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Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox.

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Speaker 1: Along with my co host Lisa A. Brahmowitz. Each day

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Speaker 1: we bring you the most important, noteworthy, and useful interviews

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Speaker 1: for you and your money, whether you're at the grocery

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Speaker 1: store or the trading floor. Find the Bloomberg p m

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Speaker 1: L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com.

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Speaker 1: Chairs of Tesla right now down nearly five after another

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Speaker 1: tweet storm from Elon Musk targeting the Securities and Exchange Commission.

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Speaker 1: Eric Gordon is a professor at the Raw School of

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Speaker 1: Business at the University of Michigan in an arbor, and

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Speaker 1: he joins us. Now, Eric Gordon, why would Elon Musk

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Speaker 1: do this? I think because he can't not do it.

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Speaker 1: You know, the first two times Elon did this crazy

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Speaker 1: twee eating stuff, I'm scratching my head and saying, how

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Speaker 1: could the CEO of a public company be doing this?

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Speaker 1: But now if a day goes by, you know, I'm

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Speaker 1: surprised that he doesn't. Um. I mean, actually, Dana Hall

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Speaker 1: put out something great on the Bloomberg this morning. Here's

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Speaker 1: here's her opening line. Another day, another tweet storm from

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Speaker 1: Elon musk Um. I think he cannot control himself. I

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Speaker 1: think he doesn't want to control himself. He just uh,

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Speaker 1: you know, he's right, the SEC, everybody else is wrong,

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Speaker 1: and and he's gonna lash out at them, all right. So,

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Speaker 1: s Professor Gordon, what is the board's role in raining

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Speaker 1: him in? Because it's clear that he doesn't want to

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Speaker 1: rain himself in, but the SEC is going to penalize

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Speaker 1: him and the company if he does not. Yeah, and

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Speaker 1: so it's that ladder part. They're going to penalize the

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Speaker 1: company if he if this guy doesn't shape up, and

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Speaker 1: that's where the board comes in. The board is not

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Speaker 1: supposed to look out for Elon except to the extent

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Speaker 1: that that helps the company. They're supposed to look out

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Speaker 1: for the company as a whole, no matter what Elon says.

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Speaker 1: So when Elon says, you know, support me or I'm

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Speaker 1: going to quit or you know whatever he pulls, I

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Speaker 1: think the board. The board is the problem here. We know,

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Speaker 1: we know what the problem is with Elon. The question

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Speaker 1: is what's wrong with this board. Why isn't the board

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Speaker 1: taking action to support the company and at some point

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Speaker 1: to just protect the company. Professor Gordon, if someone that

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Speaker 1: you were representing in the world of business publicly described

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Speaker 1: the Securities and Exchange Commission as the short seller enrichment Commission.

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Speaker 1: What would you do? You know? Um, so I'm also

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Speaker 1: a law professor in an attorney, and I would advise

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Speaker 1: them to cut it out. Um, for a couple of reasons. One,

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Speaker 1: it's it's just ridiculous. Um, that's that's not what they do.

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Speaker 1: In fact, they gave him a very easy settlement. If

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Speaker 1: I were going to criticize the sec before offering such

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Speaker 1: an settlement, but just as a practical matter, I mean,

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Speaker 1: come on, when you're on the playground, do you taunt

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Speaker 1: the guy the big kid with the big stick. No,

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Speaker 1: you don't do that. Well, professor, I'd love to get

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Speaker 1: your opinion. You were saying, why isn't the board saying

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Speaker 1: cut it out? Why aren't they reading it? In more,

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Speaker 1: it's their fault, that said. If they were to push

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Speaker 1: Elon Musk out, or if something that they did caused

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Speaker 1: him to depart the company, what would be left of Tesla?

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Speaker 1: You know, it might be a better company. So we've

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Speaker 1: said all along. I haven't said, but a lot of

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Speaker 1: people have said. Certainly, his fan club has said the

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Speaker 1: company is nothing without Ellen. If that's true, everybody who's invested,

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Speaker 1: everybody who's an employee, is in real trouble because he

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Speaker 1: could have a heart attack, He could be driving in

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Speaker 1: a Tesla and be using the driver assistant, hit a

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Speaker 1: truck and die. I mean, the company cannot be Elon if.

