WEBVTT - HPE CEO Neri Discusses Bolstering Profit Forecast 0:00:01.800 --> 0:00:04.440 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:04.480 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanovik. We're here every day bringing 0:00:07.320 --> 0:00:09.840 you the latest news from the world to business and finance, 0:00:09.840 --> 0:00:13.640 clus technology, politics, economics, all parnising the power of Business 0:00:13.680 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.160 --> 0:00:20.000 analyst in more than one twenty countries. You can download 0:00:20.000 --> 0:00:23.239 Bloomberg Business Week on iTunes, SoundCloud, or Bloomberg dot Com. 0:00:23.400 --> 0:00:25.200 You can also listen to our radio show at two 0:00:25.200 --> 0:00:28.400 pm Eastern Time on Bloomberg Radio or watch us on YouTube. 0:00:28.400 --> 0:00:32.440 Searched Bloomberg clovel News Well it shares of Hewlett Packard 0:00:32.560 --> 0:00:35.680 Enterprise HP hired by more than eleven percent, having their 0:00:35.720 --> 0:00:39.240 best day in nearly two years. The Harbormakers, saying yesterday 0:00:39.320 --> 0:00:42.000 was raising its annual profit forecast and it's strong demand 0:00:42.000 --> 0:00:44.800 for products. The company also beating on gross margin despite 0:00:44.800 --> 0:00:47.800 a tough supply environment. So let's get into it. Joining 0:00:47.880 --> 0:00:50.760 us now is Antonio Nary, President and CEO of HPE. 0:00:51.000 --> 0:00:54.600 He joins us via zoom in Houston. Antonio, It's it's 0:00:54.600 --> 0:00:56.720 good to have you with us. Um what is it? 0:00:56.800 --> 0:01:00.240 Specifically as you look out over the current year, gave 0:01:00.280 --> 0:01:04.280 you the confidence to increase your profit forecast. Well, thank 0:01:04.280 --> 0:01:06.600 you for having me today in your show. We are 0:01:06.720 --> 0:01:09.280 very excited about our performance in Q one. We had 0:01:09.280 --> 0:01:14.640 a robust demand and very very strong profitability. And the 0:01:15.080 --> 0:01:17.920 couple with the moment that we have around our strategy 0:01:17.959 --> 0:01:20.959 to become an h to cloud company for our customers 0:01:21.000 --> 0:01:24.000 and partners that they can consume us a service and 0:01:24.080 --> 0:01:26.920 the incredible backlog we have, we give us the confidence 0:01:26.920 --> 0:01:30.360 to raise once again five out of six quarters our 0:01:30.800 --> 0:01:34.039 net earnest per share the lieutenant and pres share for 0:01:34.120 --> 0:01:37.399 the full fiscal year by seven cents, with now the 0:01:37.440 --> 0:01:41.000 midpoint being two dollars and ten cents. So um, this 0:01:41.080 --> 0:01:44.080 is driven by customer demand, is driven by our strategy 0:01:44.120 --> 0:01:47.360 that's resonating with customers and honestly a great execution of 0:01:47.360 --> 0:01:51.200 what I team. Because obviously we are balancing the revenue 0:01:51.240 --> 0:01:54.080 and the profitability of the business. We want to dig 0:01:54.120 --> 0:01:56.520 into that demand a little bit more because what stuck 0:01:56.560 --> 0:01:59.680 out to me was that you had a growth in orders, 0:01:59.720 --> 0:02:04.760 which was your third consecutive quarter of at least increase. 0:02:05.000 --> 0:02:07.680 Breakdown that demand a little bit more. Where is it 0:02:07.760 --> 0:02:11.880 coming from? What's driving that. That's actually exactly right. So 0:02:12.000 --> 0:02:14.600 this is the third consecutive quarter of twenty plus percent 0:02:14.760 --> 0:02:17.840 or the growth, and it was across all businesses. You know, 0:02:17.880 --> 0:02:23.240 our compute business, with obviously people believe is commoditized um, 0:02:23.280 --> 0:02:27.080 you know, grow, our edge business, which is all about 0:02:27.280 --> 0:02:31.640 secure connectivity with a subscription model, grew an excess of. 0:02:33.280 --> 0:02:38.200 Our storage business including data services, grew an excess of 0:02:38.240 --> 0:02:42.320 fift and even our high performance computing an AI business 0:02:42.400 --> 0:02:46.200 grew in excess of I will say the shining star though, 0:02:46.680 --> 0:02:49.000 is we bring it all together in a platform, which 0:02:49.080 --> 