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IMF's Adrian on Tackling the Uneven Global Recovery · 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. The International Monetary Fund
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  Speaker 1: and World Bank they're holding their spring meetings virtually. Uh,
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  Speaker 1: let's get a sense of what might be on the agenda.
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  Speaker 1: We welcome to Bias Adrian. He's a financial counselor and
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  Speaker 1: director of the International Monetary and Capital Markets Department for
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  Speaker 1: the i m F. Tobias, give us a sense what
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  Speaker 1: is on the agenda at the IMF this week. Um,
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  Speaker 1: you know, as we start to emerge from this pandemic. Yes,
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  Speaker 1: thanks so much for this important question. So what we
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  Speaker 1: are seeing is that there's a recovery that is taking
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  Speaker 1: place globally, but it isn't a synchronous recovery. UM. So
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  Speaker 1: we have all followed the fiscal package in the US,
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  Speaker 1: and of course that has shifted expectations about the about
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  Speaker 1: the recovery in the US forward. But the recovery is
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  Speaker 1: not as fast and as strong elsewhere in the world.
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  Speaker 1: So uh, this is why a synchronous is the word
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  Speaker 1: of the day. And when we look out two years
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  Speaker 1: into the future, what we see is that the most
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  Speaker 1: advanced economies in the world have the lowest output gaps,
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  Speaker 1: while emerging markets and low income countries have larger output
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  Speaker 1: gaps relative to the pre pandemic expectations of where these
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  Speaker 1: economies would be. So basically, uh, the more advanced you are,
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  Speaker 1: the more uh the expectation is that the recovery will
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  Speaker 1: take place, will get to healing. So what can be
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  Speaker 1: done out of what can the I m F and
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  Speaker 1: World Bank recommend or or even do in terms of action? Yeah, absolutely,
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  Speaker 1: So of course we are doing three things. So number one,
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  Speaker 1: we are lending two countries that our need. So last
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  Speaker 1: year we did rapid financing was about a hundred countries
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  Speaker 1: around the world. We have never covered so many countries
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  Speaker 1: in terms of help with the rapid financing. Secondly, we
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  Speaker 1: also have programs where we basically, uh, you know, lend
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  Speaker 1: money and help economies to get back on track. And
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  Speaker 1: then lastly we give policy advice. So this is what
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  Speaker 1: it's called our surveillance, and we give very granular policy
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  Speaker 1: advice to our entire membership of one ninety countries. Tobias.
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  Speaker 1: What impact, if any at all, Kennedy, I, m F
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  Speaker 1: and the World Bank have on um countries ability to
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  Speaker 1: get inoculation, to get vaccines into the market here from
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  Speaker 1: the States. Uh, you know, we're just you know, shocked
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  Speaker 1: and at the delays that we're seeing. Uh in Western Europe?
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  Speaker 1: Is there anything that can be done from your perspective, Yeah,
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  Speaker 1: that's a that's an excellent question. Of course, this crisis
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  Speaker 1: will only be over once the pandemic is in check,
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  Speaker 1: and this is where the vaccines are so important. Uh.
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  Speaker 1: And yes, the rollout in the US has been has
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  Speaker 1: been very effective and very fast, and you know, we're
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  Speaker 1: getting to numbers that are that are getting reassuring, but
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  Speaker 1: the rollout is much slower in Europe. We do expect
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  Speaker 1: that this is going to accelerate, but it is somewhat
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  Speaker 1: disappointing how long it has taken so far. But Pabe,
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  Speaker 1: it is important too to keep in mind is that
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  Speaker 1: in between Europe and the US, we have less than
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  Speaker 1: a billion people in the world. Out there are seven
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  Speaker 1: billion doll in total and Uh, you know, really, the
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  Speaker 1: end of this pandemic is going to happen once the
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  Speaker 1: pandemic is conquered everywhere. And uh, the US and Europe
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  Speaker 1: is only a very small share in terms of total numbers.
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  Speaker 1: And you know, as long as COVID is alive, there
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  Speaker 1: will be mutations, and mutations can be threats to everybody.
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  Speaker 1: It's still kind of shocking that the famously efficient Germans
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  Speaker 1: still haven't managed to get it off the ground. They
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  Speaker 1: don't even seem to have any kind of plan as
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  Speaker 1: to how they're going to vaccinate their people. I saw
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  Speaker 1: today that the US has now fully vaccinated almost as
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  Speaker 1: many people as there are adults in Germany. And this
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  Speaker 1: isn't you know, unique to Germany. The French also are
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  Speaker 1: failing miserably at this effort. Why is such an advanced
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  Speaker 1: economy doing so poorly when it comes to getting shots
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  Speaker 1: and putting them in arms. Yeah, that's the next question.
