WEBVTT - Bloomberg Businessweek Weekend - February 8th, 2020 0:00:02.520 --> 0:00:06.240 This is Bloomberg Business Week from Bloomberg Radio. Hi, I'm 0:00:06.320 --> 0:00:08.600 Jason Kelley and I'm Carol Masser. Welcome to the weekend 0:00:08.720 --> 0:00:11.480 edition of Bloomberg Business Week. Over the next couple of hours, 0:00:11.480 --> 0:00:13.240 we'll bring you news of the week, insights from the 0:00:13.280 --> 0:00:15.880 magazine and more. And safe to say, Jason, that the 0:00:15.880 --> 0:00:17.439 big story. I mean, there was a lot going on 0:00:17.560 --> 0:00:20.520 this week, no doubt about it, between the impeachment and 0:00:20.560 --> 0:00:23.520 of course state of the Union, but the virus was 0:00:23.600 --> 0:00:26.440 definitely front and center the whole world looking at it. Well, 0:00:26.480 --> 0:00:29.479 and not to mention the Iowa Caucuses, which we thought, okay, 0:00:29.520 --> 0:00:32.640 that'll give us some clarity, it gave us exactly the opposite. 0:00:32.680 --> 0:00:34.680 And coming up, I was gonna say, if there was 0:00:34.720 --> 0:00:37.200 a theme this week, it was uncertainty on so many 0:00:37.240 --> 0:00:39.840 different levels, and that really played out in the magazine 0:00:39.840 --> 0:00:41.760 and certainly with a lot of conversations we had. So 0:00:41.760 --> 0:00:43.600 we're gonna bring you all of that in the first 0:00:43.600 --> 0:00:45.760 hour and next hour we're gonna bring you highlights from 0:00:45.760 --> 0:00:48.920 our trip last week to the Bloomberg Power Player's Summit 0:00:49.040 --> 0:00:51.320 down in Miami. We're gonna hear from the owner of 0:00:51.320 --> 0:00:53.840 the Buffalo Bills as well as John Skipper. He used 0:00:53.840 --> 0:00:57.160 to run ESPN, now he runs to Zone And now 0:00:57.360 --> 0:01:00.960 this week's cover story, let's understand what's underneath it. This 0:01:01.040 --> 0:01:03.800 is the big story of the week obviously. Here's editor 0:01:04.000 --> 0:01:08.959 Joel weber Man versus microbe and arresting cover to say 0:01:09.000 --> 0:01:10.960 the least, on a really important story. How did you 0:01:11.000 --> 0:01:14.119 get there? Yeah, this was the story of the moment, 0:01:14.200 --> 0:01:17.360 really right, and we've seen it just continue to capture 0:01:17.400 --> 0:01:21.960 attention worldwide as this virus has spread. Our measures have 0:01:22.040 --> 0:01:24.880 been largely adequate so far in terms of containing it, 0:01:24.920 --> 0:01:27.720 you know, and China has been very aggressive and sort 0:01:27.720 --> 0:01:30.800 of quarantining, as have the US. But there's a bigger 0:01:30.880 --> 0:01:33.720 problem here that I think this story really addresses, which 0:01:33.760 --> 0:01:37.480 is we don't have a long term focus around incentivizing 0:01:37.520 --> 0:01:40.800 anyone to deal with these things in a really proactive way. 0:01:40.920 --> 0:01:43.960 It's always fire, fight, fire, fight, fight, or fight, And 0:01:44.040 --> 0:01:48.080 the drugs aren't working and the viruses are becoming more 0:01:48.080 --> 0:01:51.120 prolific and spreading faster. Well, I think that's a really 0:01:51.200 --> 0:01:52.920 and you guys asked the question are we ready for it? 0:01:52.960 --> 0:01:54.960 And it's obviously that we're not, because all of a sudden, 0:01:54.960 --> 0:01:57.760 we are chasing a vaccine, And you do talk about incentives, 0:01:57.760 --> 0:02:00.200 and I think that's a really interesting component to this, 0:02:00.280 --> 0:02:03.880 that the public sector policymakers need to be involved, not 0:02:03.880 --> 0:02:06.520 not just the public sector, but the private sector. Right, 0:02:06.520 --> 0:02:09.480 there's no incentive for a drug maker to put down 0:02:09.480 --> 0:02:12.400 everything it's working on and immediately scramble something in the market, 0:02:12.760 --> 0:02:15.680 especially when you know, the patents become someone of an issue, 0:02:15.680 --> 0:02:17.680 which we saw pop up here with China this week. 0:02:17.960 --> 0:02:20.480 So I think the real question here is like how 0:02:20.600 --> 0:02:23.400 as a society do we deal with this, Like microbes 