WEBVTT - A Closer Look At Commodities 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.479 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.119 at Bloomberg dot com slash podcast. I guess the story 0:00:22.160 --> 0:00:25.360 of the weekend markets is the Federal Reserve, the FED 0:00:25.560 --> 0:00:29.600 raising expectations for rising inflation this year as well as 0:00:29.680 --> 0:00:33.519 rate heights next year and into three. And that's obviously 0:00:33.560 --> 0:00:37.040 the market is trying to digest that. Markets ares in general, 0:00:37.080 --> 0:00:40.400 including the commodities market. H we talk commoties. We always 0:00:40.400 --> 0:00:42.760 like to chat with Will Rynd. He's founder and CEO 0:00:42.760 --> 0:00:44.920 of Granite Chairs at one point five billion dollars in 0:00:44.960 --> 0:00:47.800 assets under management, located in New York. So Will, thanks 0:00:47.840 --> 0:00:50.960 so much for joining us again again. A big change 0:00:51.320 --> 0:00:54.360 in tone, well, I would say hawk ish, a tone 0:00:54.400 --> 0:00:55.880 that was probably a little bit more hawkish than the 0:00:55.920 --> 0:00:58.800 market had been discounting. What did you take away from 0:00:58.800 --> 0:01:04.200 FED Chairman Pal's comments this week? Well, I think that's um, 0:01:04.240 --> 0:01:07.120 you know much to what's kind of probably been already 0:01:07.160 --> 0:01:09.800 said in the market that you know, the expectations have 0:01:09.920 --> 0:01:13.640 been brought forward in terms of rate rises. So it 0:01:13.760 --> 0:01:16.640 seems like the the indication is that you know, inflation 0:01:16.760 --> 0:01:20.520 is rising faster than they expected. Um. And you know, 0:01:20.560 --> 0:01:25.000 to that end, trying to bring forward expectations of rate rises. 0:01:25.200 --> 0:01:28.280 There No, there was no specific comments around the tapering. 0:01:28.319 --> 0:01:31.720 That's the asset purchase program. But I think expectations, obviously, 0:01:31.760 --> 0:01:34.280 that's the big story in terms of rising rates. For 0:01:34.319 --> 0:01:37.280 the first time, I did say they're starting to talk 0:01:37.319 --> 0:01:42.560 about tapering. Previously they weren't even talking about talking about tapering. Um. 0:01:42.920 --> 0:01:47.160 The thing I found interesting Will is, alright, so rates 0:01:47.160 --> 0:01:50.120 are gonna rise earlier than expected. What do you do 0:01:50.960 --> 0:01:54.080 sell gold that makes sense? Rates are gonna rise earlier 0:01:54.160 --> 0:01:56.880 than expected. What do you do buy bonds? That doesn't 0:01:56.880 --> 0:02:00.960 make any sense at all? What's going on there? Well? 0:02:01.000 --> 0:02:03.720 I think, Um, to me, this is all a bit 0:02:03.720 --> 0:02:07.240 of a knee jerk reaction, because you know, in my mind, 0:02:07.560 --> 0:02:09.840 if you just look at that in a vacuum and 0:02:09.880 --> 0:02:13.720 you say interest rates are rising or interest rate expectations 0:02:13.760 --> 0:02:16.880 of rising cell gold, Okay, that might be fine, but 0:02:17.040 --> 0:02:21.399 what about inflation and right, now we have the lowest 0:02:21.600 --> 0:02:26.160 real interest rates by the nominal interest rate minus inflation, 0:02:26.440 --> 0:02:29.480 that we've had since the nineteen seventies. So in this 0:02:29.639 --> 0:02:34.200 environment where real rates is so low, inflation is rising 0:02:34.280 --> 0:02:36.520 much quickly. Even the said saying, you know, Jerome Power, 0:02:36.600 --> 0:02:40.000 think the exact words that he used was inflation could 0:02:40.040 --> 0:02:42.200 turn out to be higher and more persistent than we 0:02:42.240 --> 0:02:45.639 anticipate in that environment. I'm not a seller of gold. 0:02:45.960 --> 0:02:49.760 I think gold and commodities. To me, inflation is still rising, 0:02:50.240 --> 0:02:52.520 and in this environment, I think you need to have 0:02:52.600 --> 0:02:55.400 inflation hedges. All right, That's kind of where I wanted 0:02:55.480 --> 0:02:58.840 to go. Well, it just obviously you look across the 0:02:58.880 --> 0:03:02.840 commodities