WEBVTT - Far More Downside Than Upside, Says Natixis' Lafferty 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Penel Podcast. I'm Paul swing you, 0:00:05.360 --> 0:00:07.680 along with my co host Lisa Brahma wits each day 0:00:07.720 --> 0:00:10.240 we bring you the most noteworthy and useful interviews for 0:00:10.280 --> 0:00:12.520 you and your money, whether at the grocery store or 0:00:12.560 --> 0:00:15.480 the trading floor. Find a Bloomberg Penil podcast on Apple 0:00:15.520 --> 0:00:17.959 podcast or wherever you listen to podcasts, as well as 0:00:17.960 --> 0:00:21.120 at Bloomberg dot com. Yeah, we're broadcasting live from the 0:00:21.120 --> 0:00:24.479 offices of the Texas Investment Managers here in the back 0:00:24.520 --> 0:00:27.160 bay of Boston. Got a great view. It's a beautiful 0:00:27.200 --> 0:00:30.160 day here. Look at the markets. Obviously they've been whipsawed 0:00:30.240 --> 0:00:32.600 by trade. It's all about trade. It seems to move 0:00:32.640 --> 0:00:35.440 every single day. The market is now focused on December fifteenth, 0:00:35.479 --> 0:00:38.600 when new US tariffs on Chinese imports are scheduled to 0:00:38.640 --> 0:00:40.720 take effect. To get a sense of what this means 0:00:40.880 --> 0:00:43.520 near term, we welcome David Lafferty. He's the chief market 0:00:43.600 --> 0:00:46.879 strategist for in the Texas Investment Managers. And get this, 0:00:46.960 --> 0:00:50.559 they have one trillion dollars under management, so I think 0:00:50.600 --> 0:00:53.159 they have a fuel for the market. So David, thanks 0:00:53.200 --> 0:00:54.760 so much for having us here at your office. Is 0:00:54.880 --> 0:00:56.920 we appreciate it. We've got a little audience here, people 0:00:56.920 --> 0:00:59.000 coming here to see what you have to say. So 0:00:59.040 --> 0:01:01.760 how do you guys, pressure? Yeah, no pressure, no pressure. 0:01:02.000 --> 0:01:05.520 How do you guys deal with the volatility? That is, 0:01:05.680 --> 0:01:07.960 as we learn from an earlier guest, is hard to measure, 0:01:08.000 --> 0:01:10.080 It was impossible to measure, and that is about trade 0:01:10.080 --> 0:01:12.080 and tweets about trade and all that type of stuff. 0:01:12.160 --> 0:01:15.680 How do you guys position around the uncertainty of trade? Well, 0:01:15.720 --> 0:01:17.679 I think we have a few hallmarks we try to 0:01:17.720 --> 0:01:21.440 fall back on, broadly speaking across our money managers. Uh. 0:01:21.520 --> 0:01:24.680 One is a bit longer horizon. Uh. You know, it 0:01:24.720 --> 0:01:26.600 doesn't matter what the news is, but if you take 0:01:26.640 --> 0:01:28.840 a little bit longer horizon, a lot of this stuff 0:01:28.880 --> 0:01:32.279 turns out to be daily news. Uh, particularly around trade. 0:01:32.319 --> 0:01:34.279 Trade you get a tweet at eight in the morning. 0:01:34.840 --> 0:01:37.040 In terms of how a portfolio is positioned, that could 0:01:37.080 --> 0:01:39.160 be staled by eight thirty in the morning. So we 0:01:39.200 --> 0:01:41.720 don't want our clients running around making a lot of 0:01:41.760 --> 0:01:43.760 tactical changes. And I also think we think a lot 0:01:43.800 --> 0:01:47.600 about valuation. So we know markets move a lot, but 0:01:47.680 --> 0:01:50.000 we do think about where are the cheap assets, where 0:01:50.000 --> 0:01:53.960 the opportunities what's expensive, and that's a bit longer horizon 0:01:54.080 --> 0:01:56.400 kind of idea. So it's not that we don't kind 0:01:56.400 --> 0:01:59.520 of follow the ebbs and flows of the market, but 0:01:59.640 --> 0:02:02.200 we don't want to take every daily little tick in 0:02:02.240 --> 0:02:05.080 the markets too too seriously. And I think that's a 0:02:05.120 --> 0:02:08.040 trend that you'd see across a lot of our products 0:02:08.040 --> 0:02:10.600 and our money managers. A lot of the valuation today, 0:02:10.639 --> 0:02:14.359 the elevated valuation in equities has been predicated on this 0:02:14.560 --> 0:02:18.519 ongoing easing and easier cycle of central banks around the world, 0:02:18.600 --> 0:02:20.920 and we've seen that globally central banks have eased the 0:02:21.000 --> 0:02:25.080 most this year since the financial crisis. Do you think 0:02:25.240 --> 0:02:28.560 that the extra boost that that has given equity valuations 0:02:28.840 --> 0:02:34.280 can persist into I don't. I've been skeptical and now, 0:02:34.320 --> 0:02:36.520 frankly I've been wrong about that. We wrote about this 0:02:36.560 --> 0:02:39.359 earlier last year. I think the effect, at least in 0:02:39.440 --> 0:02:42.639 the real economy has begun to clearly fade. I don't 0:02:42.639 --> 0:02:45.680 think you get nearly as much credit impetus when you 0:02:45.760 --> 0:02:48.840 go from very low rates to even lower rates. Uh. 0:02:48.880 --> 0:02:50.520 You know, if you're a CEO, if you're in the 0:02:50.520 --> 0:02:53.520 c suite and you didn't borrow last year at absurdly 0:02:53.560 --> 0:02:55.680 low rates. Why are you going to borrow this year 0:02:55.720 --> 0:02:58.280 at even more absurdly low rates. So I think the 0:02:58.320 --> 0:03:01.560 credit impetus begins to al uh And I also think 0:03:01.560 --> 0:03:05.520 in terms of portfolio effect, the idea that buying all 0:03:05.560 --> 0:03:09.160 these assets will gradually raise valuations create kind of a 0:03:09.200 --> 0:03:11.840 wealth effect. People have to remember that most of the 0:03:11.919 --> 0:03:14.000 QUEI was done, at least in the US, was done 0:03:14.000 --> 0:03:16.280 when the S and P was at twelve thirteen times 0:03:16.280 --> 0:03:19.800 earnings were at nineteen times. The European Central banks QUEI 0:03:19.919 --> 0:03:23.160 policy was was largely implemented when we were at ten 0:03:23.240 --> 0:03:25.600 or eleven times earnings, So you get a bump. But 0:03:25.680 --> 0:03:29.240 I think that market effect is fading as time goes by. 0:03:29.320 --> 0:03:31.400 Although some people say that the recent strength that we've 0:03:31.440 --> 0:03:34.079 seen in equities has been driven largely by this three 0:03:34.200 --> 0:03:37.080 hundred billion dollar expansion of the Fed's balance sheet. Do 0:03:37.120 --> 0:03:41.040 you buy that? I don't think so. I really think 0:03:41.040 --> 0:03:43.200 it's been uh so. So, first of all, if you 0:03:43.320 --> 0:03:45.120 if you look at the full bull market, I really 0:03:45.560 --> 0:03:47.600 when I say bull market, I mean off the December 0:03:47.640 --> 0:03:50.920 twenty four lows. You know, we're up twenty eight percent 0:03:51.120 --> 0:03:53.560 year to date in about thirty thirty one off, the 0:03:53.960 --> 0:03:57.080 off the Christmas Eve lows last year. I view the 0:03:57.120 --> 0:04:00.480 first percent of that is just getting back the losses 0:04:00.520 --> 0:04:02.800 that we had in the fourth quarter. Everybody looks at 0:04:02.840 --> 0:04:05.880 this year as if it's this massive bull market, and 0:04:05.920 --> 0:04:09.120 that's really an accident of the calendar. Which really happened 0:04:09.200 --> 0:04:12.800 is the market basically between January one and about April 0:04:12.880 --> 0:04:16.040 thirty rallied huge and since then we're up about five 0:04:16.120 --> 0:04:18.240 or six percent. It's been a nice little run. But 0:04:18.279 --> 0:04:21.720 it's not like the market is skyrocketing. Excuse me. It's 0:04:21.720 --> 0:04:24.240 really just getting back a lot of what was lost earlier. 0:04:24.520 --> 0:04:27.080 So I think there is a monetary effect there, but 0:04:27.120 --> 0:04:30.800 it's probably still the spillover from the FEDS. One. It's 0:04:30.839 --> 0:04:34.440 not that people are looking at the term repo and thinking, hey, 0:04:34.560 --> 0:04:36.560 term repo makes stocks at right by I don't think 0:04:36.600 --> 0:04:39.160 people are doing that kind of math. Okay, well the 0:04:39.160 --> 0:04:42.000 math that people are doing now it's you know, early December, 0:04:42.160 --> 0:04:44.919 people are looking at their outlooks. Everybody on the streets 0:04:44.920 --> 0:04:50.000 publishing the outlooks. How are you guys positioned for I'm 0:04:50.000 --> 0:04:51.680 just kind of thinking about risk. Are you a little 0:04:51.680 --> 0:04:53.240 bit more risk on or maybe a little bit more 0:04:53.320 --> 0:04:55.039 risk