WEBVTT - Quant Fund Just Went to 100% Cash: Cumberland's Kotok 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Penl Podcast. I'm Paul swing you. 0:00:05.360 --> 0:00:07.680 Along with my co host Lisa Brahma Waits. Each day 0:00:07.720 --> 0:00:10.240 we bring you the most noteworthy and useful interviews for 0:00:10.280 --> 0:00:12.520 you and your money, whether at the grocery store or 0:00:12.560 --> 0:00:15.480 the trading floor. Find a Bloomberg Penl podcast on Apple 0:00:15.520 --> 0:00:17.959 podcast or wherever you listen to podcasts, as well as 0:00:17.960 --> 0:00:23.439 at Bloomberg dot com. We are joined by the one 0:00:23.440 --> 0:00:26.720 and only David Kotalk, Chairman and Chief Investment Officer of 0:00:26.800 --> 0:00:32.760 Cumberland Advisors. H really interesting right now to see bonds 0:00:32.840 --> 0:00:36.640 continuing to rally even as we get better than expected 0:00:37.200 --> 0:00:39.360 data out of China, and there seems to be a 0:00:39.400 --> 0:00:43.120 growing amount of optimism that perhaps Europe is bottoming. And 0:00:43.200 --> 0:00:45.920 I have to wander has the rally gone too far 0:00:46.400 --> 0:00:49.680 too fast? Where are you on that? I think the 0:00:49.960 --> 0:00:53.800 treasury rally in the United States that has flattened the 0:00:53.880 --> 0:00:57.520 yield curve, inverted it. Some people would say you just 0:00:58.000 --> 0:01:00.760 had a previous segment and talking about that, I think 0:01:00.760 --> 0:01:04.840 it's gone too far too fast. And this whole notion, 0:01:04.920 --> 0:01:10.920 now that we have futures pricing of rate cuts, how 0:01:11.040 --> 0:01:17.080 recently did we have futures pricing rate hikes? What makes 0:01:17.680 --> 0:01:23.560 futures pricings gospel? I don't see it, So I think 0:01:23.600 --> 0:01:26.320 we're in our shop. You know, what do you think 0:01:26.400 --> 0:01:28.240 is one thing? What do you do in a portfolio? 0:01:28.400 --> 0:01:32.319 Was another. We are shortening duration, we are favoring the 0:01:32.319 --> 0:01:37.360 front end. We've expanded the shorter maturity side of the barbell. 0:01:37.520 --> 0:01:41.840 We're taking profits in bonds because they've galloped by so 0:01:41.959 --> 0:01:46.360 many points, and we're shifting a portfolio to defense. So 0:01:47.040 --> 0:01:49.360 in the high old market, that's also how to rally? 0:01:49.400 --> 0:01:52.080 Do you see any value there? In which market is 0:01:52.920 --> 0:01:57.120 in high I'm worried about credit. When you spend ten 0:01:57.240 --> 0:02:02.320 years at zero interest rates, you buffer sensitivity, you you 0:02:03.240 --> 0:02:07.960 eliminate this notion that there's credit risk. So you see 0:02:08.040 --> 0:02:10.840 this spreading out a credit risk in spreads and then 0:02:10.880 --> 0:02:14.679 it tightens right back up and people chase yield. And 0:02:14.960 --> 0:02:18.160 chasing yield in the long run is a bad thing 0:02:18.240 --> 0:02:21.080 to do. So in our shop, we're favoring higher grade, 0:02:21.560 --> 0:02:24.959 not how you here's the problem, and this is something 0:02:25.000 --> 0:02:26.839 that I think a lot of people are struggling with. 0:02:27.120 --> 0:02:28.679 There are a lot of signs that were in late 0:02:28.760 --> 0:02:31.880 cycle on every level, whether it's equities, whether it's risk 0:02:31.919 --> 0:02:34.880 assets and credit. And the problem is is that that 0:02:34.919 --> 0:02:37.440 can continue for a long time, right, and this would 0:02:37.440 --> 0:02:41.000 actually be one of the best parts of the whole rally, 0:02:41.120 --> 0:02:45.480 especially if there is no sort of disruptive factor. So, uh, 0:02:45.560 --> 0:02:49.200 your your you look you have consternation. No, I don't. 0:02:50.480 --> 0:02:55.360 I agree with you. A late cycle sweet spot two growth, 0:02:55.720 --> 0:03:02.600 no excesses. It appears low inflation, low interest rates. Uh. 0:03:02.639 --> 0:03:07.239 The markets ignore the geopolitical risk, it's there. They ignore 0:03:07.280 --> 0:03:12.520 the narrative and volatility of politics, it's there. They ignore 0:03:12.800 --> 0:03:17.000 Brexit in the charade we call the UK trying to 0:03:17.080 --> 0:03:21.960 do something. I mean, markets are ignoring us. Well, why 0:03:22.000 --> 0:03:26.400 there's a salve. The salve is constant monetary policy with 0:03:26.560 --> 0:03:31.000 excess liquidity. And now in the United States that's normalizing. 