1 00:00:00,800 --> 00:00:04,040 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 2 00:00:04,040 --> 00:00:06,920 Speaker 1: my co host Matt Miller. Every business day, we bring 3 00:00:06,960 --> 00:00:11,520 Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along 4 00:00:11,520 --> 00:00:15,520 Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast 5 00:00:15,600 --> 00:00:18,439 Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:22,040 Speaker 1: at Bloomberg dot com slash podcast. I have a new 7 00:00:22,079 --> 00:00:25,560 Speaker 1: problem though, what these gas stations limit the amount of 8 00:00:25,600 --> 00:00:27,479 Speaker 1: gas I can get to a hundred dollars? You know 9 00:00:27,480 --> 00:00:34,400 Speaker 1: when I get to two eight, three slows down and 10 00:00:34,400 --> 00:00:36,240 Speaker 1: I'm not done filling it up. No, of course not. 11 00:00:36,320 --> 00:00:41,640 Speaker 1: You've got a shot of that idea. That's horrible. People were, Yeah, 12 00:00:41,640 --> 00:00:43,639 Speaker 1: well it's horrible. Yes, So you're a big good truck guy, 13 00:00:43,640 --> 00:00:45,240 Speaker 1: all right, pre a misrab. I'm not sure if she 14 00:00:45,360 --> 00:00:48,200 Speaker 1: dressed pick up trucks, but she does cover the interest 15 00:00:48,280 --> 00:00:50,400 Speaker 1: rate world for US managing director and global head of 16 00:00:50,440 --> 00:00:53,440 Speaker 1: rate Strategy for TV Securities. Pretty I'm looking at the 17 00:00:53,479 --> 00:00:56,080 Speaker 1: bond market. Boy, that ten year treasuries off one and 18 00:00:56,120 --> 00:00:59,200 Speaker 1: three thirty seconds, pushing that yield up to three point 19 00:00:59,240 --> 00:01:03,240 Speaker 1: three two percent? Is this still kind of fallout from 20 00:01:04,000 --> 00:01:07,920 Speaker 1: Jackson Home? What's going on. I think there's a couple 21 00:01:07,920 --> 00:01:09,800 Speaker 1: of things going on. I mean, they were just back 22 00:01:09,840 --> 00:01:12,560 Speaker 1: after the long weekend. I don't think liquidity is the 23 00:01:12,600 --> 00:01:15,240 Speaker 1: best um. I mean, I think it should get better. 24 00:01:15,280 --> 00:01:17,720 Speaker 1: We're in September. But I think there's some component of 25 00:01:18,160 --> 00:01:21,280 Speaker 1: we're getting exaggerated price moves. There is a lot of 26 00:01:21,319 --> 00:01:24,959 Speaker 1: corporate supply today and I think that's adding to duration pressure. 27 00:01:25,520 --> 00:01:28,000 Speaker 1: And then as as you said, there's the you know, 28 00:01:28,040 --> 00:01:29,880 Speaker 1: fallout from Jackson Hole, the fact that we have a 29 00:01:29,880 --> 00:01:33,119 Speaker 1: FED meeting in two weeks. The jobs report was strong, 30 00:01:33,160 --> 00:01:35,399 Speaker 1: and we had I M Services which is also strong, 31 00:01:35,480 --> 00:01:38,160 Speaker 1: So the U s economy seems to be holding in there. 32 00:01:38,640 --> 00:01:40,480 Speaker 1: We think the pressure on the FED is still there 33 00:01:40,800 --> 00:01:43,320 Speaker 1: to keep moving those rates higher, and I think all 34 00:01:43,319 --> 00:01:45,840 Speaker 1: of that is a perfect storm to make rates go up. 35 00:01:45,959 --> 00:01:49,000 Speaker 1: QUT is also continuing. I do think it's a little overdone. 36 00:01:49,120 --> 00:01:52,240 Speaker 1: I think we're very well priced now for the FED 37 00:01:52,320 --> 00:01:54,680 Speaker 1: taking rates up to four percent, keeping it there for 38 00:01:54,720 --> 00:01:57,280 Speaker 1: a while, and then if you do start to see 39 00:01:57,280 --> 00:01:59,840 Speaker 1: slowing and growth, we think the FED does act. So 40 00:02:00,520 --> 00:02:02,800 Speaker 1: I think the market may become a little too optimistic 41 00:02:02,840 --> 00:02:06,160 Speaker 1: in terms of the ability of the economy to take 42 00:02:06,240 --> 00:02:08,520 Speaker 1: these rate hikes, which I think will have an impact 43 00:02:08,520 --> 00:02:10,480 Speaker 1: on road just with the lag. We're not seeing that 44 00:02:10,560 --> 00:02:14,160 Speaker 1: in the data just yet. What happens historically? What happens 45 00:02:14,200 --> 00:02:18,160 Speaker 1: historically when you go to UM you know a certain 46 00:02:18,240 --> 00:02:20,760 Speaker 1: level on the FED funds rate. I don't care what 47 00:02:20,800 --> 00:02:22,959 Speaker 1: it is, but let's take four percent or five percent 48 00:02:23,040 --> 00:02:25,240 Speaker 1: or six percent. What happens to ten years. Do they 49 00:02:25,240 --> 00:02:29,000 Speaker 1: eventually catch up UM treasury yields or do they always 50 00:02:29,000 --> 00:02:32,840 Speaker 1: hold below the Fed fund rate? They tend to hold 51 00:02:32,880 --> 00:02:36,360 Speaker 1: below because typically, you know, the FED is not able 52 00:02:36,400 --> 00:02:40,000 Speaker 1: to get this soft landing or be able to to 53 00:02:40,200 --> 00:02:42,880 Speaker 1: keep rates at that level. So the two year or 54 00:02:42,880 --> 00:02:45,720 Speaker 1: the very front end can get up to that terminal rate, 55 00:02:46,200 --> 00:02:49,160 Speaker 1: but then the long end tends to lag because within 56 00:02:49,400 --> 00:02:51,920 Speaker 1: a year or two of the FED reaching that terminal rate, 57 00:02:51,919 --> 00:02:54,120 Speaker 1: they tend to have to start to cut rates. So 58 00:02:54,160 --> 00:02:55,960 Speaker 1: that's why the long end doesn't catch up. Now, the 59 00:02:56,040 --> 00:02:58,799 Speaker 1: one big difference this time is QUT. The FED is 60 00:02:58,840 --> 00:03:01,560 Speaker 1: also letting the balance sheet run off, and that's resulting 61 00:03:01,560 --> 00:03:04,240 Speaker 1: in more durations apply to the market. I think that 62 00:03:04,520 --> 00:03:07,040 Speaker 1: this time around is putting a little more pressure in 63 00:03:07,080 --> 00:03:09,280 Speaker 1: the long end. But I think if the FED starts 64 00:03:09,320 --> 00:03:12,120 Speaker 1: to cut rates, they're also going to stop QUT. So 65 00:03:12,440 --> 00:03:15,320 Speaker 1: you know, right now it seems to be that your 66 00:03:15,360 --> 00:03:17,480 Speaker 1: call for next year. Do you think we go into 67 00:03:17,520 --> 00:03:21,120 Speaker 1: a recession that's too deep, unemployment rises too high, American 68 00:03:21,120 --> 00:03:24,600 Speaker 1: families have trouble um keeping jobs, putting food on the table. 69 00:03:24,600 --> 00:03:26,560 Speaker 1: On the FED has to cut rates and stop QUT 70 00:03:28,520 --> 00:03:30,840 Speaker 1: pretty much. Yes, you said it well, I mean we 71 00:03:30,919 --> 00:03:34,440 Speaker 1: are looking, unfortunately for the economy to slow down, and 72 00:03:34,480 --> 00:03:37,800 Speaker 1: it's hard for me to justify the FEDS four point 73 00:03:37,920 --> 00:03:40,200 Speaker 1: one on the unemployment rate. I mean, if it starts 74 00:03:40,240 --> 00:03:43,800 Speaker 1: to rise. Typically the the unemployment rate doesn't rise that gradually. 75 00:03:44,160 --> 00:03:47,040 Speaker 1: It tends to rise, it tends to accelerate once it rises. 