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Speaker 1: If that's the case, the board is at fault for

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Speaker 1: not sending up a succession plan, for not insisting that

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Speaker 1: there'll be a strong CEO, for not insisting that a

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Speaker 1: large public company have a team. Just you know, just

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Speaker 1: the admission that it's nothing without Elon to me is saying, well,

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Speaker 1: come on board. Why would you leave everybody at such

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Speaker 1: big risk but to play devil's advocate there, Eric Gordon,

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Speaker 1: if you're an investor in Tesla, you already know all this, right.

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Speaker 1: I mean, you don't have to own I mean you

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Speaker 1: don't have to own shares of Tesla. You can buy

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Speaker 1: a lot of other things if you don't believe either

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Speaker 1: the corporate governance is accountable or indeed whether the CEO

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Speaker 1: is going off the rails with his tweet storm. Yeah,

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Speaker 1: and I think that's a good point, and that's why

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Speaker 1: their investors left the stock has gone down, but it

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Speaker 1: hasn't gone to zero. It's still a very highly valued stock,

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Speaker 1: a highly valued company. And I think what's happened is

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Speaker 1: we've seen investors who have changed their mind said let's

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Speaker 1: get out, it's too scary. Leave. But there are obviously

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Speaker 1: a lot of investors who are left who are willing

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Speaker 1: to hold stock even now it is very, very high valuation,

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Speaker 1: and who would say, look, we are willing to take

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Speaker 1: that risk. And you know, that's how the system works.

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Speaker 1: You know. If some people don't want to take the risk,

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Speaker 1: they don't. If other people want to take the risk,

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Speaker 1: let them take the risk. Thank you so much for

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Speaker 1: being with us. Eric Gordon, Michigan University professor for the

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Speaker 1: Ross School of Business talking about Elon Musk and his

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Speaker 1: inability to control himself with respect to his tweet storms.

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Speaker 1: So let's take a look at what is going on

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Speaker 1: right now and ms A bond market. Earlier this week

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Speaker 1: black Rocks Immuni bond et F which has about ten

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Speaker 1: billion dollars of assets, so it's biggest one day withdrawal

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Speaker 1: in its history. And meanwhile, you've got the shares of

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Speaker 1: that doubt at the lowest levels of the year. Joe

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Speaker 1: meisac Come on, and here you're the person who always

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Speaker 1: is following every movement in the municipal bond market, covering

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Speaker 1: our Bloomberg brief focused on that market for us. Here,

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Speaker 1: what's your perspective? This is all just rates concerns run

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Speaker 1: all right, everyone, kind of uh, a little bit of

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Speaker 1: panic in the air maybe. So this week we had

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Speaker 1: yields on a ten year go up to a little

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Speaker 1: over to seventy, which is a place we haven't seen

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Speaker 1: on the tenure municipal bonds. What you're saying on tenure

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Speaker 1: municipal bonds tax exempt, tax free, uh so to seventies

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Speaker 1: level we have not seen in quite some time. For

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Speaker 1: most of this year, as our listeners know, the ten

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Speaker 1: year has been hovering in the two and a half

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Speaker 1: percent range, seemingly range bound, which is very unusual in

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Speaker 1: the muni market. It's plateau like that from February through September.

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Speaker 1: Very unusual. And you go back years and years, rates

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Speaker 1: are always ratcheting around in the muni market reflecting supply

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Speaker 1: and demand. This year was very unusual. I'm not sure

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Speaker 1: you're going to see that sort of plateau ing again.

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Speaker 1: And you know right now, to seventy not bad. Headed higher,

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Speaker 1: one would think, alright, headed higher. If that's the case,

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Speaker 1: do you wait until rates are higher or do you

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Speaker 1: when do you start to see money come in? Uh?

