How The Ultra-Wealthy Are Investing

He's the chairman and founder of Tiger twenty one. Tiger twenty one is a peer membership organization for high net worth wealth creators and preservers, helping them to navigate the challenges and opportunity to that success creates. Tiger twenty one has nine members with more than eighty eight billion dollars in assets, so are really unique perspective and some from the group of ultrawealthy UH individuals business owners that have

monetized their businesses. Uh. Michael, thanks so much for joining us. I love to get your thoughts on what your members are telling you now that at least in the US, there are clear signs that we're coming out on the other side of this pandemic. How are they viewing the world and investment opportunities. Well, thanks for having me, Um. You know, it's an interesting time. In one sense. If you were ripped rand Winkle and you went to sleep a year and a half ago and you woke up today,

you wouldn't be all that shock. You might not even have known there was a pandemic looking at the financial numbers. But at this particular moment, I think our members are digesting some incredibly mixed signals. On the one hand, uh, there's a lot of concern about inflation, uh, and mixed messages about areas of the economy where there is inflation.

And on the other hand, as you've just talked about the you know, there's some question about whether that we're in a bubble and whether we're at the top of a market and how do you protect yourself? Uh. And yet there are these long term businesses that have incredible potential. So it's a lot of mixed signals that feels a little different than we've had in the past. It's pretty much a spring back effect coming out of the pandemic. I think, Michael, how are your clients preparing for the

changes that can emerge when it comes to taxes. Sure, First of all, they're not clients their members UM because these are all people who joined the organization and we're not an advisor, but we do get a sense of what they're doing. We had a UM we had a poll which was really interesting that showed with members that when taxes grow more than five percent, differential behavior starts changing.

And one of the things we talked about in our groups we have seventy five groups across the globe UM is you know what happens when taxes really rise quickly? Capital gains is the one we talk about a lot. There's some evidence when you raise capital gains above thirty you may not actually increase revenue to the government because people's behavior change and they don't realize as many gains and it becomes counterproductive. So depending on where the changes

occur will impact behavior. Obviously, you have tremendous migration out of New York into Florida and out of Silicon Valley into Austin, just to use as an example, because when you had the elimination of the deductibility of state and local taxes, it made the high tax states really expensive and for some people they want to change their lifestyle as a result of it, again that five percent differential

start showing behavioral changes. Michael, I'd love to get a sense of kind of what your members think about cryptocurrencies. A lot of investors just across the spectrum or are a trying to understand what the whole world of crypto and then be if I do have a working understanding of it, how do I invest in it? So how are your folks, again, the ultry wealthy folks thinking about

this space? Sure, so we tend to separate. First of all, our members are not only interested in crypto, but some of them are running some of the new crypto funds and have really extraordinary expertise. That's one of the advantages about being in our groups. But generally the first order is sort of a substitute for gold. Some attributes of particularly bitcoin superior to gold, the most being that you

have a capped amount of bitcoin, so that you have scarcity. Uh. And historically gold was a one to three percent asset across the average of our members, and today my guess is that bitcoin is approaching perhaps a one percent number. You know, with a scale of our organization that's still approaching a billion dollars of bitcoin potentially UM, but the

bigger story is the blockchain story. The blockchain story many members think could be as big as the Internet itself because of the disruptive nature UH that it will have on trade, commerce and finance. So in the bitcoin and in the cryptocurrencies, in the public area, you have things like UH, I think it's great scale bitcoin trust and I think they have some other publicly traded trusts, so you can buy it like a stock, and it reflects

the rise and fall of the price of bitcoin. But if you're interested in the broader and of course coin Base having gone public is the largest infrastructure play for cryptocurrency and in the in the broader blockchain area, UM. Probably the number one UH company involved in blockchain because of commerce is Amazon. Of course, if you buy Amazon,

you're buying a lot of other themes as well. But over the long term, they, they and some of the other tech giants really are looking at how blockchain will change the world. I'd love to switch gears just a little bit to another hot button area, which is real estate. With prices so high, are your members buying, are they waiting or what are they doing in regard to their real estate purchases right now. So so you know, our members um joined Tiger when they have liquidity events and

have built a large, successful company. And the number one asset among our members has been real estate for over a decade, followed by private equity and then public equity or today it's been reversed with public equity. Going forward, real estate is king and the reason is that's where our members have expertise. But um, you know when they say like still water runs deep. Um, if you say the word real estate, it sounds like it's a single market,

but there's no market more in transition. If you look at the retail space, there's just uh, endless negativity going forward because those Internet sales have changed the way people buy forever. And if that's hurt the retail space, the industrial space that serves those internet sales, the last mile delivery and some of the telecommunications industrial real estate has been on fire. That's been amazing. And in the middle, you know, you have the big question about residential, which

is just the perennial favorite. It's income producing an office. Everybody's gonna wonder what's happening with office. That's that's the big question. Hey, Michael, Thanks so much for joining us again. We always love getting your perspective. It is a unique perspective. Michael Son and Felt, chairman and founder of a tiger one billion dollars assets. This is Bloomberg. Well, we did get the I s M Services Index data this morning. I guess for the month of June it fell to

sixty point one versus the record sixty four May. So that's not so good. The expectation was for sixty three point five, so came in a little bit below expectations. That's not so good. But heck, are reading a sixty point one in and of itself is very good. So how to really pass through this? We welcome Steve you should oh he's a chief economist for Miszoo ho Security. Steve,

what was your takeaway this i SM data this morning? Well, I mean you kind of hit the nail on the head a moment ago PUB when you talked about the fact that you know it's down relative to expectations, but the headline number is still in that expansion every phase. Now this is for the service component of the economy. The manufacturing number are disappointed as well relative to expectations,

but again still at a healthy level. But what's most important about the data in here is the details of the report, you know, the details of the report getting at what was actually happening in terms of orders and employment and things of that nature. Whereas where we saw the weakness and the biggest negative surprise was in that employment component, which came in at minus four. It came in at forty nine point three versus fifty five point three,

and that's really a fairly large drop. That's a six index point drop in the employment component. And considering that this is what's really being the factors that people are looking at in driving monetary policy, especially after that solid payroll employment number yesterday, I'll ask Friday in terms of the headline number coming into eight hundred and fifty, this disappointment tells you that perhaps the fifty numbers more an

anomaly than it is going to be the new norm. Well, what are some of the more complicated aspects of this, right? You know? I S M had said material shortages, inflation, logistics, and employment resources continue to be a problem. Right, And so it looks like you hit a snag and one part of the economy and then it impacts another part of the economy, and it looks like, um, there's a bit of a tangled web of issues here. So how do how does this number kind of stand when you

think about broader economic recoveries here? Well, I mean, look, the reality as the economy is going to put in a very very good growth rate number this year. Okay, second quarter g DP our number seven and a half percent. That's a really solid number. But it doesn't compare to the nine percent numbers people have been talking about. And this data again doesn't fit with the numbers that have

people and being discussed in some areas. It consistent with you know, a million workers being added every month between

now and the end of the year. In terms of the employment numbers, these numbers are telling you that a lot of the incentive to the economy that was provided by the by the two point eight trillion in stimulus that we were given UM earlier this year, between the Trump program and the Biden program, the nine hundred billion and the and the one point nine trillion program, that is largely run its course, and you're starting to see the economy come back slowly to a more realistic growth level.

It's still going to be robust and solid relative to our historical norms for the next couple of quarters. But the upside momentum is kind of over and done with. We've seen the peak in the economy and now we're

rolling down the other side of that. Do you think, so, how do you think the FED kind of looks at at that Steve that Does the FED feel like I can, in fact stay on the sidelines or do we think back to the last FED meeting where the dot plots got some people's attention about potentially tightening you know, again, when the Fed changes its dots in three which, to be honest, it's a year and a half out um,

you know, and people pay attention to that. That I think is the mistake, you know, talking about going from one dot to two dots in terms of one hike to two hikes in twenty the end of twenty three, in an environment where the unemployment rate actually moved up to five point nine percent from five point eight percent

when everyone's expecting it to drop. The five point six is going to be a problem for those more hawkish members of the committee because even though the employment number was good at fifty thousand, the more political aspect of this is the jobless rate and the household employment numbers weren't particularly robust. So I think when you look at

all this, it's a really good economy. It's just not as strong as people want to see to fit with what we have seen in terms of the Hawks discussions and the optimistic scenarios as to where this economy is going to go. Essentially, members of the Committee and I think a lot of people in the financial community have written checked this economy can't cash into great economy, but it's not as strong as they would like. I like a little top Gun reference there, Stevens Judeo, chief economist

for Missoo Securities USA. I'm sure he's getting ready for top Gun two, which I think is coming in the fall from power Amount Stevens Judo. Good to have him on here talking about this. I S M data still pretty strong. Don't freak out. The bond market definitely paying attention here with the ten uere you know, below two um,

but still a good number overall. Looking at w t I crude oil here seventy four hours thirty three cents announced off about eighties cents, but it had been as high as seventies six dollars and cents earlier Today so this is uh, just moving higher. We've seen oil really over the last several weeks, and all I know about that is it's a commodity, so it's supply, it's demand. So I'm guessing demand ising, you know, more than supply

right here. So that's basically my analysis. Fortunately, we have somebody much much smarter on this to explain it to us, Fernando Valier. He's an oil and gas analyst for Bloomberg Intelligence. Fernando, let's start with OPEC here. Um, they didn't get it done this weekend, So tell us what's going on with OPEK, what happened over the weekend, and kind of how you think it might play out. Sure, both, First, thanks for

being for let me participate today. Um, there's a major disagreement between OPEC plus in putting Russia UH and the u A, the United Arab Emirates, And the big dispute is really about when you set the baseline for the OPEC plus cards their stock of extending the cuts beyond A two. The EE doesn't want to extend this early ahead, but they are okay to complain with the cuts, but their baseline for production is set in October, and they

added to tacity UH just after that. So currently the EE has about a third of its capacity that's been idled since the cuts in UM and so they want to bring back. They want to reset the baseline to be their production production production capacity as it stands as opposed to October and as opposed to the Saudi Arabian economy, the EE is a lot more depending on oil revenue. So even though they're benefiting from the rise in oil prices, they're still struggling a little bit with the fiscal balance

without that additional production. Can you draw out what's at stake here, because really it looks like it's the stability of the global economic recovery. Oil is already at a six year I what are the ramifications of a lot of these delays and the volatility that's arising from them. Well, currently the biggest issue is just higher oil prices for the short term, although right now they're trading down a

little bit. But without resetting that baseline UH and getting additional volume, we would be and in the current status grow of the mint recovery in O E C D, we would expect this UH in balance to continue and drive oil prices higher. And there's actually pressure from the Biden administrations for OPEX to increase some of that production back so we don't see a disparate impact on inflation as we're seeing with other commodities. So that's really what's

in the balance now. And ultimately UH energy is really um hinges on GDP growth in in gasoline and jet on disposal income growth. So higher oil prices are actually a long term issue for oil demand. So there is an interest for OPEC to not get back to the hundred hunder dollar oil prices that we saw in two thousand and ten to two thousand fourteen, because really that's what gave Ryan's to shale, that's what gave rise to a lot of the UH improvements in my legion that

that really have curtailed oil and man. So Fernando generally speaking, where would OPEC like oil to trade in an ideal world. I know different countries, I guess have different break evens, and just give us a sense of how that works. Yeah, exactly. So the break even is opposed to a company is not what it takes for you to cover your operating

expenses and everything else. It's because these these countries are essentially almost at dependent on oil is how much what oil prices they require in order to cover their fiscal costs, and that will vary from Pennezuela, which is into two hundreds UH, society which is probably closer to fifty five to sixty depending on their production levels and UM. So the Saudi and Russia can can make do in the six to seventy dollar range UM, but they probably prefer

anywhere between seventy to eighty dollars. I think that tends to be a price where you can start to see an impact on global demand. We have a heuristic that when at total energy costs are over seven percent of global UH the domestic product, it starts to be detrimental to overall growth. So I think that gets you anywhere between six to seventy five. I think that's probably their Goldilock scenario where they're making a lot of money UM, but at the same time they're not damaging a long

term reman. Can you give us a roadmap here of what the next couple of days should look like and what the conflicts might be in the interim, Well, I think that's that's everybody's cats. Now. THEE has said the meeting has been postponed, while SARDI and Russia said the meeting was canceled. UM. So I think for now, at least in the short term, we're going to continue having

these dually narratives. I think talks of the U E leaving OPEC are probably not unfounded, but I think we'll we'll get more pressure to at least get a temporary, at least a small increasing in production over the next couple of days UH, and that could be coupled with extending the deal beyond the current expiry. Hey, Fernando, you mentioned earlier the U S shale producers. They have not been the most disciplined lot historically. Do we expect them

to just start drilling again? Well, so far we haven't seen that, except for the private operators. The public operators have stuck to their capital discipline, and part of that is because they have to, because they took on too much debt during the pandemic and the focus now is

to reduce that debt rather than continue to grow. Um. You've seen anywhere one from chronical Phillips, who has always been disciplined increasing share by backs UH to OXY that UH hasn't always been the most discipline but focusing instead of on debt reduction. So right now, when you look at the track spread count UM, which is how many walls are completed, UH, only the permian is up significantly from the loads of April, but even that there we

haven't seen a return to twenty nineteen levels. So we're seeing that discipline. Most of the growth has been from private operators that don't have the same pressures as the public ones, and the public ones have outlined more plans to return capital as opposed to continue English to grow. What can we see coming out of Washington, UM, real quick here, really in thirty seconds or so. What can we expect from Joe Biden in terms of guidance? I

think mostly diplomacy as opposed to outward comments. The administrations in a tough spot where they have to promote higher oil production, which is really against their overall UH stated goals, but in order to prevent higher inflation that could be damaging to the to the U S and global economy, they have to pressure OPEC plus to raise production a little bit, but they can't be seen out the lead to be doing that. So so so Setst. Fernando, thank you so much for joining us. We appreciate it as

always your go to person for global oil. Fernando val oil and gas analysts for Bloomberg in intelligence, looking at w t I crude here, it's been a really volatile day. Trader as high as seventy seven dollars for barrel, now down trading down to seventy four dollars. So volatility continues in the global energy markets. Will pay attention to OPEC. This is Bloomberg. All right. Let's talk plastic waste. It's a big, big issue for a lot of consumer products

companies as they try to combat this issue. There's different technologies out there for doing that, and we as consumers try to do our part by recycling. Let's check in with marking staff and he's a deputy CEO of Carbios. Carbios is a company that trades on the UNEXT under the ticker symbol a l c RB, based in France. Martin, thanks so much for joining us here. Talk to us, just frame out for us the global problem that is

plastics waste. Yes, thank you for inviting me. Uh. You know, three and fifty million metric tons of plastics are produced every year, of which ten million metric tones end up in the environment every year, So it's a big issue and the issue is not plastics. The issue is plastic waste because we have been producing plastics for more than fifty years and we have not taken enough care of

the end of life of plastics and carbios. We are the first and only company to develop biological technologies for the end of life of plastics and fibers. Martin, maybe you could speak a little to how large global corporations like Laureale or Pepsi are able to be a part of the solution better than the problem. They are part of the solution, Yes, and they really feel responsible for that. It's a co responsibility, you know, to tackle this plastic

pollution issue. Nobody will be able to put an end to plastic pollution by itself, so it's really a global play. And our partners, you know, laur Real Nicely, PepsiCo Century, they are very aware that it's by collaborating with a startup like us, with governance, with NGOs that we will develop solutions to really tackle this plastic solution issue, which is not acceptable. Talk to us, Martin about kind of what your technology is, what it does and in kind of how it's being used. Yes, so we use a

biological tool, which is an enzyme. You know, we have a lot of enzymes in our body. An enzyme is a catalyst which triggers a reaction. Normally, it triggers a biological reaction, but our scientists had the idea to use this biological tool to trigger not a biological reaction, but a chemical reaction. And this chemical reaction is to break down plastics into its monomaiers, which are the common building

blocks of plastics. So instead of putting together the same molecule sudden of times to make a plastic or a fiber, our enzyme breaks down this long chain of molecule into single molecules which are called monomers. Then we isolate the monomaers, we purify them, and we recombine them again to make new plastic with the same quality as plastics which are made from petrochemicals. So it's a real a solution for the end of life. It is not a reused solution.

It's a pure recycling. It's a virtuous loop which we have made possible. Are there certain types of plastics that don't work to go through these technologies? You know, I think even as an ordinary recycler people have to think twice before they they do throw out or or recycled certain types of plastics. And it's interesting to see what's happening across different cities when it comes to you know, really the city is cracking down on certain companies using

and distributing certain types of plastics to the consumers. Yes, so today our technology works for polyesters, which is mostly ety, which is the plastics for bottles, but also a food trace for example, or textile. When you see poliest on the garment, it is exactly the same material than the material which is used to make transparent bottles. So our technology work for any kind of peg transparent bottle, but also colored bottle or opeque or foot trace or polyester

T shirts. We can be polymerize or deconstruct all kinds of petty waste to make any kind of petty product. So we can make a bottle from the bottle, but we can also make a T shirt from a bottle, or a bottle from a T shirt. It is exactly the same for us. In the future, we have the intention and the goal to develop this technology for other polymaires. So our technology must be seen really as a platform two to recycle any kind of plastics in the future.

That's a fascinating technology, fascinating story for a huge global problem. Just think about all the plastic bottles we see on the side of the road or worse yet, in the waterways. Martin Stefan, Deputy CEO of Carbios coming to us from France, we appreciate and again, you know that really is a global issue, uh Sonali, and it's just begging out for technological solutions in addition to more recycling, because only four

of plastics actually are recycled. Paul, I know people who have given up shopping with plastics for days in a row, and it's possible. It's hard to do. Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews with Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller. Put on false Sweeney I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio.