Speaker 1: This is Bloomberg Business Week. I'm Carole Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanibek. We're here every day bringing
Speaker 1: you the latest news from the world of business and finance,
Speaker 1: plus technology, politics, economics, all furnessing the power of Business
Speaker 1: Week reporters and editors, not to mention our journalists and
Speaker 1: analyst in more than one twenty countries. You can download
Speaker 1: Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot Com.
Speaker 1: You can also listen to our radio show at two
Speaker 1: pm Eastern Time on Bloomberg Radio or watch us on
Speaker 1: YouTube search Bloomberg Global News. Well, it is Giving Tuesday,
Speaker 1: and one company that is working to engage businesses and
Speaker 1: people in the AIDS and COVID pandemics is Read. They
Speaker 1: do it by partnering with brands which as Amazon, Apple,
Speaker 1: Louis Witton, Starbucks. So many more companies here with more
Speaker 1: on the work they are doing and the impact they
Speaker 1: are having is Red Red President in chief operating Officer
Speaker 1: Jennifer Latito. She joins us via zoom in New York City.
Speaker 1: Read by the Way, their sister organization of One, which
Speaker 1: was founded by Bono and other activist to and extreme
Speaker 1: poverty and preventable diseases. So they really are just all
Speaker 1: in on fixing what ails our world. UM, Jennifer, good
Speaker 1: to have you here with Tim and myself. How are you.
Speaker 1: I'm great, Thank you so much, and thank you so
Speaker 1: much for having me. No, absolutely great to have you
Speaker 1: here and so relevant in terms of what the world
Speaker 1: continues to fight. Here. You work with UM, you know
Speaker 1: a lot of brands. Tell us a bit of how
Speaker 1: you work, how those partnerships ultimately ultimately end up in
Speaker 1: raising a ton of money for for some really good causes. Yeah. Absolutely.
Speaker 1: Uh So for fifteen years, REDD has been focused on
Speaker 1: fighting HIV and AIDS UM and working with the biggest
Speaker 1: companies in the world in order to do that. UM.
Speaker 1: That continues to be an important priority for us. But
Speaker 1: what we've realized at this point is that you're never
Speaker 1: going to win the battle against HIV if you don't
Speaker 1: also take on the other battle that the world is
Speaker 1: facing in COVID. So we have really expanded our our
Speaker 1: mission to include funding for COVID vaccines, treat and testing
Speaker 1: in addition to all of them. All of the funding
Speaker 1: and support that we've given for HIV, and I think
Speaker 1: from a RED perspective, what's really important is we work
Speaker 1: with those companies not only to generate the money, but
Speaker 1: to generate the heat to get people to care, to
Speaker 1: have conversations like this, how do you get people well
Speaker 1: and to care in a pandemic when they're facing it
Speaker 1: each and every day. Like the thing is is, it's
Speaker 1: a different challenge than having someone care about something that
Speaker 1: ails people half a world away, which is I think
Speaker 1: away away. A lot of people thought about RED previously,
Speaker 1: absolutely and it's it's it's how people have thought about HIV,
Speaker 1: and unfortunately we're starting to make the same mistakes with
Speaker 1: covid um. You know, I think that with HIV, a
Speaker 1: lot of people think that is a crisis that is over.
Speaker 1: It is absolutely not over um And you know, there
Speaker 1: is we know how to end that, We have the
Speaker 1: tools that we need to end it. And I think
Speaker 1: from a RED perspective, what's really important to understand is
Speaker 1: that we have to keep the heat on it um
Speaker 1: because right now we're in a precarious position where we
Speaker 1: do not have equitable access to vaccines. That's what this
Speaker 1: campaign is aiming to do, is to get people to care,
Speaker 1: to get people to look at this as a global issue. UM.
Speaker 1: You know, obviously right now the headlines are being dominated
Speaker 1: by another variant. UM. That variant is because we do
Speaker 1: not have vaccines and low income countries. So while we're
Speaker 1: doing boosters here in the States and other places, less
Speaker 1: than ten percent of low income countries have gotten their
Speaker 1: first shot. So from a red perspective, our campaign, the
Speaker 1: Code red campaign, is about engaging consumers, engaging customers of
Speaker 1: these brands. UH to do you know whether it is
Speaker 1: our rewards campaign today is Giving Tuesday. We have an
Speaker 1: amazing idea which is to allow people to use their
Speaker 1: credit card rewards points. They can be turned into cash
Speaker 1: donations and those donations can go right to not only
Speaker 1: buying the vaccines, but very importantly getting those vaccines distributed
Speaker 1: where they're needed most. You know, Jennifer, when we do
Speaker 1: the numbers, and we often do it here at Bloomberg,
Speaker 1: about the number of people who have lost their lives
Speaker 1: to COVID specifically UM, and it's just staggering in terms
Speaker 1: of where we are. I think in terms of HIV,
Speaker 1: I think we all thought it was more under control,
Speaker 1: but when you look at some of the numbers globally,
Speaker 1: I was just looking at some stats, approximately thirty seven
Speaker 1: point six million people across the globe with HIV and
Speaker 1: twenty of these thirty five point nine million we're adults.
