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Well, the bets preferred measure of underlining US inflation core PCE, rose at a modest pace in a June. Consumer spending also remained healthy, encouraging signs for officials who are looking to cool inflation without breaking the economy. As far as the numbers look, core PCE, of course, it strips out volatile food and energy rose two tenths of one percent from May. From a year ago, it rose two point six percent. That's according to Bureau of Economic Analysis data
that came out this morning. Wall Street certainly happy about the data. We see stocks hire, we see yields lower. For more, we turn to Bloomberg News International and Policy correspondent Michael McKee, who joins us here in the studio. Mike, is this exactly what Jay Powell wants to see?
Yeah?
Basically I was going to say not quite, but I think he'll settle for this.
He wanted to see it even lower.
Well, they wanted to get back to two percent. But they did say that they were going to start cutting interest rates before they got to two percent, and he had said a little while ago that the range of two and a half percent, as long as they got into that range, they'd be gone.
So any change for next week based on this data.
No, because they didn't set the markets up for that. They don't like to surprise the markets. Now. I suppose there could always be a leak to the Wall Street Journal. That's only happened once in the last fifteen years or so, but people do think of it as a realistic possibility occasionally.
But in this case, I think they will be satisfied to wait, because what ends up happening is that bond yields go down if they signal that they're going to cut rates in September, and so they get the effect of a rate cut even without doing it.
So square the data that we got today with the GDP data that we had earlier this week, are we in a goldilocks scenario now with inflation moving in the right direction and the economy still strong.
Well, i'll see your cliche and raise you one and say soft landing. I think either one is probably a good description, but only as to where we are right now, because we don't know what's coming around the corner, and there are certainly analysts who think that we could be closer to an economic contraction than anything else. But right now it looks pretty good. The GDP numbers were strong and led mostly by consumption, business and consumer spending, which is what you want to see. You want to see
the demand remain It wasn't too bad. Personal spending rows just three tenths in the month of June. May and April had been revised higher, which help the GDP numbers. So overall it's exactly kind of what the Fed wants to see. Sustainable growth two point eight percent is a little high, but they anticipate it coming down. But sustainable growth with continually falling inflation.
Okay. So separately, US consumer sentiment eased in July to an eight month low, showed that consumers see prices remaining high and that cooling inflation rate has not yet helped improve their mood. Why do consumers remain so unhappy in this environment?
Well, there are a couple of reasons. One is you've heard this before that it's the price level, not the price change that bothers people. And another is the overhang of bad news that we have had in so many areas in the last six months or so. The wars and the violence and that sort of thing, and the attempted assassination of Donald Trump occurred when they were surveying. Now, what probably did not get picked up was the change in the head at the head of the Democratic ticket
when you look under the hood. And the University of Michigan has been surveying this for a long time, but they ask people, if you're a Democrat, Republican or an independent, are you more confident or less confident? And Democrats were less confident, Republicans only slightly more confident, and independence less confident. And given the reaction that we have seen anecdotally and in some polls already, you would expect Democrats to be
feeling a little bit better right now. So maybe we get that next month.
Yeah, maybe we'll have to wait and see. Mike, what about the idea that generationally inflation hasn't been around in many lifetimes of consumers, perhaps consumers who are completing these surveys. Does that have to do with this too?
It probably does, because you get used to a certain price level and you get used to inflation being so Alan Greenspan's goal always was that people could make decisions without factoring inflation into it, and that was the case for so long, and now people had to cut back on spending because prices were going up so much, so rapidly. It's also true that it hits the lower income people much worse than upper income people, because they spend most of what they earn and inflation's been tough on them.
But I think the generational aspect is also true, because, of course, there are those of us who remember the twelve, thirteen, fourteen percent mortgage rates that we once had in the olden days.
Yeah, Will I do not remember that. Thank you Emily for bringing that up, But it is something we hear a lot when people do complain about seven percent mortgages. But there are a lot of differences between that environment in the early nineteen eighties and the environment today. Here's what the team at Bloomberg Economics said about some of the data that we got today, Mike, Those spending continued
to grow at a healthy, albeit slower clip. Income growth slowed more rapidly, and with the labor market cooling, we think consumption growth will ease further in the second half of the year. Is there concern that it will slow to the extent that we could start to see negative payrolls, We could start to see a recession.
That would be a kind of far left tail risk. It's not what most people are anticipating. Slowing is what we should be getting. With the FED interest rates where they are, and even if they cut in September twenty five basis points isn't going to spur a lot of people six seven five mortgages just a bad almost as a seven percent. But it's going to be the process that starts sending it down that will make people feel better.
Okay, before we let you go, we talked a little bit about the FED meeting coming next week. The payrolls report coming on Friday, one hundred and seventy five thousand. Is what I saw last look for jobs gained during the current month that we're in. What do we need to be on the lookout for a week from today.
Well, two things we'll be looking to see. The last two or three months we have had forecasts in the range of one seventy five one eight, and they've come in significantly above that. So we'll have to see if that trend continues, and if the trend of the previous months being revised down continues. But the biggest thing is going to be the unemployment rate. This time, we're at four point one percent. Now that's the forecast for another month.