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  Speaker 1: And let me let me uh step back for a
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  Speaker 1: moment and just point out that, you know, the FISA vaccine,
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  Speaker 1: which is one of the predominant vaccines around the world.
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  Speaker 1: It's produced in both the US and Germany, and of
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  Speaker 1: course it was developed by by German scientists here, and
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  Speaker 1: so I happened to be in Germany just now I'm
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  Speaker 1: German originally, I'm also about it and absolutely absolutely and
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  Speaker 1: it is indeed, uh Morris some and I think there
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  Speaker 1: are two things that come together. So number one, the
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  Speaker 1: US is just very good, even the US government is
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  Speaker 1: very good as writing contracts and making sure that their
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  Speaker 1: population is getting the vaccines. First, and uh, the European politicians,
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  Speaker 1: including the Germans, but also more broadly, you know, the
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  Speaker 1: the c as well, has have not been quite as
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  Speaker 1: aggressive in terms of the way in which the contracts
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  Speaker 1: were structured. And secondly, I mean the US did not
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  Speaker 1: allow any shipment outside of the US until the vaccinations
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  Speaker 1: are are sufficient in the US, whereas in Europe, including
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  Speaker 1: in Germany, actually shipments have gone to poorer countries. And
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  Speaker 1: you know that is of course a good thing for
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  Speaker 1: the rest of the world, but it is to the
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  Speaker 1: detriment of the German population. So you know, there's some
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  Speaker 1: balance here that needs to be struck very interest that
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  Speaker 1: is fascinating. So I mean it is I guess in
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  Speaker 1: holding with the kind of multilateral approach that Chancellor Miracle
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  Speaker 1: has embraced. Um, it's just frustrating, I guess for the
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  Speaker 1: people of Germany. But if it's helpful for the world,
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  Speaker 1: that's that's got to be good news in the end,
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  Speaker 1: and I guess we can take it a little bit. Um. Tobias,
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  Speaker 1: thanks so much for joining us and answering my kind
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  Speaker 1: of left field questions there. Tobias Adrian is the director
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  Speaker 1: of I m F Capital Markets. He is not responsible
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  Speaker 1: for the back seeing rollout in Germany or the U
• 7:02
  Speaker 1: i m F meetings kick off. We'll be following them
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  Speaker 1: very closely. Matt. Back in the day, I worked at
• 7:09
  Speaker 1: Credit Swiss First Boston, did a stint there, um boy,
• 7:12
  Speaker 1: and in the media space we killed it. We made
• 7:15
  Speaker 1: tons of money. We had great equity platform, great high yield,
• 7:18
  Speaker 1: some of the best bankers on the street, and we
• 7:21
  Speaker 1: made lots of money. It was a great place to work.
• 7:23
  Speaker 1: But at year end, there was always something that would
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  Speaker 1: muddy up the bonus works. It was a bad trade here,
• 7:30
  Speaker 1: a bad private investment there. Uh. It seemed like there's
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  Speaker 1: always something that is still the case. Credit Swiss today
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  Speaker 1: taking a four point seven billion dollar hit. Let's break
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  Speaker 1: it down with a couple of experts. Nalie Basket, Wall
• 7:44
  Speaker 1: Street reporter for Bloomberg News and Alison Williams Uh senior
• 7:47
  Speaker 1: banks analyst for Bloomberg Intelligence who's covered the sector four decades.
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  Speaker 1: Um Ernali, want to start with you. What's the latest here?
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  Speaker 1: We've got some management changes, We've got a big hit
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  Speaker 1: to the earnings. What's the latest? Yeah, you have a
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  Speaker 1: eight of management changes, really more than a half dozen
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  Speaker 1: out the door, Paul. That's a staggering amount of change
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  Speaker 1: at one time for one of the largest banks in
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  Speaker 1: the world. You have the chief risk officer out, you
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  Speaker 1: have the head of investment banking out um and a
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  Speaker 1: new guard taking shape at a time where they still
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  Speaker 1: have some clean up work to do. So what do
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  Speaker 1: we know about the new guard, Allison? So I think
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  Speaker 1: that you know, the new guard is sort of I
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  Speaker 1: think an interim policeholder at the moment. I think the
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  Speaker 1: most important thing was that management, when they came out
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  Speaker 1: and announced to this big loss, had to at least
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  Speaker 1: show that they were starting the process to make change.
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  Speaker 1: So the management changes are part part of it. Um.
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  Speaker 1: It's it's probably not surprising that that the business had
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  Speaker 1: um as well as the chief of risk. UM are
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  Speaker 1: those that are departing the firm. Given given the circumstances um.