Speaker 1: One point seven million were children. It's just a reminder
Speaker 1: we have a long way to go to really getting
Speaker 1: this UM out of our system, you know, out of
Speaker 1: it being a really significant problem. Absolutely, and I think
Speaker 1: that you know, which is why it's so important when
Speaker 1: when we are very focused on COVID, to not overlook
Speaker 1: the impact that we've had for you know, again, Red's
Speaker 1: been doing it fifteen years, the disease has been around
Speaker 1: for several decades. There has been incredible progress. UM. We
Speaker 1: are seeing people, you know, AIDS is no longer a
Speaker 1: death sentence if you get diagnosed with HIV. There is
Speaker 1: treatment available that will stop you from passing that onto
Speaker 1: your partner and most importantly, passing it along to your child,
Speaker 1: so that we can see an HIV free generation in
Speaker 1: our future. We will not do that if we don't
Speaker 1: keep up the work that we're doing to fund the
Speaker 1: HIV programs as well as now what's needed to end
Speaker 1: the COVID pandemic. And again that's what this campaign is
Speaker 1: meant to do engage people. You know, we have you know,
Speaker 1: Read is known for our incredible products, so you can
Speaker 1: now shop Read and uh, you know, I would encourage
Speaker 1: everybody to go to code red dot org and you
Speaker 1: can find out how to use your credit card rewards
Speaker 1: points as well as shop as well as game. You
Speaker 1: can even play mind graft Um, you know. And we're
Speaker 1: really about making sure that we are giving customers and
Speaker 1: employees of the world's biggest brands the ability to help
Speaker 1: end this pandemic. Jennifer, how long do you think Red
Speaker 1: will have to exist? You know, that's that's an interesting question.
Speaker 1: I mean, at one point we talked about like, wouldn't
Speaker 1: it be amazing if we put ourselves out of business?
Speaker 1: You know, I think that Red is a really innovative model,
Speaker 1: and I think that right now again, unfortunately, we're still
Speaker 1: battling the HIV pandemic. We are now battling COVID. I
Speaker 1: don't know what's going to happen, if there's going to
Speaker 1: be another one coming around the corner. Um. But I
Speaker 1: think what's really special and unique about Red is our model.
Speaker 1: So whether our mission changes, you know, I think that
Speaker 1: we will continue to find ways to innovate that model
Speaker 1: and ensure that we're engaging the world's biggest companies along
Speaker 1: with their customers. All Right, We're gonna leave it on
Speaker 1: that note. Hey, Jennifer, good luck with the mission. And
Speaker 1: again code red dot org. You can find out more
Speaker 1: information there and certainly shop code reddish as she talked about.
Speaker 1: She is, of course, Jennifer Lotito. She's president chief operating
Speaker 1: officer at Red joining us via zoom in New York City.
Speaker 1: Great question that you asked, like, right, Like the goal
Speaker 1: is to maybe put yourself out of business exactly, but
Speaker 1: it does when I think about pandemics, Right, We've been
Speaker 1: told there's going to be more. Right and if you're
Speaker 1: not focusing on HIV AIDS or coronavirus US in COVID
Speaker 1: nineteen malaria, right, other things that eradicated poverty. Like, there's
Speaker 1: just so many issues out there. This is Bloomberg Business
Speaker 1: Week with Carol Masser and Bloomberg Quick Takes Tim Stinovic
Speaker 1: on Bloomberg Radio. Well, a lot going on when it
Speaker 1: comes to COVID. The EU has record at least forty
Speaker 1: four confirmed cases of the omicron variant in eleven countries.
Speaker 1: Does say that all of the people infected are asymptomatic,
Speaker 1: showing only mild symptoms. Oxford saying there's no evidence that
Speaker 1: the new variant defeats the vaccine it developed with Astra
Speaker 1: Zeneca and Durna, predicting vaccines will struggle while the with
Speaker 1: this variant, while the World Health Organization warned that the
Speaker 1: variant could feel a fresh surge in infections with severe consequences.
Speaker 1: All of this happening, Carol, while the U s c
Speaker 1: DC is considering tightening travel restrictions and rules, Germany taking
Speaker 1: a step closer towards making vaccines compulsory. So we slew
Speaker 1: of news happening around the world as a result of
Speaker 1: this variant. I feel like we've been here before, all right,
Speaker 1: So let's see what John Laryerman has to say. He's
Speaker 1: our health team editor at bloom News on the phone
Speaker 1: from Boston. John lot going on, trying to understand. It's
Speaker 1: confusing financial markets. It's confusing we we merror mortals. Um.
