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Speaker 2: I'm Alex the alongside Paul Sweeney. This is Bloomberg Intelligence Radio.
Speaker 2: We bring you all the top news and business, economics
Speaker 2: and finance. There are lens of our Bloomberg Intelligence analysts.
Speaker 2: They cover two thousand companies and one hundred and thirty
Speaker 2: industries worldwide. And one of them that I bug all
Speaker 2: the time is George Ferguson Bloomberg Intelligence Senior Aerospace, Defense
Speaker 2: and Airlines analysts. I stalked him yesterday over Airbus because
Speaker 2: we have a CEO on TV and I was like, George,
Speaker 2: I need more questions than just Hey, what's up with space?
Speaker 2: What's up with Boeing is now the better question for today.
Speaker 2: So Boeing now appointing Kelly Ortberg as its new chief
Speaker 2: executive officer of the stock is up by about three
Speaker 2: and a half percent. He is a retired veteran of
Speaker 2: the aviation industry. He is an engineer by training. Is
Speaker 2: this the guy that Boeing needs, George?
Speaker 3: Is he?
Speaker 1: Not?
Speaker 4: So sure? I think it's the guy that Boeing needs
Speaker 4: for a small period of time, right because he was
Speaker 4: already retired, right, he has you know, he's a great
Speaker 4: career in aerospace working at Colins, help him put Collins
Speaker 4: into RTX, I mean, a great experience. He's sixty four,
Speaker 4: So my guess is he doesn't have a lot of
Speaker 4: runway to work at Boeing. I think it'd have been
Speaker 4: nicer to see a CEO that could have put I
Speaker 4: don't know, five seven, ten years into Boeing. But look,
Speaker 4: I think the job is very difficult, and so I
Speaker 4: think it's going to take a lot out of the
Speaker 4: next CEO. And so maybe this is an interim as
Speaker 4: they continue to develop internal candidates for the job. Maybe
Speaker 4: it's very pretty difficult to recruit somebody into this job
Speaker 4: right now. Could be an interim because of that as well.
Speaker 4: So again, you know, the strong aerospace background at the
Speaker 4: component at the you know, parts maker level, but doesn't
Speaker 4: look like someone's going to be around for the next
Speaker 4: five seven years, all.
Speaker 5: Right, George, All right, So that's the CEO, how about
Speaker 5: on the fundamentals here and looking at the second quarter
Speaker 5: negative adjusted free cash slow four point three billion dollars.
Speaker 5: You can't like that. Talk to us about kind of
Speaker 5: the cash flow, that dynamics and what they need to do.
Speaker 4: So we kind of expected that four point three billion
Speaker 4: dollars to be Really honest, I'm not totally sure why
Speaker 4: the stock is up. I don't think it's Kelly because
Speaker 4: Kelly News started the day out and bowing an anchors
Speaker 4: up about one so post earnings were up. You know
Speaker 4: we've done this pop. I mean, you know, we heard
Speaker 4: from CFO Brian West during the call. He told us
Speaker 4: Burn was going to be pretty strong in three Q two,
Speaker 4: and then some the analysts tried to box him in
Speaker 4: on what Burn was going to be for the year.
Speaker 4: One said would be closer to five billion or ten billion.
Speaker 4: He said he was, and I think his quote somebody,
Speaker 4: I'm not smart enough to tell you at this time.
Speaker 4: So there's just a lot of variability right now. Look,
Speaker 4: Boeing has to keep taking inventory, taking ship sets from
Speaker 4: their supplier base to keep their supplier base in business
Speaker 4: while they ramp up builds. And they had some good
Speaker 4: commentaries and builds. They talked about the factory kind of
Speaker 4: putting out twenty ish I think was the number, and
Speaker 4: I think total deliveries in the thirty ish range for
Speaker 4: seven thirty sevens rising to thirty eight shutting down those
Speaker 4: shadow factories. It's the factories that they have, the inventoried airplanes,
Speaker 4: a lot of seven three sevens, some seven eight sevens
Speaker 4: in shutting them down by the end of the year.
Speaker 4: That was I think great commentary. You know, we got
Speaker 4: to the commentary about what's going to go on with
Speaker 4: the union negotiations. Those are coming up in September. Dave
Speaker 4: Calhoun kind of told us he I think wasn't totally
Speaker 4: focused on that right now, or didn't have couldn't give
Speaker 4: us puts and takes there. That's incredibly important. Right, So
Speaker 4: if we get into a situation where the union shuts
Speaker 4: this company down in September, the cash burn this year
Speaker 4: looks looks horrible. Their back going to capital markets looking
Speaker 4: for a bond raise, which I think everybody on the
Speaker 4: bond side is scared to death about because they don't
Speaker 4: want to see a fall to investment grade. Or they're
Speaker 4: going to the equity side, which the equity guys don't
Speaker 4: want to hear about, right, is there? That's called that's dilution,
Speaker 4: you know, so I think again. Commentary was good around
Speaker 4: deliveries and things like that, but a lot of variability coming,
Speaker 4: you know here around this cash flow burn and it's
Speaker 4: super important.
Speaker 6: All right. George, thanks so much for joining us. We
Speaker 6: appreciate it as always.
Speaker 5: George Ferguson, Senior Aerospace, Defense and Airlines Anols Bloomberg Intelligence
Speaker 5: from Princeton, New Jersey.
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Speaker 2: So it's fed day. Everyone's pumped for it. What is
Speaker 2: Ja Powell gonna say? Are they going to signal September?
Speaker 2: What is it gonna look like? We're gonna break it
Speaker 2: all down? For you with Danielle de Martino, Booth's CEO
Speaker 2: and chief strategist for QI Research. She joins us in
Speaker 2: the radio studio right now, all right, Danielle, what do
Speaker 2: you think?
Speaker 3: Like, what are we gonna get?
Speaker 7: I think we're gonna I'm actually gonna go with Anna
Speaker 7: Wong's kind of take on where this is gonna go.
Speaker 7: She and I are thinking in a similar act. We
Speaker 7: get to meet in person tonight. But I think he's
Speaker 7: still going to couch his dubbishness. I think he's going
Speaker 7: to signal September. But I think he's gonna signal September softly.
Speaker 3: What does that mean? Is he gonna whisper it?
Speaker 5: Like?
Speaker 3: What is that He's.
Speaker 7: Still going to say that they're data dependent. He's still
Speaker 7: going to say that there is the chance that there
Speaker 7: is a reacceleration in the CPI in inflation metrics, base
Speaker 7: effects kick in in the second half of this year.
Speaker 7: That make it a little bit harder to see continued
Speaker 7: declines in the inflation. On the other hand, you know,
Speaker 7: looking at real time inflation metrics, a bunch of bond
Speaker 7: traders a long time ago introduce me to true inflation
Speaker 7: TRU and that hit one point five one percent today,
Speaker 7: the lowest reading that we've had in the post pandemic era.
Speaker 7: They gave me the raw data back to twenty twelve.
Speaker 7: It's got a zero point ninety seven correlation with headline CPI.
Speaker 7: We see where this is going to me at least.
Speaker 7: I think the greatest risk, because there's this huge seven
Speaker 7: week gulf in between today's meeting and September eighteenth, is
Speaker 7: that there's a policy err in the making.
Speaker 5: So you say the highest odds is that there is
Speaker 5: a policy error. Is that another way of saying the
Speaker 5: fits behind the curve They should have already been cutting.
Speaker 7: I think that's what we're saying. I think that that's
Speaker 7: what ADP is saying. I think that's what the Employment
Speaker 7: Cost Index, the Fed's preferred measure of wage inflation, is saying,
Speaker 7: we saw a big step down there. Intel Match, nerd Wallet.
Speaker 7: Those are the three job cuts that were announced yesterday.
Speaker 7: It seems as if most companies, when they're announcing earnings
Speaker 7: are continuing to say until we see stronger revenue growth,
Speaker 7: we're going to keep cutting headcount. So that's disinflationary.
Speaker 2: So because you're here, I get ibs from people who
Speaker 2: are listening to the show, Thank you so much, so well.
Speaker 2: One of the questions is, and it goes back to
Speaker 2: the bomb market and we're obviously seeing some steady buying
Speaker 2: come in, particularly in the back end. Where do you
Speaker 2: think we end the year when it comes to the tenure?
Speaker 2: If we're treading right now at four point nine, we're
Speaker 2: below all the moving averages, like we've had a healthy
Speaker 2: move to the downside a yields.
Speaker 7: We have, And we saw kind of this resistance at
Speaker 7: four point one four in the tenure for some time,
Speaker 7: and now we've broken below that and I think that
Speaker 7: it's it's not a stretch to sit that there's going
Speaker 7: to be a three handle. The question is is the
Speaker 7: year end south of three point five percent on the tenure?
Speaker 7: And again it's going to be a gauge of the
Speaker 7: magnitude of the Fed's policy error. If they have to
Speaker 7: come rushing in in September with a half percentage point
Speaker 7: rate cut, that could easily spook the markets.
Speaker 5: So what does the FED do when they start, So
Speaker 5: let's still say they did they start in September, then
Speaker 5: what did they do they do it every other That's.
Speaker 7: A great question because we saw these kind of unusual pauses.
Speaker 3: It's not normal to.
Speaker 7: See pauses in a hiking or a cutting cycle, at
Speaker 7: least in FED history.
Speaker 6: Of course we're seeing it.
Speaker 7: In other parts of the world. But history tells us
Speaker 7: that once the Fed gets going, they keep going. And
Speaker 7: that means two days after election. Right, the November FMC
Speaker 7: is highly unusual. It's a Wednesday Thursday meeting, so that
Speaker 7: they're not meeting on Tuesday.
Speaker 8: Election day.
Speaker 7: But it's very feasible that we see another rate cut
Speaker 7: two days after the election.
Speaker 3: What happens to the curve?
Speaker 6: I we will.
Speaker 7: Certainly it will be interesting to see if the curve
Speaker 7: does not fully uninvert before the FED cuts rates, which
Speaker 7: would be again unusual.
Speaker 3: But we don't normally talk about rates are coming down.
Speaker 7: Uh, it would be because they're all coming down.
Speaker 2: Everything's coming down with the fronts coming down fast. Indeed,
Speaker 2: even though it still had it's had a pretty chunky
Speaker 2: move to begin with.
Speaker 3: But still but.
Speaker 7: Again, if you start to factor in, I remember when
Speaker 7: they were raising rates that Powell said unusually large rate hikes.
Speaker 7: That like took me back to the Princess Bride rodents
Speaker 7: of unusually large size. But it'll be interesting to see
Speaker 7: if we have unusually large rate cuts.
Speaker 5: All right, Danielle, you did some time at the Dallas FED,
Speaker 5: and I'm looking at.
Speaker 7: Something sounds like I did like time at an instag time.
Speaker 6: And now you're free.
Speaker 5: You used to have something down there called the Dallas
Speaker 5: FED Manufacturing Uncertainty Index.
Speaker 6: That's pretty cool. What does it tell you? What are
Speaker 6: some of the recent data telling me?
Speaker 9: There?
Speaker 6: You always come up with data sets that.
Speaker 7: I've never We are seeing unprecedented levels of uncertainty. Hats
Speaker 7: off to Emily Kerr and her team at the Dallas FED.
Speaker 7: They introduced kind of a National Association of Credit Manager's
Speaker 7: Index type of question in their most recent survey that
Speaker 7: came out on Monday. People are not paying their bills.
Speaker 7: I mean companies are not paying their bills and accounts
Speaker 7: receivable are being stretched out. So there these are kind
Speaker 7: of credit managers signs that hey, there's real distress and
Speaker 7: it's harder to get credit, which we've been hearing right
Speaker 7: from from smaller businesses especially.
Speaker 2: Is it sector specific in what you're seeing or is
Speaker 2: it just maybe like how big those companies are.
Speaker 7: What was interesting about this, the introduction of these new
Speaker 7: types of questions is that they ask manufacturers, servicers, and retailers,
Speaker 7: and it was retailers that were seeing the greatest degree
Speaker 7: of distress.
Speaker 6: All right, So okay, remember.
Speaker 7: This is the eighth largest economy in the world and
Speaker 7: the eighth largest exporting exporting nation in the world.
Speaker 6: Texas a Texandalone, it is.
Speaker 2: And then to that point, like there's a huge amount
Speaker 2: of products that get shipped out, right.
Speaker 7: Like that's why it's the largest exporting nation, larger than California.
Speaker 3: Yeah, and it has a huge like medical department.
Speaker 7: Like we we you know, twenty thirty years ago you
Speaker 7: could say that we were an energy centric economy in Texas.
Speaker 7: That's no longer the case, very diversified.
Speaker 5: But you're staying with us, right the United States? You guys, Yes, okay, good,
Speaker 5: There is checking everyone.
Speaker 3: That's not their grid.
Speaker 7: There is secession talk, you know, wants a republic, but
Speaker 7: I think we're staying with the country.
Speaker 2: Is that data set though at all distorted by hurricanes
Speaker 2: et cetera that you saw, No?
Speaker 7: Actually actually no. And that was again what was so
Speaker 7: fascinating was that it was so broad based across service,
Speaker 7: across the service sector, across across the manufacturing sector, and
Speaker 7: across the retail sector, and again that they do some
Speaker 7: really really good research as well, that that front runs
Speaker 7: the Senior Loan Officer Survey on a national level, and
Speaker 7: that's also showing that it's very difficult to access credit
Speaker 7: right now.
Speaker 6: You believe we're actually in a recession? Is that correct?
Speaker 10: I do?
