WEBVTT - Amazon and the FTC, SCOTUS, Ukraine, and Apple (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 called Apple Podcasts or wherever 0:00:17.400 --> 0:00:20.520 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:21.000 --> 0:00:21.400 We want to. 0:00:21.400 --> 0:00:24.520 Welcome Star Stage and Screen Creaty Groupda. She's a markets 0:00:24.520 --> 0:00:28.280 reporter for Bloomberg and she's here doing some work on 0:00:28.320 --> 0:00:31.720 an Amazon case Federal Trade Commission. It's tough to be 0:00:31.720 --> 0:00:34.240 a big tech and trying to get bigger. 0:00:33.960 --> 0:00:34.680 Is in it? It is? 0:00:34.720 --> 0:00:36.760 Look, this is my kind of weekly obsession this week. 0:00:36.760 --> 0:00:39.640 I'm traditionally Okay, it's reporter, as you know, But to me, 0:00:39.840 --> 0:00:42.200 I think one of the big stories that perhaps isn't 0:00:42.200 --> 0:00:45.200 getting enough attention is just how much momentum the FDC 0:00:45.360 --> 0:00:47.920 is getting. Some of the biggest cases against these big 0:00:47.960 --> 0:00:50.000 tech names are coming from the FTC, and a lot 0:00:50.040 --> 0:00:52.360 of them filed just this week on Amazon, the third 0:00:52.360 --> 0:00:54.360 one on Amazon. The big one I've been keeping my 0:00:54.400 --> 0:00:57.400 eye on, though, is Microsoft and Activision. Yes, and bear 0:00:57.440 --> 0:01:00.000 with me. Fun fact my very first speed at Bloomberg 0:01:00.160 --> 0:01:01.960 was video game stocks and cannabis stocks. 0:01:02.120 --> 0:01:03.319 Really, I know, I. 0:01:03.280 --> 0:01:03.840 Didn't know that. 0:01:03.840 --> 0:01:06.880 I know, it really tracks with my image, doesn't it 0:01:06.880 --> 0:01:08.959 have a cool be It actually was, And this was 0:01:08.959 --> 0:01:11.959 back in twenty eighteen, when you know, these weren't big 0:01:12.080 --> 0:01:15.760 covered sectors just yet. So Activision kind of holds a 0:01:16.000 --> 0:01:18.160 close spot in my heart. But I think what you 0:01:18.200 --> 0:01:19.800 really have to keep in mind here is that this 0:01:19.880 --> 0:01:22.759 is one of the biggest tech deals in history, sixty 0:01:22.840 --> 0:01:27.600 nine billion dollar active acquisition of Activision getting a lot 0:01:27.640 --> 0:01:32.000 of flak for basically potentially hurting consumers. That's kind of 0:01:32.000 --> 0:01:34.280 the new definition of anti trust. Now, just how competitive 0:01:34.600 --> 0:01:37.360 does it get? If I can put some numbers on it, 0:01:37.560 --> 0:01:40.520 because you did start to hear testimony from Sati Nadella, 0:01:40.640 --> 0:01:44.600 the Microsoft CEO, the Activision CEO Bobby Codec as well, 0:01:44.640 --> 0:01:48.120 and one of the big takeaways was how much market 0:01:48.160 --> 0:01:50.760 share does Microsoft take in the cloud gaming space, which 0:01:50.800 --> 0:01:54.360 is very nascent by the way, if you take over 0:01:54.480 --> 0:01:56.840 call of Duty vertical integration essentially, and one of the 0:01:56.920 --> 0:02:00.360 chief kind of complaints came from the Sony PlayStation CEO. 0:02:00.440 --> 0:02:02.240 They're saying, look, if you take call of duty off 0:02:02.280 --> 0:02:06.080 our consoles. That's going to one erode our own kind 0:02:06.080 --> 0:02:09.720 of market dominance in the console market. But two, it's 0:02:09.760 --> 0:02:11.840 really going to hurt consumers because at the end of 0:02:11.880 --> 0:02:14.160 the day, you don't just pay fifty to one hundred 0:02:14.160 --> 0:02:16.000 bucks for the game, you have to then pay two 0:02:16.120 --> 0:02:18.120 hundred and fifty to three hundred bucks for the console 0:02:18.160 --> 0:02:20.600 as well. And you know you could have gamers up 0:02:21.120 --> 0:02:21.960 in arms about that. 0:02:22.120 --> 0:02:22.360 Yeah. 0:02:22.480 --> 0:02:26.079 Yeah, So when does Microsoft say this has just gotten 0:02:26.120 --> 0:02:29.400 too hard and too expensive, let's just call it. 0:02:29.360 --> 0:02:30.200 A day on this deal. 0:02:30.400 --> 0:02:33.160 Yeah, well, that's where I think this decision is so crucial. Look, 0:02:33.160 --> 0:02:35.440 we've had about five days of testimony from both sides. 