Speaker 1: I don't know how do today? Isn't it? It's only Tuesday.
Speaker 1: It's only Tuesday. I keep I keep telling myself that
Speaker 1: because it feels much late in the week. Yeah, there's
Speaker 1: so many there's a great deal of confusing news going
Speaker 1: on out here. It's difficult to make sense of. And
Speaker 1: I think a lot of it has to do with, um, say,
Speaker 1: government trying to be extremely cautious and to a degree,
Speaker 1: drugmakers as well. And yet I think that there is
Speaker 1: a certain amount of confidence about, you know, the the
Speaker 1: effectiveness of vaccines um and uh uh it remains to
Speaker 1: be seen for the effectiveness of drugs as well. UM.
Speaker 1: So it's it's difficult to put this in all all,
Speaker 1: all of it in context because there's news coming in
Speaker 1: from so many different directions. But um uh so far um.
Speaker 1: What the drugmakers are saying, at least most of them
Speaker 1: is that they think that their vaccines will be at
Speaker 1: least somewhat effective um against omicron. What does what does
Speaker 1: somewhat mean though? And I don't think we really know,
Speaker 1: but the the vaccine so far with the percent effective,
Speaker 1: So that's a really effective vaccine, you know, you think
Speaker 1: about it. That's much more effective than the blue vaccine,
Speaker 1: right um. Flue vaccines sometimes they tend to go between
Speaker 1: thirty and effective in a given year, so it's it's there.
Speaker 1: There's still they seem very effective in keeping people out
Speaker 1: of the hospital. We don't know. I think I think
Speaker 1: the Maderna comments earlier may have thrown a bit of
Speaker 1: a scare into people because they said they thought it
Speaker 1: would be less effective and we would need a new vaccine.
Speaker 1: But that's not what the other drug makers are saying.
Speaker 1: And then the other thing that you know, counterfeit knowing
Speaker 1: that um is uh that in the places where O
Speaker 1: Macron cases have been seen, UM, they seem to be
Speaker 1: less uh severe um. And this is news that come
Speaker 1: out of both the EU and South Africa, both of
Speaker 1: which have excellent surveillance and excellent health care systems. Now,
Speaker 1: does that mean that these are breakthrough cases in people
Speaker 1: have already been vaccinated and so that's why they were severe,
Speaker 1: or does it actually mean that it's a less severe virus.
Speaker 1: It's very difficult to say. Or was it just the
Speaker 1: population that was seen in was it younger people, children?
Speaker 1: You know, people who usually don't develop uh severe cases.
Speaker 1: So there's a lot of data. I mean, it's it's
Speaker 1: not to say. Will never find the answer to these questions.
Speaker 1: I think we will at some point. But um, what
Speaker 1: have we known about you know? O Macron? I think
Speaker 1: it entered the vocabulary about five days ago, right, So, um,
Speaker 1: there's still a lot to find out about this. And
Speaker 1: the other thing to remember is, you know, um, here
Speaker 1: in the US, we still haven't seen omicron. We will,
Speaker 1: there's no doubt that we will. But um, but is
Speaker 1: that is that John, because we don't do the same
Speaker 1: kind of sequencing that other countries do. We did a
Speaker 1: story yesterday in which we sort of laid out, you know,
Speaker 1: some of the issues around the surveillance system here in
Speaker 1: the US. And we do a lot of sequencing, there's
Speaker 1: no question we do a lot, but the intensity of it,
Speaker 1: the percentage of cases that are tested in sequences sequenced
Speaker 1: is lower than say, you know, some countries like of UK,
Speaker 1: for example, which is the star. You know, they are
Speaker 1: the world leader in this and which we probably ought
Speaker 1: to be trying to catch up to. And actually South
Speaker 1: Africa is a very good job with this stuff as well.
Speaker 1: South Africa you know, huge health problems and have to
Speaker 1: keep an eye and stuff like HIV, which huge rates
Speaker 1: of So they're very good with sequencing there and that's
Speaker 1: you know, there's every reason that that's why they found
Speaker 1: owned there because they're actually keeping such close airing issues
Speaker 1: like John Larroman, thank you so much. How team editor
Speaker 1: Bloomberg News on the phone from Boston. You're listening to
Speaker 1: Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes
Speaker 1: Tim Stinovic on Bloomberg Radio. So call it storage wars
Speaker 1: on steroids to some extent um supply Jayan Carnage, creating
Speaker 1: opportunities for companies that are willing to take a chance
Speaker 1: on some random goods. Tim, what's it gonna be? Is
Speaker 1: it going to be a car? Or is it gonna
Speaker 1: be pumpkin seeds? Maybe some rotting foot both, It could
Speaker 1: be all of the above. It is a fantastic story.