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Speaker 1: I don't think the wise investor ever waits in the

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Speaker 1: meunia market, because you should. If you have a certain

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Speaker 1: amount of money that you're going to put to work

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Speaker 1: in the muni market, put it to work. Don't wait

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Speaker 1: people who who wait? Um, I mean there were people

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Speaker 1: who waited, you know, let's say, uh, seven or eight

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Speaker 1: years ago and they've missed, you know, seven or eight

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Speaker 1: years of tax free income basically. So I don't think

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Speaker 1: it's ever a good idea to wait. You might want to, uh,

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Speaker 1: you know, maybe you shorten up a little bit, but no, now,

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Speaker 1: waiting not good. But you know what, what kind of

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Speaker 1: rates what we see to attract much more interest? Yeah?

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Speaker 1: I think if you see the tenure go over three

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Speaker 1: uh well thirty basis points from now, I think you'll

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Speaker 1: see some strong interest then, Joe, I want to talk

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Speaker 1: about the technical factors because we were speaking with the

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Speaker 1: portfolio manager from McKai Shields yesterday who focuses on them

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Speaker 1: to put bond market, and he was saying, heading into

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Speaker 1: your end, you're going to see a lot of selling

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Speaker 1: pressure that liquidity could easily dry up as demand falls

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Speaker 1: for municipal bonds. What's your impression of that and how

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Speaker 1: does that factor into how high yields could go? Oh baby,

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Speaker 1: The technical factor UH to really keep an eye on

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Speaker 1: is supply overwhelming demand. So demand right now, we've seen

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Speaker 1: a lot of bidd lists out for a couple of

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Speaker 1: weeks now, and supply typically picks up in the municipal

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Speaker 1: market the last quarter of the year, So you're gonna

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Speaker 1: see a lot of bonds coming to market and they're

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Speaker 1: gonna have to pay up. It's just the it's the

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Speaker 1: nature of the beast. And then you know, back in

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Speaker 1: January and February, late December, you see a lot more

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Speaker 1: money coming back in money that's going to be looking

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Speaker 1: for a new home, which is you know, was our

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Speaker 1: theme for so much of this year. Joe, I'm wondering

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Speaker 1: if you could just speak a little bit about a

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Speaker 1: story that you wrote entitled Masked Man Preps for Showtime.

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Speaker 1: That was an interesting piece, isn't That's something I just

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Speaker 1: set the scene for people so they understand what you're

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Speaker 1: talking about. Back in April, in Illinois, there was a

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Speaker 1: lawsuit filed by a whistleblower unnamed UH who described the

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Speaker 1: pricing of variable right to and Obligation bonds. Said that

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Speaker 1: the remarketing agents, which are basically Wall Street banks UM,

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Speaker 1: who set the rates on these bonds, we're not really

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Speaker 1: doing their jobs. They were setting the rates too high

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Speaker 1: so they wouldn't have to remarket the bonds, and this

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Speaker 1: resulted in damages to the issuers of these bonds. So

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Speaker 1: in Massachusetts, in August UM, the Supreme Court in Massachusetts

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Speaker 1: rule that whistle blowers, if their file lawsuits, have to

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Speaker 1: be named if the individuals not entities. So the entity

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Speaker 1: which is called Atli's Fund in Illinois UM has to

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Speaker 1: refile its case naming the whistle blower. And they recently

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Speaker 1: got an extension and that's where it is now. But

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Speaker 1: very curious, so many people want to know who is

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Speaker 1: this masked man for woman? Do you have any idea?

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Speaker 1: I do? Would you like to? Alright, just fascinating case.

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Speaker 1: Now the RDO market variable rate demand obligations, that's a

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Speaker 1: hundred and fifty billion dollar market and this is a

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Speaker 1: sort of I haven't seen one of these attacks on

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Speaker 1: the industry. Uh, and certainly you know more than a decade.

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Speaker 1: I mean, you did have a big rigging um and

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Speaker 1: you know, swaps investigation after financial crisis around that time.