But if it goes to four point two, we're going to trigger the som rule and.
Claudia's phone will be ringing.
Claudia's phone will be ringing, and it will, as I said, scare the market, scare the horses, and we'll see what kind of reaction we get. There will be people in that case who are saying it got cut right away, got cut right away, because it already means we're going into recession. FED doesn't think so, because they think it's not that people are getting laid off, but just more people coming into the labor force that is pushing up unemployment, and that in the long run is a good thing.
Yeah, labor force participation. You want to see that go in the right direction. I thanks to Bloomberg News International Economics and Policy correspondent Michael McKee staying late for us on this Friday because he was in really really early this morning, so we appreciate that. Well. The opening ceremony is continuing as normal in Paris for the Olympics after a quote massive attack on the country's super fast rail network disrupted trains and cast a shadow over the event.
It's not just the trains that the organizers are concerned about, though, The Olympics cyber team is bracing for an onslaught from hackers, so writes Jamie Terabey, Bloomberg News cybersecurity reporter. She joins us from our Washington, DC bureau. Jamie, good to see
you on this afternoon. I want to start with the trains because lots of us in the US here waking up to the news that French Transport Minister patrese Vergray said, we're quote coordinated malicious acts that targeted several TGV lines and will seriously disrupt traffic until this weekend. What's the latest. Do we know who's behind the attacks, do we know the motives behind the attacks? And do we know when these trains will be up and running again.
Look, right now, there has been no claim of responsibility, but it could frankly, be any number of groups that are seeking to destabilize these games. They are in the heart of Paris. The entire world is watching, and whether it's home grown, you know, disenfranchised actors. We've seen France go through a very particularly tumultuous period recently, and of course we have external forces as well. The physical security aspect of the games has been something that has been
a really big concern amongst the French authorities. They've brought on tens of thousands of shot soldiers and police force and even private security guards to be part of that effort. They've had anti drone exercises happening within the city. Because the games are happening in the heart of town along landmarks, there is an even greater exposure to possible weaknesses in the system. And this wasn't this wasn't a coordinated arson attack.
And I understand that they're still in the process of getting everything back on track, but you know, it's a it's a big glaring target for a lot of different people with a lot of different motives to destabilize and ruin this for France and for the international sporting community.
Jimmy talk a little bit more about the extent of the damage that a cyber attack like this one has caused. We know that rail traffic was disrupted and that there were fires. Explain a little bit more what actually happens when there is a cyber attack at this scale.
So we know that this was this was an arson attack, So this sounds like it was a deliberately set fire at each of these signal stations. A cyber attack would come in from the systems itself and cause a breakdown or a shutdown of an electric grid, of a network of computers. It could reboot, it could cause all kinds of chaos. We could see hackers try to get malware into a system to lock it up and paralyze it.
We've seen that happen in past Olympic Games. In the Pyeongchang Winter Olympics, on opening day, on the opening ceremony, in fact, there was a very disruptive cyber attack which was later attributed to Russian actors. There are so many different points along the critical infrastructure that make up the Games. The French cybersecurity agency ante has TARGET has named five hundred different entities that they say are critical to the
smooth operation of the games. They've been working with these groups for months, if not years, to show them up, to audit their systems and look at how they can be as strong and as muscular as possible when it comes to anticipating and expecting these attacks and being able to respond if and when they do see them.
Jimmy, talk a little bit about the Russia element here, because as they have in Olympics past for other reasons, they are not necessarily present as they have been in the past at the Olympics this year, shut out in a sense, give us an understanding of where Russia is when it comes to potential cyber attacks and what the French and its allies are prepared for.
This is It's been explained to me in a lot of different ways. Is that almost the perfect storm for Vladimir Prutin he has He and the Kremlin affiliated hackers have been attacking France for a very long time through the cyber landscape. They have had people, you know, particularly with President Marquin and his attitude towards Ukraine and his support for Ukraine and he's part in beefing up NATO, has been a particular target for Russia. With the Olympics
happening it is a moment of international prestige. The opportunity for the Russians to disrupt this moment for the French and for the French leader in particular, is essentially just an irresistible moment for him. In the As you've said, we've had Russian hackers erase data sets or really disrupt past uh, you know, organize the roles of organizations like the Anti Doping Agency because right there the athlete, Russian athletes doping results were uh, somehow erased from the national
data set or from particular data sets. We've seen disruptions from the the Olympic destroyer event during the peong Chang Winter Games. Right now, we're seeing a lot of disinformation campaigns that have been happening in the lead up to and are currently happening at at at present that began on Russian language social media platforms that are spilling over into the media, into mainstream social media platforms, really disseminating messaging like there's too much terrorism risks in Paris. Uh,
there's the Frances on the verge of civil war. Paris is not clean, Paris Is is not particularly friendly. It's a terrible place to go as a tourist and all sorts of disinformation opportunities that are being attributed to Kremlin associated hackers. We're also seeing brute force attacks on websites. So what that is is when there's so much traffic directed at websites that it cripples their traffic and their
ability to operate. We've seen that recently on targets including the French Film Festival and also the Grand Palais, which is going to be one of the Olympic venues for taekwondo and I believe fencing. So they're not going to stop. They're going to do everything they can from here going forward to amplify, to disrupt, to create as much chaos as they can, because the ultimate aim here is to not give the French their moment in the international spotlight without some kind of disruption.