0:02:35.520 --> 0:02:38.720 We've heard closing arguments yesterday. We are expecting now to 0:02:38.760 --> 0:02:43.079 hear from the FTC Commissioner soon as well as well 0:02:43.080 --> 0:02:45.160 as a judge who is ruling the case. Basically, the 0:02:45.200 --> 0:02:48.040 deal here is the FDC has filed an injunction, which 0:02:48.040 --> 0:02:51.400 basically means they need to if the FDC grants it, 0:02:51.520 --> 0:02:53.760 or excuse me, if the federal court grants it, they 0:02:53.800 --> 0:02:55.720 need to then be able to take this to a 0:02:55.760 --> 0:02:59.000 proper trial, a proper hearing. That's not what's happened yet. 0:02:59.280 --> 0:03:01.360 If it is taken to that proper trial hearing, that 0:03:01.440 --> 0:03:05.240 is three years of extra administrative costs plus a three 0:03:05.520 --> 0:03:08.880 billion dollar breakup fee. Now, in the context of Microsoft, 0:03:08.919 --> 0:03:11.560 three billion dollars is not that much, but the added 0:03:11.919 --> 0:03:14.560 kind of gains you've seen in Microsoft stock off of 0:03:14.600 --> 0:03:17.880 the potential of this deal is enormous, and that's where 0:03:17.919 --> 0:03:21.000 you see a bigger loss. Basically, the chief lawyer for 0:03:21.040 --> 0:03:24.200 the Microsoft side said, if this injunction is granted, we're 0:03:24.200 --> 0:03:26.040 going to drop the deal because the closing date is 0:03:26.120 --> 0:03:27.800 July eighteenth, and there's no way you can get a 0:03:27.800 --> 0:03:28.920 hearing done before that. 0:03:29.000 --> 0:03:30.760 So so when do we hear about that injunction. 0:03:31.200 --> 0:03:34.720 We're expecting starting as early as Monday, but given the holiday, 0:03:34.920 --> 0:03:36.040 it might be later in the week. 0:03:36.160 --> 0:03:37.640 And so is there a chance that this ing could 0:03:37.680 --> 0:03:40.000 actually go to trial before you know the kind of 0:03:40.000 --> 0:03:42.720 that closing date type of thing there, and we'll get 0:03:42.720 --> 0:03:43.920 a resolution one way or the other. 0:03:44.280 --> 0:03:46.920 There is it might not go to trial, because basically 0:03:46.960 --> 0:03:49.080 Microsoft is saying is if they there is a push 0:03:49.160 --> 0:03:50.360 to go to a trial, they're going to drop the 0:03:50.360 --> 0:03:53.680 deal altogether. And if they don't grant the injunction. Traditionally, 0:03:53.760 --> 0:03:55.600 the FTC says, if you don't get the adjunction, we're 0:03:55.600 --> 0:03:57.360 going to hands off on the deal. That's been the 0:03:57.440 --> 0:04:01.080 historic trend. But Lenacon is a different She comes that 0:04:01.200 --> 0:04:03.280 tech really hard. She has been for a while. So 0:04:03.720 --> 0:04:04.800 anything can happen. 0:04:04.520 --> 0:04:08.160 Here, really, And how does this impact the AI sector 0:04:08.360 --> 0:04:08.760 as well? 0:04:08.840 --> 0:04:10.920 Chredy, what's the potential read through? Yeah, well, when we 0:04:10.920 --> 0:04:13.800 talked about cloud gaming, look, cloud gaming is something that 0:04:13.920 --> 0:04:16.480 is brand spanking new in the technology sphere, and it's 0:04:16.520 --> 0:04:18.919 why Microsoft really wants to get their hands on it 0:04:18.960 --> 0:04:22.039 as well. Here's what else is brand spanking new artificial 0:04:22.080 --> 0:04:24.440 intelligence and a lot of that is happening through these 0:04:24.480 --> 0:04:27.560 acquisitions of these smaller AI players because it hasn't grown 0:04:27.880 --> 0:04:30.280 to that ability yet. And remember acquisitions have been kind 0:04:30.279 --> 0:04:32.160 of frozen for a lot of these big tech names 0:04:32.160 --> 0:04:34.160 for a while. It's why they're sitting on i think 0:04:34.160 --> 0:04:37.120 one hundred and fifty billion dollars of cash combined with 