1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim Fox. 2 00:00:08,760 --> 00:00:11,520 Speaker 1: Along with my co host Lisa Abramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg p m L 6 00:00:20,840 --> 00:00:32,120 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Rob Rosenstein, 7 00:00:32,200 --> 00:00:35,440 Speaker 1: the Deputy Attorney General, is heading to the White House. 8 00:00:35,840 --> 00:00:39,720 Speaker 1: He's been summoned apparently, and they're conflicting reports about whether 9 00:00:39,760 --> 00:00:43,400 Speaker 1: he is going to resign or president. As we speak. 10 00:00:44,120 --> 00:00:46,720 Speaker 1: It's just changing every every second because now there's an 11 00:00:46,760 --> 00:00:50,520 Speaker 1: indication that perhaps he's resisting, which is what we would 12 00:00:50,520 --> 00:00:53,800 Speaker 1: have expected before because he's been through so many of 13 00:00:53,840 --> 00:00:57,720 Speaker 1: these turmoils and has always resisted. So that's why this 14 00:00:57,840 --> 00:00:59,800 Speaker 1: report was so shocking to you when it said that 15 00:00:59,840 --> 00:01:02,800 Speaker 1: he was going to just hanging in. Let's bring into 16 00:01:02,800 --> 00:01:05,600 Speaker 1: Al Hunt's opinion columnist. I want to get your thoughts 17 00:01:05,600 --> 00:01:08,759 Speaker 1: out about how how big of a deal this is. Basically, 18 00:01:08,840 --> 00:01:10,640 Speaker 1: what's the implication. I think that's what markets are trying 19 00:01:10,640 --> 00:01:13,000 Speaker 1: to figure out. That's what a lot of political strategistic 20 00:01:13,080 --> 00:01:15,959 Speaker 1: trying to figure out as well. If I were Joe Biden, 21 00:01:16,040 --> 00:01:17,920 Speaker 1: I would say things I can't say in radio, to 22 00:01:17,959 --> 00:01:21,480 Speaker 1: say there's a big deal, A big blanking deal. I 23 00:01:21,520 --> 00:01:23,360 Speaker 1: mean it really, we got it. I think that I 24 00:01:23,360 --> 00:01:28,680 Speaker 1: think most listeners got at the first time. Um it is. 25 00:01:28,720 --> 00:01:31,759 Speaker 1: And whether he resigns or is fired is also a 26 00:01:31,880 --> 00:01:34,200 Speaker 1: very big deal. And there's a there's an uncertainty at 27 00:01:34,200 --> 00:01:37,360 Speaker 1: this stage if he resigns because he feels he has to. 28 00:01:37,760 --> 00:01:40,520 Speaker 1: That's a that's that's the greatest gift that Donald Trump 29 00:01:40,560 --> 00:01:43,520 Speaker 1: has had, maybe in a year and a half. Because 30 00:01:43,800 --> 00:01:47,280 Speaker 1: whoever takes over this investigation, and there is the law 31 00:01:47,520 --> 00:01:50,360 Speaker 1: spells out who would who would be the next in line? 32 00:01:50,800 --> 00:01:54,080 Speaker 1: It would be the Solicitor General, who would probably recuse 33 00:01:54,200 --> 00:01:56,480 Speaker 1: himself because his law firm is involved in this. And 34 00:01:56,520 --> 00:01:57,800 Speaker 1: then it would probably be the head of O l 35 00:01:57,840 --> 00:02:00,920 Speaker 1: C and Mr Angle. I think it's almost certain they're 36 00:02:00,960 --> 00:02:03,840 Speaker 1: both movement conservatives. It's almost certain that they would not 37 00:02:03,960 --> 00:02:06,480 Speaker 1: want to give Bob Mueller the kind of freedom and 38 00:02:07,160 --> 00:02:11,320 Speaker 1: flexibility and independence the Rosen scene did. So therefore I 39 00:02:11,440 --> 00:02:14,239 Speaker 1: doubt they would fire Mueller, but I think they would 40 00:02:14,320 --> 00:02:17,160 Speaker 1: probably try to undercut the investigation. So it is a 41 00:02:17,280 --> 00:02:22,200 Speaker 1: very big deal. Al hunt. Are there figures and individuals 42 00:02:22,200 --> 00:02:24,040 Speaker 1: that are currently working in the White House that are 43 00:02:24,080 --> 00:02:29,239 Speaker 1: trying to undercut the president? Oh? Yeah, yeah, they really are. 44 00:02:30,080 --> 00:02:33,520 Speaker 1: I mean, you know, every day he commands no loyalty, 45 00:02:33,720 --> 00:02:36,919 Speaker 1: and there there are fights, they're internees, seeing warfarees that 46 00:02:37,000 --> 00:02:39,280 Speaker 1: go on, those going and go have going on in 47 00:02:39,360 --> 00:02:43,280 Speaker 1: other and other administrations. They're probably more in this administration. 48 00:02:43,360 --> 00:02:48,919 Speaker 1: The stakes are probably more petty than before, and there 49 00:02:49,040 --> 00:02:52,840 Speaker 1: is almost no loyalty to this president. So every day 50 00:02:52,960 --> 00:02:55,800 Speaker 1: there is a sense, I think among a number of 51 00:02:55,800 --> 00:02:58,160 Speaker 1: people who work there is my god, what is he 52 00:02:58,240 --> 00:03:01,239 Speaker 1: up to? I mean, we've had the quotes attributed to 53 00:03:01,320 --> 00:03:04,640 Speaker 1: Gymatics and attributed to John Kelly and attributed to Gary 54 00:03:04,720 --> 00:03:07,480 Speaker 1: Cone that he's a fifth or sixth grade education, he's 55 00:03:07,520 --> 00:03:10,320 Speaker 1: an idiot. I think there's a widespread weef among a 56 00:03:10,400 --> 00:03:13,440 Speaker 1: number of people who are in the administration that he's 57 00:03:13,440 --> 00:03:15,640 Speaker 1: not up to this job and and and it's dangerous, 58 00:03:15,639 --> 00:03:17,119 Speaker 1: all right. So I want to want to push back 59 00:03:17,120 --> 00:03:19,959 Speaker 1: on you with that, because the economy is doing well, 60 00:03:20,000 --> 00:03:22,680 Speaker 1: and I'm looking at markets, and frankly, markets have not 61 00:03:22,760 --> 00:03:24,519 Speaker 1: been taking that big of a hit from this. I 62 00:03:24,520 --> 00:03:27,040 Speaker 1: mean Initially there was a spike down, but otherwise it's 63 00:03:27,040 --> 00:03:29,200 Speaker 1: steady as she goes. We're down a little bit today, 64 00:03:29,280 --> 00:03:32,440 Speaker 1: but that's to be expected in between earning season and 65 00:03:32,360 --> 00:03:33,960 Speaker 1: then they're There are a bunch of other reasons, in 66 00:03:34,040 --> 00:03:36,320 Speaker 1: particular trade, the idea that the US and trying to 67 00:03:36,360 --> 00:03:40,240 Speaker 1: trade discussions are not going that well. I'm just wondering, 68 00:03:40,560 --> 00:03:43,240 Speaker 1: do you think that people are too sanguine about what's 69 00:03:43,280 --> 00:03:45,520 Speaker 1: happening and that it will affect things, just not in 70 00:03:45,520 --> 00:03:47,600 Speaker 1: the near term, or do you think that this is 71 00:03:47,640 --> 00:03:50,440 Speaker 1: just you know, the political and economic are two totally 72 00:03:50,480 --> 00:03:54,360 Speaker 1: separate universes that aren't intersecting right now. You know probably 73 00:03:54,360 --> 00:03:56,720 Speaker 1: better than I do, that it's impossible to separate the 74 00:03:56,760 --> 00:03:59,720 Speaker 1: two um But I do think that there is a 75 00:03:59,720 --> 00:04:04,280 Speaker 1: sense the economy is doing well, the underlying fundamentals are strong. 