:28,519 Speaker 2: So you're not new to this whole political thing. 52 00:02:28,639 --> 00:02:30,760 Speaker 5: Not new the whole political thing. And I got elected 53 00:02:30,840 --> 00:02:32,919 Speaker 5: really young. I'm the youngest person ever to get elected 54 00:02:32,960 --> 00:02:35,000 Speaker 5: this job. So even though I look like I'm fifteen, 55 00:02:35,639 --> 00:02:37,359 Speaker 5: I actually have been doing this for a little bit. 56 00:02:37,520 --> 00:02:39,799 Speaker 5: And I'm in my first year of this job, which I. 57 00:02:39,760 --> 00:02:41,000 Speaker 6: Like a lot of stuff, all right. 58 00:02:41,080 --> 00:02:43,840 Speaker 3: So I have a question that I have been asking 59 00:02:43,880 --> 00:02:47,640 Speaker 3: for years and years. As I live in Westchester, I 60 00:02:47,760 --> 00:02:52,680 Speaker 3: pay like my property taxes are a German luxury sedan 61 00:02:52,960 --> 00:02:55,960 Speaker 3: right every year. And I get that we have very 62 00:02:55,960 --> 00:02:59,040 Speaker 3: good schools in Westchester, and I get that we want 63 00:02:59,120 --> 00:03:01,639 Speaker 3: our firemen to get paid. You know when the trash 64 00:03:01,720 --> 00:03:04,919 Speaker 3: is taken out. But there are also very good schools 65 00:03:04,960 --> 00:03:08,000 Speaker 3: in New Canaan or Derry Anne, right, And the taxes 66 00:03:08,040 --> 00:03:10,600 Speaker 3: are like a third of what they are in Westchester. 67 00:03:10,800 --> 00:03:14,600 Speaker 3: Is that just because of graft and corruption that New 68 00:03:14,680 --> 00:03:15,840 Speaker 3: York taxes are so high? 69 00:03:16,440 --> 00:03:19,320 Speaker 5: You didn't get the luxury sedan for your county tax payment? 70 00:03:19,360 --> 00:03:21,640 Speaker 5: Are you saying, no, Listen? 71 00:03:21,680 --> 00:03:23,959 Speaker 1: Why is it so high? New York and New Jersey 72 00:03:23,960 --> 00:03:25,959 Speaker 1: are so much higher than Connecticut. 73 00:03:25,600 --> 00:03:28,520 Speaker 5: Lairs of government, right, We don't have county government in Connecticut, 74 00:03:28,600 --> 00:03:30,720 Speaker 5: so it's municipal government. Some people think that's a bad thing, 75 00:03:30,800 --> 00:03:32,799 Speaker 5: and sometimes it is a bad thing. But when you 76 00:03:32,880 --> 00:03:35,880 Speaker 5: pay taxes to your town, taxes to your county, taxes 77 00:03:35,920 --> 00:03:37,840 Speaker 5: to your state, it just adds up and adds up. 78 00:03:38,440 --> 00:03:40,720 Speaker 5: We don't mentically have the services that maybe you do 79 00:03:40,800 --> 00:03:44,120 Speaker 5: in Westchester County. But to your point, we've got amazing schools, 80 00:03:44,160 --> 00:03:46,640 Speaker 5: we've got local police and fire, you've got great quality 81 00:03:46,680 --> 00:03:49,520 Speaker 5: of life. And I think with this turnaround that we're seeing, 82 00:03:49,600 --> 00:03:52,440 Speaker 5: we're actually starting to see people move. Fifty seven thousand 83 00:03:52,480 --> 00:03:55,200 Speaker 5: people move from New York State to Connecticut last year alone. 84 00:03:55,400 --> 00:03:58,160 Speaker 5: You're starting to see that migration for obvious reasons, but 85 00:03:58,200 --> 00:03:59,480 Speaker 5: also the reasons you're talking. 86 00:03:59,240 --> 00:04:02,600 Speaker 3: About your take on the state and local tax deduction. 87 00:04:03,560 --> 00:04:07,160 Speaker 3: Donald Trump and the Republicans capped it ten thousand dollars 88 00:04:07,240 --> 00:04:11,440 Speaker 3: in twenty seventeen, ostensibly to raise revenue on the federal level, 89 00:04:11,520 --> 00:04:15,320 Speaker 3: but it seems like it was more like retribution for 90 00:04:15,400 --> 00:04:19,200 Speaker 3: those states that didn't vote for him. Is it helpful 91 00:04:19,240 --> 00:04:22,040 Speaker 3: to you? Does it matter to you? Do you feel 92 00:04:22,040 --> 00:04:24,640 Speaker 3: like your paying your state is paying its fair share. 93 00:04:25,160 --> 00:04:26,920 Speaker 5: I think it's a problem. I mean, I think that 94 00:04:27,320 --> 00:04:30,039 Speaker 5: I don't dabble a lot in federal politics because that 95 00:04:30,040 --> 00:04:33,120 Speaker 5: would consume my entire life. But obviously I think that 96 00:04:33,279 --> 00:04:35,800 Speaker 5: it's having an impact on our region. You just joked 97 00:04:35,800 --> 00:04:38,479 Speaker 5: about the tri state. It's a tri state issue. But 98 00:04:38,640 --> 00:04:42,200 Speaker 5: for us, you know, a lot of what we see is, 99 00:04:42,640 --> 00:04:44,279 Speaker 5: you know, we have a lot of people that live 100 00:04:44,320 --> 00:04:47,120 Speaker 5: in Fairfield County that work here in Manhattan every single day, 101 00:04:47,800 --> 00:04:51,320 Speaker 5: and when that is adjusted properly, as we're doing now 102 00:04:51,360 --> 00:04:54,200 Speaker 5: through these fifial guardrails, I'm talking about when the markets 103 00:04:54,200 --> 00:04:56,719 Speaker 5: of folatile, we actually save money and it can't be 104 00:04:56,720 --> 00:04:59,480 Speaker 5: spent by politicians, so that when things are not going 105 00:04:59,480 --> 00:05:02,359 Speaker 5: well on the market, we don't have budget imbalanced problems, 106 00:05:02,400 --> 00:05:04,360 Speaker 5: and that is that fiscal garb rue what I'm talking about. 107 00:05:04,400 --> 00:05:06,640 Speaker 5: That's bearing a lot of fruit right now and helping 108 00:05:06,680 --> 00:05:09,880 Speaker 5: us big time. But the salt cap does certainly impact 109 00:05:09,880 --> 00:05:10,800 Speaker 5: a lot of folks in our state. 110 00:05:11,080 --> 00:05:12,960 Speaker 2: So you mentioned that there are some people out there 111 00:05:13,040 --> 00:05:15,600 Speaker 2: that feel like the best days of the Connecticut may be 112 00:05:15,600 --> 00:05:18,880 Speaker 2: behind it. I know, maybe great financial crisis. I know 113 00:05:18,880 --> 00:05:20,560 Speaker 2: a lot of people that I know just said the 114 00:05:20,600 --> 00:05:23,040 Speaker 2: hell with this whole Wall Street thing. I'm out including 115 00:05:23,080 --> 00:05:26,960 Speaker 2: and they left the Tri state area. Yeah, but that 116 00:05:27,120 --> 00:05:29,920 Speaker 2: crystallized to me in terms of companies leaving Connecticut and 117 00:05:29,960 --> 00:05:31,360 Speaker 2: going to other parts of the country. Where are you 118 00:05:31,400 --> 00:05:35,159 Speaker 2: in terms of trying to attract corporate entities back into 119 00:05:35,160 --> 00:05:35,480 Speaker 2: the state. 120 00:05:35,880 --> 00:05:39,400 Speaker 5: Yeah, you know, for years, you know, the sort of 121 00:05:38,839 --> 00:05:41,800 Speaker 5: the model was, let's try to pay a company a 122 00:05:41,800 --> 00:05:44,680 Speaker 5: lot of money to move headquarters to Connecticut. And I 123 00:05:44,720 --> 00:05:46,680 Speaker 5: think now we're changing that a little bit to say, 124 00:05:46,760 --> 00:05:49,840 Speaker 5: let's try to authentically grow companies in Connecticut. And we're 125 00:05:49,880 --> 00:05:53,640 Speaker 5: seeing that a lot around biotech. Yale is a great 126 00:05:53,760 --> 00:05:56,800 Speaker 5: resource for us. Right we're between Boston and New York. 127 00:05:56,839 --> 00:05:58,600 Speaker 5: There's a lot of people who are starting to invest 128 00:05:58,640 --> 00:06:02,080 Speaker 5: in that, and we're seeing tremendous growth right now with 129 00:06:02,120 --> 00:06:07,960 Speaker 5: biotech and medical innovation. We obviously have Fairfield County. We 130 00:06:08,040 --> 00:06:10,200 Speaker 5: do see companies, you know, that have left in the 131 00:06:10,240 --> 00:06:12,719 Speaker 5: last ten years. Ge left, for example, and that was 132 00:06:12,760 --> 00:06:15,200 Speaker 5: sort of when the everyone sort of said, oh my god, 133 00:06:15,200 --> 00:06:18,320 Speaker 5: it's over. But you are seeing that growth coming back now. 134 00:06:18,400 --> 00:06:20,200 Speaker 5: And I think that that's a testament to people just 135 00:06:20,240 --> 00:06:22,080 Speaker 5: feeling bullsh on Connecticut for the first time in a 136 00:06:22,080 --> 00:06:22,479 Speaker 5: long time. 137 00:06:23,680 --> 00:06:27,919 Speaker 3: What are you doing for your employees. I'm about to 138 00:06:27,960 --> 00:06:31,800 Speaker 3: go on six months of paternity leave, okay, And when 139 00:06:31,839 --> 00:06:35,800 Speaker 3: I tell people that, they are astounded that Bloomberg offers that. 140 00:06:35,960 --> 00:06:38,039 Speaker 3: But of course they also say, then, hey, can I 141 00:06:38,040 --> 00:06:39,120 Speaker 3: get a job at Bloomberg? 142 00:06:39,320 --> 00:06:39,480 Speaker 7: Right? 143 00:06:39,560 --> 00:06:43,800 Speaker 3: It attracts people these kinds of policies. Not just that, 144 00:06:43,960 --> 00:06:49,440 Speaker 3: but I noticed that you've got some you know, reproduction policies, 145 00:06:49,480 --> 00:06:52,200 Speaker 3: You've got some pharmacy benefits policies. What are you most 146 00:06:52,200 --> 00:06:52,839 Speaker 3: excited about? 