Speaker 7: I do, and Anna Wanta actually kind of agree. She
Speaker 7: also thinks that net job cuts began last October. What's
Speaker 7: fascinating is that when we got the revision out last
Speaker 7: week from the Buer of Labor Statistics, it's said, in
Speaker 7: its assumption about business deaths, we know what business births
Speaker 7: were with the birth death adjustment, we still have yet
Speaker 7: to have them report business debts. Their assumption was that
Speaker 7: small businesses became additive, that fewer small businesses died in
Speaker 7: the fourth quarter, when actually we saw small business closings
Speaker 7: rise appreciably from the third to the fourth quarter. The
Speaker 7: risk is the reason I'm going into these details. The
Speaker 7: risk is that we see a second quarter of negative
Speaker 7: of negativity in job creation, job net job losses. If
Speaker 7: you see that for six months, because the bearer of
Speaker 7: has already said we lost one hundred and ninety two
Speaker 7: thousand jobs in the third quarter of twenty twenty three.
Speaker 7: If that stretches to being six months in a row,
Speaker 7: the National Bureau of Economic Research, the Business Cycle Dating Committee,
Speaker 7: they're going to have a hard time saying six months
Speaker 7: of job losses doesn't constitute recession.
Speaker 2: So when we get the jobs number on Friday, how
Speaker 2: do I look at that number then? Because obviously, like
Speaker 2: the headline print is going to be up right, but
Speaker 2: you're saying that on a net basis, like what am I?
Speaker 3: What's not going out again?
Speaker 7: I mean, Powell said it himself at the last FMC
Speaker 7: that payrolls are overstated. And if you get a number
Speaker 7: that was originally four hundred and ninety four thousand after
Speaker 7: the revisions that we hear from the BLS, but after
Speaker 7: the census comes in and gives us actual headcounts from companies,
Speaker 7: and that four hundred and ninety four with a plus
Speaker 7: sign in front of it turns into negative one hundred
Speaker 7: and ninety two thousand. That's it's a significant amount of
Speaker 7: download divisions, which my mentor at the Dallas Fed told me,
Speaker 7: you always see at inflection points.
Speaker 6: How long do you think this recession will be?
Speaker 5: Because it feels like it's almost a bifurcated economy. A
Speaker 5: lot of folks will say, I'm not feeling anything.
Speaker 7: I know, we have a super I mean it's like
Speaker 7: super K Yes, super K shaped economy. Okay, I mean,
Speaker 7: think about how many people at the top of the
Speaker 7: k or feeling the benefits of having gotten five and
Speaker 7: a half percent on their cash for this long and
Speaker 7: yet we're hearing that inflation is becoming more problematic for
Speaker 7: the lower income earners. And what that is a sign
Speaker 7: up is again what we saw with the employment cost
Speaker 7: Index today. It's that wages are increasingly not keeping up
Speaker 7: with the cost of living.
Speaker 2: So it's not just the FED today, you know, most
Speaker 2: of the Fed. But we got the BOJ finally hiking rates. Indeed,
Speaker 2: the press are looking back to totally we get the
Speaker 2: BOE tomorrow.
Speaker 3: The ECB's already delivered one cut.
Speaker 2: Do you think that how do you think that cycle
Speaker 2: will all play out in terms of I mean, the
Speaker 2: majority of them are cutting, right, but they're gonna cut
Speaker 2: differently in a different times and the boj's hiking.
Speaker 3: Has this all play out?
Speaker 7: You know, it's interesting that you bring this up because
Speaker 7: there is so much disparity, right now across the pond,
Speaker 7: we unexpectedly saw Germany fall back into recession a few
Speaker 7: days ago. Nobody was expecting that. You know, they're the
Speaker 7: speaking of exporting nations, the other world's third largest export
Speaker 7: and it's a reflection of China exactly. So the breadth
Speaker 7: of the global recession. When you say, okay, Asia's in recession, Okay,
Speaker 7: Germany's in recession, Okay, the United States is in recession.
Speaker 7: That changes how aggressively each individual central bank can behave.
Speaker 7: And when the FED finally does go on September the eighteenth,
Speaker 7: then the rest of the world will end.
Speaker 6: Up falling in line. Daniel thank you so much for
Speaker 6: joining us. Really appreciate it.
Speaker 5: As always, Danielle di Martino Booth for a little bit
Speaker 5: extended period here on FED Day. She is the CEO
Speaker 5: and chief strategistic QI Research based in Dallas, Texas, but
Speaker 5: we got her here in our Bloomberg and nar Actor
Speaker 5: Brokers studio today. My stat was, you know, Texas eighth
Speaker 5: largest exporting and comment's pretty cool.
Speaker 3: Yeah, really really cool.
Speaker 2: And that's not even counting I mean, Louisiana also is
Speaker 2: exporting facilities, but that's not counting all the new facilities
Speaker 2: that trying and build too.
Speaker 3: In terms of exports and stuff. Obviously I'm talking Allen.
Speaker 2: G and oil exports. But still, oh, no surprise, sir Shacker.
Speaker 2: I know that's surprising to Paul's.
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Speaker 5: will find us. All right, Kamala Harris has wiped out
Speaker 5: Donald Trump's lead across seven battleground states as the vice
Speaker 5: president rides a wave of enthusiasm young, young Black and
Speaker 5: Hispanic voters. That's according to the latest Bloomberg News Morning
Speaker 5: Console holds some pretty big news there for on the
Speaker 5: political front. Here, let's check you in with Lard Davison,
Speaker 5: Bloomberg Politics editor. She joins us here via zoom Laura.
Speaker 5: This seems like a pretty good start in terms of
Speaker 5: momentum for Vice President Kamala Harris.
Speaker 6: What are some of the key takeaways from this pole?
Speaker 10: Yeah, so this pole we've been doing since last October
Speaker 10: in all of the seven swing states that are expected
Speaker 10: to decide the election, and this is the best that
Speaker 10: the Democratic challenger to Trump has ever done.
Speaker 3: You know, this is the first time we.
Speaker 6: Have polled Harris.
Speaker 10: It's a statistical tie essentially between the two candidates. She's
Speaker 10: technically up one percentage point, but that's within the margin
Speaker 10: of air. The other key takeaway here is that black voters,
Speaker 10: young voters, Hispanic voters are much more likely to vote
Speaker 10: now that Harris is on the ticket. So this is,
Speaker 10: you know, been something that that the Trump campaign has
Speaker 10: created their strategy around of trying to get you know,
Speaker 10: pull away at the margins and black voters some Hispanic support.
Speaker 10: But this would indicate that perhaps the tides are shifting
Speaker 10: in Harris's favor on that front.
Speaker 2: Well, that was sort of one of my questions too.
Speaker 2: Are these voters that are switching or are they new
Speaker 2: voters that are swinging these polls.
Speaker 10: So we don't yet know totally what that is based
Speaker 10: on how the poll works, but what we see is
Speaker 10: that voters who are unsure if they're going to vote,
Speaker 10: are now saying they're much more likely that they're going
Speaker 10: to vote. So these may be people who voted in
Speaker 10: twenty who were not enthused by either candidate, who are
Speaker 10: going to stay at home, or people who maybe have
Speaker 10: never voted. But you know, a turnout election is expected
Speaker 10: to help Harris on this front versus Trump. You know,
Speaker 10: the Trump folks were you know, sort of hoping to
Speaker 10: pull away, particularly black men, Hispanic men. But you know,
Speaker 10: we're not hoping to see a big surgeon turnout that
Speaker 10: you know, really helped Biden in twenty twenty and could
Speaker 10: potentially help Harris in twenty four.
