1 00:00:01,800 --> 00:00:04,440 Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm 2 00:00:04,440 --> 00:00:07,280 Speaker 1: Bloomberg Quick Takes Tim Stanibek. We're here every day bringing 3 00:00:07,280 --> 00:00:09,799 Speaker 1: you the latest news from the world of business and finance, 4 00:00:09,840 --> 00:00:13,640 Speaker 1: plus technology, politics, economics, all partnising the power of Business 5 00:00:13,640 --> 00:00:17,119 Speaker 1: Week reporters and editors, not to mention our journalists and 6 00:00:17,160 --> 00:00:20,000 Speaker 1: analyst in more than one twenty countries. 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Well the US Central Bank top 11 00:00:33,120 --> 00:00:36,320 Speaker 1: of mind today next FOMC decision just nine days away. 12 00:00:36,360 --> 00:00:39,560 Speaker 1: This story is among our most read on the Bloomberg terminal. 13 00:00:39,600 --> 00:00:42,600 Speaker 1: It's about how with half point interest rate increases all 14 00:00:42,640 --> 00:00:46,040 Speaker 1: but certain in June and July, Photo Reserve officials are 15 00:00:46,040 --> 00:00:48,920 Speaker 1: shifting the focus away from a destination on hikes to 16 00:00:49,040 --> 00:00:52,320 Speaker 1: something that's trickier to determine and explain, and that is 17 00:00:52,360 --> 00:00:55,320 Speaker 1: the broader impact of their policies on the economy. So 18 00:00:55,400 --> 00:00:57,360 Speaker 1: let's get to it with Bloomberg News, Foederal Reserve and 19 00:00:57,440 --> 00:01:01,400 Speaker 1: US Economy reporter he is Craig Tours and he's on 20 00:01:01,440 --> 00:01:03,720 Speaker 1: the phone from Washington, d C. Craig, I love this 21 00:01:03,760 --> 00:01:05,600 Speaker 1: story top of mine. I feel like it. It just 22 00:01:05,760 --> 00:01:08,679 Speaker 1: meshes so well after although the recession talk we heard 23 00:01:08,720 --> 00:01:11,480 Speaker 1: from so many last week tell us about kind of 24 00:01:11,520 --> 00:01:14,800 Speaker 1: the shift in the narrative from J. Powell and Company 25 00:01:14,920 --> 00:01:18,520 Speaker 1: or J Powell specifically. Yeah, so, Carol, we really saw 26 00:01:18,560 --> 00:01:21,160 Speaker 1: it in the last press conference where he called this 27 00:01:21,360 --> 00:01:26,760 Speaker 1: concept of the neutral rate UM imprecise and then mentioned 28 00:01:26,760 --> 00:01:31,720 Speaker 1: the word financial conditions more than a dozen times. And 29 00:01:31,880 --> 00:01:35,119 Speaker 1: you know, the tricky thing about financial conditions is they 30 00:01:35,120 --> 00:01:39,000 Speaker 1: don't happen tighten, or loosen all at once. Right now, 31 00:01:39,920 --> 00:01:42,560 Speaker 1: UM mortgage rates have gone up quite a bit. They're 32 00:01:42,560 --> 00:01:46,120 Speaker 1: above five percent last I looked. But heck, if you 33 00:01:46,160 --> 00:01:51,400 Speaker 1: were financing inventory UM and selling cars, you'd probably be 34 00:01:51,520 --> 00:01:56,560 Speaker 1: financing three two right now. And that's not very tight. 35 00:01:56,800 --> 00:02:00,360 Speaker 1: So you know, what they're trying to do is strict 36 00:02:00,360 --> 00:02:04,120 Speaker 1: even further. And if you look at financial conditions in disease, 37 00:02:04,440 --> 00:02:07,360 Speaker 1: we have one Chicago Fed as one Goldman as one 38 00:02:08,080 --> 00:02:11,760 Speaker 1: they look pretty loose. Still. You know, Craig, as a 39 00:02:11,960 --> 00:02:14,600 Speaker 1: stock market guy, I think of that, and I think 40 00:02:14,960 --> 00:02:18,600 Speaker 1: you know, the Fed obviously wants to continue tightening conditions. 41 00:02:19,240 --> 00:02:21,720 Speaker 1: Is there any way they can do that without causing 42 00:02:21,720 --> 00:02:23,840 Speaker 1: the stock market to go back down to its lows 43 00:02:23,840 --> 00:02:31,720 Speaker 1: of the year? Do you think? No, That's what I thought. Um, 44 00:02:31,760 --> 00:02:35,520 Speaker 1: you know, because as you're raising borrowing costs for companies 45 00:02:35,840 --> 00:02:40,400 Speaker 1: um or on consumer credit cards, eventually, I think you're 46 00:02:40,440 --> 00:02:44,799 Speaker 1: going to be hurting earnings sooner or later, or at 47 00:02:44,840 --> 00:02:49,600 Speaker 1: least earnings outlooks. So I mean, it's what they want 48 00:02:49,639 --> 00:02:52,519 Speaker 1: to do. And part of the stock market going down 49 00:02:53,080 --> 00:02:57,919 Speaker 1: that affects financial conditions by reducing portfolio wealth, which might 50 00:02:58,000 --> 00:03:01,919 Speaker 1: reduce consumption a little bit. So yeah, I think they're 51 00:03:01,960 --> 00:03:06,760 Speaker 1: fully intent. Um, I'm tightening further. And Carol and Mike, 52 00:03:06,919 --> 00:03:09,560 Speaker 1: you know, you gotta take little brainers now the face 53 00:03:09,720 --> 00:03:14,560 Speaker 1: chair and uh we had this comment from her last week. 54 00:03:14,639 --> 00:03:19,160 Speaker 1: So you remember Mr Bostick in Atlanta. Dr Bostick, he said, well, 55 00:03:19,200 --> 00:03:23,560 Speaker 1: we might pause and then financial conditions eased, so that 56 00:03:23,760 --> 00:03:27,600 Speaker 1: you don't want financial conditions easing. And then little brainer 57 00:03:27,720 --> 00:03:31,280 Speaker 1: came back and said, nah, pause looks quote very hard. 58 00:03:32,880 --> 00:03:36,320 Speaker 1: In September, this is like one of those things like kids, look, look, 59 00:03:36,360 --> 00:03:38,200 Speaker 1: this is just a reminder, right, that each of these 60 00:03:38,200 --> 00:03:40,800 Speaker 1: FED speakers can kind of do their own thing right there, 61 00:03:41,040 --> 00:03:43,000 Speaker 1: or is there Like I always wonder if there's a 62 00:03:43,000 --> 00:03:45,120 Speaker 1: memo behind the scenes, like Leo you come out and 63 00:03:45,120 --> 00:03:52,680 Speaker 1: say this, and Bostick you say this. I always wonder. Yeah, 64 00:03:52,920 --> 00:03:54,640 Speaker 1: it doesn't seem like they all got the same memo 65 00:03:54,720 --> 00:03:57,800 Speaker 1: this time if if there is, But you know, look, 66 00:03:58,240 --> 00:04:01,000 Speaker 1: I'll say this, it's good that we not all simple 67 00:04:01,040 --> 00:04:05,000 Speaker 1: things or is decentralized as ours? Um, the unique history 68 00:04:05,000 --> 00:04:08,840 Speaker 1: of the United States were small business, businessmen and farmers. 69 00:04:09,320 --> 00:04:11,880 Speaker 1: I've read these documents, by the way, they're in the 70 00:04:11,960 --> 00:04:17,880 Speaker 1: University of Virginia, and you know, we didn't want centralized money. 71 00:04:18,000 --> 00:04:20,080 Speaker 1: We didn't want a group of seven to have all 72 00:04:20,120 --> 00:04:23,120 Speaker 1: the power so reserved. Thanks should have diverse views. That's 73 00:04:23,160 --> 00:04:26,080 Speaker 1: a good thing, a good craig. I wonder, you know, 74 00:04:26,160 --> 00:04:29,839 Speaker 1: obviously the consensus thinking is that we'll get a half 75 00:04:30,000 --> 00:04:33,520 Speaker 1: percentage point increase at the next two meetings. Um, that's 76 00:04:33,560 --> 00:04:37,160 Speaker 1: your point. Uh. Mr Bostick sort of indicated he might 77 00:04:37,200 --> 00:04:39,680 Speaker 1: like to see a pause then in September. But if 78 00:04:39,720 --> 00:04:41,640 Speaker 1: not a pause, is it possible that maybe they'll go 79 00:04:41,680 --> 00:04:44,359 Speaker 1: back go back to basis points? Have they sort of 80 00:04:44,440 --> 00:04:49,479 Speaker 1: ruled that out anyone else in the discussions lately. I 81 00:04:49,520 --> 00:04:54,400 Speaker 1: think that's an interesting um possibility. Nothing's off the table. 82 00:04:55,240 --> 00:04:58,880 Speaker 1: And Mike, what what I think they don't really understand 83 00:04:59,520 --> 00:05:03,359 Speaker 1: is balance sheet runoff that starts this month. How that 84 00:05:03,640 --> 00:05:07,760 Speaker 1: adds to financial conditions. Some people say you may add 85 00:05:07,800 --> 00:05:09,919 Speaker 1: nothing at all. I mean we you know, when the 86 00:05:09,960 --> 00:05:14,000 Speaker 1: FED buys an asset, it creates a liability in the 87 00:05:14,040 --> 00:05:16,280 Speaker 1: form of coush in the banking system, and right now 88 00:05:16,320 --> 00:05:19,279 Speaker 1: we have all this excess reserves, so much so that 89 00:05:19,400 --> 00:05:22,400 Speaker 1: banks are just reparking it at the FED at a 90 00:05:22,440 --> 00:05:25,520 Speaker 1: low interest rate. So it shouldn't make that much difference, 91 00:05:25,560 --> 00:05:28,600 Speaker 1: but it might. We don't understand this fully how this works. 