Small Business Survival Guide

Week on iTunes, SoundCloud, bl Bloomberg dot com. You can also listen to our radio show at two pm Eastern on Bloomberg Radio every weekday, or watch us on YouTube by searching Bloomberg Global News. This story is the most read on the Bloomberg in the past one hour, and it talks about the CDC. It talks about a warning it is not though, specifically about the coronavirus. Let's get into the details. Bloomberg News senior medical reporter Michelle Cortez is back with us, She joins us on the phone

from Minneapolis. I have to say, Michelle, I was like quick scanning and I'm like, wait, what is this about? Right exactly as I couldn't get any parrel. It's horrible. But there is a virus who seems to be sweeping through the US and the world in fact, every other year, and it happens. It starts increasing picking up in August and runs through November, and it leaves in its wake paralysis and effects mainly children average age of five. And so the CDC is saying, hey, it's August. It happens

every even year. Is an even year. So if you have children and they start complaining that their arm doesn't feel strong or their legs are suffering a little bit, especially if they've had, you know, a little bit of a cough for a fever a few days ahead beyond the lookout for that. What is it called. It's called acute flaccid militis. People call it like a polio like syndrome, but it's not polio. They have looked for the cause of this and they haven't been able to identify it.

There is not polio in these kids, and so we know that that's not what it is. They think it's an enterovirus. It's called N six eight, and they see higher levels of that viral infection, but it's hard to catch because as we're seeing what's testing with coronavirus. It's just difficult to catch it right. So what there. It's kind of a warning to parent, especially amid with everything else that's going on, and it's very important that you

do kind of catch it early correct exactly. So the thing is, unfortunately for kids who start showing the signs of muscle weakness and paralysis, many of them actually don't fully recover from it. There have been very rare cases of death, but there is this paralysis that can persist.

So they want to get kids treated right away so that they can do an m r I, figure out if there is something in their central nervous system that's causing it, and start immediately rehabilitation efforts and things to keep their muscles strong so that what they don't lose they will continue to be able to use. Going forward,

No go ahead, no no, no, you please finish. So the the what they're worried about is that parents are going to say, oh, you know, he did have a little bit of a fever, but he's feeling better now. He's complaining that his armor's legs bothering him. But coronavirus is out there. We don't want to go to the doctor. We don't want to go to the hospital because we're afraid that it's going to get worse, and maybe we're just watching to see if he gets better, and the

proasis can happen just in hours. So it's very important if that's what you're seeing in your child to call your doctor, go to the emergency. It's terrifying your story. You mentioned at the average age was five, I mean, and and the cases have been rising correctly, right, correct, Yeah, they have been rising. But it's also important to remember that it's very very rare and of course, probably the vast majority of people who get this enter of virus

don't have any complications at all. Right, it's probably thousands and thousands of people who get it, and the numbers were talking about are less than two hundred and fifty, so the numbers are are small. But it started, we started seeing this significant increase in there were a hundred and twenty cases and twenty fourteen, and that it increased in we were up to two d and in thirty eight or so in nineteen. Now now we have seen already even before August began, sixteen cases so far this year.

So yeah, so we're seeing a lot. You know, I don't. I'm not a dark person, Michelle, but I gotta say that there's something with viruses and viral infections. It feels like we're seeing a lot more and a lot more that are, you know, very difficult to overcome. That's that's very true. And this is affecting kids, coronavirus and affecting older people. Influenza is just around the corner of that hits everybody. Uh yeah. The good thing is Carol social distancing,

wearing a mask. It protects against all of these things. Isn't it amazing that I feel like there was so much pushback and now we've got kind of everyone. I mean the medical you know, you go to CDC and you go to various medical websites. They explain why masks makes sense. It's so simple, but it really does make a difference. It really does, all right, Michelle, one more thing for us to worry about, all right, but we

appreciate it. Um, Michelle, Thank you so much. Michelle Cortez, she's our our senior medical reporter at Bloomberg News joining us from Minneapolis. Check out her story and I'll put it out on Twitter. It is indeed the most read story on the Bloomberg in the past sixty minutes. This story, too, among our most read on the Bloomberg. This Bloomberg Business Week story. It's about the London traders that hit a half a billion dollar jackpot when the price of oil

went negative. Remember that story back in April. Well, Liam Vaughan is a financial investigations reporter at Bloomberg News. He joins us on the phone from London along with Bloomberg Business wee get or Joel Webber. He's on the phone in Massachusetts. Um, Joel, you know this is you know, about being a guest on the right side of the trade or just making a really really smart bet. Yeah,

