Druckenmiller on 2020 Outlook, Monetary Policy, U.S. Election

Stan how do you feel going into 2020 about demarco yeah my health at the markets the economy we could talk about your help too if you like what's not well you have very low unemployment here you have fiscal stimulus in Japan you have fiscal stimulus and a lot of confidence coming to Britain we're running a trillion dollar deficit for employment apparently we're gonna have some sort of green stimulus in Europe and we have negative real rates everywhere and negative absolute rates a lot of places so with that kind of unprecedented monetary stimulus relative to the circumstances it's hard to have anything of a constructive view on the markets risk and the economy intermediate-term so that's what I have because everywhere you turn you're being encouraged to take more I don't need to take more I have enough but I just I've always believed that expansions and usually would type monetary policy or credit problems and I think what we're doing is definitely borrowing from the future and we'll probably end badly as the o-7 period did but you know that could be years I'm 66 I might be dead by the time what happens so the intermediate term technicals are good yet breathitt an all-time high economy's fine and if anything our biggest our biggest problem going in once once the Fed shifted away from their cutie and tightening program our biggest problem was obviously global trade and whereas over global trade and I'm not saying everything is all peaches and roses now but certainly on a rate of change basis I don't see that being if anything there's a de-escalation not an escalation there so for now all systems go so your constructive all systems go how you're expressing that in your portfolio well I'm long equities I'm long some commodities I'm short fixed income and I'm long commodity currencies short the end so all sort of for now betting on a a benign economic outlook and a benign market outlook but as you know Eric I tend to change my mind so that's for today hopefully all last at least a couple weeks let's be a little more specific if we can short the end commodity currencies I'm assuming Canadian dollar Australian dollar that's very good anything else I'm missing there I have some New Zealand lying around I even have some Mexico lying around they're not they're not big massive positions but they're enough to matter in my non-competing world I might have more if I'd still had clients commodities have been unloved for an awfully long time what do you own I own copper believe it or not basically I think on the margin as I just described particular with fiscal stimulus and monetary easing at the same time and a D munition of trade worries global economy is going to be better than the IMF thinks and copper has a little extra kicker relative to the other ones we think that V's probably add 0.5 percent a year in demand and the supply it looks challenged it become more challenged if the Chile situation doesn't clear up but that's not why we own it we don't own energy probably should but I just I just think the demand outlook is so challenged long-term just not that interested if you like the commodities short-term it kind of makes the equities challenged because they're a long dated asset and hopefully we'll go greener and greener I'm on the board and Environmental Defense Fund so I'm perfectly happy if oil doesn't go anywhere and in the stock market anything particular you like it's interesting when we met a year ago my portfolio was heavily growth oriented particularly the cloud it was serviced now remember my oft yeah the the theory being there's like a ten-year runway and these companies would grow very well in a low nominal growth world I still own that stuff but my mix has changed dramatically to stuff that will do well in a higher nominal growth world so I have bank's financials I own Japanese so I wouldn't call it a mix evaluated I wouldn't call it a mix dominated by value but it it looks more like a normal mix now it's not just concentrated in two companies that would do well in a low nominal growth world and short fixed income which I interpret is short the Treasury market what a difference a year makes yeah last year the Fed was on this well about around this time they were about to do a hike and Jerome Powell also followed that up by saying quantitative tightening shrinking the balance sheet was all about pilot and I think they're dots called for for hikes I think that you know how to here to us right I thought that those were inappropriate and I think I looked at the transcript from last show I think we were along quite a few Treasuries so it's it's almost the exact opposite view for the exact opposite reason I don't think Jerome Powell will have the courage to raise rates next year it's a lot easier to change your mind from a tightening to an easing mode but I definitely don't think I don't think they'll be easing it's kind of absurd when you look at where a nominal growth and real growth in this country are and you look at unemployment and you look at all the other circumstances to have rates at one and a half percent if I came down from Mars and you showed me the broad landscape and asked him where Fed Funds would be I probably would guess three and a half somewhere in there so if you don't think you'll have the courage to raise rates next year should I imply that your short position is a little further out on the curve yeah we're we're short the long end because I just think these rates for these economic circumstances are inappropriate I thought they were inappropriately high last year or particularly