0:04:37.200 --> 0:04:39.480 all the kind of big tech players because they're trying 0:04:39.520 --> 0:04:42.680 to avoid that scrutiny from the federal government. So the 0:04:42.760 --> 0:04:45.080 concern here for the broader tech sphere and the broader 0:04:45.120 --> 0:04:48.160 benchmark is that if you start to see some sort 0:04:48.160 --> 0:04:51.080 of precedent that the FTC wins here, then it could 0:04:51.160 --> 0:04:55.880 hit every deal that big tech has had and might 0:04:55.920 --> 0:04:59.120 potentially have in their race to really expand on AI. 0:04:59.320 --> 0:05:02.159 Yeah, I mean that is the big fallout. Yeah, And 0:05:02.200 --> 0:05:04.039 I think we're kind of the market's kind of already 0:05:04.040 --> 0:05:07.320 pricing that in. I don't think the market anticipates the market. 0:05:07.400 --> 0:05:10.359 The government regular is allowing big tech to do anything 0:05:10.400 --> 0:05:11.440 more of size, right. 0:05:11.440 --> 0:05:13.200 Nothing more. But then they also don't think that they're 0:05:13.200 --> 0:05:15.719 going to make progress on kurttailing what's already been done, 0:05:15.760 --> 0:05:17.200 and that's really where the market. 0:05:17.040 --> 0:05:19.680 Risk is, all Rightty, great reporting, Thank you so much 0:05:19.880 --> 0:05:21.799 for coming in here. Kritti Gupta. She's host the Bloomberg 0:05:21.800 --> 0:05:24.200 Surveillants Early Edition for Bloomberg News and just doing some 0:05:24.839 --> 0:05:27.640 work here on what is a huge topic in Silicon Valley, 0:05:27.680 --> 0:05:31.000 in technology, in M and A in general, which is 0:05:31.160 --> 0:05:35.200 can big tech get anything done in terms of mergers 0:05:35.240 --> 0:05:38.360 and acquisitions? And boy, the government's really clamping down hard 0:05:38.360 --> 0:05:40.680 on that after you know, decades of a soft touch. 0:05:42.120 --> 0:05:45.520 You're listening to the team Ken's are Live program Bloomberg 0:05:45.560 --> 0:05:47.920 Markets weekdays at ten am Eastern. 0:05:47.640 --> 0:05:48.920 On Bloomberg dot Com. 0:05:49.000 --> 0:05:52.160 The iHeartRadio app and the Bloomberg Business app or listen 0:05:52.240 --> 0:05:54.360 on demand wherever you get your podcasts. 0:05:56.000 --> 0:05:58.359 First half of the year in the books, and you 0:05:58.400 --> 0:06:00.800 know when this day closes here, So we're looking at it. 0:06:01.279 --> 0:06:04.920 A nice big move up in this market. Fifteen percent 0:06:04.960 --> 0:06:06.800 plus and y s and P five hundred. Matt Stucky 0:06:06.880 --> 0:06:12.080 joins us. He's a senior portfolio manager at Northwestern Mutual. Matt, 0:06:12.160 --> 0:06:13.919 what do you make of this market here? What do 0:06:13.920 --> 0:06:18.320 you make of the first half here? With like no hindsight, Look, 0:06:18.360 --> 0:06:18.960 no hindsight. 0:06:19.040 --> 0:06:21.440 This is a surprising result for the front half of 0:06:21.480 --> 0:06:23.400 this year, and so put me in that camp of 0:06:23.440 --> 0:06:25.719 those that probably were caught a little bit off guard 0:06:25.720 --> 0:06:28.960 with how strong this market has been. Look, I mean 0:06:28.960 --> 0:06:32.800 the Nasdaq up until today is up forty percent year today. 0:06:32.839 --> 0:06:35.080 That's the best since nineteen eighty three when what a 0:06:35.160 --> 0:06:37.440 Feeling was leading the radio charts. And so this is 0:06:37.480 --> 0:06:40.360 definitely unprecedented just in terms of what this market's done 0:06:40.400 --> 0:06:43.359 in absolute terms, but also just in terms of the 0:06:43.400 --> 0:06:46.320 context of you know, we're in the middle of a 0:06:46.360 --> 0:06:50.120 fed rate hike cycle that they're moving pretty aggressively with. 0:06:50.120 --> 0:06:53.280 With there's you know, a good amount of fear out 0:06:53.279 --> 0:06:56.320 there in terms of the recession probability, and we think 0:06:56.320 --> 0:06:58.480 that is still something that's all on the table, and 0:06:58.520 --> 0:07:01.520 so pull that together, it definitely is a surprising result. 0:07:02.160 --> 0:07:05.599 So to what extent, Matt, are you concerned about lack 0:07:05.640 --> 0:07:08.320 of breadth in the rally in the first half of 0:07:08.320 --> 0:07:12.400 twenty twenty three? Paul was citing earlier some research from 0:07:12.400 --> 0:07:16.360 Bloomberg Intelligence showing that that breath may not actually be 0:07:16.400 --> 0:07:18.720 as big of a problem as we tend to talk 0:07:18.760 --> 0:07:22.160 about all day here at Bloomberg. Is that something that's 0:07:22.320 --> 0:07:23.440 on top of mind for you? 0:07:24.840 --> 0:07:27.720 It is, you know, just a I was actually looking 0:07:27.760 --> 0:07:32.280 at this topic this morning, and you know, if last 0:07:32.280 --> 0:07:36.480 October was indeed the low for this this cycle, and 0:07:36.880 --> 0:07:39.360 you know, recession risks were probably priced at that point, 0:07:39.680 --> 0:07:42.120 you would expect a pretty sizable rally off that low 0:07:42.240 --> 0:07:46.040 level and broad based participation off that level. But if 0:07:46.080 --> 0:07:48.400 you take a look at kind of what's happened since October, 0:07:48.520 --> 0:07:50.480 the equal weighted S and P five hundred for one 0:07:50.560 --> 0:07:53.200 hundred ninety days out since the low is up about 0:07:53.240 --> 0:07:57.120 fourteen percent or so. The overall market, which is cap 0:07:57.160 --> 0:07:59.800 weighted obviously, is up about twenty four percent. But if 0:07:59.840 --> 0:08:04.000 you contrast that rally off the lows of fourteen percent 0:08:04.120 --> 0:08:10.960 against prior recession trough levels, we're in weak territory on average. 0:08:10.960 --> 0:08:12.640 If you kind of go back through each recession kind 0:08:12.640 --> 0:08:14.920 of what was the low and what was the rally 0:08:15.000 --> 0:08:17.440 from the low after one hundred and ninety days, that 0:08:17.520 --> 0:08:21.520 average rally is about forty five to fifty percent or so. 0:08:21.520 --> 0:08:23.040 So we're quite a bit underneath that. 0:08:23.200 --> 0:08:26.920 So broad based participation is not quite there, and on 0:08:26.960 --> 0:08:29.360 an equal weight to basis, it's it's telling you a 0:08:29.360 --> 0:08:33.120 different story just how narrow this leadership has been, which 0:08:33.200 --> 0:08:36.400 to me makes me question some of the sustainability. 0:08:37.160 --> 0:08:40.920 All Right, so Matt, let's just assume I was overweight 0:08:41.000 --> 0:08:44.240 the magnificent seven stocks here this year. Now I'm sitting 0:08:44.280 --> 0:08:48.959 on this big game. I'm looking to reallocate here inequities. 0:08:48.960 --> 0:08:51.240 How are you kind of allocating between the various kind 0:08:51.280 --> 0:08:54.920 of ways to play this market? Large cap, small cap, growth, value, 0:08:54.960 --> 0:08:56.760 How are you guys kind of thinking about that? 0:08:58.200 --> 0:09:01.280 Well, we're shifting a little bit towards value, a little bit, 0:09:01.320 --> 0:09:04.240 a little bit towards small and madcap, which is a 0:09:04.240 --> 0:09:08.120 little bit you know, I would say it's it's not 0:09:08.520 --> 0:09:11.640 necessarily addressed for the economic environment. Yet, because we do 0:09:11.840 --> 0:09:13.800 think of recession is in the cards for later on 0:09:13.840 --> 0:09:16.800 this year and into twenty twenty four, those asset classes 0:09:16.840 --> 0:09:19.880 are a little bit more economically sensitive, you know, to 0:09:19.960 --> 0:09:23.679 the macro. But the reality that we think is priced 0:09:23.679 --> 0:09:26.839 into those asset classes to us gives us some compensation 0:09:26.920 --> 0:09:28.360 for the risks in front of us. 0:09:28.920 --> 0:09:30.599 You know, look at small. 0:09:30.320 --> 0:09:32.000 Cap as an example, it's just going to dig into 0:09:32.040 --> 0:09:35.080 that for a little bit. Earnings estimates for the four 0:09:35.120 --> 0:09:37.040 to twelve months or down about fourteen percent, and we're 0:09:37.080 --> 0:09:40.040 paying just a thirteen x multiple for those reduced estimates. 