76 00:03:47,080 --> 00:03:50,160 Speaker 1: So yeah, we're thinking closer to five in the second 77 00:03:50,160 --> 00:03:52,680 Speaker 1: half of next day on the unemployment rate, forcing the 78 00:03:52,680 --> 00:03:55,080 Speaker 1: fight to start to cut rates when I think they'll 79 00:03:55,120 --> 00:03:57,480 Speaker 1: they'll be late in starting to cut ride because they're 80 00:03:57,520 --> 00:04:00,560 Speaker 1: fighting the inflation problem. But once they start, I do 81 00:04:00,640 --> 00:04:03,080 Speaker 1: think they're at least getting to neutral and they'd have 82 00:04:03,120 --> 00:04:05,280 Speaker 1: to stop QT at that point as well. It's hard 83 00:04:05,320 --> 00:04:08,800 Speaker 1: for them to justify cutting rates and still undertaking QT, 84 00:04:09,400 --> 00:04:11,440 Speaker 1: but I think that's not something they're going to admit 85 00:04:11,480 --> 00:04:13,760 Speaker 1: to right now, They're going to let the data determine it. 86 00:04:14,120 --> 00:04:16,840 Speaker 1: Right now. It's inflation is public enemy number one, and 87 00:04:16,920 --> 00:04:19,039 Speaker 1: that's why I think the focus is whether they go 88 00:04:19,120 --> 00:04:22,400 Speaker 1: seventy five or fifty at the September meeting. So the 89 00:04:22,640 --> 00:04:25,800 Speaker 1: TV Securities, do you guys have an official recession call 90 00:04:26,200 --> 00:04:30,160 Speaker 1: or do you think this FED can soft landed? So 91 00:04:30,200 --> 00:04:33,200 Speaker 1: we have a slowdown in growth called you know, you're 92 00:04:33,360 --> 00:04:36,640 Speaker 1: zero percent growth. When you're growing at zero doesn't take 93 00:04:36,680 --> 00:04:40,280 Speaker 1: a lot to slip into recession. So it's a shallow 94 00:04:40,520 --> 00:04:42,720 Speaker 1: slow down in growth that we do pencil in, and 95 00:04:43,000 --> 00:04:45,120 Speaker 1: that's why we've penciled in rate cuts in the end 96 00:04:45,120 --> 00:04:48,640 Speaker 1: of QT next year. All right, I'm gonna talk corporate 97 00:04:48,640 --> 00:04:51,600 Speaker 1: real estate. So TV Security, you guys are one Vanderbilt, 98 00:04:51,640 --> 00:04:54,880 Speaker 1: Is that right? It is? Yes, it's a new building 99 00:04:54,960 --> 00:04:59,440 Speaker 1: right next to Grand Central exactly. That's awesome. I mean, 100 00:05:00,440 --> 00:05:02,000 Speaker 1: I mean, I'm not sure you even go there if 101 00:05:02,000 --> 00:05:04,280 Speaker 1: you work from home, but it looked when they're putting 102 00:05:04,279 --> 00:05:05,800 Speaker 1: it up, I was like, holy cow, this is gonna 103 00:05:05,839 --> 00:05:08,839 Speaker 1: be awesome. Now it's a great building. I've been in 104 00:05:08,880 --> 00:05:12,080 Speaker 1: the office since, you know, for over a year, and 105 00:05:12,560 --> 00:05:15,200 Speaker 1: it's filling up now. That. I think we're we have 106 00:05:15,320 --> 00:05:18,039 Speaker 1: a few few flaws, and there's the summit. If you 107 00:05:18,040 --> 00:05:21,160 Speaker 1: haven't been to the summit, it's great. Glass Bottom. I'm 108 00:05:21,160 --> 00:05:24,200 Speaker 1: not a huge fan of heights, but it's very impressive 109 00:05:24,560 --> 00:05:26,800 Speaker 1: when you look down on the glass bottom floor and 110 00:05:26,839 --> 00:05:29,360 Speaker 1: see all of New York. So that's a good building. 111 00:05:29,480 --> 00:05:32,000 Speaker 1: I want to do that. Let's do that. Yeah, down, 112 00:05:32,040 --> 00:05:36,200 Speaker 1: we need the invite though, yes, we need the any day, 113 00:05:36,520 --> 00:05:40,840 Speaker 1: all right, pretty so, just real, real quickly here coming 114 00:05:40,880 --> 00:05:42,640 Speaker 1: up in a couple of weeks from this photo reserve. 115 00:05:43,200 --> 00:05:45,920 Speaker 1: What would be a mistake where everybody goes, oh boy, 116 00:05:46,000 --> 00:05:50,600 Speaker 1: here we go. You know, you can think of two 117 00:05:50,600 --> 00:05:53,719 Speaker 1: sided mistakes. I think one mistake would be if they 118 00:05:53,760 --> 00:05:56,080 Speaker 1: suggest that they might be getting close to being done 119 00:05:56,760 --> 00:06:00,360 Speaker 1: because just because oil prices are lower and inflation seems 120 00:06:00,360 --> 00:06:02,840 Speaker 1: to have beat That would be one mistake. The other 121 00:06:02,880 --> 00:06:05,440 Speaker 1: mistake would be to say, oh, no, we're going until 122 00:06:05,480 --> 00:06:09,600 Speaker 1: two on your over your inflation. I think that's a 123 00:06:09,680 --> 00:06:12,560 Speaker 1: mistake I'm really nervous about because it just inflation is 124 00:06:12,600 --> 00:06:15,520 Speaker 1: a very lagging indicator, and if they ignore growth, they're 125 00:06:15,560 --> 00:06:17,960 Speaker 1: absolutely going to overdo it because inflation is going to 126 00:06:18,040 --> 00:06:20,719 Speaker 1: take a while to come down to respond to slowing growth. 127 00:06:21,040 --> 00:06:23,720 Speaker 1: So there are two sided risks. After jacksonal I'm more 128 00:06:23,760 --> 00:06:27,120 Speaker 1: concerned about the overdoing because we need to really win 129 00:06:27,200 --> 00:06:31,119 Speaker 1: that inflation battle, even if it means a slowing growth. Alright, 130 00:06:31,240 --> 00:06:33,479 Speaker 1: this fat man. If they waited too long to raise 131 00:06:33,600 --> 00:06:35,400 Speaker 1: rates and now they're going to raise rates too late 132 00:06:35,440 --> 00:06:37,560 Speaker 1: and too long, and then maybe they'll even cut them 133 00:06:37,640 --> 00:06:40,800 Speaker 1: too soon. We have to see Premisser. She'll have insight 134 00:06:40,920 --> 00:06:43,120 Speaker 1: for us along the way. As always. Managing director and 135 00:06:43,160 --> 00:06:45,679 Speaker 1: global head of Rate Strategy for TV Security is also 136 00:06:45,720 --> 00:06:48,960 Speaker 1: an ambassador for one Vanderbilt Avenue. Got to check that 137 00:06:49,040 --> 00:06:55,600 Speaker 1: building up. Alright. One of the fastest growing areas in 138 00:06:55,600 --> 00:07:00,560 Speaker 1: investing is E s G environmental social governance. Sure enough, 139 00:07:00,560 --> 00:07:03,400 Speaker 1: the largest exchange traded fund investing in s G, that 140 00:07:03,400 --> 00:07:06,040 Speaker 1: would be the I Shares E s G, AWARE M, 141 00:07:06,120 --> 00:07:07,760 Speaker 1: S C, I U S A E t F. Yep, 142 00:07:07,880 --> 00:07:10,160 Speaker 1: that's what I got it all in there increases assets 143 00:07:10,160 --> 00:07:14,080 Speaker 1: by forty seven hundred times to four billion dollars since 144 00:07:14,080 --> 00:07:18,320 Speaker 1: its inception in twenty thousand and sixteen. But Mr Rhonda 145 00:07:18,400 --> 00:07:21,280 Speaker 1: Santas the Governor of the Great State of Florida, I 146 00:07:21,280 --> 00:07:23,240 Speaker 1: don't think he's really buying into it. Let's get into 147 00:07:23,280 --> 00:07:25,720 Speaker 1: this story. Matt winklerd, Editor in chief emeritus and founder 148 00:07:26,040 --> 00:07:28,480 Speaker 1: of Bloomberg News joins us here in a Bloomberg Interactive 149 00:07:28,480 --> 00:07:30,800 Speaker 1: Broker Studio. Matt, thanks so much for joining us. You've 150 00:07:30,800 --> 00:07:33,280 Speaker 1: got a column out today looking at Florida, looking at 151 00:07:33,280 --> 00:07:36,840 Speaker 1: the governor Rhonda Santis and his views on E s 152 00:07:36,880 --> 00:07:40,360 Speaker 1: G investing. What did you find so, Paul and Matt, 