WEBVTT - Markets, ESG, And The Global Economic Outlook (Podcast) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.520 with essential market moving news. Find the Bloomberg Markets podcast 0:00:15.560 --> 0:00:18.439 called Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:21.840 at Bloomberg dot com slash podcast. Well, the big take 0:00:21.960 --> 0:00:25.200 story here Shannai Basset Bloomberg News. She covers all things 0:00:25.320 --> 0:00:28.680 Wall Street fours and how about this headline Goldman legend, 0:00:29.280 --> 0:00:33.240 crypto star and top banker. Weren't worn of the next 0:00:33.560 --> 0:00:36.240 big risk? Like we don't have enough to worry about? Shinali, 0:00:36.280 --> 0:00:38.199 thanks so much for joining us here in our Bloomberg 0:00:38.200 --> 0:00:42.199 Interactive Broker studio. So you talk to these three big 0:00:42.360 --> 0:00:44.559 folks on Wall Street? What are their concerns? Who did 0:00:44.560 --> 0:00:46.560 you speak to and what are their concerns? I spoke 0:00:46.600 --> 0:00:48.959 to three people. We do this project twice a year, 0:00:49.080 --> 0:00:51.560 and it's my favorite because there's so many things happening 0:00:51.640 --> 0:00:54.280 day to day. This is a risk management business, and 0:00:54.320 --> 0:00:57.800 what you have is former Goldman Sacks investment strategists now 0:00:57.840 --> 0:01:02.000 Columbia Business School professor to star in her entire tenure. 0:01:02.680 --> 0:01:05.600 Really worried now and also she was known for being bullish. 0:01:06.080 --> 0:01:09.120 Joseph Cohin she's worried about the American dream, and the 0:01:09.160 --> 0:01:11.720 reason she's worried is because she believes that the US 0:01:11.760 --> 0:01:14.520 has really fallen off and investing in the workforce and 0:01:14.560 --> 0:01:19.919 protecting its workforce via agencies. Meanwhile, we should just define 0:01:19.959 --> 0:01:22.679 the American dream. I mean, I think everyone has a 0:01:22.720 --> 0:01:24.760 different idea of what it is or is there one 0:01:24.880 --> 0:01:29.119 universally agreed definition of the American dream? She defines it. 0:01:29.440 --> 0:01:31.959 She defines it in terms of income. She defines it 0:01:32.000 --> 0:01:34.440 whether every generation is doing better than the previous one. 0:01:34.480 --> 0:01:36.160 And what we've seen, she says, over the last thirty 0:01:36.200 --> 0:01:38.959 or forty years, is that media and household income adjusted 0:01:38.959 --> 0:01:42.000 for inflation has not risen. And you're seeing that in 0:01:42.040 --> 0:01:45.440 the job market today only compounding with way just not 0:01:45.560 --> 0:01:49.639 rising as flash fastest inflation. Where do inflationary pressures matter? Again? 0:01:49.880 --> 0:01:53.760 With the next big risk? Ken Molis, billionaire banker, banker 0:01:53.800 --> 0:01:56.280 to companies around the world from Saudi Arabia to Hong Kong, 0:01:56.720 --> 0:01:59.720 is worried about the globalization. He thinks that's a lot 0:01:59.760 --> 0:02:03.400 of these de global and these forces going to be 0:02:03.440 --> 0:02:06.520 inflation or even more when you come about when you 0:02:06.560 --> 0:02:09.480 come to the idea that supply chains are breaking apart 0:02:09.480 --> 0:02:12.200 across the world and countries will be more responsible for 0:02:12.200 --> 0:02:17.000 their own supply chains from food to energy to financial assets. Right, well, 0:02:17.040 --> 0:02:19.320 because we had such a big problem with globalization in 0:02:19.360 --> 0:02:22.000 the first place, it's not like supply chains are breaking. 