Jamie, we only have about a minute left. But what do we know about the US's involvement keeping the Olympics safe and the participants safe as well.
We understand that representatives and employees from SISA, the US government's cybersecurity agency, are on the ground in Paris, operating out of a joint operation center. We understand that there are also other American observers who are going to be there throughout the entire event. You've also got to remember that the next Summer Games will be in Los Angeles
in twenty twenty eight. So there is a real opportunity here for lessons learned from for the Americans to be watching what's going on in Paris, how they anticipate and deal and encounter all of these challenges, and how they can apply them in four years time. So there's definitely an international effort. The French are lot alone in this. Everyone is supporting them on the Allied Western side, and they're certainly seeing that in the private sector as well as in the public sector.
Jamie Terabe, Bloomberg News, a cybersecurity reporter, joining us from our Washington, DC bureau.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm Eastern Listen on Apple car Play and then Bright Auto with a Bloomberg Business act or watch us live on YouTube.
You guys are all familiar with Joe Logan. He's widely believed to be the most popular podcaster on Earth. He's got a huge Spotify contract. We're talking hundreds of millions of dollars on message boards. People sometimes describe him as Oprah Winfrey for men.
Well.
About four years ago, during the pandemic, he decamped from Los Angeles and relocated he and his wife and three daughters to Austin, Texas, and since then he's cultivated a lifestyle tailor made for the new age of the comedy profession. It's ruled by podcasts instead of Hollywood movies and sitcoms. He's got a new podcast studio, He's got a sauna, bow hunting range, and most important, a new club, the Comedy Mothership for doing stand up, all of it engineered
to share with his friends. The past two years, a growing group of comedians and podcasters have followed Joe Rogan to set up shop in Austin. Felix Jelied and Ashley Carmen write about Joe Rogan for Bloomberg BusinessWeek. Check out their story. It's on the Bloomberg terminal and at Bloomberg dot Com slash BusinessWeek. Felix is Bloomberg BusinessWeek Media Entertainment and Telecom editor. He's also the author of the book It's Not TV. The Spectacular Rise, Revolution and Future of HBO.
He joins us here in the studio, Felix, how much Joe Rogan did you listen to when writing this story?
A lot, a lot of.
Joe Rogan, months of jo really months.
Yeah, because he wouldn't talk to us.
He doesn't really do interviews, and he loves to talk about the comedy stuff, the comedy club.
On his show.
So it's mixed in with you know, moon landing conspiracies and a lot of mma, you know, minutia that I don't really need to know, but it was interesting. You get his whole perspective on the comedy world.
So just not just recent podcast episodes, but episodes going back a few years.
Yeah, for years he's been talking about this. I mean he moved from la to Austin about four years ago and yeah he got down there and he just like everyone who moves to Austin, they just can't shut up about it.
Yeah. It's the greatest down ever.
You know, we got the best barbecue, you know, like it's incredible.
The customer.
Yeah, it is hot in the summer. But the one thing he didn't have is he missed having a place to perform because he was a regular at the Comedy Store in La Austin had a stand up comedy scene over the years, but it was always pretty minor, especially compared to the you know, live music scene there. And so he was like, you know what, like, I'm just gonna build a comedy club for myself and my friends, and I'm gonna spare no expense. He said on his show that you know, it's not to make money. He
just doesn't want to lose money on it. But he basically just puts all the money back into the comedians and it's.
A really nice club.
And because Joe Rogan is Joe Rogan and he has, you know, this huge platform that anybody who goes on Joe Rogan's show is going to get a bus, you know, bump for their their comedy show, their podcast, their book, whatever it is.
So his ability to recruit people is amazing.
And every time he has someone on the show, he gives them the sales pitch come to us that you know, come hang out with me, you can perform at the club, you can come on my show, you can have your show. You don't have to be you know, tethered to the studios of LA.
And New York anymore.
Just move here and you know, some people resist, but a lot of people have heard that pitch been like yeah, okay, And you know, Shane Gillis, Brian Simpson, Tony Hinchcliff, some pretty big name comics have moved down there, and you know, they all are headliners at the club and hang out with Rogan outside the club. There's like this whole scene
around the bar at the Comedy Mothership. It's kind of fascinating when you're there because you have this feeling that anyone that's kind of in that world, Elon Musk, Johnny Manzell, anyone that's been on Rogan's podcast recently could pop in at any time. That's kind of like their clubhouse. And it's been this very and then that's the top end.
And then there's been this whole trickle down effect in Austin where since Rogan opened the Comedy Mothership, there's now maybe a dozen other comedy clubs that have also opened up in the Vicinity in downtown Austin. And now if you talk to like young aspiring stand up comedians, which we did for the article, you know, instead of moving to New York or LA to try and make it, a lot of them are now like you know what,
I'm going to Austin. So there's all these group houses popping up in Austin, where you have you know, ten you know, up and coming stand up comedians all packed into a house doing the open mic nights around town and desperately trying to get a spot in the comedy Mothership.
