Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney. Alongside
Speaker 1: my co host Matt Miller. Every business day, we bring
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
Speaker 1: at Bloomberg dot com slash podcast. E s G Investing.
Speaker 1: I first started hearing about it maybe ten years ago
Speaker 1: from some of my institutional investor clients in Europe. First
Speaker 1: they roll into it like, is Disney is environmental, social
Speaker 1: and governance? And I said, I think Disney is okay.
Speaker 1: That was my big stock pick of the day back
Speaker 1: in the day. I think it's s d okay. I mean,
Speaker 1: it's Mickey Mouse, right, I mean, how bad could it
Speaker 1: be from the E s G perspective? But a lot
Speaker 1: of pope folks wrong. No, I think I'm okay. I
Speaker 1: think I'm okay. It's Mickey's pretty good. Mickey, Mickey, Mickey's
Speaker 1: pretty good. But a lot of folks it's obviously issue
Speaker 1: has become a major major trend. I think it's gone
Speaker 1: two ways. It's gone. On the one hand, it's it's
Speaker 1: been a good label to use for marketing, right, and
Speaker 1: we've seen that takeoff and really sputter out over the
Speaker 1: last couple of months because E s G E t
Speaker 1: F s have now gone negative and let's look at somebody.
Speaker 1: I was gonna say, it's and the the other way
Speaker 1: it's gone, Um, people who are activists or is activists
Speaker 1: the right term. Maybe people who actually do something with
Speaker 1: their steaks, you know, put their money where their mouth
Speaker 1: is and change the world. We have one of those
Speaker 1: people in the office in the studio right now, Yasmin
Speaker 1: Dia Bilder joins us. She's the head of E t
Speaker 1: F S and managing director at Engine Number one, which
Speaker 1: you know probably from last year's proxy battle that won
Speaker 1: them three spots on the board. So it's been great
Speaker 1: to have you in here. Um, talk to us about
Speaker 1: the first of all, the kind of crash and burn
Speaker 1: of the marketing side of E s G investing, because,
Speaker 1: like I said, E t F flows have gone negative. Now, yeah,
Speaker 1: it's a really interesting trend. You're scene right now, So
Speaker 1: I should say off the bat, we don't see ourselves
Speaker 1: as E s G providers, but let's talk definition. What
Speaker 1: is E s G investing. You mentioned environmental, social, and
Speaker 1: governance data. Ultimately, what most of these strategies are doing
Speaker 1: they're trying to rate companies and rank companies. So ultimately
Speaker 1: they're saying what companies look quote unquote best across environmental, social,
Speaker 1: and governance issues and what look worst? And then many
Speaker 1: strategies are built off the back of it. Um Typically
Speaker 1: what you see is strategies that exclude the worst or
Speaker 1: by the best. The challenge with the space and you're
Speaker 1: seeing it sort of play out real time is first
Speaker 1: and foremost, what is a good company and what's a
Speaker 1: bad company? Right Like, many of these data providers actually
Speaker 1: have no correlation across what where they actually rank companies.
Speaker 1: In fact, Facebook is the best example. Some rank it
Speaker 1: is a top quartel, some rank its bottom quartel. It's
Speaker 1: a very personal discussion, insane. Now you see the performances.
Speaker 1: The other thing though, which is it? It tends to
Speaker 1: be that many of these portfolios are just overweight technology
Speaker 1: and underweight oiling gas and so what are you seeing
Speaker 1: the last couple? Because Exon is clearly a bad company
Speaker 1: right from it. I don't know how they are in
Speaker 1: terms of the social and governance side of things. But
Speaker 1: in terms of environmental you just measure them by you know,
Speaker 1: CEO two emissions. Surely X it's one of the worst
Speaker 1: companies in the world. Right, we'll all talk about our
Speaker 1: campaign and what we were hoping to see for X
Speaker 1: on mobiles. It's the anniversary kind of it's right around
Speaker 1: now is when we had what we were able to
Speaker 1: successfully place three people on the board of directors of Exxon,
Speaker 1: and we did that with owning just two basis points
Speaker 1: in the company. It's very fashion. I mean, if I
Speaker 1: were on that board. But but you know what was
Speaker 1: interesting is we really focused our argument on the shareholder
Speaker 1: argument for what we wanted to talk about, not the
Speaker 1: morality climate argument. And what we were really focusing on
Speaker 1: was a few things. First, it was all about governance.
