October 12-13, 2022
We gathered in-person with the most influential, dynamic and innovative figures in investing and markets, to evaluate where we are now, predict if investors are in for more pain in 2022, and examine where money might work in this challenging environment.
Click here to view Day 1 Session 1 of Bloomberg Invest.
Click here to view the Outlook for Growth Luncheon.
Click here to view Day 1 Session 2 of Bloomberg Invest
Click here to view Bloomberg Invest: Bitcoin, Blockchain and Broader Crypto
Click here to view Day 2 Session 1 of Bloomberg Invest
- General Keith Alexander (Ret.), Founder, Chairman & Co-CEO, IronNet
- Michael Arougheti, Co-Founder & CEO, Ares Management Corporation
- Allison Bennington, Partner; Global Head of ESG Transition Advisory & Chair, Activist Defense, PJT Partners
- Dan Chung, CEO & CIO, Alger
- Nir Bar Dea, Co-CEO, Bridgewater
- José E. Feliciano, Co-Founder & Managing Partner, Clearlake Capital Group
- Sebastian Gawenda, Global Head of Institutional Sales, Crypto.com
- Myha’la Herrold, Actress
- David Hunt, President & CEO, PGIM
- Jenny Johnson, President & CEO, Franklin Templeton
- Yup S. Kim, Head of Investments, Private Equity, CalPERS
- Josh Kushner, Founder & Managing Partner, Thrive Capital
- Blue Macellari, Head of Digital Strategy, T. Rowe Price
- Kathleen McCarthy, Co-Head Real Estate, Blackstone
- Edward McGee, Chief Financial Officer, Grayscale
- Dan Morehead, CEO & Co-CIO, Pantera Capital
- John W. Rogers, Jr., Chairman, Co-CEO & CIO, Ariel Investments
- Paul J. Schroeder, QQQ Equity Product Strategist, Invesco
- Puneet Singhvi, Head of Digital Assets Institutional Clients Group, Citi
- Bart Smith, Global Head of Digital Asset Strategy, Susquehanna International Group
- Hanneke Smits, CEO, BNY Investment Management
- Michael Sonneshein, CEO, Grayscale
- Megan Starr, Head of Impact, Carlyle
- Le Thi Thu Thuy, Global CEO, VinFast & Vice Chairwoman, Vingroup
- Kenneth Tropin, Founder & Chairman, Graham Capital Management
- Boaz Weinstein, Founder & CIO, Saba Capital Management
- Tina Byles Williams, CEO & CIO, Xponance
- Kareem Zaki, General Partner, Thrive Capital
- John Zito, Partner & Deputy CIO of Credit, Apollo
- Gina Martin Adams, Chief Equity Strategist, Bloomberg Intelligence
- Tracy Alloway, Co-Host Odd Lots, Bloomberg
- Sonali Basak, Financial Correspondent, Bloomberg Television
- Romaine Bostick, Anchor, Bloomberg Television
- Michael Briody, FX & Crypto Market Specialist, Bloomberg LP
- Pierre Cox, Americas Quantitative Solutions Group Lead, Bloomberg L.P
- Scarlet Fu, Anchor, Bloomberg Quicktake
- Emilie Gallagher, Global Head of FX, Commodities & Economics Product, Bloomberg L.P.
- Caroline Hyde, Anchor, Bloomberg Television
- Jason Kelly, Chief Correspondent, Bloomberg Quicktake
- Lauren Kiel, General Manager, Bloomberg Green
- Taylor Riggs, Anchor, Bloomberg Television
- Katrina Manson, Reporter, Bloomberg
- Carol Massar, Anchor, Bloomberg Radio
- Sarah McBride, Reporter, Bloomberg
- Mark Miller, Global Editor, Bloomberg Live
- Barry Ritholtz, Co-Founder & CIO, Ritholtz Wealth Management; Host, Bloomberg’s Masters in Business
- Erik Schatzker, Editor-at-Large, Bloomberg
- Alix Steel, Anchor, Bloomberg Television
- Tim Stenovec, Anchor, Bloomberg Quicktake & Bloomberg Radio
- Joe Weisenthal, Co-Host Odd Lots, Bloomberg
- Laura Zelenko, Senior Executive Editor, Bloomberg
Strategy & Leadership With Nir Bar Dea
Growing up near Tel Aviv, with an eclectic family that included grandparents from Libya, Hungary and Poland, some of them escaping from the holocaust, influenced the arc of his life, said Nir Bar Dea, Co-CEO, Bridgewater. “The right people, when they come together, and they share culture and values can accomplish unbelievable things. That underlies everything about my life.” He agreed that a 41-year-old Israeli may not be what people expect in a Bridgewater CEO, but brings experience as a military officer, and as part of the Israeli Permanent Mission to the United Nations, and more importantly, “Bridgewater was about finding a place where I could be myself.”
