Speaker 1: This is Bloomberg Business Week inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: global business, finance and tech news. As it happened. Bloomberg
Speaker 1: Business Week with Carol Messier and Bloomberg Quick Takes Tim
Speaker 1: Stinovic on Bloomberg Radio. Hi, everyone, welcome to the weekend
Speaker 1: edition of Bloomberg Business Week. Well, this week you're going
Speaker 1: to hear from many members of our Bloomberg team as
Speaker 1: Tim and I were managing ourselves or our families through COVID,
Speaker 1: And I gotta say, Tim, it's been a crazy couple
Speaker 1: of weeks. I've had COVID twice. Yeah. I mean, look,
Speaker 1: first of all, a big thank you to the team
Speaker 1: here at Bloomberg Radio for managing through it, and then
Speaker 1: our colleagues for jumping in for us. But hey, we're
Speaker 1: on the other side of it, Carol, hopefully truly on
Speaker 1: the other side of it at this point, right, Yeah,
Speaker 1: totally fingers crossed. Uh. And it was another crazy week, right, Yeah,
Speaker 1: it was. It's look, you know, they got John monthly
Speaker 1: jobs report happened. It's become even more key in today's
Speaker 1: environment where investors just continue to consider the possible trade
Speaker 1: off between a risk session and aggressive fed tightening. Talk
Speaker 1: about being between a rock and a hard place, all right.
Speaker 1: Also ahead, we're gonna talk about a lot of stuff,
Speaker 1: including supply chains and the world's biggest business problems. Once
Speaker 1: CEO says Quantum Computing might just be the fix. Plus
Speaker 1: swamp Poodle just a funny name, not to former chairman
Speaker 1: and Mellon Bank CEO. We're on his hometown and how
Speaker 1: his humble upbringing set him up to lead one of
Speaker 1: America's biggest financial institutions. All of that to come. First up,
Speaker 1: we love love to hear about the Heist. That's the
Speaker 1: special double issue of Bloomberg Business Week. It is out
Speaker 1: now on newsstands, online and on the Bloomberg. We're bringing
Speaker 1: you stories from it throughout the next couple of hours.
Speaker 1: And to get us all going on the Heist issue,
Speaker 1: Bloomberg Business Week editor Joel Webber gives us the lowdown
Speaker 1: on this year's scams and snitches, joined here by Paul Sweeney,
Speaker 1: a Bloomberg Surveillance and senior Markets editor, Mike week It,
Speaker 1: Oh my gosh, it's like the ultimate Summer bee Tree.
Speaker 1: Number of years ago. We decided that this theme, this
Speaker 1: topic UM deserves to go cover to cover, So we
Speaker 1: go from the front cover to the back cover and
Speaker 1: we go all in on heist, which we open with
Speaker 1: a little uh opening paragraph that just also reminds people
Speaker 1: that you know, for these are mostly intended as sort
Speaker 1: of school degree stories, but there are some some real
Speaker 1: heists in the headlines right now that people people feel
Speaker 1: very much affected by. So where we acknowledge those as well.
Speaker 1: So I'll talk to us about the lot lottery lawyers
Speaker 1: and what that heist is about. That's when I haven't
Speaker 1: had a chance to read yet. The story UM is
Speaker 1: about UM, a lawyer on Long Island who basically created
Speaker 1: a new business which was advising UM people who won
Speaker 1: mega millions or powerballs, and he put together actually a
Speaker 1: little modest portfolio of winners and then help them start
Speaker 1: advising advising them and UM sort of being a financial
Speaker 1: advisor to them. And that's where the story kind of
Speaker 1: snowballs and it turns into this cast of characters that
Speaker 1: may or may not have scammed him. There there is
Speaker 1: a ongoing um H lawsuits, So I have to say
Speaker 1: this is all allegedly UM, except that the details of
Speaker 1: the story. You just can't make this stuff up, all right,
Speaker 1: A little bit more somber one perhaps is taken tax
Speaker 1: leans cost generations of Black Americans their land? How does
Speaker 1: that work? Yeah, so this was a far more sober one.
Speaker 1: UM and Margaret new Kirk came to us with this
Speaker 1: UM a number of months ago and said that she
Speaker 1: had found out about a family in South Carolina that
Speaker 1: generations ago actually ended up losing. It's losing their land.
Speaker 1: And the story is tragic. It's about the great grandmother
Speaker 1: who who basically was paying UM what she thought was
Speaker 1: UM taxes to UM via sort of a white intermediary
Speaker 1: in South Carolina who was taking money to the government
Speaker 1: on her behalf. It turns out that he had actually
Speaker 1: purchased the land from the government via a tax ling,
Speaker 1: and that the money that she was giving him was
Speaker 1: actually rent, and he broke this news to her UM
Speaker 1: upon the time that he was actually selling that land.
Speaker 1: And the story goes into not only the family story
Speaker 1: of how they missed out on this land that is
Speaker 1: actually just an incredible location and in South Carolina, but
Speaker 1: also how this is a practice that writ large across America,
Speaker 1: not only used to happen but continues to happen, and
Speaker 1: because of that, black Black Americans UM end up losing
Speaker 1: out on wealth. You know, real estate is a source
Speaker 1: of wealth and that intergenerational thing that happens between families,
Speaker 1: UM is something that a lot of Black Americans have
Speaker 1: missed out on. So we felt like that was an
Speaker 1: appropriate one to bring him to the highst issue as well. Joel,
Speaker 1: if you step back for a minute, you know you
Speaker 1: I don't know how many years in a row you've
Speaker 1: done this highest five five years that, so you're probably
Speaker 1: up to thirty stories by now. Where's the heist capital
Speaker 1: of the world in your opinion? I would actually put
Speaker 1: it as as Florida. I think the nefarious deeds that
Speaker 1: go down or make it make it a special place
Speaker 1: that I think we went a little light on Florida
Speaker 1: in this issue. But sleeper um Los Angeles. And there's
Speaker 1: another great one in this issue called the open house
Speaker 1: Hunters who who hit l as rich and famous. And
Speaker 1: this story is incredible because it's about UM this duo
Speaker 1: who would go scope houses. Also allegedly that this trial
Speaker 1: is coming up in August. Uh, they would go scope
Speaker 1: open houses and it turns out a lot of these
Speaker 1: open houses were owned by celebrities, and so they were
Speaker 1: actually able to come into homes kind of scope worth
Speaker 1: the goods were and then come back later and do
Speaker 1: their do their stuff. And this was a year's long effort.
Speaker 1: This was a massive crimes free and they took luxury bags,
Speaker 1: they took they hit Usher Usher up to have Lebron
Speaker 1: James's Cleveland calves ring from when he won the championship
Speaker 1: that got stolen. It's just amazing read. And some of
Speaker 1: these brake ins were just like the I think the
Speaker 1: cops and the detectives were like totally bufuddled, like they
Speaker 1: had like parkur abilities on top of everything else, and
Speaker 1: we're like dropping in from skylights like in Mission Impossible.
Speaker 1: So it's some fun stuff here. That was Bloomberg Business
Speaker 1: Week editor Joel Webber. Clearly, there's plenty to look forward
Speaker 1: to and this year's special Heist issue, and a big
Speaker 1: thank you, of course to Paul Sweeney of Bloomberg Surveillance
Speaker 1: and Senior Markets editor Mike Reagan for bringing us that interview.
Speaker 1: Coming up, Joel is back, this time with Bloomberg reporter
Speaker 1: and heist detective Zeke Fox to tell us about a
Speaker 1: rapper's crypto scheme and how it all went terribly wrong.
Speaker 1: You're listening to Bloomberg Business Week. This is Bloomberg. This
Speaker 1: is Bloomberg Business Week with Carol Man here and Bloomberg
Speaker 1: Quick Takes Tim Stinovin from Bloomberg Radio. An instant classic
Speaker 1: from this year's Heist issue. It's about a novelty rapper
Speaker 1: and her startup guy husband who are now facing trial
Speaker 1: for their roles in an eight billion dollar hack of
Speaker 1: cryptocurrency exchange bit fin x that took place back in
Speaker 1: So how do they pull it off? To begin with?
Speaker 1: How did they get caught? And what happened to hold
Speaker 1: that money? To tell the tale, we've got Bloomberg Market
Speaker 1: Senior editor Mike Reagan and Carol Well. They turned to
Speaker 1: the individual who wrote the piece, Bloomberg News Financial Investigations
Speaker 1: reporter Zeke Fox, along with Business Week editor Joel Weber.
