1 00:00:02,640 --> 00:00:05,320 Speaker 1: Welcome to the Bloomberg Penel Podcast. I'm Paul swing you, 2 00:00:05,360 --> 00:00:07,680 Speaker 1: along with my co host Lisa Brahma wits each day 3 00:00:07,720 --> 00:00:10,240 Speaker 1: we bring you the most noteworthy and useful interviews for 4 00:00:10,280 --> 00:00:12,520 Speaker 1: you and your money, whether at the grocery store or 5 00:00:12,560 --> 00:00:15,480 Speaker 1: the trading floor. Find a Bloomberg Penil podcast on Apple 6 00:00:15,520 --> 00:00:17,959 Speaker 1: podcast or wherever you listen to podcasts, as well as 7 00:00:17,960 --> 00:00:21,120 Speaker 1: at Bloomberg dot com. Yeah, we're broadcasting live from the 8 00:00:21,120 --> 00:00:24,479 Speaker 1: offices of the Texas Investment Managers here in the back 9 00:00:24,520 --> 00:00:27,160 Speaker 1: bay of Boston. Got a great view. It's a beautiful 10 00:00:27,200 --> 00:00:30,160 Speaker 1: day here. Look at the markets. Obviously they've been whipsawed 11 00:00:30,240 --> 00:00:32,600 Speaker 1: by trade. It's all about trade. It seems to move 12 00:00:32,640 --> 00:00:35,440 Speaker 1: every single day. The market is now focused on December fifteenth, 13 00:00:35,479 --> 00:00:38,600 Speaker 1: when new US tariffs on Chinese imports are scheduled to 14 00:00:38,640 --> 00:00:40,720 Speaker 1: take effect. To get a sense of what this means 15 00:00:40,880 --> 00:00:43,520 Speaker 1: near term, we welcome David Lafferty. He's the chief market 16 00:00:43,600 --> 00:00:46,879 Speaker 1: strategist for in the Texas Investment Managers. And get this, 17 00:00:46,960 --> 00:00:50,559 Speaker 1: they have one trillion dollars under management, so I think 18 00:00:50,600 --> 00:00:53,159 Speaker 1: they have a fuel for the market. So David, thanks 19 00:00:53,200 --> 00:00:54,760 Speaker 1: so much for having us here at your office. Is 20 00:00:54,880 --> 00:00:56,920 Speaker 1: we appreciate it. We've got a little audience here, people 21 00:00:56,920 --> 00:00:59,000 Speaker 1: coming here to see what you have to say. So 22 00:00:59,040 --> 00:01:01,760 Speaker 1: how do you guys, pressure? Yeah, no pressure, no pressure. 23 00:01:02,000 --> 00:01:05,520 Speaker 1: How do you guys deal with the volatility? That is, 24 00:01:05,680 --> 00:01:07,960 Speaker 1: as we learn from an earlier guest, is hard to measure, 25 00:01:08,000 --> 00:01:10,080 Speaker 1: It was impossible to measure, and that is about trade 26 00:01:10,080 --> 00:01:12,080 Speaker 1: and tweets about trade and all that type of stuff. 27 00:01:12,160 --> 00:01:15,680 Speaker 1: How do you guys position around the uncertainty of trade? Well, 28 00:01:15,720 --> 00:01:17,679 Speaker 1: I think we have a few hallmarks we try to 29 00:01:17,720 --> 00:01:21,440 Speaker 1: fall back on, broadly speaking across our money managers. Uh. 30 00:01:21,520 --> 00:01:24,680 Speaker 1: One is a bit longer horizon. Uh. You know, it 31 00:01:24,720 --> 00:01:26,600 Speaker 1: doesn't matter what the news is, but if you take 32 00:01:26,640 --> 00:01:28,840 Speaker 1: a little bit longer horizon, a lot of this stuff 33 00:01:28,880 --> 00:01:32,279 Speaker 1: turns out to be daily news. Uh, particularly around trade. 34 00:01:32,319 --> 00:01:34,279 Speaker 1: Trade you get a tweet at eight in the morning. 35 00:01:34,840 --> 00:01:37,040 Speaker 1: In terms of how a portfolio is positioned, that could 36 00:01:37,080 --> 00:01:39,160 Speaker 1: be staled by eight thirty in the morning. So we 37 00:01:39,200 --> 00:01:41,720 Speaker 1: don't want our clients running around making a lot of 38 00:01:41,760 --> 00:01:43,760 Speaker 1: tactical changes. And I also think we think a lot 39 00:01:43,800 --> 00:01:47,600 Speaker 1: about valuation. So we know markets move a lot, but 40 00:01:47,680 --> 00:01:50,000 Speaker 1: we do think about where are the cheap assets, where 41 00:01:50,000 --> 00:01:53,960 Speaker 1: the opportunities what's expensive, and that's a bit longer horizon 42 00:01:54,080 --> 00:01:56,400 Speaker 1: kind of idea. So it's not that we don't kind 43 00:01:56,400 --> 00:01:59,520 Speaker 1: of follow the ebbs and flows of the market, but 44 00:01:59,640 --> 00:02:02,200 Speaker 1: we don't want to take every daily little tick in 45 00:02:02,240 --> 00:02:05,080 Speaker 1: the markets too too seriously. And I think that's a 46 00:02:05,120 --> 00:02:08,040 Speaker 1: trend that you'd see across a lot of our products 47 00:02:08,040 --> 00:02:10,600 Speaker 1: and our money managers. A lot of the valuation today, 48 00:02:10,639 --> 00:02:14,359 Speaker 1: the elevated valuation in equities has been predicated on this 49 00:02:14,560 --> 00:02:18,519 Speaker 1: ongoing easing and easier cycle of central banks around the world, 50 00:02:18,600 --> 00:02:20,920 Speaker 1: and we've seen that globally central banks have eased the 51 00:02:21,000 --> 00:02:25,080 Speaker 1: most this year since the financial crisis. Do you think 52 00:02:25,240 --> 00:02:28,560 Speaker 1: that the extra boost that that has given equity valuations 53 00:02:28,840 --> 00:02:34,280 Speaker 1: can persist into I don't. I've been skeptical and now, 54 00:02:34,320 --> 00:02:36,520 Speaker 1: frankly I've been wrong about that. We wrote about this 55 00:02:36,560 --> 00:02:39,359 Speaker 1: earlier last year. I think the effect, at least in 56 00:02:39,440 --> 00:02:42,639 Speaker 1: the real economy has begun to clearly fade. I don't 57 00:02:42,639 --> 00:02:45,680 Speaker 