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Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm Pim Fox.

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Speaker 1: Along with my co host Lisa Abramowitz. Each day we

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Speaker 1: bring you the most important, noteworthy, and useful interviews for

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Speaker 1: you and your money, whether at the grocery store or

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Speaker 1: the trading floor. Find the Bloomberg P L Podcast on iTunes,

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Speaker 1: SoundCloud and at Bloomberg dot com. We have Lawrence Gallop.

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Speaker 1: He is the chief executive of Gallum Capital ascids under

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Speaker 1: management about twenty billion dollars. They're based in Chicago, but

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Speaker 1: he joins us here in our New York studio. Lawrence,

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Speaker 1: thanks very much for being here. Much appreciated. Tell people

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Speaker 1: about your focus, and the reason I want to do

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Speaker 1: this quickly is because I want to get to this

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Speaker 1: idea of revenue in the mid market. You've done some surveys.

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Speaker 1: Revenue in the US middle market group eight and a

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Speaker 1: half percent during the first two months of Q one.

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Speaker 1: We're a non bank lending business. We lend to medium

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Speaker 1: sized companies in the United States, typically with revenue between

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Speaker 1: about fifty million dollars and five hundred million dollars. So

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Speaker 1: these are businesses that are smaller than typical public companies.

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Speaker 1: As a lender. We have loans outstanding to about two

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Speaker 1: hundred companies and we're monitoring receiving their financial information on

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Speaker 1: a monthly basis. The Gallup Capital Middle Market Report focuses

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Speaker 1: on an early look at actual revenue and profit from

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Speaker 1: the first two months of each calendar quarter. So the

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Speaker 1: growth and revenue of about eight and a half percent

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Speaker 1: that you refer to is what we've seen in the

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Speaker 1: portfolio for January and February, you know, just to sort

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Speaker 1: of give more to flesh that out. Gallob overseas about

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Speaker 1: twenty billion dollars in assets and is one of the

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Speaker 1: best known names in the middle market area. And I

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Speaker 1: have to say I was looking through report and I

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Speaker 1: was struck not just by the increase in revenues, but

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Speaker 1: by the massive dispersion of avita of earnings UH depending

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Speaker 1: on the sector. I mean, you have consumer UH companies

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Speaker 1: that are seeing negative earnings a decline in earnings, whereas

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Speaker 1: you see technology companies seeing an increase of more than earning.

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Speaker 1: So can you explain, I mean, have you ever seen

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Speaker 1: such dispersion before in your life? This dispersion is very wide,

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Speaker 1: and it's really a story of an ability to control

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Speaker 1: costs and an ability to have operating leverage as volume

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Speaker 1: goes up or down in the tech sector. In our

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Speaker 1: tech sector is primarily business to business software, There's been

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Speaker 1: tremendous investment for a long time. The business buyers and

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Speaker 1: invest the purchasers of the software are eager to get

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Speaker 1: the efficiency gains that come from it, and that sector

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Speaker 1: is just really knocking the cover off the ball. Contrast

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Speaker 1: that with say healthcare, where for the third quarter in

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Speaker 1: a row, we've seen recentably good revenue growth, but the

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Speaker 1: typical companies and healthcare have not been able to control

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Speaker 1: their costs. So so, in other words, when you see

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Speaker 1: revenue growth but negative negative earnings, that's the reason why,

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Speaker 1: because of costs. I think that that's the most frequent

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Speaker 1: reason why. And in the case of healthcare, it's typically

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Speaker 1: labor costs. Uh. You know, we think about labor costs

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Speaker 1: in terms of just manufact during wages, but in fact

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Speaker 1: skilled wages for certain sectors are going up, and we're

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Speaker 1: still seeing some of the impact of the Affordable Care

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Speaker 1: Act increased demand for health care services, which is driving

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Speaker 1: class up. Also, many other healthcare service providers you know,

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Speaker 1: are are really demonstrating they're not as good as some

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Speaker 1: other industries at developing the operating efficiencies so far something

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Speaker 1: my hope we'll see change over time. I want to

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Speaker 1: just ask you about an issue that we've been talking

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Speaker 1: about having to do with wage increases and productivity, because