76 00:04:04,560 --> 00:04:06,360 Speaker 1: There's not a sense there's going to be a problem 77 00:04:06,360 --> 00:04:09,400 Speaker 1: in the foreseeable future, and there's a feeling that whatever 78 00:04:09,440 --> 00:04:12,480 Speaker 1: the political instability in Washington is, that that's not going 79 00:04:12,520 --> 00:04:14,360 Speaker 1: to affect it much. Whether that's right or not, I'm 80 00:04:14,360 --> 00:04:16,680 Speaker 1: not sure, uh, And I'd have to go back and 81 00:04:16,760 --> 00:04:18,919 Speaker 1: check all the data during the next years, but my 82 00:04:19,040 --> 00:04:22,840 Speaker 1: impression is that that that the the economy at least 83 00:04:22,839 --> 00:04:26,120 Speaker 1: didn't tank because of the perception that there was a 84 00:04:26,240 --> 00:04:28,680 Speaker 1: lack of stability in Washington back in seventy three and 85 00:04:28,720 --> 00:04:32,000 Speaker 1: seventy four. So I'm not really surprised by that. L 86 00:04:32,279 --> 00:04:35,760 Speaker 1: This is June. Um. What do you think will happen 87 00:04:35,880 --> 00:04:39,080 Speaker 1: if it turns out that Rod Rosenstein is retiring? How 88 00:04:39,120 --> 00:04:42,200 Speaker 1: do you think Democrats will react? Well, you put it, 89 00:04:43,120 --> 00:04:45,080 Speaker 1: you put it very diplomatically, retiring. Is he going to 90 00:04:45,120 --> 00:04:48,160 Speaker 1: resign or resign? Sorry, resigning? I keep on saying retiring, 91 00:04:48,160 --> 00:04:49,760 Speaker 1: because I think he's had a tough go of it. 92 00:04:50,279 --> 00:04:53,440 Speaker 1: He sure has. Um. Look, he was appointed in the 93 00:04:53,440 --> 00:04:55,960 Speaker 1: first place by Jeff Sessions in order to run the 94 00:04:56,000 --> 00:04:59,440 Speaker 1: Department of Justice manage U S attorneys, and then only 95 00:04:59,480 --> 00:05:02,400 Speaker 1: after he was appointed did it come out that Sessions 96 00:05:02,440 --> 00:05:05,400 Speaker 1: had his own conflict of interest with the Russians, so 97 00:05:05,480 --> 00:05:07,839 Speaker 1: he was he was It was almost an accident that 98 00:05:07,839 --> 00:05:09,520 Speaker 1: he was put in charge of this, which is what 99 00:05:09,640 --> 00:05:12,440 Speaker 1: drives Trump so crazy. So if he is fired, I 100 00:05:12,440 --> 00:05:14,520 Speaker 1: think the Democrats will go ballistic. I think they will 101 00:05:14,520 --> 00:05:18,360 Speaker 1: try to get legislation that some Republicans have sponsored to 102 00:05:18,400 --> 00:05:21,679 Speaker 1: assure Mother's independence. I think there will be a sense 103 00:05:21,720 --> 00:05:24,040 Speaker 1: that it could be very harmful for Republicans in the 104 00:05:24,080 --> 00:05:27,880 Speaker 1: midterm elections if he, however, resigns because he says, I 105 00:05:27,960 --> 00:05:30,599 Speaker 1: just can't, I can't, I can't stay there anymore because 106 00:05:30,640 --> 00:05:33,480 Speaker 1: of the perception. Although all of his people have said 107 00:05:33,560 --> 00:05:35,840 Speaker 1: that whatever he said about wearing a wire and it's 108 00:05:35,839 --> 00:05:37,720 Speaker 1: likely for the men's going for the men were said 109 00:05:37,720 --> 00:05:39,680 Speaker 1: in jest. But if he feels he has to resign, 110 00:05:39,839 --> 00:05:41,560 Speaker 1: I think that takes a lot of the pressure off 111 00:05:41,600 --> 00:05:48,360 Speaker 1: Republicans al Hunt. The ongoing question of whether he resigns 112 00:05:48,480 --> 00:05:52,560 Speaker 1: or whether he will be fired, does it really matter it? 113 00:05:52,640 --> 00:05:56,760 Speaker 1: Does it? Does it matters? Uh? It certainly matters politically 114 00:05:57,480 --> 00:06:00,760 Speaker 1: number one. And secondly it matters and the kind of 115 00:06:00,839 --> 00:06:04,359 Speaker 1: pressure that is brought to bear on whoever takes his 116 00:06:04,440 --> 00:06:09,240 Speaker 1: place overseeing the Mueller investigation. If he is fired, and 117 00:06:09,440 --> 00:06:11,560 Speaker 1: say Mr Engel, who is the head of the OLC, 118 00:06:11,880 --> 00:06:15,000 Speaker 1: becomes in charge of the Mueller investigation, Uh, they're going 119 00:06:15,040 --> 00:06:18,360 Speaker 1: to be whether it's the Congress, whether it's outside groups, 120 00:06:18,360 --> 00:06:20,479 Speaker 1: whether it's the press, They're gonna be watching him like 121 00:06:20,520 --> 00:06:22,840 Speaker 1: a hawk. And I think there'll be a lot more 122 00:06:22,839 --> 00:06:25,920 Speaker 1: pressure on him not to blow out the case. So 123 00:06:25,960 --> 00:06:29,000 Speaker 1: I think it does matter. What do you expect us 124 00:06:29,000 --> 00:06:31,120 Speaker 1: to actually find out what Mueller has been doing aside 125 00:06:31,120 --> 00:06:33,520 Speaker 1: from the cases that currently have been prosecuted. In other words, 126 00:06:33,680 --> 00:06:35,520 Speaker 1: does he have the goods to actually get up to 127 00:06:35,640 --> 00:06:38,840 Speaker 1: the White House or is it just gonna be sort 128 00:06:38,880 --> 00:06:41,880 Speaker 1: of left where we've seen it? Well, I don't think 129 00:06:41,880 --> 00:06:45,280 Speaker 1: we're gonna know for certainly months. Um, you know, on 130 00:06:45,320 --> 00:06:50,040 Speaker 1: the relative uh spectrum of independent councils, this has not 131 00:06:50,279 --> 00:06:52,520 Speaker 1: been in the joint out process. I mean, what can 132 00:06:52,600 --> 00:06:55,360 Speaker 1: start to four years, five years and you know, much 133 00:06:55,440 --> 00:06:59,920 Speaker 1: less serious charges and much less success. So, you know, 134 00:07:00,200 --> 00:07:02,679 Speaker 1: I think we're talking about at least until the early 135 00:07:02,720 --> 00:07:05,000 Speaker 1: part of next year. That assumes that there's not an 136 00:07:05,080 --> 00:07:07,400 Speaker 1: interference in the investigation in the process. I don't think 137 00:07:07,400 --> 00:07:10,080 Speaker 1: he's going to doing between now and November six, and 138 00:07:10,120 --> 00:07:11,880 Speaker 1: then afterwards, I'm not sure what he's gonna do. But 139 00:07:11,880 --> 00:07:13,800 Speaker 1: there's a whole bunch of people, whether it's Michael Cohen 140 00:07:13,880 --> 00:07:17,720 Speaker 1: or Paul Manaford or some of the others who you 141 00:07:17,760 --> 00:07:20,640 Speaker 1: know who, as they say, flipped and they're telling him 142 00:07:20,640 --> 00:07:22,680 Speaker 1: stuff they don't. He doesn't give them that kind of 143 00:07:22,680 --> 00:07:25,120 Speaker 1: a deal unless he thinks they have something to tell, 144 00:07:25,240 --> 00:07:27,920 Speaker 1: something to reveal, and that is almost always about someone 145 00:07:28,000 --> 00:07:31,440 Speaker 1: higher up, and there's a limited number of people who 146 00:07:31,480 --> 00:07:34,680 Speaker 1: were who are higher up. Yeah, Alhan, thank you so 147 00:07:34,720 --> 00:07:36,880 Speaker 1: much for being with us. I hear your phone beeping. 