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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Affo card Playing and

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Speaker 1: broud Otto with the Bloomberg Business app. Listen on demand

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Speaker 1: wherever you get your podcasts, or watch us live on YouTube.

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Speaker 2: You're a confident guy, John.

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Speaker 3: The consumer confidence numbers just coming out from a conference board,

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Speaker 3: man spot right on the forecast came in at one

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Speaker 3: fourteen point eight. That was right in line with expectations,

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Speaker 3: and notably it was a lot higher than last month,

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Speaker 3: which was revised down to one zero eight.

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Speaker 2: So nice pick up there.

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Speaker 3: Let's break it down with somebody who kind of knows

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Speaker 3: what's happening here, Dana Peterson, chief economist at the conference Board.

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Speaker 3: It joins us via Zoom Data. It looks like a

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Speaker 3: solid number. Put it in context for.

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Speaker 4: Us, absolutely, we have the highest reading on consumer confidence

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Speaker 4: in two years. A lot of it was led by

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Speaker 4: the present situation where consumers are feeling good about their jobs,

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Speaker 4: they're feeling good about the business situation, but also consumers

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Speaker 4: are thinking that maybe we won't have a recession, and

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Speaker 4: that also contributed to expectations which were above that threshold

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Speaker 4: that usually signals or session.

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Speaker 5: Yeah, before you came on, Dana, we did the Joelt's

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Speaker 5: Job Opening survey, more evidence the labor market is just

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Speaker 5: cooking along. How much does that play into this?

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Speaker 4: We think it plays a huge role. Consumers continue to

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Speaker 4: say that the labor market is good. Even most of

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Speaker 4: last year they said the present situation was fine with

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Speaker 4: regards to the labor market. Many of them are working.

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Speaker 4: Companies are not letting people go because they're concerned about

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Speaker 4: labor shortages, and so that's been benefiting the consumer and

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Speaker 4: definitely supporting their finances and their incomes.

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Speaker 3: And Dan, it's interesting here we're getting you know, as

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Speaker 3: interest rates come down, Like just take the mortgage rate.

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Speaker 3: Mortgage rates are coming down off their peak. They are

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Speaker 3: still a lot higher than probably people would like though,

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Speaker 3: but everybody's.

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Speaker 2: Got a job.

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Speaker 3: But once one, where are you looking at this economy

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Speaker 3: to get a sense of really where it is and

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Speaker 3: where it might be going here?

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Speaker 4: Sure, So, I mean you have to look at the

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Speaker 4: economy and look under the hood. So they're definitely areas

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Speaker 4: of weakness. The housing market is still pretty weak as

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Speaker 4: mortgage rates have come off, but there's still much higher,

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Speaker 4: almost double what we saw a pre pandemic or even

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Speaker 4: during the worst of the pandemic. Businesses are not investing

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Speaker 4: that much, and we don't think government is going to

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Speaker 4: be as big of a stimulator. But when you look

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Speaker 4: at consumers, many of them are working. As we said,

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Speaker 4: their real incomes are rising as inflation is falling, and

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Speaker 4: so that's definitely propping up spending. But the key issue

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Speaker 4: is can they continue to do so, and we're not

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Speaker 4: sure about that given the amount of debt that's being

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Speaker 4: piled up right now.

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Speaker 5: Okay, and these numbers also to some extent, because they

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Speaker 5: are good numbers, might actually be inflationary. You did mention

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Speaker 5: consumer spending.

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Speaker 4: Right, Well, the interesting thing is that in the right ends,

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Speaker 4: consumers continue to complain about inflation and prices, so the

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Speaker 4: price level is high even though inflation prices aren't rising

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Speaker 4: as quickly as they were. But the good news is

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Speaker 4: that inflation expectations continue to fall in our measure, and

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Speaker 4: that's a signal that consumers are thinking that inflation is

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Speaker 4: going to continue to decline, and so it might not

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Speaker 4: be inflationary. Despite the fact that we have seen some

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Speaker 4: pretty strong consumption, especially in the second half of last

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Speaker 4: year and in the last few months of last year.

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Speaker 5: Can you explain why those inflation expectations are important? I mean,

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Speaker 5: do they tend to be sort of self fulfilling prophecies?

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Speaker 4: Well, it can be. If inflation expectations are too high,

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Speaker 4: then people say, well, you know, I'm just not going

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Speaker 4: to spat and because I can't afford it, and I

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Speaker 4: probably won't be able to afford things in the future.

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Speaker 6: So with the.

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Speaker 4: Expectations falling, that means consumers are thinking, oh, I'm going

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Speaker 4: to get some relief later on. So that means I

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Speaker 4: don't have to put my life on hold while I

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Speaker 4: watch prices rise even faster.

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Speaker 3: So, Dana at the conference board, are you guys thinking

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Speaker 3: there's going to be a recession in twenty twenty four

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Speaker 3: or or not?

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Speaker 2: How do you think about that?

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Speaker 4: Well, we do think the likelihood of a soft landing

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Speaker 4: has definitely increased, but we're still there's still risks out

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Speaker 4: there that you could have a recession. It's probably going

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Speaker 4: to be short, it's probably going to be shallow. Why

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Speaker 4: do we think that? Again, consumers do no longer have

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Speaker 4: the massive supports from the stimulus checks. Also, many consumers

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Speaker 4: are financing their purchases with debt. At some point that's

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Speaker 4: going to come due and they have to pay it back.

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Speaker 4: We also think that some businesses may come under pressure

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Speaker 4: and start letting people go, and that will definitely put

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Speaker 4: a debt in confidence and also spending. But the key

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Speaker 4: thing is the labor market. If the labor market doesn't

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Speaker 4: weaken much further, then you're probably going to see people

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Speaker 4: continue to spend and we'll have that soft landing that

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Speaker 4: the fet is hoping for.

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Speaker 5: Are all consumers created equal or do you break this

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Speaker 5: down into certain groups geographically or income wise?

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Speaker 4: Yes, we do, and in fact every income group, with

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Speaker 4: the exception of the wealthiest group, we're more optimistic in January,

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Speaker 4: so that's definitely good news. Not sure what's going on

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Speaker 4: with the wealthier folks spically, but the thing is that

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Speaker 4: for the most part, consumers expect interest rates to be

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Speaker 4: lower and they expect the stock market to be higher

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Speaker 4: going forward. So you know, the folks who tend to

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Speaker 4: have stocks are the wealthier folks. But the point is

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Speaker 4: that every age group was feeling better in the month,

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Speaker 4: so for the most part, consumers are much more optimistic

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Speaker 4: now than they were a few months ago.

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Speaker 5: Can I just real quick the political implications, What does

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Speaker 5: it mean for a Joe Biden presidency.

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Speaker 4: Well, I will say the election is months away, and

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Speaker 4: that's kind of like an eternity right in terms of

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Speaker 4: political terms. But you know, the key thing is, you know,

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Speaker 4: it's probably gonna be domestic issues and things like the

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Speaker 4: border and spending that may cause consumers to come out

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Speaker 4: there and vote one way or the other. But certainly,

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Speaker 4: if you know, the economy does take a bit of

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Speaker 4: a swoon, we think it's going to be in the

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Speaker 4: middle of this year and by the time we get

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Speaker 4: to the election season, the economy should be recovering. And

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Speaker 4: that's that's good for either candidate.

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Speaker 1: Really.

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Speaker 3: All right, Dan, I thank you so much. We appreciate that.

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Speaker 3: Dan Peterson at the conference board.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple car Play and

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Speaker 1: Android Auto with the Bloomberg Business app. You can also

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Speaker 1: listen live on Amazon Alexa from our flagship New York

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Speaker 1: station just say Alexa, playing Bloomberg eleven thirty.

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Speaker 3: In addition to all the economic data we have this week,

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Speaker 3: in addition to all the earnings we have this week

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Speaker 3: from some big tech companies, we also have a FEDER

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Speaker 3: Reserve meeting tomorrow. I think I saw Michael Barr, I

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Speaker 3: mean Michael McKee with his bag heading down to the

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Speaker 3: cellar station.

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Speaker 5: There's a Michael Barr on the FED too.

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Speaker 2: I know exactly we're all at the one you were thinking.

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Speaker 3: Of now, exactly, Bloomberg and tell Legence, Chief US Interest

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Speaker 3: Rates strategis Ira Jersey joins us from Princeton, New Jersey

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Speaker 3: via zoom So, Ira, I guess tomorrow. You know, obviously

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Speaker 3: the rate, any movement in the rates is not expected tomorrow.

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Speaker 3: What are you looking for in tomorrow's release and in

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Speaker 3: the commentary from FED Chairman J Powell.

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Speaker 7: Yeah, tomorrow is going to be a very busy day

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Speaker 7: for those of us in rates land. We not only

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Speaker 7: have that FED meeting, but also the quarterly refunding announcement

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Speaker 7: from the Treasury Department in the morning before that. So

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Speaker 7: at the Fed, you know, we're going to be looking

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Speaker 7: at listening for nuance. I think the statement probably doesn't

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Speaker 7: change very much. But Jay Powell, I think will probably

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Speaker 7: you know, need to guide the market as to whether

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Speaker 7: or not they think there's going to be a cut

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Speaker 7: in March or not. He was going to probably say

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Speaker 7: every meeting is live, but at the same time, you know,

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Speaker 7: some meetings are more alive than others. I would say so,

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Speaker 7: so I think that if the FED is thinking about

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Speaker 7: cutting in March, he really has to make that not

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Speaker 7: abundantly clear, but I think he has to make it

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Speaker 7: a little bit more clear that they're going to be

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Speaker 7: going to be cutting in March.

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Speaker 8: The other thing that.

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Speaker 7: I think that Jay to listen for for j Powell

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Speaker 7: is what's the path thereafter? So the market is not

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Speaker 7: pricing for what Governor Waller mentioned a week and a

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Speaker 7: half ago or so, which is we're not going to

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Speaker 7: necessarily go at every meeting.

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Speaker 8: We're going to go slow.