Speaker 1: Joel Weber as editor at Bloomberg Business Week. He's with
Speaker 1: us in the Bloomberg Interactive Broker studio. Jeff Wise this
Speaker 1: freelance contributor for Bloomberg Business Week. He joins us on
Speaker 1: the phone from Westchester, New York. So, Joel, how is
Speaker 1: this an industry Oh man, this story brought me so
Speaker 1: much joy. It was like, we just keep getting a
Speaker 1: horror messages about the supply chain and how everything's broken,
Speaker 1: and then like you get a little gym like this
Speaker 1: that reveals that there are people who specialty is to
Speaker 1: deal with boxes that are sort of mysterious mystery boxes.
Speaker 1: You know, it's like the little mystery not just any
Speaker 1: boxes though, right, exactly like container boxes. And it turns
Speaker 1: out this is a an industry in and of itself
Speaker 1: that we probably wouldn't write about it if there wasn't
Speaker 1: some supply chain carnage. UM. So, Jeff, tell us about
Speaker 1: how you found out about this amazing story. Well, I
Speaker 1: was doing a story about ever Given and one of
Speaker 1: the aspects of the story that was kind of drew
Speaker 1: my attention was the fact that nobody really knew what
Speaker 1: was on that ship. You know, there was something like
Speaker 1: twenty containers, and there were there were various reports like, um,
Speaker 1: it had been reported that there was a life sized
Speaker 1: train of source rex that was heading for a mini
Speaker 1: golf course in England. Um, but like nice little details
Speaker 1: like that, but nobody really knew what the bulk of
Speaker 1: it was. And there was this young guy Uh in
Speaker 1: the UK who um was more talkative than most of
Speaker 1: these these these salvage buyers, and he um kind of
Speaker 1: became like sort of internet instant media star over in
Speaker 1: the the UK. He was on the local news and everything,
Speaker 1: talking about what he had. What he had, He had
Speaker 1: taken about twenty containers off the ship and was trying to,
Speaker 1: you know, figure out what to do with it. Um.
Speaker 1: He had actually ten containers five tons or something of
Speaker 1: raw cabbage that had been picked by farmers in China
Speaker 1: putting these containers and was destined for Europe. And then
Speaker 1: of course it was stuck for four months the heat
Speaker 1: and has liquefied had turned into goop. And so this
Speaker 1: is a guy who, um, you know, became the centerpiece
Speaker 1: of my of my article for Business Week. Um. You know,
Speaker 1: he can both turn around stuff that has some value
Speaker 1: left in it um, or he can take stuff that's
Speaker 1: absolutely toxic or dangerous or whatever it has to be
Speaker 1: disposed of. Um. So he can he whatever it is,
Speaker 1: he kind of uses his cleverness and his connections to
Speaker 1: find out the best thing to do with it. And
Speaker 1: how is the that you know in that uh you know,
Speaker 1: these could be mystery boxes, it isn't it. Don't The
Speaker 1: companies that trans transport these containers know exactly what's in
Speaker 1: every container for the most part, Yes, Um, each container
Speaker 1: has a manifest and it's sealed, and so there's there's
Speaker 1: not SUPSI to be any tampering, but there's shenanigans that
Speaker 1: go on and and sometimes the manifest is vague. In
Speaker 1: the case of the one that I wrote about in
Speaker 1: the story, it just said household goods bracket car and
Speaker 1: they was what that meant? Does anybody's gass? Like what what?
Speaker 1: What value? Do as on to that? It's like a complete,
Speaker 1: you know, random gas. Um. But he was telling me
Speaker 1: sometimes this wasn't in the article, but there's a trade
Speaker 1: where people basically because you cost money to dispose of stuff,
Speaker 1: especially dangerous stuff. So what they'll sometimes do is they'll
Speaker 1: they'll bundle up you know correctly, um say plastic recycling
Speaker 1: in the front of a container, and then behind that
Speaker 1: it's like either just junk or garbage or something hazardous
Speaker 1: and then then you ship it, you know, to Asia
Speaker 1: or to Africa, and then it's you know, effectively you're
Speaker 1: disposing of it. The same day I was there, he
Speaker 1: showed me the car. He had a load of tires
Speaker 1: that had been illegally shipped off and had been sent back,
Speaker 1: and so he was going to dispose of that. So
Speaker 1: I understand why someone might not claim twenty containers full
Speaker 1: of what was formerly known as cabbage. But why why
Speaker 1: would something like that car not get claimed? Like? How
Speaker 1: how frequently does stuff just not get claimed at the port?
Speaker 1: He is not a detective. His job is just to
Speaker 1: figure out what to do with this stuff, and he
Speaker 1: like the quicker he can do it, the better. So yeah,
Speaker 1: my instinct is the same as yours. I'm like, how
Speaker 1: do you know? But he that's not his approach, so
Speaker 1: he doesn't know, Like he has no idea what happens.
