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Speaker 3: We want to go to Ala Sabos. I've done him
Speaker 3: for a long time. He's CEO of Compass Diversified. He's
Speaker 3: joining us from California and he has a portfolio of
Speaker 3: companies that he invests in a lot of them are
Speaker 3: retail and a lot of them are in other sectors,
Speaker 3: so we can kind of get to all of them.
Speaker 3: And he's a great person to talk about retail but
Speaker 3: also infleetion. That PC data kind of right in line
Speaker 3: with where we were expecting it, So nothing moving the
Speaker 3: needle either way. When it comes to the fed Alias,
Speaker 3: it's great to see you again. It's been a while.
Speaker 3: Let's just start with retail for a second. What is
Speaker 3: your read on the consumer right now?
Speaker 4: Yeah, good morning, Alex. Nice to see you as well.
Speaker 4: You know, we're seeing the consumer and I hate to
Speaker 4: continue to say the same thing, but we're seeing this
Speaker 4: bifurcation where the more affluent consumer continues to spend and
Speaker 4: spend if there's products that they want or services that
Speaker 4: they like. And the you know, more inflation impacted consumer
Speaker 4: on the lower end is having to make real choices,
Speaker 4: and so that trend continues. But what I would say
Speaker 4: we've seen, you know, kind of in the more recent
Speaker 4: few months is just a steady weakening of kind of activity.
Speaker 4: Our industrial business has seen a little bit of a
Speaker 4: step down. The consumer business is growing quite rapidly, but
Speaker 4: is starting to slow a little bit from where it was.
Speaker 4: So I think the consumer is starting to weaken, and
Speaker 4: we saw that with the you know, kind of retail
Speaker 4: sales data which fell on a real basis today.
Speaker 5: So Elias, a lot of folks are saying, when when
Speaker 5: you look at the consumer out there, there's, boy, there's
Speaker 5: at least two types of consumers out there, the ones
Speaker 5: that are maybe asset rich and they're benefiting from the
Speaker 5: rise in the stock market, the bond market, you know,
Speaker 5: real estate, and those that aren't that are really filling
Speaker 5: the brunt of inflation. Do you see that in kind
Speaker 5: of your companies that you invest in.
Speaker 4: Yeah, Paul, we you know, in the companies we invest
Speaker 4: in mostly skew towards the more affluent consumer, and so
Speaker 4: those are more balance sheet rich customers that we have,
Speaker 4: and we've seen just really robust shopping patterns continue with
Speaker 4: that consumer subset. We have a small portion of our
Speaker 4: business that is more at the lower end and goes
Speaker 4: through the mass market, and for the last couple of years,
Speaker 4: that business has really been under pressure and we're seeing
Speaker 4: that consumer you know, have to make choices, and so, yeah,
Speaker 4: there is a real bifurcation. And right now being at
Speaker 4: the affluent end is where the market is holding up.
Speaker 3: Well, all I ask, what's the inflation and the supply
Speaker 3: chain issue when it comes to retail. Where is it
Speaker 3: now versus say, where it was a year ago?
Speaker 4: Yeah, year ago, Alex, our inflation was principally coming from
Speaker 4: well it's coming from multiple places, but principally from labor,
Speaker 4: and there was a terrible imbalance between the demand for
Speaker 4: labor and the supply of labor. You know, fast forward
Speaker 4: to today, we're actually starting to see that reverse. In fact,
Speaker 4: I just came out of all of our board meetings
Speaker 4: about three weeks ago with our ten subsidiary companies. Nobody's
Speaker 4: complaining about labor problems anymore. You know, we're seeing wage pressures,
Speaker 4: you know, kind of elevated a little bit, maybe up
Speaker 4: fifty basis points from historical norms. You know, if you
Speaker 4: went back a year ago, that was two to three
Speaker 4: hundred basis point. So you know, we're seeing those labor
Speaker 4: pressures really subside right now. Where there are some pressures
Speaker 4: on inflation gets more to distribution costs, so warehousing, transportation.
Speaker 4: But in general, Alex, if there's one thing I would say,
Speaker 4: our view on the street is that inflation is probably
Speaker 4: following faster than what we even saw on today's report.
Speaker 4: And I say that because we have customers that are
Speaker 4: asking us now for price to concessions. We're doing the
Speaker 4: same with our suppliers, and we're seeing just easing of
Speaker 4: pressures across the board. So I think the trend in
Speaker 4: inflation is going to be down and down pretty significantly
Speaker 4: as the year up folds.
Speaker 5: So Elias, I know you you're firm, your compass diversified
Speaker 5: focuses on three verticals branded, consumer, niche, industrial, and healthcare.
Speaker 5: Where are you seeing some of the best opportunities these days?
Speaker 4: Yeah, I would say the best opportunities, Paul, are in
Speaker 4: consumer you know, what we've seen is the more defensive sectors,
Speaker 4: especially healthcare and where we invest as critical outsource services.
Speaker 4: Those have really attracted a lot of demand and so
Speaker 4: there's a lot of trades that are happening there, but
Speaker 4: there are very elevated prices in the consumer business inside.
Speaker 4: What we're seeing is the choppiness of consumer earnings coming
Speaker 4: out of the pandemic has led a lot of financing
Speaker 4: partners to exit that part of the market, and we're
Speaker 4: not seeing private equity be as active. So we're seeing
Speaker 4: good deals come in consumer.
Speaker 6: We closed on.
Speaker 4: A great company called the Honey Pot in January of
Speaker 4: this year, and so this is a perfect opportunity and
Speaker 4: market for us because competition is you know, pretty much
Speaker 4: exited the consumer space right now, or it's you know,
Speaker 4: very weak compared to where it's been, and that means
Speaker 4: pricing comes down as supply of deals comes back into
Speaker 4: the market.
Speaker 3: What about industrials, niche industrials, what does that mean for
Speaker 3: Alias Sable right now?
