Perspective: Get ready for pay transparency, California

On Sept. 27, Gov. Gavin Newsom signed Senate Bill 1162 into law, which provides for pay transparency in job postings for most California employers. Under the new law, employers must provide a pay scale on all job postings and to current employees who ask for the information......»»

Category: topSource: bizjournalsNov 27th, 2022

Transcript: Marcus Shaw

    The transcript from this week’s, MiB: Marcus Shaw, CEO of AltFinance, is below. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, YouTube, and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ ANNOUNCER: This is Masters in… Read More The post Transcript: Marcus Shaw appeared first on The Big Picture.     The transcript from this week’s, MiB: Marcus Shaw, CEO of AltFinance, is below. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, YouTube, and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ ANNOUNCER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio. BARRY RITHOLTZ, HOST, MASTERS IN BUSINESS: This week on the podcast, I have another special guest. His name is Marcus Shaw. He has really a fascinating career and a focus these days. He really began as a traditional engineer/finance person working at IBM as a network engineer before he got his MBA at Duke. And from there, he did the usual research and investment banking gigs throughout a lot of Wall Street before the opportunity came to help entrepreneurs develop and grow their businesses in places like Alabama and Tennessee, which ultimately led him to participate in the founding of a new firm called AltFinance, which was created by really a group of, for lack of a better word, finance royalty. It’s Howard Marks of Oaktree Capital. It’s Tony Ressler of Ares, Marc Rowan of Apollo Global. These three gentlemen said we’re lacking the ability to tap into a very rich, diverse talent pool, including historically black colleges and universities. Venture capital, private equity, just were not recruiting for those spaces. And so they stood up a firm called AltFinance, whose main purpose was to help alternative asset managers tap into that rich pool of potential hires. Marcus Shaw works with them, and he’s the CEO of AltFinance. I found this to be really a fascinating conversation about how to access the most skilled partners and employees, what can be done to shake up a relatively staid industry that has lagged behind its peers in terms of recruiting and other things, and really how to help have a major impact in the world of finance. And I found this conversation to be fascinating and I think you will also. So with no further ado, my interview with Marcus Shaw. MARCUS SHAW, CEO & PRESIDENT, ALTFINANCE: Barry, thank you so much for inviting me. RITHOLTZ: I’m excited to chat with you. So let’s talk a little bit about Wall Street and diversity. Wall Street has been pretty bad at recruiting black talent. It’s been a stated objective for decades. Why is finance so bad at this? SHAW: Barry, I think that it’s a complex question that requires actually a complex solution and a multifaceted solution. I would say the most general issue here is that folks don’t have the networks and the access to careers in finance from across the country. Right? So if you grew up in New York, yeah, you’ll probably know some people that worked in the industry and you may have some relationships. You may go to school with somebody. Your parent may work there. And that’s whether you’re white or black. All right. But if you don’t, if you grew up in a market, where there’s not an investment bank, there’s nothing other than a branch bank for one of the multi-dimensional financials, then you’re not really going to have an understanding of what that career looks like at a young age. And so as you get ready to go to college, and you start thinking about what your career going to look like, it’s going to be primarily academic for you. And so I think that’s always a challenge that they’re not a ton of people that are in the seats, that are getting access to, in this case, black students from across the country. They’re giving them a look and this is what a career could look like for you. This is what an opportunity could look like for you. Here’s what the realm of possibilities is. And this primarily is how you get there, here’s a path to get there. That’s the biggest challenge. RITHOLTZ: So tell us about AltFinance, what is its mission? And why is this a better mousetrap than the way things have been done before? SHAW: So AltFinance is focused on building diversity in the alternative investment industry. RITHOLTZ: Alternatives being venture capital, private equity, anything else? SHAW: Private credit, real estate investing, hedge funds, everything kind of outside of traditional stock and bond investment, right, the things that are more private and market-driven often. And so our goal is to increase diversity in that space by working with partnerships at historically black colleges and universities, by providing students from HBCUs opportunities to have co-curricular programming, understanding, you know, exactly what you need to know to be successful in that role. Also to provide mentorship for students so that they’re not operating in a vacuum, so that when they have questions, there are people in the business, people that have experienced in the business that they can talk to. And also by working and partnering with schools to provide financial support to help increase capacity not only for students, but also for the institutions themselves. RITHOLTZ: So let’s talk a little bit about how AltFinance was initially funded and created. You have Howard Marks of Oaktree Capital, Marc Rowan of Apollo, Tony Ressler of Ares. These are like three heavy hitters at giant legendary firms. That’s a heady group to work with. What led them to say we need help accessing black talent, and we’re not getting it from anywhere else, we have to do it ourselves. SHAW: What I think all three gentlemen, you know, Howard, Marc, and Tony all recognize is that relationships help drive value. And so you got to have relationships with the schools and the places where there is a lot of black talent, and I think they saw HBCUs as an opportunity for that. I think what’s important, though, and what’s key is that we found ourselves at a very interesting point in time, in 2020, in the wake of George Floyd, in the middle of COVID. And so I think, everybody around the world, business leaders from across multiple industries were trying to think about how can we make the world a better place? How can we address racial equity in a way that’s specific to the businesses that we operate in? And I think that’s the key, right? This was not just about, you know, going out and being philanthropic, right, and making one time gifts. This was about how can you be strategic in building partnerships over the long term, that are going to have a systemic impact in the industry in which you operate. And that’s where I really think that the three firms led by, again, Howard, Tony, and Marc really found something that was special and something that was, you know, a better solution to a question that Wall Street has been dealing with for years. RITHOLTZ: So is it safe to say that Wall Street, in general, but alternatives like private equity and venture capital, were not recruiting at historically black colleges and universities? Was that void out there forever? SHAW: I think that it was not systemic, right? There was no systemic recruiting at HBCUs, in a way that was going to be sustainable, right? And I think that a lot of that was driven by needing to take some time and figure out how do we engage with these universities. We know we’ve got talent there. We’ve got density of talent, which is the important thing. And so I think giving us time to reflect on what had happened over the past few years was a really strong case for let’s go, let’s be direct and intentional. Let’s work with presidents of these universities. Let’s work with the deans, let’s work with the students to develop a strategy together, that’s going to rise the tide for everybody. RITHOLTZ: So I want to get into the details of what you guys actually do with students. But before I get there, you mentioned Tony, Howard and Marc, what led them to say, hey, let’s stand up some entity so we can set up an institution to correct just a recruiting shortfall we’ve had for years and years. Like that’s an unusual group of guys to get together and say “Let’s see if we can dent the universe a little bit.’ SHAW: Yeah. So I think there are two factors. Number one, and I think they both reflect strong leadership at the firms. Number one, you had, you know, somewhat of a groundswell from within the firm, certainly at leadership that said we need to figure out a way to do something. And I think as great leaders do, I think Howard and Tony and Marc were receptive to that. And also, it was perfect timing because they were thinking, how can we drive impact? How can we impact and affect change in our own way? And so it starts off with senior leaders at the firm and you know, these heads of industry working together to figure out, what can we do? Then you bring the relationships together. So Howard, Marc and Tony have known each other, but also many of their senior leaders have known each other as well. RITHOLTZ: Right, right. SHAW: And so the main thing that you have to do is say we want to take down any competitive barriers in which we operate during our standard business. And we recognize that what we’re trying to solve for is bigger than our individual company. It’s really about the industry. And if you can get to that point, which they did, very quickly, I mind you, then you can instantly start to put together something as powerful as AltFinance. And that happened, and it happened fairly quickly. But I think it took a lot of time and a lot of vulnerability, and a lot of transparency. And I think that’s really symbolic of what AltFinance represents. RITHOLTZ: So now let’s drill down a little bit and talk about what you exactly do with students. Do you guys provide coaching or mentorship? What do you do to help kids who probably aren’t all that familiar with what private credit is, and put them on a career path until alternative investments? SHAW: So there’s a framework that I use, I use it with entrepreneurs, I use it with talent anywhere I see it. First, you identify really good talent, right? Kids that have an interest in investing. Although they may not know the nuance of what investing asset class that they’re most interested in, or, you know, they’re young, they may not have the experience of understanding multi-cycles in the market, but they have an interest in investing. They have academic strength, right, some real intellectual rigor and horsepower. And so you look at kids that perform well, no matter what they do. You know, the kid can be a philosophy major, they can be a finance major, but they’re doing well in the pursuit that they’re following. And then we look for students that are coachable, right? RITHOLTZ: Coachable? SHAW: Coachable. Coachable is key. RITHOLTZ: Really? SHAW: It’s an apprentice model business. You know, there’s nobody that comes into this business, and comes in right out of college as a partner. Even if they’ve got all the resources in the world, nobody is going to come in as a partner. By and large, most people start this business as an analyst and they work with associates, and those associates working with VPs and principals, and managing directors and so forth. So you need people that are going to be willing to work through the apprenticeship model, that are willing to come in, you know, well compensated, a great network of people that they’re going to be around, but they’re still going to have to listen and be coached up in order to benefit the team in the company. And so we look for those things, people that have an interest in investing, people that have intellectual horsepower, and people that are coachable. RITHOLTZ: That’s really intriguing. So it’s not so much specific qualifications that are needed as qualities that will allow the students you select to succeed going forward? SHAW: Yeah. I think by and large, I mean, I would say that those qualities, you know, we recognize them through qualifications, right? So I look for people who have strong GPAs, and people that are taking some rigorous coursework, even if that coursework is not in finance. I look for people that have done extracurricular work, or you know, manage their own little portfolio, or have stock ideas or businesses ideas that they want to pitch. And then I look for people who also have references that say, “You know what, this young man, this young woman has been really coachable in the time that I’ve had them in school.” RITHOLTZ: So generally speaking, alternative assets, that’s a tough gig to get into regardless of where you go to school. Private equity, venture capital, hedge funds, real estate, down the whole list, not easy, how much harder is it to get into that space if you’re coming from an HBCU? SHAW: I think it can be difficult, and not because of anything that’s attributable to the student themselves. I think it can be difficult because no matter where you’re coming from, you need to know somebody to get into this business. And so the first key is how can you create networks that allow HBCU students to have mentors, to have advocates that are in the industry, that learn and know them well, know their strengths, know their weaknesses, know, you know, their ambition and their aspirations, and can speak to that and help guide them to certain careers inside of alternatives where they can be successful. RITHOLTZ: Really intriguing. Let’s talk a little bit about some of the work you’ve done, start with CEO of The Company Lab, what was CoLab’s mission and why Tennessee? SHAW: My wife and I decided to move to Tennessee back in 2016. She joined a practice down there and we had family in Tennessee, and it was really a unique opportunity to move around. We’ve moved around a bunch and have enjoyed all the different places that we lived in the country. Chattanooga is a fascinating city, really steeped in some rich history, but also a city that faces some challenges as they grow from a very small city to a more significant city in the U.S. economy. When I moved down there, I was still working with MLT, and then an opportunity came up to take a pretty significant role within the community as a CEO of The Company Lab. The Company Lab was the entrepreneurship and economic development center for Chattanooga and the surrounding areas, which include North Georgia, North Alabama, and Southeast Tennessee. It was incredible to really focus on local opportunities for entrepreneurs, for investors. for economic development, and really see how the fabric of a city with, you know, about a couple of hundred thousand people can develop, when you have people that are really dedicated to fostering that growth. RITHOLTZ: Was this like a private public partnership? Tell us a little bit about the structure of that. SHAW: It was a private public partnership. It was set up as a nonprofit that had some funding coming from the state, some funding coming from foundations, and then some funding coming from corporate entities that also found economic development in the region very important RITHOLTZ: What’s some of the economic sectors within that area? What is Chattanooga known for? SHAW: So Chattanooga is known for a couple of things, right? Key brands, number one, Coca-Cola Bottling is the company that really helped to jumpstart the city. And so Jack Lupton was kind of the patriarch of that company, and sold that company back to Coca-Cola in the mid-90s. RITHOLTZ: They were two separate companies for a while. SHAW: That’s right. So, yes, there were a number of bottling companies that would bottle Coca-Cola product and distribute it throughout the country or throughout the region. And the one in Chattanooga, Coca-Cola Bottling was one of the larger ones in the mid-century. Again, it was sold back to Coca-Cola as they consolidated those businesses, and left a pretty strong economic footprint in Chattanooga. Chattanooga was also the home of Moon Pie and Little Debbie, right? And a number of consumer products that are very familiar brands that we know about, but did not know that they were from Chattanooga. And so what I saw in Chattanooga was a rich history around entrepreneurship that necessarily hadn’t found its way into the modern day, right? We didn’t see a lot of great companies coming out of Chattanooga in the late ‘90s during the tech bubble, and so forth. RITHOLTZ: So what did you accomplish when you were there? Do you feel like you moved the needle at all? SHAW: Well, we moved the needle tremendously. You know, there were some companies that were there when I took the seat, companies like Bellhop, that’s a tremendous company and kind of operates in the Uber of moving, right. So you have fantastic moving company and a fantastic culture. There was a company FreightWaves that has done fantastic work. People kind of equate it to the Bloomberg of trucking. And so they’ve got a — RITHOLTZ: FreightWaves? SHAW: FreightWaves. FreightWaves. RITHOLTZ: W-A-V-E-S? SHAW: That’s correct. And Craig Fuller who’s the founder and CEO down there was a good friend, but also a really strong business person who’s done some great work. We brought Steve Case in Rise of the Rest to Chattanooga. RITHOLTZ: Sure. SHAW: And FreightWaves was actually the investment that they made in Chattanooga, and has done great work. The company has grown. They’ve employed hundreds of people with meaningful salaries. And that’s what it takes to move the needle in a place like Chattanooga, and there are hundreds of cities like that around the country. RITHOLTZ: So how do you go from Tennessee to Alabama at the Montgomery TechLab? SHAW: So as I was leaving CoLab, in Tennessee, I saw what was going on in Montgomery, and I saw that Montgomery had great leadership. The mayor down there, Steven Reed, has done a fantastic job in Montgomery. I also saw that they had some really unique assets. They’ve got a fantastic Air Force installation down there. They’ve got the state capitol there in Montgomery. They got a really diverse population. And so what I really did was take the thesis that we were working with in Chattanooga, and adjust it so that it applied to Montgomery. And so in a couple of years down there, we’ve been able to bring some really incredible companies to Montgomery, to see the type of value that they have there. But we’ve also, in this most recent cohort, and the team down has done an incredible job, helped grow companies that are there in Montgomery, focusing on tech solutions and tech services, to help them expand and recognize assets even outside of the region. RITHOLTZ: So you mentioned tech, I tend to think of the West Coast as the, you know, center of tech in the U.S. The Northeast is the center of finance. The Southeast, how should we think about that in terms of the business sectors that they should be known for? SHAW: So I think there are a couple of things. Number one, manufacturing has been strong in the Southeast for a number of years. RITHOLTZ: A lot of car companies really, right? SHAW: A lot of car companies. There’s a lot of pro-business environment for companies with big labor forces in the Southeast. You’re able to operate at a more efficient standard of living in terms of cost. And so you see a lot of car manufacturers operating down there. Also, transportation and logistics, Chattanooga was probably one of the biggest hubs for transportation logistics in the country. Anything that’s coming through the Southeast via truck is coming through either 81 or 75 or 24. All of that comes through Chattanooga. And so that was something that we saw. You’ve got companies like U.S. Xpress and Covenant that operate in Chattanooga. RITHOLTZ: Didn’t FedEx or UPS have a big logistics center? SHAW: So FedEx is out in Memphis, Tennessee, so on the other side of the state. But those trucks, again, will all come through Chattanooga. And so when you think about, you know, the south and you think about industries that are moving, it continues to be manufacturing and logistics. Also, healthcare is really popping up. Nashville and Atlanta are two very large healthcare hubs. Some of that is due, unfortunately, to demand, right, where you have health outcomes that are probably a little more severe in some of the Southeastern states in the United States. And so you need strong healthcare to meet the needs of the population. RITHOLTZ: It’s interesting we’re talking about different parts of the country. A lot of the bigger firms want to see the end of remote work or hybrid work. But I would imagine that that creates opportunities for parts of the country like Chattanooga, and Nashville, and Montgomery, where there are a lot of big companies that may not be located there, but they want to tap the pool of talent that’s there. SHAW: So we’ve seen that, and talking with leaders in a number of cities throughout the south, and even throughout other areas in the middle of the country that have not traditionally had the type of talent there, or the draw to those cities. You definitely saw a surge of people, I would say, during the COVID period, that were moving to cities where there was a lower cost of living, but a strong quality of living, and they could work remote. And so I think there’s been a benefit to those cities, and that you’re getting people that are moving. You know, Nashville had a ton of people that were moving to Nashville primarily from California, and that really strengthened the work or the labor force in Nashville. What you do see on the other side of the coin, though, is that for companies that are there locally, it can be a detriment because you have people that are there in the city and may take jobs outside of the region instead of taking jobs there in the region. And so there’s a delicate balance, right, to the impact, particularly for small to mid-size markets, where you have a labor force that’s needed in the market, that’s finding opportunities outside of the market, even if they continue to live. RITHOLTZ: Let’s spend a little time going over some of your history. Your family is from Mississippi, but you grew up a little bit of a military brat? Tell us about those experiences. SHAW: Yes. So my dad is actually from Mississippi. My mom was from North Carolina. My dad was a naval officer who retired shortly before I was born. So I spent most of my time growing up in Maryland, right outside of D.C. RITHOLTZ: So you didn’t do the whole army brat travel around the country? SHAW: I didn’t do that. But I did hang out on military bases a lot. So all my friends would change every three years when they PCS, right. So I had kind of the opposite side of the travel, which is being the friend that was always left behind. RITHOLTZ: Right. That’s really intriguing. What did your dad retire from doing? What was his — SHAW: So my dad had two careers in his life. He grew up in Mississippi. He’s picking cotton, believe it or not, when he was 7 years old. He was born in 1929. RITHOLTZ: Seven? SHAW: 7 years old. Right. RITHOLTZ: Wow. SHAW: We talk about skipping generations. He went into the Navy in 1945, and spent 27 years in the Navy. He retired and went to work at the Library of Congress as personnel. He was able to get his undergrad, master’s, PhD all through the GI Bill while he was in the Navy. RITHOLTZ: Wow. SHAW: But I always say my father is a real hero of mine because he truly did skip three generations in one lifetime. RITHOLTZ: Wow. That’s really impressive. Was mom working? Was she a homemaker? SHAW: My mother was a 50-year school teacher and taught public school in D.C. for 50 years — RITHOLTZ: 50. Wow. SHAW: — and really was an inspiration for the way I think about learning and understanding the value of education. RITHOLTZ: So let’s talk a little bit about education. You went to Sidwell Friends School, that’s some rarefied company, isn’t it? SHAW: There’s some good people that have gone there. RITHOLTZ: Yeah. Who did you go to school with? Any famous names that you know of? SHAW: Marcus Shaw is one. But, no, I had great, great folks in my class. Baratunde Thurston, who you may have heard of, author and producer that spent time with The Daily Show; Jon Bernthal who’s a great actor; Tommy Kail who was the director of Hamilton and some other big plays. RITHOLTZ: Wow. SHAW: But you know, everybody in our class was phenomenal. Also, folks like Chelsea Clinton, and later, the Obama girls went to Sidwell. So some rarefied air indeed, but a great group of students and a great group of friends. RITHOLTZ: So you go from there to get a mathematics degree from Morehouse College, then onto Georgia Tech for an electrical engineering degree, with little football mixed in. Tell us a little bit about your academic career in college. SHAW: So when I went to Morehouse, I was excited. I went down there with a few friends. It was a great mix to be able to go to a school, like Sidwell, and then go to an HBCU as esteemed as Morehouse was. It was really a great opportunity for me to have a bunch of different experiences. My story around playing football is probably my great interview story. I was playing cards with a bunch of guys right at the beginning of the school year, and made a bet that I could kick a 50-yard field goal. So we go out on the field, we jumped the fence, I lined up, take about 20 steps back, kick a field goal from 50 yards. One of the coaches comes out and yells at us to get off the field. We’re trespassing. As we’re leaving, he tells me to come out to the walk-on tryouts at the end of the week. RITHOLTZ: How close did you come to a 50-yard field goal? SHAW: Oh, I knocked it down. RITHOLTZ: No kidding. SHAW: I made it, man. He didn’t want me to come out because I missed it. He wanted me to come out because I made it. And you know, I went on to play four years in Morehouse and had some strong accolades there. But really, even that experience was about building great friends that I played football with. And many of those gentlemen have gone on to do incredible things as well. RITHOLTZ: Why is it not surprising that a math nerd is also a placekicker? It seems to be like the field goal seems to be one of the most mathematical parts of football. SHAW: Well, it’s pure geometry. RITHOLTZ: Right. SHAW: So 1.3 seconds from the snapper to putting the ball down and getting the ball off the ground, the angle that has got to come up, you know, is pretty significant in terms of your probability of making it. So I looked at it as an exercise in physics, geometry, you know, a little bit of chemistry, depending on the texture of the football. So I thought I was a natural. RITHOLTZ: That’s really intriguing. And then you go on, get your master’s at Duke School of Business. What led you in that direction, given the mathematics and electrical engineering undergraduate? SHAW: So I went to IBM after completing my undergrad degree at Georgia Tech in electrical engineering. I had a great time there, learned a lot, but really wanted to understand the way that we were selling business, right, understanding more about the business of IBM, and how we thought about the products and services that I was delivering as an engineer. Not to mention one of my, you know, very good friends that played football with me in Morehouse, was a year ahead of me in business school, he said, “You’re pretty smart, you should check out business school.” And fortunately enough, I had a great school in Duke that was right there in Durham. My wife was in med school at UNC. And I didn’t have to move to go to a great business school, which was really refreshing. And it was a great experience, and I learned a lot about business there and kicked off a new career. RITHOLTZ: From there, you ended up going into a decade of equity research and investment banking at shops like Bank of America, Piedmont, others. What led to that aspect of finance? SHAW: So I always tell folks this is one of the great turning points in my life. When I went to business school, I was pretty confident that I was going to come out of business school and go back to IBM. I was going to stay an engineer, wanted to learn more about marketing and you know, some operations around technology. There was a point right before the start of my first year in business school, so this is 2003, I had an opportunity to go to a camp, two-day camp at Goldman, that was focused on providing insights in investment careers for people that did not have an investment background. And you know, they fly you up, you’re a smart kid, put you up in a nice hotel. And I met a woman who covered enterprise software at Goldman, and she gave me really great insight into how I could leverage the industry knowledge that I had developed at IBM. And so, really, it was one person on an off-conversation, you know, down on Broad Street, 20-plus years ago, that led to my career. She said, “Equity research is a great place where if you know a lot about the business, and you learn a lot about finance, you can be impactful. You can earn a good living. You can really understand the markets and meet great people.” RITHOLTZ: As opposed to the opposite which is knowing a lot about finance, and then having to learn a whole industry from the outside, it’s a very different perspective than starting with the industry knowledge from the inside. SHAW: That’s right. And that perspective is something that I think we’ve got to learn to embrace more because, you know, finance is challenging, but it’s not difficult, right? It requires putting in work and getting reps in order to start to understand patterns and be able to anticipate things that you will see in the market, or things that you’ll see at a company. But really understanding the core of industry is what makes a master of business, right? I mean, that’s how you really start to hone the skills that you need in order to make true alpha out in the market as an investor. RITHOLTZ: So tell us what you did it at shops like Bank of America, what was your focus? SHAW: So I covered telecom services at Bank of America. During my time at IBM, I worked on several telecom networking projects and really understood the industry, things like spectrum and things like wireless that were coming of age at that time, I understood pretty deeply. And you know, through my understanding of finance, I was able to say, these are businesses that I think will do well. these are businesses that are positioned to do well. And once the market understands that, the stocks will perform. I had great mentors at Bank of America, a great team that I worked with, and really set me up for a great start in finance. RITHOLTZ: So you have a little bit of a health scare when you’re relatively young, and it changes your career trajectory. Tell us what led you to stepping off of the merry-go-round? SHAW: Yeah. Barry, it’s an incredible story and one that I think also defines a lot of where my life has led. So you know, I was at a firm in D.C. and covering tech media telecom, a bunch of regulated industries as well, and was having some chest pain. And a bunch of traders had, you know, what we call walking pneumonia, but it takes everything to get a trader off the desk, right? I mean, the whole desk will get pneumonia before they leave. And I was pretty sure that’s what I had and was coughing for a few days, and had some pain in my chest, go to the hospital. They take an X-ray. They see that I’ve got some swelling and a little bit of cloudiness there in my lungs, and they gave me a Z-Pak, an antibiotic. They think that I might have had pneumonia. My wife who’s a physician, as I shared with you before, you know, comes to the hospital, to the emergency room. She asked me what they said, I said, you know, as an equity research guy, I think I know it all, “I’ve gotten pneumonia. You know, they saw it on the X-ray.” What I didn’t– RITHOLTZ: It’s like, “Let me see those films.” SHAW: She’s like, “Let me see what’s going on.” Exactly. RITHOLTZ: She didn’t buy it? SHAW: Well, she didn’t buy it because she’s a doctor and she’s very good at her job. Like, I say all the time. I’ve got a great wife, but I got the best doctor that anybody could have in their house. I had some leg pain earlier in the week. RITHOLTZ: Left side? SHAW: Yeah, left side. RITHOLTZ: Ooh. SHAW: So we know where this is going, right, Barry? RITHOLTZ: All right. Yeah, you can just ignore that. That will sort itself out. SHAW: I thought it was a charley horse. RITHOLTZ: Really? SHAW: I played a little basketball with buddies. This was right at the end of a Thanksgiving holiday. And I got a group of buddies, lifelong friends, we always play basketball together. And I thought it was a charley horse. Pain in the leg went away. A couple of days later, I’m having this pain in my chest and I take myself to the hospital. She goes, “Did you tell them about your leg?” And I said, “No.” She goes into the head of the emergency room’s office. RITHOLTZ: Really? SHAW: The guy comes back out and he says, “How come you didn’t tell me about your leg?” I said, “Well, my leg doesn’t hurt anymore. It’s my chest. I got pneumonia. That’s what X-ray said.” This is where equity research guys talk themselves into a hole. They think they know more than they do. RITHOLTZ: Right. SHAW: I know a lot about telecom. I know nothing about healthcare. All right. So the guy comes out and he says, “Well, we got to give you what we call a D-dimer.” Right. There’s a test for blood clots essentially. RITHOLTZ: Right. SHAW: They do the tests. I am at this point, the second sickest person, highest priority in the emergency room. RITHOLTZ: Wow. SHAW: They rolled me in. They gave me an MRI. They see the blood clots in my lungs. They see some remnants in my leg. I’m immediately, you know, brought into the hospital and I’m there for several days. They gave me blood thinner. They want to make sure that these clots don’t — RITHOLTZ: So no bypass or anything crazy like that? SHAW: No, no, no, no, no. So what I had was a blood clot, right? So I did not have a heart attack. I’m in the stroke center there at the hospital in D.C. And for me, it was really a point where you start thinking about your life in a different way. RITHOLTZ: It had to be terrifying when your wife comes in and the head of the ER says, “Stat. Let’s get this guy taken care of immediately.” SHAW: It is, but not as scary until you realize what’s really happening. And that, you know, there’s things that they call the widow-makers, which are these bilateral blood clots that you get across the aortic valve. And I mean, you just go away. RITHOLTZ: You’re done. Right. SHAW: You’re done. Right? As somebody that kind of steeped in mathematics, probabilities, investment, you’re always thinking about the future. And you know, my great story from that is that I actually upgraded a stock Pandora Media from the ICU in the hospital. RITHOLTZ: I bet they loved that. SHAW: Yeah. To which my wife responded, you know, “If you die writing a research report, I’ll kill you.” Right. So this is where you start putting it together, you put a little bit of life together, and you start thinking like an investor, and you start investing in yourself and thinking about, you know, how are you going to measure the return in your life? And for me, I’ve done well as an analyst. You know, we did well. And I said I really I want to find ways that I can impact and help others with the years that I have left because it could have gone away right then in there. RITHOLTZ: So is that what led to Management Leadership for Tomorrow, and then AltFinance? Tell us about what took place when you got out of the hospital? SHAW: Yeah. So got out of the hospital, stuck around for a few more months at the firm that I was working. And then decided to do some other things, and that included doing some work with small- to medium-sized businesses, providing some outsourced CFO type of service, to really understand how some of these small businesses worked. An organization that I looked at doing some work with was Management Leadership for Tomorrow. And John Rice and the team at MLT do a great job. They have absolutely moved the needle and changed the trajectory for thousands of Black, Latino and Native American students over 20-plus years. I knew John a little bit and knew about the work that he had done. I had written recommendations for mentees of mine into that program. And John asked me to come out and you know, “Can you help raise some money, right, running business development?” And for me, that was a step away from the industry. And what I recognized is I got tremendous fulfillment out of seeing young people that were, you know, 10, 20 years younger than myself, but helping them get to the next level, helping give them the opportunities that that woman gave me from Goldman, when she said, “Here’s the path you should think about taking.” RITHOLTZ: Quite interesting. (COMMERCIAL BREAK) RITHOLTZ: I’m Barry Ritholtz. You’re listening to Masters in Business on Bloomberg Radio. We’re talking to Marcus Shaw. He is the CEO of AltFinance, a firm which seeks to increase diversity across alternative asset management firms. So we’ve been talking earlier about the lack of recruiting and the lack of diversity, historically, on Wall Street. But let’s talk about the other side. You often speak to groups of smart college kids, and you ask them, hey, what do you guys know about private equity, or credit, or venture capital? What sort of answer do you get when you ask those college students those questions? SHAW: So the most interesting thing that I’ve seen in assessing college students and talking to them is that students generally have very little knowledge of the companies that are operating in the private equity, private credit markets, real estate. They know some of the venture capital firms because I think venture capital has done a great job of a PR over the past 10 years or so. I mean, everybody wants to be a venture capitalist and an entrepreneur. I always attribute that to a low interest rate environment where — RITHOLTZ: Oh, no, go back to the 1990s when venture capitalists were rock stars also. SHAW: That’s right. That’s right. Well, also, though, you know, a period there where you had the Fed being a little accommodative, right? I think that by nature and by design, many of the firms that operate in private equity and private credit space don’t want to be known. But our students know many of the holding companies, right. And that’s what’s really interesting, that they know the publicly-traded companies, they know the private companies, but they don’t know the holding companies for the private companies. RITHOLTZ: You use the example, and I think it’s fascinating, Rihanna partnered with a private equity firm for her fashion line. The students know who Rihanna is and they know how wildly successful she’s become, but they don’t know who the financers are. SHAW: That’s right. That’s right. RITHOLTZ: And how do you get them to look behind the curtain and/or under the hood and see that capitalist is what’s driving the business? SHAW: I think the key to that, and we check for this when we’re interviewing students for our program, is intellectual curiosity, right? That’s the key to being an investor. Are you always thinking about peeling back another layer to the onion? You go in a store; you see a great product. Hmm, where is that product made? Who’s the company that owns that? Is there’s several different pieces to the product? Where are they getting the components from? Where are they sourcing them from? Who owns that company? Who finances those companies? That’s the way we’re teaching students to think because that brings about the type of intellectual curiosity that you need to have when ultimately, you want to put some capital behind a company that you really like. RITHOLTZ: So let’s go back to first principles. Why are companies interested in diversity? What’s in it for them? SHAW: So I think there are a number of reasons why companies are and should be interested in diversity. We have hundred million students out here, coming through, you know, K through 12, and university system that are operating at a higher level than we were 20 years ago. Students are very smart, independent of their color, their background, their religion, their gender orientation, right? What we know is that students are being educated at tremendous levels today. They have so much more access, that their intellectual curiosity is going to be really fueled by a lot more information that’s delivered in a more equitable way. If I’m hiring for talent, I want access to all of that. I want to know the brightest kid from every corner of the country, boy, girl, gay, straight, black, white, it doesn’t matter. I want to know that student because that student can help me. That student can help me build and invest, and find opportunities and generate alpha, and bring more clients into my business. And so if I’m a senior leader at a company, I think that’s the business operative, right? I’ve got to have the brightest talent, the talent that’s most differentiated and intelligent, and also helpful. I think the social part of this is that, you know, a lot of these dollars are public dollars, that companies are managing. My mother, again, a 50-year school teacher who put money into her retirement for 50 years. It would benefit her, and it would benefit the other teachers and firefighters and police officers that represent diverse communities, to have people who are investing their money look like them as well, RITHOLTZ: Really interesting. So this is more than just a checkbox on any list. Companies are actually looking to expand their diversity and inclusion practices because they see a genuine benefit to both their decision-making process and their businesses. SHAW: I think that’s the obvious answer. And that’s why with AltFinance, you know, this is a long-term plan. We’ve got a 10-year commitment from our three initial partner firms. And so this is not about checking the box; this is about changing the paradigm for recruiting talent in this industry. RITHOLTZ: So this industry has been notoriously laggard when it comes to diversity. But there are lots of other industries, technology has been accused of having a diversity issue. Medicine, law, pretty much wherever you look, United States has its own history, with some of its dark pockets. What other sectors could benefit from an organization like AltFinance, or what else can we focus on? SHAW: Yeah. I think there are a number of sectors that could benefit from this strategy, even sectors like tech that have already developed some strategies. I think, again, we’re focused around education, exposure and experience, the three elements that are going in to preparing students for careers. This is not just about scholarships, right? You give a student a scholarship, but then you don’t really give them access to the people at your firm that are going to help that student not only get a job at that firm, but feel a sense of belonging, right, once they get to that firm, so that they maximize their individual output. That’s what you’re trying to go for. Right? I’ll tell you a story about a student. So we have a student in our program. And when you talk about counseling and coaching, it was a phenomenal story. A student, very bright student who had the ability to graduate in three years, and worked last summer at a fairly reputable consulting company. And I asked the student, I said, “Why are you in a hurry to graduate? You students got a pretty good scholarship package.” Student comes from a background where, you know, he’s having to support family still at home. I mean, you know, a tough situation, and he wanted to get out in the workplace where he can earn. I said, “Trust me, if you stay for your full four years, you’ll have the opportunity through this program, to get access to a career in alternatives. You had a great opportunity last summer. You’ll come out. You could make 2x, even 3x if you stay and pursue this opportunity in alternatives.” So the young man stayed, had multiple opportunities, selected one. But here’s the real power of the network. As he’s making his decision to which role he’s going to take and you know, at one of three mega funds, he calls up his mentor who is not at one of the firms that he has an offer from. And he says, “Well, what do you think I should do?” In the course of that conversation, not only does he get guidance from the mentor, the mentor connects him with another gentleman who used to work at one of the firms, in the same group that he was going to. Now, he has a decision that he’s made, that’s been informed by two people that he did not know a year ago. That’s the dinner table. RITHOLTZ: And we will take those conversations for granted if specially someone grown up in a New York area, where you know people who work in finance or people’s parents were in finance, that network just doesn’t develop elsewhere without focused exposure to it. SHAW: That’s right. RITHOLTZ: That’s really intriguing. So you’re at Bank of America a decade ago. You had some important teams you worked with, and you led some groups. How do you see Wall Street having changed over the past 10 or 20 years? Were the signs on the road that things were getting better? Were they ripe for moving in the right direction? Or is Wall Street just calcified and needed to really be shaken up? SHAW: Well, Barry, I think that question really highlights something that’s amazing to me. Number one, that I’ve been in this business, you know, a long time. RITHOLTZ: It goes by quick, doesn’t it? SHAW: It goes by very fast. And number two, how much things change, you know, in a fairly short amount of time. You know, when I started my career in finance, I was the only black person in my group, in my division. Okay. Another young woman came shortly after. We had a great relationship. In fact, she’s been a lifelong friend. And I, you know, was a mentor to her. And — RITHOLTZ: Was that something that was very consistent? You were the only black guy working at the other shops you worked at, or at least the only person in the department? SHAW: Well, for a couple of firms. I also did work at a minority-owned firm down in North Carolina, and it was refreshing. I mean, actually, you know, some of the brightest people that I ever worked with, and much of my investment philosophy and the thesis, the way I think about investing was developed there, amongst an incredibly diverse group of investors who had, you know, tremendous experience and success. RITHOLTZ: Really intriguing. So given that you were at some big firms early 2010s, you know, what was it that led Wall Street to finally being ripe to accept changes? SHAW: I think there is an inevitable pressure from society that helps drive change. And I think Wall Street, while we talk about it, in this compartmentalized concept of its Wall Street. It’s in New York. It’s, you know, the bull down on Wall Street, right? And it’s the movies that we see. In reality, the funds that Wall Street is managing, the capital that it’s managing is coming from all over the country. RITHOLTZ: Right. SHAW: It’s coming from people that look like me. It’s coming from people that look like you. It’s coming from people that look like our parents and our children. So at the end of the day, and I think we saw this in 2008, I think we saw it again during COVID, that at the end of the day, these companies are accountable to the people, right, and to the people that are their investors, their LPs, and entities that their LPs represent, and their clients. And so I think that what we’ve evolved into is a more human Wall Street that is more inclusive by nature. And I do believe that what we’re seeing now, right, we will continue to see because we’ll have people that come through AltFinance, but also people more senior that are at the table and helping make decisions on where and how we invest in people, and where and how we invest in companies. RITHOLTZ: So that leads me to a pretty straightforward question, which is, first, how do you measure your own success with AltFinance? And second, how to people like Oaktree, Apollo, and Ares, how did they ask you to track your progress? What metrics do they look at, to say, hey, we’re getting our money’s worth for standing up this company and giving them a decade long horizon? SHAW: So I’ll address the latter first, right. Number one, so I came in in September. We started our first cohort of our fellowship in January. We now have the second cohort. I’ve got 75 students from HBCUs that are now building relationships, getting education, getting exposure, and ultimately getting experience to the alternative investment industry. That is fascinating. We’ve got students in our program that have their first full time offer with alternative investment firms, that will graduate in 2023, in May. So we’re already in a few months really hitting the cover off the ball. That’s the quantitative element, right? Those are the KPIs up on the dashboard that are saying, you know, how many students are you getting to exposure to these jobs? How many students are getting these jobs? What I also measure and this is through the conversation with students, how many students are building confidence, skills, and relationships that will help improve their wealth and economic mobility as they grow? How many students are having a conversation around the learning session that we do on interest rates, and then calling mom or dad at home and saying, “You know what, you know, what’s the interest rate on your credit card? Did you refi your house? How should I think about my student loans?” Right. They are really taking an active position in the way that they think about their personal finance, but also the way they think about investing. And I hear those conversations and have those conversations with students almost on a daily basis, and that’s what fulfills me and lets me know we’re moving in the right direction. When I look down the road in 10 years, I believe that I will have hundreds of students that are actively working in alternative investments, but I’ll have thousands that are knowledgeable and have relationships with people in this business, and are better off for it. RITHOLTZ: So we’ve been talking a lot about alt investments. Are there parallel entities to AltFinance for traditional asset management, investing banking, stocks, bonds, IPOs, et cetera? It seems like there should be something similar to what you’re doing for that space as well, which arguably, is even bigger than AltFinance. SHAW: So I think there are some organizations that have, you know, been active and providing similar opportunities for students for traditional banking, right. I mean, when you think about what Reginald Lewis did, you know, almost 30 years ago, and breaking grounds for blacks in investment banking. I think that we’re doing some of that today in the alternative space. Remember, we had our first group of fellows. We had 33 fellows in our first cohort. RITHOLTZ: What year was that? SHAW: So this is January of 2022. This is just, you know, a few months ago, right? And I asked the students, all right, how many of you know Morgan Stanley, Goldman, Citigroup? Everybody raises their hand. They all know it. They see the commercials. They get the commercials on the Internet. I asked, how many of you know Ares, Apollo, or Oaktree? One student, so roughly 3%. These students are brilliant, all high performers, all strong academic performers. I mean, they will not fail to get a job. They could get a job doing anything. But they did not have the awareness of how the pathway to enter one of the most rewarding careers in investing. RITHOLTZ: Really? SHAW: And that’s a key. And so when I look at other industries, and what other organizations are doing, we are squarely focused on helping move the needle in the alternative investment space, places where people can help do deals, be long-term owners. It’s not about, you know, the transactional element of investment banking, right? Be an owner, a direct owner of a brand that you know, but you never knew who the holding company was. I have 75 students now that can answer that question of what’s the pathway. RITHOLTZ: How much larger can you expand this to be? SHAW: So Barry, we will expand the fellowship program ultimately to be round 100 or 120 students, and you know, each year, about 40 or so in each class. We are also partnering with the Wharton School of University of Pennsylvania to develop an institute, the Wharton AltFinance Institute, which will be an online community and platform providing, again, curriculum and content and community, as well as resources to help students at any HBCU gain access to again education, exposure, and opportunities for experience in the space. And so through the institute, we’ll be able to scale some of the best parts of our fellowship, which is a real high touch part of our programming. But we will scale that to the students that are at HBCUs that we don’t partner with directly. RITHOLTZ: Really, really quite fascinating. I know I only have you for a couple of minutes more. So before I let you go, I want to ask the standard questions that I ask all of my guests, starting with, what have you been streaming these days? What’s been keeping you entertained post lockdown? SHAW: Yeah. So Barry, I would say I tend to read a lot and follow a lot obviously in news channels on finance. On podcasts, I mean, I love Howard Marks, The Memo, and I read his memos that he puts out. But I love what he’s doing in the podcast format that he’s developed. But I listened to a lot of sports. I’m a huge Jalen & Jacoby fan. I love what those guys are doing in terms of sports and entertainment. And so, you know, probably not as heavy as some of the other answers you get. But I love sports talk radio. RITHOLTZ: That’s interesting. Tell us about some of your early mentors who helped shape your career. SHAW: So, you know, a couple of the mentors that I had, there was a woman named Stacy Gorin who hired me actually at IBM. And it’s amazing to think this is over 20 years ago. Stacy was a long-term executive at IBM and has now moved to a consulting firm. But what she really helped me focus on early in my career was continuous improvement, right. You think about it as an engineer a lot, right, kind of the Kaizen principle, right, that Toyota use. But personal improvement of yourself, right, how do you continue to develop as a person? If you’re strong technically, how do you develop into a person that people feel comfortable managing others, and feel comfortable being managed by. And so as I developed into an executive and then CEO, I always reflect on those lessons that she gave me early on, about being vulnerable, and being coachable, even being coached up, right. So having somebody that reports to you have the ability to coach you up on things where you can be more helpful for your organization. RITHOLTZ: You mentioned books and you like to do a lot of reading, tell us what some of your favorites are and what are you reading right now. SHAW: Yeah. So you know, a book that I go to often and I reread this probably once every couple of years is Peter Bernstein’s “Against the Gods.” RITHOLTZ: So good. SHAW: It’s fascinating to think about this concept of risk, and how it’s affected us since the very beginning of time, right. And then, really how we have taken risk from something that was deified, right, kind of this religious concept, and turned it into an economic tool that we can arbitrage for personal gain. Unbelievable, well written, I love the historical context and bringing into the future. And so that’s one that I go to often. I’ll tell you a book that I want to pick up and the title here is John Mack’s new book. And I thought it’s interesting because, you know, John is somebody that I don’t know, personally, but I’ve always respected kind of the way that he organized and ran businesses. And you know, it’s of note that he’s dealing — you know, I think has talked publicly about the aging process that he is going through himself. And I found that particularly endearing because it’s something that I’ve dealt within my family. And to recognize that, you know, in this business, we’re still human and we’re not excluded from the human process. And so that’s the book, John Mack’s new book is one that I certainly want to pick up. RITHOLTZ: “Up Close and All In: Life Lessons from a Wall Street Warrior” is that it? SHAW: That is it. That is it. RITHOLTZ: Yeah. That’s a hell of a title. SHAW: Hell of a guy. RITHOLTZ: This is kind of a funny question because I ask this to everybody, but essentially, I’m asking you a question which is what AltFinance does, but I’ll ask it anyway. What advice do you give to a recent college grad who was interested in the career in either investments or alternative finance? SHAW: So there are two things that I tell all of our students. Number one is bigger picture and probably pretty simple, you’ve got to have intellectual curiosity. You can never run out of questions. I mean, you run incredible podcasts. You can never run out of questions. You’ve always got to have something that you’re thinking about in terms of what’s the next layer. How can I think about in a different perspective? How can I put myself in somebody else’s shoes and think about it? And how does that change the value of what I’m looking at? Right? I think that’s critical to being successful as an investor. Number two is something that somebody shared with me and that’s actually John Rice who runs MLT and is a partner and a great friend, and really one of the great leaders in the D&I space. When you’re young and you’re bright, you’ve got to take risk early in your career. And in fact, not taking risk is actually the riskiest thing you can do. It’s a little bit of a parable, right? But — RITHOLTZ: When you’re young, you can recover from failure. You don’t have that same luxury when you’re older. SHAW: It’s so hard to appreciate that when you’re, you know, 20 or 21. When you’re — RITHOLTZ: You’re afraid of failure. SHAW: When you’re afraid of failure, when you should actually be seeking failure. Right? You should not be doing anything when you’re 22 or 20 or 21 that you can’t fail it. RITHOLTZ: Right. Playing it safe is risky. SHAW: It is risky. RITHOLTZ: That’s really interesting. And our final question, what do you know about the world of investing and AltFinance today you wish you knew 20 or so years ago when you were really exploring the field in its earliest days? SHAW: So the biggest thing I would say procedurally that I see in the investment hiring cycle is that you got to be ready for the gig before you get it, which means that the recruiting process for alternative investment, even if you’re going to investment banking as an analyst, it may start before you actually start that job. There may be people that are reaching out to you, trying to assess your interest, and what you’re going to do after banking. And that was, you know, I say, one of the secrets of the industry that, you know, I was well into my career before I knew that’s how people were getting recruited into the industry. And so you got to have your ear to the ground, right? You got to know who’s who, where the players are, who you should be expecting emails and calls from. And when you get those emails and calls, you got to be ready for it. RITHOLTZ: Really interesting answer. We have been speaking to Marcus Shaw, CEO of AltFinance. If you enjoy this conversation, well, be sure and check out any of the previous 400 or so we’ve done over the past eight and a half years. You can find those at iTunes, Spotify, YouTube, wherever you get your podcasts from. We love your comments, feedback and suggestions. Write to us at Sign up for my daily reading list at Follow me on Twitter @ritholtz. I would be remiss if I did not thank the crack team that helps put this conversation together each week. Justin Milner is my audio engineer. Atika Valbrun is our project manager. Paris Wald is my producer. Sean Russo is my researcher. I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio. END ~~~   The post Transcript: Marcus Shaw appeared first on The Big Picture......»»

