Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
Speaker 1: Eastern on Affo car Playing and broud Otto with the
Speaker 1: Bloomberg Business App. Listen on demand wherever you get your podcasts,
Speaker 1: or watch us live on YouTube.
Speaker 2: Looking at Boeing stocks, the three tenths of one percent,
Speaker 2: but we've got a good better sense of kind of
Speaker 2: their first quarter deliveries the lowest since mid twenty twenty one,
Speaker 2: So not good althose you read into it. The company
Speaker 2: delivered twenty seven aircraft in March, and that's a slight
Speaker 2: improvement from the twenty seven delivered in January and February.
Speaker 2: But again the combination and all the majority of these
Speaker 2: things were the seven three seven Max jets. That's what
Speaker 2: we mostly, I think most of us fly the States
Speaker 2: at seven three seven Max. Well, I'm a Boeing person,
Speaker 2: I mean I'm a United Cus are out of Newark,
Speaker 2: and United flies the Boeing planes. And I report to
Speaker 2: George every time I get on a plane to go anywhere.
Speaker 2: I report to him what I'm the aircraft. I'm on
Speaker 2: the quality of it, how full it is. So I
Speaker 2: give him some of that primary research. George ferguson joints
Speaker 2: as he covers the airlines the aerospace companies. Is the
Speaker 2: first quarter here? Is this going to be the bottom
Speaker 2: George for Boeing in terms of deliveries?
Speaker 3: I think, yeah, for the year, I think this is
Speaker 3: going to be the bottom. So I'd expect this was
Speaker 3: the worst quarter. You know, the fa was in there
Speaker 3: doing their review of Boeing's manufacturing. Boeing's got to come
Speaker 3: up with for a plan for the FAA. Imagine that
Speaker 3: takes some hands as well, and manufacturing probably isn't moving
Speaker 3: very fast while they're in the middle of this process
Speaker 3: of figuring out how to stabilize, you know, the production
Speaker 3: of the airplanes. And so I think for the quarter
Speaker 3: it'll be sorry. For the year, this will be the
Speaker 3: worst quarter, and I would expect that things would get
Speaker 3: better second, third, and fourth into.
Speaker 1: The end of the year.
Speaker 4: George, really nice to see you. We decided that we've
Speaker 4: maybe met twice after.
Speaker 5: All this time.
Speaker 2: Well, see, there's a we have some research people in Princeton. Yeah,
Speaker 2: and they prefer the Princeton as opposed to coming to
Speaker 2: the world's financial hub center of it all. Traffic for Princeton.
Speaker 2: I get it. Yeah, that's how we do that.
Speaker 4: There's a couple of ways to break it down, so
Speaker 4: let's just take it maybe piece by piece. First of all,
Speaker 4: supply chain stuff that like Boeing will be a part
Speaker 4: of and Airbus will be a part of too, Like,
Speaker 4: how are the supply chain impacting their deliveries?
Speaker 3: Well, I mean, right now, I think the biggest problem
Speaker 3: is up at Boeing and not in the supply chain.
Speaker 5: So the supply chain stuff is fixed.
Speaker 6: No, not at all.
Speaker 3: So I meant for the number of deliveries we've seen
Speaker 3: this quarter and the constriction in that number of deliveries,
Speaker 3: this is all Boeing issue, right This is all Boeing's
Speaker 3: FAA review, their manufacturing review. Their supply chain I think
Speaker 3: is producing at a higher rate than they are right now.
Speaker 3: So Spirit Aero Systems would be an important part of
Speaker 3: their supply chain. They're building somewhere around thirty eight or
Speaker 3: they were building around thirty eight seven thirty seven maxes
Speaker 3: a month when we heard from them at the end
Speaker 3: of the year, you know, for their four Q earnings call.
Speaker 3: We understand from Spirit that their suppliers were even building
Speaker 3: at higher rates than them in some cases, maybe even
Speaker 3: up at sort of forty two numbers. And they're already
Speaker 3: thinking about Spirit moving to a forty two number for
Speaker 3: the Max. Again, we're talking Max, which is the highest
Speaker 3: volume airplane. They were talking about Spirit moving to a
Speaker 3: forty two number just prior to the Alaska you know,
Speaker 3: door panel incident, and that's when everything sort of hit
Speaker 3: the skids. But I think most of it hit the
Speaker 3: skids up at Boeing, which has to do manage all
Speaker 3: the FAA you know, inquiries and their manufacturing review.
Speaker 2: All right, George. On Thursday, I am flying from Newark
Speaker 2: to Durham, North Carolina on a Boeing seven thirty seven
Speaker 2: Max eight plane. I will report into you. You can
Speaker 2: express that primary research.
Speaker 5: What's up your off Friday?
Speaker 2: I'm off Friday?
Speaker 1: Yep, yep.
Speaker 5: I love you too, you know, bummer, So you could
Speaker 5: care a loss? Not true at all?
Speaker 2: Okay, George, If I guess from the company, I don't
Speaker 2: want to go too fast. I think you know, I
Speaker 2: can't have any more mishaps here. So it's almost like
Speaker 2: if I'm an investor, I'm not sure I'm knocking on
Speaker 2: the door saying, hey, you guys gotta get back to
Speaker 2: back to thirty eight or forty kind of do it
Speaker 2: when you can kind of thing.
Speaker 6: Yeah, I mean, do it when you can.
Speaker 3: But I mean in the long term interest of Boeing,
Speaker 3: they have to increase build rates here and that's going
Speaker 3: to drive better.
Speaker 6: Cash flow and better products.
Speaker 3: Okay, I mean, look, the competitor across the Atlantic, right
Speaker 3: which has by the way, has you know, final assembly
Speaker 3: facilities all around the world, including one in Mobile, Alabama.
Speaker 2: Really Airbus has a thing in Mobile.
Speaker 3: Absolutely, wow, absolutely, I don't know so, but their competitor
Speaker 3: is operating up in the forty five range per month
Speaker 3: for their A three twenty, the major competitor. If Boeing
Speaker 3: wants to be in this business long term, they have
Speaker 3: to stabilize production. You're right, but they've got to stabilize
Speaker 3: it at much higher levels. Prior to the pandemic, they
Speaker 3: were going close to sixty a month for the seven
Speaker 3: thirty seven max.
Speaker 6: It can be done.
Speaker 3: Their job is to make sure it happens.
Speaker 2: So what's the timeline here? When do you think, like
Speaker 2: year end, where would you like to see them?