Speaker 4: Yeah, mostly or mostly alex we're working in the industrial
Speaker 4: tech side, so you know, think of things that are
Speaker 4: helping with green energy and you know, other technology enabled
Speaker 4: industrial processes. You know, the industrial business. This pricing is
Speaker 4: actually quite high there too, believe it or not, on
Speaker 4: the M and A side, and we're seeing some weakening
Speaker 4: in some of the order books. So it's a little
Speaker 4: bit confounding to us how pricing could be up as
Speaker 4: high as it is with the economy showing some weakness
Speaker 4: and that directly impacts industrial. But you know, I think
Speaker 4: where we are, which is more in the industrial tech side.
Speaker 4: You know, we think that stays in the United States,
Speaker 4: and that is going to be something that grows, especially
Speaker 4: with government policy changing and you know, a lot of
Speaker 4: the advent of AI in the in the you know,
Speaker 4: computing business. I think that's going to drive more manufacturing
Speaker 4: here and we're going to be able to do it
Speaker 4: pretty efficiently, especially in the higher tech industrial space.
Speaker 5: Well, it's just real quickly, I'd love to get your
Speaker 5: perspective here. What's the financing market the capital markets like
Speaker 5: for a company like you'res looking to make acquisition, can
Speaker 5: you fancy your deals here? Obviously rising interest rates makes
Speaker 5: it a little bit tougher.
Speaker 4: Yeah, So, Paul, we're a little bit different in that
Speaker 4: we are a publicly traded company and when we acquire
Speaker 4: we finance at the holding company, not at our subsidiary levels,
Speaker 4: and so the markets have been, you know, fairly open
Speaker 4: to us and have been, you know for the last
Speaker 4: couple of years. You know, we have bonds that publicly trade,
Speaker 4: and the pricing on those bonds have come down. They're
Speaker 4: still up from where we issued in twenty twenty one,
Speaker 4: but we issued sort of at the peak of the market.
Speaker 4: So the capital markets remain very much open for us.
Speaker 4: We've been able to raise capital both in the debt
Speaker 4: markets and on the equity markets to fund our acquisition programs.
Speaker 4: I would say in terms of the M and A markets,
Speaker 4: where you have single asset LBO financing, we're starting to
Speaker 4: see that market come back as well, but it is
Speaker 4: coming back with higher pricing, and so it creates a
Speaker 4: competitive advantage for us in our financing structure. But we
Speaker 4: are seeing financing come back into the middle market M
Speaker 4: and A space.
Speaker 3: ALIAS thanks a lot. We really appreciate it. I love
Speaker 3: that you can hit on all the different industries and
Speaker 3: have a great window into the capital markets. Liasabos, CEO
Speaker 3: of Compass Diversified. That ticker on the NIC is COODI
Speaker 3: joining us from California. Interesting, right, I mean particularly with
Speaker 3: the industrials, like the order books are a little soft,
Speaker 3: but pricing is still strong, like and dislocations. But interesting
Speaker 3: in the inflation read that we're actually going to see
Speaker 3: inflation continue to come down. That could the FED be right?
Speaker 5: Yeah, maybe the Fed does actually have a soft landing.
Speaker 3: I mean that would be them.
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Speaker 3: Thirty Alex Steel alongside Paul So we need. This is
Speaker 3: Bloomberg Intelligence Radio. We bring you all the top news
Speaker 3: in business and finance through a lens of our amazing analysts.
Speaker 3: They cover two thousand companies in one hundred and thirty
Speaker 3: industries worldwide. We also tackle the big topics in the
Speaker 3: world that we all have really big questions on, and
Speaker 3: one of them is commercial real estate. We're all waiting
Speaker 3: for that shoe to drop. Some shoes have dropped. We
Speaker 3: get the news over the last week that s read
Speaker 3: Barry Sternlick's reat is going to pause redemptions, very similar
Speaker 3: to what be redid a few years ago. And where
Speaker 3: are we in that cycle and why are we seeing
Speaker 3: that now? Well? Joining us for his insight, which may
Speaker 3: be a little counterintuitive, is Scott Reckler. He is CEO
Speaker 3: and chairman of our x R Commercial real Estate in
Speaker 3: New York. How you doing, Scott, I'm doing well.
Speaker 6: Thanks for having me, Thanks.
Speaker 3: For coming in. We really appreciate it. When I hear
Speaker 3: a headline that s Reed is halting redemptions, that makes
Speaker 3: me think, oh my goodness, Ciri is going to be toast.
Speaker 3: What's happening?
Speaker 6: What do you see?
Speaker 1: So I think you know, and Barry's been very vocal
Speaker 1: about this for a while, right, which is that there's
Speaker 1: been a day of reckoning coming and it's someone been
Speaker 1: delayed last year as the Federal Reserve got a little
Speaker 1: bit more dubbish in their tone that people thought maybe
Speaker 1: interest rates were coming down. But I think the industry
Speaker 1: is now going through it's five stages of grief and
Speaker 1: they've gone past the denial and are now at acceptance
Speaker 1: and so a recognition that rates aren't going to come down,
Speaker 1: and so it's not going to be some saving grace
Speaker 1: and so they have to deal with these challenges. So
Speaker 1: now the banks, the institutions are busy, you know, taking
Speaker 1: the appropriate marks, taking the appropriate reserves, and now we're
Speaker 1: gonna have to start going through the process.
Speaker 6: It's a big problem.
Speaker 1: Right There's a trillion dollars of debt that's coming due
Speaker 1: this year, two trillion dollars over the next three years.
Speaker 1: And most of this debt has been financed that, you know,
Speaker 1: unofficiently interest rates that are not normal interest rates right there,
Speaker 1: interest rates that are much lower for the last ten
Speaker 1: to fifteen years that aren't going to come back. And
Speaker 1: now we're going to have more normal rates. So we
Speaker 1: have to go through a reequitization. Means that there's going
Speaker 1: to be pain on the equity side, pain on.
Speaker 6: The death side.