0:03:31.840 --> 0:03:35.560 In Europe they're gonna try in a change of regime 0:03:35.640 --> 0:03:41.440 after drugging, to try to normalize interest rates up to zero. 0:03:41.920 --> 0:03:45.200 So here's the question. Do you have a permanent free 0:03:45.320 --> 0:03:50.760 lunch of infinite liquidity and therefore everything is wonderful all 0:03:50.800 --> 0:03:55.880 the time, or is there some transfer that's taking place 0:03:56.000 --> 0:04:02.080 between those who are borrowing long term at low interest 0:04:02.160 --> 0:04:06.040 rates with some plan or no plan to ever pay 0:04:06.040 --> 0:04:09.680 it back, and those who are trapped in a paradigm. 0:04:09.960 --> 0:04:14.040 An institution, for example, that is forced to buy a 0:04:14.200 --> 0:04:18.000 German government bond with part of its capital by law. 0:04:18.880 --> 0:04:21.520 Is there a trade off and when it happens, we 0:04:21.600 --> 0:04:25.839 don't know. Does it get ugly when it does? Maybe? 0:04:26.279 --> 0:04:29.440 So when you get a massive rally like this, you 0:04:29.640 --> 0:04:31.960 put some of it in the bank. You earn your 0:04:32.000 --> 0:04:34.920 two percent on your cash in America, and you say, 0:04:34.960 --> 0:04:37.600 you know what risk is rising, and I don't know 0:04:37.640 --> 0:04:40.800 when it's gonna bite. So how much cash are you have? 0:04:40.880 --> 0:04:44.280 You increased the allocation too well. In the bond side, 0:04:44.279 --> 0:04:47.120 we're moving to the short duration. In the stock side, 0:04:47.480 --> 0:04:51.360 we run four different types of stock portfolios and they 0:04:51.400 --> 0:04:56.839 are in various positions in cash between fift and the 0:04:57.240 --> 0:05:03.559 high turnover technical quantitative strategy went to a percent cash 0:05:03.960 --> 0:05:09.120 last night last night. Please please elaborate how much was 0:05:09.160 --> 0:05:11.520 it in cash before you sold out of everything. It's 0:05:11.520 --> 0:05:14.320 a binary strategy, so it's either fully invested or it's 0:05:14.320 --> 0:05:17.840 in cash, and it had it's got phasing, its intricate 0:05:17.920 --> 0:05:23.679 math and the final trunch went to cash yesterday. David 0:05:23.760 --> 0:05:27.400 Kotok cash and one of his funds that last night. 0:05:27.560 --> 0:05:31.279 How often does it happen? Well, this strategy can sit 0:05:31.320 --> 0:05:33.520 in cash for months till it has the right kind 0:05:33.520 --> 0:05:37.400 of entry. It's it's quantitative driven. It doesn't have human 0:05:37.440 --> 0:05:41.520 beings making decisions using their emotions. So no matter what 0:05:41.600 --> 0:05:43.760 I think, it's the math that will was the last 0:05:43.800 --> 0:05:47.279 time that it was in all cash um last time 0:05:47.279 --> 0:05:53.320 it was in all cash was last um fall. Sometime 0:05:53.640 --> 0:05:57.640 we had an entry after the summer sell off and 0:05:57.760 --> 0:06:00.720 we went into the v drop in ash. So we 0:06:00.760 --> 0:06:05.800 had a Swan song down and back. Interesting. So so 0:06:06.160 --> 0:06:08.560 it's clear you think the FED has gone too far. Well, 0:06:08.600 --> 0:06:12.240 I think I think the FED was remarkable. The FED 0:06:12.360 --> 0:06:16.560 says we're data driven. The FED says we'll look at 0:06:16.640 --> 0:06:19.840 data and if it changes, will change. And the FED 0:06:19.920 --> 0:06:23.800 has said, okay, we're gonna pause for a while. That's 0:06:23.839 --> 0:06:27.280 what the dots are all about. David Kotak, thank you 0:06:27.400 --> 0:06:29.839 so much. I think we heard this was really interesting, 0:06:30.080 --> 0:06:33.279 so interesting. We've you just never hear that going to 0:06:33.480 --> 0:06:36.479 catch And it's a it's a binary strategy, to be clear, 0:06:37.080 --> 0:06:39.480 which is what David Kodak was saying. But the idea 0:06:39.600 --> 0:06:44.440 that right now things look a little bit overdone, even 0:06:45.000 --> 0:06:47.640 when it comes to someone who doesn't have emotions exactly. 