148 00:07:37,040 --> 00:07:39,200 Speaker 1: I'm sure it's on fire. I'm sure you're getting calls 149 00:07:39,240 --> 00:07:42,120 Speaker 1: from everyone under the sun, and I would love to 150 00:07:42,160 --> 00:07:45,080 Speaker 1: hear what they have to say. Alhant Bloomberg Opinion columnists 151 00:07:45,080 --> 00:07:59,600 Speaker 1: coming to us from Washington, d C. Just in the 152 00:07:59,640 --> 00:08:03,160 Speaker 1: past a few weeks, leaders from the corporate as well 153 00:08:03,200 --> 00:08:05,920 Speaker 1: as the governmental worlds came together to try to figure 154 00:08:05,920 --> 00:08:09,320 Speaker 1: out how to steve off some of the malefacts of 155 00:08:09,360 --> 00:08:12,200 Speaker 1: global warming. One of them was Berry Parking is Chief 156 00:08:12,200 --> 00:08:16,200 Speaker 1: Sustainability and procubent Officer for Mars Incorporated, and he joins 157 00:08:16,280 --> 00:08:19,040 Speaker 1: us here in our studios. So, Brian and Barry, I 158 00:08:19,080 --> 00:08:22,240 Speaker 1: was talking about the Global Climate Action Summit in San Francisco. 159 00:08:22,920 --> 00:08:29,440 Speaker 1: You have pledged to reduce mars is economic ecological footprint 160 00:08:29,520 --> 00:08:32,640 Speaker 1: carbon footprint by more than sixty percent by the year 161 00:08:33,400 --> 00:08:35,960 Speaker 1: How do you plan to do that? Well, good morning, 162 00:08:36,400 --> 00:08:40,360 Speaker 1: all um. It's an incredibly tough challenge because we plan 163 00:08:40,480 --> 00:08:43,480 Speaker 1: to do that while we continue to grow. So we're 164 00:08:43,480 --> 00:08:46,079 Speaker 1: going to do that by getting to zero carbon from 165 00:08:46,080 --> 00:08:49,320 Speaker 1: our own factories and then transforming what we buy and 166 00:08:49,360 --> 00:08:51,600 Speaker 1: where we buy it. Because most of our greenhouse gas 167 00:08:51,600 --> 00:08:55,360 Speaker 1: footprint is upstream in the raw materials in agriculture, So 168 00:08:55,440 --> 00:08:58,960 Speaker 1: we have to change the way agricultural works today. Bart 169 00:08:58,960 --> 00:09:01,199 Speaker 1: and One, if you could just suscribe a trip that 170 00:09:01,240 --> 00:09:09,120 Speaker 1: you made to a Indonesian coconut supplier, tell that story 171 00:09:09,200 --> 00:09:11,480 Speaker 1: about how that opened your eyes. I mean, you're a 172 00:09:11,559 --> 00:09:14,280 Speaker 1: veteran at Mars. How did this open your eyes to 173 00:09:14,360 --> 00:09:18,160 Speaker 1: this new area for the company. Yeah? Absolutely, you know, 174 00:09:18,360 --> 00:09:20,959 Speaker 1: I think I didn't grow up believing my career was 175 00:09:21,000 --> 00:09:23,040 Speaker 1: going to be in sustainability. So it came to me, 176 00:09:23,080 --> 00:09:26,600 Speaker 1: and it came to me through procurement and buying raw materials. 177 00:09:26,600 --> 00:09:31,200 Speaker 1: So I guess maybe fifteen years ago I visited a 178 00:09:31,240 --> 00:09:36,720 Speaker 1: coconut plantation in Southeast Asia and the scale of this 179 00:09:36,800 --> 00:09:40,280 Speaker 1: thing is incredible. Hundred kilometers by a hundred kilometers if 180 00:09:40,280 --> 00:09:44,680 Speaker 1: you can imagine that, just coconut sixty miles by sixty miles, 181 00:09:44,880 --> 00:09:46,760 Speaker 1: and you can't get to it by road. No, you 182 00:09:46,840 --> 00:09:48,800 Speaker 1: get there by boats, and you get onto a canal 183 00:09:48,920 --> 00:09:51,720 Speaker 1: system and you travel around the whole day and all 184 00:09:51,760 --> 00:09:54,240 Speaker 1: you see is coconut. At the end of the day, 185 00:09:54,520 --> 00:09:56,440 Speaker 1: I got back to the to their ports and they 186 00:09:56,480 --> 00:09:59,880 Speaker 1: have two huge factories where they're processing this coconut and 187 00:10:00,040 --> 00:10:03,040 Speaker 1: a the thing that then it's a big place. And 188 00:10:03,040 --> 00:10:05,880 Speaker 1: then they said, you're our biggest customer and this is 189 00:10:05,920 --> 00:10:08,160 Speaker 1: quite a small ingredient for us. And I suddenly got 190 00:10:08,160 --> 00:10:10,560 Speaker 1: a sense of the amount of land, the amount of 191 00:10:10,600 --> 00:10:13,840 Speaker 1: people that were at that point almost invisible to us 192 00:10:14,040 --> 00:10:17,240 Speaker 1: upstream in our supply chain. And and that's what got 193 00:10:17,240 --> 00:10:19,839 Speaker 1: really really interested in. You know, what's our footprint on 194 00:10:19,880 --> 00:10:22,520 Speaker 1: the planet and what's our footprint on people? And how 195 00:10:22,520 --> 00:10:25,360 Speaker 1: do we bring that into our thinking and into our strategies. 196 00:10:25,520 --> 00:10:28,280 Speaker 1: So how do you make it more sustainable and how 197 00:10:28,320 --> 00:10:31,880 Speaker 1: do you do it with a cost effectiveness that allows 198 00:10:31,920 --> 00:10:35,800 Speaker 1: your business to grow? Well, you you start by setting 199 00:10:35,800 --> 00:10:38,640 Speaker 1: the right goal, and we've talked about that extremely challenging goal, 200 00:10:39,120 --> 00:10:42,079 Speaker 1: but you have to you have to drive transformation and 201 00:10:42,080 --> 00:10:44,600 Speaker 1: and that means that we have to We have about 202 00:10:44,600 --> 00:10:48,280 Speaker 1: a million smallholder farmers in our supply chain. And you 203 00:10:48,320 --> 00:10:51,240 Speaker 1: know the story about smallholder farmers today is they're they're 204 00:10:51,280 --> 00:10:54,880 Speaker 1: either the victim of climate change, their livelihoods are going 205 00:10:54,920 --> 00:10:58,280 Speaker 1: to get impacted. Although the villains of of climate change 206 00:10:58,320 --> 00:11:02,280 Speaker 1: that they're the ones deforesting UH and an expand expanding 207 00:11:02,320 --> 00:11:05,120 Speaker 1: their land use. So we believe we can move them 208 00:11:05,160 --> 00:11:08,679 Speaker 1: from the victim or or them or the villain to 209 00:11:08,760 --> 00:11:11,840 Speaker 1: the hero. And we can do that by the way 210 00:11:11,400 --> 00:11:14,880 Speaker 1: they grow the crops in the future. They grow diversified crops, 211 00:11:15,280 --> 00:11:17,840 Speaker 1: lots of different plants and trees, and they work on 212 00:11:17,840 --> 00:11:20,600 Speaker 1: the quality of the soil. They can actually pull carbon 213 00:11:20,679 --> 00:11:23,800 Speaker 1: from the atmosphere and and actually be a big part 214 00:11:23,840 --> 00:11:26,200 Speaker 1: of the change that we see. So we have to change. 