WEBVTT - Yields, Earnings, Paul Taubman, and Uber (Podcast) 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:05.240 my co host Matt Miller. 0:00:05.640 --> 0:00:09.600 Every business day, we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.600 and Bloomberg experts, along with essential market moving news. 0:00:14.160 --> 0:00:17.279 Find the Bloomberg Markets Podcast on Apple Podcasts or wherever 0:00:17.400 --> 0:00:20.480 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:21.040 --> 0:00:23.319 Let's switch gears and go to our Federal Reserve. It 0:00:23.400 --> 0:00:25.759 is Tuesday. We like to talk to Ira Jersey. He's 0:00:25.800 --> 0:00:29.720 the chief US interst rate strategist for Bloomberg Intelligence. And 0:00:29.800 --> 0:00:33.000 I really got some economic data today. I mean ISM, 0:00:33.000 --> 0:00:38.040 manufacturing still in below fifty, still contracting, It's better than 0:00:38.120 --> 0:00:41.199 last month. So the economy is, you know, trying to 0:00:41.320 --> 0:00:43.599 keep kind of chugging along here. How do you think 0:00:43.600 --> 0:00:48.080 the Fed kind of us kind of the overall economy here? 0:00:49.320 --> 0:00:51.520 Yeah, I think the Federal Reserve is actually pretty happy 0:00:51.520 --> 0:00:52.320 with the economy. 0:00:52.400 --> 0:00:54.880 Their concern is still is inflation too high? 0:00:54.880 --> 0:00:58.200 And well the data today with manufacturing maybe not as 0:00:58.280 --> 0:01:01.160 bad as it has been in recent month, will that 0:01:01.240 --> 0:01:03.000 mean that prices are going to go up? And interestingly, 0:01:03.160 --> 0:01:05.479 in that ISM data that we got just a couple 0:01:05.520 --> 0:01:06.480 of minutes ago, Paul. 0:01:06.640 --> 0:01:09.160 Showed that prices paid was lower. 0:01:09.240 --> 0:01:12.960 So actually the inflation component of the ISM Manufacturing survey 0:01:13.000 --> 0:01:14.640 suggested goods prices. 0:01:14.480 --> 0:01:15.720 Might continue to come down. 0:01:16.319 --> 0:01:19.480 But this week, Paul, most importantly obviously it's payrolls, but 0:01:19.600 --> 0:01:21.480 second to that in my book and the way that 0:01:21.560 --> 0:01:24.480 I am analyzing the economy right now is going to 0:01:24.480 --> 0:01:29.240 be Thursday's ISM Services report, So looking at prices paid 0:01:29.240 --> 0:01:32.360 in there as well as new orders and what's going 0:01:32.400 --> 0:01:35.440 on with some of the forward looking components of those data. 0:01:35.560 --> 0:01:38.120 And IRA looking at treasuries pairing some of those losses 0:01:38.160 --> 0:01:41.560 on the ISM, but then also the Jolts jobs opening data, 0:01:41.600 --> 0:01:44.680 seeing that as far as those openings just dropping slightly 0:01:44.720 --> 0:01:48.000 in the quits rate ticking down in June. In that data, 0:01:48.400 --> 0:01:51.000 and looking over at what the ten years yielding close 0:01:51.040 --> 0:01:53.720 around four percent? What's your view on the direction of 0:01:53.760 --> 0:01:56.960 the tenure and where does Bloomberg Intelligence forecast to see it? 0:01:57.240 --> 0:01:57.960 At your end? 0:01:58.600 --> 0:02:01.240 Yeah, so we just revised our FOURK asked this morning, actually, 0:02:01.320 --> 0:02:04.160 and so we do think that ten year yields are 0:02:04.160 --> 0:02:06.280 going to be lower than where they are now. I 0:02:06.280 --> 0:02:08.799 think currently the market's in a range and there's a 0:02:08.840 --> 0:02:11.840 couple of technical things going on as well. So firstly 0:02:11.880 --> 0:02:15.160 we saw today's move, the move about five base points 0:02:15.200 --> 0:02:17.760 higher in ten year yields was driven largely by what's 0:02:17.800 --> 0:02:21.919 going on in Europe and the hawkish or hawker's expectations 0:02:22.480 --> 0:02:24.520 out of Europe and the Bank of England in particular. 