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Speaker 7: We might only cut three times this year. The market

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Speaker 7: doesn't believe that they're going to do that. The market

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Speaker 7: things that the FED going slow is cutting twenty five

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Speaker 7: basis points every meeting once they start, and so you

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Speaker 7: know it's going to be hard maybe to jaw bone that,

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Speaker 7: but I think Jay Powell will try to tomorrow.

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Speaker 5: What's the big worry at the FED some sort of

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Speaker 5: I don't know, Arthur Burns bumbled. You cut now and

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Speaker 5: then inflation comes roaring back and you look like a moron.

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Speaker 8: I think that's part of it.

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Speaker 7: I think that the other issue that the Fed has

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Speaker 7: is they're trying as they try to calibrate the Fed

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Speaker 7: Fund rate is there's a feeling among a lot of

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Speaker 7: economists and I think a lot of people the Federal

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Speaker 7: Reserve that as inflation comes down, you have the real

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Speaker 7: Fed fund rates of the Fed funds rate after adjusting

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Speaker 7: for inflation, continues to rise, and that that will be

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Speaker 7: too restrictive and tighten financial conditions. But I think the

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Speaker 7: bigger issue that the Fed has right now is that

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Speaker 7: financial conditions, instead of being tighter, even though that real

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Speaker 7: Fed fund rate has been going up, they've actually been easing.

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Speaker 7: So you have credit spreads that are very tight. You

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Speaker 7: have consumer lending rates that, while they're much higher than

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Speaker 7: they were, they've come down significantly from their peak. And

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Speaker 7: in large part that's because the market is expecting the

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Speaker 7: Federal Reserve to cut interest rates very aggressively starting in

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Speaker 7: May and then continuing to cut into twenty twenty five.

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Speaker 7: And that's adjusted a lot of the different borrowing rates

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Speaker 7: and a lot of the other things that go into

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Speaker 7: different financial conditions measures. And because of that, that's one

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Speaker 7: reason why I think that the Fed wants to say, Okay,

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Speaker 7: we're going to go slow because they don't want to

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Speaker 7: ease financial conditions even more and have another inflationary impulse.

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Speaker 8: So, like you said, John, like.

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Speaker 7: That's really the fear that the FED has is that

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Speaker 7: they might be the cause of yet more inflation in

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Speaker 7: the future and that the job's not done. And you're

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Speaker 7: going to hear that again, the job's not quite done,

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Speaker 7: but we're happy with the progress made so far. That's

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Speaker 7: that's going to be probably the opening line from Jay

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Speaker 7: Powell when he talks about monetary policy and inflation.

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Speaker 3: Hey, Iriti, earlier this morning, we had a cloudi assam

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Speaker 3: on some consulting and formerly the Fed. She says, the

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Speaker 3: Fed's already too late. They should have already started cutting rates.

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Speaker 3: Is that widely held out there? How do you think

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Speaker 3: about that?

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Speaker 7: Yeah, there were some people who, certainly and some investors

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Speaker 7: that think that they should be just because the economy

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Speaker 7: has slowed significantly, and you have seen that, you know,

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Speaker 7: that gap widened between inflation and the FED fundt rate.

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Speaker 7: But then there's a whole slew of others who look

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Speaker 7: at the real economy and look at what happened with

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Speaker 7: retail sales. You had the Jolts data that was just

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Speaker 7: out a couple of minutes ago that showed that job

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Speaker 7: openings actually increased in December.

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Speaker 8: The quick rate, though, kept on falling.

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Speaker 7: So I think that there was kind of a mixed

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Speaker 7: picture there in terms of the job market from that reading.

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Speaker 7: But the but nonetheless, the the economy seems to be

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Speaker 7: holding up decently right now. So so again, like if

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Speaker 7: if the Federal Reserve is behind the curve, as Missam suggested,

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Speaker 7: h then you know, certainly we don't see that in

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Speaker 7: the hard data. We do see it in other things

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Speaker 7: like some of the some of the survey data. But again,

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Speaker 7: like you just had on data from the UH from

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Speaker 7: the Conference Board, the Conference Board survey of consumer confidence

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Speaker 7: was decent today. So again there's all these mixed signals

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Speaker 7: right now. Mixed signals usually do lead to a turn

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Speaker 7: in the economy, but it's much slower this time than

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Speaker 7: you might have expected it during prior cycles. And I

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Speaker 7: think a large part of that is we still have

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Speaker 7: a big fiscal impulse rate.

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Speaker 8: We still have deficits that are.

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Speaker 7: Going to be approaching two trillion dollars this fiscal year

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Speaker 7: and over the next couple of fiscal years, so that

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Speaker 7: will keep the economy a little bit more robust than

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Speaker 7: it would be normally. And then secondly, you still have

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Speaker 7: consumers that don't have any lack of appetite to spend.

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Speaker 7: So I think that there's a lot of good things

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Speaker 7: still going on in the economy that are going to

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Speaker 7: delay I think a recession and a major downturn until

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Speaker 7: much later this year and maybe even into twenty twenty five.

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Speaker 5: All Right, you brought up fiscal iris, so let's talk

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Speaker 5: about the Treasury cut. What do they do yesterday? They

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Speaker 5: cut their quarterly borrowing estimate, which I mean to me,

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Speaker 5: on the surface, that sounds pretty good.

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Speaker 8: Yeah, so it's a good thing.

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Speaker 7: They cut it by a by about fifty five billion dollars.

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Speaker 7: The Treasury Department, what they do is they have a

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Speaker 7: forecast for a quarter ahead, and they almost always get

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Speaker 7: it at least a little bit wrong. Right, we all

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Speaker 7: don't forecast perfectly what's going to happen. So they cut

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Speaker 7: the borrowing estimate for this quarter primarily because it looks

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Speaker 7: like revenue has been coming in a little bit stronger.

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Speaker 7: Speaning tax revenue has been coming and a little bit

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Speaker 7: stronger than they anticipated. And spending has been you know

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Speaker 7: about about flat and the fact that so we can

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Speaker 7: spend more, Well that's maybe that's part of it, but

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Speaker 7: it does mean that deficits are running going to be

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Speaker 7: running a little bit lower than we initiatively anticipated.

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Speaker 8: It was pretty close to our estimates. We were actually

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Speaker 8: a little bit lower than that. We were one of

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Speaker 8: the lower people within the consensus.

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Speaker 7: A lot of people thought that they were going to

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Speaker 7: be around eight hundred billion dollars in net borrowing. We

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Speaker 7: thought it would be under closer to seven hundred. It

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Speaker 7: kind of came in the middle of that. So, yeah,

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Speaker 7: so that means that the Treasury Department probably won't issue

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Speaker 7: as many tea bills as we thought, but they still,

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Speaker 7: we think, will increase the amount of two year notes,

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Speaker 7: three year notes, all the way out to thirty year

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Speaker 7: debt issue a little bit more of that because right

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Speaker 7: now they're issuing a ton of tea bills compared to

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Speaker 7: how much they were issuing of other debt. And you know,

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Speaker 7: there's only so much appetite that's going to be out

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Speaker 7: there for short end paper, especially once the Federal Reserve

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Speaker 7: gets going and starts to start to lower interest rates, and.

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Speaker 3: I rich just you know, on these auctions remind us

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Speaker 3: again like who's buying this stuff?

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Speaker 7: So it's mostly domestic investment funds. When you look at

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Speaker 7: at at treasury auctions, like last week we had the

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Speaker 7: five year and the seven year, so you have investors

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Speaker 7: who are just saying, Okay, look we're not going to

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Speaker 7: buy the seven year. The seven year went terribly. Excuse me,

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Speaker 7: the five year went terribly, The seven year did okay.

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Speaker 7: Because I think people are getting preparing themselves for the

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Speaker 7: Federal Reserve cutting interest rates, and usually longer term debt

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Speaker 7: does better when the Fed's cutting interest rates. So you

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Speaker 7: have you know, people going out and buying that. Look,

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Speaker 7: savings is still high. There's still relatively high savings rates

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Speaker 7: compared to what we had, you know, a decade or

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Speaker 7: so ago, So there's still people that have money to

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Speaker 7: put to work. And with interest rates closer to four

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Speaker 7: percent instead of zero, treasuries are an attractive option instead

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Speaker 7: of buying maybe riskier assets that have the chance of

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Speaker 7: the fault. Maybe if revenues slip or profitability slips because

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Speaker 7: you think that there's going to be a recession, then

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Speaker 7: you rotate out of other fixed income instruments, into treasuries

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Speaker 7: and also just you know, put your incremental savings into

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Speaker 7: treasury securities.

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Speaker 5: All right, put on your politics hat, you guys in

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Speaker 5: the treasury markets, you must game all sorts of things,

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Speaker 5: like if there's something unexpectedly happens in the election that

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Speaker 5: you know your candidate doesn't win but the other guy does,

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Speaker 5: have you gained that what are all the different possibilities?

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Speaker 7: Yeah, it's interesting because, yeah, you know, the conventional wisdom

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Speaker 7: might be that if there's a Republican in the White

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Speaker 7: House in Congress, that maybe there'll be somewhat more fiscally responsible.

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Speaker 7: That actually, historically has not been the case. That typically

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Speaker 7: when you have one party that controls the White House

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Speaker 7: and both houses of Congress, deficits go up. Right, Democrats

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Speaker 7: spend more money, Republicans cut taxes, But both of those

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Speaker 7: have the same net effect of increasing budget deficits and

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Speaker 7: increasing the amount of treasury supply that needs to come out.

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Speaker 7: And quite frankly, you know, there's probably very little at

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Speaker 7: this point, over the next year or two that can

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Speaker 7: be done to quell the two trillion ish dollars of

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Speaker 7: deficit that's coming.

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Speaker 8: Regardless of who's in the White House. You know our expectation.

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Speaker 7: I think the most important thing that's going to come

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Speaker 7: out of this election is not even the fiscal stuff.

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Speaker 7: It's really who's going to be the next FED chair? Right,

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Speaker 7: if Joe Biden wins the presidency again, maybe J Powell

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Speaker 7: will be reappointed. I think that's pretty unlikely if Donald

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Speaker 7: Trump or another Republican were to win the White House,

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Speaker 7: that J Powell would wind up staying in a seat.

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Speaker 5: I mean, we have to remind everybody J Powell was

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Speaker 5: Donald Trump's pick, right.

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Speaker 7: And quite frankly, when that came out, I was pretty

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Speaker 7: surprised that Donald Trump picked him because J. Powell is

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Speaker 7: kind of a mainstream Federal Reserve governor was at the time,

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Speaker 7: I had expected Donald Trump to pick someone who would

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Speaker 7: be more definitively doubvish than that a mainstream economy or

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Speaker 7: mainstream person.

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Speaker 8: I can't call J. Powell an economists, but nonetheless, you know,

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Speaker 8: the next the.

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Speaker 7: Next FED chair might be the most important thing from

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Speaker 7: a treasury market and from a rates market point of

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Speaker 7: view that's going to come out of the election cycle.

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Speaker 7: So who do people say might be their pick for

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Speaker 7: for FED chair might be one of the more interesting

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Speaker 7: things that comes out of the election. If people are

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Speaker 7: askedt out of debate or in a town hall or

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Speaker 7: something like that, I would certainly be interested to know

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Speaker 7: is J. Powell likely to be reappointed or if not him,

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Speaker 7: then who else?

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Speaker 5: But I always thought, I mean, my conventional wisdom was that, yeah,

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Speaker 5: the president makes the pick on the advice of well

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Speaker 5: pretty much everybody on Wall Street, because if he gets

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Speaker 5: that wrong, you know, you can just kiss your you

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Speaker 5: know what, goodbye.

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Speaker 7: Yeah, but there are a number of people who I

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Speaker 7: think Wall Street would be okay with. But there's people

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Speaker 7: along the spectrum, right, Like, you know, if you chose

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Speaker 7: someone like Lyle Brainerd over Powell, then you know, you

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Speaker 7: get a slightly different outlook on there, you know, Governor Waller.

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Speaker 8: Versus versus J.

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Speaker 7: Powell again, like you'd have just some nuanced differences in

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Speaker 7: the policy outcomes that you might actually get just because

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Speaker 7: those those people have different opinions. So you know, if

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Speaker 7: you wind up with you go through a whole slew

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Speaker 7: of former governors or former Fed president, you know, Federal

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Speaker 7: Federal Reserve, regional FED Bank chairs like you know, James

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Speaker 7: Bullard for examples out there, and he might have even

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Speaker 7: a different take and uh, you know, might be more

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Speaker 7: hawkish or dubvish and some.

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Speaker 8: Of the other potential picks.

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Speaker 7: So but but and I think all of those, if

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Speaker 7: they're known quantities could probably Wall Street would probably be

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Speaker 7: okay with them. Uh, it's just a matter of you know,

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Speaker 7: what what price level you get. If you pick a

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Speaker 7: more hawkish person, then maybe, you know, stocks go down.

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Speaker 7: But it's not that the market's not going to function,

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Speaker 7: and it's not that you know, the treasury market is

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Speaker 7: suddenly going to implode because you picked you know, one

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Speaker 7: person who was more more or less a duvish mainstream

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Speaker 7: person or a hawkish mainstream person.

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Speaker 3: All right, Ira, great stuff has always really appreciate you

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Speaker 3: checking in with us. Ira Jersey, chief US interest rate

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Speaker 3: strategist for Bloomberg Intelligence.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us Live

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Speaker 1: weekdays at ten am Eastern on Apple Car playing Android

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Speaker 1: Otto with the Bloomberg Business app. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch US live on YouTube.

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Speaker 2: Are ups.

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Speaker 3: Had some I know, just some disappointments, as Nora was

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Speaker 3: just reporting, laying off some people. Ben Elgin, Bloomberg News

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Speaker 3: has got a great story today, FedEx UPS struggle on

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Speaker 3: ev transition as delivery demand grows, costs, the electric trucks

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Speaker 3: and charging complications are hampering progress. I didn't even think

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Speaker 3: about that, Like, they got to go electra too, And

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Speaker 3: if they can't get the trucks and all that kind

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Speaker 3: of stuff, how they're going to get that package to

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Speaker 3: me in fifteen minutes.

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Speaker 5: They're going electric because there it's good for the environment,

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Speaker 5: or they're trying to save money.

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Speaker 8: I don't know.

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Speaker 3: Let's check in with somebody who actually we pay this

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Speaker 3: guy to think about this stuff. Lee Clascal, Senior Transport

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Speaker 3: Logistics and Shipping Animals, is one of the best on

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Speaker 3: the street. We got them at Bloomberg Intelligencies down from

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Speaker 3: our Princeton bureau. Hey, Lee, first, let's just start with

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Speaker 3: the news at UPS. I love UPS. I love the

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Speaker 3: brown trucks. They deliver this stuff great.

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Speaker 2: What's going on? The stock hasn't done much in a while.

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Speaker 3: And I know they've got some union issues which they

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Speaker 3: resolved earlier, and now they're laying off some people and

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Speaker 3: forcing everybody to come back to work. What's happening in

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Speaker 3: our good friends at UPS?

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Speaker 9: Yeah, I mean they're really just reeling from the impact

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Speaker 9: from the labor negotiations they had last year. So running

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Speaker 9: up ahead of those negotiations, a lot of shippers were like,

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Speaker 9: you know something, I'm not going to use you, use

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Speaker 9: UPS because I might want to use one of their

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Speaker 9: competitors like FedEx or even the postal service, because I

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Speaker 9: don't know if my stuff is going to be able

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Speaker 9: to get where it needs to go on time. So

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Speaker 9: a lot of that diverted freight, you know, is kind

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Speaker 9: of deleveraging effect on the network, which really weighs on margins.

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Speaker 9: And then you know, they had the negotiations, they have

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Speaker 9: a contract in place, which is fantastic for UPS and

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Speaker 9: also for the teams stairs, you know, but a lot

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Speaker 9: of the cost the initial costs of that new contract

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Speaker 9: are in year one and so that's like a real

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Speaker 9: big hit to margins. That coupled with the fact it's

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Speaker 9: taking some time for them to win back some of

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Speaker 9: that share. You know, on today's earnings call, management noted

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Speaker 9: that they've won back about sixty percent of that share.

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Speaker 9: It's going to take time for them to get that

440
00:21:22,720 --> 00:21:23,760
Speaker 9: share back to where.

441
00:21:23,560 --> 00:21:24,119
Speaker 8: It needs to be.

442
00:21:24,320 --> 00:21:27,280
Speaker 9: And again, these are networks and when you're talking about

443
00:21:27,320 --> 00:21:30,520
Speaker 9: freight transportation. It's all about building density because the more

444
00:21:30,600 --> 00:21:33,280
Speaker 9: stuff you can deliver at the same time, you know,

445
00:21:33,359 --> 00:21:36,119
Speaker 9: the better the margins are. And that's what they're really

446
00:21:36,200 --> 00:21:40,119
Speaker 9: working through right now. And you know, and what I

447
00:21:40,160 --> 00:21:42,600
Speaker 9: thought was kind of one of the more interesting little

448
00:21:42,600 --> 00:21:44,680
Speaker 9: tidbits in the call this morning is that they think

449
00:21:44,720 --> 00:21:48,000
Speaker 9: that this year that the small package volume from an

450
00:21:48,000 --> 00:21:51,080
Speaker 9: industry standpoint, is only going to increase like one percent,

451
00:21:51,880 --> 00:21:55,639
Speaker 9: which to me I thought was a little pessimistic. But

452
00:21:55,720 --> 00:21:59,520
Speaker 9: you know, all in all, they're really dealing with tepid demand,

453
00:21:59,800 --> 00:22:03,480
Speaker 9: the dealing with rising costs, and you know, they're obviously

454
00:22:03,560 --> 00:22:06,880
Speaker 9: taking those costs pretty seriously. As you know you mentioned earlier,

455
00:22:07,119 --> 00:22:10,359
Speaker 9: they're they're laying off or planning the layoff or reduce

456
00:22:10,400 --> 00:22:13,199
Speaker 9: heads however nicely you want to say it, twelve thousand people.

457
00:22:13,880 --> 00:22:16,960
Speaker 9: And then also they're looking to get there. They're putting

458
00:22:17,040 --> 00:22:21,359
Speaker 9: their brokerage business, which is called Coyote, under a strategic review.

459
00:22:21,720 --> 00:22:25,760
Speaker 9: Coyote is the third largest freight broker out there. So

460
00:22:26,560 --> 00:22:30,200
Speaker 9: one of the largest publicly traded ones are c H.

461
00:22:30,280 --> 00:22:30,760
Speaker 8: Robinson.

462
00:22:31,080 --> 00:22:34,320
Speaker 9: People might not know that, might may know that name. Also,

463
00:22:34,520 --> 00:22:38,280
Speaker 9: RXO is another pure play brokerage as land Star. There's

464
00:22:38,320 --> 00:22:40,760
Speaker 9: a couple of private ones. A lot of large companies

465
00:22:41,400 --> 00:22:44,320
Speaker 9: like JBI Hunt have their own brokerage business in house.

466
00:22:44,440 --> 00:22:47,800
Speaker 5: You get sorry for a series of stupid questions, but

467
00:22:48,200 --> 00:22:51,000
Speaker 5: this is who you're talking to. What is a freight

468
00:22:52,200 --> 00:22:54,760
Speaker 5: what's their role on what do they do a freight brokerage?

469
00:22:55,240 --> 00:22:58,720
Speaker 9: So's they're pretty much get together buyers and sellers of freight.

470
00:22:58,840 --> 00:23:00,520
Speaker 9: So if you think about it, so if you're a

471
00:23:00,520 --> 00:23:02,520
Speaker 9: shipper and you have a load that you need to

472
00:23:02,520 --> 00:23:05,360
Speaker 9: get from point A to point B, you might use

473
00:23:05,400 --> 00:23:08,320
Speaker 9: a broker to find a truck to carry that load,

474
00:23:08,800 --> 00:23:12,120
Speaker 9: and the broker kind of makes a spread in between

475
00:23:12,359 --> 00:23:14,800
Speaker 9: what they're charging the shipper and what they're paying the

476
00:23:14,840 --> 00:23:18,000
Speaker 9: trucking company. What's happened is, you know, it's a very

477
00:23:18,000 --> 00:23:21,679
Speaker 9: cyclical business. There's there's, there's great highs and kind of

478
00:23:21,720 --> 00:23:25,320
Speaker 9: depressing loads, and margins can be very volatile during this.