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Speaker 1: when we received the payroll report last week, we saw

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Speaker 1: an increase I think it was about two points seven

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Speaker 1: percent year over year in wage in wages and that

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Speaker 1: ends up being tied to productivity and what the question

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Speaker 1: that I ask is companies choosing people over machines. Because

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Speaker 1: we hear a lot about robots and artificial intelligence in

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Speaker 1: the companies that you deal with, are they looking to

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Speaker 1: replace people? Absolutely, When when we talk about business to

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Speaker 1: business software, you know that that really is about getting

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Speaker 1: more out of the people. You have to delivering more

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Speaker 1: services without adding people and increasing your impact. It's one

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Speaker 1: of the drivers of that sector. Let's look within the

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Speaker 1: consumer products industry at restaurants, a subsector which has been weak,

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Speaker 1: had been weak for several quarters. This quarter, restaurants have

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Speaker 1: actually come back some and have some margin expansion because

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Speaker 1: they've had to deal with labor efficiency. It's not necessarily

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Speaker 1: firing people, it's better scheduling or all all aspects of

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Speaker 1: getting more productivity out, but with increasing minimum wages, with

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Speaker 1: the regulatory cost, healthcare costs, high labor content, businesses have

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Speaker 1: to react. That's one of the reasons I think we've

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Speaker 1: seen thirty one thousand lost jobs in the retail sector. Well,

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Speaker 1: talking about retail, I just want to go back to

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Speaker 1: the consumer decline in earnings. Uh This sort of negative

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Speaker 1: eight point five percent decline in ABITA among consumer companies

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Speaker 1: that you canvassed, I'm wondering, does this signal to you

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Speaker 1: broader weakness among the consumer that might not be reflected

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Speaker 1: in current economic data. Potentially, it's certainly not good news

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Speaker 1: when when you look at projections for SNPPS up nine.

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Speaker 1: There's certainly some sectors that are going to be very

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Speaker 1: strong this quarter, like energy, metals and mining, but the

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Speaker 1: consumer sector this this number is somewhat worrisome. Have you

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Speaker 1: reduced your consumer exposure in your portfolio? Uh? No, We

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Speaker 1: were very focused in our portfolio on non retail businesses.

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Speaker 1: UH So if you if you looked at a portfolio

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Speaker 1: that included retail, the numbers might even be more significant

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Speaker 1: than this. And you also provide financing for deals that

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Speaker 1: are perhaps done by private equity firms or other non

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Speaker 1: bank financial companies. Yes, the majority of our borrowers are

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Speaker 1: controlled by private equity firms, and are you seeing that

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Speaker 1: they are getting the exit valuations that they want from

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Speaker 1: their deals? The deal environment has slowed down a lot

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Speaker 1: in the past several months. The combination of some some

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Speaker 1: headwinds on the consumer side, uncertainty about the deductibility of

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Speaker 1: interest owners holding off on selling because they're hoping capital

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Speaker 1: gains rates will go down, the possible border adjustment tax,

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Speaker 1: which very few people think will pass but everyone worries about,

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Speaker 1: has all led to really a decline in the pace

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Speaker 1: of transactions. The Panera style sales and Panera is a

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Speaker 1: great company, the same source sales as past quarter up

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Speaker 1: five pc, which is industry leading. But but that sort

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Speaker 1: of multiple is pretty unusual right now. Thank you so

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Speaker 1: much for joining us. Truly fascinating report. Lawrence Gallub is

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Speaker 1: chief executive officer of Gallop Capital, which oversees about twenty

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Speaker 1: billion dollars and is based in Chicago, Illinois. He was

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Speaker 1: highlighting his latest gallob Capital Middle Market report, talking about

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Speaker 1: the broad dispersion in earnings depending on the sector of

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Speaker 1: smaller companies. Well, this deal was heralded last year as

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Speaker 1: what was going to become the biggest energy infrastructure UH

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Speaker 1: system and distribution provider in North America. Enbridge bought Spectra

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Speaker 1: Energy for thirty seven billion dollars. And here to talk

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Speaker 1: about that deal, which recently was completed, is John wheel In,

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Speaker 1: chief financial officer of en Bridge, which is based in

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Speaker 1: Calgary in Canada. John, congratulations and completing this deal. And

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Speaker 1: can you talk a little bit about what and Bridge

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Speaker 1: stands to gain from this acquisition. Well, thank you very much, Lisa.