complex, uh, and you see, you know, big gains 0:03:02.880 --> 0:03:04.600 for most of the commodities of the soft of the 0:03:04.639 --> 0:03:07.399 herds and obviously oil, uh, you know, pushing higher above 0:03:07.440 --> 0:03:10.160 seventy on w T I crewed. I guess my question 0:03:10.240 --> 0:03:12.760 is is there room to grow? And if so, what's 0:03:12.800 --> 0:03:16.040 what's kind of the drivers there? I think short term, 0:03:16.080 --> 0:03:19.200 absolutely yes, we're still in this reopening phase. I mean, 0:03:19.200 --> 0:03:21.760 obviously for those of us that you know, watch the 0:03:21.760 --> 0:03:25.440 commodities market, we are now just about to enter the 0:03:25.600 --> 0:03:29.360 notorious or infamous summer driving season, and you know what 0:03:29.480 --> 0:03:31.880 that means is that, you know, when kids get out 0:03:31.880 --> 0:03:35.000 of school and everybody takes off for some vacation, there's 0:03:35.040 --> 0:03:38.240 a lot more driving activity, which you know typically leads 0:03:38.240 --> 0:03:41.320 to higher oil demand. Now this year, arguably that's going 0:03:41.360 --> 0:03:43.760 to be bigger than we've seen it a while, because 0:03:43.800 --> 0:03:46.440 people aren't traveling abroad maybe as much as they would 0:03:46.440 --> 0:03:49.200 have done in prior years, and so the Great American 0:03:49.320 --> 0:03:52.320 Vacation is going to be in full swing. And so 0:03:52.440 --> 0:03:55.000 from that perspective, I think on the short term, you know, 0:03:55.120 --> 0:03:57.160 I looked at what happened with oil yesterday and it 0:03:57.520 --> 0:03:59.640 barely moved. Okay, did go down a little bit, but 0:04:00.080 --> 0:04:02.760 I thought it was very stood up, very well given 0:04:02.800 --> 0:04:05.160 everything else we were seeing in the market. So to me, 0:04:05.320 --> 0:04:07.760 that's an indication of the strength right now and short 0:04:07.840 --> 0:04:11.040 term strength and oil the energy complex more broadly. I 0:04:11.040 --> 0:04:14.000 think really the only things that got hit and got 0:04:14.120 --> 0:04:17.839 hit relatively severely were the metals, which you can also 0:04:17.880 --> 0:04:22.200 trade a little bit risk off when the US dollar rises. 0:04:23.320 --> 0:04:27.080 Oil special obviously, because you've got this cartel um that's 0:04:27.120 --> 0:04:29.520 watching the prices. How high do you think OPEC would 0:04:29.600 --> 0:04:33.440 let it go. Um. Well, I think that they can 0:04:33.680 --> 0:04:35.800 let it or they would let it go significantly high. 0:04:35.839 --> 0:04:38.200 I don't think a hundred dollar oil is out of 0:04:38.240 --> 0:04:42.000 the question. Um. But of course they have their own pressures, 0:04:42.000 --> 0:04:45.240 as we've seen time and time again, economic pressures and 0:04:45.279 --> 0:04:49.400 financial pressures, and you know, they've they've tried to exercise 0:04:49.680 --> 0:04:52.360 restraints in terms of putting more supply into the market. 0:04:52.400 --> 0:04:54.720 So I think naturally, you know, if the price goes 0:04:55.160 --> 0:04:57.920 much higher than it is today, they're they're already talking 0:04:57.960 --> 0:05:00.960 about putting more production on the market. It. But I 0:05:00.960 --> 0:05:06.000 think we'll see some supply response, a little demand response. 0:05:06.240 --> 0:05:09.599 I'm I'm there for the demand response. I'm willing to 0:05:09.600 --> 0:05:12.640 burn as much gas as i can this summer. I'm 0:05:12.680 --> 0:05:16.120 excited to be summer driving season well or yeah, in 0:05:16.400 --> 0:05:21.680 um in a number of different vehicles actually, although I 0:05:21.720 --> 0:05:27.400 promise that my offspring will make this shift to electric vehicles. Well, 0:05:27.440 --> 0:05:30.360 thanks so much for joining us, Will Rind. They're coming 0:05:30.360 --> 0:05:32.839 in from Granite Shares. They have one and a half 0:05:32.839 --> 0:05:37.280 billion dollars of assets under management, uh and located right 0:05:37.360 --> 0:05:40.520 in New York City. We are going to continue to 0:05:40.520 --> 0:05:43.520 watch these