1: think you get nearly as much credit impetus when you 58 00:02:45,760 --> 00:02:48,840 Speaker 1: go from very low rates to even lower rates. Uh. 59 00:02:48,880 --> 00:02:50,520 Speaker 1: You know, if you're a CEO, if you're in the 60 00:02:50,520 --> 00:02:53,520 Speaker 1: c suite and you didn't borrow last year at absurdly 61 00:02:53,560 --> 00:02:55,680 Speaker 1: low rates. Why are you going to borrow this year 62 00:02:55,720 --> 00:02:58,280 Speaker 1: at even more absurdly low rates. So I think the 63 00:02:58,320 --> 00:03:01,560 Speaker 1: credit impetus begins to al uh And I also think 64 00:03:01,560 --> 00:03:05,520 Speaker 1: in terms of portfolio effect, the idea that buying all 65 00:03:05,560 --> 00:03:09,160 Speaker 1: these assets will gradually raise valuations create kind of a 66 00:03:09,200 --> 00:03:11,840 Speaker 1: wealth effect. People have to remember that most of the 67 00:03:11,919 --> 00:03:14,000 Speaker 1: QUEI was done, at least in the US, was done 68 00:03:14,000 --> 00:03:16,280 Speaker 1: when the S and P was at twelve thirteen times 69 00:03:16,280 --> 00:03:19,800 Speaker 1: earnings were at nineteen times. The European Central banks QUEI 70 00:03:19,919 --> 00:03:23,160 Speaker 1: policy was was largely implemented when we were at ten 71 00:03:23,240 --> 00:03:25,600 Speaker 1: or eleven times earnings, So you get a bump. But 72 00:03:25,680 --> 00:03:29,240 Speaker 1: I think that market effect is fading as time goes by. 73 00:03:29,320 --> 00:03:31,400 Speaker 1: Although some people say that the recent strength that we've 74 00:03:31,440 --> 00:03:34,079 Speaker 1: seen in equities has been driven largely by this three 75 00:03:34,200 --> 00:03:37,080 Speaker 1: hundred billion dollar expansion of the Fed's balance sheet. Do 76 00:03:37,120 --> 00:03:41,040 Speaker 1: you buy that? I don't think so. I really think 77 00:03:41,040 --> 00:03:43,200 Speaker 1: it's been uh so. So, first of all, if you 78 00:03:43,320 --> 00:03:45,120 Speaker 1: if you look at the full bull market, I really 79 00:03:45,560 --> 00:03:47,600 Speaker 1: when I say bull market, I mean off the December 80 00:03:47,640 --> 00:03:50,920 Speaker 1: twenty four lows. You know, we're up twenty eight percent 81 00:03:51,120 --> 00:03:53,560 Speaker 1: year to date in about thirty thirty one off, the 82 00:03:53,960 --> 00:03:57,080 Speaker 1: off the Christmas Eve lows last year. I view the 83 00:03:57,120 --> 00:04:00,480 Speaker 1: first percent of that is just getting back the losses 84 00:04:00,520 --> 00:04:02,800 Speaker 1: that we had in the fourth quarter. Everybody looks at 85 00:04:02,840 --> 00:04:05,880 Speaker 1: this year as if it's this massive bull market, and 86 00:04:05,920 --> 00:04:09,120 Speaker 1: that's really an accident of the calendar. Which really happened 87 00:04:09,200 --> 00:04:12,800 Speaker 1: is the market basically between January one and about April 88 00:04:12,880 --> 00:04:16,040 Speaker 1: thirty rallied huge and since then we're up about five 89 00:04:16,120 --> 00:04:18,240 Speaker 1: or six percent. It's been a nice little run. But 90 00:04:18,279 --> 00:04:21,720 Speaker 1: it's not like the market is skyrocketing. Excuse me. It's 91 00:04:21,720 --> 00:04:24,240 Speaker 1: really just getting back a lot of what was lost earlier. 92 00:04:24,520 --> 00:04:27,080 Speaker 1: So I think there is a monetary effect there, but 93 00:04:27,120 --> 00:04:30,800 Speaker 1: it's probably still the spillover from the FEDS. One. It's 94 00:04:30,839 --> 00:04:34,440 Speaker 1: not that people are looking at the term repo and thinking, hey, 95 00:04:34,560 --> 00:04:36,560 Speaker 1: term repo makes stocks at right by I don't think 96 00:04:36,600 --> 00:04:39,160 Speaker 1: people are doing that kind of math. Okay, well the 97 00:04:39,160 --> 00:04:42,000 Speaker 1: math that people are doing now it's you know, early December, 98 00:04:42,160 --> 00:04:44,919 Speaker 1: people are looking at their outlooks. Everybody on the streets 99 00:04:44,920 --> 00:04:50,000 Speaker 1: publishing the outlooks. How are you guys positioned for I'm 100 00:04:50,000 --> 00:04:51,680 Speaker 1: just kind of thinking about risk. Are you a little 101 00:04:51,680 --> 00:04:53,240 Speaker 1: bit more risk on or maybe a little bit more 102 00:04:53,320 --> 00:04:55,039 Speaker 1: risk off. We'll say a couple of things. The first 103 00:04:55,040 --> 00:04:57,960 Speaker 1: thing is, I'm glad I'm down here doing this interview 104 00:04:58,000 --> 00:05:01,600 Speaker 1: because I'm not upstairs staring at a length page, which 105 00:05:01,680 --> 00:05:03,200 Speaker 1: is what I've been doing and trying to write my 106 00:05:03,240 --> 00:05:08,120 Speaker 1: outlook for the last two weeks. So uh. And it's 107 00:05:08,120 --> 00:05:09,920 Speaker 1: not that you know, we you know people have asked, 108 00:05:10,040 --> 00:05:12,360 Speaker 1: is there's so much uncertainty? I think uncertainty is always 109 00:05:12,400 --> 00:05:15,000 Speaker 1: with us. I don't see the obvious catalyst that we 110 00:05:15,080 --> 00:05:17,359 Speaker 1: like to write about. We love to write about what 111 00:05:17,480 --> 00:05:20,640 Speaker 1: central banks are doing, or that the pace of economic 112 00:05:20,680 --> 00:05:23,360 Speaker 1: growth is radically changing. We don't see central banks doing 113 00:05:23,360 --> 00:05:25,279 Speaker 1: a whole lot in the near term. We don't see 114 00:05:25,279 --> 00:05:27,640 