Speaker 1: It might actually be the biggest hack of heist of
Speaker 1: all time, right and see how does that? How does
Speaker 1: that happen? The next was one of the biggest crypto
Speaker 1: exchanges in the world, but like a lot of exchanges,
Speaker 1: it had what appears to be very poor security and
Speaker 1: somebody got into the exchange and you stole the passwords
Speaker 1: do there are bitcoins and transferred out more than half
Speaker 1: the bitcoins, more than a hundred thousand bitcoins, And for
Speaker 1: years there was a mystery what happened, and the value
Speaker 1: of those bitcoins rose and rose until at their peak,
Speaker 1: the missing bitcoins were worth more than eight billion dollars. Zeke,
Speaker 1: I wanted to ask you about the two main characters
Speaker 1: in this story, Heather Morgan, a k razzle razzle Cohn
Speaker 1: and her husband. Um, you describe what I consider some
Speaker 1: major crimes against music on her part and her rap
Speaker 1: music just awful, awful rap music is is her claim
Speaker 1: the theme. But I don't get the you know, I
Speaker 1: don't get the opinion that she was a criminal going
Speaker 1: into this. She just sort of stumbled into this heist.
Speaker 1: To walk us through how what we know about how
Speaker 1: these two got involved in this caper? Yeah, I mean
Speaker 1: that was what was so crazy is that in February,
Speaker 1: out of nowhere, the Department of Justice announced that they've
Speaker 1: recovered most of the bitcoins and arrested to people for
Speaker 1: money laundering. There's this couple, Heather and Ilia and Heather,
Speaker 1: as I said, the story she's got the rap persona.
Speaker 1: It was just it seems so unlikely. It's like something
Speaker 1: you wouldn't believe if someone made it up. Um. And yeah,
Speaker 1: she has like a very standard or not very standard
Speaker 1: but her back, but nothing about her background suggests that
Speaker 1: she would get involved in something like this. But the
Speaker 1: fact is when they when the authorities rated their apartment
Speaker 1: down in the Financial District, what they found on the
Speaker 1: husband's cloud accounts was an encrypted file that contained the
Speaker 1: passwords to all these stolen bitcoins. And like in bitcoin,
Speaker 1: you don't want anyone whoever controls these private keys, these
Speaker 1: passwords controls the coin. So the fact that he's in
Speaker 1: possession of all the sold and funds is like a
Speaker 1: strong suggestion that uh, he may have been the one
Speaker 1: who took them. And the authorities also have evidence that
Speaker 1: Morgan participated in efforts to move this money and to
Speaker 1: conceal its origins and that's why she got arrested too.
Speaker 1: Um but uh yeah, it's it's it really is mysterious
Speaker 1: how uh if these two are in fact the hackers,
Speaker 1: how they got into it, um or why they were
Speaker 1: trying to attack so much attention after they had pulled
Speaker 1: off like this crazy crime. So so yeah, break that
Speaker 1: down for us, because obviously this hack happened a while ago,
Speaker 1: and then it was sort of this big mystery and
Speaker 1: what what was the thing that triggered authorities becoming increasingly interested.
Speaker 1: So with bitcoin, it exists as like an entry on
Speaker 1: a distributed database, so anyone could look up the addresses
Speaker 1: where the hackers sent the funds like this was public
Speaker 1: and I could see that the bitcoins were in like
Speaker 1: these numbered addresses, but there's no association with any person um.
Speaker 1: So the problem was that the reputable bitcoin companies don't
Speaker 1: want to touch bitcoins that they know come from a
Speaker 1: crime like a hack. So the hackers need to find
Speaker 1: some way to move these bitcoins to someone who didn't care.
Speaker 1: And they found one place, which is called Alpha Bay,
Speaker 1: which would place essentially eBay for like drugs and guns
Speaker 1: on the dark West. And the thinking was that you
Speaker 1: send the bitcoins to alpha Bay, and then you inside
Speaker 1: Alpha Bay, all the funds are mixed up. So but
Speaker 1: then when you withdraw the bitcoins from alphabet to a
Speaker 1: new address, no one will know that the new address
Speaker 1: is associated with the hack. Um. The problem was that
Speaker 1: the authorities, in particular the cyber crime unit within the
Speaker 1: I r S was on like this crazy streak of
Speaker 1: cracking cryptocrimes, and one of the places they went after
Speaker 1: was Alpha Bay. And after like this raid with the
Speaker 1: Royal High Police in Thailand, they were able to get
Speaker 1: Alphabat's computers and that meant to have all of Alphabat's
Speaker 1: internal records and they could connect transfers to Alpha Bai
Speaker 1: with transfers out of Alpha Bay, so transfers that the
Speaker 1: hackers thought were safe. We're now UH able to be
Speaker 1: figured out. But the fact is that there was this
Speaker 1: was such a trove of data that the authorities were
Speaker 1: bringing all sorts of cases related to this. It took
Speaker 1: him a few years before UH they realized what they
Speaker 1: had and were able to gather enough evidence to UH
Speaker 1: search Heather and Ilia's apartment and and and Zeke quickly.
Speaker 1: Where where do things stand now is in present a
Speaker 1: waiting trial. Heather is out on bail, and there's evidence
Speaker 1: that they sent some or whoever had these bitcoins sent
Speaker 1: them to another dark net market in Russia called Hydra.
Speaker 1: And on Hydra you could pay someone in bitcoin and
Speaker 1: have them very rubles underground for you, and then you
Speaker 1: could go dig them up later, so you never know.
Speaker 1: They take a lot of money to hydra. There could
Speaker 1: be some fundles of rubles sitting somewhere waiting for Heather
Speaker 1: and Ilia to come they come up. That was Bloomberg
Speaker 1: News Financial Investigations reporter Zeke Fox, with Business Week editor
Speaker 1: Joe Weber, Mike Greek and of course with us there
Speaker 1: as well. We'll have more from the Heigst issue, but
Speaker 1: later on on our broadcast. Still ahead on Bloomberg Business Week,
Speaker 1: the CEO of a multimillion dollar software company says quantum
Speaker 1: computing can solve supply chain issues. Find out how. On
Speaker 1: the other side, this is Bloomberg Broadcasting from the financial
Speaker 1: capital of the world, Bloomberg Eleve in Frio in New York,
Speaker 1: to Washington, d C. Bloomberg to Boston, Bloomberg one oh
Speaker 1: six one to San Francisco, Bloomberg nine sixty to the
Speaker 1: country Sirius XM Chado one nine ten and around the
Speaker 1: globe the Bloomberg Business app and Bloomberg Radio dot Com.
Speaker 1: This is Bloomberg Business Week. My next cast is all
Speaker 1: about the zeros and the ones and how they can
Speaker 1: solve the world's biggest business problems. The CEO of Quantum Computing, Inc.
Speaker 1: Robert Listkowski, spoke with Paul Sweeney of Bloomberg Surveillance and
Speaker 1: senior markets editor Mike Reagan. They began by asking a
Speaker 1: very important question, what exactly is quantum computing. It's an
Speaker 1: exponentially much more powerful, computationally way of looking at really
Speaker 1: complex problems. You know, I can get into the physics
Speaker 1: of it, right. Classic computers look at ones and zeros.
Speaker 1: Quantum computers look at ones and zeros and a zero
Speaker 1: and one at the same time. You can get into
Speaker 1: all that stuff, right. But I think at the end
Speaker 1: of the day, for the average business user, people are
Speaker 1: need to know that we can do really really complex
Speaker 1: types of computations, dealing with supply chain, dealing with all
Speaker 1: sorts of variables in ways that classical computers can't even
Speaker 1: begin to achieve. Yes, so, Robert, your company's Quantum Computing Inc.
Speaker 1: Qubatt is the ticker simple. You tell us a little
Speaker 1: bit about some of the products you're offering or or
Speaker 1: having development. I know a lot has to do um
Speaker 1: with stuff like security support and and that sort of thing.
Speaker 1: Can you walk us through some of your main offerings
Speaker 1: and and uh, you know, what we should need to
Speaker 1: know about them. Sure, so we started off as a
Speaker 1: software company. We're a platform that was designed to allow
Speaker 1: business users or any user that for that matter, to
Speaker 1: connect up to a quantum computer. Quantum computers don't have
Speaker 1: the same programming language that classical computers do, right, You can't.
Speaker 1: You can't take what you've done on a Windows machine
Speaker 1: or an IBM three sixty or whatever the machines are
Speaker 1: out there and then be able to do that on
Speaker 1: a quantum computer. They need different programming techniques, right. They're
Speaker 1: very complex systems. You need quantum programmers to be able
Speaker 1: to do these things. So we created a platform that
Speaker 1: would allow a business user to formulate a problem that
Speaker 1: could run on not just one quantum computer, but any
Speaker 1: number of quantum computers. And that way we took the
Speaker 1: heavy lifting out of the equation and allowed people to
Speaker 1: be able to do things today the challenges quantum computing
Speaker 1: as a domain hasn't quite achieved the level of capability
Speaker 1: that we needed to get. Right. It's a process. It's
Speaker 1: an evolutionary process that says, and we can do great
Speaker 1: things today, but we're gonna really do great things, better
Speaker 1: things tomorrow because quantum computers are going to be much
Speaker 1: more capable in a few years than they are today.