commodities because after the moves that we saw yesterday, 0:05:43.680 --> 0:05:46.159 it became even more interesting than just a one way trip. 0:05:50.400 --> 0:05:53.160 Let's get over now to Lauren Sour, Associate Professor Emergency 0:05:53.160 --> 0:05:58.200 Emergency Medicine at Johns Hopkins School of Medicine UM. Lauren, 0:05:58.240 --> 0:06:02.560 I was just telling our list nerves that the delta 0:06:02.680 --> 0:06:07.840 variant of COVID nineteen is spreading quickly throughout the UK. 0:06:07.960 --> 0:06:11.480 I think there's seventy seven thousand cases this week compared 0:06:11.520 --> 0:06:17.760 to thirty three thousand cases last week, and cent of 0:06:17.839 --> 0:06:21.400 the cases that they have tracked down and researched are 0:06:21.560 --> 0:06:24.920 the delta variants. So is that going to spread now 0:06:25.000 --> 0:06:29.159 to the US and too continental Europe? Yeah, I think 0:06:29.200 --> 0:06:32.280 we are going to see delta variant overtaking a lot 0:06:32.320 --> 0:06:34.440 of the cases, sort of the stronghold, similar to what 0:06:34.520 --> 0:06:37.680 the alpha variant did UM late last year and early 0:06:37.800 --> 0:06:40.480 this year. You know, I think we're still all waiting 0:06:40.480 --> 0:06:45.080 to see UM whether or not we'll see an uptick 0:06:45.120 --> 0:06:47.120 in actual cases, but I think the cases we do 0:06:47.160 --> 0:06:50.839 see will start to be that delta variant for sure, Lauren. 0:06:50.880 --> 0:06:53.279 Here in the States, it's it's obviously a different story, 0:06:53.440 --> 0:06:56.960 much more positive story in terms of vaccine metrics. UM 0:06:57.120 --> 0:06:59.960 is it too early to start talking Yeah, it's true. 0:07:00.080 --> 0:07:02.480 Is it too early to start talking about her community 0:07:02.600 --> 0:07:06.360 here in the US? Her immunities are really challenging things 0:07:06.360 --> 0:07:08.680 to talk about in a general sense, And so you know, 0:07:08.960 --> 0:07:12.040 I think we all want to see her community UM 0:07:12.080 --> 0:07:14.800 conceptually in the US, and I think we're getting really close. 0:07:14.840 --> 0:07:16.560 I think that's why we didn't see that sort of 0:07:16.640 --> 0:07:20.680 spring UM uptick that everyone thought we would see. And 0:07:21.600 --> 0:07:25.160 the key focus in order to start having that conversation 0:07:25.200 --> 0:07:29.040 will be to understand what the the sort of overarching 0:07:29.160 --> 0:07:32.520 coverage of immunity is. So we want to make sure 0:07:32.560 --> 0:07:35.640 we get rid of those pockets of of communities that 0:07:35.720 --> 0:07:40.000 have been resistant to or enabled enabled to access vaccine UM, 0:07:40.080 --> 0:07:43.960 so that we have a really well spread immunity. The 0:07:44.000 --> 0:07:46.760 picture of community looks similar across the United States, rather 0:07:46.800 --> 0:07:48.880 than high and low and high and low. And that's 0:07:48.880 --> 0:07:51.320 where you're going to start to see her community UM 0:07:51.440 --> 0:07:55.680 broadly across the country. Could we see something in the 0:07:55.800 --> 0:07:59.080 US happen the likes of which we're seeing in the UK. 0:07:59.280 --> 0:08:03.960 Could we see another wave of infection start to rapidly 0:08:04.000 --> 0:08:08.600 spread even though UM the majority of the adult population 0:08:08.720 --> 0:08:13.640 is vaccinated. I think we could. Um. I think everyone 0:08:13.760 --> 0:08:16.400 is hopeful that we'll get vaccine coverage that's high enough 0:08:16.480 --> 0:08:19.320 that we won't see that big uptick like the way 0:08:19.720 --> 0:08:23.320 the UK has. UM. But the US is has really 0:08:23.440 --> 0:08:28.400 disparate levels of vaccination coverage, more so than the UK, 0:08:28.520 --> 0:08:31.640 I would say, and so, UM, you know, it's hard 0:08:31.680 --> 0:08:33.920 to compare. It's hard to make predictions on what will 0:08:33.960 --> 0:08:36.320 happen in the US based on what has happened in 0:08:36.320 --> 0:08:39.120 the UK. I think rather we start to look at 0:08:39.120 --> 0:08:41.480 the state level and say, Okay, if