147 00:06:53,040 --> 00:06:55,760 Speaker 5: Well, listen, I love the fact that we can sort 148 00:06:55,800 --> 00:06:58,120 Speaker 5: of do things within that two hundred and fifty thousand 149 00:06:58,200 --> 00:07:00,760 Speaker 5: universe that I oversee, which is all these employees, their 150 00:07:00,800 --> 00:07:03,560 Speaker 5: family members, the retirees. It's like a little bit of 151 00:07:03,560 --> 00:07:05,359 Speaker 5: a Petri dish where we can sort of experiment with 152 00:07:05,400 --> 00:07:08,720 Speaker 5: what works. And we find that when you treat your 153 00:07:08,720 --> 00:07:11,120 Speaker 5: employees fairly, you pay them well, you give them reach 154 00:07:11,200 --> 00:07:14,800 Speaker 5: benefits that allow them to sort of feel like secure 155 00:07:14,920 --> 00:07:17,480 Speaker 5: and valued in their job, they stay and they're productive. 156 00:07:18,640 --> 00:07:21,840 Speaker 5: We learn that best from the private sector, right companies 157 00:07:21,920 --> 00:07:23,920 Speaker 5: like this, where you treat your employees well, it's a 158 00:07:23,920 --> 00:07:26,560 Speaker 5: good place to work, it's a good environment. If we 159 00:07:26,600 --> 00:07:28,960 Speaker 5: can find out how to do that at a lower 160 00:07:29,000 --> 00:07:34,239 Speaker 5: scale and with less money, we can get that job done. 161 00:07:34,280 --> 00:07:37,520 Speaker 5: But you know it's Connecticut is a state that has 162 00:07:37,560 --> 00:07:40,960 Speaker 5: paid Family Lief, So every single person in Connecticut pays 163 00:07:41,000 --> 00:07:44,600 Speaker 5: zero point five percent of their income every pay period 164 00:07:44,640 --> 00:07:47,080 Speaker 5: towards a paid family view fund that allows anybody in 165 00:07:47,120 --> 00:07:49,240 Speaker 5: the state to take advantage of that to take time 166 00:07:49,280 --> 00:07:51,760 Speaker 5: off for a baby, to take time off to care 167 00:07:51,760 --> 00:07:55,360 Speaker 5: for a sick loved one. And so far that has worked, 168 00:07:55,400 --> 00:07:57,360 Speaker 5: and I think companies have said, actually, this is good 169 00:07:57,400 --> 00:07:59,080 Speaker 5: because we don't have to pay for it. You're paying 170 00:07:59,120 --> 00:08:01,240 Speaker 5: for it, or they're paying for What are. 171 00:08:01,120 --> 00:08:03,920 Speaker 2: The big challenges, the biggest challenges facing Connecticut these days. 172 00:08:03,960 --> 00:08:06,360 Speaker 5: Getting rid of that perception is still a problem, right, 173 00:08:07,040 --> 00:08:09,200 Speaker 5: and we don't want that to be a self fulfilling prophecy. 174 00:08:09,240 --> 00:08:10,960 Speaker 5: So we want to change that perception, which is part 175 00:08:11,000 --> 00:08:12,680 Speaker 5: of the reason why the governor spent so much time 176 00:08:12,680 --> 00:08:15,320 Speaker 5: talking about, hey, it's a new day in Connecticut to 177 00:08:15,480 --> 00:08:18,000 Speaker 5: give us a look. But I think we continue to 178 00:08:18,000 --> 00:08:19,920 Speaker 5: look at our tax structure. This year, we passed the 179 00:08:20,000 --> 00:08:22,440 Speaker 5: largest single income tax cut in the history of the state, 180 00:08:23,440 --> 00:08:26,440 Speaker 5: which is a big deal and effects literally ninety nine 181 00:08:26,480 --> 00:08:29,640 Speaker 5: percent of our filers. The year before that, we passed 182 00:08:29,640 --> 00:08:32,960 Speaker 5: the second biggest tax cut ever. So with these surpluses, 183 00:08:33,000 --> 00:08:35,839 Speaker 5: with this better fiscal management, we're not just paying down 184 00:08:35,840 --> 00:08:38,240 Speaker 5: our debt, which we have a lot of, but we're 185 00:08:38,280 --> 00:08:41,000 Speaker 5: also cutting taxes and trying to figure out a way 186 00:08:41,080 --> 00:08:43,400 Speaker 5: to make sure that Connecticut is going in the right 187 00:08:43,400 --> 00:08:46,480 Speaker 5: direction and give guys like you some optimism that maybe 188 00:08:46,520 --> 00:08:48,480 Speaker 5: you should stop paying those crazy taxes in New York 189 00:08:48,480 --> 00:08:49,480 Speaker 5: and come over to Connecticut. 190 00:08:49,559 --> 00:08:54,280 Speaker 3: Absolutely love it, absolutely love it. What about the transportation system. 191 00:08:54,320 --> 00:08:56,960 Speaker 3: I mean, as you mentioned, a lot of women and 192 00:08:57,000 --> 00:09:00,000 Speaker 3: men in Fairfield County work here, but also the whole 193 00:09:00,200 --> 00:09:03,199 Speaker 3: Northeast court or Yeah, I feel like right now is 194 00:09:03,240 --> 00:09:05,720 Speaker 3: at a point where it could get better. Or it 195 00:09:05,760 --> 00:09:06,560 Speaker 3: could get worse. 196 00:09:06,840 --> 00:09:09,199 Speaker 5: Yeah, Listen, the President just annound a couple days ago. 197 00:09:09,360 --> 00:09:11,720 Speaker 5: He's investing a lot of money into instructure and specifically 198 00:09:11,840 --> 00:09:13,800 Speaker 5: rail that is going to help. In Connecticut, there was 199 00:09:13,800 --> 00:09:16,680 Speaker 5: a three or four projects in that quarter et CE 200 00:09:16,880 --> 00:09:18,800 Speaker 5: that are going to get billions of dollars to help 201 00:09:19,240 --> 00:09:19,640 Speaker 5: U speed. 202 00:09:19,720 --> 00:09:23,320 Speaker 3: These trains are looking at cutting Amtrak's budget by like 203 00:09:23,480 --> 00:09:24,800 Speaker 3: ninety percent right now. 204 00:09:24,840 --> 00:09:26,800 Speaker 5: And this is the problem we have right now in 205 00:09:26,840 --> 00:09:29,280 Speaker 5: politics is that we don't have everybody on the same 206 00:09:29,320 --> 00:09:32,439 Speaker 5: page about what our common sense things. If you live 207 00:09:32,480 --> 00:09:34,880 Speaker 5: in this area, you should think that a train going 208 00:09:34,960 --> 00:09:38,840 Speaker 5: faster and safely faster to Manhattan from Connecticut Jersey Long 209 00:09:38,880 --> 00:09:43,000 Speaker 5: Island is a good thing for our national economy. We 210 00:09:43,040 --> 00:09:44,840 Speaker 5: have a thinking can I could call the thirty thirty thirty. 211 00:09:44,840 --> 00:09:46,840 Speaker 5: We want to get from Stanford to Manhattan at thirty 212 00:09:46,880 --> 00:09:49,240 Speaker 5: minutes and from Stanford to New Haven in thirty minutes. 213 00:09:50,000 --> 00:09:52,520 Speaker 5: That's going to cost a lot of money, but to me, 214 00:09:52,640 --> 00:09:54,920 Speaker 5: the investment is worth it. But I took Metro North down. 215 00:09:54,760 --> 00:09:55,280 Speaker 8: Here this morning. 216 00:09:55,320 --> 00:09:58,000 Speaker 5: It was very quick, it was very easy, and we 217 00:09:58,040 --> 00:09:59,720 Speaker 5: just want more people to get back on the trains. 218 00:10:00,040 --> 00:10:02,480 Speaker 2: Austin Rider show, Yeah, see he goes into Grand Central, 219 00:10:02,480 --> 00:10:04,880 Speaker 2: though I go on it's the station where the serious 220 00:10:04,920 --> 00:10:05,600 Speaker 2: commuters go. 221 00:10:06,080 --> 00:10:08,320 Speaker 3: Dude, when you get off the train at Grand Central, 222 00:10:08,360 --> 00:10:10,880 Speaker 3: you feel like a kind of dang. 223 00:10:11,200 --> 00:10:13,600 Speaker 2: You guys are pampered. You got to come into Penn Station. 224 00:10:14,000 --> 00:10:16,240 Speaker 2: That's where the hearty souls go. All right, Sean, thanks 225 00:10:16,240 --> 00:10:19,040 Speaker 2: so much for joining us. Sean Scaling. He is the comptroller, 226 00:10:19,559 --> 00:10:23,120 Speaker 2: not controller comptroller for the state of Connecticut. We're going 227 00:10:23,200 --> 00:10:26,400 Speaker 2: to call that the CFO of the state of Connecticut. 228 00:10:28,120 --> 00:10:31,520 Speaker 7: You're listening to the team Ken's are Live program Bloomberg 229 00:10:31,559 --> 00:10:34,920 Speaker 7: Markets weekdays at ten am Eastern on Bloomberg dot Com, 230 00:10:35,000 --> 00:10:38,160 Speaker 7: the iHeartRadio app, and the Bloomberg Business app, or listen 231 00:10:38,240 --> 00:10:40,360 Speaker 7: on demand wherever you get your podcasts. 232 00:10:42,120 --> 00:10:44,240 Speaker 2: I saw some old guy walking through the hallways here 233 00:10:44,760 --> 00:10:47,079 Speaker 2: with like a gray beard and all kinds of things. 234 00:10:47,120 --> 00:10:49,560 Speaker 2: I don't know how we let him in, but he 235 00:10:50,480 --> 00:10:56,160 Speaker 2: I used to go on. So but anyway, Uh okay, 236 00:10:56,360 --> 00:10:59,079 Speaker 2: so anyway, so walking around, so I just want to 237 00:10:59,200 --> 00:11:01,640 Speaker 2: check in what's happening. It's Sam Fazzelli. He's head of 238 00:11:01,679 --> 00:11:04,720 Speaker 2: European Research. He's a pharma analyst for Bloomberg Intelligence. We 239 00:11:04,800 --> 00:11:06,160 Speaker 2: used to talk to him all the time back in 240 00:11:06,160 --> 00:11:09,199 Speaker 2: the day about the pandemic and covid and the virus 241 00:11:09,240 --> 00:11:11,120 Speaker 2: and all the vaccines and all that kind of stuff. 