WEBVTT - Expectations for a Fed Rate Cut 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business App. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:27.480 us live on YouTube right now. 0:00:27.480 --> 0:00:32.920 Matt Hornback joins Global ahead of macro Strategy at Morgan Stanley. Matt, 0:00:32.960 --> 0:00:36.840 good luck with the macro strategy. September twenty twenty five. 0:00:37.200 --> 0:00:40.800 When you sit at the table in a wonderfully collegially 0:00:41.040 --> 0:00:46.080 argumentative Morgan Stanley, how divisive is the debate? Hi? 0:00:46.159 --> 0:00:48.360 Hi, Tom, Thanks for having me on. It's a pleasure 0:00:48.360 --> 0:00:52.760 to be back. Well, we don't have divisive debates. We 0:00:52.840 --> 0:00:56.520 have collegial debates, and you know, I think in the end, 0:00:56.640 --> 0:00:59.360 we all try to come to an understanding of all 0:00:59.400 --> 0:01:04.360 of the very perspectives that are informing investments taking place 0:01:04.360 --> 0:01:07.399 in the markets every day. You know, it's it's obviously 0:01:07.520 --> 0:01:12.560 not just one perspective that ends up dominating the investment landscape. 0:01:12.600 --> 0:01:15.560 It's a collection of a multitude of perspectives, and so 0:01:15.600 --> 0:01:17.760 we we like having those debates internally, but. 0:01:17.880 --> 0:01:22.839 The debates here center around an absolutely original fed meeting. 0:01:23.520 --> 0:01:27.520 I mean it's I remember years ago talking to Richard 0:01:27.560 --> 0:01:32.000 Berner at a dinner former Morgan Stanley Giant about the dots. 0:01:32.640 --> 0:01:35.240 I mean, this is not a normal meeting of dots, 0:01:35.360 --> 0:01:36.200 is it, Matt. 0:01:35.920 --> 0:01:41.480 Hornback, It certainly is not, and it's it's perhaps a 0:01:41.480 --> 0:01:44.000 meeting of dots and dissents. 0:01:43.480 --> 0:01:46.160 If I can, if I can play on words. 0:01:46.920 --> 0:01:50.760 You know in the end that the dots are a 0:01:50.800 --> 0:01:55.040 device that the FED doesn't like to use as a 0:01:55.120 --> 0:02:00.920 guidance device, but unfortunately investors have become a customed to 0:02:01.080 --> 0:02:04.520 using the dot plot as just that, as forward guidance, 0:02:04.560 --> 0:02:07.440 and so this will be an important set of dots. 0:02:07.960 --> 0:02:10.160 As you know, we add an additional year to the 0:02:10.200 --> 0:02:15.040 dot plot in September, and we also focus very much 0:02:15.120 --> 0:02:19.120 on what the dot for twenty twenty five implies for 0:02:19.200 --> 0:02:21.640 the final two meetings of the year. You know, the 0:02:21.720 --> 0:02:26.440 consensus is that we will have a median dot somewhere 0:02:26.480 --> 0:02:31.359 between two or three cuts in total for twenty twenty five, 0:02:31.400 --> 0:02:35.359 including of course the cut that everyone expects at this meeting. 0:02:36.240 --> 0:02:38.160 But there's always surprises, and. 0:02:38.080 --> 0:02:41.000 When the dots move, they tend to move a lot, 0:02:41.160 --> 0:02:44.200 so that's will really be the main question I'll be 0:02:44.200 --> 0:02:46.160 trying to answer going into the meeting. 0:02:47.320 --> 0:02:51.400 Matt So as global head of macro Strategy, where's the 0:02:51.440 --> 0:02:54.280 waiting for you guys these days, US versus rest of 0:02:54.320 --> 0:02:56.600 the world, Because there was similarly a little bit of 0:02:56.600 --> 0:02:59.160 a c change there in the beginning of this year 0:02:59.200 --> 0:03:02.200 around the liberation today. Where are you guys right now? 0:03:03.320 --> 0:03:07.880 Yeah, you know, the dominance of the US and macro 0:03:08.000 --> 0:03:12.080 markets is something that has been around for quite some time. 0:03:12.200 --> 0:03:13.359 Of course, I think one of. 0:03:13.320 --> 0:03:17.480 The main reasons for that is because the central bank 0:03:17.960 --> 0:03:21.160 that most people in the world pay attention to more 0:03:21.200 --> 0:03:23.680 than any other is the FED, of course, and so 0:03:24.200 --> 0:03:26.400 when you have all of these eyes around the world 0:03:26.560 --> 0:03:32.679 focusing on the same event, it can dominate investment perspectives 0:03:32.680 --> 0:03:36.240 and actions. So we are certainly focused on the US 0:03:36.280 --> 0:03:39.520 at the moment. You know, the US economy is one 0:03:39.560 --> 0:03:43.760 where the labor market appears to be showing the most 0:03:44.040 --> 0:03:48.000 signs of strain. I don't want to use the word stress, 0:03:48.480 --> 0:03:52.200 but I think strain is an appropriate description of what 0:03:52.760 --> 0:03:56.080 we're seeing happen in the US labor market. And of course, 0:03:56.640 --> 0:04:01.720 if the strain turns into stress, then we can expect 0:04:02.480 --> 0:04:07.240 the central bank to act much more expeditiously, to use 0:04:07.240 --> 0:04:11.360 a word that Pal has used in the past. So 0:04:11.400 --> 0:04:13.400 I think right now we are focused on the US, 0:04:13.440 --> 0:04:16.560 but we'll see, We'll see what happens in the economy 0:04:16.560 --> 0:04:18.000 into the end of the year, and maybe it will 0:04:18.040 --> 0:04:21.600 then be appropriate to focus on other parts of other 0:04:21.640 --> 0:04:22.799 parts of the investment world. 0:04:23.800 --> 0:04:26.560 Matt, we got you on YouTube video. I see outside 0:04:26.560 --> 0:04:28.760 your office. I'm bet guessing some traders out there, and 0:04:28.800 --> 0:04:30.520 they're probably thinking about what they should be doing, how 0:04:30.560 --> 0:04:33.320 they should be positioned around two o'clock. How are you 0:04:33.360 --> 0:04:35.919 guys thinking about two o'clock in the two thirty conference. 0:04:36.920 --> 0:04:41.160 So our baseline view is that the FED will lower 0:04:41.240 --> 0:04:45.120 rates by twenty five basis points. We are expecting one 0:04:45.440 --> 0:04:49.440 dissent from a board governor, in this case the newly 0:04:49.480 --> 0:04:55.599 appointed Steven Myron, and so that's what we're expecting for 0:04:55.839 --> 0:05:00.839 kind of the main bits of the meeting. What, of course, 0:05:00.920 --> 0:05:03.880 people will be focused on quite a bit is number 0:05:03.880 --> 0:05:07.279 one the dot plot. As I mentioned earlier, does that 0:05:07.480 --> 0:05:12.240 median dot settle in at two three? How many if 0:05:12.279 --> 0:05:17.719 any dots are circling around four rate cuts for in 0:05:17.760 --> 0:05:19.920 total for the year, that would be one hundred basis points. 0:05:20.160 --> 0:05:23.400 I think very few people are expecting there to be 0:05:23.440 --> 0:05:26.120 a collection of dots showing one hundred basis points of 0:05:26.200 --> 0:05:29.320 rate cuts, but there certainly could be, and that will 0:05:29.360 --> 0:05:32.400 be a point of focus. And then, naturally, the press 0:05:32.440 --> 0:05:35.800 conference is an important part of the. 0:05:35.880 --> 0:05:38.960 F MC meeting now every six to eight. 0:05:40.120 --> 0:05:44.600 Matt, with all your heritage of decades in Japan, two 0:05:44.640 --> 0:05:48.520 o'clock today in the press conference today, is your own 0:05:48.520 --> 0:05:50.200 palse central banker to the world. 0:05:50.320 --> 0:05:52.360 Is he, frankly central banker to Tokyo. 0:05:55.160 --> 0:05:59.279 Well, he might be central banker to himself. 0:06:00.480 --> 0:06:03.039 In the sense that you know, we are now in 0:06:03.120 --> 0:06:08.040 the twilight period of his time as FED chair He has, 0:06:08.360 --> 0:06:12.279 you know, just a handful of important meetings left in 0:06:12.320 --> 0:06:16.920 his tenure. I imagine the closer that he gets to May, 0:06:17.880 --> 0:06:19.880 the more he will start to reflect on his own 0:06:19.960 --> 0:06:25.080 time as chairman of the Fed, and perhaps he will 0:06:25.240 --> 0:06:28.600 start to think about the books that may or may 0:06:28.600 --> 0:06:33.560 not be written about him after he bids farewell to 0:06:33.640 --> 0:06:37.120 the Federal Reserve. In that case, you know, he could 0:06:37.120 --> 0:06:41.039 be focused on doing what is certainly right for the economy, 0:06:41.520 --> 0:06:44.360 but also in doing what is right for the economy, 0:06:45.400 --> 0:06:49.400 he ultimately is going to be helping his own reputation 0:06:49.720 --> 0:06:50.320 moving forward. 0:06:50.520 --> 0:06:53.600 Matt thank you for your time. Matthew hornbackus with Morgan Stanley. 0:06:54.279 --> 0:06:58.400 We thank him here on a FED day. Stay with us. 0:06:58.440 --> 0:07:01.640 More from Bloomberg Survey on coming up after this. 0:07:08.880 --> 0:07:12.480 You're listening to the Bloomberg Surveillance Podcast. Catch us live 0:07:12.560 --> 0:07:15.720 weekday afternoons from seven to ten am Eastern. Listen on 0:07:15.800 --> 0:07:19.440 Applecarplay and Android Otto with the Bloomberg Business app, or 0:07:19.600 --> 0:07:21.040 watch us live on YouTube. 0:07:21.160 --> 0:07:25.440 Kaylie Cox joined chief market strategists Riddultswell's management. Kaylee, get 0:07:25.520 --> 0:07:29.160 us into earnings, but more importantly, get us beyond earnings 0:07:29.200 --> 0:07:30.720 into November and December. 0:07:31.160 --> 0:07:33.320 Is there going to be like a frenzy melt up? 0:07:35.360 --> 0:07:37.840 Well, I think before earnings we need to talk the 0:07:37.880 --> 0:07:40.040 FED and the government shutdown because those are the two 0:07:40.240 --> 0:07:43.840 most prominent Yeah, risk kind of risk catalysts that are 0:07:43.840 --> 0:07:46.200 coming over the next few weeks. But one quick thing 0:07:46.240 --> 0:07:48.960 about earnings. Q three earnings obviously Q two was a 0:07:48.960 --> 0:07:52.880 low bar. Companies hurdled that bar pretty easily, although I 0:07:52.880 --> 0:07:55.000 guess there are a few caveats because I think you 0:07:55.040 --> 0:07:57.920 need to be looking at earnings on a sector sector basis. 0:07:58.600 --> 0:08:01.360 The bar will be higher. I think analysts are still 0:08:01.360 --> 0:08:04.680 having trouble processing what tariffs could mean, especially with the 0:08:04.680 --> 0:08:07.440 new change that came at the beginning of August. But 0:08:07.480 --> 0:08:09.800 I'm really focusing on what the Fed will do as 0:08:09.840 --> 0:08:11.560 a precursor to what we'll see through the end of 0:08:11.600 --> 0:08:14.720 the year, and really the pushes and pulls and the 0:08:14.720 --> 0:08:17.160 government shut down, especially as we head into October. 0:08:17.480 --> 0:08:21.280 Yeah, but if we get past those, Paul, yep, I'm sorry, 0:08:22.320 --> 0:08:26.000 I got solid GDP. I understand the tensions out there, 0:08:26.000 --> 0:08:29.440 particularly in the labor market. But Paul, where are we 0:08:30.160 --> 0:08:32.160 October twenty fifth or something? 0:08:32.200 --> 0:08:34.520 I know it's time you talk about the resiliency, the 0:08:34.559 --> 0:08:36.520 courage to be in the market's CALLI I know you 0:08:36.640 --> 0:08:39.880 folks over Aberdhalt's Wealth Management are really long term. You 0:08:40.000 --> 0:08:43.400 try not to get tripped up by by the noise here. 0:08:43.640 --> 0:08:47.199 How is your kind of outlook kind of changed, if 0:08:47.200 --> 0:08:49.000 at all, during the course of twenty twenty five. 0:08:50.600 --> 0:08:52.760 Well, it's funny. Our clients are long term, but we 0:08:52.800 --> 0:08:55.000 don't pretend that the noise isn't there. Our clients are 0:08:55.040 --> 0:08:57.440 also hearing the noise. They have legitimate questions about the 0:08:57.440 --> 0:09:00.640 headlines that they see come across the tape where we sit, 0:09:00.800 --> 0:09:04.720 and you know, our outlook has been around leaning toward 0:09:04.760 --> 0:09:07.280 value for most of the year, especially because toward the 0:09:07.280 --> 0:09:10.040 beginning of the year, you know, we had Liberation Day, 0:09:10.080 --> 0:09:12.440 we had these tariff pressures that we had to think about, 0:09:12.880 --> 0:09:16.160 and labor markets weren't looking the strongest heading into the year. 0:09:16.240 --> 0:09:18.680 And you know, we believe that the consumer drives the economy. 0:09:18.760 --> 0:09:23.800 Consumers aren't making money then, you know, Americans aren't spending 0:09:23.840 --> 0:09:27.840 like they usually are, So you know, we've been encouraging value. 0:09:27.880 --> 0:09:30.840 We've been encouraging you know, rebalancing your book, understanding what 0:09:30.920 --> 0:09:33.120 you own. We still think that this is prudent heading 0:09:33.120 --> 0:09:34.760 into the end of the year, and honestly, we think 0:09:34.800 --> 0:09:37.640 it's prudent for most of the time for our investors 0:09:37.679 --> 0:09:41.840 who are prioritizing stability and consistency. But it is a 0:09:41.840 --> 0:09:46.360 tricky moment, especially with you know, economic projections pulling in 0:09:46.440 --> 0:09:49.080 one direction and then the labor market pulling in the other. 0:09:49.200 --> 0:09:50.880 It's tough to know where to prioritize. 0:09:50.920 --> 0:09:52.440 What are people actually doing. 0:09:52.640 --> 0:09:55.400 Forget about the theory of ridd Holt's, the theory of Kelly, 0:09:55.760 --> 0:09:58.040 the theory of Josh. Are they still scared stiff. 0:10:00.080 --> 0:10:02.920 There's some healthy skepticism out there. It's funny. You know, 0:10:02.960 --> 0:10:06.200 the fears were high heading into April, or excuse me, 0:10:06.559 --> 0:10:09.040 you know fears were to start the beginning of the year. 0:10:09.080 --> 0:10:11.880 I'll say confidence was high, and then it's slowly tailored 0:10:11.880 --> 0:10:13.960 off in the first few months of the year. Now 0:10:14.080 --> 0:10:17.280 investors have those scars. They're heading into the fourth quarter. 0:10:17.440 --> 0:10:20.839 They know that the ground is shifting underneath them. We're 0:10:20.840 --> 0:10:23.040 getting a lot of questions on how to capitalize on this. 0:10:23.080 --> 0:10:25.800 I mean, mortgage refis, for example, are one of the 0:10:25.800 --> 0:10:28.520 big questions that we're getting, you know, constantly, with the 0:10:28.520 --> 0:10:31.360 thirty year mortgage down near a three year low. And 0:10:31.920 --> 0:10:34.840 quite honestly, it's a hard question to answer because you know, 0:10:34.920 --> 0:10:37.160 the long term end of the long end of the 0:10:37.200 --> 0:10:40.080 curve is one of the hardest things to talk about 0:10:40.120 --> 0:10:40.560 at the moment. 0:10:40.600 --> 0:10:42.920 There are a lot of catalysts whipping Kelly. 0:10:42.640 --> 0:10:44.080 Cox staying with us here, when do you get the 0:10:44.120 --> 0:10:47.640 market open? Right now? The vics sixteen point one for it, 0:10:47.640 --> 0:10:49.000 here's Lisa Mateo. 0:10:48.880 --> 0:10:50.680 You got it, and we'll start with the S and 0:10:50.720 --> 0:10:53.440 P five hundred right now. As we get the markets open, 0:10:53.480 --> 0:10:56.800 it's little change, little movements still up about a point 0:10:56.880 --> 0:10:58.720 at six thousand, six hundred and eight. You have to 0:10:58.720 --> 0:11:01.320 point out the levels that now two ten percent, one 0:11:01.440 --> 0:11:04.200 hundred and nine points at forty five thousand, eight hundred 0:11:04.240 --> 0:11:06.760 and seventy seven. We get to the NASAC right now. 0:11:06.960 --> 0:11:09.560 Not much movement there as well, up about two points 0:11:09.559 --> 0:11:12.320 at twenty two thousand, three hundred and thirty seven. 0:11:12.720 --> 0:11:13.560 We go to the yield space. 0:11:13.600 --> 0:11:15.959 We have the two year at three point five one percent, 0:11:16.040 --> 0:11:18.760 that's little changed. The yield on the tenure four point 0:11:18.840 --> 0:11:21.480 zero two percent, and that is little changed as well. 0:11:21.520 --> 0:11:24.240 We have the Bloomberg Dollar Spot Index, not much movement there. 0:11:24.280 --> 0:11:26.600 We have bitcoined down about half percent at just above 0:11:26.840 --> 0:11:30.040 one hundred and sixteen thousand. That is your Bloomberg opening 0:11:30.040 --> 0:11:31.160 bell report all in time. 0:11:31.520 --> 0:11:34.040 Thanks so much, Liza, greatly appreciate it. Kelly Cox with 0:11:34.120 --> 0:11:37.280 us with Rufotes Wealth Management. I'm sure it's been a 0:11:37.280 --> 0:11:40.439 point of discussion there in debate, and I'm certain with Barry, 0:11:40.440 --> 0:11:44.920 and we've talked about it for years. Kelly Cox on 0:11:45.280 --> 0:11:49.079 John Deere, which is the great CFA company to study 0:11:49.120 --> 0:11:54.120 in the brutal level one accounting treatment of the CFA Institute, 0:11:54.400 --> 0:11:59.280 Kelly Cox should John Dear Should John Dee report four 0:11:59.320 --> 0:12:03.160 times a year or like sensible YEurope two times a year. 0:12:05.240 --> 0:12:08.920 It's funny so Trump brought this up a few days ago. 0:12:08.960 --> 0:12:10.560 I think this is the second time that he brought 0:12:10.640 --> 0:12:14.800 up the possibility of cutting earnings reports down to semi annual, 0:12:14.920 --> 0:12:17.480 or at least less frequent than quarterly. I'm a big 0:12:17.480 --> 0:12:20.160 believer in transparency. I think markets are more efficient with 0:12:20.200 --> 0:12:21.319 greater transparency. 0:12:21.600 --> 0:12:23.559 But you have to look at this on both sides 0:12:23.559 --> 0:12:24.120 of the equation. 0:12:24.200 --> 0:12:28.160 It's lower compliance costs for companies, it's lower it's lower 0:12:28.200 --> 0:12:30.400 operating costs in general, though I don't think it would 0:12:30.400 --> 0:12:32.920 make much of a mark. Investors are on the losing 0:12:33.000 --> 0:12:36.280 end though, and as we you know, for where we 0:12:36.360 --> 0:12:38.600 sit in the business, we're always on the side of 0:12:38.640 --> 0:12:41.680 the investor. The hardest person to ask is me because 0:12:41.679 --> 0:12:43.600 I love rifling through data, so I have a natural 0:12:43.640 --> 0:12:44.240 bias there. 0:12:45.440 --> 0:12:46.720 She's on the conference call. 0:12:47.040 --> 0:12:50.760 Great quarter, No, hey, Kelly, talk to us about it. 0:12:50.840 --> 0:12:50.920 No. 0:12:51.000 --> 0:12:52.599 I wish the courage. 0:12:52.240 --> 0:12:55.120 To be in the market right now. What's it take 0:12:55.160 --> 0:12:57.880 to get in the market today, That's the heart of 0:12:57.920 --> 0:12:58.319 the matter. 0:12:59.640 --> 0:13:01.840 I think it takes a strong stomach, but look, you 0:13:01.960 --> 0:13:05.120 have to do it. You can't predict where the bullmarket is, 0:13:05.240 --> 0:13:07.440 especially a bull market that's been driven by momentum and 0:13:07.480 --> 0:13:09.760 sentiment for most of this year. You know, we keep 0:13:09.760 --> 0:13:12.800 reminding people that things feel uncomfortable. Obviously, there are a 0:13:12.880 --> 0:13:15.840 lot of catalysts to consider at this moment. But as 0:13:15.920 --> 0:13:18.120 rake cuts come, you're going to be you're you will 0:13:18.120 --> 0:13:20.560 be paid less and less on cash. So cash management 0:13:21.080 --> 0:13:23.280 is key as we head into the end of the year. 0:13:23.440 --> 0:13:27.320 And look, nobody ultimately knows where this bull market heads. 0:13:27.400 --> 0:13:30.360 And you know, we could still be missing a lot 0:13:30.440 --> 0:13:33.360 of You could still be missing a lot of upside here, 0:13:33.480 --> 0:13:35.880 especially from those unloved sectors of the market that are 0:13:35.920 --> 0:13:39.320 more value oriented that we've seen shine over the past 0:13:39.360 --> 0:13:41.200 month or so with this rake cut rotation. 