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  Speaker 1: But I do think, especially given all the numerous issues there,
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  Speaker 1: there needs to be sort of a deeper postmortem, not
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  Speaker 1: just on this situation, but there still situation, and then
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  Speaker 1: sort of broadly what are the risks, um and controls
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  Speaker 1: that are in place? After we were just talking about
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  Speaker 1: a post mortem. I feel like last year and bringing
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  Speaker 1: in a new CEO to make changes, so has he
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  Speaker 1: avoided the acts somehow stionally investors are trying to give
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  Speaker 1: him a grace period, it looks like to to make
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  Speaker 1: the changes, to give him time to make the changes
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  Speaker 1: of the bank needs. Here's the thing to Allison's point,
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  Speaker 1: a lot of these people are interim, right. You have
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  Speaker 1: a man who's taking over as chief risk officer in
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  Speaker 1: the interim who was previously the chief risk officer. That
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  Speaker 1: the other person you have taking over the investment bank
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  Speaker 1: who is particularly interesting as Christian Meisner, who is a
• 9:46
  Speaker 1: former executive at Bank of America. He's new to the bank.
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  Speaker 1: And you know, Credit Suite was actually doing our right
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  Speaker 1: in investment banking until all of this had happened. This
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  Speaker 1: archago scandal happened in the prime brokerage division and the
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  Speaker 1: Green still issue happened in the asset management division largely
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  Speaker 1: where we saw the saw the head of asset management
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  Speaker 1: really um, you know take accountability for this too, right,
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  Speaker 1: So you're seeing many divisions of this bank face issues
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  Speaker 1: in regard to risk management, and you know the investors
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  Speaker 1: now are paying for it. Allison, you've covered this stock,
• 10:21
  Speaker 1: this company for decades currently at Bloomberg Intelligence, but before that,
• 10:24
  Speaker 1: when you're an analyst at Morgan Stanley Investment Management, you've seen, uh,
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  Speaker 1: this company's performance versus piers. What is it about Credit
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  Speaker 1: Swiss where they always seemed to find themselves in trouble
• 10:37
  Speaker 1: one way or another. Well, there there are I mean
• 10:41
  Speaker 1: there is something different in terms of credit suites and
• 10:44
  Speaker 1: their mix. So they do generally excel in products such
• 10:49
  Speaker 1: as leverage, finance, UM and and things that you know
• 10:53
  Speaker 1: a year ago when we saw a big marks that
• 10:57
  Speaker 1: credit suite versus some others, that to me is something
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  Speaker 1: you would expect given its mix because um in in
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  Speaker 1: you know, a quarter like March of when spreads are
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  Speaker 1: blowing out. Um. You know, that's the nature of the
• 11:10
  Speaker 1: business that will be profitable over time but can be
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  Speaker 1: more volatile in you know, sitting sitting here today UM
• 11:19
  Speaker 1: with a much more significant loss UM, which which I
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  Speaker 1: think has different meaning. I think this does go more
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  Speaker 1: towards UM, you know, the d n A of the
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  Speaker 1: bank and and that's and that's what will be interesting
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  Speaker 1: to address. And I'm sure that the bank is already
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  Speaker 1: working with regulators with regard to this issue. Obviously, legal
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  Speaker 1: risk are going to be something to linger. But I
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  Speaker 1: think what's going to be important is is working with
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  Speaker 1: the regulators UM to get the processes in place. And
• 11:48
  Speaker 1: you know, there could be some some sort of trailing
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  Speaker 1: impacts I think with regard to UM capital and making
• 11:55
  Speaker 1: sure that they shored up UM financially. I mean, the
• 11:59
  Speaker 1: good news is that they had the money to withstand
• 12:01
  Speaker 1: this hit UM, but what are the operational safeguards and
• 12:06
  Speaker 1: then what are the financial safeguards going forward? Sonale, are
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  Speaker 1: you hearing from prime brokerage is that they are going
• 12:13
  Speaker 1: through their books looking for other potential wangs. Well, you
• 12:16
  Speaker 1: know what's funny about this also, you're you're worried about
• 12:19
  Speaker 1: other clients. Of course, I mean, who's taking on a
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  Speaker 1: lot of risks? Do we need to clamp down on them?
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  Speaker 1: But the other thing about it is credit suite it was,
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  Speaker 1: you know, not in the top top tier of prime brokerage. Generally,
• 12:30
  Speaker 1: when these kinds of things happen, clients look around, everyone
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  Speaker 1: looks around and says, okay, do we flocked to safety?
