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Speaker 1: Boo Bloomberg Audio Studios, podcasts, radio news. You're listening to

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Speaker 1: the Bloomberg Intelligence Podcast. Catch us live weekdays at ten

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Speaker 1: am Eastern on Apple car Playing and Broyd Auto with

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Speaker 1: the Bloomberg Business app. Listen on demand wherever you get

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

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Speaker 2: I'm Alex the alongside Paul Sweeney. This is Bloomberg Intelligence Radio.

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Speaker 2: We bring you all the top news and business, economics

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Speaker 2: and finance. There are lens of our Bloomberg Intelligence analysts.

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Speaker 2: They cover two thousand companies and one hundred and thirty

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Speaker 2: industries worldwide. And one of them that I bug all

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Speaker 2: the time is George Ferguson Bloomberg Intelligence Senior Aerospace, Defense

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Speaker 2: and Airlines analysts. I stalked him yesterday over Airbus because

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Speaker 2: we have a CEO on TV and I was like, George,

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Speaker 2: I need more questions than just Hey, what's up with space?

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Speaker 2: What's up with Boeing is now the better question for today.

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Speaker 2: So Boeing now appointing Kelly Ortberg as its new chief

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Speaker 2: executive officer of the stock is up by about three

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Speaker 2: and a half percent. He is a retired veteran of

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Speaker 2: the aviation industry. He is an engineer by training. Is

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Speaker 2: this the guy that Boeing needs, George?

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Speaker 3: Is he?

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Speaker 1: Not?

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Speaker 4: So sure? I think it's the guy that Boeing needs

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Speaker 4: for a small period of time, right because he was

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Speaker 4: already retired, right, he has you know, he's a great

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Speaker 4: career in aerospace working at Colins, help him put Collins

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Speaker 4: into RTX, I mean, a great experience. He's sixty four,

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Speaker 4: So my guess is he doesn't have a lot of

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Speaker 4: runway to work at Boeing. I think it'd have been

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Speaker 4: nicer to see a CEO that could have put I

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Speaker 4: don't know, five seven, ten years into Boeing. But look,

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Speaker 4: I think the job is very difficult, and so I

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Speaker 4: think it's going to take a lot out of the

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Speaker 4: next CEO. And so maybe this is an interim as

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Speaker 4: they continue to develop internal candidates for the job. Maybe

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Speaker 4: it's very pretty difficult to recruit somebody into this job

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Speaker 4: right now. Could be an interim because of that as well.

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Speaker 4: So again, you know, the strong aerospace background at the

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Speaker 4: component at the you know, parts maker level, but doesn't

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Speaker 4: look like someone's going to be around for the next

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Speaker 4: five seven years, all.

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Speaker 5: Right, George, All right, So that's the CEO, how about

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Speaker 5: on the fundamentals here and looking at the second quarter

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Speaker 5: negative adjusted free cash slow four point three billion dollars.

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Speaker 5: You can't like that. Talk to us about kind of

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Speaker 5: the cash flow, that dynamics and what they need to do.

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Speaker 4: So we kind of expected that four point three billion

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Speaker 4: dollars to be Really honest, I'm not totally sure why

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Speaker 4: the stock is up. I don't think it's Kelly because

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Speaker 4: Kelly News started the day out and bowing an anchors

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Speaker 4: up about one so post earnings were up. You know

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Speaker 4: we've done this pop. I mean, you know, we heard

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Speaker 4: from CFO Brian West during the call. He told us

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Speaker 4: Burn was going to be pretty strong in three Q two,

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Speaker 4: and then some the analysts tried to box him in

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Speaker 4: on what Burn was going to be for the year.

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Speaker 4: One said would be closer to five billion or ten billion.

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Speaker 4: He said he was, and I think his quote somebody,

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Speaker 4: I'm not smart enough to tell you at this time.

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Speaker 4: So there's just a lot of variability right now. Look,

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Speaker 4: Boeing has to keep taking inventory, taking ship sets from

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Speaker 4: their supplier base to keep their supplier base in business

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Speaker 4: while they ramp up builds. And they had some good

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Speaker 4: commentaries and builds. They talked about the factory kind of

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Speaker 4: putting out twenty ish I think was the number, and

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Speaker 4: I think total deliveries in the thirty ish range for

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Speaker 4: seven thirty sevens rising to thirty eight shutting down those

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Speaker 4: shadow factories. It's the factories that they have, the inventoried airplanes,

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Speaker 4: a lot of seven three sevens, some seven eight sevens

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Speaker 4: in shutting them down by the end of the year.

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Speaker 4: That was I think great commentary. You know, we got

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Speaker 4: to the commentary about what's going to go on with

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Speaker 4: the union negotiations. Those are coming up in September. Dave

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Speaker 4: Calhoun kind of told us he I think wasn't totally

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Speaker 4: focused on that right now, or didn't have couldn't give

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Speaker 4: us puts and takes there. That's incredibly important. Right, So

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Speaker 4: if we get into a situation where the union shuts

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Speaker 4: this company down in September, the cash burn this year

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Speaker 4: looks looks horrible. Their back going to capital markets looking

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Speaker 4: for a bond raise, which I think everybody on the

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Speaker 4: bond side is scared to death about because they don't

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Speaker 4: want to see a fall to investment grade. Or they're

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Speaker 4: going to the equity side, which the equity guys don't

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Speaker 4: want to hear about, right, is there? That's called that's dilution,

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Speaker 4: you know, so I think again. Commentary was good around

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Speaker 4: deliveries and things like that, but a lot of variability coming,

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Speaker 4: you know here around this cash flow burn and it's

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Speaker 4: super important.

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Speaker 6: All right. George, thanks so much for joining us. We

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Speaker 6: appreciate it as always.

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Speaker 5: George Ferguson, Senior Aerospace, Defense and Airlines Anols Bloomberg Intelligence

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Speaker 5: from Princeton, New Jersey.

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Speaker 2: Alex still here alongside Paul Sweenia and John Tucker. This

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Speaker 2: is Bloomberg Intelligence Radio. We are broadcasting to you live

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Speaker 2: from our Interactive Broker studio right here in Midtown at Manhattan.

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Speaker 2: So it's fed day. Everyone's pumped for it. What is

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Speaker 2: Ja Powell gonna say? Are they going to signal September?

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Speaker 2: What is it gonna look like? We're gonna break it

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Speaker 2: all down? For you with Danielle de Martino, Booth's CEO

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Speaker 2: and chief strategist for QI Research. She joins us in

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Speaker 2: the radio studio right now, all right, Danielle, what do

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Speaker 2: you think?

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Speaker 3: Like, what are we gonna get?

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Speaker 7: I think we're gonna I'm actually gonna go with Anna

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Speaker 7: Wong's kind of take on where this is gonna go.

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Speaker 7: She and I are thinking in a similar act. We

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Speaker 7: get to meet in person tonight. But I think he's

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Speaker 7: still going to couch his dubbishness. I think he's going

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Speaker 7: to signal September. But I think he's gonna signal September softly.

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Speaker 3: What does that mean? Is he gonna whisper it?

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Speaker 5: Like?

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Speaker 3: What is that He's.

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Speaker 7: Still going to say that they're data dependent. He's still

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Speaker 7: going to say that there is the chance that there

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Speaker 7: is a reacceleration in the CPI in inflation metrics, base

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Speaker 7: effects kick in in the second half of this year.

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Speaker 7: That make it a little bit harder to see continued

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Speaker 7: declines in the inflation. On the other hand, you know,

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Speaker 7: looking at real time inflation metrics, a bunch of bond

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Speaker 7: traders a long time ago introduce me to true inflation

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Speaker 7: TRU and that hit one point five one percent today,

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Speaker 7: the lowest reading that we've had in the post pandemic era.

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Speaker 7: They gave me the raw data back to twenty twelve.

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Speaker 7: It's got a zero point ninety seven correlation with headline CPI.

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Speaker 7: We see where this is going to me at least.

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Speaker 7: I think the greatest risk, because there's this huge seven

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Speaker 7: week gulf in between today's meeting and September eighteenth, is

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Speaker 7: that there's a policy err in the making.

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Speaker 5: So you say the highest odds is that there is

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Speaker 5: a policy error. Is that another way of saying the

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Speaker 5: fits behind the curve They should have already been cutting.

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Speaker 7: I think that's what we're saying. I think that that's

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Speaker 7: what ADP is saying. I think that's what the Employment

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Speaker 7: Cost Index, the Fed's preferred measure of wage inflation, is saying,

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Speaker 7: we saw a big step down there. Intel Match, nerd Wallet.

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Speaker 7: Those are the three job cuts that were announced yesterday.

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Speaker 7: It seems as if most companies, when they're announcing earnings

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Speaker 7: are continuing to say until we see stronger revenue growth,

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Speaker 7: we're going to keep cutting headcount. So that's disinflationary.

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Speaker 2: So because you're here, I get ibs from people who

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Speaker 2: are listening to the show, Thank you so much, so well.

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Speaker 2: One of the questions is, and it goes back to

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Speaker 2: the bomb market and we're obviously seeing some steady buying

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Speaker 2: come in, particularly in the back end. Where do you

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Speaker 2: think we end the year when it comes to the tenure?

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Speaker 2: If we're treading right now at four point nine, we're

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Speaker 2: below all the moving averages, like we've had a healthy

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Speaker 2: move to the downside a yields.

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Speaker 7: We have, And we saw kind of this resistance at

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Speaker 7: four point one four in the tenure for some time,

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Speaker 7: and now we've broken below that and I think that

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Speaker 7: it's it's not a stretch to sit that there's going

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Speaker 7: to be a three handle. The question is is the

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Speaker 7: year end south of three point five percent on the tenure?

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Speaker 7: And again it's going to be a gauge of the

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Speaker 7: magnitude of the Fed's policy error. If they have to

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Speaker 7: come rushing in in September with a half percentage point

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Speaker 7: rate cut, that could easily spook the markets.

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Speaker 5: So what does the FED do when they start, So

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Speaker 5: let's still say they did they start in September, then

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Speaker 5: what did they do they do it every other That's.

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Speaker 7: A great question because we saw these kind of unusual pauses.

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Speaker 3: It's not normal to.

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Speaker 7: See pauses in a hiking or a cutting cycle, at

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Speaker 7: least in FED history.

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Speaker 6: Of course we're seeing it.

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Speaker 7: In other parts of the world. But history tells us

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Speaker 7: that once the Fed gets going, they keep going. And

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Speaker 7: that means two days after election. Right, the November FMC

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Speaker 7: is highly unusual. It's a Wednesday Thursday meeting, so that

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Speaker 7: they're not meeting on Tuesday.

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Speaker 8: Election day.

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Speaker 7: But it's very feasible that we see another rate cut

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Speaker 7: two days after the election.

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Speaker 3: What happens to the curve?

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Speaker 6: I we will.

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Speaker 7: Certainly it will be interesting to see if the curve

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Speaker 7: does not fully uninvert before the FED cuts rates, which

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Speaker 7: would be again unusual.

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Speaker 3: But we don't normally talk about rates are coming down.

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Speaker 7: Uh, it would be because they're all coming down.