So Joe Rogan embraced Austin. But in your reporting and Ashley's reporting, did Austin embrace Joe Rogan?
Yeah, I mean I think they have to a certain degree. I mean, Austin has been such a boomtown. You know, it's been like the growing city, you know, every year for like twelve years. I think they lost the title this year. But there's been a ton of people moving there,
including a lot of people from California. And you know, there's this expression in Austin politics now, which is, you know, don't California my Texas, which initially people thought, oh, all these you know, California immigrants are going to make our you know, the state bluer. And actually, in the end what's happened is it hasn't been like the liberals who
have moved out of California. It's the more libertarians tech folks that want low taxes that move to Austin, Elon Musk, all these tech companies.
So actually Austin has gotten a.
Little bit less liberal over time. And you know, I was talking to Evan Smith, who's the co founder of the Texas Tribune.
He's a longtime Austin.
Journalist, and he was saying, you know, there was a time where if Joe Rogan had moved to Austin, there would have been like an outcry, you know, but.
Those days are basically over.
Like there was a little resistance at the beginning, but then they're like, well, he's put all this money into downtown Austin, he's revamping this part of town that really suffered during the COVID and yeah, the town has embraced him.
Can you talk a little bit about how podcasting has disrupted the traditional comedy route, because back in the day, the whole idea of becoming a successful comedian, you know, you go and do some really good sets, you get on one of the late shows, right, you do really well on the late shows, and then you're given a sitcom and that's that was like gold. Yeah, that was the way to get to the top. Yeah, it's not like that at all anymore.
No, I mean, the whole profession has really shifted, and it's fascinating to think.
I mean, in the nineteen seventies, you.
Know, the big upheaval and comedy was when Johnny Carson moved The Tonight Show from New York to LA and you know, that was the biggest thing, like getting in to do your show, you know, your act on Tonight Show and that could just catapult you. You get a sitcom, you get a you know, movie, whatever. And all the producers on Tonight's Show would recruit and they used to recruit at you know, the comedy clubs in New York.
When the show moved to LA, that all moved to the Comedy Store and so the Comedy Store was like the place to be back in the day, and that was, you know, eventually, decades later, that's where Rogan hung out. A lot of his friends are like comedy store cup medians, and I think they also saw that connection that existed back in the day between the Tonight Show and the Comedy Store.
You know.
Yeah, late night television no longer what it once was, but it is fascinating that now, like the big thing is Rogan's podcast, And similarly, the comedy club that he runs is now kind of like a gateway, and that's where talent is like, you know, pulled to with the hopes of like, well maybe if I kill it, maybe if I just absolutely make a name for myself at
Rogan's club, maybe then I get on his podcast. And that scene is like, you know, the big place to be, and even people that are out there, you know, promoting and whatever it is they want to promote, especially to the demographic that listens to Joe Rogan, which is like young men presume, you know, primarily like you know, if
you if you're selling something to that demographic. Yeah, like you want to get on his podcast, You want to get on the podcasts of all of his friends who were also in Austin this whole little universe, the Rogan verse as we like to call it, you know, And we talked to like Tucker Carlson who's trying to launch
his own streaming network, independent streaming network. Yeah, he goes down there, has dinner with Joe Rogan, does the podcast, goes to the club, does another podcast in the club, you know, and just goes hang out in the mid sies, Like that's the new place to be and it is a huge shift for the industry.
So what's the comedy like at the club? Is it all branded with the Joe Rogan, you know, carnivore diet.
Yeah, I mean you would.
Think like and when it first opened, people were like, oh, it's an anti woke club, you know, it's all going to be Rogan style of humor. In truth, it's not really like that. It's much more just like a anything goes comedy club. I mean, it's like, whatever people are doing, that's funny. You can get up there. Some of the humor is you know, political, but most of it's not.
So is it.
How's the club different than other comedy clubs that people would go to.
I mean, first of all, it's very hard to get into these days. I mean that's part of why, you know, another dozen clubs have opened up in Austin because it's just really hard to get.
A ticket just to get in there. Additionally, you know.
It's kind of like Rogan's guys who are the headliners. There's a smaller room and there's a whole system, a hierarchy in the club. You know, if you get a job as a door guy, then you work at the club. Then you can do the staff shows in the smaller room. If you really are successful there, maybe you'll.
Get up to the top room.
But it's kind of like, you know, there are definitely, like plenty of big performers comedians around the country that will never go to the Comedy Mothership. It really is kind of like a place for Rogan, the people that are already in his inner circle and the people that are death to get into his in or so just.
Very briefly, you're not allowed to bring a phone or cameras or anything in, but they have cameras set up for a very special reason.
Yeah, because they you know, you're gonna start seeing more and more live shows on Netflix.
Netflix.
Just at their first live show, Brian Simpson did a live from the Mothership. You'll see more of that. The whole place is wired so that they can do specials.