0:02:51.480 we call it h Pig Green Lake, which you can 0:02:51.520 --> 0:02:54.520 consumers a service grew a hundred and thirty six percent 0:02:54.720 --> 0:02:58.680 year of the year. So it's across all businesses. But 0:02:58.880 --> 0:03:01.960 the momentum we have is because we're bringing all our 0:03:02.040 --> 0:03:06.160 solutions in an integrated, unified experience under the hpgree like 0:03:06.320 --> 0:03:08.919 Umbrella Antonio. We've learned on the call yesterday you said 0:03:08.919 --> 0:03:13.240 that supply and logistics challenges they may last through two 0:03:13.280 --> 0:03:15.440 It's it's somewhat different than from some of the companies 0:03:15.440 --> 0:03:17.760 we've heard from thus far in recent weeks as they've 0:03:17.760 --> 0:03:21.519 reported earnings. Are you just being conservative. What's going to 0:03:21.600 --> 0:03:23.880 improve first here? Is it going to be logistics challenges 0:03:23.960 --> 0:03:28.080 or is it going to be chip components and availability here? Well, 0:03:28.120 --> 0:03:31.560 my message has been consistent for several quarters, always said 0:03:31.600 --> 0:03:36.360 that this supply chain and logistics overload situation will continue 0:03:36.400 --> 0:03:41.360 well into phisically two, and we still see it that way. 0:03:41.840 --> 0:03:44.680 The majority of the challenge that actually are in what 0:03:44.760 --> 0:03:47.200 are called low level components and not on the high 0:03:47.320 --> 0:03:51.120 value commodities. And think think about it now, stuff that 0:03:51.200 --> 0:03:55.480 people don't think about, a voltage, regulators, capacitors, things that 0:03:55.560 --> 0:03:58.480 you need to build a system at the low level 0:03:58.880 --> 0:04:02.720 before you can build actually the full integrated system. And 0:04:02.760 --> 0:04:05.320 that has to deal with the with the fact that 0:04:05.360 --> 0:04:08.880 the demand is very strong and the availability of substrates 0:04:09.240 --> 0:04:12.000 particularly you know, these components are what we call in 0:04:12.040 --> 0:04:16.120 the old generation of technologies like twenty eight meters and stuff, 0:04:16.480 --> 0:04:19.599 and a lot of the fabrication has moved to the 0:04:19.640 --> 0:04:23.760 newer technologies like fourteen and below. So I think, um, 0:04:23.800 --> 0:04:26.080 you know, the supplier of the substrate god called a 0:04:26.160 --> 0:04:29.359 little bit in between because of the huge demand that 0:04:29.440 --> 0:04:31.560 they are seeing and now they need to catch up. 0:04:32.000 --> 0:04:34.800 And this takes time because when you start bringing new 0:04:34.800 --> 0:04:40.679 capacity is complicated systems processes, and we said all along 0:04:40.920 --> 0:04:44.400 will take well under twenty the end of two. However, 0:04:45.040 --> 0:04:49.400 I will say we have never seen any noticeable customer cancelation, 0:04:49.760 --> 0:04:52.599 which again give us the confidence the demand is there 0:04:52.839 --> 0:04:55.599 is very robust, and it's also driven by the data 0:04:55.600 --> 0:04:59.720 explosion we see around us above in a personal life 0:04:59.720 --> 0:05:03.960 and in probably in a in a business side. Well, Antono, 0:05:04.120 --> 0:05:07.680 even with those supply chain and those logistical challenges, you 0:05:07.760 --> 0:05:11.479 did see gross margin increased by thirty or rather at 0:05:12.400 --> 0:05:18.400 gross margin. And what I'm curious about is whether that's sustainable. Yes, absolutely, 0:05:19.120 --> 0:05:21.839 it is sustainable, and I think he points to the 0:05:21.920 --> 0:05:27.440 quality of earnings of how we're driving our company forward. Obviously, 0:05:27.600 --> 0:05:30.840 we are driving higher mix of software and services. If 0:05:30.880 --> 0:05:34.440 you look at one particular slide our CFO Tirek Robiety 0:05:34.520 --> 0:05:37.559 show the yesterday and commented on it was the fact 0:05:37.560 --> 0:05:41.200 that our green Lake offer drives more software and services 0:05:41.200 --> 0:05:44.640 in fact now is almost two thirds of the offer 0:05:45.440 --> 0:05:50.360 that drives higher gross margins, higher gross operating margins. Obviously, 0:05:50.400 --> 