Speaker 1: It was about the fact that, whether you like it
Speaker 1: or not, whether you believe in climate change or not,
Speaker 1: energy is going through huge transformation, whether it's government regulation
Speaker 1: or shifting consumer preferences, and we felt that the board
Speaker 1: would benefit from additional folks who had real, true transformational
Speaker 1: energy experience. It was also about their capital allocation strategy.
Speaker 1: And so I think the real interesting thing from the
Speaker 1: campaign for me was two fold one was you can
Speaker 1: own a small part of a company, but if you
Speaker 1: focus on the shareholder value argument, you can bring people
Speaker 1: along with you. Um. And the other is that you know,
Speaker 1: moving the conversation from ideology to economics, and that was
Speaker 1: where we had our success. That's key, right, that's super key,
Speaker 1: And in that sense you can easily understand why shareholders
Speaker 1: would want you there. They've got to make this transformation anyway.
Speaker 1: The guys they know on the board are probably a
Speaker 1: all guys and be only know how to put holes
Speaker 1: in the ground and pull out the Earth's precious resources,
Speaker 1: and they need someone to show them the way. How
Speaker 1: does the C suite react, Well, we are an engagement focus.
Speaker 1: From the traditional theory of change in this space is divestment,
Speaker 1: which is if you don't like it, don't own it.
Speaker 1: And when I say this space, I mean broadly. It's
Speaker 1: true for climate, it's true for social issues. A lot
Speaker 1: of times e s g. People just sell you know, tobacco,
Speaker 1: sell oil, sell everything that's bad, probably gunmakers, and that
Speaker 1: doesn't really help, right because someone else just buys those
Speaker 1: steaks and keeps making tobacco, oil and guns. Well, when
Speaker 1: you think about I think carbon decarbonization in general. I
Speaker 1: think there's a real strong case to make for own
Speaker 1: and engage. I mean, energy is one place, but how
Speaker 1: about global greenhouse gas emissions comes from energy, transportation and agriculture.
Speaker 1: Like this is the heart of the transition. When we
Speaker 1: talk about the energy transition, which is, by the way,
Speaker 1: a big investment opportunity for investors. That's where it's happening.
Speaker 1: And our theory of changes um not just that it's
Speaker 1: not just that the small green technology companies are going
Speaker 1: to be the ones driving it, but that actually the
Speaker 1: big traditional incumbents have to transform themselves. So that's the automakers,
Speaker 1: that's the big ad companies, and that's our That's where
Speaker 1: we spend our time. And I will say, um, all
Speaker 1: of our engagements post xcon have been very collaborative because
Speaker 1: we're not the first people to tell the c suite
Speaker 1: of these large companies, Hey, there's a lot of focus
Speaker 1: on decarbonization. You need to have a strategy and so
Speaker 1: in some ways, I think the fact that we approach
Speaker 1: it from a shareholder value perspective allows us to have
Speaker 1: a really good dialogue with companies. What's real quickly thirty seconds,
Speaker 1: what's the next industry that you think is should get
Speaker 1: some of attention from an E s G perspective. I
Speaker 1: think the demand side of decarbonization is interesting. Everyone focused
Speaker 1: on oil and gas, but transportation is a really interesting one, right.
Speaker 1: It's it's a move to all electric vehicles. A lot
Speaker 1: of the market is focused on that, but but you
Speaker 1: have to think more deeply about it. It's what are
Speaker 1: the commodity inputs like lithium and aluminum that are needed
Speaker 1: for that. So it's a really interesting investment opportunity. Good stuff,
Speaker 1: good stuff. Yasmin, thanks so much for coming into our
Speaker 1: Bloomberg Interactor Broker studio. Yasmin daya build your head of
Speaker 1: E T f s and a managing director at a
Speaker 1: really cool firms called Engine Number one. Is probably a
Speaker 1: story behind that name as well. We'll get that, uh
Speaker 1: next time our next guest. In my notes, it says
Speaker 1: it was two point two billion assets under management his fund.