that quantitative tightening and I think they're an appropriately easy this year it's actually quite remarkable because the Fed has continued to talk about this mid to late 90s period where they were doing insurance cuts I remember running quantum at Soros and in 98 credit completely dried up with Russia and it looked like the financial the Asian financial crisis could spill over in America Greenspan cut three times twice in October on what's in November stock market went to a new high took off and since he was insuring against the Asian financial crisis he took back the insurance by the way he had cut rates three times from five and a half to four seventy-five and then he started hiking so the most fascinating thing about the recent press conference and the one before it was some reporter I don't think it was a Bloomberg reporter but some reporter cited this period and them using the insurance cuts as a model and said Chair Powell what happens if the trade war d escalates and it's no longer that big of a worry and what if breaks it is solved would you raise rates and he said absolutely not and the guy said well why you that's why you cut them he said that was insuring against this and he said well because the inflation rate is much lower now and we didn't have the risk of deflation back then and Eric that didn't sound right to me because I remembered distinctly that period Greenspan running the the great experiment with a blooming economy with no inflation I look back and the core PCE was one-and-a-half in 98 and 99 when Greenspan started raising rates again from 475 it's currently 1:7 and he's got them at one and a half I mean honestly I don't get these guys last year when we meant no credit had been issued for a month the stock market was down ten percent economic conditions were a meltdown and they hiked and they leave cutey automatic pilot now credit conditions are booming we have a new IPO every day the stock market's an all-time high employments at three and a half percent confidence is picking up and we just did three cuts so it's like these guys are pretty hard to figure I want to ask you some more questions about the Fed but before I do we haven't talked about your favorite currency we along the pound heading into the British election I was it is my favorite currency and I just you know I'm very good friends with johanna Rupert and he had told me he calls her Mrs T and that's Margaret Thatcher and he said you know when I met with mrs. tea she said never underestimate the common sense of the British people and I just I just felt that they were not going to go for socialism and frankly when I look at what's going on in Europe and then I look at what's going on in Britain I was always sort of a brexit ear because they did perfectly find for 500 years without that union of countries down there who seemed all hate each other and they can't make a decision on anything so I think this is going to be actually very good for the British economy I separate myself from most on that I think Boris Johnson is sort of a smarter version of Trump without some of the the antics to go along with it and I would expect investments to fly into that country and I think they'll do it I think they'll do very well there so you know it's funny if you look at it what if I were to tell you there was a Republican president but a better version and you had two-thirds Republican majorities in both houses of Congress and you had a deficit to GDP of two not four and a half and you had a debt to GDP lower than the United States and twelve times earnings in a four percent yield it sounds like a decent place to invest to me so we not only had the pound and still do we had the British financials the banks we have some Barclays Lloyds that kind of stuff flying around which just lying around well I don't take big positions anywhere I've become a coward since I stopped competing but uh enough that it gave me a smile on Friday let's go back to the Fed you're a frequent critic of the Fed have been over time for reasons you've articulated well you see you can't figure these guys out but do you feel Stan any more confident about the direction of monetary policy today than you did a year ago no I feel much worse first of all if you remember a lot of the bait a year ago was about quantitative tightening and despite the fact that at least the seven or eight previous times we had done QE bonds had gone down and stocks had gone up John Williams and some others there said that QE QT had no impact on markets and frankly we switched from cutie to QE and what happened bonds are going down in price and equities are are going up but you know it was just lucky eight out of eight but I just first of all the editorial cabinet I wrote we said don't raise rates for now this was back in December of yes our interview was the day before the hike we wouldn't raise rates for now we weren't saying to cut them and one of the things we've said in our interview is if you hike now you may get really scared and have to start cutting and do something drastic the next year which of course they've done I'm not sure why but you know I think it's it's always easy to be easing and things are great and you just feel like you're the cat's meow you'll remember Bernanke claiming victory and o4 with the Great Moderation and Greenspan was a maestro but I will go to my grave believing that that financial crisis happened because the bubbles created by easy money and I just don't understand why we need interest rates where they are now we normalize we're trying to normalize okay things got too tight you should back off but you