This is Bloomberg business Week inside from the reporters and editors who bring you America's most trusted business magazine, plus global business finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim stinebec from Bloomberg Radio. It's two day policy meeting, as you know, kicking off today. It's the first of the new year, and we will
hear from J. Powell tomorrow in that press conference. Policymakers widely expected to raise rates by a quarter percentage point, slowing from December's fifty basis point increase after four straight seventy basis point moves. But the big question is what words do they take out of that statement and what comes after this move. Well, to help us see into the crystal ball, look into the future, very please step back with Dr Stephen Skanky, chief economic advisor at kiel Point.
He's a member, a former member of the U. S. Treasury and White House National Security Council staff member. He's based in Washington, d C. Joining us today from there via zoom. Dr Skanky, good to have you with us, How are you great? Thanks and it's great to be with you. Tim and Carol. There's always a fun time, and especially coming into this meeting today and tomorrow, there's there's so much good news for the Fed to be
taking in UH. Their their conversations are likely to be a whole lot different than they were six weeks or twelve weeks ago. There is so much good news, but there's also some concerning news that could lead to UH potentially rates staying higher for longer. And I point specifically to the jobs market and what we see with just an incredibly resilient jobs market. It's really good, make no
mistake for for for Americans. UH. It's not so good for the Federal Reserve because they're concerned about a wage price spiral. Well that's certainly on their their list of concerns. We did get some good news just the sporting with the Employment cost Index coming down again one percent for the fourth quarter, annualizes at four percent. Obviously it's not where the Fed wants it to be, but it but it dropped from an annual rate annualized rate of four
point eight to UH to four percent. We do expect that the employment gains number coming out on Friday will also be helpful, not negative, but but down for where it was even just in December. So I want to go right to what I think is there could be a really important issue and if you think about it, um and in one of our I think it was maybe our one of our newsletters that was out this morning, I can't remember which one, but it talked about made
in China inflation. And this speaks to our Bloomberg big take, which we'll get to a little bit later on. But back in September, then fed here Johnny Ellen mold the feds first interest rate hike in almost a decade. China's economic and market wobbles were among the reasons she ended up staying her hand. How does China, Steve complicate the situation for j Well, China is really come on back, come back online, and far more quickly, I think than
anyone expected. They they ended their their COVID restraints, They're putting monetary and fiscal stimulus into it. They're standing behind their real estate sector, and so production in shadow will be helpful. Uh not that has been a big negative for inflation, but it certainly will be helpful and it will be what helps, uh the global economy be less
likely to fall into recession. Probably the problem or the biggest challenge for the FED from China's increased activity is that it's going to be increasing its demand for for energy and that will just put upward pressure on energy prices. Uh. And so we're well, that's been a positive for inflation
coming down. Uh, that positive impact is going to go away. Yeah, I was just looking through our story because I think, you know, concerns about Chinese inflation essentially what it could do in terms of kicking up inflation and the drag on the global economy. I think it's something like a
one percentage point difference. I mean, do we need to be worried that it is going to make Ultimately the FED say, you know what, we don't quite know how the China factor and it's reopening how much pick up and momentum we will see in how much draw down on global commodities and pressure on those prices that they might just stay higher for longer. Well, it certainly is going to be on their mind, and that certainly can be a factor in their decision to stay higher for longer.
But in some respects time is really on their side. The core PC inflation to flator that came out last week very good news for the Fed. It's annuallyzed over the last three months at the two point nine percent. It's not a two percent, but it's it's come down significantly from where it was. The tightening and higher interest rates are slowing economic growth, the job vacancy gap, all all that a plush and so so that the Fed is uh I think likely to increase twenty five basis
points tomorrow. Most believe that it will do another twenty five basis points in mid March. UH, and before it has to do anything after that, it will have a whole lot of information and many believe the consensus of economists is that will continue to see inflation fall really back to where the FED wants it to be, notwithstanding the negative influence that higher energy prices I mean as a result of China coming back online so strongly, could also have Okay, so that's a wild card at this point.