off. We'll say a couple of things. The first 0:04:55.040 --> 0:04:57.960 thing is, I'm glad I'm down here doing this interview 0:04:58.000 --> 0:05:01.600 because I'm not upstairs staring at a length page, which 0:05:01.680 --> 0:05:03.200 is what I've been doing and trying to write my 0:05:03.240 --> 0:05:08.120 outlook for the last two weeks. So uh. And it's 0:05:08.120 --> 0:05:09.920 not that you know, we you know people have asked, 0:05:10.040 --> 0:05:12.360 is there's so much uncertainty? I think uncertainty is always 0:05:12.400 --> 0:05:15.000 with us. I don't see the obvious catalyst that we 0:05:15.080 --> 0:05:17.359 like to write about. We love to write about what 0:05:17.480 --> 0:05:20.640 central banks are doing, or that the pace of economic 0:05:20.680 --> 0:05:23.360 growth is radically changing. We don't see central banks doing 0:05:23.360 --> 0:05:25.279 a whole lot in the near term. We don't see 0:05:25.279 --> 0:05:27.640 the pace of global or US growth changing a lot 0:05:27.640 --> 0:05:31.400 in the near term. We don't think valuations are exorbitant, 0:05:31.440 --> 0:05:34.159 but they're certainly not cheap. So all the hallmarks that 0:05:34.200 --> 0:05:35.800 I go back to when I try to write my 0:05:35.800 --> 0:05:38.480 outlook really aren't there. All right, So give him that, 0:05:38.600 --> 0:05:40.920 in just about a minute, was your highest conviction going 0:05:45.279 --> 0:05:48.120 that is high conviction on the blank page. I'll go 0:05:48.200 --> 0:05:50.599 back to what what sort of Paul was asking, which is, 0:05:50.640 --> 0:05:53.160 how do we think about risk? And where where does 0:05:53.200 --> 0:05:56.360 that sort of our conviction come from uh. My highest 0:05:56.400 --> 0:05:59.440 conviction is that while our base cases for stocks and 0:05:59.480 --> 0:06:01.600 bonds to sort to clip their coupons, I think you'll 0:06:01.600 --> 0:06:04.120 get your earnings growth and in equities, maybe not a 0:06:04.120 --> 0:06:08.400 lot of pe expansion. I'm concerned that the risk return 0:06:08.480 --> 0:06:11.160 trade off isn't that favorable when I think about whether 0:06:11.200 --> 0:06:14.360 we're wrong, maybe more maybe the economy reignites. How much 0:06:14.440 --> 0:06:17.320 upside is there? There's some, but not a ton. But 0:06:17.360 --> 0:06:19.440 what if we're wrong and we go into recession. Given 0:06:19.480 --> 0:06:23.039 where valuations are, there's far more downside than there is 0:06:23.080 --> 0:06:26.000 to upside. So I don't like the trade off, even 0:06:26.040 --> 0:06:28.200 though we're not bearish in any sense of the word. 0:06:28.480 --> 0:06:30.320 David Lafferty, we're gonna let you get back to your 0:06:30.360 --> 0:06:33.280 blank page and the blinking cursor. I have seen that 0:06:33.360 --> 0:06:36.120 many a time before. David Lafferty is and your vice president, 0:06:36.240 --> 0:06:39.760 chief market strategist, and a Texas investment managers where we 0:06:39.880 --> 0:06:42.680 are in their Boston headquarters, are hosting us right now 0:06:42.680 --> 0:06:45.000 with an audience of people all nodding along and giving 0:06:45.000 --> 0:06:49.120 you thumbs up. A couple of people, a great pantry here. 0:06:49.200 --> 0:06:51.920 I mean, it's almost bloomberg like. It's it's almost almost 0:06:52.040 --> 0:06:55.320 no really interesting though, and honestly, David's not alone when 0:06:55.320 --> 0:06:58.440 it comes to uh, the sort of blank page. It's 0:06:58.480 --> 0:07:15.160 a hard time to try to get conviction exactly. We 0:07:15.200 --> 0:07:18.960 are broadcasting live from the Jixis Investment Managers headquarters here 0:07:19.120 --> 0:07:23.200 in Boston for a Sustainable Finance Week back in New York. 0:07:23.280 --> 0:07:26.120 Amy Bands joining us, and I'm so glad that she is, 0:07:26.240 --> 0:07:30.040 because we really can't over emphasize how much money has 0:07:30.080 --> 0:07:33.480 flooded into the venture capital space, in particular through the 0:07:33.520 --> 0:07:36.160 likes of soft Bank, but another number of others, to 0:07:36.680 --> 0:07:40.120 leaving people wondering where are the opportunities. Amy Bands is 0:07:40.120 --> 0:07:43.880 managing director and head of Funds at Comcast Ventures. Amy, 0:07:44.080 --> 0:07:46.880 you come at this from a really interesting vantage point, 0:07:46.960 --> 0:07:50.000 and that is the venture capital arm inside of a 0:07:50.080 --> 0:07:53.520 big corporation. How is that different from a standalone venture 0:07:53.520 --> 0:07:58.160 capital fund. I think the changes that we're making are 0:07:58.280 --> 0:08:01.720 very much driven by the changes in the market themselves. So, 0:08:01.880 --> 0:08:04.880 as you mentioned, Lisa, there's so much money in the market. 0:08:05.120 --> 0:08:09.440 It really is giving entrepreneurs the luxury of choosing investors 0:08:09.520 --> 0:08:12.560 who bring more than dollars to the table. Um and 0:08:12.640 --> 0:08:18.040 at corporate venture capital funds like Comcast, we're really taking 0:08:18.080 --> 0:08:22.480 advantage of that by leveraging our platform, the Comcast NBCU 0:08:22.600 --> 0:08:27.560 Sky platform, to create programs that support and help our 0:08:27.600 --> 0:08:31.520 young portfolio companies grow and really in that way, it's 0:08:31.640 --> 0:08:36.240 turning the concept, the traditional concept of strategic capital on 0:08:36.480 --> 0:08:40.920 its head. So it's interesting amy that the public markets 0:08:41.120 --> 0:08:43.600 have really started paying i think, more attention to what's 0:08:43.600 --> 0:08:45.760 going on in the venture in the private market, given 0:08:45.800 --> 0:08:47.520 some of the I p O s that came and 0:08:47.559 --> 0:08:50.480 did not come this year. I'm thinking Uber Lift, you know, 0:08:50.520 --> 0:08:53.480 and the ones that didn't come we work and really 0:08:53.559 --> 0:08:57.480 calling into question the valuations that the private market in 0:08:57.480 --> 0:08:59.880 the VC market is putting on some of these companies 0:09:00.120 --> 0:09:03.240 eat miss pricing them UM. Is that just do you 0:09:03.240 --> 0:09:05.080 think that's the case, And if so, is it just 0:09:05.160 --> 0:09:08.240 too much money chasing too few deals? You know, I 0:09:08.280 --> 0:09:10.600 think there's a there's no question there's a lot of 0:09:10.640 --> 0:09:15.199 money out there UM and valuations, I agree, we agree 0:09:15.240 --> 0:09:18.800 are extraordinarily high at that point. I do think there's 0:09:18.840 --> 0:09:23.400 opportunity in that forum funds like Comcast Ventures in some 0:09:23.440 --> 0:09:27.720 ways it's forced us to go earlier UM, which in 0:09:27.760 --> 0:09:30.600 turn has you know, proven to be to our benefit 0:09:30.800 --> 0:09:34.840 because if we invest earlier at seed or at UM 0:09:34.920 --> 0:09:38.960 you know, at series in Series A, it allows us 0:09:39.000 --> 0:09:42.600 to get the equity position and potentially the board seats 0:09:42.640 --> 0:09:46.360 and the influence that we like to have in order 0:09:46.400 --> 0:09:50.720 to partner with and support our portfolio companies in the 0:09:50.720 --> 0:09:54.400 way that I just described through through special programs that 0:09:54.480 --> 0:09:58.079 leverage you know who we are UM and allow us 0:09:58.120 --> 0:10:00.520 to help and support them that you know, in ways 0:10:00.559 --> 0:10:04.360 that that that other funds can. So, given the fact 0:10:04.440 --> 0:10:07.040 that the media landscape in particular is undergoing such a 0:10:07.360 --> 0:10:11.920 dramatic transformation with the streaming side of the business, what 0:10:12.000 --> 0:10:16.200 types of startups are you targeting that could potentially offer 0:10:16.440 --> 0:10:21.200 new technologies that could even dovetail with comcasts fundamental business. Yeah, 0:10:21.240 --> 0:10:25.640 you know, Lisa, UM we actually have historically invested costs 0:10:25.720 --> 0:10:30.040 a fairly wide spectrum of categories. So yes, we do 0:10:30.240 --> 0:10:34.200 invest in media UM although uh you know, and we've 0:10:34.400 --> 0:10:39.280 we have some very successful companies there, including UM Vox 0:10:39.360 --> 0:10:44.120 and the Athletic UM. But UM lately we've invested in 0:10:44.200 --> 0:10:47.600 a in a much