0:06:48.000 --> 0:06:50.080 David Kotok, thank you so much. Thank it's a chairman 0:06:50.080 --> 0:06:53.200 of Chief Investment officer of Complerent Advisors. Always a welcome 0:06:53.240 --> 0:07:11.680 guest here in a Bloomberg Interactive Broker studio. Well, financial 0:07:11.720 --> 0:07:15.560 technology or fintech is one of the hottest areas, not 0:07:15.600 --> 0:07:18.720 only in technology but in financial services, and it is 0:07:18.760 --> 0:07:22.320 impacting companies large and small across the spectrum. To help 0:07:22.400 --> 0:07:24.720 us kind of dig into this issue, this issue, we 0:07:24.760 --> 0:07:27.880 welcome Karen Mills. Karen is a senior Fellow at Harvard 0:07:27.880 --> 0:07:31.520 Business School and she's a former Small Business Administration Administrator 0:07:31.560 --> 0:07:35.760 for President Obama. Uh, Karen, thank you, and welcome to Bloomberg. 0:07:36.240 --> 0:07:38.680 I really want to get a sense of is in 0:07:38.760 --> 0:07:41.400 your book. In the book is entitled Fintech Small Business 0:07:41.440 --> 0:07:44.160 in the American Dream. Is that your contention that financial 0:07:44.200 --> 0:07:47.480 technology is a net positive or net negative for small businesses. 0:07:48.040 --> 0:07:50.840 It's a huge positive for small business. In fact, I 0:07:50.880 --> 0:07:53.320 think we're at a huge inflection point. You know, we 0:07:53.360 --> 0:07:57.760 all talk about AI and fintech um and I think 0:07:58.000 --> 0:07:59.840 one of the places that we're going to see huge 0:08:00.080 --> 0:08:03.360 change is not in driverless cars, but it is in 0:08:03.480 --> 0:08:06.440 small business lending. We're going to see the ability of 0:08:06.480 --> 0:08:09.880 small businesses to have credit at the push of a button. 0:08:10.280 --> 0:08:12.440 And the players in this are not going to be 0:08:12.960 --> 0:08:17.800 just your old community bank. It's going to be Apple 0:08:18.240 --> 0:08:22.920 and Amazon and Square and new fin techs and then 0:08:23.280 --> 0:08:28.840 traditional places like JP Morgan are investing, you know, billions 0:08:28.880 --> 0:08:32.480 of dollars literally in providing new services. So this could 0:08:32.480 --> 0:08:36.360 be the game changer that small businesses need to get 0:08:36.360 --> 0:08:39.679 the products and services that meet their needs. So here's 0:08:39.720 --> 0:08:42.600 my question. We've had peer to peer lending that has 0:08:42.679 --> 0:08:45.200 been going strong and then not so much over the 0:08:45.240 --> 0:08:47.600 number of past number of years, we've had an increase 0:08:47.720 --> 0:08:51.719 in online marketplaces for loans to those small businesses crop up. 0:08:52.120 --> 0:08:55.200 Why have we not yet seen, uh, this sort of 0:08:55.440 --> 0:08:59.160 crossing of the tipping point with respect to how much 0:08:59.200 --> 0:09:01.960 this can help small businesses? And the book I talked 0:09:01.960 --> 0:09:04.800 about the fintech innovation curve and you just described like 0:09:04.880 --> 0:09:07.680 the first phase. In the initial part, we called it 0:09:07.760 --> 0:09:09.880 the wild West. You know, we thought everything was going 0:09:09.920 --> 0:09:13.840 to take off, and then take off was aborted because 0:09:14.679 --> 0:09:17.880 the peer to peer lenders it turned out they weren't 0:09:17.880 --> 0:09:21.240 actually solving that bigger problem. They were making a better 0:09:21.320 --> 0:09:24.760 customer experience, but they were giving people the same product, 0:09:24.880 --> 0:09:28.520 maybe at a higher price. So enter big tech and 0:09:28.520 --> 0:09:32.480 then you've got Amazon and PayPal and Square starting to lend, 0:09:32.880 --> 0:09:36.960 and then people rethought the whole experience. What happened is 0:09:37.000 --> 0:09:40.920 that data technology changed so that you could suck up 0:09:41.000 --> 0:09:43.880 big pools of data through a p I S and 0:09:43.960 --> 0:09:48.520 now the process