215 00:11:26,240 --> 00:11:27,839 Speaker 1: We have to go back. So we're you know, we're 216 00:11:27,840 --> 00:11:29,880 Speaker 1: an industrial food business. We have to go back to 217 00:11:29,960 --> 00:11:33,080 Speaker 1: agriculture and go all the way back to those farmers 218 00:11:33,120 --> 00:11:35,080 Speaker 1: at the beginning our supply chain and work with them 219 00:11:35,080 --> 00:11:37,520 Speaker 1: to change what they do. That that's what will make 220 00:11:37,520 --> 00:11:40,760 Speaker 1: the big difference. I just want to bring a headline 221 00:11:41,200 --> 00:11:44,080 Speaker 1: to you that this is coming to to us from 222 00:11:44,160 --> 00:11:48,520 Speaker 1: axios Is. The Deputy Attorney General Rod Rosenstein has verbally 223 00:11:48,800 --> 00:11:53,120 Speaker 1: resigned to the Chief of Staff John Kelly in anticipation 224 00:11:53,160 --> 00:11:56,040 Speaker 1: of being fired by President Donald Trump. This is according 225 00:11:56,120 --> 00:11:59,080 Speaker 1: to a source with direct knowledge of the situation, and 226 00:11:59,120 --> 00:12:01,720 Speaker 1: this of course from Axios. Will be bringing you more 227 00:12:01,720 --> 00:12:03,920 Speaker 1: details as we get them. And just to give you 228 00:12:03,960 --> 00:12:06,000 Speaker 1: a sense of the market reaction, the SMP five hundred 229 00:12:06,040 --> 00:12:09,720 Speaker 1: does is dropping to a session low in response to 230 00:12:10,120 --> 00:12:11,959 Speaker 1: this news, but very you know, I want to pick 231 00:12:12,080 --> 00:12:14,160 Speaker 1: up on what you're talking about, how you have to 232 00:12:14,200 --> 00:12:17,160 Speaker 1: go to the farmers and I just want to go 233 00:12:17,280 --> 00:12:21,240 Speaker 1: more to the corporate leaders. When you were in San Francisco, 234 00:12:21,600 --> 00:12:24,079 Speaker 1: did you feel like there was sort of a ground 235 00:12:24,120 --> 00:12:26,760 Speaker 1: swell of support for this view that you have and 236 00:12:26,760 --> 00:12:29,880 Speaker 1: trying to push companies in this exact direction or is 237 00:12:29,920 --> 00:12:34,320 Speaker 1: there more pushback given the political situation? Talking about politics, uh, 238 00:12:34,360 --> 00:12:36,840 Speaker 1: and sort of a reduction of some of the gas 239 00:12:36,880 --> 00:12:41,000 Speaker 1: emitting regulations. I think everybody gets the size of the 240 00:12:41,080 --> 00:12:43,840 Speaker 1: challenge and the urgency here and and most big companies 241 00:12:43,840 --> 00:12:46,360 Speaker 1: are working on this. I think what we're saying is 242 00:12:46,400 --> 00:12:50,480 Speaker 1: that the level of of disruption that has to happen 243 00:12:50,679 --> 00:12:54,920 Speaker 1: is huge. And you know, we talk about a transparency race. 244 00:12:55,360 --> 00:12:57,120 Speaker 1: You know, we have to know where all of these 245 00:12:57,160 --> 00:13:00,720 Speaker 1: materials come from, because that's what I can sumers expect 246 00:13:00,800 --> 00:13:03,120 Speaker 1: and that's what the activists in our supply change. So 247 00:13:03,400 --> 00:13:07,160 Speaker 1: we're seeing a level of disruption and transformation that perhaps 248 00:13:07,200 --> 00:13:09,319 Speaker 1: others are not yet seeing. I talk about the end 249 00:13:09,320 --> 00:13:11,680 Speaker 1: of the commodity's era. You know, we used to buy 250 00:13:11,679 --> 00:13:15,360 Speaker 1: these raw materials at arm's length, not really knowing where 251 00:13:15,360 --> 00:13:18,360 Speaker 1: they came from and not really knowing what conditions. We 252 00:13:18,440 --> 00:13:20,920 Speaker 1: think that's that era is over. You have to know 253 00:13:21,360 --> 00:13:24,000 Speaker 1: where everything that's going into your products, whether it's food 254 00:13:24,000 --> 00:13:26,559 Speaker 1: products or electronics or wherever, you have to know where 255 00:13:26,559 --> 00:13:29,240 Speaker 1: it all comes from. I just am struck by coconut 256 00:13:29,320 --> 00:13:31,760 Speaker 1: water that there's an advertisement for it where it says 257 00:13:31,800 --> 00:13:33,760 Speaker 1: feel good about your life and feel good about what 258 00:13:33,840 --> 00:13:36,240 Speaker 1: you've putting your body in a cost about eight dollars 259 00:13:36,240 --> 00:13:38,400 Speaker 1: to buy, you know, twelve ounces, and I just have 260 00:13:38,520 --> 00:13:40,839 Speaker 1: to wonder, you know, is there a cost that people 261 00:13:40,840 --> 00:13:43,160 Speaker 1: are not willing to pay in order to make things 262 00:13:43,160 --> 00:13:46,200 Speaker 1: more sustainable? On the consumer side, yeah, you know, I 263 00:13:46,200 --> 00:13:50,520 Speaker 1: think it's been slower than anybody would expect, but consumers 264 00:13:50,760 --> 00:13:55,640 Speaker 1: are moving towards sustainability. There's always been a few percent 265 00:13:55,760 --> 00:13:57,920 Speaker 1: that really care about this, and I think we're slowly 266 00:13:57,960 --> 00:14:00,439 Speaker 1: seeing that grow. It's not happening as fast there's probably 267 00:14:00,440 --> 00:14:03,040 Speaker 1: any of us predicted, but our view going forward is 268 00:14:03,080 --> 00:14:07,520 Speaker 1: that in five, ten, fifteen years, consumers will make more 269 00:14:07,559 --> 00:14:11,320 Speaker 1: and more conscious choices around more sustainable products. And we 270 00:14:11,360 --> 00:14:13,120 Speaker 1: want to be at the forefront of that. And that 271 00:14:13,200 --> 00:14:15,480 Speaker 1: means one of the things that they have to know 272 00:14:15,520 --> 00:14:17,520 Speaker 1: where everything that's going into the product that they're going 273 00:14:17,559 --> 00:14:21,000 Speaker 1: to eat comes from. And and that's the big change. 274 00:14:21,040 --> 00:14:24,600 Speaker 1: And if you if you do that, then you're inevitably 275 00:14:24,600 --> 00:14:28,160 Speaker 1: into longer term relationships and more direct relationships with those farmers. 276 00:14:28,200 --> 00:14:32,000 Speaker 1: And and that's the big procurement sourcing change that's happening 277 00:14:32,000 --> 00:14:35,600 Speaker 1: in the world at the moment. Barry because of Eminem's, 278 00:14:35,720 --> 00:14:38,800 Speaker 1: because of Mars Bars, because of all the great chocolate 279 00:14:38,840 --> 00:14:41,640 Speaker 1: confectionery products that you make. I want you to talk 280 00:14:41,680 --> 00:14:44,760 Speaker 1: if you can about coco supply because the whole supply 281 00:14:45,000 --> 00:14:48,400 Speaker 1: chain topic that you just described as something that you're 282 00:14:48,440 --> 00:14:52,480 Speaker 1: currently working on with Coco. Indeed, this is part of 283 00:14:52,520 --> 00:14:54,840 Speaker 1: our overall initiative. You're going to be spending what a 284 00:14:54,880 --> 00:14:58,400 Speaker 1: billion dollars over the next decade. Yeah, you know, we 285 00:14:58,440 --> 00:15:00,880 Speaker 1: all love chocolate and the that the truth is you 286 00:15:00,920 --> 00:15:04,360 Speaker 1: can't make chocolate without cocoa. So we have to fix 287 00:15:04,840 --> 00:15:07,480 Speaker 1: the supply chain of cocoa and and it's incredibly hard. 288 00:15:07,520 --> 00:15:11,520 Speaker 1: Coco is grown by hundreds of thousands, millions of smallholder 289 00:15:11,600 --> 00:15:15,680 Speaker 1: farmers and we have to help them become more productive 290 00:15:16,000 --> 00:15:19,560 Speaker 1: and and increase their incomes. That many of them are 291 00:15:19,560 --> 00:15:23,400 Speaker 1: not doing great, and it's been really challenging. We and 292 00:15:23,440 --> 00:15:25,440 Speaker 1: the rest of the instrument working on this for decades. 