this state has 0:08:41.480 --> 0:08:45.360 pretty high vaccination coverage, we're less likely to see um, 0:08:45.440 --> 0:08:49.520 that sort of picture in that state. Um. And over overall, 0:08:49.640 --> 0:08:53.600 I'll just remind listeners, overall the UK has more higher 0:08:53.640 --> 0:08:57.000 percentage of its population fully vaccinated than is that with 0:08:57.040 --> 0:09:01.719 astra zeneca? Though Um yeah does that, hey, doctor, does 0:09:01.720 --> 0:09:04.600 that make a difference? Is is it? Are you more 0:09:04.679 --> 0:09:07.560 likely to get the Delta variant even if you've been 0:09:07.679 --> 0:09:12.640 vaccinated if you were vaccinated with astra zeneca. Um, I'm 0:09:12.679 --> 0:09:14.640 not actually sure. I will say that we're just starting 0:09:14.640 --> 0:09:18.280 to see data back on on the cases, the vaccinated 0:09:18.320 --> 0:09:22.120 cases from Delta. Most of those cases are people who 0:09:22.120 --> 0:09:24.360 have not had their second vaccine dose, which would be 0:09:24.400 --> 0:09:28.079 obviously the MODERNA advisor vaccines. And so the key is 0:09:28.120 --> 0:09:30.920 to get that full coverage of vaccination, right, don't stop 0:09:30.960 --> 0:09:34.040 after that first dose. If you're having a two dose vaccine, 0:09:34.400 --> 0:09:36.600 make sure you're getting the booster if that's what's appropriate 0:09:36.600 --> 0:09:39.240 and recommended by your doctor UM, and make sure you 0:09:39.280 --> 0:09:41.520 get through that. You know, you sort of protect yourself 0:09:41.559 --> 0:09:45.000 and follow those other public health measures until you have 0:09:45.640 --> 0:09:48.800 you know, full vaccination coverage. And that's going to get 0:09:48.800 --> 0:09:51.599 the most protection at the individual and at the population 0:09:51.720 --> 0:09:55.320 level for UM for the delta variant. So I can't 0:09:55.320 --> 0:09:57.920 speak specifically to astrogenica. I haven't looked close enough with 0:09:58.000 --> 0:10:00.360 the data, but I do think that we that the 0:10:00.440 --> 0:10:03.600 vaccines are protective. We just have to make sure that 0:10:03.640 --> 0:10:05.920 people get the full course of the vaccine that they're 0:10:05.920 --> 0:10:09.199 getting UM in order to build that protection. Lauren, the 0:10:10.520 --> 0:10:14.120 Barkley Center where the Brooklyn Nets play their basketball game 0:10:14.240 --> 0:10:18.920 last night was packed. Does that make you nervous? You know, 0:10:19.320 --> 0:10:23.040 it's weird right now. Any sort of visible crowd makes 0:10:23.040 --> 0:10:25.520 me feel nervous. And you know, we're going to be 0:10:25.600 --> 0:10:27.080 in a place where we have to tease out what 0:10:27.200 --> 0:10:29.760 is sort of that emotional reaction. Um, And what is 0:10:29.840 --> 0:10:33.240 nervousness because um, we're still coming out of a pandemic, 0:10:33.280 --> 0:10:36.480 and we we still have pretty high numbers of cases 0:10:36.520 --> 0:10:40.480 in a lot of places, and and highly variable vaccination coverage. 0:10:40.800 --> 0:10:42.560 I'm not sure i'd be comfortable and events at the 0:10:42.559 --> 0:10:45.800 Barkley Center yet. I think, you know, the CDC's recommendations 0:10:45.840 --> 0:10:48.520 are allowing for individual choice in a way that you 0:10:48.600 --> 0:10:50.760 have to sort of look at the data and feel, 0:10:50.880 --> 0:10:53.360 you know, decide your level of comfort. I think we're 0:10:53.360 --> 0:10:57.920 all going to have really variable returns to quote unquote normalcy, 0:10:58.000 --> 0:11:01.120 you know, and and and that's okay. And and I think, um, 0:11:01.160 --> 0:11:04.679 that sort of slow roll back into what, uh, you know, 0:11:05.000 --> 0:11:08.520 what your interactions in the public look like is okay? Um. 0:11:08.559 --> 0:11:11.719 And especially if you're choosing to be more cautious um 0:11:11.840 --> 0:11:13.920 or more careful, or maybe you have someone in your 0:11:13.920 --> 0:11:16.839 life who is more vulnerable or susceptible and you want 0:11:16.840 --> 0:11:20.119 to be cautious and careful for them, that is absolutely 0:11:20.120 --> 0:11:22.800 okay right now. Lauren Sour, thank you so much for 0:11:22.880 --> 0:11:25.720 joining us. We always appreciate checking in with you here 0:11:25.840 --> 0:11:29.559 on a weekly basis, getting the latest on this pandemic. 