• 12:35
  Speaker 1: And so at the end of the day, do Morgan
• 12:37
  Speaker 1: Stanley and Goldman Sachs come out even stronger from this?
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  Speaker 1: Do they gain more clients? Uh? That's that's the big
• 12:44
  Speaker 1: question moving forward. What type of reputational hit is credit
• 12:48
  Speaker 1: sweet is going to take among clients for these losses.
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  Speaker 1: And then also there's a financial reason for clients to
• 12:54
  Speaker 1: keep an eye out. They are their outlook is negative
• 12:58
  Speaker 1: for Fitch and S and P. If they are downgraded,
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  Speaker 1: it makes counterparty risk that much more of an issue, right,
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  Speaker 1: So that's something to watch for moving forward. All right, Hinale,
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  Speaker 1: thanks very much for joining U. Shonalie Bastik. There are
• 13:12
  Speaker 1: Wall Street reporter for Bloomberg Television Alison Williams, r B
• 13:16
  Speaker 1: I Bloomberg Intelligence Banks Analysts. Get over down to Marvin Lowe,
• 13:22
  Speaker 1: senior global macro strategist at State Street to talk about Well.
• 13:27
  Speaker 1: First off, Marvin, the U S economy has really caught
• 13:31
  Speaker 1: my eye lately. Um. The jobs number was amazing. We
• 13:34
  Speaker 1: had the best I s M number manufacturing number in
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  Speaker 1: March since three and then we just got the best
• 13:41
  Speaker 1: services p M I number of all time. Um, how
• 13:45
  Speaker 1: much growth do you expect out of the US and
• 13:48
  Speaker 1: how much inflation? Yeah? I mean, UM, you know, we're
• 13:53
  Speaker 1: finally getting to a point where UM prospects are certainly brightening.
• 13:56
  Speaker 1: And UM, you know, we're we're we're we're getting to
• 14:00
  Speaker 1: a point where the reopenings are starting to really accelerate. UM.
• 14:04
  Speaker 1: I think I think the numbers, I think the numbers
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  Speaker 1: that are expected are are are reasonable given UM everything
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  Speaker 1: that we know, so six and a half percent GDP
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  Speaker 1: for the year and an inflation rate that UM will
• 14:15
  Speaker 1: certainly spike in the short term, but start to come
• 14:18
  Speaker 1: back once those space effects get lower. UM. And I
• 14:21
  Speaker 1: think the challenge for all of us looking at the
• 14:23
  Speaker 1: markets and various asset classes is trying to determine what's
• 14:27
  Speaker 1: priced in. And a lot has been priced in, I
• 14:29
  Speaker 1: mean a lot of good news UM since the beginning
• 14:32
  Speaker 1: of the year, and it's and it's coming to fruition,
• 14:33
  Speaker 1: which is which is you know, really encouraging. Yeah, Marvin,
• 14:36
  Speaker 1: That's kind of where I wanted to go I mean,
• 14:38
  Speaker 1: I think the bull case is very well known on
• 14:41
  Speaker 1: the street. With the accommodative, fed with the fiscal stimulus,
• 14:45
  Speaker 1: with the reopening trade and all of those issues, and
• 14:48
  Speaker 1: obviously the vaccination, the metrics are trending very positively here.
• 14:52
  Speaker 1: How do you get a sense of what is in
• 14:55
  Speaker 1: fact priced in? Do you look at evaluation? Do you
• 14:57
  Speaker 1: look at a pe ratio for the SMP? How do
• 14:59
  Speaker 1: you that or what do you look at to get
• 15:01
  Speaker 1: a sense of kind of where we are in terms
• 15:03
  Speaker 1: of evaluation? Yeah, I I look at the world from
• 15:06
  Speaker 1: a from a cross asset class perspective. UM. You know
• 15:09
  Speaker 1: what happens in the rates market and what happens in
• 15:11
  Speaker 1: the currency markets, UM matter I think to how you
• 15:15
  Speaker 1: approach risk assets. UM. And you know, since last Friday,
• 15:19
  Speaker 1: since the near million jobs posts, since some the record
• 15:22
  Speaker 1: p M I s that that that that you were
• 15:24
  Speaker 1: UM that you were referencing, we've had very little movement
• 15:28
  Speaker 1: on those other markets. Certainly, equities are supportive by the accommodative,
• 15:33
  Speaker 1: fed by the fiscal stimus by the fact that, um,
• 15:35
  Speaker 1: we we're talking about more fiscal spending. But um, the
• 15:40
  Speaker 1: stability in those other markets I think points to a
• 15:43
  Speaker 1: lot of the good news already in there. UM and
• 15:47
  Speaker 1: with still negative UM real guild in other words, of
• 15:51
  Speaker 1: repressive UM interest rate environment, equities wind up being one
• 15:55
  Speaker 1: of those asset classes that can that can continue to
• 15:58
  Speaker 1: benefit from this kind of broader supportive environment. So when
• 16:02
  Speaker 1: does that turn around? UM, you know what we have
• 16:06
  Speaker 1: to get Marvin, Yeah, I think I think interesting. I
• 16:09
  Speaker 1: think interest rates are are are going to be the key.