I mean it looked like this. The day that oil went negative was one that, um, you know, people were not really prepared for it, and you know, just bite a couple of more innings from CEM that it was a might have been a possibility when it happened, I just think it took a lot of people by a surprise. Um, But you know, I guess there's a couple of people in the world who could have been prepared for it.

And that's sort of what Liam managed to unearth with this firm um little known in London called Vega and and Liam bring you in here. What did you discover about how they how they pulled this off. Yes, so there was a lot of speculation asked April twenty three about how exactly oil has fallen as far as it did. Like, as you say, there was some expectations because there was no demand for oil at the moment. You know, nobody's

driving anywhere and nobody's making much. So you know, there's this kind of very unusual technical circumstances why you'd expect oil to be very cheap. But nobody really predicted it would go as far as he did. I mean, it literally fell forty dollars in a little over an hour, and so there was sort of ummings and irons about whether maybe some sort of at least disrupted trading was responsible.

Um and we managed to find out that actually there was a firm, this tiny little firm called Vega Capital London, which is literally an office above a pub with a

few deaths. Most of the guys they are trade from home. Um. They're predominantly expit traders, you know, quite kind of grizzled long in the two veterans of the oil market, who you know, a lot of times used to bind sell oil using hand signals, had managed to stick it out and then this particular day, owing to these unprecedented swirling movements in the market, were on the right side of his trade and managed to sort of bad half a billion goats, which you know, considering the size of the firm,

and I think, you know, considering that normal earnings topathically, it's just an incredible sum. It's mind blowing. And I love how you say in your story, Liam, you know this is a company, as you said, most of them are working from home. There's not a lot of information, and that their website, the company website has remained under construction on LinkedIn since it was founded a few years ago. Right,

so there's not a lot known about this firm. So is it a case that they were just on the right side of the I mean, obviously they were, But how were they able to pull this off? And I just wonder what regulators, you know, they've got to be scratching their head about how did this firm do it? Yes? So how very Matt Lavine is really good explaining this stuff, and he's absolutely right little couching it as somewhere between

hedging and potential manipulation. UM. And that's the kind of messing quagmire that the regulators we're going to have to um get through and make a decision on. But essentially mean, what they were doing and what is this kind of feature of the oil market is that you can buy oil throughout the day but not know the price, and you just agree to buy or sell oil at whatever

the settlement price ends up later that day. So what these Panny guys did, knowing that we were likely on a very downward day, is they bought up as much oil in this kind of what's called the trade at settlement market as possible, which meant that they were committed to buying thousands of bowers of oil and whatever the titles are two thirty. But then throughout the day they're

also selling oil to kind of offset their position. And you know, according to our sources, they're selling very aggressively in unison in the last kind of you know, period of the day, two minutes really of the day, and they they're trading coinciding with a complete exodus of buyers, and it contributed, you know, to this massive would fall in the market. UM. Now, as we point out, you know,

there are strict rules around trading at settlement. You're not supposed to trade in such a way as to try and deliberately move the settlement price to try and profit in another market. And people have been you know, in trouble for that previously. UM. And so what the regulators will have to determine is whether these guys who were aggressively hammering the market at the end of the day were legitimately hedging their position or they were actually trying

to to you know, last through the market. And I think it's it gets really technical there. UM. And you know one reason Liam that um, as you write in the story, that that this is complicated for regulators. Um is something that you also know a little bit about from from your book because bringing a case you actually have to show intent, which means you have to get your hands on some stuff that shows, you know, in papor In writing that somebody knew what they were doing.

So is how often a regular is able to pull that off? Yeah, thank you Joel for for mentioning the book.

