WEBVTT - Boeing Names New CEO, Fed Meeting 0:00:00.600 --> 0:00:10.720 Boo Bloomberg Audio Studios, podcasts, radio news. You're listening to 0:00:10.760 --> 0:00:14.760 the Bloomberg Intelligence Podcast. Catch us live weekdays at ten 0:00:14.800 --> 0:00:17.439 am Eastern on Apple car Playing and Broyd Auto with 0:00:17.440 --> 0:00:20.480 the Bloomberg Business app. Listen on demand wherever you get 0:00:20.560 --> 0:00:23.360 your podcasts, or watch us live on YouTube. 0:00:24.920 --> 0:00:28.080 I'm Alex the alongside Paul Sweeney. This is Bloomberg Intelligence Radio. 0:00:28.160 --> 0:00:30.280 We bring you all the top news and business, economics 0:00:30.280 --> 0:00:33.240 and finance. There are lens of our Bloomberg Intelligence analysts. 0:00:33.280 --> 0:00:35.800 They cover two thousand companies and one hundred and thirty 0:00:35.800 --> 0:00:38.879 industries worldwide. And one of them that I bug all 0:00:38.920 --> 0:00:42.680 the time is George Ferguson Bloomberg Intelligence Senior Aerospace, Defense 0:00:42.680 --> 0:00:45.840 and Airlines analysts. I stalked him yesterday over Airbus because 0:00:45.840 --> 0:00:48.000 we have a CEO on TV and I was like, George, 0:00:48.159 --> 0:00:50.720 I need more questions than just Hey, what's up with space? 0:00:51.560 --> 0:00:54.200 What's up with Boeing is now the better question for today. 0:00:54.240 --> 0:00:57.360 So Boeing now appointing Kelly Ortberg as its new chief 0:00:57.400 --> 0:00:59.639 executive officer of the stock is up by about three 0:00:59.680 --> 0:01:02.400 and a half percent. He is a retired veteran of 0:01:02.440 --> 0:01:05.679 the aviation industry. He is an engineer by training. Is 0:01:05.720 --> 0:01:08.120 this the guy that Boeing needs, George? 0:01:08.480 --> 0:01:08.759 Is he? 0:01:10.480 --> 0:01:10.560 Not? 0:01:10.680 --> 0:01:13.279 So sure? I think it's the guy that Boeing needs 0:01:13.319 --> 0:01:16.920 for a small period of time, right because he was 0:01:16.920 --> 0:01:20.320 already retired, right, he has you know, he's a great 0:01:20.360 --> 0:01:24.319 career in aerospace working at Colins, help him put Collins 0:01:24.319 --> 0:01:28.760 into RTX, I mean, a great experience. He's sixty four, 0:01:29.440 --> 0:01:31.040 So my guess is he doesn't have a lot of 0:01:31.120 --> 0:01:33.640 runway to work at Boeing. I think it'd have been 0:01:33.720 --> 0:01:36.440 nicer to see a CEO that could have put I 0:01:36.480 --> 0:01:42.080 don't know, five seven, ten years into Boeing. But look, 0:01:42.120 --> 0:01:43.880 I think the job is very difficult, and so I 0:01:43.920 --> 0:01:45.880 think it's going to take a lot out of the 0:01:45.920 --> 0:01:51.440 next CEO. And so maybe this is an interim as 0:01:51.480 --> 0:01:56.480 they continue to develop internal candidates for the job. Maybe 0:01:56.520 --> 0:01:58.960 it's very pretty difficult to recruit somebody into this job 0:01:59.080 --> 0:02:01.960 right now. Could be an interim because of that as well. 0:02:02.040 --> 0:02:06.880 So again, you know, the strong aerospace background at the 0:02:06.920 --> 0:02:10.600 component at the you know, parts maker level, but doesn't 0:02:10.639 --> 0:02:12.400 look like someone's going to be around for the next 0:02:13.040 --> 0:02:14.720 five seven years, all. 0:02:14.720 --> 0:02:17.200 Right, George, All right, So that's the CEO, how about 0:02:17.320 --> 0:02:19.560 on the fundamentals here and looking at the second quarter 0:02:19.960 --> 0:02:24.720 negative adjusted free cash slow four point three billion dollars. 0:02:25.440 --> 0:02:27.720 You can't like that. Talk to us about kind of 0:02:27.720 --> 0:02:29.800 the cash flow, that dynamics and what they need to do. 0:02:30.560 --> 0:02:32.880 So we kind of expected that four point three billion 0:02:32.960 --> 0:02:37.120 dollars to be Really honest, I'm not totally sure why 0:02:37.120 --> 0:02:39.280 the stock is up. I don't think it's Kelly because 0:02:39.320 --> 0:02:42.400 Kelly News started the day out and bowing an anchors 0:02:42.480 --> 0:02:45.160 up about one so post earnings were up. You know 0:02:45.200 --> 0:02:47.919 we've done this pop. I mean, you know, we heard 0:02:47.919 --> 0:02:50.920 from CFO Brian West during the call. He told us 0:02:50.919 --> 0:02:54.640 Burn was going to be pretty strong in three Q two, 0:02:55.440 --> 0:02:57.600 and then some the analysts tried to box him in 0:02:57.639 --> 0:02:59.320 on what Burn was going to be for the year. 0:03:00.040 --> 0:03:03.640 One said would be closer to five billion or ten billion. 0:03:04.200 --> 0:03:05.920 He said he was, and I think his quote somebody, 0:03:06.000 --> 0:03:07.680 I'm not smart enough to tell you at this time. 0:03:08.520 --> 0:03:11.560 So there's just a lot of variability right now. Look, 0:03:11.560 --> 0:03:16.120 Boeing has to keep taking inventory, taking ship sets from 0:03:16.160 --> 0:03:19.880 their supplier base to keep their supplier base in business 0:03:20.480 --> 0:03:22.600 while they ramp up builds. And they had some good 0:03:22.600 --> 0:03:26.120 commentaries and builds. They talked about the factory kind of 0:03:26.120 --> 0:03:28.480 putting out twenty ish I think was the number, and 0:03:28.520 --> 0:03:31.600 I think total deliveries in the thirty ish range for 0:03:31.720 --> 0:03:35.240 seven thirty sevens rising to thirty eight shutting down those 0:03:35.280 --> 0:03:40.320 shadow factories. It's the factories that they have, the inventoried airplanes, 0:03:40.440 --> 0:03:43.400 a lot of seven three sevens, some seven eight sevens 0:03:43.440 --> 0:03:45.080 in shutting them down by the end of the year. 0:03:45.480 --> 0:03:48.839 That was I think great commentary. You know, we got 0:03:48.840 --> 0:03:50.840 to the commentary about what's going to go on with 0:03:50.880 --> 0:03:53.839 the union negotiations. Those are coming up in September. Dave 0:03:53.920 --> 0:03:57.280 Calhoun kind of told us he I think wasn't totally 0:03:57.440 --> 0:04:00.440 focused on that right now, or didn't have couldn't give 0:04:00.480 --> 0:04:03.440 us puts and takes there. That's incredibly important. Right, So 0:04:03.760 --> 0:04:05.840 if we get into a situation where the union shuts 0:04:05.880 --> 0:04:10.080 this company down in September, the cash burn this year 0:04:10.080 --> 0:04:14.320 looks looks horrible. Their back going to capital markets looking 0:04:14.400 --> 0:04:16.680 for a bond raise, which I think everybody on the 0:04:16.720 --> 0:04:18.880 bond side is scared to death about because they don't 0:04:18.880 --> 0:04:21.200 want to see a fall to investment grade. Or they're 0:04:21.240 --> 0:04:24.039 going to the equity side, which the equity guys don't 0:04:24.040 --> 0:04:26.839 want to hear about, right, is there? That's called that's dilution, 0:04:27.960 --> 0:04:30.000 you know, so I think again. Commentary was good around 0:04:30.040 --> 0:04:32.960 deliveries and things like that, but a lot of variability coming, 0:04:33.040 --> 0:04:36.440 you know here around this cash flow burn and it's 0:04:36.480 --> 0:04:37.240 super important. 0:04:37.360 --> 0:04:39.120 All right. George, thanks so much for joining us. We 0:04:39.160 --> 0:04:40.200 appreciate it as always. 0:04:40.440 --> 0:04:44.160 George Ferguson, Senior Aerospace, Defense and Airlines Anols Bloomberg Intelligence 0:04:44.680 --> 0:04:47.160 from Princeton, New Jersey. 0:04:47.400 --> 0:04:51.279 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:04:51.360 --> 0:04:54.839 weekdays at ten am Eastern on applecar Play and Android 0:04:54.880 --> 0:04:58.040 Auto with the Bloomberg Business. You can also listen live 0:04:58.160 --> 0:05:01.240 on Amazon Alexa from our Flagshi New York station, Jo 0:05:01.400 --> 0:05:03.919 Say Alexa playing Bloomberg eleven. 0:05:05.640 --> 0:05:07.840 Alex still here alongside Paul Sweenia and John Tucker. This 0:05:07.880 --> 0:05:10.800 is Bloomberg Intelligence Radio. We are broadcasting to you live 0:05:11.200 --> 0:05:14.680 from our Interactive Broker studio right here in Midtown at Manhattan. 0:05:14.680 --> 0:05:17.480 So it's fed day. Everyone's pumped for it. What is 0:05:17.560 --> 0:05:19.800 Ja Powell gonna say? Are they going to signal September? 0:05:19.839 --> 0:05:21.919 What is it gonna look like? We're gonna break it 0:05:21.960 --> 0:05:24.400 all down? For you with Danielle de Martino, Booth's CEO 0:05:24.440 --> 0:05:27.279 and chief strategist for QI Research. She joins us in 0:05:27.320 --> 0:05:29.479 the radio studio right now, all right, Danielle, what do 0:05:29.480 --> 0:05:29.800 you think? 0:05:30.880 --> 0:05:32.200 Like, what are we gonna get? 0:05:32.720 --> 0:05:35.160 I think we're gonna I'm actually gonna go with Anna 0:05:35.240 --> 0:05:37.839 Wong's kind of take on where this is gonna go. 0:05:37.960 --> 0:05:40.160 She and I are thinking in a similar act. We 0:05:40.160 --> 0:05:43.280 get to meet in person tonight. But I think he's 0:05:43.320 --> 0:05:46.240 still going to couch his dubbishness. I think he's going 0:05:46.279 --> 0:05:49.880 to signal September. But I think he's gonna signal September softly. 0:05:50.680 --> 0:05:52.599 What does that mean? Is he gonna whisper it? 0:05:52.680 --> 0:05:52.760 Like? 0:05:52.760 --> 0:05:54.239 What is that He's. 0:05:54.080 --> 0:05:56.400 Still going to say that they're data dependent. He's still 0:05:56.440 --> 0:05:59.320 going to say that there is the chance that there 0:05:59.360 --> 0:06:04.559 is a reacceleration in the CPI in inflation metrics, base 0:06:04.600 --> 0:06:07.080 effects kick in in the second half of this year. 0:06:07.160 --> 0:06:10.000 That make it a little bit harder to see continued 0:06:10.040 --> 0:06:13.920 declines in the inflation. On the other hand, you know, 0:06:14.000 --> 0:06:16.800 looking at real time inflation metrics, a bunch of bond 0:06:16.839 --> 0:06:19.360 traders a long time ago introduce me to true inflation 0:06:19.520 --> 0:06:24.160 TRU and that hit one point five one percent today, 0:06:24.520 --> 0:06:27.920 the lowest reading that we've had in the post pandemic era. 0:06:28.240 --> 0:06:30.599 They gave me the raw data back to twenty twelve. 