Speaker 1: This guy could have died. He could have just like
Speaker 1: looked at the storage charges and been, um, I don't
Speaker 1: want to deal with this anymore. But this is a
Speaker 1: real problem. You know, the containers sit there and whatever
Speaker 1: is in it is not gaining any value, and and
Speaker 1: the costs are mounting. I actually wound up. I was
Speaker 1: I was over in the UK doing a couple of stories,
Speaker 1: and I wound up sharing a cab with a woman
Speaker 1: whose son was in the furniture importation business, and she
Speaker 1: was telling me he was looking at he might go
Speaker 1: bankrupt because there's such a shortage of truck drivers because
Speaker 1: of Brexit. All their truck drivers left and they have
Speaker 1: a real problem. They just can't move stuff and the
Speaker 1: longer it sits, you know, worst. So I just had
Speaker 1: this image of him like rubbing his hands together and like, oh,
Speaker 1: suppledging problems, all those containers you know, sitting out there.
Speaker 1: Is he like is he just you know, kind of
Speaker 1: expecting kind of a windfall? Well, um, I mean it's
Speaker 1: been good, but he but there's plenty for him to
Speaker 1: do anyway. I mean, this is you know, what's so
Speaker 1: interesting about this story is that you know, containers are
Speaker 1: kind of routinized. I mean you're basically taking what used
Speaker 1: to be every item was was individually, you know, put
Speaker 1: on board a ship by Steven Oor's and everything has
Speaker 1: been kind of routinized into these identical boxes and moved
Speaker 1: by the tens of thousands through these ports and it's
Speaker 1: it's we are are all around the world part of
Speaker 1: the system that is that is brought together. And here
Speaker 1: you have these guys who are kind of breaking that
Speaker 1: mold and there and they're and and they're sort of
Speaker 1: taking things back to the idiosyncrasy that's kind of inherent
Speaker 1: in all these little transactions that are packaged onto these boxes.
Speaker 1: Which doesn't answer your question, all I I grant you,
Speaker 1: but but is the problem getting worse. Well, the problem
Speaker 1: is bad there. It's like we have a slightly different
Speaker 1: problem here. We don't have Brexit, and we weren't quite
Speaker 1: as affected by the blockage of the Suez Canal, which
Speaker 1: had these sort of ripple knock on effects over in
Speaker 1: Europe but not so much here. Um, but we do
Speaker 1: have the kind of COVID backlog. The President had a
Speaker 1: press conference last week where he specifically addressed this, um
Speaker 1: and the people that I talked to everyone has kind
Speaker 1: of a different sense of how long this is gonna look,
Speaker 1: but it's it was anything from eight months to two years.
Speaker 1: This is gonna be with us. Yeah, I just think,
Speaker 1: like a guy like this, it's just like it seems
Speaker 1: like this would be like Christmas every every month unless
Speaker 1: you're getting and it's like a six year old. It's like,
Speaker 1: you know, anything that's wrapped up is like a surprise,
Speaker 1: and like this is the very counterous things. Right when
Speaker 1: things are going bad for everyone else, it's good for them, right,
Speaker 1: the more stuff. Every time things rot or go awry,
Speaker 1: these guys are here to pick up the slack. And
Speaker 1: I think there's you know, even when things are quote
Speaker 1: unquote normal, things always go awry. I'll pass on the
Speaker 1: cabbage and say yes to the Sedan, even though you
Speaker 1: know it's so what, so what. I probably could sell
Speaker 1: it more now than I could have. There's no title control.
Speaker 1: You'll sell that car quickly, all right, Jeff Wise, this
Speaker 1: is a great read. Freelance contributed to Bloomberg Business Week
Speaker 1: in the upcoming issue of the magazine. Jil Webber, Editor
Speaker 1: Bloomberg Business Week in our interactive broker studio Pumpkin Seeds. No,
Speaker 1: I know, all right, you're listening to Bloomberg Business Week.
Speaker 1: This is Bloomberg Radio. This is Bloomberg Business Week with
Speaker 1: Carol Masser and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio.
Speaker 1: Among our most read stories on the Bloomberg, this one
Speaker 1: is about a secretive robot that is helping one investment
Speaker 1: firm locate winners. Robots and finance. They're not new to him,
Speaker 1: but this is something different. Yeah, this is not just
Speaker 1: about picking the winners, but it's about avoiding picking the losers. Right, right.
Speaker 1: This is the the same with investing. Right, It's not only
Speaker 1: about gaining money, but it's about making sure you don't
Speaker 1: lose a lot of money. It is, but there's also
Speaker 1: a big human element involved. Unfortunately, we have a Hammond
Speaker 1: Deals Report human Bloomberg News a human. Not last time
Speaker 1: we check robot, although yeah, he gets scoops like a
Speaker 1: like some sort of super hero EDHAMM. Did it great
Speaker 1: to have you with us this afternoon? Tell us about
Speaker 1: this robot that Stripes is using and has been using.
