Wall Street Has Failed People of Color, Despite Pledges

gonna start a couple of things here. Here are thirteen unwritten rules about being black on Wall Street, according to people who've lived in I'll just give you a couple. Never forget. This is number one. Never forget, despite all those promises about diversity, only about one percent of senior management is black. Number two. Be careful about pointing that out to mostly white, mostly male trading desk. At number three, get used to hearing about the supposed lack of qualified

black applicants. So just a powerful, powerful start to a powerful story. Michelle Davis Bloomberg Finance Reported joins us. So Michelle, give us some of the key takeaway, some of the boy the way you started this article is very powerful with these thirteen unwritten rules. What kind of your key

takeaways here? Thanks? So, you know, Wall Street, much like the rest of corporate America and the nation, is basing this huge reckoning over race right now, um, in the wake of you know, the killing of George Floyd and and for years decades, while Sterns been promising to confront some of these failures, um, and right now, lots of the banks are you know, has been hosting town halls about racism, asking workers to you know, weigh in and

share their experiences. But after talking to dozens of boff workers across Wall Street, UM, what I you know heard from people is that while many are are hurtened by the fact that there are these open conversations happening right now, it's clear that Wall Street really has failed it's people of color, and there's a lot of skepticism that that any of the conversations are are you going to result

in real change people. People are skeptical that, you know, the just bro white bro culture is gonna change because it's it's hard to appear. And let's point out that it's difficult to have open conversations at work a lot of the time, just in general. So this would be a very very difficult conversation to have openly. Michelle, any idea what the delay is why it's taking so long for Wall Street to up its ranks of black people in executive chairs, in C suites and even just among

rank and file. It's not as if there really isn't enough of a pipeline. There are plenty of historically black colleges. There are plenty of candidates out there. What's Wall Streets excuse? So workers that I talked to described having to abide by unwritten rules, like you know, measuring their passion and their directness. Um. They described double standards on pay or you know, having to code switch, which if you don't know, is the practice of you know, interacting and differ ways

depending on a social context. And um, also having to live with double standards. So if you you know, are a black female trader or I mean even a black tree trader is something that is very rare in the industry. But if you have to act a different way than your white male colleagues just to you know, exist or have a role, and that is something that is going to hold you back from actually rising up the ranks. So it was a lot of this, you know, having

to abide by these unwritten rules. And some of the people I talked to, you know, mentioned that there there are some parallels between you know, maybe uh the plight of black workers and also the experiences that other you know, non white UM individuals experience on Wall st. But really this is in this moment, especially like this is about it's especially hard to be a black worker on Wall Street.

So it's intering. Michelle, having spent twenty years on Wall Street, I know the importance of having a mentor kind of guide you through your career and also sponsor you for you know, assignment, sponsor you for promotion, and maybe ultimately the managing director and or partner title talk to us about the mentor situation for UH minorities on Wall Street. So you're right, a lot of the people I talked to you said that they attributed a lot of their

success to having these sponsors within their organizations. That you know, even if they would have typically you know, wanted to sponsor someone that looks like them, they these people described them having taken a chance UM and said that they really you know, sponsorship and mentorship is something that really is critical to um, you know, black representation on Wall Street and uh, based on the conversations I I've been hearing about that are happening up at the banks, UM,

you know, it seems like there is some change happening. I know Goldman's Back has now required more biased training by its employees. They're thinking about formalizing a sort of sponsorship program. But yeah, I mean it is a very it's something that's very critical, UM, in order to uh,

you know, make the work plays better. Just to point out some of the numbers that we haven't brought up yet, there have been diversity unierships on Wall Street for decades now, but um, the industry has actually been getting whiter in recent years. At JP Morgan Banks, Ammigrant and City Group, the percentage of black workers overall has been falling, not rising. Uh. Just to point out one bank at JP Morgan, the

number has dropped from from in a little over a decade. Michelle, it's really a fantastic story of but everybody to read it. It's Michelle Davis, finance reporter for Boomberg. Black and White on Wall Street, the unwritten code on race. It's absolutely mandatory reading. Today, well, a number of massive companies, from Starbucks to Union Leaver, Code Cola and PEPs See Verise and Levi's and many many more, have decided that they

are executing an exodus from Facebook. They don't like the talk that's on Facebook, the partisanship that's on Facebook, the highly targeted ads on Facebook, and so they have pulled the plug at least for on advertising. Let's bring in someone who knows a lot about this now. Mark Douglas is CEO of Steelhouse based in Los Angeles, California, and steel House is a partner with Facebook, also a leader in highly targeted ads on you know platforms from connected

TV to the social media platforms. Mark, welcome and thanks for joining. Why now? These companies have been threatening to do this for a long time. Facebook has engaged in incremental self betterment. But now the companies have decided enough is enough. Yeah. The one thing to keep in mind and it answers the question is Facebook has two types of averagises, brand advertisers and direct response averageiser. Direct response

or basically e commerce company needs Internet repailers. Companies like that. That's too. Facebook depends upon um. Those companies also dependent on Facebook. So those companies are not boycotting yet. The brand advertisers are concerned about what they call brand safety. Basically, they spend a lot of money a company like Pepsy, some of the examples you've you've given, they spend a lot of money to build those brands, and they are always very concerned with brand safety. And so that's what's

driving the boycott. Is better to boycott or be out of Facebook than the risk damaging your brands, and so that's what's driving it. Yeah, so Mark, you know, Facebook has more than eight million advertising clients here, as you mentioned, that direct a lot of of their small advertisers direct response advertisers. So if there's and you know to the extent that they're not following suit with some of the high profile names we've seen, where is the risk to

to Facebook? Really here is they try to deal with an issue that seems to be resonating not only with advertisers, put with a lot of their users. Yeah, so the the near term risk, the immediate risk is plastic financial risk is actually not that significant for Facebook because those brand advertisers just don't really account for a lot of Facebook's revenue. Seventeen billion dollars last quarter. But there's a there's kind of a bigger risk looming for Facebook, which

is data. So Facebook relies on Facebook log in um for a lot of data and so and as people have used Facebook itself left um you don't get as much data from Instagram, which Facebook are also owned. So with the defining usage of Facebook itself, more um less data available from Instagram. If people start boycotting Facebook log in, that would actually be a huge threat. Is the Facebook logging Is that when I'm logging into a different app, I just say, hey, use my Facebook information to log

in for me, exactly. That seeds a lot of data in the Facebook and Facebook uses that data to make those smaller advertisers to give them performance the revenue that they're looking for. So if you thread that that's a much much bigger risk of Facebook, then you know, Peppsy boycotting Facebook. So how much of this, the fact that it is happening in has to do with the pandemic as well? Curious because obviously this is something that the

company's you know, really believe in. And you know, once once you know, dropped advertising, the dominos kind of fell and more and more and more doing it right now, but has something to do with the fact that it's it's sort of handy to have to pare back on spending this year. Well yeah, I mean the the that's a that's a really good point. The if if you boycott Facebook, you might have already been cutting back your

budgets anyway. So now you can basically put those cut cut backs in the context of taking a social stance, of doing something that maybe a lot of your customers may agree with. So it's super convenient as in and um, how sincere it is? Um? I think some of these large companies, you know, they're driven by the bottom line. Obviously, they're driven by brand tafety concerned. So I think, yeah, this year has a lot what has a lot to do with it. It's also an easy choice to them.

Most of those bigger customers rely on television, not social Um, so they're not really losing that much by boycotting Facebook, and it's perfect year to do it. So Mark, you do some some work with Facebook. I'm sure you know some a lot of folks at Facebook. What why do you think Zuckerberg is taking this stance here? Hey, I'm just a platform im media. I'm not a media company, I don't have any editorial responsibility. He seems to be on at least the least the less popular side of

this question, if not the wrong side. What do you think he's really thinking here? Um, well, it's a difficult question. I get a bit political. So essentially, any form of extremism is is probably not a good thing. Right, So, whether you're extremely progressive or extremely conservative, I think Mark is Stuckerberg is trying to avoid either extreme and the world is asking people to take side there. There's just

no doubt about it. And and so I mean, and I think logically he's doing the right thing by saying it's not my position to judge what you know, content is good, what content is bad. But we're living in a time right now where people are asking for judgments to be made, especially when you distribute contents over two billion people. And so, um, it's it's kind of like, um, a football game. You know, you might be the second person to throw a punch, but you're the one that

Russ saw. So so you know he so that that's the position that he's in, And um, I think it's a it's a really difficult position. It's happy to make any It's hard for him to make anyone happy right now. Yeah, it really is. Uh, and that's seeing an impact on stock and stock was it a fifty two week high just uh, you know, a week or so ago, so back we've seen in the last couple of days. You

have to take that in context. Mark Douglas, CEO of Steelhouse based in Los Angeles talking about Facebook here in a tough position they're in here is again over as as Mark was saying, over two billion users globally. Clearly they have an outsize impact on the global dialogue as relates to all issues, including political issues as well. We'll follow up on that story right now. Let's take a look at the market out look again, a strong market

here as we opened a holiday shortened week. To get a sense of kind of where we are here in the market and how we should think about the second half of returned to Philow, Orlando, chief equity market strategist for Federated Hermes. Phil, thanks so much for joining us here. We have a strong day today. Uh, you know, a tremendous rebound in the market after that initial COVID selloff

in March. What do you think about the second half here. Well, I think the easy money has been made in the sense that the stock market had this powerful rally from March twenty three into about the first week in June. Things are going to be a little choppier and not quite as easy going forward. You've got this tuggle war right now going on between uh, pretty good economic data, but you've had this spike in infections in some of

the key southeastern and southwestern states. Um, we'll have a much better feel for how that tag war is going to play out over the next six weeks or so. But we we we took some chips off the table last week because we were a little bit concerned about how well the market may do here in light of

some of these issues. Given the fact that we've had such a powerful rebound rally already, why on earth would anyone be scared At this point, the market seems to go up no matter what happens, including you know, cases spiking in a dozen states again, and this is not

going away anytime soon. Well, the situation in the Northeast and the Midwest is pretty good in terms of the peaking of infections and mortalities back in the middle of April, and the fact that we've been able to execute a grind lower over the last couple of months, in part because I think people have done the right thing social distancing, wearing masks, washing your hands, that kind of thing. Um,

that's not what's going on right now. In a couple of the key states Florida, Texas, Arizona, California, those numbers have spiked over the course of the last three or four weeks. And we don't have a vaccine yet. We may have one, uh for emergency use, perhaps as early as this fall, but we don't have one right now. Uh. And and certainly that's that's caught our attention. And uh, you run the risk of of do we shut these uh some of these key cities or some of these

key states down again? Does that does that potentially extend this recession from the first half that we think is going to end at the end of June. But but does that does that lengthen the duration of this recession at some point in the second half. And given that uncertainty, and given the fact that the stock markets up forty seven percent in in you know, twelve weeks, we thought it was prudent to maybe take some chips off the table, just manage risk a little bit and see how events

play out over the next month or so. So, Phil, how important is another round of fiscal stimulus? I know there's a trillion dollar number being thrown around Washington, but there doesn't seem to be any urgency to get another round of fiscal stimulus out there. How critical is that for the second half of this year from an economic perspective,

I would disagree with that assessment a little bit. I think there's a tremendous sense of urgency, but it's not going to happen before we see Friday or Thursday's jobs report. And that was always the plan. So so Speaker Pelosi, the Democrats in the House past the Heroes Act in May roughly a three trillion dollar program um the I think the Republican Senate would like to pass a program that's about half that size, let's call it a trillion

and a half dollars. But that's not going to happen until Congress comes back from vacation after the Independence Day holiday.

Uh So, two things. Number One, they're on vacation. Number Two, they want to see how good or how bad is the June jobs report that we're going to see this coming Thursday, and then that will inform exactly how big the bill should be and what's the best way to craft the bill in terms of where should the incentives be and how large should the incentives be in terms of trying to encourage people back to work or protecting those individuals additionally who aren't able to go back to

work because their businesses might might still be shuttered or because they're afraid of cutting coronavirus fellows. Just a little tonguentiak earlier. I mean, it really seems to me like this market is going higher and higher, and maybe it's not based on reality. I mean, what if, for example, you know, it takes weeks and weeks to bring down the coronavirus cases in the states that are sort of more southern and more westerly right now, but by then

it's already back in New York City. I mean, there is a virus on the loose out there is the market pricing it at all well? And And that's that's a very astute assessment, because the fact that the markets up in the last three months is not based upon how well and how poorly things are going right this second in terms of either combating the disease or in terms of what corporate earnings are going to look like in the second quarter. What the market is doing is

a traditional approach as a forward looking discounting mechanism. It's looking out deep into the second half of this year or even into calendar twenty one and saying, okay, um, we've got this thing under control, We've got a vaccine. Uh, we're starting to get back to normal. Let's look at what normalized durings are and then attempt to discount that back and and establish what we think as an appropriate price.

So there's something of a disconnect there between some investors who think that the market is ahead of itself because the numbers don't support where it is right now, as opposed to those investors that recognize, I think that what we're looking we're attempting to do is looking out six or twelve months and then pricing it back based upon where we think things are going to be, perhaps six or twelve months from now. So, uh, Phil, just about thirty seconds or so, you said you mentioned that you're

taking some some chips off the table. Are there still some areas where you maybe see some value in some opportunity here given the run up, well, international certainly is looking more attractive here. Developed international is as cheap compared to developed US or large cap US as it was in the bottom of the Great Recession in oh seven oh nine. Uh. Small cap still looks interesting to us. Uh, there's some attractiveness and emerging markets UM value is cheaper

than growth, so there are pockets of opportunities here. But right now we're in a bit. I think we're in a little bit of a June swoon, and we need to see how this thing plays out. Phil, thanks always great to speak with you. The S and P five hundred up nine tenths o resent right now, and over the last week it's a point six percent, so I'm still waiting to see that tune soon. The Dow Jones industrial leverage of one point six right now, mostly on Boing.

It may be able to restart testing today, which of course many many companies have been waiting on, not just the market and Boing itself. And we have the nastac for once. It is actually the lagguage today up four tenths of one percent. But thanks to Phil Orlando Federated Herme's investors for speaking with us there Florida positivity rates have been rising, and it's not the only date where

that's happening. It's happening in several states in the South and the Midwest, and the outlook is pretty pretty dire for certain states, including Arizona. Next guest says that it's not like a wildfire where you can't just put it out, and it's a really dire situation. According to our next guest, who is Dr David Engeltaler, co director and Associate Professor of the pathogen and Microbiome Division at Tejon North, he was also Arizona is a state epidemiologist for a time.

Dr angel Faler, thank you for joining, explained to us why you're so pessimistic about the outlook for Arizona and other states. Good, good morning, goney. Yeah, So I think you know what's happening with this pandemic. It's it's doing what pandemics do. They cause a lot of disease in depth, and it's going to have ebbs and flows and waves, and we can certainly affect that with public policy and

public participation in recommendations. Uh. And right now it looks like we're maybe not following recommendations enough and and this

viruses is happened a heyday. So dr you know, one of the things that I've kind of toyed about and asked a lot of experts about, is, you know, here in the New York metro area, we had Governor Andrew Cuomo, followed by Governor Murphy of New Jersey and some others, but really led by New York Governor Cuomo really take an aggressive stance on shutting down quarantining and then you know, on the reopening, doing it very gradually and focusing on

social distancing and masking and all that good stuff. Does there need to be a federal response as opposed to state by state because we've seen now the states that did not take it seriously are the ones that are paying the price. Yeah. I think what we're seeing is that, you know, obviously this virus doesn't care if you're in a red or a blue state, and I'm pretty sure it doesn't really care who your governor is. It. We

are definitely seeing different epidemiological patterns in different regions. So for instance, in the Northeast and the New Jersey. In New York, um, you know, when they were having their giant upswinging their their their case. Batality rates were really off the chart, you know, more than seven percent, and in in a number of those states and out west it's been very different. Uh and and typically around one to two and a half percent in Arizona, California, Texas,

and Utah. But the numbers right now are skyrocketing across the southern states, uh and And it could be um a large part do the fact that there's a lot of twenty somethings that are out there thinking that opening up the state means that somehow they were invisible and a lot of interactions and in public places without people social distancing or wearing masks. Uh And. I think that's

adding a lot to it. But I also think the fact that we have different strains of the virus moving around in different epichemiology and in different regions of the country. Doctor Rankles are if I could just be blund how long before it's back in the northeast again. Yeah, this is not going away. Um. We will have continue to have waves probably everywhere. Be hard to say with what's going to happen in in in specific regions. It's as as we can all tell, we can't model this scientifically,

and we certainly can't guess where where these things are going. Uh. Every every gap and every model has been wrong. Uh to date. We just know that the virus uh, you know, I've I've likened it to a wildfire. It's also like water. It finds the cracks and it gets in and then and then it then it's spreads out. Uh. And so you know, I think maybe a better question, um might actually be are we doing everything we can to protect those that are highest risk, our our elder generation uh

and sadly in most cases were not all right. So dr to the extent that uh, you know, we are bound to see continuing waves of this across the country at the varying degrees. That kind of brings us to the point of where do you think we are in terms of viable airpiece to treat the virus and more importantly, and is a ultimately a vaccine. These definitely are the

questions on on everybody's mind. We need those tools. And the good news is is that, um, you know the focus of the science scientific world, especially the biob medical world, is on this disease, and almost only this disease, which means that we're going to have a number of new advancements we've already had that we're going to be testing and looking at a lot of different drugs and and repurposing a lot of drugs, and and that's been covered heavily in the media. And some are gonna work in

some flat out won't. But we have to keep moving forward and keep drying. Uh. And then vaccines are are um certainly under development and and actually some vaccines are already in clinical trials, which is great news. Nothing's really ever moved this fast. Uh And and so we may actually see a good a couple of good vaccine candidates come out the the side of clinical trials by the end of this year. It still takes a long time to do those trials because you have to see whether

or not the vaccine is gonna work. But we may see some that it won't be distributed this year most likely, and but hopefully maybe early next year we'll have some that can get out to the ones that need it most, those that are highest risk and those that are carrying to them. Doctor. I mean, we obviously get pandemic type situations once every twenty years or so. Does the next one though come sooner? Are we in sort of an era now where we're going to experience pandemic after pandemic.

And you know, I'm saying that with full awareness that we're nowhere near seeing an end to this particular coronavirus. Looking forward to the next pandemic, there's there's no doubt we will continue to see pandemics. We are we are more connected globally than ever before. Viruses and other pathogens can move around um the world at the speed of flights. Uh. We we can be assured a new viruses will continue to come out of nature as this one has, as

many others have in the past summer. Some will be dead ends uh and and or cause limited disease like the original stars virus uh and some will be global pandemics like say pandemic flu was and like this one is so dr I guess that one of the next questions is, I mean, how do you think that the states that are dealing with a surgeon now, is this something that they can do what perhaps New York and New Jersey and some other states did and and kind of bend the curve to bring the turn back from

several months ago. Yeah, I think that we can continue to um, learn and monitor what's going on with the pandemic in local regions and a just local responses. Uh so uh, you know, we you know, after we you know, did the masses shut down, and obviously that had a lot of detrimental effects, but it also really slow down the virus. Why do we learn from that and how can we get closer to that slowing of the virus

without maybe killing the economy? So number one first and formed most for me is that we still have to do everything we can do to protect those that are most at risk. And and you know, at the very beginning of this we knew who is going to die, and sadly they have and they will continue to do so until we put absolute protection around those. And that's our nursing homes, that's our elderly population with multiple chronic condition, right,

these are the ones who are dying. It's not the twentiesomething. UM. So that's where we got right, doctor, Thank you very much. We're gonna have to leave it there. Thank you so much. Dr David engel Feller, Director of Effectious Disease at t GEN. And you also a former state epimologist epimediologists for the State of Arizona. Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews at Apple Podcasts

or whatever podcast platform you prefer. I'm Bonnie Quinn. I'm on Twitter at Bonnie Quinn. Sweeney I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio m HM