293 00:15:25,480 --> 00:15:27,200 Speaker 1: So we announced in the last couple of days a 294 00:15:27,560 --> 00:15:30,120 Speaker 1: big new investment, as you say, a billion dollars to 295 00:15:30,200 --> 00:15:33,800 Speaker 1: be spent over the next ten years to to invest 296 00:15:33,920 --> 00:15:37,480 Speaker 1: with farmers to move them from being smallholder farmers that 297 00:15:37,600 --> 00:15:42,440 Speaker 1: just grow coco too larger farms. We think that that 298 00:15:42,440 --> 00:15:45,040 Speaker 1: that will happen over time and they'll grow more things 299 00:15:45,120 --> 00:15:47,760 Speaker 1: than coca. Because it's seventy five thou farmers. You're talking 300 00:15:47,760 --> 00:15:50,440 Speaker 1: about a lot of people right now. Yeah, that's the start. 301 00:15:50,560 --> 00:15:52,520 Speaker 1: And I think what we need to do is we 302 00:15:52,560 --> 00:15:54,920 Speaker 1: need to demonstrate at scale as a path to those 303 00:15:54,920 --> 00:15:59,400 Speaker 1: farmers becoming more and more successful, employing other people and 304 00:15:59,400 --> 00:16:02,240 Speaker 1: and you back to what we're talking about earlier, also 305 00:16:02,280 --> 00:16:05,480 Speaker 1: pulling carbon out of the atmosphere into their into their farms. 306 00:16:05,520 --> 00:16:08,920 Speaker 1: We've we've proven this at small scale. The challenge has 307 00:16:08,960 --> 00:16:11,840 Speaker 1: always been to scale this up to tens and hundreds 308 00:16:11,840 --> 00:16:14,240 Speaker 1: of thousands, and that's why we're investing more money. So 309 00:16:14,320 --> 00:16:18,080 Speaker 1: I'm just wondering which countries that are major farm producers 310 00:16:18,080 --> 00:16:20,360 Speaker 1: have been the most eager to work with you and 311 00:16:20,480 --> 00:16:24,360 Speaker 1: the most effective in making some of these changes. Um 312 00:16:24,480 --> 00:16:27,800 Speaker 1: we source from Africa, Asia, all over the world. I think, 313 00:16:28,160 --> 00:16:31,400 Speaker 1: you know, a good example would be on on deforestation 314 00:16:31,400 --> 00:16:34,800 Speaker 1: in West Africa, where we've made a real breakthrough and 315 00:16:34,800 --> 00:16:37,960 Speaker 1: building a public private partnership industry and the governments of 316 00:16:38,000 --> 00:16:41,080 Speaker 1: Code of War a Ghana. We've got a really strong 317 00:16:41,480 --> 00:16:44,160 Speaker 1: Cocoa and Forests Initiative now where it lays up very 318 00:16:44,160 --> 00:16:46,320 Speaker 1: clearly what government going to do and very clearly what 319 00:16:46,400 --> 00:16:47,800 Speaker 1: industry is going to do. And I think that's a 320 00:16:47,840 --> 00:16:51,000 Speaker 1: great example of you know, if you really spend the 321 00:16:51,080 --> 00:16:53,440 Speaker 1: time to work out and get an alignment of interest, 322 00:16:53,880 --> 00:16:56,600 Speaker 1: you can make progress. And and we think we can 323 00:16:56,640 --> 00:17:00,440 Speaker 1: stop deforestation by working together. This is not easy, you know, 324 00:17:00,520 --> 00:17:03,040 Speaker 1: and and many other countries were not yet necessarily on 325 00:17:03,080 --> 00:17:05,639 Speaker 1: the same wavelength. And but that's what we have to do. 326 00:17:05,680 --> 00:17:08,000 Speaker 1: I think we've shown over and over the industry can't 327 00:17:08,000 --> 00:17:10,680 Speaker 1: solve this on their own, and often government can't solve 328 00:17:10,720 --> 00:17:12,959 Speaker 1: this on their own and it's the two together that 329 00:17:13,000 --> 00:17:15,719 Speaker 1: will get this done. Berry Parkin, thank you so much 330 00:17:15,760 --> 00:17:18,000 Speaker 1: for being with us. Truly a pleasure having you. Berry 331 00:17:18,040 --> 00:17:22,199 Speaker 1: Parking his chief sustainability and procurement officer for Mars in 332 00:17:22,200 --> 00:17:25,160 Speaker 1: New York. They have a one billion dollar sustainability investment 333 00:17:25,720 --> 00:17:28,679 Speaker 1: currently to reduce the carbon footprint of its businesses and 334 00:17:28,760 --> 00:17:44,920 Speaker 1: supply chain by more than six A Crisis of Beliefs, 335 00:17:45,040 --> 00:17:49,560 Speaker 1: Investor Psychology and Financial of fragility and is the title 336 00:17:49,760 --> 00:17:52,919 Speaker 1: of a new book written by Professor Andre Schleifer. He 337 00:17:53,040 --> 00:17:56,439 Speaker 1: is a professor of economics at Harvard University. His co 338 00:17:56,680 --> 00:18:00,920 Speaker 1: author with the book is Nicola Genali is the professor 339 00:18:00,960 --> 00:18:04,520 Speaker 1: of finance at the Bocona University in Italy. In Milan, 340 00:18:04,600 --> 00:18:07,719 Speaker 1: and Andre Schleifer joins us now. Professor, thank you very 341 00:18:07,800 --> 00:18:10,240 Speaker 1: much for being here. Talk a little bit about the 342 00:18:10,320 --> 00:18:17,280 Speaker 1: misconceptions that investors, or indeed anyone has about financial crises. Well. Thanks, 343 00:18:17,320 --> 00:18:19,760 Speaker 1: it's a pleasure to be here. Uh. This is a 344 00:18:19,760 --> 00:18:23,879 Speaker 1: book about financial crisis. It uh kind of takes off 345 00:18:24,560 --> 00:18:29,840 Speaker 1: from where Charlie Kindelberger, the great economic historian, has left off, 346 00:18:30,040 --> 00:18:34,320 Speaker 1: maybe forty years ago, and it says that, uh, most 347 00:18:34,359 --> 00:18:37,159 Speaker 1: financial crisis are kind of the same, which is to 348 00:18:37,280 --> 00:18:41,000 Speaker 1: say that they start with a bubble. Uh. This time 349 00:18:41,040 --> 00:18:43,600 Speaker 1: it was a bubble in the housing market sometimes as 350 00:18:43,640 --> 00:18:47,840 Speaker 1: bubble and government bonds. When the bubbles collapse, people lose 351 00:18:47,880 --> 00:18:50,879 Speaker 1: a lot of money, but more importantly, banks lose a 352 00:18:50,920 --> 00:18:55,760 Speaker 1: lot of money. And that's how you get into a crisis. 