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 00:00:11,560 --> 00:00:15,520 Speaker 1: with essential market moving news. Find the Bloomberg Markets podcast 5 00:00:15,560 --> 00:00:18,479 Speaker 1: called Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:22,599 Speaker 1: at Bloomberg dot com slash podcast bat We have a 7 00:00:22,640 --> 00:00:25,680 Speaker 1: really cool guest with us now. Back in and the 8 00:00:25,720 --> 00:00:29,560 Speaker 1: heat of the pandemic, we had KKR investing billions of 9 00:00:29,600 --> 00:00:33,120 Speaker 1: dollars and credit strategies as most investors had dipped out. 10 00:00:33,200 --> 00:00:36,760 Speaker 1: Now a person familiar tells me KKR invested more than 11 00:00:36,840 --> 00:00:40,040 Speaker 1: five billion dollars in the last couple of months. Joining 12 00:00:40,080 --> 00:00:42,159 Speaker 1: us now to talk about what KKR is doing is 13 00:00:42,159 --> 00:00:45,320 Speaker 1: a director at the company tall reback. Thank you so 14 00:00:45,400 --> 00:00:48,760 Speaker 1: much for joining us. Tell what are you buying right now? 15 00:00:48,800 --> 00:00:51,000 Speaker 1: And why are you able to step in when others 16 00:00:51,000 --> 00:00:54,880 Speaker 1: are stepping out? He needs a lot of great opportunities 17 00:00:54,960 --> 00:00:58,040 Speaker 1: being created, you know, albeit on the Vaultwible backdrop, and 18 00:00:58,400 --> 00:01:00,160 Speaker 1: you know, we're starting to think that Hi, You'll is 19 00:01:00,160 --> 00:01:03,800 Speaker 1: getting more attractives are in high quality pockets. Senior secured 20 00:01:03,840 --> 00:01:08,240 Speaker 1: loan paper, there's a lot of interesting dispersion also being created, 21 00:01:08,280 --> 00:01:11,120 Speaker 1: I would say interest sector, and you know, from an 22 00:01:11,160 --> 00:01:15,520 Speaker 1: inflationary perspective, we've already known about that for quite some time. 23 00:01:15,600 --> 00:01:19,000 Speaker 1: So we've been really looking at durability of cash flows 24 00:01:19,000 --> 00:01:21,360 Speaker 1: really using that as our true north and credit and 25 00:01:21,400 --> 00:01:24,360 Speaker 1: downside protection as we look across the spectrum on what 26 00:01:24,400 --> 00:01:27,560 Speaker 1: we want to lean into right now, what do you 27 00:01:27,640 --> 00:01:31,440 Speaker 1: expect the FED to do? Um, And especially given your 28 00:01:31,440 --> 00:01:33,720 Speaker 1: affiliation with the FED, I mean, you've you've got some 29 00:01:35,120 --> 00:01:39,199 Speaker 1: really deep knowledge of how how they work. But they're 30 00:01:39,360 --> 00:01:41,360 Speaker 1: in a difficult place right now because they're going to 31 00:01:41,480 --> 00:01:44,440 Speaker 1: have to fight inflation and yet um, there are worries 32 00:01:44,440 --> 00:01:49,120 Speaker 1: about slowing growth. Absolutely, you know, I think our base 33 00:01:49,200 --> 00:01:52,280 Speaker 1: cases that the FED has to continue to tighten again. 34 00:01:52,480 --> 00:01:55,480 Speaker 1: We think that's something that the market has priced in 35 00:01:55,600 --> 00:01:58,520 Speaker 1: and it should have been on investors minds for some time, 36 00:01:58,960 --> 00:02:01,400 Speaker 1: but that we don't see a way that they can 37 00:02:01,400 --> 00:02:04,080 Speaker 1: pivot away from that, you know, given all of the 38 00:02:04,120 --> 00:02:06,760 Speaker 1: moving parts in the market. So we do foresee the 39 00:02:06,840 --> 00:02:10,959 Speaker 1: rate types taking place as that continues to unfold, making 40 00:02:11,000 --> 00:02:14,640 Speaker 1: sure that we're as flexibly toggling between six and floating 41 00:02:14,639 --> 00:02:18,200 Speaker 1: great assets really thinking about our portfolio construction and keeping 42 00:02:18,240 --> 00:02:20,880 Speaker 1: in mind all of the geopolitical issues in the backdrop. 43 00:02:21,400 --> 00:02:23,080 Speaker 1: When you look around you I know that you are 44 00:02:23,120 --> 00:02:26,760 Speaker 1: finding opportunities, but where do you find big risks and 45 00:02:26,840 --> 00:02:29,239 Speaker 1: the places that investors might lose a lot of money. 