1 00:00:00,120 --> 00:00:06,800 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,640 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,440 --> 00:00:24,920 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,920 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,040 --> 00:00:36,720 Speaker 2: Terminal and the Bloomberg Business app. Be in a cheer 10 00:00:36,720 --> 00:00:39,400 Speaker 2: of academy securities, wonders if the happy talk is overblown 11 00:00:39,640 --> 00:00:43,320 Speaker 2: writing this, I like my exceptionalism to be exceptional, and 12 00:00:43,400 --> 00:00:45,440 Speaker 2: I also like my data not to be dwarfed by 13 00:00:45,479 --> 00:00:48,159 Speaker 2: plug numbers. I cannot help but wonder if, even on 14 00:00:48,200 --> 00:00:51,040 Speaker 2: the jobs front, which has been close to exceptional, we 15 00:00:51,080 --> 00:00:53,680 Speaker 2: are exposed to some sort of gap in perception and 16 00:00:53,720 --> 00:00:56,000 Speaker 2: we might wind up finding out the Goldenlocks met the 17 00:00:56,000 --> 00:00:59,400 Speaker 2: wrong group of bears. This story doesn't end so well. 18 00:01:00,040 --> 00:01:02,480 Speaker 2: Owins this now from all Peyt, thank you for jumping 19 00:01:02,520 --> 00:01:04,679 Speaker 2: on in front of a camera. We were very excited 20 00:01:04,720 --> 00:01:07,520 Speaker 2: about talking about this topic with you. Can we talk 21 00:01:07,520 --> 00:01:10,240 Speaker 2: about just how exceptional things truly are and whether you 22 00:01:10,240 --> 00:01:13,480 Speaker 2: see this narrative gaping from being too hot to being 23 00:01:13,480 --> 00:01:15,480 Speaker 2: too cold and happening very quickly. 24 00:01:16,280 --> 00:01:18,319 Speaker 3: You know, I've generally been buried on the US dock 25 00:01:18,440 --> 00:01:20,440 Speaker 3: market NASDAQ in particular for a little while, and people 26 00:01:20,480 --> 00:01:22,440 Speaker 3: look at you with this level of sympathy. And if 27 00:01:22,480 --> 00:01:26,720 Speaker 3: you look at it since mid January, it's heavily underperformed Europe. 28 00:01:26,760 --> 00:01:29,680 Speaker 3: It's underperformed China massively, right, China's up twenty five to 29 00:01:29,720 --> 00:01:33,760 Speaker 3: thirty percent since it's January lows. So this whole perception 30 00:01:33,840 --> 00:01:36,319 Speaker 3: that there's this exceptionalism and it's showing through the markets, 31 00:01:36,319 --> 00:01:38,640 Speaker 3: I think is an old story that we're clinging on to. 32 00:01:39,040 --> 00:01:41,720 Speaker 3: And then you start looking at the data, right Chicago, PMI, 33 00:01:41,880 --> 00:01:44,080 Speaker 3: and I understand Chicago's not what it once was in 34 00:01:44,160 --> 00:01:46,440 Speaker 3: terms of a center of economic hub, but we are 35 00:01:46,480 --> 00:01:49,320 Speaker 3: at a level that has previously only been associated with 36 00:01:49,400 --> 00:01:50,240 Speaker 3: being in a crisis. 37 00:01:50,320 --> 00:01:51,920 Speaker 4: So I think the data is there. 38 00:01:52,080 --> 00:01:55,000 Speaker 3: Your previous guests, Morononica, I like the city Economic Surprise 39 00:01:55,040 --> 00:01:57,720 Speaker 3: Index that's turned negative again, right, So I think there's 40 00:01:57,760 --> 00:02:00,800 Speaker 3: all these things that are going on behind the scenes. 41 00:02:00,800 --> 00:02:03,960 Speaker 3: And maybe we've just been so fixated on inflation and 42 00:02:04,000 --> 00:02:06,880 Speaker 3: the FED that we're missing this real turn. And I 43 00:02:06,880 --> 00:02:09,480 Speaker 3: think that's why we could see this gap to back 44 00:02:09,520 --> 00:02:10,600 Speaker 3: to hard landing. 45 00:02:10,360 --> 00:02:11,160 Speaker 5: Talk, Pete. 46 00:02:11,160 --> 00:02:14,480 Speaker 2: Nowdad, we've been very focused on the central bank divergence, 47 00:02:14,520 --> 00:02:17,760 Speaker 2: the prospect of the ECP cunning interest rates in June, 48 00:02:17,800 --> 00:02:19,640 Speaker 2: and the Federal Reserve maybe not doing the same thing 49 00:02:19,720 --> 00:02:22,520 Speaker 2: until much later this year. And to your point, we've 50 00:02:22,560 --> 00:02:26,119 Speaker 2: missed the fact that the economic data has turned, that 51 00:02:26,120 --> 00:02:29,080 Speaker 2: that surprise index is now negative, that the price section, 52 00:02:29,200 --> 00:02:32,040 Speaker 2: the performance has been elsewhere. So Pete, the question to 53 00:02:32,080 --> 00:02:34,960 Speaker 2: you is does it continue? Do you see more people 54 00:02:35,000 --> 00:02:37,200 Speaker 2: getting on board? And how would you play this theme now? 55 00:02:37,240 --> 00:02:39,600 Speaker 2: Would it be through equities, through foreign exchange? 56 00:02:39,720 --> 00:02:40,359 Speaker 6: What would you do? 57 00:02:41,200 --> 00:02:43,040 Speaker 4: You know? For me, I like rates right now. 58 00:02:43,080 --> 00:02:45,280 Speaker 3: I started liking yields once they got above four sixty. 59 00:02:45,680 --> 00:02:47,400 Speaker 3: I thought we'd be in a ten year range for 60 00:02:47,400 --> 00:02:49,200 Speaker 3: forty four to sixty. I think we might go back 61 00:02:49,240 --> 00:02:51,399 Speaker 3: to four thirty four to twenty five if the economic 62 00:02:51,440 --> 00:02:54,119 Speaker 3: data continues weak. And to be honest, I think there's 63 00:02:54,120 --> 00:02:56,960 Speaker 3: already been enough weak economic data that we've ignored, so 64 00:02:57,000 --> 00:02:58,640 Speaker 3: I think we can see yields do better, So I 65 00:02:58,639 --> 00:03:00,240 Speaker 3: think that's going to be the first way to play it. 66 00:03:00,520 --> 00:03:03,320 Speaker 3: Then the question is how do equities respond. Right Friday, 67 00:03:03,320 --> 00:03:06,360 Speaker 3: we clearly had a Goldilocks type situation where bonds do 68 00:03:06,400 --> 00:03:08,760 Speaker 3: well and stocks do well. I think that could fade, 69 00:03:08,760 --> 00:03:11,240 Speaker 3: and I think that could fade rather quickly as people 70 00:03:11,280 --> 00:03:14,000 Speaker 3: start saying, hey, this has only been a subset of 71 00:03:14,000 --> 00:03:16,560 Speaker 3: the economy that's been exceptional, and there has been a 72 00:03:16,600 --> 00:03:18,960 Speaker 3: subset that's been exceptional. If the rest of the economy 73 00:03:18,960 --> 00:03:22,079 Speaker 3: starts fading, these cannot do that well. So I think 74 00:03:22,120 --> 00:03:23,960 Speaker 3: you get a bit of a retrenchment. I think in 75 00:03:24,000 --> 00:03:25,840 Speaker 3: the mere term, I kind of like banks, I like 76 00:03:25,840 --> 00:03:28,040 Speaker 3: some of those other sectors maybe to benefit from this. 77 00:03:28,160 --> 00:03:29,160 Speaker 4: Goldilocks type thing. 