Speaker 1: He now has over nine of the firm's assets in cash,
Speaker 1: with the remaining ten in defensive fixed income. I can
Speaker 1: honestly say I've never seen that before. Let's check in
Speaker 1: with Phil Toes, CEO of Toes Asset Management. Phil, thanks
Speaker 1: so much for joining us really appreciate it. Talk to
Speaker 1: us about your portfolio here and your your cash position.
Speaker 1: Where is it? Our our notes correct? Are our notes correct? Yeah?
Speaker 1: So we shifted slightly in the last couple of weeks
Speaker 1: and when they move up in the markets, moved us
Speaker 1: into more of a round a cash position relative to
Speaker 1: our earlier this year. But what what drives us there
Speaker 1: isn't isn't really are thinking about the markets, but rather
Speaker 1: just algorithms that are trend following, algorithms that have the
Speaker 1: ability to attempt to move us into either either fixed
Speaker 1: income or cash instruments. And because fixed income has been
Speaker 1: doing so poorly that we've largely just been in cash.
Speaker 1: But that's been in the position that we've had primarily
Speaker 1: since January thirteenth of this year. So it's been a
Speaker 1: it's been a good thing to just not be playing.
Speaker 1: But it's like, I mean, it reminds me of Pablo Escobar.
Speaker 1: He also held most of his assets in cash, and
Speaker 1: the rats ate about ten percent every year. You have
Speaker 1: the same problem, right, don't you lose money through uh
Speaker 1: just inflation? Yeah. So if if all you're doing is
Speaker 1: putting money in cash and didn't have a plan to
Speaker 1: come back in then then that's exactly what would happened,
Speaker 1: and inflation would eat you. But if you think about
Speaker 1: the way, so to our base cases that this will
Speaker 1: be a continuing bear market, and what we've seen in
Speaker 1: the last couple of weeks is a fair market trap.
Speaker 1: So if that, if that scenario plays out, the way
Speaker 1: the markets tend to work is they move down and
Speaker 1: then they even pick up more volatility. UH. And And
Speaker 1: what happens across our platform, across our different funds in
Speaker 1: EATS is that we have a trend following algorithm and
Speaker 1: just as we exited in the early phase of this decline,
Speaker 1: they would be designed to attempt to re enter in
Speaker 1: the early stage of a rebound. So then via zoom
Speaker 1: out and look at let's let's say this is like
Speaker 1: a typical bear market and it bottoms and somewhere around
Speaker 1: October of this year, UH somewhere around thirty five percent lower.
Speaker 1: At that point, having been in casual of it, it
Speaker 1: would have been a fantastic thing. But then you have
Speaker 1: the possibility for rebound, and that, frankly, is what it's
Speaker 1: all about, which is positioning yourself. You know, it's always
Speaker 1: so amusing to hear people talk about buying the dip,
Speaker 1: and the real question is what are they buying the
Speaker 1: dip with if they remain fully invest in the whole time.
Speaker 1: So yeah, yeah, the idea is to not make a
Speaker 1: market call necessarily, but to position yourselves in a way
Speaker 1: that address was at least the contingency that this bear
Speaker 1: market will continue, and then also positions yourself to potentially
Speaker 1: capture the rebound. And that's you know, this is not
Speaker 1: something new for us. We've been doing this since nineties six.
Speaker 1: We we saw the same kind of thing happened during
Speaker 1: the Internet double burst and the financial crisis, So we're
Speaker 1: we've got a long history of trying of navigated. By
Speaker 1: the way, speaking of bubbles, um, dot com and housing,
Speaker 1: what do you think we're look at today, especially with
Speaker 1: regards to I just bought a house for more money
Speaker 1: than I thought it'd ever spend on any one thing
Speaker 1: in my entire life, and I'm still skeptical that I
Speaker 1: can actually afford it. Yeah, So I think it's really
Speaker 1: fascinating because you get, you know, get conversations like this.