Speaker 1: the pace of global or US growth changing a lot 115 00:05:27,640 --> 00:05:31,400 Speaker 1: in the near term. We don't think valuations are exorbitant, 116 00:05:31,440 --> 00:05:34,159 Speaker 1: but they're certainly not cheap. So all the hallmarks that 117 00:05:34,200 --> 00:05:35,800 Speaker 1: I go back to when I try to write my 118 00:05:35,800 --> 00:05:38,480 Speaker 1: outlook really aren't there. All right, So give him that, 119 00:05:38,600 --> 00:05:40,920 Speaker 1: in just about a minute, was your highest conviction going 120 00:05:45,279 --> 00:05:48,120 Speaker 1: that is high conviction on the blank page. I'll go 121 00:05:48,200 --> 00:05:50,599 Speaker 1: back to what what sort of Paul was asking, which is, 122 00:05:50,640 --> 00:05:53,160 Speaker 1: how do we think about risk? And where where does 123 00:05:53,200 --> 00:05:56,360 Speaker 1: that sort of our conviction come from uh. My highest 124 00:05:56,400 --> 00:05:59,440 Speaker 1: conviction is that while our base cases for stocks and 125 00:05:59,480 --> 00:06:01,600 Speaker 1: bonds to sort to clip their coupons, I think you'll 126 00:06:01,600 --> 00:06:04,120 Speaker 1: get your earnings growth and in equities, maybe not a 127 00:06:04,120 --> 00:06:08,400 Speaker 1: lot of pe expansion. I'm concerned that the risk return 128 00:06:08,480 --> 00:06:11,160 Speaker 1: trade off isn't that favorable when I think about whether 129 00:06:11,200 --> 00:06:14,360 Speaker 1: we're wrong, maybe more maybe the economy reignites. How much 130 00:06:14,440 --> 00:06:17,320 Speaker 1: upside is there? There's some, but not a ton. But 131 00:06:17,360 --> 00:06:19,440 Speaker 1: what if we're wrong and we go into recession. Given 132 00:06:19,480 --> 00:06:23,039 Speaker 1: where valuations are, there's far more downside than there is 133 00:06:23,080 --> 00:06:26,000 Speaker 1: to upside. So I don't like the trade off, even 134 00:06:26,040 --> 00:06:28,200 Speaker 1: though we're not bearish in any sense of the word. 135 00:06:28,480 --> 00:06:30,320 Speaker 1: David Lafferty, we're gonna let you get back to your 136 00:06:30,360 --> 00:06:33,280 Speaker 1: blank page and the blinking cursor. I have seen that 137 00:06:33,360 --> 00:06:36,120 Speaker 1: many a time before. David Lafferty is and your vice president, 138 00:06:36,240 --> 00:06:39,760 Speaker 1: chief market strategist, and a Texas investment managers where we 139 00:06:39,880 --> 00:06:42,680 Speaker 1: are in their Boston headquarters, are hosting us right now 140 00:06:42,680 --> 00:06:45,000 Speaker 1: with an audience of people all nodding along and giving 141 00:06:45,000 --> 00:06:49,120 Speaker 1: you thumbs up. A couple of people, a great pantry here. 142 00:06:49,200 --> 00:06:51,920 Speaker 1: I mean, it's almost bloomberg like. It's it's almost almost 143 00:06:52,040 --> 00:06:55,320 Speaker 1: no really interesting though, and honestly, David's not alone when 144 00:06:55,320 --> 00:06:58,440 Speaker 1: it comes to uh, the sort of blank page. It's 145 00:06:58,480 --> 00:07:15,160 Speaker 1: a hard time to try to get conviction exactly. We 146 00:07:15,200 --> 00:07:18,960 Speaker 1: are broadcasting live from the Jixis Investment Managers headquarters here 147 00:07:19,120 --> 00:07:23,200 Speaker 1: in Boston for a Sustainable Finance Week back in New York. 148 00:07:23,280 --> 00:07:26,120 Speaker 1: Amy Bands joining us, and I'm so glad that she is, 149 00:07:26,240 --> 00:07:30,040 Speaker 1: because we really can't over emphasize how much money has 150 00:07:30,080 --> 00:07:33,480 Speaker 1: flooded into the venture capital space, in particular through the 151 00:07:33,520 --> 00:07:36,160 Speaker 1: likes of soft Bank, but another number of others, to 152 00:07:36,680 --> 00:07:40,120 Speaker 1: leaving people wondering where are the opportunities. Amy Bands is 153 00:07:40,120 --> 00:07:43,880 Speaker 1: managing director and head of Funds at Comcast Ventures. Amy, 154 00:07:44,080 --> 00:07:46,880 Speaker 1: you come at this from a really interesting vantage point, 155 00:07:46,960 --> 00:07:50,000 Speaker 1: and that is the venture capital arm inside of a 156 00:07:50,080 --> 00:07:53,520 Speaker 1: big corporation. How is that different from a standalone venture 157 00:07:53,520 --> 00:07:58,160 Speaker 1: capital fund. I think the changes that we're making are 158 00:07:58,280 --> 00:08:01,720 Speaker 1: very much driven by the changes in the market themselves. So, 159 00:08:01,880 --> 00:08:04,880 Speaker 1: as you mentioned, Lisa, there's so much money in the market. 160 00:08:05,120 --> 00:08:09,440 Speaker 1: It really is giving entrepreneurs the luxury of choosing investors 161 00:08:09,520 --> 00:08:12,560 Speaker 1: who bring more than dollars to the table. Um and 162 00:08:12,640 --> 00:08:18,040 Speaker 1: at corporate venture capital funds like Comcast, we're really taking 163 00:08:18,080 --> 00:08:22,480 Speaker 1: advantage of that by leveraging our platform, the Comcast NBCU 164 00:08:22,600 --> 00:08:27,560 Speaker 1: Sky platform, to create programs that support and help our 165 00:08:27,600 --> 00:08:31,520 Speaker 1: young portfolio companies grow and really in that way, it's 166 00:08:31,640 --> 00:08:36,240 Speaker 1: turning the concept, the traditional concept of strategic capital on 167 00:08:36,480 --> 00:08:40,920 Speaker 1: its head. So it's interesting amy that the public markets 168 00:08:41,120 --> 00:08:43,600 Speaker 1: have really started