78 00:03:29,480 --> 00:03:31,200 Speaker 3: But I'm now very worried that we're not going to 79 00:03:31,200 --> 00:03:34,000 Speaker 3: see a smooth transition from no landing to maybe softish 80 00:03:34,080 --> 00:03:37,400 Speaker 3: landing to hard landing. I think we might gap because 81 00:03:37,400 --> 00:03:39,120 Speaker 3: the data already supports some of that fear. 82 00:03:39,640 --> 00:03:41,760 Speaker 1: There's a question about time horizon here, and whether this 83 00:03:41,840 --> 00:03:44,680 Speaker 1: is a tactical a trade or a tactical view, or 84 00:03:44,720 --> 00:03:47,680 Speaker 1: whether it's something that's strategic over the long term, or 85 00:03:47,760 --> 00:03:50,440 Speaker 1: you start to see a greater chance of some sort 86 00:03:50,480 --> 00:03:55,000 Speaker 1: of downturn that could more fundamentally challenge certain equity valuations. 87 00:03:55,280 --> 00:03:57,320 Speaker 1: Which is it Is it just tactical, or is it 88 00:03:57,360 --> 00:03:59,120 Speaker 1: something that has longer legs? 89 00:04:00,080 --> 00:04:02,080 Speaker 3: For me, I think this is more fundamental, And we've 90 00:04:02,120 --> 00:04:03,880 Speaker 3: been talking off and on for the past six months 91 00:04:03,920 --> 00:04:07,440 Speaker 3: to a year that I view china resurgence as China 92 00:04:07,480 --> 00:04:09,760 Speaker 3: trying to sell their own brands and compete more directly 93 00:04:09,840 --> 00:04:11,240 Speaker 3: with us, which I think is going to put margin 94 00:04:11,280 --> 00:04:13,840 Speaker 3: pressure on US companies and what I don't like. And 95 00:04:14,120 --> 00:04:16,880 Speaker 3: my theory has always been China will work domestically first 96 00:04:17,400 --> 00:04:20,040 Speaker 3: then sell into emerging markets, which they're doing. But I've 97 00:04:20,040 --> 00:04:22,920 Speaker 3: always viewed kind of Europe as a potential weak link. Right, 98 00:04:22,960 --> 00:04:25,719 Speaker 3: we have the ability to confront China, to draw lines 99 00:04:25,720 --> 00:04:28,239 Speaker 3: in the sand and fight with China, and our brands 100 00:04:28,240 --> 00:04:31,280 Speaker 3: are super successful. Europe to me always strikes me as 101 00:04:31,320 --> 00:04:33,400 Speaker 3: they're a little bit more dependent on China than we are. 102 00:04:33,680 --> 00:04:37,400 Speaker 3: Geez over there meeting with the French leader, I think 103 00:04:37,440 --> 00:04:39,919 Speaker 3: you could see more go to that, And unlike in 104 00:04:39,960 --> 00:04:42,440 Speaker 3: the past twenty years, where when China does well, we 105 00:04:42,480 --> 00:04:44,560 Speaker 3: get a big slice of that, here, I think we 106 00:04:44,600 --> 00:04:46,000 Speaker 3: are going to get less and less of a slice 107 00:04:46,040 --> 00:04:48,320 Speaker 3: of that and more and more competition, and so I 108 00:04:48,320 --> 00:04:51,159 Speaker 3: think this is strategic about valuations, not just a technical 109 00:04:51,279 --> 00:04:52,360 Speaker 3: or tactical trade. 110 00:04:52,480 --> 00:04:54,440 Speaker 1: And you've had this idea and it's been a brilliant 111 00:04:54,520 --> 00:04:57,000 Speaker 1: one really that we've discussed at length. Why do you 112 00:04:57,040 --> 00:04:59,280 Speaker 1: think now is the time the market is going to 113 00:04:59,360 --> 00:05:01,560 Speaker 1: kind of come to to it given the fact that 114 00:05:01,640 --> 00:05:04,440 Speaker 1: earnings have been coming in pretty well, we've seen them 115 00:05:04,480 --> 00:05:07,200 Speaker 1: retain their earnings power, even if it's not pricing power. 116 00:05:07,800 --> 00:05:10,440 Speaker 1: And there are a lot of things, including the jobs report, 117 00:05:10,680 --> 00:05:12,000 Speaker 1: that weren't exactly terrible. 118 00:05:12,040 --> 00:05:15,320 Speaker 3: Pete well, you know on the jobs report too, it's 119 00:05:15,760 --> 00:05:18,800 Speaker 3: I think we mentioned in the first part the birth 120 00:05:18,839 --> 00:05:20,800 Speaker 3: death model, which why they can't come up with a 121 00:05:20,800 --> 00:05:22,839 Speaker 3: better name for that plug where they're trying to estimate 122 00:05:22,880 --> 00:05:25,159 Speaker 3: how much jobs are created a new businesses. Right, that 123 00:05:25,200 --> 00:05:26,920 Speaker 3: was three hundred and ninety three thousand out of one 124 00:05:26,960 --> 00:05:29,320 Speaker 3: hundred ninety thousand, So we would have had job losses 125 00:05:29,520 --> 00:05:32,000 Speaker 3: had that plug number not been so high. Maybe it's 126 00:05:32,080 --> 00:05:34,479 Speaker 3: valid I question that because that's kind of the last 127 00:05:34,520 --> 00:05:37,039 Speaker 3: outlier in the whole thing. And then I think in 128 00:05:37,120 --> 00:05:39,200 Speaker 3: terms of why people who notice this China story much 129 00:05:39,200 --> 00:05:41,280 Speaker 3: more You're starting to see reaction to Timu. 130 00:05:41,520 --> 00:05:44,160 Speaker 4: You're starting to see parts of Europe react. 