Speaker 1: Classical computers can do things that quantum computers can do
Speaker 1: right now and compute, you know, computational problems that um
Speaker 1: they can really give good results for it. But but
Speaker 1: over time quantum computers are going to continue to evolve
Speaker 1: into really really capable machines. So we looked at a
Speaker 1: way that we could bring business users to those machines,
Speaker 1: get them ready to be quantum ready as as machines
Speaker 1: are coming on on online solve certain problems dealing with
Speaker 1: supply chain and other optimization problems. However, just recently, and
Speaker 1: this is really exciting for us, we just acquired a company,
Speaker 1: a photonic computing company called q photon, which actually uses
Speaker 1: photonics a different way to look at a way of
Speaker 1: computing quantumly and we can actually solve some problems today
Speaker 1: that are actually business problems, business related problems. So there's
Speaker 1: a way to apply quantum computing and techniques today that
Speaker 1: um quantum computing can actually solve and we have a
Speaker 1: computer that can do that. So it's really interesting is
Speaker 1: that we have become a full stack quantum computing company.
Speaker 1: We're no longer just a software company. Q Photon is
Speaker 1: no long going just a hardware company. Together, combining these
Speaker 1: two companies, we can do an end to end approach
Speaker 1: towards providing solutions to real world problems. Ask you about
Speaker 1: that whole notion of the full stack you know, Um,
Speaker 1: so much of what we've talked about this year has
Speaker 1: been the semiconductor market. I'm guessing in your line of work,
Speaker 1: you need access to the best, you know, fastest chips available.
Speaker 1: Is this whole uh supply chain issues with the chips
Speaker 1: themself throwing you any curveballs? Is it a problem at all? No,
Speaker 1: it hasn't been. I mean, first off, we're not producing
Speaker 1: computers at scale yet, We're just producing a couple and
Speaker 1: three of them at a time. So for us, supply
Speaker 1: chain issues haven't haven't really manifested themselves in terms of
Speaker 1: the scale that you know most supply chains are seeing that. Secondly,
Speaker 1: the chips that were manufacturing and we are manufacturing chips
Speaker 1: are are much different than what you see in the
Speaker 1: microchip industry. So are is a very specialized, very unique
Speaker 1: types of materials that go into creating the photonics that
Speaker 1: are required for our quantum computing. So we have a
Speaker 1: bump into that now in the future perhaps, but I
Speaker 1: think we've got, you know, our plans and scaling help
Speaker 1: us kind of mitigate that kind of risk. But I
Speaker 1: but to your point, you know, a lot of the
Speaker 1: computer industry is suffering from those those microcircuits and the the
Speaker 1: microchips types of supply chain issues, and they will be
Speaker 1: for the foreseeable future. We, on the other hand, don't
Speaker 1: don't We're not gonna be bumping into that. And you
Speaker 1: really can't compare the two. The quantum computer is gonna
Speaker 1: be able to do things that the classical that you know,
Speaker 1: several many classical computers couldn't do. Tied together quantum. One
Speaker 1: quantum computer is gonna be able to achieve um computational
Speaker 1: superiority um that those classical computers can't do. So supply
Speaker 1: chain issues won't be as impactful to the quantum industry
Speaker 1: as they are in the classical industry. A lot to
Speaker 1: take in there. Big thank you to Robert Liskowski, he's
Speaker 1: CEO of Quantum Computing, Inc. Joined there by Bloomberg Surveillance
Speaker 1: is Paul Sweeney and Senior markets editor Mike Regan. You're
Speaker 1: listening to Bloomberg Business Week. Up next, how former mail
Speaker 1: In Bank CEO Marty McGinn's humble beginnings set him on
Speaker 1: a path to the top of one of the America's
Speaker 1: biggest financial institutions, and why he thinks the US is
Speaker 1: at a heightened risk of recession. This is Bloomberg. You're
Speaker 1: listening to Bloomberg Business Week with Carol Messer and Bloomberg
Speaker 1: Quick Takes Tim Stinovik from Bloomberg Radio. Swampoodle funny word, right, Well,
Speaker 1: it's also the name of a North Philadelphia neighborhood. It
Speaker 1: plays a big part in our next guest new book.
Speaker 1: It's called From Swampoodle to Melanbank Ceo, An Irish Americans Journey,
Speaker 1: The autobiography of Martin G. Mcgwinn Jr. The former chairman
Speaker 1: and CEO of Melonbank, spoke in depth about his upbringing
Speaker 1: with Bloomberg Radio is Paul Sweeney and Senior Markets editor
Speaker 1: Mike Reagan. Marty, I love the title, but you gotta
Speaker 1: tell me what or where is swampoodle. Well, it certainly
Speaker 1: is an unusual word, and it's it's a neighborhood in
Speaker 1: northern Philadelphia where are a lot of Irish immigrants settled
Speaker 1: in the early nineteen hundreds, including my grandparents. So it
Speaker 1: seemed like a good place to start, uh, telling my story.
Speaker 1: And so it is from swamp poodle to Melanbank CEO. Hey, Marty, Uh,
Speaker 1: you know, I'm just kind of seeing here. You grew
Speaker 1: up in Princeton, graduated from Villanova and Villanova Law school,
Speaker 1: and then you starved into Marine Corps Vietnam. Tell us
Speaker 1: about that experience. Well, Uh, I joined the Marine Corps
Speaker 1: while I was in college because they had a program
Speaker 1: where you went down during summers in college and went
Speaker 1: through your your your basic training, and then you were
Speaker 1: commissioned when you graduated. And in my case, I was
Speaker 1: guaranteed the deferments. I could go to law school and
Speaker 1: then serve on active duty. And that seemed a good
Speaker 1: way for me to commit to serve my country at
Speaker 1: the same time be able to start my career in
Speaker 1: a way that it was consistent with my planning. And
Speaker 1: and in the Marine Corps, you may know, I mean
Speaker 1: they have a saying every man as a fighting man
Speaker 1: from the comment on on down, So you have to
Speaker 1: get through all the same basic training even if you
Speaker 1: intend to have or hope to have a basic legal responsibility,
Speaker 1: which is what I did, and then serving in Vietnam
Speaker 1: was what all Marines were doing during those days when
Speaker 1: I was was active. You know, Marty, I always like
Speaker 1: to talk to UH people who have had experiences running
Speaker 1: a bank, because I feel like they have such a
Speaker 1: unique perspective on the economy and markets, almost like no
Speaker 1: one else can sort of view from having been in
Speaker 1: your position. And I'm curious to know if we're here
Speaker 1: sitting in an environment with more than eight percent inflation,
Speaker 1: treasure yields going up one day down the next year,
Speaker 1: stocks in a bear market, what's your sort of read
Speaker 1: on the economy and and how we should think about
Speaker 1: markets and and the whole banking industry and and and
Speaker 1: everything UH in your old wheelhouse these days. That's a
Speaker 1: pretty broad question, but let me try to answer it, UH,
Speaker 1: as far as the economy is can concerned. I mean,
Speaker 1: I think we've had a fairly strong economy for quite
Speaker 1: a few years now, and then when Congress really stepped
Speaker 1: up the spending, I think that really is what triggered
Speaker 1: the first move toward inflation. UM. And then when you have,
Speaker 1: of course, the war in Ukraine and the energy problems
Speaker 1: and all the other issues. UM. And then frankly, I
Speaker 1: think the FRED was FED was very slow in moving
Speaker 1: to raise interest rates, and so the challenge now looking ahead,
Speaker 1: and my opinion is the FED would love somehow to
Speaker 1: get us what they call a soft landing, which means
Speaker 1: they contain inflation without causing too much disruption in the economy.
Speaker 1: But that's it's been very hard to do both historically
Speaker 1: and I think in this environment with so many uh
Speaker 1: problematic issues UH, that I think it's going to be
Speaker 1: difficult to do. So my own opinion is I think
Speaker 1: there's a greater chance for a recession UH than previously,
Speaker 1: So maybe there's it's more likely than less less likely.
Speaker 1: I think, going back to the banking part of your question, uh,
Speaker 1: A government regulation has been increasing in less decade or
Speaker 1: so UH, and banking it very difficult to compete in
Speaker 1: an economy where you're not only dealing with non financial
Speaker 1: institutions that are regulated differently, but you're dealing with competitors
Speaker 1: on a global basis. So it's a very difficult environment.
Speaker 1: And of course you're right, I mean the banks have
Speaker 1: to work very hard in the economy as all companies,
Speaker 1: but still they're more directly affected. So this is a
Speaker 1: very difficult environment I think for banking loves to get
Speaker 1: some color from you. You were chairman at CEO of
Speaker 1: Melon Financial Corporation from to two thousand six. Talk to
Speaker 1: us about that time and some of the challenges you faced. Well,
Speaker 1: it would that that period of time followed a very
Speaker 1: strong stock market, which was not only important for how
Speaker 1: corporation shares trade, but of course, Uh, we sold our
Speaker 1: retail banking business, so I wanted to move away from
Speaker 1: being a more traditional bank to a to a more
Speaker 1: focused organization with our strategic focus on asset management asset servicing.