242 00:11:11,160 --> 00:11:13,360 Speaker 2: But that's done and dusted for me, so we're not 243 00:11:13,360 --> 00:11:15,440 Speaker 2: even gonna go there. Didn't you just get your new vaccine? 244 00:11:15,440 --> 00:11:17,200 Speaker 2: I just got my booster, because why not. I walked 245 00:11:17,200 --> 00:11:19,080 Speaker 2: by the Walgreens and they're just like, come on in. 246 00:11:19,120 --> 00:11:20,560 Speaker 8: So did they give you a lollipop with it? 247 00:11:20,640 --> 00:11:20,720 Speaker 4: No? 248 00:11:20,760 --> 00:11:22,760 Speaker 2: I got a little. I got a little Walgreens. 249 00:11:23,240 --> 00:11:27,120 Speaker 3: I got some heart shaped band aids. At the CVS. 250 00:11:27,360 --> 00:11:29,880 Speaker 3: I got a double vaccine a couple weeks ago. So 251 00:11:29,920 --> 00:11:33,079 Speaker 3: I got the covid in one arm and then the 252 00:11:33,120 --> 00:11:33,880 Speaker 3: flu in the other. 253 00:11:34,080 --> 00:11:36,520 Speaker 2: Is that the Are we gonna get one shot going forward? 254 00:11:36,600 --> 00:11:36,800 Speaker 9: Sam? 255 00:11:36,800 --> 00:11:37,720 Speaker 6: Would be good? Wouldn't it? 256 00:11:37,920 --> 00:11:40,160 Speaker 8: Would you not roll up your sleeves more. 257 00:11:41,679 --> 00:11:43,880 Speaker 6: Likely? If it was only one? 258 00:11:44,200 --> 00:11:46,319 Speaker 1: Oh yeah, for sure, I would be so much. Actually, 259 00:11:46,320 --> 00:11:47,800 Speaker 1: I'll tell you what. I walked into the. 260 00:11:47,720 --> 00:11:51,120 Speaker 3: CVS and my wife had made the appointment but didn't 261 00:11:51,120 --> 00:11:53,440 Speaker 3: tell me much about it. And they said, all right, 262 00:11:53,480 --> 00:11:55,520 Speaker 3: we're gonna do both arms, or do you want two 263 00:11:55,559 --> 00:11:57,160 Speaker 3: in the left and two in the or and two 264 00:11:57,200 --> 00:11:59,839 Speaker 3: in the right and I said, wait two, and I 265 00:12:00,240 --> 00:12:05,360 Speaker 3: seriously considered sneaking out because I'm terrified of needles. But 266 00:12:05,400 --> 00:12:06,440 Speaker 3: it didn't hurt yet. 267 00:12:06,480 --> 00:12:08,600 Speaker 8: No, But in one it just makes it easier o 268 00:12:08,760 --> 00:12:10,079 Speaker 8: people to make a decision, all. 269 00:12:10,080 --> 00:12:12,000 Speaker 2: Right, that they didn't even want to go there. I 270 00:12:12,040 --> 00:12:15,480 Speaker 2: want to talk about the newest thing in healthcare, which 271 00:12:15,480 --> 00:12:18,400 Speaker 2: are these weight loss drugs O zembic and all this 272 00:12:18,480 --> 00:12:21,040 Speaker 2: kind of suff even so excited about it. Now we're 273 00:12:21,040 --> 00:12:24,000 Speaker 2: not doing that. So and I know you guys at 274 00:12:24,000 --> 00:12:26,199 Speaker 2: Bloomberg Intelligence have done a ton of work on it. 275 00:12:26,480 --> 00:12:29,920 Speaker 2: Talk to us about this market, this, the opportunities, you know, 276 00:12:29,960 --> 00:12:30,760 Speaker 2: all that kind of stuff. 277 00:12:30,800 --> 00:12:32,640 Speaker 8: First of all, I don't know what you see, but 278 00:12:32,760 --> 00:12:34,600 Speaker 8: neither of these guys actually need them, right. 279 00:12:34,640 --> 00:12:38,120 Speaker 3: Yes, I need. I definitely need to lose twenty pounds 280 00:12:38,160 --> 00:12:38,520 Speaker 3: and they. 281 00:12:38,480 --> 00:12:39,640 Speaker 6: Can put it back on at Christmas. 282 00:12:39,679 --> 00:12:43,480 Speaker 3: Again, well that's my problem. And to get a little 283 00:12:43,520 --> 00:12:47,000 Speaker 3: more personal than I normally would, the doctor says, I'm 284 00:12:47,120 --> 00:12:48,439 Speaker 3: pre diabetic. 285 00:12:48,559 --> 00:12:51,080 Speaker 6: Oh so so that would be a good reason to 286 00:12:51,120 --> 00:12:51,320 Speaker 6: do it. 287 00:12:51,440 --> 00:12:53,920 Speaker 8: Yeah, to lose weight, whether you take the drug to 288 00:12:53,960 --> 00:12:56,800 Speaker 8: do it, or you do it because you've been running 289 00:12:56,800 --> 00:12:58,200 Speaker 8: a lot more et cetera, or. 290 00:12:58,720 --> 00:12:59,199 Speaker 6: A lot more. 291 00:12:59,320 --> 00:13:02,040 Speaker 2: These drugs have been around for a while for diabetes. 292 00:13:01,600 --> 00:13:04,800 Speaker 8: Right, yep, yeah, I think we're into the definitely into 293 00:13:04,800 --> 00:13:07,440 Speaker 8: the second decade. Because the first version, which was Victosa, 294 00:13:07,480 --> 00:13:08,679 Speaker 8: that came out that's years ago. 295 00:13:08,800 --> 00:13:11,360 Speaker 2: So why is this now become the topic for pretty 296 00:13:11,400 --> 00:13:14,360 Speaker 2: much every kitchen table about these getting these loss drugs? 297 00:13:15,160 --> 00:13:17,360 Speaker 8: Right at the beginning, you could tell with Victoza, which 298 00:13:17,400 --> 00:13:19,959 Speaker 8: is a low dose every day, So who's going to 299 00:13:20,000 --> 00:13:22,760 Speaker 8: want to take a drug every day that's less effective 300 00:13:22,840 --> 00:13:24,680 Speaker 8: than what we've got now, which is a higher dose 301 00:13:24,720 --> 00:13:25,320 Speaker 8: once weekly. 302 00:13:25,760 --> 00:13:27,679 Speaker 3: That's what changed, right, I mean a lot of people 303 00:13:27,679 --> 00:13:28,600 Speaker 3: take drugs every day? 304 00:13:28,720 --> 00:13:31,520 Speaker 8: No, no, no, but well you don't well yeah, no, 305 00:13:31,840 --> 00:13:34,640 Speaker 8: not that many. We're aiming for like fifty million people 306 00:13:34,679 --> 00:13:36,319 Speaker 8: to take these drugs. That's the sort of volume that 307 00:13:36,360 --> 00:13:37,640 Speaker 8: these companies are aiming at. 308 00:13:37,960 --> 00:13:40,800 Speaker 3: So now they have I actually had a friend I 309 00:13:40,800 --> 00:13:43,120 Speaker 3: had lunch with the other day. He didn't eat very much. 310 00:13:43,360 --> 00:13:49,280 Speaker 3: Who's doing the pill version? Ozembic is Novo Nordisks diabetes drug, 311 00:13:49,440 --> 00:13:53,959 Speaker 3: right we go? V is their weight loss drug. 312 00:13:54,840 --> 00:13:58,760 Speaker 8: Same active And then they have rebelsis yeah, which is. 313 00:13:58,800 --> 00:14:02,640 Speaker 3: The pill form and what does that not work quite 314 00:14:02,679 --> 00:14:04,400 Speaker 3: as well? And it's a higher dose. 315 00:14:04,200 --> 00:14:05,920 Speaker 6: And it's harder to make. 316 00:14:06,040 --> 00:14:08,360 Speaker 8: You have to have it with a certain window of 317 00:14:08,480 --> 00:14:12,360 Speaker 8: eating before eating, because otherwise, if you do it too late, 318 00:14:13,040 --> 00:14:15,360 Speaker 8: it interferes with this absorption. And also if you do 319 00:14:15,360 --> 00:14:18,880 Speaker 8: it too late, you've already eaten, right, right, So that 320 00:14:19,240 --> 00:14:20,440 Speaker 8: makes it a bit more complicated. 321 00:14:20,600 --> 00:14:23,400 Speaker 6: We go with you once a week, you know, we. 322 00:14:23,400 --> 00:14:26,960 Speaker 3: Can you inject yourself, right's easy to yourself? Easy? 323 00:14:27,120 --> 00:14:27,440 Speaker 9: All right? 324 00:14:27,520 --> 00:14:27,760 Speaker 8: Yeah? 325 00:14:27,800 --> 00:14:28,080 Speaker 7: Great? 326 00:14:28,480 --> 00:14:30,680 Speaker 2: But are we going to get to a point where 327 00:14:30,720 --> 00:14:32,560 Speaker 2: it's just you take a pill once a day, which 328 00:14:32,560 --> 00:14:36,600 Speaker 2: everybody does anyway, and then this market's can explode. 329 00:14:36,720 --> 00:14:39,160 Speaker 8: So we've got data, that's so there's a couple of 330 00:14:39,240 --> 00:14:42,040 Speaker 8: things we're waiting for. One is this weekend you're going 331 00:14:42,120 --> 00:14:46,640 Speaker 8: to get the detailed cardiovascular data from nover notice, okay, 332 00:14:46,760 --> 00:14:49,640 Speaker 8: and the critical element of that is how well did 333 00:14:49,640 --> 00:14:52,360 Speaker 8: it do in people over sixty five, because that's relevant 334 00:14:52,440 --> 00:14:56,600 Speaker 8: for medicare coverage, the people who really need it. How 335 00:14:56,680 --> 00:14:59,520 Speaker 8: much benefit do they get the oral drugs in the 336 00:14:59,520 --> 00:15:02,000 Speaker 8: next twelve once we get some meaningful data from Amgen 337 00:15:02,400 --> 00:15:06,400 Speaker 8: from a whole host of other companies, right, So that's 338 00:15:06,440 --> 00:15:07,080 Speaker 8: what we're looking for. 339 00:15:07,440 --> 00:15:10,640 Speaker 6: Do these drugs are they are the orals as. 340 00:15:10,480 --> 00:15:13,720 Speaker 8: Good are they only something that you add into the 341 00:15:13,720 --> 00:15:14,920 Speaker 8: treatment paradigm. 