131 00:05:43,800 --> 00:05:46,799 Speaker 3: To Shine and for the first time, right as Chinese 132 00:05:46,839 --> 00:05:50,159 Speaker 3: stocks are doing better, there's signs that Chinese economy is bottom. 133 00:05:50,600 --> 00:05:51,960 Speaker 4: I think people will be watching. 134 00:05:51,720 --> 00:05:54,000 Speaker 3: Very closely for a few names to see how their 135 00:05:54,040 --> 00:05:57,200 Speaker 3: sales into China go and if their sales disappoint what 136 00:05:57,400 --> 00:06:01,280 Speaker 3: Chinese brands sales, you know, surge this whole view that oh, 137 00:06:01,400 --> 00:06:04,800 Speaker 3: we're sales there are only week because China's week disappears. 138 00:06:04,800 --> 00:06:07,040 Speaker 3: And that's when I think we really confront these valuation 139 00:06:07,160 --> 00:06:08,719 Speaker 3: issues and multiple issues. 140 00:06:08,480 --> 00:06:10,920 Speaker 2: Confusion around that with Apple the last week, Pete will 141 00:06:10,920 --> 00:06:12,400 Speaker 2: save that for another day. I want to talk about 142 00:06:12,400 --> 00:06:15,320 Speaker 2: the geopolitics with you. This from Axios just moments ago. 143 00:06:15,480 --> 00:06:19,080 Speaker 2: Biden lettin Yahoo to speak about RAFA later on today 144 00:06:19,320 --> 00:06:21,440 Speaker 2: they're reporting, Pete. If we get the same thing here 145 00:06:21,440 --> 00:06:23,920 Speaker 2: at Bloomberg, we'll be sure to share it. Pete, your 146 00:06:24,040 --> 00:06:26,359 Speaker 2: view the conversations with the general as you have in 147 00:06:26,400 --> 00:06:28,080 Speaker 2: an academy, what does it look like? 148 00:06:29,360 --> 00:06:31,479 Speaker 3: You know, I think we're still dubious that we will 149 00:06:31,520 --> 00:06:35,960 Speaker 3: get any form of ceasefire until Israel is done, you know, 150 00:06:36,000 --> 00:06:38,919 Speaker 3: eliminating hamas as a fighting force as much as they can. 151 00:06:38,800 --> 00:06:40,880 Speaker 4: So they are likely to go into RAFA. 152 00:06:41,720 --> 00:06:43,240 Speaker 3: You know, I think when you look at the data, 153 00:06:43,279 --> 00:06:46,000 Speaker 3: as awful as it is, they have been very conservative. 154 00:06:46,040 --> 00:06:50,479 Speaker 3: They've taken some losses. It's a very tricky situation. We 155 00:06:50,520 --> 00:06:54,400 Speaker 3: would like, probably as you know, entire community to see some. 156 00:06:54,360 --> 00:06:55,280 Speaker 4: Sort of ceasefire. 157 00:06:55,600 --> 00:06:58,640 Speaker 3: It seems unlikely and there is concern about what state 158 00:06:58,680 --> 00:07:01,120 Speaker 3: the hostages would be in after being there for so long, 159 00:07:01,240 --> 00:07:04,520 Speaker 3: so that's another kind of worrisome thing. So we don't 160 00:07:04,560 --> 00:07:08,280 Speaker 3: see an immediate ceasefire unfortunately, and we see as we 161 00:07:08,320 --> 00:07:10,920 Speaker 3: all really want to progress into RAFA to eliminate more 162 00:07:10,960 --> 00:07:11,880 Speaker 3: of aromas as a threat. 163 00:07:12,040 --> 00:07:13,960 Speaker 2: If that is the case, is they're still upside risk 164 00:07:14,000 --> 00:07:15,840 Speaker 2: for crude because we're not in the nineties, We're not 165 00:07:15,880 --> 00:07:18,960 Speaker 2: in the eighties on WCI, we're in the seventies. Pete 166 00:07:18,960 --> 00:07:21,760 Speaker 2: on Brent, we're eighty three fifty seven. Is there still 167 00:07:21,800 --> 00:07:23,560 Speaker 2: that upside risk off the back of this or do 168 00:07:23,560 --> 00:07:25,320 Speaker 2: you think this market is insulted from it? 169 00:07:26,080 --> 00:07:27,160 Speaker 4: Yeah, and we took off some of this. 170 00:07:27,200 --> 00:07:29,120 Speaker 3: A few weeks ago we were saying we were less fullishcrewed. 171 00:07:29,120 --> 00:07:31,280 Speaker 3: We're now getting back to fully bullish, and I think 172 00:07:31,360 --> 00:07:33,840 Speaker 3: as we head towards the election, I would not be 173 00:07:33,920 --> 00:07:37,440 Speaker 3: surprised to see spots of activity and around Russian and 174 00:07:37,480 --> 00:07:40,480 Speaker 3: Ukraine other things that kind of pushed crude prices higher. 175 00:07:40,560 --> 00:07:40,720 Speaker 4: Right. 176 00:07:41,120 --> 00:07:43,320 Speaker 3: You know, one theory would certainly be that if Houdin 177 00:07:43,440 --> 00:07:47,200 Speaker 3: wants Trump to be elected, higher crude prices would suit 178 00:07:47,240 --> 00:07:49,240 Speaker 3: put them very well. So I'd be watch out on 179 00:07:49,280 --> 00:07:51,480 Speaker 3: that front. So right now, back at these levels, I 180 00:07:51,480 --> 00:07:53,800 Speaker 3: think you kind of get crewed as a hedge almost 181 00:07:53,840 --> 00:07:56,600 Speaker 3: for free, because we do have demand growing for data centers, 182 00:07:56,840 --> 00:07:58,320 Speaker 3: et cet Right, they're going to need energy. 183 00:07:58,360 --> 00:08:00,160 Speaker 4: That energy is gonna be powered by. 184 00:08:00,120 --> 00:08:02,720 Speaker 3: Something, So I like energy a lot again, so I 185 00:08:02,720 --> 00:08:04,080 Speaker 3: put that a high on my list of things I 186 00:08:04,080 --> 00:08:07,120 Speaker 3: want to own, both as a geopolitical hedge and outright. 187 00:08:06,880 --> 00:08:08,640 Speaker 2: Got it, Pete, this was awesome. It's going to hear 188 00:08:08,680 --> 00:08:21,960 Speaker 2: from your pitachure and academy securities. Citi's Veronica Clik joins 189 00:08:22,000 --> 00:08:24,200 Speaker 2: us around the table here in New York City. Veronica, 190 00:08:24,320 --> 00:08:26,520 Speaker 2: I mentioned a city quote a little bit earlier summer 191 00:08:26,560 --> 00:08:29,119 Speaker 2: doven happened so fast. I think we should say upfront 192 00:08:29,160 --> 00:08:33,760 Speaker 2: that was Andrew Hollenhorst. That was not Veronica, but you 193 00:08:33,760 --> 00:08:36,240 Speaker 2: do not want to take responsibility for that. Let's talk 194 00:08:36,240 --> 00:08:39,319 Speaker 2: about how quickly this conversation could switch to rake cuts 195 00:08:39,320 --> 00:08:41,080 Speaker 2: this summer, which has been the base case for you 196 00:08:41,120 --> 00:08:42,520 Speaker 2: and the team for quite a while. 197 00:08:42,640 --> 00:08:44,360 Speaker 7: Yeah, yeah, I mean, I think we saw the early 198 00:08:44,400 --> 00:08:46,480 Speaker 7: signs of that last week. We heard from Power of 199 00:08:46,520 --> 00:08:48,319 Speaker 7: course on on Wednesday, and I think it was important 200 00:08:48,360 --> 00:08:50,920 Speaker 7: to us that, you know, he really didn't endorse this 201 00:08:51,240 --> 00:08:54,800 Speaker 7: hawkish repricing that you know, the market had experience over. 202 00:08:54,640 --> 00:08:55,560 Speaker 6: The last couple of weeks. 203 00:08:55,559 --> 00:08:57,520 Speaker 7: And I think this is a fad that is still 204 00:08:57,559 --> 00:08:59,640 Speaker 7: just waiting for a little bit more confidence on the 205 00:08:59,720 --> 00:09:02,400 Speaker 7: inflation data, just a couple more months of a softer 206 00:09:03,040 --> 00:09:06,360 Speaker 7: pace of inflation after that very strong key one, and 207 00:09:06,440 --> 00:09:08,880 Speaker 7: then of course on Friday we had softer employment data 208 00:09:09,000 --> 00:09:10,800 Speaker 7: and that is something that certainly could get the Fed 209 00:09:10,840 --> 00:09:11,200 Speaker 7: to get. 210 00:09:11,040 --> 00:09:11,360 Speaker 4: More of it. 211 00:09:11,520 --> 00:09:13,640 Speaker 2: Let's talk about Friday. I see what below consensus going 212 00:09:13,679 --> 00:09:16,560 Speaker 2: into the number, you were talking about downside risk as well. 213 00:09:16,720 --> 00:09:19,679 Speaker 2: We got that downside risk. It materialized. Why do you 214 00:09:19,679 --> 00:09:21,040 Speaker 2: not see that as a one off? Why don'd you 215 00:09:21,080 --> 00:09:22,640 Speaker 2: see that as a sign of more to country? 216 00:09:22,880 --> 00:09:23,200 Speaker 6: Yeah? 217 00:09:23,280 --> 00:09:25,559 Speaker 7: Yeah, I mean, also, you know one hundred and seventy 218 00:09:25,559 --> 00:09:27,760 Speaker 7: five thousand jobs is by no means a weak pace 219 00:09:27,840 --> 00:09:30,480 Speaker 7: of job growth on the surfaces, could still be a 220 00:09:30,480 --> 00:09:33,000 Speaker 7: pretty strong employment report. I think the issue for us, though, 221 00:09:33,080 --> 00:09:35,680 Speaker 7: is that you, for for some time, you know, four 222 00:09:35,760 --> 00:09:38,400 Speaker 7: or five six months now, we have seen a lot 223 00:09:38,400 --> 00:09:40,800 Speaker 7: of other labor market data that have been deteriorating. The 224 00:09:41,160 --> 00:09:43,679 Speaker 7: hiring rate in the Jolts numbers last week that's been 225 00:09:43,679 --> 00:09:46,720 Speaker 7: coming down. We saw that in the employment sub components 226 00:09:46,760 --> 00:09:50,440 Speaker 7: of these isms pmis a lot of signs that point 227 00:09:50,520 --> 00:09:53,160 Speaker 7: to hiring really slowing. And this is the time of 228 00:09:53,240 --> 00:09:55,360 Speaker 7: year when you would normally be hiring a lot of people. 229 00:09:56,120 --> 00:09:58,480 Speaker 7: And I think this is finally where we're starting to see, 230 00:09:58,559 --> 00:10:01,680 Speaker 7: you know, the very consistently strong payrolls, which is almost 231 00:10:01,679 --> 00:10:03,480 Speaker 7: an outlier that's starting to crack. Now. 232 00:10:03,760 --> 00:10:05,599 Speaker 1: You sent out a note as we introduced to you 233 00:10:05,640 --> 00:10:07,920 Speaker 1: while we're on air, and you talk about how FED 234 00:10:07,960 --> 00:10:10,640 Speaker 1: President New York FED President John Williams is likely to 235 00:10:10,720 --> 00:10:15,560 Speaker 1: affirm Powell's concern about the labor market an increase focus 236 00:10:15,760 --> 00:10:16,760 Speaker 1: on the employment mandem. 237 00:10:17,160 --> 00:10:19,400 Speaker 6: He's going to speak today at one pm. Why do 238 00:10:19,440 --> 00:10:19,959 Speaker 6: you think. 239 00:10:19,800 --> 00:10:21,719 Speaker 1: He's going to lean into that at a time where 240 00:10:21,760 --> 00:10:24,359 Speaker 1: a lot of people take j. Powell as uniquely dubvish 241 00:10:24,400 --> 00:10:26,920 Speaker 1: and frankly pointing to a rate cut a lot sooner 242 00:10:26,920 --> 00:10:27,640 Speaker 1: than previously. 243 00:10:27,960 --> 00:10:30,080 Speaker 7: Yeah, yeah, I mean, I think Williams is generally one 244 00:10:30,120 --> 00:10:33,000 Speaker 7: of the more dubbish officials that we hear from. And 245 00:10:33,040 --> 00:10:35,720 Speaker 7: I think, you know, Powell does speak for a lot 246 00:10:35,720 --> 00:10:38,080 Speaker 7: of the center of that committee, and Williams is part 247 00:10:38,080 --> 00:10:40,319 Speaker 7: of that. It is important to hear that confirmed in 248 00:10:40,520 --> 00:10:43,600 Speaker 7: the other speakers. But it was a pretty interesting shift 249 00:10:43,600 --> 00:10:45,440 Speaker 7: that we heard from Powell. I think on Wednesday. You know, 250 00:10:45,520 --> 00:10:48,079 Speaker 7: back in March he was saying that there are no cracks, 251 00:10:48,120 --> 00:10:51,280 Speaker 7: you know, in the labor market data. And on Wednesday, 252 00:10:51,320 --> 00:10:53,319 Speaker 7: you know, the first question, one of the first questions 253 00:10:53,360 --> 00:10:55,600 Speaker 7: about you know, how do we know that rates are restrictive? 