Speaker 5: Or you know, as a former Wall Street person, I
Speaker 5: tend to follow the money. And Vice President Kamala Harris
Speaker 5: has had a pretty good run here in the last
Speaker 5: week or so raising money. Do we know where that
Speaker 5: money's coming from.
Speaker 10: Yeah, so, her campaign says they've raised about two hundred
Speaker 10: million dollars and that's in the first week or so
Speaker 10: of the campaign. This is largely from small dollar donors.
Speaker 10: These are people who are going and giving online and
Speaker 10: you know, increments of you know, anywhere from you know,
Speaker 10: just a couple of dollars to you know, up to
Speaker 10: a couple thousand dollars. We've also know that her super pac,
Speaker 10: this is the group that can accept money and unlimited amounts,
Speaker 10: has gotten one hundred and fifty million in commitments since
Speaker 10: By has dropped out of the race. These big dollar donors,
Speaker 10: people who give millions of dollars, had decided to withhold
Speaker 10: a bunch of contributions, you know, in order to sort
Speaker 10: of pressure Biden to get off of the ticket. So
Speaker 10: now that money is coming back into the fore just
Speaker 10: for you know, kind of some in comparison here of
Speaker 10: Harris when she inhibit inherited the Biden campaign accounts that
Speaker 10: had about one hundred million dollars. Since then, she's raised
Speaker 10: another two hundred million dollars. So these are really big sums.
Speaker 2: How much of this could be also attributed just to momentum,
Speaker 2: as in, when you have the RNC, the candidate gets
Speaker 2: a boost, the DNC provides a boost. This is an
Speaker 2: unprecedented moment in political history, so no doubt the candidate
Speaker 2: would get a boosted.
Speaker 10: Yes, and the timing year is all really interesting because
Speaker 10: of course Biden just dropped out two days after the RNC,
Speaker 10: So Trump was expecting to see a big polling boost
Speaker 10: coming out of that. Of course, just a week prior
Speaker 10: that had been the assassination attempt leaving the RNC. Republicans
Speaker 10: were very confident about their chances, and you know, even
Speaker 10: Republican operatives were saying one of the things they needed
Speaker 10: to be conscious of is that they weren't over confident.
Speaker 10: Of course, that all switched, you know, just a couple
Speaker 10: of days later. What the Trump team is saying is, look,
Speaker 10: this is a Harris honeymoon. This is a surgeon momentum
Speaker 10: that will just be a flash in the pan and
Speaker 10: won't last until November. That's really what what we'll be
Speaker 10: looking for in the next couple weeks. If you know,
Speaker 10: is she able to maintain both this fundraising edge as
Speaker 10: well as his polling edge, or do we revert to
Speaker 10: where you know, the Biden Trump race was just with
Speaker 10: Harris on the ticket in a couple of weeks.
Speaker 6: How about debates?
Speaker 5: Are Biden, I'm sorry, Kamala Harris and mister Trump are
Speaker 5: they get a debate?
Speaker 6: And if so, when and how many times?
Speaker 10: This is a really big question. So Trump and Biden
Speaker 10: had agreed to a second debate on September tenth, that
Speaker 10: was on ABC News. It's very unclear if that is
Speaker 10: going to happen. Harris has said she wants to do it.
Speaker 10: Trump has, you know, suggested that he probably will end
Speaker 10: up debating her, but has thrown a couple wrenches in
Speaker 10: the system. He says he doesn't really like ABC's called
Speaker 10: them fake news and said he'd prefer someone like Fox
Speaker 10: News to host debate. He's also said he doesn't need
Speaker 10: to debate because he's already well known and people knows
Speaker 10: what he stands for, and he doesn't, you know, feel
Speaker 10: a need to do this. This is going to be
Speaker 10: an ongoing negotiation. There's also the question of what there'll
Speaker 10: be a VP debate. Trump and Biden had all also
Speaker 10: agreed to do one, you know, before the switch up
Speaker 10: and the race. You know, Harris is still in the
Speaker 10: process of naming her VP, so we may hear more
Speaker 10: about that in the coming weeks.
Speaker 2: What do we make about the situation in Israel and
Speaker 2: how that polls, how that is polling for Kamala.
Speaker 3: Harris, because clearly there's a huge section.
Speaker 2: Of voters that is very unhappy of what's happening in
Speaker 2: Gaza right that we're maybe not voting in all for
Speaker 2: President Biden, but are they coming back in now?
Speaker 3: Do we know anything along those lines.
Speaker 6: Yeah, So, what this.
Speaker 10: Poll shows is that people who are very concerned about
Speaker 10: the Israel Gaza war, and particularly young voters for whom
Speaker 10: this is a bigger issue, are more likely to vote
Speaker 10: for Harris. She's taken a softer tone on this. She's
Speaker 10: been more sympathetic to the human humanitarian situation in Palestine,
Speaker 10: and is you know, just doesn't have quite the same
Speaker 10: negatives on this issue that Biden does.
Speaker 6: You know.
Speaker 10: One of the things, you know, particularly just with the
Speaker 10: you know, events of the of late of you know,
Speaker 10: kind of there being more unrest in the Middle East,
Speaker 10: is you know that the Biden administration is still pushing
Speaker 10: for a ceasefire. Harris is still pushing for a he's fire.
Speaker 10: Democrats really want this to be an issue that is
Speaker 10: working towards a resolution versus, you know, an issue that's
Speaker 10: flaring up, particularly as students go back to college campuses
Speaker 10: in a couple of weeks. They don't want to see
Speaker 10: the protests that we saw last spring.
Speaker 5: Did the Republicans have Buyer's remorse for JD Vance. I'm
Speaker 5: seeing some reporting all along those lines.
Speaker 10: Yes, there's there's a lot of conversations on that, even
Speaker 10: on a Bloomberg television mc mulvaney, who's a Trump ally,
Speaker 10: came on earlier this week and said, no, they're not
Speaker 10: looking to replace JD.
Speaker 3: Vance.
Speaker 10: But of course if you're being asked about this, this
Speaker 10: means that this is at least a conversation that is circulating.
Speaker 10: You know, Dvance has had a rough rollout, you know,
Speaker 10: just in about the you know, two weeks or so
Speaker 10: that he's been on the ticket. You know, some past
Speaker 10: comments he's made, you know, sort of degrading childless cat
Speaker 10: ladies have come up. He has had had some jokes
Speaker 10: on the campaign trail that have come across as crass
Speaker 10: and haven't really landed. So this is a conversation that's
Speaker 10: happening on the upon those sort of Republican you know, elite,
Speaker 10: the mainstream Republican class, but isn't really reaching the Trump campaign.
Speaker 10: They have continued to say JD is our guy and
Speaker 10: we're going to stick by him.
Speaker 2: Is there an equivalent for single cat ladies for single men?
Speaker 7: Like?
Speaker 3: Is that single men dog owners?
Speaker 9: Like?
Speaker 2: I'm actually I'm not trying to be funny. I'm genuinely
Speaker 2: curious bachelors.