Speaker 1: You saw today there's announcement about US Pensions having to
Speaker 1: take more write offs on the commercial real estate. We've
Speaker 1: seen you know, more banks having issues. I think that's
Speaker 1: going to happen as well. So we're just in the
Speaker 1: beginning now of facing this challenge and it's gonna be
Speaker 1: something that's going to work its way through through this
Speaker 1: year and into next year.
Speaker 5: All right, So let's just say I've got a building
Speaker 5: in midtown wherever a part of that two point two
Speaker 5: trillion dollars that's coming. I go to my bank, the
Speaker 5: interust rate's much much higher. The value of my property
Speaker 5: is thirty forty fifty percent lower. I don't know something
Speaker 5: along that magnitude. You only loan to value fifty percent.
Speaker 5: Someone's got to get there.
Speaker 6: Right, is exactly right?
Speaker 1: So I mean, I think, and again this is different
Speaker 1: than like the two thousand and eight crisis. Right when
Speaker 1: two thousand and eight came, there was this injection of
Speaker 1: capital that really sort of lifted all values. Right, In
Speaker 1: this case, we have a structural period between the interest rates,
Speaker 1: and then some types of properties aren't going to be competitive.
Speaker 1: So you referenced an office building today, right, and then
Speaker 1: that commentary office not only has the revaluation because of
Speaker 1: interest rates, but people use office buildings differently, and some
Speaker 1: buildings are going to be competitively obsolete. So you have
Speaker 1: to pick the spots correctly, and then you have to
Speaker 1: face that reality. So the bank has to adjust its loan,
Speaker 1: the equity has to write off the equity and inject
Speaker 1: new equity, and you have to pick which buildings are
Speaker 1: going to be successful in this post pandemic world. I think,
Speaker 1: you know, the other piece of this is multifamily, which
Speaker 1: I think to me is more of the Achilles heel
Speaker 1: for the broader regional bank because there's a heavy concentration
Speaker 1: of multifamily in the regional bank around the United States.
Speaker 1: They have something like fifty to sixty percent of their
Speaker 1: book of business as loans, and those loans, even if
Speaker 1: just from an interest rate, even if credit is good,
Speaker 1: is underwater today, right. But now you also have new
Speaker 1: supply coming into the market. So there's going to be
Speaker 1: a couple of years of headwinds on that multi family
Speaker 1: market that I think is gonna put a lot of
Speaker 1: pressure on these regional banks going forward.
Speaker 3: So when there is pressure, are you a buyer? Are
Speaker 3: you a seller?
Speaker 6: What do you do? Yeah?
Speaker 1: It doesn't I think you these are could be a
Speaker 1: generational moment of time to be a buyer, right, and
Speaker 1: so we're active in the market.
Speaker 6: But you need to be very selective.
Speaker 7: Right.
Speaker 6: It's not just about having the capital.
Speaker 1: You have to have the capabilities to choose which are
Speaker 1: the properties that are going to be successful. You need
Speaker 1: to bring down the basis so you're not going to
Speaker 1: do this and think values are going to come back.
Speaker 1: You're not doing this on a bet that interest rates
Speaker 1: are just going to fall and everyone's going to do well.
Speaker 1: So you have to find a way how are you
Speaker 1: going to create value? And you really can't be necessarily
Speaker 1: to try to time the tap or the bottom.
Speaker 6: Right.
Speaker 1: So, we had a company that we sold in January
Speaker 1: of seven, and you know, we didn't know it was
Speaker 1: the top, but it felt frothy, right, so we sold it.
Speaker 1: We came back in the market of August of nine.
Speaker 1: We didn't know where we were in the cycle. It
Speaker 1: just felt like the right time to enter. So moments
Speaker 1: like this is where you want to start entering before
Speaker 1: the all clear signal is sounded. But you have to
Speaker 1: be very selective, but know that there's a lot more
Speaker 1: trouble to come that's going to create more distress in
Speaker 1: the system.
Speaker 5: Scott, do we have a housing shortage in this country?
Speaker 5: And if so, how did we get there?
Speaker 1: Yeah, we definitely have a housing shortage in this country,
Speaker 1: and it really it began to transpire after the last
Speaker 1: financial crisis, right. You ended up being a situation where,
Speaker 1: you know, the ability to build new housing became more challenging.
Speaker 1: People more conservative. So there's you know, estimates about six
Speaker 1: million units of shortages of housing in this country. And
Speaker 1: now you know, because of what the low rates during
Speaker 1: the pandemic, you've had this incredible amount of people buying
Speaker 1: homes financing long so existing home sales aren't trading.
Speaker 6: So we have this weirder nomaly.
Speaker 1: Will interest rates are up, Housing prices have stayed strong,
Speaker 1: and the market it hasn't really weakened in that regard,
Speaker 1: and so you know it's going to exacerbate the problem,
Speaker 1: right because now if you have less construction as we
Speaker 1: get to two twenty twenty six, you're going to have
Speaker 1: less housing today than you have the demand for housing.
Speaker 3: So when you're getting the feeling that you know there's distress,
Speaker 3: it's time to buy, even though they'll be more distressed later.
Speaker 3: How do you get that feeling? Like is there a
Speaker 3: screen that you look through to make sure like okay,
Speaker 3: not that property, but yes this property and if they're
Speaker 3: like right next to each other or something like, how
Speaker 3: does your brain work with that?
Speaker 1: Scott, No, I think you've got to be very concrete
Speaker 1: and have you know then screen is a good word, right.
Speaker 1: We have formulas so like in for office as an example,
Speaker 1: you know, we called we created something called Project Kodak,
Speaker 1: and we said, some buildings are going to be digital
Speaker 1: that are going to be successful in the post pandemic world,
Speaker 1: and some are going to be filmed and they're not going.
Speaker 6: To be successful. And we said, okay, we want to
Speaker 6: invest in digital.
Speaker 1: And we put the whole the other criteria as to
Speaker 1: what is digital and those are the the properties that
Speaker 1: are digital.
Speaker 3: What is digital?