paying i think, more attention to what's 169 00:08:43,600 --> 00:08:45,760 Speaker 1: going on in the venture in the private market, given 170 00:08:45,800 --> 00:08:47,520 Speaker 1: some of the I p O s that came and 171 00:08:47,559 --> 00:08:50,480 Speaker 1: did not come this year. I'm thinking Uber Lift, you know, 172 00:08:50,520 --> 00:08:53,480 Speaker 1: and the ones that didn't come we work and really 173 00:08:53,559 --> 00:08:57,480 Speaker 1: calling into question the valuations that the private market in 174 00:08:57,480 --> 00:08:59,880 Speaker 1: the VC market is putting on some of these companies 175 00:09:00,120 --> 00:09:03,240 Speaker 1: eat miss pricing them UM. Is that just do you 176 00:09:03,240 --> 00:09:05,080 Speaker 1: think that's the case, And if so, is it just 177 00:09:05,160 --> 00:09:08,240 Speaker 1: too much money chasing too few deals? You know, I 178 00:09:08,280 --> 00:09:10,600 Speaker 1: think there's a there's no question there's a lot of 179 00:09:10,640 --> 00:09:15,199 Speaker 1: money out there UM and valuations, I agree, we agree 180 00:09:15,240 --> 00:09:18,800 Speaker 1: are extraordinarily high at that point. I do think there's 181 00:09:18,840 --> 00:09:23,400 Speaker 1: opportunity in that forum funds like Comcast Ventures in some 182 00:09:23,440 --> 00:09:27,720 Speaker 1: ways it's forced us to go earlier UM, which in 183 00:09:27,760 --> 00:09:30,600 Speaker 1: turn has you know, proven to be to our benefit 184 00:09:30,800 --> 00:09:34,840 Speaker 1: because if we invest earlier at seed or at UM 185 00:09:34,920 --> 00:09:38,960 Speaker 1: you know, at series in Series A, it allows us 186 00:09:39,000 --> 00:09:42,600 Speaker 1: to get the equity position and potentially the board seats 187 00:09:42,640 --> 00:09:46,360 Speaker 1: and the influence that we like to have in order 188 00:09:46,400 --> 00:09:50,720 Speaker 1: to partner with and support our portfolio companies in the 189 00:09:50,720 --> 00:09:54,400 Speaker 1: way that I just described through through special programs that 190 00:09:54,480 --> 00:09:58,079 Speaker 1: leverage you know who we are UM and allow us 191 00:09:58,120 --> 00:10:00,520 Speaker 1: to help and support them that you know, in ways 192 00:10:00,559 --> 00:10:04,360 Speaker 1: that that that other funds can. So, given the fact 193 00:10:04,440 --> 00:10:07,040 Speaker 1: that the media landscape in particular is undergoing such a 194 00:10:07,360 --> 00:10:11,920 Speaker 1: dramatic transformation with the streaming side of the business, what 195 00:10:12,000 --> 00:10:16,200 Speaker 1: types of startups are you targeting that could potentially offer 196 00:10:16,440 --> 00:10:21,200 Speaker 1: new technologies that could even dovetail with comcasts fundamental business. Yeah, 197 00:10:21,240 --> 00:10:25,640 Speaker 1: you know, Lisa, UM we actually have historically invested costs 198 00:10:25,720 --> 00:10:30,040 Speaker 1: a fairly wide spectrum of categories. So yes, we do 199 00:10:30,240 --> 00:10:34,200 Speaker 1: invest in media UM although uh you know, and we've 200 00:10:34,400 --> 00:10:39,280 Speaker 1: we have some very successful companies there, including UM Vox 201 00:10:39,360 --> 00:10:44,120 Speaker 1: and the Athletic UM. But UM lately we've invested in 202 00:10:44,200 --> 00:10:47,600 Speaker 1: a in a much broader spectrum UM everything from B 203 00:10:47,720 --> 00:10:54,240 Speaker 1: to C consumer brands to enterprise sas cybersecurity UM and 204 00:10:54,280 --> 00:10:58,200 Speaker 1: even some frontier tech as well. UM. Again because of 205 00:10:58,240 --> 00:11:01,199 Speaker 1: who we are, you know, and and that our platform 206 00:11:01,400 --> 00:11:06,360 Speaker 1: encompasses not just the NBC piece, but also the Comcast 207 00:11:06,440 --> 00:11:10,520 Speaker 1: and Sky piece. It's really a rare company UM that 208 00:11:10,640 --> 00:11:14,199 Speaker 1: we can't as as an enterprise support in some ways. 209 00:11:14,840 --> 00:11:17,200 Speaker 1: A mean. One of the things we learned or maybe 210 00:11:17,240 --> 00:11:19,800 Speaker 1: just relearned with the we work situation is the importance 211 00:11:19,800 --> 00:11:23,040 Speaker 1: of corporate governance, good corporate governance. How do you at 212 00:11:23,280 --> 00:11:26,000 Speaker 1: Comcast Ventures view that as you consider investments. Yeah, that's 213 00:11:26,000 --> 00:11:29,120 Speaker 1: a really good question, Paul. You know, I think the 214 00:11:29,160 --> 00:11:34,400 Speaker 1: pendulum is swinging back to good growth, not just growth 215 00:11:34,480 --> 00:11:39,920 Speaker 1: at any cost, but good growth, sustainable growth, profitable growth. UM. 216 00:11:40,200 --> 00:11:45,160 Speaker 1: And you know, particularly coming into this year, which could 217 00:11:45,200 --> 00:11:49,240 Speaker 1: prove to be a bumpy year. UM, we are very 218 00:11:49,320 --> 00:11:53,880 Speaker 1: focused on looking at companies who are mindful of that 219 00:11:54,000 --> 00:11:57,680 Speaker 1: good growth mantra UM. And we're talking to our existing 220 00:11:57,720 --> 00:12:01,880 Speaker 1: portfolio companies about making sure that you know, they have 221 00:12:02,600 --> 00:12:05,920 Speaker 1: you know, they have enough runway, they have enough capital 222 00:12:06,000 --> 00:12:09,200 Speaker 1: to you know, weather a storm if and when that 223 00:12:09,280 --> 00:12:13,439 Speaker 1: storm comes just real quick here about thirty