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Speaker 2: of academy securities, wonders if the happy talk is overblown
Speaker 2: writing this, I like my exceptionalism to be exceptional, and
Speaker 2: I also like my data not to be dwarfed by
Speaker 2: plug numbers. I cannot help but wonder if, even on
Speaker 2: the jobs front, which has been close to exceptional, we
Speaker 2: are exposed to some sort of gap in perception and
Speaker 2: we might wind up finding out the Goldenlocks met the
Speaker 2: wrong group of bears. This story doesn't end so well.
Speaker 2: Owins this now from all Peyt, thank you for jumping
Speaker 2: on in front of a camera. We were very excited
Speaker 2: about talking about this topic with you. Can we talk
Speaker 2: about just how exceptional things truly are and whether you
Speaker 2: see this narrative gaping from being too hot to being
Speaker 2: too cold and happening very quickly.
Speaker 3: You know, I've generally been buried on the US dock
Speaker 3: market NASDAQ in particular for a little while, and people
Speaker 3: look at you with this level of sympathy. And if
Speaker 3: you look at it since mid January, it's heavily underperformed Europe.
Speaker 3: It's underperformed China massively, right, China's up twenty five to
Speaker 3: thirty percent since it's January lows. So this whole perception
Speaker 3: that there's this exceptionalism and it's showing through the markets,
Speaker 3: I think is an old story that we're clinging on to.
Speaker 3: And then you start looking at the data, right Chicago, PMI,
Speaker 3: and I understand Chicago's not what it once was in
Speaker 3: terms of a center of economic hub, but we are
Speaker 3: at a level that has previously only been associated with
Speaker 3: being in a crisis.
Speaker 4: So I think the data is there.
Speaker 3: Your previous guests, Morononica, I like the city Economic Surprise
Speaker 3: Index that's turned negative again, right, So I think there's
Speaker 3: all these things that are going on behind the scenes.
Speaker 3: And maybe we've just been so fixated on inflation and
Speaker 3: the FED that we're missing this real turn. And I
Speaker 3: think that's why we could see this gap to back
Speaker 3: to hard landing.
Speaker 5: Talk, Pete.
Speaker 2: Nowdad, we've been very focused on the central bank divergence,
Speaker 2: the prospect of the ECP cunning interest rates in June,
Speaker 2: and the Federal Reserve maybe not doing the same thing
Speaker 2: until much later this year. And to your point, we've
Speaker 2: missed the fact that the economic data has turned, that
Speaker 2: that surprise index is now negative, that the price section,
Speaker 2: the performance has been elsewhere. So Pete, the question to
Speaker 2: you is does it continue? Do you see more people
Speaker 2: getting on board? And how would you play this theme now?
Speaker 2: Would it be through equities, through foreign exchange?
Speaker 6: What would you do?
Speaker 4: You know? For me, I like rates right now.
Speaker 3: I started liking yields once they got above four sixty.
Speaker 3: I thought we'd be in a ten year range for
Speaker 3: forty four to sixty. I think we might go back
Speaker 3: to four thirty four to twenty five if the economic
Speaker 3: data continues weak. And to be honest, I think there's
Speaker 3: already been enough weak economic data that we've ignored, so
Speaker 3: I think we can see yields do better, So I
Speaker 3: think that's going to be the first way to play it.
Speaker 3: Then the question is how do equities respond. Right Friday,
Speaker 3: we clearly had a Goldilocks type situation where bonds do
Speaker 3: well and stocks do well. I think that could fade,
Speaker 3: and I think that could fade rather quickly as people
Speaker 3: start saying, hey, this has only been a subset of
Speaker 3: the economy that's been exceptional, and there has been a
Speaker 3: subset that's been exceptional. If the rest of the economy
Speaker 3: starts fading, these cannot do that well. So I think
Speaker 3: you get a bit of a retrenchment. I think in
Speaker 3: the mere term, I kind of like banks, I like
Speaker 3: some of those other sectors maybe to benefit from this.
Speaker 4: Goldilocks type thing.