0:02:22.040 --> 0:02:25.120 We're taking them apart, dismantling them and moving them in 0:02:25.160 --> 0:02:27.200 some cases, right, so that we don't have to rely 0:02:27.480 --> 0:02:31.520 on Russia or China necessarily to do the work that 0:02:31.560 --> 0:02:33.600 we need to get done. And he cites this in 0:02:33.760 --> 0:02:37.240 terms of Germany, for example, being in extreme trouble. But 0:02:37.280 --> 0:02:38.959 when I asked if this was just about the war, 0:02:39.280 --> 0:02:42.000 he said, you know, think about Brexit for example, or 0:02:42.040 --> 0:02:44.800 what's happening in Sri Lanka and the worry about just 0:02:44.840 --> 0:02:48.560 getting basic resources to two citizens. Let's listen to same 0:02:48.560 --> 0:02:50.840 bank and Freed also really quickly here let's take listen 0:02:50.840 --> 0:02:52.760 to what his concern is because it is different than 0:02:52.800 --> 0:02:56.160 the other two. A lot of the discourse around you know, 0:02:56.240 --> 0:02:59.520 COVID and pandemics in general has you know, as you served, 0:02:59.600 --> 0:03:03.040 you know, Franks focused on things like masks by the time. 0:03:03.120 --> 0:03:06.679 That's the debate. We have already failed at the much 0:03:06.760 --> 0:03:10.200 more important goal, which is avoiding ending up there in 0:03:10.240 --> 0:03:14.880 the first place, by having countermeasures ready beforehand, by having 0:03:14.919 --> 0:03:18.640 early detection systems, by having good ventilation in buildings. The 0:03:18.680 --> 0:03:21.040 goals to get to a place where outgrages don't become 0:03:21.080 --> 0:03:24.160 pandemics in the first place, and where we don't have 0:03:24.280 --> 0:03:26.880 to shut down, uh, you know, the economy, where people 0:03:26.880 --> 0:03:28.760 don't have to die, where we don't have to make 0:03:28.760 --> 0:03:31.600 trade offs, and hopefully we can you know, I think 0:03:31.639 --> 0:03:35.240 spend you know, tens of billions of dollars today to 0:03:35.400 --> 0:03:39.440 save tens of trillions of dollars. So there you go, 0:03:39.520 --> 0:03:42.920 Sam being been Free, the cryptocurrency billionaire who is known 0:03:42.920 --> 0:03:45.120 for shoring up his industry. He's spending a lot of 0:03:45.120 --> 0:03:50.160 his personal capital, philanthropic efforts, charitable efforts really towards preventing 0:03:50.240 --> 0:03:53.000 the next pandemic, which he worries will be deadlier and 0:03:53.120 --> 0:03:57.000 further cripple already decimated economies around the world. But all 0:03:57.040 --> 0:04:00.960 three of these folks comes down to investment and how governments, 0:04:01.200 --> 0:04:03.600 particularly the US government investors. All Right, So the big 0:04:03.600 --> 0:04:06.480 take story on the terminal on the Bloomberg dot com 0:04:06.520 --> 0:04:09.280 slash big take you had Abby Joseph Cohen, former government 0:04:09.320 --> 0:04:13.280 sex strategists now Columbia, Sam Bank, Ben Fried who was 0:04:13.280 --> 0:04:16.840 the ft X chief executive officer, and Ken molis Uh 0:04:17.320 --> 0:04:19.920 CEO of his Molis and Company big investment bank or 0:04:19.960 --> 0:04:22.039 some cool thoughts there, all right, So, Shnale, we've just 0:04:22.080 --> 0:04:26.000 gotten through three four days of the big bank earnings here? 0:04:26.480 --> 0:04:28.280 Is there when you talk to investors? Is there a 0:04:28.800 --> 0:04:32.479 takeaway here that we're getting from these names? Caution, caution 0:04:32.520 --> 0:04:35.600 and more caution. David Solomon is addressing investors right now 0:04:35.640 --> 0:04:38.560 on a call and they're asking, you know, are we 0:04:38.600 --> 0:04:41.120 just going to see a huge pullback and risk among 0:04:41.400 --> 0:04:44.359 corporate borrowers, investors willing to put money to work and 0:04:44.480 --> 0:04:47.159 risk your assets? And he's saying that people just have 0:04:47.279 --> 0:04:49.880 to get used to the new price of things. Is 0:04:49.920 --> 0:04:52.880 there loan growth out there? Are people taking on debt 0:04:52.960 --> 0:04:56.119 to fund new businesses, new cap backs. It just seems 0:04:56.160 --> 0:05:01.400 like I just sold a million credit card. Essentially, they 0:05:01.440 --> 0:05:03.080 just brought on a million new clients in the last 0:05:03.160 --> 0:05:05.479 quarter a loan and so there is some signs of 0:05:05.560 --> 0:05:09.760 optimism here, but again they also lost three million dollars 0:05:09.760 --> 0:05:12.719 in a loan book, as Fred's widen. So there's a 0:05:12.800 --> 0:05:15.240 cost to doing business