seconds. Are 224 00:12:13,480 --> 00:12:15,880 Speaker 1: you finding it harder to deployer capital given how high 225 00:12:15,960 --> 00:12:20,559 Speaker 1: valuations are No, UM, Lisa as I mentioned earlier, actually 226 00:12:21,640 --> 00:12:26,000 Speaker 1: because we've become more comfortable. You know, strategics historically have 227 00:12:26,240 --> 00:12:30,120 Speaker 1: invested at later stages UM. In the last couple of years, 228 00:12:30,160 --> 00:12:35,000 Speaker 1: we really have focused on developing an early stage muscle UM, 229 00:12:35,120 --> 00:12:38,600 Speaker 1: and you know, because we're having success there, we're actually 230 00:12:38,679 --> 00:12:43,520 Speaker 1: finding that with our sort of strategic platform behind us, 231 00:12:43,960 --> 00:12:47,679 Speaker 1: and because investors are looking for more than just money, 232 00:12:47,840 --> 00:12:51,440 Speaker 1: we're seeing opportunities that UM we've never seen before. So 233 00:12:51,600 --> 00:12:55,120 Speaker 1: we're excited about UM the place and stage in the 234 00:12:55,160 --> 00:12:58,120 Speaker 1: market that we're currently playing. Hey, Amy, thanks so much 235 00:12:58,160 --> 00:13:00,480 Speaker 1: for joining us. Next time, Lisa and I will join 236 00:13:00,559 --> 00:13:02,199 Speaker 1: you in the studio or up in Boston today. But 237 00:13:02,240 --> 00:13:04,839 Speaker 1: Amy Bands, thanks for joining us. Managing director and head 238 00:13:04,840 --> 00:13:23,800 Speaker 1: of Funds at Comcast Ventures. Time to go to Bloomberg 239 00:13:23,800 --> 00:13:27,640 Speaker 1: Opinion and interesting story out this morning. Black Rocks Mark Weissman, 240 00:13:27,800 --> 00:13:31,840 Speaker 1: senior executive was terminated today fulfilling to disclose a personal 241 00:13:31,840 --> 00:13:35,080 Speaker 1: relationship with another employee at black Rock. To help us 242 00:13:35,400 --> 00:13:38,640 Speaker 1: get through this story, we welcome Sarah Green Carmichael. She 243 00:13:38,840 --> 00:13:42,240 Speaker 1: covers the financial services industry for Bloomberg Opinion. Joins us 244 00:13:42,240 --> 00:13:45,200 Speaker 1: in o Bloomberg and Arctor Broker Studio. So Sarah, thanks 245 00:13:45,200 --> 00:13:47,280 Speaker 1: so much for joining us. Give us a sense of 246 00:13:47,320 --> 00:13:50,400 Speaker 1: what we know so far about this story at Black Rock. Well, 247 00:13:50,440 --> 00:13:53,840 Speaker 1: we don't know very much. We know that Weisman is 248 00:13:54,160 --> 00:13:56,640 Speaker 1: said to have violated company policy and that he has 249 00:13:56,679 --> 00:14:02,320 Speaker 1: apologized for failing to disclose his relationship to hr Um 250 00:14:02,360 --> 00:14:05,320 Speaker 1: at the same time, Um, you know, he is married. 251 00:14:05,400 --> 00:14:07,400 Speaker 1: So this is not like some other cases that we 252 00:14:07,440 --> 00:14:11,040 Speaker 1: have heard where there was a personal relationship that would 253 00:14:11,120 --> 00:14:14,640 Speaker 1: otherwise have been fine. Um, this was something that he 254 00:14:14,880 --> 00:14:17,520 Speaker 1: was hiding, probably from a lot of people. So it's 255 00:14:17,520 --> 00:14:20,240 Speaker 1: interest things. We've seen a number of reports recently about 256 00:14:20,280 --> 00:14:25,520 Speaker 1: consensual relationships between two people leading to the firing or 257 00:14:25,520 --> 00:14:28,280 Speaker 1: stepping down of an executive, And I'm wondering, are we 258 00:14:28,360 --> 00:14:30,880 Speaker 1: just hearing more about this or is this a shift 259 00:14:30,920 --> 00:14:34,160 Speaker 1: in policy that is pervasive across Wall Street right now? 260 00:14:34,640 --> 00:14:37,560 Speaker 1: Companies are definitely taking a harder line on this, and 261 00:14:37,920 --> 00:14:41,520 Speaker 1: it's something that hr departments on Wall Street and elsewhere 262 00:14:41,560 --> 00:14:43,720 Speaker 1: are going to really have to figure out. And my 263 00:14:43,800 --> 00:14:46,080 Speaker 1: concern at this point is that we seem to be 264 00:14:46,800 --> 00:14:49,520 Speaker 1: lumping a lot of these different cases together. Um, someone 265 00:14:49,560 --> 00:14:51,960 Speaker 1: who's having a relationship at work with a colleague is 266 00:14:52,000 --> 00:14:55,000 Speaker 1: different from someone who's having an extramartal fair with a colleague. 267 00:14:55,280 --> 00:14:59,200 Speaker 1: And both of those situations are very different than sexual harassment, 268 00:14:59,240 --> 00:15:01,720 Speaker 1: which is I think what a lot of the conversation 269 00:15:01,760 --> 00:15:05,000 Speaker 1: around me too really started a lot of these conversations. So, 270 00:15:05,200 --> 00:15:09,080 Speaker 1: what is the argument for terminating someone for having a 271 00:15:09,080 --> 00:15:12,440 Speaker 1: relationship that's consensual at work? Well? I think there's a 272 00:15:12,480 --> 00:15:15,320 Speaker 1: couple of things here. One is that if an h 273 00:15:15,360 --> 00:15:17,880 Speaker 1: our department has put in place of policies saying we 274 00:15:17,920 --> 00:15:21,160 Speaker 1: don't want you having relationships with colleagues at work, then 275 00:15:21,240 --> 00:15:23,640 Speaker 1: you are violating company policy if you have one of 276 00:15:23,640 --> 00:15:26,720 Speaker 1: those relationships. Um. And so I think it's the violation 277 00:15:26,760 --> 00:15:30,520 Speaker 1: of that policy that then becomes the fireable offense UM. 278 00:15:30,560 --> 00:15:32,360 Speaker 1: And that's a case where you don't really want to 279 00:15:32,360 --> 00:15:35,840 Speaker 1: have senior executives, you know, by violating rules they're asking 280 00:15:35,840 --> 00:15:38,560 Speaker 1: other people to follow. So, Sara, on that front, do 281 00:15:38,640 --> 00:15:41,400 Speaker 1: we have a sense of you know, across corporate America, 282 00:15:41,720 --> 00:15:43,600 Speaker 1: you know what percentage of companies are just saying, you know, 283 00:15:43,640 --> 00:15:46,600 Speaker 1: we have to have a zero policy here, just don't 284 00:15:46,760 --> 00:15:48,680 Speaker 1: do it. Is that? Do we know that? And is 285 00:15:48,720 --> 00:15:52,520 Speaker 1: it growing? I don't know specifically what the number is, 286 00:15:52,560 --> 00:15:54,880 Speaker 1: but it does seem to be growing from what I 287 00:15:54,960 --> 00:15:58,320 Speaker 1: do know, I think more and more in HUR departments think, oh, well, 288 00:15:58,400 --> 00:16:01,000 Speaker 1: the way to crack down on Haraz Sman, which is 289 00:16:01,080 --> 00:16:04,760 Speaker 1: the problem, is just to ban sex from the workplace entirely, 290 00:16:04,800 --> 00:16:07,560 Speaker 1: which I don't think frankly is realistic. Yeah, and it 291 00:16:07,600 --> 00:16:10,800 Speaker 1: also comes at a time when there is a question 292 00:16:10,800 --> 00:16:13,360 Speaker 1: about how to get more women into the workforce. Is 293 00:16:13,360 --> 00:16:17,200 Speaker 1: one concern here a senior executive having a relationship with 294 00:16:17,240 --> 00:16:19,560 Speaker 1: an underlaying and sort of some of the implications there, 295 00:16:19,600 --> 00:16:22,120 Speaker 1: I mean, is that sort of the underpinning of of 296 00:16:22,560 --> 00:16:25,800 Speaker 1: of of potential exits here. Yes, I think that was 297 00:16:25,840 --> 00:16:28,480 Speaker 1: certainly at play in the case of Steve easterbrook who 298 00:16:28,560 --> 00:16:32,160 Speaker 1: was ousted from McDonald's UM because you know, McDonald's had 299 00:16:32,200 --> 00:16:34,880 Speaker 1: a policy that no supervisor could have a relationship with 300 00:16:34,920 --> 00:16:37,560 Speaker 1: a direct report or someone lower than them on the 301 00:16:37,600 --> 00:16:41,400 Speaker 1: corporate ladder as the CEO. Obviously everyone was lower than 302 00:16:41,560 --> 00:16:44,360 Speaker 1: than Easterbrooks. So, um, this is a case where I 303 00:16:44,360 --> 00:16:46,640 Speaker 1: think well intentioned HR departments are going to have to 304 00:16:46,680 --> 00:16:49,680 Speaker 1: figure out how to handle this. UM and CEOs are 305 00:16:49,720 --> 00:16:51,480 Speaker 1: going to have to figure out how to handle this. Clearly, 306 00:16:51,520 --> 00:16:53,920 Speaker 1: a power differential can create all kinds of issues in 307 00:16:53,960 --> 00:16:57,000 Speaker 1: a relationship at the same time. You know, many people 308 00:16:57,040 --> 00:16:59,880 Speaker 1: do meet their spouse at work, and in many cases, 309 00:17:00,000 --> 00:17:02,840 Speaker 1: companies are working to recruit power couples where they want 310 00:17:02,920 --> 00:17:05,920 Speaker 1: both people to relocate for top jobs. So this is 311 00:17:05,960 --> 00:17:08,199 Speaker 1: something that's not going to go away. Yes, sir, it's interesting. 312 00:17:08,359 --> 00:17:11,760 Speaker 1: This is obviously black Rock of financial services company Wall 313 00:17:11,800 --> 00:17:14,000 Speaker 1: Street has typically been perceived as an area that is 314 00:17:14,280 --> 00:17:18,199 Speaker 1: not conducive to women. Is there any sense that certain 315 00:17:18,240 --> 00:17:22,240 Speaker 1: industries maybe are doing a better job than others. That's 316 00:17:22,280 --> 00:17:25,720 Speaker 1: an interesting question. There are certainly some industries where women 317 00:17:25,800 --> 00:17:29,880 Speaker 1: have managed to make better strides, and financial services remains 318 00:17:29,960 --> 00:17:33,080 Speaker 1: one of the most male dominated industries. Um. So I 319 00:17:33,080 --> 00:17:35,800 Speaker 1: could certainly see that in this case black Rock might 320 00:17:35,960 --> 00:17:39,439 Speaker 1: especially want to crack down on any violations of company 321 00:17:39,480 --> 00:17:42,840 Speaker 1: policy that would seem to make um, you know, the 322 00:17:42,880 --> 00:17:46,000 Speaker 1: workplace more hostile to women. It does not certainly help 323 00:17:46,040 --> 00:17:48,720 Speaker 1: Mark Wiseman in this case that his wife is also 324 00:17:48,760 --> 00:17:52,560 Speaker 1: a top black Rock executive and is the head of 325 00:17:52,560 --> 00:17:56,000 Speaker 1: black Rock Canada. Um marsham Offett. Yeah, I was. I 326 00:17:56,080 --> 00:17:58,919 Speaker 1: was thinking this has got to be an awkward moment 327 00:17:59,359 --> 00:18:01,919 Speaker 1: for a lot of people at black Rock and To 328 00:18:02,040 --> 00:18:06,240 Speaker 1: be clear, Mark Wiseman was potentially a successor to CEO 329 00:18:06,320 --> 00:18:09,400 Speaker 1: Larry Fink, So it leaves a lot of questions looming 330 00:18:09,520 --> 00:18:13,840 Speaker 1: large certainly for black Rock in terms of leadership if 331 00:18:13,960 --> 00:18:17,520 Speaker 1: Larry Fink does step down. Sarah Green Carmichael, thank you 332 00:18:17,560 --> 00:18:21,360 Speaker 1: so much for joining us. Sarah Green Carmichael of Bloomberg Opinion. 