46 00:02:30,760 --> 00:02:33,160 Speaker 1: Oh it's a great question. You know. One thing that 47 00:02:33,400 --> 00:02:36,080 Speaker 1: we've talked about a lot at KKR. Sometimes the market 48 00:02:36,080 --> 00:02:40,280 Speaker 1: grapples with a concept we like to call perception versus reality, 49 00:02:40,760 --> 00:02:43,600 Speaker 1: And in this current chapter of the market, we think 50 00:02:43,639 --> 00:02:47,040 Speaker 1: duration risk is one thing to really highlight. Given the 51 00:02:47,080 --> 00:02:51,280 Speaker 1: FED stepping in in twenty you know, conducive monetary backsdrop 52 00:02:51,400 --> 00:02:54,519 Speaker 1: or borrowers or extending their liabilities, the longer end of 53 00:02:54,600 --> 00:02:57,119 Speaker 1: the curve could see a little bit more volatility, which 54 00:02:57,120 --> 00:03:01,120 Speaker 1: we actually saw in January. So really mindful of that 55 00:03:01,280 --> 00:03:05,200 Speaker 1: duration risk across our asset allocation. And you know, understanding 56 00:03:05,200 --> 00:03:07,799 Speaker 1: that what was perceived once upon a time of safe 57 00:03:08,120 --> 00:03:11,240 Speaker 1: for example, something like fixed income and I G that 58 00:03:11,400 --> 00:03:14,320 Speaker 1: that may not be the best risk adjusted return right now. 59 00:03:14,360 --> 00:03:16,480 Speaker 1: So going a little bit sub i G is where 60 00:03:16,480 --> 00:03:18,239 Speaker 1: we would play what are the effects of the war 61 00:03:18,480 --> 00:03:22,320 Speaker 1: tal I mean, I know geopolitical uncertainty is hard to 62 00:03:22,320 --> 00:03:25,359 Speaker 1: price in but now we know what Russia is going 63 00:03:25,400 --> 00:03:28,200 Speaker 1: to do, has done, is doing um and you can 64 00:03:28,240 --> 00:03:32,560 Speaker 1: see the effects of businesses around the world. Yeah, absolutely, 65 00:03:32,639 --> 00:03:35,440 Speaker 1: you know, first and foremost our thoughts are with people 66 00:03:35,480 --> 00:03:39,160 Speaker 1: of Ukraine's during this tragic and terrible time. And you know, 67 00:03:39,280 --> 00:03:42,320 Speaker 1: KKR is fortunate enough to have established the Kkeyre Global 68 00:03:42,360 --> 00:03:45,240 Speaker 1: Institute over a decade ago, led by General Petraus, and 69 00:03:45,600 --> 00:03:48,440 Speaker 1: we're staying very close to this and over communicating with 70 00:03:48,440 --> 00:03:52,400 Speaker 1: our clients and portfolio companies. But we've we've incorporated into 71 00:03:52,400 --> 00:03:57,200 Speaker 1: our investment process geopolitical risk. So we're being extremely thoughtful, 72 00:03:57,360 --> 00:04:00,520 Speaker 1: you know, intra day as the situations of our looks, 73 00:04:00,560 --> 00:04:04,320 Speaker 1: and quite honestly, in Europe that's closer to the unfortunate 74 00:04:04,360 --> 00:04:07,560 Speaker 1: conflict we could were being collective. You know, there could 75 00:04:07,560 --> 00:04:10,120 Speaker 1: be growth slowing there, you know, the net effects and 76 00:04:10,240 --> 00:04:13,480 Speaker 1: second and third derivatives of supply chain issues and commodities. 77 00:04:13,720 --> 00:04:16,960 Speaker 1: So we're being extremely thoughtful. UM and we'll see, but 78 00:04:17,000 --> 00:04:18,760 Speaker 1: we're you know, we're just staying on our toes like 79 00:04:18,800 --> 00:04:20,960 Speaker 1: everyone else. Yeah. Interesting, that's kind of like what me 80 00:04:20,960 --> 00:04:22,839 Speaker 1: and met we're talking about earlier. Even though the stock 81 00:04:22,839 --> 00:04:26,040 Speaker 1: market is up, that people are worried about those growth concerns. 82 00:04:26,400 --> 00:04:29,279 Speaker 1: I'm wondering. You know, you mentioned General for Trayas and 83 00:04:29,480 --> 00:04:33,440 Speaker 1: his work with KKR. How are you answering questions from clients? 84 00:04:33,480 --> 00:04:35,680 Speaker 1: What are the biggest things on their mind as they 85 00:04:35,760 --> 00:04:41,120 Speaker 1: navigate this market here and broad? Yeah? Absolutely, you know, firstly, 86 00:04:41,400 --> 00:04:45,160 Speaker 1: we're we're over communicating, and you know, from a business perspective, 87 00:04:45,160 --> 00:04:48,600 Speaker 1: we have very limited indirect exposure to begin with, really 88 00:04:48,600 --> 00:04:52,000 Speaker 1: in large part to our investment process, and our platform 89 00:04:52,120 --> 00:04:55,880 Speaker 1: is so connected and global that we're constantly cross pollinating 90 00:04:55,920 --> 00:04:59,280 Speaker 1: across our different disciplines. So we're just making sure we're 91 00:04:59,320 --> 00:05:01,799 Speaker 1: ready in the veil doable. We're taking note of every 92 00:05:01,839 --> 00:05:04,159 Speaker 1: angle of the market. And one thing to say is, 93 00:05:04,320 --> 00:05:06,000 Speaker 1: you know, we're in the market day and day out 94 00:05:06,120 --> 00:05:09,239 Speaker 1: at very different verticals, so we're one team is seeing 95 00:05:09,279 --> 00:05:12,000 Speaker 1: something where another is not. We're exchanging that information and 96 00:05:12,080 --> 00:05:15,760 Speaker 1: making sure everyone is consistent on the same page. By 97 00:05:15,800 --> 00:05:18,920 Speaker 1: the way, Nale was and I've been talking about the 98 00:05:18,920 --> 00:05:22,200 Speaker 1: library OI spread for the past a few days and 99 00:05:22,480 --> 00:05:26,320 Speaker 1: I see that you are responsible for um the firm's 100 00:05:26,640 --> 00:05:31,560 Speaker 1: lie or transition effort. How how is that going to go? 101 00:05:31,760 --> 00:05:33,720 Speaker 1: You know, what what are we going to really see 102 00:05:33,720 --> 00:05:37,880 Speaker 1: in a world without libor Yeah, no, you came to 103 00:05:37,920 --> 00:05:40,360 Speaker 1: the right person on that. So I think it's it's 104 00:05:40,400 --> 00:05:42,760 Speaker 1: really interesting to see the widening and o I s 105 00:05:42,880 --> 00:05:46,880 Speaker 1: right now, particularly because most of those quotes are really 106 00:05:46,920 --> 00:05:50,359 Speaker 1: coming from the panel bank, something that we call expert judgment. 107 00:05:50,400 --> 00:05:53,440 Speaker 1: You're not seeing a whole lot of wholesale transactions, so 108 00:05:53,480 --> 00:05:56,680 Speaker 1: there's a gauge on what that bank and credit risk 109 00:05:56,880 --> 00:05:59,040 Speaker 1: looks like. But if you look at the spots bread 110 00:05:59,040 --> 00:06:00,840 Speaker 1: and you look how so for has the liquid and 111 00:06:00,880 --> 00:06:04,000 Speaker 1: SOFA is really deep in. What we're seeing is, you know, 112 00:06:04,000 --> 00:06:06,560 Speaker 1: a true adoption of the life after live boar, which 113 00:06:06,600 --> 00:06:08,880 Speaker 1: I think is a net positive and as testament to 114 00:06:08,880 --> 00:06:11,279 Speaker 1: all the work being done. But it is not, you know, 115 00:06:11,320 --> 00:06:14,560 Speaker 1: notwithstanding something that highlights a few of the challenges we've 116 00:06:14,600 --> 00:06:17,400 Speaker 1: seen with live brar historically, that it can start to 117 00:06:17,440 --> 00:06:20,520 Speaker 1: get a bit wonky, especially in market environments like these 118 00:06:20,720 --> 00:06:24,039 Speaker 1: where there's lacking liquidity. Teal great having you on. Thank 119 00:06:24,040 --> 00:06:26,160 Speaker 1: you so much for joining us, and thanks to Chinali 120 00:06:26,440 --> 00:06:30,719 Speaker 1: um for for booking or tal reback their director at KKR. 121 00:06:36,240 --> 00:06:38,480 Speaker 1: Now I told you we're gonna talk to Will Naskovitz. 122 00:06:38,520 --> 00:06:42,800 Speaker 1: He's the chairman and CEO of Heartland Advisors, and UM, 123 00:06:42,920 --> 00:06:44,800 Speaker 1: great day to have you on, Will, thanks so much 124 00:06:44,839 --> 00:06:47,200 Speaker 1: for joining us. What do you think about this bounce 125 00:06:47,240 --> 00:06:52,719 Speaker 1: back we're seeing? Um, even after we heard UM, you know, 126 00:06:52,760 --> 00:06:56,360 Speaker 1: the US is going to embargo Russian oil. That's gonna 127 00:06:56,400 --> 00:07:00,880 Speaker 1: put some real um put put some Americans in real 128 00:07:00,960 --> 00:07:04,560 Speaker 1: difficulty as prices are rising. In fact, Jeff Gunlock said, 129 00:07:04,800 --> 00:07:09,720 Speaker 1: maybe even ten inflation. Why are we up today? Well, 130 00:07:09,720 --> 00:07:12,240 Speaker 1: thanks for having me. I think it's this volatility is 131 00:07:12,240 --> 00:07:13,840 Speaker 1: going to be with us for some