0:06:30.600 --> 0:06:34.520 It's got a zero point ninety seven correlation with headline CPI. 0:06:35.000 --> 0:06:37.000 We see where this is going to me at least. 0:06:37.040 --> 0:06:39.760 I think the greatest risk, because there's this huge seven 0:06:39.800 --> 0:06:44.640 week gulf in between today's meeting and September eighteenth, is 0:06:44.680 --> 0:06:46.159 that there's a policy err in the making. 0:06:47.080 --> 0:06:48.880 So you say the highest odds is that there is 0:06:48.920 --> 0:06:51.560 a policy error. Is that another way of saying the 0:06:51.600 --> 0:06:53.719 fits behind the curve They should have already been cutting. 0:06:54.240 --> 0:06:56.479 I think that's what we're saying. I think that that's 0:06:56.520 --> 0:06:59.120 what ADP is saying. I think that's what the Employment 0:06:59.160 --> 0:07:03.040 Cost Index, the Fed's preferred measure of wage inflation, is saying, 0:07:03.080 --> 0:07:09.360 we saw a big step down there. Intel Match, nerd Wallet. 0:07:09.400 --> 0:07:13.280 Those are the three job cuts that were announced yesterday. 0:07:13.720 --> 0:07:16.760 It seems as if most companies, when they're announcing earnings 0:07:17.160 --> 0:07:20.640 are continuing to say until we see stronger revenue growth, 0:07:20.960 --> 0:07:26.040 we're going to keep cutting headcount. So that's disinflationary. 0:07:26.360 --> 0:07:29.960 So because you're here, I get ibs from people who 0:07:30.040 --> 0:07:34.200 are listening to the show, Thank you so much, so well. 0:07:34.240 --> 0:07:35.920 One of the questions is, and it goes back to 0:07:35.960 --> 0:07:38.320 the bomb market and we're obviously seeing some steady buying 0:07:38.360 --> 0:07:41.760 come in, particularly in the back end. Where do you 0:07:41.760 --> 0:07:43.640 think we end the year when it comes to the tenure? 0:07:43.640 --> 0:07:46.400 If we're treading right now at four point nine, we're 0:07:46.440 --> 0:07:48.760 below all the moving averages, like we've had a healthy 0:07:48.760 --> 0:07:50.360 move to the downside a yields. 0:07:50.640 --> 0:07:52.880 We have, And we saw kind of this resistance at 0:07:52.880 --> 0:07:55.560 four point one four in the tenure for some time, 0:07:56.360 --> 0:07:59.040 and now we've broken below that and I think that 0:07:59.560 --> 0:08:01.600 it's it's not a stretch to sit that there's going 0:08:01.680 --> 0:08:03.480 to be a three handle. The question is is the 0:08:03.560 --> 0:08:06.560 year end south of three point five percent on the tenure? 0:08:06.600 --> 0:08:09.920 And again it's going to be a gauge of the 0:08:09.960 --> 0:08:13.800 magnitude of the Fed's policy error. If they have to 0:08:13.840 --> 0:08:16.840 come rushing in in September with a half percentage point 0:08:16.920 --> 0:08:20.600 rate cut, that could easily spook the markets. 0:08:21.240 --> 0:08:24.640 So what does the FED do when they start, So 0:08:24.680 --> 0:08:27.320 let's still say they did they start in September, then 0:08:27.400 --> 0:08:29.720 what did they do they do it every other That's. 0:08:29.520 --> 0:08:33.640 A great question because we saw these kind of unusual pauses. 0:08:33.960 --> 0:08:34.800 It's not normal to. 0:08:34.800 --> 0:08:38.040 See pauses in a hiking or a cutting cycle, at 0:08:38.120 --> 0:08:39.200 least in FED history. 0:08:39.320 --> 0:08:40.120 Of course we're seeing it. 0:08:40.120 --> 0:08:43.880 In other parts of the world. But history tells us 0:08:43.880 --> 0:08:46.400 that once the Fed gets going, they keep going. And 0:08:46.440 --> 0:08:49.760 that means two days after election. Right, the November FMC 0:08:49.920 --> 0:08:52.640 is highly unusual. It's a Wednesday Thursday meeting, so that 0:08:52.640 --> 0:08:54.839 they're not meeting on Tuesday. 0:08:54.360 --> 0:08:55.120 Election day. 0:08:55.400 --> 0:08:58.720 But it's very feasible that we see another rate cut 0:08:58.760 --> 0:08:59.839 two days after the election. 0:09:00.480 --> 0:09:01.439 What happens to the curve? 0:09:02.720 --> 0:09:04.600 I we will. 0:09:04.400 --> 0:09:07.079 Certainly it will be interesting to see if the curve 0:09:07.160 --> 0:09:12.160 does not fully uninvert before the FED cuts rates, which 0:09:12.160 --> 0:09:13.599 would be again unusual. 0:09:13.720 --> 0:09:16.160 But we don't normally talk about rates are coming down. 0:09:16.600 --> 0:09:18.640 Uh, it would be because they're all coming down. 0:09:18.840 --> 0:09:21.240 Everything's coming down with the fronts coming down fast. Indeed, 0:09:21.280 --> 0:09:23.080 even though it still had it's had a pretty chunky 0:09:23.120 --> 0:09:23.800 move to begin with. 0:09:23.880 --> 0:09:25.319 But still but. 0:09:25.320 --> 0:09:28.240 Again, if you start to factor in, I remember when 0:09:28.240 --> 0:09:32.520 they were raising rates that Powell said unusually large rate hikes. 0:09:32.520 --> 0:09:35.120 That like took me back to the Princess Bride rodents 0:09:35.160 --> 0:09:38.640 of unusually large size. But it'll be interesting to see 0:09:38.679 --> 0:09:41.080 if we have unusually large rate cuts. 0:09:41.440 --> 0:09:43.800 All right, Danielle, you did some time at the Dallas FED, 0:09:43.880 --> 0:09:44.520 and I'm looking at. 0:09:44.480 --> 0:09:49.199 Something sounds like I did like time at an instag time. 0:09:48.520 --> 0:09:49.520 And now you're free. 0:09:50.040 --> 0:09:52.040 You used to have something down there called the Dallas 0:09:52.160 --> 0:09:54.680 FED Manufacturing Uncertainty Index. 0:09:55.240 --> 0:09:56.960 That's pretty cool. What does it tell you? What are 0:09:57.000 --> 0:09:57.959 some of the recent data telling me? 0:09:58.000 --> 0:09:58.160 There? 0:09:58.440 --> 0:09:59.680 You always come up with data sets that. 0:09:59.640 --> 0:10:06.280 I've never We are seeing unprecedented levels of uncertainty. Hats 0:10:06.280 --> 0:10:08.600 off to Emily Kerr and her team at the Dallas FED. 0:10:08.600 --> 0:10:11.720 They introduced kind of a National Association of Credit Manager's 0:10:12.120 --> 0:10:15.080 Index type of question in their most recent survey that 0:10:15.120 --> 0:10:18.040 came out on Monday. People are not paying their bills. 0:10:18.840 --> 0:10:21.360 I mean companies are not paying their bills and accounts 0:10:21.400 --> 0:10:24.439 receivable are being stretched out. So there these are kind 0:10:24.480 --> 0:10:29.520 of credit managers signs that hey, there's real distress and 0:10:29.600 --> 0:10:31.760 it's harder to get credit, which we've been hearing right 0:10:31.760 --> 0:10:33.760 from from smaller businesses especially. 0:10:34.600 --> 0:10:37.160 Is it sector specific in what you're seeing or is 0:10:37.160 --> 0:10:39.040 it just maybe like how big those companies are. 0:10:39.440 --> 0:10:42.360 What was interesting about this, the introduction of these new 0:10:42.400 --> 0:10:46.240 types of questions is that they ask manufacturers, servicers, and retailers, 0:10:46.440 --> 0:10:49.200 and it was retailers that were seeing the greatest degree 0:10:49.240 --> 0:10:49.880 of distress. 0:10:50.679 --> 0:10:52.640 All right, So okay, remember. 0:10:52.400 --> 0:10:54.840 This is the eighth largest economy in the world and 0:10:54.880 --> 0:10:57.320 the eighth largest exporting exporting nation in the world. 0:10:57.320 --> 0:10:58.920 Texas a Texandalone, it is. 0:11:00.080 --> 0:11:02.440 And then to that point, like there's a huge amount 0:11:02.720 --> 0:11:05.280 of products that get shipped out, right. 0:11:05.160 --> 0:11:09.240 Like that's why it's the largest exporting nation, larger than California. 0:11:09.320 --> 0:11:12.439 Yeah, and it has a huge like medical department. 0:11:12.440 --> 0:11:16.600 Like we we you know, twenty thirty years ago you 0:11:16.600 --> 0:11:20.080 could say that we were an energy centric economy in Texas. 0:11:20.160 --> 0:11:22.160 That's no longer the case, very diversified. 0:11:22.760 --> 0:11:26.319 But you're staying with us, right the United States? You guys, Yes, okay, good, 0:11:26.520 --> 0:11:28.119 There is checking everyone. 0:11:27.920 --> 0:11:28.679 That's not their grid. 0:11:28.840 --> 0:11:32.400 There is secession talk, you know, wants a republic, but 0:11:32.960 --> 0:11:34.360 I think we're staying with the country. 0:11:35.040 --> 0:11:37.640 Is that data set though at all distorted by hurricanes 0:11:37.640 --> 0:11:40.120 et cetera that you saw, No? 0:11:40.200 --> 0:11:42.400 Actually actually no. And that was again what was so 0:11:42.480 --> 0:11:46.040 fascinating was that it was so broad based across service, 0:11:46.600 --> 0:11:50.280 across the service sector, across across the manufacturing sector, and 0:11:50.360 --> 0:11:53.800 across the retail sector, and again that they do some 0:11:54.040 --> 0:11:56.960 really really good research as well, that that front runs 0:11:57.000 --> 0:12:00.400 the Senior Loan Officer Survey on a national level, and 0:12:00.400 --> 0:12:03.040 that's also showing that it's very difficult to access credit 0:12:03.120 --> 0:12:03.520 right now. 0:12:04.280 --> 0:12:06.680 You believe we're actually in a recession? Is that correct? 