342 00:15:14,600 --> 00:15:18,120 Speaker 6: Saying Okay, you've lost your weight with the. 343 00:15:17,160 --> 00:15:19,960 Speaker 8: Injection over sixteen weeks. From now on, you go onto 344 00:15:20,000 --> 00:15:21,560 Speaker 8: the oral and maintain your weight. 345 00:15:22,240 --> 00:15:26,800 Speaker 3: Why why is this skin pop better than like could 346 00:15:26,840 --> 00:15:28,280 Speaker 3: they have a transdermal patch? 347 00:15:29,360 --> 00:15:30,600 Speaker 6: You know, but you don't need it. 348 00:15:31,040 --> 00:15:33,200 Speaker 8: Transdermal patch has got you know, would you wear one 349 00:15:33,240 --> 00:15:36,080 Speaker 8: for sixteen weeks if you're diabetic? I guess you would 350 00:15:36,120 --> 00:15:38,840 Speaker 8: think about that. But honestly, the amount of money that 351 00:15:38,880 --> 00:15:41,840 Speaker 8: has to be invented invested to do that. The injections 352 00:15:41,880 --> 00:15:43,160 Speaker 8: once a week very easily. 353 00:15:43,200 --> 00:15:47,200 Speaker 3: What do you think about? So you are running this 354 00:15:47,600 --> 00:15:52,360 Speaker 3: Bloomberg intelligence research in Europe, but really for the globe, 355 00:15:53,280 --> 00:15:56,800 Speaker 3: we've had companies that are worried about declining revenue. What 356 00:15:56,840 --> 00:15:59,800 Speaker 3: Walmart says people have a smaller basket, perhaps said they 357 00:16:00,240 --> 00:16:03,440 Speaker 3: seeing the data to convince them yet, but clearly, you 358 00:16:03,480 --> 00:16:05,680 Speaker 3: know we're going to buy fewer free doos if we're 359 00:16:05,680 --> 00:16:09,280 Speaker 3: all taking ozempic, is it going to affect loads of 360 00:16:09,480 --> 00:16:11,000 Speaker 3: different businesses? 361 00:16:11,680 --> 00:16:14,640 Speaker 8: Three percent of obese people at the moment globally are 362 00:16:14,680 --> 00:16:17,360 Speaker 8: taking these drugs, So if that was the driver of 363 00:16:17,400 --> 00:16:20,400 Speaker 8: their margins and that if they were the margin or 364 00:16:20,440 --> 00:16:23,720 Speaker 8: buyers of product, then we have a problem from twenty 365 00:16:23,840 --> 00:16:28,080 Speaker 8: thirty onwards, when they become cheaper, either generic or because 366 00:16:28,080 --> 00:16:31,320 Speaker 8: of the Inflation Reduction Act, that's when you might start 367 00:16:31,360 --> 00:16:34,680 Speaker 8: seeing people taking them much more commonly. 368 00:16:35,160 --> 00:16:37,479 Speaker 6: And the other thing is I still. 369 00:16:37,240 --> 00:16:39,720 Speaker 8: Want to see five or six years of safety data 370 00:16:40,240 --> 00:16:44,040 Speaker 8: for the bigo vy dose because it's two point five 371 00:16:44,120 --> 00:16:47,760 Speaker 8: times or five times higher than the diabetes dose, and 372 00:16:47,840 --> 00:16:49,840 Speaker 8: we don't know what the side effect is. But of 373 00:16:49,840 --> 00:16:51,880 Speaker 8: course Lily uses the same dose. 374 00:16:52,720 --> 00:16:53,280 Speaker 3: So interesting. 375 00:16:53,360 --> 00:16:55,600 Speaker 2: Now, you guys, I guess I should wait for you're 376 00:16:55,640 --> 00:16:57,600 Speaker 2: not doing anything. Nobody in this room's getting any of 377 00:16:57,560 --> 00:16:59,560 Speaker 2: these in these drugs. But I mean, you guys did 378 00:16:59,560 --> 00:17:02,120 Speaker 2: some work on this. I can't think the US market 379 00:17:02,320 --> 00:17:04,920 Speaker 2: is just prime market for these companies. 380 00:17:05,000 --> 00:17:06,440 Speaker 3: Is that where the I mean, all. 381 00:17:06,400 --> 00:17:08,159 Speaker 6: You have to do is walk outside. I know, all 382 00:17:08,240 --> 00:17:09,119 Speaker 6: you have to is walk outside. 383 00:17:09,320 --> 00:17:12,960 Speaker 8: Seventy billion is where our current model sits under global. 384 00:17:12,680 --> 00:17:16,120 Speaker 2: You think seventy billion annually in these types. 385 00:17:15,840 --> 00:17:20,439 Speaker 8: Of drug that's where we're at in terms of market size, 386 00:17:20,760 --> 00:17:24,440 Speaker 8: which obviously is about the same sort of revenue line. 387 00:17:24,600 --> 00:17:27,560 Speaker 8: I think average that this consensus has so I think 388 00:17:27,560 --> 00:17:29,000 Speaker 8: everybody's going after the same. 389 00:17:29,280 --> 00:17:32,280 Speaker 2: And how big is seventy billion in your world of pharmaceuticals. 390 00:17:32,280 --> 00:17:35,760 Speaker 8: Oh, that's a lot for a class a blockbuster for 391 00:17:35,800 --> 00:17:36,800 Speaker 8: a class of drugs. 392 00:17:36,840 --> 00:17:39,840 Speaker 6: No, we have actually seventy billion. 393 00:17:40,000 --> 00:17:42,119 Speaker 8: I think even in the immuno oncology world we're not 394 00:17:42,160 --> 00:17:43,119 Speaker 8: getting seventy billion. 395 00:17:43,320 --> 00:17:46,080 Speaker 6: Really, No, this is this is big. 396 00:17:46,320 --> 00:17:46,960 Speaker 9: This is big. 397 00:17:47,000 --> 00:17:47,320 Speaker 7: All right. 398 00:17:47,400 --> 00:17:49,760 Speaker 6: So everything about these drugs is. 399 00:17:49,560 --> 00:17:52,280 Speaker 3: Can you remember, I mean, you know, like, would statins 400 00:17:52,320 --> 00:17:54,000 Speaker 3: have been comparable when they first came out? 401 00:17:54,080 --> 00:17:56,040 Speaker 8: Yeah? Yeah, I mean you know, so statings when when 402 00:17:56,600 --> 00:18:00,440 Speaker 8: phiz's lipitour was around, that was the biggest drug, and 403 00:18:00,480 --> 00:18:05,720 Speaker 8: then the Yeah, then a Visa Humaira for rumas authritis 404 00:18:05,840 --> 00:18:08,040 Speaker 8: that became the biggest druggle only a couple of years ago. 405 00:18:08,359 --> 00:18:10,960 Speaker 8: And now currently it's an immuno on College of drug 406 00:18:11,000 --> 00:18:14,600 Speaker 8: ki Truda from from MRK. But these guys will probably 407 00:18:14,600 --> 00:18:15,200 Speaker 8: overtake that. 408 00:18:15,160 --> 00:18:17,200 Speaker 2: All right, Sam, thanks so much for joining us. Sam Fazzelli, 409 00:18:17,440 --> 00:18:19,800 Speaker 2: head of European Research. He's his pharmer analysts as well 410 00:18:19,840 --> 00:18:23,119 Speaker 2: during the day for Bloomberg Intelligence based in London, somewhere 411 00:18:23,119 --> 00:18:24,840 Speaker 2: in France too. I don't know what that's all about. 412 00:18:24,880 --> 00:18:27,119 Speaker 2: That's a scam, but he's in New York right here, So. 413 00:18:27,280 --> 00:18:30,399 Speaker 7: You're listening to the tape. Kent's are live program Bloomberg 414 00:18:30,440 --> 00:18:34,040 Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio, the 415 00:18:34,119 --> 00:18:37,320 Speaker 7: tune in app, Bloomberg dot Com, and the Bloomberg Business App. 416 00:18:37,359 --> 00:18:40,200 Speaker 7: You can also listen live on Amazon Alexa from our 417 00:18:40,200 --> 00:18:44,200 Speaker 7: flagship New York station, Just say Alexa play Bloomberg eleven 418 00:18:44,320 --> 00:18:46,960 Speaker 7: thirty Matt. 419 00:18:46,720 --> 00:18:49,399 Speaker 2: Little Paul Sweeney live here in our Bloomberg Interactive Brokers studio, 420 00:18:49,440 --> 00:18:52,679 Speaker 2: streaming on YouTube as well. You know, Matt, after slinging 421 00:18:52,680 --> 00:18:55,920 Speaker 2: stocks on to institutional investors for thirty years, there's very rare, 422 00:18:56,320 --> 00:18:58,560 Speaker 2: is it when somebody walks in this studio and as 423 00:18:58,560 --> 00:19:00,760 Speaker 2: a money manager of any size, I don't know, I 424 00:19:00,760 --> 00:19:03,080 Speaker 2: haven't heard of. Well that just happened here, Matt Smith. 425 00:19:03,119 --> 00:19:06,240 Speaker 2: He's an investment director at Rouffer and I have no 426 00:19:06,280 --> 00:19:09,200 Speaker 2: idea what Ruffer is. So we're going to start right there. Matt, 427 00:19:09,280 --> 00:19:10,760 Speaker 2: thanks so much for joining because I know you're based 428 00:19:10,760 --> 00:19:13,040 Speaker 2: on London. You're joining us here in our New York studio. 429 00:19:13,320 --> 00:19:14,719 Speaker 3: Tell us about Ruffer? What do you guys do? 430 00:19:15,080 --> 00:19:19,040 Speaker 10: Thanks Paul, great to be here. So we are a 431 00:19:19,080 --> 00:19:22,840 Speaker 10: London based asset manager focused on absolute return. So we 432 00:19:22,920 --> 00:19:25,639 Speaker 10: have one main objective, which is to avoid losing money. 433 00:19:26,480 --> 00:19:26,879 Speaker 3: Like that. 434 00:19:26,880 --> 00:19:31,040 Speaker 10: That sounds pretty unimpressive or unambitious, but it's helped us 435 00:19:31,080 --> 00:19:35,200 Speaker 10: deliver positive returns in the dot com bust global financial crisis. 436 00:19:35,400 --> 00:19:37,240 Speaker 2: So you're more than like fifteen minutes old, right, you 437 00:19:37,240 --> 00:19:38,200 Speaker 2: guys have been around a while. 