is going to be radically different. If 0:09:48.520 --> 0:09:51.600 you want to understand what's inside a small business, it's 0:09:51.720 --> 0:09:54.439 very opaque. You know, how do you know this business 0:09:54.520 --> 0:09:56.720 is really making money? How do you figure it out? 0:09:57.000 --> 0:09:59.560 You have some poor banker who spends three months sort 0:09:59.559 --> 0:10:01.520 of figure ing it out and then they say, uh no. 0:10:02.559 --> 0:10:06.040 So what if all of this went into an algorithm 0:10:06.400 --> 0:10:09.640 and the lender could say right away yes or no, 0:10:10.120 --> 0:10:12.760 and the small business could also at the same time 0:10:13.280 --> 0:10:16.520 know what's going on in their business. So I think 0:10:16.559 --> 0:10:19.160 take off. We're just at this inflection point and you're 0:10:19.160 --> 0:10:21.320 going to see that takeoff you were looking for. Well, 0:10:21.360 --> 0:10:23.960 how about if I think about this, the small community 0:10:24.000 --> 0:10:26.640 banks have been to the backbone of lending too small 0:10:26.640 --> 0:10:29.840 businesses across America. Are you getting a sense that some 0:10:29.920 --> 0:10:33.640 of these smaller regional banks have the wherewithal to make 0:10:33.720 --> 0:10:36.400 the investment, to get up the technology, to curve to 0:10:36.440 --> 0:10:40.400 compete against what will be really tech driven lending to 0:10:40.480 --> 0:10:43.680 small businesses. I'm a big fan of small banks and 0:10:43.720 --> 0:10:45.960 community banks, and from my time at s b A 0:10:46.160 --> 0:10:49.640 I saw how important they were to the economy. I 0:10:49.679 --> 0:10:52.280 would not count them out. What I think is going 0:10:52.320 --> 0:10:55.200 to happen, and one of my predictions is that if 0:10:55.200 --> 0:10:58.960 we get the regulation right, data will be open. So 0:10:59.000 --> 0:11:03.199 if you give yourself permission, your permissions, then anybody can 0:11:03.240 --> 0:11:06.440 suck up that data. So the winners will be people 0:11:06.480 --> 0:11:10.200 who can create these platforms, and banks large and small 0:11:10.559 --> 0:11:14.040 they can acquire or use those platforms, and you can 0:11:14.160 --> 0:11:17.840 use your banker for more real advice and counsel rather 0:11:17.920 --> 0:11:20.720 than that sort of grinded out process of the loan. 0:11:21.200 --> 0:11:24.360 So I think you should not count out the community banks. 0:11:24.400 --> 0:11:27.160 They should stick around and wait for the fin techs 0:11:27.160 --> 0:11:29.720 to give them the products they need and just partner 0:11:29.880 --> 0:11:33.079 partner with them in the meantime. Though you did mention 0:11:33.120 --> 0:11:36.320 the behemoths the Amazons of the world, it's really just 0:11:36.440 --> 0:11:40.040 Amazon and Apple, I guess, I guess Google, but I 0:11:40.040 --> 0:11:42.560 haven't really heard them getting in on this, but Amazon 0:11:42.720 --> 0:11:45.040 really stands out to me, especially because so many of 0:11:45.080 --> 0:11:48.840 these small businesses may use the platform to actually sell 0:11:48.920 --> 0:11:52.240 their goods. And I'm just wondering, when you talk about 0:11:52.320 --> 0:11:57.520 sharing this data and allowing uh, you know, potential lenders 0:11:57.559 --> 0:11:59.960 to see into the inner workings of these small business 0:12:00.080 --> 0:12:02.000 is to give more confidence to giving them loans. I 0:12:02.040 --> 0:12:04.760 assume that's what you're talking about with the data. Um, 0:12:04.840 --> 0:12:07.320 Amazon has a tremendous leg up because they can see 0:12:07.360 --> 0:12:11.679 the flows themselves as they lend to their businesses. I mean, 0:12:11.920 --> 0:12:15.720 they could really consolidate this business. No. If Amazon wanted 0:12:15.760 --> 0:12:18.240 to play like in many businesses, they could make a 0:12:18.320 --> 0:12:21.160 huge mark. And they're already doing three billion or so. 0:12:21.720 --> 0:12:24.079 And one of the interesting things with Amazon is are 0:12:24.120 --> 0:12:26.520 they going to make the choice to use their balance 0:12:26.559 --> 0:12:30.600 sheet to really enter this market? So far they haven't. 0:12:31.000 --> 0:12:33.200 And Apple when they came in the market, they partner 0:12:33.280 --> 0:12:37.800 with Goldman Sachs. So I think that data is key 0:12:37.840 --> 0:12:40.800 to the decision making. But if we get more open 0:12:40.840 --> 0:12:43.880 access to data, if you could own the stream of 0:12:43.960 --> 0:12:47.440 information in your bank account and your Amazon flow, and 0:12:47.520 --> 0:12:50.320 you could make it funnel up into a fintech. Then 0:12:50.400 --> 0:12:53.440 that takes away some of their monopoly power. Why haven't 0:12:53.480 --> 0:12:56.080 they used their balance sheet? You know, maybe they have 0:12:56.160 --> 0:12:59.400 too many opportunities. They've got so many things that they're doing. 0:12:59.520 --> 0:13:02.040 I actually they have asked them this question, and I 0:13:02.120 --> 0:13:04.600 know that they are thinking about it, they're working on it. 0:13:04.920 --> 0:13:08.160 But one reason is that small business never seems to 0:13:08.160 --> 0:13:11.120 be the priority. First of all, people look at the 0:13:11.160 --> 0:13:14.720 consumer market, and then small business is like the poor 0:13:14.880 --> 0:13:17.880 cousin that gets the dribs and drabs. One of the 0:13:17.920 --> 0:13:20.280 things I think will happen is that somebody will figure 0:13:20.280 --> 0:13:23.520 out how to make a small business focus bank that 0:13:23.640 --> 0:13:28.280 has different products, different services, and just maybe even a 0:13:28.360 --> 0:13:32.360 vertical bank just for restaurants or just for dry cleaners, 0:13:32.400 --> 0:13:35.320 and that way they have the expertise and I think 0:13:35.320 --> 0:13:37.360 they will clean up. I think that's a way to 0:13:37.760 --> 0:13:41.040 win and invest as more technology comes into banking. Is 0:13:41.080 --> 0:13:43.520 the regulatory framework that we have in this country right 0:13:43.559 --> 0:13:46.960 now set up to really regulate it properly in your opinion? Well, 0:13:46.960 --> 0:13:49.480 the short answer to that is no, and this longer 0:13:49.520 --> 0:13:53.560 answer is absolutely no. The regulatory system in this country 0:13:53.640 --> 0:13:57.280 is what I call spaghetti soup. There are seven regulators 0:13:57.320 --> 0:14:02.320 who oversee small business lending, and in the midst of 0:14:02.320 --> 0:14:06.440 that there's overlapping, there's confusion. A lot of people say, well, 0:14:06.520 --> 0:14:09.160 let's just get rid of all that regulation and then 0:14:09.200 --> 0:14:12.000 everything will flow in community banks will come back. But 0:14:12.080 --> 0:14:15.800 that's actually not the answer. It's not less regulation. It's 0:14:15.800 --> 0:14:21.280 of course smart regulation. That means that the new regulations 0:14:21.440 --> 0:14:24.840 need to think about what's in the black box. Who 0:14:24.920 --> 0:14:28.680 owns the data? What if a small business gets a rejection, 0:14:28.840 --> 0:14:32.120 can they see what went into the algorithm? How are 0:14:32.120 --> 0:14:35.440 you going to figure out if there's a discrimination and 0:14:35.520 --> 0:14:39.160 disparate impact. So I think the regulatory questions get thornier. 0:14:39.840 --> 0:14:41.880 Karen Mills, We love having you on. Thank you for 0:14:41.920 --> 0:14:45.040 being with us. Delighted to be here. Karen Karen Mills 0:14:45.040 --> 0:14:48.160 a Senior Fellow at the Harvard Business School, former small 0:14:48.240 --> 0:14:52.240 Business administrator for President Obama from two thousand nine through two, 0:14:53.280 --> 0:14:57.520 and author, most importantly of a new book, Fintech, Small 0:14:57.560 --> 0:15:17.440 Business and the American Dream dig into some of these questions. Well. 0:15:17.440 --> 0:15:19.960 The news this morning is that black Rock is launching 0:15:19.960 --> 0:15:23.000 a massive overhaul of its leadership to help navigate mounting 0:15:23.080 --> 0:15:27.120 challenges across the asset management industry. From global expansion to 0:15:27.240 --> 0:15:30.160 pressure on fees. To help us dig deeper into this story, 0:15:30.160 --> 0:15:33.800 we welcome Annie Massa and he's a Bloomberg Finance reporter. 