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: called Apple Podcasts or wherever you listen to podcasts, and
Speaker 1: at Bloomberg dot com slash podcast. The question for a
Speaker 1: lot of investors yesterday and today and going forward over
Speaker 1: the next Saturdays certainly is how will the uncertainty, the
Speaker 1: geopolitical uncertainty in Europe effect the global economic recovery. We're
Speaker 1: talking inflation, economic growth, and what does that mean for
Speaker 1: financial assets? With David Coodla joins us. He's a founder,
Speaker 1: CEO and c i O of Mainstay Capital Management. David,
Speaker 1: as your outlooked changed it all over the last twenty
Speaker 1: four hours, It hasn't really changed from you know, where
Speaker 1: we've been for the past several months. And what I
Speaker 1: mean by that is, you know we were we've been
Speaker 1: focused more. We're overweight value and cyclical stocks UH for
Speaker 1: equity exposure, we are overweight commodities as a hedge UH,
Speaker 1: and we're mostly void interestrate sensitive bonds. Now with the
Speaker 1: geopolitical events. You know, we geopolitical events don't have a
Speaker 1: perpetual impact on markets. That's what history has shown. I
Speaker 1: think that this event is a little bit different because
Speaker 1: of the environment in with inflation and what commodities could
Speaker 1: be impacted. That's even whether they're impacted by sanctions or not. Uh,
Speaker 1: they'll be. They're just impacted by the event itself, whether
Speaker 1: we're talking about oil, gas, whether we're talking about agricultural commodities, fertilizer.
Speaker 1: Ukraine and Russia together supplied of the world's wheat and corn. Um,
Speaker 1: they're going to be in the Ukraine recovery period um.
Speaker 1: But we'll see what's yet to come. On sanctions, they've
Speaker 1: been more symbolic. They've hit the financial ins toos, but
Speaker 1: they really haven't gone after rushes jugular yet and and
Speaker 1: may not at all. On where they make their money,
Speaker 1: which is hydrocarbon's fossil fuel and and and seems like
Speaker 1: they're making more than ever we've seen. Um that Russian
Speaker 1: sales of gas were up I think today and thirty
Speaker 1: eight percent yesterday, So everyone's rushing to buy their products,
Speaker 1: even at much higher prices. UM. It doesn't seem that
Speaker 1: just doesn't seem right, but I guess that's the way
Speaker 1: it goes sometimes. What do you expect the knock on
Speaker 1: effects to be for the FED? Anything at all? Well,
Speaker 1: the you know, the Feds, the FEDS fight coming into
Speaker 1: this is inflation is bringing inflation down. We got a
Speaker 1: PC this morning at six point one percent, another you know,
Speaker 1: another increase year over year. Um we have you know,
Speaker 1: I think the FED hope that still that inflation comes
Speaker 1: down on its own a supply chains heel. Uh. You know,
Speaker 1: prices were high coming into this, they stand only to
Speaker 1: be higher. Uh as we come out because of uh
Speaker 1: we're aluminum is skyrocketed to where uh wheat up six
Speaker 1: percent yesterday. You know that the impact of this geopolitical
Speaker 1: event will have some lasting impacts. That stands to only
Speaker 1: increase inflation. And you know, for the FED, really what
Speaker 1: they're staring in the face of his stagflation, Yeah exactly.