479
00:23:25,640 --> 00:23:28,680
Speaker 5: So this this just a backup of this brokerage that

480
00:23:28,800 --> 00:23:31,159
Speaker 5: they own that they're now getting rid of. That you

481
00:23:31,200 --> 00:23:32,920
Speaker 5: could have gone to them and they could have picked

482
00:23:32,920 --> 00:23:36,400
Speaker 5: a shipper other than you know, the company that owns

483
00:23:36,440 --> 00:23:37,680
Speaker 5: them UPS.

484
00:23:39,000 --> 00:23:42,600
Speaker 9: Yeah, So you know, so UPS could potentially use its

485
00:23:42,600 --> 00:23:45,960
Speaker 9: own in house brokerage to move a trailer load of

486
00:23:46,000 --> 00:23:50,000
Speaker 9: freight between two of their sorting facilities. Or if you're

487
00:23:50,080 --> 00:23:53,239
Speaker 9: Walmart and you know you have an extra load that

488
00:23:53,280 --> 00:23:56,040
Speaker 9: you need to get from your DC to you know,

489
00:23:56,359 --> 00:23:59,800
Speaker 9: your Spring Lake Walmart. I don't think there's a Spring Walmart,

490
00:23:59,800 --> 00:24:05,280
Speaker 9: and you know you might you might use them because

491
00:24:05,600 --> 00:24:10,600
Speaker 9: either the carriers that you're contracted with don't have the capacity,

492
00:24:10,960 --> 00:24:13,200
Speaker 9: or you're trying to take advantage of cheap rates in

493
00:24:13,240 --> 00:24:16,280
Speaker 9: the spot market, and right now, truckload rates are extremely cheap.

494
00:24:16,520 --> 00:24:19,000
Speaker 9: They've been bouncing along the bottom for quite some time,

495
00:24:20,000 --> 00:24:23,199
Speaker 9: and so shippers might like to leverage that. You know,

496
00:24:23,480 --> 00:24:27,480
Speaker 9: intermodal is an example, So you know the intermodal space,

497
00:24:27,520 --> 00:24:30,359
Speaker 9: which is railroads. You know that's when you see like

498
00:24:30,680 --> 00:24:34,200
Speaker 9: two containers on top of a railroad. You know they're

499
00:24:34,200 --> 00:24:37,320
Speaker 9: facing increased competition because of the loose conditions that are

500
00:24:37,320 --> 00:24:40,280
Speaker 9: on the spot market, and a lot of those shippers

501
00:24:40,359 --> 00:24:43,480
Speaker 9: might use brokerage to try to find a load, I'm sorry,

502
00:24:43,520 --> 00:24:45,520
Speaker 9: try to find a carrier to carry their loads.

503
00:24:45,560 --> 00:24:47,760
Speaker 5: I think in there you it sounded like you just

504
00:24:47,760 --> 00:24:51,040
Speaker 5: said there was a freight recession or at least that for.

505
00:24:50,960 --> 00:24:51,520
Speaker 2: A long time.

506
00:24:51,600 --> 00:24:53,480
Speaker 9: Well there has been for about two years.

507
00:24:53,560 --> 00:24:55,040
Speaker 5: I mean, how severe is it right now?

508
00:24:56,880 --> 00:25:00,280
Speaker 9: You know, the way we look at it, we're probably

509
00:25:00,480 --> 00:25:04,159
Speaker 9: a little optimistic about twenty twenty four. Kind of a

510
00:25:04,200 --> 00:25:08,680
Speaker 9: glass half full and it's filled with a really good cabernet.

511
00:25:08,800 --> 00:25:12,919
Speaker 9: So's I'd say we're probably more optimistic than most.

512
00:25:13,600 --> 00:25:15,200
Speaker 8: You know, we've been saying that.

513
00:25:15,359 --> 00:25:18,639
Speaker 9: You know, we didn't feel that the economy necessarily had

514
00:25:18,680 --> 00:25:21,119
Speaker 9: to go into a regular recession. And just because you

515
00:25:21,200 --> 00:25:23,439
Speaker 9: go into a freight recession doesn't mean it's going to

516
00:25:23,520 --> 00:25:26,680
Speaker 9: lead into a regular recession. The freight recession is really

517
00:25:26,760 --> 00:25:29,199
Speaker 9: driven by a number of things. First and foremost is

518
00:25:29,480 --> 00:25:33,320
Speaker 9: they had really difficult comps during the pandemic. You know,

519
00:25:33,320 --> 00:25:36,080
Speaker 9: you were talking about trying to get a refrigerator. You know,

520
00:25:36,160 --> 00:25:39,199
Speaker 9: everything was just commed up during the pandemic, and so

521
00:25:39,400 --> 00:25:43,200
Speaker 9: capacity was in high demand, and the problem with getting

522
00:25:43,200 --> 00:25:47,119
Speaker 9: capacity was that there weren't enough workers to either be

523
00:25:47,240 --> 00:25:49,280
Speaker 9: in the trucks or be on the railroads or be

524
00:25:49,760 --> 00:25:52,280
Speaker 9: in the air freight area. So there was there was

525
00:25:52,280 --> 00:25:54,560
Speaker 9: a real issue there, and so we just saw like,

526
00:25:55,240 --> 00:25:57,840
Speaker 9: you know, a backup in demand and then all of

527
00:25:57,880 --> 00:26:00,919
Speaker 9: a sudden that demand got fulfilled because apply chain started

528
00:26:00,960 --> 00:26:03,399
Speaker 9: loosening up. Here we are today. You know, you have

529
00:26:04,240 --> 00:26:07,240
Speaker 9: moderating economic demand. You have you know, an ism and

530
00:26:07,280 --> 00:26:10,679
Speaker 9: negative territories, so you know that the manufacturing economy is

531
00:26:10,680 --> 00:26:13,879
Speaker 9: not great. You have some difficult comparison. So when we

532
00:26:13,920 --> 00:26:17,160
Speaker 9: look at railroads, for example, not to be all over

533
00:26:17,200 --> 00:26:19,560
Speaker 9: the place, but when you look at railroads, last year

534
00:26:19,640 --> 00:26:22,760
Speaker 9: was a fantastic year for Canadian grain. This year is

535
00:26:22,800 --> 00:26:25,159
Speaker 9: going to be a normalized crop. So that's that's a

536
00:26:25,200 --> 00:26:27,800
Speaker 9: decline in volumes that the railroads are going to have

537
00:26:27,840 --> 00:26:30,720
Speaker 9: to deal with. You know, railroads, a Canadian Pacific and

538
00:26:30,800 --> 00:26:35,160
Speaker 9: Canadian National automotive is expected to be strong this year,

539
00:26:35,240 --> 00:26:38,600
Speaker 9: continued for the railroads, but coal is probably gonna be

540
00:26:38,600 --> 00:26:41,760
Speaker 9: weak because the export markets are probably going to start

541
00:26:41,800 --> 00:26:44,920
Speaker 9: to cool and they have some really serious difficult comparisons.

542
00:26:45,160 --> 00:26:50,000
Speaker 9: And intermodal is really a crapshoot. You know, we're pretty

543
00:26:50,000 --> 00:26:53,639
Speaker 9: optimistic about the domestic demand, which is more truckload competitive,

544
00:26:53,840 --> 00:26:55,960
Speaker 9: just because the rails have gotten a lot better and

545
00:26:56,080 --> 00:26:59,440
Speaker 9: improving their their overall service. So we started talking about

546
00:26:59,520 --> 00:27:00,760
Speaker 9: ups somehow, now we.

547
00:27:00,800 --> 00:27:02,280
Speaker 2: Got all across logistics.

548
00:27:02,440 --> 00:27:05,359
Speaker 3: See that's because Lee covers the railroads, he covers the

549
00:27:05,359 --> 00:27:08,960
Speaker 3: trucking companies, he covers the logistics companies, he covers the

550
00:27:09,320 --> 00:27:12,520
Speaker 3: you know, the shipping companies and big ships on the season.

551
00:27:12,640 --> 00:27:14,320
Speaker 2: He covers a lot. So we just call them basically

552
00:27:14,760 --> 00:27:15,680
Speaker 2: logistics analysts.

553
00:27:15,720 --> 00:27:17,560
Speaker 3: I mean, if you've got to get a boxer point

554
00:27:17,560 --> 00:27:19,000
Speaker 3: A to point B and you want to know how

555
00:27:19,040 --> 00:27:21,360
Speaker 3: to do, you talk to Lee Clasgow.

556
00:27:21,960 --> 00:27:25,840
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

557
00:27:25,920 --> 00:27:28,960
Speaker 1: weekdays at ten am Eastern on Apple car Play and

558
00:27:28,960 --> 00:27:31,840
Speaker 1: Android Auto with the Bloomberg Business App. You can also

559
00:27:31,960 --> 00:27:35,480
Speaker 1: listen live on Amazon Alexa from our flagship New York station,

560
00:27:35,840 --> 00:27:39,800
Speaker 1: just say Alexa playing Bloomberg eleven thirty.

561
00:27:40,160 --> 00:27:41,920
Speaker 3: I don't know what to do with this market because

562
00:27:41,920 --> 00:27:44,480
Speaker 3: we had it just ripped there in the last couple

563
00:27:44,560 --> 00:27:47,600
Speaker 3: of months of twenty twenty three on that fed pivot.

564
00:27:48,040 --> 00:27:51,200
Speaker 3: We've had some pretty solid economic data so far this year.

565
00:27:51,320 --> 00:27:53,880
Speaker 3: The earnings okay, we'll see with some of the big

566
00:27:53,920 --> 00:27:55,760
Speaker 3: tech companies this week.

567
00:27:56,560 --> 00:27:57,640
Speaker 2: But the question is where do we.

568
00:27:57,600 --> 00:27:59,159
Speaker 3: Go in twenty twenty four? So let's check in with

569
00:27:59,160 --> 00:28:02,000
Speaker 3: somebody who does this for a living. Nimbrit Kang Joints

570
00:28:02,000 --> 00:28:04,120
Speaker 3: as she is the chief investment officer at north Star

571
00:28:04,640 --> 00:28:08,280
Speaker 3: Asset Managerment joinings via zoom from the town of.

572
00:28:08,200 --> 00:28:11,640
Speaker 2: Brotherly Love, Philadelphia, PA. I'm a huge fan of Philly, Nimber,

573
00:28:11,720 --> 00:28:13,200
Speaker 2: thanks so much for joining us here.

574
00:28:13,359 --> 00:28:16,040
Speaker 3: Again, I don't think a lot of people kind of

575
00:28:16,080 --> 00:28:20,480
Speaker 3: saw that move higher in stocks in bond prices at

576
00:28:20,480 --> 00:28:24,160
Speaker 3: the end of last year. You know, maybe some people

577
00:28:24,200 --> 00:28:26,160
Speaker 3: thought that pulled some of the performance from twenty twenty

578
00:28:26,160 --> 00:28:27,400
Speaker 3: four a little bit forward here.

579
00:28:27,800 --> 00:28:29,800
Speaker 2: So as we finished out a pretty solid.

580
00:28:29,520 --> 00:28:32,440
Speaker 3: January here, Nimber, what are you telling your clients for

581
00:28:32,720 --> 00:28:33,520
Speaker 3: twenty twenty four.

582
00:28:35,640 --> 00:28:38,360
Speaker 10: Yeah, we tell our clients to focus on what they

583
00:28:38,440 --> 00:28:40,720
Speaker 10: know with a lot of certainty. You know, what we've

584
00:28:40,760 --> 00:28:44,120
Speaker 10: seen in the last two years, Paul, is a round

585
00:28:44,160 --> 00:28:46,560
Speaker 10: trip right. Last year was a pretty strong year for

586
00:28:46,600 --> 00:28:49,719
Speaker 10: the markets, but it's was on the heels of a

587
00:28:49,720 --> 00:28:52,760
Speaker 10: pretty dismal twenty twenty two. So we really did a

588
00:28:52,880 --> 00:28:56,320
Speaker 10: round trip here in the last two years. And you know,

589
00:28:56,360 --> 00:29:00,200
Speaker 10: when we think about broadly for our clients, we expect

590
00:29:00,280 --> 00:29:04,520
Speaker 10: to be in this era of heightened uncertainty and volatility

591
00:29:04,560 --> 00:29:08,040
Speaker 10: in the financial markets, we are coming to a reversal

592
00:29:08,120 --> 00:29:12,560
Speaker 10: of several big trends that have been in play for

593
00:29:12,920 --> 00:29:15,400
Speaker 10: a number of decades almost you know, the big one

594
00:29:15,440 --> 00:29:19,000
Speaker 10: is the monetary cycle reversing. So in this environment, we

595
00:29:19,160 --> 00:29:22,040
Speaker 10: just want our clients to remain focused on what they

596
00:29:22,120 --> 00:29:25,880
Speaker 10: know with a lot of certainty, which is understanding and

597
00:29:25,960 --> 00:29:29,120
Speaker 10: clearly communicating what their financial needs are going to be

598
00:29:29,600 --> 00:29:32,920
Speaker 10: over the next five ten years and then setting appropriate

599
00:29:32,960 --> 00:29:35,160
Speaker 10: strategic asset allocation based on that.

600
00:29:36,480 --> 00:29:40,760
Speaker 5: Okay, with a monetary cycle reversing. First of all, what's

601
00:29:40,840 --> 00:29:43,920
Speaker 5: your expectation for the FED? The meeting, the two day

602
00:29:43,960 --> 00:29:44,920
Speaker 5: meeting ends tomorrow.

603
00:29:47,440 --> 00:29:50,800
Speaker 11: You know, John, as much as I would like to

604
00:29:50,920 --> 00:29:54,000
Speaker 11: kind of speculate what is thing to be doing and

605
00:29:54,480 --> 00:29:57,840
Speaker 11: how exactly they're going to say, we take a little

606
00:29:57,840 --> 00:29:59,960
Speaker 11: bit of a longer term view, and we do think

607
00:30:00,040 --> 00:30:02,160
Speaker 11: there's an upward pressure on the rates, right.

608
00:30:02,520 --> 00:30:05,520
Speaker 10: I mean, we do have record deficits going on, record

609
00:30:05,560 --> 00:30:08,680
Speaker 10: debt and at the same time our governments have to

610
00:30:08,720 --> 00:30:12,959
Speaker 10: grapple with some of these big societal ecological challenges. So

611
00:30:13,000 --> 00:30:17,400
Speaker 10: there's this continued upward pressure on spending, aging demographics. If

612
00:30:17,440 --> 00:30:19,720
Speaker 10: we take all of that into account, we do think

613
00:30:19,760 --> 00:30:21,720
Speaker 10: that you know, the ten year between the four or

614
00:30:21,800 --> 00:30:24,840
Speaker 10: five percent range is a more normalized kind of an

615
00:30:24,920 --> 00:30:28,840
Speaker 10: environment going forward. Now within that range, it fluctuates all

616
00:30:28,880 --> 00:30:31,960
Speaker 10: the time based on every single word out of the

617
00:30:32,400 --> 00:30:36,120
Speaker 10: bed about, you know, the speculation on what their next

618
00:30:36,200 --> 00:30:39,480
Speaker 10: move is going to be. Just in twenty twenty three,

619
00:30:39,520 --> 00:30:41,520
Speaker 10: I was looking at the data. The low point for

620
00:30:41,600 --> 00:30:43,880
Speaker 10: the ten year was a three to three and a

621
00:30:43,960 --> 00:30:45,600
Speaker 10: high point was five percent.

622
00:30:46,080 --> 00:30:47,640
Speaker 12: That's a big move.

623
00:30:47,560 --> 00:30:54,160
Speaker 10: For what's usually you know, a very stable asset class.

624
00:30:53,800 --> 00:30:58,120
Speaker 3: Right, yeah, it is. It's interesting And one of the

625
00:30:58,120 --> 00:31:01,640
Speaker 3: things I was thinking about, you know, putting a portfolio

626
00:31:01,680 --> 00:31:04,840
Speaker 3: together for twenty twenty four is on the fixed income side.

627
00:31:04,880 --> 00:31:08,560
Speaker 3: I was so surprised that the best performing fixed income

628
00:31:08,720 --> 00:31:13,440
Speaker 3: category in twenty twenty three was highyield bonds. How do

629
00:31:13,480 --> 00:31:16,480
Speaker 3: you think about high yield bonds in this environment where

630
00:31:16,480 --> 00:31:18,240
Speaker 3: it looks like we're going to rates coming down.

631
00:31:19,720 --> 00:31:23,239
Speaker 10: We take a little bit of a differentiated approach. So

632
00:31:23,280 --> 00:31:25,200
Speaker 10: on the credit side, we want to be in very

633
00:31:25,280 --> 00:31:29,200
Speaker 10: high quality bonds, you know, where basically there's a contractual

634
00:31:29,280 --> 00:31:32,600
Speaker 10: obligation to get the money back and we take more

635
00:31:32,680 --> 00:31:37,200
Speaker 10: off the credit or company risks really on the equity side.

636
00:31:37,320 --> 00:31:39,479
Speaker 10: So that's how really we think about it.

637
00:31:39,520 --> 00:31:40,440
Speaker 12: On the bond side.

638
00:31:40,480 --> 00:31:47,800
Speaker 10: We prefer to construct a very laddered portfolio, diversified across maturities,

639
00:31:48,080 --> 00:31:51,960
Speaker 10: but really in very high quality government guarantee debt.

640
00:31:52,240 --> 00:31:55,760
Speaker 5: Ooh number, are you sixty forty or have you changed

641
00:31:55,800 --> 00:31:57,800
Speaker 5: those allocations?

642
00:31:57,960 --> 00:32:01,880
Speaker 10: Yep, John, the allocation, it really depends on every client

643
00:32:02,000 --> 00:32:06,239
Speaker 10: and their individual needs and their investing horizon. So we

644
00:32:06,320 --> 00:32:08,640
Speaker 10: do think that equities have a very strong role in

645
00:32:08,640 --> 00:32:12,400
Speaker 10: the portfolio as long term capital appreciation. We do think

646
00:32:12,440 --> 00:32:16,160
Speaker 10: fixed income here is providing a pretty nice yield income

647
00:32:16,200 --> 00:32:18,520
Speaker 10: here for a lot of people who are looking for.

648
00:32:18,440 --> 00:32:19,640
Speaker 12: That part as well.

649
00:32:20,200 --> 00:32:23,320
Speaker 10: But the actual allocation depends on where the clients are

650
00:32:23,760 --> 00:32:24,600
Speaker 10: in their journey.

651
00:32:25,240 --> 00:32:29,040
Speaker 3: So my friend here, John Tucker, he started twenty twenty

652
00:32:29,040 --> 00:32:32,920
Speaker 3: three long and overweight, the Magnificent seven. He's just doing

653
00:32:32,920 --> 00:32:34,080
Speaker 3: this radio thing because.

654
00:32:33,840 --> 00:32:36,280
Speaker 2: He loves it. The rest of us have to work

655
00:32:36,320 --> 00:32:37,840
Speaker 2: on our portfolio. In twenty twenty four, Do.

656
00:32:38,480 --> 00:32:41,040
Speaker 3: I chase those big tech names, and again we're going

657
00:32:41,080 --> 00:32:43,840
Speaker 3: to see a lot of them start reporting earnings tonight.

658
00:32:44,160 --> 00:32:46,400
Speaker 2: Do I chase them or do I just say miss

659
00:32:46,480 --> 00:32:46,880
Speaker 2: that boat.

660
00:32:46,920 --> 00:32:52,520
Speaker 3: Let me go look at maybe a sector that's not participated, Paul.

661
00:32:52,680 --> 00:32:57,200
Speaker 10: Our approach is to really identify these long term companies

662
00:32:57,240 --> 00:33:00,800
Speaker 10: that are solving some of the secular problems invested in

663
00:33:00,840 --> 00:33:05,360
Speaker 10: them take opportunities like the market volatility to really size.