Speaker 3: So year end, what we've modeled the Bloomberg intelligence is
Speaker 3: we think Boeing will be building thirty eight seven thirty
Speaker 3: sevens a month by four Q, which should have been
Speaker 3: where they started this year out at thirty eight. We
Speaker 3: think they were looking to break to forty two by
Speaker 3: the end of the year.
Speaker 2: So do we ever get back to the sixty? Should
Speaker 2: they ever get back to the sixty?
Speaker 3: Well, I mean, if you again, if you look at
Speaker 3: their competitor, their competitor says they're shooting for seventy five
Speaker 3: a month on the A three twenty. So if their
Speaker 3: competitor is breaking to those kind of rates, when you
Speaker 3: break to higher rates on your primary narrow body, you
Speaker 3: have the opportunity to go out to your customers and
Speaker 3: non customers, people that might be upset at Boeing and
Speaker 3: sell more airplanes. Right So, right now, what we're seeing is,
Speaker 3: you know, United has expressed an interest in A three twenty.
Speaker 3: One's sort of constricted again. They've got you know, the
Speaker 3: backlog is full. There's airlines that want all those deliveries
Speaker 3: for the next number of years. We've seen Jet Blue
Speaker 3: pop up and Spear airlines pop up and say, hey,
Speaker 3: we might be willing to give up some of our
Speaker 3: airplanes or we are willing to give up some of
Speaker 3: our airplanes. We think that's a function of Airbus going
Speaker 3: out to those customers saying, we have another potential customer
Speaker 3: that would like a three twenty one's do you definitely
Speaker 3: want everything you've got in the in the books for
Speaker 3: the next couple of years.
Speaker 4: How did we get this might be a very silly question,
Speaker 4: but how did we get to the point where we
Speaker 4: got two airplane makers?
Speaker 5: And how does that make sense?
Speaker 3: Well, I mean, for I mean, these are this is
Speaker 3: not volume like automobiles, right, you sell right, I mean
Speaker 3: a good year in this business is what a little
Speaker 3: bit over a thousand airplanes a year?
Speaker 6: Right, So it's not necessarily.
Speaker 3: An industry that would support five or six manufacturers with
Speaker 3: the right pricing and you know, in the right margins.
Speaker 3: And then you've got to put money into R and
Speaker 3: D and development while you're you know, so you've got
Speaker 3: to earn a decent return so you can invest for
Speaker 3: the future.
Speaker 6: We did have more right in the US.
Speaker 3: We had Boeing, we had McDonald, Douglas, lockeed used to
Speaker 3: build a commercial aircraft. But you know, I think over
Speaker 3: time it's slimmed down to where you could make them profitable.
Speaker 3: And at the same time, airbus was growing in Europe
Speaker 3: because the Europeans wanted to be in this business. Right,
Speaker 3: this is a is a good margin, you know, strong
Speaker 3: manufacturing kind of industry which really supports great jobs. They
Speaker 3: were rising, and that meant some of the US manufacturers
Speaker 3: had to go away to create room for a European competitor.
Speaker 3: And what we have in the horizon someday, I think
Speaker 3: it's probably five or six years away at least, is
Speaker 3: the Chinese that want to be in the business. So
Speaker 3: either the pie has to grow even maybe fifty percent larger.
Speaker 6: Or someone's got a dwindle in that whole thing.
Speaker 2: Right, interesting? All right, on's the next boondoggle slash air
Speaker 2: show that you.
Speaker 1: Go schedule to go to.
Speaker 5: Yeah, you go to some fun ones.
Speaker 2: I mean, and they're not in Cleveland in December, they're not.
Speaker 3: I just well, I just have to say, none of
Speaker 3: these are boondogles. I work really hard, exhausted.
Speaker 6: When I come home.
Speaker 2: All right, So what's the next one?
Speaker 6: Farnborough Airshow Farmborough.
Speaker 2: Air Show outside of London in July? What's the theme there?
Speaker 2: I mean, if I'm boeing, can I even show my
Speaker 2: face there. I mean, what do I I can't sell stuff.
Speaker 2: I mean, even if I make an announcement I'm selling,
Speaker 2: you know, two hundred planes to Emirates or something, I
Speaker 2: don't I don't have the capacity to build them.
Speaker 3: Yeah, so this year will be very interesting, right because
Speaker 3: I think frankly, Airbus end Boeing don't have a lot
Speaker 3: more capacity right now, so I would expect the show
Speaker 3: would have a lot less sales.
Speaker 6: It's a sales show, yeap. Although on the.
Speaker 3: Wide body front, there's I think room to increase those
Speaker 3: build rates, especially for the Boeing seven eighty seven and
Speaker 3: the Airbus A three fifty.
Speaker 2: There are they separate factories. Do I build my seven
Speaker 2: thirty seven and my seven eighty seven in the same factory?
Speaker 6: No, you build them a separate.
Speaker 2: Factory, okay, So I okay, so I can ramp.
Speaker 3: Yeah, And look, you know you have much lower volume
Speaker 3: on seventy and seven builds at six a month, right,
Speaker 3: So going to nine a month, you're not asking your
Speaker 3: suppliers to do a heck of a lot more, right,
Speaker 3: They're going fifty percent higher, but on very low volume.
Speaker 3: But so both of those manufacturers would like to increase
Speaker 3: the volume of those two airplanes, the three fifty and
Speaker 3: seven eighty seven, because those would help them add to
Speaker 3: you know, better margin, better cash flow. At the rates
Speaker 3: they're at now, their break even ish, they could get
Speaker 3: them into the low or sorry, high single digits, low
Speaker 3: double digits. I think if they got them up to
Speaker 3: ten or so, they're on the road to do that.
Speaker 3: So I'd see this show being a wide body sales show.
Speaker 4: Okay, so that's sort of the Boeing Airbus story. Before
Speaker 4: we let you go, how is general demand? Like we
Speaker 4: know from say Spirit it's not great, but that might
Speaker 4: be a spirit thing. But then you have the Delta
Speaker 4: United American. How are they doing?
Speaker 3: Oh, it's great, everything's great, it's great, but profitability isn't great.
Speaker 6: So that means yea pricing might not be right.
Speaker 3: So you know, what we what we're seeing the TV's
Speaker 3: we're seeing is that it looks like premium demand.
Speaker 6: Is still pretty strong.
Speaker 3: Tom King, and that's gonna help Tom King's bereaving and
Speaker 3: that's gonna help, you know, the big three Delta United American.
Speaker 6: Right, but the back of the bus.
Speaker 3: If you will, right, the back of the cheap seats,
Speaker 3: those are those are in much more supply and much
Speaker 3: more competitive right now. And so if you're an airline
Speaker 3: that focuses just on economy, I think you're gonna have
Speaker 3: a harder time this earning season than you will for
Speaker 3: the Big three the Pats.