333 00:18:35,720 --> 00:18:39,560 Speaker 1: We are broadcasting live from the Natixis Investment Managers headquarters 334 00:18:39,560 --> 00:18:43,480 Speaker 1: here in Boston for Sustainable Finance a week and we 335 00:18:43,520 --> 00:18:47,440 Speaker 1: are so lucky to have with us. Katherine Kaminski. Dr 336 00:18:47,560 --> 00:18:51,360 Speaker 1: Katherine Kaminski, chief research strategist and portfolio manager at Alpha 337 00:18:51,520 --> 00:18:56,480 Speaker 1: Simplex Group, which is the firm founded by Dr Andrew 338 00:18:56,680 --> 00:19:01,200 Speaker 1: Low and focuses on understanding risk, mitigating it go forward. Uh. 339 00:19:01,359 --> 00:19:04,520 Speaker 1: So nice to be here, Dr Kaminsky. I'm wondering from 340 00:19:04,560 --> 00:19:08,720 Speaker 1: your perspective, what the biggest risk is heading into the 341 00:19:08,800 --> 00:19:10,800 Speaker 1: risk of a sell off and rates or the sell 342 00:19:10,840 --> 00:19:13,920 Speaker 1: off in UH credit or the concept of credit. It 343 00:19:14,080 --> 00:19:17,520 Speaker 1: uration great to be here, Lisa. UM. To be honest, 344 00:19:17,680 --> 00:19:20,680 Speaker 1: you know, as we know, uh, we've been in an 345 00:19:20,760 --> 00:19:24,480 Speaker 1: environment where we've seen rates go very very low. Um, 346 00:19:24,560 --> 00:19:27,280 Speaker 1: I'd say that you know, credit is obviously an issue. 347 00:19:27,400 --> 00:19:30,199 Speaker 1: But we're paying a lot of tension to rates and 348 00:19:30,240 --> 00:19:34,080 Speaker 1: what can happen if they go up? Um, and or 349 00:19:34,119 --> 00:19:36,880 Speaker 1: if we have a situation where um, we've already seen 350 00:19:37,000 --> 00:19:39,360 Speaker 1: some instances that we might have hit the bottom and rates, 351 00:19:39,400 --> 00:19:42,120 Speaker 1: and I think people are a little concerned about how 352 00:19:42,119 --> 00:19:45,120 Speaker 1: that might go. Um. Haven't people been worried about rising 353 00:19:45,200 --> 00:19:49,040 Speaker 1: rates for a project ever happened? I know, I mean 354 00:19:49,080 --> 00:19:51,359 Speaker 1: I've been worried about it for Actually, we don't worry 355 00:19:51,359 --> 00:19:53,800 Speaker 1: about it because we're very dynamic and how we trade 356 00:19:53,840 --> 00:19:57,040 Speaker 1: the markets and we can go short um in fixed income, 357 00:19:57,119 --> 00:20:00,280 Speaker 1: and we are worried about a lot of individual who 358 00:20:00,440 --> 00:20:02,320 Speaker 1: really can't and who have bought a lot of bonds 359 00:20:02,320 --> 00:20:05,520 Speaker 1: and this year, UM, people have definitely uh you know, 360 00:20:05,680 --> 00:20:09,120 Speaker 1: jumped into even more fixed income. And it's unclear, um, 361 00:20:09,200 --> 00:20:11,159 Speaker 1: how much more there is to go to protect you, 362 00:20:11,200 --> 00:20:14,400 Speaker 1: if we have any challenges. So it's interesting I'm looking 363 00:20:14,400 --> 00:20:18,480 Speaker 1: at your firm. Uh, you employ a proprietary risk control technology. 364 00:20:18,520 --> 00:20:21,520 Speaker 1: I think it's called adaptive volatility management. What is that 365 00:20:21,640 --> 00:20:26,199 Speaker 1: in layment terms? And I stress laymans do. So the 366 00:20:26,240 --> 00:20:29,159 Speaker 1: thing is is, if you think about risk, there's several 367 00:20:29,240 --> 00:20:31,120 Speaker 1: key ways to think about risk there's things you can 368 00:20:31,160 --> 00:20:33,880 Speaker 1: measure and things that you can actually know, and then 369 00:20:33,880 --> 00:20:36,240 Speaker 1: there's the things that you can't know. What we try 370 00:20:36,280 --> 00:20:38,159 Speaker 1: to do is do the best that we can to 371 00:20:38,320 --> 00:20:42,760 Speaker 1: understand what types of risk we can measure, quantify and understand, 372 00:20:43,160 --> 00:20:46,119 Speaker 1: and then use those um what we insights that we 373 00:20:46,200 --> 00:20:49,320 Speaker 1: gain from measuring these risks to try and balance our 374 00:20:49,359 --> 00:20:52,760 Speaker 1: portfolios over time. So as things change, we try to 375 00:20:52,920 --> 00:20:57,119 Speaker 1: use information from markets to measure that volatility, to measure 376 00:20:57,359 --> 00:21:00,320 Speaker 1: where things are moving so that we can adapt to things. 377 00:21:00,440 --> 00:21:04,920 Speaker 1: What's the most visible forward pocket that you can measure risk? 378 00:21:06,119 --> 00:21:09,360 Speaker 1: So I mean for us, it's not necessarily purely just 379 00:21:09,440 --> 00:21:12,760 Speaker 1: a forecast of risk. It's also about understanding relative risks 380 00:21:12,760 --> 00:21:16,640 Speaker 1: between different assets and quantifying it, but also understanding how 381 00:21:16,720 --> 00:21:20,440 Speaker 1: much of that is actually reliable because backward looking, it's 382 00:21:20,520 --> 00:21:23,480 Speaker 1: very easy to have a very precise measure, but you 383 00:21:23,560 --> 00:21:26,960 Speaker 1: need to actually more think about in relative terms, which 384 00:21:27,040 --> 00:21:30,480 Speaker 1: risks seem more viable than than others going forward? What 385 00:21:30,560 --> 00:21:33,959 Speaker 1: are the risks that keep you up at night that 386 00:21:34,040 --> 00:21:39,399 Speaker 1: you can't quantify? Is it a twitter? Is it macro 387 00:21:39,560 --> 00:21:43,639 Speaker 1: global trade? What are the things that so the things 388 00:21:43,640 --> 00:21:46,520 Speaker 1: that really keep me up at night are risks that 389 00:21:46,680 --> 00:21:51,040 Speaker 1: have decorrelation effects. Now what does that mean. Decorrelation effects 390 00:21:51,040 --> 00:21:53,679 Speaker 1: means that a lot of the relationships that we have 391 00:21:53,800 --> 00:21:56,520 Speaker 1: seen and things that are in the data, things that 392 00:21:56,600 --> 00:22:01,879 Speaker 1: people understand, things that people believe, revert. So unfortunately Twitter 393 00:22:02,320 --> 00:22:06,000 Speaker 1: seems to be doing that. Um. But so we worry 394 00:22:06,040 --> 00:22:09,320 Speaker 1: a lot about how how those type of events have 395 00:22:09,440 --> 00:22:14,000 Speaker 1: the ability to change relationships that we think work. UM. So, 396 00:22:14,040 --> 00:22:17,640 Speaker 1: as an example, maybe because that sounds very conceptual, UM, 397 00:22:17,680 --> 00:22:22,919 Speaker 1: a simple example would be Monday. Uh sorry, still very fresh. Um. 398 00:22:23,040 --> 00:22:25,000 Speaker 1: But if you look at a day like Monday, we 399 00:22:25,080 --> 00:22:28,360 Speaker 1: saw equity markets sell off, we saw bond markets sell 400 00:22:28,400 --> 00:22:30,639 Speaker 1: off at the same time, and also the US dollar. 401 00:22:31,160 --> 00:22:34,400 Speaker 1: That type of relationship is something that has been very 402 00:22:34,440 --> 00:22:37,200 Speaker 1: strong and stable over the last two years. So all 403 00:22:37,240 --> 00:22:39,680 Speaker 1: of us who are measuring risk and trying to understand 404 00:22:39,720 --> 00:22:43,600 Speaker 1: relationships were exposed to that measurement risk that you know, 405 00:22:43,640 --> 00:22:47,520 Speaker 1: the world changes and and that's a decorrelation effect. And 406 00:22:47,560 --> 00:22:53,119 Speaker 1: so any of these type of short bursts of you 407 00:22:53,160 --> 00:22:56,600 Speaker 1: know change and sentiment and and threats or or or 408 00:22:56,640 --> 00:23:01,440 Speaker 1: you know, tariff arguments, they scare people well and sometimes 409 00:23:01,480 --> 00:23:07,760 Speaker 1: they have very adverse, um and unintuitive reactions in the markets. 410 00:23:07,840 --> 00:23:10,359 Speaker 1: So is the goal for you to not lose money 411 00:23:10,480 --> 00:23:13,919 Speaker 1: or is it to make bigger returns than others? So 412 00:23:14,040 --> 00:23:16,080 Speaker 1: the goal for us is that you know. It turns 413 00:23:16,119 --> 00:23:20,240 Speaker 1: out mathematically that estimating returns and forecasting returns as a 414 00:23:20,280 --> 00:23:23,320 Speaker 1: lot harder than measuring risk. So one of the things 415 00:23:23,320 --> 00:23:26,720 Speaker 1: we try to do is understand risk reward tradeoff. So 416 00:23:26,760 --> 00:23:30,400 Speaker 1: we're trying to understand how much opportunity there is relative 417 00:23:30,480 --> 00:23:33,080 Speaker 1: to what types of risk you can measure, as well 418 00:23:33,080 --> 00:23:36,359 Speaker 1: as how do these different risk return profiles compare across 419 00:23:36,400 --> 00:23:39,639 Speaker 1: different assets. What is the time frame for each trade? 420 00:23:39,640 --> 00:23:42,880 Speaker 1: In other words, are these trades for a month, two 421 00:23:42,880 --> 00:23:47,720 Speaker 1: months fewer? So are our trading is actually a continuous process. 422 00:23:47,880 --> 00:23:52,120 Speaker 1: Every day we're looking mathematically at and measuring the markets 423 00:23:52,119 --> 00:23:54,760 Speaker 1: to try and determine what that risk reward trade off 424 00:23:55,040 --> 00:23:57,600 Speaker 1: of each of these different markets that we trade, so 425 00:23:57,640 --> 00:24:01,360 Speaker 1: from bonds to UM equities to come oddities, UM, we're 426 00:24:01,400 --> 00:24:04,080 Speaker 1: trying to look at what is the forward looking risk 427 00:24:04,119 --> 00:24:06,400 Speaker 1: award trade off and how do we balance those things. 428 00:24:06,400 --> 00:24:08,760 Speaker 1: So the trading is actually when you're trading in the 429 00:24:08,760 --> 00:24:12,399 Speaker 1: futures markets in particular, we're following all of these moves 430 00:24:12,440 --> 00:24:15,720 Speaker 1: pretty UM pretty um pretty quickly in some sense, not 431 00:24:15,960 --> 00:24:19,159 Speaker 1: high frequency, but definitely faster than UM. Someone who's a 432 00:24:19,160 --> 00:24:21,920 Speaker 1: long term investor, Dr Katherine Kaminski, thanks so much for 433 00:24:22,000 --> 00:24:24,800 Speaker 1: joining us. We appreciate you joining us here. Katherine's a 434 00:24:24,840 --> 00:24:28,840 Speaker 1: chief research strategist and portfolio manager for Alpha Simplex Group. 435 00:24:29,080 --> 00:24:31,520 Speaker 1: Joining us here at the offices of the Texas in 436 00:24:31,560 --> 00:24:34,399 Speaker 1: the beautiful back bay of Boston. Thanks for listening to 437 00:24:34,400 --> 00:24:36,800 Speaker 1: the Bloomberg P and L podcast. You can subscribe and 438 00:24:36,840 --> 00:24:40,000 Speaker 1: listen to interviews at Apple Podcasts or whatever podcast platform 439 00:24:40,040 --> 00:24:43,120 Speaker 1: you prefer. Paul Sweeney, I'm on Twitter at pt Sweeney. 440 00:24:43,200 --> 00:24:45,359 Speaker 1: I'm Lisa A. Bram woids I'm on Twitter at Lisa 441 00:24:45,480 --> 00:24:48,240 Speaker 1: Bramwoyds one. Before the podcast, you can always catch us 442 00:24:48,359 --> 00:24:49,960 Speaker 1: worldwide on Bloomberg Radio.