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Speaker 1: Ye. Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jaily.

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Speaker 1: We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. This

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Speaker 1: is the interview of the day on Deutsche Bank and John.

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Speaker 1: I say that because we go to the bond market

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Speaker 1: and all of the debt dynamics of any bank in

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Speaker 1: any bank has a ton of debt. Filippo already with

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Speaker 1: their messes with us UH today their senior credit analyst, Filippo,

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Speaker 1: when you sort out the glide pass of all of

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Speaker 1: these dynamics, particularly over time out to two thousand twenty two,

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Speaker 1: what's your enthusiasm for this set of a now expends?

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Speaker 1: Can they do it? Yeah? Well, Tom, as you said correctly,

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Speaker 1: it's it's quite interesting because this time and so it's

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Speaker 1: a restructor who is not going to be financed by

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Speaker 1: the shareholders, as you can expect given the thorough state

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Speaker 1: of the where the equity of Dutch Bank is trading.

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Speaker 1: This is it financed by internal resources. Essentially is financed

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Speaker 1: by reducing the capital capital target or the bank, and

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Speaker 1: I think it's the idea of DOTCH. A bank is

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Speaker 1: to go to the regulator and say, listener with the

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Speaker 1: risk in the balance sheet of the of the group

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Speaker 1: and the four So we think if you can execute

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Speaker 1: on that strategy, then we're gonna bud less of a

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Speaker 1: problem to you and before we can lower the capital target.

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Speaker 1: I think it's a little bit of an ambitious plan.

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Speaker 1: But the least we can say that the measurement has

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Speaker 1: listened to the Sharold because Charolder one anyday a the

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Speaker 1: bank to undergo a regime to reduce the balance sheet

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Speaker 1: at the same time not to tap the shelder because

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Speaker 1: such a banquet as raised thirty billion euros in twenty ten. Well,

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Speaker 1: let's talk about how likely that is. How do you

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Speaker 1: fund the bill which is seven point four billion euros

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Speaker 1: by twenty two that's the restructuring bill FELLI for as

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Speaker 1: you know, with internal resources alone. What's your judgment called

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Speaker 1: this morning? Do you think that's achievable? UM? I think

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Speaker 1: so yeah. If you look at the seven point four

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Speaker 1: billion is actually only five point four because that's all

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Speaker 1: in termo car because there is an element of right

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Speaker 1: down on the decade the fair taxas set but without

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Speaker 1: going to match into the technicalities. I think it's of

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Speaker 1: course also they're not going to pay dividend for the

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Speaker 1: full year twenty twenty nineteen and twenty twenty. They reducing

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Speaker 1: effectively the city one ratio by more than under a

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Speaker 1: business point because it was thirteen point seven now they

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Speaker 1: acknowledge will go as as twelve point five billion. I

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Speaker 1: think that's the most important things is that there won't

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Speaker 1: be any say, attrition from the on the revenue side,

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Speaker 1: because it's good to control the cost base. That they

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Speaker 1: want to reduce the cost base by six billion by

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Speaker 1: two But of course so these uh discount a not

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Speaker 1: a material deteriation on the revenue on the revision side

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Speaker 1: of the basiness, which of course it is difficult when

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Speaker 1: you're closing all the equity business outside. Yeah, it's the

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Speaker 1: difficulty with this bank has always over the last five, six, nine,

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Speaker 1: maybe even ten years, was the self fulfilling spiral downwards

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Speaker 1: that they try and retrench, but then the revenue growth

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Speaker 1: never comes and we just chase everything lower. Can we

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Speaker 1: cut that death spiral with this turnaround plan. I think

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Speaker 1: it's a possibility. I think that's all we have to

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Speaker 1: say that the recognized to the to the new measurement

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Speaker 1: that finned that. So they put in the awards where

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Speaker 1: the the mounts and I mean they attempting this, uh,

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Speaker 1: them backing very this and very ambition restructurally. It's a

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Speaker 1: very rough with the first one and probably fifteen years

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Speaker 1: that a bank is undergoing such a deep restructurally, and

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Speaker 1: I think it's uh, it's probably the way to go

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Speaker 1: for them. And time we tell whether they can achieve

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Speaker 1: the starget. Let's let's um step back and they ask

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Speaker 1: what is it in the bad bank? I mean, you've

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Speaker 1: got a wonderfully detailed note Filippo. Do do we really

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Speaker 1: know what's in the bad bank? Can we actually price it? Now?