0:12:06.840 --> 0:12:07.040 I do? 0:12:07.520 --> 0:12:10.520 I do, and Anna Wanta actually kind of agree. She 0:12:10.640 --> 0:12:16.120 also thinks that net job cuts began last October. What's 0:12:16.120 --> 0:12:19.360 fascinating is that when we got the revision out last 0:12:19.400 --> 0:12:22.160 week from the Buer of Labor Statistics, it's said, in 0:12:22.200 --> 0:12:25.880 its assumption about business deaths, we know what business births 0:12:26.080 --> 0:12:29.400 were with the birth death adjustment, we still have yet 0:12:29.440 --> 0:12:33.719 to have them report business debts. Their assumption was that 0:12:33.800 --> 0:12:39.160 small businesses became additive, that fewer small businesses died in 0:12:39.200 --> 0:12:43.760 the fourth quarter, when actually we saw small business closings 0:12:44.120 --> 0:12:46.920 rise appreciably from the third to the fourth quarter. The 0:12:47.000 --> 0:12:48.880 risk is the reason I'm going into these details. The 0:12:49.000 --> 0:12:52.640 risk is that we see a second quarter of negative 0:12:53.600 --> 0:12:58.120 of negativity in job creation, job net job losses. If 0:12:58.160 --> 0:12:59.839 you see that for six months, because the bearer of 0:13:00.720 --> 0:13:03.200 has already said we lost one hundred and ninety two 0:13:03.240 --> 0:13:05.440 thousand jobs in the third quarter of twenty twenty three. 0:13:05.640 --> 0:13:08.600 If that stretches to being six months in a row, 0:13:09.040 --> 0:13:12.760 the National Bureau of Economic Research, the Business Cycle Dating Committee, 0:13:12.800 --> 0:13:14.720 they're going to have a hard time saying six months 0:13:14.760 --> 0:13:17.320 of job losses doesn't constitute recession. 0:13:17.440 --> 0:13:19.240 So when we get the jobs number on Friday, how 0:13:19.240 --> 0:13:21.199 do I look at that number then? Because obviously, like 0:13:21.240 --> 0:13:23.160 the headline print is going to be up right, but 0:13:23.200 --> 0:13:25.599 you're saying that on a net basis, like what am I? 0:13:25.679 --> 0:13:26.840 What's not going out again? 0:13:26.880 --> 0:13:30.200 I mean, Powell said it himself at the last FMC 0:13:30.760 --> 0:13:34.400 that payrolls are overstated. And if you get a number 0:13:34.440 --> 0:13:37.960 that was originally four hundred and ninety four thousand after 0:13:38.120 --> 0:13:41.080 the revisions that we hear from the BLS, but after 0:13:41.120 --> 0:13:43.880 the census comes in and gives us actual headcounts from companies, 0:13:43.920 --> 0:13:45.480 and that four hundred and ninety four with a plus 0:13:45.520 --> 0:13:47.839 sign in front of it turns into negative one hundred 0:13:47.840 --> 0:13:52.080 and ninety two thousand. That's it's a significant amount of 0:13:52.160 --> 0:13:55.320 download divisions, which my mentor at the Dallas Fed told me, 0:13:55.360 --> 0:13:58.120 you always see at inflection points. 0:13:58.360 --> 0:14:00.760 How long do you think this recession will be? 0:14:00.760 --> 0:14:03.679 Because it feels like it's almost a bifurcated economy. A 0:14:03.679 --> 0:14:05.280 lot of folks will say, I'm not feeling anything. 0:14:05.320 --> 0:14:07.160 I know, we have a super I mean it's like 0:14:07.240 --> 0:14:10.400 super K Yes, super K shaped economy. Okay, I mean, 0:14:10.679 --> 0:14:12.840 think about how many people at the top of the 0:14:12.880 --> 0:14:15.439 k or feeling the benefits of having gotten five and 0:14:15.440 --> 0:14:18.800 a half percent on their cash for this long and 0:14:18.880 --> 0:14:21.920 yet we're hearing that inflation is becoming more problematic for 0:14:22.000 --> 0:14:23.920 the lower income earners. And what that is a sign 0:14:24.040 --> 0:14:26.200 up is again what we saw with the employment cost 0:14:26.240 --> 0:14:29.520 Index today. It's that wages are increasingly not keeping up 0:14:29.520 --> 0:14:30.360 with the cost of living. 0:14:30.440 --> 0:14:33.160 So it's not just the FED today, you know, most 0:14:33.160 --> 0:14:36.000 of the Fed. But we got the BOJ finally hiking rates. Indeed, 0:14:36.520 --> 0:14:39.560 the press are looking back to totally we get the 0:14:39.560 --> 0:14:40.600 BOE tomorrow. 0:14:40.760 --> 0:14:43.000 The ECB's already delivered one cut. 0:14:43.640 --> 0:14:46.880 Do you think that how do you think that cycle 0:14:46.920 --> 0:14:49.480 will all play out in terms of I mean, the 0:14:49.520 --> 0:14:51.440 majority of them are cutting, right, but they're gonna cut 0:14:51.480 --> 0:14:53.920 differently in a different times and the boj's hiking. 0:14:53.960 --> 0:14:55.560 Has this all play out? 0:14:55.760 --> 0:14:58.000 You know, it's interesting that you bring this up because 0:14:58.400 --> 0:15:01.680 there is so much disparity, right now across the pond, 0:15:02.040 --> 0:15:04.520 we unexpectedly saw Germany fall back into recession a few 0:15:04.600 --> 0:15:07.440 days ago. Nobody was expecting that. You know, they're the 0:15:07.800 --> 0:15:10.640 speaking of exporting nations, the other world's third largest export 0:15:11.040 --> 0:15:14.920 and it's a reflection of China exactly. So the breadth 0:15:15.200 --> 0:15:19.200 of the global recession. When you say, okay, Asia's in recession, Okay, 0:15:19.240 --> 0:15:21.720 Germany's in recession, Okay, the United States is in recession. 0:15:22.200 --> 0:15:27.360 That changes how aggressively each individual central bank can behave. 0:15:27.720 --> 0:15:31.320 And when the FED finally does go on September the eighteenth, 0:15:31.960 --> 0:15:33.200 then the rest of the world will end. 0:15:33.200 --> 0:15:35.400 Up falling in line. Daniel thank you so much for 0:15:35.480 --> 0:15:36.560 joining us. Really appreciate it. 0:15:36.600 --> 0:15:38.920 As always, Danielle di Martino Booth for a little bit 0:15:38.920 --> 0:15:41.600 extended period here on FED Day. She is the CEO 0:15:41.960 --> 0:15:45.240 and chief strategistic QI Research based in Dallas, Texas, but 0:15:45.280 --> 0:15:47.040 we got her here in our Bloomberg and nar Actor 0:15:47.040 --> 0:15:50.440 Brokers studio today. My stat was, you know, Texas eighth 0:15:50.480 --> 0:15:52.440 largest exporting and comment's pretty cool. 0:15:52.360 --> 0:15:53.360 Yeah, really really cool. 0:15:53.800 --> 0:15:55.880 And that's not even counting I mean, Louisiana also is 0:15:55.960 --> 0:15:58.280 exporting facilities, but that's not counting all the new facilities 0:15:58.320 --> 0:15:59.160 that trying and build too. 0:15:59.160 --> 0:16:02.160 In terms of exports and stuff. Obviously I'm talking Allen. 0:16:02.000 --> 0:16:04.800 G and oil exports. But still, oh, no surprise, sir Shacker. 0:16:04.840 --> 0:16:06.200 I know that's surprising to Paul's. 0:16:05.960 --> 0:16:11.040 We need you're listening to the Bloomberg Intelligence Podcast. Catch 0:16:11.120 --> 0:16:13.840 us live weekdays at ten am Eastern on Apple car 0:16:13.960 --> 0:16:16.760 Playing and broud Otto with the Bloomberg Business App. Listen 0:16:16.880 --> 0:16:19.960 on demand wherever you get your podcasts, or watch us 0:16:20.000 --> 0:16:21.760 live on YouTube. 0:16:22.920 --> 0:16:25.360 Alex Deal Paul Sweeney live here in our Bloomberg Interactive 0:16:25.360 --> 0:16:27.160 Brokers Studio streaming live. 0:16:27.320 --> 0:16:28.240 That's the video thing. 0:16:28.400 --> 0:16:31.040 YouTube dot Com search Bloomberg Podcast and that's where you 0:16:31.040 --> 0:16:34.280 will find us. All right, Kamala Harris has wiped out 0:16:34.320 --> 0:16:37.640 Donald Trump's lead across seven battleground states as the vice 0:16:37.640 --> 0:16:41.320 president rides a wave of enthusiasm young, young Black and 0:16:41.400 --> 0:16:44.960 Hispanic voters. That's according to the latest Bloomberg News Morning 0:16:45.000 --> 0:16:47.560 Console holds some pretty big news there for on the 0:16:47.560 --> 0:16:49.720 political front. Here, let's check you in with Lard Davison, 0:16:49.760 --> 0:16:53.680 Bloomberg Politics editor. She joins us here via zoom Laura. 0:16:53.720 --> 0:16:56.280 This seems like a pretty good start in terms of 0:16:56.400 --> 0:16:59.040 momentum for Vice President Kamala Harris. 0:16:59.400 --> 0:17:01.360 What are some of the key takeaways from this pole? 0:17:02.240 --> 0:17:05.680 Yeah, so this pole we've been doing since last October 0:17:05.720 --> 0:17:07.719 in all of the seven swing states that are expected 0:17:07.760 --> 0:17:10.600 to decide the election, and this is the best that 0:17:10.680 --> 0:17:13.120 the Democratic challenger to Trump has ever done. 0:17:13.160 --> 0:17:14.200 You know, this is the first time we. 0:17:14.160 --> 0:17:15.000 Have polled Harris. 0:17:15.720 --> 0:17:18.360 It's a statistical tie essentially between the two candidates. She's 0:17:18.400 --> 0:17:21.080 technically up one percentage point, but that's within the margin 0:17:21.119 --> 0:17:24.840 of air. The other key takeaway here is that black voters, 0:17:24.880 --> 0:17:27.760 young voters, Hispanic voters are much more likely to vote 0:17:28.160 --> 0:17:29.919 now that Harris is on the ticket. So this is, 0:17:30.359 --> 0:17:32.520 you know, been something that that the Trump campaign has 0:17:32.560 --> 0:17:35.080 created their strategy around of trying to get you know, 0:17:35.119 --> 0:17:38.040 pull away at the margins and black voters some Hispanic support. 0:17:38.520 --> 0:17:40.639 But this would indicate that perhaps the tides are shifting 0:17:40.680 --> 0:17:42.040 in Harris's favor on that front. 0:17:42.119 --> 0:17:43.520 Well, that was sort of one of my questions too. 0:17:43.560 --> 0:17:46.520 Are these voters that are switching or are they new 0:17:46.600 --> 0:17:48.320 voters that are swinging these polls. 