353 00:18:55,760 --> 00:18:58,480 Speaker 1: And oh, it was pretty similar. Now you asked about 354 00:18:58,600 --> 00:19:02,320 Speaker 1: misconceptions that are kind of two stories that are often 355 00:19:02,359 --> 00:19:07,560 Speaker 1: floating around that don't square well with this uh uh 356 00:19:07,960 --> 00:19:10,119 Speaker 1: set of facts. The first one is that it's all 357 00:19:10,160 --> 00:19:13,120 Speaker 1: the bank's fault. You probably have heard about two big 358 00:19:13,200 --> 00:19:18,520 Speaker 1: to fail and how banks were speculating, uh and getting 359 00:19:19,240 --> 00:19:24,320 Speaker 1: homeowners to households to buy houses. The truth is everybody 360 00:19:24,400 --> 00:19:28,120 Speaker 1: was in on it. People wanted to buy homes, banks 361 00:19:28,160 --> 00:19:33,040 Speaker 1: wanted to finance homes. Rating agencies wanted to make it simpler. 362 00:19:33,560 --> 00:19:36,440 Speaker 1: When you have a bubble, everybody is speculating. So it's 363 00:19:36,480 --> 00:19:41,720 Speaker 1: not just the banks, Uh, it's everybody. The second misconception, 364 00:19:41,800 --> 00:19:44,960 Speaker 1: which is more dramatic one uh. And it's been a 365 00:19:45,000 --> 00:19:50,280 Speaker 1: misconception that has been kind of um advocated or pursued 366 00:19:50,840 --> 00:19:54,639 Speaker 1: by some of the protagonists, the policymakers in two thousand 367 00:19:54,680 --> 00:19:58,280 Speaker 1: and eight, which is that the crisis is a total surprise, 368 00:19:58,359 --> 00:20:00,640 Speaker 1: which is to say that Lehmann came out of nowhere. 369 00:20:01,000 --> 00:20:04,280 Speaker 1: The fact of the matter is that bubbles move, bubbles 370 00:20:04,320 --> 00:20:07,640 Speaker 1: and crisis move very very slowly, and there was eighteen 371 00:20:07,720 --> 00:20:11,879 Speaker 1: months of banks facing stratospheric losses before we had Lehman. 372 00:20:12,119 --> 00:20:14,760 Speaker 1: That's really a very big misconception. There also is a 373 00:20:14,800 --> 00:20:19,040 Speaker 1: misconception of behavioral economics and how that plays into things. 374 00:20:19,240 --> 00:20:21,880 Speaker 1: People talk about the post two thousand and eight era 375 00:20:22,320 --> 00:20:25,320 Speaker 1: and how millennials, for example, have not been investing in 376 00:20:25,400 --> 00:20:28,600 Speaker 1: stocks as much as their peers, and not to mention 377 00:20:28,640 --> 00:20:30,520 Speaker 1: the fact that, you know, the sort of fervor that 378 00:20:30,600 --> 00:20:36,600 Speaker 1: creates bubbles. How does behavioral economics and psychology plan into this. Well, 379 00:20:36,600 --> 00:20:41,160 Speaker 1: the crucial part about bubbles is twofold. One is that 380 00:20:41,200 --> 00:20:44,159 Speaker 1: people think that trees grow to the sky, which is 381 00:20:44,200 --> 00:20:46,919 Speaker 1: to say, in this case that people felt that they 382 00:20:46,920 --> 00:20:51,800 Speaker 1: would get ten percent a year returns on their homes forever, 383 00:20:51,920 --> 00:20:53,800 Speaker 1: which is what happened for a few years, but it 384 00:20:53,880 --> 00:20:57,640 Speaker 1: can't happen forever. The second part, and this is why 385 00:20:57,680 --> 00:21:02,160 Speaker 1: behavioral economics also comes in, is that people don't see 386 00:21:02,160 --> 00:21:06,240 Speaker 1: the risks of bubbles and in particular of imploding bubbles, 387 00:21:06,359 --> 00:21:10,640 Speaker 1: and that gets them too optimistic. But then just as 388 00:21:10,680 --> 00:21:14,360 Speaker 1: you said, incredibly scared. So when you talk about the millennials, 389 00:21:14,720 --> 00:21:17,000 Speaker 1: the millennials, of course, to the extent that they were 390 00:21:17,000 --> 00:21:20,200 Speaker 1: involved in it, got really terrified and have now stayed 391 00:21:20,200 --> 00:21:23,000 Speaker 1: out of the market. So talking about that balance of 392 00:21:23,040 --> 00:21:27,399 Speaker 1: being overconfident and too overly terrified, where are we right now? 393 00:21:28,320 --> 00:21:31,640 Speaker 1: I think we clearly are in the regime of overconfidence 394 00:21:31,720 --> 00:21:36,080 Speaker 1: and extrapolation. You know, stock market is at very high levels, 395 00:21:36,160 --> 00:21:43,080 Speaker 1: they volatility is very very cheap, credit spreads are very 396 00:21:43,160 --> 00:21:46,919 Speaker 1: very low, expectations are very optimistic. That are all the 397 00:21:46,960 --> 00:21:52,920 Speaker 1: indicators of UH of financial markets being in a bubble. Now, 398 00:21:52,960 --> 00:21:55,679 Speaker 1: the good news, just to finish this thought, is that, 399 00:21:55,760 --> 00:21:59,439 Speaker 1: of course banks are in much better shape today than 400 00:21:59,520 --> 00:22:01,840 Speaker 1: they were in two thou eight. So if this bubble 401 00:22:01,960 --> 00:22:06,040 Speaker 1: starts UH imploding, I don't think we're going to see 402 00:22:06,040 --> 00:22:08,800 Speaker 1: the crisis that we saw ten years ago. But in 403 00:22:08,840 --> 00:22:13,919 Speaker 1: that same vein, if indeed the banks are unduly blamed 404 00:22:14,000 --> 00:22:18,080 Speaker 1: for the financial crisis one of the misconceptions, then do 405 00:22:18,080 --> 00:22:22,520 Speaker 1: you believe that the policy responses were overdone and that 406 00:22:22,600 --> 00:22:26,400 Speaker 1: they don't necessarily need all this additional capital, since perhaps 407 00:22:26,400 --> 00:22:30,520 Speaker 1: they were not as responsible as many people believe. Well, actually, 408 00:22:30,600 --> 00:22:33,160 Speaker 1: I think quite the reverse. Um. It seems to me 409 00:22:33,800 --> 00:22:35,960 Speaker 1: that to the extent that there was a policy here 410 00:22:36,080 --> 00:22:38,840 Speaker 1: in two thousand and eight, it was that the policy 411 00:22:38,880 --> 00:22:41,919 Speaker 1: makers were way too slow. They were way behind the curve. 412 00:22:42,760 --> 00:22:46,480 Speaker 1: The way in which huge crisis like Liman occur is 413 00:22:46,680 --> 00:22:50,679 Speaker 1: when banks UH lose a tremendous amount of money and 414 00:22:50,800 --> 00:22:55,800 Speaker 1: when people think that there's ovency is threatened. When the 415 00:22:55,880 --> 00:22:58,920 Speaker 1: economy or when the financial system in such a situation, 416 00:22:59,600 --> 00:23:06,080 Speaker 1: the UH regulators and policymakers need to intervene fast, and 417 00:23:06,119 --> 00:23:08,600 Speaker 1: they need to intervene aggressively. And what happened in two 418 00:23:08,640 --> 00:23:13,959 Speaker 1: thousand and eight is that policy was pretty passive until Lehman, 419 00:23:14,320 --> 00:23:17,639 Speaker 1: and of course it was very active and very aggressive 420 00:23:18,080 --> 00:23:20,320 Speaker 1: right after Lehman, but it was too late to save 421 00:23:20,359 --> 00:23:23,000 Speaker 1: the U s economy. Yeah, I just want to go 422 00:23:23,000 --> 00:23:25,520 Speaker 1: back to something you said, where you said we're definitely 423 00:23:25,720 --> 00:23:29,160 Speaker 1: in the overconfident part of the cycle. Some people would 424 00:23:29,280 --> 00:23:32,159 Speaker 1: argue that you have so many daysayers out there threatening 425 00:23:32,200 --> 00:23:34,040 Speaker 1: that we're going to see the downfall of markets, and 426 00:23:34,040 --> 00:23:36,359 