Category: blogSource: TheBigPictureNov 22nd, 2022

Goldman Sachs CEO David Solomon Says Outlook Looks Uncertain

Following is the unofficial transcript of a CNBC exclusive interview with Goldman Sachs Chairman & CEO David Solomon on CNBC’s “Squawk Box” (M-F, 6AM-9AM ET) today, Tuesday, October 18th. Following is a link to video on Goldman Sachs Ceo Says Outlook Looks Uncertain ANDREW ROSS SORKIN: Joining us in an exclusive interview is Goldman […] Following is the unofficial transcript of a CNBC exclusive interview with Goldman Sachs Chairman & CEO David Solomon on CNBC’s “Squawk Box” (M-F, 6AM-9AM ET) today, Tuesday, October 18th. Following is a link to video on Goldman Sachs Ceo Says Outlook Looks Uncertain ANDREW ROSS SORKIN: Joining us in an exclusive interview is Goldman Sachs’ CEO David Solomon. Nice to see you sir. DAVID SOLOMON: It’s nice to see you. SORKIN: On set at the table. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Walter Schloss Series in PDF Get the entire 10-part series on Walter Schloss in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues. (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2022 hedge fund letters, conferences and more   Find A Qualified Financial Advisor Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now. SOLOMON: Really happy to be here. Really, really happy to be with you on set. SORKIN: We've been joking with you for years now that you're an in person guy. So now it's nice to see you in person. SOLOMON: It's nice to be in person. It’s nice to be with you. SORKIN: So let's talk about these numbers and let's also talk about the other big headline that a lot of folks in Wall Street are talking about, which is this reorg of what's happening inside the company but in terms of the numbers, better than expected. But there's a lot of questions about what the future of this firm is going to look like so speak to it if you could. SOLOMON: Sure while, on the numbers, you know, there is a challenging operating environment, certainly for capital markets centered firm. There has not been a lot of capital markets activity given the headwinds of economic activity, equity issuance, debt issuance has been slower. M&A activity was still relatively robust, and I think strategic dialogues still remain pretty good at this point in time. Our clients were active though and the thing that I’m most proud of when I look at what our team has done over the course of the last few quarters, if you look at our market shares on our wallet shares. We're really, we're really focused on our clients and we're really doing well in servicing them and being there with liquidity and capability and financing in order to meet their needs what's a very challenging time. SORKIN: In terms of thinking of you though as a bellwether for the capital markets, what are you expecting in terms of the next like when you look out— SOLOMON: Sure. SORKIN: Over the next couple of quarters, what does it even feel like to you? SOLOMON: I think it feels uncertain and, you know, I think there's no question we're tightening economic conditions relatively quickly. We're reversing what's been a very, very long period of relatively easy economic conditions. And as you do that, at some point, there's going to be a bigger impact on consumer behavior, on market behavior. I think we've started to see that, but I think until we have a better trajectory on the direction of economic activity. It's hard to really know where markets settle. So I think it's time to be cautious. If you look at, if you look at what most economists are predicting, they're predicting slow to no growth in the US. They're predicting negative growth across other developed economies in Europe. And so that environment having to 2023 is one that I think you've got to be cautious and prepared for. SORKIN: To the extent that you have to place a bet on where to put your own business meaning is it trading where you think that the growth is going to come, I mean what, when you look out over the year to the extent there's an opportunity if there is one, what is it? SOLOMON: Well, I think there's a lot of opportunity with our clients because our clients are resorting their position, given the fact that the world's changed. We're entering a period where there's more embedded inflation. Obviously, the Fed’s focus on taming that, but we're shifting the economic environment materially, I think big businesses are looking at how they're strategically positioned and saying, how do we adapt to that? Scale matters a lot in an environment like this. People are shifting supply chains. It's not that everything's on shoring, but they're thinking more strategically about certain supply chains. And so as you look ahead, and and think about that, I think our clients will continue to be active and where they are prepared to serve them. But we don't we don't really think Andrew, we're not looking quarter to quarter, we've got a leading investment banking business, leading global markets business. We have an extraordinary asset and wealth management platform and all of those are set up to serve clients and this this reorganization of the way we're organized really comes out of our one Goldman Sachs ethos to try to say how can we continue to position ourselves to serve our clients better. SORKIN: So let's talk about that because you're gonna go from effectively four units to three. The markets business gets moved into the wealth management piece of things. There's this new platforms cloud unit that is going to encompass this sort of Goldman Apple and, and General Motors piece of the card business. Why break it up that way? SOLOMON: So this is all really driven through through this client lens that I was talking about. One of the big things that we're very proud of and we think it's really had an impact on the firm's performance over the last four years is the evolution of this one Goldman Sachs ethos. It started four years ago with taking 30 clients and saying how can we serve them across the firm, break down silos, serve them very well. It's now expanded to hundreds of clients, but it's really become an operating ethos in the firm and we've seen in doing that there are synergies between our banking and markets business, they've been operating increasingly close together over the course of the last couple of years. And when we think about our investing platforms, across asset and wealth, we've wanted to really bring those together as we've been able to organize over the last few years and so that was the lens of really doing this. The fundamentals really don't change. The leadership does move to different places, but it's the same leadership, a couple of people with different responsibilities, the financial targets are the same. With respect to how we're serving consumers, we really have had two businesses that we've been working on. One is a direct-to-consumer business. And that business we've learned a lot over the last few years. SORKIN: And that’s the markets business. SOLOMON: That's the markets business. And one of the things we've learned is that our ability to align with our wealth business to go to consumers, and people that are already on our platform is a strength of the firm and that's a better place for us to be focused than to be out massively looking for consumers. We're, we're aligning it with wealth and then we have our partnerships like the big card and those are FinTech platforms. We're embedded in somebody else's ecosystem, and those operate differently and that's a big opportunity for the firm. JOE KERNEN: Does it indicate you’ve cooled at least a little on consumer? Is it retrenching just slightly and realizing you want to focus on what Goldman, what has made Goldman great for years and three years ago, looked like you're really headed that way. SOLOMON: I think I think we've learned a lot over the last few years, Joe. We, this is an important part of the firm and the most important part of it is we now have $110 billion of digital deposits, and we need those deposits as a bank, we had to diversify our funding. That's been a hugely important part of the journey. But as we've learned, the concept of really being broad, with a consumer footprint is not really playing to our strength. But when you look at our wealth platform, you look at workplace wealth where we have access to millions of individuals who are workplace wealth offering. The ability to add banking services to that and align with that actually plays to our strength. And these partnerships are going to build FinTech platforms. If you look at what we've done in Transaction Banking, you look at what we've done with the Apple card, this is actually a strength of ours and these are interesting platforms that we can be very focused on creating more transparency around. SORKIN: What’s the chance that the Marcus brand doesn't remain? Meaning that you you move and say, you know what, Goldman Sachs is the brand. That's what works for us. That's what we're gonna do. SOLOMON: Well, we're moving, we're moving, we're moving in a direction of really amplifying Goldman Sachs. We had started when we started this, and again, when you're innovating and you're trying new things, you've got to be willing. And I think that's the strength of the firm, you've got to be willing to try things and then kind of look at the mirror and say, okay, this part worked, this part doesn't work. Let's make an adjustment. So we started with Marcus by Goldman Sachs. Now if you look at the way it's positioned, it’s Goldman Sachs Marcus, what's the brand out there that everyone really knows, Goldman Sachs. And so, you know, Marcus has some brand identity. We're going to continue to work on our deposit platform. We're going to continue to offer these banking services adjacent to our wealth platform, or that's where our direct-to-consumer model will be. It plays to our strength. It's a much better customer acquisition strategy, you know, for us and we're excited about these these digital FinTech platforms. And we think over time, we can show people that what we've built and what we have here is really unique. I think what we announced with Apple last week is pretty cool. SORKIN: The high yield product. SOLOMON: The highline enhancement that you are able to go onto your phone, go into Apple cash, and link over to a Goldman Sachs high yield savings account directly out of Apple cash. That's, that's, that's another example of how when you get into these partnerships, and you get embedded in somebody's ecosystem, and— SORKIN: Can you talk about the margin of the deal with Apple because I think people have always wanted to understand the dynamic behind that transact, beyond that arrangement. SOLOMON: Sure. Well, one of the one of the things that that you'll see that we're announcing today, and it's in it's in the it's in the earnings release in the earnings script, which is now out is that we've extended our partnership with Apple through the end of the decade and made adjustments to it. So one of the things that happened that's very very interesting about the card is we went out and we saw the card experience. The deal was based on a partnership where there were assumptions, how people behaved with this card because the technology was different. We've now looked at that, and we've now renegotiated so the partnership really works for both of us as we go forward— SORKIN: By the way, what was the lesson? Different in what way? SOLOMON: I'm sorry. SORKIN: You said, what was the lesson? Different in what way?   SOLOMON: People pay down, people, it's actually good financial health people pay down their balances much more quickly. So when you think about a credit card, how does a bank make money on a credit card? A bank makes money on a credit card because people have balances. If people are paying down their balances at a much faster rate, and you have more, less borrowers and more, you know, immediate payers, the economics are different. And so there's something about the behavior that you can click on your phone and immediately pay down that people are paying the credit card bills multiple times a month. That's good financial behavior. That's what you want. So that was an innovation. We all looked at it. We modeled it differently. You know, who negotiates, who renegotiates a partnership before the partnership’s over and extends it in something like this— BECKY QUICK: But meaning renegotiation had better terms for Goldman Sachs because you weren't going to— SOLOMON: Yes, it was, it was rebalanced because it's an important partnership for Apple and Goldman Sachs and there's a lot that we can do together. It's a real partnership. We're not just we're not just someone supplying money here. We've got technology that's embedded in their ecosystem, and we're trying to find ways to help people with their financial wellbeing and we're, you know, we're moving forward with that. So, it's, it's a very interesting platform. And like anything else, we're building something it's new. The results aren't immediate, but you know, think about Goldman Sachs. Let's step back to the earnings at a high level, tough, tough operating environment. Look at our performance are we on a relative basis to the people we compete with, we feel good about that. The firm's performing, but we're also making investments in some things that can allow the firm to grow over time, continue to position the firm competitively. That's what we're supposed to do. KERNEN: You try things, if they work, they work, maybe take another look. Did, did remote hybrid work model that you view that as a success? SOLOMON: Well, for Goldman Sachs, you know, I've talked about this actively. We have an organization where 50% of the people are in their 20s. They come to Goldman Sachs to learn, to meet people, to interact. You know, for our organization, we had to do what we could do to bring people together, you know, on a reasonable basis as possible. And we're, we're kind of operating that way at this point. Before the pandemic, about 75% of our people were in the office on any given day of the week. Today, it's about 65%. So we're we're kind of operating close to the way we were— KERNEN: You want to get back to 75 or are you okay with 60? SOLOMON: You know, I'd like to get back to the culture we had before which is people come to work, do their work, they live their lives, they have the flexibility to manage and and one of the things that was very interesting, Joe, when I looked at the data, and really looked at how things operated at the firm before the pandemic. Iif you broke the firm into people in their 20s versus people in their 30s, 40s and 50s, I mean, they're a couple of dinosaurs like me that are out of that, that entirely, but if you if you looked at, if you looked at the data, the people in their 20s generally came to work five days a week. That people in the 30s, 40s and 50s have more flexibility. We're moving around, they have responsibilities with their kids, etc. I don't want rules. I want a culture where we show up, serve our clients. We work hard. We mentor our people, we teach our people, we strive for excellence. That's what Goldman Sachs is all about. I want a culture that really promotes that. I don't want a set of rules. QUICK: Hey David, you are great at risk assessment and Jamie Dimon spoke about risk assessment last week and I think he concerned a lot of people in the market when he kind of said things that could play out. He had one line that really caught my attention just saying if you need money, you better line it up now basically. If you need that liquidity, get it. When you look at the environment when you look at the market and what's potentially out there, what do you see? SOLOMON: Well, this goes back to what I said earlier, Becky, I I think it's a time to be cautious. And I think that if you're running a risk-based business, it's a time to, it's a time to think more cautiously about, your risk box, your risk appetite. I think you have to expect that there's more volatility on the horizon. Now that doesn't mean for sure that we have a really difficult economic scenario, but in the distribution of outcomes, there's good chance we could have a recession— KERNEN: In 10 years? Did you see Druckenmiller? SOLOMON: I, I think it's hard to predict how far down. KERNEN: The future is hard to predict, but we played it if we paid it forward, the Fed, do we have unfunded liabilities at the federal level that are going to impact whether we're able to grow? Stan who knows but he said we may be unchanged in the S&P 10 years from now. We've had decades like that before. SOLOMON: We’ve had decades like that before. I'm acutely aware of the fact that that if you put $100,000 into US stocks in 1970 and 1980, it was worth it was worth $50,000. So there's no we've lived in a period really since I got out of school. I got out of school in 1984. We lived in a period where there have been lots of speed bumps, but if you kind of held your breath for six to 12 months, we kind of marched ahead on this continuation of, you know, easier money, asset appreciation, you know, relatively quickly. In an environment where inflation is more embedded and growth is slower, you know, asset appreciation will be tougher. Now, are we gonna get rooted in that kind of a decade long scenario? I don't know, the policy decisions we make from here, you know, will have an impact, you know, can we make, can we make better energy policy that can last across administrations? Can we make better immigration policy? You know, can we can we find ways to do things that allow us to invest in our society in a way that make it easier, you know, to shift this and I don't have the answers to that, but certainly we're all going to focus on it. If you're a risk manager, right now, I think you have to prepare for a more difficult environment in 2023. SORKIN: Talk about raising capital, the IPO market is closed effectively. How long do you think that that lasts? How hard is it to raise capital in this market and as a result that you think you're gonna see people taking companies private, not taking companies private? Do we also, how's this all going to work? SOLOMON: Well, I, you know, I think it's fair to say the IPO market is closed. What I prefer to say is the world is still resetting its mindset as to, you know, what valuations are if you’re going to go public. I, I’d mention it but I'm not sure that it's out there yet. We have a relatively significant IPO that's coming to market that I think is getting announced today. And just in the context of that the valuation perspective is a different valuation perspective than somebody with— SORKIN: Is this the Mobileye transaction? It’s been announced. SOLOMON: It’s been announced. Okay, so that's an example. So I mean, you know, the Porsche IPO came, so I think you're going to see good companies that have a strategic reason for going public, you know, going public, but the valuation expectations and the discounts are going to be more significant until you start to see a good experience with that and, you know, that will move forward. Historically, even in tough economic environments, the capital raising marketplace doesn't even close for years at a time. But there's definitely a reset going on in terms of, you know, what capital costs, you know, what the discounts are, but at the end of the day, companies need capital. Companies need to move forward. They need to invest and they just have to look through the lens that's appropriate for today's market environment. I think that transition is going on and, and you'll see that you know, evolve in the next— SORKIN: How do you think about your own valuation, which arguably has underperformed relative to a lot of the other banks. I mean, the bigger you know, the big money center banks. SOLOMON: I noticed year to date, year to date, you know, this year that our stock’s down less than the S&P and I think only other people we've been benchmarked against are down more than the S&P. So, you know, what window do you want to look at? I, what I like, what I like the earnings power of the firm over time to be recognized more broadly than it is of course, but I think our job Andrew is we're growing the firm, we're growing the earnings. I'm very proud of the fact since our investor day in 2020, we've grown the book value per share of Goldman Sachs by 40% since our investor day a little over two and a half years ago. If we continue to do that if we continue to grow our client franchise, focus on our franchise, grow our earnings, grow our book value, perform for our clients, we’ll do just fine. SORKIN: But do you see the growth opportunity coming from the platform business? Is that where this, I mean when you— SOLOMON: Our business, our our business is our our banking and markets business is strongest. It's the strongest piece of the business but the thing I'd highlight there that that we feel very good about, look at our wallet shares over the last three years. Some of the growth of that business came from the environment for sure. But our relative position in terms of our wallet shares, our wallet shares have really improved in those businesses over the last few years. And I think that's because of the way we're serving clients and what we're doing. So our wallet and our ranking with clients has gotten better and that's helped the growth and the stability of the business. QUICK: Stealing business from where? SOLOMON: From other, from other, from other banks. Just take the banks, everybody reports, add up the wallet that was available, but what's our share our shares are up 300 basis points. And so we've really improved our share, you know, in the in those businesses, we're growing our asset management business. I’m sorry. KERNEN: Well, historically where does Goldman trade to book? Because is this the right number 308 and it was at 306? SOLOMON: We're trading right around book. KERNEN: You’re trading below book. SOLOMON: Well, below book if the stock’s— KERNEN: Today, it’s at 314. It's up. So often do you have to buy Goldman. Buy Goldman at one times book. SOLOMON: There have been, there have been a number of periods over the last over the last 15 years where you could buy Goldman Sachs at book. There have been a handful of times we can buy it below book but generally speaking, since the firm went public, it’s stayed above book. I think if you look at if you look at the peer group, most of the peer group is trading around book or below book. But broadly speaking, I think the market still looks at these large financial institutions through a historical lens. I think they're capitalized differently. Their businesses are bigger, broader more diverse and their earnings power is is meaningful but it but at the moment, you know, certainly given the environment and the uncertainty I understand why people are cautious. QUICK: Would you spend your own money to buy stock here? SOLOMON: Well, I I own a lot of Goldman Sachs stock. QUICK: But I mean at this valuation. SOLOMON: Yeah, I I would, I'm not supposed to go on television and say, you know, this, that or the other. I think we're running a very good company, a very good business. We're doing really well with our clients and we're very focused on our clients. I think we're making some interesting investments that give us some nice opportunities in the future to add to the firm. I think the asset and wealth opportunity and our ability to grow those platforms, you know, we're very, very focused on our ability to grow management fees. We put out a $10 billion target on management fees and a $2 billion alternatives target. We're very focused on those. I think you noticed that we had to two and a quarter billion dollars in management fees, you know, in the quarter. And so we're, you know, we're focused on diversifying and strengthening the firm serving our clients. If we keep growing our book value, growing our earnings, I think we're going to do fine. KERNEN: How many how many layoffs will we see? SOLOMON: You know, I think it depends. I think when you look at when you look at businesses broadly, I think it depends on what the economic environment is. KERNEN: Well for Goldman Sachs. SOLOMON: I can't predict, you know, obviously— KERNEN: Will we see some in the next six months? SOLOMON: I can't predict we, I think you know, that we have a process that we do every year where we look at, you know, bottom performers a small single digit number that people that we don't think are really working in their jobs. We'd stopped that during Covid. And earlier this fall, we did an exercise in that context. But at the moment, we have no other plans. But I I can't tell you what the future brings. I think for all businesses, I think you have to look Joe, you know, Goldman Sachs’ headcount over the last two years has grown by 8,000 people. We've taken our headcount from 40,000 to 48,000. A lot of that is engineering talent. We're making a significant investment in the underlying infrastructure of the firm where I think, candidly, we've had some deficit and so we're trying to catch up and invest. You know, wouldn't be surprising if we got into a really tough environment. We'd certainly have to slow the pace of growth. KERNEN: Would it be most of the people that want to stay at home. Are they out of here? I mean, it's like they’re toast. I mean, it's like you don't want to come back, stay at home. You know, if you're not gonna come in on Saturday, don't even think about coming in on Sunday, right? QUICK: This is Joe’s mentality by the way, this is what he’d like— SOLOMON: So if I take a walk up from SOHO on Sunday morning, would I find you sitting here doing some work. Can I come knock on the window? KERNEN: I might stop by here. There’s a Taco Bell over here. SOLOMON: Would you let me in? We could have some coffee. If I come up on Sunday morning, we could have some coffee right here. KERNEN: I’m here when the market’s open. SOLOMON: Okay. SORKIN: David Solomon, thank you for joining us this morning. SOLOMON: Absolutely. Thank you guys. Really great to be with you. Appreciate the time......»»