0:11:29.640 --> 0:11:33.840 And on vaccines. Laurence Sour, Associate Professor of Emergency Medicine 0:11:33.880 --> 0:11:37.880 at the Johns Hopkins University School of Medicine. They're not 0:11:37.960 --> 0:11:42.720 just lacrosse players. They are there's some world class uh 0:11:42.880 --> 0:11:47.520 you know, scientists and doctors, and we appreciate their time. Now, 0:11:47.600 --> 0:11:51.880 let's bring in Downtown's with Director of Equity Strategies at Conning. 0:11:51.960 --> 0:11:55.359 They have two hundred billion dollars of assets under management, 0:11:55.440 --> 0:12:00.240 and don let's talk. I guess high dividend equities are 0:12:00.280 --> 0:12:04.199 what you're looking at? What do you see right now? 0:12:04.400 --> 0:12:09.360 And what are the what are the valuations? Tell you? Well, 0:12:09.400 --> 0:12:12.959 in terms of dividend paying stocks, we've really been at 0:12:12.960 --> 0:12:17.360 a relative discount now for quite a long time. Um. 0:12:17.400 --> 0:12:19.600 You know, one of the factors that we look at 0:12:19.720 --> 0:12:23.640 is is growth fears in the market. And growth fears 0:12:23.679 --> 0:12:28.319 actually tend to drive the growth stocks, the technology stocks 0:12:28.400 --> 0:12:31.400 that we've all seen rallies so far, it tests to 0:12:31.440 --> 0:12:33.679 drive them up because they can grow in a growth 0:12:33.679 --> 0:12:37.439 scarcity environment. And that's left some of these dividend pairs 0:12:37.520 --> 0:12:41.280 and in broader in broader terms of value stocks behind 0:12:42.040 --> 0:12:45.680 and so they're their valuations still look relatively attractive even 0:12:45.720 --> 0:12:49.920 though they've had a recent strong rally. Don It's interesting 0:12:49.920 --> 0:12:51.920 when I think about dividend stocks, one of the names 0:12:51.920 --> 0:12:55.040 that really jumps out of me is Apple. I mean, 0:12:55.040 --> 0:12:57.200 here's a company with a hundred billion dollars of net 0:12:57.200 --> 0:12:59.720 cash on the balance sheet, then a free cash flow 0:12:59.720 --> 0:13:02.000 in each the next two years of a hundred billion dollars, 0:13:02.120 --> 0:13:06.160 yet their dividend yield us less than one percent. That's 0:13:06.160 --> 0:13:08.600 gonna be frustrating for a dividend investor who would probably 0:13:08.640 --> 0:13:14.200 love to throw Apple on the portfolio. Absolutely, we would. 0:13:14.720 --> 0:13:17.160 We would love to have Apple in the portfolio if 0:13:17.200 --> 0:13:20.200 only they returned more value to the shareholder in terms 0:13:20.200 --> 0:13:23.679 of dividends. And it's been a big frustration across the 0:13:24.280 --> 0:13:28.320 whole kind of fraternity of of dividend investors. And you know, 0:13:28.440 --> 0:13:30.520 we would, we would like them to take some of 0:13:30.520 --> 0:13:33.280 that free cash flow and distribute it to get their 0:13:33.360 --> 0:13:36.040 yield up closer to two or two and a half percent. 0:13:39.400 --> 0:13:45.679 So why, um, why don't they? Well, that's a great question. 0:13:45.840 --> 0:13:49.720 I think that um, there are many technology stocks, particularly 0:13:49.720 --> 0:13:53.480 on the equipment UH and semiconductor side, that have for 0:13:53.520 --> 0:13:57.560 a very long time paid an attractive dividend, and they've 0:13:57.559 --> 0:13:59.760 done it while growing at a at a fairly good 0:13:59.760 --> 0:14:04.200 pay eight UM. I can only speculate based upon any 0:14:04.240 --> 0:14:08.319 company comments and and maybe our our biases here that 0:14:08.720 --> 0:14:12.360 that they see that cash hoard as an opportunity for 0:14:12.679 --> 0:14:15.920 acquisitions that they might see in the future, and they'd 0:14:16.000 --> 0:14:19.160 rather keep it on their balance sheet. But as it 0:14:19.200 --> 0:14:22.960 grows and grows, one can only imagine that there's going 0:14:23.000 --> 0:14:26.640 to be a growing pressure along with that that can 0:14:26.720 --> 0:14:34.720 never make any big acquisition like well, who you know 0:14:34.920 --> 0:14:37.760 who knows? I wish I knew, and I I buy 0:14:37.800 --> 0:14:41.600 a lot of that acquisition target myself. Hey, don talk 0:14:41.640 --> 0:14:46.600 to us about UM tax policy and how that impacts 0:14:46.760 --> 0:14:49.920 your strategy, your dividends strategy, because the President Biden is 0:14:49.920 --> 0:14:52.120 talking about some changes to the capital gains taxes and 0:14:52.120 --> 0:14:57.680 so on. Absolutely UM. Historically speaking, and this is really 0:14:58.080 --> 0:15:00.960 the thirty years I've been in the business, capital gains 0:15:01.040 --> 0:15:05.000 tax rates have been lower than their tax rates paid 0:15:05.040 --> 0:15:08.040 on dividends, which often are our tax at the level 0:15:08.080 --> 0:15:12.000 of your ordinary income as an investor. With the talk 0:15:12.080 --> 0:15:15.800 about raising capital gains rates, uh, it means that in 0:15:15.920 --> 0:15:20.000 relative terms, the go go growth stocks that don't pay 0:15:20.000 --> 0:15:23.400 a dividend, those stocks are going to become relatively less 0:15:23.400 --> 0:15:28.359 attractive as them as your tax rate goes up on 0:15:28.360 --> 0:15:31.800 on on the proceeds when you sell. So we think 0:15:31.840 --> 0:15:35.400 that that's actually a positive in relative terms or dividend 0:15:35.400 --> 0:15:40.960 paying stocks. As perhaps the new tax laws equalize the 0:15:41.040 --> 0:15:44.560 tax treatment of capital games and dividends, that's going to 0:15:44.600 --> 0:15:47.680 give a boost to the dividend paying stocks because the 0:15:47.720 --> 0:15:51.400 other guys have to pay more taxes too. I've always 0:15:51.440 --> 0:15:55.479 found this interesting because um, as the owner of the company, 0:15:55.560 --> 0:15:58.560 you're paying taxes on the cash that you get paid 0:15:58.560 --> 0:16:00.640 out that you pay yourself out from profits, but those 0:16:00.680 --> 0:16:06.480 profits are also getting taxed. Yes. Yes, the question of 0:16:10.040 --> 0:16:12.560 well I couldn't agree more, I couldn't agree more. Double 0:16:12.600 --> 0:16:15.960 taxation is a has been a problem for years, and 0:16:16.200 --> 0:16:19.440 I think that if if more people, if more people 0:16:20.160 --> 0:16:22.160 thought in those terms, I think that there would be 0:16:22.160 --> 0:16:26.280 more pressure on on reducing that double taxation load. For now, 0:16:27.120 --> 0:16:29.360 we're still gonna have a little with it. Yeah, So 0:16:29.640 --> 0:16:33.160 don how do you guys typically screen for dividends. Is 0:16:33.160 --> 0:16:35.320 it a certain yield and you do it by industry 0:16:35.440 --> 0:16:38.800 or how do you do that? Well, we actually do 0:16:39.080 --> 0:16:43.000 take a look at a certain yield or higher, but 0:16:43.640 --> 0:16:48.000 Unlike many dividend managers, once a company has met a 0:16:48.080 --> 0:16:51.840 certain minimum, we actually tend to be agnostic after that, 0:16:52.000 --> 0:16:55.000 because what we're looking at is companies that have a 0:16:55.160 --> 0:16:59.720 very manageable debt load and companies that are generating the 0:16:59.760 --> 0:17:03.760 free cash flow that you referred to before um consistently 0:17:03.880 --> 0:17:07.960 year after year after year. Uh. Our hidden talent really 0:17:08.040 --> 0:17:12.040 is that we're UH. We were primarily a fixed income shop, 0:17:12.080 --> 0:17:14.720 and so we have credit analysts that have decades of 0:17:14.840 --> 0:17:19.159 experience and they're looking at these same investments for the 0:17:19.359 --> 0:17:23.960 the safety and credit worthiness of their debt. We take 0:17:24.040 --> 0:17:27.000 that information and also look at the credit worthy units, 0:17:27.040 --> 0:17:31.040 if you will, of their dividend payment. Also, how sustainable 0:17:31.040 --> 0:17:33.959 as the dividend can they grow it? Are they generating 0:17:34.160 --> 0:17:37.919 excess free cash flow after they've paid their dividend