Speaker 6: But that's that's a whole different.
Speaker 3: But that's okay, Like that's a different vibe.
Speaker 2: But like if you're forty five and you have a
Speaker 2: dog and then live at home and not married, that's
Speaker 2: still funny.
Speaker 10: Maybe a gamer would be the equivalent a gamer.
Speaker 2: Okay, okay, so childless cat ladies versus gamers. It gets complicated,
Speaker 2: all right, Okay, Hey, Laurd, thanks lot, We really appreciate it.
Speaker 2: The poll was really interesting to kind of comb through there.
Speaker 2: Lord Davison, a political editor for Bloomberg News joining us
Speaker 2: from Washington, d C. They also made the great point
Speaker 2: in the article that a lot of what President Trump
Speaker 2: is very good at is putting down opponents. But having
Speaker 2: that with Kamala Harris is very difficult when you're also
Speaker 2: trying to draw over women and you're trying to draw
Speaker 2: over African Americans.
Speaker 6: Yep, tough one.
Speaker 5: And I don't remember growing up that Swing States literally
Speaker 5: decided election.
Speaker 6: You don't even go to the other found the same thing.
Speaker 6: But it's back in the day. I thought California manored
Speaker 6: New York manor Texas. I mean, now, if you're not
Speaker 6: in those swing states. You're not going to see the candidates.
Speaker 2: I don't think yeah, which is also interesting when you
Speaker 2: talk about the VP and sort of obviously Peepoota Jeedge
Speaker 2: has the most exposure because he's already in the White House.
Speaker 3: But that was interesting.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 1: Just say Alexa playing Bloomberg eleven thirty.
Speaker 5: It is FED Day. We will hear from the feed
Speaker 5: at two o'clock. Press conference of two thirty. Bloomberg's coverage
Speaker 5: begins at one thirty. Tom Keen, Lisa A. Bromwitz, John
Speaker 5: Farrell Bring it to you. Jeffrey Cleveland joins us here.
Speaker 5: He's a chief economist a Payden and Regal joining us
Speaker 5: via La.
Speaker 6: Via that Zoom technology thing.
Speaker 5: Jeff, what do you expect from the Federal Reserve today?
Speaker 5: A lot of folks are saying attention to maybe the
Speaker 5: tone as it relates to September.
Speaker 6: What are you looking for?
Speaker 11: Well, Paul, Happy fed Day, beautiful day here in Los Angeles.
Speaker 3: So excited this guy, I know, yeah, I think.
Speaker 11: This is a great day for the Fed to set
Speaker 11: up for a potential cut in September. They don't need
Speaker 11: to rush into anything, though. I don't think there's an
Speaker 11: urgent need to rush rates. We saw very to cut rates.
Speaker 11: We saw very strong second quarter growth. I think the
Speaker 11: labor market is still doing pretty well, so there's no
Speaker 11: urgent need. But you know, if inflation continues to cool
Speaker 11: like we saw in the PCEE data for the month
Speaker 11: of June, then it's possible by September we will get
Speaker 11: a rate cut. So I think, you know, setting up
Speaker 11: that possibility, keeping their options open, and then maybe pushing
Speaker 11: back a little bit on market expectations if you earlier
Speaker 11: this week, I looked through the end of next year,
Speaker 11: so the end of twenty twenty five, and there were
Speaker 11: around seven cuts price did. So that's that's more than
Speaker 11: a fine tuning operation. That would be you know, more
Speaker 11: of a rate I would.
Speaker 8: Call slashing operation.
Speaker 11: So maybe pushing back against the longer term price.
Speaker 2: Well to that point, I mean, the two year yield
Speaker 2: is down forty basis points for this month, a huge move,
Speaker 2: and I'm betting that a lot of that happened after
Speaker 2: July eleventh, was when we got that CPI number.
Speaker 3: So if J.
Speaker 2: Powells sort of becomes a little bit more balanced or
Speaker 2: tries to have a message that's more balanced, here, what's
Speaker 2: going to happen in the front end of the bomb market?
Speaker 11: You know, we think so we think we're in a
Speaker 11: soft landing, and that you know, so the scenario we're in,
Speaker 11: we'll be in the soft landing over the next.
Speaker 6: Six to twelve months or so.
Speaker 11: So in that environment, I think moderately lower treasury yields
Speaker 11: makes sense. Two year yields, five year yields, seven tens,
Speaker 11: what have you. So that makes sense on the short
Speaker 11: term basis, though I think the market is far too.
Speaker 8: Confident over this September cut.
Speaker 11: You know, you can be in a soft landing and
Speaker 11: cuts arrived later, probably in the short term. In your
Speaker 11: scenario where you know, chair pal pushes back a little bit,
Speaker 11: we will see some upward pressure on to year yields.
Speaker 11: Another candidate for some maybe some upward pressure would be
Speaker 11: Friday's jobs report. We get a decent jobs number, but also,
Speaker 11: you know, we've been watching the last few months.
Speaker 8: The unemployment rate REAP up. It's possible the unemployment.
Speaker 11: Rate will tick down this Friday, and you know that
Speaker 11: will pour some cold.
Speaker 8: Water on these sort of bearish calls about the Fed.
Speaker 8: You know, it needs to do something now.
Speaker 11: The economy is weakening and that could have impact on
Speaker 11: two year treasury yields.
Speaker 5: And Jeffery Alex and I had one of those discussions
Speaker 5: earlier today with Danielle di Martino Booth, who feels like
Speaker 5: this Yeo's economy is already in a recession if you
Speaker 5: really take a look at the real time data and
Speaker 5: that the Fed needs to they're actually behind the curve.
Speaker 6: They should have already been cutting.
Speaker 5: How do you respond to that when when you hear
Speaker 5: that amongst investors.
Speaker 11: To two, GDP grew two point eight percent quarter to
Speaker 11: quarter annualized on a year on year basis, it was
Speaker 11: three percent. The consumer continues to be solid. The unemployment
Speaker 11: rate as creeped up, it's still below that's four percent.
Speaker 8: That's very low.
Speaker 11: Historically, initial claims for unemployment insurance layoffs pretty good reliable
Speaker 11: indicator of whether we're in a recession or not. Very
Speaker 11: low still, So you know, I, you know, and I've
Speaker 11: been hearing this story for probably eight quarters. Now, I
Speaker 11: think since twenty twenty two, people said, you know, if
Speaker 11: the Fed starts high King, they're going to pull the
Speaker 11: rug out of the economy, of out from under the economy, Paul,
Speaker 11: It just hasn't happened.
Speaker 4: Right.
Speaker 8: The economy keeps going well.
Speaker 2: But here's the problem, right, is that it's a case
Speaker 2: shape economy where the lower and middle income houses are
Speaker 2: getting continually squeezed and the upper income are enjoying five
Speaker 2: percent on their treasury bills. So with that, I mean,
Speaker 2: I know that that's nothing unusual necessarily within the economy,
Speaker 2: but does that put a little bit more pressure then
Speaker 2: on the Fed?
