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The War In Ukraine, The Economy, And Energy · Bloomberg Intelligence

• 0:00
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
• 0:04
  Speaker 1: my co host Matt Miller. Every business day we bring
• 0:06
  Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
• 0:11
  Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
• 0:15
  Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
• 0:18
  Speaker 1: at Bloomberg dot com slash podcast. I want to get
• 0:22
  Speaker 1: to right away to our next guest. A lot to
• 0:24
  Speaker 1: cover here, Oh Desh Pondae, Founder and Chief investment Officer
• 0:28
  Speaker 1: of Centerstone Investors, by thanks so much for joining us here.
• 0:31
  Speaker 1: We've got a lift to the market here. But you know,
• 0:33
  Speaker 1: I'm gonna say, year to date, one of the primary
• 0:37
  Speaker 1: characteristics of this market has been uncertainty slash volatility UM is,
• 0:43
  Speaker 1: how do you deal with that in your portfolio? It
• 0:45
  Speaker 1: just seems like we're getting major, major moves UM pretty
• 0:49
  Speaker 1: much on a daily basis. We have a vix at
• 0:51
  Speaker 1: just above thirty. How do you deal with that in
• 0:52
  Speaker 1: your portfolio? Well? Hi, well, good morning, first of all,
• 0:57
  Speaker 1: and thanks for having me and at center Stone. You
• 0:59
  Speaker 1: know we're them up investors, so we go stock by
• 1:01
  Speaker 1: stock um one of them one of the biggest you know,
• 1:07
  Speaker 1: I guess risk to portfolio this year has been you know,
• 1:10
  Speaker 1: whether or not you have exposure Russia, which we don't.
• 1:13
  Speaker 1: Another risk that's kind of uh, you know, you can
• 1:15
  Speaker 1: see it overnight. For instance in China is how much
• 1:17
  Speaker 1: exposure you have to Chinese stocks and we have zero?
• 1:21
  Speaker 1: Um And you know, so in that sense, even though yeah,
• 1:26
  Speaker 1: the markets are down a lot, our funds are, I
• 1:29
  Speaker 1: mean down, you know slightly. UM. So for the most part,
• 1:35
  Speaker 1: just being away from the riskiest parts of the market
• 1:38
  Speaker 1: it works against you. For instance in two thousand twenty
• 1:41
  Speaker 1: one where those many of those stocks did fine or
• 1:44
  Speaker 1: even better than fine. And then you know the other
• 1:46
  Speaker 1: other environments that's did to be away from risk, and
• 1:50
  Speaker 1: our style is such that we you know, we tend
• 1:52
  Speaker 1: to be somewhat cautious when it comes to balance sheets
• 1:54
  Speaker 1: and management teams. So in that sense, you know, just
• 1:58
  Speaker 1: kind of by coincident, almost we don't have that much exposure.
• 2:01
  Speaker 1: Let me ask you then about growth, because I'm assuming
• 2:04
  Speaker 1: that you're exposed to the economy, the US economy, UM,
• 2:09
  Speaker 1: what kind of growth do you expect? Are you worried
• 2:11
  Speaker 1: about a recession next year? Yeah? I think what to me?
• 2:17
  Speaker 1: And you know, take this with a grain of salt,
• 2:20
  Speaker 1: because I'm a stock picker. I'm not a geo political
• 2:22
  Speaker 1: strategist or whatever. But this this reminds me a lot
• 2:26
  Speaker 1: of September eleventh, in the sense that the US economy,
• 2:30
  Speaker 1: the global economy, was already weakening in in two thousand
• 2:33
  Speaker 1: one when that shock happened, and then there was a
• 2:37
  Speaker 1: response the market rebounded, but then the ramifications of a
• 2:41
  Speaker 1: weakening economy with a slowdown and whatnot meant that the
• 2:46
  Speaker 1: stock market had trouble for another year, even a little
• 2:49
  Speaker 1: bit more. And I kind of, you know, so far
• 2:51
  Speaker 1: the playbook of the late nineties and early two thousands
• 2:54
  Speaker 1: has been, you know, the one to use. And I
• 2:56
  Speaker 1: would not be surprised that there's some sort of piece
• 2:59
  Speaker 1: deal something later this week the stock market has some lift,
• 3:03
  Speaker 1: but the damage has kind of been done. I mean,
• 3:05
  Speaker 1: we've got a massive amount of inflation pressure. It's just
• 3:08
  Speaker 1: been added to the economy is already weakening the stock market.