Well.
It's a great story by Felix, Jeled Nashley Carmen. They write about Joe Rogan for Bloomberg Business Week. Do check it out. You can read the story on the Bloomberg terminal and at Bloomberg dot com Slash BusinessWeek. Felix also the author of It's not TV, the Spectacular, Rise, Revolution and future of HBO. Joining us here in New York.
You're listening to the Bloomberg Business Week podcast. Listen live each weekday starting at two pm Eastern on applecar Play and Android Auto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa Play Bloomberg eleven thirty.
Well, you may have heard of the last month or so quite a bit of DEI news, at least on the corporate side. So just last week, deer End company, it's the world's largest top farm machinery maker, said that it was pulling back from diversity measures in the face of conservative criticism. It was the second agg related company in less than a month to bend to such pressure. At the end of June, Tractor Supply, you might recall, said it was eliminating DEI roles and retiring DEI goals
quote while still ensuring a respectful environment. So some companies are pulling back when it comes to DEI and others are leaning into it, like the investment firm Illumin Capital. Darren Dodson is managing partner at Allumin Capital. It's a fund of funds that's working to achieve racial engender equity across investing. Darren joins us from Oakland once again. Darren, good to have you back on the program with us. Good to see you. Illumin just received its annual report,
or released its annual report. We're gonna get to that in just a minute, but first I got to get you to weigh on what's happening on the corporate side, because at least at some companies when it comes to DEI, we've seen the environment shift quite a bit over the last couple of years. How are you watching this well?
Of course, our strategy at a luming capital is to address biases as a methodology for unlocking economic value. So those that are pulling away from DEI have to be really careful that they're not pulling away from returns, because that's exactly what our research and partnership with Stanford Spark shows that as we address biases, we are able to
see underlying returns. Sometimes we miss if we don't address them, particularly racial biases, which we've found that systematically black fund managers that are outperforming or overlooked by asset allocators when they're trying to achieve the highest return, they basically go against their own training and selecting high performing managers when race is present. So I think there's a lot of work for those that are moving away from DEI at that intersection of DEI and bias.
Do you think it's a mistake for companies And I'm not talking about investment firms or firms that are making investments, but companies like Deer and like Tractor supplies a mistake for them to distance themselves from DEI after getting criticism from customers.
Well, what we've found is that our investors that represent a number of the largest institutions and foundation endowments, pensions, others in the country are really excited to do the work to address these biases because they believe that there's tremendous economic value on the other side of that. And that's also what our research in partnership with Stanford Sparks shows. So I think that leaders of corporations would do well
to also look at their biases and resource allocations. Of course, Danielkahneman won the Nobel Prize in this area and looking at systematic bias and resource allocation and firms and when we look at the intersection of bias and way that shows up with women and people of color as they outperform. Yes, there's some important work for leaders of companies to do in that area as well.
So tell us more about why you founded illumin Capital and what are you looking for if you're running a fund of funds, when you're selecting different portfolio managers and different funds to invest in.
Well, we're looking for fund managers that much of the market is overlooking. So our research showed that as black fund managers outperform, many missed that outperformance and basically fall back on their own biases. So when we tested leaders of university endowments that allocate large pools of capital, when we talked to sovereign wealth funds managers and when we tested them for bias, we found systematically they went against their years and years of training and didn't select the
highest performing managers even money on the table. So, in short, what we look for is high performing managers that others in the market overlook, and that's part of the reason why with our recent impact report that was referenced at the top of the program, we've found that our managers are about double the industry averages in terms of women partners, and also four times the industry average in terms of
underrepresented people of color. Where we believe that interrupting these biases and finding these overlooked and underestimated managers will result in continuing to create economic value for our investors.
Darren, do you think that because you're investing in what you call overlooked fund managers, you're able to invest at some sort of discount because the market's not actually taking into account what their performance is and what their performance could be.
I think that it's very similar to the way that Charlie Munger invests when there's latent value in the market because others are overlooking it, and you partner with people to deliver on that latent value. That's a partnership. So we partner with our managers. We also have a unique program, the Aluminiq Proprietary Training Program, where we help them to identify companies and their underlying strategies that are also overlooked
and underestimated. So we do a tremendous amount of work alongside of the funds that we select to ensure that they are also beating their biases and choosing the best companies in the marketplace as.
Well, What kind of evidence and research do you have that kind of shows a real connection between meaningful returns and portfolio outperformance and this DEI factor we could call it.
I think the most substantial research there's probably about forty years showing the outperformance of managers of color and women led firms done by the National Association of Investment Companies. And was really unique about our research and collaboration with Stanford Spark and a number of the leading professors in the world in this particular area is that what we found is that not only was there years and years of outperformance, but there wasn't asset allocations to follow that
outperformance of women and people of color managers. So we had to ask the question why, And what we found in our research is that likely biases are interrupting people's ability to see high performing black lead funds, as we published in the Proceedings of the National Academy of Sciences in a pure reviewed paper, and that is really important information for those that are looking to make money in financial markets, is that if they're looking at their investment
strategies and they're finding that they don't have women and people of within their portfolio construction. They have more work to do to address their biases to ensure that they're not interrupting their opportunities for more returns over time.