time. And I'm 132 00:07:13,840 --> 00:07:17,880 Speaker 1: certainly not trying to diminish the significance or the gravity 133 00:07:17,920 --> 00:07:20,560 Speaker 1: of the situation in Ukraine, but for some perspective, I 134 00:07:20,600 --> 00:07:24,960 Speaker 1: think is worthwhile. And we've had hundreds of crises, you know, 135 00:07:25,040 --> 00:07:27,360 Speaker 1: going in, dozens of prices going back the hundred years 136 00:07:27,480 --> 00:07:30,720 Speaker 1: or so, and you know, typically your post the event, 137 00:07:30,880 --> 00:07:32,880 Speaker 1: whether it's at a war or terrorist attack or some 138 00:07:32,920 --> 00:07:36,680 Speaker 1: type of financial panic, the market is up. So I 139 00:07:36,720 --> 00:07:39,160 Speaker 1: don't know that this circumstance is going to play out 140 00:07:39,200 --> 00:07:41,800 Speaker 1: like that, but I do. I think it feeds the 141 00:07:42,000 --> 00:07:44,440 Speaker 1: should of trying to capitalize on some of the opportunities 142 00:07:44,440 --> 00:07:46,760 Speaker 1: that are presenting. Two investors and that's what you know, 143 00:07:46,800 --> 00:07:48,840 Speaker 1: we're going to continue to do at here at Hartman. 144 00:07:48,840 --> 00:07:51,560 Speaker 1: We're gonna continue to apply our our ten principles of 145 00:07:51,640 --> 00:07:54,960 Speaker 1: value investing and look at this specific risks and outlooks 146 00:07:55,120 --> 00:07:57,560 Speaker 1: in any particular company. I mean, what we're finding here 147 00:07:57,600 --> 00:07:59,320 Speaker 1: in this sell off, and this is perhaps why we're 148 00:07:59,320 --> 00:08:02,960 Speaker 1: seeing buying day, is that in many cases, the valuations 149 00:08:03,000 --> 00:08:05,960 Speaker 1: of companies have really disconnected from you know, their fundamentals 150 00:08:05,960 --> 00:08:07,760 Speaker 1: that they're going to be seen over over the longer term, 151 00:08:07,760 --> 00:08:10,360 Speaker 1: notwithstanding all the uncertainties that are out there. So what 152 00:08:10,440 --> 00:08:13,400 Speaker 1: are you recommending to clients? What do you do? Do 153 00:08:13,480 --> 00:08:16,040 Speaker 1: you buy amid the volatility or do you sit on 154 00:08:16,080 --> 00:08:19,840 Speaker 1: the sidelines? Well, I think you just have to be 155 00:08:19,880 --> 00:08:22,320 Speaker 1: aware of it, all right. You can't just be laser 156 00:08:22,400 --> 00:08:25,160 Speaker 1: focused on the macro and all the geopolitical. You have 157 00:08:25,200 --> 00:08:28,160 Speaker 1: to do that in conjunction with adhering to your process 158 00:08:28,240 --> 00:08:32,000 Speaker 1: and I referenced earlier us remaining focused on the specific 159 00:08:32,080 --> 00:08:35,400 Speaker 1: company risks and opportunities out there and looking at it 160 00:08:35,480 --> 00:08:38,600 Speaker 1: a case by case basis, where perhaps the valuations look 161 00:08:38,880 --> 00:08:44,079 Speaker 1: really compelling because the market overestimated some of these risks, 162 00:08:44,160 --> 00:08:47,800 Speaker 1: risks or at the very least taking a very short 163 00:08:47,960 --> 00:08:50,280 Speaker 1: term view. I mean, I think a good example, maybe 164 00:08:50,280 --> 00:08:52,560 Speaker 1: get a little more specifics on this. The health care 165 00:08:52,600 --> 00:08:54,800 Speaker 1: sector was not a great place to be last year. 166 00:08:55,080 --> 00:08:57,559 Speaker 1: We're all familiar with with COVID and all the protocols 167 00:08:57,559 --> 00:09:01,800 Speaker 1: and the labor challenges that really damp in the sidures 168 00:09:01,840 --> 00:09:06,479 Speaker 1: that companies and hospitals experience. You know, that's presenting opportunities 169 00:09:06,480 --> 00:09:09,559 Speaker 1: in that space here today because we think those procedures 170 00:09:09,600 --> 00:09:13,080 Speaker 1: come back in the evaluations aren't reflecting it. So I 171 00:09:13,080 --> 00:09:16,520 Speaker 1: think you just have to be very choosy, very specific 172 00:09:16,559 --> 00:09:18,600 Speaker 1: in your work and be you know, entrepreneurial and an 173 00:09:18,640 --> 00:09:25,000 Speaker 1: active investor. Here, let's get over Tom Stringfellow and ask 174 00:09:25,080 --> 