Speaker 3: But I'm now very worried that we're not going to
Speaker 3: see a smooth transition from no landing to maybe softish
Speaker 3: landing to hard landing. I think we might gap because
Speaker 3: the data already supports some of that fear.
Speaker 1: There's a question about time horizon here, and whether this
Speaker 1: is a tactical a trade or a tactical view, or
Speaker 1: whether it's something that's strategic over the long term, or
Speaker 1: you start to see a greater chance of some sort
Speaker 1: of downturn that could more fundamentally challenge certain equity valuations.
Speaker 1: Which is it Is it just tactical, or is it
Speaker 1: something that has longer legs?
Speaker 3: For me, I think this is more fundamental, And we've
Speaker 3: been talking off and on for the past six months
Speaker 3: to a year that I view china resurgence as China
Speaker 3: trying to sell their own brands and compete more directly
Speaker 3: with us, which I think is going to put margin
Speaker 3: pressure on US companies and what I don't like. And
Speaker 3: my theory has always been China will work domestically first
Speaker 3: then sell into emerging markets, which they're doing. But I've
Speaker 3: always viewed kind of Europe as a potential weak link. Right,
Speaker 3: we have the ability to confront China, to draw lines
Speaker 3: in the sand and fight with China, and our brands
Speaker 3: are super successful. Europe to me always strikes me as
Speaker 3: they're a little bit more dependent on China than we are.
Speaker 3: Geez over there meeting with the French leader, I think
Speaker 3: you could see more go to that, And unlike in
Speaker 3: the past twenty years, where when China does well, we
Speaker 3: get a big slice of that, here, I think we
Speaker 3: are going to get less and less of a slice
Speaker 3: of that and more and more competition, and so I
Speaker 3: think this is strategic about valuations, not just a technical
Speaker 3: or tactical trade.
Speaker 1: And you've had this idea and it's been a brilliant
Speaker 1: one really that we've discussed at length. Why do you
Speaker 1: think now is the time the market is going to
Speaker 1: kind of come to to it given the fact that
Speaker 1: earnings have been coming in pretty well, we've seen them
Speaker 1: retain their earnings power, even if it's not pricing power.
Speaker 1: And there are a lot of things, including the jobs report,
Speaker 1: that weren't exactly terrible.
Speaker 3: Pete well, you know on the jobs report too, it's
Speaker 3: I think we mentioned in the first part the birth
Speaker 3: death model, which why they can't come up with a
Speaker 3: better name for that plug where they're trying to estimate
Speaker 3: how much jobs are created a new businesses. Right, that
Speaker 3: was three hundred and ninety three thousand out of one
Speaker 3: hundred ninety thousand, So we would have had job losses
Speaker 3: had that plug number not been so high. Maybe it's
Speaker 3: valid I question that because that's kind of the last
Speaker 3: outlier in the whole thing. And then I think in
Speaker 3: terms of why people who notice this China story much
Speaker 3: more You're starting to see reaction to Timu.
Speaker 4: You're starting to see parts of Europe react.
Speaker 3: To Shine and for the first time, right as Chinese
Speaker 3: stocks are doing better, there's signs that Chinese economy is bottom.
Speaker 4: I think people will be watching.
Speaker 3: Very closely for a few names to see how their
Speaker 3: sales into China go and if their sales disappoint what
Speaker 3: Chinese brands sales, you know, surge this whole view that oh,
Speaker 3: we're sales there are only week because China's week disappears.
Speaker 3: And that's when I think we really confront these valuation
Speaker 3: issues and multiple issues.
Speaker 2: Confusion around that with Apple the last week, Pete will
Speaker 2: save that for another day. I want to talk about
Speaker 2: the geopolitics with you. This from Axios just moments ago.
Speaker 2: Biden lettin Yahoo to speak about RAFA later on today
Speaker 2: they're reporting, Pete. If we get the same thing here
Speaker 2: at Bloomberg, we'll be sure to share it. Pete, your
Speaker 2: view the conversations with the general as you have in
Speaker 2: an academy, what does it look like?
Speaker 3: You know, I think we're still dubious that we will
Speaker 3: get any form of ceasefire until Israel is done, you know,
Speaker 3: eliminating hamas as a fighting force as much as they can.
Speaker 4: So they are likely to go into RAFA.
Speaker 3: You know, I think when you look at the data,
Speaker 3: as awful as it is, they have been very conservative.
Speaker 3: They've taken some losses. It's a very tricky situation. We
Speaker 3: would like, probably as you know, entire community to see some.
Speaker 4: Sort of ceasefire.
Speaker 3: It seems unlikely and there is concern about what state
Speaker 3: the hostages would be in after being there for so long,
Speaker 3: so that's another kind of worrisome thing. So we don't
Speaker 3: see an immediate ceasefire unfortunately, and we see as we
Speaker 3: all really want to progress into RAFA to eliminate more
Speaker 3: of aromas as a threat.
Speaker 2: If that is the case, is they're still upside risk
Speaker 2: for crude because we're not in the nineties, We're not
Speaker 2: in the eighties on WCI, we're in the seventies. Pete
Speaker 2: on Brent, we're eighty three fifty seven. Is there still
Speaker 2: that upside risk off the back of this or do
Speaker 2: you think this market is insulted from it?
Speaker 4: Yeah, and we took off some of this.
Speaker 3: A few weeks ago we were saying we were less fullishcrewed.
Speaker 3: We're now getting back to fully bullish, and I think
Speaker 3: as we head towards the election, I would not be
Speaker 3: surprised to see spots of activity and around Russian and
Speaker 3: Ukraine other things that kind of pushed crude prices higher.
Speaker 4: Right.
Speaker 3: You know, one theory would certainly be that if Houdin
Speaker 3: wants Trump to be elected, higher crude prices would suit
Speaker 3: put them very well. So I'd be watch out on
Speaker 3: that front. So right now, back at these levels, I
Speaker 3: think you kind of get crewed as a hedge almost
Speaker 3: for free, because we do have demand growing for data centers,
Speaker 3: et cet Right, they're going to need energy.
Speaker 4: That energy is gonna be powered by.
Speaker 3: Something, So I like energy a lot again, so I
Speaker 3: put that a high on my list of things I
Speaker 3: want to own, both as a geopolitical hedge and outright.
Speaker 2: Got it, Pete, this was awesome. It's going to hear
Speaker 2: from your pitachure and academy securities. Citi's Veronica Clik joins
Speaker 2: us around the table here in New York City. Veronica,
Speaker 2: I mentioned a city quote a little bit earlier summer
Speaker 2: doven happened so fast. I think we should say upfront
Speaker 2: that was Andrew Hollenhorst. That was not Veronica, but you
Speaker 2: do not want to take responsibility for that. Let's talk
Speaker 2: about how quickly this conversation could switch to rake cuts
Speaker 2: this summer, which has been the base case for you
Speaker 2: and the team for quite a while.
Speaker 7: Yeah, yeah, I mean, I think we saw the early
Speaker 7: signs of that last week. We heard from Power of
Speaker 7: course on on Wednesday, and I think it was important
Speaker 7: to us that, you know, he really didn't endorse this
Speaker 7: hawkish repricing that you know, the market had experience over.
Speaker 6: The last couple of weeks.
Speaker 7: And I think this is a fad that is still
Speaker 7: just waiting for a little bit more confidence on the
Speaker 7: inflation data, just a couple more months of a softer
Speaker 7: pace of inflation after that very strong key one, and
Speaker 7: then of course on Friday we had softer employment data
Speaker 7: and that is something that certainly could get the Fed
Speaker 7: to get.
Speaker 4: More of it.
Speaker 2: Let's talk about Friday. I see what below consensus going
Speaker 2: into the number, you were talking about downside risk as well.
Speaker 2: We got that downside risk. It materialized. Why do you
Speaker 2: not see that as a one off? Why don'd you
Speaker 2: see that as a sign of more to country?
Speaker 6: Yeah?