Speaker 1: Great to be with you guys. Um, look, I think
Speaker 1: that's the first thing said. Yes, the robot's secretive, but
Speaker 1: only because Strikes itself is secretive. It's a very very
Speaker 1: private exity firm. And by that I mean they have
Speaker 1: never done the press release, they've never done an interview.
Speaker 1: They don't really go out and make any noise about
Speaker 1: what they're doing. Do you know what? You know what?
Speaker 1: You know? What's so funny? On our call this morning,
Speaker 1: on our call when we're talking about doing this story,
Speaker 1: I said, what is Stripes? Am? I should I have
Speaker 1: heard of this company? Like we are not really stupid? Yeah? No,
Speaker 1: but you should have because that was where I was.
Speaker 1: I became interested in them because some of their portfolio
Speaker 1: companies were going public and we're having these insane I
Speaker 1: p o s and becoming quite well known brands, and
Speaker 1: I was like, well, who's this company that keeps showing
Speaker 1: up again and again and again on the shelf hold
Speaker 1: to Pay and no one seems to know anything about
Speaker 1: and they're looking into them, even with Mike of Bloomberg
Speaker 1: and all of our data. I was like, we don't
Speaker 1: show a huge amount about them. This has got to
Speaker 1: be an interesting story. And so I dug in and
Speaker 1: dug in and eventually started to piece together this thing
Speaker 1: that they have, which I think is fairly unique in
Speaker 1: private equity, which is that they're using you know, what
Speaker 1: has been a long term trend in hedge funds, sort
Speaker 1: of algorithmic trading. They use using that same kind of
Speaker 1: technology to actually source deals, and then they're using humans
Speaker 1: to go and build relationships to get into those deals
Speaker 1: and then help manage those companies through their you know,
Speaker 1: through their growth from early stage right away through I
Speaker 1: p O S. And it's it's something that has obviously
Speaker 1: worked extraordinarily well for them, at least thus far well.
Speaker 1: And it sounds like the more data sonar, right is
Speaker 1: it's known internally um, but the more data it accumulates,
Speaker 1: the smarter it seems to get. And that's helping it
Speaker 1: avoid losses right right exactly, so, and this was key
Speaker 1: points of the story. It was like, yes, it has
Speaker 1: these great return numbers and you know, long term I
Speaker 1: R are that is way above what would be considered
Speaker 1: normal in the industry. But actually the more interesting part
Speaker 1: to me was that like, over a period of time,
Speaker 1: it's lost ratio has gone to sube, which is almost
Speaker 1: unheard of it in investment. I mean, really, what that
Speaker 1: means is that like if you pick twenty investments in
Speaker 1: a fund, you're you're you're losing money on on almost
Speaker 1: none of them. I mean, it's it's just a remarkable
Speaker 1: thing to do. And obviously the robot is a big
Speaker 1: part of that because it's able to refine the companies
Speaker 1: that it puts in front of the investment professionals, that
Speaker 1: strips and and so you have what seems like a
Speaker 1: very very good and consistent investment model for them. The
Speaker 1: key thing that they said to me when I was
Speaker 1: sort of digging into this, and they weren't cooperating with
Speaker 1: me on this piece, but they did say, look, the
Speaker 1: technology is only useful for our firm. It wouldn't be
Speaker 1: something that anyone else could just plug it and go
Speaker 1: and I think what that means is that the kind
Speaker 1: of investments the robot picks are ones that actually makes
Speaker 1: sense for the investors. That strips into their professional expertise.
Speaker 1: It wouldn't necessarily work at any investment fund. And what
Speaker 1: is what is the data that they're able that's that
Speaker 1: stripes is actually and this and so in our robot
Speaker 1: is actually able to to dig into because these are
Speaker 1: private companies, so this type of data isn't readily available.
Speaker 1: So what does it look at? What are the inputs? Yeah,
Speaker 1: it's a great question. I obviously was not able to
Speaker 1: establish exactly what it looks at because that would be
Speaker 1: sort of giving away their secret source. But it it
Speaker 1: takes from a very wide range of different data groups
Speaker 1: and fact sets. And some of that is, you know,
Speaker 1: news articles like we were on private companies. A lot
Speaker 1: of it is stuff like customer satisfaction surveys, credit cards scanned,
Speaker 1: and sort of more granular stuff. Um. The the interesting
Speaker 1: thing is how it scores. It's from what I understand,
Speaker 1: it has a scoring mechanism that sort of puts a tiny,
Speaker 1: tiny proportion of the companies it looks at in the
Speaker 1: sort of the box that says that the Stripes investors.