for these banks here. Also the 0:05:15.279 --> 0:05:18.760 credit thing could be seen from the other direction, right 0:05:19.040 --> 0:05:20.599 like if you need to get a credit card to 0:05:20.600 --> 0:05:23.120 fill up your car and feed your family, which you 0:05:23.200 --> 0:05:25.400 used to be able to do with your bank account balance, 0:05:25.480 --> 0:05:27.719 that's a problematic. Real quick point here. Bank of America 0:05:27.880 --> 0:05:30.159 only nine percent of its clients are below six sixty 0:05:30.200 --> 0:05:33.000 and credit score that was twelve a couple of years ago. 0:05:33.279 --> 0:05:35.880 Maybe it's just that Bank of America has less risky clients. 0:05:35.880 --> 0:05:38.240 It has shedded the riskies, said the risky and then 0:05:38.360 --> 0:05:41.360 if you're a riskier borrower in America, where do you go? 0:05:41.760 --> 0:05:44.760 And the investment bankers? Tough quarter for them, right, yes, 0:05:44.839 --> 0:05:48.599 for the underwriters. But Goldman sachs Is advisory fees were 0:05:48.600 --> 0:05:50.800 one point two billion dollars, Paul, how do you make 0:05:50.880 --> 0:05:54.599 one point two billion dollars environment length is? That's double 0:05:54.680 --> 0:05:58.040 what you saw at Morgan Stanley. It's insane, wow, because 0:05:58.040 --> 0:06:00.160 you don't usually see that disparity between Goldman and We're 0:06:00.160 --> 0:06:02.320 in Stanley on the banking side, and that tells you 0:06:02.440 --> 0:06:04.880 even though they said they're slowing the hiring velocity here, 0:06:05.279 --> 0:06:08.039 They're going to be very precise and how they do that. 0:06:08.800 --> 0:06:11.800 All right, good stuff. Shali Bastak, she covers all things 0:06:11.960 --> 0:06:13.680 Wall Street for US, got the Big Take story. You 0:06:13.680 --> 0:06:16.640 can check that out on Bloomberg uh dot com, slash 0:06:16.680 --> 0:06:19.920 Big Take or n I Big Take on the Bloomberg terminal. 0:06:19.960 --> 0:06:23.279 Those Big Take stories are awesome, Snali, big in depth 0:06:23.320 --> 0:06:25.719 reporting there, as we see almost every day from the 0:06:25.720 --> 0:06:27.640 Big Take folks here. And we also got a summary 0:06:27.680 --> 0:06:31.360 of the big investment banks reporting earnings, and a Shnally noted, 0:06:31.520 --> 0:06:40.400 probably the takeaway is caution. Samir Samana, senior global market 0:06:40.440 --> 0:06:44.120 strategist for Wells Fargo, joins A Sames also a former 0:06:44.160 --> 0:06:46.599 fixed income trader, and that's where I want to start, Samir, 0:06:47.279 --> 0:06:50.640 I'm looking at my I end go function on the 0:06:50.640 --> 0:06:55.520 Bloomberg terminal Corporate, the Bloomberg US corporate total return down 0:06:55.640 --> 0:06:58.919 thirteen point four percent year to date. What are you 0:06:58.920 --> 0:07:01.919 guys doing in the fixing co market? You know, so 0:07:02.000 --> 0:07:03.560 for much of the year we were kind of been 0:07:03.720 --> 0:07:07.719 playing defensive, you know, kind of strategy, so kind of 0:07:07.720 --> 0:07:10.560 going shorter on the duration. We've been most unfavorable on 0:07:10.640 --> 0:07:14.080 long term fixed income. More recently we downgraded credit UM 0:07:14.120 --> 0:07:17.080 too unfavorable again with the thinking data slowdown will probably 0:07:17.120 --> 0:07:19.920 impact spreads and there's still well off kind of their 0:07:19.960 --> 0:07:22.720 historical wides, so there's probably still an opportunity to kind 0:07:22.720 --> 0:07:25.480 of shy away from that UM. And then now that 0:07:25.600 --> 0:07:27.560 you know it seems like the Feds you know, gotten 0:07:27.600 --> 0:07:31.040 some religion around you know, rate increases UM, we actually 0:07:31.080 --> 0:07:34.040 took long term fix and come back to neutral UM. 0:07:34.080 --> 0:07:36.680 We think at this point there's probably some two way risk, 0:07:36.840 --> 0:07:40.160 especially if the recession were to to show up sooner 0:07:40.360 --> 0:07:42.600 and be a little bit deeper than people expect. So 0:07:42.680 --> 0:07:44.920 we we have taken uh, you know, some of that 0:07:45.120 --> 0:07:48.200 duration you know out just a little bit UM again 0:07:48.280 --> 0:07:50.280 wouldn't be you know, leaning out over our skis. But 0:07:50.320 --> 0:07:51.840 those are a couple of things that we've we've we've 0:07:51.880 --> 0:07:54.640 done recently. Also, I think it's worth noting munis right, 0:07:54.800 --> 0:07:57.480 especially when you look at the relatives to corporates and 0:07:57.520 --> 0:08:00.640 relatives to treasuries UM, those seem like a pretty interesting 0:08:00.680 --> 0:08:02.720 place to to put some money, especially if you're in 0:08:02.720 --> 0:08:05.280 a higher tax bracket. You're preaching to the choir some here, 0:08:05.360 --> 0:08:08.200 but I cannot get like colleague, here, Matt Miller to 0:08:08.400 --> 0:08:10.840 really jump in both feet into the muni's. I can't 0:08:11.040 --> 0:08:14.560 imagine the words munis and interesting in the same sense 0:08:15.160 --> 0:08:17.360 to be to be fair, right, you just buy that stuff, 0:08:17.360 --> 0:08:20.880 put it away and collect coupons, which is good, yep, um, 0:08:20.920 --> 0:08:25.240 but nobody trades it. Uh what about equities some here? 0:08:25.280 --> 0:08:28.960 I mean there has been a lot of the big 0:08:29.000 --> 0:08:32.680 bears have been saying that we're halfway through this yet. 0:08:32.960 --> 0:08:36.360 But um, if everybody's freaked out, isn't that the time 0:08:36.400 --> 0:08:39.559 to buy? It's probably a good bit of damage that's 0:08:39.559 --> 0:08:41.640 already been done, you know, kind of like fixing come. 0:08:41.679 --> 0:08:45.240 We've been playing defense on the equity side too, from 0:08:45.280 --> 0:08:47.079 the standpoint of you know, we've been going up in 0:08:47.160 --> 0:08:50.080 market cap from small, stimids and large, and we've been 0:08:50.080 --> 0:08:53.720 going from developed markets and emerging markets to the US. 0:08:53.800 --> 0:08:55.280 So you know, those part of this yere things have 0:08:55.360 --> 0:08:57.520 played you know, pretty nicely in our favor. So we 0:08:57.600 --> 0:09:00.000 feel like, you know, we have some some room maybe 0:09:00.120 --> 0:09:04.280 to to be opportunistic being kind of in that defensive position. Um. 0:09:04.440 --> 0:09:06.600 So you know, as we look towards probably you know, 0:09:06.679 --> 0:09:08.480 kind of a recovery into next year, I think we'll 0:09:08.480 --> 0:09:10.600 maybe kick the tires on some of the areas where 0:09:10.600 --> 0:09:13.600 we're unfavorable, like small caps, emerging markets and developed markets, 0:09:13.600 --> 0:09:16.200 but we think it's much too soon, so stay kind 0:09:16.240 --> 0:09:19.360 of in higher cap, higher quality areas. On the sector side, 0:09:19.360 --> 0:09:22.080 we're probably a little bit more balanced again with the 0:09:22.120 --> 0:09:25.440 thinking that um, you know, we like energy, we like healthcare, 0:09:25.520 --> 0:09:28.040 we like tech. We think they have some you know, 0:09:28.160 --> 0:09:31.040 characteristics that could help them do well. Um, energy is 0:09:31.120 --> 0:09:34.079 kind of your statflationary play healthcare if we tip into 0:09:34.120 --> 0:09:36.200 a recession, and then tech kind of has that secular 0:09:36.200 --> 0:09:39.160 growth aspect to it, um, and we've paired it against 0:09:39.240 --> 0:09:42.400 an unfavorable to discretionary. Right, So if you you kind 0:09:42.400 --> 0:09:46.280 of part and parcel growth, you've got tech, cons and discretionary, 0:09:46.280 --> 0:09:50.600 we're overweight tech, we're neutral cons, and we're unfavorable and discretionary. Um. 0:09:50.640 --> 0:09:54.720 We're also unfavorable on rates and on industrials. So you know, 0:09:54.760 --> 0:09:57.360 we've basically tried to kind of barbel with portfolio where 0:09:57.559 --> 0:10:00.600 we're not getting too defensive because again, um, you know, 0:10:00.679 --> 0:10:03.640 with rates still low, equities are you know, still a 0:10:03.679 --> 0:10:06.520 reasonable evaluation. So we've tried to be more balanced than 0:10:06.559 --> 0:10:10.800 