0:15:33.880 --> 0:15:36.600 She joins us in our Bloomberg Interactive Brooker studio. Any 0:15:36.640 --> 0:15:38.920 thanks so much for joining us. Why do you think 0:15:39.600 --> 0:15:42.320 black Rock is doing this now? What is really changing 0:15:42.360 --> 0:15:45.080 their business? I think that one of the key themes 0:15:45.080 --> 0:15:47.840 that they're trying to address with this leadership change is 0:15:48.480 --> 0:15:52.520 the desire to grow globally. So they're the world's largest 0:15:52.520 --> 0:15:55.440 asset manager already, but a lot of their revenue is 0:15:55.480 --> 0:15:59.360 focused in the America's region, and Larry think Um black 0:15:59.400 --> 0:16:02.400 Ocksy has made a big point of how he wants 0:16:02.480 --> 0:16:05.960 to keep branching out the business and expand, especially in 0:16:06.000 --> 0:16:10.400 regions like China and um In this UH News this morning, 0:16:10.840 --> 0:16:13.680 Latin America is a big focus as well. So the 0:16:13.760 --> 0:16:16.880 question that I have is how much is this a 0:16:17.520 --> 0:16:20.720 leadership issue with or issue but a bit of positive 0:16:21.120 --> 0:16:23.920 sign that black Rock is being proactive and trying to 0:16:24.000 --> 0:16:26.960 keep its position as the world's biggest asset management and 0:16:27.000 --> 0:16:29.880 how much is this a response and a reflection of 0:16:29.920 --> 0:16:33.240 the challenges in the broader asset management industry. With shrinking 0:16:33.800 --> 0:16:37.080 fees across the board, with the shift to passive and 0:16:37.200 --> 0:16:41.080 just the increased competition. Yeah, asset managers are under a 0:16:41.080 --> 0:16:43.920 lot of pressure. As you mentioned, fee pressure is one 0:16:43.960 --> 0:16:47.320 of the biggest challenges I think, and especially the large 0:16:47.360 --> 0:16:49.960 asset managers have just been locked in this UM grinding 0:16:49.960 --> 0:16:53.560 competition over fees. But I mean one solution to that 0:16:53.760 --> 0:16:57.880 is to develop client relationships in new places and and 0:16:57.960 --> 0:17:01.040 try to take on more clients UM globally. So I 0:17:01.080 --> 0:17:04.040 think that that's part of why they're why they're doing 0:17:04.080 --> 0:17:07.480 this now UM as a way to address UM that 0:17:07.760 --> 0:17:10.159 so is the expectation Annie that as they tried to 0:17:10.200 --> 0:17:14.280 develop new businesses maybe diversified geographically, that we may see 0:17:14.320 --> 0:17:17.000 black Rock, they're already the largest globally, may even get 0:17:17.119 --> 0:17:20.240 try to get bigger via M and A. Definitely UM. 0:17:20.359 --> 0:17:25.040 They've been pursuing UM some deal making globally to to 0:17:25.160 --> 0:17:28.400 try and advance those goals. And one other thing I'll 0:17:28.440 --> 0:17:31.359 add on on the fee side is they're trying to 0:17:31.760 --> 0:17:36.520 grow their alternatives business as well. And so while you 0:17:36.600 --> 0:17:40.000 see this expansion globally, you're also seeing an expansion in 0:17:40.119 --> 0:17:43.000 terms of the types of offerings that they have for clients, 0:17:43.280 --> 0:17:45.760 and the alternatives has has been a big focus for them. 0:17:45.960 --> 0:17:48.200 Let's dig into what alternatives is. Are you talking about 0:17:48.200 --> 0:17:51.960 private equity and distressed dead hedge funds and things like that. 0:17:51.960 --> 0:17:55.320 That's exactly right. So one example that we just reported 0:17:55.320 --> 0:17:58.160 on this week is black Rock has this long term 0:17:58.200 --> 0:18:01.000 private capital vehicle. It's kind of like a private equity 0:18:01.040 --> 0:18:04.760 type vehicle that they announced last year. So they've secured 0:18:04.800 --> 0:18:08.320 their first round of funding for this UM. They didn't 0:18:08.920 --> 0:18:11.360 reach their goals yet. They want to raise as much 0:18:11.400 --> 0:18:14.840 as ten to twelve billion UM for this vehicle. They've 0:18:14.840 --> 0:18:17.600 got about UM two point seven five billion already. What 0:18:17.640 --> 0:18:19.840 does it say that that it's taking longer than they 0:18:19.840 --> 0:18:22.480 had expected to raise the money for this. It's a 0:18:22.560 --> 0:18:26.240 challenging environment and it's not exactly the type of arena 0:18:26.280 --> 0:18:30.320 that you can arrive in and um, you know, just 0:18:30.400 --> 0:18:32.879 take over completely. It won't happen in the blink of 0:18:32.920 --> 0:18:36.040 an eye. UM. So it's taking a bit longer than expected. 