Speaker 1: they have been doing this for years that that is 427 00:23:36,400 --> 00:23:38,960 Speaker 1: sort of a credible specter of threat that sort of 428 00:23:39,000 --> 00:23:41,439 Speaker 1: keeps everything in check. Just quickly, here, we have a 429 00:23:41,440 --> 00:23:44,600 Speaker 1: minute left. What's your what's your perspective on that. Look, 430 00:23:45,160 --> 00:23:47,520 Speaker 1: it's one thing we know about bubbles is that it's 431 00:23:47,520 --> 00:23:51,000 Speaker 1: impossible to call the top. All the evidence shows that. 432 00:23:51,440 --> 00:23:53,919 Speaker 1: And so right now I'm not telling you the markets 433 00:23:53,920 --> 00:23:56,200 Speaker 1: are going to go down next month, or next year, 434 00:23:57,800 --> 00:23:59,800 Speaker 1: or even in two years. They might keep going up 435 00:23:59,800 --> 00:24:03,080 Speaker 1: for while. The point is that there are all the 436 00:24:03,160 --> 00:24:07,320 Speaker 1: signs of a financial system in the state of quite 437 00:24:07,600 --> 00:24:10,600 Speaker 1: extreme exuberance. Thank you so much for being with us. 438 00:24:10,880 --> 00:24:13,520 Speaker 1: Thank you, it's great to be here. Andre S. Lifers, 439 00:24:13,680 --> 00:24:17,280 Speaker 1: Professor of economics at Harvard University in Boston, co author 440 00:24:17,560 --> 00:24:21,120 Speaker 1: of a new book, A Crisis of Beliefs, Investor Psychology, 441 00:24:21,160 --> 00:24:25,600 Speaker 1: and Financial Fragility, talking about some of the misconceptions of 442 00:24:25,760 --> 00:24:38,520 Speaker 1: financial crises. So there has been a lot of discussion 443 00:24:38,600 --> 00:24:43,199 Speaker 1: around investing with a lens toward gender, in other words, 444 00:24:43,440 --> 00:24:46,360 Speaker 1: women and how much power they have in the workforce 445 00:24:46,359 --> 00:24:48,359 Speaker 1: in a variety of different ways. Reading us now is 446 00:24:48,359 --> 00:24:51,520 Speaker 1: someone who's been working deeply on that. Alicia Levine, chief 447 00:24:51,520 --> 00:24:55,119 Speaker 1: market strategist at bny Melon Investment Management. Thank you so 448 00:24:55,200 --> 00:24:58,040 Speaker 1: much for being here. Before we get started, I know 449 00:24:58,119 --> 00:25:02,119 Speaker 1: you are announcing a new fund that focuses on gender 450 00:25:02,200 --> 00:25:05,680 Speaker 1: parity in the Japanese workforce, but can you just talk 451 00:25:05,760 --> 00:25:10,000 Speaker 1: more broadly about the concept of women nomics. Well, thanks 452 00:25:10,040 --> 00:25:12,640 Speaker 1: for having me here today. So this is actually very 453 00:25:12,680 --> 00:25:17,480 Speaker 1: exciting because women omics is actually an an economic platform 454 00:25:17,520 --> 00:25:20,639 Speaker 1: of the Japanese government. In two thousand and thirteen, the 455 00:25:20,680 --> 00:25:23,800 Speaker 1: Prime Minister san Zo Abe realized that there had to 456 00:25:23,840 --> 00:25:27,439 Speaker 1: be socio economic changes in Japan in order to have 457 00:25:27,600 --> 00:25:32,399 Speaker 1: economic growth. And that's because Japan has negative population growth, 458 00:25:32,400 --> 00:25:35,040 Speaker 1: and in order to grow g g d P, you 459 00:25:35,119 --> 00:25:37,760 Speaker 1: have to have a population that can work. And so 460 00:25:37,840 --> 00:25:40,240 Speaker 1: with negative population growth, you can't grow g d P. 461 00:25:40,920 --> 00:25:44,199 Speaker 1: So what does Japan have as a perfect resource, a 462 00:25:44,320 --> 00:25:49,679 Speaker 1: highly educated population. Women were staying home and they weren't 463 00:25:49,800 --> 00:25:53,680 Speaker 1: going into the public sphere and working. And so women Omics, 464 00:25:53,720 --> 00:25:57,480 Speaker 1: which was launched in two thousand and thirteen by the government, 465 00:25:58,160 --> 00:26:02,000 Speaker 1: is a policy and economic and social policy to encourage 466 00:26:02,000 --> 00:26:04,560 Speaker 1: women to work and go into the workforce. So that 467 00:26:04,600 --> 00:26:08,160 Speaker 1: means everything from building daycare centers to rewarding companies who 468 00:26:08,160 --> 00:26:11,520 Speaker 1: promote and hire women, to senior leadership, and so everybody 469 00:26:11,560 --> 00:26:14,920 Speaker 1: has a stake in this now the dry Fast Japan 470 00:26:15,320 --> 00:26:20,879 Speaker 1: Women Omics Fund. It's the first US thematic fund for 471 00:26:21,080 --> 00:26:24,080 Speaker 1: B N y Melon. Why was that the first one? 472 00:26:24,800 --> 00:26:28,320 Speaker 1: So actually um B and y Melon Investment Management has 473 00:26:28,400 --> 00:26:32,960 Speaker 1: launched eight thematic funds over the last seven years, but 474 00:26:33,480 --> 00:26:37,160 Speaker 1: many in Europe and Asia. This is the first women 475 00:26:37,200 --> 00:26:39,439 Speaker 1: on Mix fund that we're launching here in the US, 476 00:26:40,040 --> 00:26:43,280 Speaker 1: and we think this is the perfect time for several reasons. 477 00:26:43,600 --> 00:26:46,840 Speaker 1: The first is that we have a four year track record, 478 00:26:46,920 --> 00:26:50,160 Speaker 1: and as we know, institutional and on the retail side, 479 00:26:50,200 --> 00:26:54,639 Speaker 1: clients wants to see a track record and evidence that 480 00:26:54,880 --> 00:26:58,840 Speaker 1: the thematic investing is actually working, and in fact, we're 481 00:26:59,040 --> 00:27:03,480 Speaker 1: very proud and happy with our manager's track record here. 482 00:27:03,880 --> 00:27:05,800 Speaker 1: The other thing is that we just feel like this 483 00:27:05,880 --> 00:27:08,880 Speaker 1: is the right moment for thematic funds and gender lends investing. 484 00:27:08,920 --> 00:27:12,560 Speaker 1: With everything that's happening and the conversations that are happening daily, 485 00:27:12,720 --> 00:27:14,600 Speaker 1: we think there's a lot of interest. So it is 486 00:27:14,600 --> 00:27:17,199 Speaker 1: the idea here to invest in companies that adhere to 487 00:27:17,480 --> 00:27:20,719 Speaker 1: the sort of concepts of women omics. The most closely 488 00:27:20,800 --> 00:27:23,600 Speaker 1: is that the idea so so the fund looks at 489 00:27:23,640 --> 00:27:28,360 Speaker 1: companies through three different criteria. The first is do they 490 00:27:28,440 --> 00:27:32,359 Speaker 1: hire and promote women into senior leadership? The second is 491 00:27:32,359 --> 00:27:36,600 Speaker 1: is their consumer more likely to be a woman than 492 00:27:36,640 --> 00:27:40,640 Speaker 1: a man? And third do they directly or indirectly benefit 493 00:27:40,800 --> 00:27:44,480 Speaker 1: from women omics? So here's my question, how do you 494 00:27:44,520 --> 00:27:49,280 Speaker 1: sort of correlate performance with respect to company earnings with 495 00:27:49,359 --> 00:27:51,440 Speaker 1: some of these policies, Because at the end of the day, 496 