0:05:54.880 the edge business comes with higher gross margins too, also 0:05:54.920 --> 0:05:57.960 because it's driven by a subscription model to software before 0:05:58.000 --> 0:06:01.320 you actually deploy some sort of support and access point 0:06:01.640 --> 0:06:05.400 or or a switching point. So all of that comes 0:06:05.400 --> 0:06:07.960 with higher margins. And remember that we were one of 0:06:07.960 --> 0:06:10.680 the first through the pandemic at the beginning of the 0:06:10.720 --> 0:06:14.599 pandemic to enact what we call our real locational resources 0:06:14.640 --> 0:06:17.680 into the future areas of growth that's also pay enough 0:06:17.720 --> 0:06:21.520 for us. So the margin are sustainable. And I will 0:06:21.600 --> 0:06:24.400 say really proud of what the team had done managing 0:06:24.480 --> 0:06:28.520 prioritization of borders and margins. And listen, if you look 0:06:28.520 --> 0:06:31.760 at a compute business again in the market is being 0:06:31.800 --> 0:06:35.040 seen as a commoditized business. The operative margins of the 0:06:35.160 --> 0:06:39.559 business was thirteen point eight percent. There is no vendor 0:06:39.600 --> 0:06:42.080 out there and drive the level of profitability in a 0:06:42.080 --> 0:06:45.320 commoditized business. Antonio, I want to talk a little bit 0:06:45.360 --> 0:06:49.000 about the demand environment here. You did mention some really 0:06:49.040 --> 0:06:51.880 positive you made some positive comments when it came to 0:06:52.440 --> 0:06:56.239 lack of cancelations from from clients. I'm wondering about, though, 0:06:56.520 --> 0:06:59.520 is this a reopening play here? How much was was 0:06:59.600 --> 0:07:02.960 actually pulled forward during covid um and driven by the 0:07:02.960 --> 0:07:05.920 need for corporations to actually transform their I T infrastructure 0:07:05.920 --> 0:07:11.280 to support new services like digital transformation. Well, I think 0:07:11.400 --> 0:07:14.560 them is a combination of many things. When the pandemic 0:07:14.600 --> 0:07:20.400 head obviously everyone including herself went into preservation mode internal liquidity. 0:07:21.080 --> 0:07:24.360 Second is that through the pandemic we saw a massive 0:07:24.360 --> 0:07:27.600 acceleration of the digital transformation. In many ways, the digital 0:07:27.600 --> 0:07:32.280 economy flourish even further because everybody was ordering food and 0:07:32.640 --> 0:07:36.800 other services from their mobile phones. And so what we 0:07:36.920 --> 0:07:40.360 see is a combination of people needed to modernize, obviously, 0:07:40.400 --> 0:07:44.440 apply these new technologies in a cloud oriented way um 0:07:44.520 --> 0:07:47.760 and obviously the acceleration of the digital transformation. And at 0:07:47.800 --> 0:07:51.800 the core of that is data. Data. Data, data in 0:07:51.960 --> 0:07:55.600 data is now the most precious asset customers have. In fact, 0:07:55.760 --> 0:07:59.200 I predict at one time in the future, no long 0:07:59.320 --> 0:08:03.320 distance enterprises like us, we have to recognize the value 0:08:03.400 --> 0:08:06.520 that data in the balance sheets of their companies because 0:08:06.520 --> 0:08:09.720 it's not different. They're recognized and another intelligible asset. And 0:08:09.800 --> 0:08:13.080 customers need to move faster and extracting the insight from 0:08:13.080 --> 0:08:15.520 the data. And that's why I said we have entered 0:08:15.720 --> 0:08:17.920 now what I called the new age of insights. And 0:08:18.040 --> 0:08:22.200 those brands who can extract value data fasters are winning 0:08:22.320 --> 0:08:24.480 and you can see it, you know, when they become 0:08:24.480 --> 0:08:28.880 more digital, more data driven they actually create new experiences, 0:08:29.040 --> 0:08:32.720 new business models, and more and more opportunities for their companies. 