Speaker 1: So digital are buildings like this Bloomberg building right which
Speaker 1: are you know, don't have places where people can collaborate people,
Speaker 1: they don't want to come to work because you can
Speaker 1: engage with people. They're in good communities, they're easy access
Speaker 1: from public transportation, and so that that is something that
Speaker 1: ultimately will be successful of attracting people. And so you
Speaker 1: need digital buildings, but they still may have broken capital structures.
Speaker 1: So our objective on investing is identify the digital buildings
Speaker 1: with the broken capital structures, invest in them, fix the
Speaker 1: broken capital structures. And when you do that, you see
Speaker 1: the leasing. Like last year we least two million square
Speaker 1: feet of space. This year, you know, so far we
Speaker 1: have a million and a half square.
Speaker 6: Feet of the leases out right.
Speaker 1: So if you have the right building with the right
Speaker 1: capital structure, there's a lot of tenants that want to
Speaker 1: be there.
Speaker 5: You know, I keep just stuck in my head from
Speaker 5: maybe eighteen months ago a Bloomberg News article came out
Speaker 5: and looked at Third Avenue, Manhattan between right where we
Speaker 5: are today fifty eighth Street and Grand Central down to
Speaker 5: forty second Street. Virtually you could write that whole part
Speaker 5: of Manhattan off. And that shocked me, because you've got
Speaker 5: some iconic buildings there, the Lipstick Building, just for example,
Speaker 5: what do you those aren't most of them are not
Speaker 5: A buildings. I've learned that term AA plus maybe there're
Speaker 5: be and c. What do you do with something like that?
Speaker 1: Right, So this is really where you need to start
Speaker 1: thinking about adaptive reuse. Right, if a building is going
Speaker 1: to be competitively obsolete and it's an office build and
Speaker 1: what are the alternative uses? And so we as an example,
Speaker 1: we're in the process of converting five office buildings to multifamily.
Speaker 6: Really and I hear that's hard. It's right.
Speaker 1: Some don't work, right, So you need to find ones
Speaker 1: where you have the right type of footprint and the
Speaker 1: right location so you can efficiently you know, adapt those floors,
Speaker 1: and so that's something that is important.
Speaker 6: But there's two caveats of that right. One is the
Speaker 6: value that you.
Speaker 1: Need to be investing in that building needs to be
Speaker 1: almost the equivalent of land value, So you need to
Speaker 1: have the capitulation of value coming down to that in
Speaker 1: that mix there. And then the second you need incentives.
Speaker 1: And so we're fortunate in New York the state just
Speaker 1: passed a tax incentive that about ninety percent of the
Speaker 1: tax that you normally pay is deferred for thirty five years.
Speaker 1: You don't pay it for thirty five years, so if
Speaker 1: you go through that process. So public policy can help
Speaker 1: get that done. And that's something that I think is
Speaker 1: going to be help accelerate this transition.
Speaker 5: That's fascinating stuff. I mean, real estate's always a fascinating business,
Speaker 5: but especially now. I don't know how these guys are
Speaker 5: doing it.
Speaker 3: I love that Kodak one that's might get that use that.
Speaker 5: We're going to use that if we'll give you a
Speaker 5: full attribution. But Scott Reckler, he's a CEO and chairman
Speaker 5: of our XR. We're talking real estate here. Lots of opportunities.
Speaker 5: I'm starting to hear more and more people come in
Speaker 5: here and say, you know, selectively, we think there's some
Speaker 5: time and some opportunities to make some acquisitions. So we
Speaker 5: appreciate checking in with Scott.
Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 5: Ballax Stale, Paul Swiney, We're live here on a Bloomberg
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Speaker 5: night over YouTube dot com and search Bloomberg Podcast and
Speaker 5: that's where you'll find the video feed. Of course, the
Speaker 5: news of the last twenty four hours, Former President Trump
Speaker 5: found guilty in the hush money case. We've been talking
Speaker 5: about it all day.
Speaker 6: We will bring you more President.
Speaker 5: Former President Trump is scheduled to speak at eleven am
Speaker 5: Wall Street time. We will bring that to you when
Speaker 5: he does speak. The question now, I think for a
Speaker 5: lot of folks is now what happens? And for that
Speaker 5: we're going to check in with Robert Mints, former federal prosecutor.
Speaker 5: He's now a partner at the firm Macarter and English.
Speaker 5: He joins us from beautiful Princeton in New Jersey, home
Speaker 5: of hogy Haven via zoom. So anyway, best Hoby shop
Speaker 5: in the world, hogy Haven, just say laying it out there,
Speaker 5: we never had it. We'll go no blue remote there, Robert,
Speaker 5: thanks so much for joining us here. I guess the
Speaker 5: question on everybody's mind here. Robert is given these convictions
Speaker 5: thirty fourth felon accounts. Well, former President mister Trump, will
Speaker 5: he go to jail at all?
Speaker 8: Well, that really is the big question here, and that's
Speaker 8: the decision that is going to be made solely by
Speaker 8: the trial judge. The way it works in York and
Speaker 8: everywhere else in a criminal case, the jury is the
Speaker 8: finder of fact. They ultimately determine guilt or innocence, and
Speaker 8: we know in this case they convicted the former president
Speaker 8: on all thirty four accounts. Now, the question of sentencing
Speaker 8: is entirely up to the judge and it could be
Speaker 8: anywhere from a probationary sentence to up to four years
Speaker 8: in prison or other possible terms and conditions home confinement.
Speaker 8: There could be a lot of different things the judge
Speaker 8: could do here, but it's a very weighty decision. And
Speaker 8: a very difficult decision for this judge to decide what
Speaker 8: is the right thing to do here, given the gravity
Speaker 8: of this case, given who the defendant is here, and
Speaker 8: given the that the defendant in this case, I think
Speaker 8: we're not going to see former President Trump coming in
Speaker 8: on sentencing day and expressing remorse.
Speaker 4: For what he did.
Speaker 8: Those are all factors that the judge will consider in
Speaker 8: fashioning his sentence.
Speaker 3: How does a judge come up with a sentence? How
Speaker 3: does that work?