Speaker 1: You have a decent because little rally in the stock market,
Speaker 1: and everyone just thinks, well, we're back to to life
Speaker 1: as normal. But I think we're anything but that. One
Speaker 1: of the most compelling you know, you mentioned housing. One
Speaker 1: of the most compelling data points I've seen in the
Speaker 1: last six months is the you know, the Schiller Housing
Speaker 1: Price Index, which you know, for a hundred years, that
Speaker 1: index range between a hundred and a hundred and twenty
Speaker 1: because it's a real, real prices inflation, justin prices for houses.
Speaker 1: And then we saw that shocking increase of the index
Speaker 1: up to two hundred during the during the two thousand
Speaker 1: seven and then it came back down again. But right
Speaker 1: now we're at two twenty. So in real terms, we're
Speaker 1: higher with these historically, and so that that, you know,
Speaker 1: compare that with the fact that we're in the top
Speaker 1: quintile in stock valuations. But here's the big one. Here's
Speaker 1: the big one, which is that the said has changed
Speaker 1: his motivations and where primarily over the last you know,
Speaker 1: the say, thirteen years, that said has actively tried to
Speaker 1: avoid financial market declines. Now you can actually argue that
Speaker 1: because of demand pull inflation, which effectively means that people
Speaker 1: are buying so much stuff because they have so much money.
Speaker 1: You know, Now the said, you know, maybe implicitly they're
Speaker 1: not coming out and saying that, but they may have
Speaker 1: a motivation to pop the bubble. And so that's a
Speaker 1: completely different scenario, completely different world to live in. So
Speaker 1: instead of it being like fourth quarter of two thousand
Speaker 1: and eighteen where said they're saving the day, now the
Speaker 1: said may uh, you know, have have some kind of
Speaker 1: an incentive to actually see financial asset prices, home prices
Speaker 1: come to more reasonable levels as a way of addressing inflation. Absolutely,
Speaker 1: I feel just third thirty seconds, it feels to me
Speaker 1: like your firm and your strategy tries to time the market.
Speaker 1: Is that right, Well, so we we we do. We
Speaker 1: can't extu the markets. We also use options hedging, but
Speaker 1: we would say no, not really, because most market timers
Speaker 1: are trying to make a market call and predict what's
Speaker 1: going to happen, and that tends to not go well often.
Speaker 1: So instead of doing that, all we're doing is just
Speaker 1: falling trend following algorithms, and so that tends to be
Speaker 1: in our history, a relatively reliable way of doing two things,
Speaker 1: which is getting out of the way of the real
Speaker 1: train wrecks, but also participating in what you know generally
Speaker 1: is just rising markets, and that's what markets do nine
Speaker 1: of the time. So the idea is is not not
Speaker 1: making a market call, which is not market timing, but
Speaker 1: actually positioning yourself in the way address contingencies. All right,
Speaker 1: So great stuff, man, thanks for coming on and really
Speaker 1: appreciate a really interesting kind of you, even behavior and investing,
Speaker 1: which I wanted to get to. So I hope we
Speaker 1: can get you on again, Phil, because I know you
Speaker 1: were a founder of the Behavioral Investing Institute, and I
Speaker 1: think that's that sounds pretty pretty interesting as well as
Speaker 1: released to investing. All Right, I just typed an FB
Speaker 1: equity go into my terminal for the Facebook and I
Speaker 1: got nothing. Nothing. It says it changed it's symbol today
Speaker 1: to meta, so not gonna type in meta equity go
Speaker 1: and I get Okay, there we go. I got my
Speaker 1: ticker there, and all thats two more letters. It used
Speaker 1: to be, dude, You remember when you get smaller, Yes,
Speaker 1: to get down to that, if you had one letter
Speaker 1: that was the most coveted of all tickers, like if
Speaker 1: you were t then people stopped calling you anything else.
Speaker 1: They just called you t right ford, all that kind
Speaker 1: of good stuff. All right, So I'm blaming Matt Bloxham.