Category: blogSource: valuewalkOct 18th, 2022

Engine No.1 CEO On ESG, Exxon Mobil And Energy Transition

Following is the unofficial transcript of a CNBC interview with Engine No.1 CEO Jennifer Grancio at CNBC’s ESG Impact conference, which took place today, Thursday, October 6th. Video from the interview will be available at Interview With Engine No.1 CEO Jennifer Grancio SARA EISEN: Tyler, thank you. Good morning. And Jennifer, it’s good to […] Following is the unofficial transcript of a CNBC interview with Engine No.1 CEO Jennifer Grancio at CNBC’s ESG Impact conference, which took place today, Thursday, October 6th. Video from the interview will be available at Interview With Engine No.1 CEO Jennifer Grancio SARA EISEN: Tyler, thank you. Good morning. And Jennifer, it’s good to have you here, welcome. JENNIFER GRANCIO: Thank you. EISEN: So you’re squarely in the middle of all of this. It’s a great place to start our event here today because you’re investing around some of these principles, right? Climate, social responsibility, but you’re also trying to make money and returns for investors. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2022 hedge fund letters, conferences and more   And my question to you is do those two things go hand in hand right now, when we're in the middle of a bear market, and the priority for investors really is profits, cash preservation, not necessarily some of these ESG policies? GRANCIO: Well Sara, thank you for that question and it's great to be here with everyone. We think about investing as, you know, this is this is something that you can do for the very short term, but for the vast majority of asset owners and even retail and wealth investors, people are investing over time. They're looking for very strong economic performance over time and so we built Engine No. 1 because we think the market sometimes gets confused about investing only for ideology or the market gets confused and investing extremely short term. So what we have done is we look at a company's primary business, we look at the material impact areas, and we take that into account and we go deep with companies so an example like the move from internal combustion engines to battery electric vehicles, that's a change that happens over time. It's complicated. There's a way to do that where you understand consumer demand, you understand material impact on climate, and you can work with a company to help the company win and be very successful. EISEN: Well, you mentioned your mission statement. Nobody ever heard of Engine No. 1 until what was it early last year with a .02% stake in Exxon Mobil Corp (NYSE:XOM) you fought management in a proxy battle and somehow won three board seats on this issue of climate policies and sustainability. How did that happen? GRANCIO: Well, from an Engine No. 1 perspective, we actually think of it as a campaign that was about governance and a campaign that was about long-term capitalism. And so the work that we did with Exxon was our principle of investing, which I talked about before, is to look at how companies change and how they need to change through big systems transitions. So as investors, sometimes we like to talk about Google and Amazon, that's great. But if you think about where value is really going to be created in the next decade, we've got an energy transition. We've got changes in how people get to work and use cars and transportation, changes in agriculture and so forth. And so we simply looked at Exxon as an investor and we said, if Exxon is smart and has the right capabilities from a governance perspective on the board to manage through an energy transition because we use energy and we're in transition, and also to look at how the business has value after that transition. That's great for financial shareholders of Exxon. So we were able to do that and bring a lot of other investors with us. EISEN: Well, you convinced the big institutional shareholders. Yeah, no, that that was what was so impressive as a fund that many had not heard of before. So what's the update, Jennifer? How has Exxon been doing since that that battle was won May of last year? GRANCIO: So from from a from a proxy perspective, the work that we did and investors came with us was to add some additional capabilities to the board to help Exxon manage capital allocation and to develop additional businesses over time. And so Exxon has done those things. They've been disciplined on the capital allocation side, they've set clear targets and made progress to those targets from an admissions perspective, which gives them credit and a social license to operate as they move forward. And they've also started a green energy business and on the back of the work that we did with Exxon, and this gets to this, you know, we believe that investors need to be active owners. We continue to do work across the energy sector, and work with a number of great companies that have set clear scope one and two targets and actually agreed to third party methane verification. And for people that care about climate, you know that methane matters. And so being transparent, being audited across different energy companies is a big step forward, whether you're a financial only investor and you need that data to look at the company's risk and the company's value over time, or you're interested because you're interested in impact at scale and reducing these emissions. EISNE: I guess what I'm wondering Jennifer is the Exxon has done remarkably well in the market, up a ton since you got in but a lot of it is because oil prices have spiked and there's a war with Russia cut off from from a large part of the market, a major oil producer. So is ExxonMobil a good long-term bet from here on some of these ideas about sustainability? GRANCIO: I would say if you look at the appreciation of different companies in the energy sector, the work that we did with Exxon their stock was more than doubled, was significantly higher than any of their peers. So it wasn't oil prices. It was actually the improvement in their governance and then another good example is Occidental Petroleum Corporation (NYSE:OXY), which has been a leader in the space of transparency and mission working on green businesses, and their stock was up more than 60% the first half of the year, again, different than peers. So you know, we believe that these are fundamentally investment issues and at the same time if as investors we’re working with companies, this is, you know, good old American capitalism, we’re working with these companies to create value and have appreciation in their price over time. At the same time, you're holding these companies if you're worried about impact, and you wanna find the emissions and you can work with the company to turn it down as you go through time. EISEN: But still, I mean, a part of it has to be the fact that we need fossil fuels right now and we need them desperately and Europe needs them even more right now. So what is the right balance to think about these the future of some of these energy companies and clearly, Oxy also Warren Buffett has been buying so that's been a big help but, but clearly, some of these companies find themselves at a crossroads where, where they're being asked to produce more oil and also to to shift toward a more sustainable position for the future. GRANCIO: Yeah, I think that's right and we talk about it as an energy transition. So Engine No. 1 is looking at these very complicated systems transitions, and we are in an energy transition, thanks to the war, the transition probably is a little bit longer. So what does that mean? It means if I'm an investor and I care about sustainability, I mean, I have a choice people use fossil fuel, we haven't made the transition. We as a society haven't done that yet. And so if we need fossil assets, we need them to be managed by the big companies in the most responsible way possible and we need these huge engineering and development companies to also apply resources where they can where and only where they'll be financially rewarded for it over time to look at new technologies. And how do these companies maintain value after that transition when we're in more of a renewable environment or carbon capture environment and potentially, some of these companies can be winners in that space as well because they know how to do these things at scale. So definitely think about it as we're in energy transition. How do you be responsible and run a business to deliver energy to the world which we need today. And then as you get to the other side of that transition, how do some of these great companies have business models where they can participate and they can still have value over time. EISEN: How much of your portfolio right now is energy company? GRANCIO: We have, we have as a business, we think about it as you can hold the market. And we think that there is some improvement that could be done in the index or passive side of the market. So one business we have is simply an index fund. If you're going to hold an index, we think you should be active and use the votes to drive these great long-term economic outcomes. So in that product, energy is the same. Excuse me, Sara. Energy is the same, energy is the same percentage as the index. And then we have another another ETF. It's active, it's concentrated that holds primarily energy, transportation and ag stocks because we think that's a part of the portfolio that is underweight for the vast majority of investors and you need these active themes to participate either in value creation in these industries and as you participate in these industries to do it responsibly. EISEN: Okay, I'll give, I'll give you a break to clear your throat Jennifer, hopefully, hopefully you have water there. But, but what my next question I've seen you quoted lately saying that you're not you're not necessarily always going to take an activist stance and you actually want to get away from the activist moniker. Even though as I mentioned, Exxon, the proxy fight really helped put you on the map. So I'm curious where your focus is and where you see the biggest opportunities and how you're gonna engage from here. GRANCIO: Yeah, we learned from the Exxon campaign, I think is that the we think the market is ready to have a conversation about economics. And so we don't need political theater on either side, we need to actually work with the biggest public companies in America as the capitalist system was set up to do to take material impact areas into account. And if you think about it that way and you think about it as aligning how the companies have higher value over time as well as how they can quantify and address their their major impact areas, it becomes extremely constructive. So the work we did with the other big energy companies after Exxon that I mentioned around three more companies joining oil, gas methane partnerships, that was very constructive. We do a lot of work with the auto sector. We've talked very publicly about GM and GM is a great example where supporting them on making this transition, which is long term, it does not take only a quarter. That is good for GM and that's good for the financial investors and that's good from an impact perspective. EISEN: So is GM a better play on the EV transition and Tesla? GRANCIO: It is they're both I mean they're both plays would be our opinion. And what we see in a lot of portfolios is that people know about Tesla, but they have forgotten about GM and they've forgotten about Ford. And so our sort of theory about this is if you leave your money in a passive index, or you're only buying the kind of super growth stocks, you've got a huge problem in your portfolio because we're going to see all these transitions happen in the coming decade and they need to happen at scale. The market wants EVs as battery electric vehicles, and the market is going to switch and from a scale perspective, that's 20, 30, that’s millions and millions of cars. I mean, Tesla's right here, and so there's huge room for an incumbent like GM and for Ford, frankly, to be part of creating and meeting all of this demand. And when they do that, the winners are going to be still Tesla, but also the GMs and Fords and then all of the other companies that are enablers as they build their businesses. EISEN: Is there another example, another company that you can share with us that you think is doing a good job and leading and maybe underappreciated? GRANCIO: I think it's I think if you think of it very crudely as you know, who's doing good job on governance, who's doing good job on their their businesses, very sensitive to climate, they're doing a great job, and then the same can be said for workers and wages. You know, we think the vast majority of companies are actually trying to get this right. We have more data, we have more data on the climate side today as investors as Engine No. 1 but the whole market has really great data on scope one and two, and we'll get there on scope three, so that can be quantified and we can show financial causality and when a company deals with a risk in a smart way, their value goes up. We see this in the ag space as well. EISEN: Well— GRANCIO: Go ahead Sara. EISEN: Oh, no, no, go ahead. Please I want to hear some examples from you. GRANCIO: Yeah, I was gonna say an example is in the in the in the ag space. An example of a company that we think is getting it right is Deere. So Deere makes tractors, we think tractors are dirty if we have our impact hat on, but if you flip it and you think about how do we solve, how do we solve the food crisis globally? Deere is a company that does precision agriculture. What does that mean? It means the tractor helps you manage water and fertilizer. And what does that mean? It means it's better for the climate, but it also increases yields and money and financial performance for the farmers and so there are a lot of examples of companies that we think are totally on the right path where they're building a business. They're solving these huge systemic problems that we have and it's also from an impact perspective. You aren't you're making you're doing a better job. And then in the in the consumer space, there are companies like Walmart's a great example. That has been working on how to understand the supply chain and optimize supply chain and be able to describe everything that happens along the way and that puts them in a great perspective because as consumers want to understand that consumers want good practices, they're able to understand the whole chain and explain that to consumers. EISEN: Will you guys launch another another proxy fight anytime soon? GRANCIO: Well, if we would, we wouldn't we probably wouldn't talk about it publicly. But joking, joking aside— EISEN: I’m just wondering if the strategy where it fits in— GRANCIO: Our strategy is to be constructive. We think there's, we think there's a lot of room to work very constructively with companies on these different issues and really effectively as investors be long-term investors and support these companies on solving supply chain issues and bottleneck issues. And you know, frankly, for a lot of, lot of North American companies it particularly on the manufacturing, manufacturing, transportation, logistics, we're gonna see a huge resurgence in production and manufacturing in the United States. This is great for impact, but it's going to create a huge amount of value and again, in a lot of portfolios today, thematically, the portfolio isn't holding railroads, you're not assuming cars get made in the US, you're not assuming chips get assembled made and assembled in the US. And so we will do something, we will do something in the future around this opportunity to really invest in the, in the US supply chain as well as all the work that we're doing on climate, as well as the work we do to just continue to work with companies through the proxy voting process. So no plans to do an activist campaign. But definitely we will continue to be very active. We think you should always as an investor or manager on behalf of others, be very active with the companies that are in the portfolio. EISEN: No, it's very interesting about the supply chain. So Jennifer, right right before we came on I don't know if you saw the the clips of some of the backlash, fierce backlash against ESG woke capitalism. I'm curious what you make of that pushback which only seems to be increasing politically. GRANCIO: I guess the way that we would think about it is you know, systems systems change is complicated and investing is complicated. And so as investors which we are as opposed to politicians or or anything else, we really think you have to understand these these systems and companies at a very deep level to make good choices. And so investing shouldn't our point of view at Engine No. 1 is investing should never be ideological. Investing should be about understanding these companies, understanding how the industries are changing and working with the companies on their material areas of impact. It's financial, and it all ties together. So hopefully, hopefully, we don't let theatre get in our way on some of this. We move towards looking forward, we have good data, we can use data to make investments, we can have transparency, and we can get away from some of the theater-oriented debates and focus on value creation. EISEN: Well, on that note, I did want to ask you about BlackRock because that's where you come from. You helped you helped, I think found the iShares business and I'm curious what you make of BlackRock’s strategy versus your own strategy. What the big differences are, especially in light of some of these new news tidbits like we got this week with Louisiana pulling $900 million out of BlackRock funds because they say that BlackRock’s policies are harmful to Louisiana's energy economy. GRANCIO: Well, I think as from an Engine No. 1 seat, I'm not in a position to comment on other people's practices or policies. But what I would say is a large companies with many existing businesses, it's harder as an incumbent to to pivot and to make everybody happy and to change business practice. Which is why for us we think we need new entrants as well like Engine No. 1, where we don't have a huge number of businesses, we're able to have a very simple principle of we use data, we use it to invest, impacts are a big part of that and we're entirely transparent on everything we do, including every single vote every year. It's a little easier for us as a new entrants to the market to do that, then not just one, but many of the larger asset managers where it's a little bit more complex for them. EISEN: Yes, Jennifer, thank you so much for the time today. We so appreciate it. GRANCIO: Thank you Sara. EISEN: Don't get to hear from you too often at Engine No. 1. Tyler, with that, I'll send it back over to you......»»

Category: blogSource: valuewalkOct 6th, 2022

Transcript: Samara Cohen

     The transcript from this week’s, MiB: Samara Cohen, BlackRock CIO for ETF and Index Investments, is below. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ RITHOLTZ:… Read More The post Transcript: Samara Cohen appeared first on The Big Picture.      The transcript from this week’s, MiB: Samara Cohen, BlackRock CIO for ETF and Index Investments, is below. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ RITHOLTZ: This week on the podcast, I have yet another special guest — extra special guest. Samara Cohen is the Chief Investment Officer at BlackRock where she manages ETFs and index investing. BlackRock is $10 trillion. Their ETF business is over $3 trillion. Their index business is also over $3 trillion. Samara is consistently on everybody’s list of most influential women in finance, but that’s not why you want to listen to this. You want to listen to this because there really are very few people in the world more knowledgeable about managing ETFs, managing indexes, what passive really means, how people should be thinking about the actual engineering of products if you want to have broad market exposure or specific types of beta. Really, I’m going to stop talking and just say with no further ado, my conversation with Samara Cohen. ANNOUNCER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio. RITHOLTZ: My extra special guest this week is Samara Cohen. She is BlackRock’s Chief Investment Officer for ETFs and index investments. BlackRock manages up about $10 trillion. The ETF business is about $3.27 trillion. Samara Cohen, welcome to Bloomberg. COHEN: Thank you so much, Barry. I’m happy to be here. RITHOLTZ: I’m happy to have you here. I have so many questions to ask you, but I have to start out with your education, which we usually skim over. So, you graduated UPenn with a B.S. in Economics and — and Finance at — at Wharton, but you also had a B.A. in Theatre Arts. How has theater training helped in your financial career? COHEN: First, Barry, when you hear theater, a lot of people might think that — that I was an actor, so I feel like I need to start with the fact that I was decidedly a backstage kid. My love of theater was very much on the production, design, directing, you know, behind-the-scene side, and that has definitely helped me across the course of my career. But I have to tell you, I came to the University of Pennsylvania to be a theater major, and I left with a dual degree in Finance and Theater. So, finance was something I discovered because I knew I was good at math, in fact, when I started college I didn’t really need to take any math classes because I had all of this credit. And I missed it, and so I discovered markets and economics, and it felt like math with a purpose, so — and I got to combine the financial degree with the theatre degree, which made my parents much more comfortable with the fact that I was spending all of my summers working for regional theater companies basically, but it was a big part of learning who I am. And — and today in my role, I often remember being told that casting is 95 percent of directing, and putting the right person in the right seat is a lot about leading any business, so it definitely has played a part throughout. RITHOLTZ: Really interesting. So, you — you end up interning at Goldman Sachs on the trading floor pretty early in your career. Tell us what that was like and — and how theatrical was that. COHEN: Well, actually I came to Goldman out of business school. I — well, my first job was actually at BlackRock. That’s where I came out of college. I was at BlackRock for four years, went to business school. And part of why I went back to school after BlackRock was in my head I thought, “Maybe I could further combine this love of finance and love of theater. And how might I do that?” And I loved the idea of going back to school. I’m kind of a voracious learner, and I’d work hard and I liked the idea of meeting other people and seeing what was out there after four years of — of working. And in that summer and actually in the process of figuring out where I wanted to work for the summer, I visited the trading floor. And I walked onto the trading floor, and I thought this is it. It’s a lot like theater. It’s a lot like that like multi-tasking, high-energy collaborative environment where lots of things are happening at the same time. And I thrive in that. And so, actually, the theater — the — the trading floor I found pretty theatrical, and that really worked for me. RITHOLTZ: Yeah, there’s a — there’s a buzz, there’s an electricity on a big trading floor, which I think is one of the things that’s lost from old Wall Street. You can replace it with more efficient algorithms and technology. But man, when you walk onto a big floor, you just feel there’s nothing like that. And ever … COHEN: Right. RITHOLTZ: … have a desire to become a trader? Was that — did that ever appeal to you? COHEN: Until I walked onto the trading floor, the idea really scared me. And you know what? I — actually, I don’t think I’ve ever told anybody this. I did not proactively send my résumé to the Securities Division. They reached out to me as part of a diversity hiring effort to get more women onto the trading floor. And the reason I didn’t send my résumé was it sounded really intimidating to me. And so, I think that’s just an important thing to — to note is that sometimes if something’s interesting, even if it’s intimidating, it’s worth checking out because I knew. And yes, there weren’t a lot of women on the floor when I walked out there, but it was really clear to me that I would, you know, once I got my bearing and learned to speak the language, it can be an intimidating place at first, but — but I knew it would be a great fit for me. RITHOLTZ: So, let me make sure I understand the chronology of your career. So, you intern at BlackRock, then you work at Goldman for like 16 years, something like, then you boomerang back to BlackRock. Did I — did I get that right? COHEN: Yeah, pretty much. I went to BlackRock out of college, and then business school from BlackRock, and then Goldman from business school, and then back to BlackRock. RITHOLTZ: That’s really, really interesting. I — I heard the phrase BlackRock boomerang. Is this a thing to people like work at BlackRock, leave, and then, you know, magnetically get drawn back? What’s that about? COHEN: In my case, it was definitely a thing. I don’t know the — like with the total stats are, but it’s definitely true for other people. I mean, people’s careers are marathons and — and not sprints. And — and, you know, part of my marathon — an important part of my marathon actually was that 16 years at Goldman. I think had it not been for that, I wouldn’t have the seat I currently occupy at BlackRock, so I’m pretty grateful for it. But also, I think my — my history with BlackRock and my passion for the firm and its purpose did draw me back as well. RITHOLTZ: So, let’s talk about that seat you have at BlackRock. You recently were promoted to Chief Investment Officer of ETFs and index investments. That sounds like a pretty serious job, especially when we consider at BlackRock, you know, that’s well over $3 trillion in assets. Tell us a little bit about your new job responsibilities. COHEN: I’m really excited about the new job. And — and even more than — than me being in the job, I’m excited about the fact that we have a Chief Investment Officer role for ETFs and index. And it actually is broader than the ETF book. It’s our whole indexing book. And in the — and — and what it means in short is that I’m accountable for — for investment performance in our ETFs and index book, which I love telling people because sometimes they look at me and they say, “Well, I don’t really understand that. Isn’t investment performance the outperformance of a benchmark? And aren’t you, Samara, ETF and index person the benchmark?” So, what is investment performance? And we’ve done a lot of work really in partnership with our clients and articulating what that is. And in the case of ETFs and index, it’s two things. It’s first what we call market quality. What do you expect an ETF? It’s how it trades in the market, secondary market volumes, market quality in stress scenarios, premium discount behavior. There’s a bunch of metrics that we monitor with respect to ETF market quality. Part of my job is to be accountable for performing on those, and the other part is delivering on those index outcomes, which in a world where what we can index is evolving as more markets and more strategies are indexed. It’s also important that we deliver to investors what they had signed on for with that index objective. And so, that’s what it means to be the CIO of an ETF and index book. RITHOLTZ: So you mentioned market quality and — and performing within the market, you know, was only less than two years ago we had the big COVID selloff in March, and people were concerned that ETFs were not going to be able to manage the — the pressure, they wouldn’t be able to deal with all of the stress, you know, all the usual criticisms of indexing plus additional criticisms of ETFs. How did ETFs perform during that 34 percent collapse from February to April of — of 2020? COHEN: The people who were concerned before the COVID bout of volatility had a huge and rich set of data to draw from when we emerge from those volatile markets that show that actually ETFs have really supported stressed markets, added liquidity, added transparency. And that was on a full display over the COVID volatility period, particularly in the bond market, where if you think about what was happening across the world, there were traders who were, you know, setting up their — their home desks, their — their home, you know — you know, hundreds of — that one trading floor that we talked about that came thousands and thousands of — of home office trading floors. And the bond market, in particular, still has largely operated in an over-the-counter bilateral basis in the bond market for — for that reason and a whole lot of other reasons. You know, and the treasury market, in particular, became very hard to access while ETF, you could see on your phone they were transparent, they were trading. RITHOLTZ: Right. COHEN: One of the stats that I love to quote that I think is quite indicative of what was happening over that period is, you know, we had an investment grade ETF that traded on one of those volatile days in March — March 24th 90,000 times on exchange. And, of course, every time something prints on an exchange is price formation where its — its underlying bonds — the top holdings of that underlying bond portfolio traded, on average, 30 times. So, 90,000 versus 30. There just wasn’t price formation happening in the bond market, but it was happening in the ETF market with buyers and sellers meeting on exchange, which meant that there wasn’t a whole lot that needed to happen in the underlying bond market to — to support that. And so, really — and — and what’s interesting is you can see a whole lot’s been written by policymakers around the world about this supportive role that ETFs have effectively played in — in stressed markets. The, you know, SEC has written about it, the BOE, IOSCO, so it’s been exciting to have this really rich dataset to draw and looking back at that period. RITHOLTZ: The bond discussion is really interesting, and — and I was referring to equities, but we’ll circle back to that. You know, a lot of people have complained that bond markets are thin. You know, you have a few 1,000 stocks, but there are just countless, countless numbers of bonds — many, many more times of bonds than there are stocks. It seems like the bond ETF universe handled the crash — or plunged maybe is a more accurate word because it was so short — handled it pretty well. Everybody — we saw a lot of money rotate out of stocks into bonds. As a safe harbor, didn’t seem like there were a lot of dislocations or wild price anomalies or an inability to get an execution. The bond ETF universe seemed to behave really well. COHEN: The bond ETF universe behaved well. And as a result, the bond market behaved better. And that’s one of the things that I get really excited about because the fact is I’m really a lifelong markets reformer. That’s the passion that I have. I’ve spent my entire career in the markets and — and my desire, at this point, is to contribute to making them better, making them safer, more efficient, more transparent, and we can measure how bond ETFs actually did that in the bond market. And, in fact, interestingly, as a result of the — the demand for bond ETFs that came out of the COVID period, we had seen the bond market start to trade more electronically big pieces of the bond market portfolios in the bond market. Bond dealers have started to really invest in algorithmic pricing, which creates more transparency, more trading, and more liquidity. So, we’ve written about and we’ve observed this what we call a real virtuous cycle of how ETFs have been integrated into the fabric of — of capital markets across the board. And we can definitely talk about equities, but how in the bond market it has been good for bond ETFs and also good for bonds. RITHOLTZ: So, when we had the great financial crisis since ’08, ’09, I thought that was pretty much the end of the argument that indexing is problematic for markets or ETFs aren’t going to be able to handle pressure. That — that should have been the last word in that. I was kind of surprised to see those same arguments still hanging around. And then March 20202, the execution seemed to go off without a problem. There were a handful of individual stocks that’s sort of pricing get a little wacky. But is this the end of the passivist destroying the markets and ETFs are dangerous argument or is there — are they just going to throw this out every time there’s something else to complain about. COHEN: I love your thoughts on that, Barry. I would hope that it’s a — it’s — it’s closer to the end where we — where we can kind of look forward to — to numerous things that can improve the markets. But look you make an excellent point. I mean, to be fair, in 2008, I was — I was on the bond trading floor actually at Goldman and I didn’t know what an ETF was, like in 2008, you know, in — in the fixed income markets, you didn’t — you know, you — we weren’t talking about what ETFs were. But to your point, it is true. If we look back at the data during those weeks and months when what was so valued by investors was transparency and was so feared was the lack of transparency when all this information was coming out about bank balance sheets and what was on balance sheets, we did see a real pick up in volume and velocity of ETF trading in 2008 and in 2009. And we have repeated stressed market events like the big energy selloff that happened at the end of 2015, the — you know, what we call Volpocalypse that happened in February of 2018 where we have repeatedly seen ETFs perform well under pressure and actually add support to high-velocity markets. And yet this still, you know, comes out from time to time, which feels like kind of the language that comes out around any sort of disruptive technology. But I do think like we talked about that the — the data is pretty clear. (COMMERCIAL BREAK) RITHOLTZ: You are definitely responsible for a lot of capital, and that leads me to a quote of yours that I — I need an explanation on. At BlackRock, there is absolutely nothing passive about index investing. Explain. COHEN: I am on a mission, Barry, to replace the word passive with the word index when people talk about ETFs and index investing because how we manage our portfolios is extremely active. And it goes back to that conversation we had about what investment performance is in the context of an ETF and index investment book. It is delivering the index outcomes, which the reason ETFs and – and index ones exist is that indexes aren’t often easily investable. They could have thousands and thousands of securities in them. And so, depending on how much you — you, you know, are investing, you can’t perfectly replicate the index, and so you need to optimize to deliver that index outcome with as little friction as possible. So that’s delivering the index outcomes. And then there is that huge dimension of ETF market quality, ensuring that the ETFs track the underlying portfolios with, you know, we call it premium discount behavior, ensuring that they’re strong secondary market quality, transparency, and liquidity in the ETFs. So, we have teams of people, not robots, but actual people. And a lot of them, by the way, are women around the world who are actively managing our market quality and investment performance in our ETF and index book. So that’s why there is absolutely nothing passive about it. RITHOLTZ: Really interesting. We’ve gone through these periods whether these spasms of anti-indexing sentiment, and it goes all the way back to Jack Bogle and — and the early days of indexing in the 1970’s. Indexing is un-American. It’s — we’ve heard people call it Marxist. It’s going to lead to market crashes. What — what’s your perspective when you hear these things crop up? The – by the way, the latest one is it’s anti-competitive and it’s going to lead to price fixing and a lack of competition due to all this ownership. How do you respond to those sort of backwater, low review silliness? COHEN: I — I begin with — and we’ve written on this this year in — in something we call the Investor Progress Report, but we estimate that there’s about 120 million people around the world who are accessing our ETF and index capabilities. There are more people accessing the markets, and investing in the markets, and participating in economic growth on their terms than never before in history. And from my perspective, there’s really nothing that’s more American than that. So that’s how I think about it. I think ETFs bring markets. They bring the market access. They bring transparency. And increasingly, they bring choice to lots of individual investors who are saving for retirement and thinking about their financial futures with the help of ETFs in ways that they couldn’t before. And a lot of the — you know, one of the pieces that we — that we put out recently points out to the fact that a lot of the households who own ETFs in the United States have — have median incomes of $125,000. So, you’re talking about investors who simply didn’t have market access before who, as a result of ETFs and indexation, can — can get diversified strategies to manage their risk the way more sophisticated institutional investors have and participate in the markets. RITHOLTZ: So, let’s talk a little bit about product engineering. Tell us a little bit about what that means. What sort of projects are these teams working on? It’s one of those phrases that definitely resonates. COHEN: I’m glad that it resonates. It’s something that we’ve been using for — for a few years now. And that team, which is global, there are product engineers in — in really every major region of the world. And they do two things. First, they help design the operating models and the investment process for — for new ETFs, how will creation redemption work, what are the characteristics of the index. What — you know, how will the index rebalance? Those types of things when it comes to new ETFs. And the second piece of what they do, which is actually really critical, is they continue to manage the structure of the product over its lifetime. So sometimes, we will identify something in one of those market quality statistics that, you know, let’s say it seems to be trading a little bit wide in the secondary market, and we’ll go out and we’ll talk to market makers and ask what’s happening. And they’ll say, well, it’s a little tricky to hedge because of X, Y, and Z. And sometimes, we can change something structurally and how the market interacts with the ETF to improve its investment performance in market quality. And that’s the purview of our product engineering group. So, I tell all of our teams, you know, I want all of our teams to be able to explain how they contribute to the active management of our ETF and index book, and that’s how the product engineering does by — by identifying the operating model and by continuously assessing and improving it. RITHOLTZ: So, let’s talk about the rest of your team. You have portfolio engineers, risk managers, platform architects, market structure developers, and product operating model designers. That sounds like some very intriguing job descriptions. Tell us about what a market structure developer does or some of those other really interesting titles. COHEN: I think they’re all exciting jobs, and I do have to make a plug for — for anybody who is — is considering going into investing. It’s never a dumb question to ask what — what is the job, but because there are so many different jobs. And I remember when I was in college, I was almost scared to ask that. But — but as you just pointed out, and it’s — it’s, you know, fun for me to kind of hear you walk through it, there are so many different types of ways to be an investor and to participate in an investment platform. So really, we do three things. Number one, we manage day in and day out. We are responsible for the investment performance of our funds, how we’re managing the portfolios through rebalances, through corporate actions, and how we’re managing ETF market quality. That’s number one. Number two is we are continuously improving our platform in the Aladdin technology that we use to manage our portfolios to make things that can be lower touch — lower touch to give us capacity to spend more time on, you know, new markets and new strategies so that platform architecture piece, how we create scale that’s kind of bucket two of what we do. And the third part is ecosystem leadership. And you talked about — you know, we talked about how we engage with liquidity providers, with stock exchanges. Earlier, you talked about the — the COVID volatility. And I think it’s really important and — and was a really interesting case study in the U.S. that a lot of the volatility guardrails that had been put in place by the U.S. stock exchanges over the five years preceding March 2020, market-wide circuit breakers, limit up/limit down, like the whole limit up/limit down framework was really only 10 years old had been tested a few times and had its biggest test in March of 2020. We engaged very deeply with stock exchanges. Remember in the U.S., ETFs are between 30 and 40 percent of daily trading volume, so those volatility guardrails really matter from a market quality perspective. So, focusing on the external environment for our ETFs, that’s what we mean by ecosystem developer. RITHOLTZ: You mentioned Aladdin. I just finished a couple of months ago the book, “Trillions” by Robin Wigglesworth, and he describes the Aladdin system really as the technological backbone of — of BlackRock from the very beginning and the secret sauce to that successful scaling. Tell us a little bit about — for — for a person who may be not familiar with Aladdin, tell us a little bit about that. COHEN: Aladdin is how we — we arm our investment managers, both BlackRock’s investment managers and the investment managers who are — who are Aladdin clients outside of BlackRock with best-in-class risk management tool. And it is the — the DNA of the firm. And I can say that actually because as I’ve shared with you, I was at the firm pretty much at its — at the beginning. BlackRock was started in — in 1988, and — and I started there in — in 1993. And the reason BlackRock was founded really was a group of fixed income markets, specifically mortgage-backed security experts who said, “We can take this technology that’s been built on the sell-side and deliver it directly to clients as a fiduciary to help them create better outcomes.” So, giving — putting better risk management tools directly in the hands of — of clients was really BlackRock’s founding mission. And — and that’s what Aladdin has grown in today. First, it was the system that all of BlackRock’s portfolio managers used, and then it became a system that — that other asset managers wanted to — to access as well, and it is really the — the backbone of how we — we look at risk and we run our portfolios. RITHOLTZ: Really intriguing. So, let’s talk a little bit about ESG generally, and then we’ll — we’ll — we’ll dig down a little more specifically. Your boss, Larry Fink, famously pens a — a letter each year to Corporate America’s. Tell us a little bit about why we do that and — and what — what’s the thinking behind that. COHEN: Larry writes a letter to start a conversation, and it’s really a conversation with our clients who are owners in all of these companies across Corporate America and — and what we think are — are the top of mind themes for the year ahead. And it’s a good integration of everything we’ve heard from clients, and how we’re thinking about the markets, and how we’re thinking about risk. And it becomes really a — a point of — of bringing people together us inside the firm and us with our clients to — to take a look at the world and what we’ve learned over the past year, and — and what we want to bring to — to the year in front of us. RITHOLTZ: Very interesting. Let’s talk a little bit about corporate governance. How do you think about that in terms of affecting risk? COHEN: The conversation about corporate governance is one we’ve spent a lot of time thinking about because, as — as you know, but it probably bears, you know, speaking to explicitly, in a lot of cases, we vote the shares on behalf of the clients whose money we manage. RITHOLTZ: Right. COHEN: And the question is do those clients want to vote the shares themselves? And something we did in December and it’s actually gone live this month or it went live at the beginning of 2022 was work to give our institutional clients and some of our comingled fund clients, but a — a good portion of our assets the option whether they’d want to vote their shares or not. So, it’s early to say are they going to take it us up on it or not, but that will be very instructive to us because our job is to help them create better financial futures, create better portfolio outcomes. In some cases, they may want to participate in the corporate governance process themselves. In other cases, they may want to intentionally delegate it to us, and we had a very big what we call investment stewardship function where we, you know, were very transparent. We publish the criteria in terms of what we think is important when we engage with companies, but some investors feel like, well, that — that engagement with companies is part of the value proposition that I hire my asset manager for. And some investors may feel, nope, I’d like them to manage my assets, but I want the votes. And we are really hopeful of increasingly being able to give those investors choice. (COMMERCIAL BREAK) RITHOLTZ: Let’s talk a little bit about ESG generally. You know, for a long time, it’s captured a lot of mindshare. People have talked about it, especially with climate change and the focus on the environment, but it doesn’t seem like ESG is captured as many inflows as it has, you know, sort of mindshare. What are your thoughts on that? Is this going to be a persistent gap or are we seeing more people, especially younger generations more interested in ESG investing? COHEN: I think flows are actually the tip of the ESG iceberg, and what you don’t see below the surface is the integration and evaluation of ESG risk across portfolios. And that has captured a huge amount of time and attention from investors and — and certainly from us. And it’s actually really exciting from — from an investor perspective that reminds me again dating myself here. But when I started at BlackRock, I — it was in — in, you know, 1993, and I think in the five years since BlackRock was founded, interest rates had dropped something like 300 basis points, right, like late 80’s call it 10 percent on the bond to — to seven percent. And one of the big topics of risk in the fixed income market was mortgage prepayments. And so, figuring out how to model that, articulate that, make that transparent better than anybody else, again a big part of BlackRock’s value prop that it was bringing to investors, and we are doing the same thing today with climate risk and with ESG integration. And we have integrated ESG metrics across our portfolios and transition risk metrics, so we can assess what sort of risks are there. And that’s the really the first step. It’s measurement, and transparency, and then decisions around capital commitment, and — and risk taking. RITHOLTZ: So — so I want to restate a little bit of what you’re saying. I’ve traditionally heard ESG described as I want to invest in a way that parallels my personal values, but you’re really describing ESG as a risk management tool, as a way to screen out potentially problematic concerns, sectors, companies, whatever. Am I — am I overstating that or is that a fair translation? COHEN: Both statements are actually true. It’s a spectrum, so what we need to do is give our clients choice and — and clarity, and — and help them articulate because often they’re not even sure where they want to be in that spectrum, but I would say the majority of the conversations that we have right now are much more understanding. Looking at my portfolio today, what are my ESG risks broadly? What are my climate risks? What are my risks to a net zero transition? And then the second question is how do I want to manage those. RITHOLTZ: Really, really intriguing. Let’s talk a little bit about no carbon and low carbon. That was kind of a — a hot topic a couple of years ago. I’ve always been a little perplexed by that because if you back out the big carbon producers in the S&P 500 everybody else who’s left are giant carbon consumers. How should we think about something like carbon? Is that the most attractive approach to dealing with I’m concerned about climate change or — or — or global warming? COHEN: It depends on what your goal is. And again, I think a big part of what our work has been is to offer a spectrum for investors who are trying to do different things. And even more importantly and this has been meaningful to me as a personal investor, offer transparency around what it all means. So, something we did in December is we published a metric for all of our public index and all of our ETFs called the ITR Metric, Implied Temperature Rise. And the beauty of this metric is it’s really easy to understand. You can pull up anything on our website. You can see the ITR Metric, and you can see is it Paris-aligned or not, meaning is it, you know, 1.5 degrees or lower or is it higher? And — and we show the spectrum of — of bands and ranges. And — and what you can see is, you know, to your point, 90 percent of — of companies in — in MSCI ACWI are not Paris-aligned … RITHOLTZ: Right. COHEN: … but step number one is — is getting transparency in terms of your book, and then deciding do you want to take the first step and move to something that is a screen diversion of — of that index or go much further and — and take more targeted exposures. And what we hear from clients is, you know, they want different things, so putting out that spectrum and putting out those measurements really, you know, looking to be champions of transparency in this world, which as it emerges can kind of become a Tower of Babel in terms of the different languages and different metrics. So arming investors, both institutional and personal investors, with the tools to understand what does this mean for me, that’s really been the priority. RITHOLTZ: That’s really interesting, the old Peter Drucker line is if you can’t measure it, you can’t manage it. And having metrics sounds like a great, great start. So, let’s talk a little bit about what it’s been like the past couple of years with the pandemic, and then last summer delta, it felt like it was ending, and then omicron hit. I keep hearing all these firms are trying to get their staffers back into the office and on the trading desks. Tell us what — what you guys are doing. Are you going to have everybody back in the office? Are you going to be remote? Are you going to be hybrid? What’s your thinking about the world going forward? COHEN: We are going to pilot a hybrid model, and we actually started piloting it in certain parts of the world, including New York City, prior to omicron. And what it was was you are welcome to back — to come back to the office for five days. If you would like to take two remote days, take two remote days, and — and we’ll see how that plays out. And then omicron happened and we kind of, you know, pulled back on the pilot and — and we’ll put it back in hopefully in a few weeks. I’m — I’m in the office right now. RITHOLTZ: I see. COHEN: I like being in the office. And I think we’ve had a whole bunch of learning. So, I mean, of course, our number one priority is making sure that people are safe and that people are healthy, but healthy doesn’t just mean, you know, being safe from the — from — from the virus. It means being mentally healthy. RITHOLTZ: Right. COHEN: And — and one of the things we’ve learned is — is a lot of us really missed the connection with other people. So, creating an environment where you can have those moments of human connection in the office. And, of course, there were moments of human connection that people, you know, particularly with kids of different ages we’re — we’re having at home that they didn’t have before, so trying to take those learnings from the pandemic and employ them in a way that makes people healthier physically and healthier mentally, that’s what the goal is. But I imagine we will be experimenting for a while both based if conditions in the world change and — and as we see how it works in our offices. RITHOLTZ: Yeah, the — the challenge has been how do you manage corporate culture over Zoom or remotely. And BlackRock has a very specific corporate culture. Lots of other firms are trying to maintain that. Finding that right balance seems to be a work in progress that we’re all going to be dealing with over the next couple of quarters or years for all we know. COHEN: Absolutely. RITHOLTZ: So, let’s talk a little bit about the rising demand for ETFs. It seems that lots of institutional traders are driving ETF demand. Can — can you talk to that a little bit? I’m curious as to your perspectives. COHEN: What might surprise you to hear is one of the biggest adopters of — of ETFs has been other asset managers. So institutional asset managers, you know, like, you know, BlackRock’s own asset managers outside of the index business who are integrating ETFs into their own pursuit as alpha generally to, you know, use ETFs as a cash equitization tool to look at ETFs alongside other sources of market beta like futures contracts or swap contracts, to look at options on ETFs. Often, we’ve seen — and — and this was actually a very interesting story going into the Brexit referendum, there weren’t a lot of volatility place out there, but there were some U.K. — we had a U.K. equity market ETF and — with options — with options ecosystem around it. An options open interest went up 1,800 percent … RITHOLTZ: Wow. COHEN: … into the referendum because it was a way to play volatility, and sometimes that would be an asset manager’s first experience of an ETF because they were looking for some sort of non-linear payout. And then they would become more interested in integrating ETFs as another wrapper, another tool in their overall toolkit in — in making money. So that has been one of the largest sources of — of adoption of ETF. RITHOLTZ: I have a very vivid recollection, I want to say 15 or 20 years ago. Hearing certain institutions say — or institutional fund managers say, “Look, we want to get exposure either to broad equity market or to the specific sector, but our due diligence and our research process takes so long that by the time we pick a particular company, a particular manager, a particular investment, the move is half over, I could just use the ETF and get instant exposure to X. Do you still see that sort of behavior or am I going too far back in history? COHEN: No, we absolutely see that behavior. Often, you know, people will use the ETF as a placeholder as they do that research and figure out where they want that exposure to be specifically. So sometimes they have longer-term horizon, sometimes they have shorter-term horizons, but again, this is actually a key reason why we see that increase in ETF trading during high velocity markets as they are very convenient and transparent way to manage risk and pivot exposures during fast-moving markets. So, you can make quick changes to adapt your risk profile and work into what your longer-term target state might be, and we do continue to see that. RITHOLTZ: Really interesting. Let’s talk about thematic ETFs. They seem to have exploded in popularity the past couple of years. How exciting is that for you guys to work on? And what do you see coming down the pipe? What — what’s new and interesting? COHEN: It’s so exciting that we can increasingly index new types of strategies and access new types of markets, and — and that’s really what we’re about, bringing the markets to investors on their terms. And, you know, one of the things that really brought it home for me with some of our climate-focused ETFs was being able to find something that my kids connected to. My daughter is a big environmentalist. She’s a part of her school’s Environmental Action Committee, and I think she never thought that ETFs were — or investing was particularly relevant to her. And talking to her about a climate-focused ETF, it was a conversation. So, part of how we are bringing more people into the markets is helping them connect to the themes that are important to them and then helping them use those as a way to start to construct the portfolios that will deliver the outcomes they’re looking for. RITHOLTZ: So, one of the big things that we’ve seen has been the rise of direct indexing. What are your thoughts on that? Is this a challenge to ETFs? And we’ve seen a lot of big institutions buy direct indexing shop. Tell us a little bit about your thoughts with that. COHEN: Direct indexing is a — is a very important part of the index and — and ETF ecosystem. About half of our book actually is direct indexing versus ETFs. Increasingly actually, there’s also been attention to what — to — to smaller direct indexing opportunities more for individual investors where we — we acquired Aperio to — to offer that service as well. So, I think direct indexing for individuals, for institutions fits nicely into that overall ecosystem. When you come to those things we talked about around what value the ETF wrapper brings, that secondary market liquidity, the transparency, that’s the role that ETFs play, but there’s certainly a role for a — a very important role for direct indexing, too. RITHOLTZ: Really intriguing. Your bio mentions that you’re an advocate for employee networks. Can you speak a little bit towards that? I — I know this is like a total subject change, but I don’t want to not get to this question. Tell us a little bit about employee networks, and — and what are they? And — and what role do you play with those? COHEN: I’ve been a big beneficiary over the course of my career of the networking and visibility that comes from being part of, you know, in my case, women’s networks. It’s an opportunity to meet and connect with people you wouldn’t otherwise know and an opportunity to — to think more intentionally and — and strategically about your career and — and maybe expand your universe of role models. So that’s how I participated in employee networks. And at BlackRock, one of the things I love about being a — a senior advocate for — for many of the networks is I really believe that you can’t do your best work unless you can talk about your challenges both inside and outside the office. And a lot of times these networks create safe spaces for people to talk about what they’ve struggled with, how they’ve overcome that. And — and — and I find that really inspiring and — and it helps me recruit great people. So — so it’s something that’s very important to me. RITHOLTZ: So, let’s stay with that topic, finance is notorious for not having a lot of diversity or inclusion. I know BlackRock has a couple of initiatives in that space. Tell us about them. COHEN: I’ve spent my career, you know, being asked the question of — of, well, what’s it like being a woman in finance. And — and we could talk about this for — for a really long time, what’s it like being a woman, what’s it like being a mother, what’s it like being a parent. And — and it’s always hard when you feel different no matter what. No matter what the source of the differences, I think it can be very hard to — to feel safe and to feel secure amid differences. And — and that is what we try to sell for, whether it’s with employee networks, whether it’s, you know, creating mentorships and role models, although I’ll have to say a lot of my — my most memorable mentors weren’t necessarily women. But again, thinking about those challenges, which are different for — for different people, talking about them and making people feel safe and raising what they are, that’s what we try to focus on the most. And — and probably, I think that’s what’s changed the most over the course of my career. I think early in my career I felt the imperative was to, you know, not — not address the fact that there were differences and just get out there and — and try to act like everybody else, and — and that didn’t necessarily work for me. But, you know, it was sometimes hard to talk about that. And so, talking about it like — and having transparency to those things has — you know, has really been the first step and — and one that we have to take again and again. So, I think it’s — it’s not an old conversation, it’s not a dated conversation. I am incredibly proud, Barry, that the leadership team of the ETF and index platform is majority female. And we talk all the time about how to increase our diversity — diversity of thought, racial diversity, geographic diversity because we think if we bring our differences to the table we’ll perform better. (COMMERCIAL BREAK) RITHOLTZ: So, let me throw you a curveball. You’re short of a bicoastal, New York and Boca. How do you split your time? And — and given what we’ve learned about working from home, can you operate from anywhere you have an internet connection? COHEN: I — I live in New York, Barry. I live in New York. I’m in the New York City office right now. I have a home in Florida. And — and I’ll tell you a funny story. My — my husband loves Florida, so we’ve always — we’ve had a home in Florida for a while. He — he’s a — he’s an investment manager, a triathlete. He cycles a lot. He plays a lot of golf. He, you know, does some work from down there. But I was always in Florida for vacations and weekends until the pandemic when during that 2020 spring lockdown I spent about six weeks there and — and liked it more than — than — than I had. So — but now Florida is — is — is really weekends and — and vacations for me. But last night, you’ll like the story. My daughter texted my husband and said, “Hey, dad, I’m wondering. Are you coming home tonight or are you going to be in New York City?” And, by the way, my husband and I were at a restaurant in New York City. So, the kids like to joke that my husband lives in Florida, but — but actually, we are — I am mostly here. And — and between May and November, he is mostly in — in New York City as well. RITHOLTZ: Really, really interesting. So, I know I only have you for so much time. Let me jump to my favorite questions that we ask all of our guests starting with tell us what you’re streaming these days. What have been keeping you entertained when everybody has been stuck at home? COHEN: I have three categories of — of things I stream, and I’m sure you’ve heard this before, Barry, the things I watch with my husband, the things I get my kids to sit down and watch with me, and — and the stuff I watch for myself. So — so in each category, my husband and I, we love Ted Lasso. That was one of our favorite things of the pandemic. And we also love Yellowstone. My — my kids will not sit down to watch the same shows together no matter how much I try. So, with my son, we’re watching Boba Fett and the Mandalorian. With my daughter, it’s been Emily in Paris. They are 15 and 13. And, you know, I’ll tell you for myself, I finished the — the sequel to Sex and the City and Just Like That, and I loved it. It was, you know, women around my age talking about dealing with their teenage kids and finding meaning in their lives. And I know the reviews were — were pretty mixed, but I really loved it. RITHOLTZ: We talked briefly, but you didn’t give us any names about some of the mentors who helped shape your career. Tell us about those folks. COHEN: I have had great mentors and sponsors, and I think it’s important to talk about both. I don’t think until more recently in my career I understood what a sponsor was, a sponsor being somebody who will actually work intentionally to — to move your career forward. But the — at Goldman Sachs, I had the, you know, privilege of working with John Rogers who asked me to testify to Congress in front of the House Banking Committee on — to represent Goldman, which was the scariest thing I had ever done. And what John told me, which I will never forget, it — it’s the scariest things that once you do, you are the proudest of — of having done. Marty Chavez, who I also worked for Goldman, was a tremendous mentor. And I think importantly, as I said, I’ve had — I’ve had some great female role models, but I’ve had some awesome male mentors. I think my high school calculus teacher Judy Conan (ph) probably changed the course of my career. So those three are my biggest mentors. At BlackRock, my — my boss Salim Ramji, our Head of H.R. Manish Mehta who was the — you know, had this job before me, they’ve been great sponsors. And I think being intentional about providing sponsorship as well as mentorship is something we think about a lot. RITHOLTZ: Really interesting. I know you read a lot. Tell us some of your favorite books and — and what are you reading right now. COHEN: I am — I’m sure you are as well, I am a voracious reader and I’m usually reading multiple books at a time. So, the two I am reading right now I kind of usually have something fiction, something non-fiction. The nonfiction book I’m reading is “Digital Body Language,” which in the, you know, situation that we’re in right now, it’s fascinating how — how — how we create a digital body language, how people respond to it and what you need to think about it. That’s my non-fiction book right now. And my fiction book, I’m — I’m a few chapters in and I’m loving it, it’s called “The Louding Voice,” and it’s about a young woman, a young teenager in a rural Nigerian village who gets married very young, and — and is thirsting for an education because she wants to find her louding voice, and that’s probably a theme in everything I read about women — people in general, but often women finding their voices and using them. And one of the books I read recently that — that had a big impact on me, a colleague of mine actually gave it to me when I was promoted to CIO, it was Indra Nooyi’s memoir, “My Life in Full.” And I absolutely love that book. She started out by saying, “I intended to write a book about my career as CEO of PepsiCo and not write about my life as a mother and a wife. I didn’t want to write that book. And what I ended up writing was exactly that book,” because when you’re a mom or a parent and a wife and — and how you show up with that to the office, you know, as a CEO weaving all of that together, she did brilliantly and it was really moving. RITHOLTZ: Really interesting. I have a book recommendation for your daughter. This is a fascinating book called “Windfall: The Booming Business of Global Warming” by McKenzie Funk that describes, since your daughter is interested in ESG investing … COHEN: Yeah. RITHOLTZ: … it describes how the entire world to finance slowly started recognizing investment opportunities both at, you know, the individual company level, the ESG level, but also at the venture capital and startup level, and how Wall Street has arms into all these industries that are working on either climate change or, you know, electric cars. And — and — and that book is ready about five years old. So, when they talk about firms like Tesla, they’re still fairly nascent. Maybe it’s seven years old, 2014-2015. But if she’s interested in that, it’s a really well-written book and it’s really fascinating. She may really, really enjoy it. Let’s go on to our next question. Speaking of younger people, what sort of advice would you give to a recent college grad who is interested in a career in either finance or investment management? COHEN: Ask all of your questions. Find people, ask your questions. There are no dumb questions. And — and if it sounds interesting to you, it’s worth having a conversation about it. I wish I had done that more. In a lot of ways, I feel like I — I got lucky. I — I told you I was the product of actually a diversity recruiting effort that led me to the — to the trading floor at Goldman. But if it sounds interesting, it’s worth doing the exploration. And — and networking and finding friends and just saying, hey, can I spend 10 minutes and ask you about your job? Doing that a lot, I think, is an awesome idea. RITHOLTZ: Really interesting. And our final question, what do you know about the world of investing today you wish you knew 25, 30 years ago when you were first getting started? COHEN: If you asked me 30 years ago what I thought about the world of investing, I probably would have said Gordon Gekko. I mean, I was really thinking Wall Street. And — and even, you know, when I was in college, that was the — that was the vision that I had. That’s what you had to look like to be — to be an investor. Now what I know is excellence looks like lots of different things in the world of investing. And, you know, if you’re a woman, if you’re a person of color, it’s — you can be excellent. And, in fact, if you’re a theater major, you can find a path. I think there is a superpower in being different. And my mother always suggested that to me 30 years ago, so — so maybe I should say that’s what I wish I’d believe 30 years ago when I was told. Now I know it’s true. RITHOLTZ: Really interesting. Samara, thank you for being so generous with your time. We have been speaking with Samara Cohen. She is the Chief Investment Officer for ETFs and index investments at BlackRock. If you enjoy this conversation, be sure and check out any of the previous several hundred we’ve done over the past eight years. You can find that at iTunes, Spotify, Google, Bloomberg, wherever you feed your podcast fix. Check out my daily reads at Follow me on Twitter @ritholtz. I would be remiss if I did not thank the crack staff that helps put these conversations together each week. Mark Siniscalchi is my Audio Engineer. Paris Wald is my Producer. Shawn Russo (ph) is my Researcher. Atika Valbrun is our Project Manager. I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio.   ~~~     The post Transcript: Samara Cohen appeared first on The Big Picture......»»