• 3:13
  Speaker 1: You know, in Europe the stock markets at twelve times
• 3:16
  Speaker 1: normalized earnings with a three percent yield, So one could
• 3:19
  Speaker 1: make a case that there's somewhat um better position to
• 3:22
  Speaker 1: handle this the US markets that twenty times aren't with
• 3:25
  Speaker 1: a one and a half percent of it and yield
• 3:27
  Speaker 1: is there. There are there opportunities that you can tell
• 3:33
  Speaker 1: us about that you can share with us as bottoms
• 3:34
  Speaker 1: up stock pickers is something that you know, you're you're
• 3:37
  Speaker 1: pumped about as you come into work on this Monday.
• 3:40
  Speaker 1: We have a whole bunch of companies that are that
• 3:43
  Speaker 1: are so I'll just focus on some that are in
• 3:45
  Speaker 1: the United States where that are easy to buy in
• 3:46
  Speaker 1: the US markets. We're a bunch of companies that that
• 3:50
  Speaker 1: I like where we have um you know, they're kind
• 3:53
  Speaker 1: of isolated there. The outcome is more dependent on management
• 3:56
  Speaker 1: decision making rather than interest rates and what happens in Russia.
• 4:00
  Speaker 1: You know. One good example of c d K, which
• 4:02
  Speaker 1: is a software company that provides UM you know basically
• 4:07
  Speaker 1: customer management inventory management tools to the auto dealerships in
• 4:11
  Speaker 1: the United States with a big fifty six percent market
• 4:14
  Speaker 1: share depending on this region. Another company is Parago, which
• 4:18
  Speaker 1: UM I thalked about before, but you know they're recovering now.
• 4:22
  Speaker 1: They're they're a manufacturer of of of private label UH
• 4:29
  Speaker 1: generic drugs in the US. Communister like the basically the
• 4:33
  Speaker 1: tail and awls and stuff that you would get off
• 4:35
  Speaker 1: brand in a CBS or an Amazon day. There again
• 4:38
  Speaker 1: Bust fifty market that was up. So that's Papa Romeo
• 4:44
  Speaker 1: golf Oscar and the other one is Charlie Delta kilo
• 4:48
  Speaker 1: of a. Are you in the reopening trade kind of business?
• 4:52
  Speaker 1: Because I just spent a week out in Utah skiing
• 4:54
  Speaker 1: and it is wide open out there. The economy's ripping.
• 4:58
  Speaker 1: It is the best attendance year they've had ever. Are
• 5:03
  Speaker 1: you in that reopening trade? I'd say directly, we're about
• 5:07
  Speaker 1: exposed to reopening stocks. Another that would be considered some
• 5:12
  Speaker 1: hybrid but mostly self help companies that are undergoing some
• 5:16
  Speaker 1: um you know, like these two companies have mentioned undergoing
• 5:19
  Speaker 1: a lot of management uh sort of help to to
• 5:25
  Speaker 1: re orient these companies that have also been somewhat buffeted
• 5:28
  Speaker 1: by COVID. So roughly, we have exposed to the um
• 5:33
  Speaker 1: more of a reopening story. And that's globally, not just
• 5:36
  Speaker 1: in the United States, but in Europe, parts of Asia,
• 5:39
  Speaker 1: and the remainder of the portfolios are essentially we have
• 5:42
  Speaker 1: gold treasure bond or treasure notes cash, some growth cut
• 5:48
  Speaker 1: type companies. But but but it sounds like you like
• 5:50
  Speaker 1: companies that are that have sort of self reflected and
• 5:54
  Speaker 1: reassessed in our executing on that. Yeah, I mean I
• 5:59
  Speaker 1: would much rather have a business where the outcome is
• 6:03
  Speaker 1: dependent on their own actions rather than external factors. That's
• 6:08
  Speaker 1: the bulk of our portfolio. All right, Abbey, thank you
• 6:10
  Speaker 1: so much. We always appreciate getting a few minutes of
• 6:12
  Speaker 1: your time. Abbe Dishpande, Founder and Chief investment Officer of
• 6:15
  Speaker 1: Centerstone Investors. We want to get right to our next conversation.