Hey, Darren, just thirty seconds left. What's the fundraising environment like right now?
Well, this is one of the really interesting things, and thank you for asking the question. The fundraising environment is impacted by the increasing polarization, do the upcoming election, high inflation as we know, and everyone's awaiting the feds new words.
But what we find is that at periods where there's a lot of market volatility and uncertainty like there is right now, that people increase their biases substantially, and those very things that led them to overlook and underestimate fund managers and entrepreneurs get exacerbated during periods of stress like
the period that we're in right now. So I guess what I would say is that it's even more important now to do the work to interrupt biases for those that are looking to meet their fiduciary duty and achieve higher returns than ever before.
Darren, we love it when you join us. Darren Dodson, Managing partner at a Luman Capital. It's a fund of funds that's working to achieve racial and gender equity across investing. Darren joins us from Oakland to California.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm Eastern. Listen on Apple, car Play and and brout Auto with a Bloomberg Business app, or watch US live on YouTube.
Well Block and Michelle Obama endorsed Kamala Harris as bid to become the Democratic nominee this morning. The former president and first Lady offered their support for Harris to follow in Obama's footsteps as only the second black president in US history. Here's a video which Barack Obama tweeted out this morning at five am.
Kamala, Hi, Hey there, ah, Hi, you're both together. Oh it's good to hear you.
Bout.
I can't have this phone call without saying to my girl, Kamala, I am proud of you.
This is going to be historic. We called to say, Michelle and I couldn't be prouder to endorse you and to do everything we can to get you through this election and into the Oval office.
Oh my goodness, Michelle Bractice means so much to me.
That announcement from the Obamas follows a whirlwind two days during which Harris secured enough pledged delegates to secure the nominees, raised over one hundred and thirty million dollars, and met with Israeli Prime Minister Benjamin Nett and Yahoo. Adrian Shropshire is executive director of Black Pack. It's a democratic political action committee that's focused on mobilizing and engaging with African
American voter. She joins US now from Los Angeles. Adrian, I'm wondering, in your view, how big of a deal the Obama's endorsement is to Vice President Harris.
I imagine that it's a it's a pretty big deal, I think, both to to the vice president just having that support in in you know, addition to the support from Democratic leaders you know, across the spectrum. But I also think it's a really big deal for voters. You know, obviously President Obama and Michelle Obama, you know, have really
high favorability, as we say, among among voters. They're very popular, and I think that we're Black voters in particular, you know, who showed up for President Obama and historic numbers.
For his campaigns.
It means a lot in terms of just having that sort of final endorsement in place and people really feeling like, now, you know, uh, they can get ready to go.
So what did the next few months look like, Adrian, Because we really don't have a lot of time left until the election, what kind of challenges do you anticipate in terms of getting voters to now mobilize around a candidate that just very recently came, you know, into this race.
Yeah, I think that the good news, right, it is that Vice President Harris is not unknown. I mean, I think part of the challenge with what we were hearing, you know, from inside circles and the Democratic Party about you know, the potential of going to an open primary and to you know, sort of extending the internal debate and frankly chaos, that would have been more challenging. Right,
The vice president is not unknown. She's been vetted not only from her own presidential campaign, but through the twenty twenty election, through the last four years of the administration. So she's not unknown. And in fact, you know, we've seen in our polling and even in the door knocking that we've been doing over the last few days, we made the sort of pivot. You know, folks are are you know, very much aware of who she is, and
we're seeing lots of excitement. I don't think that the challenges, you know, are very different than the challenges that we were facing three weeks ago, which is, you know, voters, a lot of voters, particularly black voters that we're talking to, need to know because they don't have a real sense of the accomplishments of the administration. They need to understand the accomplishments that the Biden Harris administration had that the
Vice president was directly involved with. We hear from folks that they don't know a lot about what she's done over the last four years. So she will need to tell that story. The campaign will need to tell that story. We will need to tell that story. But I think that that is, you know, not different right from what we're facing before getting the information out there telling her story. I think a lot of voters still don't know about her her biography and want to know about her her backstory.
So I think that they they need to tell that story. They also just need to continue with the contrast that they've been doing and making mistakes of the election very clear about where where we have the potential to go as as America as a democracy, that is, you know, toward that more perfect union or towards you know, an America that you know is continues to sort of push you know, divisiveness and uh and and rhetoric that is, you know, not taking us to the future, but taking us back.
Adrian.
One thing that we've seen in polls in recent months, and this is before Kamala Harris was at the top of the ticket, it became becoming the presumptive nominee, is that although we can't really say that former President Trump is popular with black voters, he has picked up black voters since at least according to some polls, since leaving office, becoming more popular with them. I'm wondering what your polling shows in terms of how that could shift now that Kamala Harris is in the race.
So, I mean, I'd say a couple of things about about those those polls. I mean, one is it really is unfortunate that when we see national polls that that you know, really captured the head lines, particularly about black voters.