That's something that we need to keep in mind. And remember, you know, oil supply is not something that the FED can control. Oil demand the FED can control, I guess to a certain extent when it comes to raising rates and tamping down demand. Uh dr Skanky, I want to go back to your point about higher for longer. When do you think, how how long do you think the Fed will keep rates this high? I think they'll keep
them this high at least through the end of June. Uh. Their rhetoric tomorrow is is going to be very much on track with their their higher for longer. That's surprising to hear only to June, though, because in December the Fed said they had no plans to cut this year. Well, that's right, and this is part of their forward guidance.
They're there, They're they're sound being very hawkish on purpose, notwithstanding what they're seeing internally with the slowing of the economy and some of the other achievements that that are coming forth. But rather than having to raise interest rates further and to push the economy either into a recession or deeper into a recession, they're they're trying to to strip out some of the euphoria, enthusiasm, exuberants. They look
at the SNP up six percent for the year. How how how is that not a frustration to them, and they're trying to use their rhetoric, their forward guidance to tamp that out. But they're also looking at a very much a weekending economy, and many now believe many many who who thought that it it certainly could just bounce around flat and then maybe tip into a recession in second or third quarter, are now seen that perhaps even in the first quarter, we're going to end up with
negative really economic growth. So, you know, it's an interesting time.
And Steve, yesterday we were talking with our Steve Matthews and our team UM about a story about how Feed is going to clash with Wall Street once again, because you've got traders expecting a peak policy rate of around four nine percent by May in June, falling to below four and a half percent by the December meeting, further cuts indicated during However, the latest you know dot plot from uh the Central Bank forecast showed seventeen of nineteen
officials projecting rates about five this year, two of them above five and a half percent. It's a bit of a gap, a bit of a disconnect. Um, let's play the arbitrage there. But it's just interesting to see that gap. I mean, obviously, the Fed's going to do what it's got to do, but who usually has it right? Is it?
Are you know traders right about this that that's a very good question, and to be honest, it's absolutely fascinating when you look at the dot plot and you really have yourself do they believe what they're saying or is this part of the hawk ish message they want to send to to tamp out this enthusiasm. They're very frustrated with easy and financial markets. They're they're trying to ring out inflation and financial markets. Wall Street are are acting
as though that job has already finished. In the second half of the year, interest rates are going to decline and we'll we'll be back to a the old game. It will be the Fed pivot. The Fed absolutely does not want the market to believe that that's right. Reservations are up at the pivot pivot. You know, bistro investors are buying into it. They are So what could what could j Powell say tomorrow? What what could the Fed communicate tomorrow to really hammer home that this is not
what they want to see? Well, they are going to they are going to say they haven't seen anything that tells them they can stop raising interest rates. They're going to talk about higher ongoing increases, plural in rates U it will be required, and the rate rates will remain at higher levels for some time. Um and uh. He won't he won't let anyone press him to to say what that exactly means. But higher rates, higher levels for some time, and that they're oh uh and it's it
really is amazing to watch it. Their hope is that at some point markets will will take a step back and uh stop this, uh, this this frenzy, and belief that the pivot has already happened, and that the FET is happy where inflation is. It's not happy where inflation is, and it will continue to operate until it gets it down. But it's almost as though it doesn't matter so much anymore how much the FET increases rates or or or
how long they keep them at higher levels. Inflation seems to be in the process of being wrung out as the economy cools the the employment sector is working itself out, Eddie goal gets back to some form of equilibrium. Right. Doesn't want to get fooled about. They want to see it happen, So they're not a trust that it will happen on its own. All right, We've got to run,
Steve good to check in with you. Be wells. Dr Steve Skanky, chief Economic advisor at Kiel Point, former U s Treasury and White House National Security Council staff member showing us to be a zoom from Washington, d C. You're listening to the Bloomberg Business Week podcast. Catch us live week days from two to five v m s during Listen on Bloomberg dot com, the I Heart Radio app, and the Bloomberg Business App, or watch us live on YouTube.