153 00:07:40,400 --> 00:07:43,480 Speaker 1: great to be with you. Rhonda Santis, governor of Florida, 154 00:07:43,560 --> 00:07:47,880 Speaker 1: first term governor of Florida, highly educated, went to Yale 155 00:07:48,120 --> 00:07:54,520 Speaker 1: and Harvard Law School, has an initiative that prohibits the 156 00:07:54,560 --> 00:07:57,200 Speaker 1: state of Florida, which is the third largest state and 157 00:07:57,240 --> 00:08:01,760 Speaker 1: which has about two hundred and ten billion of assets 158 00:08:01,840 --> 00:08:07,280 Speaker 1: under management, from considering what you just mentioned as E 159 00:08:07,480 --> 00:08:13,440 Speaker 1: s G criteria for investing. The trouble is with that initiative, 160 00:08:13,640 --> 00:08:18,000 Speaker 1: it goes against Florida's own very own dictum that says, 161 00:08:18,120 --> 00:08:24,920 Speaker 1: we must consider performance total return as the yard stick, 162 00:08:24,960 --> 00:08:28,280 Speaker 1: if you like, for measuring our returns. And if you 163 00:08:28,360 --> 00:08:33,640 Speaker 1: do that, E s G absolutely crushes every other benchmark 164 00:08:34,840 --> 00:08:37,840 Speaker 1: over any time period during the past decades. So his 165 00:08:37,840 --> 00:08:42,640 Speaker 1: own initiative is it odds with the essential requirement for 166 00:08:42,720 --> 00:08:46,640 Speaker 1: the Florida Retirement System to manage on the basis of performance. 167 00:08:46,760 --> 00:08:50,360 Speaker 1: But it's possible he's not as concerned about performance financial 168 00:08:50,360 --> 00:08:53,040 Speaker 1: performance as he is about politics, right, because he's made 169 00:08:53,040 --> 00:08:56,480 Speaker 1: a number of really provocative moves already that draw him 170 00:08:56,480 --> 00:08:58,600 Speaker 1: into the national spotlight and set him up for a 171 00:08:58,600 --> 00:09:03,400 Speaker 1: presidential run. Yeah. I mean it is seemingly a very 172 00:09:03,480 --> 00:09:09,080 Speaker 1: political ploy on his part because he is educated enough 173 00:09:09,160 --> 00:09:14,160 Speaker 1: to know that every fiduciary has an obligation to earn 174 00:09:14,240 --> 00:09:18,480 Speaker 1: the highest return at the lowest volatility for shareholders and 175 00:09:18,520 --> 00:09:23,480 Speaker 1: bondholders alike. And if that is your focus, then you 176 00:09:23,559 --> 00:09:26,880 Speaker 1: have to consider E s G in your investing. And 177 00:09:26,920 --> 00:09:31,480 Speaker 1: if you don't, your shareholders, your bondholders, your pensioners were 178 00:09:31,520 --> 00:09:34,480 Speaker 1: all suffer. Does the data support that? Matt? What do 179 00:09:34,520 --> 00:09:35,880 Speaker 1: you What did you see? I know you and shouldn't 180 00:09:35,880 --> 00:09:39,320 Speaker 1: pay your colleague always dive into the data for your arguments. 181 00:09:39,360 --> 00:09:44,000 Speaker 1: What's the data? So it's it's very conclusive. We have 182 00:09:44,280 --> 00:09:46,559 Speaker 1: a decade's worth of data on the Bloomberg. We look 183 00:09:46,600 --> 00:09:52,320 Speaker 1: at every if you like, exchange traded fund that invests 184 00:09:52,400 --> 00:09:55,880 Speaker 1: everywhere and those that invest in what we call e 185 00:09:56,080 --> 00:10:01,240 Speaker 1: s G um are over five years, over ten years, 186 00:10:01,240 --> 00:10:06,880 Speaker 1: over two years, outperforming by orders of magnitude the benchmarks, 187 00:10:06,920 --> 00:10:10,840 Speaker 1: the traditional benchmarks of investing, whether it's the SMP five hundred, 188 00:10:10,880 --> 00:10:15,320 Speaker 1: whether it's the Russell three thousand, whether it's any fossil 189 00:10:15,400 --> 00:10:20,880 Speaker 1: fuel UH index that lately has been a star because 190 00:10:20,960 --> 00:10:25,080 Speaker 1: of the war in Ukraine and the rise in in oil, 191 00:10:25,640 --> 00:10:29,800 Speaker 1: in energy, traditional energy, E s G has done better 192 00:10:30,000 --> 00:10:36,240 Speaker 1: than anything else. And that's not a secret actually or surprising, right. 193 00:10:36,240 --> 00:10:39,920 Speaker 1: I mean people, look, people started ten years ago buying 194 00:10:39,960 --> 00:10:42,760 Speaker 1: electric cars on the consumer level because they want to 195 00:10:43,760 --> 00:10:46,640 Speaker 1: guard against climate change or push back against climate change. 196 00:10:46,640 --> 00:10:48,720 Speaker 1: And obviously mom and pop investors are going to be 197 00:10:48,760 --> 00:10:50,560 Speaker 1: doing that. If they feel that way, they're gonna invest 198 00:10:50,600 --> 00:10:53,439 Speaker 1: with their hearts as well as their pocketbooks. And now 199 00:10:53,440 --> 00:10:55,800 Speaker 1: we have huge institutions coming in and doing it as well. 200 00:10:55,880 --> 00:11:00,000 Speaker 1: In Blackrock has ten trillion dollars in assets under managed, 201 00:11:00,240 --> 00:11:02,400 Speaker 1: and they are watching this. Yeah. I think that's a 202 00:11:02,440 --> 00:11:05,640 Speaker 1: great point. Uh. If you look at black Rock, people 203 00:11:06,440 --> 00:11:11,440 Speaker 1: may have forgotten that black Rock really saved the US 204 00:11:11,600 --> 00:11:14,720 Speaker 1: from the worst of the financial crisis. Black Rock was 205 00:11:14,840 --> 00:11:18,719 Speaker 1: the one institution that came in and helped the US government, UH, 206 00:11:18,920 --> 00:11:23,560 Speaker 1: sort out of what was a disaster the likes of 207 00:11:23,600 --> 00:11:26,000 Speaker 1: which we hadn't seen in a couple of generations. You 208 00:11:26,040 --> 00:11:27,560 Speaker 1: have to go back to the depression. So put it 209 00:11:27,600 --> 00:11:33,720 Speaker 1: on fast forward. A company called Tesla UH making zero 210 00:11:33,800 --> 00:11:38,760 Speaker 1: mission vehicles in starting in say two thousand ten, and 211 00:11:38,800 --> 00:11:40,920 Speaker 1: when it went public and then two thousand twelve it 212 00:11:40,960 --> 00:11:44,800 Speaker 1: introduces the models. And Tesla today as a car, as 213 00:11:44,800 --> 00:11:49,200 Speaker 1: a car company, has the highest market valuation in the 214 00:11:49,240 --> 00:11:54,920 Speaker 1: world among automakers. It's more than three times uh the 215 00:11:55,000 --> 00:11:58,960 Speaker 1: value of Toyota, which sells more vehicles than anyone, but 216 00:11:59,760 --> 00:12:01,760 Speaker 1: I am by a wide margin. I mean, Tesla sells 217 00:12:01,800 --> 00:12:04,319 Speaker 1: what half a million vehicles a year in Toyota must twelve. 