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Speaker 1: That's a very good question. Actually it is quite key

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Speaker 1: or the afternoon strategy up in the management dissolving with

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Speaker 1: investor on the world. I think I saw it's allowed

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Speaker 1: in this so called bad bank seventy four billion or

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Speaker 1: our w A and I think that saw a lot

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Speaker 1: is linked to the UM so some equity derivative, there

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Speaker 1: is some long term there. It is also there is

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Speaker 1: something which is called operational risk, which is something that's

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Speaker 1: what they can as long as the regulator is in favor,

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Speaker 1: they can shed relatively easily, but we don't know the

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Speaker 1: displte between say, sale and run down of the stuff

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Speaker 1: in the bad bank. And what's interesting, folks, through all

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Speaker 1: of the starting when the press release I believe it

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Speaker 1: was on Saturday, and on and on, what's interesting to me, Filippo,

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Speaker 1: is how the regulators fit into this, how the government

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Speaker 1: of Germany fits into this. Am I wrong to say

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Speaker 1: that Deutsche Bank is being run this morning by the

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Speaker 1: you know, the general statement by the German government. Um,

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Speaker 1: maybe I wouldn't go as far, but I think I

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Speaker 1: see the sense of your question and it is fair.

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Speaker 1: I mean that Dutch Bank is the largest financial group

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Speaker 1: in Germany, and you would say the German government and

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Speaker 1: also the central Bank, the European center Bank, they do

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Speaker 1: at a stake in this aubidity of the institution. So

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Speaker 1: I think that's what their point of view is, that

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Speaker 1: so they make sure that the bank is solid enough

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Speaker 1: to withstand even choppy waters. And I think this measurement

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Speaker 1: plan attempt to go in that direction to make dodger

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Speaker 1: banker's or leaner but maybe more solid. Philippa, do you

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Speaker 1: see this plan is quite a positive this morning. Um,

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Speaker 1: I'm a little bit on the fense in the sense,

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Speaker 1: of course, for for that to be in very great

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Speaker 1: positive would have involved a capital raise. But of course

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Speaker 1: that's so. I'm aware that since the bank has raised

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Speaker 1: so much money thirty billion over the last nine years,

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Speaker 1: it's actually quite tough to go back to the Shilder

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Speaker 1: say would you mind stamping it? I don't know. I

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Speaker 1: don't know another five six billion eur in order to

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Speaker 1: found this restruction. I think that's so something got a given.

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Speaker 1: And in the sense that so is the reduction on

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Speaker 1: the city one Racio Dodger Bank. I would love give

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Speaker 1: you on the regional strategy here as well, focusing on Germany, Philippa.

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Speaker 1: Focusing on Germany. It's not a good or a bad

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Speaker 1: thing right now, Well conjunctory is maybe it's not a

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Speaker 1: great thing. So, because that's what we know. The German

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Speaker 1: economy is in slowdown. But at the same time, so

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Speaker 1: you would think that the the German economy needs a

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Speaker 1: strong bank. They wouldn't make the case of forces or

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Speaker 1: lots of the world street bankers or the government, the

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Speaker 1: dripping Morga and the Bank of America. The well, very

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Speaker 1: well established in Germany. But I think as the Germans perceived,

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Speaker 1: they do need a so called national champions one able

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Speaker 1: to accompany the say the large German export around the world. Okay, exactly,

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Speaker 1: but the John's good question to those people need sophisticated

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Speaker 1: or less than sophisticated fixed income strategies. I mean, all

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Speaker 1: they want to do is affect commercial transactions in same Malaysia,

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Speaker 1: right yeah, I think so, yeah, there is an element

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Speaker 1: of that. So they want to be also the bank

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Speaker 1: to be able to accompany them, saying trades in ants program,

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Speaker 1: they want to build I don't know, a factory in

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Speaker 1: Southeast Asia, or they want to finance a the acquisition, say,

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Speaker 1: for example, of a manufacturer in Brazil by a Japanese

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Speaker 1: company or German investments, I don't know. In Canada, I

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Speaker 1: think so they the German you have to think they're

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Speaker 1: very conservative nature and they like to have a bank

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Speaker 1: to speak the same language. Philippa's I mean in London

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Speaker 1: and New York is maybe maybe a bit more difficult

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Speaker 1: to or understand, but I think it's very peculiar to

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Speaker 1: the German nature. Right. This has been wonderful, Philippa, al already,

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Speaker 1: thank you so much. We now get perspective after someone

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Speaker 1: who's really worked seven last three or four days. Alison Williams,

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Speaker 1: Publishing with Bloomberg Intelligence. Allison, what you say to the

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Speaker 1: people down in Wall Street today with Deutsche Bank? I

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Speaker 1: think that, uh, saving is made sort of the best

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Speaker 1: of some bad choices, right, so there's really no good choices.

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Speaker 1: You had to do something sort of big and bold.

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Speaker 1: I do think, you know, there's a lot of talk

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Speaker 1: about exiting the US, not having a US, but the

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Speaker 1: headlines don't say that. They don't because I think that

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Speaker 1: would have been a mistake. So, you know, instead of

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Speaker 1: editing a region, they're exiting a product. The question for

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Speaker 1: US remains, you know, they're going to keep some business there.

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Speaker 1: How big is what they're keying exactly? Why is it

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Speaker 1: stock down this morning? I mean we had the pop.

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Speaker 1: I mean you bought you bought it? What three am, John?

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Speaker 1: Keep me out of this, you know, but you bought

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Speaker 1: the pop and we're it's not pretty The stock price

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Speaker 1: is not pretty. Well, I think it's two things. Um,

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Speaker 1: you know, well, I guess it really it's one thing.

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Speaker 1: The bottom line is the fact that, um, you know,

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Speaker 1: this is sort of the one of many plans that's

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Speaker 1: come out. Yes, it's a bigger, broader plan, but I

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Speaker 1: think that it requires patients and it will take time.

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Speaker 1: And I think it's very positive that they put this

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Speaker 1: plan together, um, which should avoid a capital raise. But

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Speaker 1: I think that there's probably um, you know, perhaps a

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Speaker 1: lack of confidence in that, and that concern is going

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Speaker 1: to linger for a while, just given the past history.

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Speaker 1: What's the best news of the morning? A Torso just

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Speaker 1: purtably no Torsten slut just published at Deutsche Bank. We

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Speaker 1: like the fantastic news for Torsten Slack, and I hope

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Speaker 1: it stays that way because we all enjoyed reading this research. Alison,

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Speaker 1: outside of avoiding a capital race, what are the positives

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Speaker 1: for shareholders this morning? I think the positives are that

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Speaker 1: again it's a big change. Um, the cost targets, the

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Speaker 1: profitability targets are all reasonable, so I think, you know,

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Speaker 1: they're they're not heroic if you compare them to competitors.

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Speaker 1: You know, however, you know, given where Deutsche Bank is,

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Speaker 1: it still is sort of a tough slot. And that's

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Speaker 1: why you know, we talked about you know, more patients required. Um,

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Speaker 1: you know, I think it's been a show me story

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Speaker 1: for a long time. The key concern for us is really,

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Speaker 1: you know, you're exiting equities, you're focusing on the things

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Speaker 1: that you're good at, But how about big do you

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Speaker 1: have to be in equities to sort of keep a

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Speaker 1: presence and not hurt your competitive positions? And there's adjacent businesses,

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Speaker 1: you know, researches is an area UM that they've said

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Speaker 1: that they're gonna stay in, so equity research, MAC research.

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Speaker 1: They're going to keep enough of an equities effort to

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Speaker 1: support M and A, to support equity underwriting. Um So

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Speaker 1: how big is that and and can they still be

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Speaker 1: UM successful on that smaller scale? The stock is down

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Speaker 1: four percent the lows for the session. We've rolled over

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Speaker 1: in the last couple of minutes. Again, the headlines that

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Speaker 1: I keep reading is radical change, radical restructuring, eighteen thousand jobs,

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Speaker 1: and it certainly sounds radical. Is this radical enough for

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Speaker 1: Deutsche Bank? Kallison? I think we need to have more

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Speaker 1: details in terms of where the eighteen thousand is coming from.