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Speaker 1: Um Really, Enbridge, UH, it really is an opportunity to

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Speaker 1: extend and diversify our growth program. At the end of

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Speaker 1: the day, UH, we have a value proposition that focuses

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Speaker 1: on low risk, reliable income generative from energy infrastructure assets.

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Speaker 1: Buying a platform, the premier gas distribution and transmission platform

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Speaker 1: UH in the US really gives us a big opportunity

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Speaker 1: to extend and diverse offy off of that off of

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Speaker 1: that platform. So we're now operating in forty states, UH,

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Speaker 1: seven provinces in Canada, so we're truly a continental player.

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Speaker 1: And John, if you could speak to the issue of

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Speaker 1: environmental responsibility, how would you address the concerns that have

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Speaker 1: been brought about not only for end Bridge, but also

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Speaker 1: for the industry of transporting oil and natural gas. Right, Well,

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Speaker 1: I think that is an issue for the industry as

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Speaker 1: a whole, UH, and it's become a bit of a

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Speaker 1: focal point. But quite frankly, I think there's never been

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Speaker 1: a greater focus on operational reliability operational integrity of our

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Speaker 1: systems going forward. UM operations and safety are the number

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Speaker 1: one priority of our company, as it is many companies

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Speaker 1: in our industry at the end of the day, and

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Speaker 1: we work very hard, UH to ensure that all of

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Speaker 1: our stakeholders are customers, the communities along our rights of

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Speaker 1: way and so on, understand the steps that we take

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Speaker 1: UH to make the pipes operate reliably and safely. Can

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Speaker 1: you talk a little bit, John about the change in

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Speaker 1: the US administration and how that might affect the US

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Speaker 1: bring in Canadian oil or vice versa. Frankly, yeah, well,

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Speaker 1: I think I think generally the climate for energy would

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Speaker 1: appear to be more positive at the moment in the

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Speaker 1: US if the US exporting it, not the other way around.

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Speaker 1: Not necessarily, although I think you know, there's a tremendous

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Speaker 1: benefit that both countries get from an integrated energy market,

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Speaker 1: and we find that really huge cross border trade exists

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Speaker 1: in energy, not just self bound from Canada into the US,

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Speaker 1: but also from the US up in Canada electricity, natural

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Speaker 1: gas and so on, and for many, many years, both

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Speaker 1: countries quite frankly, have benefited hugely from that. So our

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Speaker 1: initial conversations with administration in the US and others would

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Speaker 1: tend to make us think that everybody does understand that,

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Speaker 1: But of course we do have to see how rules

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Speaker 1: around UH across border taxation and so on play out. John,

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Speaker 1: many people are familiar with Keystone XL, they might not

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Speaker 1: be familiar with g x L. Tell us about end

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Speaker 1: bridges g x L, what it plans to do, and

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Speaker 1: maybe you can just allude to some of the challenges

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Speaker 1: that you've had putting this together. Well, I think you're

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Speaker 1: probably referring to a whole series of low cost capacity

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Speaker 1: expansions that we have been looking to build on our system,

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Speaker 1: and bridges expanded the system very significantly over the last

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Speaker 1: number of years. We're continuing to do that. We have

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Speaker 1: this is all around the Great Lakes area. It also

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Speaker 1: includes expansion to the network in Minnesota, for example. Yeah, right,

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Speaker 1: We've got a large project or line through replacement project

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Speaker 1: that is currently going through the approval process, so completely

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Speaker 1: approved now in Canada and really completely approved in in

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Speaker 1: the US, with the exception of Minnesota where we are

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Speaker 1: working with the Public Utilities Commission there UH, and that

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Speaker 1: process is taking us a little longer than we expected. However,

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Speaker 1: our environmental impact statement process is completed, UH, rather not

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Speaker 1: completely I shouldn't say that has been fully scoped and

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Speaker 1: is in the process of being completed. And so we

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Speaker 1: think there's some clarity now with respect to the regulatory

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Speaker 1: UH direction and the regulatory process there, and we're moving

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Speaker 1: that project along. John uh and Bridge also has a

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Speaker 1: big renewable business, including wind farms in Texas and off

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Speaker 1: the east coast in North Carolina. Have you projected a

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Speaker 1: slower pace of growth in some of those renewable industries

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Speaker 1: given the more favorable climate for fossil fuels UM. It

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Speaker 1: really depends on jurisdictions. I think different jurisdictions have different

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Speaker 1: renewable portfolio standards in terms of what they're trying to achieve.