to 0:17:37.960 --> 0:17:41.040 be That's our secret weapon in terms of finding companies 0:17:41.080 --> 0:17:43.480 to pay a dividend and raise it. Hey, John, thanks 0:17:43.480 --> 0:17:45.879 so much for joining us. We really appreciate hearing about 0:17:46.280 --> 0:17:48.959 your strategy the dividend paying stocks. We don't talk enough 0:17:49.000 --> 0:17:53.239 about that. I think equity strategy at a Conning they 0:17:53.240 --> 0:17:55.199 have a two or billion under management, A lot of 0:17:55.240 --> 0:17:59.680 it focused on dividend paying companies and the income the 0:17:59.760 --> 0:18:06.680 day and produced for shareholders. This is Bloomberg, you know, Matt. 0:18:06.720 --> 0:18:09.760 When I came onto the street in eighties six, insider 0:18:09.800 --> 0:18:12.520 trading was really a thing. You know. We had Ivan Bowski, 0:18:13.240 --> 0:18:16.560 you know, Drexel, Burnham, Lambert. I mean, some really juicy things. 0:18:16.560 --> 0:18:18.719 They wrote books and made movies about it. But I don't. 0:18:19.080 --> 0:18:20.800 It feels like I don't see it, at least not 0:18:20.840 --> 0:18:22.840 on the scale that that we used to see it. 0:18:22.920 --> 0:18:25.320 So but actually looking at the Bloomberg terminal today, we 0:18:25.359 --> 0:18:29.359 have a good old fashioned insider trading report in there, 0:18:29.800 --> 0:18:32.320 and we have the reporter. And this reporter is a 0:18:32.480 --> 0:18:35.760 Duke Rad, so double good story here. We're overwhelmed by 0:18:35.800 --> 0:18:39.480 all these reporters. Being a duke rad is more important, 0:18:39.560 --> 0:18:42.680 I think than reporting on insider I think. So Bradhaim, 0:18:42.680 --> 0:18:44.840 she joins us here. She's reporter for Bloomberg News, and 0:18:44.840 --> 0:18:46.720 so Burtte, thanks so much for joining us here. Talk 0:18:46.760 --> 0:18:48.840 to us about this case. Give us the background of 0:18:48.920 --> 0:18:51.720 this insider trading case, because it's got a little twist 0:18:51.760 --> 0:18:54.600 because it does include an NFL player who lost quite 0:18:54.600 --> 0:18:55.840 a bit of money. But give us the background on 0:18:55.880 --> 0:18:58.119 this case. Hey, yeah, thank you so much for having me. 0:18:58.160 --> 0:19:00.640 I'm really excited to be here. UM. So, like you said, 0:19:00.640 --> 0:19:02.399 this is a very interesting case. So I've spent the 0:19:02.440 --> 0:19:04.960 last three days down at a courthouse in downtown Manhattan 0:19:05.160 --> 0:19:07.040 following this case. And there's kind of two parts that 0:19:07.080 --> 0:19:09.520 I'll break down for you here. So one is insider 0:19:09.520 --> 0:19:12.480 trading case. We have Donald Black's dad who's facing charges 0:19:12.880 --> 0:19:16.640 and prosecutors say that he committed insider trading talking with 0:19:16.760 --> 0:19:19.480 UM an accountant who worked at Alumina UM all of 0:19:19.520 --> 0:19:23.000 this well, black dad's based in San Diego UM and 0:19:23.040 --> 0:19:26.200 so he was talking with this accountant and they say 0:19:26.200 --> 0:19:29.639 that he used insider information to trade and along with 0:19:29.680 --> 0:19:31.080 some others, so they say he was the leader of 0:19:31.080 --> 0:19:33.680 this insire trading ring. They used money to trade UM, 0:19:33.760 --> 0:19:36.680 including some options related to Alumina, and make millions of 0:19:36.720 --> 0:19:40.119 dollars doing that over the course of eighteen around the 0:19:40.160 --> 0:19:42.320 same time that this was going on. They're also saying 0:19:42.720 --> 0:19:46.000 that he well, he's charged with committing investment fraud as well. Yeah, 0:19:46.080 --> 0:19:49.000 there was some shady I mean it sounds even shadier. 