It's unfortunate that the sample size of those polls are so small, and I think that that does a disservice not only to people's understanding of the race, but the electorate and how it is moving when in our research and in our polling, which are much larger, much more robust bus sample sizes, we do not see that kind of shift and support among black voters, and that is across demographic When the Black electorate, I mean, you know, regardless of gender, regardless of age, we see the same
level of support for Trump that we saw on the election day in twenty twenty and on election day in twenty sixteen, which is under ten percent. So we have not seen those kinds of shifts. We haven't seen them in our polling, we haven't seen them in our focus groups, and we definitely haven't seen them in the conversations that we've had on the doors. I don't think that that means though, that, you know, this is sort of an easy, you know, sort of chewing in terms of mobilizing and
citing the black electorate for the vice president. I think that there's a lot of work to be done, that there's a lot of conversations that they need to have with black voters, both to help black voters understand her vision for the future house problems, that sort of intractable problems that people are feeling very deeply. Whether it's the cost of living or it's crime, those sorts of issues that are really burdening people. They need to tell the
story about how they're going to address those issues. But I don't see any I have not seen in any of our research the kinds of dramatic shifts that I know that we've seen in headlines and papers over the last few months.
What have you seen in terms of what the Harris campaign can talk about. What has been a strong policy that has resonated with the black voters that you interact with.
There's a lot I would say that that, you know, black voters have a lot of issue ext There's a lot of issues that people are concerned about, and I just named some of them, you know, whether it's crime or the cost of living, healthcare, education, you know, rights and the erosion of rights. So there's there's a lot of issues that folks are concerned about, and those issues that those top issues are generally the same across the
battleground states where we're operating. You know, the top issue might be different in Philadelphia than it is in Wilmington, North Carolina. But the top issues are generally the same. When we ask people what issues are going to motivate them to the polls, the issues that they say, I'm going to go and vote because this issue matters so
much to me. Those are things that are really tied to people feeling like our rights are being taken away, that they're deeply concerned about the Supreme Court decisions, whether it's you know, decisions on voting rights, whether it's reproductive rights, whether it is affirmative action. Those are issues that people
are very concerned about. People are concerned about the rise in white supremacy, They're concerned about hate crimes, people feeling very uh, you know, personally like they have the you know, might be a victim of a hate crime. So people are worried about the divisiveness and the divisive rhetoric in the country. And so I think it's those issues. There's a set of issues that people are are deeply concerned about.
People do not want to lose more rights, They're worried about the direction of the country, and those are the things that are going to motivate people to show up to the polls.
Adrian, thanks so much. For joining us. Do appreciate. Adrian Shropshire is executive director of Black Pack, a democratic political action committee. It's focused on mobilizing and engaging with African American voters. Joining us from Los Angeles this afternoon.
Brom A Journal, you let me drive, Oh.
No, no, no, no, please, I'll do these.
I want to try.
It's a good question.
This is good drive to the globe.
Pong communing well by up to Jada.
Don on Bloomberg Radio.
Well, look at that less than twenty two minutes to go until the No, less than eighteen minutes to go? Yea, we got to look at the clock more le's than eighteen minutes to go to the end of trading on this Friday afternoon. We just heard the numbers from Charlie, but they're worth repeating. We're seeing a rally underway with the Nasdaq. Can posit up close to one percent? Yes, and people have hundred up just over one percent. Will the Dow is up one point six percent. Let's see
what Lance Cannon has to say about all this. He's portfolio manager at Hood River Capital Management. Joining us from Palm Beach, guards Florida. Lance, you manage the Hood River International Opportunity Fund, which this year is up close to fourteen percent. It puts it in the ninety fourth percentile of its piers. Good to have you with us. How are you. I'm doing well.
Thanks God be back.
Good to have you with us. Hey, we had a pretty big sell off this week, and we're actually likely going to see, depending on how things close, another down week for the Nasdaq one hundred and the S and P five hundred. The rotation continues into small caps. How are you looking at the environment right now?
So we're very constructive on small cap as you might imagine being a small cap manager, but we actually see a lot of data points that would give us reason to be excited about the opportunities over the next twelve months, particularly given the fact that look at your small cap indexes relative to the large cap indexes or their equivalent peers. They historically have traded at premiums relative to the larger indexes.
But right now that these small cap indexes, whether it's international or domestic, or trading at equivalent or even below, and we think that rotation you mentioned earlier is going to continue to happen as we continue to see these opportunities and large reason why that's happening is because you've got high quality companies are going to be delivering earnings, Revisions are gonna be positive, and people are going to see those opportunities and see that these are undervalued opportunities.
I want to rotate into those type of situations.
So what exactly has to happen in the macro environment to keep the small cap rally sustainable? That hasn't happened already because I always think of, you know, small caps, when economic growth is doing well, small caps will rally. But the economy is doing pretty well, and it has been for the last several months. So like what happens now that propels the rally further and keeps it.
It's a great question. I don't know if there's anything necessarily that's going to happen that's very unique or specific, as much as it's just the consistency that you will continue to see out of small caps.
Right.