He detailed the 12-year transition he came in on – “a must-win battle for us” -, comparing it to transplanting a person’s brain and heart. But the bedrock values remain. What they get involved in either matters a lot to how the world works, or their clients say it matters to them. Asked if there’s a goal at Bridgewater to be more normal, “No. We will always be distinctive. I think it’s crazy to be normal in that way.”
Opportunities Across Credit With John Zito
Building a credit business for the last 20 years has been done with rates mostly at zero, said John Zito, Partner & Deputy CIO of Credit, Apollo, and most of the businesses they’ve grown were based on the assumption that rates would be zero forever. He recalled when you could generate income in credit. In the last 10 years, “almost every investor I’ve met with has been trying to get out of credit. And rightfully so. Those discussions, for just a core credit mandate, have been tough.” Fast forward to today, every single global investor is trying to figure out the complete opposite. “It’s how do I get money out of equities, out of private, into credit, and the alternatives into direct, and there’s going to be that hole that is going to be filled by the global community, funding away from equity and into debt.”
Finding Value in Volatility with John W. Rogers, Jr.
John W. Rogers, Jr., Chairman, Co-CEO & CIO, Ariel Investments said he’s never seen this kind of market volatility before, adding, “But I think volatility should be your friend.” It should clue you in to when stocks are being mispriced and research isn’t being done well. “People become so short-term focused today in our society. Some of us that are left who are willing to look out three, five years, out over the horizon, looking out to see what this company will truly look like when the storm passes. That way of value investing is always going to be something that will work in our markets.”
He talked about trading more than average, and how for 39 years, adding to positions of names you truly believe in no matter what, has worked for them. “We’re doing more trading because there’s more opportunity caused by this volatility.”
The VC Outlook
Josh Kushner, Founder & Managing Partner, Thrive Capital detailed starting a firm that didn’t look like everyone else’s, taking a very first principle approach and being stage agnostic, hands-on, on the ground building and partnering to identify the fault potential. “We work for institutions that do a ton of good in the world and wanted to accomplish being the most meaningful partner for our founders. We figured it would enable us to scale, and do the exact same thing. So, we are doing the exact same thing with our $3 billion fund, as we were doing with our first, $40 million fund, and that’s something we’re proud of.”
Asked about the recent Kanye West controversy, involving one of Thrive’s most successful portfolio companies, “Getting called out by Kanye was not on last week’s Bingo card for me. But as a firm, we just keep our heads down and stay focused,” he said, adding that they feel really fortunate to work with that business and all the people involved. On a personal level, he called the anti-semetic comments, “disappointing.”
Kareem Zaki, General Partner, Thrive Capital, said their consumer investing strategy is direct-to-consumer, and they try to keep a generalist lens. “The consumer space is less around what we think is more interesting to the consumer today, but what are some of the powerful and exciting trends happening broadly. One of the things that’s really interesting is the growth and power of a creator, and having a direct voice.”
On what they continue to do to go against the conventional, “People ask if a former founder is a better investor, or does a classically trained investor lead to better results, and I think our answer is both. These businesses are becoming much more complex. The investor needs to be much more multi-dimensional around it. It also allows for taking on more ambitious opportunities.”