Just written another book called Flash Trash, and it is worth mentioning because it's actually strikingly similar situation for this whereby you had the flash crash and took down and saying and there was this big sort of scrudgingly after the event, and then a couple of years later they emerged that this guy in the in the surrounding his bedroom may have, you know, through his disruptive trading, actually been a significant contributor towards it. And this is a

very very kind of reminiscent situation. Um And yeah, to your point, um, you know, historically we see if you see another, authorities have really struggled to bring and make stand manipulation cases because it's not enough just to sort of show from the data or even from methodism things that people intended to move the market. You have to actually kind of show beyond the reasonable doubt and the market wouldn't have moved anyway. And it's actually very hard

to do that. Um So. In the surround case, the reason he got in trouble is because when they arrested him, they found him computer and there's actually videos of him unbelievably trading. Um And it also quite early in his career he sent emails talking about his plans to sort

of manipulate the market. Um So, they had that hard evidence, but sund was pretty careless in that respect, and that these guys or any you know, traders have been sort of following the news over the last few years, they will be pretty savvy to the need to communicate in a in a effective and efficient way. Um, and you know a lot of of means of communication these days

are fully encrypted and stuff. So even if the regulators suspected there's you know, there's something untowards here, actually been able to charge anyone is a different matter. Well, it's pretty incredible and as sophisticated and complicated and even with all the regulations we have to see this kind of a trade. It's it's pretty remarkable. Liam, Thank you so much,

really appreciate it. It It is, as we said, among our most read stories on the Bloomberg liamba our financial investigations reporter at Bloomberg News, joining us on the phone from London along with Jill Webber, editor at Bloomberg Business Week. He's on the phone from Massachusetts and dude, check out Liam's book Flash Crash, A Trading Savant, a Global manhunt, and the most mysterious market crash in History. That book just came out in May of this year. In this

week's edition of Bloomberg Business Week Small Business Survival Guide. UM, we've been talking a lot about small business and how they're getting through the pandemic. We're going to talk this week about preparing your business for uncertainty, which is one thing I feel like we kicked off the show Doug and I Doug Krisner talking about that specifically. Joining us

right now is Bloomberg News editor Dimitrick Hessands. She joins us on the phone, and I believe she's in New York City today, along with Hunter Lovin's board member at Simplify Power on the phone from Colorado. I'm great to have both of you with us. Um, Demitra, let's kick it off because you've been, you know, tracking small business

for US week to week. Tell us a little bit about, UM the thinking on this week's topic, because I do feel like the one thing people are certain about is that they just don't know about the rest of the year. And really, UM, it's true. And you know what was compelling about this, especially to Nick we've talked to him before also liber when he first met the folks that Simplify Power there, makers of Sustainable Safer Batteries based in California.

We've written about them before and we've been in touch with the CEO. He's recently been in touch with Hunter and talking about something they've done called scenario planning, which really has been an incredibly useful tool to anticipate. I

mean it's not really about it. It's sort of putting different scenarios before people at the company and really testing out, you know, what the company can withstand, how we can react, what it can do, what tools it has, it can It can be something that you used to decide about your supplies about you know, how much you need to kind of stockpile in terms of whatever it is that you make, um you know, where how you're going to

deal with getting products to your customers. Um So to some degree, to a very large degree from what we've heard from them, this has really been very helpful to them in weathering this period in a way that many

of their small businesses haven't been able to. So Hunter, come on in on this, and you know it's so timely because tomorrow I'm getting ready to talk to We have a group of CEOs that we regularly talk to you as part of our Bloomberg Live breakaway group and they're all wondering about reopening and what they're you know, second half talk, you know looks like and this whole idea of scenario planning I think fits right into this. Tell us a little bit about what you guys did

and how and how it really helped you. It's the most powerful tool I'm aware of too for a business to figure out how to deal with uncertainty. It's in effect and over the horizon, look at what might be coming at you, which then enables you to test your strategy against a variety of mutually inconsistent but plausible possible futures, the goal being defined a strategy that as Royal Dutchell,

which invented this discipline, calls a no regrets strategy. And it's a process that I helped companies go through in a very short period of time and simplify. We took I shut them a power point presentation the evening before then it took about four hours the next day. They involved basically everybody in the company. And even if you got no value out of the scenarios, just getting everybody in the company together and surfacing your assumptions is an

incredibly good way to engage your employees. In this case, the initial time we did in November last year, the crew was not being terribly imaginative in terms of what could go wrong. And I said, guy, it's get a little wild and crazy. What if we had a pandemic? And Katherine von Berg, the CEO, looked at the ceiling, rolled her eyes. But then she started thinking, you know, Simplify gets a lot of its materials from China. What if there were a pandemic, What if our supply chains

broke down? What if it came here? How would we keep the company operating? And so she started putting in place the mental capacity. So that went In December, words started coming out of China that there's this weird disease that's killing people. She went into overdrive and as a result, the company's profits this year about over last year. It's doing very well. It was shut down for all of two days over a weekend to do a deep cleaning and to put in place the safety provisions. It was

deemed an essential enterprise and it's rolling. It's doing just great. Hunter, how like wild is that that a year ago? That that's exactly the you know, kind of crisis situation that you guys brought up the discipline of scenario planning, has you look at what are called the steep forces social, technological, economic, environmental, and political. What's really happening out there in the world where you might want to think about what's the impact

that it's going to be on your company. And one of the things that's been predicted by the scientists for a long time is pandemics. It's not unimplausible outcome. So I was just trying to get them to think about what could go wrong, guys, and how are we going to deal with it if it does. Yeah, that it did. It's it's pretty remarkable. And Demitro just got about twenty thirty seconds here. I mean, yeah, it is pretty You know when you think about scenarios, that's not maybe the

first one that comes to mind. But you know here we are no, absolutely not. I mean, I suspect again Hunter probably used it as one of many examples out of those areas that we've touched on. It just so happened. It was happening. You know, whatever your business, this can be super youthful. You're gonna you're gonna press the right in different ways. But it's very forwarding, Well, this was

great and really helpful. Demitri, Thank you so much. Demitri Cassaniti's editor at Bloomberg News and of course, Hunter Lovin's board member at Simplified Power, joining us on the phone from Colorado bro Journal. Yeah, but you let me drive? Oh no, no, no, who's going to drive home? Honey? Please, I'll drive me. I want to drive, Just drive baby. The question trying this is the drive to the globe? Wrong commun radio. All right, you are listening to Bloomberg

Business Week Jason Kelly and Carol Master. Forgot where I was for a second. It's been that sort of day. It's been a disruptive sort of day, Carol Master. So that's what we're going to talk about. Disruption in the stock market, disruption in stocks and maybe some disruptive names. Happy to have with us, probably rom She is portfolio manager for American Century Investments, joining us on the phone from New York City. Probably really nice to have you

with us. Thank you for having me so. Disruption certainly has been the name of the game here in How do you approach it as an investor? Because you have I believe and keep me honest here you look after the Focus Dynamic Growth Strategy Fund for American Century and we've had maybe not so much focus, but we certainly had a lot of dynamism and maybe even some growth

in this market. Yes, so yes, um, I do cool Man in Focus Dynamic Growth Fund, And this is a fund where we try to keep the names limited adjacent to names, But what we're focused on is early to rapid growth phases UM for companies and that automatically leads to innovation and disruption, just like you pointed out. And disruption comes in several sizes and shapes. Uh. We all think about e commerce. Most of us are not going

to stores anymore. We buy more online. And we've had reports that you know, three years worth of growth has been squeezed into three months and apparently in e commerce and Makan say report tells you that it's ten years worth of growth in three months. So just astounding numbers there. But UM, disruption is not just in technology, Uh, it also is in traditional industries. It is also in uh, you know, healthcare for examples. So we look at disruption

pretty much across us the boat if you will. Yeah, I just want to point out too, I mean the fund, the American century focused dynamic growth fund that you co manage UM, Amazon, Alphabet, and Tesla among the top holdings. The fund has returned nearly on average annually in each of the past five years, putting it in the percentile for funds in that category. So it's really been a

top performer. And you do look at the holdings and they are companies that we know, how often are you guys, since you seem to kind of keep it down to a core portfolio, how long do you kind of hold on to something that gets into UM into one of the holdings, So, you know, But to what I said, you know, we're looking at companies in the early and rapid growth faces and I will touch on Google and Amazon. You know that are not particularly early, but we'll talk

about that. So however, so since we get an early, we hold for long periods of time. So historically it's been an average holding period of about five ideas UM because we want to stay with these names and you know, see them grow and you know, get there earlier obviously. UM. So back to your question on you know, Google and Amazon, so these are not technically new companies, but still uh,

you know, rapid growth phase. Amazon for example, you know, with the online retail their dominance there and obviously the trend towards e commerce is accelerated here. And not just that, but to start this whole aws um you know, which really was a product that was focused internally, right, so their servers ran on this product and they made it available to the world. So so we don't sit out

names just because of their age. We just look at their innovation cadence and whether that leads to growth for our investors. Um And so Amazon fits that. They'll Google the same way. They're very dominant in the digital market. But in the twenty plus years that they've been in business, they've had you know, twenty type growth in the top line throughout that time. So obviously they fit as well.

And you know, they're obviously disrupting the digital advertising market, but also they have investments in YouTube, you know, Android, way more and and you know, and the list goes on. So disruption, as you well know, and we talked about a lot on this show, doesn't just come in the form of technology companies. Boston Beer, the maker of Sam Adams, that's one that you have held over the years. Tell us about that. And there's the disruption and how it

manifests in the beer business. Yeah, you know, this one is a fascinating story because it's a family owned business in a very tough category. There are huge players in the beer business. But what Boston Beer has done and done over and over again is to create new categories.

So going back all the way to craft beers, um, so they were ones that pioneered that and then followed that up with Hot Teas and now Hot celsus Um with the Truly brand and the Truly lemonade is really restonating and it is a product for the times because what it has is um you know, it is a beer. However, it has a hundred calories, one gram of sugar, is gluten free, and the forecast are that the category itself

will grow at two hundred percent UM. Just in and Boston Beer is the only company that has actually gained share UM in this year. Obviously, you know, with a lot of us sitting at home, we're not just working from home, it looks like we're drinking at home too. So that's confirmed. That's confirmed. Yeah, and I can guarantee you that our producer Paul Brennan, who's on vacation right now, dollars to donuts. He's drinking the same Adams Boston Bear

is up a hundred this year. Yeah, totally checks out the very briefly. Probably gotta ask you just a minute left. Talk about Tesla for a second. It's a name we're obsessed with. Um, We've had a lot of balls and a few bears on here. This has defied gravity in many ways. Yes, so you know Tesla is you know, textbook disruption if you will, Um, you know, just because the whole concept of electric vehicles, and not just electric vehicles, but the entire supply chain and actually engineering it at

scale globally. So and then that's the first and the second thing is this is the first automobile which is a software first model. In other words, there is a fix more often than not, it's coming over the air versus having to drive somewhere to get your car service. And then the third thing is, you know, it's not just disruption in the car the battery itself, however, it's also disruption in the way to go to market with the director customer, no dealership. And then we can talk

about autonomous vehicles. You know, the car text after the energy storage that doesn't get a lot of air time, but it's just, you know, it's kind of disruption packaged at every point. That's why we own it, you know, that's why we own it. However, you know, of course the controversy and the fair side of the argument has to be acknowledged as well as being said. You know, the innovation is dead and that's why we hold this stuff absolutely. All right, Well, we really appreciate your time.

Thank you so much. Probo rom portfolio manager for American Century Investments, looking after the focused dynamic growth strategy. She's the comentor at that phone. Joined us on the phone from New York City. Thanks so much for listening to Bloomberg Business Week. Download the podcast on iTunes, South Cloud,

Bloomberg dot com, or wherever you get your podcasts. And of course you can always listen to our radio show at two pm Eastern on Bloomberg Radio or watch us on YouTube by searching Bloomberg Global News.