Speaker 7: Yeah, I mean, also, you know one hundred and seventy
Speaker 7: five thousand jobs is by no means a weak pace
Speaker 7: of job growth on the surfaces, could still be a
Speaker 7: pretty strong employment report. I think the issue for us, though,
Speaker 7: is that you, for for some time, you know, four
Speaker 7: or five six months now, we have seen a lot
Speaker 7: of other labor market data that have been deteriorating. The
Speaker 7: hiring rate in the Jolts numbers last week that's been
Speaker 7: coming down. We saw that in the employment sub components
Speaker 7: of these isms pmis a lot of signs that point
Speaker 7: to hiring really slowing. And this is the time of
Speaker 7: year when you would normally be hiring a lot of people.
Speaker 7: And I think this is finally where we're starting to see,
Speaker 7: you know, the very consistently strong payrolls, which is almost
Speaker 7: an outlier that's starting to crack. Now.
Speaker 1: You sent out a note as we introduced to you
Speaker 1: while we're on air, and you talk about how FED
Speaker 1: President New York FED President John Williams is likely to
Speaker 1: affirm Powell's concern about the labor market an increase focus
Speaker 1: on the employment mandem.
Speaker 6: He's going to speak today at one pm. Why do
Speaker 6: you think.
Speaker 1: He's going to lean into that at a time where
Speaker 1: a lot of people take j. Powell as uniquely dubvish
Speaker 1: and frankly pointing to a rate cut a lot sooner
Speaker 1: than previously.
Speaker 7: Yeah, yeah, I mean, I think Williams is generally one
Speaker 7: of the more dubbish officials that we hear from. And
Speaker 7: I think, you know, Powell does speak for a lot
Speaker 7: of the center of that committee, and Williams is part
Speaker 7: of that. It is important to hear that confirmed in
Speaker 7: the other speakers. But it was a pretty interesting shift
Speaker 7: that we heard from Powell. I think on Wednesday. You know,
Speaker 7: back in March he was saying that there are no cracks,
Speaker 7: you know, in the labor market data. And on Wednesday,
Speaker 7: you know, the first question, one of the first questions
Speaker 7: about you know, how do we know that rates are restrictive?
Speaker 7: He answered that with, you know, we'll look at all
Speaker 7: the signs that we see that the labor markets coming
Speaker 7: into better balance. You pointed out that following hiring rate
Speaker 7: some of the surveys that are weaker. So I do
Speaker 7: think this is a Powell and the center of the
Speaker 7: Committee that are getting worried about the employment side.
Speaker 1: John's been really good on this and just saying how
Speaker 1: much has the balance of risks or balance of waitings
Speaker 1: changed since Fed Charity Powell spoke in other words, how
Speaker 1: bad does the next print, the next two prints have
Speaker 1: to be?
Speaker 6: How weak does the CPI.
Speaker 1: Report that we get next week have to be to
Speaker 1: reintroduce the idea of a July rate cut.
Speaker 7: Yeah, I think the more slowing in the labor market
Speaker 7: data that we see, maybe the bar gets higher for
Speaker 7: what is bad inflation data for the Fed. So I
Speaker 7: don't think, you know, they're going to be too reactive
Speaker 7: to the data that we saw on Friday. Again, one
Speaker 7: hundred and seventy five thousand jobs, a low unemployment rate
Speaker 7: three point nine.
Speaker 6: That's still a pretty healthy print.
Speaker 7: But I think as you're getting to you know, four
Speaker 7: percent unemployment a bit above that, that would definitely.
Speaker 6: Get more and more worrying.
Speaker 7: And on the inflation side of things, I think you
Speaker 7: just need, you know, a couple months where PC inflation
Speaker 7: is running, you know, point two zero point two five
Speaker 7: softer than February March that we saw, but not dramatically softer.
Speaker 6: I think that's enough to do it.
Speaker 1: Jpellll laughed at the idea of stagflation or just basically
Speaker 1: dismissed it. Instead, it doesn't believe in the stag or
Speaker 1: the flation the nineteen seventies. Do you think that there
Speaker 1: is something that rhymes uncomfortably with that in the services
Speaker 1: read we got Friday.
Speaker 6: I wouldn't say yet.
Speaker 7: I mean I do kind of agree with Paul. I
Speaker 7: don't think we are in that environment now. We could
Speaker 7: see some stickiness to inflation, absolutely.
Speaker 6: But something that's more stuck.
Speaker 7: Get around two and a half to three percent inflation,
Speaker 7: not not a big reacceleration, And typically you would expect
Speaker 7: to see you activity data weakening first and then with
Speaker 7: some lag you would see that show up in softer inflation.
Speaker 7: So we might have a period that even looks more
Speaker 7: stagflationary where activity data is weak and inflation hasn't slowed yet.
Speaker 7: But I think if that officials would think that that
Speaker 7: inflation is slowness.
Speaker 2: Which on to work out Veronica the whether these are
Speaker 2: the early signs of companies word about inflation but ultimately
Speaker 2: losing price power protecting marchin bind lank off workers. Are
Speaker 2: we starting to see that.
Speaker 7: Develop I think we are seeing signs that businesses are
Speaker 7: looking to cut labor costs. That's why we see the
Speaker 7: hiring rate falling. You know, we had some anecdotes in
Speaker 7: the THESMS last week about not replacing workers if they
Speaker 7: happened to leave. We've seen hours worked coming down, your
Speaker 7: more part time employment. All those early signs that businesses
Speaker 7: are looking to cut labor costs and in layoffs haven't
Speaker 7: really happened yet, But that would be the last step.
Speaker 2: Would you just imagine the FED will see that as
Speaker 2: inflation comes next? Is that the leaning indicator for inflation?
Speaker 2: Because I think a big feature of your research, and
Speaker 2: if our audience at home are too familiar with it,
Speaker 2: you believe this FED can cut with inflation closer to
Speaker 2: three Yeah, that too, I.
Speaker 6: Think, Yeah, it's a matter of priorities.
Speaker 7: They're going to be more focused on that employment side
Speaker 7: of the mandate and they will be thinking that. You know,
Speaker 7: if you start to see the weakening in the labor market,
Speaker 7: weakening demand, that should mean that wages are slowing, and
Speaker 7: that should mean that inflation is also slowing.
Speaker 6: Eventually, can we.
Speaker 2: Get the economists perspective on an argument we've had all morning?
Speaker 2: Not an argument eight debate, wed you here, different channel debate,
Speaker 2: untelctual stuff. You know. Anyway, I've gone off on one
Speaker 2: PMO whether this is a feature or a bug of
Speaker 2: FED communication? The wild swings and understand you haven't changed
Speaker 2: your base case at all more recently anyway, but we've
Speaker 2: seen massive swings in market price and to go from
Speaker 2: seven cuts to want to want to some in just
Speaker 2: a couple of data points, it's amazing. Is that a
Speaker 2: feature or a bug of communication?
Speaker 6: I don't know if it.
Speaker 7: I mean so certainly we haven't gotten the clearest communication
Speaker 7: from the FED. You know, we know that they want
Speaker 7: more confidence, but what is more confidence? What does that
Speaker 7: look like? So it is a bit of a communication issue.
Speaker 7: But I think it's also just a data issue. There's
Speaker 7: not a good clear signal in the data right now,
Speaker 7: and in markets are very sensitive to every little data appointment.
Speaker 1: Another argument we were having, and it was an argument,
Speaker 1: was about the long and variable lags in the mortgage market,
Speaker 1: in particular in the housing market. Do you buy into
Speaker 1: this argument that if the FED cuts rates that will
Speaker 1: unleash a lot of sales, it will then drive prices down.
Speaker 6: It's yeah, I mean that's tricky.
Speaker 7: We actual we have seen in the last six months
Speaker 7: or so that new listings of homes have been coming
Speaker 7: up some and we have seen some softness in prices.
Speaker 7: Maybe that is related to you know, earlier this year
Speaker 7: we had mortgage rates much lower than they are now,
Speaker 7: So maybe there's there is some of that. But I
Speaker 7: think in a in an environment where the feed is
Speaker 7: is cutting and it's because of economic backdrop, like we
Speaker 7: see a weakening labor market that is weaker demand even
Speaker 7: for for housing.
Speaker 1: I mean it links to this question of basative future bug.
Speaker 1: Does all the volativity matter if it doesn't have an effect?
Speaker 7: Yeah, yeah, good question. I mean maybe at some point
Speaker 7: it is going to have an effect, and I think
Speaker 7: we are we are in that hard part now.
Speaker 4: You know.
Speaker 7: We we went from the soft landing narrative to the
Speaker 7: no landing narrative and the you know Q one of
Speaker 7: this year, and that stickiness of inflation is where you
Speaker 7: get them to the hard landing.
Speaker 2: Ronica enjoyed this as always. Veronica, clock the city. You've
Speaker 2: breaking things down on the Fetter reserve with tons of
Speaker 2: fed space coming up. Ken joined us now for more
Speaker 2: on this conversation. Ken, let's talk about the overhang first
Speaker 2: before we talk about the reasons to be positive this
Speaker 2: the OJ overhang. What do you think the end result
Speaker 2: is going to be.
Speaker 8: I think there's going to be some tweaking in terms
Speaker 8: of best practices for a ticket master, and John, I
Speaker 8: really want to set the stage here. There's eighteen or
Speaker 8: twenty one analysts with a buy. We went to a hold.
Speaker 8: There's still euphoria of consumers moving from product to experiences
Speaker 8: and liberty media John Malone on twenty three percent of
Speaker 8: this company and all the media analysts are just have
Speaker 8: fatigued with video streaming.
Speaker 5: So why not Live Nation?
Speaker 8: We beg too different because the businesses are kind of different.
Speaker 8: Concerts is almost like the supermarket, a loss leader. It's
Speaker 8: eighty percent over eighty percent of revenue but doesn't really
Speaker 8: make money, but that feeds into advertising and sponsorship.
Speaker 5: Ticket Master the tickets.
Speaker 8: Is only thirteen percent of last year's revenues, but it's
Speaker 8: the majority of the earnings. So that's the area to focus.
Speaker 8: And that's why your question John on the DOJ on
Speaker 8: what will they do to maybe constrain this business as
Speaker 8: a concern.
Speaker 2: There's lots of overhangs more broadly elsewhere, not just in
Speaker 2: this sector, but also for big tech. Can this came
Speaker 2: from Tavid costing of Goldman wristling to lawsuits found by
Speaker 2: US authorities against big tech companies may also be underpriced. Ken.
Speaker 2: My question to you would be, how are you meant
Speaker 2: to price this?
Speaker 8: They have a dominant position in terms of ticketing and
Speaker 8: fairness to management.
Speaker 5: At Live Nation.
Speaker 8: They have put proposals even to Congress to make sure
Speaker 8: that scalping of tickets some way there's more transparencies and
Speaker 8: better control of that, and I think for consumers that's
Speaker 8: what they want, where they're exasperated when they can't get
Speaker 8: a fair price for a tailor, swipt.
Speaker 5: Or any major artists.
Speaker 8: Will you But I want to point out again for
Speaker 8: Live Nation as an investment, they're very concentrated to the
Speaker 8: ticket master business and we don't see this large exponential
Speaker 8: growth for the company, which is why we have one
Speaker 8: hundred and five dollars target, not one eighteen, which is
Speaker 8: where the street is Ken.
Speaker 1: Aside from Life Nature Nation, there's a larger question about
Speaker 1: Department of Justice hangovers with a whole host of different
Speaker 1: industries and companies. I'm thinking, for example, of some of
Speaker 1: the bids to buy Paramount. We were talking about that earlier.
Speaker 1: A question of is it a problem not necessarily Apollo,
Speaker 1: but Sony with national security considering the fact that it's
Speaker 1: not a US company and there's going to be broadcast material.
Speaker 1: At what point are there certain industries that are immune
Speaker 1: from antitrust oversight and certain industries that are going to
Speaker 1: be that much more subject and you you have to
Speaker 1: price in a very high risk premium.
Speaker 5: It's a great question.