Speaker 1: He's a t M T anlost to Bloomberg Intelligence. He's
Speaker 1: based in London, runs all of our t MT stuff
Speaker 1: over there. Uh we snagged him about five years ago,
Speaker 1: don't remember. Uh, telecoms, tech media and technology. That's right,
Speaker 1: that people still use that moniker mat is that still?
Speaker 1: I thought that was a thing from the nineties. They
Speaker 1: still do, but I still every day you get the question,
Speaker 1: what is what's what's that team and the team? That's right?
Speaker 1: So so Matt talk to us about it. Let's just
Speaker 1: start with with Facebook. This is a meta free studio,
Speaker 1: so what we can still call it Facebook is the
Speaker 1: market buying off on this transformation. Then Mr Zuckerberg wants
Speaker 1: to take meta platforms through over the next I don't know,
Speaker 1: five to ten years. Yeah, I guess not. You know,
Speaker 1: when the share prices down over the last twelve months,
Speaker 1: I guess not. Um And I guess you know they've
Speaker 1: got bigger near term issues, you know that. I mean,
Speaker 1: obviously Instagram has been the big growth engine for them,
Speaker 1: and TikTok is adding huge amounts of pressure to the
Speaker 1: ad revenues they can generate from that. So I think
Speaker 1: they need to kind of sort out the current business first.
Speaker 1: And you know, I think that the metaverse, if it
Speaker 1: ever becomes more than just you know, the current kind
Speaker 1: of gaming environment it really is today, UM, then there's
Speaker 1: going to be a lot of rivals for it. And
Speaker 1: I think your historically Facebook UM gained its success by
Speaker 1: acquiring businesses and building them. I guess with the new
Speaker 1: constraints around um M and A, it's a question mark
Speaker 1: about whether they will be able to kind of follow
Speaker 1: that and whether they can successfully execute an organic struct
Speaker 1: in that area. I have questioned Facebook's ability to actually
Speaker 1: be the main player in the metaverse ten twenty years
Speaker 1: from now, And I got a lot of pushback on
Speaker 1: Twitter from people who said, you know what, they have
Speaker 1: invested a ton you know, they bought Oculus Rift, which
Speaker 1: was the VR headset. You know, they've done stuff, and
Speaker 1: they're spending money UM to be a major player. Do
Speaker 1: you agree, UM? I mean, I agree that they've been
Speaker 1: spending a ton of money, But then yeah, a lot
Speaker 1: of other people are spending a ton of money too,
Speaker 1: and it's you know, completely open field UM. And I
Speaker 1: think we've seen with every big technology wave, it's been
Speaker 1: a new player that nobody saw coming that's ended up
Speaker 1: being the big player. I mean that that's essentially what
Speaker 1: Facebook is. You know, it was the current the current
Speaker 1: king of the last technology cycle. I mean, I think
Speaker 1: what's going to be interesting for the metaverse as a
Speaker 1: whole is what Apple does with this kind of room
Speaker 1: with a r VR headset. And if it comes out
Speaker 1: next year, you know Apple's weight. You know, we'll create
Speaker 1: this I think so called halo effect for everybody. So
Speaker 1: maybe that will help Facebook, but you know they're going
Speaker 1: to face a lot of UM current and non existent
Speaker 1: UM competitors, you know, even the next three to five years.
Speaker 1: Think there's also I think I think there's a conception
Speaker 1: of what the metaverse is that requires you to put
Speaker 1: on a headset and something that blocks out the rest
Speaker 1: of the world. But I feel like we've already gone
Speaker 1: beyond dipping our toe into the pool of metaverse. Like
Speaker 1: if you spend all day working from home, you're on Zoom,
Speaker 1: you're on Slack or whatever, and then you spend your evenings, um,
Speaker 1: you know, shooting people on call of duty, and all
Speaker 1: of your frends are from forums You're watching other people
Speaker 1: shoot people on call of duty, Like aren't we already
Speaker 1: in a sense living in the metaverse. I think there
Speaker 1: are multiple meta verses essentially in another areas dating. You know,
Speaker 1: a lot of the big dating platforms are moving into
Speaker 1: a kind of VR environment. Yeah, you don't even have
Speaker 1: to go out of your house, and neither does she
Speaker 1: or he or whatever the person identifies as. You can
Speaker 1: spend some money on virtual gifts as you know. Crazy.