• 16:11
  Speaker 1: You know, once once UM you wind up with a
• 16:14
  Speaker 1: rates market that is not repressive, once you get UM
• 16:17
  Speaker 1: really yield closer to neutral rather than the minus sixty
• 16:20
  Speaker 1: basis points that we're in, it's it's a legitimate substitute
• 16:24
  Speaker 1: for UM UH for other risk assets at that point. UM.
• 16:28
  Speaker 1: I look at it from from from that perspective, multiple
• 16:30
  Speaker 1: expansion can certainly continue to occur and and and you know,
• 16:35
  Speaker 1: I would make that part of my thought process as
• 16:37
  Speaker 1: I look at risk assets over the course of the
• 16:39
  Speaker 1: next few quarters. Marvin, You know, a lot of folks
• 16:43
  Speaker 1: are are are looking for yield, They're looking for return,
• 16:46
  Speaker 1: They're willing to take maybe more risk as as we
• 16:49
  Speaker 1: come out on the other side of this pandemic, and
• 16:52
  Speaker 1: certainly willing to take more risk what's that. Certainly Bill
• 16:56
  Speaker 1: Wang was willing to he was a constant at a
• 17:00
  Speaker 1: risk at that Bill market. Just wondering what your thoughts
• 17:03
  Speaker 1: are on emerging markets for returns? Yeah, UM, you know,
• 17:08
  Speaker 1: I do. I do think that, UM, we have to
• 17:11
  Speaker 1: parcel the emerging markets into those that might benefit from
• 17:14
  Speaker 1: reflation versus those that are, you know, potentially looking at
• 17:18
  Speaker 1: higher inflation. UM, the backdrop, the backdrop is still is
• 17:22
  Speaker 1: still positive kind of given UM again that reach for
• 17:25
  Speaker 1: yield and UM the positive risk environment that you're talking about.
• 17:29
  Speaker 1: But UM, each one of those emerging markets are unique,
• 17:32
  Speaker 1: and I think you have to ultimately analyze the ones
• 17:35
  Speaker 1: that might benefit more in a reflationary environment, where we
• 17:38
  Speaker 1: start layering in infrastructure discussions as part of UM, as
• 17:42
  Speaker 1: part of the summer to early fall action items that
• 17:46
  Speaker 1: come out of Washington. In the dollar plays a huge
• 17:49
  Speaker 1: role in e M investments, of course, and at the
• 17:53
  Speaker 1: beginning of the year one thought the dollar was on
• 17:55
  Speaker 1: its way down. It's turned out to have a fantastic
• 17:57
  Speaker 1: quarter and it's doesn't look like it's gonna let up
• 18:01
  Speaker 1: anytime soon. How does that, how does that play a
• 18:04
  Speaker 1: role in what you look at globally. Yeah, yeah, absolutely
• 18:07
  Speaker 1: so so, so the dollar winds up being the most UM,
• 18:10
  Speaker 1: you know, one of the most important UM factors in
• 18:13
  Speaker 1: in how well the emerging market discussion occurs. UM. We
• 18:17
  Speaker 1: had an adjustment that occurred in the first quarter with
• 18:20
  Speaker 1: regard to how US growth was going to UM really
• 18:23
  Speaker 1: beat expectations, you know, whether it was fiscally driven UM
• 18:26
  Speaker 1: as well as kind of the better vaccine UM news.
• 18:29
  Speaker 1: If in fact a lot of that is priced in,
• 18:32
  Speaker 1: we could start getting back to looking at the dollar
• 18:35
  Speaker 1: as a more stable type of asset class, which I
• 18:37
  Speaker 1: think the market, which I think is encouraging for the
• 18:39
  Speaker 1: market at this point. UM. If if we've priced in
• 18:43
  Speaker 1: UM as much as we can from a fad rate
• 18:45
  Speaker 1: hight perspective UM, and we you know, need catalyst to
• 18:49
  Speaker 1: get it a little bit further, we could start building
• 18:52
  Speaker 1: other scenarios around e M eventually UM finding you know,
• 18:57
  Speaker 1: finding some traction where where it's been a struggle for
• 19:00
  Speaker 1: the for the past few months. Marvin, thirty seconds as
• 19:03
  Speaker 1: you talk to your pms at State Street, what's the
• 19:05
  Speaker 1: most exciting area that you're hearing from your fund managers? UM?