0:17:49.200 --> 0:17:52.000 So we don't yet know totally what that is based 0:17:52.040 --> 0:17:54.520 on how the poll works, but what we see is 0:17:54.520 --> 0:17:56.520 that voters who are unsure if they're going to vote, 0:17:56.560 --> 0:17:58.640 are now saying they're much more likely that they're going 0:17:58.640 --> 0:18:00.639 to vote. So these may be people who voted in 0:18:00.680 --> 0:18:03.160 twenty who were not enthused by either candidate, who are 0:18:03.200 --> 0:18:04.800 going to stay at home, or people who maybe have 0:18:04.880 --> 0:18:09.400 never voted. But you know, a turnout election is expected 0:18:09.440 --> 0:18:12.520 to help Harris on this front versus Trump. You know, 0:18:12.560 --> 0:18:14.760 the Trump folks were you know, sort of hoping to 0:18:14.800 --> 0:18:18.560 pull away, particularly black men, Hispanic men. But you know, 0:18:18.600 --> 0:18:20.879 we're not hoping to see a big surgeon turnout that 0:18:20.960 --> 0:18:23.880 you know, really helped Biden in twenty twenty and could 0:18:23.920 --> 0:18:25.439 potentially help Harris in twenty four. 0:18:25.880 --> 0:18:28.199 Or you know, as a former Wall Street person, I 0:18:28.240 --> 0:18:32.200 tend to follow the money. And Vice President Kamala Harris 0:18:32.200 --> 0:18:34.000 has had a pretty good run here in the last 0:18:34.200 --> 0:18:36.280 week or so raising money. Do we know where that 0:18:36.280 --> 0:18:37.320 money's coming from. 0:18:37.840 --> 0:18:39.960 Yeah, so, her campaign says they've raised about two hundred 0:18:40.000 --> 0:18:41.800 million dollars and that's in the first week or so 0:18:41.960 --> 0:18:45.280 of the campaign. This is largely from small dollar donors. 0:18:45.359 --> 0:18:47.320 These are people who are going and giving online and 0:18:47.359 --> 0:18:49.280 you know, increments of you know, anywhere from you know, 0:18:49.320 --> 0:18:50.760 just a couple of dollars to you know, up to 0:18:50.840 --> 0:18:54.120 a couple thousand dollars. We've also know that her super pac, 0:18:54.200 --> 0:18:56.879 this is the group that can accept money and unlimited amounts, 0:18:56.880 --> 0:18:59.720 has gotten one hundred and fifty million in commitments since 0:18:59.720 --> 0:19:02.800 By has dropped out of the race. These big dollar donors, 0:19:02.800 --> 0:19:05.679 people who give millions of dollars, had decided to withhold 0:19:05.680 --> 0:19:07.560 a bunch of contributions, you know, in order to sort 0:19:07.600 --> 0:19:10.280 of pressure Biden to get off of the ticket. So 0:19:10.320 --> 0:19:12.240 now that money is coming back into the fore just 0:19:12.280 --> 0:19:14.240 for you know, kind of some in comparison here of 0:19:14.359 --> 0:19:18.240 Harris when she inhibit inherited the Biden campaign accounts that 0:19:18.240 --> 0:19:20.560 had about one hundred million dollars. Since then, she's raised 0:19:20.560 --> 0:19:22.920 another two hundred million dollars. So these are really big sums. 0:19:23.240 --> 0:19:25.840 How much of this could be also attributed just to momentum, 0:19:25.920 --> 0:19:28.920 as in, when you have the RNC, the candidate gets 0:19:28.920 --> 0:19:30.919 a boost, the DNC provides a boost. This is an 0:19:31.000 --> 0:19:34.959 unprecedented moment in political history, so no doubt the candidate 0:19:35.000 --> 0:19:35.679 would get a boosted. 0:19:36.320 --> 0:19:38.400 Yes, and the timing year is all really interesting because 0:19:38.440 --> 0:19:40.800 of course Biden just dropped out two days after the RNC, 0:19:41.000 --> 0:19:43.080 So Trump was expecting to see a big polling boost 0:19:43.119 --> 0:19:45.000 coming out of that. Of course, just a week prior 0:19:45.040 --> 0:19:48.440 that had been the assassination attempt leaving the RNC. Republicans 0:19:48.440 --> 0:19:51.400 were very confident about their chances, and you know, even 0:19:51.440 --> 0:19:53.800 Republican operatives were saying one of the things they needed 0:19:53.800 --> 0:19:56.440 to be conscious of is that they weren't over confident. 0:19:56.480 --> 0:19:58.320 Of course, that all switched, you know, just a couple 0:19:58.359 --> 0:20:00.880 of days later. What the Trump team is saying is, look, 0:20:00.920 --> 0:20:03.440 this is a Harris honeymoon. This is a surgeon momentum 0:20:03.840 --> 0:20:05.480 that will just be a flash in the pan and 0:20:05.520 --> 0:20:08.359 won't last until November. That's really what what we'll be 0:20:08.400 --> 0:20:09.840 looking for in the next couple weeks. If you know, 0:20:09.920 --> 0:20:12.560 is she able to maintain both this fundraising edge as 0:20:12.600 --> 0:20:14.760 well as his polling edge, or do we revert to 0:20:14.800 --> 0:20:17.159 where you know, the Biden Trump race was just with 0:20:17.200 --> 0:20:18.760 Harris on the ticket in a couple of weeks. 0:20:19.240 --> 0:20:20.080 How about debates? 0:20:20.440 --> 0:20:24.359 Are Biden, I'm sorry, Kamala Harris and mister Trump are 0:20:24.359 --> 0:20:24.920 they get a debate? 0:20:24.920 --> 0:20:26.399 And if so, when and how many times? 0:20:27.280 --> 0:20:29.959 This is a really big question. So Trump and Biden 0:20:30.000 --> 0:20:32.679 had agreed to a second debate on September tenth, that 0:20:32.720 --> 0:20:35.359 was on ABC News. It's very unclear if that is 0:20:35.359 --> 0:20:37.239 going to happen. Harris has said she wants to do it. 0:20:37.440 --> 0:20:39.919 Trump has, you know, suggested that he probably will end 0:20:40.000 --> 0:20:42.080 up debating her, but has thrown a couple wrenches in 0:20:42.200 --> 0:20:44.360 the system. He says he doesn't really like ABC's called 0:20:44.359 --> 0:20:46.879 them fake news and said he'd prefer someone like Fox 0:20:46.920 --> 0:20:49.040 News to host debate. He's also said he doesn't need 0:20:49.160 --> 0:20:51.479 to debate because he's already well known and people knows 0:20:51.520 --> 0:20:53.320 what he stands for, and he doesn't, you know, feel 0:20:53.359 --> 0:20:55.119 a need to do this. This is going to be 0:20:55.160 --> 0:20:57.600 an ongoing negotiation. There's also the question of what there'll 0:20:57.640 --> 0:21:00.240 be a VP debate. Trump and Biden had all also 0:21:00.280 --> 0:21:02.560 agreed to do one, you know, before the switch up 0:21:02.600 --> 0:21:04.520 and the race. You know, Harris is still in the 0:21:04.520 --> 0:21:06.359 process of naming her VP, so we may hear more 0:21:06.400 --> 0:21:07.560 about that in the coming weeks. 0:21:08.440 --> 0:21:11.600 What do we make about the situation in Israel and 0:21:11.640 --> 0:21:15.960 how that polls, how that is polling for Kamala. 0:21:15.600 --> 0:21:18.480 Harris, because clearly there's a huge section. 0:21:18.240 --> 0:21:20.600 Of voters that is very unhappy of what's happening in 0:21:20.600 --> 0:21:23.800 Gaza right that we're maybe not voting in all for 0:21:23.960 --> 0:21:27.359 President Biden, but are they coming back in now? 0:21:27.400 --> 0:21:29.000 Do we know anything along those lines. 0:21:29.640 --> 0:21:30.320 Yeah, So, what this. 0:21:30.280 --> 0:21:32.360 Poll shows is that people who are very concerned about 0:21:32.400 --> 0:21:35.400 the Israel Gaza war, and particularly young voters for whom 0:21:35.400 --> 0:21:37.800 this is a bigger issue, are more likely to vote 0:21:37.800 --> 0:21:40.960 for Harris. She's taken a softer tone on this. She's 0:21:41.000 --> 0:21:44.639 been more sympathetic to the human humanitarian situation in Palestine, 0:21:44.680 --> 0:21:46.560 and is you know, just doesn't have quite the same 0:21:46.600 --> 0:21:48.200 negatives on this issue that Biden does. 0:21:48.800 --> 0:21:48.960 You know. 0:21:49.000 --> 0:21:50.560 One of the things, you know, particularly just with the 0:21:50.800 --> 0:21:52.760 you know, events of the of late of you know, 0:21:52.840 --> 0:21:54.960 kind of there being more unrest in the Middle East, 0:21:55.720 --> 0:21:58.280 is you know that the Biden administration is still pushing 0:21:58.280 --> 0:22:00.520 for a ceasefire. Harris is still pushing for a he's fire. 0:22:00.720 --> 0:22:03.119 Democrats really want this to be an issue that is 0:22:03.160 --> 0:22:06.240 working towards a resolution versus, you know, an issue that's 0:22:06.280 --> 0:22:08.800 flaring up, particularly as students go back to college campuses 0:22:08.840 --> 0:22:10.520 in a couple of weeks. They don't want to see 0:22:10.520 --> 0:22:11.840 the protests that we saw last spring. 0:22:12.480 --> 0:22:15.320 Did the Republicans have Buyer's remorse for JD Vance. I'm 0:22:15.359 --> 0:22:17.520 seeing some reporting all along those lines. 0:22:18.400 --> 0:22:20.600 Yes, there's there's a lot of conversations on that, even 0:22:20.600 --> 0:22:22.920 on a Bloomberg television mc mulvaney, who's a Trump ally, 0:22:22.960 --> 0:22:25.280 came on earlier this week and said, no, they're not 0:22:25.320 --> 0:22:26.880 looking to replace JD. 0:22:27.000 --> 0:22:27.280 Vance. 0:22:27.320 --> 0:22:29.399 But of course if you're being asked about this, this 0:22:29.480 --> 0:22:32.119 means that this is at least a conversation that is circulating. 0:22:32.640 --> 0:22:34.719 You know, Dvance has had a rough rollout, you know, 0:22:34.760 --> 0:22:36.639 just in about the you know, two weeks or so 0:22:36.720 --> 0:22:39.600 that he's been on the ticket. You know, some past 0:22:39.600 --> 0:22:43.760 comments he's made, you know, sort of degrading childless cat 0:22:43.840 --> 0:22:46.600 ladies have come up. He has had had some jokes 0:22:46.600 --> 0:22:48.480 on the campaign trail that have come across as crass 0:22:48.480 --> 0:22:51.360 and haven't really landed. So this is a conversation that's 0:22:51.359 --> 0:22:55.399 happening on the upon those sort of Republican you know, elite, 0:22:55.480 --> 0:22:58.399 the mainstream Republican class, but isn't really reaching the Trump campaign. 0:22:58.480 --> 0:23:00.879 They have continued to say JD is our guy and 0:23:00.920 --> 0:23:01.880 we're going to stick by him. 0:23:02.880 --> 0:23:06.000 Is there an equivalent for single cat ladies for single men? 0:23:06.400 --> 0:23:06.480 Like? 0:23:06.560 --> 0:23:07.960 Is that single men dog owners? 0:23:07.960 --> 0:23:08.040 Like? 0:23:08.240 --> 0:23:11.119 I'm actually I'm not trying to be funny. I'm genuinely 0:23:11.160 --> 0:23:12.760 curious bachelors. 0:23:13.080 --> 0:23:14.879 But that's that's a whole different. 0:23:14.680 --> 0:23:16.520 But that's okay, Like that's a different vibe. 0:23:17.240 --> 0:23:18.960 But like if you're forty five and you have a 0:23:19.000 --> 0:23:21.960 dog and then live at home and not married, that's 0:23:21.960 --> 0:23:22.520 still funny. 0:23:22.520 --> 0:23:25.240 Maybe a gamer would be the equivalent a gamer. 0:23:25.320 --> 0:23:29.360 Okay, okay, so childless cat ladies versus gamers. It gets complicated, 0:23:29.400 --> 0:23:31.399 all right, Okay, Hey, Laurd, thanks lot, We really appreciate it. 0:23:31.400 --> 0:23:33.960 The poll was really interesting to kind of comb through there. 0:23:34.160 --> 0:23:37.439 Lord Davison, a political editor for Bloomberg News joining us 0:23:37.520 --> 0:23:41.240 from Washington, d C. They also made the great point 0:23:41.240 --> 0:23:43.560 in the article that a lot of what President Trump 0:23:43.680 --> 0:23:47.040 is very good at is putting down opponents. But having 0:23:47.160 --> 0:23:50.280 that with Kamala Harris is very difficult when you're also 0:23:50.320 --> 0:23:52.600 trying to draw over women and you're trying to draw 0:23:52.680 --> 0:23:53.760 over African Americans. 0:23:53.840 --> 0:23:54.680 Yep, tough one. 0:23:54.720 --> 0:23:59.000 And I don't remember growing up that Swing States literally 0:23:59.240 --> 0:24:00.359 decided election. 0:24:00.440 --> 0:24:02.960 You don't even go to the other found the same thing. 0:24:03.119 --> 0:24:06.320 But it's back in the day. I thought California manored 0:24:06.320 --> 0:24:08.320 New York manor Texas. I mean, now, if you're not 0:24:08.359 --> 0:24:11.000 in those swing states. You're not going to see the candidates. 0:24:11.040 --> 0:24:12.639 I don't think yeah, which is also interesting when you 0:24:12.640 --> 0:24:15.560 talk about the VP and sort of obviously Peepoota Jeedge 0:24:15.600 --> 0:24:18.320 has the most exposure because he's already in the White House. 0:24:18.359 --> 0:24:19.360 But that was interesting. 0:24:20.880 --> 0:24:24.800 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:24:24.880 --> 0:24:27.920 weekdays at ten am Eastern on Apple card Play and 0:24:27.920 --> 0:24:31.200 Android Otto with the Bloomberg Business. You can also listen 0:24:31.320 --> 0:24:34.400 live on Amazon Alexa from our flagship New York station 0:24:34.760 --> 0:24:38.480 Just say Alexa playing Bloomberg eleven thirty. 0:24:39.200 --> 0:24:41.080 It is FED Day. We will hear from the feed 0:24:41.080 --> 0:24:43.840 at two o'clock. Press conference of two thirty. Bloomberg's coverage 0:24:43.880 --> 0:24:47.880 begins at one thirty. Tom Keen, Lisa A. Bromwitz, John 0:24:47.880 --> 0:24:50.239 Farrell Bring it to you. Jeffrey Cleveland joins us here. 0:24:50.240 --> 0:24:53.280 He's a chief economist a Payden and Regal joining us 0:24:53.440 --> 0:24:54.119 via La. 0:24:54.320 --> 0:24:56.440 Via that Zoom technology thing. 0:24:57.040 --> 0:24:58.800 Jeff, what do you expect from the Federal Reserve today? 0:24:58.800 --> 0:25:01.000 A lot of folks are saying attention to maybe the 0:25:01.040 --> 0:25:03.359 tone as it relates to September. 0:25:03.400 --> 0:25:04.120 What are you looking for? 0:25:05.480 --> 0:25:08.560 Well, Paul, Happy fed Day, beautiful day here in Los Angeles. 0:25:08.680 --> 0:25:11.760 So excited this guy, I know, yeah, I think. 0:25:11.600 --> 0:25:13.840 This is a great day for the Fed to set 0:25:13.920 --> 0:25:17.920 up for a potential cut in September. They don't need 0:25:17.960 --> 0:25:21.120 to rush into anything, though. I don't think there's an 0:25:21.240 --> 0:25:25.119 urgent need to rush rates. We saw very to cut rates. 0:25:25.280 --> 0:25:28.040 We saw very strong second quarter growth. I think the 0:25:28.119 --> 0:25:30.720 labor market is still doing pretty well, so there's no 0:25:30.880 --> 0:25:35.119 urgent need. But you know, if inflation continues to cool 0:25:35.520 --> 0:25:38.360 like we saw in the PCEE data for the month 0:25:38.359 --> 0:25:41.640 of June, then it's possible by September we will get 0:25:41.640 --> 0:25:43.760 a rate cut. So I think, you know, setting up 0:25:43.760 --> 0:25:48.440 that possibility, keeping their options open, and then maybe pushing 0:25:48.480 --> 0:25:51.600 back a little bit on market expectations if you earlier 0:25:51.680 --> 0:25:53.600 this week, I looked through the end of next year, 0:25:53.640 --> 0:25:56.680 so the end of twenty twenty five, and there were 0:25:56.720 --> 0:26:01.360 around seven cuts price did. So that's that's more than 0:26:01.359 --> 0:26:04.400 a fine tuning operation. That would be you know, more 0:26:04.440 --> 0:26:05.920 of a rate I would. 0:26:05.720 --> 0:26:06.920 Call slashing operation. 0:26:07.160 --> 0:26:10.800 So maybe pushing back against the longer term price. 0:26:10.920 --> 0:26:13.000 Well to that point, I mean, the two year yield 0:26:13.680 --> 0:26:17.720 is down forty basis points for this month, a huge move, 0:26:17.760 --> 0:26:20.000 and I'm betting that a lot of that happened after 0:26:20.080 --> 0:26:22.439 July eleventh, was when we got that CPI number. 0:26:22.720 --> 0:26:23.680 So if J. 0:26:23.880 --> 0:26:26.439 Powells sort of becomes a little bit more balanced or 0:26:26.600 --> 0:26:30.040 tries to have a message that's more balanced, here, what's 0:26:30.040 --> 0:26:31.840 going to happen in the front end of the bomb market? 0:26:32.760 --> 0:26:34.399 You know, we think so we think we're in a 0:26:34.440 --> 0:26:37.480 soft landing, and that you know, so the scenario we're in, 0:26:37.560 --> 0:26:39.280 we'll be in the soft landing over the next. 0:26:39.160 --> 0:26:40.719 Six to twelve months or so. 0:26:40.720 --> 0:26:45.439 So in that environment, I think moderately lower treasury yields 0:26:45.440 --> 0:26:48.480 makes sense. Two year yields, five year yields, seven tens, 0:26:48.480 --> 0:26:51.600 what have you. So that makes sense on the short 0:26:51.680 --> 0:26:54.440 term basis, though I think the market is far too. 0:26:54.280 --> 0:26:56.200 Confident over this September cut. 0:26:57.000 --> 0:26:58.440 You know, you can be in a soft landing and 0:26:58.800 --> 0:27:02.640 cuts arrived later, probably in the short term. In your 0:27:02.680 --> 0:27:05.640 scenario where you know, chair pal pushes back a little bit, 0:27:06.480 --> 0:27:09.240 we will see some upward pressure on to year yields. 0:27:09.560 --> 0:27:12.560 Another candidate for some maybe some upward pressure would be 0:27:12.840 --> 0:27:16.800 Friday's jobs report. We get a decent jobs number, but also, 0:27:16.880 --> 0:27:18.720 you know, we've been watching the last few months. 0:27:18.480 --> 0:27:22.640 The unemployment rate REAP up. It's possible the unemployment. 0:27:22.240 --> 0:27:24.879 Rate will tick down this Friday, and you know that 0:27:24.920 --> 0:27:27.280 will pour some cold. 0:27:27.040 --> 0:27:30.040 Water on these sort of bearish calls about the Fed. 0:27:30.080 --> 0:27:31.320 You know, it needs to do something now. 0:27:31.440 --> 0:27:34.320 The economy is weakening and that could have impact on 0:27:34.320 --> 0:27:35.639 two year treasury yields. 0:27:35.760 --> 0:27:38.879 And Jeffery Alex and I had one of those discussions 0:27:38.880 --> 0:27:41.800 earlier today with Danielle di Martino Booth, who feels like 0:27:41.800 --> 0:27:43.919 this Yeo's economy is already in a recession if you 0:27:43.960 --> 0:27:46.879 really take a look at the real time data and 0:27:46.880 --> 0:27:49.200 that the Fed needs to they're actually behind the curve. 0:27:49.200 --> 0:27:50.439 They should have already been cutting. 0:27:51.359 --> 0:27:52.760 How do you respond to that when when you hear 0:27:52.800 --> 0:27:54.800 that amongst investors. 0:27:54.920 --> 0:27:57.440 To two, GDP grew two point eight percent quarter to 0:27:57.560 --> 0:27:59.879 quarter annualized on a year on year basis, it was 0:28:00.160 --> 0:28:04.480 three percent. The consumer continues to be solid. The unemployment 0:28:04.520 --> 0:28:06.639 rate as creeped up, it's still below that's four percent. 0:28:06.680 --> 0:28:07.280 That's very low. 0:28:07.359 --> 0:28:11.320 Historically, initial claims for unemployment insurance layoffs pretty good reliable 0:28:11.320 --> 0:28:14.280 indicator of whether we're in a recession or not. Very 0:28:14.320 --> 0:28:17.640 low still, So you know, I, you know, and I've 0:28:17.640 --> 0:28:20.679 been hearing this story for probably eight quarters. Now, I 0:28:20.680 --> 0:28:23.840 think since twenty twenty two, people said, you know, if 0:28:23.840 --> 0:28:25.520 the Fed starts high King, they're going to pull the 0:28:25.560 --> 0:28:28.120 rug out of the economy, of out from under the economy, Paul, 0:28:29.119 --> 0:28:30.000 It just hasn't happened. 0:28:30.040 --> 0:28:30.159 Right. 0:28:30.160 --> 0:28:31.320 The economy keeps going well. 0:28:31.400 --> 0:28:34.720 But here's the problem, right, is that it's a case 0:28:34.760 --> 0:28:39.000 shape economy where the lower and middle income houses are 0:28:39.000 --> 0:28:42.280 getting continually squeezed and the upper income are enjoying five 0:28:42.320 --> 0:28:46.680 percent on their treasury bills. So with that, I mean, 0:28:46.680 --> 0:28:49.520 I know that that's nothing unusual necessarily within the economy, 0:28:49.520 --> 0:28:51.560 but does that put a little bit more pressure then 0:28:52.240 --> 0:28:52.840 on the Fed? 0:28:54.120 --> 0:28:56.560 Well, I think if you're the Fed, you are looking 0:28:56.600 --> 0:29:00.760 at inflation. It has moderated, especially in the last two months, 0:29:00.800 --> 0:29:02.560 similar to what we saw maybe in the second half 0:29:02.560 --> 0:29:03.160 of last year. 0:29:03.360 --> 0:29:05.080 If that continues, you're. 0:29:05.200 --> 0:29:08.880 You could very easily alex be back to two point 0:29:08.880 --> 0:29:11.040 two to two point three percent year on year core 0:29:11.080 --> 0:29:14.480 PCE sometime next summer, which is close to target. 