92 00:05:28,680 --> 00:05:30,800 Speaker 1: One thing I like is how you said in your 93 00:05:30,800 --> 00:05:33,240 Speaker 1: story that it may j Powell walking back from the 94 00:05:33,279 --> 00:05:36,360 Speaker 1: concept of neutral, cautioning that the discussion had a sort 95 00:05:36,360 --> 00:05:38,919 Speaker 1: of false precision, but he said, you're going to be 96 00:05:39,040 --> 00:05:40,920 Speaker 1: kind of enquiring how all of this is affecting the 97 00:05:40,920 --> 00:05:44,240 Speaker 1: economy through financial conditions. To me, that says their data 98 00:05:44,279 --> 00:05:48,440 Speaker 1: dependent on everything. I'm just got thirty seconds. Is that fair? Like? 99 00:05:48,480 --> 00:05:50,080 Speaker 1: I feel like they're going to go into every meeting 100 00:05:50,080 --> 00:05:52,240 Speaker 1: and just kind of look at the current set of 101 00:05:52,320 --> 00:05:55,479 Speaker 1: data points. I think what we want to hear in 102 00:05:55,560 --> 00:05:59,880 Speaker 1: the next pros conference, um uh is what is clear 103 00:06:00,279 --> 00:06:05,080 Speaker 1: and convincing evidence means to him three months of falling inflation. 104 00:06:05,360 --> 00:06:08,919 Speaker 1: That's the key question. All right, Well, you gave us 105 00:06:08,960 --> 00:06:12,960 Speaker 1: something to think about on another countdown to another important 106 00:06:12,960 --> 00:06:15,239 Speaker 1: FED meeting, which I think many of us would argue 107 00:06:15,240 --> 00:06:19,880 Speaker 1: that they're all important, certainly because it's just going to 108 00:06:20,000 --> 00:06:23,159 Speaker 1: determine so much as you say, FED isn't It's not 109 00:06:23,200 --> 00:06:25,120 Speaker 1: part of their mission to watch the financial or not 110 00:06:25,120 --> 00:06:27,120 Speaker 1: at least not watch the equity market, but they certainly 111 00:06:27,160 --> 00:06:29,280 Speaker 1: keep a watch on it. Bloomberg News Federal Reserve in 112 00:06:29,360 --> 00:06:32,440 Speaker 1: US Economy reporter Craig Tourist joining us on the phone 113 00:06:32,880 --> 00:06:35,240 Speaker 1: in Washington, d C. You are listening to Bloomberg Business 114 00:06:35,240 --> 00:06:37,560 Speaker 1: Week Carol Master along with Mike Reagan, and we are 115 00:06:37,600 --> 00:06:42,040 Speaker 1: Bloomberg Radio. This is Bloomberg Business Week with Carol Masser 116 00:06:42,240 --> 00:06:46,719 Speaker 1: and Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio shares 117 00:06:46,760 --> 00:06:48,839 Speaker 1: a Twitter though under some pressure they were down as 118 00:06:48,920 --> 00:06:51,080 Speaker 1: much as five point six percent, off that low, but 119 00:06:51,200 --> 00:06:54,680 Speaker 1: still down just shy of two percent. Elon Musk as 120 00:06:54,680 --> 00:06:57,480 Speaker 1: he said. Doug said believes Twitter is breaching their merger 121 00:06:57,520 --> 00:07:00,560 Speaker 1: agreement but not meeting his demands for information, spam and 122 00:07:00,560 --> 00:07:05,039 Speaker 1: fake accounts. There's the twists and turns of Ellen Musk 123 00:07:05,080 --> 00:07:07,719 Speaker 1: in his pursuit of Twitter. It's just fascinating. Hey, let's 124 00:07:07,760 --> 00:07:09,840 Speaker 1: get to it with our own. Kurt Wagner, he's technology 125 00:07:09,840 --> 00:07:11,720 Speaker 1: reporter at Bloomberg News. He's with us on the phone 126 00:07:11,720 --> 00:07:14,000 Speaker 1: from San Francisco. He's writing about this. So I just 127 00:07:14,040 --> 00:07:16,640 Speaker 1: want to know, Kurt, do you just like stay glued 128 00:07:16,680 --> 00:07:19,160 Speaker 1: to Twitter at Elon's account to find out what's next 129 00:07:19,200 --> 00:07:22,360 Speaker 1: when it comes to Twitter? Yeah, I mean just constantly 130 00:07:22,440 --> 00:07:26,520 Speaker 1: being online. It's it's reminiscent of the Donald Trump days 131 00:07:26,680 --> 00:07:31,360 Speaker 1: right where you're just bombarded with news over Twitter at 132 00:07:31,400 --> 00:07:33,440 Speaker 1: all hours of the day. I feel like that's kind 133 00:07:33,440 --> 00:07:35,960 Speaker 1: of what we're at now, you know, Kurt. The gist 134 00:07:35,960 --> 00:07:38,960 Speaker 1: of this seems to be that Twitter has stated in 135 00:07:39,000 --> 00:07:42,680 Speaker 1: their filings uh with the SEC that they believe less 136 00:07:42,680 --> 00:07:46,840 Speaker 1: than five percent of users are quote unquote bots, and 137 00:07:46,880 --> 00:07:52,080 Speaker 1: that Ellen thinks the numbers something like or more. Is 138 00:07:52,120 --> 00:07:54,840 Speaker 1: there any sort of independent third party that could you know, 139 00:07:55,160 --> 00:07:59,360 Speaker 1: chime in here that you've heard and tell us who's right. Well, 140 00:07:59,400 --> 00:08:01,840 Speaker 1: a few weeks we actually we wrote a story that 141 00:08:02,240 --> 00:08:04,680 Speaker 1: UM kind of outline the fact that there are third 142 00:08:04,720 --> 00:08:08,440 Speaker 1: parties that try to quantify this, but unfortunately they're they're 143 00:08:08,480 --> 00:08:10,760 Speaker 1: just guesses, right. I mean, the only way to really 144 00:08:10,800 --> 00:08:13,280 Speaker 1: know the answer to this is to have the data 145 00:08:13,360 --> 00:08:17,320 Speaker 1: that that Twitter the company has, and uh, they're clearly 146 00:08:17,360 --> 00:08:20,360 Speaker 1: not willing to hand over that raw data. Now. I'm 147 00:08:20,360 --> 00:08:24,040 Speaker 1: told that they have shared their methodology for calculating this 148 00:08:24,120 --> 00:08:27,760 Speaker 1: percentage with with Elon and his team. Um, they have, 149 00:08:28,120 --> 00:08:30,600 Speaker 1: you know, to a certain extent, at at a very 150 00:08:30,680 --> 00:08:33,880 Speaker 1: high level, even tweeted it publicly. Um, but they're not 151 00:08:34,000 --> 00:08:36,480 Speaker 1: willing to hand over the actual raw data, which is 152 00:08:36,600 --> 00:08:38,680 Speaker 1: I think the issue here. It's not so much that 153 00:08:38,880 --> 00:08:41,440 Speaker 1: they're not willing to show their map, it's that Ellen 154 00:08:41,559 --> 00:08:46,240 Speaker 1: doesn't think their approach or methodology makes much sense. I 155 00:08:46,280 --> 00:08:49,120 Speaker 1: also wonder occurtis there's sort of a dispute over what 156 00:08:49,240 --> 00:08:51,400 Speaker 1: the definition of a bot actually is. You know, if 157 00:08:51,440 --> 00:08:54,120 Speaker 1: I'm if I'm running a social media campaign for a 158 00:08:54,120 --> 00:08:56,840 Speaker 1: big company, and I have four or five different brands 159 00:08:56,840 --> 00:08:58,720 Speaker 1: and all of a sudden, they're they're all tweeting the 160 00:08:58,760 --> 00:09:01,000 Speaker 1: same thing. Is that am I a bot technically at 161 00:09:01,000 --> 00:09:04,040 Speaker 1: that point? Yeah, I think there's a difference between a 162 00:09:04,160 --> 00:09:08,800 Speaker 1: bot and a spam bot, right, because bots on their 163 00:09:08,800 --> 00:09:11,839 Speaker 1: own are actually allowed on Twitter. It's not against the 164 00:09:11,920 --> 00:09:15,480 Speaker 1: rules for there to be an automated account. So there 165 00:09:15,480 --> 00:09:17,760 Speaker 1: are actually bots. I've I've written about them back when 166 00:09:18,080 --> 00:09:21,200 Speaker 1: the vaccine first came out last year. There are actually 167 00:09:21,200 --> 00:09:23,360 Speaker 1: some really helpful bots that would tell you when vaccine 168 00:09:23,360 --> 00:09:26,560 Speaker 1: appointments were available and help people kind of get those 169 00:09:26,600 --> 00:09:29,320 Speaker 1: and and at the time I was like, Hey, there 170 00:09:29,360 --> 00:09:31,400 Speaker 1: are some Twitter bots that are actually pretty good and 171 00:09:31,440 --> 00:09:34,880 Speaker 1: doing helpful things. Now the issue, of course is spam bots, right, 172 00:09:34,920 --> 00:09:37,200 Speaker 1: those are different, different type, and those are the types 173 00:09:37,240 --> 00:09:39,480 Speaker 1: of things I think Ellen means when he talks about 174 00:09:39,520 --> 00:09:42,920 Speaker 1: bots broadly. Um, But again, I think really what this 175 00:09:43,000 --> 00:09:45,480 Speaker 1: comes down to is like I don't actually think this 176 00:09:45,600 --> 00:09:47,720 Speaker 1: is much of an issue about bots at all. I 177 00:09:47,760 --> 00:09:52,200 Speaker 1: think this is probably Elon really looking for a reason 178 00:09:52,280 --> 00:09:55,120 Speaker 1: to throw this deal into question. Um, you know, the 179 00:09:55,160 --> 00:09:57,920 Speaker 1: price of Twitter is so much cheaper today than it 180 00:09:58,040 --> 00:09:59,960 Speaker 1: was when he made the offer a few months ago. 181 00:10:00,600 --> 00:10:03,120 Speaker 1: And if you're someone who's now in the hook to pay, 182 00:10:03,240 --> 00:10:05,640 Speaker 1: you know, overpay for a company, what are you gonna do. 183 00:10:05,679 --> 00:10:07,240 