664
00:33:05,120 --> 00:33:06,400
Speaker 12: The position appropriately.

665
00:33:06,840 --> 00:33:09,680
Speaker 10: So, you know, you talked about the Magnificent seven, not

666
00:33:09,760 --> 00:33:12,000
Speaker 10: all seven of them, but you know, for a very

667
00:33:12,040 --> 00:33:16,000
Speaker 10: long time we have held onto some of the holdings

668
00:33:16,040 --> 00:33:19,600
Speaker 10: in there from the technology because we saw them very

669
00:33:19,720 --> 00:33:23,080
Speaker 10: playing a very vital role in solving some of the problems,

670
00:33:23,120 --> 00:33:28,920
Speaker 10: mainly related to empowering small businesses, communities, you know, entrepreneurs

671
00:33:28,960 --> 00:33:32,200
Speaker 10: all over the world. Now, when we think about, you know,

672
00:33:32,240 --> 00:33:35,960
Speaker 10: the sectors that have run up, Yes, technology has far

673
00:33:36,040 --> 00:33:39,200
Speaker 10: outperformed on a two year basis, though, believe it or not,

674
00:33:39,360 --> 00:33:42,560
Speaker 10: Magnificent seven just on a two year basis is up

675
00:33:42,600 --> 00:33:47,320
Speaker 10: only fourteen percent, So not as ridiculous as it seems,

676
00:33:47,360 --> 00:33:50,960
Speaker 10: just based on twenty twenty three data. But that said,

677
00:33:51,440 --> 00:33:55,200
Speaker 10: we do think there are plenty of opportunities elsewhere in

678
00:33:55,280 --> 00:33:58,880
Speaker 10: other areas as well to continue to tilt the portfolio

679
00:33:58,880 --> 00:34:01,080
Speaker 10: towards those types of compounders as well.

680
00:34:01,360 --> 00:34:03,720
Speaker 5: I want to get to some can you do individual names?

681
00:34:04,680 --> 00:34:08,400
Speaker 10: Yeah, absolutely, so one of the you know, area that

682
00:34:08,440 --> 00:34:11,600
Speaker 10: we think there's a long term secular problem is related

683
00:34:11,640 --> 00:34:15,239
Speaker 10: to water. You know, there's a huge issue around scarcity

684
00:34:15,280 --> 00:34:16,600
Speaker 10: of water resources.

685
00:34:16,920 --> 00:34:19,920
Speaker 12: But even just in the US, our water infrastructure was

686
00:34:19,960 --> 00:34:20,360
Speaker 12: built in.

687
00:34:20,360 --> 00:34:23,640
Speaker 10: The nineteen fifties and sixties, so there's a huge need

688
00:34:23,680 --> 00:34:28,200
Speaker 10: to upgrade this water infrastructure to make sure that we're

689
00:34:28,200 --> 00:34:31,640
Speaker 10: getting the safe quality drinking water that is so essential.

690
00:34:32,040 --> 00:34:34,719
Speaker 10: You know, just EP estimates there're seven hundred billion of

691
00:34:34,840 --> 00:34:38,080
Speaker 10: investments needed over the next twenty years. So when we

692
00:34:38,160 --> 00:34:40,840
Speaker 10: have thought about that, we have tried to get exposure

693
00:34:41,160 --> 00:34:44,720
Speaker 10: to a number of companies that play a very important

694
00:34:44,840 --> 00:34:50,120
Speaker 10: role across the water infrastructure value chain. So specific names

695
00:34:50,200 --> 00:34:55,239
Speaker 10: like Xylum. Xyleum is very prominent in valves meters, things

696
00:34:55,280 --> 00:35:02,520
Speaker 10: like that, y why out YEP, and it's you know,

697
00:35:03,440 --> 00:35:07,960
Speaker 10: Xylum especially has a big mare market position, leading market

698
00:35:08,000 --> 00:35:12,040
Speaker 10: position in wastewater treatment, again a big area of long

699
00:35:12,120 --> 00:35:16,520
Speaker 10: term growth and where we think there's major societal problems

700
00:35:16,520 --> 00:35:20,000
Speaker 10: that need to be solved. Another name, a small cap

701
00:35:20,160 --> 00:35:23,719
Speaker 10: only seven hundred million in revenues is Badger Meters. They

702
00:35:23,760 --> 00:35:26,960
Speaker 10: make your utility meters. You know, there's a big upgrade

703
00:35:27,000 --> 00:35:30,360
Speaker 10: cycle going on from upgrading that manual meter that needed

704
00:35:30,400 --> 00:35:34,359
Speaker 10: to be read to more of those smart meters which

705
00:35:34,400 --> 00:35:39,280
Speaker 10: can be read remotely. So that's another small cap company

706
00:35:39,640 --> 00:35:42,719
Speaker 10: long term tail wins. You know, the company just reported

707
00:35:42,840 --> 00:35:49,200
Speaker 10: excellent twenty twenty three numbers, double digit revenue earnings going forward,

708
00:35:49,280 --> 00:35:51,239
Speaker 10: you know, we don't expect them to have that kind

709
00:35:51,239 --> 00:35:54,400
Speaker 10: of a growth, but high single digit through the cycle

710
00:35:54,520 --> 00:35:54,759
Speaker 10: is a.

711
00:35:54,680 --> 00:35:56,239
Speaker 12: Pretty reasonable expectation.

712
00:35:56,840 --> 00:36:00,319
Speaker 10: And the last one I'll leave you with is Viraltov

713
00:36:00,760 --> 00:36:04,520
Speaker 10: lto is the ticker simple, it's it's a spin off

714
00:36:04,719 --> 00:36:09,120
Speaker 10: from Danaher, very high quality company. You know, sixty percent

715
00:36:09,160 --> 00:36:12,840
Speaker 10: comes from water quality type of businesses. They analyze the

716
00:36:12,880 --> 00:36:16,160
Speaker 10: water quality coming out of our streams, rivers, but also

717
00:36:16,200 --> 00:36:20,200
Speaker 10: have treatment solutions such as UV filtration some of the

718
00:36:20,239 --> 00:36:24,000
Speaker 10: other treatment solutions as well. So again, these other companies

719
00:36:24,000 --> 00:36:27,160
Speaker 10: that haven't kind of had the rip roaring returns we

720
00:36:27,200 --> 00:36:30,680
Speaker 10: have seen from some of the household names, but long term,

721
00:36:31,520 --> 00:36:34,880
Speaker 10: very important demand for their products and solutions.

722
00:36:35,000 --> 00:36:37,680
Speaker 5: Not the sexiest names in the world, Paul, now.

723
00:36:37,640 --> 00:36:38,200
Speaker 2: But those work.

724
00:36:38,320 --> 00:36:40,720
Speaker 3: I mean if you so, when you identify a theme

725
00:36:40,800 --> 00:36:42,920
Speaker 3: like water, for example, nimro, do you do you and

726
00:36:42,960 --> 00:36:46,799
Speaker 3: your team do you screen across the sector for evaluation,

727
00:36:47,000 --> 00:36:49,919
Speaker 3: sales growth? How do you then identify individual names once

728
00:36:49,920 --> 00:36:53,120
Speaker 3: you've identified a theme exactly.

729
00:36:53,239 --> 00:36:55,319
Speaker 10: So one of our themes in our portfolio is just

730
00:36:55,400 --> 00:36:58,960
Speaker 10: related to ecological limits, right. You know, we've had years

731
00:36:59,000 --> 00:37:02,040
Speaker 10: and decades of extra tractive growth and we think that's

732
00:37:02,160 --> 00:37:06,239
Speaker 10: you know, our natural resources are scarcer and scarcer and

733
00:37:06,280 --> 00:37:08,319
Speaker 10: we're going to have to learn to cope with these

734
00:37:08,360 --> 00:37:12,600
Speaker 10: problems waterfalls under that. We identified that a long time back,

735
00:37:13,040 --> 00:37:16,840
Speaker 10: and knowing that, then we're looking for high quality compounders

736
00:37:16,880 --> 00:37:21,080
Speaker 10: within that that are solving for that, you know, solving

737
00:37:21,160 --> 00:37:25,360
Speaker 10: that particular problem. And when we talk about high quality compounders,

738
00:37:25,680 --> 00:37:30,280
Speaker 10: you know, it's your traditional companies that have strong balance sheets,

739
00:37:30,280 --> 00:37:34,760
Speaker 10: revenue growth, free cash flow margins, good deployment of capital,

740
00:37:34,960 --> 00:37:37,440
Speaker 10: good management track record, all of.

741
00:37:37,440 --> 00:37:40,520
Speaker 12: That same kind of criteria. There.

742
00:37:40,520 --> 00:37:43,399
Speaker 10: On valuation, we take a longer five to ten year

743
00:37:43,520 --> 00:37:46,719
Speaker 10: view and we use cash flow based valuation to understand

744
00:37:46,760 --> 00:37:50,880
Speaker 10: what is the true valuation based on the earnings potential

745
00:37:51,000 --> 00:37:52,160
Speaker 10: of a company like that.

746
00:37:52,440 --> 00:37:55,160
Speaker 5: Hey, what's the number one thing on the minds of

747
00:37:55,200 --> 00:37:55,880
Speaker 5: your clients?

748
00:37:57,920 --> 00:38:00,720
Speaker 10: You know, when we talk to clients again, it's different,

749
00:38:00,800 --> 00:38:05,319
Speaker 10: but it's really around understanding that, yes, we just live

750
00:38:05,480 --> 00:38:11,200
Speaker 10: in this era of a lot of uncertainty heightened volatility.