• 6:22
  Speaker 1: This will be the conversation of the morning, if not
• 6:24
  Speaker 1: the day. On Bloomberg Radio. Markian lup Kinski, advisor to
• 6:28
  Speaker 1: the Minister of Defense of Ukraine, joins us. He is
• 6:31
  Speaker 1: in Ukraine as we speak. Mr Lupkinski, Thank you so
• 6:35
  Speaker 1: much for joining us. We'd really appreciate geting your perspective.
• 6:39
  Speaker 1: What is the absolute latest on the ground from Ukraine?
• 6:43
  Speaker 1: Thank you, thank you so much for having having me
• 6:45
  Speaker 1: at Boom boo uh. And the situation in Ukraine remained
• 6:50
  Speaker 1: very hot. So a lot of Ukrainian cities are on
• 6:55
  Speaker 1: the attack of Russian aviation, Russian missiles. So this morning
• 7:01
  Speaker 1: Key was attacked with the missiles and this is terrible
• 7:05
  Speaker 1: because they are trying to to reach civil facilities. So
• 7:11
  Speaker 1: and again hercu is in in terrible situation. And the
• 7:16
  Speaker 1: but the most, the most dangerous and the tragic, I
• 7:20
  Speaker 1: would say situation is in Mariupo because Mariupo is blocked
• 7:24
  Speaker 1: totally but by Russian troops and the situation there is
• 7:29
  Speaker 1: very hot. So are you, for your information, are you
• 7:32
  Speaker 1: having any success getting refugees out evacuating cities or are
• 7:39
  Speaker 1: the Russians continuing to um, you know, bomb those uh,
• 7:44
  Speaker 1: those passageways. We are trying to establish so called humanitarian
• 7:49
  Speaker 1: corridors from all blocked cities or from cities which are
• 7:52
  Speaker 1: under attack. So we we managed to establish around twelve
• 7:57
  Speaker 1: such corridors and we're trying to get people Ukrainians from
• 8:01
  Speaker 1: that cities to the to the west and part to
• 8:04
  Speaker 1: uk of Ukraine to Ukrainian. But so but these people
• 8:08
  Speaker 1: are on the attack of Russians, they are shooting on them.
• 8:12
  Speaker 1: Yesterday American journalist was killed also because of both of Russians.
• 8:18
  Speaker 1: Russians attacked him, they shot on him. And situation is
• 8:22
  Speaker 1: not so easy. So we're trying to assist over people.
• 8:24
  Speaker 1: So for for Ukrainian, for Ukrainian government, the most important
• 8:30
  Speaker 1: thing is to protect the people, to rescue them, and
• 8:34
  Speaker 1: that that was also point number one during today's negotiations
• 8:38
  Speaker 1: with the Russian delegation. So Mr Lupkovski, were you are
• 8:42
  Speaker 1: now in your third week of this battle this world,
• 8:45
  Speaker 1: and based upon what you've learned so far, and based
• 8:48
  Speaker 1: upon the conversations that you and the Ukrainian government have
• 8:51
  Speaker 1: had with the Russian delegation, what do you think Mr Putin? Really? Once?
• 8:59
  Speaker 1: I think that you krane only the something, only the
• 9:02
  Speaker 1: stage in his uh intention to get more. I think
• 9:08
  Speaker 1: that he what he wants to re establish Soviet Union
• 9:12
  Speaker 1: and nobody can be secure right now. So my, my,
• 9:16
  Speaker 1: my forecast is very pessimistic. So he will not stop
• 9:21
  Speaker 1: bombing and attacking Ukraine. After Ukraine will will fall, but
• 9:26
  Speaker 1: he will fight to the end. Yes, he will go.
• 9:29
  Speaker 1: He will go to Baltic States, to Poland, probably to Moldova.
• 9:33
  Speaker 1: So this is his intention and this is terrible. Yeah. So,
• 9:37
  Speaker 1: I mean, what we're hearing is that the Ukrainian defense
• 9:41
  Speaker 1: has been much stronger than President Putin had expected. Um,
• 9:46
  Speaker 1: how how how long can you preserve that strength? Because
• 9:51
  Speaker 1: clearly Russia has so much in terms of troops and
• 9:56
  Speaker 1: armament that it has yet to bring to bear. Yeah.