Speaker 1: So that slower market period after a stronger market period
Speaker 1: also had a major impact on our business. So it
Speaker 1: was it was a major struggle with one of the
Speaker 1: you know, the poorest equity market since the depression. You know, Marty,
Speaker 1: I've read a few pages from the book earlier and
Speaker 1: uh really Uh one anecdote that caught my attention was
Speaker 1: when you were a kid, uh going to see the
Speaker 1: Philadelphia Athletics play at Connie Mack Stadium. That's going back
Speaker 1: called but here's and as I said before, I Marty
Speaker 1: and I have such a similar background, I wondered if
Speaker 1: we were related. But here's what really made me think
Speaker 1: we're related. Paul's he used to wait to hold about
Speaker 1: halfway through the game so he could get in for free,
Speaker 1: not after okay, But but Martin, what are you know
Speaker 1: with that kind of that kind of humble and you know,
Speaker 1: hard working upbringing that you described in the book from
Speaker 1: your family in the swamp Poodle uh section of Philadelphia.
Speaker 1: How does that serve you eventually in the role of
Speaker 1: a bank ceo? You know? Is I'm guessing you know
Speaker 1: you earned the you learned the value of a dollar
Speaker 1: very early, and I'm guessing you must have carried that
Speaker 1: on throughout your career as a banker. Is that is
Speaker 1: that fair to say? No, I think it's it's very
Speaker 1: fair to say, and I would expand on that slightly. Yes.
Speaker 1: My my grandparents were Irish immigrants. My grandfather was an
Speaker 1: operator of a trolley, my grandmother was a homemaker, uh,
Speaker 1: And so we began with very modest the backgrounds, and
Speaker 1: so I think that certainly teaches you that not only
Speaker 1: the value of a dollar, but I think also the
Speaker 1: need to work hard, uh and to be committed do
Speaker 1: what you do and frankly, I also think of error.
Speaker 1: But my Irish American background was very important too, and
Speaker 1: in uh inculcating a desire to work hard, but also
Speaker 1: to maintain a sense of humor, especially about myself. And
Speaker 1: and I think those combined backgrounds have been very important
Speaker 1: in my life. That's true. The Irish are very self deprecating, Paul, Paul.
Speaker 1: It's rare to get three Irish guys from Philly together
Speaker 1: like this without someone getting in trouble. I don't know.
Speaker 1: I remember Conny mack Stadium was right on the edge
Speaker 1: of swamp poodle too, so it was right there. That's
Speaker 1: why I wonder where the term swamp poodle? What's the
Speaker 1: origins of that today? It's a good question, and I've
Speaker 1: tried to find the answer, uh, and it's not a
Speaker 1: very satisfactory answer. So I'm afraid I can't give you
Speaker 1: a very good answer. But somehow it's stuck, and I
Speaker 1: think many people don't know about it today, which is
Speaker 1: why it's sort of made the title kind of intriguing. Yeah, yeah,
Speaker 1: it's interesting, So Marty, if you think about that, you know,
Speaker 1: the US banking system, over the last fifteen years, we
Speaker 1: had the great financial crisis two thousands seven, two thousand
Speaker 1: and eight, and the banks obviously played a role there.
Speaker 1: We've just gone through two and a half years and
Speaker 1: still dealing with this global pandemic, and that's been an
Speaker 1: uncertain time. How do you just give us your thoughts
Speaker 1: on kind of as you look at the US banking
Speaker 1: system here today, kind of what are your views in
Speaker 1: terms of how it's performing, the relative health of it,
Speaker 1: and kind of maybe what it can do better. Well.
Speaker 1: I think these last fifteen years and and a lot
Speaker 1: of the extra regulations have made doing business we're burdensome
Speaker 1: that it needs to be. But on the other hand,
Speaker 1: some of those regulations and the requirements that banks have
Speaker 1: to comply with in terms of capital have also made
Speaker 1: the banks much stronger. And so I think today the
Speaker 1: banks in general are very strong, uh And I think
Speaker 1: these tests that have been applied periodically have shown that
Speaker 1: to be the case. Obviously, the economy now is a
Speaker 1: major challenge, but I think of banks are well positioned
Speaker 1: and and I hope we can get a balance in
Speaker 1: the regulatory environment that you know, dissuades on inappropriate risk
Speaker 1: but also encourages appropriate risk taking and keeps our banking
Speaker 1: system strong because it's so important to the economy. You know,
Speaker 1: Marty Paul and I were just talking about how it
Speaker 1: seems like there was almost a bubble in just about
Speaker 1: every asset class the last few years. That's you know,
Speaker 1: collapsing before our eyes now, from stocks to even treasuries
Speaker 1: were probably overvalued there Um. The one bubble that perhaps
Speaker 1: exists that hasn't burst just yet is housing. You know,
Speaker 1: we've had this tremendous run up in housing prices, and
Speaker 1: obviously that caused a big problem when they came back
Speaker 1: to earth during the financial crisis. To get back to
Speaker 1: that idea of regulation I mean, is that the current
Speaker 1: banking system knock on wood in much better shape to
Speaker 1: absorb some roughness in the housing market if these prices
Speaker 1: come back to earth. Yeah, I think for sure. Part
Speaker 1: of the problem with the prior crisis was that the
Speaker 1: bank lending, and not just banks, by the way, but
Speaker 1: even non banks, a lot of different financial institutions which
Speaker 1: were less regulated, where obviously lending sometimes without requiring any
Speaker 1: collateral at all, and and so at look at Lehman Brothers,
Speaker 1: they were so highly uh under capitalized and over leveraged
Speaker 1: that that's what ultimately led to their demise. And I
Speaker 1: think today banks are stronger. I think they're the requirements
Speaker 1: against lending, especially on on houses will protect the banks
Speaker 1: and hopefully homeowners as well during this crisis. But uh,
Speaker 1: remember too, part of this bubble, if that's what it is,
Speaker 1: or at least the massive appreciation is being driven by
Speaker 1: supply and demand, and there's just, you know, far more
Speaker 1: demand than there is supply, and that's being reflected many markets.
Speaker 1: On the other hand, as interest rates go up, that
Speaker 1: will have an impact on people that have borrowed, but
Speaker 1: hopefully both they and the banks are in better position
Speaker 1: to have that's former Melan Banks CEO Marty mcgwin with
Speaker 1: our Paul Sweeney and Mike Reagan. Mcgwin's autobiography it is
Speaker 1: out now, and that reps up the first hour of
Speaker 1: the weekend edition of Bloomberg Business Week from Bloomberg Radio.
Speaker 1: I'm Carol Masser, I'm Tim Stinovic. Ahead in our next hour,
Speaker 1: we'll talk with Free Vago CEO Axel Heafer on the
Speaker 1: all important summer travel season. The experience is not good.
Speaker 1: Prices are very high. Um, you have you have, as
Speaker 1: you said, you have labor shortage everywhere, so the outlook
Speaker 1: is actually not that good. Plus another gem from the
Speaker 1: Business Week heist issue all about a New York lottery
Speaker 1: lawyer who won his clients trust then lost their mega millions.
Speaker 1: This is Bloomberg. This is Bloomberg Business Week inside from
Speaker 1: the reporters and editors who bring you America's most trusted
Speaker 1: business magazine, plus global business, finance and tech news as
Speaker 1: it happened. Sloomberg Business Week with Carol Messer and Bloomberg
Speaker 1: Quick Takes Tim Stinovic on Bloomberg Radio. Plenty ahead in
Speaker 1: our second hour of the weekend edition of Bloomberg Business Week,
Speaker 1: including the CEO of travel services company Travago on temperate
Speaker 1: expectations and hot destinations for summer travel, and the story
Speaker 1: of a New York area lawyer who built a practice
Speaker 1: by giving legal and financial advice to lottery jackpot winners
Speaker 1: who's now accused of fraud. First up this hour. Though
Speaker 1: in addition to Friday's job print, new f O m
Speaker 1: C minutes came out this week. Official sy A fifty
Speaker 1: or seventy five basis point hike come in later this
Speaker 1: month to help break down the latest missive from the
Speaker 1: US Central Bank. Bloomberg News senior markets reporter Katie Greifeld
Speaker 1: and senior Markets editor Mike Reagan spoke with Don McCree,
Speaker 1: head of commercial banking at Citizens Financial Group. I think
Speaker 1: it was pretty much as expected. I think share Powell
Speaker 1: in its testimony a few weeks ago was was certainly
Speaker 1: pretty hawkish and uh, we're leaning towards probably a seventy
Speaker 1: five basis point move. Again reinforced that there's a likelihood
Speaker 1: that the economy could slip into some kind of recession.