218 00:12:04,840 --> 00:12:06,800 Speaker 1: And so what does that tell you The market, if 219 00:12:06,840 --> 00:12:10,400 Speaker 1: you like, which is not ideological, which is not political, 220 00:12:11,440 --> 00:12:14,560 Speaker 1: the market, which is just about what's cheap and what's 221 00:12:14,600 --> 00:12:18,400 Speaker 1: expensive and relative value says Tesla is by far the 222 00:12:18,440 --> 00:12:22,679 Speaker 1: most valuable company. And that's because there is a convergence 223 00:12:22,720 --> 00:12:26,600 Speaker 1: of policy and people's preferences, and Tesla is an example 224 00:12:26,640 --> 00:12:30,040 Speaker 1: of that. And uh, it's an example of what's happening 225 00:12:30,480 --> 00:12:33,920 Speaker 1: to investing worldwide, which is why uh, you know, the 226 00:12:34,000 --> 00:12:36,400 Speaker 1: total amount of money committed to E s G is 227 00:12:36,440 --> 00:12:39,520 Speaker 1: something like thirty five trillion dollars, which is obviously bigger 228 00:12:39,760 --> 00:12:42,600 Speaker 1: than the US economy. Wow. So I mean if I'm 229 00:12:42,800 --> 00:12:45,920 Speaker 1: you know, twice twice the size about right? I mean, 230 00:12:45,920 --> 00:12:49,760 Speaker 1: if if I'm a teacher in Florida, any pension holder, 231 00:12:50,640 --> 00:12:53,600 Speaker 1: I gotta say, Okay, so you're telling me my returns 232 00:12:53,600 --> 00:12:56,520 Speaker 1: are going to be lower because you have this perhaps 233 00:12:56,520 --> 00:12:59,280 Speaker 1: politically driven ideology as relates to E s G. Is 234 00:12:59,280 --> 00:13:02,480 Speaker 1: there any push from within the state or Well, what 235 00:13:02,559 --> 00:13:05,520 Speaker 1: I would like to see is exactly. I mean, It's 236 00:13:05,520 --> 00:13:08,240 Speaker 1: one thing for the governor of Florida to say this 237 00:13:08,320 --> 00:13:10,480 Speaker 1: is what we're doing. It's quite another thing to see 238 00:13:10,480 --> 00:13:15,560 Speaker 1: what Florida does. If Florida adheres to its mandate, which 239 00:13:15,640 --> 00:13:19,240 Speaker 1: is get the best or the highest total return with 240 00:13:19,280 --> 00:13:22,960 Speaker 1: the least volatility, it will have to consider E s 241 00:13:23,000 --> 00:13:26,520 Speaker 1: G investing. Whatever the initiative says, what do you what 242 00:13:26,559 --> 00:13:30,679 Speaker 1: do you think about Engine number one or ARC? I mean, 243 00:13:30,679 --> 00:13:33,840 Speaker 1: where do you think the most exciting M E s 244 00:13:33,880 --> 00:13:37,640 Speaker 1: G investments are coming from? Well? You know, look, I've 245 00:13:37,720 --> 00:13:40,800 Speaker 1: been as you well know many times with the two 246 00:13:40,800 --> 00:13:43,160 Speaker 1: of you. Said that to me, Tesla is one of 247 00:13:43,160 --> 00:13:50,240 Speaker 1: the most exciting events, um because as a disruption, it 248 00:13:50,320 --> 00:13:54,920 Speaker 1: has changed really the face of the automobile industry I 249 00:13:54,960 --> 00:14:00,640 Speaker 1: think forever, and that we are inexorably going to electric vehicles. 250 00:14:00,760 --> 00:14:04,560 Speaker 1: So that that is my my choice if you like, 251 00:14:05,480 --> 00:14:08,920 Speaker 1: not just cars. I just saw some ads for electric boats, 252 00:14:08,960 --> 00:14:11,240 Speaker 1: I mean anything that has we just we just had 253 00:14:11,320 --> 00:14:13,760 Speaker 1: one come out. It has a fifty nautical mile range. 254 00:14:13,920 --> 00:14:16,400 Speaker 1: It has a cruising speed of twenty knots and a 255 00:14:16,520 --> 00:14:19,000 Speaker 1: top speed of thirty knots. And that's pretty incredible for 256 00:14:19,040 --> 00:14:21,680 Speaker 1: a dollar boat that can hold your whole family. I'm 257 00:14:21,680 --> 00:14:25,440 Speaker 1: excited about this product. All right, Matt Winkler, thank you 258 00:14:25,480 --> 00:14:28,040 Speaker 1: so much for joining us as always, Matt Winkler, editor 259 00:14:28,040 --> 00:14:31,840 Speaker 1: in Chief emeritus UH and the founder of Bloomberg News 260 00:14:32,000 --> 00:14:34,120 Speaker 1: so many years ago, joining us here in a Bloomberg 261 00:14:34,160 --> 00:14:36,600 Speaker 1: Interactive broker studio. He's got a column out here looking 262 00:14:36,640 --> 00:14:38,640 Speaker 1: at E. S G Investing, looking at it in the 263 00:14:38,760 --> 00:14:42,200 Speaker 1: lens of Florida, and the governor there ron to Santa Syn. 264 00:14:42,240 --> 00:14:44,040 Speaker 1: You can type that. You can type n I Winkler 265 00:14:44,120 --> 00:14:47,040 Speaker 1: on the Bloomberg can you he's gutting? Of course he has. 266 00:14:47,480 --> 00:14:50,160 Speaker 1: But you can also type that p I N code okay, 267 00:14:50,280 --> 00:14:54,360 Speaker 1: and they can get Bloomberg dot com slash h O 268 00:14:54,520 --> 00:14:57,520 Speaker 1: P I N Bloomberg opinion right now for those people 269 00:14:57,560 --> 00:15:02,200 Speaker 1: that use that intra web thing. Well, there's a lot 270 00:15:02,320 --> 00:15:06,120 Speaker 1: going on in the UK, potential session, surging inflation and 271 00:15:06,280 --> 00:15:09,400 Speaker 1: energy crisis and now a change in the Prime minister. 272 00:15:09,480 --> 00:15:12,040 Speaker 1: How our markets reacting to that? Well, of course we 273 00:15:12,080 --> 00:15:13,880 Speaker 1: need a voice on the UK. We go to somebody 274 00:15:13,880 --> 00:15:16,920 Speaker 1: who was born and raised outside of Rowan Oak, Virginia 275 00:15:17,280 --> 00:15:19,920 Speaker 1: and literally the middle of nowhere, but he's now in London, 276 00:15:20,440 --> 00:15:24,920 Speaker 1: Tim Craighead, Director of Research, senior European strategist for Blueberg Intelligence. 277 00:15:24,920 --> 00:15:27,120 Speaker 1: He's been in London. We had him in Hong Kong 278 00:15:27,200 --> 00:15:29,600 Speaker 1: running our business there for years. New York. The guy 279 00:15:29,600 --> 00:15:32,960 Speaker 1: has been everywhere. Uh, Tim, a lot going on. You're 280 00:15:32,960 --> 00:15:35,160 Speaker 1: on holiday because I follow you on social media and 281 00:15:35,200 --> 00:15:38,640 Speaker 1: you're biking all over the island of England. But you 282 00:15:38,720 --> 00:15:42,840 Speaker 1: were trained Goldman Sacks. That means you're on call seven. 283 00:15:43,160 --> 00:15:45,160 Speaker 1: So we need a voice on the European markets. We 284 00:15:45,200 --> 00:15:47,360 Speaker 1: go to Tim Craig Head. Tim, what's going on in 285 00:15:47,360 --> 00:15:51,000 Speaker 1: the investing markets. There's a lot across currents there are 286 00:15:51,040 --> 00:15:54,320 Speaker 1: and thanks for having me on from the sunny coast 287 00:15:54,360 --> 00:15:59,880 Speaker 1: of South Devon. But you know, the the cross currents 288 00:16:00,000 --> 00:16:03,360 Speaker 1: are crazy looking at things this afternoon. You've got oil 289 00:16:03,480 --> 00:16:07,120 Speaker 1: down three dollars a barrel if you live at Brient Crude. Um, 290 00:16:07,160 --> 00:16:10,440 Speaker 1: You've got interest rates that continue to trade up. Um, 291 00:16:10,480 --> 00:16:15,720 Speaker 1: You've got economic stats that are waning new lockdowns across 292 00:16:15,880 --> 00:16:20,880 Speaker 1: China with a tumbling currency there. And on the currency front, 293 00:16:21,360 --> 00:16:25,120 Speaker 1: every every currency, it seems under the shining sun is 294 00:16:25,160 --> 00:16:27,680 Speaker 1: weak against the dollar. So you know, bring all that 295 00:16:27,760 --> 00:16:30,760 Speaker 1: to bear in in the UK here we announced and the 296 00:16:30,720 --> 00:16:34,040 Speaker 1: the probably minister and Liz Trust comes into comes in 297 00:16:34,080 --> 00:16:38,280 Speaker 1: the office post her her meeting with the Queen today 298 00:16:38,400 --> 00:16:43,040 Speaker 1: and you know she faces a storm. Um. Interesting with 299 00:16:43,200 --> 00:16:47,640 Speaker 1: all of that in context, the UK market essentially flat. 300 00:16:47,880 --> 00:16:50,720 Speaker 1: So yeah, the kind of tells you something right there 301 00:16:50,800 --> 00:16:53,480 Speaker 1: from the standpoint of what's discounted in the market at 302 00:16:53,480 --> 00:16:55,360 Speaker 1: this point. Well, and right now I see a pound 303 00:16:55,360 --> 00:16:59,840 Speaker 1: trading for a dollar fifteen. Um. I'm not sure that 304 00:17:00,640 --> 00:17:03,200 Speaker 1: has as much to doo with Liz Trust as it 305 00:17:03,240 --> 00:17:05,400 Speaker 1: has to do with um, you know, everything else that's 306 00:17:05,560 --> 00:17:09,399 Speaker 1: going on there from you know, inflation. I think Goldman 307 00:17:09,440 --> 00:17:12,879 Speaker 1: Sachs put out a report saying it could go to 308 00:17:11,160 --> 00:17:15,960 Speaker 1: two concerns about an I m F bailout. Tell us 309 00:17:16,000 --> 00:17:20,480 Speaker 1: about that. Yeah, so you know, I am F bailout. 