00:09:27,760 Speaker 1: him those questions. He's the chief investment Strategies at Argent 175 00:09:27,840 --> 00:09:31,080 Speaker 1: Financial Group. Tom Um, thanks for joining us. We've been 176 00:09:31,080 --> 00:09:34,200 Speaker 1: talking about these big inflation predictions and warnings from good 177 00:09:34,280 --> 00:09:37,520 Speaker 1: luck and think what do you think? Well, I appreciate 178 00:09:37,800 --> 00:09:41,520 Speaker 1: the opportunity, and you have the ten percent number. Yeah, 179 00:09:41,520 --> 00:09:43,360 Speaker 1: that's kind of a scary number and it's certainly not 180 00:09:43,440 --> 00:09:45,640 Speaker 1: one that I'm looking at at this point in time, 181 00:09:45,800 --> 00:09:48,360 Speaker 1: you know, and you know, just thinking back to the 182 00:09:48,440 --> 00:09:52,480 Speaker 1: charts that were just mentioned, absolutely correct. Everything is is, 183 00:09:52,920 --> 00:09:56,480 Speaker 1: you know, it's just escalated and elevating. And I put that, 184 00:09:56,600 --> 00:10:00,079 Speaker 1: you know, kind of a momentum rush right now that 185 00:10:00,559 --> 00:10:04,080 Speaker 1: I don't think it's sustainable in inflation if you start 186 00:10:04,080 --> 00:10:07,679 Speaker 1: talking about ten. But I wouldn't be surprised if we 187 00:10:07,679 --> 00:10:10,199 Speaker 1: don't get hit with something just shy of north of 188 00:10:10,320 --> 00:10:13,760 Speaker 1: eight percent, you know, with this coming month. Uh, you know, 189 00:10:13,800 --> 00:10:18,280 Speaker 1: in terms of CPI and maybe core somewhere around six 190 00:10:18,280 --> 00:10:21,120 Speaker 1: and a half percent. Either way, those are still well 191 00:10:21,200 --> 00:10:24,000 Speaker 1: here high. With Texas Intermedia trading at a hundred and 192 00:10:24,040 --> 00:10:27,840 Speaker 1: seventeen dollars a barrel um. You know, yesterday it looked 193 00:10:27,840 --> 00:10:30,319 Speaker 1: like we were gonna get closer to one thirty. That's 194 00:10:30,320 --> 00:10:34,200 Speaker 1: gotta that's got either brought under control or I mean, 195 00:10:34,240 --> 00:10:36,840 Speaker 1: how do you see that from Texas? Well, you know, 196 00:10:37,640 --> 00:10:39,480 Speaker 1: good point from Texas. You know, we kind of look 197 00:10:39,520 --> 00:10:42,040 Speaker 1: at it, and you know, if you're a mental owner, 198 00:10:42,120 --> 00:10:47,800 Speaker 1: you gotta love oil. Uh, if you're driving back and forth, 199 00:10:47,920 --> 00:10:50,560 Speaker 1: you know, that changes the perspective. And and you know 200 00:10:50,640 --> 00:10:53,559 Speaker 1: there is some thought that maybe you know, these higher 201 00:10:53,559 --> 00:10:56,960 Speaker 1: wall prices at the pump or somewhat deflationary because it's 202 00:10:57,000 --> 00:10:59,480 Speaker 1: taken money away from you know, what might be spent 203 00:10:59,559 --> 00:11:03,600 Speaker 1: on endurables, you know, by consumers over the next several months. 204 00:11:03,600 --> 00:11:06,800 Speaker 1: But you know, if you believe prices are going to 205 00:11:06,880 --> 00:11:09,560 Speaker 1: higher in the oil business, you've got to also believe 206 00:11:09,720 --> 00:11:14,719 Speaker 1: that the Ukraine situation gets much much worse and continues 207 00:11:14,840 --> 00:11:19,480 Speaker 1: to be an absolute uh channel blocker on the oil industry. 208 00:11:19,520 --> 00:11:22,280 Speaker 1: And and you know that's the question. What happens over 209 00:11:22,320 --> 00:11:25,640 Speaker 1: there certainly has a lot of impact on how inflationary 210 00:11:25,960 --> 00:11:28,280 Speaker 1: we're going to be, you know, not only at the 211 00:11:29,000 --> 00:11:31,559 Speaker 1: at the fuel pump, but also at the grocery store. 