0:18:36.119 --> 0:18:39.320 But it shows, I mean, especially with the reorgan today, 0:18:39.600 --> 0:18:41.439 it shows that they've got a lot of focus on 0:18:41.480 --> 0:18:44.560 this and and they're trying to like meaningfully grow UM 0:18:44.560 --> 0:18:48.760 in outside of their gigantic index business. So any does 0:18:48.840 --> 0:18:52.280 is also this management overhaul Today's is also addressed maybe 0:18:52.359 --> 0:18:55.600 succession issue for Larry Fink. Are we kind of setting 0:18:55.640 --> 0:18:58.800 up a two horse race here for to succeed Larry. 0:18:59.000 --> 0:19:02.919 It's it's more than two horses. It's actually a whole stable. UM. 0:19:03.080 --> 0:19:07.119 But today today, specifically, we've got UM a couple a 0:19:07.119 --> 0:19:09.439 couple of the people that have been widely seen as 0:19:09.480 --> 0:19:12.080 in the running. We're in play here, so especially Mark 0:19:12.160 --> 0:19:15.760 McComb UM. They've created a new role for UM of 0:19:15.880 --> 0:19:20.800 Chief Client Officer UM. But there are several people in 0:19:20.840 --> 0:19:23.520 the running. And Larry think has actually said that he 0:19:23.680 --> 0:19:27.280 likes to UM look at management this way instead of 0:19:27.320 --> 0:19:30.320 just having one air apparent, have a whole bunch of 0:19:30.320 --> 0:19:33.960 people in UM, these higher up roles, shuffle them around 0:19:34.200 --> 0:19:36.760 and UM, you know, leadership is kind of about the 0:19:36.840 --> 0:19:42.359 dynamics UM interpersonally that happened there. Does this reorganization include 0:19:42.400 --> 0:19:45.120 further layoffs in addition to the five hundred announced cuts 0:19:45.160 --> 0:19:47.240 that they've already made this year? The cuts that were 0:19:47.240 --> 0:19:50.639 announced earlier this year, UM are all that we know 0:19:50.680 --> 0:19:53.800 of right now. UM, But yeah, it is important to 0:19:53.840 --> 0:19:58.159 note that with the expansion and the reshuffling. Um there 0:19:58.160 --> 0:20:01.320 there were all there were also those massive headcount cuts 0:20:01.359 --> 0:20:05.720 that came early in January. So anyways, this overall black Rock, 0:20:05.920 --> 0:20:08.200 are they how profitable are they right now? I'm trying 0:20:08.200 --> 0:20:09.679 to get a sense of whether this is you know, 0:20:09.720 --> 0:20:11.679 coming from a position of strength or they're just like, 0:20:11.720 --> 0:20:14.480 oh boy, our business is really in trouble. Well, I 0:20:14.520 --> 0:20:16.960 mean they are the world's artist asset manager. They have 0:20:17.000 --> 0:20:20.360 the biggest ETF business in the world. So I wouldn't 0:20:20.400 --> 0:20:23.640 say it would be I think a stretch to say 0:20:23.720 --> 0:20:27.679 that they're um under tons of pressure there, but I 0:20:27.720 --> 0:20:30.480 mean asset management changes all the time. This is a 0:20:30.520 --> 0:20:33.399 business that for thirty years has been you know, growing 0:20:33.440 --> 0:20:36.879 through acquisition and now I think, um, you know, the 0:20:36.920 --> 0:20:40.159 global focus is really important to them, um as they 0:20:40.200 --> 0:20:43.840 try to kind of chart the next um, you know, expansion. 0:20:44.240 --> 0:20:46.359 Annie Massa, thank you so much for joining us. Annie 0:20:46.359 --> 0:20:50.440 Massa covers black Rock and asset management for us here 0:20:50.560 --> 0:21:10.480 at Bloomberg joining us and our Bloomberg Interactive Brokers Studios. Paul, 0:21:10.560 --> 0:21:13.280 we talk a lot about five G and how it 0:21:13.320 --> 0:21:18.760 can transform the entire communications and frankly uh technological landscape. 