0:02:25.160 --> 0:02:28.680 But importantly, tomorrow morning at eight thirty, we have the 0:02:28.680 --> 0:02:32.280 Treasury refunding announcement, and the Treasury Department will be increasing 0:02:32.680 --> 0:02:35.560 the size and the supply of treasuries coming to market. 0:02:35.639 --> 0:02:39.400 So I think some people are adjusting to that possibility 0:02:39.480 --> 0:02:42.280 and just thinking, hey, if there's more supply, maybe it'll 0:02:42.320 --> 0:02:47.600 be harder for market participants to digest the larger issuance sizes. 0:02:48.000 --> 0:02:50.280 And so I think the market's adjusting to that. 0:02:50.320 --> 0:02:52.760 But by the end of the year, you know, Anawog 0:02:52.760 --> 0:02:55.280 and Bloomberg Economics believes that they'll be at a recession. 0:02:55.560 --> 0:02:57.560 If there is a recession, you could expect ten year 0:02:57.600 --> 0:03:00.800 treasury yields to rally about seventy rasis points are so 0:03:00.919 --> 0:03:03.399 from current levels, and that's so our year on forecast 0:03:03.480 --> 0:03:05.720 is a three point three two percent if you want 0:03:05.720 --> 0:03:06.360 to be very. 0:03:07.760 --> 0:03:10.560 So I wrote, when the government comes to refund their debt, 0:03:10.600 --> 0:03:12.480 which I know they're going to do here. I guess 0:03:12.840 --> 0:03:16.480 you know, in the next several days. Here they got 0:03:16.520 --> 0:03:19.240 to raise a lot of money. Because the deficits keeps growing, 0:03:20.000 --> 0:03:24.040 interest rates are higher, so the refinance becomes even more expensive. 0:03:25.560 --> 0:03:27.600 I mean, do we run the risk of having not 0:03:27.680 --> 0:03:31.080 failed auctions, but just disappointing auctions, which really causes some 0:03:31.120 --> 0:03:32.240 concern in the marketplace? 0:03:33.200 --> 0:03:34.960 Yeah, I think we do. 0:03:35.160 --> 0:03:37.520 You know what happened in twenty twenty two, we had 0:03:37.520 --> 0:03:40.600 some very weak auctions, and even earlier this year, particularly 0:03:40.640 --> 0:03:43.720 when a lot of people thought maybe yields weren't high enough, 0:03:43.720 --> 0:03:47.000 the Federal Reserve was continuing to hike interest rates pretty aggressively. 0:03:47.360 --> 0:03:49.240 You know now that it looks like the Federal Reserve 0:03:49.320 --> 0:03:51.520 is nearing or at the end of their hiking cycle. 0:03:51.840 --> 0:03:54.040 Some of the auctions more recently in the last two 0:03:54.040 --> 0:03:58.000 months have actually been been reasonably well received. I'd say 0:03:58.000 --> 0:04:01.880 that the auctions are somewhat more mixed, But yeah, there 0:04:01.960 --> 0:04:04.280 is to your point, Paul, I think a real risk 0:04:04.320 --> 0:04:07.840 that if the government raises the size of some of 0:04:07.880 --> 0:04:11.119 these auctions too far, too fast, that it may be 0:04:11.440 --> 0:04:13.640 again difficult to digest. So some of the things you 0:04:13.680 --> 0:04:15.680 want to look at when we get to some of 0:04:15.720 --> 0:04:19.080 the auctions next week, is what's the bid to cover doing. 0:04:18.880 --> 0:04:20.520 So how many bids, how many. 0:04:20.279 --> 0:04:23.279 Offers are there to buy bonds are there compared to 0:04:23.720 --> 0:04:26.920 the amount on offer? And then secondly, you're indirect bidder, 0:04:27.000 --> 0:04:31.000 So these are investors, end users, central banks, pension funds, 0:04:31.080 --> 0:04:35.599 mutual funds who all bid through third parties, and if 0:04:35.600 --> 0:04:38.159 they come in strong, that means that end user demand 0:04:38.279 --> 0:04:41.960 is really good. Obviously the converse is true as well. 0:04:42.200 --> 0:04:45.760 If those are relatively low compared to recent history, then 0:04:45.760 --> 0:04:48.200 you could expect there to be you know, maybe yields 0:04:48.240 --> 0:04:50.920 go a little bit higher because of the lack of demand. 