Speaker 6: You're gonna take a lot of a lot of the
Speaker 6: money away from the airlines this quarter.
Speaker 3: Really, the airline business is looking to us like there's
Speaker 3: a lot less business travel.
Speaker 6: There's there's not a lot less.
Speaker 3: There's ten or ten or twenty percent less business travel,
Speaker 3: but it hurts because it's high, high price travel. So
Speaker 3: it looks like the business may make even more of
Speaker 3: its profitability in two Q and three Q. We're not
Speaker 3: expecting great things in one Q from anybody, but again,
Speaker 3: the full server should do a little bit better. And
Speaker 3: what we're all watching is is leisure summer demand going
Speaker 3: to be so strong that it's going to drive profits
Speaker 3: for the year, better profits for the year than they
Speaker 3: had last year. We feel like ticket prices might be softening.
Speaker 3: We'll get our first glimpses as as airlines start to
Speaker 3: report and tell us what they're seeing for bookings.
Speaker 2: Well, Alex and I have a major business trip for
Speaker 2: the month of June very it's gonna be very impactful.
Speaker 2: So we'll be doing our Uh did you get your tickets?
Speaker 5: I got to do that.
Speaker 1: Oh yeah, you got to do that.
Speaker 5: I TV. We're like book and stuff like three days before.
Speaker 4: I'm not like the long which is funny because I'm
Speaker 4: actually a long term planner.
Speaker 5: George, good to see you. Great to see for coming in.
Speaker 4: We'll probably drag you over here tomorrow to are you
Speaker 4: here tomorrow to.
Speaker 6: Go back to Princeton's.
Speaker 2: They have lunch, They have everything there exactly.
Speaker 5: We have un.
Speaker 2: Real lunch lunch stations.
Speaker 6: Proper all really.
Speaker 4: Wants to go to Prince Boomberg Intelligence in your Aerospace,
Speaker 4: Defense and Airlines analyst George Ferguson and joining us now
Speaker 4: always a pleasure.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on applecar Play and Android
Speaker 1: Auto with the Bloomberg Business. You can also listen live
Speaker 1: on Amazon Alexa from our flagship New York station. Just
Speaker 1: say Alexa play Bloomberg eleven thirty.
Speaker 2: Okay, sorry, okay, pay attention French.
Speaker 4: They have lavendercent they have almonds. It's just anyway. My
Speaker 4: point being is that that's how we know it. It's
Speaker 4: the good hand cream place, and apparently it's billionaire owner
Speaker 4: is nearing a deal to take that skincare company private
Speaker 4: with funding help from Blackstone. And this is people familiar
Speaker 4: with the matter ending it's fourteen year run on the
Speaker 4: Hong Kong Stock Exchange.
Speaker 5: To be honest, I didn't even know. I didn't even
Speaker 5: know what traded.
Speaker 2: In Hong Kong. Not to die. I'm trying to look
Speaker 2: it up here. But it's working on you.
Speaker 5: He's working on it.
Speaker 4: He's gonna work on it, and we're going to talk
Speaker 4: about it. Joining us now for more is David Havens,
Speaker 4: Bloomberg Intelligence, a senior credit analyst. He joins us, Okay,
Speaker 4: so do you use the hand cream?
Speaker 6: I use the soap?
Speaker 4: See soap, See soap if they give.
Speaker 7: It away at hotels.
Speaker 1: Yes.
Speaker 4: So is this Blackstone buying the company or is this
Speaker 4: Blackstone being kind of like a banker to the billionaire
Speaker 4: and helping them buy it out.
Speaker 6: It's the ladder.
Speaker 7: So the way that the story reads us far is
Speaker 7: that the billionaire owner is going to take the company private,
Speaker 7: or is making efforts to take the company private Blackstone.
Speaker 7: I don't know if they will or won't. You know,
Speaker 7: it seems like the sort of thing that Blackstone might
Speaker 7: take a piece of the equity also for some of
Speaker 7: its funds, But I think the primary role that Blackstone
Speaker 7: will be playing here is providing the funding, the credit
Speaker 7: funding for the cash purchase.
Speaker 5: So what's it?
Speaker 2: Seems like Blackstone is everywhere these days, and granted they
Speaker 2: are literally everywhere. What are they doing in this marketplace?
Speaker 8: What is it?
Speaker 2: Kind of these deals here where they take a piece
Speaker 2: of the capital structure, whether it's equity or dead or
Speaker 2: they do just big deals themselves. What are they up
Speaker 2: to these days?
Speaker 7: Well, Blackstone is a trillion dollar alternative asset manager. It's
Speaker 7: the largest in the largest in the world. Or in
Speaker 7: the earlier segment, you talked about Blackstone's position in real estate.
Speaker 7: I believe they are the largest institutional investor in real
Speaker 7: estate with over three hundred billion of assets in their portfolio.
Speaker 7: They're gigantic in private equity, gigantic and private credit.
Speaker 6: They've got about.
Speaker 7: Two hundred billion dollars a dry powder that they need
Speaker 7: to put to work in order to earn fees on
Speaker 7: that money.
Speaker 2: So they've got a lot of deals. Oh yeah, I
Speaker 2: mean where is that number? Typically, I got to figure
Speaker 2: that two hundred million dollars with dry powders, probably more
Speaker 2: than they would like because they don't necessarily get paid
Speaker 2: on that lots just sitting there. They got to go
Speaker 2: out and spend it and then raise some more, which
Speaker 2: is where they get paid.
Speaker 7: Yeah, And just to put all that in context, I
Speaker 7: think that there's two to three trillion dollars a dry
Speaker 7: powder across the private multiverse, I guess we can call it.
Speaker 7: But they're going to be looking everywhere globally, and they've.
Speaker 6: Got global reach.
Speaker 7: You know, that is pretty much not many compared to
Speaker 7: their global reach. The few in the ballpark.
Speaker 4: Maybe just going to the structure of the less of
Speaker 4: ten deal for a sec, is this unusual for Blackstone
Speaker 4: to provide the funding that like a bank would have
Speaker 4: normally done for the billionaire.
Speaker 7: It's more and more common than it used to be.
Speaker 7: And I think that you can pretty much go back
Speaker 7: to the financial crisis. You can go back to bank
Speaker 7: regulations being rewritten in the aftermath of the financial crisis,
Speaker 7: with riskway charges going up on corporate lending. So basically
Speaker 7: one of the upshots of Basle Threebouzel four dot Frank
Speaker 7: is that it's taken commercial banks, regional banks out of
Speaker 7: sort of the traditional business of lending to lending to corporations,
Speaker 7: particularly on a leverage basis, and so Blackstone KKR, the
Speaker 7: whole universe of the credit is able to step into
Speaker 7: that breach on favorable favorable funding costs without some of
Speaker 7: the regulatory overhang, and they're able to do pretty well
Speaker 7: right now.
Speaker 2: All right, folks, on the bio page, if you want
Speaker 2: to see at the bio of any guests we have,
Speaker 2: for example, you go bio in the name, and it's
Speaker 2: got career and education and all that kind of stuff.
Speaker 2: And it's also a little section there called memberships maybe
Speaker 2: where your you know, board of directors or something like that.
Speaker 2: If you're a member Council Foreign Relations, you would list
Speaker 2: it there, David havens under memberships includes Netflix and Sam's
Speaker 2: Wholesale Club.
Speaker 5: I love that you did that. That's awesome.
Speaker 2: That's a few other memberships too, right, that's very proud,
Speaker 2: very prestigious. Uhould be very very proud, David. I'm surprised
Speaker 2: we haven't seen more private equity back to IPOs. I mean,
Speaker 2: I got a market. It's up twenty five percent since October.
Speaker 2: Back when I was on the street, I could push
Speaker 2: out a gajillion deals with that kind of backdrop. Why
Speaker 2: are the private equity guys maybe not pushing Are they
Speaker 2: about down round valuations or because I got to think
Speaker 2: it's been a foul of a couple of years here
Speaker 2: for new deals, I would think they'd want to lock
Speaker 2: up or unlock some of these things.
Speaker 7: Yeah, No, I think absolutely, And I think that what's
Speaker 7: happened is you're going to see a lot more of
Speaker 7: these realizations as they're called, you know, taking place.
Speaker 6: But we're not.
Speaker 7: We're let's we're only about a year off from the
Speaker 7: regional banking crisis in the US and the failure of
Speaker 7: credit Swiss, you know, so we saw some pretty significant
Speaker 7: tectonic temblers in the world of banking, and that I
Speaker 7: think put things on pause for a period of time.
Speaker 7: But I think that we're pretty much coming out of it.
Speaker 7: And if you look at equity valuations, the markets are obviously,
Speaker 7: you know, doing extremely well. Might be concentrated in a
Speaker 7: few names, but the market's generally doing well. And if
Speaker 7: you look at the credit market, the high grade credit
Speaker 7: index in the US is eighty six basis points right now,
Speaker 7: maybe one to two percent of the time. Over the
Speaker 7: past twenty or thirty years, it's been under one hundred
Speaker 7: basis points. We're near record tights six basis points away
Speaker 7: since nineteen ninety nine. So markets I think are ready
Speaker 7: and receptive. So it's just a case of I think
Speaker 7: getting these things prepped and ready to sort of send
Speaker 7: out the door. And they may not be IPOs, they
Speaker 7: might be sales to other private investors.
Speaker 5: Right, secondaries.
Speaker 4: Right, I feel like I've read a lot about how
Speaker 4: that's huge now because the exit market has just not
Speaker 4: been around. Where do you think the issues and the
Speaker 4: cracks come in, whether you're looking at private equity or
Speaker 4: private credit. Because the narrative is like, look, it's ten
Speaker 4: year investments. Okay, it's a tough few years, but it's
Speaker 4: going to be okay because we got like seven five
Speaker 4: more years to make it up, et cetera. But everybody
Speaker 4: says that, but then everyone warns about it, and I'm
Speaker 4: trying to understand who's going to be left holding.
Speaker 5: The I don't know what are they holding? The bag,
Speaker 5: the empty bag, the non Sam's club bag.
Speaker 7: Right, So I think that a year ago there is
Speaker 7: an awful lot of concern that private credit would have
Speaker 7: serious problems. That hasn't occurred if you look at the
Speaker 7: default rates within business development company portfolios. So these are
Speaker 7: public private lenders that are part of the affiliated with
Speaker 7: the Blackstone KKR companies like that areas. If you look
Speaker 7: at their performance, they've had virtually no defaults, So things
Speaker 7: haven't fallen apart. I think that what you're seeing is
Speaker 7: that there's an awful lot of cash out there leftover
Speaker 7: from the leftover from the pandemic. When you talk about
Speaker 7: risks going forward, monetary tightening is having I guess a
Speaker 7: negative influence in that there's less money supply out there,
Speaker 7: but it's just not showing up in terms of the
Speaker 7: performance of the companies that have been lent.
Speaker 6: To thus far.
Speaker 2: What's the capital raising environment like for a lot of
Speaker 2: the funds you cover, both equity and for private credit.
Speaker 2: Can I go out there and just is it still
Speaker 2: I can go out there and pretty much raise any
Speaker 2: money if I'm a Blackstone or Apollo or KKR.
Speaker 7: Yeah, if I have it right. I think that Blackstone
Speaker 7: raised one point one billion dollars for a b credit,
Speaker 7: which is the largest business development company. It's got about
Speaker 7: fifty billion dollars of assets. It's a privately traded company,
Speaker 7: but I think they raised one point one billion in
Speaker 7: December or January, which I think was their biggest month ever.
Speaker 7: And if you look at b Ret, which is I
Speaker 7: think the largest reate out there, they had a lot
Speaker 7: of redemption requests a year ago. Those redemption requests I
Speaker 7: think have dropped precipitously, So there's a lot of money
Speaker 7: out there that needs to find a home. And if
Speaker 7: you look at the total returns on private credit at Blackstone,
Speaker 7: for example, I think it was up fourteen percent last year,
Speaker 7: which compares extremely well to just about anything else out there.
Speaker 7: So people are always.
Speaker 5: Chasing You're great, You're really it's great, we love you.
Speaker 5: What else you're watching?
Speaker 7: Well, you know, I cover all sorts of financial thing imagigs.
Speaker 7: They are not non bank thing ima jigs. And one
Speaker 7: of the areas which I think is really interesting is
Speaker 7: what's going on between the private world, private debt, private credit,
Speaker 7: alternative asset management, and life insurance. And you know, that's
Speaker 7: a forty trillion dollar addressable market for the alternative asset managers.
Speaker 7: You've seen companies like Apollo and Kkar via a theme
Speaker 7: and Global Atlantic owning some of the top annuity in
Speaker 7: life insurance companies in the United States. So that's an
Speaker 7: area which I think we're going to see a lot
Speaker 7: more convergence over the next couple of years. And then
Speaker 7: you were talking in the earlier segment about office also
Speaker 7: and about how real estate is not all created equal.
Speaker 7: Office is an area that we're going to continue to
Speaker 7: keep a very close eye on because there is a
Speaker 7: real secular shift on top of what was a cyclical
Speaker 7: shift apartments, warehouses, you know, health properties, life sciences.
Speaker 2: I'm interesting to see for some of these big office
Speaker 2: properties trade in the urban centers and big big discounts
Speaker 2: I think. David Havens, thanks so much for joining us.
Speaker 2: David Havens, he's a senior credit analyst for Bloomber Intelligence.
Speaker 2: Joining us live here in our Bloomberg Interactive Brokers studio.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on Apple car Play and
Speaker 1: Android Auto with the Bloomberg Business app. Listen on demand
Speaker 1: wherever you get your podcasts, or watch us live on YouTube.
Speaker 4: Waiting for CPI A thirty tomorrow. Will it be a
Speaker 4: big market uber and if not, what else are we
Speaker 4: waiting for?
Speaker 5: Waiting then for earnings. They're gonna kick off on Friday.
Speaker 4: So let's get the take now with Rubin Jmenision, his
Speaker 4: generalist portfolio manager over TCW's fixed income group. He joins
Speaker 4: us from Los Angeles, California. Rubin, what do you think
Speaker 4: the pain trade is into tomorrow's CPI?
Speaker 8: Good morning, Thanks for having me on.
Speaker 9: Well, we think the CPI tomorrow, Well, the big pain
Speaker 9: trade is as we've seen in the beginning of the year.
Speaker 9: We have seen we may see some some some increase
Speaker 9: in CPI for deriven by seasonal factor or driven by
Speaker 9: some other quirks of inflation calculation.
Speaker 8: But generally speaking, as we look at the inflation inflation matrix.
Speaker 9: Over a longer term, we see that the trend is
Speaker 9: one of the declining or this acceleration of inflation. So
Speaker 9: as we look at PC, looked we got PC about
Speaker 9: a week ago or so.
Speaker 8: The PC core PC he read was about two.
Speaker 9: Point eight percentage two point eight percent year over year,
Speaker 9: And while that's above the target that the Fed has,
Speaker 9: but that marks the fourteenth year over year decline in
Speaker 9: a row. And as we look at the core pc
Speaker 9: X shelter. As we know, shelter is one of the
Speaker 9: notorious lagging indicators of the inflation calculation. That was about
Speaker 9: two point one percent, much closer to the inflav to
Speaker 9: the Fed inflation expectation, and again that marks more than
Speaker 9: a year of declining year over year reads of that
Speaker 9: of that may measure all.
Speaker 2: Right, So Rubin, let's I guess one of the first
Speaker 2: questions people have its like, what's this economy going to do?
Speaker 2: And what's this federal reserve going to do? It feels
Speaker 2: like the soft landing is being fairly well negotiated by
Speaker 2: the Federal Reserve and that more than more than not,
Speaker 2: there will be some rate cuts this year. Do you
Speaker 2: guys agree with that?
Speaker 8: We do agree with that.
Speaker 9: We moreover, we do think that the rate cut where
Speaker 9: we will see more rate cuts than what's currently being
Speaker 9: priced in. So generally, as we look at the market,
Speaker 9: we think that the market is being priced for perfection.
Speaker 9: You know, we have very very gradual rate cuts priced in.
Speaker 9: You look at the credit markets, corporate credit markets, they
Speaker 9: are at cycle tights. Spreads are at cycle tights right now,
Speaker 9: which means that the compensation that corporate bond investors receive
Speaker 9: for holding corporate bonds is at the lowest level we've
Speaker 9: seen in this cycle, and that's a lot of oplimism
Speaker 9: that's being priced into the market. We at TCW are
Speaker 9: less optimistic about the prospects of the economy. We think,
Speaker 9: in fact that a lot of that optimism that we
Speaker 9: see in the market is perhaps extrapolation of the strong
Speaker 9: resilient twenty twenty three that we've seen. But we think
Speaker 9: that one should use a lot of caution when extrapolating
Speaker 9: from the strong resilient twenty twenty three into twenty twenty four,
Speaker 9: because there were some significant tailwinds that helped growth in
Speaker 9: twenty twenty three that we don't think are going to
Speaker 9: be nearly as powerful for twenty twenty four.
Speaker 8: Growth enhanced, the growth will prove yes.
Speaker 4: So what do you think, where will the data become
Speaker 4: weaker and where will we see that reflected. It seems
Speaker 4: like we can kind of pick the narrative and find
Speaker 4: the data right like the NFIB for example, at lowest
Speaker 4: level since twenty twenty one, right expecting sales to fall
Speaker 4: like it doesn't look great, But then you take a
Speaker 4: look at the jobs number, and then it looks great.
Speaker 8: Yes, you're absolutely right.
Speaker 9: The data has been coming in mixed, and you know,
Speaker 9: we had some very strong payroll data, but NFIB Business
Speaker 9: Optimist number this morning was very was very very was
Speaker 9: not as good. Was actually pretty bad across across the board,
Speaker 9: whether you look at the credit condition for small businesses,
Speaker 9: whether you look at hiring plans, and if you if
Speaker 9: you do believe that the small businesses employee about forty
Speaker 9: percent of your workforce, that's pretty significant.
Speaker 8: So we already see some cracks in the data.
Speaker 9: You know, you know, the the some of the tailwinds
Speaker 9: that they talked about that that were powerful in twenty
Speaker 9: twenty three and perhaps the first quarter of twenty twenty
Speaker 9: four as well as the data is coming in helped prolong.
Speaker 8: The cycle, so to speak.
Speaker 9: So but we do still see cracks, especially in areas
Speaker 9: that are highly exposed to high that are more interest
Speaker 9: rates sensitive. So when we look at on consumer side,
Speaker 9: for example, we look at the delinquency rates, and there
Speaker 9: are higher across the almost across the board, and in
Speaker 9: many many cases delinquency rates that we see are higher
Speaker 9: than pre pandemic levels. Is you remember in twenty twenty three,
Speaker 9: the store was that the links rates are rising, but
Speaker 9: they're rising to pre pandemic normal to pre pandemic levels,
Speaker 9: so they're normalizing to pre pandemic.
Speaker 8: That is no longer the.
Speaker 9: Case because in many cases, especially at the you know,
Speaker 9: for the bottom cohores of income distribution spectrum, we do
Speaker 9: see that those linkal s rates are way higher than
Speaker 9: pre pandemic levels and rising. When we look at the
Speaker 9: corporate sector, we do see that the segments that are
Speaker 9: most sensitive to interest rates, bank loans that reset the
Speaker 9: rate on a quarterly basis.
Speaker 8: They see their default rates increasing. There.