• 9:59
  Speaker 1: So uh, today is the nineteenth day of our heroic resistance,
• 10:05
  Speaker 1: resistance by Ukrainian armed forces, and Putting never expected that
• 10:10
  Speaker 1: he will he will find such kinds of resistance and
• 10:15
  Speaker 1: his plans. His plan was to take Kiev in okarkive
• 10:20
  Speaker 1: In in two three days, so but that never happened.
• 10:23
  Speaker 1: We still have enough power to protect ourselves. But from
• 10:28
  Speaker 1: the other side, the you know, hope, Uh, the Russian
• 10:33
  Speaker 1: troops are numerous and they're bringing a lot of weapons
• 10:37
  Speaker 1: to Ukrainian territory. So that's why Uh, Ukrainian forces are
• 10:43
  Speaker 1: in critical need of anti tank weapons, defense missile systems,
• 10:47
  Speaker 1: ammunition rathers and intelligence systems. So we're really looking forward
• 10:53
  Speaker 1: to get all these all these tools from other partners.
• 10:58
  Speaker 1: And again this discussion around MIX cannot take too much
• 11:03
  Speaker 1: time because if we will not get that assistance, it
• 11:07
  Speaker 1: will be too late. If you do get the MiGs. No,
• 11:11
  Speaker 1: if if you do get the mix, or how how
• 11:14
  Speaker 1: will will it? Will you be ready to fly them?
• 11:16
  Speaker 1: Will you be ready to operate them? Will you be
• 11:18
  Speaker 1: ready to maintain them? Sure? If you will get mixed,
• 11:22
  Speaker 1: we will we will close the sky over Ukraine, we
• 11:26
  Speaker 1: will be able to operate them, to fly with them,
• 11:28
  Speaker 1: and we will be able to shut on on missiles
• 11:33
  Speaker 1: and protect Ukraine from the air because right now we
• 11:36
  Speaker 1: are quite good on the ground and the but but
• 11:39
  Speaker 1: the air site is still very big, big part of
• 11:44
  Speaker 1: of of our our resistance. So Mr. Lupkivski, give us
• 11:49
  Speaker 1: a state of the talks that you're having with the
• 11:52
  Speaker 1: Russian counterparts. There are any progress being made? How just
• 11:57
  Speaker 1: give us a status report. So, uh, you know, our
• 12:03
  Speaker 1: negotiations with the Russians took place today and there was
• 12:06
  Speaker 1: taking a technical break, so we will proceed to speak
• 12:10
  Speaker 1: to them tomorrow. But other positions, our position positions remain unchanged.
• 12:16
  Speaker 1: So a position of Ukrainian side is to establish to
• 12:20
  Speaker 1: achieve peace, immediate ceasefire, withdrawal of all Russian troops after all,
• 12:26
  Speaker 1: and only after that we can talk about some some
• 12:30
  Speaker 1: relations or political settlements. So I can say that at
• 12:34
  Speaker 1: this stage there is no big, big progress, but negotiations
• 12:39
  Speaker 1: are ongoing, and as a diplomat, I still believe that
• 12:43
  Speaker 1: the negotiations are the only way how we can solve
• 12:47
  Speaker 1: the and how we can protect Ukraine from the from
• 12:50
  Speaker 1: the Russian aggression. So you you mentioned the threat from
• 12:56
  Speaker 1: the skies. Give us your thoughts or kind of the
• 12:58
  Speaker 1: thinking within Ukraine and diplomat circles about a no fly zone.