0:04:51.120 --> 0:04:53.480 IIRA explain to us what's going on when we're looking 0:04:53.520 --> 0:04:57.520 at how speculators were more bearish on treasury futures in 0:04:57.560 --> 0:05:00.840 this latest data that came obviously ahead of the FEDS 0:05:00.960 --> 0:05:04.520 just prior meeting that we just had, and what's happening 0:05:04.680 --> 0:05:07.200 as far as how they're boosting their net short exposure 0:05:07.279 --> 0:05:09.520 across this curve with the exception if you're looking at 0:05:09.560 --> 0:05:11.360 say five and ten year futures. 0:05:12.160 --> 0:05:14.359 Yeah, it's a little bit it's a little bit difficult 0:05:14.400 --> 0:05:17.080 to tell, you know, when a hedge fund or a 0:05:17.120 --> 0:05:20.480 levered investor, and that's a prim So there's speculators, right, 0:05:20.520 --> 0:05:23.560 so we had no speculators versus hedgers. 0:05:23.120 --> 0:05:24.680 That's one component. 0:05:24.720 --> 0:05:28.360 But then they also there's another breakdown that's levered investors 0:05:28.440 --> 0:05:33.279 versus versus asset managers versus dealers. And when you look, 0:05:33.320 --> 0:05:35.599 it's almost all levered funds that are short. So the 0:05:35.680 --> 0:05:38.920 question is are they short treasuries because on the other 0:05:39.040 --> 0:05:42.080 side they happen to be long corporates or long equities, 0:05:42.120 --> 0:05:44.880 like is that a hedge to other assets that they 0:05:44.960 --> 0:05:48.600 might be might have a position in, And so it's 0:05:48.600 --> 0:05:52.560 a little bit difficult to know that. I do suspect 0:05:52.600 --> 0:05:56.080 that there are people who just had taken advantage of 0:05:56.120 --> 0:05:58.880 the fact that we had rallied back to It wasn't 0:05:58.880 --> 0:06:00.040 that long ago that we were at three and a 0:06:00.040 --> 0:06:02.559 half percent in treasury, so now we've you know, sold 0:06:02.560 --> 0:06:05.960 off to four percent, So there could be some short 0:06:05.960 --> 0:06:09.360 covering that we see somewhere around the old yield highs 0:06:09.400 --> 0:06:10.760 around four. 0:06:10.520 --> 0:06:12.839 Point nine percent. Four point oh nine percent. 0:06:13.680 --> 0:06:16.000 That's a pretty important technical level at this point, and 0:06:16.040 --> 0:06:18.159 I suspect that as we get a little bit above 0:06:18.200 --> 0:06:20.719 four percent, you will see some short covering among those 0:06:20.800 --> 0:06:21.680 levered investors. 0:06:22.480 --> 0:06:24.479 Ieric talked to us about liquidity in the marketplace. 0:06:24.480 --> 0:06:26.640 If I'm a big mutual fund or hedge fund and 0:06:26.680 --> 0:06:28.479 that I want to dump a bunch of treasuries, I 0:06:28.480 --> 0:06:30.760 call it Morgan Stanley and Goldman Sachs, and I say, hey, 0:06:30.760 --> 0:06:33.240 bid me here, what kind of efficiency? 0:06:33.240 --> 0:06:34.720 What kind of execution am I going to get? 0:06:36.160 --> 0:06:39.640 Yeah, there's been these pockets of illiquidity that have cropped up, 0:06:39.720 --> 0:06:42.320 but liquidity over the last couple of weeks has actually 0:06:42.320 --> 0:06:46.200 been pretty decent. You've seen decent sizes in terms of 0:06:47.160 --> 0:06:48.320 on the screens. 0:06:47.880 --> 0:06:49.200 Of what you're able to sell. 0:06:49.720 --> 0:06:54.039 I think that the challenge for market participants is is 0:06:54.120 --> 0:06:57.279 everyone going the same way all at once, And we 0:06:57.400 --> 0:06:59.839 haven't seen that so much the last month or so. 0:07:00.080 --> 0:07:02.279 But you did see earlier this year when there were 0:07:02.320 --> 0:07:04.880 a lot of people rushing to buy securities. For example, 0:07:04.960 --> 0:07:08.520 in March during the SVB the banking inks that was 0:07:08.560 --> 0:07:12.280 going on. You know, you saw these pockets of illiquidity 0:07:12.320 --> 0:07:14.800 where no one wanted to sell their treasuries because everyone 0:07:14.800 --> 0:07:17.080 thought the price was going to be higher. So you 0:07:17.160 --> 0:07:21.800 saw these big jumps in price and much lower yields 0:07:21.880 --> 0:07:25.160 very quickly, So I call the liquidity at. 0:07:25.040 --> 0:07:26.160 This point as being fickle. 