0:09:40.080 --> 0:09:43.160 Contrast that to the S and P five hundred, which 0:09:43.160 --> 0:09:45.520 have actually seen earning's revisions start to rise and they're 0:09:45.559 --> 0:09:47.520 only three percent off the all time highs, and you're 0:09:47.520 --> 0:09:51.240 paying nineteen times earnings for that. You know, valuations aren't 0:09:51.840 --> 0:09:55.640 a very good short term indicator for performance, but over 0:09:55.640 --> 0:09:58.240 the long term, where we try to align our time 0:09:58.280 --> 0:10:01.839 horizon with our investment and portfolio, they do start to matter. 0:10:02.440 --> 0:10:06.240 And so we think we can probably weather the storm 0:10:06.280 --> 0:10:09.360 pretty well in something that already is pricing in a 0:10:09.440 --> 0:10:12.079 little bit of economic weakness, which is what we expect 0:10:12.080 --> 0:10:14.040 as we kind of move throughout the rest of this year. 0:10:14.480 --> 0:10:17.120 But you know, broad outside of equities, we do think 0:10:17.160 --> 0:10:21.400 fixed income is attractive here, and we've allocated more of 0:10:21.400 --> 0:10:23.960 our portfolio towards fixed income for those that have more 0:10:24.000 --> 0:10:29.400 balanced portfolios. Part of that is just due to an 0:10:29.440 --> 0:10:33.520 overall outlook of again recession, but also inflationary pressures are 0:10:33.880 --> 0:10:36.679 coming down and religious rates are rising. These are some 0:10:36.720 --> 0:10:38.360 of the highest real interest rates we've seen in over 0:10:38.400 --> 0:10:41.480 a decade, and so for investors that are out there 0:10:41.480 --> 0:10:44.240 that have balanced portfolios, we do think fixed income is attractive. 0:10:45.160 --> 0:10:47.560 I want to talk to you about this breaking news 0:10:47.559 --> 0:10:51.199 that we've got on student loan forgiveness from the Supreme 0:10:51.240 --> 0:10:54.800 Court throwing out Biden's proposal on student loan forgiveness. There 0:10:54.880 --> 0:10:56.600 Biden's saying that he's going to come back with a 0:10:56.640 --> 0:10:59.720 different plan. But let's say that those student loan payments 0:10:59.760 --> 0:11:03.680 are not forgiven. And of course the student loan payments 0:11:03.760 --> 0:11:07.240 are resuming after a three year pause. JP Morgan says 0:11:07.280 --> 0:11:10.080 that's going to cause a hit, particularly to core retail 0:11:10.160 --> 0:11:13.720 sales growth. Are you concerned about the return of student 0:11:13.760 --> 0:11:16.160 loan payments impacting earnings this season? 0:11:17.920 --> 0:11:19.560 We are a little bit concerned about that. 0:11:20.160 --> 0:11:23.839 I think if let's just use a hypothetical situation here 0:11:23.960 --> 0:11:28.560 that you know, payments are turned back on, and what's 0:11:28.840 --> 0:11:30.520 the cost of that to the economy. It's about you know, 0:11:30.520 --> 0:11:32.480 one hundred and twenty five billion or so worth of 0:11:32.600 --> 0:11:35.320 consumer payments that are going to be reallocated towards meeting 0:11:35.360 --> 0:11:38.880 their student loan obligations. And of that subset of those 0:11:38.920 --> 0:11:43.160 that are going to be required to start repaying, think 0:11:43.160 --> 0:11:46.599 about the propensities to spend of that population. You know, 0:11:46.720 --> 0:11:49.480 typically these are younger people, these are people with lower 0:11:49.559 --> 0:11:53.640 incomes relative to the rest of the population, and the 0:11:53.679 --> 0:11:56.680 propensity is spend is very high. So the direct impact 0:11:56.720 --> 0:11:59.400 of the economy, we would think it probably punches above 0:11:59.400 --> 0:12:02.880 the way a little versus that number, and so you 0:12:02.880 --> 0:12:06.280 know the direct impact, Yeah, it's probably consumer related businesses, 0:12:06.920 --> 0:12:09.840 Retail sales definitely collecting a lot of the impact. 