Remember how we were all on a buying spree during the pandemic, Well, are you still waiting for your couch? Just a few things? Well, the same goes for those of the shipping industry who are looking to invest. Record profits made during the pandemic contain annial lines man, They went on a buying bins. Well, now all those new vessels will start arriving, and they've got to be named,
just as the global economy is slowing. This story in the upcoming new issue of Bloomberg Business Week, on news stands later this week, already online at Bloomberg dot com and on the Bloomberg terminal. With more We've got Bloomberg Business Week editor Joel Webber and Bloomberg News Trades are Brendan Murray, who joins us on the phone in London. Joel's here in our interactive broker's studio. So Joel, how
do you name a ship? Well, you you go, you go to the Midwest and you sort of like throw it darted a map and sometimes it lands on a on a place called may View, Missouri. Um, so Brendan, why why is Maresk who makes a lot of big vessels, some of them uh bordering on fours even Uh, and these are the style of both cargo vessels that that him alluded to that are going to be hopefully coming to mark coming to oceans near you. And nothing alleviate uh,
but not too many problems, too many? But but why did Mayor's you know, Copenhagen based company go to Mayview, Missouri to name one of its ships, which that name will be the may View marisk That's right. So, so marisk Is is a hundred and twenty year old company and they and they're very proud of their history. A guy named Arnold Peter Mueller married a woman whose family was from the tiny town of Mayview, Missouri. This was
about fifty miles east of Kansas City. Uh. You, I tried to find a stoplight using Google Earth and I couldn't find one. Um, that's not to say it's the folks that aren't proud of it. And I'm told there's even a plaque commemorating the fact that they've gotten one of the world's biggest ships named after the town. Okay, so there you know names aside um, and maybe we can spend a little bit more time with that yet. But Marisk isn't even the biggest buyer, right, Like who
are you know? NSC is one name that's come up uh in some Bloomberg business we we week stories lately. Uh. It also happens to be a big buyer of ships, that's right. So so that this industry is the container shipping industry made record profits over the past two years, basically because we all bought things for our backyards or our home offices. Now that is starting to cool off, but in the meantime, they've all uh these and there is dominated by about ten companies, of half in Europe,
Path and Asia. Um MSc, as you mentioned, is the biggest one. It's a sort of uh fairly low key company based in Switzerland owned by an Italian billionaire. Uh that and they are going full They're they're putting all their cards in the ocean freight. Uh game Uh and they are. They have something like a hundred and thirty ships on order now at about hundred and fifty to two hundred million dollars per ship. Somebody do the master
me on that. But it's you know, it's a couple of a couple of billion dollars worth of ships they have on order. Um. So yeah. But but Marisk, on the other hand, is wants to be more of a door to door kind of end to end logistics providers. So they only have, you know, a couple of dozen ships on order compared to probably ten times the amount that are that are ten times more that MSc has.
I gotta say, I keep thinking of a conversation Tim and I had recently with Mario Cordero, executive director at the Court of Long Beach, who talked about shipping containers being canceled. You know, very different from what we saw in the pandemic. There's no backup, prices are coming down. It's a very different environment. Are these guys do they
make some wrong bets? Well, they don't. They don't bet on you know, a couple of hundred million dollars on a container ship on what's happening over the next twelve to eighteen months. These are these are investments of you know, years sometimes, but this is a very cyclical business. It rises and falls with the with the economic tides. And we are you know, the the the economy, the global economy it softening, and all these ships are going to hit the market just exactly the time when they don't
need them. Container ships are kind of like hotels, and if they're not filled, uh, they're not making money. And if they're not making money, then the price comes down, so that benefits consumers. You know, we're we're gonna we're gonna see UH and and companies like Walmart and akia that that use a lot of shipping services, you know, they're going to see their rates come down and probably stay down. As our Bloomberg Intelligence UH logistics analysts said,
we're going to see low ocean freight rates. So well into it time to talk about the names again, because you can talk about the names again. Why not talk about the names again? Um, Britan, I'm curious, since um you did some dogged reporting here, what did you learn about names that was you know, as somebody who follows this stuff so closely, you know, what was the big