Speaker 1: All right, I'm honest with you. I'm done with this
Speaker 1: whole conversation. Let's talk music. Spotify. How to Capital Markets?
Speaker 1: Day said they got their analysts, they got their investors
Speaker 1: coming in. There's another stock. You know, you talk to
Speaker 1: these high flying technology names. It's all fifty percent this year.
Speaker 1: What's the story with Spotify? I mean, I thought the
Speaker 1: future of music was kind of renting this stuff. Yeah,
Speaker 1: and you know, I think it's I guess one of
Speaker 1: the near term worreas that people have had is that,
Speaker 1: in the wake of the whole Netflix subscribe by growth
Speaker 1: slowing um that perhaps Spotify is a similar kind of
Speaker 1: platform where there's going to be um a challenge there.
Speaker 1: I think Spotify is a bit different because unlike video
Speaker 1: subscription services, where essential you've got exclusive, unique content and
Speaker 1: you've spent tons of months to build it. Essence, you
Speaker 1: can get most music across all platforms. So if it's
Speaker 1: more about the user interface and the kind of platform itself,
Speaker 1: and your Spotify is a very strong, compelling platform. So
Speaker 1: I think they don't face the same kind of stagnation
Speaker 1: risks that we've seen with Netflix, and yesterday they were
Speaker 1: incredibly bullish on the mid term. They've got, you know,
Speaker 1: give or take half a billion users today and want
Speaker 1: to get that to a billion over the long term.
Speaker 1: I think you're one of the One of the bigger
Speaker 1: issues that they've had recently is the drag on profits
Speaker 1: from there for a into podcasts. They're not even making
Speaker 1: a gross margin on that today, and they were trying
Speaker 1: to reassure people that they'll get to some kind of
Speaker 1: gross margin in the next year or two. Um. You know,
Speaker 1: I think that the shares moved a little bit possibly yesterday,
Speaker 1: but you know, I think there's still a long way
Speaker 1: for them to go. To the podcasting business everybody in
Speaker 1: their Jack introduced a new podcast yesterday, Dak Shepherd of
Speaker 1: you Know, Armchair Expert, which is arguably one of the
Speaker 1: best podcasts that there is with his wife Kristen bell Um,
Speaker 1: the actress famous for Frozen among other things. Um, and
Speaker 1: they're going to give relationship advice and do I pay
Speaker 1: for this? Is just all that support you have to
Speaker 1: be on Spotify together, that's the idea, right, And Armchair
Speaker 1: Expert moved to Spotify. I think Obama is. I guess
Speaker 1: he was on Armchair Expert, but he's also got a
Speaker 1: deal with Spotify and he has a lot on there
Speaker 1: beyond just music, right, yeah, exactly. But it's it's a
Speaker 1: very different model where we can with the music. There's
Speaker 1: that they have a pay away to the music platforms,
Speaker 1: so there's kind of less risk around it, whereas you know,
Speaker 1: the podcast taken them into purchase a kind of content acquisition,
Speaker 1: if you like, so a bit more like a PATV platform,
Speaker 1: and you're kind of risking, you know, hundreds of millions
Speaker 1: of dollars essentially just to try and kind of generate
Speaker 1: more users and keep people on the platform. So it's
Speaker 1: quite a different business model, and I guess it's spook
Speaker 1: people a bit, you know that that it's a drag
Speaker 1: on earnings podcasting in general. How big is it is
Speaker 1: that profitable business? Is it? Something that Um, well, I
Speaker 1: think it is for some of the podcasters, right, made
Speaker 1: a lot of money, and that's what pushed a lot.