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Speaker 2: Everything's coming down with the fronts coming down fast. Indeed,

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Speaker 2: even though it still had it's had a pretty chunky

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Speaker 2: move to begin with.

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Speaker 3: But still but.

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Speaker 7: Again, if you start to factor in, I remember when

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Speaker 7: they were raising rates that Powell said unusually large rate hikes.

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Speaker 7: That like took me back to the Princess Bride rodents

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Speaker 7: of unusually large size. But it'll be interesting to see

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Speaker 7: if we have unusually large rate cuts.

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Speaker 5: All right, Danielle, you did some time at the Dallas FED,

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Speaker 5: and I'm looking at.

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Speaker 7: Something sounds like I did like time at an instag time.

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Speaker 6: And now you're free.

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Speaker 5: You used to have something down there called the Dallas

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Speaker 5: FED Manufacturing Uncertainty Index.

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Speaker 6: That's pretty cool. What does it tell you? What are

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Speaker 6: some of the recent data telling me?

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Speaker 9: There?

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Speaker 6: You always come up with data sets that.

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Speaker 7: I've never We are seeing unprecedented levels of uncertainty. Hats

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Speaker 7: off to Emily Kerr and her team at the Dallas FED.

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Speaker 7: They introduced kind of a National Association of Credit Manager's

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Speaker 7: Index type of question in their most recent survey that

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Speaker 7: came out on Monday. People are not paying their bills.

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Speaker 7: I mean companies are not paying their bills and accounts

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Speaker 7: receivable are being stretched out. So there these are kind

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Speaker 7: of credit managers signs that hey, there's real distress and

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Speaker 7: it's harder to get credit, which we've been hearing right

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Speaker 7: from from smaller businesses especially.

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Speaker 2: Is it sector specific in what you're seeing or is

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Speaker 2: it just maybe like how big those companies are.

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Speaker 7: What was interesting about this, the introduction of these new

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Speaker 7: types of questions is that they ask manufacturers, servicers, and retailers,

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Speaker 7: and it was retailers that were seeing the greatest degree

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Speaker 7: of distress.

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Speaker 6: All right, So okay, remember.

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Speaker 7: This is the eighth largest economy in the world and

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Speaker 7: the eighth largest exporting exporting nation in the world.

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Speaker 6: Texas a Texandalone, it is.

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Speaker 2: And then to that point, like there's a huge amount

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Speaker 2: of products that get shipped out, right.

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Speaker 7: Like that's why it's the largest exporting nation, larger than California.

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Speaker 3: Yeah, and it has a huge like medical department.

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Speaker 7: Like we we you know, twenty thirty years ago you

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Speaker 7: could say that we were an energy centric economy in Texas.

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Speaker 7: That's no longer the case, very diversified.

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Speaker 5: But you're staying with us, right the United States? You guys, Yes, okay, good,

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Speaker 5: There is checking everyone.

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Speaker 3: That's not their grid.

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Speaker 7: There is secession talk, you know, wants a republic, but

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Speaker 7: I think we're staying with the country.

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Speaker 2: Is that data set though at all distorted by hurricanes

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Speaker 2: et cetera that you saw, No?

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Speaker 7: Actually actually no. And that was again what was so

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Speaker 7: fascinating was that it was so broad based across service,

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Speaker 7: across the service sector, across across the manufacturing sector, and

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Speaker 7: across the retail sector, and again that they do some

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Speaker 7: really really good research as well, that that front runs

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Speaker 7: the Senior Loan Officer Survey on a national level, and

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Speaker 7: that's also showing that it's very difficult to access credit

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Speaker 7: right now.

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Speaker 6: You believe we're actually in a recession? Is that correct?

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Speaker 10: I do?

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Speaker 7: I do, and Anna Wanta actually kind of agree. She

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Speaker 7: also thinks that net job cuts began last October. What's

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Speaker 7: fascinating is that when we got the revision out last

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Speaker 7: week from the Buer of Labor Statistics, it's said, in

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Speaker 7: its assumption about business deaths, we know what business births

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Speaker 7: were with the birth death adjustment, we still have yet

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Speaker 7: to have them report business debts. Their assumption was that

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Speaker 7: small businesses became additive, that fewer small businesses died in

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Speaker 7: the fourth quarter, when actually we saw small business closings

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Speaker 7: rise appreciably from the third to the fourth quarter. The

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Speaker 7: risk is the reason I'm going into these details. The

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Speaker 7: risk is that we see a second quarter of negative

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Speaker 7: of negativity in job creation, job net job losses. If

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Speaker 7: you see that for six months, because the bearer of

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Speaker 7: has already said we lost one hundred and ninety two

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Speaker 7: thousand jobs in the third quarter of twenty twenty three.

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Speaker 7: If that stretches to being six months in a row,

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Speaker 7: the National Bureau of Economic Research, the Business Cycle Dating Committee,

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Speaker 7: they're going to have a hard time saying six months

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Speaker 7: of job losses doesn't constitute recession.

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Speaker 2: So when we get the jobs number on Friday, how

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Speaker 2: do I look at that number then? Because obviously, like

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Speaker 2: the headline print is going to be up right, but

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Speaker 2: you're saying that on a net basis, like what am I?

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Speaker 3: What's not going out again?

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Speaker 7: I mean, Powell said it himself at the last FMC

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Speaker 7: that payrolls are overstated. And if you get a number

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Speaker 7: that was originally four hundred and ninety four thousand after

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Speaker 7: the revisions that we hear from the BLS, but after

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Speaker 7: the census comes in and gives us actual headcounts from companies,

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Speaker 7: and that four hundred and ninety four with a plus

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Speaker 7: sign in front of it turns into negative one hundred

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Speaker 7: and ninety two thousand. That's it's a significant amount of

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Speaker 7: download divisions, which my mentor at the Dallas Fed told me,

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Speaker 7: you always see at inflection points.

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Speaker 6: How long do you think this recession will be?

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Speaker 5: Because it feels like it's almost a bifurcated economy. A

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Speaker 5: lot of folks will say, I'm not feeling anything.

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Speaker 7: I know, we have a super I mean it's like

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Speaker 7: super K Yes, super K shaped economy. Okay, I mean,

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Speaker 7: think about how many people at the top of the

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Speaker 7: k or feeling the benefits of having gotten five and

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Speaker 7: a half percent on their cash for this long and

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Speaker 7: yet we're hearing that inflation is becoming more problematic for

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Speaker 7: the lower income earners. And what that is a sign

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Speaker 7: up is again what we saw with the employment cost

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Speaker 7: Index today. It's that wages are increasingly not keeping up

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Speaker 7: with the cost of living.

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Speaker 2: So it's not just the FED today, you know, most

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Speaker 2: of the Fed. But we got the BOJ finally hiking rates. Indeed,

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Speaker 2: the press are looking back to totally we get the

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Speaker 2: BOE tomorrow.

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Speaker 3: The ECB's already delivered one cut.

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Speaker 2: Do you think that how do you think that cycle

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Speaker 2: will all play out in terms of I mean, the

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Speaker 2: majority of them are cutting, right, but they're gonna cut

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Speaker 2: differently in a different times and the boj's hiking.

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Speaker 3: Has this all play out?

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Speaker 7: You know, it's interesting that you bring this up because

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Speaker 7: there is so much disparity, right now across the pond,

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Speaker 7: we unexpectedly saw Germany fall back into recession a few

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Speaker 7: days ago. Nobody was expecting that. You know, they're the

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Speaker 7: speaking of exporting nations, the other world's third largest export

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Speaker 7: and it's a reflection of China exactly. So the breadth

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Speaker 7: of the global recession. When you say, okay, Asia's in recession, Okay,

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Speaker 7: Germany's in recession, Okay, the United States is in recession.

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Speaker 7: That changes how aggressively each individual central bank can behave.

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Speaker 7: And when the FED finally does go on September the eighteenth,

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Speaker 7: then the rest of the world will end.

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Speaker 6: Up falling in line. Daniel thank you so much for

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Speaker 6: joining us. Really appreciate it.

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Speaker 5: As always, Danielle di Martino Booth for a little bit

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Speaker 5: extended period here on FED Day. She is the CEO

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Speaker 5: and chief strategistic QI Research based in Dallas, Texas, but

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Speaker 5: we got her here in our Bloomberg and nar Actor

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Speaker 5: Brokers studio today. My stat was, you know, Texas eighth

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Speaker 5: largest exporting and comment's pretty cool.

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Speaker 3: Yeah, really really cool.

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Speaker 2: And that's not even counting I mean, Louisiana also is

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Speaker 2: exporting facilities, but that's not counting all the new facilities

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Speaker 2: that trying and build too.

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Speaker 3: In terms of exports and stuff. Obviously I'm talking Allen.

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Speaker 2: G and oil exports. But still, oh, no surprise, sir Shacker.

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Speaker 2: I know that's surprising to Paul's.

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Speaker 1: We need you're listening to the Bloomberg Intelligence Podcast. Catch

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Speaker 1: live on YouTube.

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Speaker 5: Alex Deal Paul Sweeney live here in our Bloomberg Interactive

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Speaker 5: Brokers Studio streaming live.

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Speaker 6: That's the video thing.

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Speaker 5: YouTube dot Com search Bloomberg Podcast and that's where you

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Speaker 5: will find us. All right, Kamala Harris has wiped out

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Speaker 5: Donald Trump's lead across seven battleground states as the vice

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Speaker 5: president rides a wave of enthusiasm young, young Black and

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Speaker 5: Hispanic voters. That's according to the latest Bloomberg News Morning

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Speaker 5: Console holds some pretty big news there for on the

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Speaker 5: political front. Here, let's check you in with Lard Davison,

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Speaker 5: Bloomberg Politics editor. She joins us here via zoom Laura.

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Speaker 5: This seems like a pretty good start in terms of

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Speaker 5: momentum for Vice President Kamala Harris.

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Speaker 6: What are some of the key takeaways from this pole?

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Speaker 10: Yeah, so this pole we've been doing since last October

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Speaker 10: in all of the seven swing states that are expected

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Speaker 10: to decide the election, and this is the best that

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Speaker 10: the Democratic challenger to Trump has ever done.

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Speaker 3: You know, this is the first time we.

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Speaker 6: Have polled Harris.

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Speaker 10: It's a statistical tie essentially between the two candidates. She's

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Speaker 10: technically up one percentage point, but that's within the margin

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Speaker 10: of air. The other key takeaway here is that black voters,

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Speaker 10: young voters, Hispanic voters are much more likely to vote

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Speaker 10: now that Harris is on the ticket. So this is,

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Speaker 10: you know, been something that that the Trump campaign has

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Speaker 10: created their strategy around of trying to get you know,

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Speaker 10: pull away at the margins and black voters some Hispanic support.

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Speaker 10: But this would indicate that perhaps the tides are shifting

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Speaker 10: in Harris's favor on that front.

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Speaker 2: Well, that was sort of one of my questions too.

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Speaker 2: Are these voters that are switching or are they new

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Speaker 2: voters that are swinging these polls.

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Speaker 10: So we don't yet know totally what that is based

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Speaker 10: on how the poll works, but what we see is

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Speaker 10: that voters who are unsure if they're going to vote,

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Speaker 10: are now saying they're much more likely that they're going

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Speaker 10: to vote. So these may be people who voted in

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Speaker 10: twenty who were not enthused by either candidate, who are

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Speaker 10: going to stay at home, or people who maybe have

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Speaker 10: never voted. But you know, a turnout election is expected

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Speaker 10: to help Harris on this front versus Trump. You know,

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Speaker 10: the Trump folks were you know, sort of hoping to

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Speaker 10: pull away, particularly black men, Hispanic men. But you know,

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Speaker 10: we're not hoping to see a big surgeon turnout that

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Speaker 10: you know, really helped Biden in twenty twenty and could

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Speaker 10: potentially help Harris in twenty four.

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Speaker 5: Or you know, as a former Wall Street person, I

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Speaker 5: tend to follow the money. And Vice President Kamala Harris

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Speaker 5: has had a pretty good run here in the last

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Speaker 5: week or so raising money. Do we know where that

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Speaker 5: money's coming from.

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Speaker 10: Yeah, so, her campaign says they've raised about two hundred

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Speaker 10: million dollars and that's in the first week or so

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Speaker 10: of the campaign. This is largely from small dollar donors.

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Speaker 10: These are people who are going and giving online and

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Speaker 10: you know, increments of you know, anywhere from you know,

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Speaker 10: just a couple of dollars to you know, up to

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Speaker 10: a couple thousand dollars. We've also know that her super pac,

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Speaker 10: this is the group that can accept money and unlimited amounts,

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Speaker 10: has gotten one hundred and fifty million in commitments since

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Speaker 10: By has dropped out of the race. These big dollar donors,

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Speaker 10: people who give millions of dollars, had decided to withhold

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Speaker 10: a bunch of contributions, you know, in order to sort

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Speaker 10: of pressure Biden to get off of the ticket. So

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Speaker 10: now that money is coming back into the fore just

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Speaker 10: for you know, kind of some in comparison here of

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Speaker 10: Harris when she inhibit inherited the Biden campaign accounts that

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Speaker 10: had about one hundred million dollars. Since then, she's raised

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Speaker 10: another two hundred million dollars. So these are really big sums.

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Speaker 2: How much of this could be also attributed just to momentum,

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Speaker 2: as in, when you have the RNC, the candidate gets

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Speaker 2: a boost, the DNC provides a boost. This is an

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Speaker 2: unprecedented moment in political history, so no doubt the candidate

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Speaker 2: would get a boosted.

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Speaker 10: Yes, and the timing year is all really interesting because

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Speaker 10: of course Biden just dropped out two days after the RNC,

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Speaker 10: So Trump was expecting to see a big polling boost

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Speaker 10: coming out of that. Of course, just a week prior

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Speaker 10: that had been the assassination attempt leaving the RNC. Republicans

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Speaker 10: were very confident about their chances, and you know, even

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Speaker 10: Republican operatives were saying one of the things they needed

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Speaker 10: to be conscious of is that they weren't over confident.

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Speaker 10: Of course, that all switched, you know, just a couple

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Speaker 10: of days later. What the Trump team is saying is, look,

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Speaker 10: this is a Harris honeymoon. This is a surgeon momentum

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Speaker 10: that will just be a flash in the pan and

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Speaker 10: won't last until November. That's really what what we'll be

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Speaker 10: looking for in the next couple weeks. If you know,

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Speaker 10: is she able to maintain both this fundraising edge as

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Speaker 10: well as his polling edge, or do we revert to

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Speaker 10: where you know, the Biden Trump race was just with

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Speaker 10: Harris on the ticket in a couple of weeks.

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Speaker 6: How about debates?

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Speaker 5: Are Biden, I'm sorry, Kamala Harris and mister Trump are

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Speaker 5: they get a debate?

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Speaker 6: And if so, when and how many times?

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Speaker 10: This is a really big question. So Trump and Biden

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Speaker 10: had agreed to a second debate on September tenth, that

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Speaker 10: was on ABC News. It's very unclear if that is

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Speaker 10: going to happen. Harris has said she wants to do it.

440
00:20:37,440 --> 00:20:39,919
Speaker 10: Trump has, you know, suggested that he probably will end

441
00:20:40,000 --> 00:20:42,080
Speaker 10: up debating her, but has thrown a couple wrenches in

442
00:20:42,200 --> 00:20:44,360
Speaker 10: the system. He says he doesn't really like ABC's called

443
00:20:44,359 --> 00:20:46,879
Speaker 10: them fake news and said he'd prefer someone like Fox

444
00:20:46,920 --> 00:20:49,040
Speaker 10: News to host debate. He's also said he doesn't need

445
00:20:49,160 --> 00:20:51,479
Speaker 10: to debate because he's already well known and people knows

446
00:20:51,520 --> 00:20:53,320
Speaker 10: what he stands for, and he doesn't, you know, feel

447
00:20:53,359 --> 00:20:55,119
Speaker 10: a need to do this. This is going to be

448
00:20:55,160 --> 00:20:57,600
Speaker 10: an ongoing negotiation. There's also the question of what there'll

449
00:20:57,640 --> 00:21:00,240
Speaker 10: be a VP debate. Trump and Biden had all also

450
00:21:00,280 --> 00:21:02,560
Speaker 10: agreed to do one, you know, before the switch up

451
00:21:02,600 --> 00:21:04,520
Speaker 10: and the race. You know, Harris is still in the

452
00:21:04,520 --> 00:21:06,359
Speaker 10: process of naming her VP, so we may hear more

453
00:21:06,400 --> 00:21:07,560
Speaker 10: about that in the coming weeks.

454
00:21:08,440 --> 00:21:11,600
Speaker 2: What do we make about the situation in Israel and

455
00:21:11,640 --> 00:21:15,960
Speaker 2: how that polls, how that is polling for Kamala.

456
00:21:15,600 --> 00:21:18,480
Speaker 3: Harris, because clearly there's a huge section.

457
00:21:18,240 --> 00:21:20,600
Speaker 2: Of voters that is very unhappy of what's happening in

458
00:21:20,600 --> 00:21:23,800
Speaker 2: Gaza right that we're maybe not voting in all for

459
00:21:23,960 --> 00:21:27,359
Speaker 2: President Biden, but are they coming back in now?

460
00:21:27,400 --> 00:21:29,000
Speaker 3: Do we know anything along those lines.

461
00:21:29,640 --> 00:21:30,320
Speaker 6: Yeah, So, what this.

462
00:21:30,280 --> 00:21:32,360
Speaker 10: Poll shows is that people who are very concerned about

463
00:21:32,400 --> 00:21:35,400
Speaker 10: the Israel Gaza war, and particularly young voters for whom

464
00:21:35,400 --> 00:21:37,800
Speaker 10: this is a bigger issue, are more likely to vote

465
00:21:37,800 --> 00:21:40,960
Speaker 10: for Harris. She's taken a softer tone on this. She's

466
00:21:41,000 --> 00:21:44,639
Speaker 10: been more sympathetic to the human humanitarian situation in Palestine,

467
00:21:44,680 --> 00:21:46,560
Speaker 10: and is you know, just doesn't have quite the same

468
00:21:46,600 --> 00:21:48,200
Speaker 10: negatives on this issue that Biden does.

469
00:21:48,800 --> 00:21:48,960
Speaker 6: You know.

470
00:21:49,000 --> 00:21:50,560
Speaker 10: One of the things, you know, particularly just with the

471
00:21:50,800 --> 00:21:52,760
Speaker 10: you know, events of the of late of you know,

472
00:21:52,840 --> 00:21:54,960
Speaker 10: kind of there being more unrest in the Middle East,

473
00:21:55,720 --> 00:21:58,280
Speaker 10: is you know that the Biden administration is still pushing

474
00:21:58,280 --> 00:22:00,520
Speaker 10: for a ceasefire. Harris is still pushing for a he's fire.

475
00:22:00,720 --> 00:22:03,119
Speaker 10: Democrats really want this to be an issue that is

476
00:22:03,160 --> 00:22:06,240
Speaker 10: working towards a resolution versus, you know, an issue that's

477
00:22:06,280 --> 00:22:08,800
Speaker 10: flaring up, particularly as students go back to college campuses

478
00:22:08,840 --> 00:22:10,520
Speaker 10: in a couple of weeks. They don't want to see

479
00:22:10,520 --> 00:22:11,840
Speaker 10: the protests that we saw last spring.

480
00:22:12,480 --> 00:22:15,320
Speaker 5: Did the Republicans have Buyer's remorse for JD Vance. I'm

481
00:22:15,359 --> 00:22:17,520
Speaker 5: seeing some reporting all along those lines.

482
00:22:18,400 --> 00:22:20,600
Speaker 10: Yes, there's there's a lot of conversations on that, even

483
00:22:20,600 --> 00:22:22,920
Speaker 10: on a Bloomberg television mc mulvaney, who's a Trump ally,

484
00:22:22,960 --> 00:22:25,280
Speaker 10: came on earlier this week and said, no, they're not

485
00:22:25,320 --> 00:22:26,880
Speaker 10: looking to replace JD.

486
00:22:27,000 --> 00:22:27,280
Speaker 3: Vance.

487
00:22:27,320 --> 00:22:29,399
Speaker 10: But of course if you're being asked about this, this

488
00:22:29,480 --> 00:22:32,119
Speaker 10: means that this is at least a conversation that is circulating.

489
00:22:32,640 --> 00:22:34,719
Speaker 10: You know, Dvance has had a rough rollout, you know,

490
00:22:34,760 --> 00:22:36,639
Speaker 10: just in about the you know, two weeks or so

491
00:22:36,720 --> 00:22:39,600
Speaker 10: that he's been on the ticket. You know, some past

492
00:22:39,600 --> 00:22:43,760
Speaker 10: comments he's made, you know, sort of degrading childless cat

493
00:22:43,840 --> 00:22:46,600
Speaker 10: ladies have come up. He has had had some jokes

494
00:22:46,600 --> 00:22:48,480
Speaker 10: on the campaign trail that have come across as crass

495
00:22:48,480 --> 00:22:51,360
Speaker 10: and haven't really landed. So this is a conversation that's

496
00:22:51,359 --> 00:22:55,399
Speaker 10: happening on the upon those sort of Republican you know, elite,

497
00:22:55,480 --> 00:22:58,399
Speaker 10: the mainstream Republican class, but isn't really reaching the Trump campaign.

498
00:22:58,480 --> 00:23:00,879
Speaker 10: They have continued to say JD is our guy and

499
00:23:00,920 --> 00:23:01,880
Speaker 10: we're going to stick by him.

500
00:23:02,880 --> 00:23:06,000
Speaker 2: Is there an equivalent for single cat ladies for single men?

501
00:23:06,400 --> 00:23:06,480
Speaker 7: Like?

502
00:23:06,560 --> 00:23:07,960
Speaker 3: Is that single men dog owners?

503
00:23:07,960 --> 00:23:08,040
Speaker 9: Like?