0:07:26.280 --> 0:07:29.200 So it's like liquidity is really good until it's not, 0:07:29.440 --> 0:07:31.600 and then when it's not, it's really not good. 0:07:31.840 --> 0:07:34.160 Right all right, Hira Jersey, thank you so much. 0:07:34.320 --> 0:07:36.920 We appreciate it as always getting our lowdown on what 0:07:36.960 --> 0:07:39.760 our federal reserve is going to do in the treasure market. 0:07:39.840 --> 0:07:44.280 Ira Jersey, Chief US Interest rate Strategists for Bloomberg Intelligence. 0:07:46.280 --> 0:07:49.720 You're listening to the Team Ken's Are Live program Bloomberg 0:07:49.760 --> 0:07:53.120 Markets weekdays at ten am Eastern on Bloomberg dot Com, 0:07:53.200 --> 0:07:56.360 the iHeartRadio app, and the Bloomberg Business App, or listen 0:07:56.440 --> 0:07:58.520 on demand wherever you get your podcasts. 0:08:00.120 --> 0:08:03.400 We welcome now our Bloomberg Television audience and radio listeners. 0:08:03.440 --> 0:08:07.679 I'm Shanali Bassett standing alongside PJT partner CEO Paul Taubman, 0:08:07.960 --> 0:08:10.040 who joins me now for an exclusive interview. 0:08:10.160 --> 0:08:10.960 Thank you for being here. 0:08:10.960 --> 0:08:13.280 It's pretty rare for you to join us for television. 0:08:13.920 --> 0:08:17.600 It's also remarkable that eight years ago you started PJT, 0:08:17.760 --> 0:08:21.000 took it public, and now you've tripled your headcount. You're 0:08:21.040 --> 0:08:23.480 much bigger than you were and are having a record 0:08:23.560 --> 0:08:26.600 half year at a time where most investment banks are 0:08:26.640 --> 0:08:28.800 facing a prolonged slump in revenue. 0:08:28.960 --> 0:08:29.880 So can you keep it up? 0:08:30.200 --> 0:08:31.520 Well, I don't know if we can keep it up. 0:08:31.560 --> 0:08:33.480 We're going to certainly try to. But first of all, 0:08:33.520 --> 0:08:36.079 thank you for having me on this morning, Shanali. It's 0:08:36.080 --> 0:08:39.000 great to be here. It's almost eight years as you 0:08:39.120 --> 0:08:41.480 point out, and we have a plan and we're just 0:08:41.559 --> 0:08:44.120 moving forward with the plan. But if you look at 0:08:44.120 --> 0:08:46.680 our first six months, it was driven by we have 0:08:46.679 --> 0:08:51.080 a leading restructuring practice and we're increasingly taking share from others, 0:08:51.120 --> 0:08:53.800 and we're trying to get at the forefront of liability management, 0:08:54.240 --> 0:08:58.040 trying to work with companies to reaquitize and restructure their 0:08:58.080 --> 0:09:00.520 balance sheets and deal with the fact that interest rates 0:09:00.520 --> 0:09:03.880 continue to grind higher. And we're growing out a leading 0:09:03.880 --> 0:09:07.320 strategic advisory business that's still in the early innings. So 0:09:07.360 --> 0:09:09.199 even though we're dealing with a lot of the same 0:09:09.880 --> 0:09:14.319 macro headwinds that others are, we're able to gain share 0:09:14.360 --> 0:09:19.360 and continue to move forward and continue to advance our position. 0:09:19.679 --> 0:09:22.240 You know, we'll talk more about that restructuring wave because seriously, 0:09:22.320 --> 0:09:25.080 these idea of higher interest rates are going to have 0:09:25.520 --> 0:09:28.000 some impacts over a long period of time. But also 0:09:28.040 --> 0:09:30.760 remarkable is that you're hiring. You are hiring at a 0:09:30.760 --> 0:09:33.320 pretty rapid clip at a time when most investment banks 0:09:33.360 --> 0:09:36.760 are letting people go by the tens of thousands. How 0:09:36.880 --> 0:09:38.920 significant are your hiring plans this year? 0:09:39.160 --> 0:09:41.839 Oh, they're quite significant. So if you take a step back, 0:09:41.920 --> 0:09:45.120 we have tripled our headcount in eight years, we've tripled 0:09:45.120 --> 0:09:48.960 the revenues, share prices up nearly four times. And if 0:09:49.000 --> 0:09:51.800 you look at the size we are today, we're still 0:09:51.960 --> 0:09:54.360 a half to a third the size of many of 0:09:54.400 --> 0:09:57.600 our direct competitors, and where a fraction the size of 0:09:57.640 --> 0:10:00.880 the large banks. So we see tremendous art opportunity to grow. 0:10:00.960 --> 0:10:05.240 This is an incredibly conducive environment to grow. You need 0:10:05.320 --> 0:10:08.240 to see M and a slow down in order to 0:10:08.320 --> 0:10:10.520 hire the best M and A bankers. And that's the 0:10:10.960 --> 0:10:14.520 ultimate paradox. And the reason for that, Shinali is because 0:10:14.559 --> 0:10:17.960 the switching costs are much lower when you're dealing with 0:10:18.000 --> 0:10:21.720 a low velocity environment trying to get a best in 0:10:21.760 --> 0:10:24.880 class M and A banker to leave in the midst 0:10:24.960 --> 0:10:27.440 of an M and a bull run when they're loaded 0:10:27.559 --> 0:10:30.880 up with a whole host of mandates the switching costs 0:10:31.120 --> 0:10:33.920 to extract themselves, they end up leaving their clients in 0:10:33.960 --> 0:10:36.440 the lurch. So we're taking advantage of the fact that 0:10:36.480 --> 0:10:39.200 even though the environment is quite challenging in the near term, 0:10:39.559 --> 0:10:41.320 we know it's going to inflect. We know it's going 0:10:41.400 --> 0:10:43.959 to come back, and we want to continue to press 0:10:44.000 --> 0:10:45.840 forward and continue to grow the franchise. 0:10:45.920 --> 0:10:47.480 Is this going to be a record hiring year and 0:10:47.559 --> 0:10:50.160 can some of this momentum continue even into next year? 0:10:50.800 --> 0:10:53.320 Well, it's certainly going to be a record and we 0:10:53.360 --> 0:10:57.960 intend to continue to press forward. Now, how many individuals 0:10:58.120 --> 0:11:01.600 we attract to the platform, really we don't control fully 0:11:01.760 --> 0:11:04.360 because at the end of the day, we have a 0:11:04.559 --> 0:11:06.000 very clear sens as to who. 0:11:05.880 --> 0:11:08.199 Would work well on the platform. 0:11:07.920 --> 0:11:10.760 Who's best in breed, who's best in class, who shares 0:11:10.800 --> 0:11:15.200 our vision, shares our values, And you cannot end up 0:11:15.640 --> 0:11:19.360 turning this into a quota as to how many you 0:11:19.440 --> 0:11:23.280 hire each year. But there's no doubt that we're still 0:11:23.320 --> 0:11:27.079 relatively small compared to the opportunity set. So if you 0:11:27.160 --> 0:11:29.439 ask me, are we going to be much larger three 0:11:29.559 --> 0:11:33.120 five years from now, the answer is absolutely. 0:11:33.120 --> 0:11:35.959 Bring us under the hood, because it's a pretty fascinating dynamic. 0:11:35.960 --> 0:11:38.880 You have such high profile bankers leaving Goldman, Sachs, and 0:11:38.920 --> 0:11:41.679 Credit Suez, all for different reasons, and so what are 0:11:41.720 --> 0:11:44.840 bankers telling you as you're having these conversations. 0:11:45.320 --> 0:11:47.880 Well, if you step way back, there are a few 0:11:47.920 --> 0:11:51.360 trends which have been in evidence for the last decade. 0:11:51.480 --> 0:11:55.480 The first is that increasingly clients want to work with 0:11:55.559 --> 0:11:58.600 smaller firms, and we started to see that coming out 0:11:58.600 --> 0:12:01.960 of the global financial crisis. That's only picked up speed 0:12:02.000 --> 0:12:04.199 over time. So that's the first point is you need 0:12:04.240 --> 0:12:07.880 to have buy in from your client base. I think 0:12:07.920 --> 0:12:11.800 the second, which is a corollary trend that most individuals 0:12:11.800 --> 0:12:15.719 didn't really pick up on, is if the most sophisticated, 0:12:15.720 --> 0:12:18.480 consequential companies around the globe are going to work with 0:12:18.559 --> 0:12:22.360 smaller firms, they're going to expect the sophistication of a 0:12:22.440 --> 0:12:24.720 larger firm. So that means you need to continue to 0:12:24.720 --> 0:12:28.960 build out the breadth of services, the caliber of individual 0:12:29.040 --> 0:12:30.600 You need to