0:02:23.440 --> 0:02:25.520 aren't going away. They've been with us for a really 0:02:25.560 --> 0:02:28.480 long time. We've actually gotten very good at fighting them. 0:02:28.680 --> 0:02:31.919 But that's a recent phenomenon, you know, polio, that's only 0:02:31.919 --> 0:02:36.840 a hundred your history with our success in that matter, 0:02:37.160 --> 0:02:41.160 and as these things proliferate, we're not ready for it. 0:02:41.280 --> 0:02:43.720 All right, Joe Weber, thank you so much. A really 0:02:43.760 --> 0:02:46.519 powerful look from a number of different angles at this. 0:02:46.760 --> 0:02:48.680 And well, companies are warning that they may be hit. 0:02:48.800 --> 0:02:51.600 It still might be too early to tell. And that 0:02:51.720 --> 0:02:55.040 brings us to this week's remarks. Here's Economics editor Peter coy. 0:02:55.200 --> 0:02:58.720 He wrote those remarks taking a look at the economics 0:02:58.800 --> 0:03:01.480 so far and where we may go. How did you 0:03:01.480 --> 0:03:04.560 get into this? I mean, it's the obvious question, where 0:03:04.639 --> 0:03:07.480 is this going. I'm focusing less on the death toll, 0:03:07.600 --> 0:03:11.080 as serious as that is. That was more the other 0:03:11.120 --> 0:03:14.880 story in the package, more in the economic consequences. So 0:03:15.120 --> 0:03:17.280 the surprising thing is if you talk to people at 0:03:17.280 --> 0:03:22.520 Bloomberg Economics, people like Tom Rolick, they're saying the outcome 0:03:22.680 --> 0:03:26.639 is likely to be fairly modest. So they're saying that 0:03:26.760 --> 0:03:31.600 they predict that for the full year, China's GDP should 0:03:31.600 --> 0:03:34.560 go about five point seven, which only two tenths of 0:03:34.600 --> 0:03:37.320 a percentage point less than they had predicted before the 0:03:37.360 --> 0:03:40.720 outbreak of the virus. And that's in their baseline scenario. 0:03:41.080 --> 0:03:43.080 If things are a little worse, let's say they can't 0:03:43.080 --> 0:03:47.040 contain it, they're there their worst not quite worst case 0:03:47.040 --> 0:03:49.880 in theari, but they're somewhat worse. Scenario is that contained 0:03:49.880 --> 0:03:53.280 in the second quarter, that'd be five point six GDP 0:03:53.360 --> 0:03:55.680 growth for the years old. So what they're predicting is 0:03:55.720 --> 0:03:57.880 that this will be contained and then there'll be a 0:03:58.000 --> 0:04:01.600 v shaped recovery, downs deeply and then right back up again. 0:04:01.760 --> 0:04:04.680 But I feel like the conversation initially was like you know, 0:04:05.040 --> 0:04:06.680 this might just be a little bit of I'm a blip, 0:04:06.720 --> 0:04:08.440 but I feel like it's turned a little bit Peter 0:04:08.520 --> 0:04:10.880 to what we don't know, what we don't know kind 0:04:10.880 --> 0:04:13.040 of thing. There's still a lot of questions out there. 0:04:13.080 --> 0:04:16.080 There are certainly a lot of questions, and Tom Raleck 0:04:16.160 --> 0:04:19.000 and team are the first to admit that things could 0:04:19.000 --> 0:04:21.760 turn out differently. You know, if you're an economist, you 0:04:21.880 --> 0:04:23.880 kind of got to go with what you have at 0:04:23.880 --> 0:04:25.599 the time, and that's what they've come up with. But 0:04:26.000 --> 0:04:28.640 as my story gets into there are a lot of 0:04:28.640 --> 0:04:32.720 ways in which this could turn really sour, and the 0:04:32.800 --> 0:04:37.120 obvious one is that the virus is less containable than predicted. 0:04:37.720 --> 0:04:43.440 So far, we've seen spreading to dozens of countries already 0:04:43.520 --> 0:04:46.880 deaths outside of China. China, of course itself is by 0:04:46.880 --> 0:04:50.839 far the worst hit, especially Hubei Province and Wuhan, but 0:04:51.080 --> 0:04:56.080 we're seeing cases Europe, Asia and uh of course North 0:04:56.120 --> 0:04:58.159 American United States well. And one of the things to 0:04:58.240 --> 0:05:00.599 the point of the unknown unknowns is is even in 0:05:00.680 --> 0:05:04.159 countries like Kimbodi and the Philippines, they've essentially been saying, 0:05:04.160 --> 0:05:06.640 