Speaker 11: Well, I think if you're the Fed, you are looking
Speaker 11: at inflation. It has moderated, especially in the last two months,
Speaker 11: similar to what we saw maybe in the second half
Speaker 11: of last year.
Speaker 8: If that continues, you're.
Speaker 11: You could very easily alex be back to two point
Speaker 11: two to two point three percent year on year core
Speaker 11: PCE sometime next summer, which is close to target.
Speaker 8: So that's good.
Speaker 11: At the same time, the unemployment rate has crept up,
Speaker 11: so they don't want to just be restrictive stick at
Speaker 11: five point fifty for the foreseeable future.
Speaker 8: So there.
Speaker 11: They are aware of that, and you know, I think
Speaker 11: that's a good argument for fine tuning the FED funds, Right,
Speaker 11: you don't need to be at five to fifty If
Speaker 11: inflation's at two point three and the unemployment rates creeping up, Now,
Speaker 11: do you need to slash back to two and a
Speaker 11: half percent or three percent?
Speaker 8: Probably not either. It's more of a fine tuning operation.
Speaker 11: I might have mentioned it on this show before, but
Speaker 11: you know, like the mid to late nineties is more
Speaker 11: of the historical analog, if you will, for what I
Speaker 11: sort of envision. The Fed did cut a few times
Speaker 11: in there, but growth continued throughout that period.
Speaker 8: Stocks did well, you know, bonds did well well. So
Speaker 8: it was a good environment.
Speaker 5: So overall, in terms of the consumer, how do you
Speaker 5: feel like the consumers faring out there?
Speaker 11: I think, you know, for me, job growth continues, you
Speaker 11: have more people working, they're still earning wages, although wages
Speaker 11: have you know, cooled off a little bit to about
Speaker 11: four percent year on year. With what we're seeing in
Speaker 11: the ECI data, it's inconsistent what we've been seeing in
Speaker 11: average hourly earnings. But it's really income growth that drives
Speaker 11: the consumer and consumer spending and that is that is
Speaker 11: still holding up through the latest set of data. We'll
Speaker 11: get an update on that on Friday, But I think
Speaker 11: that's really key. Separate from that, Paul, you can think
Speaker 11: about household net worth still looks pretty good. We still
Speaker 11: think households have savings. If you look at household debt
Speaker 11: service as a share of their disposable income, those ratios
Speaker 11: are still.
Speaker 8: Quite low, even though rates have prepped up.
Speaker 11: So all in all, I think the consumer is in decent,
Speaker 11: decent shape. Still all right, let's oh no, no, sorry, gohad.
Speaker 2: I was gonna say, before you go, before we let
Speaker 2: you go, what would be the question you'd ask Jay
Speaker 2: Powell if you're in the presser?
Speaker 8: Well, I would ask him, hey, what you know?
Speaker 6: You think?
Speaker 8: What do you think about the unemployment rate rise?
Speaker 11: We've gone from you know, three point four percent last spring,
Speaker 11: we're now four point one.
Speaker 8: How concerning is that to you?
Speaker 11: How much does that wane on you in terms of
Speaker 11: the decisions you will make. I might also ask him, Hey,
Speaker 11: the market thinks you're definitely cutting in September.
Speaker 8: What would what is the one thing that would really
Speaker 8: change your view?
Speaker 1: Is it?
Speaker 11: I think it would be core PCEE you know, coming
Speaker 11: in month to month, hotter in the next couple of months,
Speaker 11: choppy inflation.
Speaker 8: But I think that's a worthwhile ask.
Speaker 3: All right, thanks so much.
Speaker 2: We really appreciate it, and I would love it if
Speaker 2: you went into a press room. It's like, hey, Jay,
Speaker 2: tell me about this, all right. Jeffrey Cleveland, Chief economist
Speaker 2: over Opinion regal super appreciate that.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
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Speaker 1: Just say Alexa playing Bloomberg eleven thirty.
Speaker 5: You're listening to Bloomberg Intelligence, Alex Steel, Paul Swiney live
Speaker 5: here in our Bloomberg you know, active broadcast studio. All right,
Speaker 5: here's a company for you. I had not heard about
Speaker 5: it until recently. Train Technologies. I believe they're based in Ireland,
Speaker 5: but there are a global climate innovator focused on sustainable
Speaker 5: solutions for buildings, homes, and transportation. Karen Uberhart from Bloomberg Intelligence.
Speaker 5: She covers this stock and she's a grizzled veteran she
Speaker 5: is not given to praise companies, you know. Unnotably, she
Speaker 5: says they had a great quarter again, amazing company in
Speaker 5: a very attractive sector.
Speaker 6: So she told me that.
Speaker 5: I said, we got to get these guys on Bloomberg
Speaker 5: and get her talking about see what's going on with
Speaker 5: this company. Dave Regnery joins us. He is the CEO
Speaker 5: of Trained Technologies. The tickers tt on your Bloomberg terminal
Speaker 5: stock hit a fifty two week and actually and I'm
Speaker 5: going to call it an all time high today on
Speaker 5: the back of some pretty good numbers, earnings and sales
Speaker 5: beat on consensus. Dave, thanks so much for joining us
Speaker 5: here in Lovely David's and North Carolina.
Speaker 6: Talk to us about your company.
Speaker 5: What's driving the performance of Trained Technologies these days?
Speaker 12: Well, first, Paul, thanks for having me on the show.
Speaker 12: I just got off our earnings call and we reported
Speaker 12: a very strong second quarter, much like we did in
Speaker 12: the first quarter. Our organic revenue growth was up thirteen percent,
Speaker 12: our order rates were up nineteen percent, and our EPs
Speaker 12: growth was up twenty three percent. So very proud of
Speaker 12: what we've been able to how we've been able to perform.
Speaker 12: Look as far as what's driving our growth. You know,
Speaker 12: I always tell people we have a system of things
Speaker 12: that makes Train Technologies a great company. And whether it's
Speaker 12: the way we we operate our facilities, through our business
Speaker 12: operating system ways, whether it's the way we innovate our
Speaker 12: new products, or whether it's our direct salesforce, those are
Speaker 12: a system of things that make us a great company.
Speaker 12: And we have a service business that's a third of
Speaker 12: our company that's performing extremely well. In the second quarter,
Speaker 12: our service business was up mid teens from a growth perspective,
Speaker 12: and we have a culture that's you know, we believe
Speaker 12: in challenging what's possible and innovating for a sustainable world.
Speaker 2: So based on that, it's great to chat with you.
Speaker 2: By the way, I love love talking to you, because
Speaker 2: you have such a great read on the residential and
Speaker 2: commercial businesses. Basically, if a commercial HVAC unit and a
Speaker 2: near term residential HVAC unit, and of course that's heating, ventiletion,
Speaker 2: air and cooling, where's the strength, where's the growth, where
Speaker 2: are the weak points?
Speaker 12: Yeah, I'll start with residential. We had a very strong
Speaker 12: quarter in the second quarter. Our revenue was up mid
Speaker 12: teens I'm sorry, low teens, but that our residential business.
Speaker 12: For the prior I'll say, you know, three quarters had
Speaker 12: really been struggling with a refrigerant change that wasn't clear.