Speaker 1: This is you know, this is a top score for us.
Speaker 1: What have they invested in? Cookies? Cookies there, that's right
Speaker 1: there in Levian Bakery there. Did you get to eat
Speaker 1: any of those for your reporting? That's something I haven't
Speaker 1: done yet, Okay, you and me, Third Avenue, Upper East Side.
Speaker 1: I might even order some to the office in studio.
Speaker 1: But they're in cookies. They are in Parade, which is
Speaker 1: this like fas stuff and coming underwear group. They're in
Speaker 1: on running there in Monday. They are in Remittly, which
Speaker 1: is the cash transfer out. They're in a lot of
Speaker 1: different companies, and a lot of very successful companies, and
Speaker 1: four of which went public over the summer and have
Speaker 1: had As I say, it's sort of like rapid rapid growth,
Speaker 1: even post idea, although that may have called off slightly today,
Speaker 1: but along with everything else, but it's interesting when we
Speaker 1: know that there's a lot of money chasing, especially a
Speaker 1: lot of younger companies, it does sound like that this
Speaker 1: is giving them a big advantage, both on the upside
Speaker 1: but particular on the downside as well. And Hammond, thank
Speaker 1: you so much. Blomberg News Deals reporter ed Hammond on
Speaker 1: the phone, in New York City. I love this story.
Speaker 1: I love living cookies. Okay, I didn't know that they've
Speaker 1: had private equity investment. Could you just think about it? Right? Like? Uh?
Speaker 1: And ultimately these companies go public if you get in
Speaker 1: early enough, you think about the potential for rewards. You
Speaker 1: need the robot. You're listening to Bloomberg Radio. I'm rob Yeah,
Speaker 1: I bet you let me drive. Oh no, no, no no,
Speaker 1: this is not a toy night. Please, I'll do the ridings.
Speaker 1: I want to drive. It's a good question. This is
Speaker 1: the drive to the clothes on Bloomberg Radio. All right,
Speaker 1: everybody just got ten minutes left in today's trading session.
Speaker 1: We are pretty much at our lows when it comes
Speaker 1: to the SMP and the DOLL a little bit off
Speaker 1: of it when it comes to the NASDA. But definitely
Speaker 1: it does feel like a recalibration when it comes to
Speaker 1: investors as they try to make sense of J. Powell's
Speaker 1: testimony today, because he certainly seemed a little bit hawkish.
Speaker 1: But keep in mind rates are still low, low, low.
Speaker 1: Let's see what Aaron Cannon has to say, co founder
Speaker 1: and chief executive officer at Clear Harbor Asset Management of
Speaker 1: a billion in assets under management. Aaron back with us
Speaker 1: on the phone from Stanford, Connecticut. He Aaron, Uh, it's
Speaker 1: been interesting the last week or so, certainly concerns about
Speaker 1: the latest COVID variant, and then we had J. Powell today.
Speaker 1: What was the most significant thing you think we got
Speaker 1: from the Fed chief? Well, certainly the pivot around the
Speaker 1: acceleration of the taper. We knew the taper was coming,
Speaker 1: but the notion that perhaps they would accelerate it by
Speaker 1: two months just sort of suggest that poll has has
Speaker 1: pivoted from a belief that inflation is transitory to now
Speaker 1: being seemingly concerned about the sort of stickiness factor of inflation.
Speaker 1: Of course, as you have the the other headwind of
Speaker 1: of the uncertainty factor around this new variant, and you
Speaker 1: know the question around transmissibility and lethality and whether or
Speaker 1: not the current vaccines will will prove effective or not,
Speaker 1: and so sort of the perfect elixir for higher volatility,
Speaker 1: which we've really seen now over the last uh several days.
Speaker 1: I think we bottomed on through this year and implied
Speaker 1: volatility about fifteen and it's it's up over twenty seven today.