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Speaker 1: But you really have to go back to the yield

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Speaker 1: burning business of the mid ninety nineties yesterday for you. Well, yeah,

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Speaker 1: joe My Sak, thank you very much. Joe My Sac

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Speaker 1: Bloomberg editor for the Bloomberg brief on municipal markets. Thank

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Speaker 1: you very much for being with us cyber security and

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Speaker 1: hacks China using a tiny chip to hack into US companies,

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Speaker 1: though many of those US companies, such as Apple and Amazon,

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Speaker 1: have denied the contents of Bloomberg Business Week cover story.

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Speaker 1: Here to tell us about this topic is Malcolm Harkins.

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Speaker 1: He is the chief security and trust officer at a

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Speaker 1: Side Clans and he joins us. Now, Um, Malcolm, maybe

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Speaker 1: you could just tell us what does the chief security

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Speaker 1: and trust officer at CYD Clans do and then comment

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Speaker 1: on this Bloomberg Business Week cover story. Please. Yeah, not

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Speaker 1: a problem, and it's actually silent. I beg your pardon. Yeah,

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Speaker 1: no worries. So, as chief security and trust officer at Silence,

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Speaker 1: I'm responsible for our internal security controls and compliance efforts,

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Speaker 1: and really trying to make sure our infrastructure and uh

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Speaker 1: base of capability for how we operate our company is

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Speaker 1: adequately secured and protected against a variety of risks. Okay, So,

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Speaker 1: given the fact that you also served in a similar

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Speaker 1: role at Intel, can you put us into give us

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Speaker 1: some insight into just how big of a risk it

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Speaker 1: is if this is true that China is indeed possibly

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Speaker 1: even implanting tiny microscopic chips in the hardware that they

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Speaker 1: could use to have a backdoor entrance to a number

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Speaker 1: of different servers. Well, for me, and given my prior

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Speaker 1: role at Intel and being in the compute ecosystem for

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Speaker 1: decades now, supply chain compromises has been a long time concern,

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Speaker 1: not only for myself but many in the industry. And

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Speaker 1: so there are nation states that have the capacity the

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Speaker 1: capability to actually do these type of things and implant chips,

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Speaker 1: or change software programs, or do other forms of manipulation

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Speaker 1: that would affect the foundation of computing, such as what

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Speaker 1: was reported by Bloomberg the other day. Malcolm, there's a

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Speaker 1: report that there are going to be new cybersecurity rules

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Speaker 1: put in place in China beginning November first, police officers

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Speaker 1: in China will have the authority to physically inspect businesses

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Speaker 1: and remotely access corporate networks. Do you believe that that's

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Speaker 1: consistent with the reporting about a chip that may have

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Speaker 1: been implanted by the People's Liberation Army companies in the

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Speaker 1: service that Lisa was referring to. Well, it could be

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Speaker 1: the case that they created that chip in order to

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Speaker 1: have that slow into Chinese organizations for that purpose. But

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Speaker 1: the other aspect of it is one of lawful entry.

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Speaker 1: And if they've passed a law that said the Chinese can,

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Speaker 1: under certain circumstances access a company's network access their devices,

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Speaker 1: they don't necessarily need to have a chip to do that.

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Speaker 1: They could do that by just showing up to the

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Speaker 1: front door and making that in essence lawful entry and

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Speaker 1: then demanding access to those systems. It's like, I guess

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Speaker 1: I'm trying to understand, Malcolm, whether we're sort of overblowing

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Speaker 1: the potential risk here of some of these international uh

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Speaker 1: cyber scrutinies or cyber hacking. I guess I'm trying to

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Speaker 1: figure out, especially given the fact that these chips that

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Speaker 1: we were just talking about have been put into the hardware,

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Speaker 1: and you know in servers that were in the Pentagon

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Speaker 1: for example, as well as the big tech giants in

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Speaker 1: the United States. What's the worst case scenario here? And

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Speaker 1: do you think that people are getting a little more

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Speaker 1: concerned that they need to be well? I think the

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Speaker 1: concern is real. And at that foundation of computing, it

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Speaker 1: would be like having rebar in the cement that that

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Speaker 1: isn't appropriate, or having the wrong cement mix. And at

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Speaker 1: that foundation level, if you have this type of compromise,