0:13:41.600 --> 0:13:43.679 Kelly, Thank you so much, Kelly Cosh for the west 0:13:43.720 --> 0:13:45.200 to management. Stay with us. 0:13:45.440 --> 0:13:55.720 More from Bloomberg Surveillance coming up after this. 0:13:55.720 --> 0:13:59.560 This is the Bloomberg Surveillance podcast. Listen live each weekday 0:13:59.600 --> 0:14:03.160 starting seven am Eastern on Applecarplay and Android Auto with 0:14:03.240 --> 0:14:06.240 the Bloomberg Business app. You can also listen live on 0:14:06.320 --> 0:14:10.000 Amazon Alexa from our flagship New York station. Just Say 0:14:10.120 --> 0:14:12.320 Alexa play Bloomberg eleven thirty. 0:14:12.720 --> 0:14:17.160 This is well timed, to say the least. Randy Schummer's 0:14:17.200 --> 0:14:19.600 with us, who's been doing this a while, Vice chairch 0:14:19.640 --> 0:14:24.520 Churchill Asset Management and also chief investment strategists. Oh, chief 0:14:24.600 --> 0:14:30.120 investment strategists. Should my grandmother have private credit in our 0:14:30.200 --> 0:14:31.000 four oh one k? 0:14:31.640 --> 0:14:32.160 Look? 0:14:32.560 --> 0:14:35.120 Look at the rest of our investors. We have five 0:14:35.280 --> 0:14:40.640 million teachers through the TIAA retirement program, including my brother 0:14:40.680 --> 0:14:44.280 and sister in law, who every Thanksgiving ask about private credit, 0:14:44.400 --> 0:14:46.520 how how their portfolio is doing? 0:14:46.600 --> 0:14:46.760 Right? 0:14:46.800 --> 0:14:50.080 So you're in good company. Look what's interesting now, particularly 0:14:50.080 --> 0:14:52.160 my new role, is we're focused on one of the 0:14:52.160 --> 0:14:55.120 fastest growing channels out there, which is private wealth. What 0:14:55.240 --> 0:14:56.000 is private wealth? 0:14:56.080 --> 0:14:56.280 Right? 0:14:56.440 --> 0:15:00.160 Private wealth is pretty much everyone we all have of 0:15:00.560 --> 0:15:03.360 private wealth. We all are looking for yield and we're 0:15:03.400 --> 0:15:06.440 looking for income. You know, I'm at a softball game 0:15:06.560 --> 0:15:09.280 with my daughter watching your play. Somebody comes up and 0:15:09.320 --> 0:15:11.160 he says, Hey, I think I heard you on Bloomberg 0:15:11.240 --> 0:15:13.600 last time. With those guys, you seem pretty smart. How 0:15:13.600 --> 0:15:16.520 do I get into this assay class? That is what 0:15:16.720 --> 0:15:19.360 a lot of people are thinking about, particularly when you 0:15:19.400 --> 0:15:22.400 look at the sixty forty model, which you guys are 0:15:22.440 --> 0:15:26.320 experts on, But what's happening is the alternative model, which 0:15:26.360 --> 0:15:31.240 is including ten twenty thirty percent of non correlated assets 0:15:31.240 --> 0:15:34.600 that have longer yield less correlation, is getting a lot 0:15:34.640 --> 0:15:36.880 more action right now. And I haven't talked to you 0:15:36.960 --> 0:15:39.920 about this during most of our programming, but half of 0:15:39.960 --> 0:15:42.920 our committed capital is going to private equity and junior capital. 0:15:43.000 --> 0:15:47.160 Think about that. So we have probably our fastest growing 0:15:47.200 --> 0:15:50.400 products right now in private equity because the yields are better. 0:15:50.880 --> 0:15:54.640 And in the current environment when gps are trying to 0:15:54.680 --> 0:15:58.080 get more liquidity because the exits are slower, they're looking 0:15:58.120 --> 0:16:00.920 for more products that can help them get liquided, not 0:16:01.040 --> 0:16:03.400 just for them but for their LPs as well. So 0:16:03.520 --> 0:16:06.440 exits are a little slow, but for the best private 0:16:06.440 --> 0:16:09.640 equity firms, actually fundraising is pretty good. So you know, 0:16:09.680 --> 0:16:11.680 I like to come every morning with you with a 0:16:11.880 --> 0:16:15.800 fun fact. Fun fact for us, Our gps that have 0:16:15.840 --> 0:16:19.040 been