Speaker 8: Well, typically what a judge does is he or she
Speaker 8: will look at the way similarly situated defendants have been
Speaker 8: treated in the past. So people who have been convicted
Speaker 8: of the same type of types of offenses, do they
Speaker 8: typically go to jail? If so, for how long In
Speaker 8: this kind of case, it's a record keeping case. Usually
Speaker 8: for a first defender, they will not be jail time.
Speaker 8: But there's also other factors that the court will consider
Speaker 8: the age of the defendant. As I mentioned earlier too,
Speaker 8: whether the defendant expresses remorse, acknowledges that they committed a crime,
Speaker 8: that they've done something wrong. And I think the judge
Speaker 8: will also take into account, at least in some manner,
Speaker 8: the fact that there are other pending criminal cases out there,
Speaker 8: and also the way in which former President Trump conducted
Speaker 8: himself during the trial. As you remember, the judge imposed
Speaker 8: a gag order that he was found in contempt several
Speaker 8: times for making statements that the judge found to have
Speaker 8: crossed the line. All of that may factor into this,
Speaker 8: and the judge will have to decide does he or
Speaker 8: does he not send former President Trump to jail, If so,
Speaker 8: for how long.
Speaker 5: That's kind of where I wanted to go, Robert. We're
Speaker 5: waiting comments from former President Trump at eleven a m
Speaker 5: from Trump Tower. So my question is is he still
Speaker 5: subject to the gag rule because it doesn't appear that
Speaker 5: he's going to hold back on any commentary about the
Speaker 5: judge or the trial itself.
Speaker 8: Well, that's a great question, and I think it's a
Speaker 8: little bit unclear, but generally probably not. Because the gag
Speaker 8: order was really imposed so that former President Trump would
Speaker 8: not make comments that might have affected witnesses or might
Speaker 8: have affected jurors. None of that really is relevant at
Speaker 8: this point. The case is over, there's been a conviction,
Speaker 8: So I think we're going to see former President Trump
Speaker 8: speak freely. I don't think we're going to see the
Speaker 8: judge in any way react to those comments unless it
Speaker 8: gets very personal with court personnel or with the judge.
Speaker 8: But otherwise I think the judges is going to let
Speaker 8: it go, but he will be watching. And I do
Speaker 8: think those issues on statements that are made by former
Speaker 8: President Trump may ultimately factor into his decision about whether
Speaker 8: or not to send former President Trump to jail.
Speaker 6: And if so, for how long.
Speaker 3: If this trial had been held in any other state
Speaker 3: but say California or New York, would it have gone
Speaker 3: any differently or would it be reasonable to have expected
Speaker 3: this outcome in the majority of durors and trials.
Speaker 8: You know, that's a great question and obviously impossible to answer.
Speaker 8: I mean, I do think we saw a fairly diverse
Speaker 8: jury in the sense that you had people from various
Speaker 8: backgrounds socioeconomically, people who were from different parts of the city.
Speaker 8: So there was some balance to that. And you do
Speaker 8: have to remember that both the prosecution on the defense
Speaker 8: played a role in picking this jury. They were able
Speaker 8: to exercise what it's called peremptory challenges, which means to
Speaker 8: strikers who they did not want on the jury for
Speaker 8: whatever reason, and so they both jointly ended up picking
Speaker 8: this jury. But you're correct in that there is a
Speaker 8: jury pool the limited number of people that you'd find
Speaker 8: in Manhattan, And the question is would they be any
Speaker 8: different than a jury pool in some other state. The
Speaker 8: answer is, we really don't know. The reality is that
Speaker 8: probably is different from state to state. But that happens
Speaker 8: in every criminal case across the country, no matter where
Speaker 8: it's tried, whether you're in federal court or state court,
Speaker 8: there's going to be a difference, perhaps, for example, if
Speaker 8: you try the case in Florida, or if you try
Speaker 8: a case in New York. Then even within a state,
Speaker 8: for example, if you try a case in Miami versus
Speaker 8: in the northern part of Florida, you may find different
Speaker 8: jurors there. So that does happen all the time. But
Speaker 8: bear in mind that jurors are instructed, and if we
Speaker 8: assume they follow the instructions of the Corps, they are
Speaker 8: supposed to simply put all their biases aside. They're supposed
Speaker 8: to make a decision based solely on the evidence that's
Speaker 8: presented to them during the process of the trial, and
Speaker 8: that's how they make their decision. But obviously they bring
Speaker 8: their backgrounds, they bring common sense to it, and jurors
Speaker 8: are different, So it is quite possible that as this
Speaker 8: case has been tried in some other part of the country,
Speaker 8: there might have been a different result.
Speaker 9: Hey, Bob John Tucker here real quick, just got a
Speaker 9: less than a minute left. Has Trump now violated the
Speaker 9: pre trial conditions of release in the Georgia case?
Speaker 8: That's a good question. I don't actually know the answer
Speaker 8: to that. The fact that there's a conviction here and
Speaker 8: whether that how that may play into his terms of
Speaker 8: release in other states. It is something that those judges
Speaker 8: may consider, but I don't think it's going to ultimately
Speaker 8: affect his conditions of release. I don't think you're going
Speaker 8: to see anything more stringent being imposed upon and based
Speaker 8: upon this conviction.
Speaker 3: So my final question for you, why do we have
Speaker 3: to wait so long to get a sentencing here? Like
Speaker 3: it just seems to prolong it in all the angst
Speaker 3: in the political sphere.
Speaker 8: Well, it's really not unusual for the time between a
Speaker 8: conviction and a sentencing to be at least a couple months.
Speaker 8: In federal court is often even longer than that because
Speaker 8: what happens is there is a report that's prepared by
Speaker 8: the court system they ask all kinds of questions about
Speaker 8: the defendant, the background of the defendant. And this is
Speaker 8: an unusual case. Obviously, everybody knows who foreign President Trump is,
Speaker 8: they know his background. But it's going to be treated
Speaker 8: like any other case. And so it has to go
Speaker 8: through the same processes and procedures that any other defendant would,
Speaker 8: and the report has to be prepared. The defense has
Speaker 8: an opportunity to submit information, and this is generally how
Speaker 8: long it takes, at least a couple months before actual
Speaker 8: sentencing after the conviction.
Speaker 5: Robert, thank you so much for joining us. Really appreciate it.
Speaker 5: Robert Mints. He's a former federal prosecutor. He's also partner
Speaker 5: now with McCarter and English. Joining us from Princeton, New Jersey.
Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 2: Just Say Alexa playing Bloomberg. Eleven thirty.
Speaker 5: Former President Donald Trump speaking at Trump Tower in Middon
Speaker 5: and press conference in response to the finding being found
Speaker 5: guilty of.
Speaker 3: For thirty four accounts, thirty four.
Speaker 5: Counts of felony. So again some of the typical response.
Speaker 5: I guess we would expect he's calling this a sham
Speaker 5: and kind of being railroaded, so not certainly supporting.
Speaker 6: What is going on.
Speaker 5: Let's go to Joe Matthew right here, he's co host
Speaker 5: of the Bloomberg Balance of Power. Joe, I guess nothing
Speaker 5: new in the comments from former President Trump.
Speaker 6: What are your thoughts here?
Speaker 7: No, this is a pretty much rehash of the stump speech,
Speaker 7: to be honest, although he's going deep now, all the
Speaker 7: way back to January sixth, whether he attacked the Secret
Speaker 7: Service in the car. He started with the border, which
Speaker 7: was interesting. Of course, this was built as a press
Speaker 7: conference on his conviction. Yesterday, he's still in over a
Speaker 7: half an hour, has not taken one question. He's just
Speaker 7: going off the cough on a list of grievances. The
Speaker 7: one thing I'll point out here you can fact check
Speaker 7: this stuff all day long, is that when he gets
Speaker 7: into as he said, quote, this is all done by
Speaker 7: Biden and his people. This is done by Washington. This
Speaker 7: is a state case. You guys are sitting in New
Speaker 7: York and it actually has no direct connection to the administration.
Speaker 3: Or Washington, meaning that it's a right, yes, understood. So
Speaker 3: what else really stands out though, in terms of what
Speaker 3: we can then expect in that campaign trail as we
Speaker 3: go forward, and this is being used as a political
Speaker 3: pinball within that well.
Speaker 7: I think we've seen it already. Political prisoner is how
Speaker 7: he's billing himself, retribution towards how the campaign began. And look,
Speaker 7: if this comes down to a jailhouse call into the
Speaker 7: Republican convention in Milwaukee, and we don't know if that's
Speaker 7: going to be the case or not, he will probably
Speaker 7: find a way to spend that to his advantage. I mean, look,
Speaker 7: he's been selling mugshot t shirts for months and months now,
Speaker 7: making money on it. So this is someone who, as
Speaker 7: we see here in the process, he's making people laugh
Speaker 7: the way that he's making fun of Joe Biden. But
Speaker 7: the questions that we have are about the long term
Speaker 7: corrosive impact that this could have, particularly on independent voters,
Speaker 7: suburban women and folks who are looking now at a
Speaker 7: convicted felon. And we'll see what happens after he meets
Speaker 7: with his probation officer and is eventually sentenced.
Speaker 6: So, Joe, I guess yeah, you.
Speaker 5: Raised the political question is what the impact will be
Speaker 5: on I guess just folks that are not in either camp,
Speaker 5: some of those moderates, that people in the middle. Have
Speaker 5: we seen any polling on that, Joe.
Speaker 7: We have, and some of it is right here at Bloomberg.
Speaker 7: We were asking in January in our Bloomberg Swing state
Speaker 7: pole what a conviction would do or an incarceration, and
Speaker 7: we did find within single digits the number of folks
Speaker 7: who said that they in fact would change their vote
Speaker 7: on that. But it's different when it's hypothetical. We didn't
Speaker 7: even know what trial we'd be talking about then, And
Speaker 7: there are posters in the field right now who are
Speaker 7: going to have an interesting look at what we see here.
Speaker 7: You could actually see a pop, almost a post state
Speaker 7: of the Union, in this case, a post verdict pop
Speaker 7: for Donald Trump. But does he keep that also fundraising?
Speaker 7: This does not seem to be bothering the mega donors
Speaker 7: who are gravitating toward Donald Trump, as well as the
Speaker 7: small dollar donors. As I mentioned before he started here,
Speaker 7: thirty five million dollars raised online since the beginning of
Speaker 7: this whole thing, since the verdict less than twenty four
Speaker 7: hours ago. They crashed the win red system that Trump
Speaker 7: uses to raise money last night. You couldn't even get
Speaker 7: on that app to raise money for a while if
Speaker 7: you wanted to. So this has been a mobilizing event.
Speaker 7: Let's see where it goes days and weeks from now.
Speaker 3: I actually, this is a great point that you made
Speaker 3: that when you guys did the polling in terms of
Speaker 3: if Trump is convicted, will people still vote for him?
Speaker 3: That didn't specify which conviction. I think I missed that detail,
Speaker 3: meaning that maybe the Georgia election case a conviction, they're
Speaker 3: very different than a hush money trial.
Speaker 7: Well, I guess that's true. I think the idea of
Speaker 7: convicted felon right when we think about the rhetoric or
Speaker 7: just sort of the aura that that brings. It's not
Speaker 7: a good thing not to mention someone incarcerated. That's just
Speaker 7: a different look too if you're someone behind bars. Not
Speaker 7: that either would keep him from running on a legal level.
Speaker 7: But so this is kind of the unknown. He's dealing
Speaker 7: with the cards. He's been Dealty's good at that. Joe
Speaker 7: Biden has been pretty good at staying out of it.
Speaker 7: Outside of his one decision recently to send Robert de
Speaker 7: Niro to the Lower Manhattan Courthouse. I'm not sure what
Speaker 7: else they have up their sleeve right now other than
Speaker 7: to let Donald Trump keep talking. I think that's Joe
Speaker 7: Biden's strategy as we speak.