Speaker 1: I mean Paul has been asking or making the point
Speaker 1: for for weeks or months now that the FED can't
Speaker 1: stop inflation caused by supply constraints. They can only slow
Speaker 1: demand with increased rates, right, So that means kind of
Speaker 1: the only choice is to slow down the economy um
Speaker 1: to to get inflation under control. Yeah, and we have
Speaker 1: you know when we talk about these knock on effects
Speaker 1: or what's going on with uh, you know, with prices
Speaker 1: going higher, especially when we talk about oil that you know,
Speaker 1: at one point Brent crude was a roaching hundred five
Speaker 1: dollars per arrow per barrel. But you know, uh, even
Speaker 1: before the geopolitical event, we were looking for oil gas
Speaker 1: prices to go even higher. Oil is a tax on
Speaker 1: the economy, and but it's also inflationary. So they're really
Speaker 1: between a rock and a hard place because there are
Speaker 1: forces there they're gonna be slowing the economy and forces
Speaker 1: it seemed to be continuing to ramp inflation higher, much
Speaker 1: higher than where the fat expected and probably a lot
Speaker 1: of others as well. So we're seeing these forecasts for
Speaker 1: how many rate hikes we get this year. You know,
Speaker 1: they've been all over the map this week. Each day
Speaker 1: is to what was happening in the conflict in Ukraine. So, David,
Speaker 1: what are your clients asking you most, you know, over
Speaker 1: the last few days, what's the big question they have?
Speaker 1: What this geopolitical event means to the market. It I
Speaker 1: think it's typical Uh, as much as you educate your
Speaker 1: clients talk about these things. We sent out a communication
Speaker 1: on Tuesday mornings specifically about you know, what you create,
Speaker 1: you create going on in Ukraine and what it means
Speaker 1: to the markets, what it means to the portfolios. But
Speaker 1: you know, there's still at twenty four hour news cycle. Um,
Speaker 1: they're hearing the concerns about, uh, what could happen. And
Speaker 1: you know, we've seen you know, leaders around the world,
Speaker 1: specifically in the EU and US, who have been trying
Speaker 1: to get gas and oil anywhere they can and they
Speaker 1: are not in i think in terms of sanctions not
Speaker 1: to put those supplies at risk because they're concerned about
Speaker 1: domestic policy. So you know that the concern is they
Speaker 1: see higher inflation, they hear the the discussions about slower growth,
Speaker 1: and you know that's that's that's obviously a good discussion
Speaker 1: to have to put them at ease about what we're doing.
Speaker 1: All Right, David, thank you so much for joining us
Speaker 1: once again. We always appreciate getting your perspective on these markets.
Speaker 1: David Coudlif, founder, CEO and c IO of main Stake
Speaker 1: Capital Management. Okay, we're let's call it thirty six hours
Speaker 1: into this news cycle with Russia invading Ukraine. It seems
Speaker 1: like something out of the twentieth century at Jason Bourne.
Speaker 1: But here we are nevertheless, markets very violatile. Yesterday took
Speaker 1: a big sol off as one would expect, but then
Speaker 1: in the afternoon really came back with a vengeance and
Speaker 1: closed on the upside. And we've got some more green
Speaker 1: on the screen today. But how do you factor in
Speaker 1: geopolitical risk uh into your investing, particularly if you're a
Speaker 1: tech investors, And for that we check in with Lauren Hine,
Speaker 1: head of advisor relations at robo Global. Lauren, thanks so
Speaker 1: much for taking the time here, um, as the last
Speaker 1: twenty four hours changed the way you guys think about
Speaker 1: these markets. Hi, thanks for having me. Absolutely not. We
Speaker 1: don't make decisions um about kind of the long term
Speaker 1: outlook for innovation based on market swings. I mean, frankly,
Speaker 1: if anything, the lasts in the last I guess month
Speaker 1: or two have given our investors a good opportunity to
Speaker 1: kind of buy in at lower prices. So there's long
Speaker 1: term opportunity for us whenever we have these kind of
Speaker 1: geopolitical hits. Um. Do you is that the first thought
Speaker 1: after obviously the human issues that we're all concerned about. UM.
Speaker 1: When you look at the markets, do you think this
Speaker 1: UM is going to cause volatility that is going to
Speaker 1: give us a chance to get in UM. That's very
Speaker 1: much I think where our our mindset is and our
Speaker 1: investors mindset is. I mean, robot Global specializes in investing
Speaker 1: in things like robotics and automation, and you know, despite
Speaker 1: what's happening in the geopolitical landscape, there will be more automation,
Speaker 1: there will be more innovation, more robotics application cross sector
Speaker 1: over the next twelve months, over the next three or
Speaker 1: five ten years. So a twenty four hour kind of
Speaker 1: geopolitical news cycle isn't going to really affect the trajectory
Speaker 1: of technology. And this this leads me to another question.
Speaker 1: Paul and I were talking to UM a guy who
Speaker 1: runs a tech cup any recently and he specialized in logistics,
Speaker 1: and we asked him, you know, does this present a
Speaker 1: problem Russia invading Ukraine for the global supply chain? And
Speaker 1: he said, actually, the economies are pretty insular and not
Speaker 1: really do you see it the same way, UM, I mean, honestly,
Speaker 1: it's not something that we've raised a lot of red
Speaker 1: flags about here in the last day. We're obviously when
Speaker 1: we're watching logistics, we're watching supply chain and factory automation regardless,
Speaker 1: is something we're very optimistic and excited about for the future,
Speaker 1: something that frankly, technology can really solve some serious problems.
Speaker 1: But it's not nothing being affected by Russia that we're
Speaker 1: talking about right now, Lauren. Five G that's something that
Speaker 1: we've heard a lot about last eighteen months or so.
Speaker 1: How do you guys think about five G and maybe
Speaker 1: how are you guys trying to get some exposure to that? Sure, Honestly,
Speaker 1: we're not trying to get a pure play exposure to
Speaker 1: five G through any of our indexes or any of
Speaker 1: our underlying technology funds that we're creating UM. As far
Speaker 1: as the five network itself, we know that we need it.
Speaker 1: We need a faster network with more capacity UM for
Speaker 1: any of our technologies to run. So what will be
Speaker 1: crucial in kind of the next the new economy, But
Speaker 1: it's not something that we're actively trying to get exposure to.
Speaker 1: I think we're specialists on kind of the ecosystem of
Speaker 1: automation more than on the the infrastructure technology space. All right, Lauren,
Speaker 1: thank you so much for joining us, really appreciate getting
Speaker 1: We didn't get to ask her at all about softball.
Speaker 1: I know there's there's a lot of serious stuff going on,
Speaker 1: and we come to you, Lauren for real market knowledge,
Speaker 1: and you're great at that. But you also played varsity
Speaker 1: um softball at WESI UM. I spent my time in
Speaker 1: left field, and you guys are making me think I
Speaker 1: need to get someone on my Google and really start
Speaker 1: scrubbing that. I'm just thinking. It just sounds like so
Speaker 1: much fun, and it's Friday, and there's no reason that
Speaker 1: we shouldn't mention. Mean, how great is intercollegiate softball? Actually,
Speaker 1: college sports are wonderful. Softball is a fast game. It's
Speaker 1: fun to watch, it's fun to play, and frankly, the
Speaker 1: discipline and the team atmosphere is a great skill set
Speaker 1: for kind of the rest of your life, especially in
Speaker 1: a fast faced environment like working with the markets. So
Speaker 1: that it can't endorse it enough, we're gonna bring it up.
Speaker 1: We're going to talk some softball. Larenheyde, head of advisor
Speaker 1: relations at Robot Global. This is the big take, the
Speaker 1: best of Bloomberg's in depth original reporting from around the globe.
Speaker 1: We're running on a financial system that's running on old
Speaker 1: technology prices. Fish recordized. What unfolds in mid terms, we
Speaker 1: will no doubt see again in the next presidential election.
Speaker 1: The Big Take on Bloomberg Radio, all right, the Big
Speaker 1: Takes story today really focuses on economics, macro economics on
Speaker 1: a global scale, and the question is how the unfolding
Speaker 1: war in Europe could threaten the global economic recovery from
Speaker 1: the pandemic. Let's check in with Tom or Like, chief
Speaker 1: economists for Bloomberg Economics. He joins us here on the
Speaker 1: phone time, So give us a sense of kind of
Speaker 1: what you and your colleagues are thinking about this continued
Speaker 1: global economic recovery post pandemic, and how it may be
Speaker 1: impacted by the events we're seeing in Russia and Ukraine.