• 13:02
  Speaker 1: What does that mean to you? Um and how important
• 13:05
  Speaker 1: would that be? It is important, but I'm quite skeptical
• 13:10
  Speaker 1: because almost every day we're trying to uh to to
• 13:14
  Speaker 1: you know, to close the sky over Ukraine. And this
• 13:18
  Speaker 1: is crucial for us because in that case, but in
• 13:21
  Speaker 1: that case we can, we can. We also understand the
• 13:24
  Speaker 1: the over threats which are coming with that, for for NATO,
• 13:29
  Speaker 1: for PONATO countries. But from the other side, let me
• 13:32
  Speaker 1: remind it, yesterday almost devoted with the NATO States was
• 13:37
  Speaker 1: under attack because of of missiles on the peace keeping
• 13:43
  Speaker 1: International peacekeeping center near Ukrainian Polish body. So nobody is
• 13:49
  Speaker 1: safe now. And I think that we are too late
• 13:52
  Speaker 1: with the all these you know, discussions to to close
• 13:55
  Speaker 1: the sky or not. We should be very very you know,
• 13:59
  Speaker 1: tough in that. But because what we will do if
• 14:02
  Speaker 1: one day put in will will will get the victory
• 14:07
  Speaker 1: and he will appear and on the boarder with the
• 14:10
  Speaker 1: with the NATO countries, and so you know, that's why
• 14:14
  Speaker 1: we're really looking forward to to to get more assistance
• 14:18
  Speaker 1: and to be brave, you need from from other partners
• 14:22
  Speaker 1: to show how the day are brave as Ukrainian stuff.
• 14:26
  Speaker 1: Can I can I just ask because we heard from
• 14:28
  Speaker 1: a US defense official UM the Pentagon thought that it
• 14:33
  Speaker 1: wasn't really clear if Ukraine did need additional fixed wing
• 14:38
  Speaker 1: fighter aircraft liked like the MiGs that Poland offered earlier
• 14:42
  Speaker 1: this week. You're saying you definitely want those MiGs. You
• 14:46
  Speaker 1: have the ability to use them, and you could create
• 14:48
  Speaker 1: a no fly zone yourself without NATO involvement if you
• 14:51
  Speaker 1: had the equipment correct correct, So correct, absolutely, And if
• 14:56
  Speaker 1: we can get mixed from one side and we can
• 14:59
  Speaker 1: get all assistance you can, you can provide us intense
• 15:02
  Speaker 1: to protect our sky. We will be able to protect
• 15:06
  Speaker 1: Ukraine ourselves. So Mark, and from your perspective again, Day nineteen,
• 15:12
  Speaker 1: what would be a victory for Ukraine here realistically, given
• 15:18
  Speaker 1: where we are right now, what would be a victory
• 15:19
  Speaker 1: for Ukraine? Very tough question. But for us, the victory
• 15:27
  Speaker 1: will be then Russian troops will leave Ukraine, uh they
• 15:32
  Speaker 1: then they will stop shooting on on other people. So
• 15:36
  Speaker 1: I'm I'm optimistic in that regard so I think that
• 15:40
  Speaker 1: we will win, we will survive. We we we we
• 15:43
  Speaker 1: are very motivated nation. And I'm I'm impressed with our
• 15:48
  Speaker 1: army which is really good and on the ground and
• 15:52
  Speaker 1: protecting the other people. So I think that the the
• 15:56
  Speaker 1: the final final victory will be then Ukraine will bring
• 16:01
  Speaker 1: back other territories including Crimea and the and the donants
• 16:06
  Speaker 1: can look on skur reagents. At this stage this is
• 16:09
  Speaker 1: not realistic. But from the other side, this is the
• 16:12
  Speaker 1: this is the the points for discussion with the with
• 16:16
  Speaker 1: the Russians and the again via Via absolutely focused on negotiations.
• 16:23
  Speaker 1: We we are not we are protecting ourselves. We are
• 16:26
  Speaker 1: we are descending our countries. We are not attacking anybody.
• 16:29
  Speaker 1: So and we we but we we we need that negotiations. Uh.
• 16:34
  Speaker 1: And I think that the President Zelenski was very clear
• 16:38
  Speaker 1: in that, and he's staying in Kiev together with the government,
• 16:42
  Speaker 1: with the parliament, and we are ready to protect our
• 16:45
  Speaker 1: capital market. And Lupkivski, thank you so much for joining us.
• 16:48
  Speaker 1: We really appreciate you taking the time and giving us
• 16:50
  Speaker 1: the latest from Ukraine. Mark and Lupkivski, advisor to the
• 16:53
  Speaker 1: Minister of Defense of Ukraine, let's check in with Ed Smith.