0:12:10.679 --> 0:12:14.400 Hey, on your fixed income comment, Matt, talk to us 0:12:14.400 --> 0:12:16.640 about duration. Can I go out from the curve? I mean, 0:12:16.640 --> 0:12:19.640 I'm I'm very comfortable sitting here in my two year 0:12:19.679 --> 0:12:21.920 treasury four point eight seven percent. Some people are saying 0:12:21.920 --> 0:12:23.120 I got to get out of my comfort zone a 0:12:23.160 --> 0:12:25.400 little bit. And go out in duration. I don't know 0:12:25.440 --> 0:12:26.280 about that. What do you think? 0:12:28.080 --> 0:12:32.679 It's tricky right now? You know, right now, actually one 0:12:32.720 --> 0:12:35.560 year treasury bills treasury bonds are at five point four 0:12:35.600 --> 0:12:37.880 one percent. That's twenty bases higher than we were prior 0:12:37.880 --> 0:12:40.040 to the regional bank crisis that flirted up during March. 0:12:40.679 --> 0:12:43.560 And you kind of think, okay, back then, the mark 0:12:43.720 --> 0:12:48.240 was expecting a rake cut in the next thirty days 0:12:48.360 --> 0:12:51.680 when we started to see Sippy fail. Now there's no 0:12:51.760 --> 0:12:54.280 cuts priced in for the next six months, and this 0:12:54.800 --> 0:12:57.480 increase is probably we're going to get two more hikes 0:12:57.480 --> 0:13:00.800 from the Federal Reserve, and so kind of think, okay, 0:13:01.200 --> 0:13:04.160 interest rates are pressured upward from here, and maybe even 0:13:04.160 --> 0:13:07.760 the two years pressured upward from here. But we kind 0:13:07.760 --> 0:13:10.600 of go through history and hiking cycles and cutting cycles. 0:13:10.600 --> 0:13:12.720 The Fed, you know, when they're forced to cut, doesn't 0:13:12.760 --> 0:13:15.880 just cut by twenty five basis points. Typically that first 0:13:15.880 --> 0:13:18.439 cut is one hundred and fifty to two hundred basis points. 0:13:18.720 --> 0:13:22.400 If they have that in the bag, that's usually due 0:13:22.440 --> 0:13:25.000 to some sort of economic event going on, you know, 0:13:25.040 --> 0:13:26.280 some sort of form of a recession. 0:13:26.440 --> 0:13:28.040 There's a crisis somewhere. 0:13:28.880 --> 0:13:30.720 I'm just going through history, and we're not calling for 0:13:30.800 --> 0:13:34.200 any kind of episodic situation that would force that, but 0:13:34.640 --> 0:13:37.839 you know, we do need to probably think through the 0:13:38.800 --> 0:13:41.320 likelihood that what we're seeing that's attractive on the front 0:13:41.400 --> 0:13:45.240 end here, how long that's likely to persist. And so 0:13:45.360 --> 0:13:48.800 we're more intermediate and that's what we're recommending to our clients, 0:13:48.840 --> 0:13:51.640 where we get that nice balance between duration and reinvestment 0:13:52.559 --> 0:13:56.520 right for our clients. And you know, it is tempting 0:13:56.559 --> 0:13:58.480 there to take those attractive front end yields, though I 0:13:58.559 --> 0:13:59.520 understand that exactly. 0:13:59.520 --> 0:14:01.320 All right, Matt, thanks so much for joining us. Appreciate 0:14:01.320 --> 0:14:04.680 getting your thoughts. Matt Stuckey, Senior portfolio manager for Northwestern Mutual. 0:14:04.880 --> 0:14:08.000 You're listening to the tape Can's our live program Bloomberg 0:14:08.040 --> 0:14:11.640 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:14:11.720 --> 0:14:13.679 tune in app, Bloomberg dot Com, and. 0:14:13.640 --> 0:14:14.959 The Bloomberg Business App. 0:14:14.960 --> 0:14:17.800 You can also listen live on Amazon Alexa from our 0:14:17.800 --> 0:14:23.760 flagship New York station, Just say Alexa play Bloomberg eleven thirty. 