0:08:33.360 --> 0:08:36.199 And Antonio, let's talk a little bit about intelligent edge here, 0:08:36.200 --> 0:08:38.440 because you are going head to head with Cisco, but 0:08:38.840 --> 0:08:41.559 clearly you're growing in this area. And I'm curious whether 0:08:41.559 --> 0:08:44.400 that's a function of you taking market share, whether the 0:08:44.440 --> 0:08:50.200 pie is just getting bigger. Well, we've definitely taking market share. Um. 0:08:50.559 --> 0:08:54.360 At the same time, the own ramp to digitize your 0:08:54.400 --> 0:08:58.640 business is through connectivity. You know, we call the edge 0:08:58.760 --> 0:09:03.160 the next frontier in the edges where we live and work, um. 0:09:03.240 --> 0:09:05.760 You know, that's where the vast majority of the data 0:09:05.840 --> 0:09:09.079 is created, not in a in a cloud of sorts, 0:09:09.120 --> 0:09:12.559 but really what the action is and that first step 0:09:12.640 --> 0:09:14.800 is to be connected in One of the concerns I 0:09:14.880 --> 0:09:17.760 have while this is all good, is the fact that 0:09:17.840 --> 0:09:22.600 connectivity is an essential service, not different than water and electricity. 0:09:22.640 --> 0:09:25.160 And and that's why it's important as we go forward 0:09:25.160 --> 0:09:29.040 and we deployed this new massive distributed enterprise and this 0:09:29.160 --> 0:09:32.880 new way of working, connectivity needs to be available everywhere. 0:09:32.880 --> 0:09:36.040 So we are taking share, We are creating new opportunities. 0:09:36.400 --> 0:09:40.120 But we have a differentiated strategy is called UBA Services 0:09:40.160 --> 0:09:43.200 Platform as a part of each pigree lake in that 0:09:43.320 --> 0:09:46.240 cloud or ented approach. In a mobile first approach, you 0:09:46.280 --> 0:09:51.880 can procure, provision and manage any aspect of your connectivity, 0:09:51.880 --> 0:09:55.280 whether it's a WiFi connectivity, whether it's a land port 0:09:55.320 --> 0:09:58.960 connectivity or a one connectivity. Remember that a lot of 0:09:58.960 --> 0:10:01.520 the old system, you know, whether it's a data center, 0:10:01.600 --> 0:10:05.600 campus and branch, we are connected through fixed networks. As 0:10:05.679 --> 0:10:10.040 more and more cloud native applications, particularly your phone gets developed, 0:10:10.160 --> 0:10:13.760 the traffic gets routed through the Internet, and therefore you 0:10:13.840 --> 0:10:16.600 have to connect these millions of endpoints in a very 0:10:16.600 --> 0:10:21.880 sustainable way. And hp Aruba Services Platform provide that integrated 0:10:21.920 --> 0:10:24.839 experience for our customers in a subscription model, and that's 0:10:24.840 --> 0:10:27.600 why we're growing so so fast. Antonio. In the last 0:10:27.600 --> 0:10:29.160 minute that we have with you, I want to try 0:10:29.160 --> 0:10:31.720 to understand what it's been like for your team over 0:10:31.760 --> 0:10:34.120 the least last couple of years. How you've had to 0:10:34.240 --> 0:10:37.240 raise wages at Hewlett Packard Enterprise to attract and retain 0:10:37.320 --> 0:10:41.840 talent um. How do you see cost being affected there? Well, 0:10:41.920 --> 0:10:45.240 no question that today one of the biggest challenges all 0:10:45.280 --> 0:10:49.600 of us have is attract, retained and developed the right warforce, 0:10:50.040 --> 0:10:53.839 and that warforce is changing, right and the pandemic, you know, 0:10:54.400 --> 0:10:58.520 enable people to think differently, to work differently, and so 0:10:58.600 --> 0:11:00.520 I always said, you know, we had as good as 0:11:00.559 --> 0:11:02.800 the innovation of the technology and the people we have 0:11:03.000 --> 0:11:05.640 in this company. So that's a top priority for me, 0:11:06.000 --> 0:11:08.200 and that's why I pad a lot of emphasis on 0:11:08.240 --> 0:11:11.640 the culture. Culture is everything in the end, and I 0:11:11.679 --> 0:11:15.200 have to say really proud of what this company does 0:11:15.320 --> 0:11:18.360 for customers and partners, aligned to a very clear purpose 0:11:18.400 --> 0:11:20.600 to amunce the way people in a work. When you 0:11:20.679 --> 0:11:25.280 talk to uhcurrent employee or prospect, emply they want to 0:11:25.360 --> 0:11:28.040 understand what you stand for. They want to make an impact. 