Speaker 9: They went from sub two percent in a couple of
Speaker 9: years ago to mid single digits depending on how you measure,
Speaker 9: and that there's a measure defaults. So they're on the
Speaker 9: rise as well, and we think that will continue as
Speaker 9: we see, you know, the monetary policy lacks dissipate and
Speaker 9: monitary policy continue to weigh on the economic growth.
Speaker 2: So Rubin, I mean, I'm an equity guy, but I
Speaker 2: look at the two year treasury and I can get
Speaker 2: four point seventy three percent work my money there or
Speaker 2: do I take some credit risk and think about that?
Speaker 2: How do you guys think about that?
Speaker 9: Well, we do like the front end of the curve,
Speaker 9: So we're overweight duration, and a big fraction of our
Speaker 9: overweight is in the front end of the curve in
Speaker 9: two years and five years, because we do think that's
Speaker 9: an attract that those are attractive rates. That being said,
Speaker 9: credit we think is very very optimistically priced. We don't
Speaker 9: think investors get a ton of compensation or forget being
Speaker 9: in corporate credit, but we do think that the securitized
Speaker 9: markets agency mbs for instance, and some segments of non
Speaker 9: agency securitized credit are very attractively priced. So we are
Speaker 9: currently expressing some overweights in those areas as we think
Speaker 9: that those are more attractive, far more attractive than corporate credit,
Speaker 9: which is as I mentioned at cycle tights in IG
Speaker 9: and in high yield as well.
Speaker 4: So if you like the front end, is that a
Speaker 4: pure yield play or is that a price appreciation play
Speaker 4: or honestly.
Speaker 9: Both, well, it's both. We do think we'll see some
Speaker 9: price appreciate. Gilds are attractive, as we know, but we
Speaker 9: think that we'll get some price appreciation as well because
Speaker 9: we do think that the rates will will come down,
Speaker 9: especially more so in the front end of the curve.
Speaker 9: We do expect a bulls deepening of the curve where
Speaker 9: where by the front end of the you know, the
Speaker 9: lower tenors, the shorter tenors will come down more than
Speaker 9: the belly and the and the long end of the curve.
Speaker 8: So we think you'll get both.
Speaker 9: You'll get a price appreciation and obviously you're clipping a
Speaker 9: very high yield uh while holding the short treasury bonds.
Speaker 4: All right, Rubin, thanks very much. I really appreciate Rubin
Speaker 4: hoven asci And Okay, I'm going to get it.
Speaker 5: Homan Is, Did I get it? Did I sort of
Speaker 5: get it?
Speaker 8: Yes? Yes, you did?
Speaker 5: Nice? All right, he joins us.
Speaker 4: There he's a general's portfolio manager at tc w's fixed
Speaker 4: income group.
Speaker 2: Those those people tc W, every person we get smart.
Speaker 4: Super smart smart.
Speaker 8: Uh.
Speaker 4: And you know you raised the point about you know
Speaker 4: you're the equity The ampity risk premium is like nothing
Speaker 4: over bonds, right, It's just like, how do you buy
Speaker 4: equities then when you can get a two year yielding
Speaker 4: almost five percent? And we talk a lot about how
Speaker 4: all that money and money market funds is going to
Speaker 4: go somewhere?
Speaker 2: How about how about New Jersey municipal bonds?
Speaker 5: Oh about on a deep teas for Friday.
Speaker 2: Tuesday, but just get you're ready municipals on Friday.
Speaker 5: So yeah, it's true. I mean slowly he'll convert me.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on applecar Play and Android
Speaker 1: Auto with the Bloomberg Business. You can also listen live
Speaker 1: on Amazon Alexa from our flagship New York station Just
Speaker 1: Say Alexa playing Bloomberg eleven thirty.
Speaker 4: We strive to bring you the best from Bloomberg Intelligence.
Speaker 4: We cover two thousand companies one hundred and thirty industries worldwide.
Speaker 4: We also strive to bring you the best from Bloomberg News,
Speaker 4: and to do that we go to Sheridan Prasso. She's
Speaker 4: Bloomberg News Senior Investigations a writer and she joins us
Speaker 4: from Washington, d C. Her her story is the Big
Speaker 4: Take story on Bloomberg. She co authored about how countries
Speaker 4: from Central Asia to South America are building their own
Speaker 4: killer tech based on Iranian designs.
Speaker 5: This does not.
Speaker 4: Feel like a feel good story, Sheridan, thank you so
Speaker 4: much for joining us.
Speaker 5: Really appreciate it.
Speaker 4: Walk us through your stories about and what you learned
Speaker 4: in this investigation process.
Speaker 10: Hi, So thanks for having me. We had we took
Speaker 10: a look at how US technology flows are going into
Speaker 10: Iran's drone program, and what we found is just an
Speaker 10: incredible proliferation of Iranian drones now spreading throughout the world
Speaker 10: in ways that surprised even me from when I first
Speaker 10: started looking into this. You know, we obviously know about
Speaker 10: Iran's drone proliferation in the Middle East context, right through Syria,
Speaker 10: I Rock, including now into Yama and Yemen, and then
Speaker 10: in the Middle East, you know, conflict in Gaza now
Speaker 10: as well, we're seeing kind of use of Iranian drones
Speaker 10: in the periphery of that conflict as well. But what
Speaker 10: also was surprising to us we found is that Iranian
Speaker 10: drones are now being manufactured in Russia. There's a program
Speaker 10: for six thousand Iranian drones there that are starting to
Speaker 10: turn up now in the battlefields of Ukraine. They're increasing
Speaker 10: proliferation in places like Central Asia and in South America
Speaker 10: as well, so it really is quite an enormous spread
Speaker 10: around the world.
Speaker 2: How is the technology, how advanced is the technology? Is
Speaker 2: just a model airplane with a lawnmower engine on the
Speaker 2: back or are they going something.
Speaker 10: Further it essentially is, and it's fairly low tech. But
Speaker 10: what's been really successful about these programs is that they're
Speaker 10: increasingly developing them and learning from experiences on the battlefield,
Speaker 10: for example in Ukraine. So what is now believed to
Speaker 10: be the case is that Iran learned from the way
Speaker 10: that Iranian drones were now being able to get into
Speaker 10: Ukraine had increased their effectiveness in the Middle East context.