Speaker 1: In fact, I think, actually, this is what I was
Speaker 1: thinking of. Obama has a deal with Spotify, but they're
Speaker 1: ending it now because of Neil Young and all these
Speaker 1: people who are mad about Joe Rogan saying like you
Speaker 1: can feel COVID by drinking horsty Warmer. Yeah, yeah, that's
Speaker 1: what I mean. As you said, I think that the
Speaker 1: big winners, um right now, all the all the big,
Speaker 1: the big podcast is actually I think there was a
Speaker 1: story um earlier in the week that she's even some
Speaker 1: of the smaller podcast is generating you know, relatively big
Speaker 1: bucks all advertising. Yep, yep. Interesting. All right, Matt, don't
Speaker 1: we have a podcast Bloomberg Market? We do? We should.
Speaker 1: We should get some some big ad people on there.
Speaker 1: I'll make a few phone calls. Get that going, all right,
Speaker 1: Matt Blocks, and thanks so much for joining us here
Speaker 1: in our Bloomberg Interactive Broker studio. It's in how long
Speaker 1: are you here? I'm here until tomorrow, you think, PARTI,
Speaker 1: And he flies back to London Queen Victoria Street, which
Speaker 1: is our London office which is just so awesome. Um.
Speaker 1: It's just an amazing right in the city of London,
Speaker 1: right by the Bank of England, right smack down there.
Speaker 1: And there's a Greg right down the street, so you
Speaker 1: can always get good sausage roll. Yeah. There you go,
Speaker 1: all right at Blocks and t mt Annals Bloomberg intelligence
Speaker 1: student joining us year. We appreciate getting the latest on
Speaker 1: all things tech media and telecom. Lots to talk about.
Speaker 1: They're always June is Pride month and a month when
Speaker 1: we're focusing on equality issues here at Bloomberg. Today we
Speaker 1: speak with Jape Rice and chief economist at Wells far
Speaker 1: going to talk about the economic influence of the LGBT community.
Speaker 1: And I must note that Jay was educated down the
Speaker 1: road from my Duke University at some school down and
Speaker 1: I think it's Chapel Hill or something. The name escapes me,
Speaker 1: but maybe we'll get to it at some point. Jay,
Speaker 1: Thanks for joining us here talk to us about Wells
Speaker 1: Fargo and how you guys or financial services in general
Speaker 1: kind of thinks about the LGBT community. It's it's pretty big. Um.
Speaker 1: I'm just wondering growing and growing and wonder if they
Speaker 1: get you know, kind of the um, the focus for
Speaker 1: maybe the financial services business. Well, that's that's a good question, Paul.
Speaker 1: And and so, first of all, it is it has
Speaker 1: been and growing. Um. So just put just a level
Speaker 1: set here, um And and yes it's kind of vary,
Speaker 1: but you know, if you look at the Gallop data,
Speaker 1: it would uh be around seven percent or so of
Speaker 1: the population today. Put that in perspective, and that was
Speaker 1: only three and a half percent, you know, about a
Speaker 1: decade ago. So it certainly is growing. And you know,
Speaker 1: whether or not it gets the full attention of the
Speaker 1: financial service community at this point, I think is an
Speaker 1: open question. But this is also a young population and
Speaker 1: as that um and well educated, and as that population
Speaker 1: continues to grow, uh, with the young population, they're going
Speaker 1: to be more financial services and you know, other sorts
Speaker 1: of of goods and services as well. Well. It's also
Speaker 1: an incredibly diverse group. I mean, there are a lot
Speaker 1: of letters there, and each one person in this community
Speaker 1: is an individual human. Is it hard to market to
Speaker 1: or offer financial services to a group like this when
Speaker 1: it's made up of such unique individuals? Yeah, I think
Speaker 1: it is. And and and part of the part of
Speaker 1: the issue I think is so not only is you know,
Speaker 1: it's very diverse in terms of different um sex, sexual orientation,
Speaker 1: but it's also the data isn't all that really um
Speaker 1: good right now, the best day that we have really
Speaker 1: would be on individuals who are lesbian, gay, and bisexual.