• 19:10
  Speaker 1: You know, I I still I still from broad risk
• 19:12
  Speaker 1: is is something that is something that's that's encouraging for folks.
• 19:15
  Speaker 1: There is a lot more discussion about alternative investments. You know, certainly,
• 19:18
  Speaker 1: certainly the the crypto spaces is interesting, um as a
• 19:23
  Speaker 1: potential as a class to think about. But um it
• 19:26
  Speaker 1: really is trying to continue along with this with this
• 19:29
  Speaker 1: risk discussion that's been going on. Marvin low thank you
• 19:32
  Speaker 1: so much for joining us. We was appreciate chatting with
• 19:34
  Speaker 1: you and getting your perspective on global markets. Marvin Lowe,
• 19:38
  Speaker 1: Senior at Global macro Strategists at State Street. They're located
• 19:41
  Speaker 1: in Boston. They are one of the mega players matt
• 19:44
  Speaker 1: up in Boston. You go up there and you see
• 19:45
  Speaker 1: the big utual fund complexes as I did for many
• 19:48
  Speaker 1: years as an annaly. State Street is an absolute anchor meeting. Uh.
• 19:51
  Speaker 1: They have a certainly a global view. I'm super pumped
• 19:57
  Speaker 1: for our next guest on us right now. He's senior
• 20:01
  Speaker 1: vice president for Global Strategy and Innovation at the Berkeley
• 20:05
  Speaker 1: College of Music. What does music have to do with innovation?
• 20:09
  Speaker 1: You ask, Well, he's a co author of Two Beats Ahead,
• 20:12
  Speaker 1: What Musical Minds teach Us about Innovation? His co author
• 20:16
  Speaker 1: on that book, Michael Hendrix, I'm assuming no relation to
• 20:19
  Speaker 1: the great guitarist Um Pano. Thanks so much for joining us. Interestingly,
• 20:24
  Speaker 1: I was just reading about will I am Um from
• 20:28
  Speaker 1: the Black from the Black Eyed Peas teaming up with
• 20:31
  Speaker 1: Um Honeywell to bring out a supermask high tech you know,
• 20:37
  Speaker 1: COVID mask essentially, and I thought, Wow, that's so cool,
• 20:40
  Speaker 1: and how come no one else thought of that already?
• 20:44
  Speaker 1: What what is your book, um telling us in terms
• 20:47
  Speaker 1: of musicians and innovation? Thank you so much. That is
• 20:53
  Speaker 1: a fascinating pairing, I think very illustrated. Well, the book
• 20:57
  Speaker 1: is all about the mindset that musicians have that we
• 21:00
  Speaker 1: believe are trans terrible and applicable in other other domains.
• 21:04
  Speaker 1: The way that musicians collaborate, the way that they listen
• 21:09
  Speaker 1: to the environment around them, the way that they create
• 21:12
  Speaker 1: through experimentation or remixing, or even the way that they're
• 21:16
  Speaker 1: able to go out there and connect with audiences. I
• 21:19
  Speaker 1: believe these are all mindsets and skills that we can
• 21:23
  Speaker 1: all learn from. All right, Panos, It's interesting here as
• 21:28
  Speaker 1: we continue to deal with this pandemic of so many groups,
• 21:33
  Speaker 1: so many people have seen their lives disrupted. Gives a
• 21:36
  Speaker 1: sense of how the average professional musician, what has he
• 21:41
  Speaker 1: or she had to do to kind of make it
• 21:43
  Speaker 1: to this pandemic? What's it? What's been fascinating about musicians
• 21:48
  Speaker 1: the music industry is, if you think about it, whether
• 21:50
  Speaker 1: it's pandemics, or whether it's technological shifts, or whether it's
• 21:54
  Speaker 1: societal shifts. Uh, the music industry and musicians in general
• 21:59
  Speaker 1: have a history of going through massive disruption but somehow
• 22:03
  Speaker 1: being the first to often embrace new technologies and new
• 22:07
  Speaker 1: means of connecting with audiences. And this goes back to
• 22:09
  Speaker 1: the earlier days of radio, television, cable TV, social media,
• 22:14
  Speaker 1: Have Your A Member Musicians were the first to embrace
• 22:17
  Speaker 1: social media, subsequently streaming and even the subscription models, and
• 22:21
  Speaker 1: now with COVID, worth seeing musicians embrace all kinds of
• 22:25
  Speaker 1: new platforms like clubhouse, TikTok, Twitch and really taking their
• 22:30