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Speaker 1: So there are some places where I know UH. We

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Speaker 1: continue to plot forward UM on a number of different projects,

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Speaker 1: both here in the US and in Canada and also

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Speaker 1: in Europe right now, whether it's a significant focus on

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Speaker 1: the development of renewable and renewable energy, So it really

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Speaker 1: is more of a local consideration primarily for US in

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Speaker 1: terms of where the activity is. Can you speak to

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Speaker 1: the issue once again, just a pipeline safety, because as

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Speaker 1: you build out this network, there's been a lot of

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Speaker 1: criticism about spills and potential harm to the environment from

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Speaker 1: this pipeline extension. What are you doing differently now than

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Speaker 1: you did, let's say ten or fifteen years ago. Well,

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Speaker 1: we have put a tremendous amount of UH, both time,

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Speaker 1: effort and money into improving and enhancing the integrity of

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Speaker 1: our overall systems. Old pipe is being replaced by a

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Speaker 1: new pipe. That's what that major project going through Minnesota

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Speaker 1: is really all about. And we've been working to um

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Speaker 1: if you will enhance the operational uh the operational integrity

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Speaker 1: of the overall system. Safety has always been, but never

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Speaker 1: more than now, the number one priority for our our

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Speaker 1: operating leaders. All Right, I want to thank you very

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Speaker 1: much for joining us. John Wheeland is the Chief Financial Office,

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Speaker 1: Sir of en Bridge. The promise and the potential products

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Speaker 1: from biotechnology investments here to tell us more as Eli

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Speaker 1: has than he's a managing partner of kasid In Capital.

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Speaker 1: He joins us in the studio, Eli, thanks for coming

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Speaker 1: in today. Maybe you could just give people a little

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Speaker 1: quick background of kasid In Capital, how you came to

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Speaker 1: the business, and then the focus that you're taking. Sure,

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Speaker 1: thanks for having me. It's great to be here. UM

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Speaker 1: so I launched the kasid In Capital in where life

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Speaker 1: science technology investment firm. UM We invest primarily and publicly

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Speaker 1: traded companies, but when we can't find what we want

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Speaker 1: in the public markets, will invest in privates. That said,

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Speaker 1: not a venture capitalist by training or disposition, and so

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Speaker 1: we hope never to do it. We've done it now

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Speaker 1: twenty one times and the fund is organized all around

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Speaker 1: this broad identity that the cost curves for analyzing and

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Speaker 1: manipulating molecular biology DNA specifically have come down dramatically over

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Speaker 1: the last decade, particularly fast in the last five years.

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Speaker 1: For a reference, the Human Genome Project, which cost about

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Speaker 1: three billion dollars and took thirteen years to do UM

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Speaker 1: can now be done in a day for a thousand dollars. Well,

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Speaker 1: so just from the thirty views. Still, I'm curious how

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Speaker 1: your firm deals with smoth of volatility that we've seen

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Speaker 1: in biopharmaceutical company shares just based on i mean, tweets

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Speaker 1: and and off the cuff commentary by politicians. I mean,

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Speaker 1: how do you capture value at a time when kind

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Speaker 1: of research could be thrown out the window by by

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Speaker 1: you know, a press release. Yeah, we certainly don't try

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Speaker 1: to manage volatility. UM. You can't write, you know, if

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Speaker 1: if Hillary can tweet and crush the market, Um, there's

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Speaker 1: no way to sort of manage through that except to

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Speaker 1: know what you own, buy more when it's when it's

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Speaker 1: lower UM, and sort of hold on UM and Uh.