Speaker 5: And Joe, I guess we had some conflicting legal opinions
Speaker 5: today as to whether former President Trump is still under
Speaker 5: the gag rule. He seemed to say clearly in his
Speaker 5: remarks that he believes he is.
Speaker 2: Yeah.
Speaker 7: I talked to criminal defense attorney Robert mcwherterer about this.
Speaker 7: He said that technically, yes, this trial is technically not
Speaker 7: over until sentencing. So therefore Judge murshawn could in fact
Speaker 7: enforce the gag order if he wanted to. And I'll
Speaker 7: remind everybody that we're waiting to hear from the Supreme Court. Still,
Speaker 7: the fact that this is done now brings us to June,
Speaker 7: when we could get a ruling on this presidential and
Speaker 7: expect to this presidential immunity claim. That would then potentially
Speaker 7: unlock the next trial, that's the January sixth trial with
Speaker 7: Special Counsel Jack Smith.
Speaker 6: That could be a.
Speaker 7: Very major game changer for this campaign, and it would
Speaker 7: likely coincide with the final throes of the election. Imagine
Speaker 7: a world in which that trial was happening when the
Speaker 7: election took place, or in fact, was held between the
Speaker 7: election and the inauguration. Could we have a president elect
Speaker 7: on criminal trial and federal trial here in Washington. All
Speaker 7: of these remain questions and distinct possibilities.
Speaker 3: So we have the benefit. I've talked about this for
Speaker 3: just half an hour. You're going to be talking about
Speaker 3: this for three more hours today as you did yesterday
Speaker 3: for three hours. What are going to be your questions? Like,
Speaker 3: how do you walk this forward now? And there's so
Speaker 3: many things we don't.
Speaker 7: Know these are This is the moment I think they
Speaker 7: get granular. What are the next steps here for Donald
Speaker 7: Trump's defense? What is that appointment? What is his first
Speaker 7: meeting with his probation officer going to look like?
Speaker 6: What will be the venue?
Speaker 7: What is the Secret Service talked about with New York
Speaker 7: Corrections officials about a potential incarceration. We heard Nick Ackerman,
Speaker 7: the former Watergate prosecutor, talk about a presidential suite potentially
Speaker 7: being built at Riker's Island. But I also want to
Speaker 7: know about the jurors. There are a couple of folks,
Speaker 7: including our own Eric Larson and his team at Bloomberg.
Speaker 7: Mark Caputo's another one at the Bulwark, is going to
Speaker 7: join us at noon to talk about who these people
Speaker 7: actually were, what they were going through. Now that we
Speaker 7: want to reveal identities, but what did these Americans experience?
Speaker 7: What were their expressions, what did they hear, and what
Speaker 7: might have gone on inside that jury room?
Speaker 6: Those are all questions I.
Speaker 5: Have, all right, Joe, thank you so very much. We
Speaker 5: appreciate it. Joe Matthew, he's co host of Bloomberg Balance
Speaker 5: of Power, joining us from the Washington DC Bureau. And
Speaker 5: as you mentioned, Alex, he's gonna be he and his
Speaker 5: team will be spending a lot of time looking at
Speaker 5: this in this landmark court case from yesterday. Then some
Speaker 5: of the comments from the former president today, who is
Speaker 5: just finished speaking, so he's walking away from the lectern
Speaker 5: there so interesting.
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Speaker 5: Thirty Big Take story today related to the news of
Speaker 5: the day regarding former President Trump. Wall Street billionaires rush
Speaker 5: to back Trump. Verdict be damned. A growing number of
Speaker 5: financial elites are throwing their weight behind Trump, who's found
Speaker 5: guilty in the first criminal trial of a former US
Speaker 5: as an entry Naa Rajen joins just one of the
Speaker 5: reporters on that story, Senior finance reporter Bloomberg News, joining
Speaker 5: us here in our Bloomberg Interactive Brokers studio. What is behind?
Speaker 5: What did you find in your reporting tree about what
Speaker 5: some of these billionaires or what are they thinking? Is
Speaker 5: they think about supporting former President Trump at the next election?
Speaker 10: In some ways, it's not a surprise, but in some ways,
Speaker 10: in many ways, it's extraordinary. In almost any other generation,
Speaker 10: any other era, any other candidate, you would have assumed
Speaker 10: that there will be this entire crowd of supporters that
Speaker 10: will be looking to distance themselves from this individual. In
Speaker 10: this case, most of Trump's deep pocketed donors are actually
Speaker 10: rallying around him and using this guilty verdict as a
Speaker 10: rallying cry to get more support for him. And that
Speaker 10: has been the trend that we've seen. Those who have
Speaker 10: been trumped backers and have stood by him through all
Speaker 10: these years, continue to stand by him. Those who have
Speaker 10: been reluctant travelers don't seem to be getting swayed by
Speaker 10: the verdict, and in fact they're using it as an
Speaker 10: opportunity to more people into the Trump fold, and that's extraordinary.
Speaker 10: A lot of what they're attacking is is what they
Speaker 10: claim is the misuse of the legal system. These are
Speaker 10: titans of the industry. These are people who've used the
Speaker 10: legal system, the bedrock of capitalism in this country, in
Speaker 10: some ways to build grow a quie accumulate wealth. These
Speaker 10: are the very same people who look at this verdict
Speaker 10: and suddenly have a number of grave concerns about the
Speaker 10: carriage of justice or what they call miscarriage of justice
Speaker 10: in this case.
Speaker 3: So in my world, the first kind of turn was
Speaker 3: Harold Ham, billionaire owns cnnental Resources, right, and he supported
Speaker 3: Nicki Haley, and he was saying he was not going
Speaker 3: to support President Trump because he just felt like he
Speaker 3: just said he wasn't electable. And then slowly, as the
Speaker 3: momentum couldn't pick up for a moderate like a Nikki Haley,
Speaker 3: if we'll just call her a moderate that eventually the
Speaker 3: rhetorics started to turn. And I'm wondering how many are
Speaker 3: similar like that on Wall Street, where in terms of electability,
Speaker 3: in terms of likability, in terms of focus, they don't
Speaker 3: want President Trump, but because they weren't able to rally
Speaker 3: the support behind a moderate, I were seen as a moderate,
Speaker 3: they have no choice. How much of it is that
Speaker 3: versus an actual support.