Speaker 1: You're gonna look to try and lower the price, and 184 00:10:07,320 --> 00:10:09,640 Speaker 1: this fields like an effort to do that. Well, that's 185 00:10:09,640 --> 00:10:11,319 Speaker 1: what I wanted to say, and I love what you said. 186 00:10:11,559 --> 00:10:14,559 Speaker 1: One of my favorite things in your story today is 187 00:10:14,600 --> 00:10:18,199 Speaker 1: about how it's just so similar to former President Donald 188 00:10:18,240 --> 00:10:21,040 Speaker 1: Trump and could use social media to kind of get 189 00:10:21,040 --> 00:10:23,160 Speaker 1: what he wanted or at least get a narrative going 190 00:10:23,160 --> 00:10:25,520 Speaker 1: out there. And I do feel like Elon Musk is 191 00:10:25,559 --> 00:10:30,240 Speaker 1: incredibly savvy about posting things, and is he just trying 192 00:10:30,240 --> 00:10:32,640 Speaker 1: to get a cheaper price for this deal? And and 193 00:10:32,760 --> 00:10:35,960 Speaker 1: we're a regulator saying you cannot do this. And where 194 00:10:36,040 --> 00:10:38,000 Speaker 1: was he, you know, early on when he was doing 195 00:10:38,000 --> 00:10:41,720 Speaker 1: his due diligence um and saying, hey, I got some 196 00:10:41,760 --> 00:10:44,240 Speaker 1: problems with the bot stuff, let's figure that out before 197 00:10:44,240 --> 00:10:47,440 Speaker 1: I actually put in an offer, Like, well, where where 198 00:10:47,559 --> 00:10:49,520 Speaker 1: was he with the due diligence? Is that he didn't 199 00:10:49,520 --> 00:10:51,640 Speaker 1: do due diligence, right, And that was part of the 200 00:10:51,920 --> 00:10:53,760 Speaker 1: that was part of the deal, was that he didn't 201 00:10:54,200 --> 00:10:58,120 Speaker 1: want to or need to supposedly look behind the curtain 202 00:10:58,160 --> 00:11:01,560 Speaker 1: that Twitter's you know, non public information, right, And so 203 00:11:01,640 --> 00:11:06,520 Speaker 1: now that's obviously um apparently becoming an issue for him. 204 00:11:06,559 --> 00:11:10,520 Speaker 1: But again, is it really I'm not entirely sure that 205 00:11:10,559 --> 00:11:13,679 Speaker 1: this is this is the body issue. It's it's instead, 206 00:11:13,800 --> 00:11:16,160 Speaker 1: to your point, kind of lowering the price. And what 207 00:11:16,200 --> 00:11:18,079 Speaker 1: does this mean for regulators? Now? I don't know about 208 00:11:18,080 --> 00:11:20,600 Speaker 1: the regulation front, but I can say on Twitter side, 209 00:11:20,640 --> 00:11:24,520 Speaker 1: they've said we intend to enforce this merger agreement, right, 210 00:11:24,600 --> 00:11:29,080 Speaker 1: so Twitter can in theory, as long as they get 211 00:11:29,080 --> 00:11:33,360 Speaker 1: shareholder approval and and other a couple other stipulations, they 212 00:11:33,360 --> 00:11:35,680 Speaker 1: could go to Ellen and try to sue him to 213 00:11:35,800 --> 00:11:39,719 Speaker 1: force him to complete his part of the agreement here. Now, 214 00:11:39,760 --> 00:11:41,679 Speaker 1: that's obviously a ways down the road, and that could 215 00:11:41,720 --> 00:11:44,080 Speaker 1: be very messy, and maybe something comes up to stop that. 216 00:11:44,600 --> 00:11:47,400 Speaker 1: But there is a scenario here where Twitter actually sues 217 00:11:47,440 --> 00:11:49,960 Speaker 1: Elon to try and make him buy this company that 218 00:11:50,000 --> 00:11:51,760 Speaker 1: he agreed to buy a few months ago, like a 219 00:11:51,800 --> 00:11:57,080 Speaker 1: really well, it's so messy, and as as Ellen has tweeted, 220 00:11:57,120 --> 00:12:01,400 Speaker 1: he's gathering an army of street fighting at Arney's. I guess, uh, 221 00:12:01,440 --> 00:12:04,480 Speaker 1: I guess with that in mind, but Kert quickly I wonder, um, 222 00:12:04,600 --> 00:12:06,760 Speaker 1: I'm trying to think who would take the job of 223 00:12:06,840 --> 00:12:10,640 Speaker 1: CEO if Elon does this takeover? Have there been any 224 00:12:10,760 --> 00:12:13,760 Speaker 1: rumblings about that and whether or not he's he might 225 00:12:13,880 --> 00:12:16,920 Speaker 1: have a difficulty finding a CEO given his sort of 226 00:12:17,000 --> 00:12:20,800 Speaker 1: unpredictable and and uh contentious personality. And Kurt just got 227 00:12:20,840 --> 00:12:23,720 Speaker 1: about twenty seconds. Yeah, well, he said that he's going 228 00:12:23,760 --> 00:12:26,680 Speaker 1: to temporarily be CEO. The only name of someone that 229 00:12:26,840 --> 00:12:29,199 Speaker 1: seems to keep coming up is Jack Dorsey, although he 230 00:12:29,280 --> 00:12:31,800 Speaker 1: said he'd never be CEO again. You just have to 231 00:12:31,840 --> 00:12:33,400 Speaker 1: remember there are a lot of people out there who 232 00:12:33,440 --> 00:12:36,800 Speaker 1: really do still love and admire Elon Musk. So I 233 00:12:36,840 --> 00:12:39,920 Speaker 1: think finding one person who's willing to take this job 234 00:12:39,920 --> 00:12:41,520 Speaker 1: and work for him won't be that hard. It just 235 00:12:41,600 --> 00:12:43,959 Speaker 1: depends on who that person is going to be. Well, 236 00:12:44,000 --> 00:12:48,640 Speaker 1: it just continues to give and give and give. This story. Um, Kurt, 237 00:12:48,679 --> 00:12:51,000 Speaker 1: thank you so much. Really appreciated, Kurt Wagner. He's technology 238 00:12:51,080 --> 00:12:52,960 Speaker 1: port U Bloomberg News on the phone in San Francisco. 239 00:12:53,000 --> 00:12:54,760 Speaker 1: Shares of Twitter, as I mentioned, they were down five 240 00:12:54,760 --> 00:12:57,400 Speaker 1: point six percent at it's lows, still down about one 241 00:12:57,400 --> 00:13:01,880 Speaker 1: point seven per cent. You're listening to Bloomberg Business Week 242 00:13:02,080 --> 00:13:06,079 Speaker 1: with Carol Messer and Bloomberg Quick Takes Tim Stinovic on 243 00:13:06,200 --> 00:13:09,680 Speaker 1: Bloomberg Radio. Alright, everybody. In the upcoming issue of Bloomberg 244 00:13:09,720 --> 00:13:12,040 Speaker 1: business Week. Actually it's the back page. It's out later 245 00:13:12,080 --> 00:13:15,480 Speaker 1: this week. It's a story on the industrial stalwart that 246 00:13:15,640 --> 00:13:18,559 Speaker 1: is going all in on specialty software. So let's get 247 00:13:18,559 --> 00:13:22,000 Speaker 1: to it. Bloomberg Opinion Deals and industrialist columnist brook Sutherland. 248 00:13:22,120 --> 00:13:24,800 Speaker 1: Her columns on the industrial space always a must read, 249 00:13:25,200 --> 00:13:26,640 Speaker 1: and she judge us on the phone in New York 250 00:13:26,679 --> 00:13:28,880 Speaker 1: City along with Bloomberg Business Week nitor Joel Webber on 251 00:13:28,960 --> 00:13:31,600 Speaker 1: the access line in Brooklyn. I love these kind of stories. 252 00:13:31,679 --> 00:13:34,040 Speaker 1: It's like a kind of a tell, if you will, 253 00:13:34,080 --> 00:13:36,840 Speaker 1: to our audience, Um, about a company maybe we don't 254 00:13:36,840 --> 00:13:38,439 Speaker 1: talk about all the time, but maybe it's got to 255 00:13:38,480 --> 00:13:42,240 Speaker 1: be on our radar. Yes, so yeah, I had to 256 00:13:42,280 --> 00:13:45,199 Speaker 1: tell you. Oh wait, hang on, Brook, Well, let's bring Joel. 257 00:13:47,800 --> 00:13:51,400 Speaker 1: So yeah. I'm always pleasantly surprised with what brook brings 258 00:13:51,400 --> 00:13:55,120 Speaker 1: our way. And you totally uh, you described it perfectly, 259 00:13:55,160 --> 00:13:57,480 Speaker 1: like Roper Industrial is not a name that I was 260 00:13:57,520 --> 00:14:01,960 Speaker 1: familiar with until Brooke enlightened me. And what's interesting about 261 00:14:02,000 --> 00:14:05,680 Speaker 1: this company is sort of, uh, it's leaving uh, sort 262 00:14:05,679 --> 00:14:08,360 Speaker 1: of the domain of brook Sutherland and coming something else. Brooke, 263 00:14:08,400 --> 00:14:09,880 Speaker 1: what what jumped out to you, and why did you 264 00:14:09,960 --> 00:14:13,320 Speaker 1: choose to write about Roper? Sure, so it's the company 265 00:14:13,360 --> 00:14:15,400 Speaker 1: I've been writing about for a couple of years now. 266 00:14:15,400 --> 00:14:18,079 Speaker 1: But you're completely right that it is not a household 267 00:14:18,160 --> 00:14:20,920 Speaker 1: name that most people typically think of. But what always 268 00:14:20,920 --> 00:14:23,480 Speaker 1: took me as interesting about it is they really were 269 00:14:23,600 --> 00:14:27,880 Speaker 1: ahead of the curve when it came to investing in software. UM. 270 00:14:27,920 --> 00:14:29,160 Speaker 1: You know, it was a couple of years ago now, 271 00:14:29,200 --> 00:14:31,480 Speaker 1: but back in ten we had this sort of mini 272 00:14:31,480 --> 00:14:34,960 Speaker 1: wave where all of these industrial companies were talking about digital, 273 00:14:35,440 --> 00:14:39,920 