751
00:38:11,320 --> 00:38:15,800
Speaker 10: You know, last year this whole thing around AI really

752
00:38:15,880 --> 00:38:18,600
Speaker 10: magnified and gave a really new leash to life for

753
00:38:18,800 --> 00:38:23,200
Speaker 10: these magnifist and seven names. But longer term, people just

754
00:38:23,320 --> 00:38:27,200
Speaker 10: want people. You know, our investors, our clients are concerned

755
00:38:27,200 --> 00:38:31,440
Speaker 10: about making sure that they have their financial assets can

756
00:38:31,480 --> 00:38:34,680
Speaker 10: help them meet their financial needs and goals, right yep,

757
00:38:34,760 --> 00:38:38,720
Speaker 10: and taking a balanced approach and a very risk aware

758
00:38:38,800 --> 00:38:41,680
Speaker 10: approach towards constructing those portfolios for them.

759
00:38:41,800 --> 00:38:43,919
Speaker 3: All right, That's how the pros do it. Nimmer Kang,

760
00:38:43,920 --> 00:38:46,640
Speaker 3: thank you so much. We appreciate it as always. Nimmer Kang,

761
00:38:46,800 --> 00:38:49,520
Speaker 3: Chief Investment Officer, north Star Asset Management.

762
00:38:51,120 --> 00:38:55,000
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

763
00:38:55,080 --> 00:38:58,600
Speaker 1: weekdays at ten am Eastern on applecar Play and Android

764
00:38:58,640 --> 00:39:01,800
Speaker 1: Auto with the Bloomberg Business. You can also listen live

765
00:39:01,920 --> 00:39:05,080
Speaker 1: on Amazon Alexa from our flagship New York station just

766
00:39:05,160 --> 00:39:07,360
Speaker 1: say Alexa playing Bloomberg eleven.

767
00:39:09,719 --> 00:39:14,120
Speaker 3: Let's talk UK stocks, Let's talk European stocks. We don't

768
00:39:14,120 --> 00:39:16,759
Speaker 3: do that as much here, but we can do it

769
00:39:16,800 --> 00:39:19,160
Speaker 3: today because Tim Craighead is here, and Tim Craighead is

770
00:39:19,160 --> 00:39:22,279
Speaker 3: a European equity strategist for Bloomberg Intelligence. He joins his

771
00:39:22,320 --> 00:39:24,720
Speaker 3: live here in a Bloomberg Interactor broker studio. That's important

772
00:39:24,719 --> 00:39:30,600
Speaker 3: because he's based in London at the awesome Bloomberg European headquarters.

773
00:39:30,640 --> 00:39:32,520
Speaker 2: We got to get your lead to go. It is

774
00:39:32,600 --> 00:39:34,800
Speaker 2: just it is super cool. Yeah, it is just awesome.

775
00:39:34,800 --> 00:39:37,680
Speaker 3: I mean, and what I like about it a it's

776
00:39:37,719 --> 00:39:40,200
Speaker 3: just a phenomenal building in the city of London, right

777
00:39:40,200 --> 00:39:44,600
Speaker 3: by the Bank of England. But when you know, Brexit happened,

778
00:39:46,040 --> 00:39:48,600
Speaker 3: Mike was over there with the Mayor of London saying no,

779
00:39:48,840 --> 00:39:51,919
Speaker 3: we're doubling down on London, which I thought was very

780
00:39:51,920 --> 00:39:56,239
Speaker 3: cool because up until Brexit, a credible argument could be

781
00:39:56,239 --> 00:39:58,880
Speaker 3: made that London was the world's financial capital visa via

782
00:39:58,880 --> 00:40:01,880
Speaker 3: New York, A credible argument after a couple of pints

783
00:40:01,880 --> 00:40:03,920
Speaker 3: at the local pub. And you could make that argument

784
00:40:04,239 --> 00:40:04,759
Speaker 3: now you can.

785
00:40:05,360 --> 00:40:07,719
Speaker 5: Before remind me, before he leaves, I got to ask

786
00:40:07,800 --> 00:40:09,320
Speaker 5: him about congestion pricing.

787
00:40:09,480 --> 00:40:11,400
Speaker 2: Okay, all right, Tim Craighead joins it.

788
00:40:11,400 --> 00:40:13,359
Speaker 3: Ay, Tim, just give us a sense here. Let's start

789
00:40:13,360 --> 00:40:17,120
Speaker 3: with the UK here, how did the UK trade last year?

790
00:40:17,120 --> 00:40:19,360
Speaker 3: How did that market perform and what's the expectations for

791
00:40:19,400 --> 00:40:19,759
Speaker 3: this year?

792
00:40:20,040 --> 00:40:22,759
Speaker 6: So the UK did the same thing last year that

793
00:40:22,840 --> 00:40:26,080
Speaker 6: it did in twenty twenty two, interesting enough, which is

794
00:40:26,120 --> 00:40:29,759
Speaker 6: a big fat nothing. And if you think back in

795
00:40:29,800 --> 00:40:33,680
Speaker 6: twenty twenty two, that was a good stellar performance, it

796
00:40:33,800 --> 00:40:38,160
Speaker 6: was a hero. Twenty three not so much, especially with

797
00:40:38,239 --> 00:40:40,279
Speaker 6: the rally at the end of the year. So far

798
00:40:40,440 --> 00:40:44,959
Speaker 6: this year pretty much again, it's sort of status quot

799
00:40:45,040 --> 00:40:48,040
Speaker 6: and our view is that's kind of where we're stuck.

800
00:40:48,080 --> 00:40:51,479
Speaker 6: It's a funny thing. The UK market has this very

801
00:40:51,520 --> 00:40:58,680
Speaker 6: odd composition where you've got this big basic material commodity base,

802
00:40:58,960 --> 00:41:03,000
Speaker 6: and you've got medals and you've got oil. You've got

803
00:41:03,000 --> 00:41:08,680
Speaker 6: a big defensive brand base of companies like Unilever and

804
00:41:08,800 --> 00:41:14,799
Speaker 6: Diagio I think Whiskeys, and healthcare pharma with Glaxo Smith

805
00:41:14,840 --> 00:41:19,480
Speaker 6: Klein AstraZeneca, and then you've got a big dose of

806
00:41:19,560 --> 00:41:24,520
Speaker 6: financials with the big banks like HSBC. Those three. You

807
00:41:24,600 --> 00:41:27,520
Speaker 6: always end up with a driver that's good for one

808
00:41:28,120 --> 00:41:31,440
Speaker 6: but bad for the others, or vice versa, and quite

809
00:41:31,480 --> 00:41:33,680
Speaker 6: often they just sort of nix each.

810
00:41:33,520 --> 00:41:36,640
Speaker 3: Other because you don't have that technology thing, which is

811
00:41:36,680 --> 00:41:38,640
Speaker 3: actually the leader of the US.

812
00:41:38,520 --> 00:41:43,120
Speaker 6: Market, the entire TMT group. So you take internet and

813
00:41:43,320 --> 00:41:48,000
Speaker 6: tech and the good media e commerce, the whole kaboodle

814
00:41:48,080 --> 00:41:49,680
Speaker 6: about one percent of the UK market.

815
00:41:50,000 --> 00:41:53,040
Speaker 5: What was the best performing stock individuals talk.

816
00:41:53,920 --> 00:41:57,279
Speaker 6: Rolls Royce if memory serves correct, which.

817
00:41:57,040 --> 00:41:59,799
Speaker 5: Is this is the engine maker, not the Yes car.

818
00:42:00,719 --> 00:42:05,320
Speaker 6: Yes, the engine maker that feeds into the rebound in commercial,

819
00:42:05,320 --> 00:42:07,480
Speaker 6: aerospace and defense.

820
00:42:08,280 --> 00:42:10,640
Speaker 5: The cool thing about Rolls Rice is like each of

821
00:42:10,680 --> 00:42:14,480
Speaker 5: their engines has had a name like the Yeah, well

822
00:42:14,480 --> 00:42:17,120
Speaker 5: going back to like World War two, Okay, the Maryland.

823
00:42:17,360 --> 00:42:21,120
Speaker 5: The Maryland probably the most famous engine there ever was

824
00:42:21,400 --> 00:42:25,560
Speaker 5: They stuck that in Well, the Spitfire, I digress and

825
00:42:25,600 --> 00:42:29,760
Speaker 5: then fifty one D Mustang and made it the greatest

826
00:42:29,800 --> 00:42:30,479
Speaker 5: plane in the world.

827
00:42:30,719 --> 00:42:33,560
Speaker 3: Absolutely, still my favorite fighter plane, the P fifty one.

828
00:42:33,760 --> 00:42:36,160
Speaker 3: The Spitfire is right there at fourteen's nomber three.

829
00:42:36,600 --> 00:42:40,480
Speaker 2: All right, Tim, I actually think about this stuff. We

830
00:42:40,600 --> 00:42:41,799
Speaker 2: digress and digress more.

831
00:42:41,960 --> 00:42:44,480
Speaker 3: How about Europe here a little bit broader kind of

832
00:42:45,040 --> 00:42:48,680
Speaker 3: markets in terms of the waitings here. How are your

833
00:42:48,719 --> 00:42:50,160
Speaker 3: clients looking at the European market?

834
00:42:50,239 --> 00:42:55,160
Speaker 6: So the European market is reasonably well positioned from the

835
00:42:55,200 --> 00:42:58,879
Speaker 6: standpoint of a diverse sector base, it still doesn't have

836
00:42:59,040 --> 00:43:02,560
Speaker 6: the technology opportunity set.

837
00:43:02,320 --> 00:43:04,600
Speaker 2: That sap AM.

838
00:43:05,080 --> 00:43:08,600
Speaker 6: You've got basically four big tech companies there. If you

839
00:43:08,640 --> 00:43:12,399
Speaker 6: think about it, one five one is SAP. We all

840
00:43:12,440 --> 00:43:16,320
Speaker 6: know that, and it's doing fine. Look at its earnings,

841
00:43:16,320 --> 00:43:18,520
Speaker 6: look at stock price. Here is of late, it's been

842
00:43:18,560 --> 00:43:24,640
Speaker 6: a really good call. That's one ASML, which is chip

843
00:43:24,719 --> 00:43:30,600
Speaker 6: manufacturing equipment, absolutely a must when it comes to making

844
00:43:30,920 --> 00:43:33,920
Speaker 6: things for say Nvidia with their chip set, you have

845
00:43:34,000 --> 00:43:39,080
Speaker 6: to have ASML's equipment. And then you've got semiconductor companies

846
00:43:39,600 --> 00:43:43,600
Speaker 6: like Infinian and st Micro and they feed into more

847
00:43:44,160 --> 00:43:48,720
Speaker 6: energy transition, autose, industrial applications, things along those lines.