0:11:28.200 --> 0:11:32.439 Obviously they come in because the field, the job provides 0:11:32.440 --> 0:11:35.600 for their family. But I also want to grow, you know, 0:11:35.720 --> 0:11:38.960 not different than I did when I became, um, you know, 0:11:39.080 --> 0:11:42.800 an employee hp T. Three years later, I became the 0:11:42.800 --> 0:11:46.559 precedency of the company career mobility and opportunity and diversity 0:11:46.600 --> 0:11:51.400 and inclusion, sustainability all place. So definitely, you know, we 0:11:51.480 --> 0:11:55.040 are making great progress. We have a lot to work 0:11:55.040 --> 0:11:58.439 to be done, particularly diversity, but I think this company 0:11:58.520 --> 0:12:02.400 is absolutely the right path with the sun Sholder value 0:12:02.600 --> 0:12:04.640 and you can see it through the results we deliver 0:12:04.720 --> 0:12:07.960 in Q one. Antonio Nary, President and CEO of Hewlett 0:12:07.960 --> 0:12:12.600 Packard Enterprise, running us via zoom from Houston, Texas. Thanks 0:12:12.600 --> 0:12:16.800 so much, Antonio. This is Bloomberg Business Week with Carol 0:12:16.840 --> 0:12:21.320 Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. 0:12:21.840 --> 0:12:23.880 Well a story that's featured in the upcoming issue of 0:12:23.920 --> 0:12:26.560 Bloomberg Business Week magazine that you can read now on 0:12:26.600 --> 0:12:29.840 the Bloomberg terminal and of course also at Bloomberg dot 0:12:29.840 --> 0:12:32.920 com Slash business Week. It's all about an heir to 0:12:33.160 --> 0:12:37.640 a billionaire who's hanging up his healing crystal to fix capital. 0:12:37.679 --> 0:12:39.680 I think a lot of our audience is familiar with 0:12:39.720 --> 0:12:42.800 Thomas Petterfee. According to the Bloomberg Billionaires Index, he's one 0:12:42.840 --> 0:12:45.880 of the wealthiest people in the world. He's the seventies 0:12:45.960 --> 0:12:51.160 second richest person on the globe. His son, though, William Petterfee, 0:12:51.679 --> 0:12:54.480 is the only son of the billionaire, and he cycled 0:12:54.480 --> 0:12:57.680 through a lifetimes worth of occupations in just thirty two years. 0:12:57.920 --> 0:13:01.160 Annie Massa wrote the story. She's invested reporter for Bloomberg News. 0:13:01.240 --> 0:13:04.920 Joel Webber is editor at Bloomberg Business Week. Interactive Brokers 0:13:04.960 --> 0:13:08.400 is a sponsor of Bloomberg Radio and Bloomberg Television. Joel, 0:13:08.400 --> 0:13:10.760 I want to start with you, um, who is William 0:13:10.760 --> 0:13:17.480 petterfe Well? His uh dad is the founder and formerly 0:13:17.520 --> 0:13:21.720 CEO of UM Interactive Broker. And I think in some 0:13:21.760 --> 0:13:24.200 ways you could probably define him as the son of 0:13:24.559 --> 0:13:26.840 Right and I think it's an important place to start. 0:13:26.920 --> 0:13:30.880 And like many sons and fathers, like sometimes the son 0:13:31.440 --> 0:13:33.760 you know, rejects the father's profession. And that's sort of 0:13:33.800 --> 0:13:37.080 what's happened for a lot of Will's life. Only just 0:13:37.200 --> 0:13:41.880 recently he's basically coming coming from the cold, took on 0:13:41.960 --> 0:13:46.160 a version of of something to that resembles of his 0:13:46.280 --> 0:13:50.600 dad's UM progression and as part of the inter Interactive 0:13:50.640 --> 0:13:53.240 Broker world now, which an he's gonna tell us more about. 0:13:54.360 --> 0:13:56.560 It's also like in my mind and why I was 0:13:56.600 --> 0:13:58.840 excited about it as a Business Week story, it's like 0:13:58.880 --> 0:14:03.199 a real life six session story with its own version 0:14:03.240 --> 0:14:05.959 of the drama. And it's also got E. S G. 0:14:06.240 --> 0:14:09.760 Which sort of is part of what makes it all 0:14:09.840 --> 0:14:13.640 interesting because that was the thing that brought Will into 0:14:13.679 --> 0:14:17.360 the fold. So any who is Will, Yeah, that's right. 0:14:18.600 --> 0:14:21.040 It is like a succession story. But it's a succession 0:14:21.040 --> 0:14:24.360 story in reverse basically because you have Thomas Petterfie, this 0:14:24.480 --> 0:14:29.560 billionaire who founded Interactive Brokers giant trading platform, and his 0:14:29.720 --> 0:14:34.040 son and his two sisters always rejected the business and 0:14:34.320 --> 0:14:37.400 kind of their dad's role on Wall Street. So if 0:14:37.440 --> 0:14:40.000 you think about logan roy and succession and all the 0:14:40.040 --> 0:14:42.720 kids are vying for control of that business, this is 0:14:42.760 --> 0:14:45.400 a case where all the kids are like, we don't 0:14:45.400 --> 0:14:48.760 want anything to do with capitalism. And now what's happening. 