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Speaker 1: And I should flag the fact that they started a

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Speaker 1: presentation at eight am, so I'm not sure um if

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Speaker 1: there was something said early in the call. UM. I

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Speaker 1: know that there was a media call earlier where there

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Speaker 1: were a lot of questions about where the eighteen thousand's

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Speaker 1: going to come from. You know, management is not giving

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Speaker 1: detail on that. I think the fact that they're not

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Speaker 1: giving detail, the fact that they outlined one point four

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Speaker 1: million of costs in the private bank signals that some

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Speaker 1: of those could be coming from retail, some could be

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Speaker 1: coming from Germany. Why did they decide to not do

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Speaker 1: a cash call? It was that dictated to them by

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Speaker 1: large shareholders, was a dictated to them by the German government.

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Speaker 1: I think that they, obviously for their shareholders, want to

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Speaker 1: avoid this cash call. They are cutting the dividends, so

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Speaker 1: there is some pain to shareholders. But there definitely are

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Speaker 1: some smart money investors in this company, some former bank managements.

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Speaker 1: Presumably any company UM where you're going through such a

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Speaker 1: big change, UM would would talk to your major shareholders

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Speaker 1: and think about how they how they think about Well,

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Speaker 1: I just want to explore this a little bit further

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Speaker 1: with you, just to wrap up the conversation, Alison. I

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Speaker 1: do wonder whether this narrative starts to take hold that

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Speaker 1: the profitability targets are bold, the restructuring costs is so

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Speaker 1: high that yes, they may say we don't need a

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Speaker 1: cash call now, but I wonder whether the market is

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Speaker 1: making an assumption now that they won't be able to

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Speaker 1: avoid one because of those reasons. I think the market

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Speaker 1: is sort of telling you that or and that seems

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Speaker 1: to be with the sock is signaling I think, because

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Speaker 1: you know, a bank can can say all day long

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Speaker 1: they don't need capital, but given past history, UM, you know,

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Speaker 1: with banks, with this company in particular. Also, we don't

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Speaker 1: know about the environment, so there's still a lot of

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Speaker 1: environmental risks out there. And I think that UM would

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Speaker 1: be my concern as an investor UM. And you know,

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Speaker 1: let's give it some time and see how things UM

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Speaker 1: play out. Alison Wilson Williams, thank you so much, greatly,

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Speaker 1: greatly appreciate. It has been an extraordinary day and we

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Speaker 1: see that now with further erosion in Deutsche Bank. Let

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Speaker 1: me get up the chart here right now, because it's

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Speaker 1: not a pretty chart. We can describe an eight percent

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Speaker 1: moved down from the peak this morning seven point four

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Speaker 1: eight ish seven point four nine and the peak that

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Speaker 1: was in the three am hour, and now we break

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Speaker 1: down to new lows moments ago. Marcus ashworths with us,

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Speaker 1: maybe with a good summary after talking to bond experts,

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Speaker 1: that airms, if talking to Allison Williams, the equity and

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Speaker 1: the strategic fundamentals, let's talk about the human condition of this.

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Speaker 1: We can do this with Mr Ashworth with years and

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Speaker 1: years on Global Wall Street. What a miserable day, Marcus

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Speaker 1: for eighteen thousand plus at Deutsche Bank. Indeed it is

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Speaker 1: it's been a long time coming on. In essence, what

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Speaker 1: we're seeing here is international Messem banking employees being like, oh,

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Speaker 1: though some will be transferred to other firms, possibly um

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Speaker 1: at the expense of domestic German retail employees, which is

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Speaker 1: what would have happened or more of if the Comments

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Speaker 1: bank um merger had come through. But you know, Deutsche

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Speaker 1: has kept too many options open for too long. It's

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Speaker 1: not going to be in filman sacks of Europe and

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Speaker 1: it had finally to take the domestic and go back

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Speaker 1: to be a bank rather than investment bank. Let's take

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Speaker 1: a broader conversation the people that will be looking for jobs.