broader spectrum UM everything from B 0:10:47.720 --> 0:10:54.240 to C consumer brands to enterprise sas cybersecurity UM and 0:10:54.280 --> 0:10:58.200 even some frontier tech as well. UM. Again because of 0:10:58.240 --> 0:11:01.199 who we are, you know, and and that our platform 0:11:01.400 --> 0:11:06.360 encompasses not just the NBC piece, but also the Comcast 0:11:06.440 --> 0:11:10.520 and Sky piece. It's really a rare company UM that 0:11:10.640 --> 0:11:14.199 we can't as as an enterprise support in some ways. 0:11:14.840 --> 0:11:17.200 A mean. One of the things we learned or maybe 0:11:17.240 --> 0:11:19.800 just relearned with the we work situation is the importance 0:11:19.800 --> 0:11:23.040 of corporate governance, good corporate governance. How do you at 0:11:23.280 --> 0:11:26.000 Comcast Ventures view that as you consider investments. Yeah, that's 0:11:26.000 --> 0:11:29.120 a really good question, Paul. You know, I think the 0:11:29.160 --> 0:11:34.400 pendulum is swinging back to good growth, not just growth 0:11:34.480 --> 0:11:39.920 at any cost, but good growth, sustainable growth, profitable growth. UM. 0:11:40.200 --> 0:11:45.160 And you know, particularly coming into this year, which could 0:11:45.200 --> 0:11:49.240 prove to be a bumpy year. UM, we are very 0:11:49.320 --> 0:11:53.880 focused on looking at companies who are mindful of that 0:11:54.000 --> 0:11:57.680 good growth mantra UM. And we're talking to our existing 0:11:57.720 --> 0:12:01.880 portfolio companies about making sure that you know, they have 0:12:02.600 --> 0:12:05.920 you know, they have enough runway, they have enough capital 0:12:06.000 --> 0:12:09.200 to you know, weather a storm if and when that 0:12:09.280 --> 0:12:13.439 storm comes just real quick here about thirty seconds. Are 0:12:13.480 --> 0:12:15.880 you finding it harder to deployer capital given how high 0:12:15.960 --> 0:12:20.559 valuations are No, UM, Lisa as I mentioned earlier, actually 0:12:21.640 --> 0:12:26.000 because we've become more comfortable. You know, strategics historically have 0:12:26.240 --> 0:12:30.120 invested at later stages UM. In the last couple of years, 0:12:30.160 --> 0:12:35.000 we really have focused on developing an early stage muscle UM, 0:12:35.120 --> 0:12:38.600 and you know, because we're having success there, we're actually 0:12:38.679 --> 0:12:43.520 finding that with our sort of strategic platform behind us, 0:12:43.960 --> 0:12:47.679 and because investors are looking for more than just money, 0:12:47.840 --> 0:12:51.440 we're seeing opportunities that UM we've never seen before. So 0:12:51.600 --> 0:12:55.120 we're excited about UM the place and stage in the 0:12:55.160 --> 0:12:58.120 market that we're currently playing. Hey, Amy, thanks so much 0:12:58.160 --> 0:13:00.480 for joining us. Next time, Lisa and I will join 0:13:00.559 --> 0:13:02.199 you in the studio or up in Boston today. But 0:13:02.240 --> 0:13:04.839 Amy Bands, thanks for joining us. Managing director and head 0:13:04.840 --> 0:13:23.800 of Funds at Comcast Ventures. Time to go to Bloomberg 0:13:23.800 --> 0:13:27.640 Opinion and interesting story out this morning. Black Rocks Mark Weissman, 0:13:27.800 --> 0:13:31.840 senior executive was terminated today fulfilling to disclose a personal 0:13:31.840 --> 0:13:35.080 relationship with another employee at black Rock. To help us 0:13:35.400 --> 0:13:38.640 get through this story, we welcome Sarah Green Carmichael. She 0:13:38.840 --> 0:13:42.240 covers the financial services industry for Bloomberg Opinion. Joins us 0:13:42.240 --> 0:13:45.200 in o Bloomberg and Arctor Broker Studio. So Sarah, thanks 0:13:45.200 --> 0:13:47.280 so much for joining us. Give us a sense of 0:13:47.320 --> 0:13:50.400 what we know so far about this story at Black Rock. Well, 0:13:50.440 --> 0:13:53.840 we don't know very much. We know that Weisman is 0:13:54.160 --> 0:13:56.640 said to have violated company policy and that he has 0:13:56.679 --> 0:14:02.320 apologized for failing to disclose his relationship to hr Um 0:14:02.360 --> 0:14:05.320 at the same time, Um, you know, he is married. 0:14:05.400 --> 0:14:07.400 So this is not like some other cases that we 0:14:07.440 --> 0:14:11.040 have heard where there was a personal relationship that would 0:14:11.120 --> 0:14:14.640 otherwise have been fine. Um, this was something that he 0:14:14.880 --> 0:14:17.520 was hiding, probably from a lot of people. So it's 0:14:17.520 --> 0:14:20.240 interest things. We've seen a number of reports recently about 0:14:20.280 --> 0:14:25.520 consensual relationships between two people leading to the firing or 0:14:25.520 --> 0:14:28.280 stepping down of an executive, And I'm wondering, are we 0:14:28.360 --> 0:14:30.880 just hearing more about this or is this a shift 0:14:30.920 --> 0:14:34.160 in policy that is pervasive across Wall Street right now? 0:14:34.640 --> 0:14:37.560 Companies are definitely taking a harder line on this, and 0:14:37.920 --> 0:14:41.520 it's something that hr departments on Wall Street and elsewhere 0:14:41.560 --> 0:14:43.720 are going to really have to figure out. And my 0:14:43.800 --> 0:14:46.080 concern at this point is that we seem to be 0:14:46.800 --> 0:14:49.520 lumping a lot of these different cases together. Um, someone 0:14:49.560 --> 0:14:51.960 who's having a relationship at work with a colleague is 0:14:52.000 --> 0:14:55.000 different from someone who's having an extramartal fair with a colleague. 0:14:55.280 --> 0:14:59.200 And both of those situations are very different than sexual harassment, 0:14:59.240 --> 0:15:01.720 which is I think what a lot of the conversation 0:15:01.760 --> 0:15:05.000 around me too really started a lot of these conversations. So, 0:15:05.200 --> 0:15:09.080 what is the argument for terminating someone for having a 0:15:09.080 --> 0:15:12.440 relationship that's consensual at work? Well? I think there's a 0:15:12.480 --> 0:15:15.320 couple of things here. One is that if an h 0:15:15.360 --> 0:15:17.880 our department has put in place of policies saying we 0:15:17.920 --> 0:15:21.160 don't want you having relationships with colleagues at work, then 0:15:21.240 --> 0:15:23.640 you are violating company policy if you have one of 0:15:23.640 --> 0:15:26.720 those relationships. Um. And so I think it's the violation 0:15:26.760 --> 0:15:30.520 of that policy that then becomes the fireable offense UM. 0:15:30.560 --> 0:15:32.360 And that's a case where you don't really want to 0:15:32.360 --> 0:15:35.840 have senior executives, you know, by violating rules they're asking 0:15:35.840 --> 0:15:38.560 other people to follow. So, Sara, on that front, do 0:15:38.640 --> 0:15:41.400 we have a sense of you know, across corporate America, 0:15:41.720 --> 0:15:43.600 you know what percentage of companies are just saying, you know, 0:15:43.640 --> 0:15:46.600 we have to have a zero policy here, just don't 0:15:46.760 --> 0:15:48.680 do it. Is that? Do we know that? And is 0:15:48.720 --> 0:15:52.520 it growing? I don't know specifically what the number is, 0:15:52.560 --> 0:15:54.880 but it does seem to be growing from what I 0:15:54.960 --> 0:15:58.320 do know, I think more and more in HUR departments think, oh, well, 0:15:58.400 --> 0:16:01.000 the way to crack down on Haraz Sman, which is 0:16:01.080 --> 0:16:04.760 the problem, is just to ban sex from the workplace entirely, 0:16:04.800 --> 0:16:07.560 which I don't think frankly is realistic. Yeah, and it 0:16:07.600 --> 0:16:10.800 also comes at a time when there is a question 0:16:10.800 --> 0:16:13.360 about how to get more women into the workforce. Is 0:16:13.360 --> 0:16:17.200 one concern here a senior executive having a relationship with 0:16:17.240 --> 0:16:19.560 an underlaying and sort of some of the implications there, 0:16:19.600 --> 0:16:22.120 I mean, is that sort of the underpinning of of 0:16:22.560 --> 0:16:25.800 of of potential exits here. Yes, I think that was 0:16:25.840 --> 0:16:28.480 certainly at play in the case of Steve easterbrook who 0:16:28.560 --> 0:16:32.160 was ousted from McDonald's UM because you know, McDonald's had 0:16:32.200 --> 0:16:34.880 a policy that no supervisor could have a relationship with 0:16:34.920 --> 0:16:37.560 a direct report or someone lower than them on the 0:16:37.600 --> 0:16:41.400 corporate ladder as the CEO. Obviously everyone was lower than 0:16:41.560 --> 0:16:44.360 than Easterbrooks. So, um, this is a case where I 0:16:44.360 --> 0:16:46.640 think well intentioned HR departments are going to have to 0:16:46.680 --> 0:16:49.680 figure out how to handle this. UM and CEOs are 0:16:49.720 --> 0:16:51.480 going to have to figure out how to handle this. Clearly, 0:16:51.520 --> 0:16:53.920 a power differential can create all kinds of issues in 0:16:53.960 --> 0:16:57.000 a relationship at the same time. You know, many people 0:16:57.040 --> 0:16:59.880 do meet their spouse at work, and in many cases, 0:17:00.000 --> 0:17:02.840 companies are working to recruit power couples where they want 0:17:02.920 --> 0:17:05.920 both people to relocate for top jobs. So this is 0:17:05.960 --> 0:17:08.199 something that's not going to go away. Yes, sir, it's interesting. 0:17:08.359 --> 0:17:11.760 This is obviously black Rock of financial services company Wall 0:17:11.800 --> 0:17:14.000 Street has typically been perceived as an area that is 0:17:14.280 --> 0:17:18.199 not conducive to women. Is there any sense that certain 0:17:18.240 --> 0:17:22.240 industries maybe are doing a better job than others. That's 0:17:22.280 --> 0:17:25.720 an interesting question. There are certainly some industries where women 0:17:25.800 --> 0:17:29.880 have managed to make better strides, and financial services remains 0:17:29.960 --> 0:17:33.080 one of the most male dominated industries. Um. So I 0:17:33.080 --> 0:17:35.800 could certainly see that in this case black Rock might 0:17:35.960 --> 0:17:39.439 especially want to crack down on any violations of company 0:17:39.480 --> 0:17:42.840 policy that would seem to make um, you know, the 0:17:42.880 --> 0:17:46.000 workplace more hostile to women. It does not certainly help 0:17:46.040 --> 0:17:48.720 Mark Wiseman in this case that his wife is also 0:17:48.760 --> 0:17:52.560 a top black Rock executive and is the head of 0:17:52.560 --> 0:17:56.000 black Rock Canada. Um marsham Offett. Yeah, I was. I 0:17:56.080 --> 0:17:58.919 was thinking this has got to be an awkward moment 0:17:59.359 --> 0:18:01.919 for a lot of people at black Rock and To 0:18:02.040 --> 0:18:06.240 be clear, Mark Wiseman was potentially a successor to CEO 0:18:06.320 --> 0:18:09.400 Larry Fink, So it leaves a lot of questions looming 0:18:09.520 --> 0:18:13.840 large certainly for black Rock in terms of leadership if 0:18:13.960 --> 0:18:17.520 Larry Fink does step down. Sarah Green Carmichael, thank you 0:18:17.560 --> 0:18:21.360 so much for joining us. Sarah Green Carmichael of Bloomberg Opinion. 0:18:35.720 --> 0:18:39.560 We are broadcasting live from the Natixis Investment Managers headquarters 0:18:39.560 --> 0:18:43.480 here in Boston for Sustainable Finance a week and we 0:18:43.520 --> 0:18:47.440 are so lucky to have with us. Katherine Kaminski. Dr 0:18:47.560 --> 0:18:51.360 Katherine Kaminski, chief research strategist and portfolio manager at Alpha 0:18:51.520 --> 0:18:56.480 Simplex Group, which is the firm founded by Dr Andrew 0:18:56.680 --> 0:19:01.200 Low and focuses on understanding risk, mitigating it go forward. Uh. 0:19:01.359 --> 0:19:04.520 So nice to be here, Dr Kaminsky. I'm wondering from 0:19:04.560 --> 0:19:08.720 your perspective, what the biggest risk is heading into the 0:19:08.800 --> 0:19:10.800 risk of a sell off and rates or the sell 0:19:10.840 --> 0:19:13.920 off in UH credit or the concept of credit. It 0:19:14.080 --> 0:19:17.520 uration great to be here, Lisa. UM. To be honest, 0:19:17.680 --> 0:19:20.680 you know, as we know, uh, we've been in an 0:19:20.760 --> 0:19:24.480 environment where we've seen rates go very very low. Um, 0:19:24.560 --> 0:19:27.280 I'd say that you know, credit is obviously an issue. 