  Speaker 1: art form in ways of connecting with audiences in a
• 22:33
  Speaker 1: different in a different way. We see a level of
• 22:36
  Speaker 1: resilience that I believe we can all learn from. And
• 22:41
  Speaker 1: absolutely the music community has been devastated by COVID with
• 22:45
  Speaker 1: respect to losing in some ways the last fashion of
• 22:49
  Speaker 1: income that they had by performances um. But on the
• 22:53
  Speaker 1: other hand, we're seeing this creativity, imagination and the desire
• 22:57
  Speaker 1: to connect really siding their choices. I think we can
• 23:00
  Speaker 1: blown lots from them. I'd say, my kid brother is
• 23:03
  Speaker 1: a guitarist and a musician producer in in New York,
• 23:07
  Speaker 1: and I've always been struck by his electrical engineering skills, right,
• 23:13
  Speaker 1: same is true for for Hendricks and a number of
• 23:15
  Speaker 1: other guitars. They have to understand the science of amplification
• 23:19
  Speaker 1: and they play with it to to kind of blow
• 23:21
  Speaker 1: our minds. But I've also been struck by you know,
• 23:24
  Speaker 1: his whole crew. Um. The way that they've innovated to
• 23:28
  Speaker 1: create new revenue streams has been astounding. And are we
• 23:34
  Speaker 1: going to see the music industry change in any significant
• 23:37
  Speaker 1: way due to the pandemic? Oh? Absolutely, you are already
• 23:41
  Speaker 1: seeing it change. Uh. First of all, you're seeing growth
• 23:45
  Speaker 1: for five consecutive years in a row, so that's a
• 23:49
  Speaker 1: new chapter that's being written when it comes to music.
• 23:53
  Speaker 1: But you're also seeing again all kinds of new platforms
• 23:56
  Speaker 1: being embraced by the music the music industry as a
• 24:01
  Speaker 1: means of connecting with audiences. I mentioned a few a
• 24:05
  Speaker 1: few before, but they were also seeing all these amazing
• 24:08
  Speaker 1: collaborations that are recurring that just never happened before. So
• 24:11
  Speaker 1: we're seeing a community calless UH be able to be
• 24:15
  Speaker 1: giving in ways that we haven't seen before UH and
• 24:19
  Speaker 1: I am convinced that it's not just new technologies, but
• 24:22
  Speaker 1: new creative expressions that will come out of this pos
• 24:25
  Speaker 1: Talk to us about the ability of musicians and songwriters
• 24:29
  Speaker 1: to get to get paid. That's always been a challenge,
• 24:32
  Speaker 1: and even more so in this digital area. But I
• 24:35
  Speaker 1: know Apple's invested in something called United Masters. Talk to
• 24:38
  Speaker 1: us about that and how that might help musicians and
• 24:41
  Speaker 1: artists actually get compensated for their work. Absolutely well, we're
• 24:48
  Speaker 1: obviously with a migration to streaming the music community has
• 24:53
  Speaker 1: um UH lost a significant amount of its its revenue
• 24:57
  Speaker 1: that it used to earn from c D Ease as
• 25:00
  Speaker 1: well as other sources. Now with streaming, I think it
• 25:05
  Speaker 1: takes about three thousand streams and hour on Spotify for
• 25:09
  Speaker 1: the average musician to earn an equage, so clearly that
• 25:13
  Speaker 1: has that has to change. We have sixty thousand songs
• 25:17
  Speaker 1: a day that are uploaded to Spotify. I mean that's
• 25:21
  Speaker 1: a staggering amount of music. So not only is it
• 25:24
  Speaker 1: more difficult to be discovered, but also because of the
• 25:27
  Speaker 1: way that UH the streaming services pay in in in
• 25:31
  Speaker 1: the paradoxical way, the more users and the more music
• 25:34
  Speaker 1: is there, the less money is distributed, especially to musicians
• 25:38
  Speaker 1: at the lower at the lower end, or or the
• 25:41
  Speaker 1: tail at the thinner end of the tail. So with
• 25:44
  Speaker 1: united masters from the end the Apple deal, that's an
• 25:47
  Speaker 1: interesting move by Apple ineffectively investing in this new uh,
• 25:52
  Speaker 1: new independent artist community if you will, that's emerging and
• 25:57
  Speaker 1: really showing faith. Then the music industry has growth beyond
• 26:03
  Speaker 1: the major superstars. Were really seeing the independent music sector