Speaker 12: That's been clarified. It was really struggling with excess inventory
Speaker 12: kind of a hangover from the COVID days that was
Speaker 12: in the channel. Those both correct it, and we're off
Speaker 12: to a very warm start to the cooling season, which
Speaker 12: should have us all concerned for a different reason as
Speaker 12: the climate continues to increase in temperature. But I would
Speaker 12: tell you that it's a very strong start of the year,
Speaker 12: so very strong and residential, our commercial business really broad
Speaker 12: based growth. You know, certainly the high growth verticals like
Speaker 12: data centers. We do very very well in our education
Speaker 12: or in healthcare, but we had broad based growth in
Speaker 12: the Americas. We track fourteen different verticals and we were
Speaker 12: hard pressed to find a vertical that we were not
Speaker 12: strong in. So it was just it was a very
Speaker 12: strong quarter for trained Technology. I'm very proud of what
Speaker 12: the team's been able to accomplish.
Speaker 5: Yeah, I'm reading the Bloomberg Intelligence research note on your earnings.
Speaker 5: North America's sixteen percent organic growth was much greater than
Speaker 5: the ten percent consensus.
Speaker 6: What drove that.
Speaker 12: Yeah, really two things. Our residential business perform better. Okay,
Speaker 12: we thought that was going to be you know, in
Speaker 12: the beginning of the year, we thought our residential business
Speaker 12: would below single digits. We came in you know, low
Speaker 12: teams in the quarter, so we significantly outdrove that. And
Speaker 12: then our commercial HVAC business just continues to operate at
Speaker 12: a very high level. And like I said, services was
Speaker 12: up in the high teens actually in the Americas, and
Speaker 12: their equipment business just continues to exceed our customers' expectations.
Speaker 12: So very strong quarter. You know, I was listening to
Speaker 12: your show earlier. You were talking about sustainability, and you know,
Speaker 12: I would tell you that Trained Technologies, our purpose is
Speaker 12: built around sustainability. And what people are talking about right
Speaker 12: now as you're hearing a lot about, you know, how
Speaker 12: much power is going to have to be generated to
Speaker 12: meet the demand that's coming. And you'll hear a lot
Speaker 12: about data centers using a lot of the electricity. What
Speaker 12: nobody is talking about is the amount of power that's
Speaker 12: being generated that's being wasted. And I would tell you
Speaker 12: we call it demand side management, and we know because
Speaker 12: we've done hundreds of thousands of energy audits and buildings
Speaker 12: that most buildings operate about thirty percent inefficiently. So just
Speaker 12: think if we could solve that problem, and if we
Speaker 12: can make buildings perform the way they were designed, or
Speaker 12: assets performed the way they're designed. Just think about the
Speaker 12: amount that we could save and the energy that's being
Speaker 12: produced and which was obviously has a trickle effect to
Speaker 12: the carbon footprint. So that's what train technology is all about.
Speaker 12: People always ask me, where do you see the growth
Speaker 12: coming from. It's going to be on the demand side,
Speaker 12: management side.
Speaker 2: Hey, did we really appreciate it? Definitely come back. I
Speaker 2: know you got to run, but we appreciate your time
Speaker 2: today when you're in the city, come in and tell
Speaker 2: us more about it, you know. And I'm also curious
Speaker 2: as to those customers are think willing to pay up
Speaker 2: for it we got last morning to talk about.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 1: Alexa play Bloomberg eleven thirty.
Speaker 2: Let's get back to the market Shaw, We just go
Speaker 2: back to ETFs, talk about it.
Speaker 6: Growth business. Jennifer Crancio Joints is here. She's global head
Speaker 6: of distribution for TCW.
Speaker 5: Let's Trust Company of the West, Los Angeles. Space used
Speaker 5: to be a huge plan of mine.
Speaker 6: They loved me. She joins us here in our Bloomberg
Speaker 6: Interactive Brokers studio.
Speaker 5: Jennifer, I mean, the money just keeps flowing to you guys,
Speaker 5: and it's just unbelievable how your market is growing, the
Speaker 5: ETF market. Where's some of the money going now? Are
Speaker 5: folks looking for income? Are they looking for special situations?
Speaker 5: What are they looking for these days?
Speaker 9: Yeah? From a TCW perspective, people know us for fixed
Speaker 9: income and so we have a developed set of equity
Speaker 9: ETFs now. But we launched the first fixed income ETF recently.
Speaker 9: And the ticker because that's you know, that's what we
Speaker 9: do in ETFs is flex or FLXR. But Flexer and
Speaker 9: strategies like it are giving you return in the fixed
Speaker 9: income portfolio, but they're also giving you very consistent income.
Speaker 9: And if you think about how to actually construct a portfolio,
Speaker 9: equities can be volatile market market, money market funds and rates.
Speaker 9: They will go down eventually, and so we see a
Speaker 9: lot of investors looking for products that are giving you return,
Speaker 9: but they're also giving you this consistent income.
Speaker 3: This might be a really silly question. Are these actively
Speaker 3: managed ETFs or are these boring? Not boring, I mean
Speaker 3: just passive ETFs. We ad TCW.
Speaker 9: We have one index CTF, and everything else we do
Speaker 9: is active. So our view on portfolios right now is
Speaker 9: there's a lot of uncertainty in the market, and particularly
Speaker 9: when it comes to fixed income and bonds, we think
Speaker 9: active management is the way to go. We can make
Speaker 9: a lot of choices about how to both manage your
Speaker 9: risk and optimize return and in the case of a
Speaker 9: product like flexible income, optimize income at the same time.
Speaker 9: So we think active is the way to go in
Speaker 9: the current market.
Speaker 5: And what's issuing about your met west flexible income It
Speaker 5: was a mutual fund, so you convert a mutual fund
Speaker 5: into an ETF.
Speaker 6: Why do that?
Speaker 9: Advisors like to invest in portfolio managers that have a
Speaker 9: long track record. They want to know that the team's
Speaker 9: been around and together and been making these choices on
Speaker 9: risk and return for a very long time. So at
Speaker 9: TCW we have an excellent fixed income team. They've managed
Speaker 9: this particular strategy for six years with very high performance
Speaker 9: versus peers, and so in this case, it's logical for
Speaker 9: us to take that great track record and simply flip
Speaker 9: it into an ETF vehicle.
Speaker 2: This might be also silly question, but if the Fed
Speaker 2: starts cutting rates, does the appeal of an actively managed
Speaker 2: fixingcome ETF become less because we're no longer going to
Speaker 2: be at five percent like money market fund rates for example.
Speaker 3: Well, I think it's.
Speaker 9: We're not going to be at zero either, And so
Speaker 9: the way that we would think about it is, if
Speaker 9: you're moving through time for years ahead of us, there
Speaker 9: really is an opportunity to be active to drive return
Speaker 9: in the fixed income part of the portfolio. And frankly,
Speaker 9: from an income perspective, people need to keep up with inflation,
Speaker 9: so inflation's down somewhat. But from a price perspective, particularly
Speaker 9: aging population, if everyone's living till ninety or one hundred
Speaker 9: years old, there are a lot of portfolios where the
Speaker 9: regular repeatable income and in the case of flexible income,
Speaker 9: it's say seven percent yield. So as money markets go down,
Speaker 9: we're actively able to manage to a higher income target.