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Speaker 1: in that type of vulnerability, everything above it in the

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Speaker 1: compute stack, and therefore the business processes, the communications, the

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Speaker 1: sensitive secrets is now at risk. You know, Microsoft has

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Speaker 1: what they call a transparency center in Beijing where officials

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Speaker 1: can test products for security. Apple is building a data

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Speaker 1: center in the Southwestern province of China to comply with

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Speaker 1: rules that require cloud data from Chinese customers be stored

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Speaker 1: in China. If one of those companies or a company

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Speaker 1: that was thinking of doing business in this way in

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Speaker 1: China came to you, what kind of recommendations are guidelines

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Speaker 1: would you offer them well first and foremost in those situations,

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Speaker 1: and for a lot of multinational companies, it's a it's

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Speaker 1: a business decision and a business choice. If you want

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Speaker 1: to grow and you want to enter the Chinese market,

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Speaker 1: you have to comply by local laws in if those

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Speaker 1: local laws then require certain testing or other things, then

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Speaker 1: that's a business decision. Do you want the revenue and

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Speaker 1: you want to be in that market relative to the

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Speaker 1: compliance requirements. And then you also have to think about

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Speaker 1: then the implication of those local laws in terms of

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Speaker 1: the risk to the rest of the business or the

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Speaker 1: risk to your customers, and and so it really becomes

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Speaker 1: a calculus decision in terms of the revenue and the

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Speaker 1: potential risk, and then how you navigate those choices. Malcolm Harkins,

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Speaker 1: thank you so much for joining us a really important

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Speaker 1: topic and important perspective. Malcolm Harkins is chief Security and

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Speaker 1: Trust Officer at Silence. He was the former he probably

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Speaker 1: was in a similar role at Intel. Talking about what

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Speaker 1: we've been seeing and what Bloomberg reported yesterday with respect

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Speaker 1: to China implanting microchips in some of the hards are

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Speaker 1: used by many companies. We've talked so much in the

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Speaker 1: past a few weeks about leveraged loans and how they

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Speaker 1: are looking riskier than they have in the past, given

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Speaker 1: the amount of money that's flowed in. Joining us now

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Speaker 1: to talk about that is Beth McLean. She has portfolio

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Speaker 1: manager at PIMCO and she is absolutely one of the

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Speaker 1: most important people in the loan market. I would say so,

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Speaker 1: but thank you so much for joining us. We really appreciated.

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Speaker 1: So let's just start with all of the news articles

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Speaker 1: and headlines that have basically come out talking about how

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Speaker 1: the UH leverage loan issuance is going gangbusters, and how

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Speaker 1: deal terms are getting loosened up, and how risk is

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Speaker 1: building and how setting up for a fall when the

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Speaker 1: market turns. What's your perspective on that, well, I think, um, first,

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Speaker 1: thanks Lisa, thanks for having me today. Um And and

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Speaker 1: there definitely has been a lot of press about some

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Speaker 1: of the negative developments in the loan market. But but

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Speaker 1: I do think we need to keep it in perspective

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Speaker 1: a little bit. Um. You know, first, I'd say that

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Speaker 1: across all of leverage finance have have gotten a little

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Speaker 1: bit looser, so it's not exclusive to loans. But then

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Speaker 1: we have to keep in mind that loans still are

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Speaker 1: senior secured top of the capital structure. So while we've

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Speaker 1: we've seen some erosion in some of the protections as

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Speaker 1: far as UM you know, tests on indebtedness and and

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Speaker 1: looser restricted payment baskets, etcetera. I think what that just

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Speaker 1: signals to us is that it's very important for us

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Speaker 1: to do our diligence to really you know, focus on

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Speaker 1: that bottom up credit work factor in what different scenarios

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Speaker 1: might develop given these areas of flexibility and the documents,

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Speaker 1: um and and then make the choices on which credits

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Speaker 1: we are comfortable can survive, uh, you know, even in

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Speaker 1: a weaker economic environment with that type of flexibility. But

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Speaker 1: but I think it's it's very important not to lose