make sure that you can follow your 0:12:30.640 --> 0:12:34.800 clients anywhere around the globe. So those two things have 0:12:34.960 --> 0:12:38.840 continued to prove out, and as bankers at bullsh bracket 0:12:38.840 --> 0:12:43.040 firms increasingly see that their clients would be highly supportive of. 0:12:43.000 --> 0:12:44.440 A move to a smaller firm. 0:12:44.920 --> 0:12:48.160 The question becomes, what's the catalyst, what's going to get 0:12:48.240 --> 0:12:51.600 you out of a comfortable position to take a jump, 0:12:51.679 --> 0:12:54.440 take a leap, do something different. And I like to 0:12:54.440 --> 0:12:57.240 say that we're in that exquisite sweet spot, which is 0:12:57.400 --> 0:13:00.280 we're big enough so that no one's going to miss 0:13:00.280 --> 0:13:03.200 a beat. They're going to have access to working with 0:13:03.240 --> 0:13:08.400 some of the most sophisticated colleagues around the globe, but 0:13:09.000 --> 0:13:11.520 we have so much white space that they can get 0:13:11.520 --> 0:13:14.880 in early, not be jocking for position, and do what 0:13:14.920 --> 0:13:17.560 they love to do, which is be bankers, not managers. 0:13:17.600 --> 0:13:20.200 Speaking of being a banker, bankers have been writing a 0:13:20.240 --> 0:13:24.200 lot on Wall Street, always, always, always, about everything. But 0:13:24.360 --> 0:13:26.280 you know, when you think about what they're actually talking 0:13:26.280 --> 0:13:28.840 about now it's returned to work. How often do they 0:13:28.880 --> 0:13:31.200 have to be in the building and how flexible do 0:13:31.280 --> 0:13:32.720 you have to be to keep them around? 0:13:33.559 --> 0:13:36.560 Well, that's a great question. I made a commitment in 0:13:36.600 --> 0:13:39.920 the depths of COVID of two things. One was we 0:13:39.920 --> 0:13:43.160 were learning so much from how to work remotely that 0:13:43.200 --> 0:13:46.120 we were never going back precisely to how we did 0:13:46.160 --> 0:13:50.080 work pre COVID. On the other hand, if you're not 0:13:50.200 --> 0:13:53.000 in the office most of the time, and if you're 0:13:53.040 --> 0:13:55.920 not creating those personal connections, and if you're not learning 0:13:56.320 --> 0:13:59.240 through an apprenticeship model, you're not doing it the right way. 0:14:00.120 --> 0:14:03.400 We've been continuing to evolve to is a model which 0:14:03.520 --> 0:14:07.000 starts with being in the office, because that's where you learn, 0:14:07.559 --> 0:14:10.320 that's the best way to support the clients, that's the 0:14:10.360 --> 0:14:14.480 best way to train and develop individuals, and there's no 0:14:14.600 --> 0:14:17.839 latitude for people not being back in the office. Having 0:14:17.920 --> 0:14:21.760 said that, you can't allow technology to continue to invade 0:14:21.760 --> 0:14:25.480 your personal space. Be on call seven days a week, 0:14:25.880 --> 0:14:28.120 be expected to get on a zoom call on a 0:14:28.160 --> 0:14:31.880 moment's notice, and not have some release valve. So what 0:14:31.920 --> 0:14:35.400 we did about a year ago was we turned fridays 0:14:35.520 --> 0:14:37.920 in office to be optional. You could work from home 0:14:38.040 --> 0:14:41.640 on Fridays, but work from home starts with work. You 0:14:41.680 --> 0:14:45.320 may be home, but you're working, and in the dog 0:14:45.440 --> 0:14:48.360 days of summer, which is after the summer interns leave 0:14:48.760 --> 0:14:52.200 until Labor Day, we also have a work from home option. 0:14:52.320 --> 0:14:55.760 And I think by acknowledging that we can use technology 0:14:55.800 --> 0:14:58.720 to be more productive, but making the centrality of being 0:14:58.760 --> 0:15:02.000 in the office, can try and find that that sweet spot. 0:15:02.080 --> 0:15:05.120 It's about to get busier slowly after a big deal slump. 0:15:05.280 --> 0:15:08.440 How fast do you actually expect murders and acquisitions to 0:15:08.560 --> 0:15:09.880 start coming back to the market. 