438 00:19:38,400 --> 00:19:39,840 Speaker 10: We have nineteen ninety four. 439 00:19:40,520 --> 00:19:41,760 Speaker 2: How come I've never heard yet? 440 00:19:42,119 --> 00:19:45,520 Speaker 10: So we only started marketing making ourselves available to US 441 00:19:45,600 --> 00:19:46,879 Speaker 10: clients at the beginning of last year. 442 00:19:47,080 --> 00:19:49,440 Speaker 3: H okay, all right, so absolute return? 443 00:19:49,480 --> 00:19:49,720 Speaker 7: Are you? 444 00:19:49,920 --> 00:19:51,920 Speaker 2: Are you long only long shorter? A hedge fund? 445 00:19:51,920 --> 00:19:52,640 Speaker 9: What's your structure? 446 00:19:52,840 --> 00:19:55,440 Speaker 10: We're a hedge fund and what we're focused on doing 447 00:19:55,760 --> 00:20:01,920 Speaker 10: is studying regimes, market regimes, inflation regimes, predicting them in advance. 448 00:20:02,960 --> 00:20:03,920 Speaker 2: So what's an example of that. 449 00:20:06,760 --> 00:20:09,879 Speaker 10: The change from ZUP, the exit from ZERP. Is it 450 00:20:09,920 --> 00:20:12,680 Speaker 10: going to stick with us higher rates or are we 451 00:20:12,720 --> 00:20:13,240 Speaker 10: going to get back to. 452 00:20:14,240 --> 00:20:18,359 Speaker 3: That's right, zero interest rate policy? Some some people say NERP. 453 00:20:19,000 --> 00:20:22,560 Speaker 10: I think Japanese is still in NERP negative interest rate policy. 454 00:20:23,240 --> 00:20:27,560 Speaker 3: But so right now we're shifting from ZERP back to 455 00:20:28,000 --> 00:20:30,840 Speaker 3: what normal or how does it look to you. 456 00:20:30,920 --> 00:20:34,560 Speaker 10: So we are of the firm belief that there has 457 00:20:34,600 --> 00:20:38,480 Speaker 10: been a regime change from an era of low inflation 458 00:20:38,520 --> 00:20:42,640 Speaker 10: and low interest rates to a new era of higher inflation, 459 00:20:42,800 --> 00:20:49,080 Speaker 10: more volatile inflation, and a structurally rising set of interest rates. 460 00:20:49,480 --> 00:20:52,000 Speaker 3: So that's interesting because I would have thought, maybe we're 461 00:20:52,000 --> 00:20:55,399 Speaker 3: in a new interest rate regime, call it back to 462 00:20:55,480 --> 00:20:57,840 Speaker 3: normal or higher for longer, or whatever you like, out 463 00:20:57,840 --> 00:21:01,919 Speaker 3: of zero. And as a result of that change, we 464 00:21:02,040 --> 00:21:07,000 Speaker 3: have the volatility in inflation. But it seems to a 465 00:21:07,000 --> 00:21:09,119 Speaker 3: lot of people that inflation really did turn out to 466 00:21:09,160 --> 00:21:12,360 Speaker 3: be transitory, just took a longer time than expected, and 467 00:21:12,400 --> 00:21:14,119 Speaker 3: now we're just going to get back to a normal 468 00:21:14,160 --> 00:21:16,480 Speaker 3: level of inflation, like we are getting back to a 469 00:21:16,480 --> 00:21:17,479 Speaker 3: normal level of rates. 470 00:21:17,960 --> 00:21:20,119 Speaker 10: I think the best way to characterize the change is 471 00:21:20,160 --> 00:21:23,600 Speaker 10: that we've moved from a ceiling of two percent inflation 472 00:21:23,960 --> 00:21:27,399 Speaker 10: to a floor of two percent inflation. That sounds like 473 00:21:27,480 --> 00:21:29,840 Speaker 10: not much, but that's a very dramatic shift. 474 00:21:29,880 --> 00:21:30,000 Speaker 7: Now. 475 00:21:30,080 --> 00:21:31,159 Speaker 3: That sounds uncool to me. 476 00:21:31,359 --> 00:21:36,359 Speaker 10: Actually, it makes life significantly more difficult for two people 477 00:21:36,440 --> 00:21:39,880 Speaker 10: in the economy, the US government and how they calibrate 478 00:21:40,040 --> 00:21:44,920 Speaker 10: fiscal spending and the FED. And we have one core 479 00:21:45,000 --> 00:21:48,439 Speaker 10: structural macro thesis that the FED is a paper tiger. 480 00:21:49,480 --> 00:21:53,120 Speaker 10: When they are faced with a slowdown in the economy 481 00:21:53,200 --> 00:21:55,720 Speaker 10: or a slow down in markets, they will cut hard, 482 00:21:57,080 --> 00:22:00,959 Speaker 10: just like they did in the mid mid sixties, cut excessively, 483 00:22:01,320 --> 00:22:04,800 Speaker 10: and they won't have dealt with inflation sufficiently before they 484 00:22:05,200 --> 00:22:06,119 Speaker 10: enter the easing cycle. 485 00:22:06,760 --> 00:22:12,520 Speaker 3: All right, So doesn't J Powell like explicitly say he 486 00:22:12,560 --> 00:22:14,960 Speaker 3: wants to avoid that? I mean, isn't the whole idea 487 00:22:15,160 --> 00:22:18,560 Speaker 3: of J. Powell was until I guess last week that 488 00:22:18,640 --> 00:22:22,320 Speaker 3: he wants to make sure he does not repeat the 489 00:22:22,359 --> 00:22:24,080 Speaker 3: burnsy and mistakes of that FED. 490 00:22:24,800 --> 00:22:29,000 Speaker 10: That is absolutely what he has to say in advance. 491 00:22:29,520 --> 00:22:32,399 Speaker 10: But not even Arthur Burns wanted to be Arthur Burns 492 00:22:32,440 --> 00:22:36,200 Speaker 10: in advice. Central Bank is honestly there. They're products of 493 00:22:36,240 --> 00:22:41,040 Speaker 10: their time, not not independent. Ultimately, the FED is responsible 494 00:22:41,080 --> 00:22:45,159 Speaker 10: to Congress, and if they are frustrating the will of 495 00:22:45,160 --> 00:22:47,960 Speaker 10: Congress by getting in the way of government spending or 496 00:22:48,040 --> 00:22:51,920 Speaker 10: strong economy, they'll just be uh, They'll just be sidelined. 497 00:22:52,600 --> 00:22:59,399 Speaker 2: So how has your investment focus or strategy at Rougher 498 00:22:59,480 --> 00:23:01,960 Speaker 2: changed in the last couple of years? 499 00:23:02,000 --> 00:23:04,040 Speaker 3: As we are now in a different. 500 00:23:03,760 --> 00:23:08,560 Speaker 10: World, So our view actually switched that the world was 501 00:23:09,160 --> 00:23:11,560 Speaker 10: from a deflationary world to a world that will end 502 00:23:11,600 --> 00:23:15,080 Speaker 10: in inflation in December eight. So we've been preparing and 503 00:23:15,119 --> 00:23:18,120 Speaker 10: thinking about this for some time. Clearly it's been accelerated 504 00:23:18,440 --> 00:23:21,000 Speaker 10: by COVID. What it means is that you have to 505 00:23:21,040 --> 00:23:26,120 Speaker 10: have a portfolio that is not reliant on bonds for protection. Structurally, 506 00:23:26,800 --> 00:23:29,119 Speaker 10: you have to be more dynamic and agile with your 507 00:23:29,160 --> 00:23:32,159 Speaker 10: asset allocation. So I put another way, the things that 508 00:23:32,240 --> 00:23:35,640 Speaker 10: worked best in the prior regime, long the thirty year 509 00:23:35,680 --> 00:23:40,120 Speaker 10: treasury and long the big tech stocks. Basically and crucially 510 00:23:40,280 --> 00:23:44,280 Speaker 10: a passive approach or a static asset allocation. That is, 511 00:23:45,080 --> 00:23:49,280 Speaker 10: through this new regime, the worst possible approach. We think 512 00:23:49,960 --> 00:23:52,560 Speaker 10: that doesn't mean it won't have good moments, and actually 513 00:23:52,560 --> 00:23:54,600 Speaker 10: we think right now is a good moment for the 514 00:23:54,640 --> 00:23:58,640 Speaker 10: thirty year treasury. But you've got to be a lot 515 00:23:58,680 --> 00:23:59,600 Speaker 10: more dynamic than. 516 00:24:00,000 --> 00:24:02,719 Speaker 2: What is your asset allocation today versus maybe what it 517 00:24:02,760 --> 00:24:03,520 Speaker 2: was a few years ago. 518 00:24:04,000 --> 00:24:08,560 Speaker 10: So we have a core structural allocation to thirty year tips, 519 00:24:08,800 --> 00:24:12,440 Speaker 10: the inflation link securities and the fifty year equivalent in 520 00:24:12,480 --> 00:24:16,840 Speaker 10: the UK to protect our clients against the risk of 521 00:24:17,280 --> 00:24:22,440 Speaker 10: inflation and roading away their capital. At the moment, we 522 00:24:22,480 --> 00:24:27,520 Speaker 10: are pretty concerned about the potential for a sharp sell off, 523 00:24:27,880 --> 00:24:30,199 Speaker 10: or put another way, for any market sell off to 524 00:24:30,240 --> 00:24:35,720 Speaker 10: be pretty self feeding, and so we have credit protection, 525 00:24:36,800 --> 00:24:39,879 Speaker 10: we have volatility protection through things like the Vicks. 526 00:24:40,040 --> 00:24:41,399 Speaker 3: By the way, when you say sell off, do you 527 00:24:41,480 --> 00:24:44,520 Speaker 3: mean in bonds or in stocks or like risk acids 528 00:24:44,560 --> 00:24:45,840 Speaker 3: in general? What are you thinking of? 529 00:24:46,280 --> 00:24:49,000 Speaker 10: Most likely a stock sell off. But the way that 530 00:24:49,040 --> 00:24:52,080 Speaker 10: the FED is implementing monetary policy this cycle means that 531 00:24:52,119 --> 00:24:55,320 Speaker 10: any ecty market sell off is probably a contagious event 532 00:24:57,640 --> 00:24:59,480 Speaker 10: into wider risk markets. 