Category: blogSource: TheBigPictureMar 29th, 2022

New Order Co-Founder: Teams May Lack Reputation To Draw Top Developers To Launch DeFi Projects

As DeFi projects grow in number, competition to make an industry-changing impact is sizzling up. In this outlook, Decentralized Autonomous Organizations (DAOs) are also in a race to innovate, but they face several hurdles such as the inability to scale and develop solid multi-chain interoperability, machine learning, and new digital asset classes. Q3 2021 hedge […] As DeFi projects grow in number, competition to make an industry-changing impact is sizzling up. In this outlook, Decentralized Autonomous Organizations (DAOs) are also in a race to innovate, but they face several hurdles such as the inability to scale and develop solid multi-chain interoperability, machine learning, and new digital asset classes. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Walter Schloss Series in PDF Get the entire 10-part series on Walter Schloss in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues. (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2021 hedge fund letters, conferences and more Part of those challenges relate to coordinating DAO members’ skills, building a community, and securing the best developer talent. We spoke with Eden Dhaliwal, former head of crypto at Outlier Ventures and current co-founder of New Order, a venture DAO, which aims at enhancing DeFi innovation through a maximum of 30 projects every year –supporting and launching them across all L1 ecosystems. Eden shares how New Order is planning to achieve this, and delves into the challenges startups and investors are facing as the market expands towards multi-chain support and new digital assets. Can you share your 60 seconds elevator pitch about New Order? Despite the current frothy market of venture capital, founders are in desperate need of expertise, community, and networking opportunities specifically tailored to the unique challenges of the crypto industry, in order to have a successful launch. New Order’s goal is to build a self-governing venture DAO positioned to assist DeFi innovation, by promoting new asset classes, chain independence, and machine learning while leveraging its expansive community of builders and investors. To achieve this goal and source resources for DeFi startups, New Order is planning to launch 20-30 projects per year by identifying gaps in the DeFi ecosystem and providing a platform for the community to build and grow them. To kick off the pipeline, New Order will be launching 3 projects built in-house into this DAO. Is it difficult for DAOs to scale? If so, why? First, let’s give a quick definition of a DAO. DAO stands for Decentralized Autonomous Organization. In its simplest form, it is basically a community with a shared bank account. This organization allows members to facilitate and coordinate members’ skills, resources, and funds as they work towards a common goal. Decisions are made from the bottom up and governed by the community with rules enforced through voting on the blockchain. It can be difficult to scale a DAO because many people come from traditional organizations with their existing work habits and are not used to working in this environment, where much of the work is transient and self-directed. This comes down to educating new DAO members on the processes for bottom up governance, setting expectations in a DAO setting, and providing proper incentivization for contributors. Through your DAO incubator, you will support innovative DeFi projects. What type of projects would qualify as "innovative"? We’re focused on projects that tackle at least one of the three following components: multi-chain interoperability, machine learning, and new digital asset classes. Building on top of our thesis of machine learning and new digital asset classes, two of the three DApps we will be launching with this new ecosystem are [REDACTED] and H2O. [REDACTED] is the first official branch of OlympusDAO focused on acquiring CRV, CVX, and other relevant governance tokens to expand Olympus DAOs reach beyond risk-free value and into a multi-token ecosystem. The intention is to further democratize and incentivize the adoption of Curve, Convex, and Olympus by putting the good faith, long-term backers of these projects, and increasing their yield and influence by aggregating liquidity under a new meta-token model and improved governance process. H2O is a new Non-Pegged Stable Asset, which will be used as the primary stable asset within the Ocean Protocol data marketplace. Users often complain about the pricing risk associated with digital crypto assets and H2O is a mechanism to avoid this risk as the price in USD will remain relatively constant. H2O is unique in that it uses data in the form of datatokens as the underlying form of collateral against which H2O tokens are minted. How could the main DeFi stakeholders –venture creators, community builders, software developers– benefit from New Order’s incubator? DeFi stakeholders can benefit from growth opportunities and utilize our community of industry professionals including developers, traders, and yield strategists to get the needed insight to scale a project's liquidity and community. Our network has access to a wide range of VC’s, PR companies, and exchanges with specific domain expertise in the crypto space. In order to complement growth, we provide the needed contacts tailored for a project needs. From the fundraising perspective, we will be providing the required resources to bootstrap ideas including introduction to crypto focused funds and even anonymous founders. Our plan is to guide projects through the various fundraising phases, from pre-launch SAFT sales to post-launch treasury sales. From an engineering perspective, we have a core team and a community of partners with deep expertise in token economics and dApp design. Teams accelerated through the DAO will find they need tokens, mining, and treasury management frameworks tailored to their specific use cases, and our community can help with that. Having worked with thousands of developers over the past year and a half, we’ve created a great DeFi-specific community and we plan to augment teams’ internal resources with this network. By working with New Order, teams can ensure they’re using the latest standards in contract development and security practices both pre and post launch. Finally, it’s important to mention that we missed the most important stakeholder –the users of these protocols themselves. With New Order’s radical transparency and public governance process we plan to make these users central to decision making and what is being built for them. A key DeFi trend is the market expanding towards multi-chain support and new digital assets. What are the challenges startups and investors are facing in this regard? With all the new chains popping up, it’s tough for investors to keep track and up-to-date with everything happening in each DeFi ecosystem, while still maintaining an edge. And from a startup perspective, recruiting can be quite difficult because of the technical requirements for building secure software on each chain. Sourcing talent can be challenging because, firstly, there is a lack of ready talent and there are not enough people with the relevant chain experience to build secure software. And secondly, teams may lack the connections and reputation to draw the top developers and community leaders required to launch a DeFi project. These technical barriers can manifest as UX challenges or insecure contracts, resulting in stuntened user growth, or more catastrophically, the loss of all funds within a buggy contract and consequently the teams’ reputation. What can you share about New Order’s DAO’s dApp marketplace and why is it innovative? It's incredibly challenging for DeFi projects to rise above the thousands of projects in this space in bootstrapping both a community of users and liquidity for their tokens. By leveraging the DAOs Dapp marketplace, teams will have an in-built stream of users and traders who have tried other Dapps from New Order and this will give them a running start right upon launch. Moreover, after projects are accelerated through our program, they continue operating in our ecosystem creating another revenue stream for the DAO which can be further invested in building the future of DeFi. The marketplace then creates a virtuous loop where great products can be found attracting even more users and investors to participate in New Order’s ecosystem. Updated on Nov 30, 2021, 2:01 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkNov 30th, 2021

Kulicke & Soffa Reports Fourth Quarter 2021 Results

SINGAPORE, Nov. 17, 2021 /PRNewswire/ -- Kulicke and Soffa Industries, Inc. (NASDAQ:KLIC) ("Kulicke & Soffa", "K&S" or the "Company"), today announced financial results of its fourth fiscal quarter ended October 2, 2021. The Company reported fourth quarter net revenue of $485.3 million, net income of $133.7 million and non-GAAP net income of $138.3 million. Quarterly Results - U.S. GAAP Fiscal Q4 2021 Change vs. Fiscal Q4 2020 Change vs. Fiscal Q3 2021 Net Revenue $485.3 million up 173.1% up 14.4% Gross Profit $231.3 million up 160.2% up 18.2% Gross Margin 47.7% down 230 bps up 160 bps Income from Operations $154.8 million up 573% up 28.5% Operating Margin 31.9% up 1900 bps up 350 bps Net Income $133.7 million up 746.2% up 17.5% Net Margin 27.6% up 1870 bps up 80 bps EPS – Diluted $2.10 up 740% up 17.3% Quarterly Results - Non-GAAP Fiscal Q4 2021 Change vs. Fiscal Q4 2020 Change vs. Fiscal Q3 2021 Income from Operations $160.2 million up 448.7% up 27.2% Operating Margin 33.0% up 1660 bps up 330 bps Net Income $138.3 million up 535.7% up 16.4% Net Margin 28.5% up 1630 bps up 50 bps EPS - Diluted $2.17 up 520% up 16% A reconciliation of the GAAP and non-GAAP adjusted results is provided in the financial tables included in this release. See also "Use of non-GAAP Financial Results" section. During the fiscal fourth quarter the Company was able to exceed revenue expectations by temporarily extending production capacity and also by delivering additional advanced display systems and services. Fusen Chen, Kulicke & Soffa's President and Chief Executive Officer, stated, "Throughout fiscal 2021 we continued to support an ongoing period of industry expansion, while carefully navigating global supply-chain challenges. Additionally, we continued our aggressive development efforts, released several new market-ready solutions and also received customer acceptance with several others. These efforts expand our access to favorable long-term trends within the automotive, electronics assembly and advanced display end-markets." Fiscal Year 2021 Financial Highlights Net revenue of $1,517.7 million. Gross margin of 45.9%. Net income of $367.2 million or $5.78 per share; non-GAAP net income of $390.2 million or $6.14 per share. The Company repurchased a total of approximately 215.0 thousand shares of common stock at a cost of approximately $10.2 million. Fourth Quarter Fiscal 2021 Financial Highlights  Net revenue of $485.3 million. Gross margin of 47.7%. Net income of $133.7 million or $2.10 per share; non-GAAP net income of $138.3 million or $2.17 per share. Cash, cash equivalents, and short-term investments were $739.8 million as of October 2, 2021. First Quarter Fiscal 2022 OutlookThe Company currently expects net revenue in the first fiscal quarter of 2022, ending January 1, 2022, to be approximately $460 million, +/- $20 million, and expects non-GAAP EPS to be approximately $1.88, +/- 10%. This revenue outlook is very similar to the fourth fiscal quarter expectations provided on August 4, 2021. Looking forward, Fusen Chen commented, "We continue to efficiently support strong, ongoing and broad demand across our served end-markets. Throughout fiscal 2022, we anticipate ongoing industry expansion and also rapid growth of our emerging portfolio of solutions which directly addresses semiconductor, electric vehicle, and advanced LED assembly challenges." Earnings Conference Call DetailsA conference call to discuss these results will be held tomorrow, November 18, 2021, beginning at 8:00am EST. To access the conference call, interested parties may call +1-877-407-8037 or internationally +1-201-689-8037. A live webcast will also be available at A replay will be available from approximately one hour after the completion of the call through November 25th by calling toll-free +1-877-660-6853 or internationally +1-201-612-7415 and using the replay ID number of 13723617. A webcast replay will also be available at Use of Non-GAAP Financial ResultsIn addition to U.S. GAAP results, this press release also contains non-GAAP financial results. The Company's non-GAAP results exclude amortization related to intangible assets acquired through business combinations, costs associated with restructuring, equity-based compensation, acquisition and integration cost, impairment relating to assets acquired through business combinations, income tax expense arising from discrete tax items triggered by significant changes in tax laws, gain/loss on disposal of business, as well as tax benefits or expense associated with the foregoing non-GAAP items. The non-GAAP adjustments may or may not be infrequent or nonrecurring in nature, but are a result of periodic or non-core operating activities. These non-GAAP measures are consistent with the way management analyzes and assesses the Company's operating results. The Company believes these non-GAAP measures enhance investors' understanding of the Company's underlying operational performance, as well as their ability to compare the Company's period-to-period financial results and the Company's overall performance to that of its competitors. Management uses both U.S. GAAP metrics as well as non-GAAP metrics to evaluate the Company's operating and financial results. Non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in the Company's industry, as other companies in the industry may calculate non-GAAP financial results differently. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact on the Company's reported financial results. The presentation of non-GAAP items is meant to supplement, but not substitute for, GAAP financial measures or information. The Company believes the presentation of non-GAAP results in combination with GAAP results provides better transparency to the investment community when analyzing business trends, providing meaningful comparisons with prior period performance and enhancing investors' ability to view the Company's results from management's perspective. A reconciliation of each available GAAP to non-GAAP financial measure discussed in this press release is contained in the financial tables at the end of this press release. Management has not reconciled its outlook for non-GAAP Diluted EPS to Diluted EPS for Q1F22 as it does not provide guidance on the reconciling items between Diluted EPS and non-GAAP Diluted EPS, as a result of the uncertainty regarding, and the potential variability of, these items. The actual amount of such reconciling items could have a significant impact on our non-GAAP Diluted EPS and, accordingly, a reconciliation of Diluted EPS to non-GAAP Diluted EPS for Q1F22 is not available without unreasonable effort. About Kulicke & SoffaKulicke & Soffa (NASDAQ:KLIC) is a leading provider of semiconductor, LED and electronic assembly solutions serving the global automotive, consumer, communications, computing and industrial markets. Founded in 1951, K&S prides itself on establishing foundations for technological advancement - creating pioneering interconnect solutions that enable performance improvements, power efficiency, form-factor reductions and assembly excellence of current and next-generation semiconductor devices. Leveraging decades of development proficiency and extensive process technology expertise, Kulicke & Soffa's expanding portfolio provides equipment solutions, aftermarket products and services supporting a comprehensive set of interconnect technologies including wire bonding, advanced packaging, lithography, and electronics assembly. Dedicated to empowering technological discovery, always, K&S collaborates with customers and technology partners to push the boundaries of possibility, enabling a smarter future ( Caution Concerning Results and Forward Looking StatementsIn addition to historical statements, this press release contains statements relating to future events and our future results. These statements are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. While these forward-looking statements represent our judgments and future expectations concerning our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to, the effects of the COVID-19 pandemic on our business, the effects of supply chain constraints on our business, and the other factors listed or discussed in our Annual Report on Form 10-K for the fiscal year ended October 3, 2020, filed on November 20, 2020, and our other filings with the Securities and Exchange Commission. Kulicke and Soffa Industries, Inc. is under no obligation to (and expressly disclaims any obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise. Contacts: Kulicke & Soffa Industries, Inc. Joseph Elgindy Investor Relations & Strategic Initiatives P: +1-215-784-7518 F: +1-215-784-6180 KULICKE & SOFFA INDUSTRIES, INC. CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (In thousands, except per share and employee data) (Unaudited) Three months ended Twelve months ended October 2, 2021 October 3, 2020 October 2, 2021 October 3, 2020 Net revenue $ 485,326 $ 177,688 $ 1,517,664 $ 623,176 Cost of sales 254,011 88,803 820,678 325,201 Gross profit 231,315 88,885 696,986 297,975 Operating expenses: Selling, general and administrative 40,186 28,101 139,224 107,947 Research and development 34,929 35,553 137,478 123,459 Acquisition-related cost — — 1,730 — Amortization of intangible assets 1,322 1,920 5,974 7,371 Restructuring 42 263 133 689    Total operating expenses 76,479 65,837 284,539 239,466 Income from operations 154,836 23,048 412,447 58,509 Other income / (expense): Interest income 520 653 2,321 7,541 Interest expense (72) (26) (218) (1,716) Income before income taxes 155,284 23,675.....»»

Category: earningsSource: benzingaNov 17th, 2021

Facebook To Change Company Name To Meta

Whitney Tilson’s email to investors discussing Facebook, Inc. (NASDAQ:FB) to change company name to Meta; reader feedback on Facebook; Tesla Inc (NASDAQ:TSLA)- on the road to a $10 trillion company and beyond. Q3 2021 hedge fund letters, conferences and more Facebook to Change Company Name to Meta 1) I suppose if I, like Facebook (FB), […] Whitney Tilson’s email to investors discussing Facebook, Inc. (NASDAQ:FB) to change company name to Meta; reader feedback on Facebook; Tesla Inc (NASDAQ:TSLA)- on the road to a $10 trillion company and beyond. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get Our Activist Investing Case Study! Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to read anywhere! Sign up below! (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2021 hedge fund letters, conferences and more Facebook to Change Company Name to Meta 1) I suppose if I, like Facebook (FB), had behaved badly for years, harming people in pursuit of growth and self-enrichment, and all of this became public knowledge, sullying my name, I'd be thinking of changing it as well... Facebook to Change Company Name to Meta in Focus on Metaverse. That said, what I really hope I'd do is change my ways and fix the underlying problems, rather than trying to put lipstick on a pig with a name change! Facebook's tone-deafness continues to boggle my mind. Just read CEO Mark Zuckerberg's comments at the beginning of the earnings call earlier this week (transcript here). This is what I wrote to a friend about it: It's consistent with what he posted a couple of weeks ago, which I addressed in my daily e-mail the next day. Totally lame and tone-deaf. No acknowledgement that there's any problem and that Facebook needs to do more. Charlie Munger always says: "Show me the incentives and I'll show you the behavior." I don't think Zuckerberg set out to do evil, but he's consistently chosen growth (and thus his wealth) over safety. After my friend replied that I make things sound so simple, I responded, "No, things are VERY complex. But the overall picture is clear to me..." Reader Feedback On Facebook 2) Speaking of Facebook, I received a number of e-mails in response to my October 13 daily about more and more Americans going down rabbit holes, thanks in part to the social media giant and its peers: "Hang in there Whitney. You are on the right side of history and are doing meaningful work." – Les J. "Whitey, sadly, your analysis of the letter from that crazy woman is spot on. We're in a very bad way in this country right now, and I weep for it. Our democracy is truly at risk." – Sherwin R. "The 2020 election was stolen. Zuckerberg helped make it happen with half a billion dollars. Democrats were desperate to install a demented piece of crap named Joe Biden. If you want to ignore this fact you have a problem. "If you think George Soros is a hero you are wrong. He is a financial terrorist and his Open Society Foundation was created to cause destruction and disruptions so he can make more billions shorting the markets. "Enjoy paying for millions of illegal invaders and be ready for the next terrorist attack. Afghanistan was an American defeat. It was the biggest military and political blunder in American history. Are you ignorant enough to believe the cover up with a mountain of LIES." – John B. "Whitney, I am compelled to break my typical resolve never to respond to email postings. This alteration is due to your transparency today. "I could not agree more with Mark D – especially about your consistently compassionate perspective on life and investing. "And I am appalled by the rant from your second responder, although not surprised. When one drinks deeply from a gusher of lies as she describes that she does it will numb one's good sense and perspective of reality. I regret that she has created such a miserable environment for her life. And of course she thinks that only she has the truth. "I do worry about our country and the threat to our democracy enduring. "A word about myself: I am in my late 80s, a retired Baptist minister; my wife is a retired social worker. I stay engaged in a volunteer group seeking to create inclusive communities. In the 21 years of retirement, I have turned my intention to investing the funds we saved for always living within our income, and am now shocked to find that I am wealthy with an estate of several million. I subscribe to several financial newsletters and weigh the insights I derive from them. "Again, thank you for your transparent values. It is obvious that you received excellent parenting early and education along the way. Please continue your work." – Robert W. "Hi Whitney, Just wondering if you realize how much bias you exhibit when you hand select the most outrageous far, far right-wing comments from a reader and then seemingly compare all conservatives to QAnon supporters. "I am a conservative who is truly horrified by the politics of the day. I truly cannot understand how any believer in capitalism can turn a blind eye to what has happened to the democratic/socialist party and the aligning media. "The left-wing technique of equating all conservatives to QAnon and white supremacists is quite apparent in the media, and unfortunately, your daily emails. As is so often the case, I am guessing you are completely unaware of this bias and likely lump me in with the complete whack job you chose to publish. "All that being said, I will continue to weed through the bias to pick up your many salient financial points." – Andrew S. To the last one, I replied: Thank you for the feedback, Andrew. I try to be balanced and would be happy to publish an e-mail sent to me by someone on the far, far left wing – but I haven't gotten any. Best, Whitney Tesla - On The Road To A $10 Trillion Company And Beyond 3) Tesla's (TSLA) stock has rocketed past $1,000 per share, making the company only the sixth in history to surpass a $1 trillion market cap. It's truly astounding... I have owned the first five – Apple (AAPL), Amazon (AMZN), Alphabet (GOOGL), Microsoft (MSFT), and Facebook – and sorely regret not still owning all of them. As I've discussed many times before, my sales of these juggernauts were among the greatest mistakes of my investing career. But I don't feel the same way about Tesla. Sure, there are times when I look back at my many warnings over the years to my short-selling friends not to short the stock and ask myself, "How hard would it have been to go long it?" But hindsight is always 20/20 – and Tesla's stock has always been based more on the "story" than the fundamentals, so I try not to beat myself up too much... Mostly, I just sit back with a bowl of popcorn and watch the incredible spectacle that is this company and stock – it's so entertaining and educational! I also continue to share my thoughts once or twice a week with my Tesla e-mail list (to join it, simply send a blank e-mail to: Here's the latest e-mail I sent around: Tim Davies of Australian tech-focused $100 million fund Holon Global Investments recently published this 144-page bullish report, Tesla – on the road to a US $10 trillion company and beyond. (He also released a video here .) I asked my analyst Kevin DeCamp (who's now made more than 150 times his money on TSLA!) to take a look and here's what he sent me: I've seen much of this data and analysis before, but it's definitely worth at least reading the executive summary and watching the video, which is compelling. The projections and title he chooses are clearly to attract attention (why not one-up Cathie Wood with a $3,369 current value and a $10 trillion target!), but it's a good overview to understand what's actually going on in the auto industry, especially the challenges that legacy automakers are facing transitioning to EVs [electric vehicles]. Of note is his emphasis on Tesla's impressive profitability while still producing at a much smaller scale than legacy OEMs [original equipment manufacturers] (comparing Tesla's EVs to legacy's ICE [internal combustion engine] production numbers). This will continue to improve as Tesla grows on average around 50% and its revenue mix continues to shift more toward software. Tesla reported 28.8% gross margins in the third quarter excluding regulatory credits while facing supply chain issues and producing cars well under capacity. As I've said before, the myth that Tesla cannot make a profit without regulatory credits will continue to die a slow death. It's on its way to Apple-like margins with a much bigger total addressable market ("TAM"). I'm not convinced on his bullish developing market projections, although it's something to consider. Best regards, Whitney Updated on Oct 29, 2021, 11:56 am (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkOct 29th, 2021

Bodycam footage of Tyre Nichols" fatal beating will be released today. But many fear video will do more harm than good.