0:19:27.400 --> 0:19:30.199 But we're paying a lot of tension to rates and 0:19:30.240 --> 0:19:34.080 what can happen if they go up? Um, and or 0:19:34.119 --> 0:19:36.880 if we have a situation where um, we've already seen 0:19:37.000 --> 0:19:39.360 some instances that we might have hit the bottom and rates, 0:19:39.400 --> 0:19:42.120 and I think people are a little concerned about how 0:19:42.119 --> 0:19:45.120 that might go. Um. Haven't people been worried about rising 0:19:45.200 --> 0:19:49.040 rates for a project ever happened? I know, I mean 0:19:49.080 --> 0:19:51.359 I've been worried about it for Actually, we don't worry 0:19:51.359 --> 0:19:53.800 about it because we're very dynamic and how we trade 0:19:53.840 --> 0:19:57.040 the markets and we can go short um in fixed income, 0:19:57.119 --> 0:20:00.280 and we are worried about a lot of individual who 0:20:00.440 --> 0:20:02.320 really can't and who have bought a lot of bonds 0:20:02.320 --> 0:20:05.520 and this year, UM, people have definitely uh you know, 0:20:05.680 --> 0:20:09.120 jumped into even more fixed income. And it's unclear, um, 0:20:09.200 --> 0:20:11.159 how much more there is to go to protect you, 0:20:11.200 --> 0:20:14.400 if we have any challenges. So it's interesting I'm looking 0:20:14.400 --> 0:20:18.480 at your firm. Uh, you employ a proprietary risk control technology. 0:20:18.520 --> 0:20:21.520 I think it's called adaptive volatility management. What is that 0:20:21.640 --> 0:20:26.199 in layment terms? And I stress laymans do. So the 0:20:26.240 --> 0:20:29.159 thing is is, if you think about risk, there's several 0:20:29.240 --> 0:20:31.120 key ways to think about risk there's things you can 0:20:31.160 --> 0:20:33.880 measure and things that you can actually know, and then 0:20:33.880 --> 0:20:36.240 there's the things that you can't know. What we try 0:20:36.280 --> 0:20:38.159 to do is do the best that we can to 0:20:38.320 --> 0:20:42.760 understand what types of risk we can measure, quantify and understand, 0:20:43.160 --> 0:20:46.119 and then use those um what we insights that we 0:20:46.200 --> 0:20:49.320 gain from measuring these risks to try and balance our 0:20:49.359 --> 0:20:52.760 portfolios over time. So as things change, we try to 0:20:52.920 --> 0:20:57.119 use information from markets to measure that volatility, to measure 0:20:57.359 --> 0:21:00.320 where things are moving so that we can adapt to things. 0:21:00.440 --> 0:21:04.920 What's the most visible forward pocket that you can measure risk? 0:21:06.119 --> 0:21:09.360 So I mean for us, it's not necessarily purely just 0:21:09.440 --> 0:21:12.760 a forecast of risk. It's also about understanding relative risks 0:21:12.760 --> 0:21:16.640 between different assets and quantifying it, but also understanding how 0:21:16.720 --> 0:21:20.440 much of that is actually reliable because backward looking, it's 0:21:20.520 --> 0:21:23.480 very easy to have a very precise measure, but you 0:21:23.560 --> 0:21:26.960 need to actually more think about in relative terms, which 0:21:27.040 --> 0:21:30.480 risks seem more viable than than others going forward? What 0:21:30.560 --> 0:21:33.959 are the risks that keep you up at night that 0:21:34.040 --> 0:21:39.399 you can't quantify? Is it a twitter? Is it macro 0:21:39.560 --> 0:21:43.639 global trade? What are the things that so the things 0:21:43.640 --> 0:21:46.520 that really keep me up at night are risks that 0:21:46.680 --> 0:21:51.040 have decorrelation effects. Now what does that mean. Decorrelation effects 0:21:51.040 --> 0:21:53.679 means that a lot of the relationships that we have 0:21:53.800 --> 0:21:56.520 seen and things that are in the data, things that 0:21:56.600 --> 0:22:01.879 people understand, things that people believe, revert. So unfortunately Twitter 0:22:02.320 --> 0:22:06.000 seems to be doing that. Um. But so we worry 0:22:06.040 --> 0:22:09.320 a lot about how how those type of events have 0:22:09.440 --> 0:22:14.000 the ability to change relationships that we think work. UM. So, 0:22:14.040 --> 0:22:17.640 as an example, maybe because that sounds very conceptual, UM, 0:22:17.680 --> 0:22:22.919 a simple example would be Monday. Uh sorry, still very fresh. Um. 0:22:23.040 --> 0:22:25.000 But if you look at a day like Monday, we 0:22:25.080 --> 0:22:28.360 saw equity markets sell off, we saw bond markets sell 0:22:28.400 --> 0:22:30.639 off at the same time, and also the US dollar. 0:22:31.160 --> 0:22:34.400