533 00:25:00,080 --> 00:25:02,240 Speaker 3: So we see a sell off in the S and P, 534 00:25:02,520 --> 00:25:05,359 Speaker 3: that means they're going to also sell what the like 535 00:25:05,440 --> 00:25:09,320 Speaker 3: Paul's going to sell his to your treasuries that he will. 536 00:25:09,160 --> 00:25:13,600 Speaker 10: Probably or wider asset managers will be like, okay, stocks 537 00:25:13,600 --> 00:25:16,200 Speaker 10: are going down, I'm going to be buying treasury bills 538 00:25:16,280 --> 00:25:18,520 Speaker 10: just to keep my risk at a low level. And 539 00:25:18,600 --> 00:25:21,280 Speaker 10: what that does is force money into the Feds are 540 00:25:21,320 --> 00:25:24,360 Speaker 10: our p facility denying it to the banking system, and 541 00:25:24,400 --> 00:25:27,040 Speaker 10: that that just makes the set up even more fragile, 542 00:25:27,359 --> 00:25:29,639 Speaker 10: just at the point where markets need liquidity. 543 00:25:30,280 --> 00:25:34,760 Speaker 2: All right, So what do you I'm trying to say, so, 544 00:25:34,800 --> 00:25:36,560 Speaker 2: what is kind of what have you added to your 545 00:25:36,560 --> 00:25:39,080 Speaker 2: portfolio in the last six months. 546 00:25:39,760 --> 00:25:43,120 Speaker 10: A couple of things. So we've started to go very 547 00:25:43,119 --> 00:25:45,680 Speaker 10: long off long duration bonds for the first time. 548 00:25:45,720 --> 00:25:48,320 Speaker 3: Treasury bonds or corporates or treasury. 549 00:25:47,920 --> 00:25:51,000 Speaker 10: Bonds, So we want to stay clear of corporate bonds. 550 00:25:51,720 --> 00:25:53,359 Speaker 10: In fact, really it sounds boring. 551 00:25:54,160 --> 00:25:59,200 Speaker 3: No, this is exciting. You're going longer by Disney. 552 00:25:59,320 --> 00:26:01,359 Speaker 10: Treasury is more volatile in the S and P at 553 00:26:01,359 --> 00:26:01,760 Speaker 10: the moment. 554 00:26:02,480 --> 00:26:03,160 Speaker 9: That's not good. 555 00:26:03,600 --> 00:26:04,960 Speaker 3: It's not good, but it's exciting. 556 00:26:05,880 --> 00:26:08,360 Speaker 9: Yesap boring if you're trading the don't forget. 557 00:26:08,400 --> 00:26:10,320 Speaker 10: We're in the business of trying to avoid losing money. 558 00:26:10,359 --> 00:26:12,960 Speaker 10: We're about preserving capital for our investors through time. 559 00:26:13,280 --> 00:26:16,320 Speaker 2: How did you just fill up on that? Twenty twenty two, 560 00:26:16,320 --> 00:26:19,040 Speaker 2: when equities were down big, fixed income was down big, 561 00:26:19,400 --> 00:26:19,760 Speaker 2: we were. 562 00:26:19,720 --> 00:26:22,960 Speaker 10: Up around six percent. We're not and that was thanks 563 00:26:23,000 --> 00:26:27,480 Speaker 10: mainly to our derivative positions. We've been worried about a 564 00:26:27,520 --> 00:26:31,199 Speaker 10: correlated sell off in equities and bonds for about a decade. 565 00:26:31,240 --> 00:26:35,000 Speaker 10: By that point, we finally finally sorts of preconditions line up, 566 00:26:35,680 --> 00:26:40,320 Speaker 10: so we were long of effectually short interest rates, short 567 00:26:40,359 --> 00:26:44,120 Speaker 10: of crowded stocks, in particular, that's something that's very vulnerable 568 00:26:44,119 --> 00:26:46,960 Speaker 10: if liquidity is coming out of the system. This year 569 00:26:47,000 --> 00:26:50,960 Speaker 10: has been a lot more difficult. We've been expecting yields 570 00:26:51,000 --> 00:26:56,159 Speaker 10: to start biting on stock markets a lot sooner than 571 00:26:56,160 --> 00:26:59,080 Speaker 10: they have. But we think we've reached a pretty critical 572 00:26:59,080 --> 00:27:02,159 Speaker 10: point where if yield start to go much higher than 573 00:27:02,200 --> 00:27:05,000 Speaker 10: five percent, that's going to be doing real damage too. 574 00:27:05,080 --> 00:27:07,320 Speaker 3: So you don't think we've seen a peak in yields. 575 00:27:07,440 --> 00:27:10,360 Speaker 3: You think that there could be a sell off even 576 00:27:10,400 --> 00:27:12,359 Speaker 3: at the long end of the curve that drives a 577 00:27:12,400 --> 00:27:15,240 Speaker 3: yields higher than five percent on tens, twenties, thirties. 578 00:27:15,480 --> 00:27:18,480 Speaker 10: I think what I'm saying is that if yields do 579 00:27:18,560 --> 00:27:21,160 Speaker 10: go through five percent, that will be dangerous for markets. 580 00:27:21,320 --> 00:27:24,480 Speaker 10: So from a portfolio perspective, you can be long of 581 00:27:24,640 --> 00:27:27,720 Speaker 10: the tenure the thirty year, provided you've got protection against 582 00:27:27,800 --> 00:27:30,959 Speaker 10: a risk asset sell off and construct a nice balanced 583 00:27:30,960 --> 00:27:32,560 Speaker 10: portfolio with those assets. 584 00:27:33,520 --> 00:27:33,840 Speaker 3: Cool. 585 00:27:34,280 --> 00:27:35,680 Speaker 2: I mean, I'm looking at your webs I had. 586 00:27:36,240 --> 00:27:38,560 Speaker 3: I want to sit I want to sit Matt down 587 00:27:38,600 --> 00:27:41,520 Speaker 3: with like Cam Harvey, yes, to debate inflation. So he's 588 00:27:41,520 --> 00:27:45,760 Speaker 3: a I would love to do that. He says, it's 589 00:27:45,760 --> 00:27:49,239 Speaker 3: whipped and he says, you know it's below two and 590 00:27:49,280 --> 00:27:52,080 Speaker 3: the Fed is just looking at the wrong data points 591 00:27:52,160 --> 00:27:54,240 Speaker 3: for example, to price housing inflation. 592 00:27:54,720 --> 00:27:56,879 Speaker 10: I mean, this is what gives you the opportunity in 593 00:27:56,960 --> 00:28:00,760 Speaker 10: investment terms. The market currently price is thirty inflation at 594 00:28:00,840 --> 00:28:03,840 Speaker 10: two two and a half percent, So that's the market 595 00:28:03,880 --> 00:28:08,239 Speaker 10: saying the Fed has got this, they have tightened and 596 00:28:08,280 --> 00:28:11,639 Speaker 10: crucially they can stay tight and that's that's what I 597 00:28:11,680 --> 00:28:15,920 Speaker 10: think is just not correct. So that gives you the 598 00:28:15,920 --> 00:28:19,520 Speaker 10: opportunity to buy buy inflation expectations at that price. 599 00:28:20,160 --> 00:28:22,479 Speaker 3: Do you think the Fed is going to cut the 600 00:28:22,520 --> 00:28:24,840 Speaker 3: minute we see in economic downturn and it's going to 601 00:28:24,880 --> 00:28:27,240 Speaker 3: go too far and inflation is going to come roaring back? 602 00:28:28,359 --> 00:28:28,879 Speaker 10: Absolutely? 603 00:28:28,920 --> 00:28:30,680 Speaker 2: All right, good stuff man, I'm glad you got it. 604 00:28:31,160 --> 00:28:34,480 Speaker 2: Matt Smith, Investment director Rougher in the City of London. 605 00:28:34,440 --> 00:28:36,760 Speaker 2: They're Edinburgh. There in Paris. Next time you're in York, 606 00:28:36,840 --> 00:28:37,760 Speaker 2: let us know. We'll get you back on. 607 00:28:37,800 --> 00:28:39,000 Speaker 9: We'll see about what I think they say. 608 00:28:39,120 --> 00:28:41,800 Speaker 3: Edinburgh, Edinburgh, Edinburgh, Edinburgh. 609 00:28:41,920 --> 00:28:45,040 Speaker 7: You're listening to the tape. Cat's are live program Bloomberg 610 00:28:45,080 --> 00:28:48,680 Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio. The 611 00:28:48,760 --> 00:28:51,960 Speaker 7: tune in app Bloomberg dot Com and the Bloomberg Business App. 612 00:28:52,000 --> 00:28:54,840 Speaker 7: You can also listen live on Amazon Alexa from our 613 00:28:54,840 --> 00:28:59,920 Speaker 7: flagship New York station. Just say Alexa play Bloomberg eleven thirty. 614 00:29:00,800 --> 00:29:05,760 Speaker 3: Philip Richter here, president of Hollowbrook Wealth Management, who I 615 00:29:05,840 --> 00:29:09,320 Speaker 3: know from a car show that he puts on out 616 00:29:09,360 --> 00:29:12,360 Speaker 3: in Bedford, and I want to talk so with Philip 617 00:29:12,360 --> 00:29:14,280 Speaker 3: a little bit about the markets, but also a little 618 00:29:14,280 --> 00:29:18,440 Speaker 3: bit about cars and the collections, because. 619 00:29:18,320 --> 00:29:20,560 Speaker 2: I'd rather talk about like that again, the car market, 620 00:29:20,560 --> 00:29:23,000 Speaker 2: the art market because interest rates are higher, right, Yes, 621 00:29:23,800 --> 00:29:26,760 Speaker 2: it's not just you know, interest rates higher, bond prices 622 00:29:26,960 --> 00:29:29,360 Speaker 2: lower things. Other stuff goes lower, right, I mean it 623 00:29:29,400 --> 00:29:31,280 Speaker 2: impacts evaluations for everything, right. 624 00:29:31,360 --> 00:29:32,600 Speaker 3: I mean I don't know. 625 00:29:32,760 --> 00:29:35,280 Speaker 1: Well, let Philip, let's ask you what do higher interest 626 00:29:35,320 --> 00:29:36,800 Speaker 1: rates do to the collector car market. 