254 00:10:55,640 --> 00:10:57,760 Speaker 7: He answered that with, you know, we'll look at all 255 00:10:57,760 --> 00:10:59,600 Speaker 7: the signs that we see that the labor markets coming 256 00:10:59,600 --> 00:11:02,320 Speaker 7: into better balance. You pointed out that following hiring rate 257 00:11:02,840 --> 00:11:05,040 Speaker 7: some of the surveys that are weaker. So I do 258 00:11:05,120 --> 00:11:07,199 Speaker 7: think this is a Powell and the center of the 259 00:11:07,240 --> 00:11:09,560 Speaker 7: Committee that are getting worried about the employment side. 260 00:11:09,600 --> 00:11:11,600 Speaker 1: John's been really good on this and just saying how 261 00:11:11,679 --> 00:11:15,400 Speaker 1: much has the balance of risks or balance of waitings 262 00:11:15,520 --> 00:11:19,360 Speaker 1: changed since Fed Charity Powell spoke in other words, how 263 00:11:19,600 --> 00:11:22,600 Speaker 1: bad does the next print, the next two prints have 264 00:11:22,679 --> 00:11:22,880 Speaker 1: to be? 265 00:11:23,000 --> 00:11:24,520 Speaker 6: How weak does the CPI. 266 00:11:24,280 --> 00:11:26,200 Speaker 1: Report that we get next week have to be to 267 00:11:26,280 --> 00:11:28,760 Speaker 1: reintroduce the idea of a July rate cut. 268 00:11:28,880 --> 00:11:32,280 Speaker 7: Yeah, I think the more slowing in the labor market 269 00:11:32,320 --> 00:11:35,880 Speaker 7: data that we see, maybe the bar gets higher for 270 00:11:35,960 --> 00:11:39,079 Speaker 7: what is bad inflation data for the Fed. So I 271 00:11:39,160 --> 00:11:41,040 Speaker 7: don't think, you know, they're going to be too reactive 272 00:11:41,080 --> 00:11:43,320 Speaker 7: to the data that we saw on Friday. Again, one 273 00:11:43,400 --> 00:11:46,520 Speaker 7: hundred and seventy five thousand jobs, a low unemployment rate 274 00:11:46,520 --> 00:11:47,080 Speaker 7: three point nine. 275 00:11:47,120 --> 00:11:48,680 Speaker 6: That's still a pretty healthy print. 276 00:11:49,480 --> 00:11:51,400 Speaker 7: But I think as you're getting to you know, four 277 00:11:51,440 --> 00:11:54,440 Speaker 7: percent unemployment a bit above that, that would definitely. 278 00:11:54,120 --> 00:11:55,199 Speaker 6: Get more and more worrying. 279 00:11:55,960 --> 00:11:57,800 Speaker 7: And on the inflation side of things, I think you 280 00:11:57,880 --> 00:12:01,000 Speaker 7: just need, you know, a couple months where PC inflation 281 00:12:01,120 --> 00:12:03,360 Speaker 7: is running, you know, point two zero point two five 282 00:12:03,520 --> 00:12:07,200 Speaker 7: softer than February March that we saw, but not dramatically softer. 283 00:12:07,320 --> 00:12:08,440 Speaker 6: I think that's enough to do it. 284 00:12:08,679 --> 00:12:11,480 Speaker 1: Jpellll laughed at the idea of stagflation or just basically 285 00:12:11,480 --> 00:12:13,800 Speaker 1: dismissed it. Instead, it doesn't believe in the stag or 286 00:12:13,800 --> 00:12:17,480 Speaker 1: the flation the nineteen seventies. Do you think that there 287 00:12:17,640 --> 00:12:21,480 Speaker 1: is something that rhymes uncomfortably with that in the services 288 00:12:21,520 --> 00:12:22,439 Speaker 1: read we got Friday. 289 00:12:22,880 --> 00:12:23,839 Speaker 6: I wouldn't say yet. 290 00:12:23,840 --> 00:12:25,240 Speaker 7: I mean I do kind of agree with Paul. I 291 00:12:25,240 --> 00:12:28,280 Speaker 7: don't think we are in that environment now. We could 292 00:12:28,320 --> 00:12:30,840 Speaker 7: see some stickiness to inflation, absolutely. 293 00:12:30,840 --> 00:12:32,720 Speaker 6: But something that's more stuck. 294 00:12:32,800 --> 00:12:35,120 Speaker 7: Get around two and a half to three percent inflation, 295 00:12:35,240 --> 00:12:38,959 Speaker 7: not not a big reacceleration, And typically you would expect 296 00:12:38,960 --> 00:12:41,960 Speaker 7: to see you activity data weakening first and then with 297 00:12:42,040 --> 00:12:44,559 Speaker 7: some lag you would see that show up in softer inflation. 298 00:12:45,240 --> 00:12:47,439 Speaker 7: So we might have a period that even looks more 299 00:12:47,480 --> 00:12:51,000 Speaker 7: stagflationary where activity data is weak and inflation hasn't slowed yet. 300 00:12:51,400 --> 00:12:53,120 Speaker 7: But I think if that officials would think that that 301 00:12:53,160 --> 00:12:54,200 Speaker 7: inflation is slowness. 302 00:12:54,280 --> 00:12:56,600 Speaker 2: Which on to work out Veronica the whether these are 303 00:12:56,600 --> 00:12:59,320 Speaker 2: the early signs of companies word about inflation but ultimately 304 00:12:59,400 --> 00:13:03,120 Speaker 2: losing price power protecting marchin bind lank off workers. Are 305 00:13:03,120 --> 00:13:03,959 Speaker 2: we starting to see that. 306 00:13:03,920 --> 00:13:07,320 Speaker 7: Develop I think we are seeing signs that businesses are 307 00:13:07,360 --> 00:13:09,280 Speaker 7: looking to cut labor costs. That's why we see the 308 00:13:09,400 --> 00:13:12,079 Speaker 7: hiring rate falling. You know, we had some anecdotes in 309 00:13:12,120 --> 00:13:15,160 Speaker 7: the THESMS last week about not replacing workers if they 310 00:13:15,160 --> 00:13:18,319 Speaker 7: happened to leave. We've seen hours worked coming down, your 311 00:13:18,320 --> 00:13:21,040 Speaker 7: more part time employment. All those early signs that businesses 312 00:13:21,280 --> 00:13:24,040 Speaker 7: are looking to cut labor costs and in layoffs haven't 313 00:13:24,080 --> 00:13:25,960 Speaker 7: really happened yet, But that would be the last step. 314 00:13:26,120 --> 00:13:28,000 Speaker 2: Would you just imagine the FED will see that as 315 00:13:28,040 --> 00:13:30,960 Speaker 2: inflation comes next? Is that the leaning indicator for inflation? 316 00:13:31,040 --> 00:13:33,240 Speaker 2: Because I think a big feature of your research, and 317 00:13:33,520 --> 00:13:35,559 Speaker 2: if our audience at home are too familiar with it, 318 00:13:35,640 --> 00:13:37,880 Speaker 2: you believe this FED can cut with inflation closer to 319 00:13:37,920 --> 00:13:39,439 Speaker 2: three Yeah, that too, I. 320 00:13:39,360 --> 00:13:41,400 Speaker 6: Think, Yeah, it's a matter of priorities. 