0:15:10.360 --> 0:15:14.120 The pace of activity and dialogue is clearly picking up. 0:15:14.200 --> 0:15:16.960 We're looking at levels today that we haven't seen in 0:15:17.000 --> 0:15:19.960 more than a decade. So M and A volumes today 0:15:20.880 --> 0:15:23.320 are not much greater than they were coming out of 0:15:23.360 --> 0:15:28.080 the global financial crisis. If you benchmarket relative to GDP 0:15:28.400 --> 0:15:32.280 or market capitalizations, it's at low's we haven't seen I 0:15:32.320 --> 0:15:35.000 think ever, So I'm not really going out on a 0:15:35.040 --> 0:15:37.440 limb by saying it's going to get better from where 0:15:37.440 --> 0:15:39.960 we are today. There's no doubt about that. It can't 0:15:39.960 --> 0:15:41.800 get worse. There's an old saying you can't get hurt 0:15:41.880 --> 0:15:44.200 jumping out of a basement. I don't think you know. 0:15:44.280 --> 0:15:46.760 We are in danger of going lower than where we 0:15:46.840 --> 0:15:51.520 are today. The question is how quickly does it inflect. 0:15:52.120 --> 0:15:54.400 And one of the things about M and A iss 0:15:54.440 --> 0:15:59.960 a pro cyclical business transaction activity begets more transaction activity. 0:16:00.720 --> 0:16:03.320 There's the ultimate fomo fear of missing out, which is 0:16:03.360 --> 0:16:07.720 if your competitor is transacting, if they're growing, if they're investing, 0:16:08.160 --> 0:16:10.880 if another private equity firm in the alternative space is 0:16:10.880 --> 0:16:14.560 committing capital, it tends to lead to more activity. I 0:16:14.600 --> 0:16:18.080 think we have the conditions that are nearly ripe for that, 0:16:18.600 --> 0:16:21.240 and it wouldn't surprise me if sometime between now and 0:16:21.280 --> 0:16:24.040 the end of the year you see a very sharp inflection. 0:16:24.240 --> 0:16:26.240 There is one place things could get worse. That is 0:16:26.240 --> 0:16:29.120 with restructuring, higher interest rates, a whole bunch of forces 0:16:29.400 --> 0:16:32.400 that are pushing companies to either restructure or go bankrupt. 0:16:32.680 --> 0:16:35.360 How significant is this wave of distress going to be? 0:16:35.400 --> 0:16:38.160 What does it look like? Well, I think we're in 0:16:38.240 --> 0:16:41.520 for an extended wave of elevated restructuring relative to where 0:16:41.520 --> 0:16:44.800 we are today. But where we are today is at 0:16:44.840 --> 0:16:47.160 historic lows in terms of default rates and the like. 0:16:47.240 --> 0:16:52.320 We're still feasting off of the easy money environment, relatively 0:16:52.400 --> 0:16:54.960 low interest rates. But there's a day of reckoning and 0:16:55.000 --> 0:16:58.080 we're going to see a meaningful uptick in restructuring activity. 0:16:58.480 --> 0:17:01.520 But again, to put it in perspective, that's relative to 0:17:01.840 --> 0:17:05.320 historic lows. And I often get asked the question, can 0:17:05.440 --> 0:17:08.840 an upswing in M and A coexist with an upswing 0:17:09.400 --> 0:17:12.480 in restructuring? And my answer is pretty simple, is right 0:17:12.520 --> 0:17:16.720 now they're both at historic lows. We're seeing historically low 0:17:16.760 --> 0:17:20.240 default rates and we're seeing historically low M and A volumes, 0:17:20.520 --> 0:17:23.199 And I think both of them can sort of snap 0:17:23.240 --> 0:17:26.800 back more to traditional long term levels and both start 0:17:26.880 --> 0:17:28.520 to be engines for our firm. 0:17:28.720 --> 0:17:31.919 Now, Paul, before you left and started PJT, you were 0:17:31.920 --> 0:17:33.800 a very senior at Morgan Stanley. You were seen as 0:17:33.800 --> 0:17:36.840 a CEO candidate. Now fast forward more than eight years 0:17:36.840 --> 0:17:40.040 and you have Morgan Stanley going through its own CEO transition. 