reveal for you? And in the naming of how we get these uh, you know vessels that sometimes become iconic and pop culture in the case of like saying the ever given right, so the so well if you bring up the ever Given so Evergreen Marine is the Taiwanese company. And they like consistency. They like putting ever in front of the name of their ships. So they've got dozens
and dozens of ships. That's the ever Early I think there was one the ever uh superb exactly just any any any noun, you know, fill in the blank and put ever in front of it, and that's how they named their ships. Um other companies that you know, it's it's it's some some uh source of corporate pride. I mean the MSc said that they named Mayor's after uh family members of employees. So maybe it's you know, kind
of a motivational thing. You know, you have a good year and you know, you get a ship named after your kid or something friended. I mean, you've done so much reporting on this. Have any companies come to you and said, we want to name this one after the trades are at Bloomberg? Well, you know I did lobby for that with with marrisk and they and the and the and the public relations guy who I talked to said, you've got to get in mine behind me because I won't say his name, but he he's you know, kind
of quietly wants one named after him. Ever, Brendon has a kind of nice thing to it. Don't get stuck. I agree, exactly. Well, there's nine hundred ships coming over the next three or four years, and so you know you've got to figure one of those, you know, uh could uh you know, could be named after one of us.
Maybe we didn't come back to may View, Missouri. Why maybe so maybe you stuck out to me because I'm well number one, because I'm from St. Louis, and I wanted to know how did this tiny little town literally, like I said, no spent you know, there any stoplights? And fairly it's not even a suburb of Kansas City.
It's kind of just just an old farming community that has basically had two or three hundred residents for for as long as I could see the census day to go back, uh and and it was it meant something to the history of the company. I spoke to the historian mcmay's cousin in house historian, and he said that the that the that there and there are uh family members, you know, descendants of the founder who still work for
the company. And that's just been the tradition. If they try to, uh, you know, keep that, keep that tradition going. Arnold Peter Mueller was married in may View. Go ahead, go figure. Ever Murray works too, it does Ever Webber, why not. I'll take that all right. Joel and Brendan, thank you. You're listening to the Bloomberg Business Week Podcast. Catch us live week days from two to five p m s during Listen on Bloomberg dot com, the I Heart Radio app, and the Bloomberg Business app, or watch
us live on YouTube. It is time for plugged in your weekly look at e VS. And I gotta say tim lot's happening in the world always when it comes to electric vehicles, GM investing six fifty million developing the largest U S lithium deposit. And that's really a move to ramp up its efforts to secure supplies of the
key metal used in electric vehicle batters. I mean, it is all about getting those raw materials and components in order to be able to meet demand and speaking of demand and e vs GM CEO Mary Bara dismissing concerns about those price cuts after Tesla and Ford cut their EV sticker prices. Look at shares of GM today up
significantly after reporting results. Let's break it all down with Bloomberg Technology co host ed Ludlow, who's in the Bloomberg nine sixties studio in San Francisco, And I want to start with um the six fifty million dollar investment that GM is going to make the largest U S lithium deposit. So it's a big headline. It is. It is a big headline, But take us into the details of the just a headline? Is that what you say? What's the story behind the story here? I mean the devil's in
the detail. This is for lithium supply starting from so a few years away from now. But you know it's all part of the widest story about concern for all of these players. Test being the pure play market incumbent GM and four being the legacy US names transitioning to e V making sure that they have access in their supply chains to the raw materials for battery cells right as they ramp up the volume of evs they produce, they need more battery cells and therefore they need more
access to the metals that go into them. And you know, in this case it's lithium. It's a partnership with Lithium America's Corps. It's about a mine in Nevada, specifically the factor past mine UM. And you know, I think that you know it meets GM's ambition, right because this is a company that you know is aiming to build a millionaivs a year eventually and they need to make sure
they've got the raw materials to do that. Um, do we have enough lithium to do what we need to do to turn over everybody to trick question that is a trick question is what the conversation do you have around this? Well? Do you know why it's a trick question, And it's because it's not about necessarily how much lithium we have available to us, but also where it's coming from. Because remember the whole point of the Inflation Reduction Act,