321 00:13:41,400 --> 00:13:43,480 Speaker 7: They're going to be more focused on that employment side 322 00:13:43,520 --> 00:13:45,760 Speaker 7: of the mandate and they will be thinking that. You know, 323 00:13:45,760 --> 00:13:48,040 Speaker 7: if you start to see the weakening in the labor market, 324 00:13:48,040 --> 00:13:50,920 Speaker 7: weakening demand, that should mean that wages are slowing, and 325 00:13:50,960 --> 00:13:52,880 Speaker 7: that should mean that inflation is also slowing. 326 00:13:52,880 --> 00:13:53,640 Speaker 6: Eventually, can we. 327 00:13:53,640 --> 00:13:56,199 Speaker 2: Get the economists perspective on an argument we've had all morning? 328 00:13:56,240 --> 00:13:59,480 Speaker 2: Not an argument eight debate, wed you here, different channel debate, 329 00:13:59,640 --> 00:14:03,959 Speaker 2: untelctual stuff. You know. Anyway, I've gone off on one 330 00:14:03,960 --> 00:14:06,720 Speaker 2: PMO whether this is a feature or a bug of 331 00:14:06,720 --> 00:14:10,040 Speaker 2: FED communication? The wild swings and understand you haven't changed 332 00:14:10,040 --> 00:14:13,240 Speaker 2: your base case at all more recently anyway, but we've 333 00:14:13,240 --> 00:14:15,560 Speaker 2: seen massive swings in market price and to go from 334 00:14:15,640 --> 00:14:18,680 Speaker 2: seven cuts to want to want to some in just 335 00:14:18,720 --> 00:14:20,680 Speaker 2: a couple of data points, it's amazing. Is that a 336 00:14:20,720 --> 00:14:22,120 Speaker 2: feature or a bug of communication? 337 00:14:22,320 --> 00:14:22,960 Speaker 6: I don't know if it. 338 00:14:23,080 --> 00:14:25,760 Speaker 7: I mean so certainly we haven't gotten the clearest communication 339 00:14:25,840 --> 00:14:27,880 Speaker 7: from the FED. You know, we know that they want 340 00:14:27,920 --> 00:14:30,360 Speaker 7: more confidence, but what is more confidence? What does that 341 00:14:30,440 --> 00:14:33,280 Speaker 7: look like? So it is a bit of a communication issue. 342 00:14:33,320 --> 00:14:35,440 Speaker 7: But I think it's also just a data issue. There's 343 00:14:35,520 --> 00:14:38,040 Speaker 7: not a good clear signal in the data right now, 344 00:14:38,040 --> 00:14:41,120 Speaker 7: and in markets are very sensitive to every little data appointment. 345 00:14:41,680 --> 00:14:44,120 Speaker 1: Another argument we were having, and it was an argument, 346 00:14:44,360 --> 00:14:47,640 Speaker 1: was about the long and variable lags in the mortgage market, 347 00:14:47,680 --> 00:14:50,440 Speaker 1: in particular in the housing market. Do you buy into 348 00:14:50,520 --> 00:14:53,880 Speaker 1: this argument that if the FED cuts rates that will 349 00:14:54,000 --> 00:14:56,920 Speaker 1: unleash a lot of sales, it will then drive prices down. 350 00:14:58,000 --> 00:14:59,520 Speaker 6: It's yeah, I mean that's tricky. 351 00:14:59,640 --> 00:15:01,840 Speaker 7: We actual we have seen in the last six months 352 00:15:01,920 --> 00:15:04,120 Speaker 7: or so that new listings of homes have been coming 353 00:15:04,200 --> 00:15:07,240 Speaker 7: up some and we have seen some softness in prices. 354 00:15:07,600 --> 00:15:09,920 Speaker 7: Maybe that is related to you know, earlier this year 355 00:15:09,920 --> 00:15:11,880 Speaker 7: we had mortgage rates much lower than they are now, 356 00:15:12,360 --> 00:15:14,800 Speaker 7: So maybe there's there is some of that. But I 357 00:15:14,840 --> 00:15:16,800 Speaker 7: think in a in an environment where the feed is 358 00:15:16,800 --> 00:15:20,000 Speaker 7: is cutting and it's because of economic backdrop, like we 359 00:15:20,040 --> 00:15:22,760 Speaker 7: see a weakening labor market that is weaker demand even 360 00:15:22,880 --> 00:15:23,560 Speaker 7: for for housing. 361 00:15:23,680 --> 00:15:26,360 Speaker 1: I mean it links to this question of basative future bug. 362 00:15:26,520 --> 00:15:29,040 Speaker 1: Does all the volativity matter if it doesn't have an effect? 363 00:15:29,480 --> 00:15:31,720 Speaker 7: Yeah, yeah, good question. I mean maybe at some point 364 00:15:31,760 --> 00:15:33,760 Speaker 7: it is going to have an effect, and I think 365 00:15:33,880 --> 00:15:35,720 Speaker 7: we are we are in that hard part now. 366 00:15:35,840 --> 00:15:36,040 Speaker 4: You know. 367 00:15:36,040 --> 00:15:38,920 Speaker 7: We we went from the soft landing narrative to the 368 00:15:38,960 --> 00:15:40,920 Speaker 7: no landing narrative and the you know Q one of 369 00:15:40,960 --> 00:15:43,960 Speaker 7: this year, and that stickiness of inflation is where you 370 00:15:44,000 --> 00:15:45,400 Speaker 7: get them to the hard landing. 371 00:15:45,920 --> 00:15:49,280 Speaker 2: Ronica enjoyed this as always. Veronica, clock the city. You've 372 00:15:49,280 --> 00:15:51,480 Speaker 2: breaking things down on the Fetter reserve with tons of 373 00:15:51,480 --> 00:16:03,680 Speaker 2: fed space coming up. Ken joined us now for more 374 00:16:03,720 --> 00:16:06,040 Speaker 2: on this conversation. Ken, let's talk about the overhang first 375 00:16:06,080 --> 00:16:08,280 Speaker 2: before we talk about the reasons to be positive this 376 00:16:08,440 --> 00:16:10,640 Speaker 2: the OJ overhang. What do you think the end result 377 00:16:10,680 --> 00:16:11,080 Speaker 2: is going to be. 378 00:16:12,600 --> 00:16:15,040 Speaker 8: I think there's going to be some tweaking in terms 379 00:16:15,080 --> 00:16:19,160 Speaker 8: of best practices for a ticket master, and John, I 380 00:16:19,200 --> 00:16:21,800 Speaker 8: really want to set the stage here. There's eighteen or 381 00:16:21,800 --> 00:16:25,000 Speaker 8: twenty one analysts with a buy. We went to a hold. 382 00:16:25,400 --> 00:16:30,640 Speaker 8: There's still euphoria of consumers moving from product to experiences 383 00:16:31,160 --> 00:16:34,480 Speaker 8: and liberty media John Malone on twenty three percent of 384 00:16:34,520 --> 00:16:38,240 Speaker 8: this company and all the media analysts are just have 385 00:16:38,400 --> 00:16:39,960 Speaker 8: fatigued with video streaming. 386 00:16:40,080 --> 00:16:41,720 Speaker 5: So why not Live Nation? 387 00:16:42,400 --> 00:16:47,360 Speaker 8: We beg too different because the businesses are kind of different. 388 00:16:47,760 --> 00:16:51,200 Speaker 8: Concerts is almost like the supermarket, a loss leader. It's 389 00:16:51,280 --> 00:16:54,000 Speaker 8: eighty percent over eighty percent of revenue but doesn't really 390 00:16:54,040 --> 00:16:57,600 Speaker 8: make money, but that feeds into advertising and sponsorship. 391 00:16:58,240 --> 00:17:00,400 Speaker 5: Ticket Master the tickets. 392 00:17:00,200 --> 00:17:03,520 Speaker 8: Is only thirteen percent of last year's revenues, but it's 393 00:17:03,600 --> 00:17:07,080 Speaker 8: the majority of the earnings. So that's the area to focus. 394 00:17:07,080 --> 00:17:10,399 Speaker 8: And that's why your question John on the DOJ on 395 00:17:10,680 --> 00:17:13,320 Speaker 8: what will they do to maybe constrain this business as 396 00:17:13,359 --> 00:17:13,920 Speaker 8: a concern. 397 00:17:14,119 --> 00:17:16,760 Speaker 2: There's lots of overhangs more broadly elsewhere, not just in 398 00:17:16,800 --> 00:17:19,080 Speaker 2: this sector, but also for big tech. Can this came 399 00:17:19,119 --> 00:17:23,199 Speaker 2: from Tavid costing of Goldman wristling to lawsuits found by 400 00:17:23,320 --> 00:17:27,680 Speaker 2: US authorities against big tech companies may also be underpriced. Ken. 401 00:17:27,800 --> 00:17:29,840 Speaker 2: My question to you would be, how are you meant 402 00:17:29,880 --> 00:17:30,480 Speaker 2: to price this? 403 00:17:33,200 --> 00:17:36,560 Speaker 8: They have a dominant position in terms of ticketing and 404 00:17:36,680 --> 00:17:38,399 Speaker 8: fairness to management. 405 00:17:37,920 --> 00:17:38,920 Speaker 5: At Live Nation. 406 00:17:39,680 --> 00:17:43,359 Speaker 8: They have put proposals even to Congress to make sure 407 00:17:43,440 --> 00:17:48,119 Speaker 8: that scalping of tickets some way there's more transparencies and 408 00:17:48,160 --> 00:17:51,880 Speaker 8: better control of that, and I think for consumers that's 409 00:17:51,960 --> 00:17:55,720 Speaker 8: what they want, where they're exasperated when they can't get 410 00:17:55,760 --> 00:17:57,760 Speaker 8: a fair price for a tailor, swipt. 411 00:17:57,520 --> 00:17:59,080 Speaker 5: Or any major artists. 412 00:17:59,640 --> 00:18:02,000 Speaker 8: Will you But I want to point out again for 413 00:18:02,160 --> 00:18:07,280 Speaker 8: Live Nation as an investment, they're very concentrated to the 414 00:18:07,359 --> 00:18:12,040 Speaker 8: ticket master business and we don't see this large exponential 415 00:18:12,080 --> 00:18:14,159 Speaker 8: growth for the company, which is why we have one 416 00:18:14,200 --> 00:18:17,320 Speaker 8: hundred and five dollars target, not one eighteen, which is 417 00:18:17,359 --> 00:18:18,879 Speaker 8: where the street is Ken. 418 00:18:18,920 --> 00:18:21,720 Speaker 1: Aside from Life Nature Nation, there's a larger question about 419 00:18:21,760 --> 00:18:24,879 Speaker 1: Department of Justice hangovers with a whole host of different 420 00:18:24,920 --> 00:18:27,359 Speaker 1: industries and companies. I'm thinking, for example, of some of 421 00:18:27,400 --> 00:18:30,240 Speaker 1: the bids to buy Paramount. We were talking about that earlier. 422 00:18:30,320 --> 00:18:33,280 Speaker 1: A question of is it a problem not necessarily Apollo, 423 00:18:33,359 --> 00:18:37,000 Speaker 1: but Sony with national security considering the fact that it's 424 00:18:37,000 --> 00:18:39,879 Speaker 1: not a US company and there's going to be broadcast material. 425 00:18:40,280 --> 00:18:43,400 Speaker 1: At what point are there certain industries that are immune 426 00:18:43,520 --> 00:18:47,240 Speaker 1: from antitrust oversight and certain industries that are going to 427 00:18:47,280 --> 00:18:49,879 Speaker 1: be that much more subject and you you have to 428 00:18:49,920 --> 00:18:51,600 Speaker 1: price in a very high risk premium. 429 00:18:52,200 --> 00:18:53,000 Speaker 5: It's a great question. 430 00:18:53,160 --> 00:18:56,320 Speaker 8: I think corporates have to be very smart about what 431 00:18:56,359 --> 00:19:00,959 Speaker 8: they do on acquisitions, either vertical or horizontal. Well, in 432 00:19:01,000 --> 00:19:05,080 Speaker 8: the case of Apollo and Sony, you also have issues 433 00:19:05,119 --> 00:19:07,000 Speaker 8: related to FCC licenses. 434 00:19:07,800 --> 00:19:10,160 Speaker 5: But I think deals can get done. 435 00:19:10,680 --> 00:19:14,280 Speaker 8: Where it becomes a big problem Lisa is of course concentration, 436 00:19:14,760 --> 00:19:17,160 Speaker 8: and given that the world has changed in this case 437 00:19:17,200 --> 00:19:21,800 Speaker 8: for entertainment with the likes of Meta, Google, Amazon, Apple 438 00:19:21,960 --> 00:19:23,800 Speaker 8: coming in, you know, whether. 439 00:19:23,560 --> 00:19:25,640 Speaker 5: You put two studios together and we have a buy 440 00:19:25,720 --> 00:19:27,080 Speaker 5: on Paramount at CPRA. 441 00:19:27,800 --> 00:19:30,800 Speaker 8: I also, as you know, Lisa covered financials, I cover Apollo. 