So again we're talking about we look for high quality companies we want to be invested in over a period of time. They're being run by phenomenal management teams. These guys have been doing the same thing that you know, you've been talking about during this economic period where they've been delivering, but they've been overshadowed by these larger players.
As those shadows tend to fade, we think that they're going to start to shine and be able to be seen and think be more managers to rotate down that direction, just kind of given the opportunity that they see where these are undervalues that situations relative to their larger piers. I think Viking Holdings would be a great example of something like that that were kind of already seen here
more recently. This is a cruise operator that has historically been doing a lot of stuff in the rivers and mostly in Europe, put has made a shift here to the US.
I think a lot of people are familiar with the marketing Viking River Cruises, right.
Yeah, if you haven't seen it yet, you probably will now exactly. But they've been doing a lot. They've do really great in the river side on the river kind of cruises type thing. They're making a push now into ocean as well, and people are gravitating towards US because they have the great experiences there. We think they're going to grow at twice the three of what the industry are going to be growing, so you can imagine they're either taking share or they're creating share in the marketplace,
but then they're also expanding their margins. We think they're going to do this set a rate that's much higher than what expectations are out there, and that will lead to a stock that will continue to appreciate going forward.
Alenz, how long do you think we'll see small caps outperform in your view, because it's been a lot of years where they haven't.
I wish I had a crystal ball to tell you how long that will be, but I again, I'm pretty positive on it. I think that the market is starting to recognize that these things have been undervalued for quite a while now, that these are not just junk companies that are down here in small Collemba. They are high quality businesses to be had opportunities to take advantage of.
I think that one of the things that sets us apart to is just the ability to identify those high quality businesses and so you don't get necessarily all the riff raft down here when you're investing in a Hood River type fund, just because you're looking at high quality businesses being run by high quality individuals and that will lead you to see hopefully longer term returns that are better than what the indexes putting out there.
What about on a sector level, what is interesting to you right now?
I think obviously there's a lot of stuff happening out in the AI world. Small cap has a lot of opportunities in which you can participate in the development of our official intelligence and the things that are happening in that space, whether it's in the data center side, you can even do stuff on the semi conductor aspect of things as well. And then in another area that I think it's pretty interesting too. It's just this idea of
moving things online. So one of the companies that we would like an international fund is this company by the name of red Care Pharmacy out of Germany. This is an online pharmacy dealer ow an online pharmacy stores excuse me, throughout Europe. But Germany just made it a case where they're now allowing you to actually order your prescription drugs online that it was not allowed before. You had to go to a doctor and get it signed, It had to be handwritten, had to be taken to the pharmacy
delivered by hand. So now you can actually go online. You can order it and do it all electronically, right, so you can have an e visite thing in theory i've heard of. The doctor could then prescribe you. Yeah you have, maybe you've done one.
Yeah, I don't know, if you're interesting. They have the you know, the fast trains.
But but they do you have to get medicine by hand. In twenty twenty.
Four you did. Yeah. So as of May it all kind of shifted, right, and so we got our first look into in the Q two results as to what happened there, and they saw a thirty five percent subfluential growth rate in the e subscription business, and we think that's going to continue and be the real driver of the growth. Meanwhile, all their other all the other stuff in a pharmacy now you can buy online as well.
Over the that they're seeing that part of the business continue to grow a twenty percent clip the streets, looking for twenty percent total growth for next year. We think this is going to continue to be a main driver just kind of given the size of the prescription business in Germany sixty five billion, and less than one percent of that is penetrated today. Most countries in Europe that have moved this way where they are allowing e prescriptions.
They're doing seeing a twenty five percent penetration rate, So to go from one to twenty five percent, that's a big chunk of cash that is to be had by these guys.
Lance, we have a FED meeting coming up.
Oh we do yeah, next Tuesday Wednesday.
Next Tuesday Wednesday. So I'd love to get your thoughts.
Well, it felt like this week we heard a lot of people say that the FED needs to be cutting sooner rather than.
You did have a couple of prominent voices come out and say that.
Bill Dudley saying let's do a cut right now in July. What are your thoughts? What are you expecting Powell to come out and talk about.
I think there's a lot of people that would love to see that happen. We are not necessarily planning on that in nor do we position the portfolio to take advantage meent type of macro type of environment. We're bottom up fundamentalists. At the end of the day, We're looking for long term opportunities that we believe the fundamentals are there, regardless of what's happening from a macro standpoint. So I'd like to say we're macro aware, but we're not macro driven.
So in terms of like what happens next week with the FED, you know, hopefully, you know, they're seeing some of the same stuff that I think others are starting to see, and maybe that is voiced in a certain way that gives us some confidence. But it's not necessarily something that I'm spending a lot of time trying to, you know, position the portfolio around at this juncture.
I'm spending a lot of time thinking about it.
I'm spending a lot of time thinking about that view that Lance has out of his backyard. Looks like he's red on the water.
I wish this was my backyard.
This is yeah, oh okay, Well, wherever you are, that's where we want to be. Lance Can, Portfolio Manager, River Capital Management, joining us from Palm Beach Gardens, Florida on this Friday afternoon.
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