which provides for a federal credit, a consumer incentive. Being eligible for that incentive long term is dependent on where you source your raw materials on in lithium's case, in particular, China is such a massive player, and the whole point of the I r A is to make America's supply chain more competitive. So it's not just about how much lithium there is on the planet, it's about where it's
coming from and making the US more competitive. And again, this announcement that GM made Tuesday is for a mine in Nevada, so that would very much mean that any battery packs with lithium from that mine were eligible going forward for the IRA credit. But also brings us back to the question about making different batteries or batteries that are that have different materials in them add and are you betting on a component that's guaranteed to be used
for the next X number of years? Yeah, I mean you have to look at the word that Tesla has done right around changing the cell chemistry. Um Lithium is one metal that is prominent in lithian ion batteries, right, but also cobalt and nickel are important. You can use different cell compositions, and cell chemistry is to boost the
proportion of one to the other. The end goal is to make sure that the battery or sell therefore pack has the greatest energy density how much energy can you squeeze into that little cylinder and into that battery pack. That is the equation from an economics perspective of what they're trying to achieve, how expensively or cheaply. Conversing you
source your metals has a direct impact on that. So, UM, I just feel like, you know, it's interesting and I was looking to put together some gainers for when we do our cross platform. You know, market closed here today, and it's interesting. You've got Tesla continuing, you know, to move higher this year again rallying rythan UM I believe was also among the top gainers in the NAZAC one. I just want to do allow check here. You know,
we're seeing a lot of momentum into that space. UM. We know that there's a bit of a pricing were going on on the GM saying and Mary bar saying, we don't necessarily need to to play in that price war. So what are the bigger, broader trends that are going on here when it comes to the space. I mean, I would love to tell you that the market dynamics driving the market is about kind of the love back
in love with evs. You have to remember these are also some of the most downtrodden stocks there are out there. Riving and Lucid the two worst performers on the NASDAC one in two Tesla had its worst year I think on record. I was just checking my Bloomberg terminal in two right sixty decline and so you see a lot of participants in the market look at how valuations have come down and say, yeah, now's a good time to buy. The other side of the coin is that test zonings
were great. You know, they showed that using the level of price cuts does induce demand. And Elon must talked about in the first early weeks of January of this year, the demand for their vehicles was twice what they're able to produce in that snapshot moment. So there is excitement about what's possible, but still nervousness broadly about demand tapering
off this year. Were you surprised ed to hear GM CEO Mary Burrow dismissed concerns about price cuts give Tesla and Ford seemed to be in this the beginnings of a price war. Yes, I mean the general consensus across sell side analysts at least was that Tesla cutting its prices in the words of RBC would have a cascading effect, so you know Ford went next. There was suspicion actually that we'll see the European automakers follow suit. GM's currently
bucking that trend. It's interesting because they had earnings right, and the numbers were very strong, particularly how bullish. Their outlook for earnings this year would be the e BIT forecast, in particular earnings per share of six to seven dollars for the full year. But you have to remember that that is held up on a pillar of sustained demand for their expensive gas vehicles while they transition to electric vehicles.
The price cut comments were interesting though they're basically seem to be saying, we're not going to adjust the prices of our electric vehicles for now. But remember GM has done what many automakers do, first come to market with a very expensive e V and their models that are more mass market, more affordable, those are still a little way away from mass production. So that's part of the
equation too. Do we ever think about that in terms of the raw materials that we're going or that are needed in order to make all of these electric vehicles. I mean, I know the discussion has been out there. But I wonder if there's more momentum that we're just kind of trading a fixed commodity with limitations on the amount that are out there, meaning fossil fuels, just for another basket of raw materials that are fixed as well.