Speaker 1: Whether it's deeper shallow is to be seen. Don it
Speaker 1: strikes me as a pretty uh difficult environment to be
Speaker 1: in commercial banking. One day we have interest rates rising
Speaker 1: really vastly. The next day they're coming back down. The
Speaker 1: focus seems to shift from concerns about inflation so concerns
Speaker 1: about the economy possibly falling into a recession. What is
Speaker 1: sort of the atmosphere among your clients right now. Are
Speaker 1: they sort of pulling back on demand for loans at
Speaker 1: a time like this, or is there even more demanding
Speaker 1: It's actually pretty good. I mean, if anything, there's more
Speaker 1: demand at the margin. Um, that's largely a function of
Speaker 1: a lot of the other markets. Being so disrupted. So
Speaker 1: you know, the equity markets are clearly you know, selling off.
Speaker 1: There's not a lot of new capital being raised there.
Speaker 1: The high yeld market has been essentially closed. I think
Speaker 1: there was billion of issuance in the in the last quarter,
Speaker 1: which has got to be a record low and for
Speaker 1: very light light calendars going forward. And the institutional loan
Speaker 1: markets are kind of backed up right now and really
Speaker 1: kind of hanging to the sidelines still. I see what
Speaker 1: the economic picture. So we've had a pretty heavy client
Speaker 1: flow um. And remember in a in a bank like ours,
Speaker 1: our loan book is floating rates, so as rates go up,
Speaker 1: it's a short term index and floating rates, so as
Speaker 1: rates go up, that's generally a good thing, you know,
Speaker 1: for our P and L and bank earnings. And then
Speaker 1: on the risk side, I would say that we're seeing
Speaker 1: very little stress in the portfolio. I think that CEOs
Speaker 1: got very serious during the pandemic. They adjusted their businesses,
Speaker 1: trim their workforce, adjusted their working capital um and that's
Speaker 1: continuing as they stare into you know, a potential recession.
Speaker 1: So people are very focused and they're taking actions on
Speaker 1: their business to try to make sure they can survive.
Speaker 1: Whatever the economy throws at them, and on what kind
Speaker 1: of conversations are you having with clients right now? Because
Speaker 1: if I, you know, look across Wall Street commentary that
Speaker 1: I get in the morning, if I look at you know,
Speaker 1: consumer sentiments surveys, seems like there's a lot of angst
Speaker 1: out there. Would you say that that's showing up in
Speaker 1: some of the conversations that you've been having as well
Speaker 1: it is, I'd say, sarn. I wouldn't. I wouldn't. I
Speaker 1: think anst as a little bit strong. Um. I think
Speaker 1: they're trying to figure out ways to automate and become
Speaker 1: less dependent upon the labor because that continues to be
Speaker 1: a real constraint being able to hire people. That's constraining
Speaker 1: the sales line in a lot of our clients. The
Speaker 1: one one piece of good news that they're not worried
Speaker 1: about is interest rates because a lot of companies refinanced
Speaker 1: over the last two or three years, taking advantage of
Speaker 1: the really low rates that were available in the marketplace
Speaker 1: and turned out their debt. So we're not facing a
Speaker 1: wall of maturities that we might otherwise be facing right now. Um.
Speaker 1: And they're they're if they're not if they're not termed out.
Speaker 1: There's been enormous amounts of hedging activity boast in the
Speaker 1: currency markets and in the commodities marketing, in the interest
Speaker 1: rate market, so people are people are somewhat protected in
Speaker 1: a rising rate environment, which is the other thing you
Speaker 1: always worry about. So don how does someone in your
Speaker 1: position sort of think about and prepare for recession? You know,
Speaker 1: is it time to start tightening up your underwriting standards
Speaker 1: on on the loans you are issuing or is it
Speaker 1: too early for that? You know, how do you sort
Speaker 1: of navigate such We're definitely tightening. We're definitely tightening a
Speaker 1: little bit at the margin um and being more selective,
Speaker 1: particularly if it's not an existing client. You know. Number
Speaker 1: one is is we've banked in a large number of
Speaker 1: our clients for many, many years. We've seen them go
Speaker 1: through cycles. We've seen how the management's behave. You know,
Speaker 1: we're literally in touch with them weekly or monthly, really
Speaker 1: understanding what's happening in their business and how they're preparing
Speaker 1: on the new business side. You know, if something is
Speaker 1: is a little more marginal or a little more leveraged,
Speaker 1: we may take a pass at the split second, but
Speaker 1: it's I wouldn't say it's it's significant in terms of
Speaker 1: our origination volumes. Interesting to hear you say that, you know,
Speaker 1: it does matter whether or not this person has been
Speaker 1: a client in the past in terms of evaluating. But
Speaker 1: I am curious. I want to hear um your broad
Speaker 1: thoughts on what this sort of whip lash that we've
Speaker 1: seen across financial assets, not just in stocks, but in
Speaker 1: bonds and all corners of fixed income, what that has
Speaker 1: meant for M and A and for deals, Because anecdotally
Speaker 1: I don't have the numbers in front of me, it
Speaker 1: feels like there's been quite a slowdown. Yeah, there has,
Speaker 1: and you know we have we continue to have a
Speaker 1: very very large, maybe record M and A pipeline. It's
Speaker 1: just not going to be executable right now, you know,
Speaker 1: if it requires financing of any kind of scale with
Speaker 1: any kind of leverage. To think about the private equity arena. Um,
Speaker 1: there's been a real slowdown in terms of of P
Speaker 1: and E or PE oriented M and A. And then
Speaker 1: I think if you've got size and if you have
Speaker 1: to go out and raise you know, seven eight nine
Speaker 1: billion dollars as part of an M and A transaction,
Speaker 1: the markets are just not that deep right now, and
Speaker 1: that's away from buyers and sellers trying to figure out
Speaker 1: whether value still works at whatever in whatever conversations that
Speaker 1: they've been having. So I think you need a valuation
Speaker 1: adjustment in certain areas of the economy and then there's
Speaker 1: going to be a wait and see in terms of
Speaker 1: what can be financed. Um particularly that's got some size
Speaker 1: to it. That was Don McCree, head of commercial banking
Speaker 1: at Citizens Financial Group, along with Bloomberg's Katie Greifeld and
Speaker 1: Mike Regain. You're listening to Bloomberg Business Week. Coming up
Speaker 1: the story of the so called a lottery lawyer who
Speaker 1: stands accused of a massive fraud after spending years advising
Speaker 1: jackpot winners. A lot of lottery winners are not financially
Speaker 1: sophisticated in a blowing at all, feel like they've got
Speaker 1: to give it to friends or family or whatever, and
Speaker 1: so this guy takes advantage of this opening more in
Speaker 1: the alleged one million dollars scammer that's coming up. This
Speaker 1: is Bloomberg. This is Bloomberg Business Week with Carol Masser
Speaker 1: and Bloomberg Quick Takes. Tim Stenovik from Bloomberg Radio. We've
Speaker 1: got one more story for you from the Bloomberg Business
Speaker 1: Week annual Heist issue. This next story features a New
Speaker 1: York area attorney who courted newly wealthy clients and allegedly
Speaker 1: built them out of tens of millions of dollars in
Speaker 1: lottery winnings. Bloomberg Radio is Paul Sweeney and Bloomberg Markets
Speaker 1: correspondent Creedy Cooped caught up with a Business Week freelance
Speaker 1: reporter Simon van Zyland, would to help unravel the story
Speaker 1: of Jay Kurland. Let's soften it before we get into
Speaker 1: calling you a scam. Okay, is he is going on
Speaker 1: trial in about two weeks, so we have to say
Speaker 1: alleged with him, although he has some co conspirators who
Speaker 1: I'll get into, who have all played guilty and so scammy. Indeed,
Speaker 1: this looks essentially The lottery lawyer is a guy named
Speaker 1: Jason Kurwin, and he cornered a niche market of the
Speaker 1: legal world by representing newly minted power Ball and Megan
Speaker 1: Millions winners. And so he show up on the Today's
Speaker 1: Show or all over the internet basically saying if you've
Speaker 1: won money and you're bewildered and you've no idea what
Speaker 1: to do with it. Called me, I'm your guy. And
Speaker 1: you know, as some of your listeners may know, a
Speaker 1: lot of a lottery winners are not financially sophisticated. They
Speaker 1: end up blowing at all. I feel like they've got
Speaker 1: to give it to friends or family or whatever. And
Speaker 1: so this guy takes advantage of this opening. He has
Speaker 1: alleged to basically have squandered over a hundred million dollars
Speaker 1: from some of the bigger lottery winners in recent history
Speaker 1: on a variety of colorful schemes. And that's that's sort
Speaker 1: of the top line of it. So how did he
Speaker 1: get caught here? Um? So that's a great question because
Speaker 1: there's these overlapping criminal schemes that, um that are at
Speaker 1: play here. So there was a I think that probably
Speaker 1: it's there's a Ponzi scheme involved, and so we don't
Speaker 1: really need to explain why the Ponzi schemes involved. Basically,
Speaker 1: a guy purporting to be a jeweler in Long Island
Speaker 1: was saying he could get massive returns on jeweler I
Speaker 1: think like the uncut gems Oudam Sandler movie, but like
Speaker 1: in Long Island. He ends up getting pinched for with
Speaker 1: the Ponzi scheme, and that Ponzi scheme overlaps the water lawyer.