Doubling Down on ESG
“ESG is not a religion,” said Megan Starr, Head of Impact, Carlyle, reacting to poll results overwhelmingly in favor of renaming and redefining it. Even though it’s a science and an investment methodology, “People love to say “I don’t believe in ESG” or “I believe in ESG.” Investment managers apply it in very different ways. Part of the ESG backlash is greenwashing, “which happens when everyone writes their own report card. We get more than 300 ESG data requests every year. Let’s sit in a room and agree on how we’re going to measure that.” Carlyle has met with many of their peers to establish a single method to track data across portfolios.
Allison Bennington, Partner; Global Head of ESG Transition Advisory & Chair, Activist Defense, PJT Partners sees big opportunities in ESG transformation. “Energy and food security are absolutely issues companies can do something about through investment.” She went beyond the question of it needing a new name, emphasizing the problem of it having many names. “Accurate labels are needed, and fund managers need to be a lot clearer with them.”
From the pension vantage point, Yup S. Kim, Head of Investments, Private Equity, CalPERS, said, “The first thing I tell our GPs is recognize the power, the privilege and the responsibility you have as truly a change catalyst to driving and accelerating returns, while also positively impacting society.” There was a time when digital strategy was met with deep skepticism by CEOs and management teams across the board. It’s early days on an ESG valuation tool kit, but it’s “a superior ownership model coupled with a long-term orientation.” His advice is to look at it as levers that can really transform a business.
The ‘Disney v. Desantos’ issue was discussed, with Bennington stating the debate is opening up on political and social issues being placed above customer needs, while Starr talked about people labeling companies as either “green” or “brown,” with no in-between, and the proven success of diverse business teams.
VinFast Sponsor Spotlight: Investment in the US
Le Thi Thu Thuy, Global CEO, VinFast & Vice Chairwoman, Vingroup announced they will begin shipping in North America by the end of the year, and stop producing internal combustion engine cars. Well-established in Vietnam, the company is “rethinking traditional sales models,” including direct-to-consumer and selling and leasing batteries separately. Their portfolio of EVs targets all market segments and have been receiving lots of attention at U.S. auto shows over the past year, she said. Trust will factor in, she acknowledged. “Our 10-year warranty tell people we believe in and are willing to stand behind our products.”
Bloomberg Invest: The Outlook for Growth
Despite all the headwinds that we’ve seen within large cap growth, QQQ has seen an inflow of about $2 billion, said Paul J. Schroeder, QQQ Equity Product Strategist, Invesco. It now represents 27% of all large cap growth ETF assets. “The investors that I’m speaking to are still bullish on the long-term prospects of growth. “We feel it is the company’s abilities to be more innovative than the broader market that has propelled the performance of the fund since its inception back in 1999.”
Tina Byles Williams, CEO & CIO, Xponance spoke to an entirely differently structured environment, looking back at decades of economic impacts, the eradication of cyclical inflation, and wondered, if any of that matters now. “The San Francisco Fed did a fantastic study of disaggregating cyclical from structural inflation and the latter shows an increase, and I think it will be a sustained increase.” She believes that when the Fed evaluates its dogma in 2025, the 2% target will be on the table.
Dan Chung, CEO & CIO, Alger disagreed, saying the 2% is too low and clearly incorrect. “I think it’s an artifact of the ever-lower rates. We’ve had terrific periods of growth in the economy and the stock market – the 90s – when, actually, people were terrified of anything below 3%. People were worried about deflation and stagnation.” Are growth stocks bottoming out? Chung referenced three stages, the valuation correction, which is done, recession, and growth. When the FED takes action again in December, “It’s going to be really interesting. It will be pivotal.” The next big growth investment is batteries. “When they’re totally figured out, it’s going to be a game-changer.”
Whales, Tails, & Fails With Boaz Weinstein
There are distinct differences between this and other bear markets, according to Boaz Weinstein, Founder & CIO, Saba Capital Management. There have been a lot of “bolts from the blue,” like the 9/11 attacks, and the very beginning of covid. “People knew right after what they needed to do, like not buying airline stocks, in both cases.” But in 2021, there was a lot of time to get worried, and no place to hide. The knowns and unknowns were a million balls up in the air. “People just felt risk all over for 10 months. It led to blowing out things that are not particularly risky. It made for distortions and opportunities that are really interesting.” Weinstein said things are “worse now than the worst day during covid.”