0:14:23.080 --> 0:14:27.400 Madison Mills, Paul Sweeney. Here in our Bloomberg directive Broger Studio, Busy, 0:14:27.480 --> 0:14:30.120 busy day here, we need to take some time out 0:14:30.120 --> 0:14:32.440 here and get the latest on the geopolitical issues, particularly 0:14:32.440 --> 0:14:36.240 as it relates to Ukraine. And nobody better to speak 0:14:36.280 --> 0:14:38.200 to about this issue than Mike Rodgers. Mike is a 0:14:38.200 --> 0:14:41.720 retired four star admiral with the United States NAVING. Of course, 0:14:41.720 --> 0:14:44.840 we thank him for his service. Admiral, thanks so much 0:14:44.920 --> 0:14:47.080 for taking the time to chat with us today. I 0:14:47.120 --> 0:14:50.760 would love to get your view of the current situation 0:14:51.360 --> 0:14:53.360 on the battlefield in Ukraine. 0:14:54.520 --> 0:14:56.280 Sure, and thanks very much for the opportunity. 0:14:56.320 --> 0:14:58.400 Paul. You know, as I look at it, I don't 0:14:58.440 --> 0:15:01.880 think either side, even the aftermath of the Wagner Group 0:15:01.920 --> 0:15:06.880 activities of the rebellion, neither side has yet shown the 0:15:06.880 --> 0:15:09.640 ability to deliver a knockout bow. Even in the midst 0:15:09.760 --> 0:15:13.240 of this disarray within the Russian and this side so 0:15:13.320 --> 0:15:16.880 to speak. Is this mutiny was ongoing, Ukraine wasn't unable 0:15:16.880 --> 0:15:18.280 to really take advantage of it. 0:15:18.480 --> 0:15:21.240 They're still in the early stages I think of their offensive. 0:15:21.320 --> 0:15:24.200 We'll see how that plays out, but right now my 0:15:24.320 --> 0:15:26.280 assessment would be we're likely to see a kind of 0:15:26.280 --> 0:15:29.080 continued stalemate for the near future at least. 0:15:30.120 --> 0:15:34.560 What is your takeaway from this? Just stunning news of 0:15:34.600 --> 0:15:37.840 what happened within Russia over the last week with the 0:15:37.880 --> 0:15:41.040 Wagner Group, and most specifically, what do you think that 0:15:41.120 --> 0:15:44.440 means for Putin standing within Russia. 0:15:44.600 --> 0:15:47.040 Well, first of all, I think at highlights there's probably 0:15:47.080 --> 0:15:49.880 more fragility in the Russian system than most of the 0:15:49.880 --> 0:15:54.200 West has recognized. If I was Putin, I'd be very concerned, 0:15:54.240 --> 0:15:57.360 and I'd be concerned about a couple of specific dimensions. 0:15:57.440 --> 0:16:02.680 Number One, you saw almost no reaction from the Russian 0:16:02.680 --> 0:16:06.960 military or the Russian security services to this meeting. They 0:16:07.120 --> 0:16:10.880 literally seemed to sit on the sidelines and watch, and 0:16:11.200 --> 0:16:14.280 the Wagner Group was able to relatively quickly move several 0:16:14.360 --> 0:16:19.560 hundred miles, occupy Rostov and a few other locations with 0:16:19.720 --> 0:16:22.200 in southwest Russia, and then move on to Moscow before 0:16:22.280 --> 0:16:25.240 ultimately I think Putin cut a deal to get this 0:16:25.320 --> 0:16:27.760 thing to stop, but the fact that they didn't respond 0:16:28.440 --> 0:16:31.720 that would worry me if I were Secondly, if you 0:16:31.760 --> 0:16:33.840 look at the videos of the Wagner Group as it 0:16:33.880 --> 0:16:37.080 moved into Rostov, the largest urban area that we saw 0:16:37.160 --> 0:16:40.480 them in, are you saw people on the streets literally cheering? 0:16:40.600 --> 0:16:40.800 Yep? 0:16:41.000 --> 0:16:41.960 Now, not because they. 0:16:41.880 --> 0:16:44.880 Thought forgoes in The leader of the Wagner group was 0:16:44.920 --> 0:16:48.960 trying to overthrow Putin because he wasn't. But the idea 0:16:49.160 --> 0:16:53.240 that this strong individual who's been leading a group that's 0:16:53.280 --> 0:16:56.920 been relatively successful by Russian standards of the battlefield of Ukraine. 