Speaker 5: All right, you guys in the ETF business. I understood
Speaker 5: the passive ETFs. I got that whole story in the cost.
Speaker 5: Then you guys brought in active ETFs. I'm like, wait
Speaker 5: a minute, I think active. I think managers, analyst overhead costs.
Speaker 5: So is an active we managed ETFs cheaper than a mutual.
Speaker 3: Fund in some cases? In some cases they will be.
Speaker 3: In some cases maybe they won't be.
Speaker 9: So in this case with flexible income, we actually brought
Speaker 9: the cost down because we see the demand from an
Speaker 9: ETF perspective, and we think the fund is going to grow,
Speaker 9: and so we were able to take an active product
Speaker 9: that is a forty basis point fee, But that forty
Speaker 9: basis point fee is actually lower than when we were
Speaker 9: managing it in a mutual fee, and that brings real
Speaker 9: value to clients.
Speaker 6: How about to you guys, Well.
Speaker 9: For us, we're building a business and we think that
Speaker 9: there's real demand for products like the one that we're
Speaker 9: talking about today, and so as that product grows, it's
Speaker 9: a great business for us to be able to serve
Speaker 9: clients with a product that can really scale and grow
Speaker 9: in assets under management.
Speaker 2: Jennifer, before you were at TCW, you were the CEO
Speaker 2: of Engine Number one. TCW acquired that part of the
Speaker 2: firm's business back in October of twenty twenty three. I'm
Speaker 2: an oil nerd, so I think Engine number one and
Speaker 2: I'm thinking, oh, the really successful shareholder push on Exon
Speaker 2: to get three members on their board, to really push
Speaker 2: for climate change.
Speaker 3: Can you walk me through all of that.
Speaker 9: Yeah. So, from an end to Number one perspective, we
Speaker 9: saw an opportunity in the market where people were investing
Speaker 9: in energy transition or transformation, either not investing in holding
Speaker 9: index funds or investing in private equity. So a lot
Speaker 9: of what we did at Endine number one was build
Speaker 9: a public market products. Exon was a big part of that,
Speaker 9: still a big holding in one of the funds that
Speaker 9: came over to TCW, which is another ETF net Z
Speaker 9: And the idea there is that we are going through
Speaker 9: an energy transition over many decades to come, and so
Speaker 9: in the case of working with Exon, helping Exon realize
Speaker 9: they could optimize their business and capital allocation to not
Speaker 9: waste money in the out years but take advantage of
Speaker 9: what was happening in the next ten years. And that
Speaker 9: kind of that work has added a lot of value
Speaker 9: to everybody that has held exon over this period. And
Speaker 9: at TCW we still manage this Energy Systems Transition Fund,
Speaker 9: So to that.
Speaker 2: Point, I mean that was also when energy transition and
Speaker 2: green and climate were so the pendulum was swinging very
Speaker 2: much one way, and the pendulum is swinging back the
Speaker 2: other way. Are you guys noticing anything not TCW on that.
Speaker 9: Well, we're at TCW are probably one of the leaders
Speaker 9: in looking at companies from an underlying risk and reward
Speaker 9: perspective across climate and governance for example. So we're a
Speaker 9: leader in that. That's a big part of our business
Speaker 9: in Europe. In the US, people may not want to
Speaker 9: buy products that are value screened, but we still do
Speaker 9: the work so that we're doing the work so that
Speaker 9: if there's a company that's mispriced based on a climate
Speaker 9: risk or mistakes on the governance side, we understand that
Speaker 9: and that's information that goes up to our fundamental portfolio
Speaker 9: managers and it's just another way we're adding alpha for clients.
Speaker 5: Interesting, So we're from the ECF business for TCW.
Speaker 6: What's next for you guys? Where's the area focus?
Speaker 12: Is?
Speaker 6: It continued on the fixed income front.
Speaker 9: It is for sure continuing on the fixing come front.
Speaker 9: So we have a set of equity product tool buildt
Speaker 9: to that over time.
Speaker 3: Excuse me.
Speaker 9: But on the fixed income side, we've got flexible income
Speaker 9: out in the market now and we've filed for another
Speaker 9: four to five products that may be out as soon
Speaker 9: as the end of the year. Because what we see
Speaker 9: is people want the best solution in fixed income portfolio construction.
Speaker 9: And so what we do is active managers, whether it's
Speaker 9: in the CLO market, secured bank loans, high yield, we
Speaker 9: think we can deliver very attractive and more competitive then
Speaker 9: other people are out there today, return and risk profiles,
Speaker 9: and so we look forward to launching those ETFs shortly.
Speaker 2: Can I go back to climate for a second, Oh, Paul,
Speaker 2: hate me here. You mentioned that you are helping to
Speaker 2: judge climate risk. Can you pass it on to the managers?
Speaker 2: How do you How do you judge climate risk for
Speaker 2: a company?
Speaker 3: It's different for every company I know, and so how
Speaker 3: do you do it?
Speaker 1: Yeah?
Speaker 9: I mean so, so the way we the way we
Speaker 9: do it is look at look at each company at
Speaker 9: an underlying data level. So if a company is in
Speaker 9: the energy sector, you know, what are they doing about
Speaker 9: capital allocation in old world energy? What are they doing
Speaker 9: to approve or green up in other areas? So we're
Speaker 9: looking at that, and then across most large companies, we're
Speaker 9: looking at water use, electrification, the goals that they're setting,
Speaker 9: and then measuring the progress that they're making against those goals.
Speaker 9: So we don't look at it in a carbon footprint only.
Speaker 9: We look at it as a sort of transformation transition.
Speaker 9: How are they planning, how will they beat their competitors
Speaker 9: effectively in doing a better job as we move through
Speaker 9: time and we move through the transition.
Speaker 6: So cool, I don't want.
Speaker 5: To how you invest in energy companies, because I would
Speaker 5: be do I want my companies going green now or
Speaker 5: just waiting?
Speaker 2: Well, that's part of the problem is that if you're
Speaker 2: a big energy company like or if you're an investor,
Speaker 2: you really only want to own one because you can't
Speaker 2: own a bunch for that exact reason, and you can't
Speaker 2: go to shareholders or your investors and say, hey, I
Speaker 2: have a boltload of energy companies. So then that begs
Speaker 2: the question, how do you choose which means bigger is better?
Speaker 2: And then hence forth the next Sun Chevron kind of
Speaker 2: thing that's that's what I keep hearing shayby next on
Speaker 2: earnings out Friday, So very exciting. This is great, Jennifer,
Speaker 2: thank you so much. It was wonderful to meet you.
Speaker 2: A big fan of Katie Kotch also who's the CEO
Speaker 2: of TCW, so it's great to get you in the studio.
Speaker 2: Come back anytime at Jennifer Grancio a global head of
Speaker 2: distribution over at TCW, normally based in La so.
Speaker 3: We're very lucky to have her here.
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