raising money this year in new funds have all 0:16:19.360 --> 0:16:22.360 hit their hard caps. What does that mean? You have 0:16:22.400 --> 0:16:24.600 a target cap of funds you want to raise five 0:16:24.640 --> 0:16:27.000 hundred million billion, whatever it is, and then you have 0:16:27.040 --> 0:16:28.880 a hard cap above which you're not going to go 0:16:28.920 --> 0:16:32.200 because you don't want to dilute your existing investors. They've 0:16:32.240 --> 0:16:35.000 all hit their hard caps. That's different than the news 0:16:35.040 --> 0:16:39.200 you're hearing generally outside of Bloomberg about fundraising because people say, oh, 0:16:39.240 --> 0:16:40.920 fundraising is slow, not for the best. 0:16:41.280 --> 0:16:44.760 All right, So I'm on your distributional list. I get 0:16:44.880 --> 0:16:48.200 notes from you guys. You're all over the world. What 0:16:48.240 --> 0:16:49.960 are you doing when you go to Asia, when you 0:16:50.000 --> 0:16:51.640 go to the Middle East, when you go to the Europe? 0:16:51.680 --> 0:16:55.000 Are you looking for capital? Are you looking for deals? 0:16:55.360 --> 0:16:57.640 So doing these days in my new role, but even 0:16:57.760 --> 0:16:59.320 you know, when you can think of think of me as. 0:16:59.240 --> 0:17:03.240 Likeocus on the private wealth site, private wealthments, and. 0:17:03.280 --> 0:17:06.640 You know, we obviously have institutional clients. But the key 0:17:06.640 --> 0:17:08.800 to my friend Jess larsenal give him a tip of 0:17:08.800 --> 0:17:11.520 the hat, you know, over at Briarcliffe says that beta 0:17:11.640 --> 0:17:16.439 for private capital is performance. Alpha is education, because you 0:17:16.520 --> 0:17:20.320 need to explain to investors what this private credit, private 0:17:20.359 --> 0:17:23.359 capital opportunity really is. You guys have been helping me. 0:17:23.400 --> 0:17:25.919 Are so so grateful for that over the last several years, 0:17:26.080 --> 0:17:29.440 getting the message out, getting the gospel of private capital out. 0:17:29.560 --> 0:17:31.440 But what it means is that how do I get 0:17:31.560 --> 0:17:35.040 value out of an ill liquid asset class? What is 0:17:35.080 --> 0:17:36.960 the benefit to me if I can't sell? 0:17:37.160 --> 0:17:38.560 What do you think benefits. 0:17:39.640 --> 0:17:43.280 Correct? And the answer is less correlation when markets trade down, 0:17:43.680 --> 0:17:47.720 and more consistency and premium income when when rates go down, 0:17:47.760 --> 0:17:50.200 for example. So we're going to see some interesting turns 0:17:50.200 --> 0:17:52.960 over the next few months and next year as rates 0:17:53.040 --> 0:17:53.800 start to come down. 0:17:54.280 --> 0:17:56.280 You know, I got to get this question, and we're 0:17:56.280 --> 0:17:58.040 going to have to run here on an incredible FED day. 0:17:58.359 --> 0:18:00.600 But Randy, to me, what's a pard of the matter 0:18:00.680 --> 0:18:02.320 here is the big boys are going to come in. 0:18:02.520 --> 0:18:05.200 Churchill can manage its story, fine, I get it, I 0:18:05.320 --> 0:18:07.440 love it. But the big boys are going to show 0:18:07.520 --> 0:18:10.960 up in private equity and particularly conservative private credit where 0:18:11.000 --> 0:18:13.760 you can make a coupon blah blah blah. What's going 0:18:13.840 --> 0:18:17.840 to happen when Blackrock and the others send a wall 0:18:18.160 --> 0:18:21.160 of money right into this environment? 0:18:21.400 --> 0:18:24.720 So you know that are the way we do deals 0:18:24.880 --> 0:18:27.080 is that we're an investor in the GPS. We're an 0:18:27.240 --> 0:18:31.280 LP actually in four hundred roughly GP funds. So we're 0:18:31.320 --> 0:18:35.320 getting the best assets from those investors that we've already 0:18:35.400 --> 0:18:40.520 pre credentialed. We've already pre qualified. Portfolio quality is destiny 0:18:40.600 --> 0:18:43.680 in asset management. If your portfolio put if your portfolio 0:18:43.800 --> 0:18:46.359 is hied to high quality, then you are going to 0:18:46.400 --> 0:18:48.920 be able to satisfy the needs of your investors. In 0:18:49.160 --> 0:18:50.720 order for it to be high quality, you have to 0:18:50.760 --> 0:18:51.480 be super selected. 