442 00:19:31,920 --> 00:19:33,320 Speaker 5: I think that's the right deal. 443 00:19:33,840 --> 00:19:38,840 Speaker 8: And it's interesting Paramot's former independent director, who left along 444 00:19:38,880 --> 00:19:42,920 Speaker 8: with three other directors because there wasn't fairness for public shareholders, 445 00:19:43,200 --> 00:19:46,280 Speaker 8: was the former president of Sony USA. 446 00:19:47,080 --> 00:19:49,359 Speaker 1: I guess heading toward the election, this has been something 447 00:19:49,400 --> 00:19:51,320 Speaker 1: that a lot of companies have been talking about, including 448 00:19:51,359 --> 00:19:53,600 Speaker 1: Brian moynihan of Bank of America, that a lot of 449 00:19:53,640 --> 00:19:56,320 Speaker 1: companies and corporate executives are not willing to pull the 450 00:19:56,359 --> 00:19:59,480 Speaker 1: trigger on certain deals because of this concern about what 451 00:19:59,520 --> 00:20:02,639 Speaker 1: could happen with the Department of Justice. Are you hearing 452 00:20:02,720 --> 00:20:05,040 Speaker 1: or seeing that soften that there is a sense that 453 00:20:05,200 --> 00:20:07,919 Speaker 1: maybe on a case by case basis, things are going 454 00:20:08,000 --> 00:20:09,680 Speaker 1: to start getting done in a way that they haven't 455 00:20:09,880 --> 00:20:11,200 Speaker 1: over the past few years. 456 00:20:12,040 --> 00:20:14,760 Speaker 8: I think corporates at large are going to have measured risk, 457 00:20:14,840 --> 00:20:18,000 Speaker 8: and I think what's factoring now is that rates are not. 458 00:20:18,000 --> 00:20:18,800 Speaker 5: Going to zero. 459 00:20:19,480 --> 00:20:22,800 Speaker 8: So the views in terms of buyers or sellers across 460 00:20:22,920 --> 00:20:26,080 Speaker 8: industries is that, well, rates are going to be kind 461 00:20:26,080 --> 00:20:28,399 Speaker 8: of where they are now. So when you look at cost, 462 00:20:28,480 --> 00:20:31,240 Speaker 8: the capital return on investment, how you want to fund 463 00:20:31,280 --> 00:20:35,760 Speaker 8: a deal with equity and debt, those calibrations are already happening. 464 00:20:35,800 --> 00:20:40,200 Speaker 8: So we're very optimistic for a very improved mergers and 465 00:20:40,280 --> 00:20:43,600 Speaker 8: acquisition and equity underwriting market for the rest of this. 466 00:20:43,760 --> 00:20:46,480 Speaker 1: Year, even in banks at a time where a number 467 00:20:46,480 --> 00:20:48,960 Speaker 1: of them have said we need to see mergers and acquisitions. 468 00:20:48,960 --> 00:20:51,359 Speaker 1: But unless your name has first and Republican and it 469 00:20:51,400 --> 00:20:52,520 Speaker 1: probably isn't going to happen. 470 00:20:53,920 --> 00:20:56,240 Speaker 8: That's right, And I go back to last week to 471 00:20:56,359 --> 00:20:59,520 Speaker 8: jpout because one of the questions most important for the 472 00:20:59,560 --> 00:21:03,159 Speaker 8: banking industry, particularly the largest banks, who would be the 473 00:21:03,200 --> 00:21:05,280 Speaker 8: acquires is the basel. 474 00:21:04,920 --> 00:21:07,560 Speaker 5: Three end game. Put that all in English. 475 00:21:07,960 --> 00:21:12,600 Speaker 8: The worry for investors is whether the regulators would require 476 00:21:12,720 --> 00:21:18,240 Speaker 8: a higher capital entries. There's been pushback not only from 477 00:21:18,359 --> 00:21:21,800 Speaker 8: the banking industry but also Congress and its effects on 478 00:21:21,840 --> 00:21:25,000 Speaker 8: the US economy. So I think with the banking industry, 479 00:21:25,600 --> 00:21:29,680 Speaker 8: deals acquisitions will be done when the large banks are 480 00:21:29,680 --> 00:21:31,000 Speaker 8: comfortable with regulation. 481 00:21:31,520 --> 00:21:32,560 Speaker 5: And then again. 482 00:21:32,840 --> 00:21:35,040 Speaker 8: When we look at the smaller banks, which have less 483 00:21:35,080 --> 00:21:38,680 Speaker 8: impact for investing, but they're really important for the US economy. 484 00:21:38,960 --> 00:21:41,520 Speaker 2: Ken just how tight our lending standards At the moment 485 00:21:41,760 --> 00:21:43,880 Speaker 2: one year ago, we were meant to be going into 486 00:21:43,920 --> 00:21:47,400 Speaker 2: recession following a regional bank crisis, if we can even 487 00:21:47,440 --> 00:21:50,400 Speaker 2: call it one now. And the idea was that ultimately 488 00:21:50,480 --> 00:21:52,399 Speaker 2: these banks would need to pull back and the biggest 489 00:21:52,440 --> 00:21:55,440 Speaker 2: data point every single quarter would be the Senior Loan 490 00:21:55,480 --> 00:21:57,959 Speaker 2: Opinion Officer survey. Because Ken, that was what was going 491 00:21:58,000 --> 00:22:01,560 Speaker 2: to strangle this economy. How tie our lending standards? 492 00:22:02,640 --> 00:22:07,159 Speaker 8: I think it's conservative around the table, but there is 493 00:22:07,240 --> 00:22:11,760 Speaker 8: availability of credit. There's also different alternatives that you have, 494 00:22:12,200 --> 00:22:15,919 Speaker 8: not only from bank loans, public credit, but also private 495 00:22:16,000 --> 00:22:19,480 Speaker 8: credit from the large firms as we mentioned before, like Apollo. 496 00:22:20,400 --> 00:22:25,800 Speaker 8: So I think at this point there's opportunity, but it's 497 00:22:25,880 --> 00:22:29,560 Speaker 8: nowhere where we're in a risk on environment and they're 498 00:22:29,640 --> 00:22:33,200 Speaker 8: letting borrowers have high leverage ratios. 499 00:22:33,560 --> 00:22:35,439 Speaker 2: Ken wonder for to hear from you, sir Ken, They 500 00:22:35,520 --> 00:22:39,640 Speaker 2: on their of CFRA. This is the Bloomberg Seventans podcast, 501 00:22:39,760 --> 00:22:43,679 Speaker 2: bringing you the best in markets, economics, and geopolitics. You 502 00:22:43,720 --> 00:22:46,479 Speaker 2: can watch the show live on Bloomberg TV weekday mornings 503 00:22:46,480 --> 00:22:49,440 Speaker 2: from six am to nine am Eastern. Subscribe to the 504 00:22:49,480 --> 00:22:53,000 Speaker 2: podcast on Apple, Spotify or anywhere else you listen, and 505 00:22:53,000 --> 00:22:56,120 Speaker 2: as always, on the Bloomberg Terminal and the Bloomberg Business app.