Speaker 10: So it's increasingly battlefield experience and more and more use
Speaker 10: of these drones that are allowing them to make more
Speaker 10: deadly strikes. Actually in these conflicts. We're seeing them, especially
Speaker 10: in the Red Sea. And also there was the particular
Speaker 10: case of the three servicemen who were killed in Jordan
Speaker 10: earlier this year. It was a fairly low tech small drone,
Speaker 10: but what it was able to do is we learned
Speaker 10: in the course of this reporting that it was kind
Speaker 10: of drafting in behind a US drone that was attempting
Speaker 10: to land at the same time. And those drafting techniques
Speaker 10: are something that they've been working on improving in the
Speaker 10: Russian and Ukrainian context. So this kind of learning growing
Speaker 10: proliferating technology using low tech technology, but actually improving its
Speaker 10: effectiveness is actually proving very deadly.
Speaker 5: What can we do about this?
Speaker 10: So the US has export controls where we try to
Speaker 10: stop US technology from going into these drones and into
Speaker 10: the manufacturing of these drones. The issue, though, is that
Speaker 10: Iran in particular has become a master of circumventing, you know,
Speaker 10: over forty years of sanctions. There are very developed networks
Speaker 10: where front companies from all over the world are able
Speaker 10: to acquire this low tech technology at uh. A lot
Speaker 10: of our export controls are aimed at stopping sort of
Speaker 10: the higher end you know, chips now going to China
Speaker 10: for example, for their AI, but in fact the proliferation
Speaker 10: of kind of lower tech you know, you need like
Speaker 10: maybe a few hundred low tech chips, the kind that
Speaker 10: go into your you know, lawnmower or you or blender
Speaker 10: or any kind of regular household equipment. That low tech
Speaker 10: stuff is actually what's powering the drones as well. And
Speaker 10: a lot of that is just available, it's recycled from
Speaker 10: old products, it's uh available from suppliers in Asia. China
Speaker 10: in particular has not been willing to enforce our US
Speaker 10: export controls against Russia, for example, So there's actually a
Speaker 10: very big loophole, particularly in Asia, for US tech flowing
Speaker 10: now into Russia into a run drone program in Russia.
Speaker 10: So there are a bunch of concerted efforts now to
Speaker 10: try to make that stop.
Speaker 2: Sheridan, Do we know how effective these drones are?
Speaker 10: So they've been very deadly in particular instances. What we've
Speaker 10: seen is a halt to I forget the percentage, maybe
Speaker 10: more than fifty percent of shipping in the Red Sea
Speaker 10: has been halted by some drone attacks in the past
Speaker 10: few months. We've saw the deadly attack in Lebanon and
Speaker 10: several other very effective drone strikes as well, and so
Speaker 10: it's really cause for alarm in Washington. You know, we're
Speaker 10: wondering how far this is going to go, how effective
Speaker 10: this is, our efforts at stopping it are going to be.
Speaker 10: You know, we're considering kind of how do you actually
Speaker 10: get US companies to stop allowing their technology to go there.
Speaker 10: And the companies that we talked to, for example, Texas Instruments,
Speaker 10: Analog Devices, a lot of their stuff at least eighty
Speaker 10: percent of the drones that are turning up in Ukraine
Speaker 10: or containing this US technology from in particularly these companies
Speaker 10: and a few others as well. How do you get
Speaker 10: that to stop and therefore decrease Iran's ability to proliferate.
Speaker 10: And that's the biggest question right now.
Speaker 5: What did those companies say.
Speaker 10: The companies say that that we ad by by US
Speaker 10: export controls. We have our insisted our suppliers do so
Speaker 10: as well. The issue is that there's so many loopholes,
Speaker 10: and in particular Hong Kong is proving to be a
Speaker 10: very difficult place. It used to be maybe ten, twelve,
Speaker 10: fifteen years ago, we had much better relations with Hong Kong.
Speaker 10: They would have been a lot closer to Western interests.
Speaker 10: And now with the changes that have happened in Hong
Speaker 10: Kong and the last three four years, we have seen
Speaker 10: less willingness on the part of Hong Kong officials to
Speaker 10: actually enforce US export controls, particularly going towards Russia, and
Speaker 10: so we've seen a big uptick in proliferation from equipment
Speaker 10: going via Hong Kong into Russia, for example. It is
Speaker 10: much better though at enforcing UN sanctions against Iran, and
Speaker 10: so it has successfully stopped a lot of technology going
Speaker 10: to run. But still there are quite a few kind
Speaker 10: of leaks in the dam basically, so it's happening all
Speaker 10: around all right.
Speaker 4: Shardon, thanks a lot, We really appreciate it. Sharon impress
Speaker 4: so Bloomberg News Senior Investigations a writer, and I highly
Speaker 4: recommend that everyone read her piece.
Speaker 5: You can find the.
Speaker 4: Story on Bloomberg and at Bloomberg dot com, slash Big Take,
Speaker 4: check out the Bloomberg Big Take podcast at Bloomberg dot
Speaker 4: com and wherever you.
Speaker 5: Get your podcasts. I love how like, how do you
Speaker 5: get turned on to all these stories?
Speaker 4: Right? Because you're investigative reporter, it can go to so
Speaker 4: many different directions. But what an amazing piece of work
Speaker 4: and something that isn't We're working on it like an
Speaker 4: easy quick fix.
Speaker 2: No no, and on this story that there is the
Speaker 2: Big Take podcast hosted co hosted by David Gura, and
Speaker 2: they're featuring this story. So you can go check out
Speaker 2: that podcast. Just fascinating stuff.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on applecard Play and Android
Speaker 1: Auto with the Bloomberg Business app. You can also listen
Speaker 1: live on Amazon Alexa from our flagship New York station,
Speaker 1: Just Say Alexa Play Bloomberg eleven thirty.
Speaker 2: A lot of folks are saying, you know, as I
Speaker 2: look at the market here off a half a one percent,
Speaker 2: is Jonas's reporting that what this market needs is a
Speaker 2: you know, a more I guess bigger pullback, maybe five percent,
Speaker 2: ten percent, something like that, that that would not be
Speaker 2: the worst thing for this market, but we have not
Speaker 2: seen that in some time. Again, SMP up more than
Speaker 2: twenty five percent off of those October lows. Let's check
Speaker 2: in with a professional now, Nancy Daoud. She is private
Speaker 2: wealth advisor at Amorprice Financial, joining us from Miami, Florida
Speaker 2: via zoom. Nancy, thanks so much for joining us here.
Speaker 2: I mean, what are you telling your clients here? Is
Speaker 2: it just up up in a way here for risk assets?