0:17:40.640 --> 0:17:42.640 What do you think the future of Morgan Stanley looks like? 0:17:42.960 --> 0:17:46.040 Look, I think James has done a terrific job. I 0:17:46.080 --> 0:17:50.600 think the firm is firing on all cylinders, notwithstanding the 0:17:50.880 --> 0:17:54.280 difficult macro backdrop, and I have no doubt that they'll 0:17:54.280 --> 0:17:57.840 continue to thrive going forward. I think the question for 0:17:57.920 --> 0:18:00.760 our firm is what do we do do we thrive 0:18:00.880 --> 0:18:03.880 going forward? And I'm confident that we have so much 0:18:04.359 --> 0:18:07.680 open running space ahead of us that. 0:18:06.840 --> 0:18:08.040 That's what I'm focused on. 0:18:08.200 --> 0:18:09.800 That's where my attention is. 0:18:09.920 --> 0:18:11.520 How are you thinking about number two already? 0:18:11.760 --> 0:18:14.879 I'm always thinking about a succession. I'm always thinking about, 0:18:14.960 --> 0:18:17.919 you know, who's going to succeed me? Because We're building 0:18:17.920 --> 0:18:21.360 this firm to last, to be durable, to be sustainable, 0:18:21.760 --> 0:18:24.520 and that means that you need to be able to 0:18:24.560 --> 0:18:29.360 train develop a next generation. Most of our growth has 0:18:29.440 --> 0:18:33.080 come from external candidates, but that's reflective of the fact 0:18:33.520 --> 0:18:36.000 that we're only eight years old. But the goal is 0:18:36.080 --> 0:18:38.679 over the next eight years as more and more of 0:18:38.720 --> 0:18:43.439 those individuals who join at the most entry level positions, 0:18:43.800 --> 0:18:46.040 they get to grow up in our firm, their train 0:18:46.160 --> 0:18:49.000 they're developed to be the world class banker and they 0:18:49.000 --> 0:18:50.960 have only one home and that's PJAT. 0:18:51.280 --> 0:18:52.399 So that's what I'm. 0:18:52.240 --> 0:18:54.720 Focused speaking of. This is the last week for the interns. 0:18:54.800 --> 0:18:58.520 The interns are starting to, you know, leave Manhattan now 0:18:58.560 --> 0:19:00.520 and all the cities they're in. Do you have any 0:19:00.520 --> 0:19:02.560 advice for them because there is a lot of anxiety 0:19:02.600 --> 0:19:05.560 about what jobs they can get coming out of these cycles. 0:19:05.640 --> 0:19:09.720 Well, it's crazy. We have our firm nearly one hundred 0:19:10.640 --> 0:19:14.760 summer interns around the globe, and that's about one percent 0:19:15.040 --> 0:19:17.199 of the resumes that we get. We get close to 0:19:17.240 --> 0:19:21.120 ten thousand applications every year and about one hundred show 0:19:21.200 --> 0:19:24.040 up at our firm for the summer. And one of 0:19:24.080 --> 0:19:26.560 the things that we've initiated which I think is terrific, 0:19:27.160 --> 0:19:29.680 is that at the end of the program, every one 0:19:29.720 --> 0:19:33.000 of our interns is obligated to then spend time doing 0:19:33.040 --> 0:19:37.119 community service in a project of their choice. And to me, 0:19:37.280 --> 0:19:39.080 that's one of the things that I would tell everyone 0:19:39.119 --> 0:19:41.840 on Wall Street to take away, which is you can 0:19:42.040 --> 0:19:45.159 go at it really hard, be very focused on your career, 0:19:45.440 --> 0:19:47.560 but there's a bigger world out there. You're part of 0:19:47.560 --> 0:19:50.600 a broader community, and find a way to do something 0:19:50.680 --> 0:19:52.360 to give back to your community. 0:19:52.400 --> 0:19:56.239 Anchors are people too, Yanks. Absolutely, Paul, thank you so 0:19:56.359 --> 0:19:58.199 much for your time. It was great to sit with 0:19:58.240 --> 0:20:00.600 you in such a very interview with you at a 0:20:00.600 --> 0:20:01.800 really historic time for your company. 0:20:01.840 --> 0:20:02.280 So thank you. 0:20:02.680 --> 0:20:05.680 That is Paul Tauman. He is the CEO and founder 0:20:05.720 --> 0:20:07.800 and chairman of PJT Partners. 0:20:07.920 --> 0:20:11.040 You're listening to the tape cats are Live program Bloomberg 0:20:11.080 --> 0:20:14.679 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:20:14.760 --> 0:20:16.720 tune in app, Bloomberg dot Com, and. 0:20:16.680 --> 0:20:17.960