you know, it's not a big deal, and yet they're 0:05:06.680 --> 0:05:10.360 just maybe cases. We don't know. That's that's really scary 0:05:10.440 --> 0:05:13.320 because you know, certainly the United States, Western Europe have 0:05:13.440 --> 0:05:17.160 highly sophisticated technology for monitoring and testing. Some of these 0:05:17.160 --> 0:05:22.200 countries don't. And so China is special in that it 0:05:22.320 --> 0:05:26.920 has uh the worst outbreak, but also the ability to 0:05:26.960 --> 0:05:31.200 pose draconian restrictions on its own population, a lot of 0:05:31.320 --> 0:05:34.279 shut this thing down. You go to another country with 0:05:34.360 --> 0:05:38.880 a weak health public health infrastructure and a lack of 0:05:38.960 --> 0:05:43.080 that ability, and you can easily imagine the disease raging 0:05:43.120 --> 0:05:45.640 out of control. I also think once we hopefully get 0:05:45.680 --> 0:05:49.640 beyond this right and new cases and hopefully it's it's 0:05:49.760 --> 0:05:53.800 um minimal, you know, ultimately uh, and that the economic 0:05:53.839 --> 0:05:56.279 impact is reduced as well. But I do wonder about, 0:05:56.360 --> 0:05:58.680 as you say, kind of the long term consequences on 0:05:58.680 --> 0:06:01.320 the relationship between US. Funny, we've had some US officials 0:06:01.320 --> 0:06:05.279 make some comments that certainly feel like they're well see. 0:06:05.360 --> 0:06:09.440 Of course, the chi America, the tight union between the 0:06:09.520 --> 0:06:12.240 China and the United States, which benefited both countries, is 0:06:12.680 --> 0:06:18.800 becoming apart already over US concern about job loss, the 0:06:19.240 --> 0:06:24.719 heightening military contest between the two countries. Trump's trade war 0:06:24.800 --> 0:06:28.360 and so on. This becomes yet another thing that would 0:06:28.360 --> 0:06:31.960 tend to drive these two world's two largest, most powerful 0:06:32.000 --> 0:06:37.000 economies apart. And you can imagine that lasting even after 0:06:37.160 --> 0:06:40.520 this virus dies down. And that's Economics editor Peter Coy 0:06:40.520 --> 0:06:43.640 a very smart take because aside from the obvious human 0:06:43.680 --> 0:06:48.720 tragedy here, the economic implications are still very much unknown, right, 0:06:48.720 --> 0:06:51.000 And that's exactly what he gets into. Despite people putting 0:06:51.000 --> 0:06:53.440 out numbers and projections, you have to remember that there 0:06:53.520 --> 0:06:56.760 is still so many things that could make it a 0:06:56.839 --> 0:07:00.280 very different outcome. The comments heard around the financial world 0:07:00.320 --> 0:07:03.040 it happened late last year, saying it one billionaire someone 0:07:03.080 --> 0:07:06.240 who was among the most successful money managers in America, Jason. 0:07:06.240 --> 0:07:08.480 We're talking about Ken Fisher, and he took a big 0:07:08.560 --> 0:07:12.520 hit as a result, big institutional investors pulling their money. 0:07:13.000 --> 0:07:17.680 And yet here he is grinding on the retail machine. 0:07:18.040 --> 0:07:21.360 And Sabrina Wilmer and Jena Lauren, they describe everything that's 0:07:21.400 --> 0:07:23.600 happened and described the state of play and where it 0:07:23.640 --> 0:07:26.080 may go from here. Sabrina's here with this in New York, 0:07:26.240 --> 0:07:29.640 phenomenal story. You have been following this from the beginning, 0:07:29.720 --> 0:07:32.560 really from those first comments remind us how we got here. 0:07:33.120 --> 0:07:37.080 In October, Ken Fisher spoke out of San Francisco conference 0:07:37.600 --> 0:07:43.200 and he made some sexual remarks which caused a person 0:07:43.240 --> 0:07:47.240 to go on to Twitter and express how upset he 0:07:47.440 --> 0:07:51.440 was about the remarks, and then other people came forward 0:07:52.240 --> 0:07:56.280 and it just caused a lot of anger among people. Um. 0:07:56.400 --> 0:08:00.680 And then I actually interviewed him shortly after that, and 0:08:00.840 --> 0:08:04.440 he said he said those types of words, um, but 0:08:04.520 --> 0:08:07.880 they were taken out of context, and