212 00:11:32,720 --> 00:11:35,520 Speaker 1: You know, it's not it's really not just oil though, 213 00:11:35,760 --> 00:11:38,160 Speaker 1: right real quick here, I mean, how much are these 214 00:11:38,160 --> 00:11:42,000 Speaker 1: price increases going to float through the economy? Well, and yeah, 215 00:11:42,040 --> 00:11:44,640 Speaker 1: that's that's a great point. And you know, right now 216 00:11:44,840 --> 00:11:49,559 Speaker 1: we started to see companies uh starting to raise prices, 217 00:11:49,679 --> 00:11:52,160 Speaker 1: and you know, I think that's inevitable. You know, they're 218 00:11:52,160 --> 00:11:54,640 Speaker 1: going to have to continue trying to keep you know, 219 00:11:54,760 --> 00:12:00,040 Speaker 1: reasonable target margin for you know, their operations. So it 220 00:12:00,080 --> 00:12:03,040 Speaker 1: is definitely going to bleed through, especially you know, anything 221 00:12:03,080 --> 00:12:06,040 Speaker 1: that's resource based. You know, these prices are going to 222 00:12:06,160 --> 00:12:08,800 Speaker 1: have to flow through to the market. And you know, 223 00:12:08,840 --> 00:12:11,760 Speaker 1: I don't know that we have seen that kind of 224 00:12:11,800 --> 00:12:15,920 Speaker 1: pricing yet into the underlying financials and the into the 225 00:12:15,960 --> 00:12:19,920 Speaker 1: market itself. Investors I think are focusing on you know, 226 00:12:20,000 --> 00:12:23,720 Speaker 1: the impact on interest rates and inflation and you know, 227 00:12:23,760 --> 00:12:26,960 Speaker 1: what's that going to do based on prior history, But 228 00:12:27,240 --> 00:12:31,160 Speaker 1: I don't see that having been priced into the market. Yeah, 229 00:12:31,160 --> 00:12:34,400 Speaker 1: what we're seeing today I think is just natural for 230 00:12:34,440 --> 00:12:38,720 Speaker 1: a volatile, uncertain market. You know, we're in a pendulum 231 00:12:38,760 --> 00:12:41,200 Speaker 1: swing right now that just keeps to it seems to 232 00:12:42,040 --> 00:12:45,439 Speaker 1: you know, go from one extream to another. That's that's 233 00:12:45,480 --> 00:12:48,000 Speaker 1: how I view this. But this volatility has also given 234 00:12:48,080 --> 00:12:50,720 Speaker 1: us some great buys. Yeah, Tom, we're gonna have to 235 00:12:50,760 --> 00:12:52,280 Speaker 1: get the check back in with you later on those 236 00:12:52,280 --> 00:12:54,920 Speaker 1: buying opportunities, But appreciate your time today, Tom string Fellow, 237 00:12:55,080 --> 00:13:03,200 Speaker 1: Chief Investment Strategy, Argent Financially. Just get over to Caroline 238 00:13:03,200 --> 00:13:06,720 Speaker 1: Bresson right now, Managing director of the Open Road Alliance 239 00:13:07,200 --> 00:13:10,920 Speaker 1: and the Open Road Impact Fund. UM. Caroline, Caroline talked 240 00:13:10,920 --> 00:13:13,160 Speaker 1: to us about what exactly you do with the Open 241 00:13:13,240 --> 00:13:17,520 Speaker 1: Road Alliance. Sure, and thanks mat intionally for for having 242 00:13:17,559 --> 00:13:20,760 Speaker 1: me today. So open Road steps up at critical moments 243 00:13:21,000 --> 00:13:23,720 Speaker 1: and UM, there's some sort of delay or or there's 244 00:13:23,760 --> 00:13:26,920 Speaker 1: kind of an acceleration for an impact first company that 245 00:13:27,080 --> 00:13:31,120 Speaker 1: addressing climate change or inequality. Uh So, for example, we 246 00:13:31,160 --> 00:13:35,000 Speaker 1: actually just funded a company that provides a warning system 247 00:13:35,040 --> 00:13:38,640 Speaker 1: for air strikes against civilians. They give seven to ten 248 00:13:38,720 --> 00:13:41,800 Speaker 1: minutes warning um and and serve over two million people 249 00:13:41,840 --> 00:13:45,480 Speaker 1: across Syria and Yemen. So we're hoping Hollow Systems can 250 00:13:45,480 --> 00:13:49,400 Speaker 1: provide their services soon in Ukraine. Um. But our investment 251 00:13:49,480 --> 00:13:52,560 Speaker 1: helps them, uh, you know, accelerate their growth and continue 252 00:13:52,600 --> 00:13:54,920 Speaker 1: to keep their their impact on track when they had 253 00:13:54,960 --> 00:13:57,360 Speaker 1: some snags in their fundraising. Well that's just the thing 254 00:13:57,400 --> 00:14:00,040 Speaker 1: about impact investing. If you're if your impact invest so 255 00:14:00,160 --> 00:14:01,440 Speaker 1: you need to kind of stick in it for the 256 00:14:01,520 --> 00:14:06,520 Speaker 1: long road. What are some of the challenges along the way. Yeah, so, um, 257 00:14:06,559 --> 00:14:09,080 Speaker 1: you know, open road plays a very specific role. We 258 00:14:09,080 --> 00:14:12,800 Speaker 1: we do bridge financing. So unfortunately, UM, my dad's an economist. 