0:19:49.080 --> 0:19:52.720 Because I love your story by the way, bree Um, 0:19:52.800 --> 0:19:55.320 because you you you put some details in there that 0:19:56.160 --> 0:19:58.600 I think make it more interesting because I can imagine 0:19:58.640 --> 0:20:02.120 being there. So at the stake house, for example, Um, 0:20:02.160 --> 0:20:06.800 you know, he gives this football player a prospectus. The 0:20:06.840 --> 0:20:10.000 guy reads it. He's into it for an energy company 0:20:10.040 --> 0:20:14.760 that apparently has some kind of storage technology for renewables 0:20:14.880 --> 0:20:17.199 that is just about to go off the hook because 0:20:17.720 --> 0:20:20.480 California is going to change the law and this ball 0:20:20.600 --> 0:20:22.760 er says, all right, I'm in for one fifty. The 0:20:22.800 --> 0:20:26.640 guy then takes his money. Uh, the investment manager, puts 0:20:26.640 --> 0:20:29.359 it into a bank account where he keeps also his 0:20:29.440 --> 0:20:34.320 personal money, and apparently uses that lump sum to make 0:20:34.359 --> 0:20:37.919 an offer to pick up another company unrelated to the 0:20:38.040 --> 0:20:41.000 energy company in which the baller wanted to invest in 0:20:41.000 --> 0:20:43.879 the first place. Yeah, so it gets very complicated, and 0:20:43.880 --> 0:20:45.840 we're still seeing the prosecution and defense lay out their 0:20:45.880 --> 0:20:49.119 cases right now. The prosecution is um questioning witnesses, so 0:20:49.160 --> 0:20:51.560 we haven't actually gotten to um here all the defenses 0:20:51.600 --> 0:20:53.879 side yet. But um, so what happened here was we 0:20:53.960 --> 0:20:57.080 have this NFL player corelj who had been UM picked 0:20:57.119 --> 0:20:59.639 in the first round of the two thousand and eleven draft. 0:20:59.760 --> 0:21:03.119 He UM pretty high profile UM defensive lineman and he 0:21:03.160 --> 0:21:06.440 went out to UM dinner at this San Diego steakhouse. 0:21:07.080 --> 0:21:10.240 UM and Donald Black's dad was there and they talked 0:21:10.240 --> 0:21:13.960 about this company, mid Continental Petroleum that Black dad UM 0:21:14.080 --> 0:21:17.640 was hyping up, and later on he sent UM Lug 0:21:17.960 --> 0:21:20.560 this prospectus that they ended up reading out a lot 0:21:20.600 --> 0:21:23.159 of parts of in court yesterday, some very technical language. 0:21:23.160 --> 0:21:25.320 They are going over some of these very specific clauses 0:21:25.800 --> 0:21:29.000 and talking through UM, you know just what Luge's experience 0:21:29.119 --> 0:21:32.160 was with this process. And then he ended up wiring 0:21:32.440 --> 0:21:36.399 UM make Continental Petroleum's account one hundred fifty thousand dollars. 0:21:36.440 --> 0:21:39.680 And that's kind of where the NFL player becomes involved 0:21:39.680 --> 0:21:42.720 in this story. And prosecutors are saying that Um this 0:21:42.760 --> 0:21:45.960 money ended up being used for at least parts of 0:21:46.000 --> 0:21:49.480 it ended up being used for personal UM purposes. And 0:21:49.800 --> 0:21:52.880 the defense said in their opening statements, however, that Um 0:21:53.040 --> 0:21:55.840 Black said was using one account for all purposes. So 0:21:55.880 --> 0:21:57.960 they're saying that, you know, this was an account that 0:21:57.960 --> 0:22:00.240 he used for business used for personal purposes, and that 0:22:00.320 --> 0:22:03.520 he put his own money UM involved in business purposes too. 0:22:03.760 --> 0:22:05.840 So how much money are we talking about here on 0:22:05.880 --> 0:22:08.720 this insider trading deal? Again? I just mentioned a man 0:22:08.840 --> 0:22:11.640 I just haven't seen too many high profile ones recently. 0:22:11.680 --> 0:22:14.560 How how much we're talking about here, Yeah, that's that's 0:22:14.600 --> 0:22:17.280 obviously a great question. Um. So we originally saw when 0:22:17.320 --> 0:22:20.200 prosecutors were first talking about this that a black side 0:22:20.280 --> 0:22:22.800 his associate, so he had several people involved in this. 0:22:22.880 --> 0:22:25.520 That's why they're calling it, you know, an inspire trading ring. Um. 0:22:25.560 --> 0:22:27.560 They initially tossed out the figure of about six million 0:22:27.560 --> 0:22:30.000 dollars um that was made, and actually what we were 0:22:30.000 --> 0:22:31.639 seeing in court where they left off at the end 0:22:31.640 --> 0:22:34.679 of the day yesterday was having an sec economist go 0:22:34.840 --> 0:22:38.760