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Speaker 1: sight of the fact that you know, loans still our

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Speaker 1: senior secured top of the cap structure um and And

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Speaker 1: then secondly, and I think this is a point that

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Speaker 1: that people have overlooked, is you know, we're not seeing

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Speaker 1: levels of leverage that we saw precry in late oh

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Speaker 1: six early oh seven, the big l e O s

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Speaker 1: had you know, over of debt and leverages high as

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Speaker 1: ten to twelve times UM. So far this year, the

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Speaker 1: biggest deal we've seen was a fourteen billion dollar deal

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Speaker 1: that came a couple of weeks ago. But We're leverage

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Speaker 1: was still only around seven times, So I think when

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Speaker 1: we look at the risk in the market, you have

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Speaker 1: to kind of look at that holistically. Where are we

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Speaker 1: versus leverage. The terms might be might be looser, but

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Speaker 1: the leverage is lower. And then again it's critical for

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Speaker 1: us as active managers to do the work and do

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Speaker 1: the diligence and make sure we're picking the right credits. Beth,

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Speaker 1: I wondering if you could just comment on something that

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Speaker 1: I've noticed. And I don't know whether this is a

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Speaker 1: trend or whether this has always been there, but I've

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Speaker 1: just been paying closer attention, but the emphasis on advertisements

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Speaker 1: for individuals who have mortgages to pay off those mortgages

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Speaker 1: using home equity lines of credit, and that the reason

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Speaker 1: I bring that up is because one obviously the lines

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Speaker 1: of credit tip we our adjustable rate, whereas mortgages tend

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Speaker 1: to be fixed rate. What do you see there? So

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Speaker 1: the mortgage market is not my area of expertise, but

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Speaker 1: I'll tell you, I think that's just another symptom of

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Speaker 1: you know, potentially re leveraging in the system. Right, So

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Speaker 1: if if we are in fact seeing a trend of

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Speaker 1: increasing home equity line usage. Um, I don't think that's

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Speaker 1: necessarily I wouldn't think about the recent terms of floating

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Speaker 1: versus fixed rate debt in that space. But more is

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Speaker 1: that just an overall releveraging um that you know, that

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Speaker 1: that we're seeing across you know, corporate credit, mortgage, other spaces,

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Speaker 1: and that's certainly something to watch. You know. One thing

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Speaker 1: that that some people talk about the loan market is that,

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Speaker 1: as you said, it is senior secure debt in general,

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Speaker 1: but second lean sales, which is basically more subordinate debt,

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Speaker 1: have increased more and there are a lot of companies

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Speaker 1: that are turning to the loan market instead of the

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Speaker 1: bond market. In other words, there is no other debt

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Speaker 1: below it that with they would default on before defaulting

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Speaker 1: on their loads. I mean, how does that play into year,

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Speaker 1: into into your currncern or view of the market right now? Sure?

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Speaker 1: I think I think at least actually you highlight probably

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Speaker 1: what we see as the biggest risk in the market,

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Speaker 1: which is there has been um a shift from loans

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Speaker 1: with bonds beneath them in the capital structure too, maybe

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Speaker 1: loans with just the second lean or even loan only

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Speaker 1: capital structures. So because capital structure. Subordination is probably the

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Speaker 1: most critical component of what your recovery will be when alone,

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Speaker 1: if alone has to restructure that is, that is certainly

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Speaker 1: very important. So, whether it's a second lean or a

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Speaker 1: high yield bond, if you lack that subordination, um, you know,

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Speaker 1: that's where you could that's where you could get into

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Speaker 1: trouble in in some of these instances. So how much

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Speaker 1: lower do you think recoveries are going to be on

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Speaker 1: loans in the next downturn, just going forward versus the past? Sure? Well,

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Speaker 1: In fact, moody is put out a piece a little

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Speaker 1: while ago where they um, you know, they highlighted the

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Speaker 1: risk of loan recoveries flipping to you know, in the

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Speaker 1: sixty cents on the dollar range versus you know, high seventies,

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Speaker 1: low eighties, which we've experienced before. I think it's hard