than outright defensive. You know, it feels semear. I mean, 0:10:10.800 --> 0:10:12.960 I've been in this game for thirty plus years, but 0:10:13.000 --> 0:10:16.760 it feels like the confidence, the sentiment in the marketplace 0:10:16.800 --> 0:10:20.280 today is just really bad. Whether it's a recession, whether 0:10:20.320 --> 0:10:25.080 it's in inflation, uh, interest rates, It's almost kind of 0:10:25.120 --> 0:10:27.800 gets me to the point of I haven't seen it 0:10:27.840 --> 0:10:30.520 this bad in a long time. It almost makes me 0:10:30.520 --> 0:10:33.839 feel like, maybe actually buy in here. You know, it's 0:10:33.840 --> 0:10:36.240 not a bad idea to stick to a plan, right, 0:10:36.240 --> 0:10:38.120 I mean, if your dollar cost averaging, or if you've 0:10:38.160 --> 0:10:40.280 got cash flows coming in and your continue to allocate 0:10:40.280 --> 0:10:42.480 to equities, I mean, I think, you know, I think 0:10:42.480 --> 0:10:44.200 there's a good point to be made about you know, look, 0:10:44.240 --> 0:10:47.200 we started this journey at hundred. We started this journey 0:10:47.200 --> 0:10:50.760 in January. We're now closer to thirty eight hundred, forty hundred, 0:10:50.840 --> 0:10:53.320 and we're already in the middle part of July. And 0:10:53.400 --> 0:10:55.520 so you know, if you think about bear markets lasting 0:10:55.520 --> 0:10:57.319 a little over a year and you see them kind 0:10:57.320 --> 0:11:00.200 of draw down about thirty, you could argue you that 0:11:00.240 --> 0:11:02.120 you're about you know, a half to two thirds of 0:11:02.160 --> 0:11:05.320 the way on both price and time. So you know, 0:11:05.360 --> 0:11:07.000 again it's not a bad idea to stick to a 0:11:07.040 --> 0:11:09.520 plan and ta casine to allocate equities. I mean, you know, 0:11:09.800 --> 0:11:12.000 nobody should take what we're saying as as a reason 0:11:12.040 --> 0:11:14.360 to avoid them all together. I think you know, what 0:11:14.400 --> 0:11:16.679 we try to do, you know, with respect to our 0:11:16.720 --> 0:11:18.920 investment professionals, in our clients, is just make sure that 0:11:18.920 --> 0:11:21.800 they're not surprised. And I think, you know, from that standpoint, 0:11:21.840 --> 0:11:23.560 I think what we're at least telling them is, you know, look, 0:11:23.679 --> 0:11:26.360 as these rate hikes, you know, continue to kind of 0:11:26.360 --> 0:11:28.480 pile up and work with the lag that they normally 0:11:28.480 --> 0:11:30.600 work with, you know, they're going to have much of 0:11:30.600 --> 0:11:33.000 their impact in the second half of this year, and 0:11:33.120 --> 0:11:35.440 so you know, it's just hard to to say that 0:11:35.480 --> 0:11:37.760 you're not going to see a shoe drop with restrict 0:11:37.800 --> 0:11:40.920 to earnings, right. I mean, you've got consensus still, you know, 0:11:40.920 --> 0:11:42.880 showing growth for this year and next year and the 0:11:42.960 --> 0:11:44.720 year after that. So I guess earnings do go to 0:11:44.760 --> 0:11:47.240 the sky after all. Um, So you know, until those 0:11:47.240 --> 0:11:50.240 expectations come down, it's just hard to say that, you know, 0:11:50.440 --> 0:11:52.720 stocks can can do well. I appreciate the sentiment piece 0:11:52.760 --> 0:11:55.240 of it, but sentiment sometimes can be a little bit 0:11:55.320 --> 0:11:59.760 too jumpy, right, Alright, awesome stuff. Samir thanks so much 0:12:00.000 --> 0:12:01.720 for joining us giving us your thoughts here as we 0:12:02.040 --> 0:12:06.280 try to navigate these markets rules, certainly for equity and 0:12:06.320 --> 0:12:11.040 fixed income investors. Samir Samana, senior Global market strategists at 0:12:11.160 --> 0:12:13.840 Wells Fargo, join us here giving us his thoughts on 0:12:13.880 --> 0:12:22.200 these markets. All right, let's talk E s G. Environmental, social, 0:12:22.679 --> 0:12:25.840 and governance. That has been one of the big big 0:12:25.960 --> 0:12:28.280 themes and investments. I'm going to say over the last 0:12:28.720 --> 0:12:30.600 ten of fifteen years here in the U