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Speaker 1: What's the state of Global Wall Street right now? And

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Speaker 1: particularly the state of your London. I have to say, um,

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Speaker 1: obviously there's a Brexit element to it, though I don't

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Speaker 1: think that's anything near as important as Meford two. And

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Speaker 1: indeed the whole robotic AI switched to doing UH finance

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Speaker 1: and in a in a more efficient manner and with

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Speaker 1: less body count. And I think that this is a

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Speaker 1: another big crunch akin to the global financial crisis for

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Speaker 1: for for employees around the world and investment banking, because

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Speaker 1: there simply isn't any money to be made in a

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Speaker 1: negative rate environment. That Feds cutting rates as well, so

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Speaker 1: we've got no upside and people do not pay for

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Speaker 1: trading stocks. I mean, I mean you, and in folks,

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Speaker 1: I should say that if you read Marcus Ashworth and

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Speaker 1: Bloomberg opinion, it's extremely visceral writing about the moment. In

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Speaker 1: the moment of the last two weeks into this Deutsche

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Speaker 1: Bank announcement, Marcus is price up, yield down, and they

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Speaker 1: keep buying. I keep telling people this is not a

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Speaker 1: yield analysis, it's a price analysis. The desperation to own paper,

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Speaker 1: What is the why of the desperation to own notes,

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Speaker 1: bills and barns. It's simply because you have an index,

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Speaker 1: or a lot of people have indexes to perform regardless

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Speaker 1: in some senses. If you can see it's going one

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Speaker 1: way traffic, you have to be part of it, and

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Speaker 1: that's hold your close your eyes, hold your nose, whatever

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Speaker 1: is and buy. Because in essence, this is going to

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Speaker 1: be a terrible year for people after possibly a bad

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Speaker 1: twenty team in certain ways and getting caught out in

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Speaker 1: particularly the bond markets by not being long enough stock

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Speaker 1: or long enough of maturity. Is is going to hurt

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Speaker 1: you badly. What is your understanding of if Deutsche Bank

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Speaker 1: slims and trims in New York and London and everywhere else,

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Speaker 1: they're going to be quote a German bank, what does

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Speaker 1: that mean to Marcus Ashworth? What it means that they

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Speaker 1: were once seen, obviously is for many years as the

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Speaker 1: titan of German corporate um industry, and not that where

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Speaker 1: perhaps as where Comets Bank has maintained it's it's it's reputation.

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Speaker 1: Deutsche Bank then went outside around the world and tried

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Speaker 1: to take on Wall Street, and it very nearly succeeded.

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Speaker 1: In fact, you could argue succeeded brilliantly for many years.

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Speaker 1: But the domestic business is something which they obviously feel

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Speaker 1: they can make still make good money on on on

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Speaker 1: deploying capital into using the weight of German industry and

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Speaker 1: the weight of German banking and combine it together as

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Speaker 1: a powerhouse of Europe. And that's what they are. They're

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Speaker 1: a powerhouse of Europe Germany, and they need a bank

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Speaker 1: to reflect it. And they've not had it. They've had

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Speaker 1: a underperforming um not quite up to bulge back at

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Speaker 1: status US investment Bank. And then there's that little article

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Speaker 1: Marcus of BMP Perry bar making clear they're going to

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Speaker 1: go after their prime brokerage, their hedge funds, servicing business

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Speaker 1: as well. I mean, on a game theory basis, everyone

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Speaker 1: in continental Europe un credit BMP Perry, but all of

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Speaker 1: them Commerce bank. They all react to this news. What

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Speaker 1: kind of meetings are they having today? Is their adversaries struggles. Well,

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Speaker 1: I think you'll find that that some of the Deutsche

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Speaker 1: businesses will switch to BMP in the sense so much

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Speaker 1: how they're going to be sold or what they're gonna

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Speaker 1: get from the point is is that Deutsche Bank is

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Speaker 1: making a clear statement here. It fell in love with

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Speaker 1: the hedge fund, it fell in love with America, and

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Speaker 1: they are moving away from both of those types of business.