I appreciate the debate. I mean, at the end of the day, the fundamentally, what you have is a lot of demand, which is in the form of many automakers with plans to ramp their output of electric vehicles, trying to latch onto what is a relatively finite, immediately available source of supply, you know. And it's no surprise that we saw GM make this announcement on lithium with Lithium
America's on Tuesday. Tesla has done very similar things in invertically integrating its supply chain right and in other words, cut out the middleman, go direct to the source and use that to make yourselves. The thing is that those legacy also makers GM and for their future proofing right, so GM forecast making four hundred thousand vs from the start of last year through to the middle of next year. Long term, their aim is to reach millions of units,
but they're not quite there yet. Ford is ramping up the Marquee production from around seventy eight thousand units last year to a hundred and thirty thousand this year, but long term its ambitions are much greater, and it's that long term that they're trying to secure that supply for At the moment. As we spoke about yesterday, though, one of the challenges here is the margins on evs. For
margins on internal combustion engine vehicles. I mean, look no further than GM's results for just how you know much big or margins are when it comes to those old school gas guzzlers. Um, just in thirty seconds because I want to talk about some other stuff here. What's to watch for with that? Yeah, I mean, ultimately, if you build vehicles at greater volumes, you can buffer the margins, and if you cut prices, that's clearly a headwind to margins,
and Forward are trying to get that equation right. The Marquees unprofitable, but what they're saying is as we grow our footprint and produce greater volumes each year, there is some protection to margins that comes with that. I remember back in two thousand nineteen very quick Jim Hackett, former CEO. The day they unveiled the Marquis A Driss Elbert was there. It was weird. He promised it would be profitable from unit one, but then the world changed, you know, inflation,
rising commodities costs. Okay, this is what I wanted to talk to you about. It's a hard pivot. It's Palanteer Technology is Tomorrow, You've got a big interview with Alex Carpets, CEO and co founder. Thirty seconds. What's on your agenda? Yeah, look, I'm getting a rare invite down to one of their facilities in Palo Alto. He's in town. Remember this is a company that pivoted and moved from California to Colorado.
And we're going to catch up. And you can catch the interview on Bloomberg Technology on Wednesday, two pm Pacific, five pm Eastern. That's a great interview. Looking forward to it, Ed, Uh, and really appreciate you weighing in as you always do for us when it comes to the e V space, because it's kind of fast and furious sometimes. Ed Ludlow, co host of Bloomberg Technology at Bloomberg News, really wide ranging conversation. I do think about these raw materials and
precious materials, if you will. Uh, and the access to them, and you know, it's kind of another race. Yeah. I think about a lot about how the technology has changed in just a few years for batteries, for batteries, Yeah, yeah, exactly. You're listening to the Bloomberg Business Week Podcast. Catch us live week days from two to five pm Eastern on
Bloomberg Radio, the Bloomberg Business App, and YouTube. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa playing Bloomberg eleven thirty bloom The Journal. Yeah, but you let me drive? Oh no, no, no no, no, all right, please, I'll do vel. I want to drive. It's a good question. This is the Drive to the Clothes on Bluebird Radio. All right, everybody, just about seventeen minutes left in today's trading session. We've got,
as you heard from Chile, Charlie, a rally underway. We've seen yields back off a bit. This lesson twenty four hours away from the first FED decision of the new year, and coming up with a good guest to talk about what's going on in the trade here. Yeah, very pleased to have with us. This afternoon. Larry Patkowski, managing partner and portfolio manager at good Haven Capital Management, joining us on the phone from Millbourne, New Jersey. Good to have you with us, Larry. Uh So, here we are at
the end of the best January in years. We're seeing a rally just as the FED kicks off it's two day policy meeting with the SPU by a full percentage point. Uh Does the FED rate on the frade tomorrow? Uh? Tim. It's nice to be here, hello, Carroll. Tim. I appreciate you starting with an easy question, Okay, And it's an easy question because I don't know. It is not the type of thing that we try and make short term predictions about. And and my I don't know is not
a flippant or dismissive. I don't know. It's a respectful and humble I don't know, because I do know. I believe where a good Haven our circle of confidence as investors ends, and we try very hard to develop a varying perception about the handful of companies we have an investment in, and we try and make those investments where