• 17:00
  Speaker 1: He's partner president of Union Square Advisors. Ted, we came
• 17:02
  Speaker 1: into the year and everybody's preaching volatility. Boy with a right,
• 17:06
  Speaker 1: what's your market call right here in the middle of March. Well,
• 17:11
  Speaker 1: we think we're going to continue to see quite a
• 17:12
  Speaker 1: bit of volatility yet, Paul and Matt, thank you for
• 17:15
  Speaker 1: having me today. But we also think that it's gonna
• 17:17
  Speaker 1: play itself out a little bit here in the first
• 17:19
  Speaker 1: in the second quarter, where things will likely get a
• 17:21
  Speaker 1: little calmer in the second half of the year, and
• 17:23
  Speaker 1: we'll get back to what we hope will be a
• 17:25
  Speaker 1: greater degree of normality. So is the Fed going to
• 17:30
  Speaker 1: throw a wrench in those plans? I mean, is the
• 17:34
  Speaker 1: Fed going to aggressively hike us into a recession or
• 17:37
  Speaker 1: are they going to turn tail and run at the
• 17:39
  Speaker 1: first sign of real economic pain. I think they're going
• 17:43
  Speaker 1: to be measured about it. I think they're gonna try really,
• 17:45
  Speaker 1: really hard not to drive us into that recessionary territory. Um.
• 17:49
  Speaker 1: They've got a lot of conflicting signals out there between
• 17:52
  Speaker 1: what's happening with inflation and prices across the board, certainly
• 17:55
  Speaker 1: with oil that everybody with a car stealing pain about UM.
• 17:59
  Speaker 1: But we're also of seeing, you know, a lot of
• 18:01
  Speaker 1: other factors. Obviously, the situation in Ukraine, UM, various aspects
• 18:06
  Speaker 1: of the overall economy are sending those mixed signals. So
• 18:08
  Speaker 1: I think that's got a pretty tough job to do.
• 18:11
  Speaker 1: But I think job one is making sure that we
• 18:14
  Speaker 1: curb inflation, and job too is making sure that we
• 18:16
  Speaker 1: don't work so hard that, to your point, we we
• 18:18
  Speaker 1: drive us back into a processionary territory, all right, ted,
• 18:21
  Speaker 1: Given that backdrop in and there's a many many bricks
• 18:25
  Speaker 1: in the wall of worry these days, where are you
• 18:28
  Speaker 1: and your partners at Union Square? Where are you kind
• 18:30
  Speaker 1: of allocating capital these days? We're focused a lot we
• 18:34
  Speaker 1: First of all, we're a tech focused investment banks, so
• 18:37
  Speaker 1: we focused primarily in that sector. In the tech sector itself,
• 18:41
  Speaker 1: we're seeing a lot of activity continuing in cybersecurity. That's
• 18:44
  Speaker 1: always a hot space, but certainly again with the threats
• 18:48
  Speaker 1: UH in and around Ukraine, we've seen even a greater
• 18:51
  Speaker 1: surge there. We see a lot of work in and
• 18:53
  Speaker 1: around customer experience management, customer engagement given sort of the
• 18:56
  Speaker 1: new reality of how consumers interact with brands. We're seeing
• 19:00
  Speaker 1: a lot of work around healthcare and healthcare I really
• 19:03
  Speaker 1: the rules of healthcare and i T have been rewritten
• 19:06
  Speaker 1: as a result of the pandemic, and so we're seeing
• 19:07
  Speaker 1: a lot of really new and interesting companies. And then
• 19:10
  Speaker 1: has certainly been the case over the past two or
• 19:12
  Speaker 1: three years with no signs of baiting, a lot of
• 19:14
  Speaker 1: work in and around fintech and next generation banking at canans.
• 19:18
  Speaker 1: Are those all good inflation hedges? I think they're gonna
• 19:22
  Speaker 1: there's I think they're different, obviously, I think, but I
• 19:26
  Speaker 1: think generally they are sector's poised for growth. And as
• 19:29
  Speaker 1: a result, if you think the right way to a
• 19:31
  Speaker 1: hedge against inflation, which we certainly do, is to invest
• 19:34
  Speaker 1: for growth so that you can outpace that inflation, we
• 19:36
  Speaker 1: think those are great sectors for ongoing growth. All right,
• 19:40
  Speaker 1: thank you so much for joining us. Really appreciate it.