259 00:14:12,840 --> 00:14:15,360 Speaker 1: So if you say, we have a very inefficient impact 260 00:14:15,400 --> 00:14:18,480 Speaker 1: investing sector where funds are committed, but they're often not 261 00:14:18,600 --> 00:14:22,120 Speaker 1: dispersed into the hands of entrepreneurs for you know, sometimes 262 00:14:22,160 --> 00:14:24,680 Speaker 1: twelve months um and so when you think about all 263 00:14:24,680 --> 00:14:26,920 Speaker 1: that red tape in particular, if you're getting an investment 264 00:14:26,960 --> 00:14:30,960 Speaker 1: from a government or something like that. Um, people, entrepreneurs 265 00:14:30,960 --> 00:14:32,920 Speaker 1: are just sitting on their hands waiting for for cash 266 00:14:32,960 --> 00:14:35,440 Speaker 1: to come in the door. So Open Road provides these 267 00:14:35,480 --> 00:14:38,560 Speaker 1: bridge loans that solve for those one time, discrete moments 268 00:14:38,440 --> 00:14:43,160 Speaker 1: of cash crunch. What does a raising rate environment mean 269 00:14:43,200 --> 00:14:47,480 Speaker 1: to you? Yeah, good question. So it's interesting. The impact 270 00:14:47,560 --> 00:14:51,080 Speaker 1: sector is a bit you know, government funds and so 271 00:14:51,600 --> 00:14:55,320 Speaker 1: I believe that rates will go up um on on 272 00:14:55,360 --> 00:14:57,560 Speaker 1: the debt side, just as as you would see in 273 00:14:57,680 --> 00:15:00,600 Speaker 1: in any financial market. However, there is a lot of 274 00:15:00,640 --> 00:15:04,240 Speaker 1: downward pressure from you know, philanthropic funds and and government 275 00:15:04,280 --> 00:15:06,360 Speaker 1: funds that might keep the cost of capital lower for 276 00:15:06,440 --> 00:15:09,720 Speaker 1: these impacts focused on entrepreneurs. Now, when you think about 277 00:15:09,760 --> 00:15:11,840 Speaker 1: kind of what's happening in the world and and the 278 00:15:12,000 --> 00:15:15,680 Speaker 1: fight over oil and the investment that might go into 279 00:15:15,800 --> 00:15:18,840 Speaker 1: energy into the United States, I mean, how does that 280 00:15:18,960 --> 00:15:21,080 Speaker 1: start to complicate a lot of the big E s 281 00:15:21,120 --> 00:15:27,080 Speaker 1: G investments that have been brewing for so long. Yeah, well, 282 00:15:27,120 --> 00:15:29,640 Speaker 1: you know, E s G is really just a framework, 283 00:15:29,760 --> 00:15:33,600 Speaker 1: and so what it does is it identifies risks up front. 284 00:15:33,880 --> 00:15:36,000 Speaker 1: It doesn't say that, you know, you should avoid it. 285 00:15:36,000 --> 00:15:39,280 Speaker 1: It means that the price should reflect the risk. Um. 286 00:15:39,320 --> 00:15:41,000 Speaker 1: But but I think you know, what's going on with 287 00:15:41,040 --> 00:15:43,880 Speaker 1: Russian oil right now really is a great moment for 288 00:15:43,920 --> 00:15:47,880 Speaker 1: green energy. And we've seen that Germany already has, you know, 289 00:15:48,200 --> 00:15:51,360 Speaker 1: UH moved up their target to five to get into 290 00:15:51,360 --> 00:15:53,800 Speaker 1: full green energy. So I'm hopeful that it'll just mean 291 00:15:53,840 --> 00:15:57,760 Speaker 1: a recommitment to getting towards those climate goals sooner. Difficult 292 00:15:57,760 --> 00:16:01,240 Speaker 1: though for the American consumer, for the everyday person here 293 00:16:01,360 --> 00:16:05,000 Speaker 1: right when you see gas prices at six seven dollars 294 00:16:05,000 --> 00:16:09,160 Speaker 1: of barrel, I have noticed that even I, UH as 295 00:16:09,280 --> 00:16:11,360 Speaker 1: as an incredible car lover, have thought, you know what, 296 00:16:11,400 --> 00:16:14,360 Speaker 1: maybe I should take the train. Um. That kind of 297 00:16:14,400 --> 00:16:19,240 Speaker 1: demand instruction is probably good for the transition, right. Yeah. Absolutely. 