we think we have marginal safety. But I don't think we have, uh, the ability to have a varying perception about short term moves and Fed policy, interest rates and the g d P. So, uh, we understand what everybody seems to be kind of expecting, you know, ah, you know, a quarter of a point and uh, the beginning of some slow down in this. And we don't have a very different view. And again we're not dismissive. I guess for me, it's more about commentary and less about a
singular move tomorrow. It's it's more about what A Powell says about holding rates higher for longer and what he says about financial conditions. Our view about the recent environment is the following. I am not as young as I look. We're sound. I have seen periods. I have seen periods where there have been existential risks to the financial system and to the economy. I've been saying for the last there's In other words, you understand that a zero interest
rate environment is abnormal, not normal. How you make a great point. And a few years ago we did say, like, look, interest rates will go higher at some point, and we try to add something to the portfolio that we thought would benefit from somewhat higher rates, as some financial companies that could use more interest income, whether it be proper and casualty insurance companies or some aspects of the commercial
banking sector. But I don't think what we've been experiencing recently, which is much higher interest rates and a slower economy, is an existential economic risk compared to some things I have seen in my career. So we've been doing what we normally do. We get up earlier, go to sleep later, and keep looking for a handful of companies that we think can do fine even in an imperfect economy. And we've been fortunate enough, you know, to be able to
find something well. And I'm looking at your fund, the Good Haven Fund UH year to day up more than seven percent, putting it in the ninety third percentile according to Bloomberg data. Longer term three years on average annually again more than eleven putting it in a ninety percentile. So you're making some good bets. UM a listener and viewer a business week writing in and saying what went into the decision to invest more in larger cap stocks
as opposed to small to mid cap stocks. UH. First of all, Carol, thank you for noticing we have been working quite hard, you know, to continue to drive long term returns, you know, like that for us and our fellow shareholders, so thank you. We have a mix of larger companies, some of them are that our household names. We have a mix of some mid sized companies, and we have some real below the radar screen companies. We are not you know, uh, myself uh and also ARTI
quack here who works with me. We are not waking up every day saying, boy, we want to look for another company of a certain size or you know, we're looking for the best bargains in companies. We feel that we understand where they are going, We understand management teams. We think we have an edge and understanding the business and where we're buying with a marginal stafty that we can find and you know, one should find great things infrequently.
But we've been fortunate to have been i think positioned reasonably well as the statistics you've called out have demonstrated what what's been a newby as of late and not necessarily a whole new position or adding to a position. Well. We had kept our eye on for some years k k R. In our minds, the movement of capital to the alternative asset managers over the last bunch of years was a very interesting trend, and it was not a
trend we thought we was stopping any time soon. As a matter of fact, very recently, I think New York has upped the percentage that they're going to going to commit to alternatives from we ended up first. We we looked at KKR and we admired what they had built. Distributable learnings had gone from like a buck sixties six and seventeen to recently like four and a half bucks a share that's buck sixty six per shared to four and a half a share over the last trailing twelve months.
And we bought some at the peak of the covid UH in the spring of when you know, the world was going through a very difficult period. But we have added to it in two kind of around these prices. What I think has been interesting lately is some of the cloud from some of the issues surrounding UH, you know, the black Stone b read, I think has given perhaps an opportunity to look at the whole sector. And KKR is the only one we own, and we think it's
well managed. We think we understand where the business is going. We think earnings management says they think earnings can be seven bucks within a couple of years, and we think that's intriguing. Yeah, rallied big time higher one down about thirty almost thirty eight percent last year, but we're seeing
money move into KKR certainly this year. It's already up almost here in Larry Pittkowski, thank you so much, Managing partner, portfolio manager, Goodhaven Capital Management, joining us on the phone from Milburgh, New Jersey. This is the Bloomberg Business Week podcast, available on Apple, Spotify, and anywhere else you get your podcast. Listen live each weekday starting at two pm Eastern on Bloomberg dot com, the I Heart Radio app, tune In,
and the Bloomberg Business App. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal.