WEBVTT - DirecTV, Dish to Merge, Potential Port Strike

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<v Speaker 2>Let's switch gears here, little M and A. Here in

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<v Speaker 2>the satellite television space. I never thought i'd see the

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<v Speaker 2>day Direct TV and Dish they're going to merge to

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<v Speaker 2>create the largest US PayTV provider. Let's get the latest

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<v Speaker 2>on that. Keitha Raganathan joins as she's a US media

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<v Speaker 2>anas for Bloomberg Intelligence. Keitha, this is big news in

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<v Speaker 2>a satellite business. You've only got two satellite players out there,

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<v Speaker 2>and now looks like they're going to be merging.

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<v Speaker 3>Here.

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<v Speaker 2>What's driving this deal?

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<v Speaker 4>What's really driving this deal is desperate times kind of

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<v Speaker 4>call for desperate measures. Paul So, Satellite TV has steadily

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<v Speaker 4>seen an erosion of its subscripase. I mean, at one

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<v Speaker 4>point it was the only other game in town, along

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<v Speaker 4>with cable TV, for people to get access to different

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<v Speaker 4>PATV packages. Today the world is a completely different place.

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<v Speaker 4>I mean, you have cable you have satellite, which is

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<v Speaker 4>of course the traditional facilities based operators, but then you

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<v Speaker 4>also have a whole slew of new internet based options,

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<v Speaker 4>whether you know it's a YouTube TV which gives you

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<v Speaker 4>all of the linear TV options, or whether it's like

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<v Speaker 4>completely different what are known as sphalts services subscription video

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<v Speaker 4>on demand services like an Amazon Prime or Netflix, and

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<v Speaker 4>so the world today is completely different. And because of this,

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<v Speaker 4>satellite TV has seen a huge, huge erosion of its

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<v Speaker 4>subscriber base. Dish and direct TV once upon a time,

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<v Speaker 4>you know, they were some of the largest PATV operators.

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<v Speaker 4>They've lost about sixty three percent of their satellite subscriber

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<v Speaker 4>base just over the past seven years.

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<v Speaker 5>That's unbelievable. Did two wrongs then make a right slash

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<v Speaker 5>for regulators like it?

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<v Speaker 4>So regulators of course squashed this deal back, you know,

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<v Speaker 4>about twenty years ago, but then again it was a

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<v Speaker 4>completely different landscape. They have to kind of understand that

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<v Speaker 4>things have completely changed today. One of the main appeal

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<v Speaker 4>you know, or you know, appealing points of satellite TV,

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<v Speaker 4>why people even taken in the first place, is because

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<v Speaker 4>in a lot of areas in rural America, this is

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<v Speaker 4>the only way that you can get access to PATV.

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<v Speaker 4>But things have been changing because you know, we've had

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<v Speaker 4>this whole initiative to narrow the digital divide. So more

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<v Speaker 4>and more houses in rural America are getting wired up,

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<v Speaker 4>and with that they now have the option to switch

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<v Speaker 4>to internet based TV, which is you know, exactly what

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<v Speaker 4>Distion Direct TV are saying, this is the reason why

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<v Speaker 4>they've lost subscribers. So this is the reason why there

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<v Speaker 4>is more competition, and therefore regulators should allow the deal

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<v Speaker 4>to pass.

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<v Speaker 2>And I guess a parallel announcement here today is that

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<v Speaker 2>TPG Group, the private equity company, is going to acquire

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<v Speaker 2>AT and t's seventy percent stake in direct TV that

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<v Speaker 2>TVG doesn't already own. So in effect, a private equity

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<v Speaker 2>owner is now going to own the entire US satellite

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<v Speaker 2>television business. What's going on there?

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<v Speaker 1>Why?

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<v Speaker 2>Why is this happening?

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<v Speaker 4>Yeah, exactly, Paul. So it's you know, Charlie ergan walking

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<v Speaker 4>away from the PATV business, and in many ways again

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<v Speaker 4>T you know, AT and T also walking away from

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<v Speaker 4>the PATV business. And as you well know, AT and

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<v Speaker 4>T had invested heavily in the media businesses. They had

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<v Speaker 4>bought the whole Warner Brothers operation, which they kind of

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<v Speaker 4>got rid of selling that to Discovery. And then of

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<v Speaker 4>course they had also bought the Direct TV operations, which

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<v Speaker 4>they sold a thirty percent stake to TPG. They still

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<v Speaker 4>retained a seventy percent stake, and of course today with

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<v Speaker 4>that deal with TPG, they are completely exiting that business.

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<v Speaker 4>And for both of them, if you kind of look

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<v Speaker 4>at what you know is the final endgame here for

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<v Speaker 4>both AT and T and you know EchoStar or the

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<v Speaker 4>the other part of the dish business, it's they really

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<v Speaker 4>want to kind of focus on their core business, which

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<v Speaker 4>is the wireless business for AT and T. Of course

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<v Speaker 4>it's the wireless business for EchoStar. They have you know, built,

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<v Speaker 4>they've mastered a huge amount of spectrum, and they ultimately

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<v Speaker 4>want to become the fourth largest wireless player in the

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<v Speaker 4>United States and this deal really helps them do that

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<v Speaker 4>and kind of focus their resources, investments, time and energy

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<v Speaker 4>on just that part of the operation.

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<v Speaker 5>This might be a dumb question, but do they grow

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<v Speaker 5>their customer base at this point? Is there a customer

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<v Speaker 5>base to grow, or as you said, do they just

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<v Speaker 5>become better at execution and they kind of cut with

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<v Speaker 5>synergies and that's how they become successful.

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<v Speaker 4>Yes, so, yes, they are looking at about the outline

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<v Speaker 4>about a billion dollars in synergies. A lot of those

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<v Speaker 4>will of course be programming costs. They still will be

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<v Speaker 4>with the combination. They still will be the largest PATV operator.

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<v Speaker 4>They will have about nineteen to twenty million subscribers, but

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<v Speaker 4>there's not a whole lot to really grow ALEX. So

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<v Speaker 4>it's really more kind of stemming the declines, if you will,

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<v Speaker 4>just reducing the bleeding and becoming much much more efficient

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<v Speaker 4>in kind of delivering customized, tailor made packages for you know,

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<v Speaker 4>the PATV market.

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<v Speaker 2>He githin' about thirty seconds left. What's your forecast for

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<v Speaker 2>just the overall pay TV business? Are paying subscribers going to.

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<v Speaker 3>Go to zero?

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<v Speaker 2>Is where we're going to be all streaming stuff soon?

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<v Speaker 4>I hope not, but we're definitely seeing that. You know,

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<v Speaker 4>YouTube tv is becoming a major major player in the

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<v Speaker 4>market again. They are delivering linear TV channels. Uh they

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<v Speaker 4>right now are you know, about the third or the

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<v Speaker 4>fourth largest operator eight million subscribers, So they actually have

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<v Speaker 4>more subscribers than Dish has on a satellite business. But

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<v Speaker 4>we eventually in the next two to three years see

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<v Speaker 4>them becoming the largest player, and then that of course

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<v Speaker 4>changes the whole dynamics of the whole PATV market because

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<v Speaker 4>then you have a streaming based operator that's providing, that's

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<v Speaker 4>the largest operator of you know, the patv's market.

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<v Speaker 2>And again you know the DirecTV and Dish getting together.

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<v Speaker 2>DirecTV is paying one dollar for the equity and assuming

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<v Speaker 2>all the debts. So talk about a inglorious and to

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<v Speaker 2>the PATV business from the great Charlie Ergan, who you know,

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<v Speaker 2>built that satellite business from scratch about thirty years ago.

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<v Speaker 3>KEITHA.

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<v Speaker 2>Roganatha, thanks so much for joining us US media analysts

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<v Speaker 2>for Bloomberg Intelligence, joining us from Princeton and again kind

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<v Speaker 2>of an end of an ear for Charlie Ergen, again

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<v Speaker 2>one of the leaders in satellite television, in satellite technology

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<v Speaker 2>in general, and commercial telecommunications putting up the satellite thirty

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<v Speaker 2>forty fifty years ago. So just walking away from that

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<v Speaker 2>satellite television business, focusing on the wireless spectrum that he

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<v Speaker 2>still retains.

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<v Speaker 1>You're listening to the Bloomberg Intelligence podcast catch us live

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<v Speaker 5>Let's get to this story. Danny Berger, Bloomberg Television anchored

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<v Speaker 5>It joins us. Now.

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<v Speaker 6>She is at the.

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<v Speaker 5>Port Newark Elizabeth in Newark, New Jersey. So she's on

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<v Speaker 5>the ground. She's been talking to the people. Walk us through, Danny,

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<v Speaker 5>what's the scene there? Set the scene for us. What's

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<v Speaker 5>it like?

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<v Speaker 7>So we are at this point, just some sixteen hours

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<v Speaker 7>away from a potential strike. The next update we're waiting

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<v Speaker 7>for is the International Longshoreman. They're set to release an

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<v Speaker 7>update at eleven am New York time on the current

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<v Speaker 7>status of this strike, but by all accounts, it will

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<v Speaker 7>be going forward at twelve oh one am on Tuesday,

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<v Speaker 7>that's when the current contract expires. There are no scheduled

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<v Speaker 7>talks until then, so it seems like we're unlikely to

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<v Speaker 7>get an agreement. The two major sticking points. One is

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<v Speaker 7>about wages and benefits. They want a some eighty percent

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<v Speaker 7>increase in pay over the next six years. They say

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<v Speaker 7>what's currently on offer is quote stingy. They also want

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<v Speaker 7>language in the new contract that prevents further automation of

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<v Speaker 7>these ports. Automation, I should say, there's really prevalent in

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<v Speaker 7>other places like Amsterdam and Asia. It's pretty standard, but

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<v Speaker 7>they don't want it here because they don't want the

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<v Speaker 7>jobs removed. They have a pretty strong hand to play

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<v Speaker 7>at the moment. They have an administration in the Biden

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<v Speaker 7>administration that's very friendly to labor, and we also have

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<v Speaker 7>a supply demand issue. There's not enough people who want

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<v Speaker 7>these jobs, which of course is part of the reason

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<v Speaker 7>that the workers here, the employers want to automate these ports.

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<v Speaker 2>So what's the expectation here. It doesn't seem to be

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<v Speaker 2>any emergency feeling that they need to get something done here.

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<v Speaker 2>Is there a sense that this could be a long

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<v Speaker 2>potential strike here.

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<v Speaker 7>Most of the people that I've been speaking to think

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<v Speaker 7>that this will just last a couple of days, really,

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<v Speaker 7>just because there is so much pressure. There is so

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<v Speaker 7>much money at stake. Not to mention, as I said,

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<v Speaker 7>this is a friendly administration to them. If they stretch

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<v Speaker 7>this out and it gets closer to the November election,

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<v Speaker 7>what happens if they realize that the next administration coming

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<v Speaker 7>in won't be as friendly to them?

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<v Speaker 3>Now?

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<v Speaker 7>A lot of companies, a lot of retailers have been

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<v Speaker 7>trying to stock up in anticipation of this. So if

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<v Speaker 7>it just lasts a couple of days, the thinking is

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<v Speaker 7>is that most people could go around it. But if

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<v Speaker 7>it does last longer than a couple of days, it

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<v Speaker 7>takes time. Ships will kind of build up on the

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<v Speaker 7>ports around me, like you see, and they need to

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<v Speaker 7>offload it. So something last let's say a week, it

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<v Speaker 7>could end up taking months to resolve itself. There's not

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<v Speaker 7>also not a lot of other options for ships to

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<v Speaker 7>go to the West coast ports Canada. They can't handle

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<v Speaker 7>the same amount of volume and really absorb everything that's

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<v Speaker 7>supposed to be happening here on these East coast ports.

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<v Speaker 5>All right, Danny, thanks a lot, really appreciated Danny Berger

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<v Speaker 5>joining us there on the port strike. She joins us

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<v Speaker 5>from Port Newark, Elizabeth over in Newark, New Jersey. Let's

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<v Speaker 5>get more analysis with Lee las Gal Bloomberg Intelligence senior

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<v Speaker 5>transport logistics and shipping analysts joining us on this, Hayley.

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<v Speaker 5>What can be rerouted, what can't? And how does this

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<v Speaker 5>all work?

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<v Speaker 8>These are great questions. So what can be rerouted?

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<v Speaker 6>Are things that shippers needed to have the foresight to

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<v Speaker 6>reroute a couple months ago. So if a ship is

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<v Speaker 6>going to expected to hit the East coast sports, it's

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<v Speaker 6>not so easy for it to find another port of

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<v Speaker 6>call to find because they're schedules that these ships have

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<v Speaker 6>to adhere to.

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<v Speaker 8>So the more sophisticated shippers.

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<v Speaker 6>Probably have been plans in place that are currently you know,

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<v Speaker 6>bringing freight to the West coast or maybe East coast.

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<v Speaker 8>In Canada, and we're seeing that.

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<v Speaker 6>We're seeing that in the really huge volumes in imports

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<v Speaker 6>at La Long Beach last month. So we're seeing that

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<v Speaker 6>it's happening now obviously as if there is a strike

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<v Speaker 6>and it appears that there's going to be a strike

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<v Speaker 6>and there's high value, time sensitive freight that needs to

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<v Speaker 6>get somewhere on the East coast, there's always air freight.

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<v Speaker 6>We haven't seen that much movement into air freight right now.

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<v Speaker 6>It's really just being diverted to.

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<v Speaker 9>Other ports where they can come in and once they

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<v Speaker 9>come from the West Coast, they either can get shrucked

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<v Speaker 9>across the country or they can put on trains through

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<v Speaker 9>intermodal And this is actually a net positive for.

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<v Speaker 6>A lot of companies that I cover. So I cover

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<v Speaker 6>companies like Union Pacific and JB. Hunt and Werner and

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<v Speaker 6>night Swift. These are all companies that will probably benefit

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<v Speaker 6>from this in the short term because it's really should

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<v Speaker 6>provide a boost to spot rates in the market, and

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<v Speaker 6>a lot of this business is going to go in

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<v Speaker 6>the spot market.

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<v Speaker 2>Well, how about some of the shipping companies and logistics

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<v Speaker 2>companies that you cover. Are they what are they saying

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<v Speaker 2>from their perspective about how much pain they're willing to take,

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<v Speaker 2>how much flexibility they're willing to have in these negotiations.

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<v Speaker 6>Well, well, mask you know, mentioning that they're going to,

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<v Speaker 6>you know, put out a surcharge for the additional costs

0:11:35.640 --> 0:11:38.040
<v Speaker 6>that they're going to face. So they're looking to pass

0:11:38.080 --> 0:11:40.839
<v Speaker 6>on any additional costs that they might have, whether if

0:11:40.840 --> 0:11:43.959
<v Speaker 6>they're ships waiting by the ports and to unload or

0:11:43.960 --> 0:11:47.640
<v Speaker 6>whatever those additional costs might be. So they're hedging themselves.

0:11:48.280 --> 0:11:50.520
<v Speaker 6>But it really seems like the two sides are really

0:11:50.559 --> 0:11:54.120
<v Speaker 6>far apart from you know, what I've been able to glean.

0:11:54.160 --> 0:11:57.440
<v Speaker 6>It seems like, you know, the rays that the port

0:11:57.480 --> 0:12:01.600
<v Speaker 6>workers want the poor it's about fifty percent below what

0:12:01.640 --> 0:12:04.160
<v Speaker 6>they're looking for. So there's a lot of middle ground

0:12:04.200 --> 0:12:07.240
<v Speaker 6>that has to be made, and we do expect a

0:12:07.320 --> 0:12:10.880
<v Speaker 6>strike to act to happen, But like a lot of

0:12:10.920 --> 0:12:13.959
<v Speaker 6>the people that have been speaking before me, a strike

0:12:14.080 --> 0:12:16.560
<v Speaker 6>probably won't last that long, and if it lasts more

0:12:16.600 --> 0:12:19.040
<v Speaker 6>than a week or two, call it. I think the

0:12:19.280 --> 0:12:22.800
<v Speaker 6>federal government will definitely step in with the taff had Lay.

0:12:22.679 --> 0:12:27.080
<v Speaker 5>Act right, which basically says that they can get involved

0:12:27.120 --> 0:12:29.800
<v Speaker 5>and restrict the activities and power of labor unions when

0:12:29.800 --> 0:12:32.839
<v Speaker 5>it winds up upsetting the country basically and they can't

0:12:32.840 --> 0:12:35.360
<v Speaker 5>sort of function as a whole. So to this point,

0:12:35.400 --> 0:12:38.840
<v Speaker 5>then if we get something, let's just say fifty to

0:12:38.880 --> 0:12:42.720
<v Speaker 5>seventy percent wage increases over six years, what does that

0:12:42.760 --> 0:12:45.280
<v Speaker 5>look like for the companies that will be involved for that?

0:12:45.960 --> 0:12:49.680
<v Speaker 8>So I don't cover the coort operators themselves. I cover Maris,

0:12:49.760 --> 0:12:52.000
<v Speaker 8>which has some port operations. I mean, it will just

0:12:52.040 --> 0:12:53.559
<v Speaker 8>mean that their costs are arising.

0:12:54.360 --> 0:12:57.040
<v Speaker 6>Right now, those are pretty good businesses.

0:12:57.920 --> 0:13:01.000
<v Speaker 8>I think the more interesting thing for my repetive is.

0:13:00.920 --> 0:13:08.320
<v Speaker 10>The U the union's inability to accept the reality of automation. Obviously,

0:13:08.360 --> 0:13:10.920
<v Speaker 10>you know, they want to protect jobs, but in a

0:13:10.960 --> 0:13:15.640
<v Speaker 10>world of AI, you know, and productivity improvements whether that's

0:13:15.679 --> 0:13:17.520
<v Speaker 10>you know, in offices or on docks.

0:13:17.920 --> 0:13:20.840
<v Speaker 8>Uh, there's really a lot to be said there. Uh,

0:13:21.160 --> 0:13:23.199
<v Speaker 8>and it would be a shame that, you know, the.

0:13:23.120 --> 0:13:27.199
<v Speaker 6>US sports wouldn't be as competitive to other ports around

0:13:27.240 --> 0:13:27.680
<v Speaker 6>the world.

0:13:28.520 --> 0:13:30.160
<v Speaker 2>All right, Lee, thanks so much for joining us. Always

0:13:30.200 --> 0:13:33.080
<v Speaker 2>appreciate getting your time. Lee Clasgow. He's the senior transport,

0:13:33.160 --> 0:13:37.240
<v Speaker 2>Logistics and shipping analyst for Bloomberg Intelligence. He follows everything

0:13:37.240 --> 0:13:39.959
<v Speaker 2>the rails, the trucks, the sea ships, the all that

0:13:40.040 --> 0:13:44.280
<v Speaker 2>kind of stuff logistics companies, so he's our supply chain expert.

0:13:44.280 --> 0:13:48.560
<v Speaker 2>He joins us from b I down in Princeton, New Jersey.

0:13:48.960 --> 0:13:52.840
<v Speaker 1>You're listening to the Bloomberg Intelligence Podcast. Catch us live

0:13:52.920 --> 0:13:55.640
<v Speaker 1>weekdays at ten am Eastern on fo card Playing and

0:13:55.760 --> 0:13:58.680
<v Speaker 1>broud Auto with the Bloomberg Business app. Listen on demand

0:13:58.720 --> 0:14:02.400
<v Speaker 1>wherever you get your pod, or watch us live on YouTube.

0:14:04.240 --> 0:14:06.480
<v Speaker 5>This is Bloomberg Intelligence Radio. We cover all the top

0:14:06.520 --> 0:14:09.040
<v Speaker 5>news and business, economic and finance through our lens of

0:14:09.080 --> 0:14:12.000
<v Speaker 5>our Bloomberg Intelligence folks. They cover two thousand companies in

0:14:12.040 --> 0:14:15.239
<v Speaker 5>one hundred and thirty industries worldwide. We alsotimes go outside

0:14:15.240 --> 0:14:17.000
<v Speaker 5>that and just take a look at the broader market

0:14:17.040 --> 0:14:19.360
<v Speaker 5>and get the nice macro view from some people who

0:14:19.440 --> 0:14:21.320
<v Speaker 5>run money, and for that we go to Jerry Kudzil,

0:14:21.520 --> 0:14:25.480
<v Speaker 5>Group Managing Director and Generalist portfolio manager over at TCW.

0:14:25.520 --> 0:14:27.960
<v Speaker 5>He joins us now from LA. There's lots of different

0:14:28.000 --> 0:14:29.400
<v Speaker 5>ways to go with this, but I'm looking at a

0:14:29.400 --> 0:14:31.880
<v Speaker 5>stock market that's a little softer. You have yields on

0:14:31.920 --> 0:14:35.320
<v Speaker 5>the front end there a little bit higher. What is

0:14:35.360 --> 0:14:38.080
<v Speaker 5>gonna What is the pain trade right now for you?

0:14:38.160 --> 0:14:41.600
<v Speaker 5>Considering the massive move into Chinese equities that we've seen.

0:14:41.880 --> 0:14:43.240
<v Speaker 5>Where's the pain trade right now?

0:14:44.560 --> 0:14:44.800
<v Speaker 3>Well?

0:14:45.600 --> 0:14:48.080
<v Speaker 11>Thanks a lot, I appreciate being on the show.

0:14:49.000 --> 0:14:51.080
<v Speaker 12>I'll tell you this this rumor about two to eighty

0:14:51.160 --> 0:14:54.200
<v Speaker 12>gas prices as me, I think you guys are.

0:14:54.120 --> 0:14:57.200
<v Speaker 11>Lying at lass. It's a five dollars Still.

0:14:56.800 --> 0:14:58.840
<v Speaker 5>You have a whole different problem there in LA. So

0:14:58.920 --> 0:14:59.480
<v Speaker 5>there's that we.

0:14:59.520 --> 0:15:01.160
<v Speaker 11>Have a for a whole different problem.

0:15:01.160 --> 0:15:02.440
<v Speaker 12>But I will what I will say is, you know,

0:15:02.480 --> 0:15:07.160
<v Speaker 12>pat trade for for markets appears to be a concern

0:15:07.200 --> 0:15:10.560
<v Speaker 12>about inflation, and what we would what we would say

0:15:10.640 --> 0:15:15.080
<v Speaker 12>is that that's not I don't think anyone anyone is

0:15:15.120 --> 0:15:16.120
<v Speaker 12>really concerned about that.

0:15:16.200 --> 0:15:16.840
<v Speaker 3>It feels like.

0:15:18.440 --> 0:15:21.440
<v Speaker 12>It feels like the Fed is trying to and I think, look,

0:15:21.480 --> 0:15:23.560
<v Speaker 12>how tip to have tip to the Fed? So far,

0:15:24.160 --> 0:15:26.880
<v Speaker 12>they've controlled the narrative really well. I mean, you've you've

0:15:26.920 --> 0:15:32.720
<v Speaker 12>reset expectations only from June first to move rates one

0:15:32.800 --> 0:15:35.480
<v Speaker 12>hundred basis points lower. We had we had one cut

0:15:35.520 --> 0:15:37.320
<v Speaker 12>priced in by the end of the year June first,

0:15:37.760 --> 0:15:39.160
<v Speaker 12>we're now going to have it, but we're now going

0:15:39.240 --> 0:15:41.520
<v Speaker 12>to have about six and.

0:15:41.120 --> 0:15:43.600
<v Speaker 3>And ultimately the.

0:15:42.800 --> 0:15:45.640
<v Speaker 11>Evaluations really have been have been unimpacted.

0:15:46.280 --> 0:15:47.960
<v Speaker 3>So so hat tip to the Fed.

0:15:48.040 --> 0:15:51.600
<v Speaker 12>So far feels like, you know, the market's embracing the

0:15:51.680 --> 0:15:54.560
<v Speaker 12>idea of a soft landing, uh, the idea that.

0:15:54.760 --> 0:15:56.960
<v Speaker 11>You know, lowering of inflation is a good thing.

0:15:57.560 --> 0:15:57.760
<v Speaker 3>Uh.

0:15:57.800 --> 0:16:01.000
<v Speaker 12>And we'll see ultimately, Ultimately, we'll see what proves out.

0:16:01.040 --> 0:16:04.160
<v Speaker 12>But I think the data, certainly there's something, there's something

0:16:04.200 --> 0:16:06.400
<v Speaker 12>in there for everyone as it relates to economic data

0:16:06.480 --> 0:16:07.680
<v Speaker 12>right now, the bulls.

0:16:07.400 --> 0:16:08.120
<v Speaker 3>And the bears.

0:16:08.480 --> 0:16:11.480
<v Speaker 2>How much risk should fixed income investors be taking these days,

0:16:11.560 --> 0:16:14.120
<v Speaker 2>given that rates are coming down?

0:16:15.440 --> 0:16:16.800
<v Speaker 3>That's a that's that's a good question.

0:16:16.840 --> 0:16:19.160
<v Speaker 12>Look, I think as we think about it, there's a

0:16:19.160 --> 0:16:20.920
<v Speaker 12>bunch of ways to answer that question, Paul.

0:16:20.960 --> 0:16:22.480
<v Speaker 11>But the reality is.

0:16:23.960 --> 0:16:28.080
<v Speaker 12>Rates rates are going to come down because inflation, inflation

0:16:28.240 --> 0:16:31.680
<v Speaker 12>expectations are are stable. I think the right question to

0:16:31.720 --> 0:16:34.280
<v Speaker 12>ask is why are rates coming down? Are rates coming

0:16:34.280 --> 0:16:39.000
<v Speaker 12>down because demand economy is slowing? Have a potential issue,

0:16:39.040 --> 0:16:41.840
<v Speaker 12>and I think we'll learn a lot more as we

0:16:42.000 --> 0:16:43.000
<v Speaker 12>as we moved through the week.

0:16:43.000 --> 0:16:44.560
<v Speaker 3>We're going to get We're going to get a you.

0:16:44.480 --> 0:16:47.760
<v Speaker 11>Know, a couple of a couple of economic numbers.

0:16:47.360 --> 0:16:50.239
<v Speaker 12>This week that that will probably be pretty pretty impactful.

0:16:51.040 --> 0:16:54.640
<v Speaker 12>I would say we we like fixed income broadly. You

0:16:54.640 --> 0:16:57.440
<v Speaker 12>can create income and portfolios. We like the belly of

0:16:57.480 --> 0:16:59.200
<v Speaker 12>the curve, but we do what we don't think you

0:16:59.240 --> 0:17:02.200
<v Speaker 12>should be doing, taking significant amount of credit risk in portfolios.

0:17:02.240 --> 0:17:04.800
<v Speaker 11>We talked about this a bunch on the on the show,

0:17:05.359 --> 0:17:06.960
<v Speaker 11>and the reality.

0:17:06.600 --> 0:17:12.280
<v Speaker 12>Is the risk free rate gives you eighty five percent

0:17:12.400 --> 0:17:15.800
<v Speaker 12>of your yield when you consider investment grade corporate bonds.

0:17:16.240 --> 0:17:18.680
<v Speaker 12>And when you pull this back historically, when you look

0:17:18.720 --> 0:17:21.280
<v Speaker 12>whether you're looking at high yield or you're looking at

0:17:21.359 --> 0:17:24.720
<v Speaker 12>investment grade credit, at the at the end of the day,

0:17:24.720 --> 0:17:27.920
<v Speaker 12>you can get the majority that yield in the risk

0:17:27.960 --> 0:17:28.440
<v Speaker 12>free rate.

0:17:28.480 --> 0:17:29.520
<v Speaker 3>And we like the belly.

0:17:29.600 --> 0:17:31.160
<v Speaker 12>We like the belly of the curve and the front

0:17:31.240 --> 0:17:34.480
<v Speaker 12>end of the curve because we think inflation expectations are stable,

0:17:34.800 --> 0:17:37.359
<v Speaker 12>the curve will continue to steep in, and you'll be

0:17:37.359 --> 0:17:41.639
<v Speaker 12>able to generate some some healthy income without taking this volatility.

0:17:41.640 --> 0:17:43.320
<v Speaker 12>We don't think you need to introduce that in your

0:17:43.359 --> 0:17:45.400
<v Speaker 12>portfolios with with significant amount of credit risk.

0:17:45.640 --> 0:17:48.160
<v Speaker 5>There's still money though, flowing into money market funds kind

0:17:48.160 --> 0:17:50.439
<v Speaker 5>of like unbelievably, and the money hasn't come out of

0:17:50.480 --> 0:17:53.560
<v Speaker 5>money market funds to say the least, When does it

0:17:53.640 --> 0:17:56.080
<v Speaker 5>and where does it belong? In fixed income? After that?

0:17:57.720 --> 0:17:59.120
<v Speaker 3>What's it that?

0:17:59.119 --> 0:18:02.840
<v Speaker 12>That's the seven trillion dollar question, right, that's the that's

0:18:02.880 --> 0:18:04.560
<v Speaker 12>the real where where's the where's.

0:18:04.320 --> 0:18:05.040
<v Speaker 3>The money gonna go?

0:18:05.720 --> 0:18:08.920
<v Speaker 12>The The market at the at the moment is comfortable

0:18:08.960 --> 0:18:10.960
<v Speaker 12>that rates are coming down, but ultimately you need the

0:18:11.040 --> 0:18:12.800
<v Speaker 12>rate to come You need the rate to come down.

0:18:12.840 --> 0:18:15.040
<v Speaker 12>We think to see that, to see that money move,

0:18:15.520 --> 0:18:17.480
<v Speaker 12>and where's where's that money gonna go?

0:18:18.560 --> 0:18:20.919
<v Speaker 3>Well, it's it's gonna kind of it's gonna kind of go,

0:18:21.040 --> 0:18:22.200
<v Speaker 3>It's gonna kind of go everywhere.

0:18:22.400 --> 0:18:26.000
<v Speaker 12>I think our our opinion is, our opinion is it

0:18:26.000 --> 0:18:27.680
<v Speaker 12>will it will benefit the markets.

0:18:27.920 --> 0:18:31.880
<v Speaker 3>But the reality I would just pause and and.

0:18:31.560 --> 0:18:33.480
<v Speaker 12>And for us, what we would what we would say

0:18:33.560 --> 0:18:37.680
<v Speaker 12>is we're a little bit more concerned about the direction

0:18:38.000 --> 0:18:40.960
<v Speaker 12>of the economy, uh, where it's heading and really a

0:18:41.000 --> 0:18:44.120
<v Speaker 12>function of of the labor market. And and I think

0:18:44.160 --> 0:18:46.679
<v Speaker 12>we're seeing some slowing in the labor market. Whether you

0:18:46.720 --> 0:18:48.800
<v Speaker 12>have a lot of money in monkeys or a little

0:18:48.840 --> 0:18:51.760
<v Speaker 12>money in money markets, when people lose their jobs, they

0:18:51.760 --> 0:18:54.640
<v Speaker 12>don't spend money, and that's slowing in the economy.

0:18:54.680 --> 0:18:56.800
<v Speaker 3>Is gonna, I think, we think is gonna gonna.

0:18:56.600 --> 0:18:59.800
<v Speaker 12>Overwhelm any kind of short term movement of money and

0:19:00.680 --> 0:19:03.600
<v Speaker 12>go to challenge risk assets at least performance or risk

0:19:03.640 --> 0:19:05.400
<v Speaker 12>assets in the near to medium term.

0:19:05.680 --> 0:19:07.720
<v Speaker 2>Hey, Jerry, thanks so much for joining us. Appreciate getting

0:19:07.720 --> 0:19:10.320
<v Speaker 2>your thoughts there. Jerry Kutzel, He's a group managing director

0:19:10.359 --> 0:19:13.600
<v Speaker 2>and a generalist portfolio manager at tc W. Joining us

0:19:13.800 --> 0:19:15.680
<v Speaker 2>from their home in Los Angeles.

0:19:17.080 --> 0:19:20.960
<v Speaker 1>You're listening to the Bloomberg Intelligence Podcast. Catch us live

0:19:21.040 --> 0:19:24.560
<v Speaker 1>weekdays at ten am Eastern on applecar Play and Android

0:19:24.600 --> 0:19:27.359
<v Speaker 1>Auto with the Bloomberg Business app. You can also listen

0:19:27.480 --> 0:19:30.600
<v Speaker 1>live on Amazon Alexa from our flagship New York station

0:19:30.960 --> 0:19:33.720
<v Speaker 1>Just Say Alexa playing Bloomberg eleven thirty.

0:19:35.720 --> 0:19:37.720
<v Speaker 2>Let's get to the other significant story I think out

0:19:37.720 --> 0:19:39.640
<v Speaker 2>of the day, which is just this real sell off

0:19:39.720 --> 0:19:43.000
<v Speaker 2>in global auto stocks. Here Stillantis with a profit warning

0:19:43.280 --> 0:19:45.920
<v Speaker 2>that came in much more egregious than maybe I think

0:19:45.920 --> 0:19:48.359
<v Speaker 2>people were discounting that stock US off thirteen fourteen percent.

0:19:48.600 --> 0:19:51.840
<v Speaker 2>Craig Trudell, Bloomberg Global Autos analyst, he's an editor or

0:19:51.840 --> 0:19:54.880
<v Speaker 2>there I'm sorry, Bloomberg Global Autos editor on a slow

0:19:54.920 --> 0:19:58.160
<v Speaker 2>down in the European auto industry. So, Craig, it seems

0:19:58.200 --> 0:20:01.360
<v Speaker 2>like this auto industry globally, certainly for the European operators,

0:20:01.440 --> 0:20:05.760
<v Speaker 2>the North American operators, this transition to electric vehicles is

0:20:05.800 --> 0:20:10.000
<v Speaker 2>proving much more, I guess, difficult than maybe the market

0:20:10.080 --> 0:20:12.800
<v Speaker 2>had anticipated. Where are we here, what's happening with these

0:20:12.960 --> 0:20:13.880
<v Speaker 2>big auto companies?

0:20:15.280 --> 0:20:17.760
<v Speaker 13>Yeah, I think that's spot on. I think in the

0:20:17.840 --> 0:20:20.080
<v Speaker 13>case of Stilantis, you had a company that, especially in

0:20:20.119 --> 0:20:22.840
<v Speaker 13>North America, was really taking its sweet time in terms

0:20:22.880 --> 0:20:26.760
<v Speaker 13>of going electric, and they're now really caught in a

0:20:26.800 --> 0:20:29.959
<v Speaker 13>buying because they've spent an awful lot on playing catch up.

0:20:30.760 --> 0:20:33.119
<v Speaker 13>They have, you know, some electric vehicles, some plug in

0:20:33.200 --> 0:20:36.560
<v Speaker 13>hybrids coming to market just as as that market really

0:20:36.600 --> 0:20:39.800
<v Speaker 13>slows down, and they've maybe invested in that at the

0:20:39.880 --> 0:20:42.400
<v Speaker 13>expense of some of you know, some of the vehicles

0:20:42.400 --> 0:20:45.200
<v Speaker 13>in their lineup that you know really were strong sellers

0:20:45.240 --> 0:20:47.480
<v Speaker 13>and and that dealers were quite fond of. If you

0:20:47.480 --> 0:20:50.600
<v Speaker 13>look at you know, Jeep or Ram, you know, some

0:20:50.640 --> 0:20:55.320
<v Speaker 13>of the major brands that you know, Chrysler, you know,

0:20:57.320 --> 0:21:00.159
<v Speaker 13>has for a long time been shepherding in the UI. Yes,

0:21:00.880 --> 0:21:02.840
<v Speaker 13>this is a company that you know, has way too

0:21:02.920 --> 0:21:05.600
<v Speaker 13>much inventory, has been trying to take too much price

0:21:05.640 --> 0:21:09.120
<v Speaker 13>for too long. And you know, the CEO, Carlos Tavares,

0:21:09.119 --> 0:21:12.639
<v Speaker 13>has taken some blowback over that, even from dealers, and

0:21:13.240 --> 0:21:16.719
<v Speaker 13>in a really unusual way, for the head of the

0:21:16.920 --> 0:21:20.680
<v Speaker 13>US Dealer Council to issue a public letter a few

0:21:20.680 --> 0:21:25.359
<v Speaker 13>weeks back criticizing him and criticizing the company was really remarkable.

0:21:25.800 --> 0:21:29.560
<v Speaker 5>What I'm having a hard time understanding is why it's

0:21:29.600 --> 0:21:32.320
<v Speaker 5>hard for these companies to get a true handle on

0:21:32.800 --> 0:21:35.639
<v Speaker 5>why things are bad. So just the idea that Stalantis

0:21:35.640 --> 0:21:39.680
<v Speaker 5>cuts its forecast again in just a few months, Why

0:21:39.760 --> 0:21:41.480
<v Speaker 5>is it so hard for them to get a read

0:21:41.560 --> 0:21:42.520
<v Speaker 5>on their own business?

0:21:44.080 --> 0:21:47.040
<v Speaker 13>Well, I think in the case of Stalantis, you've seen

0:21:47.520 --> 0:21:50.640
<v Speaker 13>actually sort of a reluctance for them to lower their guidance.

0:21:50.680 --> 0:21:55.159
<v Speaker 13>So they did release a very disappointing first half result

0:21:55.800 --> 0:21:59.679
<v Speaker 13>a couple months back. But you know, the the companies

0:21:59.720 --> 0:22:02.160
<v Speaker 13>that maybe have had a harder time getting a handle

0:22:02.200 --> 0:22:05.520
<v Speaker 13>on on earnings, I would I would put Volkswagen in

0:22:05.560 --> 0:22:08.040
<v Speaker 13>that camp. They've had their second warning in the matter

0:22:08.480 --> 0:22:11.520
<v Speaker 13>of a short period. I think Nissan maybe next. As

0:22:11.560 --> 0:22:14.720
<v Speaker 13>we reported earlier today, I do think that this is

0:22:14.760 --> 0:22:17.920
<v Speaker 13>a case where you know, automakers globally, you know, very

0:22:17.960 --> 0:22:21.160
<v Speaker 13>quickly went from this position of being you know, production

0:22:21.280 --> 0:22:24.719
<v Speaker 13>constrained and you know, looking to move as quickly as

0:22:24.720 --> 0:22:28.480
<v Speaker 13>they possibly could to ramp production back up. And you know,

0:22:28.720 --> 0:22:30.960
<v Speaker 13>once they were able to get through the many supply

0:22:31.080 --> 0:22:33.280
<v Speaker 13>chain issues that they've had over the last few years

0:22:33.320 --> 0:22:35.960
<v Speaker 13>coming out of the pandemic, they were it really took

0:22:36.000 --> 0:22:38.119
<v Speaker 13>them some time to adjust to the fact that, you

0:22:38.119 --> 0:22:40.560
<v Speaker 13>know what, at some point they were going to get

0:22:40.600 --> 0:22:44.240
<v Speaker 13>to where they were no longer you know, production constrained,

0:22:44.240 --> 0:22:46.760
<v Speaker 13>that you know, demand wasn't going to live up to

0:22:47.560 --> 0:22:50.159
<v Speaker 13>what everyone was making, and it was kind of a

0:22:50.200 --> 0:22:52.600
<v Speaker 13>matter of who was going to blink first. And you know,

0:22:52.640 --> 0:22:55.119
<v Speaker 13>I think Stillantis maybe is getting you know bonked on

0:22:55.200 --> 0:22:57.480
<v Speaker 13>the head today because they were one of the last

0:22:57.520 --> 0:23:00.560
<v Speaker 13>to really sort of bow to reality that they had

0:23:00.600 --> 0:23:03.719
<v Speaker 13>way too much supply relative to to the demand that

0:23:03.760 --> 0:23:04.240
<v Speaker 13>was out there.

0:23:05.080 --> 0:23:08.600
<v Speaker 2>So what do you Is there a consensus growing here,

0:23:08.720 --> 0:23:11.560
<v Speaker 2>Craig about how this industry is going to continue to

0:23:11.560 --> 0:23:13.680
<v Speaker 2>make this transition to EV because it seems like it's

0:23:13.720 --> 0:23:16.399
<v Speaker 2>slower than maybe they had thought as recent recently as

0:23:16.400 --> 0:23:20.040
<v Speaker 2>a year ago, more bumpier. How is this going to

0:23:20.080 --> 0:23:21.440
<v Speaker 2>play out? Is there any consensus building?

0:23:23.080 --> 0:23:23.240
<v Speaker 12>You know?

0:23:23.320 --> 0:23:27.439
<v Speaker 13>I think there's probably going to be more collaboration. We've heard,

0:23:28.200 --> 0:23:31.280
<v Speaker 13>you know, the CEO of Reno in France call for

0:23:31.359 --> 0:23:34.560
<v Speaker 13>an airbus of autos, you know, coming together of European

0:23:34.600 --> 0:23:38.840
<v Speaker 13>companies to try and you know, confront these challenges together.

0:23:39.160 --> 0:23:41.879
<v Speaker 13>I think you've seen some analysts call for more collaboration

0:23:42.040 --> 0:23:44.240
<v Speaker 13>among Western companies and Chinese companies.

0:23:44.800 --> 0:23:44.919
<v Speaker 2>Uh.

0:23:45.359 --> 0:23:48.119
<v Speaker 13>And we're seeing that in Stillantis right where they're teaming

0:23:48.240 --> 0:23:52.040
<v Speaker 13>up with Leap Motor, one of the smaller EV makers

0:23:51.800 --> 0:23:54.719
<v Speaker 13>in China. But I do think that there are some

0:23:54.840 --> 0:23:58.159
<v Speaker 13>real limits to that latter strategy, given this sort of

0:23:58.160 --> 0:24:01.120
<v Speaker 13>appetite for that in Washington, right. I think it's it's

0:24:01.119 --> 0:24:04.320
<v Speaker 13>the one thing that's really uniting Republicans and Democrats, is

0:24:04.359 --> 0:24:07.119
<v Speaker 13>this idea that you know, we shouldn't be at all

0:24:07.160 --> 0:24:11.160
<v Speaker 13>reliant on China going forward, and that there are enemy

0:24:11.200 --> 0:24:11.840
<v Speaker 13>and not our friend.

0:24:12.080 --> 0:24:14.000
<v Speaker 5>So what I also find interesting is that it's not

0:24:14.080 --> 0:24:17.480
<v Speaker 5>just China and it's not just EVS, I mean specifically

0:24:17.480 --> 0:24:21.199
<v Speaker 5>Salantas said jeep sales like. So it's easy to blame

0:24:21.359 --> 0:24:23.919
<v Speaker 5>China cheap EV's, It's easy to blame the fact that

0:24:23.960 --> 0:24:26.040
<v Speaker 5>people don't want to buy evs right now, but that's

0:24:26.520 --> 0:24:30.080
<v Speaker 5>not necessarily the only problem.

0:24:30.240 --> 0:24:32.199
<v Speaker 13>I think that's a really key insight. I think this

0:24:32.400 --> 0:24:36.920
<v Speaker 13>was a case of mismanagement on Stillantis's part, and you've

0:24:36.960 --> 0:24:39.520
<v Speaker 13>seen some analysts come out with really sort of harsh words,

0:24:39.600 --> 0:24:41.960
<v Speaker 13>not only for the way that they've sort of bungled things,

0:24:42.240 --> 0:24:45.400
<v Speaker 13>but the way they've communicated. You know, even just last week,

0:24:45.480 --> 0:24:49.160
<v Speaker 13>the CFO of the company, you know, was talking about

0:24:49.240 --> 0:24:52.160
<v Speaker 13>the sort of outlook, and you know, the company has

0:24:52.200 --> 0:24:55.400
<v Speaker 13>not necessarily been forthcoming, even as you know, one European

0:24:55.440 --> 0:24:59.920
<v Speaker 13>company after another was was issuing profit warnings for them too,

0:25:00.840 --> 0:25:02.680
<v Speaker 13>you know, sort of drag their feet and only do

0:25:03.320 --> 0:25:06.000
<v Speaker 13>so now when the writing maybe seemed to be on

0:25:06.040 --> 0:25:08.280
<v Speaker 13>the wall, even when they were doing first half results.

0:25:08.760 --> 0:25:11.080
<v Speaker 13>I think that's part of why you're seeing this negative

0:25:11.119 --> 0:25:13.480
<v Speaker 13>reaction because some are saying, you know, how can we

0:25:13.520 --> 0:25:16.840
<v Speaker 13>trust this management team, you know, going forward, giving the

0:25:16.880 --> 0:25:17.760
<v Speaker 13>way they've messaged this.

0:25:18.359 --> 0:25:20.360
<v Speaker 5>All right, Craig, thanks a lot, really appreciate it. Cred

0:25:20.400 --> 0:25:23.760
<v Speaker 5>Trudel joining us Bloomberg and no, you're not Bloomberg Intelligence,

0:25:23.760 --> 0:25:27.200
<v Speaker 5>he's Bloomberg Global Autos editor. I weirdly promoted him.

0:25:27.200 --> 0:25:29.000
<v Speaker 2>I think, yeah, I did the same thing.

0:25:29.040 --> 0:25:30.560
<v Speaker 5>You did the same thing, and yeah, so cool. It

0:25:30.600 --> 0:25:31.720
<v Speaker 5>just means that you're super smart.

0:25:33.160 --> 0:25:37.040
<v Speaker 1>You're listening to the Bloomberg Intelligence podcast. Catch us live

0:25:37.119 --> 0:25:40.640
<v Speaker 1>weekdays at ten am Eastern on applecar Play and Android

0:25:40.680 --> 0:25:43.440
<v Speaker 1>Auto with the Bloomberg Business Act. You can also listen

0:25:43.560 --> 0:25:46.640
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0:25:47.000 --> 0:25:50.720
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0:25:51.560 --> 0:25:51.879
<v Speaker 13>All right.

0:25:51.920 --> 0:25:53.440
<v Speaker 5>Joining us now in the bond market because you're taking

0:25:53.440 --> 0:25:55.000
<v Speaker 5>a look at the sell off pretty much across the curve.

0:25:55.040 --> 0:25:56.879
<v Speaker 5>You got the two year yield up by five basis

0:25:56.880 --> 0:25:59.119
<v Speaker 5>points three point six. You're also looking at the tenure

0:25:59.200 --> 0:26:01.440
<v Speaker 5>up by about two three basis points up at three

0:26:01.480 --> 0:26:02.959
<v Speaker 5>point seven seven. Joining us now.

0:26:03.040 --> 0:26:03.199
<v Speaker 14>R J.

0:26:03.280 --> 0:26:07.320
<v Speaker 5>Gallow, Senior portfolio Manager, Fixed Income at Federated Hermes joining

0:26:07.440 --> 0:26:09.760
<v Speaker 5>us on the space. All right, what's your best bet

0:26:09.760 --> 0:26:10.800
<v Speaker 5>on the curve right now?

0:26:12.600 --> 0:26:13.320
<v Speaker 3>Well, good morning.

0:26:14.080 --> 0:26:16.320
<v Speaker 14>Our view on the curve has been for quite some time,

0:26:16.400 --> 0:26:19.000
<v Speaker 14>and this is a pretty widely held view, is that

0:26:19.080 --> 0:26:22.160
<v Speaker 14>the US economy is unlikely to turn into a recession.

0:26:22.560 --> 0:26:25.720
<v Speaker 14>But at the same time, the FED is completely shifted

0:26:25.720 --> 0:26:28.240
<v Speaker 14>their focus. They had been almost like a soul mandate

0:26:28.240 --> 0:26:31.560
<v Speaker 14>inflation fighting central bank when we had CPI north of

0:26:31.600 --> 0:26:33.840
<v Speaker 14>six percent all the way up to nine. If you recall,

0:26:34.440 --> 0:26:36.720
<v Speaker 14>they now have shifted gears and the sort of the

0:26:36.760 --> 0:26:39.400
<v Speaker 14>weight now is more on the employment side of the mandate.

0:26:39.720 --> 0:26:41.879
<v Speaker 14>So the Fed's an easy mode that should bring shorter

0:26:41.960 --> 0:26:45.040
<v Speaker 14>yields down. At the same time we're heading into an election.

0:26:45.119 --> 0:26:47.560
<v Speaker 14>The economy, according to the Atlanta Fed GDP is still

0:26:47.560 --> 0:26:51.120
<v Speaker 14>growing around three percent, so longer yields might not come

0:26:51.160 --> 0:26:53.320
<v Speaker 14>down nearly as much. That's a bit of a steepener,

0:26:53.359 --> 0:26:56.399
<v Speaker 14>and we've had a good success generating some excess returns

0:26:56.440 --> 0:26:59.040
<v Speaker 14>to that on a year to day basis. On duration,

0:26:59.320 --> 0:27:01.840
<v Speaker 14>we thought bonds we're gonna have a pretty good year

0:27:01.840 --> 0:27:06.919
<v Speaker 14>this year, and they are. Since April thirtieth, the US

0:27:06.960 --> 0:27:11.040
<v Speaker 14>Aggregate Index is up eight point twenty four percent, and

0:27:11.119 --> 0:27:14.359
<v Speaker 14>the Treasury Index is up seven point six percent. How's

0:27:14.359 --> 0:27:16.600
<v Speaker 14>that for a heck of a run for less than

0:27:16.560 --> 0:27:17.199
<v Speaker 14>a year's time in.

0:27:17.200 --> 0:27:20.720
<v Speaker 2>The bottom up exactly like these guys doing the lapse here.

0:27:21.160 --> 0:27:22.960
<v Speaker 2>How about the high yield business that's actually been the

0:27:22.960 --> 0:27:25.320
<v Speaker 2>best performer year to date r J.

0:27:26.160 --> 0:27:26.879
<v Speaker 15>Why is that?

0:27:27.000 --> 0:27:29.080
<v Speaker 2>And kind of how do you look at that market

0:27:29.119 --> 0:27:29.600
<v Speaker 2>going forward?

0:27:31.320 --> 0:27:34.840
<v Speaker 14>Yeah, it's you're absolutely right on an internet basis. Uh,

0:27:35.200 --> 0:27:37.800
<v Speaker 14>The Treasury Index, just to give some context, is only

0:27:37.880 --> 0:27:39.760
<v Speaker 14>up four point oh eight percent, the number I shared

0:27:39.800 --> 0:27:42.480
<v Speaker 14>before with some April thirtieth. So the Treasury Index is

0:27:42.560 --> 0:27:44.760
<v Speaker 14>just over four and the AG is around four to seventy.

0:27:45.040 --> 0:27:48.480
<v Speaker 14>High yield is almost eight seven point nine eight percent.

0:27:49.640 --> 0:27:50.199
<v Speaker 3>Why is that?

0:27:50.240 --> 0:27:55.119
<v Speaker 14>Well, the economy has proven resilient beyond nearly anyone's expectations

0:27:55.160 --> 0:27:58.920
<v Speaker 14>with respect to the drastic FED hiking and now easing

0:27:58.960 --> 0:28:02.240
<v Speaker 14>that has gone on and the disinflation process that has occurred.

0:28:02.720 --> 0:28:06.879
<v Speaker 14>The view of a soft landing is a risk asset winner. Really,

0:28:07.240 --> 0:28:09.360
<v Speaker 14>look at stocks, they're up double digits here to date.

0:28:09.960 --> 0:28:14.119
<v Speaker 14>If you can have the ability to slow down inflation

0:28:14.400 --> 0:28:18.119
<v Speaker 14>without sharply slowing down the economy, that's very favorable to

0:28:18.160 --> 0:28:20.240
<v Speaker 14>risk assets, and that's been win at the back for

0:28:20.440 --> 0:28:24.840
<v Speaker 14>high yield pretty much all year as a firm. I'll

0:28:24.880 --> 0:28:26.479
<v Speaker 14>be frank, this is a tough business. Sometimes you get

0:28:26.520 --> 0:28:29.280
<v Speaker 14>them right, sometimes you don't. We've been a little underweight

0:28:29.359 --> 0:28:31.880
<v Speaker 14>high yield in our multi sector portfolios and that's been

0:28:32.160 --> 0:28:34.520
<v Speaker 14>a little difficult. However, we've made up some of that

0:28:35.400 --> 0:28:39.000
<v Speaker 14>pain by being overweight mortgages and by playing the curve

0:28:39.040 --> 0:28:41.200
<v Speaker 14>it and the rates direction to some degree. So there's

0:28:41.200 --> 0:28:42.800
<v Speaker 14>a lot of levers to push and pool and fixing.

0:28:43.640 --> 0:28:46.920
<v Speaker 5>When we talk about say job's data that's going to

0:28:46.920 --> 0:28:48.720
<v Speaker 5>come out on Friday, right, I'm wondering, what do you

0:28:48.720 --> 0:28:51.320
<v Speaker 5>think the reaction function of the bond market is going

0:28:51.360 --> 0:28:52.240
<v Speaker 5>to be to that number.

0:28:54.400 --> 0:28:56.840
<v Speaker 14>With the FEDS shift and mandate. Like I was saying

0:28:57.120 --> 0:28:59.800
<v Speaker 14>a few moments ago, the job's data becomes all the more.

0:29:00.000 --> 0:29:02.320
<v Speaker 14>I we went through an extended period there where jobs

0:29:02.400 --> 0:29:06.040
<v Speaker 14>data took a backseat to inflation. Now that is the opposite.

0:29:06.400 --> 0:29:11.040
<v Speaker 14>I think that Chairman Powell at the podium recently after

0:29:11.120 --> 0:29:15.920
<v Speaker 14>the September FMC suggested that they're going to be sort

0:29:15.920 --> 0:29:19.800
<v Speaker 14>of mentally haircutting the employment report, especially the non farm

0:29:19.840 --> 0:29:22.120
<v Speaker 14>payroll numbers sort of the headline figure, and that has

0:29:22.160 --> 0:29:23.840
<v Speaker 14>everything to do with the fact that data out of

0:29:23.840 --> 0:29:26.960
<v Speaker 14>the Commerce Department, which is used to periodically revise the

0:29:27.520 --> 0:29:29.360
<v Speaker 14>payrolls data that we're familiar with from the Bureau of

0:29:29.400 --> 0:29:32.880
<v Speaker 14>Labor Statistics, the Commerce Department data has been weaker less

0:29:32.920 --> 0:29:35.640
<v Speaker 14>job creation, so that took about I think it was

0:29:35.680 --> 0:29:39.240
<v Speaker 14>eight hundred and ninety thousand jobs or so off the board,

0:29:40.000 --> 0:29:44.479
<v Speaker 14>and that is as a result, sort of casting some shade,

0:29:44.520 --> 0:29:46.480
<v Speaker 14>if you will, in terms of the quality of the

0:29:46.560 --> 0:29:48.840
<v Speaker 14>data that we get from your Bureau of Labor Statistics.

0:29:48.880 --> 0:29:50.880
<v Speaker 14>So if we get numbers like you know, one twenty one,

0:29:51.000 --> 0:29:53.680
<v Speaker 14>thirty one forty, I think that the market will view

0:29:53.720 --> 0:29:56.360
<v Speaker 14>that somewhat dubbishly in a bond friendly sense that it

0:29:56.440 --> 0:29:59.960
<v Speaker 14>sort of keeps the FED in the game of sequence

0:30:00.320 --> 0:30:03.960
<v Speaker 14>easing significant easing to come. Conversely, if the data is

0:30:04.000 --> 0:30:07.360
<v Speaker 14>really strong, I don't know if yields would rise that much.

0:30:07.400 --> 0:30:10.440
<v Speaker 14>I think that yield direction in your term is more symmetric,

0:30:10.480 --> 0:30:12.960
<v Speaker 14>in part because we're heading into an election season or

0:30:13.120 --> 0:30:15.240
<v Speaker 14>season we're heading into an election itself. We've been in

0:30:15.240 --> 0:30:17.840
<v Speaker 14>the season for a while, the outcome of which could

0:30:17.840 --> 0:30:21.400
<v Speaker 14>have a significant impact on overall fiscal policy, to include

0:30:21.680 --> 0:30:26.560
<v Speaker 14>stimulus from extending expiring tax cuts. If President Trump is

0:30:26.600 --> 0:30:28.760
<v Speaker 14>to return to the White House, we have tariff and inflation.

0:30:28.840 --> 0:30:32.680
<v Speaker 14>Tariffs and inflation concerns to think about. If it's if

0:30:32.720 --> 0:30:36.760
<v Speaker 14>it's Kamala Harris, then it's another picture. She also increases

0:30:36.760 --> 0:30:39.120
<v Speaker 14>the deficit, maybe a little less. Those are factors I

0:30:39.120 --> 0:30:40.960
<v Speaker 14>think that are going to become pretty important as we

0:30:41.280 --> 0:30:44.080
<v Speaker 14>get past the election and see what happens next.

0:30:44.600 --> 0:30:46.760
<v Speaker 2>I'm a big fan of municipal bond market RJ. I

0:30:46.840 --> 0:30:48.560
<v Speaker 2>love to get your thoughts on munich here.

0:30:48.600 --> 0:30:49.800
<v Speaker 5>You couldn't just wait till Friday.

0:30:49.880 --> 0:30:52.880
<v Speaker 14>Come on, man, I know you have the MUNI moment,

0:30:53.200 --> 0:30:55.880
<v Speaker 14>but I'm happy to do it here too. You know,

0:30:55.880 --> 0:30:57.800
<v Speaker 14>it's funny the muni market came into the year at

0:30:57.800 --> 0:31:01.840
<v Speaker 14>a relatively rich point, and for those who are in munis,

0:31:02.680 --> 0:31:05.760
<v Speaker 14>it tends to be a playground for individuals who want

0:31:05.800 --> 0:31:08.560
<v Speaker 14>relatively high quality investments. You know, the average credit quality

0:31:08.560 --> 0:31:10.600
<v Speaker 14>of the uni markets around double a much higher.

0:31:10.400 --> 0:31:11.440
<v Speaker 8>Than corporate bonds.

0:31:12.040 --> 0:31:15.640
<v Speaker 14>They also are very drawn by the tax benefits of

0:31:15.840 --> 0:31:19.360
<v Speaker 14>interest free tax free interest, and so that's going to

0:31:19.360 --> 0:31:21.160
<v Speaker 14>bring in people who can benefit the most from it,

0:31:21.200 --> 0:31:25.040
<v Speaker 14>people who are the top few tax brackets. So the

0:31:25.120 --> 0:31:27.760
<v Speaker 14>year started out with a lot of optimism on bond returns.

0:31:28.120 --> 0:31:31.160
<v Speaker 14>Higher absolute yields that increases the value of that tax

0:31:31.200 --> 0:31:34.680
<v Speaker 14>exemption in a sort of taxable equivalent sense. So demand

0:31:34.680 --> 0:31:37.120
<v Speaker 14>has been pretty good for muni's pretty much all year,

0:31:37.160 --> 0:31:38.760
<v Speaker 14>but that meant we started the year at a sort

0:31:38.760 --> 0:31:41.160
<v Speaker 14>of a rich point, and then supply has served. We've

0:31:41.160 --> 0:31:43.520
<v Speaker 14>had one of the busiest supply years in a very

0:31:43.520 --> 0:31:45.480
<v Speaker 14>long time. It's up like thirty five percent year of

0:31:45.520 --> 0:31:47.280
<v Speaker 14>a year. It might even be a record year when

0:31:47.280 --> 0:31:49.880
<v Speaker 14>it's all said and done. So when you supply and

0:31:49.960 --> 0:31:52.800
<v Speaker 14>demand and relative price matter, Muni's on a year to

0:31:52.840 --> 0:31:55.040
<v Speaker 14>day basis are not up quite as much.

0:31:55.480 --> 0:31:55.800
<v Speaker 3>I said.

0:31:55.800 --> 0:31:58.560
<v Speaker 14>Treasuries are up four the ags for eight Muni's with

0:31:58.600 --> 0:32:01.720
<v Speaker 14>no adjustment for their tax benefits are only up around

0:32:01.800 --> 0:32:05.680
<v Speaker 14>two point nine percent two point two percent, depending upon

0:32:05.720 --> 0:32:08.960
<v Speaker 14>which index you look at. And that's because of that

0:32:09.080 --> 0:32:12.640
<v Speaker 14>supplied demand pricing picture that we've seen. Right now, Muni's

0:32:12.640 --> 0:32:15.200
<v Speaker 14>look sort of reasonably valued, maybe a little bit to

0:32:15.240 --> 0:32:18.640
<v Speaker 14>the rich side, but their tax benefits are still bringing

0:32:18.720 --> 0:32:21.760
<v Speaker 14>people in. The Munique credit picture looks really good. A

0:32:21.840 --> 0:32:24.320
<v Speaker 14>number of years ago, people used to fret about unique

0:32:24.320 --> 0:32:27.480
<v Speaker 14>credit quality crumbling all over the place at the state level,

0:32:27.520 --> 0:32:31.000
<v Speaker 14>at the local level. Right now it's very strong, great stuff.

0:32:31.120 --> 0:32:34.520
<v Speaker 3>See Munich. Yeah yeah, yeah, yeah, Focus, Get Friday, Get ready.

0:32:34.640 --> 0:32:34.840
<v Speaker 3>R J.

0:32:34.920 --> 0:32:38.040
<v Speaker 2>Gallow, Senior portfolio manager Fixing Home and Federated at Hermes,

0:32:38.240 --> 0:32:40.840
<v Speaker 2>given us the breakdown here on the fixed income markets.

0:32:40.840 --> 0:32:41.120
<v Speaker 3>Again.

0:32:41.400 --> 0:32:43.479
<v Speaker 2>Year to date, returns across the fixed income space has

0:32:43.480 --> 0:32:46.960
<v Speaker 2>been solid, you know, kind of mid high single digits

0:32:47.120 --> 0:32:49.880
<v Speaker 2>and even better performs coming off that April low there

0:32:49.960 --> 0:32:51.240
<v Speaker 2>that we saw a little bit of a dip there,

0:32:51.280 --> 0:32:54.160
<v Speaker 2>so as good returns for fixed income investors, and that

0:32:54.280 --> 0:32:54.800
<v Speaker 2>is a good thing.

0:32:56.320 --> 0:33:00.000
<v Speaker 1>You're listening to the Bloomberg Intelligence Podcast. Catch us Low

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<v Speaker 5>We wanted to focus though today on the Inflation Reduction Act.

0:33:57.000 --> 0:33:59.320
<v Speaker 5>It is very much on the chopping block and it

0:33:59.320 --> 0:34:01.240
<v Speaker 5>feels like a buyinary trade when it comes to the

0:34:01.320 --> 0:34:05.040
<v Speaker 5>US elections come November. What has happened over the last

0:34:05.080 --> 0:34:07.840
<v Speaker 5>two years in terms of deployment and projects and what

0:34:07.960 --> 0:34:09.000
<v Speaker 5>is still left to do.

0:34:10.560 --> 0:34:12.680
<v Speaker 15>I think the main thing that has happened, you know,

0:34:12.760 --> 0:34:14.720
<v Speaker 15>you'll see most of the money will have flowed through

0:34:14.840 --> 0:34:17.759
<v Speaker 15>into the build out of the power sect, particularly into

0:34:17.840 --> 0:34:20.320
<v Speaker 15>solar and wind and storage. Now there's a question of

0:34:20.360 --> 0:34:22.640
<v Speaker 15>whether that was all going to get built anyway, and

0:34:22.680 --> 0:34:24.120
<v Speaker 15>what you would say the real value of the Inflation

0:34:24.200 --> 0:34:26.800
<v Speaker 15>Reduction Act. There is been more of a buffer against

0:34:26.920 --> 0:34:30.319
<v Speaker 15>changing commodities prices. So when the Act, when the Act

0:34:30.440 --> 0:34:33.680
<v Speaker 15>was passed, natural gas was pretty expensive. It's come down

0:34:33.719 --> 0:34:36.640
<v Speaker 15>a whole lot since then. So at the time it

0:34:36.920 --> 0:34:38.520
<v Speaker 15>you know, you might have argued that that stuff was

0:34:38.520 --> 0:34:42.719
<v Speaker 15>going to get built anyway, but it it it. Yeah,

0:34:42.760 --> 0:34:45.399
<v Speaker 15>with the drop in prices, I think that actually maybe

0:34:45.400 --> 0:34:48.160
<v Speaker 15>it wouldn't happen, So it gave that stability to that sector.

0:34:48.640 --> 0:34:51.160
<v Speaker 15>Then outside of that, one of the big things we've

0:34:51.200 --> 0:34:55.120
<v Speaker 15>seen is the development of supply chains. You know, where

0:34:55.200 --> 0:34:57.799
<v Speaker 15>the US was really at a standing start with regards

0:34:58.719 --> 0:35:01.799
<v Speaker 15>batteries and so in particular, now we're seeing a lot

0:35:01.800 --> 0:35:05.240
<v Speaker 15>of factories being announced in different states across the country.

0:35:06.320 --> 0:35:10.759
<v Speaker 15>And then finally a real uptick in investment in hydrogen

0:35:11.600 --> 0:35:16.200
<v Speaker 15>electoralizer orders have significantly ticked upwards. Those are some of

0:35:16.200 --> 0:35:19.040
<v Speaker 15>the it's kind of kept the power sector on the

0:35:19.040 --> 0:35:21.800
<v Speaker 15>steady path that was on, and then it's really poured

0:35:21.920 --> 0:35:24.120
<v Speaker 15>fertilizer on the ground of some of these more nascent

0:35:24.160 --> 0:35:26.359
<v Speaker 15>technologies in.

0:35:26.280 --> 0:35:29.320
<v Speaker 2>Your world of you know, kind of managing this transition

0:35:29.760 --> 0:35:33.919
<v Speaker 2>to a cleaner energy. What is the political risk that

0:35:34.200 --> 0:35:36.080
<v Speaker 2>for this market, for this part of the world, if

0:35:36.080 --> 0:35:39.040
<v Speaker 2>we were to get a reelection of former President Trump,

0:35:39.080 --> 0:35:39.799
<v Speaker 2>what would that mean.

0:35:40.480 --> 0:35:42.440
<v Speaker 15>It's something we get asked about a lot, and actually

0:35:42.480 --> 0:35:46.080
<v Speaker 15>we're producing some research right now to really answer that question.

0:35:46.760 --> 0:35:49.960
<v Speaker 15>I think one of the things that we have concluded

0:35:50.160 --> 0:35:53.840
<v Speaker 15>is that actually the main provisions of the Inflation Reluction

0:35:53.960 --> 0:35:56.719
<v Speaker 15>Act are probably safe for a couple of reasons. One

0:35:56.760 --> 0:36:01.279
<v Speaker 15>is that in the US, it's so hard to change legislation,

0:36:01.560 --> 0:36:04.279
<v Speaker 15>you know, with you don't have a trifector, and you know,

0:36:04.320 --> 0:36:07.320
<v Speaker 15>whatever the result of the election, a trifector is somewhat unlikely.

0:36:07.800 --> 0:36:10.719
<v Speaker 15>And even if there was a Republican trifector, a lot

0:36:10.719 --> 0:36:13.160
<v Speaker 15>of the investment from the Inflation Reduction Act is going

0:36:13.200 --> 0:36:17.000
<v Speaker 15>into states and into districts represented by Republicans, So there's

0:36:17.920 --> 0:36:19.800
<v Speaker 15>they would have to have a really big majority in

0:36:19.840 --> 0:36:23.120
<v Speaker 15>both chambers of the House. So I think there are

0:36:23.200 --> 0:36:26.240
<v Speaker 15>certain aspects of the Inflation Reduction Act that could change.