0:14:48.760 --> 0:14:51.680 The change that the story really centers on is Will 0:14:51.760 --> 0:14:53.400 has made peace with the fact that he can come 0:14:53.400 --> 0:14:56.720 work for Interactive Brokers like his dad always wanted, as 0:14:56.760 --> 0:14:59.760 long as he works in E s G and sustainable 0:14:59.760 --> 0:15:02.160 and sting. So what does that look like ESG and 0:15:02.200 --> 0:15:05.320 sustainable investing for for interactive Brokers and for Will's position here. 0:15:05.320 --> 0:15:06.520 And this is a guy who you know, he was 0:15:06.560 --> 0:15:09.720 a ranch hand as you right, among other things, among 0:15:09.880 --> 0:15:12.440 among many other things. And the longest he'd worked in 0:15:12.480 --> 0:15:14.360 finance before this was what less than a year at 0:15:14.360 --> 0:15:17.040 a couple different firms, right, So he really he didn't 0:15:17.080 --> 0:15:18.880 have much of a background in finance, and he had 0:15:18.920 --> 0:15:22.000 done so many different things. He worked on a documentary 0:15:22.000 --> 0:15:26.160 on archetypal astrology, UM, you know, talking kind of was 0:15:26.200 --> 0:15:30.000 talking about how different alignments of planets affect moments of 0:15:30.080 --> 0:15:32.920 revolutionary change on Earth. So then he comes to Interactive 0:15:32.960 --> 0:15:36.920 Brokers and his role there. It's interesting because Interactive Brokers, 0:15:36.960 --> 0:15:40.960 just to name one example, UM has a very homogeneous board. 0:15:41.040 --> 0:15:44.560 For example, UM pretty much all white men, including Will 0:15:44.600 --> 0:15:47.120 who's now a board member UM and and it now 0:15:47.200 --> 0:15:51.120 has recently UM added one woman. So he's trying to 0:15:51.160 --> 0:15:54.040 make changes around the edges to make Interactive Brokers more 0:15:54.120 --> 0:15:58.320 of a UM sustainable company. And he's built an app 0:15:58.400 --> 0:16:00.880 that can kind of let you invest your values. As 0:16:00.880 --> 0:16:03.960 they would say, how does his dad feel about his app? 0:16:04.840 --> 0:16:08.440 His dad had some really uh funny comments about the app. 0:16:08.520 --> 0:16:11.440 He kind of when we were doing the interview, showed 0:16:11.480 --> 0:16:13.440 me that he had downloaded it and he said that 0:16:13.480 --> 0:16:16.400 he how much does he have in the account? He 0:16:16.480 --> 0:16:19.760 said only four hundred and eighties six thousand dollars and 0:16:19.760 --> 0:16:22.080 then he kind of paused and he said, which is 0:16:22.120 --> 0:16:27.960 pretty good. H So, so he does have some money 0:16:27.960 --> 0:16:30.920 on some marginal amount of money on the app, and 0:16:31.320 --> 0:16:34.240 the things that he invested in were more environmentally focused, 0:16:34.480 --> 0:16:36.720 and he does, um, you know, like the environment and 0:16:36.760 --> 0:16:39.000 sort of conservation efforts. But then when I asked him 0:16:39.040 --> 0:16:41.720 more about the social side of e s G. He said, 0:16:41.920 --> 0:16:43.920 that's not really my thing. That's not that's not what 0:16:44.000 --> 0:16:47.400 I prioritize. Okay, So forget the forget the s sounds 0:16:47.440 --> 0:16:50.680 like um. So you have so many great details in 0:16:50.720 --> 0:16:55.200 this story, including where Will's change of heart actually happened, 0:16:55.280 --> 0:17:00.360 what happened in Costa Rica. So Will was attending a 0:17:00.680 --> 0:17:03.840 party at an eco village in Costa Rica, and he 0:17:03.880 --> 0:17:06.160 said that he kind of had this aha moment that 0:17:06.280 --> 0:17:08.919 he had been he had been working on this documentary 0:17:08.960 --> 0:17:12.040 about astrology. He had been, you know, in New Mexico, 0:17:12.320 --> 0:17:15.880 trying to absorb the healing powers of the desert there 0:17:15.960 --> 0:17:19.919 because he had been really um burned by his small 0:17:19.960 --> 0:17:23.480 foray into into hedge funds