don't need to go the other way to the extent we've had and then this crazy president saying we need negative rates to compete with negative rates in countries where they clearly aren't working they're not growing as well as I do it's the most anti-capitalist idea I could ever dream up and he's pushing Palin you know I didn't want to believe this but it's pretty clear now that he's had an effect on pal and of course the media is gone all he's really standing up to him well with verbage not an action in action he's been cutting and doing the president is bidding he hasn't gone negative god help us some people say he deserve high marks whether it's the media or others deserve high marks for resisting some of that pressure from the White House kind of grade would you give Jay palace Fed Chairman not a good one I don't think he's resisted anything he just well rate him against Yellen Bernanke Greenspan he's a weaker version of Yellen without the monetary framework Bernanke and I philosophically disagree about easy money and helicopter money but the man had conviction and he controlled the room which i think is really important in a Fed chair and I don't see that here and of course let's not compare him with my true hero Paul Volcker who the late great Paul Volcker yes who he cited as hers and I couldn't agree more and it's too bad we don't have some of that kind of courage at the Fed today you brought up your friend Kevin wash with whom you wrote the op-ed arguing for the Fed to pause and not raise rates as it subsequently did that is raised rates in December of 2018 Kevin is considered a candidate for the job of governor the Bank of England you think he'll get it I don't know whether he'll get it and I don't know whether he wants it I don't know anything about this but I hope for my sake it's not true because he's been a trusted advisor Claude who knows not me Stan tell me what you think of Christine Lagarde is the new ECB president it's early days yet she's a lawyer I think it's way too early to judge her I'm a little taken aback by linking climate change with monetary policy I am on the board of a montemagno fence so I'm a greeny but you know I think there's other buckets to execute climate change through and it shouldn't have anything to do with monetary policy but who knows how strongly she feels about that but it's early days and I think we should give her the benefit out and asked me in a year if we're still here central bankers whether it's policy makers at the ECB or for that matter members of the FOMC seemed determined at whatever cost to bring inflation back to two percent in Europe it's met negative rates here they're now beginning to talk about inflation averaging would be a catch-up period if it hasn't met the 2% target for a period of time my question to you is in whether negative rates necessarily work or whether averaging inflation is necessarily a good idea you're free to answer both but first I want to know whether you think inflation matters anymore well first of all there's 14 recognized measures of inflation twelve of them are above two percent their preferred measure the core PCE E is at 1.7 percent the risks they are taking with regard to miss allocation of resources bubbles all that stuff because something is at 1.7 as opposed to two and now they're talking about a make up period first of all monetary policy is supposed to look forward not backward so why are we looking backward and if there's a make up period after inflation was 10% in the 70s why didn't we have a target of minus 10 a year in the 80s and we're talking about decimal points here about something Eric that you can't even really measure so and I'd like to remind everyone because now they've turned it into a mandate there is no mandate for 2% the mandates states very clearly price stability and full employment in this country yes well I live in this country and so does the Fed and I don't know how 1.7 percent is not like the greatest success ever if we're talking about price stability so this thing about it's the greatest challenge of our time to get out from 1.72 to when we don't even know whether it's 1 or 3 it's just you know the measurements are so random I just find it astonishing we're living in a time of technological advancement all kinds of new innovations that are creating deflationary pressures surely reflected in that one-point-seven whether you think it's adequately or accurately measured where does that fit into your thinking about the importance of inflation at all I'm glad you asked because you know when the last big technological revolution was it was the late 1800s and we had three percent deflation and eight percent real growth for ten years so I remember talking to a central banker so medical is 19% of GDP here what have you found a way either through co-payments or whatever to get the consumer to respond to price and then you used our technological wunderkind so let's just call it for no better term what if we Amazon the whole medical system and you drove the costs of medicine not medicine of healthcare down as countries from say 19 to 13 it's 11 in most other countries would the Fed then panic because it sends the CPI under zero is this some horrible thing that we're gonna it's gonna be the greatest crisis for our time and have a huge response to no and I would say the same thing about all this stuff for at large you have these magnificent productivity increases going on right now at the corporate level because of cloud content and so forth there's nothing pernicious about inflation if it's driven deflation if it's driven from the supply side I don't see people walking around oh my god I'm not gonna buy a car this month because it might be cheaper in three months and by the way we haven't even had deflation it's just sort of this imaginary thing that it's not up to there two percent arbitrary target for the time being anyway this obsession if we can call it that with inflation has driven these insurance cuts and helped once again to reflate financial assets 2019 was an extraordinary year for investors how did you do not as well as I like I just got into double digits last week I wasn't even able to say that I'm just too conservative on my old age I was I was well-positioned but very timidly I'll leave it at that why are you timid we got nothing to lose I have a lot to lose that's that's what other he doesn't timid I don't know when I was competing and managing other people's money I just I'm a very competitive person and I felt the compulsion to take risks I'm still a competitive person but it's either that or something about my age I don't trust myself or the last year in particular I've just never trusted this administration not to do something that would preclude me from taking positions that I just felt were safe and secure and all in risk and I think unfortunately a lot of people probably felt the same way as you know people have actually sold equities and put them into bonds this year I didn't do that I was just timid about what I did do but this administration with wondering about where the hell the next bomb is coming from just doesn't allow me to take some of the positions I've taken historically where I just thought it was a one-way bet to me this was always binary in a two-way bet it's not just policy uncertainty it's something how would you describe you call it policy uncertainty is a great term one of the reasons I'm pretty sanguine right now is I think we're close enough to the election at least we can breathe for a few months that I think I don't expect any dramatic policy that can overwhelm the favorable backdrop of monetary stimulus in a decent economy you describe yourself as being timid maybe we'll use the word cautious in part because you're no longer competing there are still lots of people who are competing and yet many of the greatest fund managers we've seen in our lifetimes are struggling to generate good returns why well if you're talking about the macro community where the biggest problem has been they're just not the opportunities that were in the 1890s because with central bank's suppressing interest rates there has not been sort of the one way high risk reward bet there were I you know I remember when the Japanese when me a know inappropriately tightened after a big bubble I bought Japanese bonds at 7% okay and I mean a lot of them when I was at Soros okay are you gonna go plow into the 10-year at 190 or whatever it is no but you might think rates are going down so you just take lesser of a position I also think a lot of them seem to be led around by the nose with the by the Fed and the Fed you know they talk about the dots and they obsess over this I always made my money when I felt differently the Fed and I went in the other direction because once the Fed changes you make money and the feds have been very wrong on the economy and on the markets and on policy and I think those that followed them that's a problem the other thing has happened obviously is you've suppressed currencies but there are plenty of great young money managers who are killing it now they're mainly in technology stocks they were long the disrupter and short the disrupted we'll see what happens now if the world is changing the way I think it is but off yeah I think that's those are some reasons who impresses you among the current generation of young inventor not say because someone asked me that seven years ago and I think I cursed the people I answered so but let me say this I think one of the reasons I had the record I did I was the only person in my class in 75 who went to the securities business at Bowdoin and there were of the higher schools in Bowdoin I don't think anybody at the end of a seven or eight year bear market was going to Wall Street so the level of competence I was competing against in the 80s and early 90s made me look quite good once once you've been through 20 years of bear market these kids that all come in the industry in late 90s and 2000 not to mention the quants like Jim Simons and all those guys they've all got like 50 IQ points on me so you know I just think one of the reasons it's tougher is a lot of really really talented human capital has been brought in and with the internet a lot of the old trade secrets that I had that were in my head about what leads and lags markets now that Davis is sending like five emails a day telling if this happens and that happens you just don't I think a lot of these investors don't have the edge we had back then I was extremely fortunate to come into the business particularly the macro business when I did from both an opportunity set and who I was competing against well you've told me before quants have changed the game for fundamental investors and people like you need to adapt yes we do so how are you adapting well I think we talked about this last year but one of my big things and you got beat up for it a little bit that's okay one of my big things in investing was price action versus news and gathering price signals from the market and I think those price signals versus news were very effective for 20 or 30 years now with the quants who respond to a different set of variables and then we used to back then I used to want to buy a stock maybe