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Speaker 1: The fundamental reality though, is that these companies, those that

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Speaker 1: are successful, build products that change people's lives UM and

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Speaker 1: that has value. And so you just needed time frame

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Speaker 1: to ride out through that volatility. Eli. Uh. One of

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Speaker 1: the things I note about your process is that you

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Speaker 1: hold information sessions lunches basically in which you invite your

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Speaker 1: investors to come in and meet with the actual chief

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Speaker 1: executives at some of the companies that you're invested in.

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Speaker 1: One example is Sage Therapeutics, and I'm wondering if you

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Speaker 1: could use that example to tell us what does SAGE do,

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Speaker 1: How did you come to find them? And why you

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Speaker 1: do that? Why do you bring the investors literally into

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Speaker 1: the business and say here, meet directly with the company. Yeah, no,

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Speaker 1: it's UM. I think the reason we do it, and

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Speaker 1: I'll start there is that UM largely our investor based

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Speaker 1: are successful UH investors in their own right, running large

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Speaker 1: private equity funds, hedge funds, not typically in the healthcare space.

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Speaker 1: And and what we find is they think that the

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Speaker 1: life sciences is sort of pixie ust. You know, that

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Speaker 1: you sort of get lucky, you find some kind of

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Speaker 1: insight in the lab, and and if you're lucky uh,

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Speaker 1: ten percent of the time it turns into something and

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Speaker 1: that's worth it. Um Our belief is that actually, UM,

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Speaker 1: it's all the execution between the lab and commercial product

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Speaker 1: done by human beings, real people that determine success. And

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Speaker 1: so what we try to do is of our effort

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Speaker 1: is find good science and then confirmed that the people

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Speaker 1: are really good that can actually deliver UM. So and

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Speaker 1: so in that example, we like to bring in these

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Speaker 1: c e o s who we think are very impressive

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Speaker 1: and built impressive firms and let our investors have at

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Speaker 1: them and sort of see, wow, these are really uh,

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Speaker 1: these are real businessmen, um. And I would just note

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Speaker 1: that the you know, if you take Gilead, Gen's time,

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Speaker 1: gene Tech by Geni Deck uh and cell Gene Uh,

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Speaker 1: their revenue comes from assets they went out and acquired

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Speaker 1: and brought in, which means their internal R and D

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Speaker 1: didn't deliver, but their business acumen UH did. And so

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Speaker 1: that's what we're trying to find businessmen like that for people.

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Speaker 1: I know that you can't wager around policy. It's a

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Speaker 1: very tricky and uh potentially unsatisfying area to go at.

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Speaker 1: And yet there are some pretty significant changes that could

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Speaker 1: be made, whether it's uh forcing US pharmaceutical companies to

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Speaker 1: sell biosimilar as in the US, you know, other efforts

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Speaker 1: to reduce drug prices. How are you sort of positioned

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Speaker 1: around that, and how do you factor in some of

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Speaker 1: the drug pricing issues? Yeah, and listen, I think, UM,

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Speaker 1: drug pricing is a really uh challenging issue. You know, Historically,

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Speaker 1: the mechanism of going from a branded product to a

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Speaker 1: generic product, patent lives and the expiration of those those

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Speaker 1: patents has been a really effective way to keep drug

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Speaker 1: prices in check in the last couple of years UM

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Speaker 1: due to due to several factors, some of them actually

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Speaker 1: regulatory UM. That transmission mechanism has broken down, fewer generic

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Speaker 1: applications being approved UH, fewer manufacturers, and so there's been

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Speaker 1: a lack of competition in the generics market, which has

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Speaker 1: allowed generic pricing to go up and sort of broken

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Speaker 1: that transmission mechanism. So one thing is you've got to

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Speaker 1: fix that. The second thing is we invest in companies

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Speaker 1: that are developing drugs where the alternative is usually death.

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Speaker 1: And so our belief is that if you can develop

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Speaker 1: a novel therapy that UH has a huge impact on

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Speaker 1: a group of patients, that's worth something UM. And so

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Speaker 1: we don't try to look to invest in marginal products

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Speaker 1: or me to sort of follow ones. We're really looking

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Speaker 1: to invest in true innovation and avoid UH what we

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Speaker 1: call manipulators, people taking advantage of inefficiencies to make margin.