Speaker 1: So there's three channels which we see for impact from
Speaker 1: Ukraine to the rest of the world. The first is
Speaker 1: spillovers from Russian sanctions Russian recession to Europe. That's a
Speaker 1: drag on exports for Europe, especially for the Eastern European
Speaker 1: countries which are most closely had the closest trade links
Speaker 1: with Russia. The second is what happens to energy prices Now,
Speaker 1: the big concern here is that Russian supplies of gas
Speaker 1: to Europe get affected. We see spiking European gas prices,
Speaker 1: global oil prices that hit consumer spending power at the
Speaker 1: same time as pushing inflation higher. And the third channel, well,
Speaker 1: that's the financial market channel. We've not seen it so far.
Speaker 1: Energy prices have stabilized, equity markets have stabilized, but clearly
Speaker 1: in a geopolitical conflict, in a war, there's the chance
Speaker 1: of a sustained risk off move for markets. If that happens,
Speaker 1: we see another drag on growth. Potentially we see a
Speaker 1: more dovish trajectory for the fair heading into the second
Speaker 1: half of the year. Tom, how bad would it be
Speaker 1: for the European continental economy to start buying gas, oil,
Speaker 1: and aluminum from Russia. I mean, surely the prices would
Speaker 1: go higher, a lot of shortages would be would pop up,
Speaker 1: making life more difficult. But would it be a huge
Speaker 1: problem for growth. It would be a very significant problem
Speaker 1: for growth. And this is the kind of the dilemma
Speaker 1: for Europe's leaders. On the one hand, they want to
Speaker 1: signal to put in that this behavior is completely unacceptable. Well,
Speaker 1: start funding. The other hand, start funding the right exactly.
Speaker 1: On the other hand, turning off gas imports from Russia,
Speaker 1: which would really be the sort of the maximum pain
Speaker 1: point for Putin, would also impose very high costs on Europe.
Speaker 1: We'd see inflation going higher, we'd see consumer spending power
Speaker 1: going down. Likely, we'd see Europe going into at least
Speaker 1: a mild down term, if not an outright recession. So far,
Speaker 1: European leaders have been very, very reluctant to pay that price,
Speaker 1: and that's why we're seeing sanctions that hit banks, that
Speaker 1: hit corporates, that stop but stop short of hitting Russia's
Speaker 1: energy sector. I guess the question there in is what
Speaker 1: needs to occur for for the United States and his
Speaker 1: Western allies to take that step, Tom, to really go
Speaker 1: after the energy complex, which is point out we'll have,
Speaker 1: you know, repercussions for certainly Europeans, and you know, probably
Speaker 1: even more than that. Well, they've got to decide it's
Speaker 1: worth it, right the exament, they don't think it's worth it.
Speaker 1: It's not worth the injury to our own economy too,
Speaker 1: to stop funding Vladimir Putin's invasion of other countries. So, Tom,
Speaker 1: is there any scenario where you see that happening. So
Speaker 1: I think one crucial point here, um is that Ukraine
Speaker 1: is not a member of NATO, right um. And so
Speaker 1: the obligation to put boots on the ground, um, and
Speaker 1: to get really serious about defense of the democracy there
Speaker 1: is not nearly as strong as it would be a
Speaker 1: favorite NATO member. So I'm an economist, I'm not an
Speaker 1: international relations expert, but I think it's the NATO membership
Speaker 1: question which is crucial there. Um. And if you saw
Speaker 1: Putin's ambition stretching two countries that are members of NATO,
Speaker 1: that's when things get really seri us in terms of sanctions,
Speaker 1: in terms of military support, that's when you'd start to
Speaker 1: really be concerned about the gas being turned off for
Speaker 1: Europe if they went to the Baltics for example. Um.
Speaker 1: We have seen, you know, during the Reagan administration, as
Speaker 1: the Cold War was at its you know peak, um,
Speaker 1: military spending was massive and so was economic growth. Is
Speaker 1: that is that a possibility of this if this escalates.