310 00:17:20,520 --> 00:17:23,400 Speaker 1: I think it's a bit on the extreme side. UM. 311 00:17:23,640 --> 00:17:28,320 Speaker 1: One thing that was key today with Trust coming into 312 00:17:28,400 --> 00:17:32,480 Speaker 1: into offices, there's been a a void from the standpoint 313 00:17:32,480 --> 00:17:36,200 Speaker 1: of what government policy would be given the energy crisis 314 00:17:36,240 --> 00:17:39,520 Speaker 1: here in the UK and more broadly across Europe and 315 00:17:40,280 --> 00:17:44,960 Speaker 1: UM an ongoing growing list of big economies big government. 316 00:17:45,359 --> 00:17:49,399 Speaker 1: UM has been announcing policies to help get businesses and 317 00:17:49,480 --> 00:17:54,879 Speaker 1: consumers through the winter. And indeed, UM there was fear 318 00:17:54,920 --> 00:17:58,080 Speaker 1: in the UK that Liz Trust would come in with 319 00:17:58,119 --> 00:18:01,639 Speaker 1: an ultra right wing conservative of approach of cutting taxes 320 00:18:01,680 --> 00:18:04,720 Speaker 1: and not offering handouts as she likes to call them. 321 00:18:04,760 --> 00:18:08,199 Speaker 1: But you know, before she's even in the office, UM, 322 00:18:08,280 --> 00:18:13,320 Speaker 1: you know, Bloomberg News actually found today UM the draft 323 00:18:13,359 --> 00:18:16,560 Speaker 1: of a proposal to offer upwards of forty billion in 324 00:18:16,600 --> 00:18:19,359 Speaker 1: support to business and a hundred and thirty billion and 325 00:18:19,440 --> 00:18:24,040 Speaker 1: potential support for consumers to get through energy crisis by 326 00:18:24,160 --> 00:18:29,600 Speaker 1: essentially capping energy prices now so that inflation rate would 327 00:18:29,600 --> 00:18:33,920 Speaker 1: have would have essentially been driven in large part by 328 00:18:34,400 --> 00:18:37,040 Speaker 1: huge escalations and energy prices. By the way, I love 329 00:18:37,119 --> 00:18:40,440 Speaker 1: when politicians do. I love when politicians do massive u 330 00:18:40,600 --> 00:18:43,840 Speaker 1: turns on campaign promises the day they come into office. 331 00:18:44,240 --> 00:18:47,919 Speaker 1: You know, there you go, remember read my lips, no 332 00:18:48,000 --> 00:18:50,480 Speaker 1: new taxes. Sure, yeah, that at least that took him 333 00:18:50,520 --> 00:18:53,880 Speaker 1: like a year or two. That cost him the reelection. 334 00:18:54,200 --> 00:18:57,800 Speaker 1: So Tim, go ahead, go ahead, Tim. Now, I was 335 00:18:57,840 --> 00:19:00,000 Speaker 1: gonna say part of that, part of that pound weakness 336 00:19:00,200 --> 00:19:03,360 Speaker 1: was a lot of the concern that you'd have all 337 00:19:03,359 --> 00:19:06,879 Speaker 1: sorts of havoc with a you know, lower tax rates 338 00:19:07,000 --> 00:19:09,720 Speaker 1: in the middle of of of a crazy period in 339 00:19:09,760 --> 00:19:13,000 Speaker 1: the economy. And in fact, the first thing we're seeing 340 00:19:13,040 --> 00:19:17,040 Speaker 1: some support is for the domestic economy. For Footsie doesn't 341 00:19:17,040 --> 00:19:19,600 Speaker 1: really matter because as we've talked before, it's a mostly 342 00:19:19,640 --> 00:19:26,440 Speaker 1: globally oriented, a big international brand, franchises and consumer and healthcare, 343 00:19:26,440 --> 00:19:29,919 Speaker 1: et cetera. The week pounds actually a boon to those guys. 344 00:19:30,800 --> 00:19:33,760 Speaker 1: So Tim, uh Matt and I were discussing, it's been 345 00:19:33,760 --> 00:19:36,440 Speaker 1: a few years since we've been in the UK. Find 346 00:19:36,600 --> 00:19:42,520 Speaker 1: what's what's your favorite point cost you a devon today? 347 00:19:42,760 --> 00:19:46,440 Speaker 1: That's a critical question on holiday. Um, you notice I 348 00:19:46,480 --> 00:19:49,400 Speaker 1: say holiday in a vacation and I noticed two weeks 349 00:19:49,400 --> 00:19:51,879 Speaker 1: in a row. By the way, See, he's definitely getting 350 00:19:51,920 --> 00:19:56,920 Speaker 1: used as a European thing there. You go so somewhere 351 00:19:56,960 --> 00:19:59,640 Speaker 1: around uh seven or eight pounds that you could find 352 00:19:59,640 --> 00:20:01,800 Speaker 1: them at London, you know North at ten right now 353 00:20:01,840 --> 00:20:07,320 Speaker 1: if you go to the wrong pub. Really that's inflation, dude. Yeah, 354 00:20:07,359 --> 00:20:09,120 Speaker 1: I have a list, by the way, if you ever 355 00:20:09,560 --> 00:20:13,320 Speaker 1: are down in Chelsea or or Fulham. I like the 356 00:20:13,320 --> 00:20:15,800 Speaker 1: Hollywood arms a lot. I'm a big fan of the 357 00:20:15,840 --> 00:20:18,320 Speaker 1: builder's arms. I like the Duke of Clarence. I like 358 00:20:18,320 --> 00:20:21,560 Speaker 1: the Duke on the Green Um and I love the 359 00:20:21,600 --> 00:20:23,760 Speaker 1: Anglesey arms if you really want to hang with kind 360 00:20:23,760 --> 00:20:27,320 Speaker 1: of the eurotrash there. But there's so many. Yeah, the 361 00:20:27,400 --> 00:20:30,960 Speaker 1: right places the Washington in Delphize Park and that's named 362 00:20:30,960 --> 00:20:36,240 Speaker 1: after George by the way, exactly all right, Tim, enjoy 363 00:20:36,320 --> 00:20:41,920 Speaker 1: the holiday biking around um southern England. Uh. He's into 364 00:20:41,960 --> 00:20:45,080 Speaker 1: this biking thing in the whole family. It's kind of yeah. 365 00:20:45,680 --> 00:20:48,600 Speaker 1: My dad's into it too. He's very philoton guy, so 366 00:20:48,680 --> 00:20:52,320 Speaker 1: you're also about He also like rock climbs too, so 367 00:20:52,359 --> 00:20:54,640 Speaker 1: I mean, I don't know what's going on. Tim Craigead, 368 00:20:54,640 --> 00:20:58,560 Speaker 1: he's a Director Research, senior European strategist for Bloomberg Intelligence. 