0:16:57.320 --> 0:17:00.000 This individual was saying, Look, the reason we're not winning 0:17:00.080 --> 0:17:03.960 his war is because of incompetence within the defense ministry 0:17:04.520 --> 0:17:08.639 and the Russian senior military leadership. And therefore, I Progozen 0:17:09.400 --> 0:17:11.080 are going to put enough pressure on the Putin that 0:17:11.119 --> 0:17:13.440 he's going to remove those people and will ultimately win 0:17:13.520 --> 0:17:13.960 this war. 0:17:14.240 --> 0:17:16.719 Because Progosen had been an advocate war, he had been 0:17:16.840 --> 0:17:19.960 arguing that it was an appropriate action. The fact that 0:17:20.040 --> 0:17:21.879 so many people were cheering this. 0:17:22.520 --> 0:17:25.000 If I was Putin, I would be thinking to myself, 0:17:25.640 --> 0:17:27.480 this is something I need to be thinking. 0:17:27.240 --> 0:17:29.240 About in terms of what does that mean? Why is 0:17:29.280 --> 0:17:32.119 the public responding so positively to this? 0:17:32.280 --> 0:17:35.160 So to speaking, well, what about the global response. I'm 0:17:35.200 --> 0:17:42.080 curious what you're thinking about to what extent this reaction 0:17:42.240 --> 0:17:44.719 to Putin on the ground is going to impact the 0:17:44.760 --> 0:17:48.440 ability for other world leaders to continue to rebuff him 0:17:48.800 --> 0:17:51.320 and rebuff Russia when it comes to things like sanctions 0:17:51.720 --> 0:17:53.960 and other measures that other global leaders have. 0:17:55.200 --> 0:17:59.080 So I think it doesn't change the broad dynamic where 0:17:59.160 --> 0:18:03.240 the West, US, EU, NATO, and a handful love on 0:18:03.320 --> 0:18:08.159 the nations remain committed to helping Ukraine, both through the 0:18:08.160 --> 0:18:12.840 provision of weapons, through assistance, and through these sanctions that 0:18:12.880 --> 0:18:16.080 are being imposed on Russia. I think all of those 0:18:16.160 --> 0:18:19.159 nations remain committed, and this activity of the last week 0:18:19.680 --> 0:18:23.960 doesn't change that. Likewise, I don't think China, the biggest 0:18:24.000 --> 0:18:27.000 champions so to speak, of the Russians, is likely to 0:18:27.080 --> 0:18:30.000 change their position at least now. I think most of 0:18:30.000 --> 0:18:33.320 the major outside parties are trying to get a sense 0:18:33.359 --> 0:18:36.080 for was this event unique, was it a one off? 0:18:36.760 --> 0:18:40.880 Does it suggest that there's something more foundational or problematic, 0:18:40.960 --> 0:18:43.400 that there's greater weakness than the Russian system that we've 0:18:43.400 --> 0:18:45.960 fully realized. So I think right now you're watching people 0:18:46.040 --> 0:18:49.320 observe this and trying to see does this activity that 0:18:49.359 --> 0:18:49.960 we watch. 0:18:49.760 --> 0:18:53.000 With the Wagoner group, does it start to spur others. 0:18:52.720 --> 0:18:55.840 In Russia to startlingly start talking about, Hey, we need 0:18:55.880 --> 0:18:57.640 to stand up, we need to stop this war. 0:18:58.840 --> 0:19:01.320 We'll see. I think we're going to see anything immediately, 0:19:01.359 --> 0:19:02.960 but everybody's clearly paying great. 0:19:02.760 --> 0:19:08.719 Attention Admiral, is there any I guess, weaponry, armaments, or 0:19:08.720 --> 0:19:12.399 even sanctions that could be provided by the West that 0:19:12.480 --> 0:19:16.200 could tip the scales materially in the favor of Ukraine. 0:19:16.200 --> 0:19:19.280 I'm thinking F sixteen fighter jets. Is there anything out 0:19:19.320 --> 0:19:22.360 there that could be provided that would make a big difference? 0:19:23.240 --> 0:19:25.439 Well, I think, though I don't want to speak for Ukraine, 0:19:25.440 --> 0:19:27.680 but my sense is if you ask them, what's the 0:19:28.359 --> 0:19:30.840 greatest capability that we wish we had that we don't 0:19:30.880 --> 0:19:34.160 have right now, I suspect their argument would be, give 0:19:34.240 --> 0:19:37.119 us long range weapons that would enable us to strike 0:19:37.200 --> 0:19:41.600 targets deeper within Russia. That would increase the pressure on 0:19:41.680 --> 0:19:45.240 Russia both domestically, it's populous, would see the war start 0:19:45.320 --> 0:19:48.320 to feel the war. Putin would be more pressured, and 0:19:48.359 --> 0:19:51.280 it would also enable us to try to stop the 0:19:51.320 --> 0:19:56.560