Speaker 1: So the end of the Cold War hasn't played out
Speaker 1: quite as hoped write Um. If you go back to
Speaker 1: the ES, there was this kind of triumphalist view that
Speaker 1: democracy and free market and the West or in the ascendancy,
Speaker 1: and Russia was going to move on to that path,
Speaker 1: and maybe even China was going to move onto that path.
Speaker 1: And that's why you had this very optimistic period in
Speaker 1: the early two thousands where China was coming into the
Speaker 1: global economy and Russia scene to be on a reforming
Speaker 1: path and globalization was driving great for everybody. Well, covid
Speaker 1: Us China trade wars, neither war in the Ukraine. Seems
Speaker 1: we've moved decisively off that trajectory deglobalization, maybe not, but
Speaker 1: certainly slower globalization going forward. Yep, all right, Tom, thanks
Speaker 1: so much for joining us. Tom orl chief economists for
Speaker 1: Bloomberg Economics. Well, today President Biden selected a nominee for
Speaker 1: the Supreme Court, Judge Katangi Brown and Jackson, the first
Speaker 1: black woman nominee to the Supreme Court. Um, what does
Speaker 1: it mean and how is this going to go? How's
Speaker 1: the whole process gonna work? And this person get approved?
Speaker 1: June Grasso, host of Bloomberg and Bloomberg Opinionsso it's Grosso.
Speaker 1: What did I say? So this is important to people?
Speaker 1: How you pronounced their name? June Grasso? What did I say?
Speaker 1: By the way, you said Grasso, like like Dick Grass. Remember,
Speaker 1: so it's grosso with June. Are you going with the
Speaker 1: soft a Yes, soft day. I wouldn't have stopped you though,
Speaker 1: but but Matt did. Mat he has no Yeah, he
Speaker 1: doesn't work. Listen June. I used to drive home at
Speaker 1: the same time as June had her show every day.
Speaker 1: She had a great legal show on Bloomberg Radio with
Speaker 1: Michael Beast. I listened to it every day. I loved it. Um.
Speaker 1: She went to Wellesley, which I think is amazing. Uh
Speaker 1: and uh law degree from Harvard. She's an Emmy Award winner,
Speaker 1: So she's kind of a big deal. And yet I
Speaker 1: wasn't nominated to the Supreme Court. What happened to tell
Speaker 1: us about the nominee? All Right, she is a star
Speaker 1: Katangi Brown Jackson. She's been on the bench for nearly
Speaker 1: a decade. She has the Ivy League credentials, Harvard College,
Speaker 1: Harvard Law School, she clerked for Brier, who she's going
Speaker 1: to replace. And she's got a different kind of background
Speaker 1: in that she served as a federal public defender. The
Speaker 1: last Supreme Court justice with significant public defender uh or
Speaker 1: significant experience representing criminal defendants was Thorgrid Marshall, the legendary
Speaker 1: civil rights lawyer, and she has been considered a contender
Speaker 1: for quite a while. President Obama not actually did an
Speaker 1: interview with her when a sea came open that he
Speaker 1: gave to Merrick Garland. We know how that turned out.
Speaker 1: But she she's just a star June. Do you think
Speaker 1: she'll get approved? Oh, I definitely think she'll get approved.
Speaker 1: When she went when the question is how nasty will
Speaker 1: the nomination process be? I mean the nomination process has
Speaker 1: been for the last few nominees contentious since Garland. Yeah,
Speaker 1: well yeah, Garland never got never even got a care Yes, yeah,
Speaker 1: but it was getting it was a little bit before that,
Speaker 1: but it's gotten so contangents and awful. But she just
Speaker 1: not a year ago, less than a year ago, went
Speaker 1: through the confirmation process for the d C Circuit, which
Speaker 1: is sort of the feeder court to the Supreme Court,
Speaker 1: and she sailed. She sailed through that. Basically there were
Speaker 1: three Republicans that voted with her, uh for her that
Speaker 1: was out of the committee. That was Lindsay Graham's uh,
Speaker 1: Susan Collins and Lisa Murkowski. But you know, the Supreme
Speaker 1: Court is a different The Supreme Court nominations and hearings
Speaker 1: are different, so we don't know if she'll get those
Speaker 1: particular votes. But the Republicans really don't have a coherent
Speaker 1: strategy or reason to attack her. So, you know, the
Speaker 1: the questioning we heard from Republicans during that hearing was
Speaker 1: about you know, wonky sort of sentencing guidelines and the
Speaker 1: fact that she had represented as a public defender or
Speaker 1: guantanam obey inmate. That was probably the most they had
Speaker 1: on her and her you know. Also, she's ruled in
Speaker 1: a lot of high profile cases, but none cases involving
Speaker 1: those hot button issues like abortion or guns or religious rights.