369 00:20:58,600 --> 00:21:04,600 Speaker 1: He's based in London. What we said that in the 370 00:21:04,640 --> 00:21:07,399 Speaker 1: next life, I want to come back as a healthcare 371 00:21:07,680 --> 00:21:10,880 Speaker 1: m and a banker. Every week it seems like there's 372 00:21:10,880 --> 00:21:14,160 Speaker 1: a big, blockbuster healthcare deal and banks are getting paid 373 00:21:14,200 --> 00:21:17,320 Speaker 1: left and right. Today, CBS to buy Signify Health in 374 00:21:17,359 --> 00:21:21,240 Speaker 1: an eight billion dollar deal. CBS, you know, big pharmacy company, 375 00:21:21,240 --> 00:21:24,640 Speaker 1: Healthcare Services Company, a hundred thirty billion dollar market gap. 376 00:21:24,680 --> 00:21:27,600 Speaker 1: It's a big company. Stocks down about four percent year today, 377 00:21:27,640 --> 00:21:30,399 Speaker 1: kind of flat today. Let's dive into this deal. Jonathan Palmer, 378 00:21:30,480 --> 00:21:34,800 Speaker 1: senior equity research analyst, a team leader for Bloomberg Intelligence, 379 00:21:34,840 --> 00:21:38,800 Speaker 1: also a proud graduate of the Penn State University, which 380 00:21:39,040 --> 00:21:41,480 Speaker 1: had a good road win this weekend to start the year. 381 00:21:41,560 --> 00:21:44,560 Speaker 1: All right, Johnathan, CBS Signify Health, tell us what's going 382 00:21:44,600 --> 00:21:46,480 Speaker 1: on here? Well, Paul, you you hit the nail right 383 00:21:46,520 --> 00:21:49,600 Speaker 1: in the head when you mentioned services company. And CVS 384 00:21:49,680 --> 00:21:51,280 Speaker 1: has kind of three legs to this tool. They have 385 00:21:51,359 --> 00:21:53,880 Speaker 1: their retail stores, they have what they call their PBM 386 00:21:53,960 --> 00:21:57,359 Speaker 1: or pharmacy Benefit manager, which which manages drug benefits, and 387 00:21:57,359 --> 00:22:00,480 Speaker 1: then they have their insurer Etna, and really all these 388 00:22:00,520 --> 00:22:04,280 Speaker 1: companies in the healthcare services universe want to expand their 389 00:22:04,280 --> 00:22:07,880 Speaker 1: service offering, and Signify does that in a meaningful way 390 00:22:07,920 --> 00:22:10,680 Speaker 1: for CVS because Signify is in the home and they 391 00:22:10,720 --> 00:22:13,720 Speaker 1: have assets where they send people out to people's house 392 00:22:13,760 --> 00:22:16,640 Speaker 1: to do evaluations and managed care. And so the next 393 00:22:16,680 --> 00:22:19,560 Speaker 1: step after you know, we've had the pandemic here from 394 00:22:19,600 --> 00:22:23,960 Speaker 1: the virtual cares home care. Yeah. I mean, if if 395 00:22:24,000 --> 00:22:28,880 Speaker 1: I'm right looking at the medical industry, everything's going towards telemedicine, 396 00:22:29,400 --> 00:22:33,439 Speaker 1: UM home care or a CVS, right because there's no 397 00:22:33,520 --> 00:22:38,440 Speaker 1: reason anymore to go to the medical um offices compound 398 00:22:38,680 --> 00:22:41,479 Speaker 1: or to your local g p UM. You can do 399 00:22:41,520 --> 00:22:46,280 Speaker 1: it all by phone, by phone or by zoom and um. 400 00:22:46,320 --> 00:22:48,359 Speaker 1: You know, the only time I need to interact with 401 00:22:48,359 --> 00:22:50,360 Speaker 1: somebody is when I get my booster shot, and I'll 402 00:22:50,400 --> 00:22:52,879 Speaker 1: do that down the street. Yeah, the market is definitely 403 00:22:52,920 --> 00:22:55,359 Speaker 1: moving in that direction, and really the pandemic was a 404 00:22:55,400 --> 00:22:58,360 Speaker 1: catalyst for it. And you know, we've seen a lot 405 00:22:58,400 --> 00:23:00,440 Speaker 1: of care move out of traditional setting is into the 406 00:23:00,520 --> 00:23:03,440 Speaker 1: home in the in the virtual spaces, and we've seen 407 00:23:03,480 --> 00:23:06,120 Speaker 1: Amazon move, you know, with one medical to to kind 408 00:23:06,119 --> 00:23:08,879 Speaker 1: of follow a suit here. So is this tell us 409 00:23:08,880 --> 00:23:11,920 Speaker 1: about signify what is what's special about these guys? Why 410 00:23:11,960 --> 00:23:14,720 Speaker 1: is it worth eight billion? Well, they operate in a 411 00:23:14,840 --> 00:23:15,879 Speaker 1: niche and I don't want to bore you with the 412 00:23:15,880 --> 00:23:17,520 Speaker 1: details of what they actually do on a day to 413 00:23:17,600 --> 00:23:22,800 Speaker 1: day basis, but really they help manage Medicaid and managed care, 414 00:23:23,560 --> 00:23:28,160 Speaker 1: manage managed care, Medicaid and Medicare advantage participants. Every year, 415 00:23:28,200 --> 00:23:30,960 Speaker 1: these people need to see a doctor. Um if the 416 00:23:31,000 --> 00:23:33,400 Speaker 1: plan doesn't have them come into the office, they send 417 00:23:33,400 --> 00:23:36,439 Speaker 1: somebody out to see them doing evaluation. It's part of 418 00:23:36,440 --> 00:23:38,679 Speaker 1: the business model and it really fills a niche. And 419 00:23:38,720 --> 00:23:41,320 Speaker 1: so what CBS is hoping to do is is uh 420 00:23:41,600 --> 00:23:44,800 Speaker 1: expand that niche. There's about eighty five million people in 421 00:23:44,840 --> 00:23:48,320 Speaker 1: those those two buckets and signifies only seeing about two 422 00:23:48,359 --> 00:23:51,240 Speaker 1: million of those a year and build more services around that. 423 00:23:51,359 --> 00:23:54,920 Speaker 1: That home platform. You know, you mentioned CBS had acquired 424 00:23:55,359 --> 00:23:57,800 Speaker 1: and I've forgotten all about that deal. And when that 425 00:23:57,840 --> 00:24:01,119 Speaker 1: deal was announced, I had no idea what's CBS was doing. 426 00:24:01,160 --> 00:24:04,200 Speaker 1: How is up and it's a big insurance company. What's 427 00:24:04,200 --> 00:24:06,760 Speaker 1: a drug store company doing buying an insurance company? How 428 00:24:06,840 --> 00:24:09,359 Speaker 1: is that played out over the last a couple of years. Well, 429 00:24:09,400 --> 00:24:11,480 Speaker 1: they've finally gotten to a point where the debt level 430 00:24:11,560 --> 00:24:14,159 Speaker 1: from from the deals down and it's finally kind of 431 00:24:14,160 --> 00:24:17,119 Speaker 1: realizing the vision that they foresaw where they have this explaned, 432 00:24:17,160 --> 00:24:20,000 Speaker 1: expanded platform where they offer a little bit of everything. 433 00:24:20,680 --> 00:24:22,960 Speaker 1: You know, CVS probably doesn't really want to be in 434 00:24:23,000 --> 00:24:28,399 Speaker 1: the retail drug store business anymore. There's Amazons and but 435 00:24:28,440 --> 00:24:31,480 Speaker 1: they want to turn those locations into service centers and 436 00:24:31,640 --> 00:24:33,840 Speaker 1: they have things like health hubs that they're offering where 437 00:24:33,840 --> 00:24:36,560 Speaker 1: instead of going to your you know, your local GP, 438 00:24:36,680 --> 00:24:39,000 Speaker 1: you'll just pop into your CBS, get your blood pressure chair, 439 00:24:39,040 --> 00:24:42,800 Speaker 1: to get your meds, do an evaluation. So the evolution 440 00:24:42,800 --> 00:24:45,719 Speaker 1: of healthcare is expanding in where we see more of 441 00:24:45,760 --> 00:24:49,840 Speaker 1: the traditional players kind of spreading their tentacles out, you know, 442 00:24:49,840 --> 00:24:53,360 Speaker 1: whether it's Walgreens, whether it's Amazon, whether it's Walmart. Everybody 443 00:24:53,359 --> 00:24:55,360 Speaker 1: wants to be in the healthcare game. I can't believe 444 00:24:55,359 --> 00:24:56,840 Speaker 1: they want to get out of the drug store business. 