627 00:29:36,880 --> 00:29:38,000 Speaker 9: So at Hollowbrook, we. 628 00:29:37,920 --> 00:29:40,160 Speaker 11: Work with a lot of art collectors and car collectors, 629 00:29:40,200 --> 00:29:42,680 Speaker 11: so we stay very close to this market. And what's 630 00:29:42,720 --> 00:29:45,920 Speaker 11: happening is this bifurcation you're reading about the art markets 631 00:29:45,960 --> 00:29:48,520 Speaker 11: down twenty four percent year to date. We've got this 632 00:29:48,720 --> 00:29:53,320 Speaker 11: unbelievable auction this evening Emily Fisher Landau's collection and beautiful 633 00:29:53,320 --> 00:29:57,400 Speaker 11: collection of art. These are roth Codes, the best wroth CODs, 634 00:29:57,800 --> 00:30:01,280 Speaker 11: you know, the best, the the best of the best, 635 00:30:02,240 --> 00:30:05,160 Speaker 11: the Jasper John's and so forth. These will sell for 636 00:30:05,360 --> 00:30:08,760 Speaker 11: big money, right, These These are not that lower tier 637 00:30:09,000 --> 00:30:09,800 Speaker 11: or mid tier art. 638 00:30:09,800 --> 00:30:11,800 Speaker 9: This is the best. It will not come to market again. 639 00:30:12,280 --> 00:30:14,480 Speaker 3: So when you say art market is down twenty four percent, 640 00:30:14,560 --> 00:30:16,400 Speaker 3: that doesn't include this kind of art. 641 00:30:16,680 --> 00:30:18,400 Speaker 11: I think it's by forgetting. And we're seeing the same 642 00:30:18,440 --> 00:30:20,720 Speaker 11: thing in the collector car world, right, the Gto that's 643 00:30:20,720 --> 00:30:22,120 Speaker 11: going to be auctioned in. 644 00:30:22,080 --> 00:30:24,840 Speaker 3: A few days at Sotheby's on Monday, babies, yep. 645 00:30:24,880 --> 00:30:28,360 Speaker 11: And then the big auction in Vegas that arms Southeby's having. 646 00:30:28,520 --> 00:30:32,320 Speaker 11: There are two Mercedes men clkgtrs being auctioned in Vegas. 647 00:30:32,680 --> 00:30:34,720 Speaker 11: You never see those cars come up for sale let 648 00:30:34,760 --> 00:30:37,080 Speaker 11: alone too. So these are the best, the best, and 649 00:30:37,120 --> 00:30:39,960 Speaker 11: whether the dows at thirty four thousand or five thousand, 650 00:30:40,320 --> 00:30:42,160 Speaker 11: there is a market for these cars because they will 651 00:30:42,160 --> 00:30:43,960 Speaker 11: not come back to auction in a long. 652 00:30:43,840 --> 00:30:46,600 Speaker 3: Time, all right. So interest rates have basically no effect 653 00:30:46,720 --> 00:30:49,600 Speaker 3: on you know, the Gto, which is by the way, 654 00:30:49,840 --> 00:30:52,600 Speaker 3: if you've seen Ferris Bueller's Day Off, ye, right, that's 655 00:30:52,840 --> 00:30:57,360 Speaker 3: the car I mean that wasn't a real one obviously 656 00:30:57,600 --> 00:30:59,840 Speaker 3: that they pushed out the back window of his dad's. 657 00:30:59,600 --> 00:31:01,840 Speaker 9: Garage, but was a California Spider. 658 00:31:01,960 --> 00:31:04,000 Speaker 3: Yeah. And at the time that was also one of 659 00:31:04,040 --> 00:31:06,680 Speaker 3: the most expensive cars ever sold. I think I remember 660 00:31:06,840 --> 00:31:08,920 Speaker 3: hearing when I was a kid that it was going 661 00:31:08,960 --> 00:31:13,040 Speaker 3: for like fourteen million dollars. Now we're expecting a price 662 00:31:13,040 --> 00:31:17,160 Speaker 3: of more than twice that from the Southebey's auction on Monday. 663 00:31:18,520 --> 00:31:22,200 Speaker 3: Doesn't matter when someone buys these cars, she or he 664 00:31:22,200 --> 00:31:25,400 Speaker 3: doesn't care if rates or zero or ten, right, Yeah. 665 00:31:25,240 --> 00:31:27,520 Speaker 11: Well I think it does matter. I mean, interest rates 666 00:31:27,520 --> 00:31:31,320 Speaker 11: affect everything. They affect equities, they affect real assets. I 667 00:31:31,320 --> 00:31:34,239 Speaker 11: think there's a lag effect, right, it takes time. We 668 00:31:34,280 --> 00:31:38,240 Speaker 11: had ten years of free money of QE and suddenly 669 00:31:38,480 --> 00:31:40,920 Speaker 11: we're in a different environment. We had cheap energy, we 670 00:31:40,960 --> 00:31:44,040 Speaker 11: didn't have geopolitical conflicts to speak of, you know, we 671 00:31:44,280 --> 00:31:47,400 Speaker 11: had globalization going gangbusters, and now suddenly we're in a 672 00:31:47,440 --> 00:31:49,520 Speaker 11: different world of a four and a half to five 673 00:31:49,520 --> 00:31:53,160 Speaker 11: percent ten uere. This takes time to meander through the system. 674 00:31:53,200 --> 00:31:55,480 Speaker 11: What I'm saying is the best of the best, a 675 00:31:55,600 --> 00:31:59,960 Speaker 11: gto or a calder that Emily Fisher Landau bought years ago. 676 00:32:00,680 --> 00:32:01,800 Speaker 11: Those are different. 677 00:32:01,920 --> 00:32:04,080 Speaker 3: That's a different ball, by the way, tell us about 678 00:32:04,360 --> 00:32:07,120 Speaker 3: the GTO. I mean, there's the one I mentioned in 679 00:32:07,160 --> 00:32:09,120 Speaker 3: the movie. There's that was. 680 00:32:09,040 --> 00:32:10,160 Speaker 9: A California Spider. 681 00:32:10,160 --> 00:32:13,160 Speaker 3: Actually I get okay, So I think also Nick Mason 682 00:32:13,440 --> 00:32:15,200 Speaker 3: has a GTO. 683 00:32:15,240 --> 00:32:15,760 Speaker 9: As a club. 684 00:32:15,800 --> 00:32:18,400 Speaker 3: Who's Nick Mason the drummer for Pink Floyd Thank He 685 00:32:19,000 --> 00:32:21,320 Speaker 3: also is a big car collector and has I think 686 00:32:21,320 --> 00:32:25,280 Speaker 3: a fund that people have invested in. Why is this for? 687 00:32:25,360 --> 00:32:26,720 Speaker 3: Why is Ferrari Gto? 688 00:32:27,000 --> 00:32:27,080 Speaker 8: Like? 689 00:32:27,120 --> 00:32:29,760 Speaker 3: Why is that the top? It's the single. 690 00:32:29,440 --> 00:32:33,000 Speaker 11: Most iconic car that Ferrari ever built. Most of them 691 00:32:33,040 --> 00:32:35,920 Speaker 11: were When did they built it in the early sixties, 692 00:32:36,000 --> 00:32:38,800 Speaker 11: sixty two, sixty three, sixty four time? And yeah, the 693 00:32:38,840 --> 00:32:42,000 Speaker 11: styling of it is just outrageous. When you see a GTO, 694 00:32:42,480 --> 00:32:44,720 Speaker 11: it doesn't look like any other car on the road, 695 00:32:44,800 --> 00:32:49,040 Speaker 11: or any other Ferrari for that matter. It's it's It's 696 00:32:49,120 --> 00:32:52,280 Speaker 11: folklore is growing by leaps and bounds every day with 697 00:32:52,360 --> 00:32:57,480 Speaker 11: Ferrari's popularity and Ferrari's mystique. The Ford Verse Ferrari movie, 698 00:32:57,920 --> 00:33:01,200 Speaker 11: The GTO is really the nucleus of what Enzo Ferrari 699 00:33:01,400 --> 00:33:03,760 Speaker 11: wanted to do, and the gto was unique because it 700 00:33:03,800 --> 00:33:05,840 Speaker 11: was a car you could drive to the track and 701 00:33:05,880 --> 00:33:08,680 Speaker 11: you could race and be competitive in the car, very competitive. 702 00:33:08,880 --> 00:33:11,040 Speaker 11: So it's a it's a you know, it's a it's 703 00:33:11,080 --> 00:33:15,480 Speaker 11: an incredibly unique asset. And this one that's for sale 704 00:33:15,480 --> 00:33:18,640 Speaker 11: at Sotheby's, I think it. The numbers are going to 705 00:33:18,680 --> 00:33:20,480 Speaker 11: be unbelievable. 706 00:33:20,480 --> 00:33:21,040 Speaker 3: Who's selling? 707 00:33:21,200 --> 00:33:21,960 Speaker 2: Do we know who owns it? 708 00:33:22,040 --> 00:33:22,200 Speaker 8: Now? 709 00:33:22,520 --> 00:33:22,720 Speaker 7: Yeah? 710 00:33:22,720 --> 00:33:25,680 Speaker 11: The owner is known. I think he's a gentleman from Ohio. 711 00:33:25,840 --> 00:33:27,920 Speaker 11: I read the article. I forget who at the great 712 00:33:27,920 --> 00:33:28,480 Speaker 11: state of Ohio. 713 00:33:29,120 --> 00:33:30,520 Speaker 9: I believe so somewhere in the Midwest. 714 00:33:30,520 --> 00:33:33,040 Speaker 2: So I went to the Concourse Dale Elegance, a pebble 715 00:33:33,040 --> 00:33:37,760 Speaker 2: beach for many, many many years. This past year, for example, 716 00:33:38,160 --> 00:33:40,920 Speaker 2: were the proceeds up or down? Or they don't care 717 00:33:40,960 --> 00:33:41,320 Speaker 2: as well? 718 00:33:41,400 --> 00:33:43,160 Speaker 9: So I will tell you I was there. 719 00:33:43,480 --> 00:33:46,240 Speaker 11: I spoke on a panel, and I spent the weekend 720 00:33:46,400 --> 00:33:50,000 Speaker 11: at in Monterey and I walked all the auction houses. 721 00:33:50,280 --> 00:33:52,480 Speaker 11: I went to Gooding, I went to RM and I 722 00:33:52,480 --> 00:33:55,640 Speaker 11: will tell you the quality of cars that are coming 723 00:33:55,680 --> 00:33:59,480 Speaker 11: on the market so high, the Gooding auction in particular, 724 00:33:59,520 --> 00:34:01,960 Speaker 11: I mean some vehicles they had there, things that haven't 725 00:34:01,960 --> 00:34:04,080 Speaker 11: been seen in years. And you wonder like, where have 726 00:34:04,120 --> 00:34:06,040 Speaker 11: all these cars been? Why are they coming out of 727 00:34:06,080 --> 00:34:06,520 Speaker 11: the woodwork? 