Speaker 1: That guy, the Ponzi scheme jeweler guy ends up becoming
Speaker 1: a confidential informant and starts wire tapping calls involved with
Speaker 1: a lottery lawyer, and that I think ends up toping
Speaker 1: some dominoes. Other people start flipping. There's wire taps up
Speaker 1: the wazoo in this call in this case. Uh. And
Speaker 1: eventually they would let down and they figure out that
Speaker 1: the water lawer has been been losing money on behalf
Speaker 1: of the people that you're supposed to be managing, you know,
Speaker 1: their money and growing it, not you know, throwing it
Speaker 1: down the toilet. What are some of the quote unquote
Speaker 1: investment uh that these folks made on behalf of their clients.
Speaker 1: Because it seems to me, I always say to myself
Speaker 1: when I see somebody on the TV screen holding up
Speaker 1: that big check for I would just buy treasuries and
Speaker 1: go to sleep. They do. So this is the irony.
Speaker 1: So these guys, they you know, varying levels of financialifuication.
Speaker 1: But so one of his big winners in the biggest
Speaker 1: single lottery winner of all time, meaning she won. She
Speaker 1: was a Long South Carolina woman who kept her identity private.
Speaker 1: One point five billion dollars Jack Pott before tacks, and
Speaker 1: she said to him, please invest conservatively, and he was
Speaker 1: like surchure. Sure. Turns out that one of the bigger
Speaker 1: investment schemes was something called the Merchant Cash Advanced Business.
Speaker 1: He and somebodies in Long Island got into mc AS
Speaker 1: and what that is. It's it's almost like kind of
Speaker 1: gray area legal loan sharking, highly extracted loans, incredibly high
Speaker 1: interest rates up too. It's for people with bad credit,
Speaker 1: deathper for cash, maybe they have criminal history, who knows,
Speaker 1: very popular kind of gray area of industry here in
Speaker 1: New York State. He decides this would be a great
Speaker 1: investment scheme. Uh. The guys he ends up partying with
Speaker 1: their total crooks, one of them one of whose grandfather
Speaker 1: was the head boss of the Colombo crime. Yeah, and
Speaker 1: so that's maybe not the guy. I don't know if
Speaker 1: he googled him or not, but like, that might not
Speaker 1: be the guy you want to get in business with.
Speaker 1: And so that that money starts disappearing for a combination
Speaker 1: of reasons. One the grandson of the mob boss plus
Speaker 1: this other guy. Uh, they start kind of raiding the accounts, like, hey,
Speaker 1: we deserve a like we didn't win the lottery. One
Speaker 1: of these guys deserve all the money. So they start
Speaker 1: rating it. Then they start investing what ends up being
Speaker 1: the Ponzi scheme, which so they lose all of it.
Speaker 1: And then this is a kicker to try to get
Speaker 1: the money back. They learn about another guy who actually
Speaker 1: is an alleged member of the New York City mob
Speaker 1: but for a different family, the Genevaise family, who says
Speaker 1: this is the beginning of the pandemic. Now he says,
Speaker 1: I've got something called Ppe and I'm gonna make a
Speaker 1: ton of money on it. And then that's the final
Speaker 1: way that losing money. There's there's a lot of layers
Speaker 1: to this story. Clearly, let's add one more. Talk to
Speaker 1: us about Cheddar Capital. Yeah, so Cheddar Capital ridiculous name
Speaker 1: and if you google it, like you, this is the
Speaker 1: name of a business, Uh, you can't even find it.
Speaker 1: It's like there's that vanity fair website called Cheddar and
Speaker 1: then there's the cheese and it's like, is this even
Speaker 1: a real thing? Cheddar was one of the merchan cash
Speaker 1: advanced businesses that he was putting a lot of the
Speaker 1: lottery winner's money in. And I think it's the beginning.
Speaker 1: It's possible that this was such an extractive and lucrative
Speaker 1: industry actually, um, that they were making a fair amount
Speaker 1: of money on it. Uh, it's just that it seemed
Speaker 1: to have been terribly mismanaged. Um so Cheddar. Once the
Speaker 1: Cheddar money started allegedly disappearing, UM that that toppled a
Speaker 1: bunch of other dominoes which led us down the road.
Speaker 1: I was just telling you about. So Simon. There are
Speaker 1: four kind of main characters in your story here, but
Speaker 1: the lottery lawyer, and three of them have already pled
Speaker 1: guilty in their waiting sentencing. But the lottery lawyer himself,
Speaker 1: he's going to trial, right, give us a sense of
Speaker 1: the timing one once that can occur, how do you
Speaker 1: what's the expectation about how that might play out? The
Speaker 1: looks like um, at least a couple of co conspirators
Speaker 1: will testify against him. His own brother in law who's
Speaker 1: a very careful, colorful character. He's a cosmetic surgeon in
Speaker 1: Long Island, uh called Scott Bleyer, who's handle on Instagram
Speaker 1: is dr b Fixen and definitely worth a look if
Speaker 1: you're on Instagram. He will be testifying apparently against his
Speaker 1: own brother in law and a whole separate aspect of this.
Speaker 1: So I would say this, between all the lawyers they
Speaker 1: talked to and people involved in the case, everyone is
Speaker 1: shocked at this guy. A lottery lawyers even going to trial.
Speaker 1: He was fired from his law firm Riskin Rattler, which
Speaker 1: is based on Long Island, as soon as the allegations
Speaker 1: hit that the wire tops are incriminating. There's three gather
Speaker 1: guys who played guilty. Um, but his lawyer, I think
Speaker 1: he will. My guess is he's trying to clear his
Speaker 1: name because even if he if he takes a plea,
Speaker 1: I don't think he's worried. He's never gonna work again.
Speaker 1: And his whole reputation was based on integrity, right, I'm
Speaker 1: gonna help you manage your money. I'm the good guy,
Speaker 1: and his record was alice until then. He seems like
Speaker 1: a family guy. He just seemed pretty milk past. I
Speaker 1: think he's going to Hell Mary to try to clear
Speaker 1: his name, and the lawyers, basically, I think are going
Speaker 1: to argue that he himself was scammed by his co
Speaker 1: conspirators that he invested money in a bench of that
Speaker 1: bunch of bad schemes and it wasn't in fault. The
Speaker 1: problem is that he, unbeknownst to the allegedly unbeknownst to
Speaker 1: the winners, was taking a cut of the investment in
Speaker 1: terms of in like these things like Cheddar capital these businesses,
Speaker 1: and was allegedly spending it on you know, classic cliches
Speaker 1: like sac fIF avenue, uh an SUV like you name
Speaker 1: that kind of stuff, and so might be a tall
Speaker 1: hurdle for them to get an acquittal. That was Business
Speaker 1: Week freelance reporter Simon van zyland Wood talking with Paul
Speaker 1: Sweeney of Bloomberg Surveillance and Markets correspondent Creedy Gupta. Still
Speaker 1: to come on Bloomberg business Week. New research on the
Speaker 1: changing landscape of E s G Why A recent survey
Speaker 1: showed impact investing to be more appealing to men and
Speaker 1: women and the E s G sector Americans are most concerned.
Speaker 1: This is Bloomberg Broadcasting from the financial capital of the world,
Speaker 1: Bloomberg eleven Rio in New York to Washington, d C.
Speaker 1: Bloomberg to Boston, Bloomberg one of six one does San Francisco,
Speaker 1: Bloomberg nine six to the country, Sirius XM Channel one
Speaker 1: nine and around the globe, the Bloomberg Business and Bloomberg
Speaker 1: Radio dot Com. This is Bloomberg Business Week with Carol
Speaker 1: Messer and Bloomberg Quick Takes Tim Stenovan on Bloomberg Radio. Well, well,
Speaker 1: CHILEI on Wall Street certainly in the first half of
Speaker 1: two Chile in my studio as well, and chilly when
Speaker 1: it comes to E s G because in May, investors
Speaker 1: made the biggest ever monthly redemptions from US Exchange traded
Speaker 1: e s G funds based on Bloomberg Intelligence estimates. So
Speaker 1: let's get to our guests see what she and her
Speaker 1: team are seeing. When it comes to impact investing in
Speaker 1: E s G. Sarah Bratton hughes his head of E
Speaker 1: s G and Sustainable Investing in America's Century Investments. She
Speaker 1: joins us phone on the phone from New York City,
Speaker 1: American Century. By the way, they're controlling owner is the
Speaker 1: biomedical research Organizations Stower's Institute for Medical Research. The firm
Speaker 1: directs its profits to their efforts to defeat life threatening diseases.