504
00:23:08,240 --> 00:23:11,119
Speaker 2: I'm actually I'm not trying to be funny. I'm genuinely

505
00:23:11,160 --> 00:23:12,760
Speaker 2: curious bachelors.

506
00:23:13,080 --> 00:23:14,879
Speaker 6: But that's that's a whole different.

507
00:23:14,680 --> 00:23:16,520
Speaker 3: But that's okay, Like that's a different vibe.

508
00:23:17,240 --> 00:23:18,960
Speaker 2: But like if you're forty five and you have a

509
00:23:19,000 --> 00:23:21,960
Speaker 2: dog and then live at home and not married, that's

510
00:23:21,960 --> 00:23:22,520
Speaker 2: still funny.

511
00:23:22,520 --> 00:23:25,240
Speaker 10: Maybe a gamer would be the equivalent a gamer.

512
00:23:25,320 --> 00:23:29,360
Speaker 2: Okay, okay, so childless cat ladies versus gamers. It gets complicated,

513
00:23:29,400 --> 00:23:31,399
Speaker 2: all right, Okay, Hey, Laurd, thanks lot, We really appreciate it.

514
00:23:31,400 --> 00:23:33,960
Speaker 2: The poll was really interesting to kind of comb through there.

515
00:23:34,160 --> 00:23:37,439
Speaker 2: Lord Davison, a political editor for Bloomberg News joining us

516
00:23:37,520 --> 00:23:41,240
Speaker 2: from Washington, d C. They also made the great point

517
00:23:41,240 --> 00:23:43,560
Speaker 2: in the article that a lot of what President Trump

518
00:23:43,680 --> 00:23:47,040
Speaker 2: is very good at is putting down opponents. But having

519
00:23:47,160 --> 00:23:50,280
Speaker 2: that with Kamala Harris is very difficult when you're also

520
00:23:50,320 --> 00:23:52,600
Speaker 2: trying to draw over women and you're trying to draw

521
00:23:52,680 --> 00:23:53,760
Speaker 2: over African Americans.

522
00:23:53,840 --> 00:23:54,680
Speaker 6: Yep, tough one.

523
00:23:54,720 --> 00:23:59,000
Speaker 5: And I don't remember growing up that Swing States literally

524
00:23:59,240 --> 00:24:00,359
Speaker 5: decided election.

525
00:24:00,440 --> 00:24:02,960
Speaker 6: You don't even go to the other found the same thing.

526
00:24:03,119 --> 00:24:06,320
Speaker 6: But it's back in the day. I thought California manored

527
00:24:06,320 --> 00:24:08,320
Speaker 6: New York manor Texas. I mean, now, if you're not

528
00:24:08,359 --> 00:24:11,000
Speaker 6: in those swing states. You're not going to see the candidates.

529
00:24:11,040 --> 00:24:12,639
Speaker 2: I don't think yeah, which is also interesting when you

530
00:24:12,640 --> 00:24:15,560
Speaker 2: talk about the VP and sort of obviously Peepoota Jeedge

531
00:24:15,600 --> 00:24:18,320
Speaker 2: has the most exposure because he's already in the White House.

532
00:24:18,359 --> 00:24:19,360
Speaker 3: But that was interesting.

533
00:24:20,880 --> 00:24:24,800
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

534
00:24:24,880 --> 00:24:27,920
Speaker 1: weekdays at ten am Eastern on Apple card Play and

535
00:24:27,920 --> 00:24:31,200
Speaker 1: Android Otto with the Bloomberg Business. You can also listen

536
00:24:31,320 --> 00:24:34,400
Speaker 1: live on Amazon Alexa from our flagship New York station

537
00:24:34,760 --> 00:24:38,480
Speaker 1: Just say Alexa playing Bloomberg eleven thirty.

538
00:24:39,200 --> 00:24:41,080
Speaker 5: It is FED Day. We will hear from the feed

539
00:24:41,080 --> 00:24:43,840
Speaker 5: at two o'clock. Press conference of two thirty. Bloomberg's coverage

540
00:24:43,880 --> 00:24:47,880
Speaker 5: begins at one thirty. Tom Keen, Lisa A. Bromwitz, John

541
00:24:47,880 --> 00:24:50,239
Speaker 5: Farrell Bring it to you. Jeffrey Cleveland joins us here.

542
00:24:50,240 --> 00:24:53,280
Speaker 5: He's a chief economist a Payden and Regal joining us

543
00:24:53,440 --> 00:24:54,119
Speaker 5: via La.

544
00:24:54,320 --> 00:24:56,440
Speaker 6: Via that Zoom technology thing.

545
00:24:57,040 --> 00:24:58,800
Speaker 5: Jeff, what do you expect from the Federal Reserve today?

546
00:24:58,800 --> 00:25:01,000
Speaker 5: A lot of folks are saying attention to maybe the

547
00:25:01,040 --> 00:25:03,359
Speaker 5: tone as it relates to September.

548
00:25:03,400 --> 00:25:04,120
Speaker 6: What are you looking for?

549
00:25:05,480 --> 00:25:08,560
Speaker 11: Well, Paul, Happy fed Day, beautiful day here in Los Angeles.

550
00:25:08,680 --> 00:25:11,760
Speaker 3: So excited this guy, I know, yeah, I think.

551
00:25:11,600 --> 00:25:13,840
Speaker 11: This is a great day for the Fed to set

552
00:25:13,920 --> 00:25:17,920
Speaker 11: up for a potential cut in September. They don't need

553
00:25:17,960 --> 00:25:21,120
Speaker 11: to rush into anything, though. I don't think there's an

554
00:25:21,240 --> 00:25:25,119
Speaker 11: urgent need to rush rates. We saw very to cut rates.

555
00:25:25,280 --> 00:25:28,040
Speaker 11: We saw very strong second quarter growth. I think the

556
00:25:28,119 --> 00:25:30,720
Speaker 11: labor market is still doing pretty well, so there's no

557
00:25:30,880 --> 00:25:35,119
Speaker 11: urgent need. But you know, if inflation continues to cool

558
00:25:35,520 --> 00:25:38,360
Speaker 11: like we saw in the PCEE data for the month

559
00:25:38,359 --> 00:25:41,640
Speaker 11: of June, then it's possible by September we will get

560
00:25:41,640 --> 00:25:43,760
Speaker 11: a rate cut. So I think, you know, setting up

561
00:25:43,760 --> 00:25:48,440
Speaker 11: that possibility, keeping their options open, and then maybe pushing

562
00:25:48,480 --> 00:25:51,600
Speaker 11: back a little bit on market expectations if you earlier

563
00:25:51,680 --> 00:25:53,600
Speaker 11: this week, I looked through the end of next year,

564
00:25:53,640 --> 00:25:56,680
Speaker 11: so the end of twenty twenty five, and there were

565
00:25:56,720 --> 00:26:01,360
Speaker 11: around seven cuts price did. So that's that's more than

566
00:26:01,359 --> 00:26:04,400
Speaker 11: a fine tuning operation. That would be you know, more

567
00:26:04,440 --> 00:26:05,920
Speaker 11: of a rate I would.

568
00:26:05,720 --> 00:26:06,920
Speaker 8: Call slashing operation.

569
00:26:07,160 --> 00:26:10,800
Speaker 11: So maybe pushing back against the longer term price.

570
00:26:10,920 --> 00:26:13,000
Speaker 2: Well to that point, I mean, the two year yield

571
00:26:13,680 --> 00:26:17,720
Speaker 2: is down forty basis points for this month, a huge move,

572
00:26:17,760 --> 00:26:20,000
Speaker 2: and I'm betting that a lot of that happened after

573
00:26:20,080 --> 00:26:22,439
Speaker 2: July eleventh, was when we got that CPI number.

574
00:26:22,720 --> 00:26:23,680
Speaker 3: So if J.

575
00:26:23,880 --> 00:26:26,439
Speaker 2: Powells sort of becomes a little bit more balanced or

576
00:26:26,600 --> 00:26:30,040
Speaker 2: tries to have a message that's more balanced, here, what's

577
00:26:30,040 --> 00:26:31,840
Speaker 2: going to happen in the front end of the bomb market?

578
00:26:32,760 --> 00:26:34,399
Speaker 11: You know, we think so we think we're in a

579
00:26:34,440 --> 00:26:37,480
Speaker 11: soft landing, and that you know, so the scenario we're in,

580
00:26:37,560 --> 00:26:39,280
Speaker 11: we'll be in the soft landing over the next.

581
00:26:39,160 --> 00:26:40,719
Speaker 6: Six to twelve months or so.

582
00:26:40,720 --> 00:26:45,439
Speaker 11: So in that environment, I think moderately lower treasury yields

583
00:26:45,440 --> 00:26:48,480
Speaker 11: makes sense. Two year yields, five year yields, seven tens,

584
00:26:48,480 --> 00:26:51,600
Speaker 11: what have you. So that makes sense on the short

585
00:26:51,680 --> 00:26:54,440
Speaker 11: term basis, though I think the market is far too.

586
00:26:54,280 --> 00:26:56,200
Speaker 8: Confident over this September cut.

587
00:26:57,000 --> 00:26:58,440
Speaker 11: You know, you can be in a soft landing and

588
00:26:58,800 --> 00:27:02,640
Speaker 11: cuts arrived later, probably in the short term. In your

589
00:27:02,680 --> 00:27:05,640
Speaker 11: scenario where you know, chair pal pushes back a little bit,

590
00:27:06,480 --> 00:27:09,240
Speaker 11: we will see some upward pressure on to year yields.

591
00:27:09,560 --> 00:27:12,560
Speaker 11: Another candidate for some maybe some upward pressure would be

592
00:27:12,840 --> 00:27:16,800
Speaker 11: Friday's jobs report. We get a decent jobs number, but also,

593
00:27:16,880 --> 00:27:18,720
Speaker 11: you know, we've been watching the last few months.

594
00:27:18,480 --> 00:27:22,640
Speaker 8: The unemployment rate REAP up. It's possible the unemployment.

595
00:27:22,240 --> 00:27:24,879
Speaker 11: Rate will tick down this Friday, and you know that

596
00:27:24,920 --> 00:27:27,280
Speaker 11: will pour some cold.

597
00:27:27,040 --> 00:27:30,040
Speaker 8: Water on these sort of bearish calls about the Fed.

598
00:27:30,080 --> 00:27:31,320
Speaker 8: You know, it needs to do something now.

599
00:27:31,440 --> 00:27:34,320
Speaker 11: The economy is weakening and that could have impact on

600
00:27:34,320 --> 00:27:35,639
Speaker 11: two year treasury yields.

601
00:27:35,760 --> 00:27:38,879
Speaker 5: And Jeffery Alex and I had one of those discussions

602
00:27:38,880 --> 00:27:41,800
Speaker 5: earlier today with Danielle di Martino Booth, who feels like

603
00:27:41,800 --> 00:27:43,919
Speaker 5: this Yeo's economy is already in a recession if you

604
00:27:43,960 --> 00:27:46,879
Speaker 5: really take a look at the real time data and

605
00:27:46,880 --> 00:27:49,200
Speaker 5: that the Fed needs to they're actually behind the curve.