Speaker 1: some more instantively than others perhaps, UM. But Roper at 274 00:14:39,960 --> 00:14:42,360 Speaker 1: that point was really, you know, already sort of far 275 00:14:42,440 --> 00:14:45,880 Speaker 1: along down the past of really becoming a software company UM. 276 00:14:45,880 --> 00:14:49,120 Speaker 1: And they did that through a takeover based strategy where 277 00:14:49,120 --> 00:14:53,520 Speaker 1: they were to acquire these niche providers of software UM 278 00:14:53,560 --> 00:14:56,360 Speaker 1: where there wasn't very much competition in the market. They 279 00:14:56,400 --> 00:15:00,200 Speaker 1: could command high margins UM and good free cash low 280 00:15:00,240 --> 00:15:02,400 Speaker 1: and then they would turn around and spend that free 281 00:15:02,400 --> 00:15:06,640 Speaker 1: cash flow on yet more deals. Rachel, I did not know. 282 00:15:07,480 --> 00:15:11,520 Speaker 1: I did not know that there was software that still 283 00:15:11,560 --> 00:15:13,680 Speaker 1: had white space. What kind of software are we talking 284 00:15:13,680 --> 00:15:18,560 Speaker 1: about here, Brookes? Uh, it is interesting and it's really 285 00:15:18,680 --> 00:15:21,480 Speaker 1: niche and so we're talking about in you know, business 286 00:15:21,520 --> 00:15:25,280 Speaker 1: management software for law firms. Uh, they bought a company 287 00:15:25,280 --> 00:15:30,040 Speaker 1: that makes software that used to make visual effects for movies. Um. 288 00:15:30,240 --> 00:15:32,720 Speaker 1: They have software that connects you know, different parts of 289 00:15:32,760 --> 00:15:37,239 Speaker 1: the construction and building product industries, from building product manufacturers 290 00:15:37,240 --> 00:15:40,560 Speaker 1: to architects. Um. It's in. All of these businesses don't 291 00:15:40,600 --> 00:15:43,400 Speaker 1: necessarily have a lot to do with each other. Um. 292 00:15:43,400 --> 00:15:45,000 Speaker 1: What they have in common is they tend to be 293 00:15:45,080 --> 00:15:48,320 Speaker 1: software based. And then again they tend to generate very 294 00:15:48,360 --> 00:15:50,680 Speaker 1: high margins and throw off a lot of free cash flow. 295 00:15:50,760 --> 00:15:52,840 Speaker 1: So there are a bit more like a private equity 296 00:15:52,880 --> 00:15:55,880 Speaker 1: firm in that respect, and that they're not necessarily hunting 297 00:15:55,920 --> 00:15:59,640 Speaker 1: for strategic adjacencies. They're looking for businesses that have really 298 00:15:59,680 --> 00:16:03,320 Speaker 1: good financial characteristics. Draw your right. You know, whenever I 299 00:16:03,320 --> 00:16:06,280 Speaker 1: read a Brook column, I know it's about an industrial company, 300 00:16:06,400 --> 00:16:08,520 Speaker 1: so I love it. I felt this was almost like 301 00:16:08,560 --> 00:16:12,240 Speaker 1: an obituary of an industrial company. It's kind of sad, 302 00:16:12,440 --> 00:16:14,720 Speaker 1: kind of sad. Read a little bit, But Brook, I 303 00:16:15,480 --> 00:16:17,880 Speaker 1: want to get back to that notion of these companies 304 00:16:17,920 --> 00:16:21,000 Speaker 1: they decided to acquire. I'm reading your story here and 305 00:16:21,120 --> 00:16:24,880 Speaker 1: it sounds like the core company it makes pumps, compressors, 306 00:16:25,000 --> 00:16:30,800 Speaker 1: and controls. Okay, classic industrial Uh, then business management software 307 00:16:30,840 --> 00:16:34,000 Speaker 1: for law firms, and software used to create visual effects 308 00:16:34,000 --> 00:16:36,960 Speaker 1: for the movie industry. So what's there a rhymer reason 309 00:16:37,200 --> 00:16:40,480 Speaker 1: for these sort of bolt on acquisitions? Or was it 310 00:16:40,520 --> 00:16:44,160 Speaker 1: was just a very acquisition focused management that when they 311 00:16:44,200 --> 00:16:46,480 Speaker 1: saw a good deal they couldn't resist. Um? How do 312 00:16:46,520 --> 00:16:49,240 Speaker 1: you end up with this sort of conglomerate of businesses 313 00:16:49,280 --> 00:16:52,520 Speaker 1: all under one roof? Sure, so it definitely was an 314 00:16:52,560 --> 00:16:56,360 Speaker 1: acquisition focused company. UM. They you know, have really sort 315 00:16:56,360 --> 00:16:59,600 Speaker 1: of built their strategy around takeovers in the past couple 316 00:16:59,600 --> 00:17:01,560 Speaker 1: of years. And I think, you know, if you take 317 00:17:01,560 --> 00:17:04,760 Speaker 1: a step back, I think what the former CEO of 318 00:17:04,800 --> 00:17:08,119 Speaker 1: the company, Brian Jellison, realizes that, you know, the growth 319 00:17:08,160 --> 00:17:12,320 Speaker 1: opportunities are in software. Um, it's getting very difficult to 320 00:17:12,359 --> 00:17:15,160 Speaker 1: grow in industrials. We keep talking about all of these 321 00:17:15,640 --> 00:17:18,560 Speaker 1: reasons to be optimistic for industrial growth, and yet here 322 00:17:18,560 --> 00:17:21,679 Speaker 1: we are again talking about potentially get another recession for 323 00:17:21,760 --> 00:17:24,240 Speaker 1: this industry. UM. And I think you know, when you 324 00:17:24,280 --> 00:17:27,040 Speaker 1: look at software, it's a lot less vulnerable to economic 325 00:17:27,080 --> 00:17:30,680 Speaker 1: slings UM. And you know, it really preserves that free 326 00:17:30,680 --> 00:17:34,440 Speaker 1: cash flow profile. But then makes this acquisition machine work UM. 327 00:17:34,480 --> 00:17:36,639 Speaker 1: And what made me want to take another look at 328 00:17:36,640 --> 00:17:40,000 Speaker 1: this company is they actually are doing a transaction to 329 00:17:40,040 --> 00:17:42,720 Speaker 1: finally get out of their industrial businesses. They struck a 330 00:17:42,760 --> 00:17:46,439 Speaker 1: deal with private equity firm Quate, Doublia and Rice to 331 00:17:46,640 --> 00:17:50,399 Speaker 1: sell a majority interest in the remaining industrial assets UM 332 00:17:50,440 --> 00:17:52,119 Speaker 1: and then they intend to sell down the rest of 333 00:17:52,160 --> 00:17:56,320 Speaker 1: that stake over time. So they are formally transitioning away 334 00:17:56,440 --> 00:18:00,240 Speaker 1: from the industrial manufacturing sector, which is really interesting because 335 00:18:00,240 --> 00:18:03,480 Speaker 1: it's the capstone of really a multi decade strategy to 336 00:18:03,520 --> 00:18:06,400 Speaker 1: transform this company here UM. And you know, one thing 337 00:18:06,400 --> 00:18:09,560 Speaker 1: that's interesting is Brian Jellison had already sort of resisted 338 00:18:09,920 --> 00:18:12,520 Speaker 1: getting out of these industrial businesses in part because they're 339 00:18:12,520 --> 00:18:16,080 Speaker 1: not bad businesses. I mean, Rocher is a good company. 340 00:18:16,119 --> 00:18:19,520 Speaker 1: They managed these assets well. These businesses, even in the 341 00:18:19,560 --> 00:18:22,680 Speaker 1: oil and gas types, are tended to generate pretty good returns, 342 00:18:22,760 --> 00:18:26,159 Speaker 1: even in times of uh, you know, economic cycles, and 343 00:18:26,280 --> 00:18:28,359 Speaker 1: you know, they weren't bad assets to keep around. But 344 00:18:28,400 --> 00:18:31,000 Speaker 1: to your point, they really didn't ask that much to 345 00:18:31,080 --> 00:18:33,879 Speaker 1: do with software. And I think his successor, Neil Hunt, 346 00:18:34,200 --> 00:18:36,080 Speaker 1: has been a lot more aggressive in getting rid of 347 00:18:36,080 --> 00:18:39,760 Speaker 1: some of these more traditional assets and completing the company's transformation. 348 00:18:42,520 --> 00:18:45,760 Speaker 1: So you trade one sector for another, that's a pretty 349 00:18:45,760 --> 00:18:50,119 Speaker 1: incredible transformation. Uh. And what do you what do you 350 00:18:50,119 --> 00:18:52,200 Speaker 1: look like now that you're in a new world. What 351 00:18:52,520 --> 00:18:55,120 Speaker 1: does Roper? How does stack up with its new competitive set? 352 00:18:56,080 --> 00:18:58,200 Speaker 1: I think that's what's going to be really interesting because 353 00:18:58,240 --> 00:19:00,960 Speaker 1: the end their benefit of holding on to these industrial 354 00:19:01,040 --> 00:19:04,200 Speaker 1: assets was that you've got to continue to be followed 355 00:19:04,520 --> 00:19:08,400 Speaker 1: by industrial people like myself, but also you know Wall 356 00:19:08,440 --> 00:19:12,959 Speaker 1: Street analysts and investors who have different attitudes towards business. 