Speaker 1: So uh, they're not only investing for others. They really
Speaker 1: are kind of walking the talk. Sarah. Nice to have
Speaker 1: you here with Mike and myself. What interest are you
Speaker 1: seeing an E s G right now amid all the
Speaker 1: market volatility? Thank you for having me, Carroll. We are
Speaker 1: still seeing UM increased interest and E s G and
Speaker 1: sustainable investing. Although those headlines thought redemptions, Although the redemptions
Speaker 1: have gathered headlines, you can't really look at them in
Speaker 1: a vacuum. You have to look at them versus the
Speaker 1: broader market as well. So UH, this year we conducted
Speaker 1: the FIT edition of our Impact Investing survey and there
Speaker 1: were some really interesting UH findings and there are all
Speaker 1: just talk about these three things that really surprised today. UM.
Speaker 1: Here in the US we've seen increased appeal of impact investing.
Speaker 1: But interestingly, it was probably the first or only survey
Speaker 1: I've ever seen that men had preferred impact investing over
Speaker 1: a woman. And when you really killed back the onion
Speaker 1: and looked at the numbers, what you saw was actually
Speaker 1: there's a delta around what the education and impact investing
Speaker 1: is a woman, UH, particularly in the baby boomer generation.
Speaker 1: So as we think about the transfer of wealth, UM,
Speaker 1: people often talk about the intergenerational transfer of wealth, but
Speaker 1: I like to think of it first as an intergender
Speaker 1: transformation of wealth. What we've also noticed is the dominance
Speaker 1: dominance of the S factors in the US, so UM consistently.
Speaker 1: UM US investors, when they're looking at the factors that
Speaker 1: they want to impact, consistently have had more appeal in
Speaker 1: S factors than our global counterparts. So what we observed
Speaker 1: this year again, healthcare is the most important factor from
Speaker 1: a US perspective. Climate is up there second, but there
Speaker 1: isn't another E factor from a U S perspective, UM,
Speaker 1: whereas that is dominating, Climate dominates the UK, Germany and Australia.
Speaker 1: And then the third and final bit is on greenwashing,
Speaker 1: where over fifty of the investors were concerned about greenwashing.
Speaker 1: I would actually, Carol think that that number was higher
Speaker 1: or bay within marketing. I would agree. I would agree
Speaker 1: because I really do feel like anything with the S
Speaker 1: G and impact, people are like, Okay, enough of it.
Speaker 1: We've seen a ton of money go into it. Now
Speaker 1: show me that you're really doing it. Mike, do you
Speaker 1: feel the same way. Yeah, Well, you know, Carol's sitting
Speaker 1: and Sarah, there's certainly been a bit of a backlash
Speaker 1: from the right side of the political aisle towards the
Speaker 1: notion of the s G in general. Sarah, I'm wondering
Speaker 1: if you view that as any sort of legitimate risk
Speaker 1: going forward, especially no as these mid term elections come
Speaker 1: up and a lot of people expecting the Republicans to
Speaker 1: gain House and gain seats in Congress. Is there is
Speaker 1: this backlash? Uh, sort of in the early phases. But
Speaker 1: I wonder if is it a real risk to you?
Speaker 1: Do you think, how are you thinking about it? So
Speaker 1: I look at what has really resulted in the rise
Speaker 1: of the SG investing, and it's um, the continued um
Speaker 1: demand we've seen from a both in a retail client
Speaker 1: perspective but also institutional clients. Um. It is the sort
Speaker 1: of economic argument for it when you've seen this massive
Speaker 1: rise of intangibles on balance sheets. If you look at
Speaker 1: the amount of intangibles on balance sheets in nineteen seventy five,
Speaker 1: the last figures were over twenty UM were over. But
Speaker 1: I think the biggest thing is the policy environment. So
Speaker 1: according to the UN Principles for Responsible Investing, the top
Speaker 1: fifty out of the toxic economy have some form of
Speaker 1: policy design to help investors consider sustainability, risks, opportunities and
Speaker 1: outcomes UM. And for the longest time, the US was
Speaker 1: the outlier UM in terms of policies. We're providing kill
Speaker 1: wins for sustainable investing UM and now we may become
Speaker 1: the outlier again. However, what we're seeing happening in the
Speaker 1: rest of the world, particularly Europe, is going to continue
Speaker 1: to provide kill win. That's Sarah Bratton Hughes, head of
Speaker 1: E s G and Sustainable Investing over at American Century Investments,
Speaker 1: along with me and Mike Reagan Bloomberg Markets. You're listening
Speaker 1: to Bloomberg Business Week. Coming up travelers in the US
Speaker 1: and around the globe Europe for a summer vacation to remember,
Speaker 1: The CEO of Trovago explains what's hindering companies such as
Speaker 1: his from meeting our pent up demand to hit the beach.
Speaker 1: This is Bloomberg. You're listening to Bloomberg Business Week with
Speaker 1: Carol Messer and Bloomberg Quick Takes Tim Stinovik from Bloomberg Radio.
Speaker 1: A recent survey from travel services company Trovago found that
Speaker 1: four and five consumers expect two will be their best summer. Yeah,
Speaker 1: This is rising fuel prices, labor shortages and an abundance
Speaker 1: of flight cancelations snarl airports across the globe, already making
Speaker 1: summer travel complicated and really testing our patients and our pocketbooks.
Speaker 1: I don't know, Carol, I've had a better summer. This
Speaker 1: has been Yeah, I don't know. We're not part of that.
Speaker 1: Servey Bloomberg New Senior Markets reporter Katie Greifeld and Bloomberg
Speaker 1: Market Senior editor Mike Reagan as Tree Vago CEO axcel
Speaker 1: Hea for why he thinks travelers are looking past the
Speaker 1: inconvenience for the prospect of excitement. It's a very interesting
Speaker 1: point in time, to be honest, because we are coming
Speaker 1: out of the pandemic and and everybody was looking very
Speaker 1: much forward to the summer travel. And you see actually
Speaker 1: a very strong demand for summer. But on the other hand,
Speaker 1: you also can see that the experience is not good.
Speaker 1: Prices are very high. Um, you have you have, as
Speaker 1: you said, you have labor shortage everywhere, So the outlook
Speaker 1: is actually not that good. Yeah, excell, is there any
Speaker 1: sense of when things will get back to normal? Uh?
Speaker 1: You know, this has just been a really nasty summer.
Speaker 1: As Katie said, for delays and cancelations, is already light
Speaker 1: at the end of the tunnel that you can see. Yeah,
Speaker 1: I mean it's it's it's not that easy to be honest,
Speaker 1: because I mean it's it's not only in the travel industry.
Speaker 1: I mean you've got labor shortages UM pretty much everywhere.
Speaker 1: And I mean, to me, the question really is how
Speaker 1: do you get the world back into balance now? So
Speaker 1: so there is UM is a lot more demands than
Speaker 1: the kill what can be filled by by the current
Speaker 1: staff levels and by supply and UM, I think we'll
Speaker 1: probably see a slowdown in demand and have to see
Speaker 1: a slow end demand UM and over years, demand supply
Speaker 1: will meet each other. And so actually it's interesting. So
Speaker 1: so Trivago has actual data points here. You have a
Speaker 1: study that found that any three percent of respondents believe
Speaker 1: that summer of two will be the best yet for
Speaker 1: travel and advant adventures. Sort of square that circle for us.
Speaker 1: How how does that uh sort of be a possibility
Speaker 1: amid some of the themes that we're talking about. Yes, so, so,
Speaker 1: I mean the in the pandemic, we have seen one
Speaker 1: thing very very clearly. I mean, no, no matter how
Speaker 1: difficult the situation has been and no no matter how
Speaker 1: big the health warriors have been, UM, people want to
Speaker 1: travel in summer, and so they need to get a break,
Speaker 1: They need to break out of their daily routine. So
Speaker 1: and and that's that's what I think what you can
Speaker 1: see and in the survey that we've run that that
Speaker 1: coming out of the pandemic, we are all looking very
Speaker 1: much forward to the summer UM. But the experience in
Speaker 1: the summer in many many places is actually not that
Speaker 1: good because the supply UM is not able to meet
Speaker 1: the demand. Plus obviously you have you have all these
Speaker 1: problems in the world which leading to too bad service
Speaker 1: to two higher prices. And I mean for for us
Speaker 1: that UM that's actually interesting because we compare prices, you know,
Speaker 1: so so in a way higher prices and and a
Speaker 1: bigger discrepancy in different price levels is UM is for
Speaker 1: us good because we can provide more value to our users.