0:18:51.560 --> 0:18:54.520 How is our listeners and viewers going to do a 0:18:54.680 --> 0:18:59.600 credit analysis and quality analysis of the ginormous huge bank 0:19:00.160 --> 0:19:04.119 either Park Avenue or Downtown West Street ETF fund in 0:19:04.200 --> 0:19:04.840 their retirement. 0:19:04.960 --> 0:19:07.720 The beauty of retail investing is, if you're investing in 0:19:08.600 --> 0:19:10.720 our funds, you're investing in the same funds that the 0:19:11.200 --> 0:19:15.040 ginormous sovereign wealth funds, including our parent company, Trillion Dollar, 0:19:15.119 --> 0:19:17.320 TA and Euveen are investing in same deals. 0:19:19.920 --> 0:19:20.840 Are you? 0:19:21.960 --> 0:19:23.199 Are you in triple leverage? 0:19:23.200 --> 0:19:25.359 I got to take a Chase Man, hadn't bank credit 0:19:25.440 --> 0:19:27.160 training and going into private credit. 0:19:27.240 --> 0:19:28.240 You do that again? 0:19:28.840 --> 0:19:31.840 What was it like buying your first fancy white shirt 0:19:31.960 --> 0:19:34.520 and blue suit to do the folks? This is what 0:19:34.680 --> 0:19:37.639 Sweeney did. Was like gospel back then. It was like 0:19:37.720 --> 0:19:40.000 going to State department. You did private. 0:19:40.040 --> 0:19:41.560 We all came out of we all came out of 0:19:41.680 --> 0:19:43.760 NBA programs and they said, get what you've learned. 0:19:43.920 --> 0:19:45.760 Now we're going to tea. Now we're going to. 0:19:45.720 --> 0:19:46.440 Teach you how to do it. 0:19:46.560 --> 0:19:48.160 Was very good, by the way, he was very good. 0:19:48.440 --> 0:19:50.440 Well, Sir Randy Schummer, thank you so much. 0:19:50.520 --> 0:19:53.399 With Paul Sweeney looking down a whole new environment with 0:19:53.520 --> 0:19:55.399 private credit and private equity. 0:19:55.640 --> 0:19:56.239 Stay with us. 0:19:56.560 --> 0:19:59.639 More from Bloomberg Surveillance coming up after this. 0:20:07.200 --> 0:20:11.040 This is the Bloomberg Surveillance podcast. Listen live each weekdays. 0:20:11.040 --> 0:20:15.000 Were sitting where this is, Andrew Lloyd allenhursts that was 0:20:15.040 --> 0:20:16.000 City Bank, here. 0:20:17.800 --> 0:20:19.560 Circumstances at the table. 0:20:21.600 --> 0:20:24.120 I was trying to go back to the nineteen eighties 0:20:24.280 --> 0:20:28.440 and Wayne Angel and some of the fiery debates of monetorism. 0:20:28.960 --> 0:20:30.840 We've never seen this, have we end. 0:20:31.400 --> 0:20:32.680 It's going to be a big debate today. 0:20:32.720 --> 0:20:36.040 I think about not just what they should do at 0:20:36.080 --> 0:20:38.000 this meeting, although at this meeting we could have a 0:20:38.040 --> 0:20:41.080 couple of descents, but also where policies should be going, 0:20:41.119 --> 0:20:43.760 where the neutral rate is, with the balance of risks is, 0:20:43.920 --> 0:20:45.800 so every everything is on the table at this meeting. 0:20:45.880 --> 0:20:49.680 Paul Donovan at UBS, a student of the British process, said, 0:20:49.720 --> 0:20:51.960 we're becoming like the Bank of England, are we? 0:20:52.880 --> 0:20:54.760 It feels a little bit that way, where you have 0:20:55.000 --> 0:20:57.760 just this big divergence between some FED officials who didn't 0:20:57.760 --> 0:20:59.640 want to cut rates at all this year, other FED 0:20:59.680 --> 0:21:02.400 official those who wanted to cut more aggressively and dissented. 0:21:02.600 --> 0:21:05.600 Back in July, we had Waller and Bowman with those 0:21:05.640 --> 0:21:07.760 twenty five basis point cut VIEWA. 0:21:08.520 --> 0:21:13.400