0:21:18.960 --> 0:21:22.359 Four nations. Certainly the U, S and China have been 0:21:22.840 --> 0:21:27.800 sort of facing off in this battle for five G supremacy. 0:21:27.880 --> 0:21:31.440 Joining US now is Meredith Meredith at Well Baker c 0:21:31.640 --> 0:21:34.920 t I, a president and CEO former Commissioner of the 0:21:34.960 --> 0:21:37.879 f CC. She was appointed by President Barack Obama in 0:21:37.880 --> 0:21:40.639 two thousand nine, serving on the f c C until 0:21:40.640 --> 0:21:43.159 two thousand and eleven. Meredith, thank you so much for 0:21:43.240 --> 0:21:46.879 being with us. So you're saying that you think the 0:21:47.000 --> 0:21:50.159 US has actually started to take the lead with the 0:21:50.280 --> 0:21:54.959 race for five G technology, please explain well, first of all, 0:21:55.000 --> 0:21:56.640 Lisa and Paul, thanks so much for having me. I'm 0:21:56.640 --> 0:21:59.359 pleased to be with you. Guys, Um and um, what 0:21:59.480 --> 0:22:01.960 are our stages is? We're just releasing a paper today 0:22:02.000 --> 0:22:05.440 from Analysis Recun that says that, you know, a year ago, 0:22:05.640 --> 0:22:08.159 China and South Korea led the five G race, but 0:22:08.240 --> 0:22:10.920 the US was close behind, and really because of the 0:22:11.000 --> 0:22:15.480 quick actions of our administration and the FCC and Congress 0:22:15.880 --> 0:22:19.520 were tied in we're tied with China. Overall. US is 0:22:19.600 --> 0:22:22.000 first in private investment, and we're first and high and 0:22:22.040 --> 0:22:27.120 low band availability, but overall we're tied with China. So again, 0:22:27.119 --> 0:22:29.560 what are really the metrics that you define to say 0:22:29.600 --> 0:22:33.960 who's winning or losing, because it's my understanding that not 0:22:34.080 --> 0:22:36.640 only were we be behind China, but we were well 0:22:36.680 --> 0:22:40.640 behind China. Well, the US leads commercial deployments, and we'll 0:22:40.680 --> 0:22:43.520 have twice the number of other nations by the end 0:22:43.560 --> 0:22:47.159 of twenty and remember that China won't have a single 0:22:47.240 --> 0:22:49.439 deployment by the end of the year. We're looking at 0:22:49.480 --> 0:22:53.840 having over ninety deployments. All right. So the reason why 0:22:53.960 --> 0:22:56.359 one reason why we're raising that is because we spoke 0:22:56.400 --> 0:22:58.400 with a couple of weeks ago, we spoke with Susan Crawford, 0:22:58.400 --> 0:23:02.119 who's a Harvard law professor and a former special assistant 0:23:02.160 --> 0:23:05.760 during the Obama invest administration as well. Uh, and she 0:23:05.880 --> 0:23:08.119 just wrote a book saying the coming Tech Revolution and 0:23:08.160 --> 0:23:10.840 why America might miss it, about how the US is 0:23:10.880 --> 0:23:15.000 profoundly behind in five G I'm just wondering, you know, how, 0:23:15.040 --> 0:23:19.040 how could you give us some confidence as you know 0:23:19.359 --> 0:23:23.160 that that that what you're saying is is more accurate. Um, well, 0:23:23.200 --> 0:23:26.080 I mean the metrics of the paper, certainly the investment 0:23:26.200 --> 0:23:31.280 of our companies is um you know, uh, three hundred 0:23:31.320 --> 0:23:33.720 it's gonna add you know, the jobs and the numbers 0:23:33.760 --> 0:23:36.160 that it is going to add to the economy. It's 0:23:36.280 --> 0:23:40.439 three billion dollars. You talked about the the UM what 0:23:40.640 --> 0:23:44.080 is going to bring to you know, all all of 0:23:44.119 --> 0:23:47.320 the United States and our numbers or three and a 0:23:47.400 --> 0:23:50.880 hundred one point eight million new jobs. UM. We look 0:23:51.000 --> 0:23:53.640 at what the companies are investing. And if you look 0:23:53.680 --> 0:23:56.000 at A T and T and Verizon the top investing 0:23:56.000 --> 0:23:59.159 companies in the country, UM, and so what they are 0:23:59.160 --> 0:24:02.879 willing to invest, what they have invested. After the administration 0:24:03.080 --> 0:24:06.800 had tax reform, and after the FCC lowered the barriers 0:24:06.880 --> 0:24:11.000