He spoke about buying protection, providing liquidity to banks, and described 2022 as a “slow motion explosion.” “The market is still trying to figure out what it should be worried about,” and there’s no clear signal as to when things will get better.
Crypto.com Sponsor Spotlight: Crypto as an Integrated System
Sebastian Gawenda, Global Head of Institutional Sales, Crypto.com said that having more than 50 million clients, from retail to sophisticated institutions provides insights into the incredible intersection of what clients can do. “With the integrated system, we can see what’s working and what’s not, and leverage core competencies toward success.” Crypto, he said, is like an engine; it can power so many things. On regulations, he believes they are agile enough for digital, allowing traditional players to do more.
Putting Money to Work in Crypto With Dan Morehead
“I can see a world where Bitcoin does really well even when other risk assets are impacted. It’s like digital gold,” said Dan Morehead, CEO & Co-CIO, Pantera Capital. That will be in a few years, he predicts, when more than a billion people use it in a variety of ways, from storing wealth to moving money across borders for free. “It’s going to disrupt so many different things, it won’t matter if we’re wrong on some.” Adoption will happen in its own time, especially for something so revolutionary. He compared it to the evolution of the Internet, and what’s happening with Web3, with decentralized versions of what we’re used to proving to be so much better. For instance, it cuts out the middleman with music sharing, connecting artists directly to their fans. “Even the fans get to own a chunk of the network just by participating. It’s cooperatively owned and cooperatively governed.” Morehead believes we will end up with about 10 level ones, “all doing their own thing.”
Absolutely invest in Bitcoin, he said. “The fundamentals are great. It just got caught up in risk reductions.” His message to regulators, “Whether you like crypto or not, it’s going to happen, and you’d rather have control on-shore.”
Grayscale Sponsor Spotlight: Evolution of Crypto Institutional Adoption
Edward McGee, Chief Financial Officer, Grayscale spoke to leaving Goldman Sachs in 2019, and spending a lot of personal time researching the asset class, when “it really became a question of, ‘Why not crypto?’” The adoption of it became both personal and professional, where he wanted to be involved with it not as a technological revolution, but because of the capabilities of the technology. Grayscale, the asset manager of the world’s largest Bitcoin trust was the place to pursue that. Next from Grayscale is a revolution of its product suite, including thematic products that reflect how investors have taken a leap forward in how they think about the asset class.
Why Macro is Killing It
Kenneth Tropin, Founder & Chairman, Graham Capital Management gave credit to central banks raising rates, a divergent set of global circumstances and market inefficiencies, and predicted macro will see a few more years of favorability. Inflation will continue to dominate the narrative until next year, and it will take until 2025 to get to target. “The problem is, inflation, and some of the factors that cause it, are out of the Fed’s purview, like supply chain disruption and energy prices.” One of the U.S. drivers is labor, he said. “The majority of the workforce never lived through a recession. Complacency has developed around expectations of constant wage increases.”
Tropin spoke about green energy in the macro analysis, Bitcoin, and gold. “If there was ever a year people wanted it for an inflation hedge, this was it, but it just wasn’t effective,” he said, admitting that he doesn’t know why its value is deflated, but they’ve seen some small profits.
Playing Across Sectors: Industrials, Technology and Sports
José E. Feliciano, Co-Founder & Managing Partner, Clearlake Capital Group spoke about resiliency and keeping a close eye on the right time – not just yet – to consider turnarounds on distress opportunities. On selling businesses, “now is not a good time, unless you have to, or you’re approached with a good cash offer.”
More relevant to the moment was Clearlake’s recent acquisitions of Ticket Evolution and the Chelsea Football Club. Now on their Victory Live platform, it’s a space that plays to their strengths, he said, and offers many interesting aspects, such as major access to consumer data. What’s it like to own such a publicly known asset? “Most people have no clue about all the much more lucrative transactions we’ve recently done,” Feliciano said, adding that it’s very strange when it comes to monitoring its performance as an investment. “Instead of waiting for a report, you get to watch how you’re doing on TV.”