s and 0:12:30.600 --> 0:12:32.800 maybe even longer than that in Europe. And it's so 0:12:32.880 --> 0:12:36.840 big that Bloomberg Intelligence, the investment research arm of Bloomberg, 0:12:37.000 --> 0:12:40.920 has multiple E s G analysts and our lead E 0:12:41.080 --> 0:12:44.319 s G analysts, Shaheen, contractor, she covers all things s 0:12:44.360 --> 0:12:46.199 G for Bloomberg Intelligence. She joins us here in a 0:12:46.200 --> 0:12:50.560 Bloomberg Interactive broker studio. She heen. It's just been the 0:12:50.760 --> 0:12:53.000 rage people like, Oh, E s G investing. I have 0:12:53.080 --> 0:12:55.720 to have exposure to it. You've been telling me this 0:12:55.720 --> 0:12:59.520 this for years. Talk to us about kind of where 0:12:59.520 --> 0:13:03.319 we are today because everywhere you look in the marketplace, equities, 0:13:03.440 --> 0:13:07.000 fixed income down double digits. How is E s G 0:13:07.240 --> 0:13:10.680 investing and the flows into history how's that behaving this year? 0:13:11.200 --> 0:13:14.720 Suppose this year has been particularly interesting for E S 0:13:14.760 --> 0:13:17.439 SHE especially after all the growth we've seen in the 0:13:17.520 --> 0:13:20.960 last few years, and this year has actually been one 0:13:21.000 --> 0:13:22.680 of the few have you've seen a bit of a 0:13:22.720 --> 0:13:25.320 slow down. So if you consider E S G E 0:13:25.400 --> 0:13:27.000 T S as you know, it's just a slice of 0:13:27.040 --> 0:13:31.760 the pie. Assets at the end of the second quarter 0:13:31.840 --> 0:13:38.640 with about four dred billion about decline over the last year. Yes, 0:13:39.000 --> 0:13:41.760 so it's just assets in E S G in E 0:13:41.880 --> 0:13:44.040 T F rappers, right, not the price of the E 0:13:44.120 --> 0:13:46.800 T s because they've come down more than that. Correct, 0:13:46.920 --> 0:13:49.760 So that asset decline, you're right, is largely because of 0:13:49.840 --> 0:13:52.800 market contraction, but we have to recognize that flow is 0:13:52.960 --> 0:13:57.080 slowed more fresc than on. Yes, I mean my question 0:13:57.240 --> 0:14:02.319 is has the especially the environmental side of it. Has 0:14:02.360 --> 0:14:07.960 that been hurt or helped by um the inflation combined 0:14:08.040 --> 0:14:12.120 with the war in Ukraine, which amplifies the inflation, right, 0:14:12.120 --> 0:14:17.200 because either the lack of fossil fuels out of Russia 0:14:17.240 --> 0:14:20.160 pushes us more towards wind and solar, like we've got 0:14:20.160 --> 0:14:23.680 to build that out faster, but at the same time 0:14:24.120 --> 0:14:27.200 we're also using all the coal that we can and 0:14:27.240 --> 0:14:30.920 maybe turning nuclear reactors back on. Yeah. Yeah, so answer 0:14:31.000 --> 0:14:35.880 a question definitely, hoot. And that's because hes she funds 0:14:35.920 --> 0:14:38.120 tend to be overweight deck on the way energy, as 0:14:38.160 --> 0:14:40.160 you said, and that's not been so great so far. 0:14:40.240 --> 0:14:45.040 To right, deck has been particularly challenged. Energy has has 0:14:45.400 --> 0:14:47.840 sort of skyrocketed. I mean, you're looking at it from 0:14:47.840 --> 0:14:51.560 an investment perspective, but what about maybe a policy perspective. 0:14:51.640 --> 0:14:56.160 It's it's boosted because even though now we're using dirty, 0:14:56.160 --> 0:15:00.000 dirty coal. Um, you know, politicians are saying we really 0:15:00.040 --> 0:15:02.200 we need to build these wind farms, or we need 0:15:02.240 --> 0:15:06.240 to invest more in solar energy or solar capacentator production, 0:15:06.760 --> 0:15:10.360 et cetera. So over the long term, yes, this hopefully 0:15:10.440 --> 0:15:13.960 will accelerate a shift to cleaner energy over the long term, 0:15:14.080 --> 0:15:18.720 especially to reduce Russia sort of dependency on oil and gas. Um. 0:15:18.720 --> 0:15:20.680 But if you look at short term performance, if you 0:15:20.760 --> 0:15:24.920 ask me, Hot continued for the rest of the hot. Okay, 0:15:25.040 --> 0:15:28.680 So talk to us about just, um, where's the demand 0:15:28.720 --> 0:15:31.280 coming for E s G investments? Because when I first 0:15:31.320 --> 0:15:34.600 started hearing about E s G, it was probably more 0:15:34.640 --> 0:15:37.840 than a decade ago, and it was from European institutional 0:15:37.840 --> 0:15:40.400 investors that I would go visit. They would say, I'll 0:15:40.440 --> 0:15:42.520 be talking to them about Disney and they would ask 0:15:42.520 --> 0:15:44.360 me what the E S G score was, And I said, 0:15:44.360 --> 0:15:46.840 what are you even talking about? I mean, it's Mickey Mouse. 