728 00:34:06,560 --> 00:34:06,720 Speaker 7: Now? 729 00:34:06,840 --> 00:34:09,280 Speaker 11: They're coming out of the woodwork now because markets are high, 730 00:34:09,520 --> 00:34:13,279 Speaker 11: valuations are high. It's a global market now, uh And 731 00:34:13,480 --> 00:34:15,000 Speaker 11: and they can realize it is. 732 00:34:14,920 --> 00:34:17,520 Speaker 2: A global market because I mean, we live We lived 733 00:34:17,560 --> 00:34:20,879 Speaker 2: in Carmel for a long time, sleepy little town tourist talent. 734 00:34:21,200 --> 00:34:23,720 Speaker 2: But during the concourse it is like the United Nations. 735 00:34:23,800 --> 00:34:25,960 Speaker 2: I mean, people speaking every different language walking down. 736 00:34:26,239 --> 00:34:29,040 Speaker 3: Now do car collectors get the same kind of respect 737 00:34:29,040 --> 00:34:30,879 Speaker 3: that art collectors have? I always thought as a kid 738 00:34:30,880 --> 00:34:34,840 Speaker 3: it was crazy that somebody would pay more for a 739 00:34:34,880 --> 00:34:37,880 Speaker 3: picture of flowers that a guy named van Go painted, 740 00:34:37,880 --> 00:34:40,040 Speaker 3: then they would pay for a Ferrari, like you can't 741 00:34:40,120 --> 00:34:41,520 Speaker 3: drive a painting right. 742 00:34:41,680 --> 00:34:44,520 Speaker 11: Well, Matt, that's changing now, I think. I think collector 743 00:34:44,600 --> 00:34:47,480 Speaker 11: cars are becoming a legitimate asset class that people want 744 00:34:47,520 --> 00:34:50,480 Speaker 11: to own. You can enjoy them, you can share, for example, 745 00:34:50,520 --> 00:34:54,600 Speaker 11: the gto the celebrities and the level of people that 746 00:34:54,680 --> 00:34:59,480 Speaker 11: own GTOs. They get together socially and they do drives together, 747 00:34:59,680 --> 00:35:01,680 Speaker 11: and they're things worldwide. They ship the cars all over 748 00:35:01,719 --> 00:35:03,840 Speaker 11: the world and they drive through Venice or wherever that 749 00:35:03,880 --> 00:35:07,200 Speaker 11: you know. They go to cite, they do all of that. 750 00:35:07,400 --> 00:35:10,680 Speaker 11: So there's a social component to this that doesn't really 751 00:35:10,719 --> 00:35:12,799 Speaker 11: I think exists as much in the art world, although 752 00:35:12,840 --> 00:35:15,720 Speaker 11: it's obviously very social too. But I think the collectric 753 00:35:15,760 --> 00:35:18,680 Speaker 11: car world is moving up as an industry as a 754 00:35:18,760 --> 00:35:23,200 Speaker 11: legitimate acid category, and if the electric drive phenomenon accelerates 755 00:35:23,520 --> 00:35:27,040 Speaker 11: a lot of these cars, you know, these intricate, beautiful 756 00:35:27,160 --> 00:35:30,440 Speaker 11: V twelve handcrafted devices, that's not going to be being 757 00:35:30,440 --> 00:35:33,280 Speaker 11: made anymore. Right, We're gonna have We're gonna have electric appliance. 758 00:35:33,400 --> 00:35:34,640 Speaker 2: Do you think that day is gonna come? 759 00:35:34,960 --> 00:35:36,120 Speaker 9: I think we're a long way off. 760 00:35:36,560 --> 00:35:38,560 Speaker 11: I think their electric cars have a place in certain 761 00:35:38,560 --> 00:35:39,680 Speaker 11: applications in Florida. 762 00:35:40,120 --> 00:35:43,279 Speaker 9: Great, you know you've got clean power. Uh, and you've 763 00:35:43,280 --> 00:35:45,080 Speaker 9: got you've got to you know, good. 764 00:35:44,880 --> 00:35:49,720 Speaker 11: Temperatures, but long haul Northeast cold temperatures. 765 00:35:50,200 --> 00:35:51,640 Speaker 9: It's it's not a total second. 766 00:35:51,719 --> 00:35:54,359 Speaker 2: Are your Lamborghinis. I think they're not going to make 767 00:35:54,400 --> 00:35:55,440 Speaker 2: electric vehicles, are they? 768 00:35:55,560 --> 00:35:59,640 Speaker 3: They are going to make electric vehicles? Yeah, and that 769 00:35:59,719 --> 00:36:00,319 Speaker 3: like those cards. 770 00:36:00,560 --> 00:36:03,160 Speaker 1: It's the sound, yeah, Like it's not only a sound, 771 00:36:03,239 --> 00:36:05,279 Speaker 1: it's the vibrations, it's the smell. 772 00:36:05,000 --> 00:36:08,000 Speaker 3: And it's the hand build the engineering. 773 00:36:08,080 --> 00:36:11,120 Speaker 11: Yes, I mean a V twelve Ferrari motor is one 774 00:36:11,120 --> 00:36:13,520 Speaker 11: of the most beautiful things to behold if you're an 775 00:36:13,520 --> 00:36:18,120 Speaker 11: engineer and you like machinery. Incredible, incredible, miracle device under 776 00:36:18,160 --> 00:36:18,479 Speaker 11: the hood. 777 00:36:18,600 --> 00:36:22,279 Speaker 3: Are there more ways for investors to get into this 778 00:36:22,400 --> 00:36:25,000 Speaker 3: asset class other than going to a souther res auction 779 00:36:25,160 --> 00:36:28,880 Speaker 3: and buying you know, a gto or or ladies. 780 00:36:28,960 --> 00:36:30,759 Speaker 11: There's a lot of on ramps to the car world. 781 00:36:30,760 --> 00:36:33,320 Speaker 11: I mean, I was just gonna mention, bring a trailer 782 00:36:33,520 --> 00:36:37,600 Speaker 11: has really revolutionized the access to the market globally. So 783 00:36:37,680 --> 00:36:40,200 Speaker 11: there are some fantastic cars being sold on bring a 784 00:36:40,239 --> 00:36:43,760 Speaker 11: trailer at all budgets. So you can buy the single 785 00:36:43,880 --> 00:36:46,520 Speaker 11: best Volkswagen cabriolet in the world and wait on bring 786 00:36:46,520 --> 00:36:48,239 Speaker 11: a trailer and find it. Or you can buy a 787 00:36:48,320 --> 00:36:49,720 Speaker 11: Dusenberg on bring a trailer. 788 00:36:49,760 --> 00:36:51,359 Speaker 3: We have it. We only have a minute left field, 789 00:36:51,400 --> 00:36:53,000 Speaker 3: And I want you to tell us about the Turtle Invitational, 790 00:36:53,000 --> 00:36:54,560 Speaker 3: because I went to what I believe was the fourth 791 00:36:54,880 --> 00:36:57,840 Speaker 3: Yeah Invitation, that's the car show that he puts on 792 00:36:57,920 --> 00:36:59,399 Speaker 3: in Bedford. Tell us about it. 793 00:36:59,440 --> 00:37:02,560 Speaker 11: So the Turtle Invitational four is a biennial event. We 794 00:37:02,600 --> 00:37:05,120 Speaker 11: do it every other year. It benefits the Malcolm Prey 795 00:37:05,160 --> 00:37:08,319 Speaker 11: Achievement Center in Bedford, New York. Malcolm Pray was one 796 00:37:08,320 --> 00:37:11,160 Speaker 11: of the first Porscha Outy Volkswagen dealers in the United States. 797 00:37:11,160 --> 00:37:14,320 Speaker 11: In Greenwich. We do great things for kids there, teaching 798 00:37:14,320 --> 00:37:18,640 Speaker 11: them entrepreneurial pursuits and enlightening them to new pursuits. And 799 00:37:18,800 --> 00:37:23,720 Speaker 11: we decided I decided to have a really special collector 800 00:37:23,760 --> 00:37:27,120 Speaker 11: car show, collector car event that would honor Malcolm Pray's 801 00:37:27,160 --> 00:37:30,160 Speaker 11: legacy but also raise money for his charity and awareness. 802 00:37:30,200 --> 00:37:31,360 Speaker 9: When is it. 803 00:37:31,360 --> 00:37:34,359 Speaker 11: It's in September late September every other year, so we're 804 00:37:34,440 --> 00:37:37,680 Speaker 11: September twenty first, twenty twenty five, and you can go 805 00:37:37,719 --> 00:37:39,600 Speaker 11: to the website Turtleinvitational dot com. 806 00:37:39,600 --> 00:37:40,560 Speaker 9: There's more info there. 807 00:37:40,640 --> 00:37:42,880 Speaker 2: Okay, I know a couple of the Sweeney offspring that 808 00:37:42,880 --> 00:37:44,239 Speaker 2: would be interested in that. I got a couple of 809 00:37:44,239 --> 00:37:46,480 Speaker 2: car Yeah, he's very cool, my offspring. Yeah, that's what 810 00:37:46,480 --> 00:37:48,759 Speaker 2: happens when you spend a lot of time in Carmel, California. 811 00:37:48,800 --> 00:37:50,919 Speaker 2: Philip Richter, thank you so much for joining us. Philip Rictor, 812 00:37:50,960 --> 00:37:53,640 Speaker 2: he's a president hollow Brook Wealth Management, joining us live 813 00:37:53,680 --> 00:37:55,800 Speaker 2: here in our Bloomberg Interactive Broker Studio. 814 00:37:57,120 --> 00:38:00,239 Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can 815 00:38:00,280 --> 00:38:04,000 Speaker 1: subscribe and listen to interviews at Apple Podcasts or whatever 816 00:38:04,080 --> 00:38:07,800 Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on Twitter 817 00:38:08,000 --> 00:38:09,919 Speaker 1: at Matt Miller nineteen seventy three. 818 00:38:10,400 --> 00:38:11,240 Speaker 3: And I'm Fall Sweeney. 819 00:38:11,280 --> 00:38:13,920 Speaker 2: I'm on Twitter at pt Sweeney. Before the podcast, you 820 00:38:13,920 --> 00:38:17,319 Speaker 2: can always catch us worldwide at Bloomberg Radio