Industry’s Breakout Star on Navigating the World of High Finance
Myha’la Herrold, Actress, in researching her role in the British television drama, Industry, noted the similarity of having to “claw your way to the top” in the acting and finance industries. “I also didn’t know that the world of finance had any people of color in it. “Based on media I had seen, I felt that it was the richest, the oldest, the whitest of men. That was really refreshing and exciting to me, that I was able to bring my experience as a young, black, American woman into this world, because we existed there.”
Bloomberg Invest: Bitcoin, Blockchain and Broader Crypto
Dinner & Discussion
Blue Macellari, Head of Digital Strategy, T. Rowe Price left traditional finance for a crypto-native startup at the beginning of the last crypto winter. It was such a new space, the commitment wasn’t there. This winter is panning out much differently. “Institutions, and the market more broadly, have embraced this and continue to stick with it. And I think there’s a real generational piece that people have started to recognize, as well.”
On moving an 85-year old firm into the digital space, Macellari said, “While blockchain is a new technology, technology itself isn’t new to T. Rowe.” A team of analysts there is building out “robust, fundamental research across the ecosystem to understand how everything comes together.” It comes down to recognizing that crypto markets have gotten to the size that they will impact and interact with traditional markets.
Bart Smith, Global Head of Digital Asset Strategy, Susquehanna International Group said the difference he’s seeing now is the infrastructure being built out and validation from companies like BNY Mellon, State Street, and BlackRock, which announced they’re going to have it on the Aladdin program, which a vast number of institutions use for critical infrastructure. “That’s the piece that’s different now, and all of the solutions are on the horizon.” He addressed the issue of understanding crypto, advising to concentrate on specific, bite-sized portions, instead of getting caught up in the minutiae. “You have to remember that Bitcoin was created specifically to offer an alternative to traditional finance, and then people get frustrated when it doesn’t fit neatly into the thing it was meant to disrupt.”
Puneet Singhvi, Head of Digital Assets Institutional Clients Group, Citi looked at it from the capabilities perspective, with one platform bringing money and securities together, a new way of settling and a way for institutions to communicate, “That could be pretty unique,” adding it would have to be in a very well-regulated format. On moving the emerging technology through fund managers to the clients, it will be driven by retail, he said. “We’re just starting to see the emergence of real money engaging with this, so the level of demand is still not there.” The cost is also an issue.”What we’re starting to see is people wrapping those things in different ways to use traditional rails to get exposure.”
The Alternatives Landscape With Michael Arougheti
Investing in credit is a good move in this cycle, said Michael Arougheti, Co-Founder & CEO, Ares Management Corporation. Private credit markets with shorter durations, lower risk and floating rates are best. On the rate of change and volatility, It’s not so long ago that we were in an environment where we were managing 5% rates.The opportunity we’re looking for is something we’ve done before. From my seat, this feels more like a traditional credit cycle.”
He spoke to default cycles, massive credit acceleration, inevitable but a long way off, the valuation hit, and the UK, which he praised for working to improve its policy clarity, and “selling assets appropriately.”
For the coming year, he’s most excited that “it’s finally interesting again.” He added that it will also be interesting to see reactions. “Everything has been up and to the right for so long. We have a whole generation of investors who have never been through a cycle.” His advice was to remain calm. “We’ve had 5% and recessions before. Investing with anxiety is not a successful investment formula.”
The Asset Management Outlook
For active managers, volatility is a good thing, according to Jenny Johnson, President & CEO, Franklin Templeton. In these types of environments, where you have market volatility, it’s an opportunity. “The opportunity gets more difficult, especially where the CPI came in today. During these bear markets, you’re reminded that 40% of the return comes from dividends. It’s a good time to have solid cash flow companies with good dividends.” On where the geographic opportunities lie, she pointed to Asia, where 80% are expected to reach the middle class in the next decade.
Hanneke Smits, CEO, BNY Investment Management advised remaining calm and focused during volatility. “We can’t rely on growth as a factor, but that doesn’t mean you can’t invest in growth companies.” BNY is focused now on organic growth. She added that the underlying impact trends haven’t changed. There’s a demand for low-cost investment solutions.