Speaker 10: That's sort of a very interesting point. And I'd like
Speaker 10: to actually point to two important voices in the story today.
Speaker 10: One of them Dan Lufkin. He's ninety two today, but
Speaker 10: he is one of the co founders of DLJ. He
Speaker 10: therefore had one of the most prominent positions in the industry.
Speaker 3: Right.
Speaker 10: And here's a man who comes out and says, look,
Speaker 10: Wall Street has never been known and this is important
Speaker 10: the way he frames it. He says, Wall Street has
Speaker 10: never been known for its values. Is there a willingness
Speaker 10: to support Trump if it looks like he's on the
Speaker 10: right track. Yes, he says, I'm not proud of that,
Speaker 10: and I'm not part of that either, because he was
Speaker 10: a Nicki Hayley supporter, and he's definitely staying never Trumper.
Speaker 10: But he's saying that is definitely visible. And we have
Speaker 10: Whitney Tilson, former HETG fund manager ran a two hundred
Speaker 10: million dollar hatch fund, who says the industry does attract
Speaker 10: its own crowd of opportunists, and that sort of extends
Speaker 10: to Trump's backers in the upper rungs of the business
Speaker 10: community who've come out publicly right now. And his point
Speaker 10: is they've concluded Trump is going to win. They don't
Speaker 10: believe this is a dead heat. They are pretty certain
Speaker 10: and convinced themselves that Trump is going to win come November,
Speaker 10: and if he is the next president, then it is
Speaker 10: in their self interest to support him early. And you
Speaker 10: can't discount that logic.
Speaker 5: You know, what I see in your story is, you know,
Speaker 5: kind of self made billionaires, Steven Schwartzman, Harold Lutnick.
Speaker 7: What I don't see.
Speaker 5: Is corporate CEOs, the CEO of Coca Cola or Procter
Speaker 5: and Gamble or something like that that probably says something
Speaker 5: as well. I mean, if I've got my billions, I
Speaker 5: don't really care what people think. I can maybe be
Speaker 5: more open with who.
Speaker 10: Just yes, absolutely. But at the same time, I will
Speaker 10: also point out that a lot of these corporate CEOs
Speaker 10: were loud and vocal in twenty seventeen. In August twenty seventeen,
Speaker 10: after the white supremacist rallies in Charlottesville, Virginia, they were
Speaker 10: loud and vocal after jan six, twenty twenty one. What
Speaker 10: you have seen, in some ways is in a historic
Speaker 10: moment like this, right first have a former president to
Speaker 10: be tried in the for sort of in criminal counts
Speaker 10: to be found guilty. You would have thought that there
Speaker 10: would be more in the upper rungs of the business
Speaker 10: class so would be able to come out and point
Speaker 10: that out. But they are choosing to remain silent or
Speaker 10: at least don't want to express an opinion, and their
Speaker 10: silence in this case speaks as much as their comments
Speaker 10: in some of the previous instances.
Speaker 3: No, I'm glad you brought that up, because something that
Speaker 3: we saw back in twenty and sixteen is it was
Speaker 3: silent supporters that people voted for Trump on Wall Street
Speaker 3: in particular, but no one said anything, and that that
Speaker 3: was in us why polls were so wrong and why
Speaker 3: I caught everyone else so off guard. Is it something
Speaker 3: the same way, like, hey man, I make a lot
Speaker 3: of money and I want lower taxes straight up, I'm
Speaker 3: going to vote for Trump, but I can't say excel
Speaker 3: lose clients.
Speaker 10: And some of those who are backing and kind of
Speaker 10: also making that point publicly. But yes, in twenty sixteen,
Speaker 10: there was a I think it's fair to say, at
Speaker 10: least on Wall Street, there was a lot more stigma
Speaker 10: in being able to come out and openly say I
Speaker 10: back Donald Trump. Doesn't feel like that so much in
Speaker 10: twenty twenty four.
Speaker 5: All right, so we haven't heard from JP. Have you
Speaker 5: heard from Jamie Diamond, CEOs or Brian moy in a
Speaker 5: hand you know, anything like that from Big Wall Street?
Speaker 10: Not particularly, But it is interesting that yesterday Jamie Diamond
Speaker 10: was sort of the star attraction at this JP Morgan
Speaker 10: alumni event. This this is held at the Morgan Library
Speaker 10: every year. It's a bit of a tradition among the
Speaker 10: JP Morgan crowd. And a couple of years ago he
Speaker 10: did create quite a bit of a stir where he
Speaker 10: went on this sort of expletive laid and tirade against
Speaker 10: Donald Trump. That is Jamie Diamond, the Dean of Finance.
Speaker 10: This was back when m Jansick was still top of
Speaker 10: everyone's mind. Yesterday they're meeting a mere two hours after
Speaker 10: this guilty verdict, and Jamie doesn't even reference it to
Speaker 10: a tangential question about politics and the outlook. He talks
Speaker 10: about the need to respect the seventy four million voters
Speaker 10: who voted for Trump because they must have seen that
Speaker 10: he had done some good things. All fair points, but
Speaker 10: again interesting to note what he's choosing to remain silent
Speaker 10: on at this moment versus what he was vocal about
Speaker 10: just a couple of years ago.
Speaker 5: All Right, Sree, thanks so much for jourinning a Shrinana Rojen.
Speaker 5: He is a senior financial reporter for Bloomberg News. Journey
Speaker 5: us here in our Bloomberg Interactive Brokers studio. The Big
Speaker 5: Takes story of the day. We love the Big Takes
Speaker 5: stories so well, deeply sourced and reported, lots of COO
Speaker 5: graphics for people like me, Wall Street billionaires, Rush Tobac
Speaker 5: Trump verdict be Damned is the headline on that story.
Speaker 5: So yeah, Wall Street has following the money.
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