Speaker 11: Well, that's a great question, because you know, everybody wants
Speaker 11: to talk about how great the market is, and what
Speaker 11: I'm what we're really telling our clients is essentially to
Speaker 11: be very very cautious because people get too used to
Speaker 11: this and they expect it to just continue forever. And
Speaker 11: up markets don't last, and neither do down markets, you know, obviously,
Speaker 11: And I think this is the opportunity for us to
Speaker 11: sit down with our clients and talk about well, what
Speaker 11: are your shorter term cash needs, because there's no better
Speaker 11: time to just take some money off the table and
Speaker 11: board it for those immediate cash needs, anything in the
Speaker 11: one to the next one to three years, this is
Speaker 11: the time to do it. And I believe also that
Speaker 11: that's probably what we're seeing. I mean, we saw a
Speaker 11: couple of days of downturns in the last week, and
Speaker 11: of course now that's happening again. I think a good
Speaker 11: chunk of that could very well be some profit taking.
Speaker 2: Yeah, absolutely, but we just you know, a lot of
Speaker 2: folks again expect to see more pronounced profit taking than
Speaker 2: what we've seen recently. And one of the issues is,
Speaker 2: you know, for by and large, this is a market
Speaker 2: really in twenty twenty three and continuing to some degree
Speaker 2: this year, has really been led by those big tech names.
Speaker 2: I know there's some laggards like Apple, like Tesla, but
Speaker 2: the big tech names have still been kind of leading
Speaker 2: the way. Is that still going to be the case?
Speaker 2: Is that you're do you think tech is still the
Speaker 2: leader in this market?
Speaker 11: Well, longer term, certainly, yes, But just more recently it's
Speaker 11: been nice to see a broadening of the market a
Speaker 11: little bit. We've seen financials do really well, healthcare continues
Speaker 11: to do well. Energy obviously is catching up a bit,
Speaker 11: and mostly because of the geopolitical environment that we're in,
Speaker 11: and we're seeing a little bit of the broadening of
Speaker 11: the market, which helps in that sentiment a little bit.
Speaker 11: You'd never want just one sector to dominate, you know,
Speaker 11: to make or break the market. But longer term, certainly
Speaker 11: technology is the next boom, or the AI really is
Speaker 11: the next boom. And if you're in it for the
Speaker 11: longer term, meaning seven to ten years or longer, what
Speaker 11: opportunity do.
Speaker 4: You feel in the shorter term? Do you feel confident
Speaker 4: that the broadening out will continue throughout this earning season.
Speaker 11: Well, you know, I think there's quite a few variables
Speaker 11: that may or may not affect that, and that's the
Speaker 11: persistent inflation. I mean, getting to two percent, I think
Speaker 11: is going to be a lot tougher than everyone thinks
Speaker 11: because the progression or the progress that we've made in
Speaker 11: the last couple of years has been, you know, pretty
Speaker 11: much on track, but it's always that home stretch that
Speaker 11: takes a little longer and with a significant more I
Speaker 11: know everybody's been very bullish about rate cuts happening you know,
Speaker 11: next month, or we don't believe that that's going to
Speaker 11: happen anytime soon, and if it does, it won't be
Speaker 11: until the latter part of the year. I mean, we're
Speaker 11: seeing mortgage rates actually going up at this time, and
Speaker 11: the reality is sinking in, you know, and that is
Speaker 11: that although inflation is no longer increasing or going up
Speaker 11: as much, you know, this is the new normal. Prices
Speaker 11: are the way they are now. They are not going back,
Speaker 11: and there's a little bit of an adjustment to that.
Speaker 2: Yeah, Hey, Nancy, my co host here, Alex is a
Speaker 2: expert in the field of all things energy. What do
Speaker 2: you think about that sector right now with Brent crude
Speaker 2: at you know, close to ninety dollars a barrel.
Speaker 11: Well, typically we always see energy as an opportunity during
Speaker 11: a time of geopolitical risk, which we certainly have right now.
Speaker 11: So since October when the Israel the Middle East war started,
Speaker 11: then we begin to buy some energy or ETFs mainly,
Speaker 11: and that's that's when we saw a big uptick, but
Speaker 11: then it kind of came down. Now it's really pulling
Speaker 11: going up again. So this is you know, oil prices
Speaker 11: are always something to watch during a time when there's
Speaker 11: a lot of geopolitical risk and we have a war
Speaker 11: in Europe and we have some going on in Southeast Asia.
Speaker 11: I mean, it's it's on every front.
Speaker 4: So based on that, I mean, I appreciate that the
Speaker 4: oil trade is there for that. Do you think the
Speaker 4: gold is moving along the same lines as that or
Speaker 4: do you think gold is moving on its own because
Speaker 4: no one kind of really gets what's going on there.
Speaker 11: Well, that's hard to predict, but it doesn't appear that
Speaker 11: they're moving together. I think they're probably kind of on
Speaker 11: its own. Gold is probably on its own a bit.
Speaker 4: Yeah, it's interesting when we talk about save Haven's Paul right, Yeah,
Speaker 4: is that what's happening? Okay, we're going to play stuff,
Speaker 4: but we're going to go save Haven as gold or
Speaker 4: is it something?
Speaker 6: Yeah?
Speaker 2: And you know the central banks that we had a
Speaker 2: guest this morning, Tom Keenan and I and really talking
Speaker 2: about the central banks around the world kind of concerted
Speaker 2: buying there, including China NATSI just lastly broke real quick,
Speaker 2: what are you looking for in earnings? We're going to
Speaker 2: get earnings kicking off in Earnest this week here.
Speaker 11: We're expecting to see more of the same, it wouldn't
Speaker 11: be unusual to see a little bit of some pullback
Speaker 11: or you know, not maybe not as strong. But you know,
Speaker 11: it's interesting that it's always about expectations. If we expect
Speaker 11: earnings to be really strong and they come up weaker,
Speaker 11: the market reacts violently. And if the market if I'm sorry,
Speaker 11: if earnings are expected to be weak and they come
Speaker 11: out really strong, the market, you know, reacts violently also.
Speaker 11: So it really all has to do with expectations, not
Speaker 11: so much much about the real numbers. And you know,
Speaker 11: when we put together portfolios and make recommendations for clients,
Speaker 11: it's really about the math, not about sentiment. You've got
Speaker 11: to always go back to the math because the math
Speaker 11: are always rules in the end.
Speaker 2: Yep, Nancy, thank you so much for joining us at
Speaker 2: Nancy Dude President. She's a private wealth advisor at Amerorprise Financial.
Speaker 1: This is the Bloomberg Intelligence Podcast, available on apples, Spotify,
Speaker 1: and anywhere else you will get your podcasts. Listen live
Speaker 1: each weekday ten am to noon Eastern on Bloomberg dot com,
Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app.
Speaker 1: You can also watch us live every weekday on YouTube
Speaker 1: and always on the Bloomberg Terminal