and what I would call the second inning when something's gone that much their models may have figure out that it's gonna go back to the first inning before proceeds on its merry way what I've tried to adapt to is having a fundamental belief and if they're creating volatility in the markets using the volatility rather than getting abused by the volatility but Eric I'm not that secure in my fundamental beliefs I liked it better when I could just use price signals but you know I've tried to adapt it you know I'm doing all right I'm gonna hold you accountable to something else you told me a year ago you said at the time you thought we'd been in a global bear market for a year yeah not a correction in a secular bull market yes and was gonna be hard to escape was that the wrong diagnosis or are we still in a global bow market absolutely the wrong diagnosis for it weren't new highs 12 months later I'm proud of the fact that I pivoted before the force mattered but I couldn't have been more wrong but I would say until the last month or so the US was about the only one that continued in this kind of markets but uh no question that was wrong the question is how long is this going to last the answer is I don't know nobody long enough that I'm maybe Jim Simons knows I'm not sure Jim Simons knows but I bet his machine they'd had created knows where he can sleep at night and the thing makes money for him God talk about their bono so it's awfully hard of course to predict when the next downturn is going to come do you have any idea Stan particularly as someone who's made more money in bear markets than in bull markets what will trigger it yeah if if there's a political event change of leadership in the White House that goes to some of the anti capitalists I would think that would definitely trigger a bear market whether it would permanently end the bull market I don't know but that would trigger it the other thing that would obviously trigger it is if by the end of this year we started to get enough inflation that the feds start tightening and then of course the other thing is if we had a credit event and if you look at the credit markets it's very obvious that you've got a really lot of bad apples out there that are not being exposed because the interest costs are so low by the way one of them being the US government we're running a trillion dollar deficit why because we can affect a lot of these new professor geniuses think this is just a free lunch but I would think it's one of those three events a political be change in Fed policy because you know who knows when inflation turns you can come up with a theory why it would turn I kind of believe the secular forces will hold it down but I've been wrong before and I'll be wrong and in the future and then the third one is and this is more what happened in oh seven oh eight the the bubble just collapses on itself because things have just gotten so ridiculous I don't think we're anywhere near there but I've been wrong before and you know these things seem to happen after elections in fact when I first came in the business my first boss told me just by two years after the election and then sell the election and then that worked like every four year period it worked until Bush tried to extend the cycle and for the whole four years and we blew up is that what you're going to try heading into this election what's not is that what you're going to try heading into this election what so I don't know what I'm gonna do I'm only gonna sell when I start to see the signs to say good so I can have all these great long term to pontificating but as a practitioner you know I can't really think about the long long term but I need to be aware of it so that I can pull the trigger to go that way let me go back to your point about anti capitalists would an Elizabeth Warren presidency really be that bad in your view in what respect well are we talking about markets are we talking about the United States what are we talking about mm well let's start with the markets because that's how we got on to the point and then you can expand well with regard to the markets let me just put it this way every consultant that ever studied Duquesne said I have a negative correlation of the SP and I do very well in bear markets I think a Warren presidency would be very good for my business but not necessarily good for America is there a Warren hedge well let's see if it happens first but yeah you just sell it you could just short stocks is not real complicated and you probably sell the dollar I mean there's all kinds of stuff but I'm kind of on the other side and this is not just one of all this rhetoric out there including the business community about failed capitalism and we need to improve capitalism and capitalism as a failed experiment so you're on the other side meaning what I think capitalism I'm a dyed-in-the-wool capitalist who believes in free markets and believes in creative destruction and leaves us so I just I'm a little offended by the narrative in the media not that it's anti-capitalist everyone's entitled to their own opinion I don't have a monopoly on the truth but on the facts so I don't think most people are aware let's just take poverty in the United States it was 26 percent a few decades ago it was 16 percent in the financial crisis and it's 13 percent now it's at an all-time low it's 13 percent of poverty right low enough absolutely not and it's something we have to work on but do you think 99 percent of Americans would guess too high or too low on what had happened to the change in the poverty rate the last 15 or 20 years much less the last five