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Speaker 1: I want to just the tie get back to Sage

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Speaker 1: Therapeutic just as an example, because Jeff Jonas, the chief

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Speaker 1: executive of the company, had many other roles previous to

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Speaker 1: being the chief executive of Sage. This is a company

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Speaker 1: that's working on central nervous system UH drugs. How did

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Speaker 1: you come to connect with Jeff Jonas and Sage? Um.

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Speaker 1: You know, we're looking for great companies, As I said,

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Speaker 1: great managers, pursuing novel biology and then developing it in

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Speaker 1: a process that yields very early results of whether a

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Speaker 1: go no god decision. The challenge for developing drugs is

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Speaker 1: that historically the the outcome has been all focused on

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Speaker 1: the phase three where it's the most expensive component and

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Speaker 1: you're sort of playing roulette until you get there. Um.

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Speaker 1: Jeff is has stepped into Sage, has had some amazing

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Speaker 1: science around the CNS particular sort of UH receptor thesis,

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Speaker 1: and then has developed very UH specific UH small molecule

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Speaker 1: US to target it, and then has a very novel

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Speaker 1: way to get early proof of principle so that when

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Speaker 1: you go into a phase one to phase phase two three,

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Speaker 1: you you have a lot of confidence and you get

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Speaker 1: a very definitive result. What are the top picks that

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Speaker 1: you would say are undervalued right now? Oh? Gosh, UM,

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Speaker 1: I don't know every You know everything in our portfolio,

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Speaker 1: and um, everything everything, and I think everyone should know. Um. Listen,

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Speaker 1: we think about the unit of the healthcare continuum moving

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Speaker 1: from life science tools to applications of those tools and diagnostics,

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Speaker 1: to application of those diagnostics into drug development, ultimately leading

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Speaker 1: into industrial biotech. Are are feeling on the diagnostic spaces.

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Speaker 1: This is a relatively when we when we start investing

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Speaker 1: in the diagnostic space, reimbursement was terrible. It's now become horrendous.

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Speaker 1: But one company is surviving Foundation Medicine because they have

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Speaker 1: the support of roche Um, and so we think that

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Speaker 1: that company and it's with their diagnostics, has a lot

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Speaker 1: of potential Foundation Medicine found Eli Hasten, thank you so

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Speaker 1: much for joining us. Eli Hastens, managing partner of Kasdanic Capital,

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Speaker 1: focusing on the biotech sector, drug pricing, everything under the

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Speaker 1: biopharmaceutical son Now let's turn our attention to some business

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Speaker 1: news and bonds and bringing Brian to Patta because Brian

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Speaker 1: has written a story that I think is worth everybody

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Speaker 1: paying attention to. This has to do with foreign investors

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Speaker 1: not necessarily loving US treasuries as much as they have

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Speaker 1: in the past, and that could be a potential problem.

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Speaker 1: Let's find out more. Brian, thanks very much for coming

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Speaker 1: in and your patients tell us about this idea that

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Speaker 1: you've got negative or you had negative yielding sovereign debt

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Speaker 1: places like Germany, for example, But that's now positive yielding debt,

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Speaker 1: and as a result, the lure of US treasuries might

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Speaker 1: not be so intense, right exactly. Um, there are still

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Speaker 1: negative yielding bonds out there, but the stack has gone

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Speaker 1: down by about three trillion dollars worth. UM. So all

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Speaker 1: of a sudden, you know, you have these investors that

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Speaker 1: we're looking at negative yielding bonds, which you know, even

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Speaker 1: just a few years ago was borderline absurd. I mean,

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Speaker 1: why would you pay for the privilege of owning a security, um,

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Speaker 1: all of a sudden because the government told you to

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Speaker 1: in one way or another. You gotta hold something very

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Speaker 1: secure if you're a bank, right because of the central banks.