848
00:43:49,080 --> 00:43:51,600
Speaker 5: But wait, a tech in Europe, I want to lose

849
00:43:51,640 --> 00:43:55,080
Speaker 5: weight all isn't that where those weight loss drugs come from?

850
00:43:55,160 --> 00:43:55,920
Speaker 5: Or initially?

851
00:43:56,040 --> 00:44:00,680
Speaker 6: So that's Novo Nordis and you know obviously is coming

852
00:44:00,760 --> 00:44:05,640
Speaker 6: up as a big second here. But the pharma industry.

853
00:44:05,719 --> 00:44:09,840
Speaker 6: Pharma's business is a big business from a European perspective,

854
00:44:10,040 --> 00:44:13,799
Speaker 6: no doubt. You've got really big consumer franchise, you've got

855
00:44:13,880 --> 00:44:17,920
Speaker 6: luxury goods and the big one of the bigger businesses

856
00:44:18,000 --> 00:44:22,000
Speaker 6: over there that is different from here is the big

857
00:44:22,080 --> 00:44:26,959
Speaker 6: high end luxury auto companies, which are a big play

858
00:44:27,000 --> 00:44:30,759
Speaker 6: on China. Another difference with Europe versus the US is

859
00:44:31,400 --> 00:44:33,439
Speaker 6: China is really important over there.

860
00:44:33,640 --> 00:44:35,560
Speaker 3: I mean if you big buyers of the big German

861
00:44:35,560 --> 00:44:36,880
Speaker 3: industrial equipment.

862
00:44:36,520 --> 00:44:40,440
Speaker 6: Well, and it's pervasive. The UK has a ton of

863
00:44:40,560 --> 00:44:43,839
Speaker 6: It's actually the most exposed because you've got companies like

864
00:44:45,920 --> 00:44:48,880
Speaker 6: Rio Tinto and Glencore and big medals and money that

865
00:44:49,000 --> 00:44:51,600
Speaker 6: feeds in. But you've also got the autos, You've also

866
00:44:51,640 --> 00:44:54,040
Speaker 6: got the industrials, You've got the luxury goods, and.

867
00:44:54,000 --> 00:44:55,160
Speaker 2: All of that adds to.

868
00:44:56,800 --> 00:45:00,840
Speaker 6: Roughly a four hundred and fifty billion euro revenue business

869
00:45:01,160 --> 00:45:04,880
Speaker 6: from Europe selling to China. What happens in China matters

870
00:45:04,920 --> 00:45:08,160
Speaker 6: a lot for Europe, which is a different story than

871
00:45:08,200 --> 00:45:10,360
Speaker 6: what you have here from a US perspective. If you

872
00:45:10,360 --> 00:45:14,759
Speaker 6: add all that together, Europe is okay. It's a lot

873
00:45:14,880 --> 00:45:18,400
Speaker 6: cheaper from a multiple perspective than the US, but the

874
00:45:18,440 --> 00:45:21,840
Speaker 6: earnings growth expectations for this year next year are not

875
00:45:22,000 --> 00:45:24,000
Speaker 6: as robust as they are here in the US, and

876
00:45:24,040 --> 00:45:24,839
Speaker 6: it holds it back.

877
00:45:25,200 --> 00:45:26,719
Speaker 5: Do I have to worry about things? If I'm a

878
00:45:26,840 --> 00:45:30,560
Speaker 5: U and US investor looking to invest in Europe? Do

879
00:45:30,600 --> 00:45:34,880
Speaker 5: I have to worry about things like the currency translations?

880
00:45:35,719 --> 00:45:36,120
Speaker 8: You do?

881
00:45:36,400 --> 00:45:39,080
Speaker 6: And it's kind of typical with currency as a double

882
00:45:39,160 --> 00:45:43,040
Speaker 6: edged sword. I think the conventional wisdom this year is

883
00:45:43,040 --> 00:45:47,399
Speaker 6: if the FED cuts early and first, then you've got

884
00:45:47,400 --> 00:45:49,920
Speaker 6: a week dollar scenario to be told. Now, if you're

885
00:45:49,960 --> 00:45:54,239
Speaker 6: a US person and you're buying European markets, let's say

886
00:45:54,719 --> 00:45:57,239
Speaker 6: all else being equal, that's going to be good for you,

887
00:45:57,640 --> 00:46:01,080
Speaker 6: because you're going to be carrying, you know, Europe over

888
00:46:01,160 --> 00:46:05,000
Speaker 6: to here, which is a stronger currency. It actually ends

889
00:46:05,080 --> 00:46:07,520
Speaker 6: up being negative for the European companies themselves from an

890
00:46:07,560 --> 00:46:09,160
Speaker 6: innings translation basis.

891
00:46:09,160 --> 00:46:10,160
Speaker 5: But it's different argument.

892
00:46:10,200 --> 00:46:13,600
Speaker 3: All right, tim you've lived in London a long time.

893
00:46:14,520 --> 00:46:16,080
Speaker 3: You live just outside of London. So we'll get to

894
00:46:16,080 --> 00:46:19,040
Speaker 3: the congestion pressing. The economy here in the US is good.

895
00:46:19,120 --> 00:46:21,879
Speaker 3: You had a great GDP print, inflation's coming down. How's

896
00:46:21,880 --> 00:46:23,200
Speaker 3: the economy in the UK?

897
00:46:23,520 --> 00:46:27,080
Speaker 6: Yeah, Actually it feels a lot better than necessarily what

898
00:46:27,120 --> 00:46:30,359
Speaker 6: the headlines might suggest. I think there are signs that

899
00:46:30,440 --> 00:46:34,560
Speaker 6: housing prices are possibly stabilizing, certainly like everywhere else. If

900
00:46:34,600 --> 00:46:36,719
Speaker 6: you end up seeing interest rates coming down and the

901
00:46:36,760 --> 00:46:39,000
Speaker 6: expectations are for the Bank of England as well as

902
00:46:39,200 --> 00:46:43,120
Speaker 6: the European Central Night to be cutting, then that could

903
00:46:43,160 --> 00:46:47,080
Speaker 6: be a good thing as well. But big election cycle

904
00:46:47,120 --> 00:46:49,399
Speaker 6: this year. From a UK perspective, that's going to cause

905
00:46:49,400 --> 00:46:51,600
Speaker 6: a lot of noise, just like it is here in

906
00:46:51,680 --> 00:46:57,520
Speaker 6: the US. And yeah, on the ground you're traveling, you're

907
00:46:57,560 --> 00:47:00,880
Speaker 6: looking around, you're going places which you do feels it

908
00:47:00,920 --> 00:47:02,080
Speaker 6: feels he doesn't.

909
00:47:02,680 --> 00:47:06,320
Speaker 5: Go to your congestion pricing because okay, and everybody should

910
00:47:06,320 --> 00:47:09,239
Speaker 5: care about this. London did it first, where cars coming

911
00:47:09,280 --> 00:47:11,880
Speaker 5: into the central part of the city to reduce congestion

912
00:47:12,120 --> 00:47:14,719
Speaker 5: are charged a fortune. New York City is trying to

913
00:47:14,760 --> 00:47:18,520
Speaker 5: do that. But all sorts of you a fan or like.

914
00:47:20,440 --> 00:47:22,160
Speaker 6: Whether you like when I'm gonna say or not, I

915
00:47:22,160 --> 00:47:24,319
Speaker 6: guess we'll see. I am a fan. I think it

916
00:47:24,480 --> 00:47:25,840
Speaker 6: is a good thing for you.

917
00:47:28,960 --> 00:47:31,880
Speaker 2: Yeah, but and not like a mile that writes like

918
00:47:31,880 --> 00:47:33,440
Speaker 2: a long way all kinds of weather.

919
00:47:33,719 --> 00:47:37,920
Speaker 6: But but but it is a case where between congestion

920
00:47:38,400 --> 00:47:42,839
Speaker 6: pricing and they are expanding that congestion zone as well

921
00:47:42,880 --> 00:47:46,279
Speaker 6: as increasing things like cycle lanes and other elements of

922
00:47:46,280 --> 00:47:50,200
Speaker 6: public transport, it is an easier place to get around

923
00:47:50,280 --> 00:47:51,200
Speaker 6: unless you want to drive.

924
00:47:52,719 --> 00:47:54,879
Speaker 5: I don't have a choice, though, we're gonna get I'm

925
00:47:54,880 --> 00:47:57,200
Speaker 5: gonna take my bicycle. At two o'clock in the morning.

926
00:47:57,320 --> 00:47:58,320
Speaker 2: It comes through the Lincoln tunnel.

927
00:47:58,320 --> 00:47:59,479
Speaker 6: That's what you don't have to worry about.

928
00:47:59,480 --> 00:48:00,360
Speaker 2: Now we're gonna we're.

929
00:48:00,200 --> 00:48:01,719
Speaker 3: Going to work with somebody we know and get so

930
00:48:01,800 --> 00:48:04,240
Speaker 3: John can expense his congestion pricing.

931
00:48:04,480 --> 00:48:06,000
Speaker 2: I think I know somebody can help out with that.

932
00:48:06,040 --> 00:48:07,560
Speaker 2: Tim Craigh, thanks so much for joining us.

933
00:48:07,640 --> 00:48:09,960
Speaker 3: Tim Craig at European Equity Strategists know, by the way,

934
00:48:09,960 --> 00:48:12,000
Speaker 3: he is also the director of research over there in Europe,

935
00:48:12,000 --> 00:48:13,280
Speaker 3: so doing lots of stuff.

936
00:48:13,320 --> 00:48:17,799
Speaker 1: This is the Bloomberg Intelligence podcast, available on apples, Spotify,

937
00:48:18,000 --> 00:48:21,200
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938
00:48:21,200 --> 00:48:24,600
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939
00:48:24,680 --> 00:48:28,120
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940
00:48:28,200 --> 00:48:31,320
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941
00:48:31,440 --> 00:48:33,200
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