that he said 0:08:08.040 --> 0:08:11.960 similar things in the past many times and nobody questioned it. 0:08:12.600 --> 0:08:16.520 And then following that, some of some big institutions started 0:08:16.560 --> 0:08:20.080 pulling money, like Goldman, Sacks and Fidelity, and about four 0:08:20.120 --> 0:08:23.240 billion left the firm in a month. But you know, 0:08:23.520 --> 0:08:25.400 I gotta tell you what blew my mind to. Yes, 0:08:25.440 --> 0:08:27.760 four billion dollars sounds like a lot, but from what 0:08:27.800 --> 0:08:31.600 I understand, he still manages about billion dollars. He still 0:08:31.640 --> 0:08:34.520 manages a lot of money, and assets have actually grown 0:08:34.640 --> 0:08:39.000 since the crisis, and part of that has to do 0:08:39.080 --> 0:08:42.280 with the stock market, and he puts a lot of 0:08:42.320 --> 0:08:47.640 his retirees mostly in stocks, so that helps. And I mean, 0:08:47.679 --> 0:08:50.080 this story kind of takes a step back and looks 0:08:50.200 --> 0:08:54.839 at how he built his business. He's quadrupled assets since 0:08:55.160 --> 0:08:57.720 two thousand nine, and a lot of that has to 0:08:57.800 --> 0:09:01.280 do with his marketing and sales operate. Step back, though, 0:09:01.480 --> 0:09:04.720 A lot of who invests with him, though, are individual investors. 0:09:04.720 --> 0:09:07.280 Like that's mind everybody that even though a Goldman and 0:09:07.320 --> 0:09:10.200 a Fidelity pulled out some money, the bulk of his 0:09:10.240 --> 0:09:14.280 investments at a hundred and twenty one billion is individual investors, right, 0:09:14.880 --> 0:09:19.800 It's mostly individuals across the country. And I interviewed some 0:09:19.880 --> 0:09:22.679 of them for the story and asked them what they 0:09:22.720 --> 0:09:26.000 thought about Ken's remarks, and one woman that I quoted 0:09:26.240 --> 0:09:28.880 said she doesn't really mind what he said, and she 0:09:28.960 --> 0:09:32.360 thought that political correctness has gone too far, and what 0:09:32.520 --> 0:09:35.240 she cares about is how her portfolio is doing, and 0:09:35.320 --> 0:09:38.439 she's pleased with the performance in the portfolio. So you 0:09:38.480 --> 0:09:43.280 went out to see Ken and some attorneys out in 0:09:43.600 --> 0:09:46.560 California and take us there, because even the way you 0:09:46.640 --> 0:09:51.200 described the scene is really really well done because it 0:09:51.440 --> 0:09:57.479 speaks to essentially what he's very successfully built over decades. Yeah, 0:09:57.679 --> 0:10:01.440 I mean, he's very different from anybody else in finance, 0:10:01.880 --> 0:10:06.640 and his whole thing is to basically try to get 0:10:06.679 --> 0:10:10.560 away from Wall Street and he tells customers, you know, 0:10:10.679 --> 0:10:14.480 you can't trust you can't trust brokers and hit. This 0:10:14.600 --> 0:10:17.160 location that I went to is as far away from 0:10:17.160 --> 0:10:20.680 Wall Street as you can get. I took an uber 0:10:21.440 --> 0:10:25.280 all the way up this you know steep mountain with 0:10:25.679 --> 0:10:28.600 you know redwoods, and you could see half Moon Baye 0:10:28.600 --> 0:10:31.640 from there. It was beautiful, but it's not the place 0:10:31.679 --> 0:10:34.920 that you would imagine, you know, a multibillion dollar asset 0:10:34.960 --> 0:10:37.959 manager UM running their operations like it's sort of a 0:10:38.000 --> 0:10:43.920 compound on the Yeah, And when I got there, I 0:10:43.920 --> 0:10:46.720 thought maybe I was in the wrong spot because I 0:10:46.760 --> 0:10:51.920 just saw this sign saying Country Store and then the 0:10:52.120 --> 0:10:55.040 it's it's kind of the office is set back where 0:10:55.080 --> 0:10:57.600 you can't really see it from the street and there's 0:10:57.640 --> 0:11:01.480 really nothing around you don't you just hear tweeting? Uh? 0:11:01.679 --> 0:11:04.800 So when I went in there, I mean, it's beautiful views. 