606
00:27:49,200 --> 00:27:50,439
Speaker 6: They should have already been cutting.

607
00:27:51,359 --> 00:27:52,760
Speaker 5: How do you respond to that when when you hear

608
00:27:52,800 --> 00:27:54,800
Speaker 5: that amongst investors.

609
00:27:54,920 --> 00:27:57,440
Speaker 11: To two, GDP grew two point eight percent quarter to

610
00:27:57,560 --> 00:27:59,879
Speaker 11: quarter annualized on a year on year basis, it was

611
00:28:00,160 --> 00:28:04,480
Speaker 11: three percent. The consumer continues to be solid. The unemployment

612
00:28:04,520 --> 00:28:06,639
Speaker 11: rate as creeped up, it's still below that's four percent.

613
00:28:06,680 --> 00:28:07,280
Speaker 8: That's very low.

614
00:28:07,359 --> 00:28:11,320
Speaker 11: Historically, initial claims for unemployment insurance layoffs pretty good reliable

615
00:28:11,320 --> 00:28:14,280
Speaker 11: indicator of whether we're in a recession or not. Very

616
00:28:14,320 --> 00:28:17,640
Speaker 11: low still, So you know, I, you know, and I've

617
00:28:17,640 --> 00:28:20,679
Speaker 11: been hearing this story for probably eight quarters. Now, I

618
00:28:20,680 --> 00:28:23,840
Speaker 11: think since twenty twenty two, people said, you know, if

619
00:28:23,840 --> 00:28:25,520
Speaker 11: the Fed starts high King, they're going to pull the

620
00:28:25,560 --> 00:28:28,120
Speaker 11: rug out of the economy, of out from under the economy, Paul,

621
00:28:29,119 --> 00:28:30,000
Speaker 11: It just hasn't happened.

622
00:28:30,040 --> 00:28:30,159
Speaker 4: Right.

623
00:28:30,160 --> 00:28:31,320
Speaker 8: The economy keeps going well.

624
00:28:31,400 --> 00:28:34,720
Speaker 2: But here's the problem, right, is that it's a case

625
00:28:34,760 --> 00:28:39,000
Speaker 2: shape economy where the lower and middle income houses are

626
00:28:39,000 --> 00:28:42,280
Speaker 2: getting continually squeezed and the upper income are enjoying five

627
00:28:42,320 --> 00:28:46,680
Speaker 2: percent on their treasury bills. So with that, I mean,

628
00:28:46,680 --> 00:28:49,520
Speaker 2: I know that that's nothing unusual necessarily within the economy,

629
00:28:49,520 --> 00:28:51,560
Speaker 2: but does that put a little bit more pressure then

630
00:28:52,240 --> 00:28:52,840
Speaker 2: on the Fed?

631
00:28:54,120 --> 00:28:56,560
Speaker 11: Well, I think if you're the Fed, you are looking

632
00:28:56,600 --> 00:29:00,760
Speaker 11: at inflation. It has moderated, especially in the last two months,

633
00:29:00,800 --> 00:29:02,560
Speaker 11: similar to what we saw maybe in the second half

634
00:29:02,560 --> 00:29:03,160
Speaker 11: of last year.

635
00:29:03,360 --> 00:29:05,080
Speaker 8: If that continues, you're.

636
00:29:05,200 --> 00:29:08,880
Speaker 11: You could very easily alex be back to two point

637
00:29:08,880 --> 00:29:11,040
Speaker 11: two to two point three percent year on year core

638
00:29:11,080 --> 00:29:14,480
Speaker 11: PCE sometime next summer, which is close to target.

639
00:29:14,480 --> 00:29:15,040
Speaker 8: So that's good.

640
00:29:15,640 --> 00:29:18,640
Speaker 11: At the same time, the unemployment rate has crept up,

641
00:29:18,760 --> 00:29:21,800
Speaker 11: so they don't want to just be restrictive stick at

642
00:29:21,800 --> 00:29:24,200
Speaker 11: five point fifty for the foreseeable future.

643
00:29:24,760 --> 00:29:25,360
Speaker 8: So there.

644
00:29:25,640 --> 00:29:28,000
Speaker 11: They are aware of that, and you know, I think

645
00:29:28,000 --> 00:29:30,960
Speaker 11: that's a good argument for fine tuning the FED funds, Right,

646
00:29:30,960 --> 00:29:32,520
Speaker 11: you don't need to be at five to fifty If

647
00:29:32,560 --> 00:29:36,080
Speaker 11: inflation's at two point three and the unemployment rates creeping up, Now,

648
00:29:36,120 --> 00:29:38,120
Speaker 11: do you need to slash back to two and a

649
00:29:38,160 --> 00:29:39,360
Speaker 11: half percent or three percent?

650
00:29:39,800 --> 00:29:42,520
Speaker 8: Probably not either. It's more of a fine tuning operation.

651
00:29:43,520 --> 00:29:45,600
Speaker 11: I might have mentioned it on this show before, but

652
00:29:45,720 --> 00:29:48,680
Speaker 11: you know, like the mid to late nineties is more

653
00:29:48,720 --> 00:29:52,280
Speaker 11: of the historical analog, if you will, for what I

654
00:29:52,320 --> 00:29:54,920
Speaker 11: sort of envision. The Fed did cut a few times

655
00:29:54,920 --> 00:29:57,680
Speaker 11: in there, but growth continued throughout that period.

656
00:29:58,120 --> 00:30:00,360
Speaker 8: Stocks did well, you know, bonds did well well. So

657
00:30:00,760 --> 00:30:01,720
Speaker 8: it was a good environment.

658
00:30:02,080 --> 00:30:04,840
Speaker 5: So overall, in terms of the consumer, how do you

659
00:30:04,880 --> 00:30:07,000
Speaker 5: feel like the consumers faring out there?

660
00:30:07,960 --> 00:30:11,800
Speaker 11: I think, you know, for me, job growth continues, you

661
00:30:11,880 --> 00:30:15,200
Speaker 11: have more people working, they're still earning wages, although wages

662
00:30:15,200 --> 00:30:17,000
Speaker 11: have you know, cooled off a little bit to about

663
00:30:17,040 --> 00:30:18,960
Speaker 11: four percent year on year. With what we're seeing in

664
00:30:19,000 --> 00:30:21,680
Speaker 11: the ECI data, it's inconsistent what we've been seeing in

665
00:30:21,720 --> 00:30:25,880
Speaker 11: average hourly earnings. But it's really income growth that drives

666
00:30:26,040 --> 00:30:28,560
Speaker 11: the consumer and consumer spending and that is that is

667
00:30:28,600 --> 00:30:31,239
Speaker 11: still holding up through the latest set of data. We'll

668
00:30:31,280 --> 00:30:33,520
Speaker 11: get an update on that on Friday, But I think

669
00:30:33,520 --> 00:30:36,239
Speaker 11: that's really key. Separate from that, Paul, you can think

670
00:30:36,280 --> 00:30:39,440
Speaker 11: about household net worth still looks pretty good. We still

671
00:30:39,440 --> 00:30:42,760
Speaker 11: think households have savings. If you look at household debt

672
00:30:42,880 --> 00:30:46,520
Speaker 11: service as a share of their disposable income, those ratios

673
00:30:46,520 --> 00:30:47,040
Speaker 11: are still.

674
00:30:46,920 --> 00:30:48,960
Speaker 8: Quite low, even though rates have prepped up.

675
00:30:49,040 --> 00:30:51,760
Speaker 11: So all in all, I think the consumer is in decent,

676
00:30:51,920 --> 00:30:55,160
Speaker 11: decent shape. Still all right, let's oh no, no, sorry, gohad.

677
00:30:55,160 --> 00:30:56,480
Speaker 2: I was gonna say, before you go, before we let

678
00:30:56,560 --> 00:30:58,800
Speaker 2: you go, what would be the question you'd ask Jay

679
00:30:58,800 --> 00:30:59,880
Speaker 2: Powell if you're in the presser?

680
00:31:01,000 --> 00:31:02,719
Speaker 8: Well, I would ask him, hey, what you know?

681
00:31:02,960 --> 00:31:03,360
Speaker 6: You think?

682
00:31:03,720 --> 00:31:05,400
Speaker 8: What do you think about the unemployment rate rise?

683
00:31:05,400 --> 00:31:08,560
Speaker 11: We've gone from you know, three point four percent last spring,

684
00:31:08,880 --> 00:31:10,120
Speaker 11: we're now four point one.

685
00:31:10,720 --> 00:31:12,160
Speaker 8: How concerning is that to you?

686
00:31:12,200 --> 00:31:14,120
Speaker 11: How much does that wane on you in terms of

687
00:31:14,160 --> 00:31:17,240
Speaker 11: the decisions you will make. I might also ask him, Hey,

688
00:31:17,720 --> 00:31:20,440
Speaker 11: the market thinks you're definitely cutting in September.

689
00:31:20,520 --> 00:31:22,520
Speaker 8: What would what is the one thing that would really

690
00:31:22,600 --> 00:31:23,160
Speaker 8: change your view?

691
00:31:23,200 --> 00:31:23,440
Speaker 1: Is it?

692
00:31:23,680 --> 00:31:26,040
Speaker 11: I think it would be core PCEE you know, coming

693
00:31:26,080 --> 00:31:27,880
Speaker 11: in month to month, hotter in the next couple of months,

694
00:31:27,920 --> 00:31:28,640
Speaker 11: choppy inflation.

695
00:31:28,760 --> 00:31:30,800
Speaker 8: But I think that's a worthwhile ask.

696
00:31:31,680 --> 00:31:32,640
Speaker 3: All right, thanks so much.

697
00:31:32,680 --> 00:31:34,240
Speaker 2: We really appreciate it, and I would love it if

698
00:31:34,280 --> 00:31:36,000
Speaker 2: you went into a press room. It's like, hey, Jay,

699
00:31:36,680 --> 00:31:39,160
Speaker 2: tell me about this, all right. Jeffrey Cleveland, Chief economist

700
00:31:39,160 --> 00:31:41,520
Speaker 2: over Opinion regal super appreciate that.

701
00:31:43,080 --> 00:31:46,960
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

702
00:31:47,040 --> 00:31:50,560
Speaker 1: weekdays at ten am Eastern on applecar Play and Android

703
00:31:50,600 --> 00:31:53,360
Speaker 1: Auto with the Bloomberg Business app. You can also listen

704
00:31:53,480 --> 00:31:56,600
Speaker 1: live on Amazon Alexa from our flagship New York station.

705
00:31:56,960 --> 00:32:00,120
Speaker 1: Just say Alexa playing Bloomberg eleven thirty.

706
00:32:01,520 --> 00:32:04,080
Speaker 5: You're listening to Bloomberg Intelligence, Alex Steel, Paul Swiney live

707
00:32:04,120 --> 00:32:06,400
Speaker 5: here in our Bloomberg you know, active broadcast studio. All right,

708
00:32:06,440 --> 00:32:08,320
Speaker 5: here's a company for you. I had not heard about

709
00:32:08,320 --> 00:32:13,320
Speaker 5: it until recently. Train Technologies. I believe they're based in Ireland,

710
00:32:13,360 --> 00:32:17,680
Speaker 5: but there are a global climate innovator focused on sustainable

711
00:32:17,720 --> 00:32:22,160
Speaker 5: solutions for buildings, homes, and transportation. Karen Uberhart from Bloomberg Intelligence.

712
00:32:22,160 --> 00:32:25,120
Speaker 5: She covers this stock and she's a grizzled veteran she

713
00:32:25,240 --> 00:32:29,640
Speaker 5: is not given to praise companies, you know. Unnotably, she

714
00:32:29,760 --> 00:32:33,720
Speaker 5: says they had a great quarter again, amazing company in

715
00:32:33,760 --> 00:32:34,840
Speaker 5: a very attractive sector.

716
00:32:34,880 --> 00:32:35,520
Speaker 6: So she told me that.

717
00:32:35,560 --> 00:32:37,760
Speaker 5: I said, we got to get these guys on Bloomberg

718
00:32:38,720 --> 00:32:40,400
Speaker 5: and get her talking about see what's going on with

719
00:32:40,440 --> 00:32:43,920
Speaker 5: this company. Dave Regnery joins us. He is the CEO

720
00:32:44,000 --> 00:32:47,640
Speaker 5: of Trained Technologies. The tickers tt on your Bloomberg terminal

721
00:32:48,080 --> 00:32:50,160
Speaker 5: stock hit a fifty two week and actually and I'm

722
00:32:50,160 --> 00:32:53,280
Speaker 5: going to call it an all time high today on

723
00:32:53,320 --> 00:32:55,560
Speaker 5: the back of some pretty good numbers, earnings and sales

724
00:32:55,600 --> 00:32:59,240
Speaker 5: beat on consensus. Dave, thanks so much for joining us

725
00:32:59,360 --> 00:33:02,280
Speaker 5: here in Lovely David's and North Carolina.

726
00:33:02,400 --> 00:33:03,520
Speaker 6: Talk to us about your company.

727
00:33:03,760 --> 00:33:07,800
Speaker 5: What's driving the performance of Trained Technologies these days?

728
00:33:08,520 --> 00:33:10,360
Speaker 12: Well, first, Paul, thanks for having me on the show.

729
00:33:10,720 --> 00:33:13,360
Speaker 12: I just got off our earnings call and we reported

730
00:33:13,400 --> 00:33:16,320
Speaker 12: a very strong second quarter, much like we did in

731
00:33:16,360 --> 00:33:20,120
Speaker 12: the first quarter. Our organic revenue growth was up thirteen percent,

732
00:33:20,280 --> 00:33:23,600
Speaker 12: our order rates were up nineteen percent, and our EPs

733
00:33:23,640 --> 00:33:27,960
Speaker 12: growth was up twenty three percent. So very proud of

734
00:33:27,960 --> 00:33:31,040
Speaker 12: what we've been able to how we've been able to perform.

735
00:33:31,760 --> 00:33:35,280
Speaker 12: Look as far as what's driving our growth. You know,

736
00:33:35,320 --> 00:33:37,280
Speaker 12: I always tell people we have a system of things

737
00:33:37,280 --> 00:33:40,600
Speaker 12: that makes Train Technologies a great company. And whether it's

738
00:33:40,640 --> 00:33:44,520
Speaker 12: the way we we operate our facilities, through our business

739
00:33:44,520 --> 00:33:47,479
Speaker 12: operating system ways, whether it's the way we innovate our

740
00:33:47,520 --> 00:33:51,320
Speaker 12: new products, or whether it's our direct salesforce, those are

741
00:33:51,320 --> 00:33:53,520
Speaker 12: a system of things that make us a great company.

742
00:33:53,960 --> 00:33:56,760
Speaker 12: And we have a service business that's a third of

743
00:33:56,800 --> 00:34:01,840
Speaker 12: our company that's performing extremely well. In the second quarter,

744
00:34:02,000 --> 00:34:06,440
Speaker 12: our service business was up mid teens from a growth perspective,

745
00:34:06,880 --> 00:34:09,600
Speaker 12: and we have a culture that's you know, we believe

746
00:34:09,640 --> 00:34:12,520
Speaker 12: in challenging what's possible and innovating for a sustainable world.

747
00:34:13,000 --> 00:34:15,480
Speaker 2: So based on that, it's great to chat with you.

748
00:34:15,520 --> 00:34:18,560
Speaker 2: By the way, I love love talking to you, because

749
00:34:18,560 --> 00:34:20,600
Speaker 2: you have such a great read on the residential and

750
00:34:20,680 --> 00:34:24,680
Speaker 2: commercial businesses. Basically, if a commercial HVAC unit and a

751
00:34:24,719 --> 00:34:29,560
Speaker 2: near term residential HVAC unit, and of course that's heating, ventiletion,

752
00:34:29,840 --> 00:34:33,759
Speaker 2: air and cooling, where's the strength, where's the growth, where

753
00:34:33,760 --> 00:34:35,000
Speaker 2: are the weak points?

754
00:34:35,680 --> 00:34:38,760
Speaker 12: Yeah, I'll start with residential. We had a very strong

755
00:34:38,880 --> 00:34:41,520
Speaker 12: quarter in the second quarter. Our revenue was up mid

756
00:34:41,560 --> 00:34:46,960
Speaker 12: teens I'm sorry, low teens, but that our residential business.

757
00:34:47,000 --> 00:34:50,200
Speaker 12: For the prior I'll say, you know, three quarters had

758
00:34:50,239 --> 00:34:55,240
Speaker 12: really been struggling with a refrigerant change that wasn't clear.

759
00:34:55,960 --> 00:34:59,600
Speaker 12: That's been clarified. It was really struggling with excess inventory

760
00:34:59,640 --> 00:35:02,040
Speaker 12: kind of a hangover from the COVID days that was

761
00:35:02,040 --> 00:35:06,520
Speaker 12: in the channel. Those both correct it, and we're off

762
00:35:06,520 --> 00:35:09,759
Speaker 12: to a very warm start to the cooling season, which

763
00:35:09,760 --> 00:35:12,680
Speaker 12: should have us all concerned for a different reason as

764
00:35:12,680 --> 00:35:16,279
Speaker 12: the climate continues to increase in temperature. But I would

765
00:35:16,280 --> 00:35:19,120
Speaker 12: tell you that it's a very strong start of the year,

766
00:35:19,200 --> 00:35:23,800
Speaker 12: so very strong and residential, our commercial business really broad

767
00:35:23,840 --> 00:35:27,719
Speaker 12: based growth. You know, certainly the high growth verticals like

768
00:35:27,840 --> 00:35:30,840
Speaker 12: data centers. We do very very well in our education

769
00:35:31,680 --> 00:35:35,319
Speaker 12: or in healthcare, but we had broad based growth in

770
00:35:35,360 --> 00:35:39,839
Speaker 12: the Americas. We track fourteen different verticals and we were

771
00:35:39,960 --> 00:35:42,400
Speaker 12: hard pressed to find a vertical that we were not

772
00:35:42,520 --> 00:35:45,759
Speaker 12: strong in. So it was just it was a very

773
00:35:45,760 --> 00:35:47,960
Speaker 12: strong quarter for trained Technology. I'm very proud of what

774
00:35:47,960 --> 00:35:50,160
Speaker 12: the team's been able to accomplish.

775
00:35:50,440 --> 00:35:53,640
Speaker 5: Yeah, I'm reading the Bloomberg Intelligence research note on your earnings.

776
00:35:53,640 --> 00:35:57,400
Speaker 5: North America's sixteen percent organic growth was much greater than

777
00:35:57,440 --> 00:35:58,759
Speaker 5: the ten percent consensus.

778
00:35:59,400 --> 00:36:00,120
Speaker 6: What drove that.

779
00:36:01,520 --> 00:36:04,560
Speaker 12: Yeah, really two things. Our residential business perform better. Okay,

780
00:36:04,640 --> 00:36:06,719
Speaker 12: we thought that was going to be you know, in

781
00:36:06,760 --> 00:36:08,840
Speaker 12: the beginning of the year, we thought our residential business

782
00:36:08,840 --> 00:36:11,439
Speaker 12: would below single digits. We came in you know, low

783
00:36:11,480 --> 00:36:15,600
Speaker 12: teams in the quarter, so we significantly outdrove that. And

784
00:36:15,640 --> 00:36:19,400
Speaker 12: then our commercial HVAC business just continues to operate at

785
00:36:19,400 --> 00:36:22,920
Speaker 12: a very high level. And like I said, services was

786
00:36:23,000 --> 00:36:27,239
Speaker 12: up in the high teens actually in the Americas, and

787
00:36:27,280 --> 00:36:31,919
Speaker 12: their equipment business just continues to exceed our customers' expectations.

788
00:36:32,080 --> 00:36:35,160
Speaker 12: So very strong quarter. You know, I was listening to

789
00:36:35,239 --> 00:36:39,799
Speaker 12: your show earlier. You were talking about sustainability, and you know,

790
00:36:40,040 --> 00:36:43,719
Speaker 12: I would tell you that Trained Technologies, our purpose is

791
00:36:43,800 --> 00:36:48,920
Speaker 12: built around sustainability. And what people are talking about right

792
00:36:48,920 --> 00:36:51,759
Speaker 12: now as you're hearing a lot about, you know, how

793
00:36:51,840 --> 00:36:54,040
Speaker 12: much power is going to have to be generated to

794
00:36:54,120 --> 00:36:57,080
Speaker 12: meet the demand that's coming. And you'll hear a lot

795
00:36:57,080 --> 00:37:00,200
Speaker 12: about data centers using a lot of the electricity. What

796
00:37:00,360 --> 00:37:03,279
Speaker 12: nobody is talking about is the amount of power that's

797
00:37:03,320 --> 00:37:06,400
Speaker 12: being generated that's being wasted. And I would tell you

798
00:37:06,440 --> 00:37:09,560
Speaker 12: we call it demand side management, and we know because

799
00:37:09,560 --> 00:37:13,080
Speaker 12: we've done hundreds of thousands of energy audits and buildings

800
00:37:13,120 --> 00:37:16,920
Speaker 12: that most buildings operate about thirty percent inefficiently. So just

801
00:37:16,960 --> 00:37:19,520
Speaker 12: think if we could solve that problem, and if we

802
00:37:19,560 --> 00:37:22,279
Speaker 12: can make buildings perform the way they were designed, or

803
00:37:22,320 --> 00:37:25,000
Speaker 12: assets performed the way they're designed. Just think about the

804
00:37:25,040 --> 00:37:28,399
Speaker 12: amount that we could save and the energy that's being

805
00:37:28,440 --> 00:37:30,880
Speaker 12: produced and which was obviously has a trickle effect to

806
00:37:30,920 --> 00:37:33,759
Speaker 12: the carbon footprint. So that's what train technology is all about.

807
00:37:33,920 --> 00:37:35,760
Speaker 12: People always ask me, where do you see the growth

808
00:37:35,800 --> 00:37:37,799
Speaker 12: coming from. It's going to be on the demand side,

809
00:37:37,840 --> 00:37:38,720
Speaker 12: management side.