Speaker 1: When it comes to you know, trans or queer or
Speaker 1: other sorts of areas, that data isn't as good and
Speaker 1: and probably because what you're looking at is you're looking
Speaker 1: at self identification, and for many reasons, many of these
Speaker 1: individuals don't really want to self identify as that. So
Speaker 1: whereas you may have really good data on say white
Speaker 1: males or or black females or et cetera, UM, the
Speaker 1: data in this community is not quite as as robust
Speaker 1: as it is in other areas. J From I guess
Speaker 1: an economic demographic perspective, what do we know about the
Speaker 1: LGBT population in terms of you know, educations and incomes
Speaker 1: and things like that. Yeah, So so again, what we're
Speaker 1: pot we looked at here and in the data we
Speaker 1: have would be on individuals who identify as lesbian, gay,
Speaker 1: and bisexual. And I would say that that that group
Speaker 1: of people is more educated than the overall population. So well,
Speaker 1: individuals have to be friend to get right, if you
Speaker 1: if you have more income, you know that if you
Speaker 1: feel secure enough in your environment that if you feel
Speaker 1: safe enough to identify as one of these as part
Speaker 1: of the group that's discriminated against like this from the
Speaker 1: get go, you're automatically gonna be likely to have more
Speaker 1: wealth and more education, right, I think I think that's right. Yeah,
Speaker 1: And you know, again it's it's hard to parse all
Speaker 1: that out. But what we do know are you know,
Speaker 1: a lesbian, gay, and bisexual individuals. If you look at
Speaker 1: the people who have a bachelor's degree, that's roughly twenty
Speaker 1: seven of that community um. The overall population that's about
Speaker 1: And then when you look at post bachelor so that
Speaker 1: would be master's, pH d. Professional degree, you're looking at
Speaker 1: more than twenty and that's five percentage points higher than
Speaker 1: the overall population. And consequently, UH, these individuals tend to
Speaker 1: have higher income UM in general than you know, the
Speaker 1: overall population. JA any geographic diversify K should there. I mean,
Speaker 1: I think the expectation or the supposition is that maybe
Speaker 1: more on the coastal UH cities for example in New
Speaker 1: York and San Francisco, might have a higher percentage is
Speaker 1: that what your data shows. Yeah, so we didn't look
Speaker 1: at it in terms of metropolitan statistical areas per set.
Speaker 1: We looked at it in terms of states, and the
Speaker 1: District of Columbia got it. And when you look at
Speaker 1: it there Washington, d C. You know, so the overall
Speaker 1: average again is somewhere seven eight percent outside of Washington.
Speaker 1: You see, it's you know, these individuals are going to
Speaker 1: be concentrated in you know, the West Coast, um, in
Speaker 1: the Upper Midwest, in the Northeast. But that's said every
Speaker 1: state in the in the United States, UM has individuals
Speaker 1: who who are identified with this community. Great stuff, all right, Jay,
Speaker 1: thanks so much for joining us. They're really fascinating and
Speaker 1: that you guys have done a lot of economic research
Speaker 1: on this community. Jay Brice and Managing director and chief
Speaker 1: economist at Wells Fargo. But I think it's a community
Speaker 1: that hasn't really been addressed by the financial industry. Right,
Speaker 1: so there's a lot of money at stake there, UM
Speaker 1: for the bank that can crack this nut first or
Speaker 1: or best right UM. And Jay is a great uh
Speaker 1: resource to have on because not only is he a
Speaker 1: managing director in chief economist at Wells Fargo, but he's
Speaker 1: also been an adjunct professor at a very regionally diverse
Speaker 1: group of University of Alabama, at North Carolina, at Johns Hopkins,
Speaker 1: and Georgetown. So great to get everything from Jay. Thanks
Speaker 1: for listening to the Bloomberg Markets podcast. You can subscribe
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Speaker 1: platform you prefer. I'm Matt Miller. I'm on Twitter at
Speaker 1: Matt Miller three pt on false Sweeney I'm on Twitter
Speaker 1: at pt Sweeney Before the podcast. You can always catch
Speaker 1: us worldwide at Bloomberg Radio