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Speaker 1: to put one number on it though, because again the

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Speaker 1: market is somewhat bifurcated. You may see lower bond like

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Speaker 1: recoveries on some of these weaker loan only capital structures,

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Speaker 1: and at the same time you can still see very strong,

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Speaker 1: you know, eight cent and above recoveries on companies you know,

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Speaker 1: the larger liquid companies with a more robust capital structure,

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Speaker 1: so I can kind of see where they get to

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Speaker 1: that average of sixty area. UM. But it's going to

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Speaker 1: be very distinct amongst managers and again depending on how

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Speaker 1: people are positioned in their portfolios, which is why you

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Speaker 1: know it's it's again one of one of the key

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Speaker 1: themes you'll hear from us at PIMCO. Y active management

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Speaker 1: and bottom up credit research is so important because we

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Speaker 1: need to make sure we're in behalf of the market

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Speaker 1: that has the eighty recoveries, not the fifty recoveries. Can

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Speaker 1: you speak a little bit about the current liquidity that

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Speaker 1: exists in the marketplace right now? Sure? Actually, you know

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Speaker 1: that's one of the bright spots I'd say frankly, Um,

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Speaker 1: the loan market has now surpassed to trillion dollars. It's

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Speaker 1: closing in on being the same size as the high

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Speaker 1: old bond market, and I think we see you know,

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Speaker 1: similar liquidity in in in the loan and the bond markets. Um.

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Speaker 1: But again it's it's it's somewhat distinct in different portions

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Speaker 1: of the market. For some of the there has been

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Speaker 1: an increase in smaller issuers and some of those smaller issuers,

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Speaker 1: those deals tend to get sort of tucked away and

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Speaker 1: don't trade very often. But particularly in the larger corporate space,

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Speaker 1: the large liquid names that do have a diverse capital structure. Um,

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Speaker 1: we we see pretty good, pretty good liquidity in those markets.

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Speaker 1: How do you think that loans are going to fare

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Speaker 1: as rates rise, especially if it does kind of constrain

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Speaker 1: lending conditions? Well, sure, I think, Um, you know, loans

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Speaker 1: are are one of the few bright spots for fixed

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Speaker 1: income in a rising rate environment. Because we're floating rate

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Speaker 1: and prepayable, we don't have the duration impact that you

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Speaker 1: might see in in investment grade and high yield markets.

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Speaker 1: I think that's one of the reasons you do see good,

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Speaker 1: good flows coming into the market. Um. So, I think

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Speaker 1: as long as the rate path continues to be a

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Speaker 1: gradual rise with a more moderate endpoint, I think loan

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Speaker 1: should share actually pretty well. And again, keep in mind,

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Speaker 1: loans rates are rising because the economy is pretty strong, right,

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Speaker 1: We've got a pretty steady US economic backdrop, We've got

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Speaker 1: strong earnings still coming from corporates with still a pretty

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Speaker 1: positive outlook there. Um And so in that during this

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Speaker 1: tra directory where rates rise on a gradual path. That

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Speaker 1: means things are pretty good in the U. S economy

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Speaker 1: and things should be pretty good for credit broadly, um,

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Speaker 1: you know. And then it's it's more if we get

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Speaker 1: to the end of the cycle, what happens, then that's

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Speaker 1: where we think about, you know, again, some of that

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Speaker 1: credit selection being in the right names when when that

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Speaker 1: turnaround happens. But for the foreseeable future, with with rising rates,

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Speaker 1: that's actually a pretty pretty good place to be in

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Speaker 1: the loan market. Thank you very much for being with us.

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Speaker 1: Beth McClane is portfolio manager for Pimco talking about the

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Speaker 1: bridge loan market. Thanks for listening to the Bloomberg P

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Speaker 1: and L podcast. You can subscribe and listen to interviews

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Speaker 1: at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer.

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Speaker 1: I'm pim Fox. I'm on Twitter at pim Fox. I'm

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Speaker 1: on Twitter at Lisa Abramo. It's one before the podcast.

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Speaker 1: You can always catch us worldwide on Bloomberg Radio.