Videos of police brutality can be traumatizing, especially for the Black community. Balancing transparency and mental health is key, experts say. RowVaughn Wells, mother of Tyre Nichols, and Rodney Wells, Nichols' stepfather, at a news conference in Memphis, January 23. The family has urged peaceful protests.Gerald Herbert/AP Images Body cam footage of Tyre Nichols' death is expected to be released Friday evening. Graphic videos of police brutality can be traumatizing, especially for the Black community. Balancing transparency and accountability with trauma is key, experts say. Memphis is bracing for unrest as the public waits for police to release bodycam footage of Tyre Nichols' death.Nichols, a 29-year-old Black man, died three days after he was held at a traffic stop and beaten by Memphis police officers. The police department fired the five officers, who are facing murder charges, and are expected to release video footage of the arrest on Friday evening.But many members of the Black community and police accountability experts fear that video footage can do more harm than good, even if the evidence can provide transparency and accountability in cases of police brutality.RowVaughn Wells, Nichols' mother, has refused to watch the video, and urged parents not to show kids the video when it's released."What I've heard is very horrific, very horrific and any of you who have children please don't let them see it," Wells told the public.Members of the Memphis clergy and activist community have had several meetings with city officials to discuss planning for the release of the video in a way that would minimize any unrest.Balancing transparency and trauma is a difficult but important necessity for advancing justice, according to police accountability experts and lawyers.Video footage can be retraumatizingMembers of the Black community have similarly said they won't be watching the video of Nichols' death, and are urging the public not to share the video. Bodycam footage of police brutality cases are often graphic and can be traumatizing for viewers, especially Black people.—Charity Sadé (@BlckFemmesMattr) January 27, 2023 "It is traumatizing to see, especially for Black people. If it takes watching Black people get tortured & not the fact that we have been screaming forever about the violence from police then they need to figure that sh-t out, but not at the expense of Black people," one Twitter user wrote.Others have shared steps on limiting exposure to graphic video footage.Family and officials who watched the video described it as "heinous" and "inhumane.""It was an unadulterated, unabashed, non-stop beating of this young boy for three minutes," Antonio Romanucci, the Nichols family's attorney, said, likening Nichols to "a human pinata."Citizens in Memphis await the release of video footage of Tyre Nichols' death.Gerald Herbert/AP PhotoBodycam footage does not always prevent police brutalityBody-worn cameras are meant to improve officer safety, increase evidence quality, and protect the public.Research on the effectiveness of bodycams have yielded mixed results: One 2021 report by the University of Chicago Crime Lab and Council on Criminal Justice's Task Force on Policing found that complaints against police dropped 17% and the use of police force fell by nearly 10%, while other studies found no statistically significant differences in either use of force or civilian complaints.In the courtroom, video footage can provide "immeasurably important" evidence in police brutality cases, according to Christopher E. Brown, principal attorney at The Brown Firm, a law firm that litigates cases involving police excessive force.One of the most powerful examples of the significance of video played out in the trial of Derek Chauvin, the former Minneapolis police officer convicted of murder and manslaughter in the killing of George Floyd. Bodycam footage from the police officers involved in Floyd's arrest revealed his death from various angles, and both prosecutors and defense attorneys used the video extensively throughout the case."If there weren't video, you're dealing with the blue line: the officers protecting one another. From their perspective, it's admirable. From our perspective, it's atrocious. The bodycam footage penetrates that line," Brown told Insider.Balancing transparency and accountability with traumaReleasing video footage of police brutality is a way to ensure transparency and accountability for law enforcement, which has an obligation to the public, according to experts."One of the most important things about state violence is that it often happens in public spaces," Lauren Bonds, executive director of the National Police Accountability Project, said. "So it really does go beyond the individual interaction between the police officers in question and the person injured. It's a public issue that all of us should be invested in and care about, and that could impact all of us at some point."Bonds, a Black lawyer fighting to end police brutality, said it's "incredibly valid" that viewing graphic footage can be traumatic, and said she doesn't watch these videos unless her work requires it. Having footage available to the public, however, can provide power to pressure law enforcement to hold officers accountable, Bonds said."It is the responsibility of the people who put these videos out there to give viewers advanced notice and the option to opt out," Bonds told Insider.Regardless of whether members of the public decide to watch the footage, which family attorney Ben Crump said will "evoke strong emotions," the Nichols family remains steadfast in their calls for peaceful protest."This is a special case. We had a special son," Nichols' stepfather Rodney Wells said, adding later, "Please, please protest, but protest safely."Read the original article on Business Insider.....»»

Category: worldSource: nyt4 hr. 42 min. ago

A Non-Salesy Annuity Guide To Buying Annuities

In the past, buying an annuity was a lot of work. The first step toward determining whether an annuity is right for your retirement plan is to do a little research. In most cases, the first step is to answer important questions such as: What is an annuity? Which type of annuity is right for […] In the past, buying an annuity was a lot of work. The first step toward determining whether an annuity is right for your retirement plan is to do a little research. In most cases, the first step is to answer important questions such as: What is an annuity? Which type of annuity is right for me? You then have to go through a bunch of information and listen to several sales pitches to pick a company or agent. Then you’re ready to apply, which means double-checking and reading the annuity contract. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q4 2022 hedge fund letters, conferences and more   Find A Qualified Financial Advisor Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now. As soon as you apply your funds, you might have to wait a little longer until the insurance company issues your policy. In today’s world, however, online financial services are almost universal. In fact, managing your assets is easier than ever thanks to virtual tax advisors and digital banks. It seems about time the annuity purchasing process got a little simpler, doesn’t it? The good news? You can finally buy an annuity online now. What Is an Annuity? Before going any further, let’s cover some annuity basics. An annuity essentially guarantees you a certain income for a set period of time. They’re contracts that are sold or distributed by some sort of financial institution, where the money is invested. Often, these institutions are insurance companies. Most people use them when they’re retired because they reduce the risk of outliving their savings. Basically, you pay the company upfront, then they pay you monthly. The contracts will set the age at which payments start, the interval between payments, etc. You may receive those payments monthly for a set period of time or for life, depending on how the annuity is structured. Alternatively, you can set up your annuity to continue paying income to your spouse after your death if you’re married. In a sense, annuities are like life insurance because there’s a guaranteed payout and a premium to pay. The difference? Those benefits usually go to your beneficiaries after you pass away. The Main Types of Annuities During retirement, most people purchase annuities to supplement their pensions and social security income. How come? The income is guaranteed for the rest of your life. As a result, if these other income streams dry up, they will still have money to live on. So let’s focus on the four types of annuities that will help you get this peace of mind. Fixed vs. Variable Annuities There are two types of annuities: fixed and variable. How do they differ? Fixed Annuities Fixed annuities are probably the most common and well-known type. In this case, a buyer buys a fixed annuity. As a result, the insurance company promises to pay a certain amount at a future date. While it might be decades away, it might be right now if you have an immediate annuity. How does the insurance company make this money? A lot of insurers invest in safe investments like U.S. Treasury securities and high-rated corporate bonds. You won’t become Elon Musk-rich through fixed annuities, as the returns on these investments aren’t high. However, they are predictable and safe. The regular monthly payments from fixed annuities make them a desirable option for people who don’t want to take risks. Inflation can also reduce the purchasing power of fixed annuities. It is possible to plan for inflation in some annuity contracts, however. Variable Annuities With a variable annuity, an insurer invests in various mutual funds. Investments can, however, be chosen by the buyer. The performance of these funds determines the growth of the account. In addition, variable annuities can pay out a fixed amount or change based on performance. Annuities with variable rates are more suitable for those who are willing to take on some risk in order to generate higher returns. Variable annuities are usually best for experienced investors who know about mutual funds and their risks. Equity Indexed Annuities In equity-indexed annuities, the interest rate is linked to a particular index, such as the S&P 500. The rate of growth of the contract will be determined by the insurance company. An equity-indexed annuity is complicated since insurers calculate index returns using various methods. Despite not knowing how much you’ll get back, the calculations should give you a general idea. The return on equity-indexed annuities is not usually reflected in reinvested dividends, and surrender charges can be high. Immediate vs. Deferred Annuities Depending on when the payments start, annuities can either be immediate or deferred. When purchasing an annuity, you should ask yourself if you want regular income now or in the future. Let’s quickly review each of their benefits and drawbacks in order to help you answer that question. With deferred payments, your money grows over time. An annuity can accumulate earnings tax-free until you begin receiving payments, similar to a 401(k) or IRA. Continuing to accumulate that amount may result in higher future payments. Annuity terminology refers to this period as the accumulation period. An immediate annuity is exactly what it sounds like. After the buyer pays the insurance company one lump sum, they can begin receiving payments. A fixed or variable annuity can be a deferred annuity as well as an immediate annuity. How to Buy an Annuity Buying an annuity starts with assessing your financial situation. In particular, how much income do you think you’ll need from an annuity, and how long will it last? Traditionally, a financial advisor would help you understand what you need from an annuity depending on your current financial situation. Based on your age and retirement status, you can choose an annuity based on your goals and risk tolerance. For instance, fixed annuities can provide reliable income, but they may yield lower returns. Variable annuities on the other hand tend to have the highest risks. An indexed annuity splits risk and reward. The next step is to pick an annuity provider. Choosing a provider is key since annuity companies differ. The preferred company to work with has a stellar reputation and strong financial and credit ratings. You’re more likely to lose your annuity payments if the company’s credit rating is low. Once you’ve chosen a provider, you can apply. This requires sharing personal and financial information. Before submitting your application, make sure it’s accurate, as mistakes or omissions could slow things down. Next, pay the required premiums. It can be a lump sum or a series of payments. Choose how you’ll pay these, either from a savings account, brokerage account, or some other source. If you withdraw money from a brokerage account or tax-advantaged account to buy an annuity, you might get hit with taxes. When the annuity is funded, the free look period starts. If you want, you can review the annuity’s terms during this time. Your money is refunded if you decide annuities aren’t for you during the free look period. You might have to pay a surrender fee if you want to surrender your annuity later. Can You Buy Annuities Online? Short answer? Absolutely. You should remember, however, that an annuity is a type of insurance product that can provide you with lifetime income. In terms of retirement planning, it can be a valuable tool. As such, It’s critical to consider factors like fees, customer service, and investment options when choosing a company. Because of that, you should use an annuity expert, otherwise, you might be putting your retirement in jeopardy. As such, deferred annuities are great for people who want their funds to grow tax-deferred over time, while immediate annuities are excellent for people who need income immediately upon retirement. There are a few providers that are bringing the annuity process into the 21st century. Rather than going through an agent, you can purchase certain types of annuities directly online. In fact, annuities can be purchased online from several reputable companies such as Vanguard, Fidelity, and TIAA-CREF. What Are the Steps to Buying an Annuity Online? It is easy, fast, and safe to buy an annuity online. Here’s how it works. Get a quote. Make sure you do your research before buying an annuity online. An expert can provide quotes based on your specific needs if you are interested in researching annuities. Gather the information you need. Your social security number, driver’s license, bank account number, and routing number will be needed. In the case of adding an annuitant other than yourself, you will also need their name, address, email address, phone number, and social security number (or green card). The name of at least one beneficiary is always advisable. Providing the insurance company with as much information as possible about the beneficiary makes it easier for them to contact them if needed. Answer these questions. In addition to selecting your contract term and starting fund amount, you will be asked a few basic questions. You may be asked: “What kind of emergency fund do you have?” “Will you need your money before 59 ½? ” No, these aren’t trick questions. The annuity provider wants to determine whether an annuity is right for you, just as an insurance agent would. Select the beneficiary and the annuitant. In the event that your contract is annuitized, the annuitant is entitled to annuity payouts. There is a possibility that this is you. The payouts can, however, be made to someone else (like your spouse or kids) instead of you. The annuity will still belong to you. It’s just that you won’t receive the payouts. Alternatively, beneficiaries receive your annuity if you die before the contract ends. Typically, they won’t charge surrender charges for cashing out your premiums. Decide how you will fund your annuity. Don’t overlook deciding how you’ll fund your annuity. The most common way to transfer money is via a check or wire transfer. Your annuity can also be funded with money from a 401(k) or IRA (qualified funds). You can also transfer an annuity from one insurance company to another. Your application needs to be reviewed and signed. Make sure your information is right, sign your documents online through a service like DocuSign, and you’re good to go. You’ll have a guaranteed retirement income within 48 hours. Why Should You Buy An Annuity Online? Convenience is the biggest benefit of buying an annuity online. From the comfort of your own home, you can also compare different annuities. Furthermore, you’ll have all the info you need at your fingertips. Annuities are cheaper online than through traditional brokers, too. There are no agent fees. Commissions are traditionally paid to insurance agents who sell annuities. Although you may not pay an agent directly, you’re not out of the woods: commissions are usually included in your return. In other words, insurance companies give you a lower interest rate to compensate for the cost of your agent. When you buy an annuity online, you don’t have to deal with an agent, so there’s no fee for them. Since the insurance company doesn’t pay commissions to agents, they can offer you a better rate as well. There’s no pressure to buy. What’s the most appealing thing about buying annuities online? No one is trying to pressure you into buying an annuity on the spot. It’s okay to close your laptop, walk around, take another look at your retirement plan, call your financial planner, and come back to it later. It’s faster. The process is faster and easier. When you buy an annuity online, you get straight to the point: owning one. Even better? Conversations don’t drag on. You won’t hear any more sales pitches. You simply buy your annuity and you’re on your way. How Risky Is An Online Annuity Purchase? Annuities aren’t easy to understand, so buying them online can be risky. As such, before you commit to an investment, make sure you have done your research and you’re comfortable with it. As with any financial transaction, there is always the possibility of fraud. By using a credit card instead of a debit card and working with a reputable company, this risk can be mitigated. Annuities should be purchased with caution, as with any other investment. You should not lock yourself into any products until you are sure that you fully understand them. The following are some things you should consider before buying an annuity online. Having an expert on hand may be helpful. In some cases, annuities are downright complicated, especially fixed and variable index annuities. A financial professional or insurance agent can help you understand complex annuity contracts. The information you provide must be personal. Data theft online is no laughing matter. Be sure your annuity provider keeps your valuable information secure before giving out your personal information online. In addition, make sure to buy your annuity through a trusted Wi-Fi connection, such as your home network, if you want to be extra safe. You may not be able to purchase annuities from your online provider. It’s not uncommon for some websites to advertise “online annuities” when, in reality, they’re just providing quotes. Their system generates annuity quotes from insurance companies in your area based on your personal information. However, you will still need to buy an annuity the traditional way, usually in person or over the phone. Moreover, some of these quote-generating sites sell your personal information to insurance companies. You should avoid these sites if you hate receiving unsolicited calls and emails. Online Annuities: Which Are Safe? Fixed, fixed index, immediate, or long-term care annuities are often the safest to buy online. Annuities with fixed interest rates give you a guaranteed return. If your annuity contract is up, you will receive a lump-sum payment combining your original investment and interest. The S&P 500 or Nasdaq Index is used when calculating the interest rate on a fixed index annuity. As you earn interest, your money is not directly invested in the stock market, but rather used as a “measuring stick”. If your annuity contract expires, you’ll receive a lump-sum payment that includes your original investment plus interest. It is possible to convert a lump sum of money into an immediate annuity. This produces a guaranteed income stream for the rest of your life or for a fixed period. With these annuities, you can rest assured that your money will not be lost due to stock market volatility. What Annuities Are Best Purchased Directly From An Agent? In general, it is better to consult with an agent rather than purchase an annuity since there are many poor-quality or poorly-rated annuities available. Additionally, the agent receives a commission from the insurance company instead of charging you a fee. If you are considering buying variable annuities, you should consult a financial advisor. The reason? They are complex, have investment risks, and can be expensive. How Should You Choose an Online Annuity Provider? A high-quality insurance company will cost you a lot of money, so you should be careful when choosing one. Consider these five qualities before making a decision. Financial stability. It’s important to remember that annuities aren’t insured by the FDIC, nor are they backed by the federal government — although insurers are backed by their state guaranty association. You should therefore choose an insurance company with good financial standing in order to protect your retirement income. What is the most effective way to ensure that? Check the ratings of independent credit rating agencies such as Standard & Poor’s, Moody’s, Fitch, and A.M. Best, in order to assess your insurance provider’s financial stability. Protection of data. Personal information should be as critical to your insurer as it is to you. As technology evolves, reputable data security providers should partner with them and continue to update their software. Also, they should explain why they need your personal information in a clear manner. You should be wary if they ask for your credit card number if it’s not related to buying an annuity. Last but not least, make sure the insurance company’s website is safe and encrypted. Contact customer service to learn more about data protection for complete peace of mind. Openness and transparency. Even though annuities can be complex, your insurer should never take advantage of their complexity. Even the tiniest details should be clearly spelled out in your contract by your insurer. In other words, know what to expect if you withdraw money early and what will happen if you pass away before you retire. Advice from experts. Online insurance buying should be simple. At the same time, if you need help, you should be able to speak with a licensed agent at your insurance company. It is a must for these agents to provide you with a clear explanation of the licenses they hold. In addition, they should answer your questions in plain English without trying to upsell you. Exceptional service. As a last step, ensure that your insurance company is actually willing to serve your needs. Look for customer complaints on the Better Business Bureau (BBB) or third-party review sites to get an idea of their service. Selling Your Annuity Are you aware that you can also sell your annuity? It’s true. Many annuitants sell the rest of their annuity value when they no longer need the money. Either the entire annuity value or a specific portion can be sold. In order to sell your annuity, you have three main options. An entire annuity can be sold. The assets in your annuity will be liquidated if you sell the entire value. All future payments and income won’t be available to you. In accordance with your contract, you can take the lump sum amount from the buyer. Partial sale of annuity payments. Depending on your needs, you may wish to sell only a specific portion of your annuity. While enjoying the tax benefits, you can continue receiving periodic incomes. A partial period of payment can be sold to a buyer if you need hard cash urgently. By selling one or four of your upcoming payments, for example, you will continue to receive your payment as normal once the period has ended.   You can sell a portion of your payments. Payments can be sold in chunks as well. This is known as a partial buyout. In this case, you can accept a lump sum amount and agree to share a specific amount in your periodic payments. The Benefits Of Buying And Selling Annuities There are a lot of benefits to selling your annuity. For example, if you have any pending payments, liquid cash will help you pay them off. As a result, you’ll be able to meet your financial needs. And, more importantly, when you have your own money, you don’t have to borrow it. Aside from that, an annuity has a lot of advantages. Besides providing annuitants with a stream of income, annuities also offer tax advantages. With its tax-deferred payment method, contributions are limitless. Also, all your money goes to your beneficiaries if you die. FAQs When is the best time to buy an annuity? You should buy the annuity as soon as you can. Ideally, though, you should choose the annuity if you’ve maxed out your limits in other retirement plans. Is there a time when annuities shouldn’t be bought? Annuities aren’t for everyone. For example, there’s no need to get one if you have something already that covers your retirement. It’s also not a good idea to buy one if you’re getting social security or pension benefits to cover all of your expenses. And, it may not be the best investment for you if you want high returns. In addition, annuities aren’t for people with poor health or who are struggling in the current investment climate. Are annuities guaranteed, and if so, by whom? There’s no federal agency that protects your annuity’s principal value like the FDIC. So, it’s possible to lose some of your investment’s principal. In other words, you take the same risk when you invest in stocks, bonds, mutual funds, and ETFs. It is possible to obtain up to $100,000 of coverage through a guarantee association in most states, however. In the event of a default by the insurance company, this would offer a measure of protection like the Securities Investors Protection Corporation (SIPC). In contrast to SIPC, the guarantee association isn’t government-backed. It’s an industry arrangement between various insurance companies. Can an annuity be a good investment? In order to determine whether an annuity is a sound investment for you, you must first determine your financial needs and goals. You can however purchase an annuity if you want a guaranteed retirement income. If you want to boost your monthly benefit amount by delaying taking your Social Security benefits, you can get an annuity instead. In the same way, married couples want to make sure their spouses are okay if they pass away. Depending on how the annuity is structured, your spouse may still get payouts after you die. If, however, you lack cash on hand to cover the premiums or you haven’t taken full advantage of other savings options, an annuity may not make sense. You can benefit from some important tax advantages if you max out your 401(k) or IRA each year. Another option to save tax-free is to use a health savings account (HSA). Is the provider of the annuity financially sound? By purchasing an annuity, you are trusting the company backing the annuity to pay you in the future. So it’s important to make sure the company is financially sound. You should only invest in an annuity provider that is consistently rated highly by the major credit rating agencies, like AM Best, Fitch, Standard & Poor’s, and Moody’s. Article by John Rampton, Due About the Author John Rampton is an entrepreneur and connector. When he was 23 years old, while attending the University of Utah, he was hurt in a construction accident. His leg was snapped in half. He was told by 13 doctors he would never walk again. Over the next 12 months, he had several surgeries, stem cell injections and learned how to walk again. During this time, he studied and mastered how to make money work for you, not against you. He has since taught thousands through books, courses and written over 5000 articles online about finance, entrepreneurship and productivity. He has been recognized as the Top Online Influencers in the World by Entrepreneur Magazine and Finance Expert by Time. He is the Founder and CEO of Due......»»

Category: blogSource: valuewalk11 hr. 14 min. ago

Businesses, not governments, will need to lead the transition to clean energy, executives say

Firms must take swift action to get to net zero, execs say, but changing everyone's minds and actions requires trust, transparency, and cooperation. Joan Motsinger from Seagate and Jamie Gamble from PwC talked with Insider about the role of business in addressing the climate crisis.PwC Getting companies and consumers to be sustainable will require transparency, cooperation, and trust. The transition to clean energy isn't a choice, executives told Insider. The net-zero shift must be "affordable, safe and reliable, and clean." The US is about a decade behind where it should be to reach some of its net-zero goals. To make progress, business can't wait for the government to fix the problem.That assessment came from Joan Motsinger, the senior vice president of sustainability and transformation at Seagate, a data-storage company, in a recent discussion with Insider at PwC's Trust Leadership Institute. Getting boards, employees, and, finally, consumers to agree to and then implement strategies, adopt new technologies, and use more-sustainable products isn't easy and will require a high level of trust, transparency, and cooperation, Motsinger and two other executives told Insider.Motsinger and Kevin Fitzgerald — the chief utility officer at Energy Impact Partners, a venture-capital firm focused on sustainable energy with more than $3 billion in assets under management — had a conversation at the Trust Leadership Institute with Jamie Gamble, a PwC managing director, on shaping strategies around sustainability and the importance of transparency. The professional-services firm runs the Trust Leadership Institute — which aims to help C-suite and senior-level executives and directors think about the evolving and increasingly complex role that trust places in business, including public policy, data and technology, cybersecurity, workforce management, governance, and sustainability. The institute is part of PwC's $300 million commitment to push leaders to embed trust-based fundamentals into their day-to-day and long-term management styles and business practices. Motsinger said the move to sustainable business practices, infrastructure, supply chains, and products couldn't wait for the government to mandate such moves."Businesses are going to have to lead in the collective," she said.Some investments in the economic transition will be home runsGamble told Insider that leaders should think of the shift to net zero not in terms of cost but of investment. Fitzgerald agreed: "We're investing, not driving up costs," he said, adding that sustainable products and services had to be "affordable, safe and reliable, and clean." Of course, a change of this scale will be costly. Fitzgerald pointed to one estimate that it would take $9.2 trillion in annual investment to transform the global economy to net zero by 2050.Motsinger is concerned that many people are taking too long to understand the threat posed by the climate crisis. Fitzgerald added that it's key to develop trust among all sides so that businesses could roll out new technology. Gamble noted that in any industry or transition, such as what's needed to tackle the climate emergency, there will always be investments that fail. Yet that risk might not put off some investors. Fitzgerald said there were hundreds of billions of dollars that venture firms wanted to invest in sustainable startups, projects, and technology. Some of these investment areas are proven, while others aren't ready to be commercialized and are higher risk, such as zero- or low-emitting aviation fuel."It's worth the bet because if it works, it's a game changer, but it's a high-tech risk. If it goes to market and fails, then they need to move on," Fitzgerald said.VC funds are looking at sustainability projects and startups for one to two home runs out of 20 to 30 swings, Fitzgerald said. Many of these technologies have to be deployed by 2030, and some, like clean electricity across an upgraded grid, are high priority. Once we have safe, reliable, and affordable options in those areas, Fitzgerald said attention might turn to areas considered harder to decarbonize — processes like steelmaking, cement production, and construction. Technology is key to progress in sustainabilityThere are bellwether industries that will help tell the world how well things are going, Fitzgerald said, citing transportation. In the future, electric vehicles will likely dominate the roads, yet there are many questions about how we'll get there.The US electrical grid will require a major overhaul to deliver sufficient power for charging EVs. Fitzgerald said a passenger plaza along a highway serving cars and trucks could require enough electricity to power a small town."How much capacity do we have on the grid for that?" he said. "What kind of infrastructure needs to be built around that? What kinds of chargers do we need? And can we roll those out quickly?"While the transition of transportation to electrification is in its infancy, it's a great space to watch to see how the implementation of clean energy is going, Fitzgerald said. He added that investments in areas like battery-storage tech and even software for battery storage would serve as indicators of how quickly the US might reach its climate goals."It may be bumpy," he said.Fitzgerald said the technological evolution of many of Energy Impact Partners' companies and how far they'd come, and what'd been deployed for wider use, "shows that this can be done." But he added that as the world accelerated the clean-energy transition, issues would arise. There needs to be a continued focus on reliability and affordability for this to work."I have faith in innovators and faith in technology," Motsinger said, particularly because investors are putting money into more sustainable technologies and standards.Gamble said the transition wasn't a choice: "The world has moved, and leaders have to react to it in a positive way and creatively think."Read the original article on Business Insider.....»»

Category: dealsSource: nyt15 hr. 42 min. ago

NASA spotted a rock formation on Mars that looks just like a giant bear face

A volcano or mudslide likely caused the rock formation. It's the latest in a string of amusing images spotted by NASA spacecraft on Mars. A photo taken by the Mars Reconnaissance Orbiter looks like a bear.NASA/JPL-Caltech/UArizona A NASA satellite has beamed back a picture of an interesting Martian rock formation. The picture looks like a giant bear.  NASA has spotted several other amusing rock formations on Mars over the years.  NASA's Mars Reconnaissance Orbiter snapped a picture of a rock formation that looks remarkably like a bear. "A bear on Mars?" a release from the team analyzing the picture asked. Hardly, but the resemblance is uncanny in this picture taken on December 12. The pattern is made by stress fracture running in a circle around a collapsed structure. From the right angle, it looks like a bear's mouth. The scientists suggest this may have once been an impact crater filled by deposits, which would explain the circular crack.The raised structure in the middle could have been a volcano or a mud vent, per the release. The Mars Reconnaissance Orbiter, a satellite launched in 2005, has provided groundbreaking science on its mission.But it and other probes have also been a source of light entertainment in the form of funny space photos.Human brains are known to have a tendency to look for recognizable shapes in what they see, a phenomenon called pareidoliaIn 2019, the Mars Reconnaissance Orbiter spotted the "Star Trek" logo on the Red Planet, for instance. Others have sworn that a zoomed-in picture from NASA's Mars rover showed alien crabs ready to pounce on your face, which was of course discredited by NASA. Some have said they've spotted the face of Mahatma Gandhi on the Google Mars map. The most iconic example of pareidolia is the "Face on Mars," a picture snapped in 1976 by NASA's Viking 1 spacecraft. NASA's iconic "face on Mars" picture snapped by Viking-1 in 1976.NASAThe shape, which looks like a human face, attracted many a conspiracy theory.Unfortunately, when NASA got closer, it turned out the enigmatic face was no more than a ridge. A 3D perspective view of the Face on Mars landform produced by Jim Garvin (NASA) and Jim Frawley (Herring Bay Geophysics).NASA   Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 26th, 2023

"Leave Him Alone!!!": Trump Defends Pence After Discovery Of Classified Documents At Indiana Home

"Leave Him Alone!!!": Trump Defends Pence After Discovery Of Classified Documents At Indiana Home Authored by Frank Fang via The Epoch Times (emphasis ours), Former President Donald Trump defended former Vice President Mike Pence on Tuesday, after classified documents were found at Pence’s home in Indiana. “Mike Pence is an innocent man. He never did anything knowingly dishonest in his life. Leave him alone!!!” Trump wrote on his Truth Social account on Jan. 24. Former Vice President Mike Pence gestures as he speaks during a Republican Jewish Coalition Annual Leadership Meeting in Las Vegas on Nov. 18, 2022. (Wade Vandervort/AFP via Getty Images) Pence’s lawyer, Greg Jacob, told the National Archives and Records Administration in a Jan. 18 letter that a “small number of documents” marked classified were found at Pence’s Indiana home two days earlier. The documents were “inadvertently boxed and transported” to the former vice president’s home at the end of the Trump–Pence administration. The discovery came after Pence engaged outside counsel to review records stored at his residence, according to Jacob, who added that the classified documents were “immediately secured” in a locked safe. “Vice President understands the high importance of protecting sensitive and classified information and stands ready and willing to cooperate fully with the National Archives and any appropriate inquiry,” Jacob wrote. FBI agents visited Pence’s residence on Jan. 19 and collected the documents that had been secured, according to Jacob. At the time, Pence was in Washington to attend the March for Life rally. Former President Donald Trump speaks at the Conservative Political Action Conference at the Hilton Anatole in Dallas, Texas, on Aug. 6, 2022. (Brandon Bell/Getty Images) The discovery of classified documents at Pence’s home came on the heel of investigations by the Department of Justice over classified documents found in President Joe Biden’s Delaware home and his former office space in Washington, as well as in Trump’s Mar-a-Lago estate in Florida. White House press secretary Karine Jean-Pierre did not comment on Tuesday when a reporter asked if the White House had any reaction to Pence’s documents. “I’m not going to comment on any ongoing criminal investigation or any investigation,” she said. “As you all know, the Department of Justice is independent, and we will not politically interfere.” Congress The news of the discovery of classified documents at Pence’s residence has generated mixed responses from lawmakers. House Committee on Oversight and Accountability Chairman James Comer (R-Ky.) issued a statement saying that Pence has agreed to work with congressional oversight. “Former Vice President Mike Pence reached out today about classified documents found at his home in Indiana,” Comer wrote. “He has agreed to fully cooperate with congressional oversight and any questions we have about the matter. “Former Vice President Pence’s transparency stands in stark contrast to Biden White House staff who continue to withhold information from Congress and the American people.” On Jan. 22, Comer accused the White House of “stonewalling” a Republican investigation into Biden’s handling of classified documents. Rep. Jamie Raskin (D-Md.), ranking member of the House Committee on Oversight and Accountability, issued a statement saying it was important for the Department of Justice to conduct its probes. “It is critical that we allow the Justice Department to carry out its investigations and follow the facts in specific cases, and we should work together on a bipartisan basis to improve all relevant federal policies and practices,” Raskin wrote. “There is plainly a lot of work to do.” Sen. Lindsey Graham (R-S.C.) wrote on Twitter on Jan. 24 that he believed neither Biden, Trump, nor Pence had anything “sinister” over how they handled classified documents. “I don’t believe there were ‘sinister motives’ with regards to the handling of classified information by President Biden, President Trump, or Vice President Pence,” Graham wrote. “We have a classified information problem which needs to be fixed.” Special Counsel Rep. Matt Gaetz (R-Fla.) said it remains to be seen whether Attorney General Merrick Garland would appoint a special counsel to investigate Pence. “Whether or not Mike Pence gets a special counsel for classified documents found at his residence is dependent on if he announces that he is running for president,” Gaetz wrote on Twitter. Read more here... Tyler Durden Wed, 01/25/2023 - 15:45.....»»

Category: personnelSource: nytJan 25th, 2023

Going Cashless: Norway"s Digital Currency Project Raises Privacy Questions

Going Cashless: Norway's Digital Currency Project Raises Privacy Questions Authored by David Attlee via, At this point, the test network for the Norwegian CBDC uses not the public Ethereum ecosystem, but a private version of the enterprise blockchain Hyperledger Besu... The small Nordic country of Norway may not be particularly notable on the global crypto map. With its 22 blockchain solution providers, the nation doesn’t stand out even at the regional level.  However, as the race to test and implement central bank digital currencies (CBDCs) accelerates every day, the Scandinavian nation is taking an active stance on its own national digital currency. In fact, it was among the first countries to begin the work on a CBDC back in 2016. Dropping cash In recent years, amid a rise in cashless payment methods and concern over cash-enabled illicit transactions, some Norwegian banks have moved to remove cash options altogether. In 2016, Trond Bentestuen, then an executive at major Norwegian bank DNB, proposed to stop using cash as a means of payment in the country: “Today, there is approximately 50 billion kroner in circulation and [the country’s central bank] Norges Bank can only account for 40 percent of its use. That means that 60 percent of money usage is outside of any control.” A year before that, another large Norwegian bank, Nordea, also refused to accept cash, leaving only one branch in Oslo Central Station to continue handling cash. This sentiment came in parallel with Bitcoin enthusiasm, as DNB enabled its customers to buy BTC via its mobile app, local courts demanded that convicted drug dealers pay their fines in crypto, and local newspapers widely discussed investments in digital assets. Last year Torbjørn Hægeland, executive director for financial stability at Norway’s central bank, Norges Bank, outlined to the project’s goal of replacing cash use in the country: "With this background, the decline in cash use and other structural changes in the payment system are key drivers for the project." The experimental phase of the Norwegian CBDC will last until June 2023 and end with recommendations from the central bank on whether the implementation of a prototype is necessary. Ethereum is the key  In September 2022, Norges Bank released the open-source code for the Ethereum-backed digital currency sandbox. Available on GitHub, the sandbox is designed to offer an interface for interacting with the test network, enabling functions like minting, burning and transferring ERC-20 tokens. However, the second part of the source code, announced to go public by mid-September, has yet to be revealed. As specified in a blog post, the initial use of open-source code was not a “signal that the technology will be based on open-source code,” but a “good starting point for learning as much as possible in collaboration with developers and alliance partners.” Norges Bank in Oslo. Source: Reuters/Gwladys Fouche Earlier, the bank revealed its principal partner in building the infrastructure for the project — Nahmii, a Norway-based developer of a layer-2 scaling solution for Ethereum of the same name. The company has been working on this scaling technology for Ethereum for several years and has its own network and tokens. At this point, the test network for the Norwegian CBDC uses not the public Ethereum ecosystem, but a private version of the enterprise blockchain Hyperledger Besu. In late 2022, Norway became part of Project Icebreaker, a joint exploration with the central banks of Israel, Norway and Sweden on how CBDCs can be used for cross-border payments. Within its framework, the three central banks will connect their domestic proof-of-concept CBDC systems. The final report for the project is scheduled for the first quarter of 2023. Local specifics, universal problems In terms of hopes and fears, what defines the Norwegian CBDC project among others is the national regulatory context. Like its geographical neighbors, Norway is known for its cautious approach to the digital assets market, with high taxes and the relatively small scale of its domestic crypto ecosystem — a recent study by EU Blockchain Observatory estimated its total equity funding at a modest $26.9 million. Norwegian serial entrepreneur Sander Andersen, who has recently moved his fintech company to Switzerland, doubts that the upcoming project will co-exist peacefully with the crypto industry. There are already more than enough problems for tech entrepreneurs in the country, he said in a chat with Cointelegraph: “Despite the country's strong infrastructure for entrepreneurs in other industries, such as low energy costs and free education, these benefits do not extend to the digital realm. The tax burden faced by digital companies makes it nearly impossible to compete with businesses based in more business-friendly jurisdictions.” As central bank digital currencies have the potential to compete with private cryptocurrencies, and the goal of any government is to control financial transactions as tightly as possible, Andersen doesn’t see Norway among the exceptions: “The Norwegian central bank's CBDC project can also pose a threat to the legal status of private stablecoins in the country. The introduction of a CBDC may prompt increased regulation and oversight of private stablecoins, making it harder for these companies to operate.” Speaking to Cointelegraph, Michael Lewellen, head of solutions architecture at OpenZeppelin, a company contributing its contracts library to the Norges Bank project, doesn’t sound so pessimistic. From a technical perspective, he emphasized, there is nothing stopping private stablecoins from trading and operating alongside CBDCs on both public and private Ethereum networks, especially if they use common, compatible token standards such as ERC-20.  However, from a policy perspective, there’s nothing that can stop central banks from performing financial gatekeeping and enforcing the Know Your Customer (KYC) standards, and this is where the CBDC looks like a natural development. Banks will not sit idly by as the blockchain ecosystem grows, as there is a lot of shadow-banking activity happening on-chain, Lewellen specified, adding: “CBDCs offer central banks the ability to better perform gatekeeping and enforce KYC rules on CBDC holders, whereas enforcing the same standards against entities using non-governmental stablecoins is far more challenging.” Could Norway’s CBDC offer anything reassuring in terms of users’ privacy? It’s hardly possible from both technological and strategic points of view, Lewellen said. Today, a mature solution doesn’t exist that would allow privacy in a compliant manner regarding the use of CBDCs. Any national digital currency would almost certainly require every address to be linked to an identity, using KYC and other means we see in banks today. In fact, if done on the private ledger, like the one that Norges Bank is testing right now, the CBDC will offer not only less privacy for a single customer, but at the same time less public transparency with regard to blockchains. Tyler Durden Sun, 01/22/2023 - 09:55.....»»