810
00:37:38,840 --> 00:37:41,160
Speaker 2: Hey, did we really appreciate it? Definitely come back. I

811
00:37:41,200 --> 00:37:43,520
Speaker 2: know you got to run, but we appreciate your time

812
00:37:43,560 --> 00:37:45,879
Speaker 2: today when you're in the city, come in and tell

813
00:37:45,920 --> 00:37:47,920
Speaker 2: us more about it, you know. And I'm also curious

814
00:37:47,920 --> 00:37:49,719
Speaker 2: as to those customers are think willing to pay up

815
00:37:49,719 --> 00:37:51,440
Speaker 2: for it we got last morning to talk about.

816
00:37:51,200 --> 00:37:56,560
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

817
00:37:56,640 --> 00:38:00,480
Speaker 1: weekdays at ten am Eastern on applecar Play at All

818
00:38:00,560 --> 00:38:03,560
Speaker 1: with the Bloomberg Business. You can also listen live on

819
00:38:03,640 --> 00:38:06,919
Speaker 1: Amazon Alexa from our flagship New York station, Just say

820
00:38:07,000 --> 00:38:09,320
Speaker 1: Alexa play Bloomberg eleven thirty.

821
00:38:10,320 --> 00:38:12,040
Speaker 2: Let's get back to the market Shaw, We just go

822
00:38:12,120 --> 00:38:13,799
Speaker 2: back to ETFs, talk about it.

823
00:38:13,920 --> 00:38:16,600
Speaker 6: Growth business. Jennifer Crancio Joints is here. She's global head

824
00:38:16,600 --> 00:38:18,160
Speaker 6: of distribution for TCW.

825
00:38:18,400 --> 00:38:21,319
Speaker 5: Let's Trust Company of the West, Los Angeles. Space used

826
00:38:21,360 --> 00:38:22,480
Speaker 5: to be a huge plan of mine.

827
00:38:22,680 --> 00:38:25,040
Speaker 6: They loved me. She joins us here in our Bloomberg

828
00:38:25,040 --> 00:38:26,400
Speaker 6: Interactive Brokers studio.

829
00:38:27,280 --> 00:38:30,680
Speaker 5: Jennifer, I mean, the money just keeps flowing to you guys,

830
00:38:31,080 --> 00:38:34,000
Speaker 5: and it's just unbelievable how your market is growing, the

831
00:38:34,000 --> 00:38:37,120
Speaker 5: ETF market. Where's some of the money going now? Are

832
00:38:37,160 --> 00:38:41,080
Speaker 5: folks looking for income? Are they looking for special situations?

833
00:38:41,120 --> 00:38:42,320
Speaker 5: What are they looking for these days?

834
00:38:42,560 --> 00:38:45,560
Speaker 9: Yeah? From a TCW perspective, people know us for fixed

835
00:38:45,600 --> 00:38:48,200
Speaker 9: income and so we have a developed set of equity

836
00:38:48,239 --> 00:38:51,960
Speaker 9: ETFs now. But we launched the first fixed income ETF recently.

837
00:38:52,520 --> 00:38:54,920
Speaker 9: And the ticker because that's you know, that's what we

838
00:38:54,960 --> 00:38:58,840
Speaker 9: do in ETFs is flex or FLXR. But Flexer and

839
00:38:58,880 --> 00:39:02,040
Speaker 9: strategies like it are giving you return in the fixed

840
00:39:02,080 --> 00:39:05,160
Speaker 9: income portfolio, but they're also giving you very consistent income.

841
00:39:05,440 --> 00:39:08,279
Speaker 9: And if you think about how to actually construct a portfolio,

842
00:39:08,600 --> 00:39:13,400
Speaker 9: equities can be volatile market market, money market funds and rates.

843
00:39:13,440 --> 00:39:15,880
Speaker 9: They will go down eventually, and so we see a

844
00:39:15,880 --> 00:39:19,160
Speaker 9: lot of investors looking for products that are giving you return,

845
00:39:19,560 --> 00:39:21,760
Speaker 9: but they're also giving you this consistent income.

846
00:39:22,200 --> 00:39:24,400
Speaker 3: This might be a really silly question. Are these actively

847
00:39:24,440 --> 00:39:27,279
Speaker 3: managed ETFs or are these boring? Not boring, I mean

848
00:39:27,320 --> 00:39:29,320
Speaker 3: just passive ETFs. We ad TCW.

849
00:39:29,480 --> 00:39:32,200
Speaker 9: We have one index CTF, and everything else we do

850
00:39:32,360 --> 00:39:35,520
Speaker 9: is active. So our view on portfolios right now is

851
00:39:35,560 --> 00:39:38,600
Speaker 9: there's a lot of uncertainty in the market, and particularly

852
00:39:38,640 --> 00:39:41,919
Speaker 9: when it comes to fixed income and bonds, we think

853
00:39:41,960 --> 00:39:44,359
Speaker 9: active management is the way to go. We can make

854
00:39:44,400 --> 00:39:47,239
Speaker 9: a lot of choices about how to both manage your

855
00:39:47,320 --> 00:39:49,719
Speaker 9: risk and optimize return and in the case of a

856
00:39:49,760 --> 00:39:53,799
Speaker 9: product like flexible income, optimize income at the same time.

857
00:39:53,960 --> 00:39:56,200
Speaker 9: So we think active is the way to go in

858
00:39:56,239 --> 00:39:56,960
Speaker 9: the current market.

859
00:39:57,080 --> 00:40:00,600
Speaker 5: And what's issuing about your met west flexible income It

860
00:40:00,760 --> 00:40:03,399
Speaker 5: was a mutual fund, so you convert a mutual fund

861
00:40:03,480 --> 00:40:04,839
Speaker 5: into an ETF.

862
00:40:05,560 --> 00:40:06,560
Speaker 6: Why do that?

863
00:40:07,320 --> 00:40:10,360
Speaker 9: Advisors like to invest in portfolio managers that have a

864
00:40:10,360 --> 00:40:12,560
Speaker 9: long track record. They want to know that the team's

865
00:40:12,600 --> 00:40:15,080
Speaker 9: been around and together and been making these choices on

866
00:40:15,160 --> 00:40:17,480
Speaker 9: risk and return for a very long time. So at

867
00:40:17,520 --> 00:40:20,960
Speaker 9: TCW we have an excellent fixed income team. They've managed

868
00:40:20,960 --> 00:40:24,640
Speaker 9: this particular strategy for six years with very high performance

869
00:40:24,719 --> 00:40:27,200
Speaker 9: versus peers, and so in this case, it's logical for

870
00:40:27,280 --> 00:40:29,960
Speaker 9: us to take that great track record and simply flip

871
00:40:29,960 --> 00:40:31,280
Speaker 9: it into an ETF vehicle.

872
00:40:31,640 --> 00:40:33,919
Speaker 2: This might be also silly question, but if the Fed

873
00:40:33,960 --> 00:40:37,520
Speaker 2: starts cutting rates, does the appeal of an actively managed

874
00:40:37,560 --> 00:40:40,120
Speaker 2: fixingcome ETF become less because we're no longer going to

875
00:40:40,120 --> 00:40:42,480
Speaker 2: be at five percent like money market fund rates for example.

876
00:40:42,920 --> 00:40:43,680
Speaker 3: Well, I think it's.

877
00:40:43,560 --> 00:40:45,360
Speaker 9: We're not going to be at zero either, And so

878
00:40:45,360 --> 00:40:46,799
Speaker 9: the way that we would think about it is, if

879
00:40:46,840 --> 00:40:50,000
Speaker 9: you're moving through time for years ahead of us, there

880
00:40:50,000 --> 00:40:53,240
Speaker 9: really is an opportunity to be active to drive return

881
00:40:53,320 --> 00:40:56,000
Speaker 9: in the fixed income part of the portfolio. And frankly,

882
00:40:56,000 --> 00:40:58,600
Speaker 9: from an income perspective, people need to keep up with inflation,

883
00:40:58,960 --> 00:41:03,400
Speaker 9: so inflation's down somewhat. But from a price perspective, particularly

884
00:41:03,560 --> 00:41:06,440
Speaker 9: aging population, if everyone's living till ninety or one hundred

885
00:41:06,520 --> 00:41:09,600
Speaker 9: years old, there are a lot of portfolios where the

886
00:41:09,719 --> 00:41:12,920
Speaker 9: regular repeatable income and in the case of flexible income,

887
00:41:12,920 --> 00:41:16,319
Speaker 9: it's say seven percent yield. So as money markets go down,

888
00:41:16,480 --> 00:41:19,400
Speaker 9: we're actively able to manage to a higher income target.

889
00:41:20,600 --> 00:41:23,680
Speaker 5: All right, you guys in the ETF business. I understood

890
00:41:23,719 --> 00:41:26,360
Speaker 5: the passive ETFs. I got that whole story in the cost.

891
00:41:26,600 --> 00:41:29,480
Speaker 5: Then you guys brought in active ETFs. I'm like, wait

892
00:41:29,520 --> 00:41:34,440
Speaker 5: a minute, I think active. I think managers, analyst overhead costs.

893
00:41:35,440 --> 00:41:39,120
Speaker 5: So is an active we managed ETFs cheaper than a mutual.

894
00:41:38,880 --> 00:41:41,840
Speaker 3: Fund in some cases? In some cases they will be.

895
00:41:41,920 --> 00:41:43,360
Speaker 3: In some cases maybe they won't be.

896
00:41:43,480 --> 00:41:45,920
Speaker 9: So in this case with flexible income, we actually brought

897
00:41:45,960 --> 00:41:48,960
Speaker 9: the cost down because we see the demand from an

898
00:41:48,960 --> 00:41:51,359
Speaker 9: ETF perspective, and we think the fund is going to grow,

899
00:41:51,440 --> 00:41:53,840
Speaker 9: and so we were able to take an active product

900
00:41:53,880 --> 00:41:56,479
Speaker 9: that is a forty basis point fee, But that forty

901
00:41:56,520 --> 00:41:58,799
Speaker 9: basis point fee is actually lower than when we were

902
00:41:58,840 --> 00:42:00,960
Speaker 9: managing it in a mutual fee, and that brings real

903
00:42:01,040 --> 00:42:01,960
Speaker 9: value to clients.

904
00:42:02,200 --> 00:42:04,000
Speaker 6: How about to you guys, Well.

905
00:42:03,840 --> 00:42:06,400
Speaker 9: For us, we're building a business and we think that

906
00:42:06,440 --> 00:42:08,919
Speaker 9: there's real demand for products like the one that we're

907
00:42:08,920 --> 00:42:12,239
Speaker 9: talking about today, and so as that product grows, it's

908
00:42:12,280 --> 00:42:14,279
Speaker 9: a great business for us to be able to serve

909
00:42:14,360 --> 00:42:16,879
Speaker 9: clients with a product that can really scale and grow

910
00:42:16,880 --> 00:42:18,080
Speaker 9: in assets under management.