0:29:14.480 --> 0:29:15.040 So that's good. 0:29:15.640 --> 0:29:18.640 At the same time, the unemployment rate has crept up, 0:29:18.760 --> 0:29:21.800 so they don't want to just be restrictive stick at 0:29:21.800 --> 0:29:24.200 five point fifty for the foreseeable future. 0:29:24.760 --> 0:29:25.360 So there. 0:29:25.640 --> 0:29:28.000 They are aware of that, and you know, I think 0:29:28.000 --> 0:29:30.960 that's a good argument for fine tuning the FED funds, Right, 0:29:30.960 --> 0:29:32.520 you don't need to be at five to fifty If 0:29:32.560 --> 0:29:36.080 inflation's at two point three and the unemployment rates creeping up, Now, 0:29:36.120 --> 0:29:38.120 do you need to slash back to two and a 0:29:38.160 --> 0:29:39.360 half percent or three percent? 0:29:39.800 --> 0:29:42.520 Probably not either. It's more of a fine tuning operation. 0:29:43.520 --> 0:29:45.600 I might have mentioned it on this show before, but 0:29:45.720 --> 0:29:48.680 you know, like the mid to late nineties is more 0:29:48.720 --> 0:29:52.280 of the historical analog, if you will, for what I 0:29:52.320 --> 0:29:54.920 sort of envision. The Fed did cut a few times 0:29:54.920 --> 0:29:57.680 in there, but growth continued throughout that period. 0:29:58.120 --> 0:30:00.360 Stocks did well, you know, bonds did well well. So 0:30:00.760 --> 0:30:01.720 it was a good environment. 0:30:02.080 --> 0:30:04.840 So overall, in terms of the consumer, how do you 0:30:04.880 --> 0:30:07.000 feel like the consumers faring out there? 0:30:07.960 --> 0:30:11.800 I think, you know, for me, job growth continues, you 0:30:11.880 --> 0:30:15.200 have more people working, they're still earning wages, although wages 0:30:15.200 --> 0:30:17.000 have you know, cooled off a little bit to about 0:30:17.040 --> 0:30:18.960 four percent year on year. With what we're seeing in 0:30:19.000 --> 0:30:21.680 the ECI data, it's inconsistent what we've been seeing in 0:30:21.720 --> 0:30:25.880 average hourly earnings. But it's really income growth that drives 0:30:26.040 --> 0:30:28.560 the consumer and consumer spending and that is that is 0:30:28.600 --> 0:30:31.239 still holding up through the latest set of data. We'll 0:30:31.280 --> 0:30:33.520 get an update on that on Friday, But I think 0:30:33.520 --> 0:30:36.239 that's really key. Separate from that, Paul, you can think 0:30:36.280 --> 0:30:39.440 about household net worth still looks pretty good. We still 0:30:39.440 --> 0:30:42.760 think households have savings. If you look at household debt 0:30:42.880 --> 0:30:46.520 service as a share of their disposable income, those ratios 0:30:46.520 --> 0:30:47.040 are still. 0:30:46.920 --> 0:30:48.960 Quite low, even though rates have prepped up. 0:30:49.040 --> 0:30:51.760 So all in all, I think the consumer is in decent, 0:30:51.920 --> 0:30:55.160 decent shape. Still all right, let's oh no, no, sorry, gohad. 0:30:55.160 --> 0:30:56.480 I was gonna say, before you go, before we let 0:30:56.560 --> 0:30:58.800 you go, what would be the question you'd ask Jay 0:30:58.800 --> 0:30:59.880 Powell if you're in the presser? 0:31:01.000 --> 0:31:02.719 Well, I would ask him, hey, what you know? 0:31:02.960 --> 0:31:03.360 You think? 0:31:03.720 --> 0:31:05.400 What do you think about the unemployment rate rise? 0:31:05.400 --> 0:31:08.560 We've gone from you know, three point four percent last spring, 0:31:08.880 --> 0:31:10.120 we're now four point one. 0:31:10.720 --> 0:31:12.160 How concerning is that to you? 0:31:12.200 --> 0:31:14.120 How much does that wane on you in terms of 0:31:14.160 --> 0:31:17.240 the decisions you will make. I might also ask him, Hey, 0:31:17.720 --> 0:31:20.440 the market thinks you're definitely cutting in September. 0:31:20.520 --> 0:31:22.520 What would what is the one thing that would really 0:31:22.600 --> 0:31:23.160 change your view? 0:31:23.200 --> 0:31:23.440 Is it? 0:31:23.680 --> 0:31:26.040 I think it would be core PCEE you know, coming 0:31:26.080 --> 0:31:27.880 in month to month, hotter in the next couple of months, 0:31:27.920 --> 0:31:28.640 choppy inflation. 0:31:28.760 --> 0:31:30.800 But I think that's a worthwhile ask. 0:31:31.680 --> 0:31:32.640 All right, thanks so much. 0:31:32.680 --> 0:31:34.240 We really appreciate it, and I would love it if 0:31:34.280 --> 0:31:36.000 you went into a press room. It's like, hey, Jay, 0:31:36.680 --> 0:31:39.160 tell me about this, all right. Jeffrey Cleveland, Chief economist 0:31:39.160 --> 0:31:41.520 over Opinion regal super appreciate that. 0:31:43.080 --> 0:31:46.960 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:31:47.040 --> 0:31:50.560 weekdays at ten am Eastern on applecar Play and Android 0:31:50.600 --> 0:31:53.360 Auto with the Bloomberg Business app. You can also listen 0:31:53.480 --> 0:31:56.600 live on Amazon Alexa from our flagship New York station. 0:31:56.960 --> 0:32:00.120 Just say Alexa playing Bloomberg eleven thirty. 0:32:01.520 --> 0:32:04.080 You're listening to Bloomberg Intelligence, Alex Steel, Paul Swiney live 0:32:04.120 --> 0:32:06.400 here in our Bloomberg you know, active broadcast studio. All right, 0:32:06.440 --> 0:32:08.320 here's a company for you. I had not heard about 0:32:08.320 --> 0:32:13.320 it until recently. Train Technologies. I believe they're based in Ireland, 0:32:13.360 --> 0:32:17.680 but there are a global climate innovator focused on sustainable 0:32:17.720 --> 0:32:22.160 solutions for buildings, homes, and transportation. Karen Uberhart from Bloomberg Intelligence. 0:32:22.160 --> 0:32:25.120 She covers this stock and she's a grizzled veteran she 0:32:25.240 --> 0:32:29.640 is not given to praise companies, you know. Unnotably, she 0:32:29.760 --> 0:32:33.720 says they had a great quarter again, amazing company in 0:32:33.760 --> 0:32:34.840 a very attractive sector. 0:32:34.880 --> 0:32:35.520 So she told me that. 0:32:35.560 --> 0:32:37.760 I said, we got to get these guys on Bloomberg 0:32:38.720 --> 0:32:40.400 and get her talking about see what's going on with 0:32:40.440 --> 0:32:43.920 this company. Dave Regnery joins us. He is the CEO 0:32:44.000 --> 0:32:47.640 of Trained Technologies. The tickers tt on your Bloomberg terminal 0:32:48.080 --> 0:32:50.160 stock hit a fifty two week and actually and I'm 0:32:50.160 --> 0:32:53.280 going to call it an all time high today on 0:32:53.320 --> 0:32:55.560 the back of some pretty good numbers, earnings and sales 0:32:55.600 --> 0:32:59.240 beat on consensus. Dave, thanks so much for joining us 0:32:59.360 --> 0:33:02.280 here in Lovely David's and North Carolina. 0:33:02.400 --> 0:33:03.520 Talk to us about your company. 0:33:03.760 --> 0:33:07.800 What's driving the performance of Trained Technologies these days? 0:33:08.520 --> 0:33:10.360 Well, first, Paul, thanks for having me on the show. 0:33:10.720 --> 0:33:13.360 I just got off our earnings call and we reported 0:33:13.400 --> 0:33:16.320 a very strong second quarter, much like we did in 0:33:16.360 --> 0:33:20.120 the first quarter. Our organic revenue growth was up thirteen percent, 0:33:20.280 --> 0:33:23.600 our order rates were up nineteen percent, and our EPs 0:33:23.640 --> 0:33:27.960 growth was up twenty three percent. So very proud of 0:33:27.960 --> 0:33:31.040 what we've been able to how we've been able to perform. 0:33:31.760 --> 0:33:35.280 Look as far as what's driving our growth. You know, 0:33:35.320 --> 0:33:37.280 I always tell people we have a system of things 0:33:37.280 --> 0:33:40.600 that makes Train Technologies a great company. And whether it's 0:33:40.640 --> 0:33:44.520 the way we we operate our facilities, through our business 0:33:44.520 --> 0:33:47.479 operating system ways, whether it's the way we innovate our 0:33:47.520 --> 0:33:51.320 new products, or whether it's our direct salesforce, those are 0:33:51.320 --> 0:33:53.520 a system of things that make us a great company. 0:33:53.960 --> 0:33:56.760 And we have a service business that's a third of 0:33:56.800 --> 0:34:01.840 our company that's performing extremely well. In the second quarter, 0:34:02.000 --> 0:34:06.440 our service business was up mid teens from a growth perspective, 0:34:06.880 --> 0:34:09.600 and we have a culture that's you know, we believe 0:34:09.640 --> 0:34:12.520 in challenging what's possible and innovating for a sustainable world. 0:34:13.000 --> 0:34:15.480 So based on that, it's great to chat with you. 0:34:15.520 --> 0:34:18.560 By the way, I love love talking to you, because 0:34:18.560 --> 0:34:20.600 you have such a great read on the residential and 0:34:20.680 --> 0:34:24.680 commercial businesses. Basically, if a commercial HVAC unit and a 0:34:24.719 --> 0:34:29.560 near term residential HVAC unit, and of course that's heating, ventiletion, 0:34:29.840 --> 0:34:33.759 air and cooling, where's the strength, where's the growth, where 0:34:33.760 --> 0:34:35.000 are the weak points? 0:34:35.680 --> 0:34:38.760 Yeah, I'll start with residential. We had a very strong 0:34:38.880 --> 0:34:41.520 quarter in the second quarter. Our revenue was up mid 0:34:41.560 --> 0:34:46.960 teens I'm sorry, low teens, but that our residential business. 0:34:47.000 --> 0:34:50.200 For the prior I'll say, you know, three quarters had 0:34:50.239 --> 0:34:55.240 really been struggling with a refrigerant change that wasn't clear. 0:34:55.960 --> 0:34:59.600 That's been clarified. It was really struggling with excess inventory 0:34:59.640 --> 0:35:02.040 kind of a hangover from the COVID days that was 0:35:02.040 --> 0:35:06.520 in the channel. Those both correct it, and we're off 0:35:06.520 --> 0:35:09.759 to a very warm start to the cooling season, which 0:35:09.760 --> 0:35:12.680 should have us all concerned for a different reason as 0:35:12.680 --> 0:35:16.279 the climate continues to increase in temperature. But I would 0:35:16.280 --> 0:35:19.120 tell you that it's a very strong start of the year, 0:35:19.200 --> 0:35:23.800 so very strong and residential, our commercial business really broad 0:35:23.840 --> 0:35:27.719 based growth. You know, certainly the high growth verticals like 0:35:27.840 --> 0:35:30.840 data centers. We do very very well in our education 0:35:31.680 --> 0:35:35.319 or in healthcare, but we had broad based growth in 0:35:35.360 --> 0:35:39.839 the Americas. We track fourteen different verticals and we were 0:35:39.960 --> 0:35:42.400 hard pressed to find a vertical that we were not 0:35:42.520 --> 0:35:45.759 strong in. So it was just it was a very 0:35:45.760 --> 0:35:47.960 strong quarter for trained Technology. I'm very proud of what 0:35:47.960 --> 0:35:50.160 the team's been able to accomplish. 0:35:50.440 --> 0:35:53.640 Yeah, I'm reading the Bloomberg Intelligence research note on your earnings. 0:35:53.640 --> 0:35:57.400 North America's sixteen percent organic growth was much greater than 0:35:57.440 --> 0:35:58.759 the ten percent consensus. 0:35:59.400 --> 0:36:00.120 What drove that. 0:36:01.520 --> 0:36:04.560 Yeah, really two things. Our residential business perform better. Okay, 0:36:04.640 --> 0:36:06.719 we thought that was going to be you know, in 0:36:06.760 --> 0:36:08.840 the beginning of the year, we thought our residential business 0:36:08.840 --> 0:36:11.439 would below single digits. We came in you know, low 0:36:11.480 --> 0:36:15.600 teams in the quarter, so we significantly outdrove that. And 0:36:15.640 --> 0:36:19.400 then our commercial HVAC business just continues to operate at 0:36:19.400 --> 0:36:22.920 a very high level. And like I said, services was 0:36:23.000 --> 0:36:27.239 up in the high teens actually in the Americas, and 0:36:27.280 --> 0:36:31.919 their equipment business just continues to exceed our customers' expectations. 0:36:32.080 --> 0:36:35.160 So very strong quarter. You know, I was listening to 0:36:35.239 --> 0:36:39.799 your show earlier. You were talking about sustainability, and you know, 0:36:40.040 --> 0:36:43.719 I would tell you that Trained Technologies, our purpose is 0:36:43.800 --> 0:36:48.920 built around sustainability. And what people are talking about right 0:36:48.920 --> 0:36:51.759 now as you're hearing a lot about, you know, how 0:36:51.840 --> 0:36:54.040 much power is going to have to be generated to 0:36:54.120 --> 0:36:57.080 meet the demand that's coming. And you'll hear a lot 0:36:57.080 --> 0:37:00.200 about data centers using a lot of the electricity. What 0:37:00.360 --> 0:37:03.279 nobody is talking about is the amount of power that's 0:37:03.320 --> 0:37:06.400 being generated that's being wasted. And I would tell you 0:37:06.440 --> 0:37:09.560 we call it demand side management, and we know because 0:37:09.560 --> 0:37:13.080 we've done hundreds of thousands of energy audits and buildings 0:37:13.120 --> 0:37:16.920 that most buildings operate about thirty percent inefficiently. So just 0:37:16.960 --> 0:37:19.520 think if we could solve that problem, and if we 0:37:19.560 --> 0:37:22.279 can make buildings perform the way they were designed, or 0:37:22.320 --> 0:37:25.000 assets performed the way they're designed. Just think about the 0:37:25.040 --> 0:37:28.399 amount that we could save and the energy that's being 0:37:28.440 --> 0:37:30.880 produced and which was obviously has a trickle effect to 0:37:30.920 --> 0:37:33.759 the carbon footprint. So that's what train technology is all about. 0:37:33.920 --> 0:37:35.760 People always ask me, where do you see the growth 0:37:35.800 --> 0:37:37.799 coming from. It's going to be on the demand side, 0:37:37.840 --> 0:37:38.720 management side. 0:37:38.840 --> 0:37:41.160 Hey, did we really appreciate it? Definitely come back. I 0:37:41.200 --> 0:37:43.520 know you got to run, but we appreciate your time 0:37:43.560 --> 0:37:45.879 today when you're in the city, come in and tell 0:37:45.920 --> 0:37:47.920 us more about it, you know. And I'm also curious 0:37:47.920 --> 0:37:49.719 as to those customers are think willing to pay up 0:37:49.719 --> 0:37:51.440 for it we got last morning to talk about. 0:37:51.200 --> 0:37:56.560 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:37:56.640 --> 0:38:00.480 weekdays at ten am Eastern on applecar Play at All 0:38:00.560 --> 0:38:03.560 with the Bloomberg Business. You can also listen live on 0:38:03.640 --> 0:38:06.919 Amazon Alexa from our flagship New York station, Just say 0:38:07.000 --> 0:38:09.320 Alexa play Bloomberg eleven thirty. 0:38:10.320 --> 0:38:12.040 Let's get back to the market Shaw, We just go 0:38:12.120 --> 0:38:13.799 back to ETFs, talk about it. 0:38:13.920 --> 0:38:16.600 Growth business. Jennifer Crancio Joints is here. She's global head 0:38:16.600 --> 0:38:18.160 of distribution for TCW. 0:38:18.400 --> 0:38:21.319 Let's Trust Company of the West, Los Angeles. Space used 0:38:21.360 --> 0:38:22.480 to be a huge plan of mine. 0:38:22.680 --> 0:38:25.040 They loved me. She joins us here in our Bloomberg 0:38:25.040 --> 0:38:26.400 Interactive Brokers studio. 0:38:27.280 --> 0:38:30.680 Jennifer, I mean, the money just keeps flowing to you guys, 0:38:31.080 --> 0:38:34.000 and it's just unbelievable how your market is growing, the 0:38:34.000 --> 0:38:37.120 ETF market. Where's some of the money going now? Are 0:38:37.160 --> 0:38:41.080 folks looking for income? Are they looking for special situations? 0:38:41.120 --> 0:38:42.320 What are they looking for these days? 0:38:42.560 --> 0:38:45.560 Yeah? From a TCW perspective, people know us for fixed 0:38:45.600 --> 0:38:48.200 income and so we have a developed set of equity 0:38:48.239 --> 0:38:51.960 ETFs now. But we launched the first fixed income ETF recently. 0:38:52.520 --> 0:38:54.920 And the ticker because that's you know, that's what we 0:38:54.960 --> 0:38:58.840 do in ETFs is flex or FLXR. But Flexer and 0:38:58.880 --> 0:39:02.040 strategies like it are giving you return in the fixed 0:39:02.080 --> 0:39:05.160 income portfolio, but they're also giving you very consistent income. 0:39:05.440 --> 0:39:08.279 And if you think about how to actually construct a portfolio, 0:39:08.600 --> 0:39:13.400 equities can be volatile market market, money market funds and rates. 0:39:13.440 --> 0:39:15.880 They will go down eventually, and so we see a 0:39:15.880 --> 0:39:19.160 lot of investors looking for products that are giving you return, 0:39:19.560 --> 0:39:21.760 but they're also giving you this consistent income. 0:39:22.200 --> 0:39:24.400 This might be a really silly question. Are these actively 0:39:24.440 --> 0:39:27.279 managed ETFs or are these boring? Not boring, I mean 0:39:27.320 --> 0:39:29.320 just passive ETFs. We ad TCW. 0:39:29.480 --> 0:39:32.200 We have one index CTF, and everything else we do 0:39:32.360 --> 0:39:35.520 is active. So our view on portfolios right now is 0:39:35.560 --> 0:39:38.600 there's a lot of uncertainty in the market, and particularly 0:39:38.640 --> 0:39:41.919 when it comes to fixed income and bonds, we think 0:39:41.960 --> 0:39:44.359 active management is the way to go. We can make 0:39:44.400 --> 0:39:47.239 a lot of choices about how to both manage your 0:39:47.320 --> 0:39:49.719 risk and optimize return and in the case of a 0:39:49.760 --> 0:39:53.799 product like flexible income, optimize income at the same time. 0:39:53.960 --> 0:39:56.200 So we think active is the way to go in 0:39:56.239 --> 0:39:56.960 the current market. 0:39:57.080 --> 0:40:00.600 And what's issuing about your met west flexible income It 0:40:00.760 --> 0:40:03.399 was a mutual fund, so you convert a mutual fund 0:40:03.480 --> 0:40:04.839 into an ETF. 0:40:05.560 --> 0:40:06.560 Why do that? 0:40:07.320 --> 0:40:10.360 Advisors like to invest in portfolio managers that have a 0:40:10.360 --> 0:40:12.560 long track record. They want to know that the team's 0:40:12.600 --> 0:40:15.080 been around and together and been making these choices on 0:40:15.160 --> 0:40:17.480 risk and return for a very long time. So at 0:40:17.520 --> 0:40:20.960 TCW we have an excellent fixed income team. They've managed 0:40:20.960 --> 0:40:24.640 this particular strategy for six years with very high performance 0:40:24.719 --> 0:40:27.200 versus peers, and so in this case, it's logical for 0:40:27.280 --> 0:40:29.960 us to take that great track record and simply flip 0:40:29.960 --> 0:40:31.280 it into an ETF vehicle. 0:40:31.640 --> 0:40:33.919 This might be also silly question, but if the Fed 0:40:33.960 --> 0:40:37.520 starts cutting rates, does the appeal of an actively managed 0:40:37.560 --> 0:40:40.120 fixingcome ETF become less because we're no longer going to 0:40:40.120 --> 0:40:42.480 be at five percent like money market fund rates for example. 0:40:42.920 --> 0:40:43.680 Well, I think it's. 0:40:43.560 --> 0:40:45.360 We're not going to be at zero either, And so 0:40:45.360 --> 0:40:46.799 the way that we would think about it is, if 0:40:46.840 --> 0:40:50.000 you're moving through time for years ahead of us, there 0:40:50.000 --> 0:40:53.240 really is an opportunity to be active to drive return 0:40:53.320 --> 0:40:56.000 in the fixed income part of the portfolio. And frankly, 0:40:56.000 --> 0:40:58.600 from an income perspective, people need to keep up with inflation, 0:40:58.960 --> 0:41:03.400 so inflation's down somewhat. But from a price perspective, particularly 0:41:03.560 --> 0:41:06.440 aging population, if everyone's living till ninety or one hundred 0:41:06.520 --> 0:41:09.600 years old, there are a lot of portfolios where the 0:41:09.719 --> 0:41:12.920 regular repeatable income and in the case of flexible income, 0:41:12.920 --> 0:41:16.319 it's say seven percent yield. So as money markets go down, 0:41:16.480 --> 0:41:19.400 we're actively able to manage to a higher income target. 