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Speaker 1: It's become a much more of a corporate bank, focusing

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Speaker 1: on European and and it's it's industrial strengths and moving

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Speaker 1: away from hedge fund clients. Those people stay with Deutsche

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Speaker 1: Bank or continue a part of their business or marginally

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Speaker 1: add business with Deutsche Bank out of national duty. Yeah,

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Speaker 1: of course they do, and I think I think some

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Speaker 1: will increasingly if they feel that they're being loved, whereas

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Speaker 1: perhaps they may be ignored. And I think that there

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Speaker 1: will be more emphasis on trying to unify a European

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Speaker 1: banking presence, which is overall in a pretty poor states

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Speaker 1: as it happens. Basically, they couldn't make any money trying

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Speaker 1: to sell stocks to hedge funds and that that that

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Speaker 1: is a very simplistic way of putting it. But there's

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Speaker 1: no money in stocks anymore. You don't get charge any

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Speaker 1: brokerage for it. There's not They're not getting enough m

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Speaker 1: and a business to to justify having the secondary presence.

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Speaker 1: And they can probably do a lot of this anyway

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Speaker 1: regardless without having about a massive equise union. That's the

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Speaker 1: whole point. They can dip in and dip out, and

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Speaker 1: some of their captive corporate clients will do business with

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Speaker 1: them regardless. Tell me about the asset management, Marcus, you

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Speaker 1: and I had a conversation X months ago. They were

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Speaker 1: going to sell the Crown Jewel. That didn't work out.

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Speaker 1: They couldn't get the price, and now their trumpet in DWS.

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Speaker 1: Their asset management business is the future. But do you

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Speaker 1: see active management as a future right now for anyone? Well,

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Speaker 1: I think what they're trying to do is less than

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Speaker 1: the pain of the fact they're moving out the invest

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Speaker 1: in banking side to to such a large degree, in

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Speaker 1: particularly obviously focused that I would be on equity that

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Speaker 1: they're trying to emphasize they are still a broad brace bank.

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Speaker 1: They have private wealth management to have asset management because

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Speaker 1: they did have to raise some money from DWS. But

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Speaker 1: the point is that DUS is worth more to than

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Speaker 1: the moment in house, and they're emphasizing the fact it

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Speaker 1: has these managed to grow some assets. So it's you know,

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Speaker 1: asset managed being a terrible business to be in for

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Speaker 1: the last two three years. Going to suffer from that,

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Speaker 1: but at the moment, relatively speaking, it looks better than

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Speaker 1: the others. Tell me about your London. Let's finish up

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Speaker 1: here in Marcus, with the city. I mean it is

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Speaker 1: the wall, it is historic. Full disclosure, folks. I've been

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Speaker 1: a guest of Deutsche Bank a number of times in London.

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Speaker 1: Is Well, we're talking to Shinelli Basak about downtown New York,

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Speaker 1: downtown Manhattan and the sadness that will be there today.

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Speaker 1: How does that work culturally in London? How do they

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Speaker 1: handle the layoffs at the Wall? Well, I mean, it's

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Speaker 1: going to be a difficult day for many. Um. I

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Speaker 1: think that we know that this is going to be

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Speaker 1: a process which like when Lehman Brothers, will be a

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Speaker 1: lot of media attentions are focused on and I think

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Speaker 1: you'll find that will be a good a good effort

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Speaker 1: done by a lot of head hunters to try and

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Speaker 1: get the best, the cream of the crop. So for

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Speaker 1: some people this will be it will be relief. There'd

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Speaker 1: be probably not been joying the life of some while,

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Speaker 1: and there'll be a lot of tension on trying to

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Speaker 1: grab the best out of Deutsche Bank. So some some

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Speaker 1: they'll this will be a good day. For some it's

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Speaker 1: the end of a career. Interesting. Thank you so much,

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Speaker 1: Marcus Ashworth. Great perspective there, Lisa rom woids here in

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Speaker 1: for Paul Sweeney. The big question bond markets today is

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Speaker 1: can U S yields go lower at a time when

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Speaker 1: the U S economy seems to be pretty good? I mean, Tom,

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Speaker 1: that seems to me the fundamental issue here. And uh,

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Speaker 1: Christian Momany is going to give us a sense of

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Speaker 1: what invest goo and Christian I think in dovetail in

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Speaker 1: here the up down, the back of the fourth of

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Speaker 1: the weekend. Christian, you're going on Monday morning, what do

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Speaker 1: you do? You guys are long term? How casual are

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Speaker 1: you on this Monday? Well, so we are not casual

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Speaker 1: at all. This is investing and this is serious business.