00:27:51,440 --> 00:27:54,440 Speaker 1: people want to make money. That's true. So let's let's 497 00:27:54,520 --> 00:27:56,480 Speaker 1: let's back up a little bit and talk about labor 498 00:27:56,480 --> 00:28:00,760 Speaker 1: force participation. So it took twenty years for or labor 499 00:28:00,920 --> 00:28:04,640 Speaker 1: the female labor force partition participation rate to go from 500 00:28:04,640 --> 00:28:08,840 Speaker 1: fifty to sixty percent, So that took twenty years. In 501 00:28:08,960 --> 00:28:12,240 Speaker 1: five years too, from two thousand and thirteen to today, 502 00:28:12,920 --> 00:28:16,479 Speaker 1: that rate went from six to sixty seven percent. It 503 00:28:16,560 --> 00:28:20,119 Speaker 1: also means that the entire labor force is being driven 504 00:28:20,119 --> 00:28:23,480 Speaker 1: by women entering the labor force, not by men. So 505 00:28:23,760 --> 00:28:26,359 Speaker 1: if your consumer is a woman, you're more likely to 506 00:28:26,359 --> 00:28:29,159 Speaker 1: be a growth company, you're more likely to outperform. And 507 00:28:29,200 --> 00:28:31,560 Speaker 1: it's kind of a simple topic, but you can actually 508 00:28:31,640 --> 00:28:35,720 Speaker 1: draw the lines between women working having more economic power 509 00:28:36,320 --> 00:28:39,640 Speaker 1: and the decisions they make with their capital and it's 510 00:28:39,640 --> 00:28:41,840 Speaker 1: it's kind of a simple thing, but it works, and 511 00:28:41,880 --> 00:28:44,760 Speaker 1: it turns out that you can invest this way. In addition, 512 00:28:45,280 --> 00:28:50,480 Speaker 1: it's UM companies which have or more women on executive 513 00:28:50,520 --> 00:28:54,080 Speaker 1: committees or in senior leadership tend to outperform the Topics Index, 514 00:28:54,560 --> 00:28:57,840 Speaker 1: So there is evidence that promotion of women to senior 515 00:28:57,920 --> 00:29:02,360 Speaker 1: leadership does lead to company out performance. What would you 516 00:29:02,440 --> 00:29:05,719 Speaker 1: measure the performance of the fund against? Since there is 517 00:29:05,800 --> 00:29:09,800 Speaker 1: no specific benchmark, So so we use the Topics Index, 518 00:29:09,840 --> 00:29:14,320 Speaker 1: which is uh an index of all the Japanese companies UM. 519 00:29:14,480 --> 00:29:18,320 Speaker 1: That index has over two thousand stocks right now. Our 520 00:29:18,480 --> 00:29:21,960 Speaker 1: fund is a high conviction fund with fifty positions that 521 00:29:22,040 --> 00:29:26,800 Speaker 1: are curated and and picked specifically on one of these 522 00:29:26,800 --> 00:29:29,640 Speaker 1: three criteria, and also growth going forward and you know, 523 00:29:29,760 --> 00:29:32,800 Speaker 1: earnings going forward. One thing I'm wondering is how applicable 524 00:29:32,800 --> 00:29:35,600 Speaker 1: this concept of women on mix is to say the US, 525 00:29:35,680 --> 00:29:38,520 Speaker 1: because Japan is sort of uh its own story unto 526 00:29:38,560 --> 00:29:41,680 Speaker 1: itself due to the population shrinkage, whereas a place like 527 00:29:41,760 --> 00:29:45,240 Speaker 1: the United States has immigration, has a higher population rate. 528 00:29:45,840 --> 00:29:48,680 Speaker 1: So we think right now Japan is the place to 529 00:29:48,760 --> 00:29:52,840 Speaker 1: actually test the gender lens thesis because it's the only 530 00:29:52,840 --> 00:29:55,960 Speaker 1: place where you have an enormous change of women entering 531 00:29:55,960 --> 00:29:59,640 Speaker 1: the workforce driven by the government, and it's measurable, it's 532 00:29:59,800 --> 00:30:02,680 Speaker 1: very hard. And other places where you already have very 533 00:30:02,840 --> 00:30:08,240 Speaker 1: high labor force participation rates and closer gender parity in income, 534 00:30:08,600 --> 00:30:11,880 Speaker 1: Japan still has a wage gap, a very wide wage gap, 535 00:30:11,960 --> 00:30:14,520 Speaker 1: and as the government tries to get that to close, 536 00:30:15,120 --> 00:30:18,680 Speaker 1: you can see that the spending power for women just increases. 537 00:30:20,360 --> 00:30:23,440 Speaker 1: The criteria for the companies doesn't matter in terms of 538 00:30:23,480 --> 00:30:27,000 Speaker 1: market cap size, it's all it's all sizes in our 539 00:30:27,040 --> 00:30:28,800 Speaker 1: fund right now, it tends to be more skewed to 540 00:30:28,960 --> 00:30:32,120 Speaker 1: small cap. But for instance, we look at sectors all 541 00:30:32,120 --> 00:30:34,640 Speaker 1: over the place, and one of the most interesting sectors 542 00:30:34,640 --> 00:30:38,200 Speaker 1: were looking at is construction because you wouldn't think that 543 00:30:38,280 --> 00:30:41,560 Speaker 1: this would be a sector that would benefit from women 544 00:30:41,600 --> 00:30:46,240 Speaker 1: on However, they can't find labor. And as construction becomes 545 00:30:46,280 --> 00:30:50,000 Speaker 1: more tech oriented and less heavy lifting, it turns out 546 00:30:50,040 --> 00:30:53,520 Speaker 1: that the marginal marginal employee is a woman right now. 547 00:30:53,840 --> 00:30:56,120 Speaker 1: And so those are the kinds of decisions that we're 548 00:30:56,120 --> 00:30:58,320 Speaker 1: looking and you can really only do it by fundamental 549 00:30:58,320 --> 00:31:01,200 Speaker 1: analysis and knowing what you own. So we tend to 550 00:31:01,240 --> 00:31:05,880 Speaker 1: be heavy in retail and services construction UM. But something 551 00:31:05,960 --> 00:31:10,840 Speaker 1: for example as a as a UM, you know a 552 00:31:11,400 --> 00:31:13,640 Speaker 1: when when when people are out of the house, you 553 00:31:13,680 --> 00:31:16,840 Speaker 1: may need security services because there's nobody home. So security 554 00:31:16,880 --> 00:31:18,720 Speaker 1: services are doing well because all of a sudden, the 555 00:31:18,720 --> 00:31:21,640 Speaker 1: women are not at home anymore. So things you wouldn't 556 00:31:21,640 --> 00:31:24,320 Speaker 1: think of, but you can definitely draw the line A. 557 00:31:24,800 --> 00:31:27,160 Speaker 1: Thank you very much for being with us and sharing 558 00:31:27,200 --> 00:31:32,240 Speaker 1: this information. Alicia Levine is the chief strategist for a 559 00:31:32,320 --> 00:31:36,840 Speaker 1: b N Y Melon, speaking about the Dreyfuss Japan equity 560 00:31:36,960 --> 00:31:43,120 Speaker 1: women on mix fund. Thanks for listening to the Bloomberg 561 00:31:43,120 --> 00:31:45,800 Speaker 1: p m L podcast. You can subscribe and listen to 562 00:31:45,840 --> 00:31:50,360 Speaker 1: interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. 563 00:31:50,760 --> 00:31:54,360 Speaker 1: I'm pim Fox. I'm on Twitter at pim Fox. I'm 564 00:31:54,360 --> 00:31:57,680 Speaker 1: on Twitter at Lisa Abramo. It's one before the podcast. 565 00:31:57,720 --> 00:32:08,880 Speaker 1: You can always catch us worldwide on Bloomberg Radio m