0:15:46.880 --> 0:15:49.920 How how bad can he be? Um? But now it's 0:15:49.960 --> 0:15:52.600 become more of a thing here in the US. Where 0:15:52.600 --> 0:15:54.640 are we kind of in kind of the development of SG. 0:15:55.160 --> 0:15:58.640 So if you think about assets Europe, you're right. Europe 0:15:58.680 --> 0:16:01.440 has been you know, the traditional sort of the heavyweight, 0:16:01.720 --> 0:16:05.080 but the US has got up. US assets have seen 0:16:05.720 --> 0:16:09.120 It's gone from about se as a ship to about 0:16:09.720 --> 0:16:15.160 which is quite substantial. But if you share total invested assets, okay, okay, yes, 0:16:15.400 --> 0:16:18.400 but if you consider where these assets are coming from, 0:16:18.440 --> 0:16:22.040 I would still describe it as very institutional and still 0:16:22.200 --> 0:16:28.520 very European if that makes sense, but definitely institutional and nature. So, um, 0:16:28.680 --> 0:16:31.360 we focus on the E, the S and the G. 0:16:31.920 --> 0:16:36.880 Is that improving over this year? I mean, so it 0:16:36.960 --> 0:16:39.800 seems like, well, here's a government story for you, Matt 0:16:40.160 --> 0:16:43.720 Porsche is come in public, right, and that's not a 0:16:43.760 --> 0:16:46.480 good G thing because their governance there. It seems like 0:16:46.720 --> 0:16:49.400 all the shareholders like if I'm gonna be a public shareholder. 0:16:49.400 --> 0:16:51.960 I'm getting like almost no rights there in that company 0:16:51.960 --> 0:16:54.640 because the rights are sticking with VW and all their 0:16:54.680 --> 0:16:58.160 crazy shareholders have a family that owns all of that 0:16:59.040 --> 0:17:02.120 family and right family. So what am I getting, Well, 0:17:02.160 --> 0:17:05.720 you're hopefully you're going to participate in future growth. So 0:17:05.880 --> 0:17:07.679 I'm tying an E S G with an I P 0:17:08.160 --> 0:17:10.560 I P O big. I guess you probably don't focus 0:17:10.600 --> 0:17:13.200 on that kind of government. We do? We do, Yeah, 0:17:13.280 --> 0:17:15.399 we do. I think governance has always been sort of 0:17:15.440 --> 0:17:17.520 a stronghold. It's been the E N S that have 0:17:17.600 --> 0:17:20.920 sort of picked up an attention, particularly the I think 0:17:20.920 --> 0:17:23.000 the S has picked up in terms of attention a 0:17:23.040 --> 0:17:25.680 lot after COVID, but that's really been only in the US. 0:17:26.040 --> 0:17:27.880 I mean, if you ask me, the whole Tesla thing 0:17:28.000 --> 0:17:31.080 is really a G issue, though everybody keeps confusing it. 0:17:31.280 --> 0:17:33.720 So so what is your view or what is the 0:17:33.760 --> 0:17:37.800 E S G view community's view of Tesla? Yes, SHE 0:17:37.960 --> 0:17:40.800 community is very divided. I can tell you my view. 0:17:40.920 --> 0:17:44.400 So my view is that Tesla fits well within an 0:17:44.400 --> 0:17:46.800 E or an impact for you know, one that creates 0:17:46.840 --> 0:17:49.200 externality on the world. But if you ask me E 0:17:49.440 --> 0:17:52.920 S SHE in terms of risk mitigation. Tesla's g does 0:17:53.000 --> 0:17:55.440 not put it in that bucket, and I wouldn't consider 0:17:55.480 --> 0:17:59.920 it as in any fund, but everybody does. Right, it's divided, 0:18:00.040 --> 0:18:02.399 it's it's the most hotly debated thing. But yes, a 0:18:02.440 --> 0:18:05.199 lot of funds too because MSc I does have it 0:18:05.240 --> 0:18:07.720 as a high E s SHE scoring company, and a 0:18:07.760 --> 0:18:10.679 lot of e sc et F tend to be MSCI based, 0:18:10.800 --> 0:18:12.399 so it ends up in many funds. By the way, 0:18:12.400 --> 0:18:15.960 in terms of the debates in the E s G community, 0:18:16.119 --> 0:18:21.199 we had on Engine number one recently and you know, um, 0:18:21.280 --> 0:18:25.040 they are the I guess activist fund that got board 0:18:25.080 --> 0:18:28.959 seats and two board seats at Exon. You wouldn't normally 0:18:28.960 --> 0:18:32.280 think of Xon in an E s G fund. You 0:18:32.320 --> 0:18:35.720 don't want to hold Xon because they're doing all the polluting. 