357 00:19:12,960 --> 00:19:16,280 Speaker 1: I mean, because Roper had so much software, they didn't 358 00:19:16,320 --> 00:19:18,719 Speaker 1: really look like an industrial company, and they had you know, 359 00:19:18,760 --> 00:19:21,640 Speaker 1: off the chart margins, off the chart, return on invested 360 00:19:21,680 --> 00:19:23,840 Speaker 1: capital um, and you know, you would talk to the 361 00:19:23,880 --> 00:19:26,399 Speaker 1: industrial analysts and they really would get sort of stars 362 00:19:26,400 --> 00:19:28,879 Speaker 1: in their eyes talking about this company because it really 363 00:19:29,040 --> 00:19:32,200 Speaker 1: was such a standout in the industrial wells. Now they're 364 00:19:32,240 --> 00:19:33,760 Speaker 1: going to be part of the S and P five 365 00:19:33,800 --> 00:19:37,679 Speaker 1: under and Information Technology sector index. That's a little bit 366 00:19:37,720 --> 00:19:40,440 Speaker 1: of a different ballgame. It's people who have different standards 367 00:19:40,440 --> 00:19:42,800 Speaker 1: for what they expect from software companies. So, like I said, 368 00:19:42,920 --> 00:19:45,520 Speaker 1: Roper has always been very well run. They have this 369 00:19:45,680 --> 00:19:49,119 Speaker 1: fine tuned acquisition machine, This is a very good company 370 00:19:49,160 --> 00:19:52,480 Speaker 1: that they are entering a different arena with different expectations. 371 00:19:52,600 --> 00:19:54,520 Speaker 1: I gotta say that book. I do wonder with IoT 372 00:19:54,640 --> 00:19:58,159 Speaker 1: and you know, the Internet of Big Things, whether or 373 00:19:58,200 --> 00:20:01,560 Speaker 1: not we like, does the concept to industrial change a 374 00:20:01,600 --> 00:20:03,280 Speaker 1: little bit, you know, in a new era? And just 375 00:20:03,280 --> 00:20:06,520 Speaker 1: got about thirty seconds left. Sure, I mean it definitely 376 00:20:06,600 --> 00:20:08,520 Speaker 1: is changing. Like I said, you had sort of that 377 00:20:08,600 --> 00:20:11,199 Speaker 1: rush of industrial companies getting into digital and that is 378 00:20:11,240 --> 00:20:14,159 Speaker 1: only continued. I will say these strategies have gotten a 379 00:20:14,200 --> 00:20:16,359 Speaker 1: little bit more fine honed over the years. So I 380 00:20:16,359 --> 00:20:18,760 Speaker 1: think it is sort of table stakes that industrials will 381 00:20:18,760 --> 00:20:21,639 Speaker 1: have a digital strategy. But it fits um, you know, 382 00:20:21,760 --> 00:20:25,800 Speaker 1: handed glove with their manufacturing, whereas ropers really going all 383 00:20:25,840 --> 00:20:27,760 Speaker 1: in on software like we talked about, you know, business 384 00:20:27,800 --> 00:20:31,280 Speaker 1: management software for law firms, where for the movie industry. 385 00:20:31,280 --> 00:20:35,239 Speaker 1: It's not really industrial anymore. Transformation is happening all around us, 386 00:20:35,280 --> 00:20:38,720 Speaker 1: all right. Brook Sutherland deals in industrials columnist Bloomberg Opinion 387 00:20:39,160 --> 00:20:40,960 Speaker 1: on the phone in New York City. As we mentioned, 388 00:20:41,000 --> 00:20:42,920 Speaker 1: this story we feature in the upcoming issue of Business 389 00:20:42,960 --> 00:20:44,879 Speaker 1: Week magazine. You can read it now on the Bloomberg 390 00:20:44,880 --> 00:20:47,359 Speaker 1: and a Bloomberg dot com slash business Week, and our 391 00:20:47,440 --> 00:20:50,280 Speaker 1: thanks always to Tell Webber, he's the editor of Bloomberg 392 00:20:50,280 --> 00:20:53,240 Speaker 1: Business Week magazine. Joining us from Brooklyn. You're listening to 393 00:20:53,240 --> 00:20:59,280 Speaker 1: Bloomberg Radio. This is Bloomberg. This is Bloomberg Business Week 394 00:20:59,480 --> 00:21:03,399 Speaker 1: with Carol Master and Bloomberg Quick Takes Tim Stenovic on 395 00:21:03,600 --> 00:21:08,080 Speaker 1: Bloomberg Radio. We have seen so many Americans die from 396 00:21:08,160 --> 00:21:12,960 Speaker 1: drug overdoses. Between nineteen yearly half a million Americans dying 397 00:21:13,200 --> 00:21:16,680 Speaker 1: as part of the opioid epidemic. Opioid drugs probably contributed 398 00:21:16,720 --> 00:21:21,360 Speaker 1: to an unprecedented decline in US life expectancy from seventeen. 399 00:21:21,840 --> 00:21:23,920 Speaker 1: They've also hit the labor markets. We've seen a lot 400 00:21:23,960 --> 00:21:27,520 Speaker 1: of estimates about the cost in so many different levels 401 00:21:27,720 --> 00:21:30,240 Speaker 1: when it comes to opioids. Well, here with the latest 402 00:21:30,320 --> 00:21:32,680 Speaker 1: on the settlements and more, we welcome William Tongue. He's 403 00:21:32,680 --> 00:21:35,560 Speaker 1: Attorney General of the State of Connecticut with us in 404 00:21:35,600 --> 00:21:38,560 Speaker 1: our Interactive Broker studio. General Tongue, it's so nice to 405 00:21:38,600 --> 00:21:40,800 Speaker 1: have you here with us. I do feel like there's 406 00:21:40,800 --> 00:21:43,240 Speaker 1: two big issues right now affecting the safety and well 407 00:21:43,280 --> 00:21:45,920 Speaker 1: being of our citizens, and I think about guns and opioids, 408 00:21:46,240 --> 00:21:49,200 Speaker 1: and if I may, let's talk about guns. First, Um, 409 00:21:49,320 --> 00:21:53,360 Speaker 1: you were key and helpful in passing gun control measures 410 00:21:53,560 --> 00:21:56,400 Speaker 1: after the Sandy Hooks massacre. I think we all thought 411 00:21:56,440 --> 00:21:59,520 Speaker 1: after that, oh, things are going to change dramatically. I'm 412 00:21:59,560 --> 00:22:02,920 Speaker 1: not even sure what the smart conversation is about gun 413 00:22:03,000 --> 00:22:06,480 Speaker 1: control in this country when we see tragedy after tragedy, 414 00:22:06,640 --> 00:22:09,520 Speaker 1: just in the last month alone, what is the smart conversation? 415 00:22:10,160 --> 00:22:13,600 Speaker 1: Recognize that this is a public health emergency and an epidemic, 416 00:22:13,880 --> 00:22:17,879 Speaker 1: and nobody knows it better than Texas right now, and 417 00:22:17,920 --> 00:22:21,000 Speaker 1: nobody knows it better than Connecticut. You know, it's been 418 00:22:21,040 --> 00:22:24,280 Speaker 1: barely ten years that we suffer the same tragedy that 419 00:22:24,320 --> 00:22:27,760 Speaker 1: people and you bold you are experiencing now. And Um, 420 00:22:27,760 --> 00:22:31,359 Speaker 1: we're grateful for our own home state Senator Chris Murphy, 421 00:22:31,359 --> 00:22:34,720 Speaker 1: who's leading the charge in Washington. We do hope that 422 00:22:34,720 --> 00:22:38,960 Speaker 1: those discussions will bear fruit, but hopeful, but are in 423 00:22:39,000 --> 00:22:41,919 Speaker 1: the reality. I mean, we're realistic. Why has it become 424 00:22:42,080 --> 00:22:44,520 Speaker 1: so much a right about bearing arms versus protecting the 425 00:22:44,560 --> 00:22:47,159 Speaker 1: broader society? No, I don't know. I have a sixteen 426 00:22:47,200 --> 00:22:49,240 Speaker 1: year old and a thirteen year and a ten year old, 427 00:22:49,600 --> 00:22:51,520 Speaker 1: and I think all of us are asking how many 428 00:22:51,520 --> 00:22:54,960 Speaker 1: more children have to die? I mean, what's what's hard 429 00:22:55,080 --> 00:22:57,639 Speaker 1: about doing what we have to do to keep our 430 00:22:57,720 --> 00:23:02,480 Speaker 1: children safe? What's polarizing? What's political all about that? Nothing? Nothing? 431 00:23:02,560 --> 00:23:05,200 Speaker 1: You know, all of us put our kids on our 432 00:23:05,240 --> 00:23:08,280 Speaker 1: buses or drop them off at school every single day, 433 00:23:08,680 --> 00:23:12,040 Speaker 1: and we hope we get them back safe. And and 434 00:23:12,119 --> 00:23:15,240 Speaker 1: that that hope is is now not a given, but 435 00:23:15,359 --> 00:23:18,040 Speaker 1: in question is terrifying for all of us who have 436 00:23:18,160 --> 00:23:21,720 Speaker 1: children in this country. And so after Newtown, we took 437 00:23:21,880 --> 00:23:25,719 Speaker 1: strong action, effective action. We have some of the strongest 438 00:23:25,760 --> 00:23:28,200 Speaker 1: gun laws in the nation, some of the lowest rates 439 00:23:28,200 --> 00:23:31,680 Speaker 1: of gun violence in the nation. After Sandy Hook. It 440 00:23:31,800 --> 00:23:34,560 Speaker 1: still happens in Connecticut, as it happens everywhere. But we're 441 00:23:34,600 --> 00:23:38,760 Speaker 1: blessed to have a ban on large capacity magazines UM 442 00:23:38,840 --> 00:23:42,600 Speaker 1: on the A R fifteen. We have UM a ban 443 00:23:42,720 --> 00:23:45,880 Speaker 1: on ghost guns in Connecticut. I wrote UM the domestic 444 00:23:45,960 --> 00:23:48,159 Speaker 1: violence gun law, which a lot of people referred to 445 00:23:48,280 --> 00:23:51,040 Speaker 1: as a red flag law. I did that before, and 446 00:23:51,080 --> 00:23:55,879 Speaker 1: I became attorney general when sense so common sense. UM 447 00:23:56,160 --> 00:23:59,159 Speaker 1: hard to understand what the objections are. But still, William, 448 00:23:59,200 --> 00:24:02,720 Speaker 1: I wonder you know, if you pass these measures in Connecticut, UM, 449 00:24:02,800 --> 00:24:05,719 Speaker 1: you still run the risk of some state next door 450 00:24:05,720 --> 00:24:09,520 Speaker 1: two states over having looser laws and someone you know, 451 00:24:09,640 --> 00:24:12,840 Speaker 1: buying a gun there smuggling it in. So it must 452 00:24:12,880 --> 00:24:16,680 Speaker 1: be frustrating in a way. I mean ultimately from where 453 00:24:16,720 --> 00:24:19,880 Speaker 1: you sit, is this really a job that DC has 454 00:24:19,920 --> 00:24:23,960 Speaker 1: to undertake? So we we we don't run that risk. 455 00:24:24,040 --> 00:24:29,320 Speaker 1: We live there right there, there's the iron pipeline, um, 456 00:24:29,359 --> 00:24:34,000 Speaker 1: that comes up from the South to Connecticut and literally 457 00:24:34,119 --> 00:24:36,679 Speaker 1: people with guns in the back of their trunks and 458 00:24:36,760 --> 00:24:40,520 Speaker 1: they go in often into urban areas and in Connecticut, 459 00:24:40,600 --> 00:24:43,120 Speaker 1: pop the trunk and say what are you looking for? 460 00:24:43,760 --> 00:24:48,520 Speaker 1: It's terrible and and it's terrible, UM, on some very 461 00:24:48,560 --> 00:24:51,160 Speaker 1: real level, it's totally nuts that we have a system 462 00:24:51,240 --> 00:24:54,439 Speaker 1: like this. And um, as so many of us have 463 00:24:54,520 --> 00:24:56,560 Speaker 1: said over and over again, I bet you have in 464 00:24:56,720 --> 00:24:59,439 Speaker 1: the past couple of weeks. This happens nowhere else in 465 00:24:59,480 --> 00:25:04,359 Speaker 1: the world but here. And um that we're unable to 466 00:25:04,359 --> 00:25:07,360 Speaker 1: stop stop it, not that we're powerless to stop it. Right. 467 00:25:07,600 --> 00:25:11,879 Speaker 1: Remember what, Remember what Justice Scalia and Justice Alito said 468 00:25:11,920 --> 00:25:18,080 Speaker 1: in Heller and McDonald, the two big um gun control 469 00:25:18,160 --> 00:25:21,080 Speaker 1: for lack of a better description cases before the Supreme Court. 470 00:25:21,320 --> 00:25:24,320 Speaker 1: They said states have a role in the name of 471 00:25:24,359 --> 00:25:29,440 Speaker 1: public safety to regulate gun ownership and gun use UM 472 00:25:29,720 --> 00:25:33,199 Speaker 1: to keep people safe. And this is Justice Alito and 473 00:25:33,320 --> 00:25:36,480 Speaker 1: Justice Scalia saying this. And so if it's obvious that 474 00:25:36,600 --> 00:25:41,400 Speaker 1: we have a role, then let's take UM, let's take 475 00:25:41,480 --> 00:25:44,120 Speaker 1: on our responsibility to keep people safe. I do want 476 00:25:44,119 --> 00:25:46,200 Speaker 1: to point out Michael Bloomberg, the founder majority owner of 477 00:25:46,200 --> 00:25:49,360 Speaker 1: Bloomberg LP, the parn of Bloomberg Radio, and of course 478 00:25:49,400 --> 00:25:52,159 Speaker 1: Bloomberg Philanthropy is a donor to groups that's up our 479 00:25:52,200 --> 00:25:56,200 Speaker 1: gun control, including every Town for Gun Safety. UM. We're 480 00:25:56,200 --> 00:26:00,000 Speaker 1: talking with William Tong, Attorney General the State of Connecticut. UM, 481 00:26:00,119 --> 00:26:02,720 Speaker 1: we might do wonder if we see more Americans I 482 00:26:02,760 --> 00:26:05,399 Speaker 1: think about what's going on with abortion, where individuals can 483 00:26:05,600 --> 00:26:08,679 Speaker 1: kind of go after you know, kind of almost become 484 00:26:09,600 --> 00:26:13,119 Speaker 1: like public sheriffs if you will, in going after things 485 00:26:13,160 --> 00:26:17,959 Speaker 1: or vigilant. If Americans can start and aggressively so start 486 00:26:19,119 --> 00:26:22,639 Speaker 1: suing more gunmakers, might that bring about a change, and 487 00:26:22,680 --> 00:26:25,240 Speaker 1: should they be allowed to it might? And And there's 488 00:26:25,240 --> 00:26:29,000 Speaker 1: the case against Remington's in Connecticut that broke new ground 489 00:26:29,720 --> 00:26:33,720 Speaker 1: UM in the law. And basically what the Supreme Court 490 00:26:33,760 --> 00:26:38,600 Speaker 1: of Connecticut said is that UM people can bring consumer 491 00:26:38,640 --> 00:26:44,600 Speaker 1: protection lawsuits against the gun manufacturers UM. Notwithstanding UM the 492 00:26:44,600 --> 00:26:48,480 Speaker 1: federal law known as Placa, which UM is a huge 493 00:26:48,520 --> 00:26:53,920 Speaker 1: liability shield for the gun industry, and and so that's encouraging. UM. 494 00:26:54,040 --> 00:26:57,960 Speaker 1: We you know, we're prepared UM for the Supreme Court 495 00:26:58,080 --> 00:27:01,160 Speaker 1: to issue a decision in the Brewing case that's coming. 496 00:27:01,200 --> 00:27:04,119 Speaker 1: So all the focuses on abortion right now in Dobbs, 497 00:27:04,160 --> 00:27:06,320 Speaker 1: but Bruin is coming to and it affects New York 498 00:27:06,359 --> 00:27:10,840 Speaker 1: States gun laws, and so that will that may be bad, 499 00:27:10,880 --> 00:27:12,920 Speaker 1: and that may have a direct impact on connecticuts laws. 500 00:27:12,960 --> 00:27:15,040 Speaker 1: Just kind of segues into opioids because I do feel 501 00:27:15,080 --> 00:27:18,840 Speaker 1: about like liability. Why is it that you have companies 502 00:27:18,880 --> 00:27:22,639 Speaker 1: that create products that put so many Americans at risk? 503 00:27:23,200 --> 00:27:25,960 Speaker 1: And I think about opioids. UM, you held that with 504 00:27:26,000 --> 00:27:30,560 Speaker 1: the state settlement in Connecticut UM for Connecticut Base Perdue Pharma, 505 00:27:30,760 --> 00:27:33,159 Speaker 1: UH and the Sackler family, and I think doubled or 506 00:27:33,640 --> 00:27:36,359 Speaker 1: more so the amount in terms of their responsibility. But 507 00:27:36,440 --> 00:27:38,520 Speaker 1: why is it though that when it comes down to it, 508 00:27:38,960 --> 00:27:42,480 Speaker 1: they're not really held liable as individuals or you know 509 00:27:42,520 --> 00:27:45,000 Speaker 1: what I mean, Like we have these settlements and companies, well, 510 00:27:45,040 --> 00:27:48,920 Speaker 1: we did no wrong, we didn't. They're extraordinarily powerful these 511 00:27:48,960 --> 00:27:53,359 Speaker 1: companies because of lobbying that they're extraordinarily well connected. Um 512 00:27:53,400 --> 00:27:57,240 Speaker 1: they have great lawyers and I'm a lawyer too, and um, 513 00:27:57,400 --> 00:28:04,240 Speaker 1: um they behind a system, a bankruptcy system that is broken. 514 00:28:04,520 --> 00:28:07,960 Speaker 1: And and that's why that's part of the reason why 515 00:28:08,200 --> 00:28:12,399 Speaker 1: Connecticut continued to fight and held out. As you say, um, 516 00:28:12,440 --> 00:28:15,800 Speaker 1: when we said the first settlement offer a three billion 517 00:28:15,840 --> 00:28:19,040 Speaker 1: and then four and a half billion wasn't enough, because um, 518 00:28:19,080 --> 00:28:23,040 Speaker 1: it wasn't enough. And it's not just about the money, right, 519 00:28:23,160 --> 00:28:27,360 Speaker 1: it's about doing justice. It's about not creating the wrong 520 00:28:27,440 --> 00:28:30,680 Speaker 1: incentives that if you're a gazillionaire and you do something 521 00:28:30,720 --> 00:28:34,480 Speaker 1: horrible and you kill people, you're in Connecticut Still that 522 00:28:34,560 --> 00:28:37,399 Speaker 1: number is going up. And more than ten billion dollars 523 00:28:37,400 --> 00:28:41,040 Speaker 1: in damage every year to one state of three million people. 524 00:28:41,640 --> 00:28:44,360 Speaker 1: How much money did they make. Yeah, they took out 525 00:28:44,600 --> 00:28:48,640 Speaker 1: conservatively eleven twelve billion dollars out of the company. You 526 00:28:48,680 --> 00:28:50,719 Speaker 1: know it's much more than that. And by the way, 527 00:28:50,880 --> 00:28:53,680 Speaker 1: you also know they're getting richer right now by the minute, 528 00:28:53,680 --> 00:28:56,280 Speaker 1: I'm looking at the ticker tape here right on the screen. 529 00:28:56,720 --> 00:28:59,560 Speaker 1: Every day they're in the market, they're making more money 530 00:28:59,680 --> 00:29:04,200 Speaker 1: and and and should the individuals the family be held responsive. Yes, yes, 531 00:29:04,400 --> 00:29:08,880 Speaker 1: and and we have encouraged criminal authorities in the Department 532 00:29:08,920 --> 00:29:11,560 Speaker 1: of Justice to do the same. Um. I don't have 533 00:29:11,600 --> 00:29:14,600 Speaker 1: that authority as the state attorney general in Connecticut, and 534 00:29:14,680 --> 00:29:18,440 Speaker 1: so I did everything I could to push a deal 535 00:29:19,160 --> 00:29:22,160 Speaker 1: um that was at four and a half billion, to 536 00:29:22,280 --> 00:29:26,040 Speaker 1: increase it to six billion as at increase to make 537 00:29:26,240 --> 00:29:30,240 Speaker 1: them the Sacklers face the victims and have victims and 538 00:29:30,520 --> 00:29:34,000 Speaker 1: survivors speak directly to members of the Sacklo family. That 539 00:29:34,040 --> 00:29:37,480 Speaker 1: was a specific ask by Connecticut that that happened. That 540 00:29:37,560 --> 00:29:39,520 Speaker 1: was a big deal. You know, William, I'm trying to 541 00:29:39,560 --> 00:29:42,840 Speaker 1: put myself in your shoes as the state attorney general 542 00:29:42,840 --> 00:29:44,920 Speaker 1: in Connecticut. And and don't worry, I'm not a lawyer, 543 00:29:44,960 --> 00:29:47,280 Speaker 1: so no competition. You don't have to worry about me. 544 00:29:47,320 --> 00:29:51,240 Speaker 1: It is an election here. But but you know, I'm 545 00:29:51,280 --> 00:29:54,560 Speaker 1: thinking of both of these problems. You're big, big, huge problems. 546 00:29:54,600 --> 00:29:58,760 Speaker 1: You're trying to solve opioids and guns. And in Connecticut, 547 00:29:58,880 --> 00:30:01,920 Speaker 1: you know that ensure in industry is so crucial to 548 00:30:02,000 --> 00:30:04,480 Speaker 1: the state of Connecticut. And I'm wondering is there any 549 00:30:04,600 --> 00:30:07,960 Speaker 1: role for insurance companies in both of these issues. And 550 00:30:07,960 --> 00:30:09,239 Speaker 1: the reason I asked is, you know, when I got 551 00:30:09,280 --> 00:30:12,120 Speaker 1: a trampoline at my house, I got notified by my 552 00:30:12,240 --> 00:30:15,120 Speaker 1: insurance company that they were dropping my homeowners because of 553 00:30:15,120 --> 00:30:17,880 Speaker 1: the trampoline. Is there a case to be made that 554 00:30:17,960 --> 00:30:20,040 Speaker 1: if someone has an A R fifteen in their house 555 00:30:20,640 --> 00:30:24,320 Speaker 1: that the insurance company should be alerted. Uh, Or if 556 00:30:24,320 --> 00:30:28,080 Speaker 1: a doctor is prescribing too much opioids that they're in 557 00:30:28,320 --> 00:30:32,880 Speaker 1: malpractice insurance company. You know, given your position in Connecticut 558 00:30:32,920 --> 00:30:34,479 Speaker 1: with a lot of insurance companies, I wonder if these 559 00:30:34,520 --> 00:30:36,600 Speaker 1: issues ever come up, and they do. They do. There's 560 00:30:36,640 --> 00:30:40,400 Speaker 1: a lot of creative thinking around that, around ways in 561 00:30:40,440 --> 00:30:45,640 Speaker 1: which insurance can step in and require coverage. UM. Then 562 00:30:45,680 --> 00:30:50,800 Speaker 1: there are counter arguments UM that that that somehow infringes 563 00:30:50,840 --> 00:30:54,760 Speaker 1: on the right UM and and there are some arguments 564 00:30:54,760 --> 00:30:57,480 Speaker 1: when you put pressure on the insurance companies that that's 565 00:30:57,520 --> 00:31:01,040 Speaker 1: somehow bad for business and bad for the economy. What's interesting, though, 566 00:31:01,120 --> 00:31:05,320 Speaker 1: is not only does Connecticut have a long standing and traditional, 567 00:31:05,960 --> 00:31:09,320 Speaker 1: deep relationship with the insurance industry insurance industry, we also 568 00:31:09,400 --> 00:31:11,960 Speaker 1: have a deep and long standing relationship with the gun 569 00:31:12,000 --> 00:31:16,400 Speaker 1: manufacturing industries. Right and on top of that produce farm 570 00:31:16,440 --> 00:31:20,840 Speaker 1: of the Sacklers pharmaceutical companies also based in Connecticut. So 571 00:31:21,400 --> 00:31:24,440 Speaker 1: a lot of interested parties for better or worse. Well, right, 572 00:31:24,440 --> 00:31:26,920 Speaker 1: because there's the upside to the economy, right jobs like 573 00:31:27,160 --> 00:31:29,200 Speaker 1: like you bring in these companies, but you do wonder, 574 00:31:29,600 --> 00:31:31,600 Speaker 1: you know at the end of the day, like where's 575 00:31:31,640 --> 00:31:36,080 Speaker 1: the ultimate responsibility. We've learned this with cigarettes, with climate change, 576 00:31:36,120 --> 00:31:39,200 Speaker 1: the oil industry, like right, like things that we know 577 00:31:39,360 --> 00:31:42,520 Speaker 1: do harm. And people ask me when I first got 578 00:31:42,520 --> 00:31:45,880 Speaker 1: elected and I started to get really aggressive on opioids 579 00:31:45,960 --> 00:31:50,520 Speaker 1: and on the the Sacklers in Purdue Pharma, and they said, William, 580 00:31:50,560 --> 00:31:52,440 Speaker 1: you know, what does it mean to you that they're 581 00:31:52,560 --> 00:31:55,239 Speaker 1: from Connecticut or based in Connecticut. And I think they 582 00:31:55,280 --> 00:31:58,120 Speaker 1: expected me to be like a homer, right that, oh, well, 583 00:31:58,160 --> 00:32:00,840 Speaker 1: there are law jobs at stake, and you know, good 584 00:32:00,880 --> 00:32:05,280 Speaker 1: Connecticut company. I said that what it means to me 585 00:32:05,400 --> 00:32:08,160 Speaker 1: is that Connecticut and the state attorney General has a 586 00:32:08,240 --> 00:32:12,800 Speaker 1: special obligation to be aggressive. It's on me, it's on us. Well, 587 00:32:12,920 --> 00:32:16,320 Speaker 1: great to get your perspective, and we certainly will follow 588 00:32:16,720 --> 00:32:19,040 Speaker 1: your efforts. Thank you so much. William Tong, He's Attorney 589 00:32:19,040 --> 00:32:20,880 Speaker 1: General of the state of Connecticut. Joining us here in 590 00:32:20,920 --> 00:32:31,200 Speaker 1: our Interactive Broker Studio. I'm room a journal now, but 591 00:32:31,320 --> 00:32:36,080 Speaker 1: you let me drive. Oh no, no, no no, no, honey, please, 592 00:32:36,240 --> 00:32:41,960 Speaker 1: I'll do the ride revels. I want to drive. It's 593 00:32:41,960 --> 00:32:47,920 Speaker 1: a good question. Drive. This is good Drive to the 594 00:32:47,960 --> 00:32:54,040 Speaker 1: Globe on blue Bird Radio. Just about ten minutes left 595 00:32:54,040 --> 00:32:57,800 Speaker 1: in today's trading session on this Monday, June six, Let's 596 00:32:57,840 --> 00:32:59,960 Speaker 1: get to it to drive to the close with Jason Greenblack, 597 00:33:00,200 --> 00:33:03,479 Speaker 1: Senior portfolio manager American Century Investments. They've got some two 598 00:33:03,560 --> 00:33:07,440 Speaker 1: hundred sixteen billion in assets under management. He joins us 599 00:33:07,480 --> 00:33:09,200 Speaker 1: on the phone from New York City. He's also involved 600 00:33:09,200 --> 00:33:12,280 Speaker 1: in the management of several funds. Hey, Jason, is so 601 00:33:12,320 --> 00:33:14,840 Speaker 1: great to have you here on Bloomberg Business Week with 602 00:33:14,880 --> 00:33:18,440 Speaker 1: myself and Mike Regan. How are you? And tell me 603 00:33:18,640 --> 00:33:23,240 Speaker 1: why investors should care about fixed income at this juncture? Hi, Carol, 604 00:33:23,360 --> 00:33:25,400 Speaker 1: Hi Mike. It's nice to speak with you today. So 605 00:33:25,560 --> 00:33:28,560 Speaker 1: that's a question that we often get is why why 606 00:33:28,600 --> 00:33:32,360 Speaker 1: fixed income? Why now down double digits in most asset 607 00:33:32,360 --> 00:33:36,760 Speaker 1: classes within UH fixed income? Why should I care? And 608 00:33:36,840 --> 00:33:40,640 Speaker 1: our response to that is is, um, We've we've repriced 609 00:33:40,640 --> 00:33:44,360 Speaker 1: a lot. It certainly depends on your time horizon. If 610 00:33:44,400 --> 00:33:48,200 Speaker 1: you're trying to to make short term asset allocation plays. 611 00:33:48,600 --> 00:33:50,640 Speaker 1: You probably lost in the last week and a half. 612 00:33:50,680 --> 00:33:52,640 Speaker 1: If you look back a week and a half ago, 613 00:33:52,720 --> 00:33:56,240 Speaker 1: the tenure treasury was at two and three quarters were 614 00:33:56,240 --> 00:33:58,880 Speaker 1: now up thirty basis points, and you would have lost 615 00:33:58,920 --> 00:34:02,360 Speaker 1: two and a half percent UM. If you think about 616 00:34:02,360 --> 00:34:05,000 Speaker 1: it longer term, though, in our minds, we think now 617 00:34:05,120 --> 00:34:08,960 Speaker 1: is actually an interesting time to to start dipping in. UH. 618 00:34:09,040 --> 00:34:12,120 Speaker 1: Spreads have certainly repriced in a lot of spread sectors, 619 00:34:12,600 --> 00:34:16,040 Speaker 1: and treasury yields have really doubled this year, So we 620 00:34:16,080 --> 00:34:19,040 Speaker 1: think on a longer term basis it makes sense, UM. 621 00:34:19,080 --> 00:34:22,600 Speaker 1: But we also think it makes sense to have dry powder. UM. 622 00:34:22,640 --> 00:34:24,319 Speaker 1: You know, we know that that we don't have a 623 00:34:24,360 --> 00:34:27,920 Speaker 1: crystal ball. You know that volatility is high. We want 624 00:34:27,920 --> 00:34:31,719 Speaker 1: to take advantage of opportunities, UM, on an active basis here. 625 00:34:32,560 --> 00:34:36,000 Speaker 1: You know, Jason, I've noticed you say you're underweight mortgage 626 00:34:36,000 --> 00:34:41,680 Speaker 1: backed securities and underweight both investment grade and high yield credit. 