0:36:26.320 --> 0:36:28.719
<v Speaker 15>There's how the laws are implemented. There's a lot of

0:36:28.719 --> 0:36:31.600
<v Speaker 15>regulations still being written around some of the tax credits,

0:36:31.920 --> 0:36:35.239
<v Speaker 15>and that could be written differently because that happens in

0:36:35.280 --> 0:36:39.680
<v Speaker 15>government agencies which report up to the executive branch. But

0:36:39.840 --> 0:36:44.600
<v Speaker 15>I think there's less risk than maybe one might assume how.

0:36:44.560 --> 0:36:46.719
<v Speaker 5>Much money still needs to get deployed. I just was

0:36:46.760 --> 0:36:48.880
<v Speaker 5>really struck by Sarah Week for example. It's where all

0:36:48.880 --> 0:36:50.840
<v Speaker 5>the energy people go and talk about stuff. It's a

0:36:50.840 --> 0:36:53.320
<v Speaker 5>big conference, happens in Houston every year, happens in March,

0:36:53.520 --> 0:36:56.840
<v Speaker 5>and Senator Secretary Granholm is really like, guys, come and

0:36:56.880 --> 0:36:59.279
<v Speaker 5>get money, like we have it, we will give it

0:36:59.320 --> 0:37:01.840
<v Speaker 5>to you. Come to us to let us give us money.

0:37:02.040 --> 0:37:03.799
<v Speaker 5>And some people don't like that. Some people are like

0:37:03.840 --> 0:37:06.200
<v Speaker 5>that just shows that we're spending money on stuff that

0:37:06.239 --> 0:37:07.920
<v Speaker 5>we don't necessarily need to spend money on.

0:37:08.440 --> 0:37:11.160
<v Speaker 15>Yeah, I mean, it's it's an interesting one because for

0:37:11.200 --> 0:37:14.440
<v Speaker 15>the most part, the Inflation Reduction Act is not a

0:37:14.560 --> 0:37:20.560
<v Speaker 15>pot of money, in that the majority of the investment

0:37:20.600 --> 0:37:22.640
<v Speaker 15>would come through tax credits, which are really just dependent

0:37:22.680 --> 0:37:25.080
<v Speaker 15>on how much stuff gets built. Where there is a

0:37:25.120 --> 0:37:27.239
<v Speaker 15>pot of money, and I should have come in with

0:37:27.280 --> 0:37:30.800
<v Speaker 15>the actual figure is the amount that's been authorized for

0:37:30.800 --> 0:37:34.239
<v Speaker 15>the Loan Program's office. So and that is the one

0:37:34.239 --> 0:37:36.759
<v Speaker 15>that is really politically under threat because that you know,

0:37:36.840 --> 0:37:39.560
<v Speaker 15>that was the the program in the past that was

0:37:39.600 --> 0:37:43.319
<v Speaker 15>associated with Cylendra. So there is this perception that this

0:37:43.480 --> 0:37:48.640
<v Speaker 15>is money being allocated to two companies that may fail,

0:37:49.320 --> 0:37:51.799
<v Speaker 15>and there's there's a lot of that money still yet

0:37:51.840 --> 0:37:55.800
<v Speaker 15>to be spent currently, and it's it's it's an ongoing process.

0:37:56.600 --> 0:38:00.360
<v Speaker 2>What industries are doing relatively well versus their bench marks,

0:38:00.440 --> 0:38:02.399
<v Speaker 2>versus maybe some industries that aren't. We were just talking

0:38:02.440 --> 0:38:05.360
<v Speaker 2>to Brian Egger from Boomberg Intelligence about the cruise industry

0:38:05.400 --> 0:38:07.279
<v Speaker 2>and their carbon footprint and trying to manage that. Which

0:38:07.360 --> 0:38:09.280
<v Speaker 2>industries are doing well, which maybe you're struggling.

0:38:10.680 --> 0:38:12.640
<v Speaker 15>I suppose on I think of things on a really

0:38:12.680 --> 0:38:15.000
<v Speaker 15>macro level, so you know, I divide the world into

0:38:15.040 --> 0:38:18.399
<v Speaker 15>power and transport and industry, which obviously is a real,

0:38:18.600 --> 0:38:22.560
<v Speaker 15>real simplification. Most of them are. Momentum in decarbonization to

0:38:22.680 --> 0:38:25.360
<v Speaker 15>date in the US has been in the power sector, okay,

0:38:25.480 --> 0:38:28.200
<v Speaker 15>and most of that has been because of gas plants

0:38:28.239 --> 0:38:31.400
<v Speaker 15>replacing coal plants, which doesn't get you to zero. It

0:38:31.520 --> 0:38:35.359
<v Speaker 15>just brings emissions down in the near term. So wind

0:38:35.400 --> 0:38:38.200
<v Speaker 15>and solar is then the next wave, and that's really

0:38:38.239 --> 0:38:40.680
<v Speaker 15>starting to kick in now. So there is good progress

0:38:40.680 --> 0:38:45.600
<v Speaker 15>in power. Then transport historically hasn't had great success in

0:38:45.640 --> 0:38:48.200
<v Speaker 15>reducing its emissions, but I think we're just at the

0:38:48.239 --> 0:38:50.960
<v Speaker 15>start of the electric vehicle wave, which is gonna, I think,

0:38:51.000 --> 0:38:52.720
<v Speaker 15>be a slow burn over the a couple of decades,

0:38:52.719 --> 0:38:56.680
<v Speaker 15>because even if electric vehicle sales increase quickly, it takes

0:38:56.719 --> 0:38:58.840
<v Speaker 15>time for the whole vehicle fleet to turn over. But

0:38:59.080 --> 0:39:03.120
<v Speaker 15>there is a downward trajectory in transport. So it's really

0:39:03.640 --> 0:39:06.640
<v Speaker 15>industry where what we call the hard to abate sectors,

0:39:06.680 --> 0:39:07.320
<v Speaker 15>where there's.

0:39:07.080 --> 0:39:09.640
<v Speaker 5>More work to be done, like some men steel that

0:39:10.200 --> 0:39:12.440
<v Speaker 5>kind of fun stuff before I let you go. What

0:39:12.480 --> 0:39:14.600
<v Speaker 5>I've also noticed when it comes to the IRA specifically,

0:39:14.640 --> 0:39:17.080
<v Speaker 5>it really helped ignite the demand side of it, right

0:39:17.239 --> 0:39:19.400
<v Speaker 5>excuse me, the supply side of it with tax credits,

0:39:19.400 --> 0:39:21.479
<v Speaker 5>but not the demand side. So the gap between here's

0:39:21.480 --> 0:39:23.680
<v Speaker 5>my cool hydrogen thing that I just built and then

0:39:23.719 --> 0:39:25.880
<v Speaker 5>here's this company buying that cool hydrogen thing that I

0:39:25.960 --> 0:39:28.440
<v Speaker 5>just built is wide. Yes, how do we solve that?

0:39:28.760 --> 0:39:32.400
<v Speaker 15>I mean, that's very especially true for hydrogen, and that

0:39:32.520 --> 0:39:37.400
<v Speaker 15>is fundamentally the issue around the policy support that hydrogen

0:39:37.440 --> 0:39:39.640
<v Speaker 15>receives is it's so much has been focused on supply,

0:39:40.840 --> 0:39:43.040
<v Speaker 15>but I think it speaks to a deeper issue of

0:39:43.040 --> 0:39:45.279
<v Speaker 15>what policy has to come next, because I think the

0:39:45.360 --> 0:39:49.560
<v Speaker 15>nature of the Inflation Reduction Act was really throwing a

0:39:49.600 --> 0:39:52.600
<v Speaker 15>lot at all these different industries to get things kick started.

0:39:53.480 --> 0:39:56.399
<v Speaker 15>It's a bit like putting petrol in the engine. Maybe

0:39:56.440 --> 0:39:59.719
<v Speaker 15>not the best analogy such, but it put petrol in

0:39:59.719 --> 0:40:02.560
<v Speaker 15>the end of the energy transition in the US. But

0:40:02.640 --> 0:40:04.560
<v Speaker 15>whatever comes next needs to be more like a steering

0:40:04.560 --> 0:40:08.719
<v Speaker 15>wheel because it's established this momentum. But there are all

0:40:08.800 --> 0:40:10.839
<v Speaker 15>these questions now that are you know, we never knew

0:40:10.880 --> 0:40:13.680
<v Speaker 15>we'd have this problem of oh, there's too much supply,

0:40:13.800 --> 0:40:16.160
<v Speaker 15>where's the demand because at the time there was no

0:40:16.239 --> 0:40:18.520
<v Speaker 15>supply in no demand. Yeah, so the next wave of

0:40:18.520 --> 0:40:21.520
<v Speaker 15>a legislation has to address that, whether it's some hydrogen

0:40:21.600 --> 0:40:23.640
<v Speaker 15>or a steering wheel.

0:40:23.719 --> 0:40:24.080
<v Speaker 4>I like that.

0:40:24.080 --> 0:40:25.759
<v Speaker 5>We're gonna use that, We're gonna steal it, all right, Thomas,

0:40:25.800 --> 0:40:28.040
<v Speaker 5>thanks a lot. Thomas Rowlands rees he is a bl

0:40:28.760 --> 0:40:31.280
<v Speaker 5>Bloomberg be any app head of research.

0:40:31.320 --> 0:40:34.799
<v Speaker 1>Thank you so much for This is the Bloomberg Intelligence podcast,

0:40:34.920 --> 0:40:38.799
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