0:11:05.080 --> 0:11:07.719 You see this bowl in a bear and bear statue 0:11:07.960 --> 0:11:10.920 out on the patio. UM, But that's not where you 0:11:10.960 --> 0:11:14.320 were in the right place, yes, but that yeah, that's 0:11:14.480 --> 0:11:18.080 that's where he started. Uh you know, that's where his 0:11:18.120 --> 0:11:22.000 first headquarters was UM and he actually lived in that 0:11:22.120 --> 0:11:24.920 office with his family. So what I think is cool 0:11:25.040 --> 0:11:27.320 is you got some time with him, and I'm curious 0:11:27.320 --> 0:11:30.600 about what he had to say about everything that happened. 0:11:31.160 --> 0:11:33.760 And you know, I think there's been some concerns about 0:11:33.760 --> 0:11:35.520 culture at his company as well. So what did he 0:11:35.559 --> 0:11:37.240 have to say about all of this? Because he really 0:11:37.520 --> 0:11:39.400 I think you're right in saying he hearkens back to 0:11:39.440 --> 0:11:41.720 a different era in Wall Street. I'm not forgiving it. 0:11:41.760 --> 0:11:44.559 I'm just saying a different time, right, I mean, he 0:11:44.559 --> 0:11:47.240 he apologized a number of times for what he said. 0:11:47.320 --> 0:11:51.319 He still said that his words were taken out of context. 0:11:51.640 --> 0:11:54.959 He also said that the media was in part to 0:11:55.040 --> 0:11:58.240 blame for some of these outflows. He said that some 0:11:58.400 --> 0:12:01.160 of the institutions probably wouldn't have pulled money if it 0:12:01.200 --> 0:12:05.720 wasn't for pressure from the press. Um. In terms of 0:12:05.920 --> 0:12:10.760 his culture, he said that he uh, you know, he 0:12:10.760 --> 0:12:16.160 he disputes the boys club type description. And I did 0:12:16.240 --> 0:12:20.040 interview a number of employees who described this sort of 0:12:20.080 --> 0:12:24.040 boys club And you know how Ken's words were part 0:12:24.040 --> 0:12:28.280 of this macho environment, particularly with some of the salespeople 0:12:28.360 --> 0:12:31.600 to count executives, and he he hires these people right 0:12:31.640 --> 0:12:36.720 out of college, and from my interviews, these people had 0:12:37.240 --> 0:12:40.679 a lot of like a frat boy type, you know, attitude, 0:12:40.720 --> 0:12:43.440 and you can kind of see that in my story 0:12:43.640 --> 0:12:47.959 through some email exchanges in one incident. Well, and it's 0:12:48.000 --> 0:12:51.040 interesting too because you do really go deep into this 0:12:51.160 --> 0:12:54.720 culture that is, as Carol says, sort of hearkens back 0:12:54.800 --> 0:12:59.440 to this very you know, almost cinematic like cell Cell Cell. 0:12:59.480 --> 0:13:00.599 I mean, I think do you have a line in 0:13:00.640 --> 0:13:02.880 the story which is great because it really evoked it 0:13:02.960 --> 0:13:05.880 for me. It's like a David Mammott play, you know, 0:13:06.000 --> 0:13:09.120 just like always be selling, you know, two plus calls 0:13:09.520 --> 0:13:13.040 a day, and it has been, to be fair an 0:13:13.040 --> 0:13:17.040 incredibly successful model. You know, this sort of blanket marketing 0:13:17.040 --> 0:13:19.920 approach has won a lot of customers. That's right. I 0:13:19.960 --> 0:13:24.120 mean it's it's a big part of his whole business. 0:13:24.200 --> 0:13:28.000 I mean, Ken Fisher came back and basically said, well, 0:13:28.280 --> 0:13:31.120 there's more to my business than just sales. It's about 0:13:31.120 --> 0:13:34.440 the customer service. And you do hear about that from 0:13:34.480 --> 0:13:37.680 some of his customers just they love the luncheons that 0:13:37.720 --> 0:13:41.320 he puts on. And um, so he's talking about how 0:13:41.880 --> 0:13:45.120 it's and then he talks about his performances right well, 0:13:45.400 --> 0:13:47.360 and well and he sorry, I just want to follow 0:13:47.400 --> 0:13:49.480 up on that because you know, part of what he's 0:13:49.520 --> 0:13:54.080 selling is a fairly high fee product in a world 0:13:54.440 --> 0:13:57.800 that's getting closer and closer to free for money management. 