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Speaker 1: But um, essentially, now what's happening is more of those

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Speaker 1: are turning into positive yields. And so all that money

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Speaker 1: that was flooding into US treasuries because it was basically

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Speaker 1: the only positive yielding option available, all of a sudden,

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Speaker 1: you know, maybe those baskets are full and they say,

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Speaker 1: you know, maybe now is the time to to buy

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Speaker 1: some buns or buy some French debt. For example, Brian,

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Speaker 1: really fascinating story. You highlight have four owners currently owned

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Speaker 1: of the nearly fourteen trillion dollars of US treasuries outstanding.

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Speaker 1: So this is why, uh, this dynamic is so important.

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Speaker 1: Have we already seen signs of foreigners backing away from

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Speaker 1: the US market to go into boon's or yet denominated bonds. Yeah,

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Speaker 1: we've definitely seen some of that, especially the latest Japan

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Speaker 1: data showed that there was another month of NETS selling

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Speaker 1: UH in February, So that's now four straight months basically

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Speaker 1: ever since November, when you know, the losses were really

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Speaker 1: severe on on treasuries with the Trump win and the

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Speaker 1: reflation bets UM, So there has been some selling. And

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Speaker 1: the question going forward is going to be is that

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Speaker 1: going to flip eventually? You know, what's going to be

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Speaker 1: that trigger? Or is the prospect of you know, higher

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Speaker 1: rates everywhere gonna you know, scare them off still well?

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Speaker 1: And what differential people tolerate? I mean, I'm looking at

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Speaker 1: at a thirty year yield that still is relatively low,

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Speaker 1: has not increased substantially this year, so you have to wonder,

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Speaker 1: you know, where are we seeing is uh sort of

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Speaker 1: around the edges departure by foreign investors. Yeah, I mean definitely,

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Speaker 1: Yields are still very low by by all metrics, and

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Speaker 1: I think the question going forward is going to be,

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Speaker 1: you know, you talk about differentials, I mean, where is

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Speaker 1: you know, our yields really going to increase the most?

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Speaker 1: I mean most people are still calling for higher yields.

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Speaker 1: You look at French bonds for example, and you've seen

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Speaker 1: those really yields climb on you know, geopolitical election risks,

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Speaker 1: things like that. Um, but I mean people are trying

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Speaker 1: to figure out exactly where to go. I mean I

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Speaker 1: was talking with the Japanese data and they were huge

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Speaker 1: sellers of French bonds lately. Uh, you know, they don't

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Speaker 1: like losses, and you know, no one in bonds do.

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Speaker 1: I mean, I think Cathy Jones from Charles Schwab summed

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Speaker 1: it up greatly that it's the bastion of skepticism and

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Speaker 1: you know they don't like to look at losses. So

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Speaker 1: where we get some positive return is going to be

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Speaker 1: the big question. In the months I had, well, you

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Speaker 1: still got a lot of bids underneath the U S.

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Speaker 1: Treasury market. Because I'm looking right now with the thirty

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Speaker 1: year it's hands at two point nine, we are up

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Speaker 1: fifteen thirty seconds, so there's a bid throughout the yield

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Speaker 1: curve all the way down to the six month bill. Yep.

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Speaker 1: Then we got the three year auction coming up at

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Speaker 1: one pm Eastern, so that's going to be another sign

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Speaker 1: of whether there's really demand out there for for US

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Speaker 1: treasuries going forward. Branch Potter, thank you so much for

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Speaker 1: joining us. Truly fascinating story and important topic, UH to

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Speaker 1: look at. Important the foreign dynamic with respect to the

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Speaker 1: US treasury market, how much it has fueled gains in

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Speaker 1: this market, and how much it could end up causing

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Speaker 1: some of the losses if there is some kind of exodus.

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Speaker 1: Branch pot as US Treasury reporter for Bloomberg. Thanks for

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Speaker 1: listening to the Bloomberg P and L podcast. You can

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Speaker 1: subscribe and listen to interviews at iTunes, SoundCloud, or whatever

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Speaker 1: podcast platform you prefer. I'm pim Fox. I'm out there

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Speaker 1: on Twitter at pim Fox. I'm out there on Twitter

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Speaker 1: at Lisa Abramo. It's one before the podcast. You can

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Speaker 1: always catch us worldwide on Bloomberg Radio m HM