Speaker 1: You know, Axel, Katie and I are major market nerds
Speaker 1: if they didn't warrant so, so we often view every
Speaker 1: story from sort of the market angle. And the big
Speaker 1: story this summer is the currency market weakness in the
Speaker 1: Euro it's almost trading dollar for dollar on parody against
Speaker 1: the dollar, and the dollar at multi year highs against
Speaker 1: many currencies. Is that affecting travel trends at all? You know,
Speaker 1: we're seeing more Americans visit Europe and fewer Europeans visit
Speaker 1: America this summer. I mean, you've got trans atlantic travel
Speaker 1: up in both directions, um not not unexpectedly. So you
Speaker 1: can't really see that, at least in the numbers that
Speaker 1: that we have to can't really see that because you
Speaker 1: have this overall recovery of um of trans atlantic travel
Speaker 1: um that is just dominating the overall trend um. I
Speaker 1: think it it might be something that you that you
Speaker 1: potentially will see in the in the months to come,
Speaker 1: because you're right, I mean, it got a lot cheaper
Speaker 1: for Americans to go to Europe. Have you seen any
Speaker 1: difference in how people are traveling post pandemic, whether that's
Speaker 1: with someone or you know, the type of trips that
Speaker 1: they're taking. Yeah, I mean, we we've got the usual
Speaker 1: suspect on top of the list. So in the US
Speaker 1: you've got Las Vegas, Orlando, New York City on the
Speaker 1: top five. So, um, we haven't seen that fundamental shift.
Speaker 1: Asia is still um not back because Obviously the situation
Speaker 1: there is more difficult, but other than that, the behavior
Speaker 1: is much more normal compared to what we've seen last
Speaker 1: year in the year before. Actually, we're talking a little
Speaker 1: bit about where people are going. If I look at
Speaker 1: some of the data that you sent over Las Vegas
Speaker 1: favorite domestic destination, If I look down the list, it
Speaker 1: seems that there's a theme, and that theme is going
Speaker 1: to the beach. Yeah, absolutely, I mean the But that's
Speaker 1: that's a very consistent to what we've seen in the
Speaker 1: last two years. Um, it's really breaking out of the
Speaker 1: of the city and and and going really form for
Speaker 1: summer occasion where you can relax, you know. Actual, I
Speaker 1: hear hot destinations, and I think price destinations, and I'm
Speaker 1: really a cheap skate at heart. So I'm curious. Are
Speaker 1: there any sort of off the beaten track destinations that
Speaker 1: people are going, any sort of bargain hidden gem getaways
Speaker 1: that we should know about. Yeah, I mean the I
Speaker 1: mean this summer, actually it's there. There are there are
Speaker 1: no real bar games, to be honest, Um, but obviously
Speaker 1: you should avoid the top destinations So Vegas, New York, Orlando,
Speaker 1: or Panama City, beat cetera. They are they are pretty
Speaker 1: well booked. Um. So the best advice to get value
Speaker 1: for money is actually to be very flexible, to be honest,
Speaker 1: so um, to avoid air transportation, go by your own
Speaker 1: car and and then be flexible on the time when
Speaker 1: you're going, and and also on the destination. Of course,
Speaker 1: if you take a car, you do have to pay
Speaker 1: for gas, but at least you know no one can
Speaker 1: cancel your car ride at least not Yeah, I don't
Speaker 1: have to deal with that, but uh, accel very aware
Speaker 1: that you're joining us from Germany. I've talked a lot
Speaker 1: about the US so far, but when you look outside
Speaker 1: of the United States States, I mean, where are people going?
Speaker 1: What makes the sort of the summer destination list there?
Speaker 1: I mean, it obviously depends a bit by country, Um
Speaker 1: you I mean I have a similar trend the usual
Speaker 1: suspect so um majorca for for the Germans and the
Speaker 1: bread Dubai is very popular. So so really people were
Speaker 1: after the pandemic looking forward to go to their favorite
Speaker 1: beach destination. And and that's that's what you see pretty
Speaker 1: much everywhere. Acts with all these flight cancelations, um, and
Speaker 1: all the turmoil that's causing, I wonder does it help
Speaker 1: to book way in advance or to your point, is
Speaker 1: it better to be flexible and almost planning your vacation
Speaker 1: at the last minute. Yeah. I mean the best advice
Speaker 1: is really too to control transportation, because that's the part
Speaker 1: that you that it is very difficult. Um right now. Um, So,
Speaker 1: really driving is actually the best of the safest, And
Speaker 1: if you're driving to a destination, you should actually book
Speaker 1: in advance because there are a lot of destinations where
Speaker 1: just there's just nothing available anymore. M hm. That is
Speaker 1: so interesting. Yeah, and again coming off of just a
Speaker 1: ton of headlines about flight cancelations, flight delays, at least
Speaker 1: in the US, it's not I can't I don't know.
Speaker 1: Can you drive to Mexico? I've never tried it. Let's
Speaker 1: do it. Let's just got to get through this show
Speaker 1: and then then we're Mike and I are going to
Speaker 1: research that. But so the summer travel season obviously in
Speaker 1: full swing, a little bit difficult, but people are still traveling.
Speaker 1: Let's push ahead and talk about autumn. Um. I mean,
Speaker 1: do you have any expectations for how that might go,
Speaker 1: any sense that you know, given some of the difficulties
Speaker 1: we've been talking about that making national headlines. Might people
Speaker 1: just sort of hold off and wait for autumn? Yeah, so,
Speaker 1: I mean not our expectations, and I mean I'm not
Speaker 1: an economist, so so you might know better than me.
Speaker 1: But our expectation aation is that the overall economy economy
Speaker 1: has to slow down. Um. I mean we we are
Speaker 1: completely out of balance, and you have obviously very high inflation,
Speaker 1: intrograce arising, etcetera. So the disposal of the income of
Speaker 1: many many people is coming under pressure. So what we
Speaker 1: expect is that that people will actually try to save
Speaker 1: money on their trips, which for us is I said earlier,
Speaker 1: is is actually a good thing. Um. And that that
Speaker 1: means that they travel more locally or more regionally um,
Speaker 1: and that they shop around more for the right accommodation. Well,
Speaker 1: this conversation gets me thinking about you know, business travel
Speaker 1: for example, Um, I mean, what are what are you seeing? There?
Speaker 1: Is business travel ever going to return to pre pandemic
Speaker 1: levels or sort of like you know, the office environment
Speaker 1: itself with some shifting to hybrid work. I mean, is
Speaker 1: the business travel landscape sort of fundamentally changed here? I
Speaker 1: do think? So, I think, I mean this, this is
Speaker 1: actually different and I mean if we go back to
Speaker 1: two thousand eight nine and to two thousand one two,
Speaker 1: I mean we had the same discussions business travel will
Speaker 1: not come back, etcetera. I think now there is one
Speaker 1: very fundamental change, which is that even not traveling, I
Speaker 1: mean in our core job, we accept that you can
Speaker 1: actually work remotely and you can do you know, project updates, etcetera.
Speaker 1: Remotely and we do that every week. And so that
Speaker 1: that actually learning will lead to lower necessity for business travel.
Speaker 1: And the way we are thinking about it, you have
Speaker 1: basically two kinds of business travel. One is more relationships
Speaker 1: sales focused, where you need to meet in person because
Speaker 1: building relationship virtually is very difficult. The other one is
Speaker 1: more transactional. I mean you you discuss the deal, you
Speaker 1: give a project update, etcetera. Which is a lot of
Speaker 1: intra company travel, and that will not come back to
Speaker 1: pre pandemic levels. And a big thanks to Travago CEO
Speaker 1: AXL he for for joining our broadcast and also to
Speaker 1: our colleagues here at Bloomberg News you filled in for
Speaker 1: both him and throughout the past week or so Katie
Speaker 1: gray Feld, Mike Regan, Kregopt and Paul Sweeney. They are
Speaker 1: the best. We appreciate their assist and expertise in really
Speaker 1: guiding our ship this past week. Also got to thank
Speaker 1: our producers Ri Lagami, Paul Brennan, and Carl Wanna, who
Speaker 1: juggled a lot while we were out, oftentimes with just
Speaker 1: minutes to find that we weren't available, so really appreciate
Speaker 1: them heading up the ship. This week really takes a village.
Speaker 1: I'm the village idiot and at COVID Free Village. All right,
Speaker 1: that wraps up, You're no idiot. That wraps up the
Speaker 1: weekend edition of Bloomberg Business Week from Bloomberg Radio. Thanks
Speaker 1: so much for joining us. I'm Carol Masser. Be sure
Speaker 1: to tune into Bloomberg Business Week Monday through Friday starting
Speaker 1: at two pm Wall Street Time on Bloomberg Radio. You
Speaker 1: can also watch our daily broadcast on YouTube. Just search
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Speaker 1: available on newsstands now, at Bloomberg dot com and on
Speaker 1: the Bloomberg Terminal. I'm Tim Stutter and I'm Carol Masser.
Speaker 1: Have a healthy and safe week, and everyone this is Bloomberg.