0:13:57.800 --> 0:14:01.000 So it's anachronistic in some way. That's right, because you 0:14:01.000 --> 0:14:03.880 know he is an act even though he disputes us, 0:14:03.920 --> 0:14:08.000 he is an active manager. They pick stocks, but he 0:14:08.040 --> 0:14:11.160 says that, oh, this is what we do different We 0:14:11.160 --> 0:14:15.960 we provide service to and advice unlike other companies. So 0:14:16.040 --> 0:14:21.080 that's kind of there his argument um, but it is 0:14:21.240 --> 0:14:24.160 kind of I think it is based on my reporting. 0:14:24.720 --> 0:14:28.760 Most of this has been driven by marketing, because he's 0:14:28.760 --> 0:14:32.360 written all these books too, and you know you kind 0:14:32.400 --> 0:14:35.800 of recognize him from the ads that he puts out 0:14:35.840 --> 0:14:40.479 bashing annuities, and to be fair, I think we Bloomberg 0:14:41.000 --> 0:14:43.960 at different times have certainly run his ads on our 0:14:44.000 --> 0:14:48.360 media properties and as a guest as well. So let's 0:14:48.360 --> 0:14:50.120 get to it. I mean, that's a lot of money 0:14:50.160 --> 0:14:52.960 to have under management, and it hasn't got away, even 0:14:53.000 --> 0:14:56.000 though there's some controversy over those comments. There's been some 0:14:56.080 --> 0:15:00.760 charges about how money is managed. What has been his performance? 0:15:00.800 --> 0:15:03.520 What kind of performance returns have we seen from him? Well, 0:15:03.560 --> 0:15:07.920 it hasn't been spectacular. If you look at the ten 0:15:08.040 --> 0:15:12.160 year performance he does. They have a specific benchmark that 0:15:12.280 --> 0:15:14.600 they said, it's not the SMP it's m s c 0:15:14.760 --> 0:15:19.520 I Global Index, And on a tenure basis, it actually 0:15:19.560 --> 0:15:23.600 misses the benchmark. Three and five year basis, it beats 0:15:23.600 --> 0:15:27.640 it by one percentage point um. The shorter term it's 0:15:27.680 --> 0:15:30.400 been beating, but longer term it has not. Yes for 0:15:30.520 --> 0:15:33.160 the ten year, right, so it's kind of mixed. So 0:15:33.200 --> 0:15:34.880 what was your takeaway from all this? I mean, you've 0:15:34.960 --> 0:15:38.440 you've followed it literally from from the beginning, You've covered 0:15:38.480 --> 0:15:42.360 the money management industry for for a long time. As 0:15:42.400 --> 0:15:46.360 you finished this story up, what do you make of it? 0:15:46.360 --> 0:15:52.280 It was an unusual process, um, And I've yeah, I've 0:15:52.320 --> 0:15:57.320 never kind of encountered this situation before. Um And I mean, 0:15:57.360 --> 0:16:00.080 this is kind of a shift in financial sort this 0:16:00.200 --> 0:16:05.720 says where people are starting to speak out about uh, 0:16:05.760 --> 0:16:10.880 you know, sort of uh you know language, sexual language. 0:16:10.920 --> 0:16:13.720 And I think this marks like a maybe a turning 0:16:13.760 --> 0:16:19.320 point um for the financial services industry where people are 0:16:19.320 --> 0:16:23.560 held accountable. So that's part of what I learned. It 0:16:23.640 --> 0:16:28.680 was just a very interesting process. Yet he's still very successful, 0:16:28.800 --> 0:16:32.680 still managing a lot of money. I mean, that's that's right. 0:16:33.120 --> 0:16:37.400 I mean, I I think most of the outflows have 0:16:37.440 --> 0:16:42.360 already happened, so it's really yet to be seen how 0:16:42.400 --> 0:16:45.800 the company internally is going to change. He is vowed 0:16:45.920 --> 0:16:49.880 not to say these types of things ever again. Um, 0:16:49.960 --> 0:16:54.280 they've started Diversity and Inclusion task Force and that's just 0:16:54.360 --> 0:16:56.560 starting to get off the ground, So it's yet to 0:16:56.560 --> 0:16:58.560 be seen what's going to happen with that. You know, 0:16:58.560 --> 0:17:00.480 one of the things that struck me, you know, knowing 0:17:00.520 --> 0:17:03.320 and following your work very closely over the years, Sabrina, 0:17:03.480 --> 0:17:06.320 is that you know, you have a keen understanding two 0:17:06.320 --> 0:17:09.520 of the difference between institutional and individual behavior, and that 0:17:09.560 --> 0:17:12.240 does seem to be at the core of this. Right, 0:17:12.320 --> 0:17:15.480 you know that institutions are feeling more and more pressure, 0:17:16.160 --> 0:17:19.080 public pressure to act in a certain way, and yet 0:17:19.119 --> 0:17:22.080 you have individuals in this case, it feels like who 0:17:22.119 --> 0:17:25.600 are essentially saying, listen, if the guy's making me money. 