Take lessons from history, said David Hunt, President & CEO, PGIM, but don’t spend time fighting the wrong war. “I believe the Fed is doing that. They’re fighting the war they know from the 70s. But it’s not like the 70s anymore.” Around the world, governments have put 10% GDP back into their economies, and another 5% that they’ve allowed to be borrowed. So, you have an enormous stimulus that’s coming from policy that you haven’t seen in 20 years.” This is not a growth story for the economy, but investors will see some of the best growth across a broad range of asset classes.
On China, Hunt expects a lot of returns from Asia, broadly, but said it can’t be called an emerging market. Smits said there will be interesting opportunities, but investment has to be long-term. The U.S. is still the largest, and growing, but China will be next. “We need to be able to compete in both in five to 10 years.”
Invesco QQQ Sponsor Spotlight: Innovation as Opportunity
Paul J. Schroeder, QQQ Equity Product Strategist, Invesco revealed the background of the “Qs,” now the fifth largest ETF and second-most traded. In this landscape, companies need to be agile, he said, using Amazon as an example. “They went from bookseller, to retail and to a massive web service provider.” QQQ companies consistently spend more on R&D, and even have revenue from R&D. They also look at patents as an investment in a company’s relevance years down the line, and to help with short-term evaluations.
Bloomberg Intelligence Presents: Global Equities Outlook
Gina Martin Adams, Chief Equity Strategist, Bloomberg Intelligence presented the new inflation regime, supported the Fed’s efforts against inflation, but knows the market still has questions. She offered charts showing investment strategies and the three Ds of secular inflation drivers; deglobalization, decarbonization, and demographics. Detailed were impact restrictions, demand and supply, and the U.S. labor force, predicted at 2.4 available workers for every retiree by 2030.
Global Real Estate Outlook with Kathleen McCarthy
Warehousing is the word in property investment right now, according to Kathleen McCarthy, Co-Head Real Estate, Blackstone, who talked further about where their new real estate investment fundraising vehicle, that will break their own record, may be applied. They have entered the growing retail market in India with malls that disrupt their long-held premise. “They have to have more things to do than shopping. They have to offer experiences and community.” COVID-19 accelerated trends Blackstone was already working on, with a process that starts with analyzing customer demand. Despite assumptions, office buildings are not about a lot of empty space right now. Speed is picking up on what was already trending; the desire for more amenities, flexibility and co-office spaces, and again, creating an experience. “Employers want to attract their workers back and tenants want more options and sustainability.” This is a moment in real estate, she said. A good moment.
On recession, she leaned toward “economic cooling,” because so much is unprecedented. “For 30 years, Blackstone has been planning for inflation and different scenarios. We thought we had seen it all. Before covid, no one was underwriting empty hotels.”
Bloomberg Presents: A Look Inside BQuant Enterprise
Pierre Cox, Americas Quantitative Solutions Group Lead, Bloomberg L.P. offered a look at the new platform in the Bloomberg Terminal, a fully managed solution that allows custom applications, because no matter how much effort the team puts into it, someone always wants a nuance. It addresses the lack of time, human capital, infrastructure and access in collecting data. It increases efficiency, and access to the data companies need to create a dynamic and interactive way to really dig into the minutiae of what’s happening in their world.
Protecting Financial Services from Cyber Threats With Gen. Keith Alexander (Ret.)
As the former head of the NSA, now focused on what he believes is the biggest threat out there, General Keith Alexander (Ret.), Founder, Chairman & Co-CEO, IronNet offered thoughtful, expert analysis of Vladimir Putin and what his next move may be. He’s backed into a corner, his citizens are figuring out his lies and may rise up against him. “The nuclear threat toward Ukraine is his show of force, but it’s not working, and an exit today would be his end. He has to have some kind of win, or someone to blame the loss on.” At this point, cyberattacks to undermine global infrastructure have to be a tempting option. With limited resources because of sanctions, Russia has been launching “dumb” missiles. Alexander theorized that the nuclear attack available to them is a tactical weapon. “I think he’s considering it, but it would be the end of his regime, because the U.S. and everyone else would get involved.”
As to the financial woes of his company and a “baseless” class action suit over going public, Alexander said they have a lot of work to do, and will keep at it. “I’m in this company because I think it’s the right thing to do for our country.”
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