911
00:42:18,480 --> 00:42:21,880
Speaker 2: Jennifer, before you were at TCW, you were the CEO

912
00:42:22,000 --> 00:42:25,480
Speaker 2: of Engine Number one. TCW acquired that part of the

913
00:42:25,480 --> 00:42:28,440
Speaker 2: firm's business back in October of twenty twenty three. I'm

914
00:42:28,480 --> 00:42:31,719
Speaker 2: an oil nerd, so I think Engine number one and

915
00:42:31,760 --> 00:42:35,800
Speaker 2: I'm thinking, oh, the really successful shareholder push on Exon

916
00:42:35,920 --> 00:42:38,359
Speaker 2: to get three members on their board, to really push

917
00:42:38,400 --> 00:42:39,280
Speaker 2: for climate change.

918
00:42:39,280 --> 00:42:41,600
Speaker 3: Can you walk me through all of that.

919
00:42:42,280 --> 00:42:44,480
Speaker 9: Yeah. So, from an end to Number one perspective, we

920
00:42:44,600 --> 00:42:47,680
Speaker 9: saw an opportunity in the market where people were investing

921
00:42:47,680 --> 00:42:51,680
Speaker 9: in energy transition or transformation, either not investing in holding

922
00:42:51,719 --> 00:42:54,640
Speaker 9: index funds or investing in private equity. So a lot

923
00:42:54,640 --> 00:42:56,360
Speaker 9: of what we did at Endine number one was build

924
00:42:56,360 --> 00:42:59,400
Speaker 9: a public market products. Exon was a big part of that,

925
00:42:59,520 --> 00:43:01,640
Speaker 9: still a big holding in one of the funds that

926
00:43:01,680 --> 00:43:04,960
Speaker 9: came over to TCW, which is another ETF net Z

927
00:43:05,920 --> 00:43:08,719
Speaker 9: And the idea there is that we are going through

928
00:43:08,719 --> 00:43:11,960
Speaker 9: an energy transition over many decades to come, and so

929
00:43:12,040 --> 00:43:14,920
Speaker 9: in the case of working with Exon, helping Exon realize

930
00:43:15,080 --> 00:43:18,560
Speaker 9: they could optimize their business and capital allocation to not

931
00:43:18,640 --> 00:43:20,799
Speaker 9: waste money in the out years but take advantage of

932
00:43:20,800 --> 00:43:22,880
Speaker 9: what was happening in the next ten years. And that

933
00:43:23,440 --> 00:43:25,760
Speaker 9: kind of that work has added a lot of value

934
00:43:26,120 --> 00:43:29,200
Speaker 9: to everybody that has held exon over this period. And

935
00:43:29,239 --> 00:43:32,640
Speaker 9: at TCW we still manage this Energy Systems Transition Fund,

936
00:43:32,840 --> 00:43:33,560
Speaker 9: So to that.

937
00:43:33,560 --> 00:43:37,680
Speaker 2: Point, I mean that was also when energy transition and

938
00:43:37,760 --> 00:43:40,359
Speaker 2: green and climate were so the pendulum was swinging very

939
00:43:40,440 --> 00:43:42,480
Speaker 2: much one way, and the pendulum is swinging back the

940
00:43:42,520 --> 00:43:45,799
Speaker 2: other way. Are you guys noticing anything not TCW on that.

941
00:43:46,440 --> 00:43:49,240
Speaker 9: Well, we're at TCW are probably one of the leaders

942
00:43:49,280 --> 00:43:53,560
Speaker 9: in looking at companies from an underlying risk and reward

943
00:43:53,640 --> 00:43:58,360
Speaker 9: perspective across climate and governance for example. So we're a

944
00:43:58,400 --> 00:44:00,360
Speaker 9: leader in that. That's a big part of our business

945
00:44:00,400 --> 00:44:02,960
Speaker 9: in Europe. In the US, people may not want to

946
00:44:02,960 --> 00:44:06,080
Speaker 9: buy products that are value screened, but we still do

947
00:44:06,120 --> 00:44:08,080
Speaker 9: the work so that we're doing the work so that

948
00:44:08,120 --> 00:44:11,320
Speaker 9: if there's a company that's mispriced based on a climate

949
00:44:11,400 --> 00:44:15,080
Speaker 9: risk or mistakes on the governance side, we understand that

950
00:44:15,200 --> 00:44:18,080
Speaker 9: and that's information that goes up to our fundamental portfolio

951
00:44:18,120 --> 00:44:21,120
Speaker 9: managers and it's just another way we're adding alpha for clients.

952
00:44:21,520 --> 00:44:25,000
Speaker 5: Interesting, So we're from the ECF business for TCW.

953
00:44:25,080 --> 00:44:27,000
Speaker 6: What's next for you guys? Where's the area focus?

954
00:44:27,120 --> 00:44:27,160
Speaker 12: Is?

955
00:44:27,160 --> 00:44:28,920
Speaker 6: It continued on the fixed income front.

956
00:44:29,080 --> 00:44:31,839
Speaker 9: It is for sure continuing on the fixing come front.

957
00:44:31,920 --> 00:44:33,800
Speaker 9: So we have a set of equity product tool buildt

958
00:44:33,800 --> 00:44:34,640
Speaker 9: to that over time.

959
00:44:35,120 --> 00:44:35,680
Speaker 3: Excuse me.

960
00:44:36,080 --> 00:44:38,480
Speaker 9: But on the fixed income side, we've got flexible income

961
00:44:38,520 --> 00:44:41,200
Speaker 9: out in the market now and we've filed for another

962
00:44:42,280 --> 00:44:44,239
Speaker 9: four to five products that may be out as soon

963
00:44:44,280 --> 00:44:46,279
Speaker 9: as the end of the year. Because what we see

964
00:44:46,320 --> 00:44:50,240
Speaker 9: is people want the best solution in fixed income portfolio construction.

965
00:44:50,400 --> 00:44:52,480
Speaker 9: And so what we do is active managers, whether it's

966
00:44:52,480 --> 00:44:57,160
Speaker 9: in the CLO market, secured bank loans, high yield, we

967
00:44:57,239 --> 00:45:00,560
Speaker 9: think we can deliver very attractive and more competitive then

968
00:45:00,600 --> 00:45:03,960
Speaker 9: other people are out there today, return and risk profiles,

969
00:45:04,000 --> 00:45:06,080
Speaker 9: and so we look forward to launching those ETFs shortly.

970
00:45:06,760 --> 00:45:08,600
Speaker 2: Can I go back to climate for a second, Oh, Paul,

971
00:45:08,640 --> 00:45:11,719
Speaker 2: hate me here. You mentioned that you are helping to

972
00:45:11,800 --> 00:45:14,440
Speaker 2: judge climate risk. Can you pass it on to the managers?

973
00:45:14,480 --> 00:45:16,440
Speaker 2: How do you How do you judge climate risk for

974
00:45:16,480 --> 00:45:17,000
Speaker 2: a company?

975
00:45:17,239 --> 00:45:19,200
Speaker 3: It's different for every company I know, and so how

976
00:45:19,200 --> 00:45:19,640
Speaker 3: do you do it?

977
00:45:19,719 --> 00:45:19,919
Speaker 1: Yeah?

978
00:45:19,960 --> 00:45:21,799
Speaker 9: I mean so, so the way we the way we

979
00:45:21,840 --> 00:45:24,120
Speaker 9: do it is look at look at each company at

980
00:45:24,160 --> 00:45:26,920
Speaker 9: an underlying data level. So if a company is in

981
00:45:26,960 --> 00:45:29,480
Speaker 9: the energy sector, you know, what are they doing about

982
00:45:29,520 --> 00:45:33,799
Speaker 9: capital allocation in old world energy? What are they doing

983
00:45:33,800 --> 00:45:37,719
Speaker 9: to approve or green up in other areas? So we're

984
00:45:37,719 --> 00:45:40,719
Speaker 9: looking at that, and then across most large companies, we're

985
00:45:40,719 --> 00:45:44,680
Speaker 9: looking at water use, electrification, the goals that they're setting,

986
00:45:44,760 --> 00:45:47,760
Speaker 9: and then measuring the progress that they're making against those goals.

987
00:45:47,840 --> 00:45:50,560
Speaker 9: So we don't look at it in a carbon footprint only.

988
00:45:50,760 --> 00:45:53,680
Speaker 9: We look at it as a sort of transformation transition.

989
00:45:54,120 --> 00:45:56,560
Speaker 9: How are they planning, how will they beat their competitors

990
00:45:56,560 --> 00:45:59,040
Speaker 9: effectively in doing a better job as we move through

991
00:45:59,040 --> 00:46:00,440
Speaker 9: time and we move through the transition.

992
00:46:01,520 --> 00:46:03,959
Speaker 6: So cool, I don't want.

993
00:46:03,840 --> 00:46:05,439
Speaker 5: To how you invest in energy companies, because I would

994
00:46:05,440 --> 00:46:07,880
Speaker 5: be do I want my companies going green now or

995
00:46:07,960 --> 00:46:08,440
Speaker 5: just waiting?

996
00:46:08,480 --> 00:46:09,839
Speaker 2: Well, that's part of the problem is that if you're

997
00:46:09,840 --> 00:46:12,240
Speaker 2: a big energy company like or if you're an investor,

998
00:46:12,360 --> 00:46:14,640
Speaker 2: you really only want to own one because you can't

999
00:46:14,680 --> 00:46:16,680
Speaker 2: own a bunch for that exact reason, and you can't

1000
00:46:16,680 --> 00:46:18,600
Speaker 2: go to shareholders or your investors and say, hey, I

1001
00:46:18,680 --> 00:46:21,400
Speaker 2: have a boltload of energy companies. So then that begs

1002
00:46:21,400 --> 00:46:23,880
Speaker 2: the question, how do you choose which means bigger is better?

1003
00:46:23,960 --> 00:46:26,640
Speaker 2: And then hence forth the next Sun Chevron kind of

1004
00:46:26,640 --> 00:46:28,880
Speaker 2: thing that's that's what I keep hearing shayby next on

1005
00:46:28,920 --> 00:46:32,320
Speaker 2: earnings out Friday, So very exciting. This is great, Jennifer,

1006
00:46:32,320 --> 00:46:34,000
Speaker 2: thank you so much. It was wonderful to meet you.

1007
00:46:34,040 --> 00:46:36,040
Speaker 2: A big fan of Katie Kotch also who's the CEO

1008
00:46:36,080 --> 00:46:38,520
Speaker 2: of TCW, so it's great to get you in the studio.

1009
00:46:38,680 --> 00:46:41,920
Speaker 2: Come back anytime at Jennifer Grancio a global head of

1010
00:46:41,920 --> 00:46:44,960
Speaker 2: distribution over at TCW, normally based in La so.

1011
00:46:44,880 --> 00:46:46,080
Speaker 3: We're very lucky to have her here.

1012
00:46:46,360 --> 00:46:50,839
Speaker 1: This is the Bloomberg Intelligence podcast, available on Apples, Spotify,

1013
00:46:51,040 --> 00:46:53,960
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1014
00:46:54,040 --> 00:46:57,640
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1015
00:46:57,760 --> 00:47:01,160
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1016
00:47:01,280 --> 00:47:04,240
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1017
00:47:04,520 --> 00:47:06,360
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