Speaker 8: I think corporates have to be very smart about what
Speaker 8: they do on acquisitions, either vertical or horizontal. Well, in
Speaker 8: the case of Apollo and Sony, you also have issues
Speaker 8: related to FCC licenses.
Speaker 5: But I think deals can get done.
Speaker 8: Where it becomes a big problem Lisa is of course concentration,
Speaker 8: and given that the world has changed in this case
Speaker 8: for entertainment with the likes of Meta, Google, Amazon, Apple
Speaker 8: coming in, you know, whether.
Speaker 5: You put two studios together and we have a buy
Speaker 5: on Paramount at CPRA.
Speaker 8: I also, as you know, Lisa covered financials, I cover Apollo.
Speaker 5: I think that's the right deal.
Speaker 8: And it's interesting Paramot's former independent director, who left along
Speaker 8: with three other directors because there wasn't fairness for public shareholders,
Speaker 8: was the former president of Sony USA.
Speaker 1: I guess heading toward the election, this has been something
Speaker 1: that a lot of companies have been talking about, including
Speaker 1: Brian moynihan of Bank of America, that a lot of
Speaker 1: companies and corporate executives are not willing to pull the
Speaker 1: trigger on certain deals because of this concern about what
Speaker 1: could happen with the Department of Justice. Are you hearing
Speaker 1: or seeing that soften that there is a sense that
Speaker 1: maybe on a case by case basis, things are going
Speaker 1: to start getting done in a way that they haven't
Speaker 1: over the past few years.
Speaker 8: I think corporates at large are going to have measured risk,
Speaker 8: and I think what's factoring now is that rates are not.
Speaker 5: Going to zero.
Speaker 8: So the views in terms of buyers or sellers across
Speaker 8: industries is that, well, rates are going to be kind
Speaker 8: of where they are now. So when you look at cost,
Speaker 8: the capital return on investment, how you want to fund
Speaker 8: a deal with equity and debt, those calibrations are already happening.
Speaker 8: So we're very optimistic for a very improved mergers and
Speaker 8: acquisition and equity underwriting market for the rest of this.
Speaker 1: Year, even in banks at a time where a number
Speaker 1: of them have said we need to see mergers and acquisitions.
Speaker 1: But unless your name has first and Republican and it
Speaker 1: probably isn't going to happen.
Speaker 8: That's right, And I go back to last week to
Speaker 8: jpout because one of the questions most important for the
Speaker 8: banking industry, particularly the largest banks, who would be the
Speaker 8: acquires is the basel.
Speaker 5: Three end game. Put that all in English.
Speaker 8: The worry for investors is whether the regulators would require
Speaker 8: a higher capital entries. There's been pushback not only from
Speaker 8: the banking industry but also Congress and its effects on
Speaker 8: the US economy. So I think with the banking industry,
Speaker 8: deals acquisitions will be done when the large banks are
Speaker 8: comfortable with regulation.
Speaker 5: And then again.
Speaker 8: When we look at the smaller banks, which have less
Speaker 8: impact for investing, but they're really important for the US economy.
Speaker 2: Ken just how tight our lending standards At the moment
Speaker 2: one year ago, we were meant to be going into
Speaker 2: recession following a regional bank crisis, if we can even
Speaker 2: call it one now. And the idea was that ultimately
Speaker 2: these banks would need to pull back and the biggest
Speaker 2: data point every single quarter would be the Senior Loan
Speaker 2: Opinion Officer survey. Because Ken, that was what was going
Speaker 2: to strangle this economy. How tie our lending standards?
Speaker 8: I think it's conservative around the table, but there is
Speaker 8: availability of credit. There's also different alternatives that you have,
Speaker 8: not only from bank loans, public credit, but also private
Speaker 8: credit from the large firms as we mentioned before, like Apollo.
Speaker 8: So I think at this point there's opportunity, but it's
Speaker 8: nowhere where we're in a risk on environment and they're
Speaker 8: letting borrowers have high leverage ratios.
Speaker 2: Ken wonder for to hear from you, sir Ken, They
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