basically. So, so he had 0:17:23.520 --> 0:17:26.159 been out in New Mexico working on this documentary and 0:17:26.200 --> 0:17:28.480 he's in Costa Rica, and he said that he had 0:17:28.480 --> 0:17:32.040 this aha moment where he thought, well, I could go 0:17:32.119 --> 0:17:35.639 to work for my dad. But because his dad always 0:17:35.680 --> 0:17:37.439 since he was a teenager, wanted him to work for 0:17:37.480 --> 0:17:40.359 Interactive Brokers, but he said, but I could do it 0:17:40.400 --> 0:17:42.160 in a way that's kind of true to my values, 0:17:42.280 --> 0:17:45.679 and I could uh work in sustainability at Interactive Brokers. 0:17:45.760 --> 0:17:47.960 So he has this dramatic moment where he flat and 0:17:48.000 --> 0:17:49.560 he knew that his dad was going to step down 0:17:49.560 --> 0:17:52.919 as CEO. He flies to this company party in Manhattan 0:17:53.440 --> 0:17:56.280 and uh, you know, shortly thereafter, he tells his dad, 0:17:56.280 --> 0:17:59.040 I'm on board as long as I can work on 0:17:59.040 --> 0:18:02.200 sustainability at your company. So he's gonna be the next 0:18:02.200 --> 0:18:06.359 CEO of the company. Uh. No. One thing that these 0:18:06.400 --> 0:18:09.920 two men definitely agreed on, and I asked them both um, 0:18:10.280 --> 0:18:13.840 was that Will Will not be CEO. Will said, he's 0:18:13.840 --> 0:18:16.639 too interested in his other pursuits. He's got other stuff 0:18:16.680 --> 0:18:18.480 going on. He's a poet. He likes to go out 0:18:18.520 --> 0:18:21.040 into the forest where he lives in Boulder and kind 0:18:21.080 --> 0:18:24.080 of um go out there without a tent or any 0:18:24.119 --> 0:18:27.880 food and test his willpower. Um. His dad also said, 0:18:27.920 --> 0:18:30.320 you know, I don't think he's going to be the CEO. 0:18:30.560 --> 0:18:33.520 He's too interested in traveling in nature in South America 0:18:33.560 --> 0:18:35.800 to do something like that. So they were they were 0:18:35.840 --> 0:18:37.919 in agreement that that's not really in the in the 0:18:37.960 --> 0:18:40.520 pathway for Well, this is one of those features that 0:18:40.720 --> 0:18:44.080 has it all. He's a poet, he's quoting experts in 0:18:44.119 --> 0:18:48.360 Hallucinogen's Annie masa investing reporter at Bloomberg News. Check out 0:18:48.359 --> 0:18:50.400 her story. It's featured in the upcoming issue of Bloomberg 0:18:50.440 --> 0:18:51.920 Business Week magazine. You can read it now in the 0:18:51.960 --> 0:18:54.880 Bloomberg and at Bloomberg dot com Slash business Week also 0:18:54.920 --> 0:18:57.959 also with a Joe Weber, editor at Bloomberg business Week. 0:18:58.000 --> 0:19:00.560 Interacted Brokers is a sponsor of Bloomberg Radio and at 0:19:00.560 --> 0:19:05.000 Bloomberg Television. This is Bloomberg Business Week with Carol Massier 0:19:05.240 --> 0:19:09.920 and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Well, 0:19:10.000 --> 0:19:12.199 a lot of our Bloomberg audience is certainly familiar with 0:19:12.200 --> 0:19:14.040 our next guests. They are the host of the Odd 0:19:14.080 --> 0:19:17.280 Lots podcast, not other than Bloomberg News executive editors Joe 0:19:17.280 --> 0:19:20.840 Wisenthal and Tracy Allaway. On this week's episode of Odd Lots, 0:19:20.880 --> 0:19:23.840 they speak with Credit Suite short term interest rate strategists 0:19:23.920 --> 0:19:26.919 Zoltan posts Are. The podcast is the subject of today's 0:19:26.960 --> 0:19:31.040 Bloomberg Big Take. It's all about Russia's FX reserves following 0:19:31.080 --> 0:19:34.080 sanctions against the country for their invasion of Ukraine. Here's 0:19:34.080 --> 0:19:38.360 an excerpt from the podcast. The present situation has elements 0:19:38.440 --> 0:19:41.480 of a little bit of everything. I think it has, 0:19:41.800 --> 0:19:46.000 you know, definitely a local currency crisis, a local bank 0:19:46.280 --> 0:19:49.119 funding crisis, you know a little bit of crisis of 0:19:49.200 --> 0:19:52.359 FX reserves where typically we are used to situations where 0:19:52.359 --> 0:19:55.480 central banks that show they have something, they don't have it, 0:19:55.680 --> 0:19:57.800 and then you know, the market gets surprised by it. 0:19:57.920 --> 0:20:02.320 For example, you know Southeast Asia this time around, you know, 0:20:02.320 --> 0:20:04.080 the central bank, you've had a lot of reserves, but 0:20:04.119 --> 0:20:07.200 then these were seized. So I think it's, uh, it's 0:20:07.280 --> 0:20:10.159 it's pretty uncharted territories, and it's and it's hard to 0:20:10.200 --> 0:20:13.320 tell which fadus is going to go from here. That 0:20:13.440 --> 0:20:16.200 was credits We short term interest rate strategist Zoltan post 0:20:16.280 --> 0:20:19.560 Are speaking with the host of the Bloomberg Abots podcast, 0:20:19.600 --> 0:20:22.840 Bloomberg News executive editors Joe Wisenthal and Tracy Alloway, who 0:20:23.040 --> 0:20:25.080 joined Katie and Me right now. Tracy, I want to 0:20:25.080 --> 0:20:27.720 start with you, what does what does Postar mean when 0:20:27.760 --> 0:20:32.800 he says that the bank band threatens the dollars status? Sure, well, 0:20:32.840 --> 0:20:35.760 I mean it sounds very dramatic, but at this point are, 0:20:35.880 --> 0:20:38.600 I think our perceptions of drama have probably changed a 0:20:38.600 --> 0:20:41.320 little bit. And Salton isn't the only one saying something 0:20:41.359 --> 0:20:43.959 along these lines, but he's basically arguing that there are 0:20:43.960 --> 0:20:45.639 a lot of central banks out in the world that 0:20:45.720 --> 0:20:49.560 hold their reserves in dollar denominated assets, and typically these 0:20:49.600 --> 0:20:53.040 dollars nominated assets are held by another central bank or 0:20:53.080 --> 0:20:56.239 another financial institution. And when you get these types of 0:20:56.560 --> 0:21:01.720 tensions that explode into very extreme saying auctions, suddenly those 0:21:01.760 --> 0:21:04.960 dollar denominated assets that you thought actually belonged to you 0:21:05.200 --> 0:21:08.399 might not no longer, might no longer be accessible, and 0:21:08.520 --> 0:21:11.000 might essentially not be yours anymore. And this seems to 0:21:11.000 --> 0:21:13.199 be not just what's happened with Russia, but also what 0:21:13.240 --> 0:21:15.880 we saw with Afghanistan when the US said that actually, 0:21:16.119 --> 0:21:18.560 the Taliban isn't going to have access to those reserves. 0:21:18.760 --> 0:21:21.280 And so naturally, if you're a central bank, thinking well, 0:21:21.320 --> 0:21:24.080 at some point, maybe I might have a problem with 0:21:24.160 --> 0:21:27.399 the US, you might be rethinking what you're actually going 0:21:27.440 --> 0:21:29.760 to hold your reserves in. Okay, So I have some 0:21:29.840 --> 0:21:33.840 ancient history to bring up, because in April I wrote 0:21:33.840 --> 0:21:36.840 for Business Week magazine for the first time in a decade, 0:21:36.840 --> 0:21:39.240 the world central banks are looking beyond the dollar for 0:21:39.320 --> 0:21:41.560 their currency reserves. And I remember I was a baby 0:21:41.560 --> 0:21:44.560 currency reporter at the time, and all the strategists told me, 0:21:44.640 --> 0:21:47.439 you know, you're going to write the story every five years. 0:21:47.480 --> 0:21:50.200 But for better or for worse, it feels like, especially 0:21:50.240 --> 0:21:54.760 central banks reserve managers, they can't quit the dollar. I mean, 0:21:54.960 --> 0:21:57.520 what truly is different this time around? And I that's 0:21:57.520 --> 0:22:01.320 a ridiculous question to ask, but is this an enough No, 0:22:01.680 --> 0:22:04.040 it's a it's a great question to ask. And the 0:22:04.160 --> 0:22:06.720 interesting thing is, you know, for a long time, I 0:22:06.760 --> 0:22:09.760 think people have talked about this idea of the dollars demises, 0:22:09.760 --> 0:22:12.040 like a warning like oh, if the US spends too 0:22:12.119 --> 0:22:14.760 much or too much qui or something like that, and 0:22:15.040 --> 0:22:17.680 the you know this, this could be trouble for the dollar. 0:22:18.000 --> 0:22:20.199 But the problem has been the opposite. It's not that 0:22:20.240 --> 0:22:22.320 the dollars, but week the problem is that it continues 0:22:22.359 --> 0:22:24.120 to be too strong and no one can get off 0:22:24.160 --> 0:22:26.439 of it. But I think, look, if you have this 0:22:26.520 --> 0:22:31.440