You're listening to Bloomberg Business Week with Carol Messer and Tim Stenebek on Bloomberg Radio.
So we recently reported on how the US Supreme Court is near decisions on the use of affirmative action at colleges and university. It's something US businesses are watching very closely. So by the end of this month, I mean there's only a few days left, matt Leal experts predict that the US Supreme Court will ban race based admissions in higher education. You and I have talked about this, Yeah.
We have.
And you know, it's a very interesting and controversial issue, right because a lot of people are for it, and they think we need affirmative action to make strides that we clearly haven't yet by market means. And there are those who say this is just using discrimination to reverse the ills of discrimination.
So yeah, and Business Week did actually talk to different individuals about it, and some said, yep, I definitely benefited. Some said, you know what, I don't think it's a good thing. And these are people who you know, had access to affirmative action programs that actually did something for them. So I'm curious nixt's guess has to say and how it kind of plays into the financial arena. Let's head to Oakland, California, where we find a lumin Capital managing partner,
Darren Dotson on zoom from Oakland. Darren, Nice to have you back with us. I do want to start with those Supreme Court decisions because it does feel like there's a wave making its way through the country. What do you think about this because companies are watching too, because they are caught in the crossfire of all of this, their initiatives that they put into place, and yet you see kind of from a legal perspective, the winds are changing.
Yeah.
Thanks, it's great. It's great to be back. And what I would say is that from our standpoint at a looming capital, a lot of the elements that we're looking at in terms of the waves of change within the country result back to the asset management business and the fact that only one point four percent of eighty two two trillion dollars in capital or managed by women and people of color. So we think that that's well believed.
To repeat that's dat because I think a lot of people will be like, what that sounds crazy, but it's it's true true, So say it again.
Percent of eighty two trillion dollars in capital managed by women and people of color. And you know, there's for those of us that love statistical analysis and market based strategies, that's in the context of massive, growing and multi trillion dollar black and Latin X buying power in the United States, and we've seen that there's an incredible opportunity to invest in companies and that one strange thing that we found in our research with Stanford was that the higher black
managers performed, the less capital they get. People are more willing to leave money on the table the higher they perform. So I think there's some real deep analysis needed.
What's up that? Is the world just racist?
You know?
I think that within the biases that asset allocators sign up for their fiduciary duty, but biases keep them from fulfilling their fiduciary duty to make the most money for
their clients. And in this case, going past high performing black fund managers to invest in people that are familiar is a violation of their fiduciary duty, which is another legal requirement that those that manage money are supposed to live up to every day, and it happens if they don't work on these biases towards black people, women, Latin X people, then they're really not serving their investors in ways that they're signing up legally to do.
Yeah, it's interesting. I'll never forget a phrase that Marcus Shaw on this program shared with us, you need to let your greed overcome your bias. His point was that you know, if you increase diversity, you're going to be able to increase your revenue and your your profits as well. Let's talk about building back Black Wall Street, the revitalization of Black Wall Street as opposed to starting a new
one Black Wall Street, black banks. This is something that at one point had a lot of momentum and was destroyed.
Yes, in terms of building black back Black Wall streets. More generally, there were a number of thriving communities across the country that were wealthy Black communities that were targeted with either interventions that were government focused in or revente in terms of building highways through communities, or targeted by racial violence, like in Tulsa a little more than one
hundred years ago. But I think what I'd like to share is the idea of Black Wall Street as an idea and the tearing down of Black Wall Street as an idea, because I think that it's too easy to forget that those that built Wall Street were literally enslaved black folks, that New York, Boston and other areas of the country benefited from the financial system of slavery over time.
And as we look at what Wall Street can do, we look at that stark number of one point four percent of eighty two trillion dollars in capital, despite women and people of color making up half of the country and magnificant amounts and growing amounts of the country, and we have to ask the question, why isn't the statistical probability that women in black people would be represented in the leadership of asset management, business or ownership that sort
of represented as it might be statistically. So that's part of the questions that we ask with our research partners at Stanford Spark, who are some of the top folks in the world in social psychology professors at Stanford and those that are running with many firms around the country statistical analysis on portfolio construction.
So Matt and I've talked about this a lot, and it's above and beyond the right thing to do, and I just but sometimes.
You know, increasing gender and racial diversity.
Correct, But returns often speak volumes and what can you share with us about pursuit doing this type of investing and what you guys are doing and what kind of returns you get for your investors.
Yeah, what I'd say from a return perspective is that you know and this isn't new information. In fact, doctor Lisa Cook the only black woman in the one hundred and eight year history of the Federal Reserve Board. Her area of research as a professor is on terror and black value creation. She studies patents in black communities and equates the eleven hundred lost patents because of racial terror between nineteen hundred and roughly twenty ten as the value
of a small European economy and lost GDP. So, I think the real message here is that so many in the asset management business are missing such value in a system that is pushing people away that could equate to returns or increase value in the magnitude of a small European country, boost to the GDP, which, certainly as inflation increases and we have lots of different challenges around interest rates in the United States, could be a large benefit to lift all boats.
So what do you do, Darren on the ground in order to increase gender and racial diversity.
Oh, we partner with the funds that we work with over a ten year period and we focus on giving them the tools to address bias within their hiring, promotion, retention and attraction of talent processes, within their board selection processes, and then within their investment decision making processes. And what we want them to do is find the best people
in the world. I think to us that includes women and people of color or whereas to much of the financial markets, often high performing or better performing women people of color are left out of the conversation when it comes to hiring, which again results in one point four percent of eighty two trillion dollars in capital managed by women and people of color collectively. So something is going on beyond looking at financial decision making is certainly our thesis.
Well, it's so good to check in with you once again and look forward to doing so in the future. Darren, Thank you so much and hearing about the work you guys are doing. Darren Dots and managing partner at a lumin And Capital on Zoom from Oakland, California, Oakland, its own city with you know, revitalization, going through a lot and coming around.
Yeah, no, absolutely. It is interesting to see people like Darren who are investing in this and trying to make a difference with the money that they put into the market. You know, we talk with so many people who come on here with studies and the results of studies and we's actually doing are bad. A need to be changed, and he's actually putting his money where his mouth is.
No, exactly and can see the payoff in certainly in terms of increasing and creating communities.
This is Bloomberg Business Week with Carol Messer and Tim Stenebeck on Bloomberg Radio.
Top of Mind continues to be what's going on inside Russia. We've talked about it from a couple of different angles, and we know President Vladimir Putin spoke for about six minutes a very short address to his nation, condemning leaders of the Wagner Mercenary Group as traders to Russia in a late night speech to his nation. Those were his first public comments since the mutiny that posed the most serious threat to his nearly quarter century rule. So let's
get to it a little bit more analysis. Andy Brown, his partner at Brunswick Group. Former editorial director at Bloomberg New Economy. He spent three decades in Asias both China editor and a columnist for The Wall Street Journal. Today he leads the China Hub as a partner at Brunswick Group, and he is joining us on Zoom in New York City. Andy, good to have you here. Also with us is Mick mulroy,
co founder of the Lobo Institute. They advise, consult teach on current and future conflicts and how to end them and really how to prevent them from happening again in the future. Andy, is, I've forgive me Mick is on Zoom on the phone. Excuse me for Montana. I'll get my zooms and phones right, Andy, Mick, thank you for being with Matt and me. I'm curious, Andy, what kind of calls you are getting, specifically on what's going on in Russia.
Well, it's great to be here, Carole, Matt. Yes.
So the hot off the press, Putin has come up with angry comments calling Pregosian and his mutiny as traitors and saying that the whole of Russian society has rallied against them, and saying that they only made their move to cover up battlefield failures and pray, all of which, of course is complete nonsense, demonstrated such by television pictures that Russians indeed the whole world, or over the weekend where we saw Wagner fights being enthusiastic we received in
Rostal and almost no opposition. Has several of his columns swept north do within almost one hundred miles of the gates of Moscow.
Yeah, I mean they were lined up to take selfies with Pregosi. Clearly this guy has serious support in Russia, at least in the areas that he occupied. Mick mulvaney, let me bring you in, mc mulroy, let me bring you into this and ask you.
I know that was a flash in the past, well not so far, I know, I know.
So Nick mulroy a very different person than McK mulvaney. Let me ask you your take on this in terms of how does Putin do without the Wagner group If they're responsible for pretty much everything that the Russians have gotten right in Ukraine, you know, from their perspective, if you were just up to the Russian army, you know, Ukraine may have pushed them out already. So can he do without them?
So great to be with you guys, and certainly a lot going on today. That is a good question because from President Putin's speech two things really stuck out to me. One he acknowledged that they were a colossal threat, something that most totalitarian regimes don't like to admit. And two, he didn't really have any of the concessions that we thought he might based on whatever deal he made with Progotion.
He did not announce that he would remove the Administra of Defense Shoigu or the Chief of Staff Grossamov, and he did reiterate that he wants Wagner or he insists that Wagner either lay down their arms or join the mod That is good for Ukraine and all those that
support him. It is not necessarily good for Russian efforts in Ukraine because although it's composed mostly of war criminals, quite frankly, they are one of the few Russian forces that is willing to go on the offensive and has taken some of the more key terrain that Russians have taken within the last six months. So that is going to be to be determined of just what the fate of Progosion and the Wagner Group is at the end of it.
So clearly Putin has to do something to sort of re cement his place and power. A lot of people are saying Progosion doesn't have long to live. But on the other hand, Progosian seems to be in a pretty good place, specifically if he goes rather than to Belarus, back to Rostov, which is a key way to maintain his leverage. Right it's the logistics hub for the fight in Ukraine that he's already shown he can occupy. What do you think his next move.
Is, So that's a good question. I do think he should be looking over his shoulders and probably haven't. Somebody tastes his soup before he does. He has. He has definitely provoked the Russian establishment all the way to the top. Whether he is essentially under guardianship in Belarus is to be determined. But another factor to consider is the Wagner
Group obviously operates in more places than Ukraine. There are throughout Africa, especially Sub Saharan Africa, and they make quite a lot of money, and I would assume the regime gets a portion of that. I don't know, but I would assume that is in direct cooperation with the regime.
So it might be that he is precluded from potentially leaving Belarus for operating in Ukraine, but they might want him to keep his operations going in Central African Republic and now in Sudan, and maybe in other places where they not only operate, but they operate potentially at a profit.
Incredibly profitably. Actually, Mick Matt brings up a question I want to throw to Andy. If Progosion is making reportedly he's making over a billion dollars in you know, just a few properties in Africa. I mean, the grand total may be much more than that, but he can't put that in a US bank or even keep it offshore anymore. What does a Russian criminal who uh you know isn't allowed to move around financially in the Western world do with his wealth? Does he have to, you know, kiss
the ring of Vladimir Putin? Can he bring it to China? Can he bring it to India?
First of all, I think he's interested probably right now, I'm all concerned about his life rather than preserving his wealth.
He's a marked He's a marked man. He has punched Putin's or invincibility.
Putin is no longer the strong man that he wants was, and everybody can see that. Here you have Pregosion who's challenged the Krambling, and he's not exactly got off scot free, but Putin appears on the weekend to have sort of led him off the hope.
We don't know where he is. He may or may not be in yellar Us. Certainly the deal was broken by Lushenko.
Uh and we don't actually know what the status quo is of his heavily battle hardened Wagner forces.
They certainly haven't demobilized.
In fact, all of the reports that I've been reading out of Russia day is that his recruitment centers across the country are still operating normally. So the the reason that Pregosian gave for launching them munity was that he said that the Russian military wanted to disband the Wagner forces.
Clearly that has not happened.
Andy our Bloomberg Big Take, which is our story that our editorial team deems that the world should read on the Bloomberg and at Bloomberg dot com. But it talks about the Russian president and basically facing this historic threat to his absolute grip on power in Russia. Do you think his years or his term is coming to an end as a result of this?
You know, it's hard, it's it's hard to predict where it's where this is going to go. These are early days, and everything is very confused right now. Uh but certain but certainly, as I say, his aura of power has been has been badly damaged. Let's see what happens to
Let's see what happens to progression. The other very interesting thing about the weekend, uh puncture to what Poutings said about the whole country rallying against him when this thing first started, and remember, we didn't know that if it was a mutiny, whether it was a coup, and nobody in Russia knew that either. And the Russian elites, the ones that are closest to Putin, failed.
To speak up for it. They held their silence.
They were waiting to see very clearly which way the winds were going to blow, whether the mutiny as it was back then, a whop as it seemed to be, would be successful or not.
So he's clearly Putin has.
Clearly lost a lot of his support, or at least perceptions of support, in parts of Russian society and the security forces that really matter.
Make you agree in terms of President Putin's standing in his.
Country, yes, I do. I would add also that it's become very clear that his decision to invade Ukraine was a significant strategic mistake. And you have Progosion, one of the main fighters there, acknowledging and he can't unring that bell that the Russian people relied to there was no NATO expansion there is now, but there wasn't before, and that there was no threat to ethnic Russians in Ukraine.
He already said that, And I think the Russian people are going to hear that, and they're going to hear it more often. And I think that and the fact that that Russia is in effect losing what they wanted to do in Ukraine, and most dictators cannot survive a loss like that, and certainly when he looks as weak as he does, acknowledging that this was a colossal, colossal threat to him from the Bogner group.
Yeah, certainly, you think you'd think that Russian mothers will consider pregosians word when they hear that their sons have died, and how many you know? Now, I think more than a couple of hundred thousand Russians have died in Ukraine. Mick, you you know, from your years at the CIA, from your years at the Department of Defense, what do you think we are hoping for? What do you think America is hoping for in terms of a coup, Because it seemed on Friday like, oh, coup, that would be great.
We want Putin out of power, but we it seems now like, well, we definitely don't want pregotion in power. So let's who else is out there that could challenge Vladimir Putin?
So to start with, I do not think and I don't know. I'm out of government, but I do not think the US had anything to do with this. I don't see a logical reason why they would want to replace, you know, Vladimir Putin with progosion. Progosion is actively called for the use of tactical nuclear weapons in Ukraine in the past, and he's quite frankly, very unstable. So I don't see that I would agree with the White House position that they would not have any reason to promote that.
Who would be a suitable alternative to Putin? I don't know right now, but I guarantee you. The intelligence community is assessing just that and trying to find out who may not that we would push for any of them, because we're not. Our policy is not regime change is Rasia, but to be able to get ahead of anybody who may potentially take a run at Putin. I just don't know who that person would be.
Andy, come on in on this if you have any thoughts about who might take over for Putin. But I also want to throw China into this. This is something you know, you know so much about China and how they lead. We've kind of laughed, but not laughed a little bit about the Chinese Foreign Ministry coming out with a statement describing the weekends events in Russia as Moscow's internal affairs, something they often say about their own internal affairs.
But how do you.
Think about the role of China and what happens here in Russia specifically, what do we kind of need to kind of have top of mind here?
Well?
I think that the Chinese are looking at this with a mixture of alarm, but also a certain amount of small self satisfaction and the alarm because they're worried, They're concerned that they have made a very bad bet on gladymir Putin. Putin is to Jim King's quote unquote best friend. They've met forty odd times, and you know, they're quite similar figures in a way. They both promote a resentful
form of nationalism. They're both on a mission to revive the historic glories of their respective countries, and they believe that the United States stands in the way.
And they formed an axis, an east.
West axis to push back against US power and to revise the US led global order. And the anchor of that western axis of Vladimir Putin is looking decidedly shapy right now, and the project to push back against US power is becoming bobbed down in the bloodstot battlefields of Ukraine. Smart self satisfaction, because I think such thing is looking at this and saying this would never happen in China. We would never I would never allow control of China to slip away in this way.
In fact, the.
First thing that she doing did when he came to power in twenty thirteen was a purge in the military, and he put hisself voyalists in charge.
Well, so happy to have the two of you here, Thank you so much, Really, appreciate it. Andy Brown, partner over at Brunswick Group. Mick mulroy, co founder of Lobo Institute, really smart and insight and coming at it from a couple different angles there. We so appreciate it. Be well to both of you.