Speaker 1: The highest profile you have to think about is the
Speaker 1: Don McGann case where she famously said presidents are not
Speaker 1: kings about Donald Trump. So, so assuming she gets confirmed June,
Speaker 1: what does the Supreme Court look like then? So the
Speaker 1: ideological makeup of the court won't change. It will still
Speaker 1: be six Conservatives and three liberals, but those three liberals
Speaker 1: will be women. It's going to be an all women block,
Speaker 1: and also with diversity of their own Hispanic, Jewish, and Black.
Speaker 1: It's going to be I think, really something to see
Speaker 1: because those three women are going to be able to
Speaker 1: talk about some of the issues, and particularly with her
Speaker 1: background Katangi Brown Jackson, in some of the cases that
Speaker 1: come forward. For example, they're going to be an attack
Speaker 1: on affirmative action coming up next term, and the only
Speaker 1: other black on the court, Clarence Thomas, is not a
Speaker 1: fan of affirmative action, So we'll see how she relates
Speaker 1: in that case and and what happens. I just expect
Speaker 1: that they're really going to be speck tacular. They're all
Speaker 1: three are so well spoken and really um sort of there.
Speaker 1: You know, you can there you have sound bites from
Speaker 1: them if you ever listen, if you're wonk enough to
Speaker 1: listen to Supreme Court arguments, you'll you can you know,
Speaker 1: you sort of see that the justices that have like
Speaker 1: what i'd call a sound bite that say things that
Speaker 1: just resonate. And Elena Kagan and so do Mayor certainly
Speaker 1: have that, and I expect that Katangi Brown Jackson will
Speaker 1: as well. By the way, how do you do judges
Speaker 1: ideological leanings stay the same because their careers are so long, right,
Speaker 1: and I know Reagan, for example, appointed a few Federal
Speaker 1: Court judges who turned extremely liberal in there, right, and
Speaker 1: so that's definitely true. You have certain justices who turn
Speaker 1: with David Sutor is a great example of a justice
Speaker 1: that they thought was going to be moderate to conservative
Speaker 1: and turned out to be moderate to liberal liberal. So
Speaker 1: but the thing is that in order to prevent that
Speaker 1: from happening in the future, what's being done now is
Speaker 1: they're vetting these candidates more closely, and they're looking for
Speaker 1: a background, a history of conservatism so that it will
Speaker 1: be unusual, or liberalism or liberalism so that it will
Speaker 1: be unusual for them to all of a sudden make
Speaker 1: a turn. But gradually it could happen. And also there
Speaker 1: are some cases where you don't expect, you know, a
Speaker 1: ruling and all of a sudden, for example, in the
Speaker 1: in the ruling about um uh transgender you know, being
Speaker 1: able to get a job and the violation we had
Speaker 1: Gorset's writing that majority option, which was a surprise. Okay, June,
Speaker 1: thank you so much for breaking it down for us.
Speaker 1: Drewn Grosso, host of Bloomberg Law and Bloomberk Opinion for
Speaker 1: Bloomberg News. Thanks for listening to the Bloomberg Markets podcast.
Speaker 1: You can subscribe and listen to interviews with Apple podcasts
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Speaker 1: on Twitter at Matt Miller and inteen seventy three and
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