Category: blogSource: zerohedgeJan 22nd, 2023

How Russia Is Leveraging Its Arctic Region For Global Influence

How Russia Is Leveraging Its Arctic Region For Global Influence By Rachel Premack of FreightWaves, For the past decade, while the rest of us weren’t looking, Russia has invested seriously in its Arctic region. Now, some 20% of the country’s GDP and 30% of its exports come from these chilly lands. Climate change has softened the landscape where critical oil and gas reserves were stuck underground, while melting ice caps have allowed tanker ships to transport that fuel across Eurasia.  A soldier walks at a radar facility on the Alexandra Land island near Nagurskoye, Russia, Monday, May 17, 2021. (AP Photo/Alexander Zemlianichenko) It’s a fascinating trend that’s set to get more critical in the coming decades. To learn more, we spoke with Malte Humpert, senior fellow and founder of the Arctic Institute. Our interview transcript was lightly condensed and edited for clarity.   FREIGHTWAVES: Just to get started, who or what entities or companies or countries are currently shipping through the Arctic Ocean? HUMPERT: By and large, it’s Russia.  We have to distinguish between the ice-covered Arctic and the non-ice-covered Arctic. There’s always been shipping in the Arctic around the Norwegian coastline, Iceland and some shipping along Greenland in the summer, whenever there is no ice. But what’s really happened in the last 10, 12, 15 years is that we are shipping in an area that was previously just the domain of nuclear icebreakers along the Russian coastline, or through the Canadian Archipelago, along the Northwest Passage. So, that’s really where the big change has been happening over the last 10, 12, 15 years. Whenever they’re talking about Arctic shipping or new trends or routes, it’s really along the Russian coastline, which goes from Murmansk on the western side to Kamchatka in the far east. It is, in theory, a shortcut to connect markets in Europe and in Asia. Arctic shipping routes mostly feature liquefied natural gas and oil tankers. No container ships yet!  In the ’80s and ’90s, and even in the 2000s, it was really just nuclear icebreakers providing supplies to local communities, to supply some military installations. Now, we are seeing a lot of destination shipping. Russia is using the Northern Sea Route to bring oil and gas resources, some coal, some iron ore, but mostly LNG and oil from the Arctic to markets in Europe and in Asia. That’s the big volume, and that’s where Russia has been investing a lot of money into new icebreakers, into new port infrastructures, into new ice-capable tankers, LNG and oil. We are [also] seeing some branded shipping. There have been a couple hundred voyages now. It started really in 2009 with a German company called Beluga, which was the first one to send cargo ships through the Northern Sea Route. From then, we’re seeing anywhere from a few dozen to now 70, 80, 90 voyages a year. This year we didn’t really see any, because of Ukraine and sanctions.  (Source: GAO) A lot of companies that did some trial voyages the last few years decided to not do it anymore. But the biggest one is probably Cosco of China. They’ve probably been the most adventurous. They’re doing the most trial voyages to gain operational experience. And they’ve probably done 60, 70, 80 voyages in the last seven, eight years. They’re sending easily boxed cargo, like large windmill parts, or windmill blades, or some iron ore from Asia to Europe to use those quick shortcuts. [There’s also] Maersk, which did one container ship in 2019. That was a big story, when they had a new ice-capable container ship that needed to go to the Baltics. Instead of going the traditional route through the Suez Canal, they just went through the Arctic. It generated a lot of headlines, but it was a one-off voyage. By and large, it is Russia doing it. Russia is doing it to bring natural resources from the Arctic to Europe and Asia.  The Arctic Ocean will probably never be a major route The question is, long term, if the ice keeps melting and eventually you really have an ice-free summer, will eventually big liner operators be able to go through the Arctic? There’s always two sides to it. There’s those that are saying, “No, it’s just not feasible. It’s not reliable enough. You need schedule reliability. You need that infrastructure, which are 10 to 15 major ports along the route to really make the Arctic container shipping work.” And then others are saying, “Yes, that’s true. We won’t reform, or we won’t revolutionize the main shipping arteries of the world. But the Arctic can serve as a supplemental shipping route.” For now, it’s really just destination shipping from the Russian Arctic to markets in Europe and Asia. And then there’s a little bit of the Canadian Arctic. The Northwest Passage probably sees 10, 15, 20 transits every year. There’s some iron ore that gets exported from the Canadian Arctic to market. But really, Arctic shipping, what everyone is talking about, is the billions of dollars Russia is investing in infrastructure, and getting oil and gas that we previously couldn’t get to, to the markets in Europe and in Asia. Russia has used Arctic routes in 2022 to still move liquefied natural gas into Europe  FREIGHTWAVES: Is there a certain amount of uproar that happens when a Western European shipping company, like Maersk, engages in Arctic shipping? It seems like there’s a difference in the response from the public depending on who ships on the Arctic.  HUMPERT: Anyone can go onto the Northern Sea Route. All you need is to get a permit from the Northern Sea Administration. I mean, that door is wide open. It’s not that hard to do. You need some icebreaker escort. What’s interesting to look at is, how is Europe behaving in terms of sanctions? [2022] saw a record level of Russian Arctic LNG flowing from the Russian Arctic into the EU.  While on one hand, you stopped the import of pipeline gas, now they’re receiving record levels of LNG. That comes from the Arctic and uses Arctic shipping. A crew member attaches a Russian national flag as the ice breaker moves along the frozen Moskva River with the Kremlin in the background during snowfall in Moscow, Russia, Tuesday, Jan. 12, 2016. (AP Photo/Alexander Zemlianichenko) So, Arctic shipping definitely ties into the geopolitics of what’s going on right now. I think a lot of companies decided that it’s not worth it, the optics or the environmental risk to ship in the Arctic. By and large, it’s Russian LNG and oil. There’s a couple of bulk carriers, just like large items that need to go into the Arctic or come out of the Arctic.  But 99% of Arctic shipping is really there to support Russian oil and gas development, or the export of those resources. It’s not easy to ship in the Arctic, especially when it is dark 24 hours a day in the winter HUMPERT: There’s been very few transit voyages where someone is like, “OK, I need to get something from point A in Europe to point B in Asia.” It will take a few months a year where that voyage into the Arctic might make economic sense. But, at the same time, it requires a lot of logistics. A lot of planning, ice pilots and special certification for the crew. You need to abide by the Polar Code. That brings a host of challenges with it that the crew needs to be certified, and you need to have a special ship, or ice class. You can’t dump your wastewater. Shipping in the Arctic is still, it’s not the Mediterranean. It’s not the Atlantic. It’s still very challenging, especially in the winter, when it’s 24-hour darkness. It is still very specialized shipping. It’s also a very pristine environment. A few hundred ships a year represent a significant challenge, and danger to the Arctic environment. That’s why things like the Polar Code have been put in place to make sure that there are some safety mechanisms; vessels are specifically built and certified for operating in ice and ice-infested waters in the Arctic. The Polar Code is serious business … but it has some loopholes  FREIGHTWAVES: What are some of the specifications of the Polar Code? What are some of the most challenging or maybe surprising factors that comes along with shipping in the Arctic as an ocean carrier? HUMPERT: The Polar Code was established under the International Maritime Organization. And it requires ice pilots on board. You need to have specific crew training, specific survival gear. You need to have ice classes. That’s more based on domestic Russian certification.  For the Northern Sea Route, there are different categories, depending on if the ice conditions are light, medium or heavy. You need to have either a specific ice class for the vessel, or you need to have an icebreaker escort you through ice conditions that you are not allowed to navigate independently. Of course, there’s politics as well. There have been instances in the last few years where vessels that are not supposed to be where they are, in terms of ice conditions, are navigating by themselves, because the Russians turn a blind eye to that. There have been instances now where vessels don’t abide by the Russian rules, and they should have a higher ice classification. The question is, how much of that is because ice conditions are really getting easier and easier because of climate change? Or is it Russians ignoring the rules for economic expediency, and want to push along oil and gas exports? 60% of Russia’s Arctic fuel goes to Europe, and the other chunk goes to Asia  FREIGHTWAVES: And right now, where is Russia shipping on the Northern Sea Route? Are they exporting only to China? Are they still exporting to Europe? What does that look like right now? HUMPERT: We have a number of oil and gas projects in the Arctic. The biggest one is Yamal LNG on the Yamal Peninsula, by the Russian company Novatek. They export about 20 million tons of LNG every year.  Some of that flows to Europe, and some of that flows to Asia. This year it’s probably 60% Europe, 40% Asia. In terms of Asia, most of that goes to China. In previous years, a bit more went to Japan.  In terms of Europe, a lot of it goes to France, Spain, Portugal, Belgium, countries that actually previously had not really received any Russian gas. Now they are importing Russian LNG. There is the Novy Port/Arctic Gate by Gazprom Neft. That is also oil that flows to Europe.  Now there’s going to be a big new terminal called Vostok Oil, which was announced a few months ago. It’s on the Gydan Peninsula. The forecasts say that that’ll be 25 million tons by 2025, and then a hundred million tons by 2030. There is a lot of volume of the oil already being transported around the Northern Sea. In the 1980s, ’90s and 2000s, that would be between 2 and 4 million tons of cargo that would flow along the Northern Sea Route. Now we’re around 32, 33 million tons. All that increase has come in the last four or five years. The forecasts are 80 to 100 million tons by the end of the decade. So, we’re still looking at a threefold increase in terms of tonnage between LNG and oil. Arctic oil production is replacing other resources for Russia FREIGHTWAVES: It seems like Arctic shipping has been pretty important for Russia’s energy industry, and really making them even more of an energy exporter than previously. HUMPERT: Probably not more. They have to replace other capacity. There’s a lot of oil and gas resources in other parts of Russia that have been producing for many decades, and they’re running out. A lot of future oil and gas resources lie in the Russian Arctic. If you look at the US Geological Survey study that everyone cites from 2009, which looked at oil and gas resources across the entire Arctic, 80% of those resources are located in the Russian Arctic. [AUTHOR’S NOTE: For those who are not familiar with this particular survey, it’s pretty interesting. It estimates that 30% of the world’s undiscovered gas and 13% of its undiscovered oil is in the Arctic.] For lack of a better term, Russia is the gas station. The future of that gas station definitely lies in the Arctic, and Russia wants to make sure it keeps exporting oil and gas. Previously it couldn’t get to those oil and gas resources, because it was frozen, and building pipelines in the tundra is very technically challenging and expensive. But now they have a shipping route, and they have the technology, and they can get to the oil and gas that previously was inaccessible. That’s where Arctic shipping comes in for Russia being really important. The combination of climate change, oil and gas resources, and the Northern Sea Route opens a whole new logistics chain for Russia. China and Russia are becoming closer than ever, thanks to the Arctic! FREIGHTWAVES: And how does Arctic shipping strengthen the relationship between Russia and China? HUMPERT: Well, China is a big investor in Russian Arctic energy projects. They are the recipient of a lot of LNG that flows into China. This year, China is receiving about 25, 30% of the LNG produced at Yamal LNG. They have a lot of long-term 20-year, 30-year projects. [China is] gobbling up all the LNG being produced anywhere around the world. The Arctic is no exception there. China is really focused on long-term energy security, and receiving all the LNG that they can. That’s the same for the Russian Arctic. A lot of people focus on the Northern Sea as a potential shipping, export, container shipping route for China. That’s really theoretical. There’s still too much ice. It’s not reliable enough. For China, really, the benefit of the Northern Sea Route and its connection with Russia is the receipt of LNG and oil. Russia is now the largest oil provider for China, ahead of Saudi Arabia. It’s a lot closer to go from the Russian Arctic to China than it is to go from Saudi Arabia through the Strait of Malacca and Singapore and the South China Sea. Apparently Western Europeans do not care about the optics of receiving fuel that might endanger the Arctic (even before Russia’s war) FREIGHTWAVES: At what point is it bad optics for, say, Europe to be importing energy that was moved on through Arctic shipping? Even before the Ukraine war. HUMPERT: Well, I mean, I don’t particularly think that sovereign countries really cared about that. Germany clearly didn’t care about being super energy reliant on Russia. I think for some individual companies it probably played a role. I mean, there have been companies that said they would not invest in oil projects in the Arctic. But, by and large, it was a lot of the big majors. I mean, Siemens, Linde, Total, Bakers. All the major companies that work in oil and gas, either construction or servicing, or the production of oil and gas, were all involved to various degrees. Exxon was in the Russian Arctic, because a lot of oil and gas resources are there.  Now with sanctions, most of them or all of them have actually exited those projects. Russia right now is struggling to replace some of the technology and some of the financing that they lost over the last 10 months with new partners. They’ve looked to the Middle East. They’ve looked to the UAE. China has stepped up. They’re trying to build turbines and gas concentrators, and all the high-tech stuff that is required in the liquefaction of natural gas. They are looking to build it domestically.  From an environmental perspective, there were not too many qualms on the part of companies. And now with the sanctions, it’s just a general, “We can’t really do business with Russia anymore.” You’ve got to cut the cord and get out of there, and most companies did.  It is always the interesting facet of this, that previously France and Spain and Portugal and Belgium did not really receive any Russian gas, because there is no pipeline from Russia that goes to France, or from Russia to Spain. It was more Germany and the Eastern European countries.  But now, France and Spain and Portugal and Belgium are importing significant amounts of LNG, which they previously did not.  I now have FOMOOA: Fear Of Missing Out On Arctic FREIGHTWAVES: It’s interesting looking at this Arctic shore as a key part of Russia’s quest for maybe not global dominance, but still being important on the global stage. I feel like I don’t often think of the Arctic shore as part of any country’s coastline. But given the fact that ice caps are melting … HUMPERT: You make a very good point. I mean, the Arctic plays a completely different role in the national identity and the economic importance in the psyche of Russian people. I think maybe the only other country with that is the Scandinavian countries.  But if you ask someone in the U.S. in Alabama about the Arctic, they don’t know what you’re talking about, because Alaska is 500,000 people, and contributes less than 1% to the GDP of the U.S. Oil supply has been declining. You have cheaper oil and gas available in the Lower 48. There is really not that much of a need to build icebreakers. Russia has a fleet of a dozen nuclear icebreakers. The U.S. has one conventional icebreaker, and another half one that’s always broken. An icebreaker in the St. Clair River in Michigan. Brrrr. (AP Photo/Paul Sancya) The economic importance is a lot less. I mean, if you take Alaska away tomorrow, the U.S. is going to be fine. Well, you take away the Russian Arctic, Russia’s not going to be fine. It generates 20% of its GDP above the Arctic Circle. And that number is probably going to just increase. Russia isn’t just investing into Arctic shipping. It’s investing into an Arctic military.    HUMPERT: That’s why they’re investing large amounts of resources into revitalizing old military bases, building new ones, building runways, and building large radar installations. We saw the explosions on the Nord Stream pipelines two months ago, three months ago. That’s exactly the kind of thing that Russia wants to not have happen to its own investments in the Arctic. That’s why there is a ring of military bases, and forward-looking radar, and S300 and S400 missiles and aircraft — because they know that the Arctic is hugely important for economic development. On Tuesday, they approved another billion dollars to build two more nuclear icebreakers. That’s just something they do on a Tuesday. While in the U.S., it took 10 years to have the Coast Guard contract one conventional icebreaker that won’t be ready before the end of the decade, because it has to be built domestically, and the U.S. hasn’t built an icebreaker in 35 years. So, it’s totally understandable why Russia is investing that much money and effort and political capital. Putin is there whenever they launch a new nuclear icebreaker or they open a new military base. Putin is there for the photo op. And it caters to an element of Russia, the Russian empire, Soviet Union, the Arctic, the Arctic frontier. In the U.S., you don’t really have that psyche. In Canada, 10, 15 years ago, Prime Minister Harper did that a little bit. He would become a little bit more nationalistic when he would talk about the Arctic, and how the Arctic is part of the Canadian heritage, and the Arctic is Canada, Canada is the Arctic, and so forth. But again, no one cared. Of course I’m exaggerating here, but you don’t have 20% of your GDP being generated above the Arctic Circle. In this handout photo taken from a footage released by Russian Defense Ministry Press Service on March 26, 2021, a Russian nuclear submarine breaks through the Arctic ice during military drills at an unspecified location. (Russian Defense Ministry Press Service via AP) I mean, purely from a logistical aspect, what Russia has been able to do the last 10 years is really, really impressive. You can be for it, you can be against it. You can say the environmental risk is not worth it. We should stop producing oil and gas, and the geopolitics of it. But just looking at it from the infrastructure in the Arctic, and building the ships needed to get the oil and gas out of there, and doing it all in 24-hour darkness in the Arctic, it’s really, really impressive. It takes a lot of effort, a lot of money. And people were skeptical, but Russia is doing it. And Western Europe and Japan and China are customers of what Russia is producing and exporting in the Arctic. For the US and Europe, the solution is probably not ‘drill, baby, drill’ FREIGHTWAVES: Yeah, it seems like Russia’s competitive advantage. Canada and other countries also have access to these resources, theoretically. But Russia’s really the one that is investing the most into this, and seeing the most benefit from this massive shoreline that it has with the Arctic Circle. So, should the U.S. be taking this more seriously? What do you think would be the approach from the U.S. or Europe that counteracts this, or that takes potential Arctic resources more seriously? HUMPERT: Well, I mean, the question is, should we? Personally, I’m glad we’re not drilling for oil and gas in the Arctic.  I think what the U.S. and Europe should do is just generally be more aware that the Arctic is opening up, that it is becoming a navigable ocean. Within 20 or 30 years, for at least six months out of the year, it’ll be more like a blue-water navy-type environment. There needs to be more forward-looking and long-term planning to see, how can we operate in the Arctic? How can we contain threats in the Arctic? How can we avoid conflict in the Arctic?  A lot of that is being done now. I think the U.S. has been waking up to it. They reorganized the 3rd Fleet. They’ve held exercises above the Arctic Circle. There was the Trident Juncture, which was a big NATO exercise a few years ago. They did an exercise off the coast of Iceland maybe two, three years ago. The Coast Guard is getting its new icebreaker, hopefully plural. Supposedly they’re going to build six of them. But, that’s at least 15 years away. They are doing things, but it’s really hard to find the resources to spend that kind of money when the Arctic is not currently that important to you. When you just finished two wars in Iraq and Afghanistan, and you have terrorism, and you have whatever else is going on in the world, it’s very hard to think about 2030 or 2050. That’s where Russia and also China are better, because they’re not a democracy. They don’t need to cater to the two-year election cycle and figure out what the immediate priorities are. They’re able to think long term. But, in general, I mean, the Arctic is opening up. For better or worse, there’s going to be economic activity. There’s hopefully not going to be military conflict in the Arctic. But, the way things are evolving with Russia and future discord or conflict with China, you can never exclude that it could become a theater for conflict. Cleaning up oil spills in cold water is really hard, which is one of many reasons why Arctic shipping is not great for polar waters FREIGHTWAVES: Really quickly, or maybe not really quickly, I have one last question. What does Arctic shipping do to its ocean? HUMPERT: Well, I mean, it’s definitely not good.  We already had a bunch of near misses of accidents. We had a couple of cruise ships run aground in the Canadian Archipelago a couple years ago. We had a couple of near misses along the Northern Sea Route, where oil tankers ran into each other, luckily without puncturing the double hull. There was, according to the Russians, no loss of oil or whatever. But the more activity you have, the risk goes up. The question is loss of limb and life. That’s why, under the Arctic Council, we have the search and rescue agreement, because the Arctic is really remote, and we have more and more cruise ships going up there. How do you get 2,000 people off a cruise ship when the entire island that you’re visiting has less people than that? There’s a lot of concern about the risk to people when they venture out in the Arctic. Of course, you can look at the Exxon Valdez accident in Alaska 25, 30 years ago and what that did. Cleaning up oil in the Arctic is a lot more challenging than in more temperate water, because the oil becomes a lot more viscous, a lot more thick, like a heavy paste. So, how are you going to get it off, and where are you going to put it? You’re 10,000 miles away from anywhere. The Arctic environment is obviously very pristine and very untouched in a lot of areas. Because it’s so cold, if there were to be an oil spill, it would be dissolved a lot less quickly, because everything, in colder temperature, everything happens a lot slower than in more temperate water. In an ideal world, you’d say, “Yeah, let’s leave the Arctic the way it is, and let’s not go up there and drill for oil and gas.” But that’s not happening, obviously. What we can do is put the regulations in place to keep it as safe and as pristine as we can. But it’s probably just a matter of time until we will see accidents. The more heavy industrial activity you have, you’ll see an accident. The Arctic is offering a preview of how much our lives could transform thanks to climate change  FREIGHTWAVES: Well, great. Thank you so much again for taking the time to talk with me. Anything else I didn’t ask about, or anything else you think would be important? I mean, I’m sure we could talk about this for a long time. But anything else that comes off the top of your head? HUMPERT: I think we covered it. For me, it’s always important, because I read so many headlines about the new Cold War in the Arctic, or the rush for Arctic resources, or the new super shipping highway — it’s not like that. There is a lot happening in the Arctic, and it’s very, very fascinating.  But we’re not on the route for World War III in the Arctic. We’re not going to replace the Suez Canal. Russia is not going to become the next Saudi Arabia in the Arctic. But it doesn’t need to be, right? The Arctic previously was frozen, and now it’s melting because of climate change. And so, it really is the first region where climate change is altering the economic realities and the landscapes. There’s some positives, and there’s some negatives. It’s never just black and white. Some local, indigenous communities are really struggling. Others may have new economic opportunities because of tourism or shipping or whatever is going on. The Arctic is offering a preview. It’s warming at four times the rate as the rest of the planet. Challenges that are maybe 20 or 30 years away in other parts of the world are already happening in the Arctic today, because the ice is melting. Without climate change, you and I, we wouldn’t be having this conversation right now, because the Arctic would still be frozen. It’s this nexus of climate change, economic opportunity and geopolitics. It all comes together in the Arctic, over resources, over shipping, over geopolitics. And it’s the first region where climate change is literally altering the map of the world. You can go through the Arctic now for two, three, four months a year in a normal ship. And 20 years ago, that was not possible. Tyler Durden Sat, 01/21/2023 - 07:00.....»»

Category: blogSource: zerohedgeJan 21st, 2023

The Supreme Court"s investigation raises questions about the justices" determination to find the abortion draft leaker

Had the court been serious about the leak investigation, "they would've brought the FBI in," a legal expert told Insider. Members of the Supreme Court pose for a group photo on April 23, 2021. Seated from left: Associate Justice Samuel Alito, Associate Justice Clarence Thomas, Chief Justice John Roberts, Associate Justice Stephen Breyer and Associate Justice Sonia Sotomayor, Standing from left: Associate Justice Brett Kavanaugh, Associate Justice Elena Kagan, Associate Justice Neil Gorsuch and Associate Justice Amy Coney Barrett.Erin Schaff-Pool/Getty Image The Supreme Court could not determine who leaked a draft abortion ruling last May. Yet the 20-page report has raised concerns about the rigor of the court's investigation. "I'm still disappointed that they didn't find out," one legal expert said. The Supreme Court on Friday revealed that the justices cooperated in its investigation into a leaked draft ruling of a major abortion case, but weren't asked to speak under oath, following widespread speculation about the scope of the probe. "During the course of the investigation, I spoke with each of the Justices, several on multiple occasions," Supreme Court Marshal Gail Curley, who conducted the investigation, said in a statement."The Justices actively cooperated in this iterative process, asking questions and answering mine. I followed up on all credible leads, none of which implicated the Justices or their spouses," she added. "On this basis, I did not believe that it was necessary to ask the Justices to sign sworn affidavits."The 20-page report released by the nation's highest court on Thursday spurred skepticism, given its ambiguity about whether the justices were scrutinized. Investigators perused cell phones and laptops, forensically examined printers, and interviewed 97 of the court's employees, including law clerks, who may have had access to the draft opinion. Yet those individuals went unnamed in the report — and there was no mention that the justices were among them.Friday's statement appeared to answer that question. Still, the eight-month-long investigation ultimately came up empty, and the leaker's identity remains unknown, raising concerns about the court's determination to finding the leaker. The report also comes amid public discussion that it could have been one of the justices themselves, especially since the court has also come under fire over another alleged breach of a 2014 decision, Burwell v. Hobby Lobby Stores.  A former anti-abortion leader has claimed he had advance knowledge of the ruling, but the author of the opinion, Justice Samuel Alito, has denied the allegations."It gives me more assurance than I had yesterday," Carl Tobias, a professor at the University of Richmond School of Law, told Insider. "I'm still disappointed that they didn't find out. Everybody is. So they should keep digging."The report's inconclusive findings also showed the constraints of a court investigating itself, as opposed to a third party launching an independent probe, court observers said."The court did as much as they could given their resources, but the decision to keep this internal prevented them from doing a full blown, thorough investigation," Josh Blackman, a professor at the South Texas College of Law, told Insider.Had the court been serious about the investigation, "they would've brought the FBI in," Blackman said."I think they were committed, but not enough to involve the FBI to actually, really get to the bottom of it," he added.An executive-branch investigation may have led to the justices speaking under oath, a line the Supreme Court marshal did not cross, according to her statement. But the delicate and fraught nature of the matter could explain why, according to Tobias."They're going to be more forthcoming if they're not under oath," he said of the justices. "It would be an insult to them, I think, they would think. To some extent, they're her boss, right?"The unprecedented leak last May penetrated the often blocked-off world of the Supreme Court, prompting some of the justices to publicly condemn it at the time. The court did so again in an unsigned statement on Thursday, labeling the breach "a grave assault on the judicial process."The draft opinion, which showed the court was ready to overturn nearly 50 years of constitutionally protected abortion rights, provoked national outrage at an institution that had already been declining in public trust. The leak further eroded that trust, and shattered it within the institution.And while the report, along with Friday's clarification, offered at least some transparency into the investigation, it failed to restore trust, according to observers."There will continue to be suspicions that have bad effects on all interpersonal relations among justices and between justices and clerks and staff," said Richard Pierce, a professor at George Washington University Law School.Congressional lawmakers have vented about the court's unsuccessful investigation to find the culprit. House Republicans, now in the majority, previously called for their own probe into the leak. Some GOP senators have sounded the alarm about the possibility of future leaks."This is inexcusable," Sen. Josh Hawley of Missouri tweeted on Thursday. "And it means brazen attempts like this one to change the Court's decisions - from within - will become more common. Someone ought to resign for this."But it's uncertain whether new evidence will come to light anytime soon. The Supreme Court's marshal did not note any new leads in her report. While they may be at a dead-end now, some legal experts think that might not be the case forever."People like to talk, and so somebody may leak the name of the leaker," Tobias said. "That could happen."Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 20th, 2023