445 00:24:56,920 --> 00:24:59,359 Speaker 1: I mean, that's where it's like a one stop shop 446 00:24:59,520 --> 00:25:02,400 Speaker 1: for every Yeah, well except for cigarettes, right, I can't 447 00:25:02,400 --> 00:25:04,800 Speaker 1: buy cigarettes of CBS, right, No, not for a while, 448 00:25:05,760 --> 00:25:08,320 Speaker 1: but well I remember when that came across, and obviously 449 00:25:08,280 --> 00:25:10,000 Speaker 1: it makes perfect sense, but I wonder if they're going 450 00:25:10,040 --> 00:25:12,320 Speaker 1: to ever start selling weed, you know, because they do 451 00:25:12,400 --> 00:25:16,080 Speaker 1: CBD already. Right, that's a good question. I don't know 452 00:25:16,160 --> 00:25:18,560 Speaker 1: that fits in the mantra of CVS health, but well, 453 00:25:18,600 --> 00:25:21,520 Speaker 1: we'll see mental health. So talk to us about just 454 00:25:21,560 --> 00:25:24,400 Speaker 1: your space general thirty seconds, Jonathan, what's the hot area 455 00:25:24,440 --> 00:25:26,600 Speaker 1: that that you're covering right now? What if your investor 456 00:25:26,640 --> 00:25:28,639 Speaker 1: clients want to talk about the most Yeah, well, I 457 00:25:28,720 --> 00:25:31,600 Speaker 1: think that one of the key areas is actually this 458 00:25:31,800 --> 00:25:33,639 Speaker 1: this space that we're talking about right now, which is 459 00:25:33,680 --> 00:25:37,400 Speaker 1: technology enabled assets. And so we've seen a big retreat 460 00:25:37,440 --> 00:25:41,040 Speaker 1: invaluations from the peak of the pandemic last year where 461 00:25:41,040 --> 00:25:43,840 Speaker 1: everybody was really boiled up on virtual care, and now 462 00:25:43,840 --> 00:25:45,800 Speaker 1: we're starting to see now that these stock prices have 463 00:25:45,880 --> 00:25:48,520 Speaker 1: come back. You know, one Medical getting picked up by Amazon, 464 00:25:48,680 --> 00:25:51,879 Speaker 1: we see Signify getting picked up by CBS. We think 465 00:25:51,880 --> 00:25:53,800 Speaker 1: there's more to come. What is Amazon going to do 466 00:25:53,840 --> 00:25:56,920 Speaker 1: in healthcare? That sounds like a monster vertical they could do. Well. 467 00:25:56,960 --> 00:25:59,240 Speaker 1: I think that's the that's the plan, although they haven't 468 00:25:59,280 --> 00:26:02,480 Speaker 1: executed so far. I mean, their pharmacy is really nowhere 469 00:26:02,600 --> 00:26:05,840 Speaker 1: right now. They had a business for employers called Amazon Care, 470 00:26:05,880 --> 00:26:08,360 Speaker 1: which they just announced that they're gonna fold which they're 471 00:26:08,359 --> 00:26:10,960 Speaker 1: now going to use one medical probably to be the 472 00:26:10,960 --> 00:26:14,480 Speaker 1: beach head there. So healthcare is hard. Yeah, it's hard 473 00:26:14,520 --> 00:26:17,120 Speaker 1: to have and I don't understand it at all. That's 474 00:26:17,119 --> 00:26:19,600 Speaker 1: why we have smart people like Jonathan Palmer to kind 475 00:26:19,600 --> 00:26:20,840 Speaker 1: of walk us through some of the stuff. All right. 476 00:26:20,880 --> 00:26:23,720 Speaker 1: Jonathan Palmer, senior equity research analysts and team leader. He 477 00:26:23,840 --> 00:26:26,520 Speaker 1: covers it, does all the healthcare stuff here, manages the 478 00:26:26,560 --> 00:26:31,639 Speaker 1: team of analysts we have here, a Bloomberg intelligence. All right, 479 00:26:31,680 --> 00:26:34,120 Speaker 1: let's talk cybersecurity. I kind of been telling my kids 480 00:26:34,160 --> 00:26:36,280 Speaker 1: have been entering the workforce over the last several years. 481 00:26:36,600 --> 00:26:40,119 Speaker 1: It's not plastics is the future. It's cyber security. I 482 00:26:40,160 --> 00:26:42,800 Speaker 1: think that's going to be a long term growth story. 483 00:26:42,800 --> 00:26:46,440 Speaker 1: Shawn Joyce, Global Cybersecurity and Privacy leader at p w 484 00:26:46,640 --> 00:26:50,800 Speaker 1: S c sean give us a sense of I don't 485 00:26:50,800 --> 00:26:53,240 Speaker 1: know the the C suite folks you talked to, the 486 00:26:53,320 --> 00:26:57,119 Speaker 1: board members you talked to do you think they're putting 487 00:26:57,160 --> 00:27:03,520 Speaker 1: cybersecurity risk? They're giving it an enough attention. So I 488 00:27:03,560 --> 00:27:07,240 Speaker 1: think it's a great question, and I think that it 489 00:27:07,480 --> 00:27:10,359 Speaker 1: is coming to the forefront of the board of agenda 490 00:27:11,000 --> 00:27:13,600 Speaker 1: and there probably isn't the boardroom that I go into 491 00:27:13,640 --> 00:27:17,119 Speaker 1: where they're not talking about a digital transformation. And I 492 00:27:17,119 --> 00:27:22,320 Speaker 1: would argue that within that digital transformation technology is that 493 00:27:22,440 --> 00:27:26,720 Speaker 1: central nervous system for many companies in confirming that the 494 00:27:26,920 --> 00:27:31,040 Speaker 1: data is secure and protected is really and can be 495 00:27:31,200 --> 00:27:35,000 Speaker 1: brand defining, you know. And I would just add, you know, 496 00:27:35,520 --> 00:27:40,720 Speaker 1: the boardroom became very concerned during the Russian Ukrainian conflict 497 00:27:40,920 --> 00:27:44,080 Speaker 1: or war, and you know, what should we do? Do 498 00:27:44,160 --> 00:27:47,520 Speaker 1: we have any business there operations? And I would just 499 00:27:47,560 --> 00:27:52,000 Speaker 1: say that is the first time that we're really seen 500 00:27:52,880 --> 00:27:56,080 Speaker 1: cyber as a risk come to the forefront from from 501 00:27:56,080 --> 00:28:00,800 Speaker 1: this perspective. First, it's over cyber cyber warfare are in 502 00:28:01,280 --> 00:28:04,920 Speaker 1: between Ukraine and Russia. We're seeing seven Wiper viruses that 503 00:28:04,960 --> 00:28:09,680 Speaker 1: have been deployed, We're seeing infrastructure being targeted, satellites being targeted, 504 00:28:09,720 --> 00:28:13,679 Speaker 1: and obviously an ongoing informational war. The second thing is 505 00:28:14,160 --> 00:28:18,720 Speaker 1: we're actually seeing crowd sourcing in civilian groups acting on 506 00:28:18,840 --> 00:28:22,399 Speaker 1: behalf of nation states. So not only are you seeing 507 00:28:22,440 --> 00:28:25,840 Speaker 1: it coming to the forefront on the board agenda, but 508 00:28:26,080 --> 00:28:30,520 Speaker 1: this threat is becoming more complex and I think a 509 00:28:30,560 --> 00:28:35,640 Speaker 1: lot of companies struggle to really handle this risk effectively. 510 00:28:35,680 --> 00:28:38,520 Speaker 1: Does a major company automatically outsource this or do they 511 00:28:38,640 --> 00:28:42,600 Speaker 1: does anybody try and take it on themselves. I think 512 00:28:42,640 --> 00:28:45,920 Speaker 1: you'll see some of the more mature companies, especially when 513 00:28:45,920 --> 00:28:50,400 Speaker 1: you're talking financial services, defense contractors, a lot of them 514 00:28:50,600 --> 00:28:55,000 Speaker 1: take it on themselves because it's critical to what they 515 00:28:55,040 --> 00:28:57,080 Speaker 1: do each and every day and part of their brand. 