years or let's look at globally you've got since 1999 when you had a billion seven people in the world and extreme poverty number today is 700 million so 1 billion people have been lifted out of extreme poverty in the last 20 years why because obviously India and China adopted a free-market model and with regard to all this other talk about billionaires and so forth so during that same period you've created 2,500 billionaires but you've brought a billion people out of poverty so that means for every billionaire you've created 400 thousand to 1 have limited have exited extreme poverty ok now you can be for capitalism or you're not be for capitalism but I object to the fact that out there which are simply incorrect I gave you another one and as you know I'm not a great fan of the president but the fact of the matter is this income inequality talk it really doesn't stand up to the facts the middle class and the poor are doing very well in fact they're doing better and then they've done in quite some time are they doing well enough No are they doing as good as Jeff Bezos no but on an absolute basis they're definitely improving relative to where they were 5 or 10 years ago and you'll probably be astonished to know that if you take income after government transfer payments and negative taxes which I think we all agree it should be total competition the top quintile has had the same percentage increase as a bottom quintile now I'm not going to phony facts appear for you the 1% have done better because they all own stocks but in terms of the lower middle class for the first time they're actually improving relative to the upper quintile here's how I would put it to you in terms of political risk at the end of the day Stan does it matter of course the data do matter but does it matter to those people who feel screwed or feel like they're getting screwed what the data show to them all that matters is how they feel and how they feel why do things what they're gonna track they feel that the votes at the ballot box why do they feel that way one of the reasons because your profession goes out and validates that feeling with a Mis statement of facts on a daily basis how many times have you heard how the poor and the middle class are getting screwed of course they're getting screwed relative to just Jeff Bezos but you know what again to me that's capitalism and I'd rather have a rising tide where one group is not rising as fast as another group then I would have them all sinking I would also posit that it's not a binary choice between capitalism and raising taxes on billionaires which is clearly what some people running for the Democratic nomination want to do well since most billionaires own stocks and assets it's hard to believe they didn't okay I'm all for raising taxes on billionaires because as you know for years including when I ran hedge funds I've said I wanted to normalize capital gains that we should be paying just as high rate as a plumber is paying I've been against carried interest then against pass-throughs all that stuff to me inside the tax code now that's not well I guess it is officially raising capital gains but that's not officially raising taxes but what it will do it we'll raise taxes on the wealthy I would also say there's another false narrative how they've cut taxes on all the writ for the rich with with the Trump tax plan I don't know you live in New York I don't know about you my tax is one up they didn't go down I got a tiny cut in my rate and I can't deduct state and local so my taxes went up I'm not complaining again I'm just stating facts here I don't object to the other side's argument I disagree with it but I don't object to it again I don't have monopoly on the truth but I really object to a Mis statement of facts out there do you think cat and I think it's feeding this feeling you're talking about getting screwed that may very well be true but at this point heading in to November of 2020 do you genuinely believe that capitalism as we know it is is in question or at risk or is it just an argument around the edges of I think the system we have I think we need more capitalism less to me when you have a president as states who put hundreds of billions in tariffs and then goes and picks and chooses individual economic actors who pay those tariffs and who don't depending on leaders and losers exactly it might as well be the Politburo when you have monetary policy around the world with negative rates and you cannot have capitalism you don't have a hurdle rate for investment so we don't really have the market sack allocating capital the way they would under a capitalist model that that's another version of it you know it's funny because Trump if if things if Trump gets reelected and things implode in the second term capitalism will get a very bad name in my opinion and we'll probably have a big political response but it will be under someone who's sort of the antithesis of capitalism then you've got the other side who want to villainize billionaires which is okay but their view is if I take money away from this billionaire that means the lower the lower income levels are going to rise Eric that's not the way it works that's like Trump's trade thing with a zero-sum game if China loses we win no you can both lose it's the same thing of the economy if you screw Jeff besos and he decides to take his his entrepreneurship and go home okay this man has created 657 thousand jobs if you take out the whole foods acquisition all right and you know all this innovation all this stuff going on and you reverse the economic will we can both lose yeah you can