Davos Highlights: David Solomon, David Rubenstein, Albert Bourla And Much More

Following are excerpts from the unofficial transcripts of CNBC interviews which aired on CNBC’s “Worldwide Exchange” (M-F, 5AM-6AM), “Squawk Box” (M-F, 6AM-9AM ET), “Squawk on the Street” (M-F, 9AM-11AM) and “TechCheck” (M-F, 11AM-12PM) today, Wednesday, January 18th for Davos 2023 in Davos, Switzerland. Interview with Pfizer Chairman & CEO Albert Bourla Bourla On China And […] Following are excerpts from the unofficial transcripts of CNBC interviews which aired on CNBC’s “Worldwide Exchange” (M-F, 5AM-6AM), “Squawk Box” (M-F, 6AM-9AM ET), “Squawk on the Street” (M-F, 9AM-11AM) and “TechCheck” (M-F, 11AM-12PM) today, Wednesday, January 18th for Davos 2023 in Davos, Switzerland. Interview with Pfizer Chairman & CEO Albert Bourla Bourla On China And Vaccines ALBERT BOURLA: Everybody has their own healthcare priorities and how they want to be able to control it. They have their own, apparently they have their own vaccines, they rely on Chinese vaccines and as far as I know, they didn’t ask for western vaccines, but they did ask for treatments from the west. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q4 2022 hedge fund letters, conferences and more   Bourla On CDC Investigation BOURLA: What the CDC said was they saw a signal in one small little database and as a result, they triggered a very comprehensive review of all the databases in existence and they discovered nothing. Bourla On Pfizer Vaccine Safety BOURLA: Irrelevant from conspiracy or not, we have a team that constantly does this. They are collaborating with major scientific institutions and they are doing with them and alone ourselves digging into databases and we constantly review and analyze data. It’s not a signal, although we have distributed billions of doses. Bourla On Covid Strains BOURLA: Every time a strain comes up, we treat it like it would be a suspicious strain. We start working on it. Once we discover there is, we start working on it to see if we’ll overcome protection of the vaccine. Possibility, immediately we develop a kind of vaccine just in case the authorities will ask us to do it. Bourla On RSV Vaccine BOURLA: For us, we submit it. So we’re going to get it whenever the FDA will provide this approval. We have priority review because of the strong data and the disease doesn’t have any vaccine right now. Interview with Nasdaq CEO Adena Friedman Friedman On Interest Rate Environment ADENA FRIEDMAN: I think there's still a lot of unknowns that people want to see have a little more certainty around most notably the interest rate environment and what I think we should expect is within the first three to four months, we'll have a pretty known interest rate environment. Friedman On Recession Concerns FRIEDMAN: I'd like to think that we don't actually have to plan for a recession. And it's not it's not an absolute certainty that it's going to happen. But what people really want is a known environment, right. So they want to understand their cost of capital as a company. We want to understand that in terms of underwriting investments, as an investor, you need to understand that in terms of you to model investment, and then understand what your hurdle rate is, in terms of your investment return versus your cost of capital. If we can get to that point where we have a known interest rate environment, even if inflation is still a little elevated, I think we can operate in that environment for a long time. That will allow investors to make decisions on companies to make capital allocation decisions. And I think we're gonna end up hopefully, even you know, starting a recession, but even if we live in one for a little while, we'll know the environment and that it creates a better environment for investors Friendman On The Cost Of Growth FRIEDMAN: This notion of growth at all costs is gone for some period for the foreseeable future. I, the cost of capital is real. So, money costs money and so access to capital is going to have some sort of consequence. That'll make it so companies are making more discerning investment choices in terms of how to grow and expand their business. They're going to be focused on cash flow a little bit more, I think probably a lot more. And then I think investors are going to underwrite companies that can show profitable growth or a clear path to profitability. And in that in that environment, that's a nice sustainable way for us to manage for a while and a much more sustainable market environment as well. Friedman On Digital Transformation FRIEDMAN: The digital transformation of the economy is something that's going to happen. It's happening. It's an unstoppable force. I think companies will continue to focus on that making their use of their data much more strategic, being able to leverage their infrastructure much more efficiently. And frankly, with the labor environment, they're trying to do more with less. So they want that technology, that technological transformation is real. I think that's one of the threes, right? That's the one that's going to go into three and then they're gonna have to look at what what growth pillars are really painful and as like we have three key growth pillars and we're continuing to be very bullish on us. But we have to make sure we're very efficient internally to be to have the benefit to be an investment Friedman On Blockchain And Crypto FRIEDMAN: I think that the blockchain technology continues to be something that could have really interesting, you know, for in finance but when you look at cryptocurrencies that that particular ecosystem went through a massive reckoning. And I like to say that way you kind of saw what would happen in the framework, that there was no regulation, right? It's just, you have to think about regulation is actually helping create sustainable high integrity, trusted markets. I also think about the crypto world we had, it's lost trust, it's lost the confidence of investors. So what's gonna happen next, I don't think it's gonna die. I think, frankly, there are going to be there certain cryptocurrencies that have real utility. More adults want to come into the room. And it is time for, it's time for some really trusted players to come into the space. However, the regulatory environment needs to be clarified. Interview with Accenture CEO Julie Sweet Sweet On Shaping The Economy JULIE SWEET: For us, working with emerging technologies, being ahead of the curve is what we do, and what is most interesting about this work is that because we’re doing it with not-for-profits, governments and companies, we’re actually shaping the technology at scale, and that’s, you can’t put a price on that. Sweet On Metaverse Use Cases SWEET: Consumers want to do it. 55% all say they want to do it in the next 12 months. Industrial metaverse – huge. Enterprise metaverse – I’ve already got 150,000 people going through it to onboard. First diversity fair in the metaverse starting next month. The use cases are enormous. Interview With NYSE President Lynn Martin Martin On Pipeline LYNN MARTIN: The pipeline is strong. The pipeline’s never been stronger. The power of the public market currency has never resonated more than it’s currently resonating. However, as you know and as you report on every day, we’re in a period of deep uncertainty, and that’s being reflected by the market. Market doesn’t like uncertainty. So what that’s caused is CEOs of companies looking to go public have postponed their plans, and they’re just waiting for the market volatility to abate. Martin On Coming To Market MARTIN: We’re excited about the pipeline. We’re excited about the amount of innovation that’s coming to market. We’re just really looking forward to the time when the market volatility could abate just a bit so some of these amazing companies could come public. Martin On Crypto MARTIN: I’ve long said that crypto is a market in need of regulation. We need to know what the regulatory guideposts are. We need to know what a framework is to bring this asset class under the more traditional structures that have served volatile markets, volatile periods well, and that’s more the centrally traded, centrally cleared types of frameworks. Interview with EY Global Chairman & CEO Carmine Di Sibio Di Sibo On Market Optimism CARMINE DI SIBIO: I think people are starting to think that maybe the major markets in the world are getting inflation under control. Maybe with China opening in terms of COVID, there'll be more physical interaction between individuals which will be helpful in terms of any kind of relationships, in particular on the business side. Interview With Cisco Chairman & CEO Chuck Robbins Robbins On US And China CHUCK ROBBINS: I think it’s more important from a global stability perspective more so than it is about whether I invest in China or not. I think we need the U.S. and China to find a way to compete and disagree but do it in a way that it works for the global economy. Robbins On Recession ROBBINS: Somebody asked me last night, what are you hearing from all of your peers? And I said, well publicly everybody’s being asked are we going to have a recession, and most people are saying, yeah we’re going to have a mild one. Beyond that we’re not really talking about it. And I think most people are generally over the mid-term and long-term very optimistic, and hopefully it turns out to be like Davos. If everybody’s talking about a recession, it won’t be as bad because we’re just going to be wrong. Robbins On Companies Investing ROBBINS: The pandemic taught the C-suite executives and government leaders around the world really up close and personal the power of this technology and what it can do, and I think they’re now understanding. Whether it’s connecting industrial systems to the internet or changing the way you interact with your customers, companies are investing. Interview with Georgia Governor Brian Kemp Kemp On Being In Davos BRIAN KEMP: I'm here selling our great state. I mean, we have so many good things going on in our economy. We've had two record years in a row with job growth and investment. Our mid-year numbers that I got while I was on the way out here are set to break last year's record if you take out in the Rivian and Hyundai deals which you don't get those maybe once in a decade if you're lucky if that. So we're still doing incredible even in this environment. Kemp On EV Legislation KEMP: Well when the legislation passed, it treated our Georgia based companies unfairly. You know, it helped because we're, you know, I think a right to work say I believe the legislation the way it was drawn up and passed was designed to help the union base workforce in other states. You know, we made that aware to our US senators. Before the legislation passed, we worked with the White House and them since to get some changes so that just every company that's building electric vehicles in the United States is treated fairly. That's all we're asking for. It's unfortunate that was not the case when the legislation passed and we continue to urge them to fix it. Interview with Goldman Sachs Chairman & CEO David Solomon Solomon On Consumer Business DAVID SOLOMON: We probably took on more than we should’ve, too much too quickly. But I think we now have a very good deposits business. We’re working on our cards platform, and I think the partnership with Apple is going to pay meaningful dividends for the firm over time. We have this acquisition of GreenSky. We think it’s a good business and so we’re going to give people a clearer view, there’s more transparency around how they can contribute. Solomon On Executing Goldman’s Strategy SOLOMON: We’re focused on executing our strategy. We’ve made a lot of progress over the last few years. We’ve got more to do, but I think the firm is incredibly well-positioned. And we have a business mix that’s very sensitive to capital markets activity and asset prices. We’re trying to evolve that, but we still have a distance to go and we’re working on it. Solomon On Job Cuts SOLOMON: During the pandemic for 2 and a half years, we stopped our normal process of reviewing underperformers for 2 and a half years. The environment’s changed, and we made the difficult decision and it’s kind of a reset, and I think it was the right decision, and it positions us very well as we go forward as we see the environment forward. So I hate the fact that we had to do it, but given how we’ve grown the firm and the headcount, it was the right decision to do. Solomon On Views Of Soft Landing SOLOMON: I think the sentiment is softening a little bit and the view the chance of a softer landing both in the U.S. and Europe is actually increasing. Our economists, you know, our economics team has been pretty soft landing over the last 6 months. I was more in a position because I was talking to CEOs who have been more cautious that I was more uncertain. But I see CEOs softening a little bit. Solomon On Dealmaking SOLOMON: Dealmaking has slowed a little bit, but I point you to our M&A revenues in the 4th quarter and the relative performance of our M&A franchise. We’re still seeing good performance in our M&A franchise, but it’s off the peak. Interview with Liberty Global CEO Michael Fries Fries On Broadband In The Pandemic MICHAEL FRIES: In the broadband business, the pandemic wasn't that bad to us, right? Nobody was disconnecting internet or mobile during the pandemic, they were actually looking for faster speeds and more connectivity. So we kind of did pretty well during the pandemic period. And I think, you know, we're an essential service and that's been positive. Fries On Cable TV Business FRIES: I think the pay TV business or the cable TV business traditionally has done better in Europe, principally, because streamers came later. And I think the broadcasters in Europe are actually pretty strong. Fries On Fixed Wireless FRIES: US cable guys have started selling horizons mobile product and they're having to get to four or 5 million customers, each still small. In Europe, one out of every two broadband subscribers takes a mobile product from us, I think in the US, it's 20%. So we're highly converged and we're approaching each home and each business with a fixed and mobile proposition and with equal, equal weight and equal dependence fixed wireless, which is trying to provide 5G access to the rural markets. Not as big an issue here because Europe is dense and urban. Interview with Guggenheim Partners CIO Anne Walsh Walsh On Being Ahead Of Market Peers ANNE WALSH: We’re a little ahead of our market peers in terms of our viewpoint. Our market peers are sort of anticipating a recession maybe at the end of 2023, maybe into 2024. But we think that this quantitative tightening, which is both a combination of rate hikes, which we anticipate the Fed will continue. Certainly the market has priced in 2 25-basis-point rate hikes this year still. And of course the addition of the quantitative tightening coming from the reduction of the balance sheet will also help to drive down prices further. So all this is sort of feeding into our narrative for this year. Walsh On Time To Reposition WALSH: I think this is a time to reposition portfolios. As a long time fixed income manager, there’s one thing the Fed has done for us, and they put the income back in fixed income. So right now, there’s a very good time to be in investment-grade fixed income relative to equities. Equities haven’t repriced yet, and as we go through a recessionary timeline, we will see that. But certainly right now, the fixed income story is a good one. Interview with Carlyle Group Co-Founder & Co-Chairman David Rubenstein Rubenstein On Inflation Concerns DAVID RUBENSTEIN: I think the Fed has telegraphed that it's likely to do 25 basis points at its February meeting, and they haven’t telegraphed it but it’s probable that they'll do maybe 25 in March and then I think they'll pause for a while and see what the impact is. And hopefully by the end of the year, they might be able to do the reverse and actually begin to lower rates. That's the hope. Rubenstein On The Best Time To Invest RUBENSTEIN: In my own view is that the best time to invest is when there's some uncertainty or when the economy is seen to be a little bit nervous in terms of where it's going. That's the best time to invest. It’s not when the markets are going this way. RUBENSTEIN: It's a good time to invest now because I think the markets are not going to see another 20% drop in public prices. I think that's probably past us. I think we're probably coming back to the point where people are gonna feel very comfortable investing at least in my view. I think prices between the sellers and buyers are still a big gap and because the sellers are are afraid that— ANDREW ROSS SORKIN: They're holding on. RUBENSTEIN: Right and the buyers don’t want to look stupid by buying now but there's too big a gap and it's that is a bigger problem than anything else right now. Rubenstein On Congress RUBENSTEIN: I do think that in terms of fiscal policy, Congress is not likely to default in my view, they will go right up to the end. And then at the end, somebody will plank and I think that's probably a good thing. The markets are not going to want to have a default. We've never had a default. I think that's not a good thing. And I think we shouldn't be playing chicken but I think— Rubenstein On China RUBENSTEIN: When you change your government policy, you can't do it overnight so quickly. All of a sudden, it looks like you were making a mistake before. So you evolve. And I think the Chinese government is now evolving from a complete Covid shutdown to the kind of more different different Covid policy. I think they would like a better relationship with the United States and they are astounded that we think they're going to invade Taiwan sometime soon. They just don't think that's in the cards for them. So I don't think they are against having a better relationship. The real problem, I think, is the US doesn't have a situation where we can get into a better relationship with China without causing all the Republicans to be upset with Biden and vice versa. Interview With Uber CEO Dara Khosrowshahi Khosrowshahi On Consumer Spend DARA KHOSROWSHAHI: Consumer spend remains strong and a lot of people are thinking about, oh, there’s a recession coming, etc., there’s demand weakness. We obviously haven’t announced our results, but generally I’d say across the world the consumer stays strong, and we’re a consumer company in terms of demand. Khosrowshahi On Uber Drivers KHOSROWSHAHI: We need more drivers. We are now the single largest source of work in the world. There are 5 million drivers. Not gig work. Work in the world. There are 5 million drivers on our platform, and we could add another 500,000 drivers tomorrow and they would have work, so we absolutely need to add drivers. Khosrowshahi On Inflation KHOSROWSHAHI: At the same time, 70-80% of drivers who are joining the platform are saying that one of the reasons they’re joining the platform is because of inflation. It is because of cost of living and earning on Uber is helping them buy their groceries or otherwise continue to live their lives. Khosrowshahi On Volatility In Earnings KHOSROWSHAHI: There’s volatility in the earnings. You have good days, you have bad days, there are good situations, etc. And if we can remove some of that volatility, which means benefits, minimum earning standards, etc., we can actually make driving more attractive. Interview With Moderna CEO Stephane Bancel Bancel On RSV Vaccine STEPHANE BANCEL: So pre-Covid in 2019 if you look at the respiratory viruses that drove specialization in the US and around the world, RSV was number two. It's not very well known. It used to be not tested. And because there's no vaccine, nobody really talks about it. There's a flu vaccine, of course, as you know, and so as we just looked at the impact on the world, hospitalization and death, we need to find a solution. And so we deployed the mRNA technology and actually if you look at one of the amazing things about this technology is we started with Phase I for the RSV vaccine in January 2021, just after the COVID-19 vaccine was approved and here we are just 24 months after, we are now seeing Phase III positive data. Bancel On How Covid Is Handled BANCEL: I think governments and industry have to work together. We're, of course, the scientific and academic community to figure out how do we educate people? How do we share the real-world evidence? Bancel On Combining Vaccines BANCEL: We're trying to combine them so we currently have in the clinic Covid booster and flu booster in one dose. Covid booster, flu booster and RSV also in one dose because I agree with you when we talk to consumers, people don't even remember now did I get a Covid shot this winter or the flu shot? Think about when you had third one- for people who are 50 or 60 years old. Interview with Illinois Governor J.B. Pritzker Pritzker On Crime J.B. PRITZKER: Crime is coming down gradually in the city and across the state. It’s going to take a little while. These things don’t come down immediately. But it’s getting better. Pritzker On Jobs And Business PRITZKER: We’re in a much better fiscal situation in the state and a much better position to help businesses. It has not been a high tax state. 4.95% individual income tax is not a high rate. We’re not raising that rate. The rate has remained steady. And we’re attracting jobs and business to the state. Interview With Coca-Cola Chairman & CEO James Quincey Quincey On China JAMES QUINCEY: What matters to our business is the mobility of consumers in the country. Obviously there’s an increase in mobility so that’s going to be good for us. Chinese New Year is a couple of weeks away so we’re going to have to wait and see how that all plays out. We typically don’t know how the end of the year start from the beginning of the year has gone in China until we get past Chinese New Year because it’s such a big occasion for them and with the reopening it’s a little confused so we’ll see. The trajectory of them reopening I’m sure will be very like the U.S. and the European reopens. Quincey On Consumer Stress QUINCEY: Cleary there’s consumer stress you cannot go on long when inflation runs ahead of wages without consumer stress. That happened in the U.S., happened in Europe. Our focus has been we’re going to past on the cost increases come through, whether from services or commodities or other inputs. Of course, we try and adapt our packaging strategy to give the consumers the price point that works for their pocketbook.   Quincey On Commodity QUINCEY: We’ve seen commodity pressure slightly reduce. Obviously, we’re a large corporation, large system so we hedge forward so sometimes commodities come up and then come down but the underlying price is still higher today than it was necessarily before. Quincey On Inflation QUINCEY: The inflation has moved to the service sector, to the wage sector and so some costs are slowing down and some are ramping up if you like, but overall, I think everyone’s expectation is that the inflation pressure will soften if only we’re going to start comparing to the high numbers from last year. Quincey On Having The Right Portfolio For Consumers QUINCEY: The number one thing about us is there is no silver bullet. What’s really working for us is having the right portfolio for the consumer and backing it up with the market and innovation. Interview With Mastercard CEO Michael Miebach Miebach On Consumer Resilience MICHAEL MIEBACH: The consumer has been resilient so that’s the headline. And if you peel the onion a bit, what you generally see is depending on the country, the inflation is clearly a trend that is global, but the impact on the consumer has been different country by country depending on policy reactions. Miebach On Credit Delinquencies MIEBACH: If you look across the industry, we talked to our financial services partners, banks and the like, we are still finding our way back to pre-crisis delinquency levels on the long-range normal so it’s still in below average territory. Miebach On How Inflation Is Affecting Business MIEBACH: Medium, short-term, moderate inflation has been good for our business because it raises the overall volume but this is, this is the kind of impact on a business you don’t really want as you look at having a sound economy. Miebach On China MIEBACH: Northeast Asia has been shut and now it’s starting to really gain a lot of momentum. So I think we should all look forward with optimism on what that will do for a global economy. We have seen the last few years, wherever travel restrictions have been removed, people just travel they go and they go out and we expect the same thing here and it’s going to be big volume. Miebach On Blockchain MIEBACH: We have been bullish on blockchain technology and what it can solve so that’s really where our investments went, where we went out to the market to partner with banks and so forth and see how we can further optimize cross-border payments, make them cheaper, more effective, things like that. That’s where our focus was, so the noise that we have, unfortunate noise in the crypto winter, and those are things that we are staying close to to make sure that we protect Mastercard holders there. But, it’s really the focus on technology and what can it do......»»

Category: blogSource: valuewalkJan 19th, 2023

The bloodletting at Goldman Sachs might not be done yet as the bank looks for more ways to cut costs

Goldman Sachs already reduced its headcount by 6%, but the bank could look to make even more cuts as it tries to lower its expenses. Good morning! Dan DeFrancesco checking in from NYC, which isn't as fancy as Davos, but certainly more fun these days in the absence of all those executives.I've never rooted harder for a story to go viral as much as this one about why every company needs to adopt a four-day work week.On tap, we've got stories on what some say it's like to work at Tiger Global Management, why Wall Street analysts are already off to a rough start with their 2023 market predictions, and 10 ways to boost your mood right now. But first, did Goldman go far enough?If this was forwarded to you, sign up here. Download Insider's app here.Reuters1. Goldman's not out of the woods yet.If you're a Goldman Sachs' employee who made it through the company's recent layoffs, be warned: There could be more to come. Anyone hoping Goldman's fourth-quarter earnings report would represent a fresh start for the bank was sorely disappointed.Insider's Carter Johnson, Dakin Campbell, and Emmalyse Brownstein report that high expenses are set to remain a lingering issue at the bank in the coming months. And instead of providing reassurance that the bank was ready to move forward, Tuesday's earnings call was another reminder that more cost cutting would be required to get back on track. One key point of consideration is Goldman's Platform Solutions division, which includes a mishmash of pieces from what was the bank's consumer and wealth management division. That group lost nearly $4 billion from 2020 to 2022, the bank reported on Tuesday. And while it might sound like a lost cause at this point, Goldman isn't giving up just yet."Our focus remains singularly on driving toward profitability of this segment, but there will continue to be a period of time during which we lose money until we reach that point of ultimate profitability," Denis Coleman, Goldman Sachs' chief financial officer, said during the earnings call. That puts Goldman in a difficult spot: The bank recognizes it needs to cut costs, but also doesn't want to completely gut the division that is costing it the most money. Today should provide some hints at to how the bank will navigate things, as Goldman is set to inform employees on their year-end bonuses.Disappointing bonuses among more profitable segments of the bank, such as trading, could be an indication the bank is hoping to subsidize Platform Solutions with its bigger earners.How long those folks are willing to stick around, though, remains to be seen. Here's why Goldman Sachs might need to cut more jobs.In other news:Tiago Majuelos for Insider2. Inside the bro culture at Tiger Global Management. Questions around the work environment at the hedge fund are coming to light after a report of a $10 million payment Tiger made to a former female employee over allegations of harassment. More on what some say it's like to work at Tiger.3. The end of an era at Bain Capital. Steve Pagliuca, the PE firm's co-chairman, is retiring, The Wall Street Journal reports. Click here to read more about his 34-year career.4. Wall Street's 2023 predictions are already missing the mark. The general consensus across the Street was a difficult start that would lead to a recession before an eventual turnaround by year end. But less than a month into 2023, that doesn't seem to be the case. Read more on how Wall Street analysts got it so wrong.5. The gloves come off with ESG. BlackRock CEO Larry Fink told Bloomberg that people are starting to get really nasty when it comes to ESG investing, including making personal attacks. More on why debates over ESG are getting ugly.6. This is where investors are placing their bets when it comes to climate tech. Speaking of ESG, we asked VCs where startups can have the most impact when it comes to solving the climate crisis. These are the three areas they are most keen on.7. Time to pay up at Twitter. The first interest payment tied to Elon Musk's $44 billion Twitter deal reportedly could be due as soon as this month. Here's why that could spell trouble for the social-media site. Meanwhile, if you are in the market for an industrial-sized pizza oven or a statue of the Twitter bird, check out what the company is auctioning off.8. The founders of a bankrupt crypto hedge fund want to create a marketplace for people to trade crypto bankruptcy claims. Su Zhu and Kyle Davies, founders of failed crypto hedge fund Three Arrows Capital, are looking to raise $25 million for their marketplace, which is currently named GTX, in what is surprisingly not an article from The Onion. What could possibly go wrong?9. How much do you make? Conversations around pay have long been considered taboo, but that's starting to change. Insider's Aki Ito embraced the salary-transparency trend head on by sharing her compensation with friends, colleagues, and sources. Here's how it went.10. Some tips for improving your mood in the midst of the winter doldrums. Not in the mood to tackle the day? Ready to pack it in before 9 a.m.? Here are 10 tips for getting out of a funk and boosting your mood.Curated by Dan DeFrancesco in New York. Feedback or tips? Email, tweet @dandefrancesco, or connect on LinkedIn. Edited by Jeffrey Cane (tweet @jeffrey_cane) in New York and Hallam Bullock (tweet @hallam_bullock) in London.  Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 18th, 2023

"Avatar" filmmaker James Cameron and billionaire Ray Dalio invested in a submarine company. See inside the submersibles popular with the über-rich.

Triton Submersibles offers submarines that cost between $2.5 million and $40 million, and can be used for anything from yacht exploration to tourism. Triton submersibles exploring ocean depths.Nick Verola via Triton Submersibles Billionaire investor Ray Dalio and "Avatar" filmmaker James Cameron back the submarine company Triton Submersibles. The company offers submarines that cost between $2.5 million and $40 million. The customizable submarines can be used for anything from yacht exploration to tourism. In December,Triton Submersibles announced that Bridgewater's Ray Dalio and Hollywood filmmaker James Cameron had each taken an equity stake in the company.James Cameron (left) and Ray Dalio (right).GettyThe announcement was made at an event celebrating the 10-year anniversary of Cameron's Deepsea Challenge expedition — the second time in history that a human made the trip to the world's deepest known point.Its not the first time the two men have worked together. In 2021, National Geographic announced a docuseries called "OceanXplorers" executive produced by Cameron and Dalio. The show has yet to air.Source: Triton Submersibles, National GeographicTriton cofounder Patrick Lahey told Insider that he's known the "Avatar" creator since 2001.Patrick Lahey, Triton's cofounder.Buena VistaLahey said he helped Cameron get a set of submersibles — small underwater watercrafts —ready for his documentary "Aliens in the Deep," which explores the hypo-thermal vents in the depths of the ocean that are known to house unusual sea creatures."I vividly remember him telling me that, 'I make feature films to support my submarine and underwater documentary filmmaking,' and I knew he was a kindred spirit," Lahey said. "He's somebody that really is in love with the ocean just like me."Lahey said he's been fascinated by the ocean since his adolescence. He learned how to scuba dive at age 13 and went to commercial diving school when he turned 18. Twenty-six years later he founded Triton Submersibles with his former business partner Bruce Jones. In 2010, Lahey developed a business relationship with Dalio when he built a submarine for the billionaire through Triton Submersibles.Ray Dalio (left) and Patrick Lahey (right).Courtesy of the Natural History Museum of Los Angeles CountyThe billionaire investor has been outspoken in his support of ocean exploration in the past."Ocean exploration seems to me much more exciting and important than space exploration," Dalio told Financial Times in December. "You're not going to see any aliens in outer space but you will see aliens underneath."Dalio cofounded OceanX, a philanthropic ocean exploration initiative, in 2018. A year later he bought his second submarine from Triton. Lahey told Insider that Dalio helped the company overcome technical challenges that could have become an "extinction event" for the company in 2012. At the time, Dalio offered the company a loan that helped it overcome production issues with its acrylic structures.Source: Financial Times, The New York TimesTo date, the company has delivered 25 submarines.A Triton submersible exploring the ocean.Nick Verola via Triton SubmersiblesLahey said the company has continued to ramp up production in recent years, jumping from building one to two submersibles per year to four to six. He expects the company will soon scale production to reach 10 to 12 per year. "It's still incredibly limited production," he said. "This is not a mass market product. It's sort of the definition of boutique manufacturing.""Subs are incredibly versatile and almost infinitely configurable, so we put tools and equipment on a sub to cater to each client's specific interests," he added. "Some of our clients are interested in just exploring and having fun. Others want to film, so they need to have more elaborate cameras and lighting systems. Others, like Ray, are interested in science so we need to make sure the sub has legitimate scientific tools that can be used to take samples and collect information from instruments that are fitted to the vehicle."   Prices for the submarines range from $2.5 million to as high as $40 million.A Triton submarine completed one of the world's deepest diving operations.Courtesy of Triton SubmersiblesMost of the submersibles cost between $3.5 million and $7 million, per Lahey, who said the price depends on the size of the subs and how deep they can go.The company's smallest submarine fits only one person, while its largest can fit as many as 66 people. Triton has submarines that are designed for shallower dives, as well as deep-diving submersibles that can travel the full depth of the ocean in about three hours.Source: Triton SubmersiblesIn 2019, Victor Vescovo set a deep-diving record in a Triton Submersible.A Triton submarine completed one of the world's deepest diving operations.Courtesy of Triton SubmersiblesIn 2019, Vescovo, an explorer and the cofounder of Insight Equity Holdings, completed five solo dives in the Mariana Trench using Triton's DSV Limiting Factor — its model that is capable of reaching the full ocean depth. Sources: Wired, Triton SubmersiblesIn addition to deep-sea exploration, the submarines can also be used for tourism.Triton DeepView 24 at the Vinpearl Resort in Vietnam.Courtesy of Triton SubmersiblesLast year, a resort in Vietnam launched a tourist attraction using a Triton submersible which Lahey called "basically a Greyhound bus that can go underwater."The Triton DeepView 24, a 24-person vessel, has a completely transparent pressure hull that gives tourists at the Vinpearl Resort an immersive experience to view shipwrecks, as well as reef and marine life.Source: CNN  Lahey said the company's typical buyers are yacht enthusiasts.A Triton Submersible vessel in the ocean.Nick Verola via Triton Submersibles"Yacht owners are, by and large, people who have an interest in the ocean," Lahey said. "They like to go places and experience new things, and there's nothing quite like seeing the ocean from the perspective of a submersible." While Lahey said operating a sub is relatively simple, the company has a lengthy training process.A Triton Submersible vessel getting installed.Andy Mann via Triton SubmersiblesWhen the submarine is close to its delivery date, Lahey said the company teaches either the owner or — more likely — a member of the owner's staff how to operate the vessel. "You don't have to be a SEAL Team Six guy to operate the sub, but to be a skilled pilot, you do need to be able to identify issues and fix them," Lahey said.A Triton Submersible vessel getting deposited in the ocean.Courtesy of Triton SubmersiblesDuring the final weeks before a submarine is delivered, Lahey's team teaches the new operator how to take parts of the sub apart. The team will also take them out on 15 to 20 dives.While the company might be popular with the über-rich, Triton's mission statement focuses on the importance of ocean exploration.Two Triton submersibles exploring a ship wreck.Nick Verola via Triton Submersibles"Triton aims to increase ocean awareness and advocacy while enhancing knowledge and understanding of the ocean through the widespread use of our products, which will continue to challenge conventional thinking and push the boundaries of what's possible through innovation, creativity, and our commitment to excellence," a spokesperson said.Lahey told Insider the company's acrylic structure lets people peek into "another world."Triton DeepView 24 at the Vinpearl resort in Vietnam.Courtesy of Triton Submersibles"It's really immersive. You really feel like you are in that world," he said. "You feel like you could reach out and touch the animals that are outside the hull or that they could swim into the compartment that you're in."  Read the original article on Business Insider.....»»