0:17:26.520 --> 0:17:29.080 You know, it feels almost like a political statement to 0:17:29.119 --> 0:17:31.800 some extent, Right, that's right. And if you go on 0:17:31.840 --> 0:17:35.040 social media after this, you can see the divide on this. 0:17:35.640 --> 0:17:39.080 I mean, some people reacted saying, oh, what Ken's side 0:17:39.160 --> 0:17:43.320 is wrong? And other people were like, this is political 0:17:43.320 --> 0:17:45.720 correctness gone too far. So it was a very it 0:17:45.800 --> 0:17:48.920 is a political divide, right. That's Sabrina Wilmer and Jason. 0:17:48.920 --> 0:17:51.080 What I love about this she's been covering this story 0:17:51.160 --> 0:17:53.520 since last ball when ken Fisher made those comments that 0:17:53.560 --> 0:17:57.479 really were heard throughout the financial world, and looks at 0:17:57.480 --> 0:18:00.360 the repercussions. What I love is she's met with the man. 0:18:00.480 --> 0:18:02.840 She's talked with Ken Fisher, she went to his company 0:18:02.840 --> 0:18:05.760 and really digs into who he is, his background, and 0:18:05.800 --> 0:18:07.919 also takes a look at the company culture well, and 0:18:07.960 --> 0:18:11.600 that company culture and really just the relatively novel way 0:18:11.640 --> 0:18:14.359 that they have marketed. That's what's gotten them to a 0:18:14.440 --> 0:18:18.399 hundred plus billion dollars and there are some questions as 0:18:18.440 --> 0:18:20.639 to how it all works, and so much of that, 0:18:20.720 --> 0:18:23.080 of course is individual investors were not We're talking about 0:18:23.080 --> 0:18:26.720 the retail community, that's right, not the institutional community. This week, 0:18:26.920 --> 0:18:30.280 caucus chaos, a technical glitch in Iowa up ended the 0:18:30.359 --> 0:18:35.320 opening act of the Democratic presidential primary. Plus China coronavirus 0:18:35.359 --> 0:18:39.440 outbreak has triggered an unprecedented travel band to and from 0:18:39.800 --> 0:18:43.320 the world's second largest economy. We break down the potential 0:18:43.359 --> 0:18:45.840 impact on global markets only one of our big stories 0:18:45.880 --> 0:18:48.920 this week and Business Week Talks, we speak with Verizon 0:18:48.960 --> 0:18:52.639 CEO Hans Vestberg on the company's partnerships with Apple Music 0:18:52.680 --> 0:18:55.960 and Disney Plus and Amazon. First up, the caucus. Here's 0:18:56.000 --> 0:18:58.240 Josh Green. He was there and now he's back in 0:18:58.359 --> 0:19:00.720 d C. That's where he joins us. He writes on 0:19:00.800 --> 0:19:04.480 the mess that Iowa made. The ramifications of this are 0:19:04.560 --> 0:19:07.919 going to be widespread. They already are in many ways. Josh, 0:19:08.119 --> 0:19:11.560 what is going on? Uh? Well, nobody really knows. I 0:19:11.560 --> 0:19:15.240 mean that the Iowa caucuses, which traditionally, uh you know, 0:19:15.359 --> 0:19:19.720 shape the field, winnow the lesser candidates and deliver two 0:19:19.800 --> 0:19:24.040 or three winners who typically go on to become the nominee. Instead, 0:19:24.119 --> 0:19:27.800 this year, the entire process broke down on caucus day. Uh. 0:19:27.840 --> 0:19:30.040 There was a faulty app, a bug in the code. 0:19:30.080 --> 0:19:34.240 It's days later. Uh, you know, we're just now getting 0:19:35.040 --> 0:19:39.000 what looked like full election results. And on top of 0:19:39.040 --> 0:19:41.840 all that, the takeaway is a virtual tie between a 0:19:41.880 --> 0:19:45.000 modern and radical uh, somebody who draws older voters and 0:19:45.040 --> 0:19:49.880 younger voters. So essentially, the Iowa caucus settled nothing at all. Uh, 0:19:49.920 --> 0:19:52.199 And now the whole party moves on to New Hampshire. Well, 0:19:52.200 --> 0:19:54.040 they move on to New Hampshire, but they also missed 0:19:54.040 --> 0:19:57.240 an opportunity, right, Josh, Because um Iowa was often seen 0:19:57.280 --> 0:20:00.240 as a launching pad, whether it's for fundraising, with it's 0:20:00.240 --> 0:20:02.520 for media coverage. I mean this is an important or 0:20:02.600 --> 0:20:06.320 usually an important first step. Yeah, that's right. I mean, look, 0:20:06.359 --> 0:20:10.440 the party really really screwed up here. I mean, typically 0:20:10.520 --> 0:20:13.960 the winner of the Iowa caucus gets a bump in 0:20:14.119 --> 0:20:18.359 national polls of about twelve percent. You get glowing media coverage. 