Speaker 1: And as as you uh noted, to long long dated
Speaker 1: treasuries are are lower today even though UH Paul is
Speaker 1: seemingly concerned about inflation. So I think that sort of
Speaker 1: suggests to me that the market is UM is maybe
Speaker 1: believing Paul around taper, but but not so much around
Speaker 1: the idea that he can UH convey a more aggressive
Speaker 1: tightening UH program around a higher FED funds right in
Speaker 1: two thousand and twenty two. So how many reckons style
Speaker 1: these competing forces happening right now? One is Fittrick Helle's
Speaker 1: comments about taper, and the other one is about this
Speaker 1: transmissibility of unknown, the new variant running rampant throughout the
Speaker 1: world right now, and the concerns around that because that
Speaker 1: could lead to shutdowns and it could lead to a
Speaker 1: decline in economic activity. Yeah, Tim, that's a great question,
Speaker 1: because it's it's almost odd in my mind that Paul
Speaker 1: would decide this week to serve pivot the issue of
Speaker 1: inflation when there's really no new inflation data this week, UM,
Speaker 1: and two weeks ago he was a little more certainly
Speaker 1: in the transitory camp. So I'm a bit baffled by that, UM,
Speaker 1: And I wonder if this is akin to this sort
Speaker 1: of UH taper tantrum of two thousand and eighteen just
Speaker 1: before Christmas. Um. With that said, the virus at least
Speaker 1: at an anecdotal level, maybe less lethal and is more
Speaker 1: transmissible than than the delta variant. Now that's quite normal, Um,
Speaker 1: that this would occur, um as Um, A virus is
Speaker 1: trying to sort of remain uh quote unquote alive in
Speaker 1: a in a population, transmissibility tends to spread and um
Speaker 1: lethality tends to tends to move lower, Aaron. It says
Speaker 1: something though, right for j Powell, to Tim's point that
Speaker 1: he was comfortable enough in you know, an environment where
Speaker 1: over the past three days we've seen volatility in a
Speaker 1: big way, and we've seen the concerns about the variant.
Speaker 1: But for him to still feel confident in his testimony
Speaker 1: and going before lawmakers to take the word transitory off
Speaker 1: the table, to say that we might speed up the
Speaker 1: pace at which we uh cut back on those asset purchases.
Speaker 1: Does it speak to the underlying strength that he sees
Speaker 1: in the economy even with all of that going on. Well, Um,
Speaker 1: you know, I don't know, is the short answer, Um,
Speaker 1: But you know, I must confess I'm sort of in
Speaker 1: the camp that still believes that if it were not
Speaker 1: for COVID, we would not have an inflation problem, and
Speaker 1: that if we do have a post COVID world, if
Speaker 1: COVID can dissipate to the point where the global economy
Speaker 1: can can normalize. And is that a two thousand and
Speaker 1: two event or two three events, We do not know,
Speaker 1: but I believe it is something for the future, that
Speaker 1: there is an episodic or transitory or whatever term you
Speaker 1: want to use nature to inflation and bottlenecks should subside
Speaker 1: UM and some of the sort of structural headwinds too
Speaker 1: uh too inflation should also rear rear their head again,
Speaker 1: which is that you know, we do have an aging
Speaker 1: worker population, we do have a decline in global UH
Speaker 1: rate of population growth. More more generally, UM productivity gains
Speaker 1: through technological advancements should prove disinflationary or continue to prove
Speaker 1: disinflationary over time. But you know, there's also the other
Speaker 1: side of this that that I think we need to
Speaker 1: be cognizant about, and maybe this is where Paul is
Speaker 1: is right now, and that is there's a bit of
Speaker 1: a deglobalization effort underway where I think a lot of
Speaker 1: corporate um corporations are realizing that the notion notion of
Speaker 1: just in time uh may may be less important than
Speaker 1: you know, having you know, as the phrases just in case,
Speaker 1: having you know, production here in the United States or
Speaker 1: with our neighbors, and not with a nemesis economically, militarily,
Speaker 1: and so that can be inflationary over time. And maybe
Speaker 1: that's a sticky part of this equation. Hey, and we
Speaker 1: just have about a minute left with you, and I'm
Speaker 1: wondering the fun days like today, you're getting calls from
Speaker 1: clients because they're so used to seeing the stock market
Speaker 1: at least go one way higher. Yes, I mean, to
Speaker 1: be honest with you, our our phones have been quiet
Speaker 1: on that front. And I think that's because we stay
Speaker 1: in touch with our clients. We have an asset allocation
Speaker 1: and a risk management framework that's unique to each client.
Speaker 1: And so the idea that a client may need cash
Speaker 1: today or tomorrow doesn't mean we run out and have
Speaker 1: to sell equities in this market today. That would mean
Speaker 1: I think that we're doing something quite irresponsible in the
Speaker 1: planning process. So I think our clients are probably reasonably
Speaker 1: calm about where things are. They know that volatility is
Speaker 1: a natural function of markets, but they also know that we're,
Speaker 1: you know, looking after their asset allocation and that we're
Speaker 1: creating a risk adjusted portfolio that's specific to them both
Speaker 1: for the short, medium and long term in their financial life. Well,
Speaker 1: it's for me, it just feels like there's a recalibration
Speaker 1: of so many different things going on, whether it's in
Speaker 1: the energy markets, whether it's in demand, whether it's people
Speaker 1: leaving the workforce for good and just different things going on.
Speaker 1: But but we're definitely seeing things play out in the market. Hey, Aaron,
Speaker 1: thank you so much. Co founder, chief executive officer at
Speaker 1: Clear Harbor Asset Management roughly one billion in assets under
Speaker 1: management with us on the phone once again from Stamford, Connecticut.
Speaker 1: Thanks for listening to Bloomberg Business Week. Download the podcast
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