Category: personnelSource: nytJan 17th, 2023

Transcript: Jennifer Grancio, Engine No. 1

       The transcript from this week’s, MiB: Jennifer Grancio, Engine No. 1, is below. You can stream and download our full conversation, including any podcast extras, on iTunes, Spotify, Stitcher, Google, YouTube, and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ ANNOUNCER: This is… Read More The post Transcript: Jennifer Grancio, Engine No. 1 appeared first on The Big Picture.        The transcript from this week’s, MiB: Jennifer Grancio, Engine No. 1, is below. You can stream and download our full conversation, including any podcast extras, on iTunes, Spotify, Stitcher, Google, YouTube, and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ ANNOUNCER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio. BARRY RITHOLTZ, HOST, MASTERS IN BUSINESS: This week on the podcast, I have an extra special guest, Jennifer Grancio was there at Barclays when the beginning of ETFs and passive indexing really took off on an institutional basis. She was one of the founding members when BlackRock bought iShares from Barclays and really helped drive broad adoption of passive and ETFs in the financial community. Today, she is the CEO of Engine No. 1, which focuses on the fascinating transitions that are taking place in broad strokes across the economy. There are numerous opportunities in energy, in climate, in robotics, in automation, and her firm helps invest in those spaces. Not quite an activist investor, but she has worked with a number of companies like Exxon and General Motors and Occidental, where the input of Engine No. 1 drove significant changes at those companies. They’re a longtime investor than a black hat activist where they’re looking to buy stock Forza, an exit of the CEO and sell once the stock pops, really fascinating story. I found it quite fascinating and I think you will as well. So with no further ado, my interview with Engine No. 1’s Jennifer Grancio. Let’s start out talking about the early part of your career. I’m really curious how you ended up in BlackRock. But before that, you’re working as a consultant. JENNIFER GRANCIO, CHIEF EXECUTIVE OFFICER, ENGINE NO. 1: Yes. I think like a lot of people in undergrad, I went to Stanford thinking I was going to do genetics and science — RITHOLTZ: Right. GRANCIO: — did an internship, pivoted, ended up doing international relations. Then as you head towards the end of college, you figured you’re going to save the world, then I’m going to go work for the World Bank. The World Bank wants you to take out more student debt and get a master’s degree. So like so many other bright-eyed graduates, I trooped off to, you know, one of the traditional professional services professions. But what’s kind of interesting for me about consulting was this idea that you almost apprentice with somebody that’s senior, and you run around and try to help companies and problems. So it seems like a good idea at that time. RITHOLTZ: At that time. GRANCIO: And that’s what I went off to do. RITHOLTZ: So how do you go from that? How do you end up at a place like BlackRock? iShares seems to have been almost an accidental business line from them. Am I remembering correctly, that was a post financial crisis Barclays’ purchase, something along those lines? GRANCIO: Yes, exactly. Yeah. So if you go back, so management consulting, moved back to California and decided I was going to be a California person, not a New Yorker, no offense to New York, spent a lot of time here, all those things, right? RITHOLTZ: Better weather. The geography is beautiful. Sure. GRANCIO: And so I went looking for what I thought would be the best asset management business, I focused on asset management within the consulting space. Like, this idea that somehow if you got portfolio construction and savings right, you help people over time. And so I joined what was Barclays at that time. The asset management business of Barclays Bank was this little firm called Barclays Global Investors based in San Francisco. RITHOLTZ: And that was not such a little firm at that time, was it? GRANCIO: No. It was growing very quickly. And that business was an institutional business. So as an institutional business, we did indexing. We thought indexing was cool. And the iShares and the ETF idea came from, we just had a fundamental belief it was a better mousetrap. So there’s something about an ETF and we could go into that another time. There’s something about an ETF that’s a better mousetrap than a mutual fund. And so for Barclays Bank, we pitched here’s a great idea. Let’s build this ETF business in the U.S. And it’s a way for Barclays to build in the United States. And so we launched the business in 2000. So we launched it right into the dot-com crisis. RITHOLTZ: So from the dot-com crisis to the global financial crisis, what were the circumstances surrounding BlackRock saying to Barclays, yeah, we’ll take that little worthless business off your hands for a couple of hours? GRANCIO: Yeah. And the interesting thing about an ETF business is that it takes a long time to build. And so to your question, around that time, you’re going into 2008, Barclays needed cash. And the index business was starting to take off in the form of ETFs, or at least we thought that, but it was still a relatively small business. And so who were the other people that probably looked at that acquisition included other big indexers, big asset managers who weren’t sure, was indexing going to be a thing or not? Because remember, at the time, ETFs and index were synonymous, but Larry, you know, was more forward-looking. RITHOLTZ: Larry being? GRANCIO: Larry Fink of BlackRock. RITHOLTZ: Who arguably, and I know who Larry is, I just want the audience to know, arguably the purchase of iShares by BlackRock from Barclays could be one of the great opportunistic distressed purchases in the middle of a crisis ever in financials. What is iShares up to now? Like $4 trillion, something insanely? GRANCIO: Enormous. RITHOLTZ: Yeah. And they picked it up for a teeny tiny fraction of that. So what was your experience like when BlackRock took over iShares? GRANCIO: Yeah. So we built the iShares business first within Barclays. And we were a, you know, small but mighty team doing ETFs. And the whole idea I remember of ETFs is to go and to challenge mutual funds and challenge active management. So that’s a big thing to take on. And so as BlackRock work through the acquisition of all of the BGI business, including iShares, we spent a couple of years then getting to know BlackRock, as a little iShares team, and talking about ETFs and fee-based advice and portfolio construction, and all these things that we thought were trends we could take advantage of and use to build the business. But then the business really just got from strength to strength after that acquisition. We came out of the financial crisis, few rocky years in the ETF industry overall. Vanguard decided to get into ETFs in a serious way. BlackRock and iShares launched that core series as a competitive business. So kind of responding to what was going on in the market, and the business continued to grow and grow. And then I think from an ETF industry perspective, we did some important work on trying to protect the category of ETFs. So we did a lot of work with the U.S. regulators, European regulators and run the business in Europe for a while as well, talking about the differences between like a passive index fund, for example, an ETF that’s got commodity exposure and ETF that’s leveraged or inverse, in terms of trying to protect the vehicle and protect the category. And really since then, there’s just been continued explosive growth. RITHOLTZ: In your wildest dreams, did you ever imagine back from the sleepy early days of passive and ETF at Barclays that would grow up to be just the dominant intellectual force in investing, and reach the size it’s reached? What is even after this year, BlackRock has something like $8 trillion? $9 trillion? GRANCIO: Yeah. I mean, the numbers are huge. I think we did, but maybe we were naïve. But our view was, it was a trend that was going to happen. And if you could own the trend, and if you could accelerate the trend, this was a better way to invest. A better way to invest is to have a low cost solution at the core of the portfolio, and then hire people that are deeply capable to deliver alpha. So I would say we thought it could be big. But you know, it’s pretty amazing. RITHOLTZ: So you talk about accelerating the trend. What exactly do you do to help accelerate that trend? How do you drive acceptance of both ETFs as a wrapper as opposed to traditional ‘40 Act mutual funds, and passive versus more traditional stock picking market timing, active investment? GRANCIO: Yeah. I think when the industry first started, so going back, you know, 20 years now, the two things were synonymous. But, you know, let’s take those one at a time. So from a passive perspective, the argument we made as an industry selling passive ETFs was you really had to take a look at what the portfolio is doing over time, total cost, total risk exposure. And when you did that, you often found that there was a way to get better long-term performance and cheaper, by having some index in a portfolio. So that was the story on indexing. And then we kind of kept driving that into this idea of models. So now, you know, there’s a model, a huge amount of money, you know, trillions of dollars sit in models in U.S. wealth. What does that mean? It means a big wire house. Your brokerage puts a model together, this much of Europe, this much U.S., this much small cap. And then you can use index products to fill all those allocations. And so that was the kind of the 20-year build of how did passive get so big. And then ETF as a wrapper, it’s just a great way to get the price at the moment if you’re buying into the public markets, number one. And number two, it’s a great way to manage tax, where if you buy something now and you sell it in 20 years, and the markets gone up, guess what, we have to pay tax on that. But the kind of annual capital gains gift you get from a lot of mutual funds, it can be managed very astutely in the ETF wrapper. And that’s great. Like, that’s great for all investors. RITHOLTZ: Meaning if you’re a mutual fund owner who’s not selling, but somebody else sells and generates a capital gain, that gets spread around to the other older (ph) — GRANCIO: Exactly. So even if you’re — RITHOLTZ: — which doesn’t make sense at all. GRANCIO: I mean, as somebody that’s been doing ETFs for a long time, I say it doesn’t make any sense, whatsoever, because there’s another way to do it. And we’re finally seeing that now. We’re finally seeing a lot of the big mutual fund companies start converting into ETFs. RITHOLTZ: The flows even in a down year like 2022, the flows have all been towards passive, towards ETFs, towards low cost. It seems like a much better mousetrap. GRANCIO: I think it is. RITHOLTZ: But I’m not going to get much of an argument from you on that. So you mentioned Vanguard, we’re talking about Black Rock. Let’s talk a little bit about the role of brand on in the industry. How important is that when you’re putting out either a low cost passive ETF at 3 or 4 BPS, or something more active or thematic on the ETF side? GRANCIO: Yeah. I mean, the role of brand is pretty critical. And if you think about in the index business, if you’re managing it well, there’s not a lot of performance. It’s are you tracking the index? Yes or no. And so that power of the brand is massive. And my observation in this space is that the average investor, the average retail person that’s going out and investing or talking to an advisor, they don’t necessarily know one product provider or investor versus another. But they definitely know who they do business with or who they buy from. So that retail brokerage brand, their advisory brand has a huge impact on them. So to your question on Vanguard, like Vanguard is a brokerage firm, so you kind of know Vanguard. Vanguard does your 401(k), you’ve heard of Vanguard. And so for other people that enter the industry, and this is certainly what we did in the iShares business or what we do now at Engine No. 1, is you really have to be clear on who are you and what is your story because that brand matters a lot. RITHOLTZ: So you mentioned brokerage firms, and Vanguard does 401(k) brokerage. They do all sorts of obviously mutual funds and ETFs. How do you see some of the bigger custodians and actual brokers like Schwab and Fidelity in terms of ETF developments? We know it’s BlackRock, Vanguard and State Street at the top. These guys are no slouches either, are they? GRANCIO: No. I mean, I would say if we go back and we look at the history of ETFs and how they’ve developed, we see State Street, Vanguard and BlackRock. BlackRock iShares is very dominant, and they’re going to continue to be dominant in passive, period. They’re there. They’re big. They’re so big now. And we’ll come back to this later. I personally think there’s some problems with how big they are. But from an ease of buying decision-making perspective, they’re big. They’re dominant. The brokerages were late to get in the game. So Fidelity and Schwab got in much later. They don’t charge fees for those products. And so it makes it harder for them as a kind of a corporate organism to, you know, have that be a big part of their business. And then what we’re very excited about it Engine No. 1, and what you’re seeing with the mutual fund conversions, the big ones at DFA, at Franklin Templeton, and the list goes on, there are many, is that we’re now ready to move active funds into the ETF structure. And that I think is very exciting. But that’s new, that’s very new development. RITHOLTZ: So let’s talk a little bit about Engine No. 1. First, how did you get there from Black Rock? What led that transition? GRANCIO: Yeah. So I left BlackRock very large. I wanted to do a little bit more innovation. And I think sometimes the biggest firms are great, but they can’t always lead from an innovation or change perspective. RITHOLTZ: Right. GRANCIO: So I spent a couple of years, I built an advisory firm, and took a couple years to decide on, you know, what was the next move? And I did some great work with a number of large wealth and IRA firms that were going through an M&A or selling themselves process, did some work on impact investing, actually led me to Ethic and joined the MannKind board, but decided I was definitely going to be a builder, that there was this opportunity to do something different than traditional mutual fund and passive ETF. And so I started looking for what would be the thing I wanted to build with partners, and then I met Chris James. RITHOLTZ: And did you launch Engine No. 1, or did you join him when it was already existing? GRANCIO: We launched it together. Going back, you know, before we started the firm, so Chris James is our founder at Engine No. 1. And Chris’ background is hedge fund and private fund investments. And what he’s really known for, he’s known for taking an extremely long view on something and doing the work to let’s say, where is the opportunity as you go through a huge transformation or transition? So Chris was hard at work on this and wanted to reach into the wealth space. So rather than just doing products that were private and you could help institutions invest, what could we do that was broad and into the wealth space? So I joined him to collaborate, given my background on that side of the business. And the idea of Engine No. 1 is just to help people benefit from these huge transitions and transformations that are very much not the backwards-looking. Look, Google and Amazon got great. You know, our portfolios have a lot of growth in tech, great. There’s a lot of money to be made in the energy transition, transportation, agriculture. And so really, the idea of the firm is to be able to look forward, find mispricing, and make money as we go through these huge changes. RITHOLTZ: The firm’s name is intriguing. Where does Engine No. 1 come from? GRANCIO: The first firehouse in San Francisco is actually a couple of blocks from our office. And in talking about what we were trying to do, which is maybe it’s grandiose, but if you think about it like capitalism works. And what we were agitated about is we saw the market, you have ESG over here, very small. We think old school ESG does not work. We have a strong view on that. We’ll come back to that. Indexing, too many shares are locked up in indexes. Index don’t vote their shares. And then maybe most important of all, we’re going to need a General Motors and Ford to actually be able to do this huge transition from internal combustion to battery electric vehicles. And so, you know, actually, the firehouse is the center of the community, right. And if you think about how a community survives, the firehouse is the center of the community. It takes care of itself. A well-run business really should be as simple as sort of taking care of the environment, it’s in being aware of it. And in public markets, that means you also have to be able to adapt and manage their change. RITHOLTZ: So tell us a little bit about the strategies you guys employ. What are your key focuses? How do you deploy capital? GRANCIO: Yeah. As a business, we run an alts business, and then we run the ETF platform. So if you think about it very simply, these huge ideas about transition and transformation and how to make money are very common across what we do. But we have two businesses. And the big ideas are these transitions and transformations, and how do you take advantage. And so when we look at public companies, we look at every single company, and we look at what their path is through time. So I think this is one of the problems with a lot of investment strategies right now is they’re looking to short term. And then we build the impact or externality data, we just build it into the financial model, right? Because the data is out there particularly on governance, particularly on environmental issues. And when we do that, in the sectors that are in transition, let’s take energy, for example. If you’re an oil and gas company, and you don’t account for the emissions that you’re dealing with and you don’t decrease them over time, you’re going to have a problem. And we saw this when we started building the business that a lot of these companies were heading towards zero terminal value. So let’s take Exxon, for example — RITHOLTZ: Okay. GRANCIO: — where if you take Exxon, and Exxon keeps doing long-dated fossil fuel projects, and has no plan to reduce emissions at any point in time, and has no plans to develop a green business. Well, that’s not very good for Exxon stock when we get to 7 or 10 years out. And so we see a lot of these opportunities where like it’s just math. The capitalist system is supposed to have the company govern itself, so that it’s making money through time. It has a longer duration of business, and it has a higher value. And that’s the kind of the way that we work in everything that we do. RITHOLTZ: So you mentioned environmental issues and impact. You mentioned governance. This sounds a lot like two-thirds of ESG. GRANCIO: Yeah. We think the way people use that label is a little bit problematic. So people often use that label looking backwards. RITHOLTZ: Flash that out a little more — GRANCIO: Yeah, yeah. RITHOLTZ: — because when I hear someone mentions ESG, I typically think of an investor and for the most part, as we go through this generational wealth transfer, you do surveys of investors, husband passed away, the wife tends to be much more empathetic with issues of equality and environmental concerns. And the next generation is much more concerned. So it seems like there is a desire to express those beliefs in their portfolios. Why does that not work with ESG? GRANCIO: Yeah. I mean, I guess our view on that would be, you can always express values in a portfolio. But if you’re going to express values in a portfolio, say that I am expressing my values in the portfolio, which is different than the core concept of managing money over time generally, for the person that’s doing the managing is to be a fiduciary — RITHOLTZ: Right. GRANCIO: — and drive good outcomes and strong returns. And in general, for the investor, is to drive returns over time. And so the way we think about it is, really, you can do that. And any business that is going to survive over time has to be sustainable, has to address or basically cover their impacts, right, after the cost of capital so that they can be profitable over time. So instead of thinking ESG means it’s values based, I don’t like the company, they’re bad, I’m going to screen them out of my portfolio. We don’t think that’s a great way to manage your core portfolio over time. We think the better way is you simply have to engage with the companies to make sure that their most material impacts that’s financial data, right? That’s risk data if you don’t manage your emissions as an oil and gas company. And so let’s build that into just investing to make returns as opposed to this special class, which, you know, it devalues base and ESG tends to kind of infer value over performance, right, or divesting from companies that you don’t like. And we don’t think that’s a great way to invest. RITHOLTZ: So let me push back a little bit on the low carbon strategy. It seems like it’s half of the economic equation because people seem to be approaching entities like ExxonMobil and others, the suppliers of the carbon-based fuel. What is that doing if you’re ignoring the other half, the consumers? So every other company that is not a carbon energy producer is likely to be a carbon energy consumer. They’re running factories. They’re shipping goods. They’re having offices. Why focus on one half of the equation and not the other? GRANCIO: Yeah. I mean, I think that’s the right question. And we focus on both. And so let’s take for a minute the energy industry, and then the transportation or auto industry. That’s an example of that kind of handshake or handlock, right? So in the case of the car companies, that’s consumption. So if we’re consumers and we’re driving cars, which we still do and people are planning to do in the future, the car company can switch from encouraging the behavior of driving internal combustion engines, which have very high emissions, or the car company can know that the consumer demand is shifting a little bit and they can build a car that is an awesome battery electric, reasonably priced vehicle. And then they can capture that shift in demand. And that’s really good for the car company. So actually, we a hundred percent believe that this has to primarily be driven on the consumer demand side and on my first piece of that. So if I’m a consumer, I buy a car, you’ve got to start with the car company. However, if you look at global emissions, you know, 34 percent of that today comes from the energy companies. So at the same time in parallel, there’s still an opportunity to work with those companies on, as battery electric comes up, as fossil fuel comes down, how do those companies make a lot of money 9 or 10 years from now as we go through that transition? RITHOLTZ: Explain that 34 percent. Because, again, it’s that someone is a buyer, someone is a seller. They’re not burning 34 percent of the fossil fuels, they’re selling it to consumers — GRANCIO: That’s right. RITHOLTZ: — who were burning it. Like, there are some low carbon ETFs. I just don’t understand. It’s why the war on drugs failed, if you’re only going to interdict the supply but ignore the demands, you’re not going to be successful. GRANCIO: Yeah, that’s right. I mean, and we think from an investment perspective, if you want to solve this problem on how do you take emissions down, we think that problem can be solved and you can make money by owning the people that are going to win. So you asked before, like, what do we do? What strategies do we run in the ETF business? Our active team, it’s effectively hedge fund investors. So they’re very concentrated portfolios. We believe we’re right. There’s a handful of names, like under 30 names today in the portfolio. Ticker is NETZ, Transform Climate (NETZ), and what that portfolio holds is it holds companies that have emissions. But we believe that the companies in the portfolio are the companies that have the right strategy to, if I’m an energy company, I’m producing energy. There’s demand for energy, that’s what I do. But I’ll tell you my emissions, I’ll do methane third-party monitoring. I’ll do all the right things. So that from a social license to operate perspective, I’m at the top of my peer group. And in all cases, they have a strategy whereas fossil fuel demand declines, not today, but in 7, 10 years, they have a strategy to actually make money and still have value. So we’re picking the top best performing energy companies. We’re not saying energy is bad. Energy is essential, and we need that energy in the transition. And the portfolio then also holds the car companies that we think win. RITHOLTZ: So let’s talk about a couple of names. So a couple of energy names from NETZ and a couple of core companies from NETZ. GRANCIO: Yeah. And so one of the names we had in the portfolio, which is actually so highly valued, it goes in and out, depending on if it’s overvalued — RITHOLTZ: Right. GRANCIO: — it’s an active fund, is Occidental (OXY). And that’s an example, they were really the leader in the space. So they had started to develop greener businesses so that as fossil use comes down, they have another business and they’re competitive. That’s great for long-term value of the company. And — RITHOLTZ: What are their green businesses? Things like solar and wind or — GRANCIO: They have a range of things that they do in that space, but think of it as committing early to find ways to make money, having these people on staff, on the board that know how to run green businesses. And then from an emissions perspective, also, they were very early on telling us, being very transparent on Scope 1 and 2, and agreeing to oil, gas, methane partnership emissions with third-party monitoring of emissions, which we think is critical because again, methane emissions leaking, that’s probably the biggest thing. RITHOLTZ: Especially with natural gas. But with pretty any form of car being — GRANCIO: That’s right. RITHOLTZ: — capture, your carbon removal from the ground, that’s a big risk. Methane is even worse than CO2 in the atmosphere, right? GRANCIO: That’s right. And that’s right, and that’s some of the active ownership work we did on that portfolio, where Conoco and Devon are companies that we worked with, to join the methane third-party verification partnership this past summer. And that’s when we talk about Engine No. 1 as active owners, it’s not always, you know, the black hat activist. We actually haven’t done that other than Exxon. But the ability to really understand their business and go in and work with them. And actually, having them methane verified is a big deal, because then people understand what you’re doing in that part of the business. And it gives you license to operate because we need that energy source. RITHOLTZ: What are the car companies that are in NETZ? GRANCIO: General Motors is in NETZ. Ford has been, it goes in and out of the portfolio, based on how they’re doing, managing some of their supply chain constraint issues. And then Tesla is in the portfolio. But GM is at a much larger weight than Tesla. And then Tesla went out of the portfolio for governance reasons. RITHOLTZ: Because? Give me more specific. GRANCIO: Twitter. Because of Twitter. So the way that we manage that portfolio, basically what NETZ is, is you’re holding some of the biggest emitters, and you’re holding this 1.8 metric tons of emissions a year, so not low carbon, high carbon. And then what we expect is that those companies are going to take that number down to less than half within a decade. And so if you care about impact or sustainability, yeah, that’s great. That’s a huge win. You’re holding the companies, watching them. They’re taking emissions down. But if you want to make money, you’re holding the companies that are providing energy, but doing it in a way that they have a social license to operate. And then sort of come back to your Tesla example, all of this starts with governance. And so if a public company is going to make money over years and years, it’s all about governance. And do you understand your markets? Do you understand how things change? And so if you’re running Tesla and you have a huge job to do in terms of scaling that business, but you’re also doing other things at the same time — RITHOLTZ: Assess. GRANCIO: — and saying you don’t have time to run Tesla, well, that’s kind of a governance issue. RITHOLTZ: So when I looked at the acquisition of Twitter which started out as a lark, $44 billion, the market drops, wild overpayment. The bigger issue is if you think about who’s Tesla buyers, they seem to not be the people who Elon is playing to on Twitter. And in fact, as much as there are a lot of fanboys and I think you have to give Elon full credit for moving the entire auto industry to EVs, I think all the legacy-makers looked at him and said, we can’t let Elon do to us what Bezos did to the book industry and the booksellers and a dozen other industries. But it seems like he’s alienating that core middle left, all those liberals we’re going to own on Twitter. He seems to be chasing away a lot of his future buyers of Tesla’s. GRANCIO: He may be. That’s good news for GM NASA. We’re okay. We’re covered on that one. RITHOLTZ: And to say nothing about valuation issues and other assorted things — GRANCIO: Right. RITHOLTZ: — I’m assuming this is in strictly an ESG checklist. You looked at the usual — GRANCIO: Not at all. Yeah, we looked at the usual things and that’s maybe our main point, which is the people get in our industry in particular. They get stuck in old frameworks, right? An ETF is an index fund. An activist is somebody that comes in short term and fires the CEO. So I think we need to be careful of those sort of short ways and shorthand ways of thinking in investments. Our point of view is that there’s a lot of data available now. We have a huge amount of data. Take the climate and environmental-related issues. We have a lot of data on carbon, and we can estimate carbon prices. And so in a basic fundamental financial model, you can start with your old traditional financial model. But you can add in, we do this, we can add in the monetization of those emissions. And then as you build out your financial model, you can look at how the company reduces them over time. And we see those as purely financial metrics, right? That large externality for a company is a risk or financial measure. It’s not some separate ESG dot bubble rating system. It’s just their numbers, it’s math. It should go into the long-term valuation of the business. RITHOLTZ: Let’s talk about the Exxon situation. You accumulated a relatively small number of shares, and then reached out to management. Tell us about the process and how they reacted to your overtures. GRANCIO: Yeah. So from a team perspective, we started by making an economic case. So we did the work on here’s what we would do differently, here’s how we think the value of the business wouldn’t be higher if we did this. And the suggestions on what we would do differently included disclosure of emissions. It included better capital allocation decisions between this sort of short-term energy transition period. And we don’t know when it’s going to be, thanks to, you know, Putin and the Ukraine, longer than we thought a year ago. RITHOLTZ: Right. Right. GRANCIO: But at some point, we’re going to start to really pivot into an energy transition. And so what’s your best thinking, Exxon as a company, on what your business looks like, and your capability at a board level to extend the duration of the business, do things that may be renewable, or whatever they may be. What is it that you can do that’s in that area? And so those were the things that we requested. RITHOLTZ: They were receptive to that? GRANCIO: They were not receptive to that. But those are the things that we requested, which is usually how these things start. RITHOLTZ: So .02 percent of outstanding shares doesn’t exactly put the fear of God into them. Why a toe in the water and not a more substantial stake? GRANCIO: Exxon, going back to when we started the proxy campaign — RITHOLTZ: They were giant, right? GRANCIO: They were giant, but also they were a giant in terms of the big asset managers had not been able to get them to pivot from a governance perspective. So there were known concerns about governance. A lot of the big investors take a slower approach to work with management, not cause too much change, request changes. And there just hadn’t been any progress in this case. So we were able to have conversations. And the team did a huge amount of work with investors and passive investors, and active investors, walking through our economic case. If these things happen, better governance, better economic performance, and that, we think, is what allowed us to rally support. And as we were rallying support, as you see in this situation, I’m sure Exxon was talking to some of those investors as well. And so as we went through the campaign process, we saw some of these changes, changes in capital allocation decisions, and intention to launch a green business. So some of these changes started even before the proxy vote where new directors were elected onto the board. RITHOLTZ: So we talk a lot about specific companies. How do you look at the macro environment and geopolitics? You mentioned Putin’s invasion or the Russian invasion of Ukraine. Arguably, that’s going to accelerate the greening of Europe in particular, and the move to alternative energy sources, not dependent on Russia, which is all carbon. GRANCIO: Yeah. And I think to some extent, you can’t control what is the moment in time where the energy transition happens, right? However — RITHOLTZ: Right now. Right. Aren’t we more or less in the midst of this today? GRANCIO: We are in the transition. Absolutely. But we think that if you wanted to not use fossil or carbon intensive now, it wouldn’t possibly work. RITHOLTZ: Right. GRANCIO: We’re not ready to be transitioned. We are in the transition. And so the way we think about it is we have to be very savvy about where do you have a brown business? Where can that brown business be gray? Where does it start to use green techniques? Natural gas is a great example. We need natural gas. So how do you move natural gas in a way where you’re looking at methane. You don’t have methane leaks. You’re using green energy and electric sources to process the natural gas. There are a lot of things we can do even while we’re using fossil to be cleaner, nd to put the people that are cleaner and doing fossil in a better position to sell versus their competitor, because we are seeing these changes. And we do have a lot of people looking at carbon footprint as they’re buying or investing in companies. RITHOLTZ: So my colleague, Matt Levine mentioned your win. And now says, when they see you coming, you are no longer presenting as a scrappy, small startup. You’re bringing some receipts to the table. Hey, Exxon knuckled down. Now, you and I have a conversation. How has that changed since that win? GRANCIO: Yeah. We started with Exxon effectively. And so I wouldn’t say the next day, it was a sea change in a positive way. I would say it’s complicated, because after you’ve done that, the board and the CEO are a little bit worried about what our intentions are and it takes time to build those relationships. And Chris does a lot of this work directly with the CEOs and the companies that are in the portfolios. And it takes time to build trust. But our relationship with them is basically having modeled their business ourselves and modeled all their competitor businesses, and have gone to kind of up and down the supply chains. And once we get to know each other, we’re giving them what they find is actually some very helpful point of view on if I like your business, I think this, you know, consumer demand is going to flip sooner, you’re going to miss it, or how organized are you on supply chain? What are your bottlenecks? And so it’s become really very constructive with a lot of the companies that we work with. RITHOLTZ: It sounds like your early training in the consultant world wasn’t for naught. This is almost a hybrid between activist investing and consultants. GRANCIO: And just investing, right, high quality investing means you really have to understand what a company strategy is and what are the bottlenecks, what are the places where they may miss. If you understand those, you can make those faster, shorter, better, less risk. Then that’s really positive for being more sure that the company increases in value. RITHOLTZ: So let’s talk a little bit about your toolbox. You mentioned proxy voting, you mentioned modeling. What else does Engine No. 1 bring to the table as ways to get management to see the world from your perspective? GRANCIO: Yeah. And part of it is the data science work that we do around the sizing of emissions, comparative emissions, monetization of emissions, so call that our total value approach to looking at the externalities of these companies. So we bring that. We’ve done the modeling all the fundamental work that we do. And then it’s very active engagement, where we want to stay engaged. That’s part of where the alts business came from. If there’s something in the private markets that could work differently to help a big public company move, can we make connections? Can we help that move along? And then proxy voting is important. So most of what we do is this kind of very intense active engagement. And we’re active owners of the company, not always an activist in a traditional meaning. We also launched an index product. So you know, our view is that you really have to hold these companies if you want to own the winners over time. And if you want to drive change, you also have to hold the companies, you can’t divest. A problem in the dominance of the current index providers is that they’re big and it’s complicated to vote shares, because you have people on different sides of every issue. So while we’re at it, put a new index product out on the market, that ticker is VOTE, which is pretty simple. It’s literally an index. We vote the shares in line with our economic outcomes, and we post them as soon as we vote. So a little option for people that still want to use index instead of active. RITHOLTZ: That’s really interesting. We’ve talked about Exxon so far, and Tesla and Ford. Tell us about your involvement in General Motors, what attracted you to the company, and what sort of positioning do you have with it. GRANCIO: Yeah. And General Motors, it’s going to take some time, right? So General Motors has been in the portfolio since we launched NETZ and still is, and has stayed there. And when we work with General Motors, a lot of our work has been about how do we accelerate the transition to battery electric vehicles for them as a manufacturer, and not for an ideological reason, purely because we think the consumer demand is shifting more quickly. RITHOLTZ: That’s where the market is going. GRANCIO: Right. That’s where the market is going. RITHOLTZ: That’s where the consumer demand is moving. GRANCIO: Again, this is an economic argument for us in working with General Motors, that the faster you get to all battery electric, which means you need to build the battery plants, you need to build them bigger, you need to build them faster, you need supply agreements locked up for the rare metals, and then you need to work on bringing the cost of batteries down. Because as all of that happens, GM makes 8 to 9 million cars a year. And so if those cars are all battery electric vehicles and the battery cost comes down, you know, what’s Tesla’s multiple, right? They have the opportunity to go from where the GM multiple is today, which is very low, very depressed value stock, all the way up to what producing BEVs at scale is going to look like. And that’s a huge value creation opportunity. RITHOLTZ: Let’s talk about what’s going on in the world of ESG and greenwashing and wokeism. There’s so many things happening here and I think people don’t really use these buzzwords appropriately. Let’s start out with greenwashing. Tell us your view of it and why it’s problematic. GRANCIO: Well, I think if you could do everything from scratch, I get this a lot from people that run large asset management companies, they’re like, gosh, I wish I could just start everything from scratch again in this environment. So I think the reality is, if you’re running a strategy and you don’t care, or you don’t have risk metrics on, let’s say, the environment and your strategy, it’s very hard to fit them on top. And I think a lot of people get caught in that from a greenwashing perspective. What we do is we start from scratch. We think about these material impact things as financial data, and it’s just part of our process. And so there’s no greenwashing there. But for people that were investing in something and now want to take advantage of a moment in time, or people that are investing and actually don’t really understand how environmental risk factor into the portfolio, I do think you just have to take a timeout and go back to basics and better articulate what the strategy is and what you’re actually doing to the market. And if it’s not a green strategy, you kind of have to say that. RITHOLTZ: It seems like a lot of this has just been on the hot buzzword of the day. GRANCIO: Well, a lot of our society right now has been on the buzzword of the day. So I think we need to be very careful about that when it comes to investing. RITHOLTZ: So let’s talk about wokeism. You’re describing ESG as sort of a risk management tool to filter out certain potential problems down the road. But if I pick up the Wall Street Journal or the New York Post and flip it to the editorial section, all I hear is woke capitalism and this is what Disney is doing, and this is what Apple is doing, and this is what Nike is doing. Is this really woke capitalism? Tell us what’s happening in that space. GRANCIO: Yeah, I think we have to remember what capitalism is. And then I’m not sure what we mean by woke, which is part of the problem. So your capitalism is meant to be you in public markets kind of, you know, put that in the private markets as well. It’s meant to be you have a set of financial shareholders, you have other stakeholders. You’re making money for the shareholders over time. That’s the definition of capitalism. It’s really hard to make money for shareholders, the financial shareholders over time if you don’t treat your workers well or you destroy the community in which you live. That’s just kind of good business or doing business the right way. I think we sometimes get confused when we talk about values or practices, and you can’t link it directly back to financial returns. So, listen, when it comes to climate, we feel like we can do a pretty good job with the data out there, to link how a company handles climate and environment with how they perform as a stock over time. You know, there’s not enough data on the social side. The research is spotty. I really hope there’s better data. I hope the research gets better. I hope we have causality there. But I think as investors, we have to be careful what we’re talking about. If the company has less emissions, they get credit for trying to do the right thing and the stock price goes up. That’s capitalism. Where from a values-based perspective, we want to ask a company to do something, that’s a little bit different. So I think that distinction is really important. RITHOLTZ: And it’s pretty robust then on governance, if you — GRANCIO: Yes, it did. RITHOLTZ: — elevate women to senior members, if you have people on your board that are diverse. Those companies historically have outperformed the companies that have not. GRANCIO: Yeah. And the board, for a minute, is another one that’s very hard to reduce into one stat. So if you think about all the research that’s been done on boards, in Engine No. 1, we do a lot of work with academics. So we’re always trying to look for these places where we’ve got data and causality, and we can link it to economic outcomes. And when it comes to boards, what a lot of the research would tell us is if a board is deeply non-diverse, that first, if you add one diverse person or thinker, they may actually have worse performance. But if a board starts to have multiple varieties of diversity, and the board listens to the diverse points of view, those are the boards where we get the real outperformance. And then remember, it’s a board. So it’s not just diversity of thought, it has to be diversity of capability. Because as these companies go through change, you know, you need other CEOs that have been successful through change. You know, if you’re an old school media company, you need people on the board that are successful with where the puck is going. So I think we have to look for both of those kinds of diversity. And boards that listen to each other, have diversity and have that important diversity of capability, absolutely, those are going to be the highest performing ones. RITHOLTZ: So we talked about Exxon. We talked about GM, and Ford, and Tesla. What other companies are you looking at as being on the cutting edge of change to take advantage of this transitional moment? GRANCIO: Yeah. I mean, one of the things we’re excited about, I can’t talk about the product because we’re not through the SEC with it yet — RITHOLTZ: Right. GRANCIO: — although it’s in filing. But from a theme perspective, we’re super excited for the U.S., from a U.S. competitiveness perspective. What happened during COVID is supply chains were too global, too fragile, and they broke. RITHOLTZ: Right. GRANCIO: And so what we’re already seeing, and we’re going to see a lot more of this in the next few years, is we’re seeing a huge resurgence of manufacturing jobs in the U.S. and it’s going to be great for a lot of these communities. So we see semiconductor plants. We see battery plants, Michigan, Tennessee, Kentucky. RITHOLTZ: Arizona is starting a big chip — GRANCIO: — Texas. Exactly. So it’s happening already. There’s a huge increase in manufacturing. And then as that happens, if you build a manufacturing plant, there’s a huge job multiplier. You have people come in to build the plant, and people work in the plant, and people work to move goods in and out of a plant. And we’re going to see a huge growth, we believe, in railroads. So if you’re going to increase manufacturing in the North America, guess what, you don’t need to ship things overseas. You need better, more effective railroad, continuing to strengthen the lines and the movement of goods around the U.S. And then automation, so good and bad is, you know, we have less birthrate and less people coming to the U.S. And we’re going to have a huge number of quality jobs. And so companies like Rockwell Automation, that high quality jobs and brand new factories, with automation to assist in the manufacturing. It’s going to be pretty awesome from an investment team perspective. RITHOLTZ: So Rockwell just isn’t terrifying us with YouTube videos of robots that are coming to kill jobs (ph)? GRANCIO: No. The high quality blue collar, if you will, workers and all these new plants, they’re not going to be enough of them. And they’re going to be happy that robots are there to help them RITHOLTZ: Really quite interesting. So let’s talk a little bit about some of the political pushback to the sort of investing you do. Maybe Florida is the best example, passing laws to punish a specific company, Disney, who objected to Florida’s anti-LGBTQ sort of legislation. Is the environment changing for this sort of proxy voting and criticism and working with companies? Or is Florida just Florida and you know, it’s kind of a one-off? GRANCIO: Listen, I think companies have consumers. And so if I’m a company, if I’m Disney and I have consumers, and I feel like my company needs to stand for something because it allows me to serve my consumers to say my brand has value, that’s something that Disney is going to have to push for. So I think, first of all, when it comes to public companies, some of them have one audience, some of them have another audience, and they may need to behave in ways to make their audience feel good so they can be in business and sell their product. And I think, separately, if we talk about proxy voting, successful proxy votes should be economic. So back to the kind of fiduciary concept we were talking about earlier. So if a proxy vote says, you know, can you please disclose more information about your workforce? That’s helpful to investors. Great. That often makes sense to us. If the proxy vote says, I don’t like this thing you do, please don’t do it. But there’s no economic causality. RITHOLTZ: Right. GRANCIO: I think it’s hard for that to be a proxy voting issue versus a values-based conversation with the company. So our belief is proxy votes matter. We should all use our vote. But proxy voting is a tool to drive kind of long-term economic performance with companies. Sometimes there are just value-based issues that shouldn’t be tackled through proxy votes. RITHOLTZ: I know I only have you for a limited amount of time. So let’s jump to our favorite questions that we ask all of our guests starting with, tell us about your early mentors who helped to shape your career. GRANCIO: Yeah. It’s funny, I don’t have a lot of mentors where it was that one guiding light. I found that I picked up little bits and pieces from different people. So Condi Rice was a provost when I was at Stanford. RITHOLTZ: Really? GRANCIO: And so it was that inspiration that sort of sent me off down the international relations path. There was just a level of smarts and confidence that I really appreciated, that I picked up from her. And then a professor in business school who said women can definitely have it all. But you’re kidding yourself if you think you can have it all at the same time. So, like, pace yourself, Like, go after it, but pace yourself. You can’t literally do it all at the same time, which is good advice. And then I think there are a lot of people for me, where I learned one or two lessons from different people. And now, I do a lot of mentoring of other people. And that is my overarching suggestion on this is you got to ask a lot of questions. And you don’t always have to have a lifetime relationship with everyone, but get any nugget you can get and run with it. RITHOLTZ: I like it. Let’s talk about books. What are some of your favorites and what are you reading currently? GRANCIO: So Maya Angelou is actually a favorite of mine. I find it relaxing and it’s so different than what I do every day, and kind of American and lyrical. Harry Potter, one of our kids is younger, so working our way through Harry Potter. And then the Daniel Kahneman Thinking Fast and Acting Slow, I read that last year. I like that a lot because you got to remember sometimes how our brains work. And the fact that we rush to things and we shortcut, and we group things. And so I find that helpful sometimes and just being calm about how else can we solve a problem, or why is somebody reacting the way that they do. RITHOLTZ: What sort of advice would you give to a recent college graduate who is interested in a career in either impact ESG activist, whatever you want to call it, type investing, or ETF and passive investing? GRANCIO: Well, first, I’d say those are great areas to go into. You should go into it. And definitely learn how to invest, learn how to be an investor. Don’t stick to one fad or one mousetrap. If you can learn how to be an investor, or how investors think, that will serve you so well in our business. And I guess to new graduates, I would say don’t give up hope. It’s going to be a bad job market. So take those internships, be a little bit scrappy, and just learn from whatever that first job is, two years in, because you’ll pick up a phenomenal amount of information. And if it’s not what you love, great, then go do something else after it. But it’s a great place to build a career. RITHOLTZ: Really interesting. And our final question, what do you know about the world of investing today that you wish you knew 30 or so years ago? GRANCIO: I think it’s that the overall portfolio construction matters, right? So as an investor, thinking about when you build, like when we build Engine No. 1, we built products or we put strategies out into the market, the more you can make them balanced and with some duration. So if somebody puts something in the portfolio, they sort of understand what it’s going to do, and what the return stream looks like and what the risk looks like, as we’re investing and then selling to other people. I think that ability to build products that are durable, and it’s clear what they do is really, really important. It lets you build your brand. It lets you build trust with the investors. RITHOLTZ: Really interesting. Thank you, Jennifer, for being so generous with your time. We have been speaking with Jennifer Grancio. She is the CEO of Engine No. 1. If you enjoy this conversation, well, check out any of our previous 450 interviews. You can find those at iTunes, Spotify, YouTube, wherever you get your favorite podcasts. Sign up from my daily reads at You can follow me on Twitter @ritholtz. Check out all of the Bloomberg podcast @podcast. I would be remiss if I did not thank our crack team who helps put these conversations together each week. Sarah Livesey is my audio engineer. Atika Valbrun is my project manager. Sean Russo is my head of Research. Paris Wald is my producer. I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio. END ~~~   The post Transcript: Jennifer Grancio, Engine No. 1 appeared first on The Big Picture......»»

Category: blogSource: TheBigPictureJan 17th, 2023

A leaked Google memo compared it to slime mold

It's like the start of a joke: What do Google and slime mold have in common? A lot, says a memo from an ex-Googler. Hiya, I'm deputy editor Jake Swearingen, on my last day filling in for Diamond Naga Siu. You've been a wonderful audience; please tip your email server.It's like the start of a joke: What do Google and slime mold have in common? A lot, says a memo from an ex-Googler comparing the org to a "slime mold." It's not exactly an insult: Both Google and slime molds solve complex problems sans brain or central coordination. (A key difference: Stanford grads aren't desperate to intern at a slime mold.) But with ChatGPT setting off alarm bells inside and outside the org, Google should probably move faster and with more intention than slime mold. Just before we jump in, Matt Turner, the editor in chief of business at Insider, is at the World Economic Forum in Davos. He will be posting notes and videos to his LinkedIn all week. You can follow along here — and read his latest post here. Now, let's get started.If this was forwarded to you, sign up here. Download Insider's app here.AlbyDeTweede/iStock/Getty Images1. Google "slime-mold" structure. Reporter Hugh Langley got his hands on "Why everything is so darn hard at Google," a memo penned by a former Google program manager during his long tenure at the company from 2008 to 2021.The most memorable part of the memo compares Google's bottom-up organizational structure to a "slime mold," highlighting how both Google and a slime mold can work independently but still come together to solve complex problems. It's a strength and a weakness: A culture that prizes autonomy can accomplish big things, but the larger the organization grows, the slower things get. As each fiefdom within Google operates on its own, Google engages in "messy" behavior that can be "hard to predict."  Per the memo, this all leads to a "coordination headwind," which is why at Google even "seemingly simple things seem to take forever."The version of the memo Insider obtained was last updated around 2019. Google added over 70,000 employees since then, up 57% to 186,779 in the first nine months of 2022. Concerns with Google's bureaucracy aren't new. In 2018, more than a dozen vice presidents at Google sent an email to Google's CEO, Sundar Pichai, warning him that the company was experiencing growing pains.Click here to read more on Google's mold problem.In other news:Apple CEO Tim Cook.Stephen Lam/Reuters2. Disrupting Apple and Google. The two tech titans have been on cruise control for a decade plus, with Google owning search and Apple building moat after moat around its iPhone revenue. But this year Google faces a push from ChatGPT, and Apple is being forced to open up its App Store. Don't write their obits yet, but it's going to get interesting.3. Radical salary transparency. Writer Aki Ito decided to tell everyone, from coworkers to first dates, her salary, broaching one of the taboo topics in modern life (outside of Blind posts, of course). She asked other people about their salary too. The result: For the first time in her career, she asked for a raise during her annual review.4. Cheap Teslas won't save Elon. Tesla is cutting prices by up to 20% as it tries to juice demand for its cars. But bigger and better competition is coming, and discounts are a band-aid on the larger problem of how Elon Musk and Tesla fare when every manufacturer has its own Tesla competitors on the market.5. Salesforce may cut deeper. The pain isn't over at Salesforce, with insiders telling reporters Ellen Thomas and Ashley Stewart that another round of layoffs will hit in February, after the end of its fiscal year. More worrying, leadership may be looking at cutting another 10% of staff on top of the 10% already on the chopping block.6. Sex, art theft, and privacy: AI avatar creator Lensa exploded in popularity at the tail end of 2022. Now it's dealing with charges that it sexualizes women, steals from artists, and collects personal data. 7. Shopify sizes up. Shopify's brand has been a cute and cuddly e-comm platform for small businesses to get their start, with the average Shopify merchant making $35,000 in sales a year. But now it's ready to go big, rolling out a suite of new offerings for massive retailers and teaming up with brands like Mattel, which did nearly $5.5 billion in sales in 2021.8. Ex-FTX.US president rips into SBF. Brett Harrison was, until recently, the president of FTX's US affiliate. He pulled back the curtain on problems at now-bankrupt FTX and "insecure" Sam Bankman-Fried in a long Twitter thread — here are the top 10 things we learned.Odds and ends:Exterior view of the Twitter office in New York on April 26, 2022.Kena Betancur/Getty Images9. Twitter is literally buggy.  Twitter staff at the company's New York offices have spotted cockroaches in employee areas including showers and a changing room at the Chelsea office, sources told Insider.10. Podcast recs. We asked investors at JetBlue Ventures, Mighty Capital, and other VC firms to share their favorite listens for staying on top of tech, and they gave us the 11 best venture capital podcasts going right now.Curated by Jake Swearingen in New York. (Feedback or tips? Email or tweet @jakeswearingen.) Edited by Hallam Bullock (tweet @hallam_bullock) in London.Read the original article on Business Insider.....»»

Category: worldSource: nytJan 17th, 2023