0:18:35.760 --> 0:18:37.600 On the other hand, maybe you do want to hold 0:18:37.800 --> 0:18:40.760 x On so you can control the future of the company. Correct. 0:18:41.000 --> 0:18:43.199 So I think that's sort of the new angle of 0:18:43.320 --> 0:18:46.159 proxy voting and you know, owning a company to be 0:18:46.240 --> 0:18:48.520 able to vote your feet if that makes sense and 0:18:48.600 --> 0:18:51.720 create change, and that's really the strategy behind what Engine 0:18:51.720 --> 0:18:53.880 one is doing. Then you vote e t F, they're 0:18:53.880 --> 0:18:56.480 just going to hold the SMP five and engage with 0:18:56.560 --> 0:18:58.880 all the companies. So it really depends on what you're 0:18:58.920 --> 0:19:01.560 trying to achieve. When so energy companies, they're kind of 0:19:01.560 --> 0:19:04.560 the poster, at least for me, of you know, an 0:19:04.560 --> 0:19:07.600 E s G like a poor score or a week 0:19:07.680 --> 0:19:10.120 score on E s G. But some people have said 0:19:10.560 --> 0:19:13.760 these guys are really particularly the European energy companies, are 0:19:13.840 --> 0:19:18.840 really trying to go green, and so that might you know, say, hey, 0:19:18.880 --> 0:19:20.600 maybe you think about him as an E s G 0:19:20.920 --> 0:19:24.080 compliant company earlier to rape the Earth of all her 0:19:24.119 --> 0:19:29.000 resources in the greenest possible way. So so fun, I 0:19:29.000 --> 0:19:31.159 think to your point, when I think of you know, 0:19:31.200 --> 0:19:33.120 E s G, I don't think of it as being 0:19:33.119 --> 0:19:35.040 you know, energy is bad and this is good. I 0:19:35.080 --> 0:19:38.320 think it's more within an industry, what are the better 0:19:38.560 --> 0:19:41.399 performing companies, because otherwise then you just end up with 0:19:41.440 --> 0:19:43.239 what you have today right on the way energy oh 0:19:43.280 --> 0:19:46.520 waits something and you don't have diversification benefits. That's kind 0:19:46.520 --> 0:19:47.639 of what I think. I mean, I look at an 0:19:47.600 --> 0:19:49.520 E s G fund, it kind of looks like a 0:19:49.600 --> 0:19:53.639 tech fund to me, Teken healthcare fund and mean industry agnostic. 0:19:53.840 --> 0:19:56.720 Yeah there you go, all right, chicken contractor e s 0:19:56.760 --> 0:20:00.080 G Research channels for Bloomberg Intelligence, joining us lie of 0:20:00.280 --> 0:20:08.159 in our Bloomberg Interactive Broker studio. We'll talk sustainable energy here. 0:20:08.160 --> 0:20:10.840 We can do that with pair Reg Narson, CEO of 0:20:10.920 --> 0:20:14.399 Climate Rock. Climate Rock is a nastack listed stocks c 0:20:14.920 --> 0:20:17.639 l R c U is a symbol to punch in 0:20:17.640 --> 0:20:20.440 on your Bloomberg terminal. It's a blank check company looking 0:20:20.480 --> 0:20:25.200 to get into the sustainable energy biz. Per Thanks so 0:20:25.280 --> 0:20:28.000 much for joining us here. Tell us about Climate Rock. 0:20:28.040 --> 0:20:31.359 What are you guys looking to do? Yeah, thank you 0:20:31.400 --> 0:20:34.400 for thank you for having me. And you know we 0:20:34.400 --> 0:20:37.800 we are sustainable energy. UM. We chose the route of 0:20:37.880 --> 0:20:40.600 the of the s back market to list the company 0:20:40.760 --> 0:20:45.439 that would invest into sustainable energy meaning renewable energy so 0:20:45.560 --> 0:20:51.359 wind and solar, hydro electric power, Global Investment mandate UM 0:20:51.520 --> 0:20:54.080 in a time where you know, climate chains and so 0:20:54.160 --> 0:20:57.959