0:41:20.600 --> 0:41:23.680 All right, you guys in the ETF business. I understood 0:41:23.719 --> 0:41:26.360 the passive ETFs. I got that whole story in the cost. 0:41:26.600 --> 0:41:29.480 Then you guys brought in active ETFs. I'm like, wait 0:41:29.520 --> 0:41:34.440 a minute, I think active. I think managers, analyst overhead costs. 0:41:35.440 --> 0:41:39.120 So is an active we managed ETFs cheaper than a mutual. 0:41:38.880 --> 0:41:41.840 Fund in some cases? In some cases they will be. 0:41:41.920 --> 0:41:43.360 In some cases maybe they won't be. 0:41:43.480 --> 0:41:45.920 So in this case with flexible income, we actually brought 0:41:45.960 --> 0:41:48.960 the cost down because we see the demand from an 0:41:48.960 --> 0:41:51.359 ETF perspective, and we think the fund is going to grow, 0:41:51.440 --> 0:41:53.840 and so we were able to take an active product 0:41:53.880 --> 0:41:56.479 that is a forty basis point fee, But that forty 0:41:56.520 --> 0:41:58.799 basis point fee is actually lower than when we were 0:41:58.840 --> 0:42:00.960 managing it in a mutual fee, and that brings real 0:42:01.040 --> 0:42:01.960 value to clients. 0:42:02.200 --> 0:42:04.000 How about to you guys, Well. 0:42:03.840 --> 0:42:06.400 For us, we're building a business and we think that 0:42:06.440 --> 0:42:08.919 there's real demand for products like the one that we're 0:42:08.920 --> 0:42:12.239 talking about today, and so as that product grows, it's 0:42:12.280 --> 0:42:14.279 a great business for us to be able to serve 0:42:14.360 --> 0:42:16.879 clients with a product that can really scale and grow 0:42:16.880 --> 0:42:18.080 in assets under management. 0:42:18.480 --> 0:42:21.880 Jennifer, before you were at TCW, you were the CEO 0:42:22.000 --> 0:42:25.480 of Engine Number one. TCW acquired that part of the 0:42:25.480 --> 0:42:28.440 firm's business back in October of twenty twenty three. I'm 0:42:28.480 --> 0:42:31.719 an oil nerd, so I think Engine number one and 0:42:31.760 --> 0:42:35.800 I'm thinking, oh, the really successful shareholder push on Exon 0:42:35.920 --> 0:42:38.359 to get three members on their board, to really push 0:42:38.400 --> 0:42:39.280 for climate change. 0:42:39.280 --> 0:42:41.600 Can you walk me through all of that. 0:42:42.280 --> 0:42:44.480 Yeah. So, from an end to Number one perspective, we 0:42:44.600 --> 0:42:47.680 saw an opportunity in the market where people were investing 0:42:47.680 --> 0:42:51.680 in energy transition or transformation, either not investing in holding 0:42:51.719 --> 0:42:54.640 index funds or investing in private equity. So a lot 0:42:54.640 --> 0:42:56.360 of what we did at Endine number one was build 0:42:56.360 --> 0:42:59.400 a public market products. Exon was a big part of that, 0:42:59.520 --> 0:43:01.640 still a big holding in one of the funds that 0:43:01.680 --> 0:43:04.960 came over to TCW, which is another ETF net Z 0:43:05.920 --> 0:43:08.719 And the idea there is that we are going through 0:43:08.719 --> 0:43:11.960 an energy transition over many decades to come, and so 0:43:12.040 --> 0:43:14.920 in the case of working with Exon, helping Exon realize 0:43:15.080 --> 0:43:18.560 they could optimize their business and capital allocation to not 0:43:18.640 --> 0:43:20.799 waste money in the out years but take advantage of 0:43:20.800 --> 0:43:22.880 what was happening in the next ten years. And that 0:43:23.440 --> 0:43:25.760 kind of that work has added a lot of value 0:43:26.120 --> 0:43:29.200 to everybody that has held exon over this period. And 0:43:29.239 --> 0:43:32.640 at TCW we still manage this Energy Systems Transition Fund, 0:43:32.840 --> 0:43:33.560 So to that. 0:43:33.560 --> 0:43:37.680 Point, I mean that was also when energy transition and 0:43:37.760 --> 0:43:40.359 green and climate were so the pendulum was swinging very 0:43:40.440 --> 0:43:42.480 much one way, and the pendulum is swinging back the 0:43:42.520 --> 0:43:45.799 other way. Are you guys noticing anything not TCW on that. 0:43:46.440 --> 0:43:49.240 Well, we're at TCW are probably one of the leaders 0:43:49.280 --> 0:43:53.560 in looking at companies from an underlying risk and reward 0:43:53.640 --> 0:43:58.360 perspective across climate and governance for example. So we're a 0:43:58.400 --> 0:44:00.360 leader in that. That's a big part of our business 0:44:00.400 --> 0:44:02.960 in Europe. In the US, people may not want to 0:44:02.960 --> 0:44:06.080 buy products that are value screened, but we still do 0:44:06.120 --> 0:44:08.080 the work so that we're doing the work so that 0:44:08.120 --> 0:44:11.320 if there's a company that's mispriced based on a climate 0:44:11.400 --> 0:44:15.080 risk or mistakes on the governance side, we understand that 0:44:15.200 --> 0:44:18.080 and that's information that goes up to our fundamental portfolio 0:44:18.120 --> 0:44:21.120 managers and it's just another way we're adding alpha for clients. 0:44:21.520 --> 0:44:25.000 Interesting, So we're from the ECF business for TCW. 0:44:25.080 --> 0:44:27.000 What's next for you guys? Where's the area focus? 0:44:27.120 --> 0:44:27.160 Is? 0:44:27.160 --> 0:44:28.920 It continued on the fixed income front. 0:44:29.080 --> 0:44:31.839 It is for sure continuing on the fixing come front. 0:44:31.920 --> 0:44:33.800 So we have a set of equity product tool buildt 0:44:33.800 --> 0:44:34.640 to that over time. 0:44:35.120 --> 0:44:35.680 Excuse me. 0:44:36.080 --> 0:44:38.480 But on the fixed income side, we've got flexible income 0:44:38.520 --> 0:44:41.200 out in the market now and we've filed for another 0:44:42.280 --> 0:44:44.239 four to five products that may be out as soon 0:44:44.280 --> 0:44:46.279 as the end of the year. Because what we see 0:44:46.320 --> 0:44:50.240 is people want the best solution in fixed income portfolio construction. 0:44:50.400 --> 0:44:52.480 And so what we do is active managers, whether it's 0:44:52.480 --> 0:44:57.160 in the CLO market, secured bank loans, high yield, we 0:44:57.239 --> 0:45:00.560 think we can deliver very attractive and more competitive then 0:45:00.600 --> 0:45:03.960 other people are out there today, return and risk profiles, 0:45:04.000 --> 0:45:06.080 and so we look forward to launching those ETFs shortly. 0:45:06.760 --> 0:45:08.600 Can I go back to climate for a second, Oh, Paul, 0:45:08.640 --> 0:45:11.719 hate me here. You mentioned that you are helping to 0:45:11.800 --> 0:45:14.440 judge climate risk. Can you pass it on to the managers? 0:45:14.480 --> 0:45:16.440 How do you How do you judge climate risk for 0:45:16.480 --> 0:45:17.000 a company? 0:45:17.239 --> 0:45:19.200 It's different for every company I know, and so how 0:45:19.200 --> 0:45:19.640 do you do it? 0:45:19.719 --> 0:45:19.919 Yeah? 0:45:19.960 --> 0:45:21.799 I mean so, so the way we the way we 0:45:21.840 --> 0:45:24.120 do it is look at look at each company at 0:45:24.160 --> 0:45:26.920 an underlying data level. So if a company is in 0:45:26.960 --> 0:45:29.480 the energy sector, you know, what are they doing about 0:45:29.520 --> 0:45:33.799 capital allocation in old world energy? What are they doing 0:45:33.800 --> 0:45:37.719 to approve or green up in other areas? So we're 0:45:37.719 --> 0:45:40.719 looking at that, and then across most large companies, we're 0:45:40.719 --> 0:45:44.680 looking at water use, electrification, the goals that they're setting, 0:45:44.760 --> 0:45:47.760 and then measuring the progress that they're making against those goals. 0:45:47.840 --> 0:45:50.560 So we don't look at it in a carbon footprint only. 0:45:50.760 --> 0:45:53.680 We look at it as a sort of transformation transition. 0:45:54.120 --> 0:45:56.560 How are they planning, how will they beat their competitors 0:45:56.560 --> 0:45:59.040 effectively in doing a better job as we move through 0:45:59.040 --> 0:46:00.440 time and we move through the transition. 0:46:01.520 --> 0:46:03.959 So cool, I don't want. 0:46:03.840 --> 0:46:05.439 To how you invest in energy companies, because I would 0:46:05.440 --> 0:46:07.880 be do I want my companies going green now or 0:46:07.960 --> 0:46:08.440 just waiting? 0:46:08.480 --> 0:46:09.839 Well, that's part of the problem is that if you're 0:46:09.840 --> 0:46:12.240 a big energy company like or if you're an investor, 0:46:12.360 --> 0:46:14.640 you really only want to own one because you can't 0:46:14.680 --> 0:46:16.680 own a bunch for that exact reason, and you can't 0:46:16.680 --> 0:46:18.600 go to shareholders or your investors and say, hey, I 0:46:18.680 --> 0:46:21.400 have a boltload of energy companies. So then that begs 0:46:21.400 --> 0:46:23.880 the question, how do you choose which means bigger is better? 0:46:23.960 --> 0:46:26.640 And then hence forth the next Sun Chevron kind of 0:46:26.640 --> 0:46:28.880 thing that's that's what I keep hearing shayby next on 0:46:28.920 --> 0:46:32.320 earnings out Friday, So very exciting. This is great, Jennifer, 0:46:32.320 --> 0:46:34.000 thank you so much. It was wonderful to meet you. 0:46:34.040 --> 0:46:36.040 A big fan of Katie Kotch also who's the CEO 0:46:36.080 --> 0:46:38.520 of TCW, so it's great to get you in the studio. 0:46:38.680 --> 0:46:41.920 Come back anytime at Jennifer Grancio a global head of 0:46:41.920 --> 0:46:44.960 distribution over at TCW, normally based in La so. 0:46:44.880 --> 0:46:46.080 We're very lucky to have her here. 0:46:46.360 --> 0:46:50.839 This is the Bloomberg Intelligence podcast, available on Apples, Spotify, 0:46:51.040 --> 0:46:53.960 and anywhere else you will get your podcasts. Listen live 0:46:54.040 --> 0:46:57.640 each weekday, ten am to noon Eastern on Bloomberg dot com, 0:46:57.760 --> 0:47:01.160 the IR radio app, tune In, and the Bloomberg Business app. 0:47:01.280 --> 0:47:04.240 You can also watch us live every weekday on YouTube 0:47:04.520 --> 0:47:06.360 and always on the Bloomberg terminal.