• 19:41
  Speaker 1: We'll chat with you again. I first started learning about
• 19:49
  Speaker 1: e s G investing, environment, social governance probably a dozen
• 19:52
  Speaker 1: years ago talking to my institutional clients in Europe, and
• 19:56
  Speaker 1: they seem to be first and foremost on that. But
• 19:58
  Speaker 1: since then it's just become all the rage and global
• 20:00
  Speaker 1: asset management investors want to invest in E s G
• 20:03
  Speaker 1: friendly assets. Jonathan Maxwell, he does this for a living.
• 20:07
  Speaker 1: He's a CEO and co founder of Sustainable Development Capital.
• 20:10
  Speaker 1: Jonathan Again. E s G is a big, big, fast
• 20:14
  Speaker 1: growing part of the institutional investor marketplace. But I kind
• 20:17
  Speaker 1: of feel like, first with the pandemic and then now
• 20:21
  Speaker 1: maybe with the war in Ukraine, it's kind of been
• 20:23
  Speaker 1: pushed to the back burner. Just give us a status
• 20:26
  Speaker 1: from your perspective of how this market is in terms
• 20:29
  Speaker 1: of size and in terms of growth parameters. Yeah, thank
• 20:33
  Speaker 1: you very much for having me on today. So we've
• 20:37
  Speaker 1: seen a huge movement over the last ten fifteen years
• 20:40
  Speaker 1: in sustainable investment, and one of the largest markets has
• 20:45
  Speaker 1: been energy. That's been as much, if not more investment
• 20:49
  Speaker 1: in clean energy in the last ten past years then
• 20:51
  Speaker 1: that has been in conventional energy, and we've seen that
• 20:54
  Speaker 1: accelerat over the last two or three years. I think
• 20:56
  Speaker 1: what's going on right now um on a a political
• 21:01
  Speaker 1: front creates two directions. One, you know, is a realization
• 21:08
  Speaker 1: that an energy system which is or gas and call
• 21:13
  Speaker 1: you know, there's going to be now going to have
• 21:14
  Speaker 1: to be a tremendous, restably balancing of energy sourcing in
• 21:17
  Speaker 1: Europe and potentially in other markets in particular, that could
• 21:21
  Speaker 1: be a short term headwind for clean energy. On the
• 21:25
  Speaker 1: other hand, clean energy and in particular a bit more
• 21:28
  Speaker 1: efficient with how we use energy, bearing in mind that
• 21:31
  Speaker 1: we waste most of it. In a clean energy and
• 21:34
  Speaker 1: energy efficiency both very important parts as sustainable investment model.
• 21:38
  Speaker 1: I think you're going to be enormously important to the
• 21:41
  Speaker 1: economies of Europe and indeed of North American other markets. Yeah,
• 21:45
  Speaker 1: I can't. I can understand that, Um, you know, Americans
• 21:51
  Speaker 1: are going to want to drill, baby drill when they
• 21:53
  Speaker 1: see the price at the pump, and that Europeans are
• 21:57
  Speaker 1: going to be asking their leaders why on earth did
• 22:00
  Speaker 1: you make us so dependent on Russian gas? Um? And
• 22:03
  Speaker 1: you're gonna need to see restructuring due to that. But
• 22:08
  Speaker 1: it seems to me clean energy just has a huge
• 22:11
  Speaker 1: tail wind. I mean, how many people are going to
• 22:14
  Speaker 1: want to be installing their own, um, you know, solar
• 22:18
  Speaker 1: panels and batteries, especially in Europe as they faced the
• 22:23
  Speaker 1: very real prospect of their power getting cut. Well, I mean,
• 22:27
  Speaker 1: I think there've been I agree with you, and I
• 22:29
  Speaker 1: think there are sort of three main drivers. And these
• 22:31
  Speaker 1: drivers by the way, I think affect the United States
• 22:34
  Speaker 1: as as well as affecting Europe, and the three main
• 22:37
  Speaker 1: drivers really have been about security, resilience, cost, and carbon
• 22:43
  Speaker 1: I think. And security in the United States has been
• 22:46
  Speaker 1: a longstanding factor. Of course, with with whether Superstorm Sandy
• 22:51
  Speaker 1: Louisiana and Texas last year, so you know whether severe
• 22:54
  Speaker 1: weather events have been big problems for energy resilience. But
• 22:57
  Speaker 1: of course now geopolitics has really crashed home here in Europe.