punish Jeff Bezos but how do you really hurt the poor in the middle class bad economic policy that's how you hurt them one of the things you've been doing for years already in an effort to maybe counter bad economic policy is give your money away what have you been doing with your money lately stand and do you think DeLand through P has as bright a future in this country as its as it's had the past several years well first of all I want to be clear I don't give my money away because a bad economic policy I give my money away because I can it it's hard to explain but I was unbelievably lucky to be born in this country I think the odds were twenty three to one the day I was born then whether I would being born in America and I can talk to myself about how I'd pulled up my bootstraps or this or that but I could have been born in North Korea or Iran or one I'm kind of guessing I wouldn't have had the economic success I've had then the other thing I would say in our in our system I have a skill set my mother-in-law says I'm an idiot savant I was not in the top 10% of my high school class but I'm very good at compounding money and I just get a real pleasure both emotional of just trying to make sure other individuals have the same shot I had I was in a bad school district my father moved me you know I had an opportunity how'd he not moved me I don't think I'd be sitting here today and I see so it's not a bad economic policy it's a lot of help people who haven't been as lucky as you I'm helping myself too I love giving money away it gives me pleasure and to me it's a privilege I think a lot of people would do it if they had the kind of resources I have it gives me a thrill to be at Memorial Sloan Kettering and see them moving the needle on on cancer it really gives me a thrill to see that we're providing kids in Harlem and others the same shot or at least a better shot at the American dream so we you know one of the things we emphasize and we like to give to is economic mobility there's a lot of very cool stuff going on I'd say my latest and most passion of his experience is with blue Meridian when during my Harlem Children's Zone well I'm still those days are continuing but when we founded Harlem Children's Zone Jeff and I there was a woman at mo McConnell Clark named Nancy Roop and they helped us set up our original business plan and she did the due diligence on us for 20 years and believe me when you're on the other side of strong due diligence you get to learn how Telenet someone is so when Nancy told me that the Clark foundation wanted to liquidate and she wanted to set up this thing to satisfy the MIT's match between all the wealth that's been created today and then there's this whole incredible group of young on social entrepreneurs out there who want to deal with the problem but the money's kind of stuck here and the supply of talent is here and her concept was to transfer the money in there you've got stuff going on like The Giving Pledge and all this stuff that shows an intent unfortunately there's not a there's not a lot of movement yet but I'm pretty optimistic given the tent and also given the talent that's out there on the social entrepreneurs sector what were I talked about talent being drawn in the financial sector it's amazing the talents been drawn into this social entrepreneur sector I think it's a sign of our times and everything we're talking about so I'm hopeful enthusiastic excited that a platform like blue Meridian that brings these funders together with these practitioners is going to work and deal with some of the problems what problems in particular economic mobility I think is the biggest one so live already and is funding place-based strategies like Harlem Children's Zone funding nurse family partnerships which is you know early life because obviously kids if not properly attuned to their first two or three years don't have the vocabulary and the chance but you know just help helping mothers single mothers give the same kind of attention to their baby that our children might but there there's a number of organizations across the board but the idea is if you take great leaders and you identify them I was lucky enough to meet Jeff Canada and you invite us aim investment principles I've used in my lifetime and investing which is find a winner back them scale them up don't sell them ride the winner keep investing with them as long as they're innovating and that's the concept here so we're we're making big big bets putting the dream out there of a hundred to two hundred million dollars of funding for organizations that we think can be scaled up that will solve the economic mobility problem or and not solve it but put a big dent in it and give others a chance of the American dream so perhaps little timid with investing but not so timid in your philanthropy definitely not timid in the philanthropy and hugely excited about what might what might lie ahead in this in this country for it and you know I don't mean to be honest Oh box about this thing but I know there's been some commentary about billionaires and their pets I can just say that I think using the private sector to encourage innovation with these social entrepreneurs and then if the model work then plowing the money in there that's a lot more exciting to me than giving the money to Mitch McConnell or Nancy Pelosi I'd much rather give it to Jeff Canada or some of these other organizations these entrepreneurs

Channel: Bloomberg Markets and Finance

Views: 303,002

Rating: 4.6809626 out of 5

Keywords: Bloomberg

Id: Cs-0aC9Rd8g

Length: 50min 9sec (3009 seconds)

Published: Wed Dec 18 2019