0:20:19.040 --> 0:20:21.600 Very often, you get millions and millions of dollars as 0:20:21.600 --> 0:20:25.160 a candidate, and a lot of candidates, especially those who 0:20:25.280 --> 0:20:28.800 don't have a big fundraising apparatus, count on that in 0:20:28.920 --> 0:20:31.119 order to be able to to to move forward and 0:20:31.160 --> 0:20:33.960 have a viable path to the nomination. So if you're 0:20:34.080 --> 0:20:37.800 someone like Pete Buddha Judge who doesn't have a ton 0:20:37.840 --> 0:20:39.920 of money but but looks as if he performed well 0:20:39.920 --> 0:20:42.199 in this campaign, if he'd gotten a clean win, he 0:20:42.240 --> 0:20:44.119 could have been that guy rocketing to the top of 0:20:44.160 --> 0:20:47.040 the polls. Bernie Sanders, if he had gotten a clean win, 0:20:47.400 --> 0:20:49.879 you know, he could have really pushed aside other people 0:20:50.040 --> 0:20:53.119 in the field and set an emerging narrative that the 0:20:53.160 --> 0:20:56.880 Democratic race is taking a big shift to the left instead. 0:20:57.200 --> 0:21:00.320 It's still not clear exactly who won a functional it 0:21:00.440 --> 0:21:03.159 was a tie, but because there weren't clear results, it 0:21:03.200 --> 0:21:06.320 also didn't force out some of the weaker candidates who underperformed, 0:21:06.359 --> 0:21:09.440 like Amy Klobascher, Joe Biden Well and Josh I want 0:21:09.440 --> 0:21:12.080 to take you back to the screw up itself because 0:21:12.480 --> 0:21:16.720 you documented an effort by the Democratic Party last year 0:21:16.880 --> 0:21:21.640 to really engage in a much more sophisticated technical, high 0:21:21.720 --> 0:21:25.199 tech way that was underneath all of this tell us 0:21:25.240 --> 0:21:29.480 about that. Well, you know, basically both parties are looking 0:21:29.520 --> 0:21:32.359 to modernize and Democrats have invested a lot of money 0:21:32.440 --> 0:21:35.840 and trying to improve their technology. The the breakdown in 0:21:35.880 --> 0:21:39.240 the caucus process stem from an app, uh and I 0:21:39.280 --> 0:21:43.000 got an exclusive interview with the CEO of Shadow Inc. 0:21:43.119 --> 0:21:46.280 Which is the company that built the faulty app, and 0:21:46.320 --> 0:21:49.960 got him to explain to us essentially what happened on 0:21:50.000 --> 0:21:52.920 this nightmare caucus day, how it broke down, and where 0:21:52.960 --> 0:21:56.680 that left Democrats. But where it left Democrats is looking 0:21:56.800 --> 0:21:59.960 very badly. I mean, the process failed in the fact 0:22:00.000 --> 0:22:02.920 act that they can't run a caucus when they're trying 0:22:02.920 --> 0:22:04.879 to make an argument that they should be given the 0:22:04.920 --> 0:22:08.000 reins to the country and Alice, Donald Trump isn't a 0:22:08.000 --> 0:22:10.560 good look for Democrats and as I said, does nothing 0:22:10.640 --> 0:22:13.840 to clarify who the eventual nominee could be. We might 0:22:13.880 --> 0:22:17.440 even be headed for a contested convention, which would be 0:22:18.000 --> 0:22:21.800 unprecedented in modern American politics. And that's Josh Green always 0:22:21.800 --> 0:22:24.159 a treat to catch up with him. He is exactly 0:22:24.160 --> 0:22:27.960 who we wanted on the ground in Iowa, especially when 0:22:28.000 --> 0:22:30.480 things went awry, and you were the first to really 0:22:30.560 --> 0:22:34.480 connect the dots, and he certainly connected the dots while 0:22:34.520 --> 0:22:37.520 he was out there, because this was meant to be 0:22:37.640 --> 0:22:42.600 this amazing evolution, almost revolution in the Democratic Party using 0:22:42.640 --> 0:22:45.640 technology in a way that the Trump campaign did back 0:22:45.680 --> 0:22:49.480