516 00:28:57,120 --> 00:28:59,640 Speaker 1: And I would add to tech companies too. I think 517 00:28:59,680 --> 00:29:04,719 Speaker 1: there are other sectors and companies that should outsource different 518 00:29:04,760 --> 00:29:08,760 Speaker 1: aspects of this cyber risk. Right, we're talking about cyber risk, 519 00:29:09,240 --> 00:29:12,160 Speaker 1: and really if it's not the main part of what 520 00:29:12,240 --> 00:29:14,960 Speaker 1: they do as a business, I would say I would 521 00:29:15,040 --> 00:29:17,840 Speaker 1: outsource that to someone who has that expertise. By the way, 522 00:29:17,840 --> 00:29:19,600 Speaker 1: do you have any headline numbers? I mean, we always 523 00:29:19,600 --> 00:29:23,080 Speaker 1: talk about how many hundreds of billions of dollars are 524 00:29:23,120 --> 00:29:26,800 Speaker 1: stolen in crypto every year, but it seems to me, um, 525 00:29:27,200 --> 00:29:31,600 Speaker 1: you know, much more damage can be done. Um, when 526 00:29:31,640 --> 00:29:36,640 Speaker 1: you're talking about huge financial entities like the big Wall 527 00:29:36,680 --> 00:29:40,520 Speaker 1: Street banks or you know a Walmart or um, you know, 528 00:29:40,680 --> 00:29:44,880 Speaker 1: signa healthcare how much damage is done in dollar terms 529 00:29:45,000 --> 00:29:49,800 Speaker 1: via cyber crime every year? I would say easily tens 530 00:29:49,800 --> 00:29:53,200 Speaker 1: of billions of dollars being done by you know, cyber 531 00:29:53,240 --> 00:29:56,600 Speaker 1: criminals in Nation States each every year. And that's not 532 00:29:56,720 --> 00:30:00,000 Speaker 1: just you know, through cyber crime and fraud and account 533 00:30:00,040 --> 00:30:03,840 Speaker 1: takeover is it's all through also through the theft of 534 00:30:04,000 --> 00:30:08,840 Speaker 1: intellectual property from companies. Just recently, we saw a breach 535 00:30:08,960 --> 00:30:12,840 Speaker 1: or a ransomware event of the US company and they 536 00:30:12,920 --> 00:30:16,920 Speaker 1: lost a hundred million dollars just in operations and the 537 00:30:16,960 --> 00:30:22,080 Speaker 1: inability to actually produce their products. So this definitely is 538 00:30:22,160 --> 00:30:26,720 Speaker 1: having a critical effect on business operations. And I think, 539 00:30:26,760 --> 00:30:29,240 Speaker 1: you know, unlike what you probably talked about on your 540 00:30:29,240 --> 00:30:32,000 Speaker 1: show when you talk about credit risk and market risk, 541 00:30:32,760 --> 00:30:36,520 Speaker 1: fiber risk is newer, and I think a lot of 542 00:30:36,520 --> 00:30:42,040 Speaker 1: people because of the educational gap and not being digital natives. 543 00:30:42,560 --> 00:30:45,000 Speaker 1: As I said, it's a challenge to really deal with 544 00:30:45,040 --> 00:30:48,680 Speaker 1: this risk versus some of the other traditional risk that 545 00:30:48,920 --> 00:30:51,440 Speaker 1: you know, you and I have heard of historically that 546 00:30:51,480 --> 00:30:55,560 Speaker 1: many people are familiar with. Sean, your deputy director of 547 00:30:55,560 --> 00:30:59,080 Speaker 1: the FBI, I'd love to get your perspective on, you know, 548 00:30:59,160 --> 00:31:01,720 Speaker 1: kind of how pair do you think the US government 549 00:31:02,000 --> 00:31:05,160 Speaker 1: is and all of the interests aligned with the government 550 00:31:05,240 --> 00:31:07,920 Speaker 1: is for cybersecurity, because it just seems like the risk 551 00:31:08,360 --> 00:31:11,480 Speaker 1: whether it's coming from you know, Nation States or others 552 00:31:11,480 --> 00:31:14,600 Speaker 1: are just almost impossible. Is that a Pentagon issue or 553 00:31:14,640 --> 00:31:16,960 Speaker 1: does that fall under Does the FBI have its own 554 00:31:17,880 --> 00:31:21,360 Speaker 1: division there, does the you know, um, the White House 555 00:31:21,360 --> 00:31:23,920 Speaker 1: have its own cybersecurity people or or do you have 556 00:31:24,000 --> 00:31:28,280 Speaker 1: one branch that overlooks it for everybody? So currently in 557 00:31:28,320 --> 00:31:31,120 Speaker 1: the administration, so to answer your question directly, there is 558 00:31:31,160 --> 00:31:35,800 Speaker 1: not one agency that handles everything. Uh. And I believe 559 00:31:35,960 --> 00:31:39,040 Speaker 1: there should be an approach and a whole of government 560 00:31:39,040 --> 00:31:42,840 Speaker 1: approach for those agencies to come together. However, I think 561 00:31:42,840 --> 00:31:47,200 Speaker 1: this administration has done some great steps forward, you know 562 00:31:47,280 --> 00:31:51,000 Speaker 1: with the establishment you know, SISSA as you know, just 563 00:31:51,120 --> 00:31:55,600 Speaker 1: pushed through in legislation the National Cyber Incident Reporting Act. Right, 564 00:31:55,680 --> 00:31:58,400 Speaker 1: we're seeing them do things like Shields Up, which is 565 00:31:58,480 --> 00:32:01,120 Speaker 1: really companies coming together and how do they help protect 566 00:32:01,200 --> 00:32:05,120 Speaker 1: each other? Um. Sister has also established the Joint Cyber 567 00:32:05,200 --> 00:32:09,200 Speaker 1: Defense Collaborative. Right. When you look at the FBI, they 568 00:32:09,280 --> 00:32:14,240 Speaker 1: have really pushed on their public private partnerships how they're 569 00:32:14,240 --> 00:32:17,720 Speaker 1: actually helping companies defend along with the n s A. 570 00:32:18,480 --> 00:32:22,280 Speaker 1: So it is really a collection of agencies, um. And 571 00:32:22,400 --> 00:32:24,880 Speaker 1: like you're saying, though, I think that needs to be 572 00:32:24,920 --> 00:32:28,800 Speaker 1: revisited and look at how can the government approach this 573 00:32:29,000 --> 00:32:33,120 Speaker 1: from more of the next century approach versus maybe historically, 574 00:32:33,160 --> 00:32:37,080 Speaker 1: how they how they've done that. The bureau, specifically the FBI, 575 00:32:37,240 --> 00:32:40,160 Speaker 1: they have a cyber division. They have over a thousand 576 00:32:40,160 --> 00:32:42,600 Speaker 1: people that are working this each and every day throughout 577 00:32:42,680 --> 00:32:46,720 Speaker 1: the country and overseas. So they're coordinating with many different 578 00:32:46,720 --> 00:32:49,080 Speaker 1: agencies and that, as you know, is one of their 579 00:32:49,160 --> 00:32:52,160 Speaker 1: highest priorities of what they do each and every day. 580 00:32:52,840 --> 00:32:54,719 Speaker 1: All Right, Sean, thank you so much for joining us. 581 00:32:54,720 --> 00:32:58,600 Speaker 1: Really appreciate that. Shawn Joyce, Global Cybersecurity and Privacy Leader 582 00:32:59,320 --> 00:33:02,720 Speaker 1: for PW. You see again, it was a debut director 583 00:33:02,760 --> 00:33:05,080 Speaker 1: at the FBI, so he kind of gets it from 584 00:33:05,200 --> 00:33:08,640 Speaker 1: um the you know, the private company side as well 585 00:33:08,640 --> 00:33:13,280 Speaker 1: as the governmental side. Thanks for listening to the Bloomberg 586 00:33:13,320 --> 00:33:16,680 Speaker 1: Markets podcast. You can subscribe and listen to interviews with 587 00:33:16,760 --> 00:33:21,560 Speaker 1: Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. 588 00:33:21,840 --> 00:33:25,720 Speaker 1: I'm on Twitter at Matt Miller three, pt on Fall 589 00:33:25,720 --> 00:33:28,640 Speaker 1: Sweeney I'm on Twitter at pt Sweeney. Before the podcast, 590 00:33:28,680 --> 00:33:31,440 Speaker 1: you can always catch us worldwide at Bloomberg Radio.