• 23:02
  Speaker 1: So decentralized energy, generating energy close to or right where
• 23:06
  Speaker 1: you need it, um you know, in decentralized cleaner solutions
• 23:11
  Speaker 1: incredibly important. Second of all, by decentralizing energy, bringing it
• 23:15
  Speaker 1: closer to where you need it, you lose less of
• 23:18
  Speaker 1: it in generating it and transmitting it and distributing it.
• 23:21
  Speaker 1: The way that we've built the global energy system is
• 23:23
  Speaker 1: generally supplying energy into a centralized system, it creates incredible losses.
• 23:28
  Speaker 1: There's an extraordinary number where we're probably wasting between sixty
• 23:32
  Speaker 1: and of the world energy somewhere through the points of generation,
• 23:37
  Speaker 1: transmission and distribution. So actually to start with generating it
• 23:40
  Speaker 1: closer to where you need it, it's more secure and
• 23:43
  Speaker 1: it's actually cheaper, and of course along with the loss
• 23:46
  Speaker 1: of wastage, it also produces pollution and carbon. So those
• 23:50
  Speaker 1: are really the three main drivers. You know, it's lower cost,
• 23:54
  Speaker 1: lower carbon, more resilient energy solutions, and that's really what
• 23:57
  Speaker 1: we drive out with regards to sustainable energy investing, lower cost,
• 24:01
  Speaker 1: lower carbon, more reliable, more secure sources of energy supply.
• 24:05
  Speaker 1: So Johnson, give us an example of maybe a recent
• 24:07
  Speaker 1: investment you've made that kind of maybe goes to some
• 24:09
  Speaker 1: of those issues. Yeah. So, I mean in the United States,
• 24:13
  Speaker 1: we have the portfolios of solar and storage investments that
• 24:17
  Speaker 1: we've made where we're generating energy solar power combined with
• 24:20
  Speaker 1: storage on rooftops, carports, ground mount where we can link
• 24:24
  Speaker 1: it directly into end buildings and its dramatically reduces cost
• 24:28
  Speaker 1: and carbon. We've got in the United States investments where
• 24:31
  Speaker 1: we're recycling what would otherwise be pollution, so blast furnace
• 24:36
  Speaker 1: gases coming off with steel mills and using those as
• 24:38
  Speaker 1: the fuel to generate power and steam back for the
• 24:42
  Speaker 1: for the steel facilities. In Europe we have on site
• 24:46
  Speaker 1: generation using natural gas, bio gas, um in in due course, hydrogen,
• 24:53
  Speaker 1: ground and air source heat, solar, All of these technologies
• 24:57
  Speaker 1: can dramatically reduce the amount of cost and carbon involved
• 25:01
  Speaker 1: with generating energy, as well as increasing the energy security
• 25:04
  Speaker 1: that's on the supply side. On the demand side, change
• 25:08
  Speaker 1: the way that buildings, industry transport use energy. Seventy of
• 25:12
  Speaker 1: the worlds energy is used in buildings, industry and transport.
• 25:15
  Speaker 1: Most people think about energy as the grids think about
• 25:17
  Speaker 1: the end user. The buildings industry and transport can use
• 25:21
  Speaker 1: better lights, better heating, ventilation, air conditioning, and of course,
• 25:25
  Speaker 1: electrification of cars is a much more efficient way of
• 25:28
  Speaker 1: driving cars efficient compared to oil from a well efficient Jonathan,
• 25:36
  Speaker 1: thank you so much for joining us. Always love talking
• 25:38
  Speaker 1: about sustainable investment. Lots of opportunities out there. Jonathan Maxwell,
• 25:42
  Speaker 1: CEO and co founder of Sustainable Development Capital. Thanks for
• 25:48
  Speaker 1: listening to the Bloomberg Markets podcast. You can subscribe and
• 25:51
  Speaker 1: listen to interviews of Apple Podcasts or whatever podcast platform
• 25:55
  Speaker 1: you prefer. I'm Matt Miller. I'm on Twitter at Matt
• 25:59
  Speaker 1: Miller nine seven twenty three and on false Sweeney I'm
• 26:01
  Speaker 1: on Twitter at pt Sweeney. Before the podcast, you can
• 26:04
  Speaker 1: always catch us worldwide at Bloomberg Radio