298 00:16:19,280 --> 00:16:21,320 Speaker 1: You know, I'm jealous of my neighbor down the streets 299 00:16:21,320 --> 00:16:24,320 Speaker 1: that bought a Tesla UM, and I think it will 300 00:16:24,440 --> 00:16:28,440 Speaker 1: just accelerate. Um. You know, the investment into UH into 301 00:16:28,480 --> 00:16:31,680 Speaker 1: electric cars, UM, the companies out there uponnding the pavement 302 00:16:31,720 --> 00:16:34,280 Speaker 1: to to raise new funds hopefully. UM. You know, the 303 00:16:34,360 --> 00:16:36,400 Speaker 1: more money they get, the quicker they can invest, the 304 00:16:36,400 --> 00:16:38,520 Speaker 1: more they can bring down costs on electric cars and 305 00:16:38,560 --> 00:16:41,440 Speaker 1: similar technologies that will hopefully show up in the hands 306 00:16:41,440 --> 00:16:46,000 Speaker 1: of consumers and into solar. Um. You know, because when 307 00:16:46,000 --> 00:16:49,360 Speaker 1: you have your neighbor probably doesn't want to be powering 308 00:16:49,560 --> 00:16:54,200 Speaker 1: his or her tesla with dirty coal electricity. Would be 309 00:16:54,320 --> 00:16:56,360 Speaker 1: much better to put solar panels on the roof and 310 00:16:56,400 --> 00:16:58,240 Speaker 1: charge it up that way. Is that something that you 311 00:16:58,240 --> 00:17:00,720 Speaker 1: think is going to pick up? Because it wasn't the 312 00:17:00,720 --> 00:17:03,520 Speaker 1: Open Road Alliance. Um, it wasn't that a big part 313 00:17:03,520 --> 00:17:07,440 Speaker 1: of the of the start of Open Road. Yeah. So 314 00:17:07,520 --> 00:17:10,879 Speaker 1: about half of our portfolio is in in renewable energy, 315 00:17:11,080 --> 00:17:13,480 Speaker 1: and UM, we just see more and more, you know, 316 00:17:13,560 --> 00:17:17,159 Speaker 1: funds being started to help accelerate that. Um. But when 317 00:17:17,200 --> 00:17:19,439 Speaker 1: you look at some states are kind of already ahead 318 00:17:19,440 --> 00:17:23,000 Speaker 1: of the curve. I think Washington State, Um, over the 319 00:17:23,080 --> 00:17:27,480 Speaker 1: energy produced is is via hyperpower. California, well over half 320 00:17:27,480 --> 00:17:30,960 Speaker 1: of the energy is solar. And so we should see that, 321 00:17:31,040 --> 00:17:34,160 Speaker 1: you know, reliance on oil coming down. Um. It just 322 00:17:34,200 --> 00:17:37,000 Speaker 1: depends on how much your state's invested in that technology 323 00:17:37,040 --> 00:17:40,520 Speaker 1: to date. On one hand, and we just have about 324 00:17:40,520 --> 00:17:44,320 Speaker 1: a minute left here. You say that it's inefficient sometimes 325 00:17:44,320 --> 00:17:46,760 Speaker 1: to invest this way, but I can really show up 326 00:17:46,760 --> 00:17:51,440 Speaker 1: in times of an emergency. How's that working now? Yeah? 327 00:17:51,480 --> 00:17:54,200 Speaker 1: You know, when we think about how these large climate 328 00:17:54,240 --> 00:17:57,520 Speaker 1: commitments are translated into impact. It's it's obvious that individual 329 00:17:57,560 --> 00:18:01,000 Speaker 1: companies must receive capital from those large commitments to get 330 00:18:01,000 --> 00:18:03,920 Speaker 1: their climate mitigating work started. You know, salaries must be paid, 331 00:18:03,920 --> 00:18:06,960 Speaker 1: inventory ordered, et cetera. And so the demand is higher 332 00:18:07,000 --> 00:18:09,359 Speaker 1: than ever for Open Road UM. You know, we are 333 00:18:09,400 --> 00:18:11,680 Speaker 1: providing our bridge loans at a at a breakneck pace, 334 00:18:11,760 --> 00:18:14,200 Speaker 1: trying to meet the demands of companies that are working 335 00:18:14,240 --> 00:18:18,240 Speaker 1: towards this climate transition. All right, really interesting stuff, Caroline, 336 00:18:18,240 --> 00:18:21,400 Speaker 1: Thanks so much for joining us, Caroline Brassan. They're managing 337 00:18:21,520 --> 00:18:26,120 Speaker 1: director of Open Road Alliance and Open Road Impact. Fun 338 00:18:26,240 --> 00:18:32,480 Speaker 1: talking to us about UM their business. Thanks for listening 339 00:18:32,520 --> 00:18:36,040 Speaker 1: to the Bloomberg Markets podcast. You can subscribe and listen 340 00:18:36,040 --> 00:18:40,320 Speaker 1: to interviews with Apple Podcasts or whatever podcast platform you prefer. 341 00:18:40,720 --> 00:18:44,680 Speaker 1: I'm Matt Miller. I'm on Twitter at Matt Miller three 342 00:18:45,320 --> 00:18:47,920 Speaker 1: on false Sweeney I'm on Twitter at pt Sweeney. Before 343 00:18:47,920 --> 00:18:51,080 Speaker 1: the podcast, you can always catch us worldwide at Bloomberg Radio.