• 26:07
  Speaker 1: for the first time breaking the billion dollar revenue stream UH,
• 26:11
  Speaker 1: and I believe this will continue to accelerate. I think
• 26:14
  Speaker 1: something that we have not seen yet with streaming is
• 26:16
  Speaker 1: the creation of what many people had termed of an
• 26:19
  Speaker 1: artistic middle class. I'm very hopeful that gradually with companies
• 26:24
  Speaker 1: like Apple UH coming into the freight through investments like
• 26:28
  Speaker 1: the one they're doing. If you're not masters of this,
• 26:30
  Speaker 1: this will change the game and frankly changed the experience
• 26:33
  Speaker 1: of discovering music for all of us is consumers in
• 26:36
  Speaker 1: terms of musicians, that change the way we live. I mean,
• 26:41
  Speaker 1: I'm in Berlin, right, um, where David Bowie spent a
• 26:45
  Speaker 1: large part of his life, and he's kind of a
• 26:49
  Speaker 1: generational um you know force uh radio Head. I listened
• 26:55
  Speaker 1: to the Okay Computer Record for the first time when
• 26:58
  Speaker 1: I lived here about twenty years ago, and that is just, um,
• 27:01
  Speaker 1: you know a band that's up there, you know, on
• 27:05
  Speaker 1: the on the mountain with the Stones and Zeppelin. Who
• 27:09
  Speaker 1: is the new Who are the new kids that are
• 27:11
  Speaker 1: gonna be like the new radio Head? Is there such
• 27:14
  Speaker 1: a thing anymore? Or is it just so diverse um,
• 27:17
  Speaker 1: due to the democratization of you know, the Internet. Frankly,
• 27:22
  Speaker 1: I think it's I think it's both. I think that um,
• 27:26
  Speaker 1: we're seeing maybe a plethora of choices, but there are
• 27:31
  Speaker 1: so many amazing artists that are coming about that are
• 27:35
  Speaker 1: really using all this new media to again create new expressions,
• 27:40
  Speaker 1: in new ways of connecting with fans or even seeing
• 27:43
  Speaker 1: right now the rise of non funcible tokens or n
• 27:46
  Speaker 1: f t s. And I know that right now a
• 27:48
  Speaker 1: lot of people are dismissing them as a fad, But
• 27:51
  Speaker 1: I think the story that's not been written yet is
• 27:54
  Speaker 1: how are artists creating uh or or embracing this new
• 27:59
  Speaker 1: me the invest for the first time to the advoct
• 28:01
  Speaker 1: of the digital era. You can actually have limited coffees,
• 28:04
  Speaker 1: whether it's one or ten or twenty um that our
• 28:08
  Speaker 1: audio visual in nature, how are they embracing them to
• 28:12
  Speaker 1: create again new kinds of connections and new kinds of
• 28:15
  Speaker 1: of of art forms. So for me, I'm very hopeful
• 28:20
  Speaker 1: about the the industry. Uh the artistry that's coming out
• 28:24
  Speaker 1: of it. You're seeing collaborations. Even if you just saw
• 28:26
  Speaker 1: the Grammy Awards, look at the diversity that exists. They're right,
• 28:30
  Speaker 1: you would have not ever seen even just a few
• 28:32
  Speaker 1: years ago. Uh Duo Lipa is part Albanian. You have
• 28:37
  Speaker 1: a Bruno Mars teaming up with Anderson pack And and
• 28:40
  Speaker 1: he's part Korean uh and and as is Bruno Mars
• 28:44
  Speaker 1: part of the Latino UM. So I actually am very
• 28:48
  Speaker 1: hopeful of of the industry, not just in terms of growth,
• 28:50
  Speaker 1: but in terms of diversity and discovery of all kinds
• 28:53
  Speaker 1: of new amazing artists that would be interesting to see
• 28:56
  Speaker 1: and it's fascinating to see how this industry is evolving.
• 28:59
  Speaker 1: Senior Vice president IT for Global Strategy and Innovation at
• 29:01
  Speaker 1: the Berkeley College of Music, and thank you so much
• 29:04
  Speaker 1: afford joining us. We appreciate that. Thanks for listening to
• 29:07
  Speaker 1: the Bloomberg Markets podcast. You can subscribe and listen to
• 29:11
  Speaker 1: interviews with Apple Podcasts or whatever podcast platform you prefer.
• 29:16
  Speaker 1: I'm Matt Miller. I'm on Twitter at Matt Miller y
• 29:19
  Speaker 1: three and on Fall Sweeney I'm on Twitter at pt Sweeney.
• 29:22
  Speaker 1: Before the podcast, you can always catch us worldwide at
• 29:25
  Speaker 1: Bloomberg Radio