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Speaker 1: Having said that, one has to be somewhat amused with

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Speaker 1: the gyrations that we have had so far so far

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Speaker 1: this year. Our bottom line in this regard is very simple.

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Speaker 1: We think the U S economy is going to pick

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Speaker 1: up in the second half of the second quarter was

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Speaker 1: just a soft patch, a payback perhaps for the inventory

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Speaker 1: bill that we had in the first quarter, and things

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Speaker 1: are going to get better and as a result, rates

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Speaker 1: are probably going higher rather than lower. And I think

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Speaker 1: the employment report on Friday was a proof point in

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Speaker 1: that regard. However, the markets will do the equity markets

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Speaker 1: will do better, and on the SNP is what I'm

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Speaker 1: looking at. Can we just pause and say, I believe

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Speaker 1: I heard optimism there, well, optimism about equities, but the

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Speaker 1: implication here for bonds is potentially dire. I mean, how

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Speaker 1: how much higher could rates go given the fact that

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Speaker 1: duration levels, the sensitivity of investors fixed income assets is

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Speaker 1: the highest it's ever been to an increase in interest rates. Sure,

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Speaker 1: so I think that that certainly is a problem, and

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Speaker 1: that that particular issue may cause a bit of this

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Speaker 1: location in the marketplace. Having said that, our outlooking rates

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Speaker 1: are probably our u S tenure rates probably end up

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Speaker 1: closer to two fifty, not a whole lot higher from

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Speaker 1: where we are right now, but you know, the fifty

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Speaker 1: basis point move, and that could be a significant movement

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Speaker 1: as the market adjust. That may cause a bit of

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Speaker 1: a dislocation. As I mentioned, however, that this location in

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Speaker 1: our view is a buying opportunity rather than a reason

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Speaker 1: for us to kind of get discombabulated and panic. What

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Speaker 1: sector is most attractive right now? If it's a buying opportunity.

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Speaker 1: I know you don't talk individual stocks, but what sector

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Speaker 1: is particularly opportunistic given the cacophony of news. Well, so

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Speaker 1: let's let's talk about what the first what sectors are

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Speaker 1: probably not a good opportunities and the defensives the sectors

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Speaker 1: that do well when interest rates rally, of the reeds

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Speaker 1: and other safer asset classes utilities, those are not the

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Speaker 1: sectors that you want to be in. The sectors that

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Speaker 1: you want to be in are the typical sectors that

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Speaker 1: do well because the economy is improving and the outlook

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Speaker 1: for the economy, certainly in our view, is improving, and

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Speaker 1: therefore industrials, uh and uh, you know, sectors that are

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Speaker 1: sensitive to the overall economic growth. Pictures and tech. The

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Speaker 1: one thing that I would say is that a lot

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Speaker 1: of people who get very worried about tech valuation and

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Speaker 1: concentration and things like that. But from my standpoint, if

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Speaker 1: the markets are going to do well, and I firmly

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Speaker 1: believe they're going to do well, the likelihood that they

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Speaker 1: do well without tech doing well, that just doesn't fool.

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Speaker 1: So tech remains a favorite sector of of mine and

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Speaker 1: probably will remain favorite sector of mine for the rest

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Speaker 1: of this cycle. Christia, one question I have is can

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Speaker 1: the US tenure really moved two and a half percent

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Speaker 1: given where we are in Europe, and given the fact

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Speaker 1: that people are still speculating that the ECB may even

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Speaker 1: add quantitative easing leader this year, well so, no, that's

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Speaker 1: that's a very valid point. If the policy action in

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Speaker 1: Europe end up being very, very prolific, and with the

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Speaker 1: change in leadership, that may indeed or at least some

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Speaker 1: version of that may become become reality. If that's the case,

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Speaker 1: then the two fifty may not may not pan out.

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Speaker 1: Having said that, the key point that I'm trying to

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Speaker 1: make is direction of rates is higher rather than lower,

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Speaker 1: primarily driven by US economy doing better. Christian MoManI with

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Speaker 1: this with investoral. Thanks for listening to the Bloomberg Surveillance podcast.

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Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or

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Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom

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Speaker 1: Keane before the podcast. You can always catch us worldwide.

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Speaker 1: I'm Bloomberg Radio.