627 00:34:42,160 --> 00:34:45,480 Speaker 1: I'm curious, um, sort of what the rationale is for that. 628 00:34:45,600 --> 00:34:47,960 Speaker 1: Is it strictly a matter of rates are gonna keep 629 00:34:48,000 --> 00:34:50,400 Speaker 1: going up? Or are you worried about any sort of 630 00:34:50,440 --> 00:34:53,120 Speaker 1: credit risks starting to percolate in the economy as we 631 00:34:53,280 --> 00:34:55,359 Speaker 1: as we cool down a little bit from the growth 632 00:34:55,440 --> 00:34:58,040 Speaker 1: spurt we had and see these interest rate rise Are 633 00:34:58,520 --> 00:35:01,080 Speaker 1: we looking at some deteriorating credit quality? Do you think 634 00:35:02,440 --> 00:35:04,880 Speaker 1: we think it's the latter. We think that, Um, we 635 00:35:04,960 --> 00:35:07,560 Speaker 1: are starting to see some cracks. We heard last week 636 00:35:07,640 --> 00:35:11,640 Speaker 1: from from Jamie Diamond at JP Morgan Elon Musk making 637 00:35:11,680 --> 00:35:14,840 Speaker 1: some comments. But the quote that I think is is 638 00:35:14,920 --> 00:35:18,640 Speaker 1: really um you know most relevant today is is from 639 00:35:19,080 --> 00:35:22,879 Speaker 1: Restoration Hardware CEO. UM. He made a comment saying that, 640 00:35:23,080 --> 00:35:24,360 Speaker 1: you know, we have a long way to go and 641 00:35:24,560 --> 00:35:27,520 Speaker 1: in rising rates to fight inflation, and none of us 642 00:35:27,560 --> 00:35:29,960 Speaker 1: have a crystal ball, and we have to be prepared 643 00:35:30,000 --> 00:35:33,440 Speaker 1: for anything right now. And we agree. We think that 644 00:35:33,680 --> 00:35:36,719 Speaker 1: if the FED is still pushing forward with rates, inflation 645 00:35:36,760 --> 00:35:40,239 Speaker 1: is still a problem. That we've heard on numerous occasions 646 00:35:40,320 --> 00:35:44,520 Speaker 1: from many CEOs and management teams on first quarter earnings 647 00:35:44,600 --> 00:35:47,520 Speaker 1: calls that we do think that that credit does have 648 00:35:47,800 --> 00:35:50,799 Speaker 1: some some room to crack here. Um, it's not going 649 00:35:50,880 --> 00:35:52,880 Speaker 1: to be at the upper tier of of the market. 650 00:35:52,960 --> 00:35:55,920 Speaker 1: We think it's probably more so and those that are 651 00:35:56,040 --> 00:35:59,319 Speaker 1: more highly levered, those companies that have a higher rate 652 00:35:59,400 --> 00:36:03,759 Speaker 1: of ating rate um interest expense, and at some point 653 00:36:03,880 --> 00:36:05,880 Speaker 1: we think that, you know, companies are going to be 654 00:36:06,000 --> 00:36:10,160 Speaker 1: having difficult times passing along these price increases to consumers 655 00:36:10,239 --> 00:36:13,760 Speaker 1: and it's not We think we're seeing evidence of that today. 656 00:36:14,480 --> 00:36:17,680 Speaker 1: And we think that, you know, credit does have a 657 00:36:17,760 --> 00:36:21,360 Speaker 1: propensity to widen from here, and at some point we 658 00:36:21,480 --> 00:36:24,160 Speaker 1: want to use that built up liquidity to to buy 659 00:36:24,280 --> 00:36:26,680 Speaker 1: when valuation is cheap en up. You know, it's funny 660 00:36:26,680 --> 00:36:28,640 Speaker 1: that you say that about r H because our Romaine 661 00:36:28,680 --> 00:36:32,120 Speaker 1: Bostick last week, you know, I think listened a lot 662 00:36:32,320 --> 00:36:35,640 Speaker 1: to the earnings call and just said it was like 663 00:36:35,760 --> 00:36:38,440 Speaker 1: listening to a FED call, Like it was just fascinating 664 00:36:38,560 --> 00:36:40,480 Speaker 1: the amount he was talking about. You wouldn't have thought 665 00:36:40,480 --> 00:36:43,919 Speaker 1: it was this high end, you know, furniture company because 666 00:36:43,920 --> 00:36:45,880 Speaker 1: they were talking so much about interest rates in the 667 00:36:45,960 --> 00:36:48,880 Speaker 1: economic outlook. But is it is interesting to see how 668 00:36:48,960 --> 00:36:53,040 Speaker 1: the the tone has changed. Um, are you setting up 669 00:36:53,120 --> 00:36:56,719 Speaker 1: your investors for some kind of you know, deep recession 670 00:36:56,920 --> 00:37:01,719 Speaker 1: or recession at all? Recession? Certainly a question that we 671 00:37:01,880 --> 00:37:04,840 Speaker 1: keep asking ourselves internally. At this point, that is not 672 00:37:04,960 --> 00:37:08,360 Speaker 1: our central case scenario. We we think that stagflation is 673 00:37:08,480 --> 00:37:12,839 Speaker 1: more likely the outcome here where growth is slowing um 674 00:37:12,920 --> 00:37:16,799 Speaker 1: and flation will remain stubbornly high. However, I do think 675 00:37:16,880 --> 00:37:20,600 Speaker 1: that is fixed income investors. We we typically model our 676 00:37:20,680 --> 00:37:24,359 Speaker 1: cash flows and our assumptions to say, well, how will 677 00:37:25,000 --> 00:37:29,680 Speaker 1: company why or Z perform in a recession and a 678 00:37:29,840 --> 00:37:32,960 Speaker 1: risk off environment. And when you come to valuations and 679 00:37:33,000 --> 00:37:34,840 Speaker 1: you look at corporate O A, S and I G 680 00:37:35,080 --> 00:37:38,040 Speaker 1: at one thirty and about four hundred for high yield, 681 00:37:38,320 --> 00:37:42,080 Speaker 1: we just don't think we're being compensated for that stagflation 682 00:37:42,200 --> 00:37:46,040 Speaker 1: or even the recessionary risk that that could be looming 683 00:37:46,680 --> 00:37:50,320 Speaker 1: um in the next twelve to eighteen months. You know, Jason, 684 00:37:50,400 --> 00:37:53,279 Speaker 1: Obviously everyone is talking about how the FED wants to 685 00:37:53,360 --> 00:37:57,000 Speaker 1: see financial conditions tighten a little bit further before they're 686 00:37:57,200 --> 00:38:00,279 Speaker 1: comfortable that they're they're getting the job done on the 687 00:38:00,360 --> 00:38:05,320 Speaker 1: inflation side. What kind of credit market turmoil do you 688 00:38:05,400 --> 00:38:07,960 Speaker 1: think it would take to cause the FED the sort 689 00:38:08,000 --> 00:38:12,960 Speaker 1: of back off of their tightening campaign. Um, I think 690 00:38:13,000 --> 00:38:14,800 Speaker 1: we need to look at the very front end of 691 00:38:14,840 --> 00:38:19,080 Speaker 1: the curve. The liquidity markets and funding in particular had 692 00:38:19,239 --> 00:38:22,239 Speaker 1: had tightened back in March. That to us was an 693 00:38:22,280 --> 00:38:26,480 Speaker 1: indication that maybe the FED the expectations coming off the 694 00:38:27,120 --> 00:38:29,840 Speaker 1: beginning of the war in the Ukraine was starting to 695 00:38:30,600 --> 00:38:36,040 Speaker 1: perhaps um influence the FED a bit. Um. However, I 696 00:38:36,160 --> 00:38:39,040 Speaker 1: think just listening to the FED governors and even the 697 00:38:39,160 --> 00:38:42,520 Speaker 1: chair over the last couple of weeks, they want to 698 00:38:42,560 --> 00:38:46,080 Speaker 1: continue to push harder and and push forward with their 699 00:38:46,160 --> 00:38:50,200 Speaker 1: rate hikes. So I think the liquidity that we're feeling 700 00:38:50,280 --> 00:38:53,240 Speaker 1: at the moment, and and it is a less liquid 701 00:38:53,320 --> 00:38:56,160 Speaker 1: market than we were in six months ago, it's just 702 00:38:56,280 --> 00:38:58,600 Speaker 1: not enough. And I think conditions need to tighten up 703 00:38:58,920 --> 00:39:01,759 Speaker 1: quite a bit more for them too, to perhaps put 704 00:39:01,880 --> 00:39:08,000 Speaker 1: that um great hike on pause. Jason, really quickly thirty seconds. Um. 705 00:39:09,040 --> 00:39:11,160 Speaker 1: In terms of green money and E s G. It 706 00:39:11,239 --> 00:39:13,239 Speaker 1: does feel like a reckoning. You guys don't have a 707 00:39:13,280 --> 00:39:16,920 Speaker 1: dedicated kind of green money space necessarily, but this is 708 00:39:17,000 --> 00:39:20,040 Speaker 1: part of your process. Is this an opportunity for investors, 709 00:39:20,120 --> 00:39:21,520 Speaker 1: especially as we look at what's going on to you 710 00:39:21,600 --> 00:39:24,640 Speaker 1: politically with energy markets just so much kind of being 711 00:39:24,680 --> 00:39:29,439 Speaker 1: disrupted and again just quickly sure, UM, I do think 712 00:39:29,480 --> 00:39:31,719 Speaker 1: that there are opportunities. We see them every day in 713 00:39:32,120 --> 00:39:36,560 Speaker 1: new issuance as far as certain sectors go. Um. You know, 714 00:39:36,840 --> 00:39:39,520 Speaker 1: I think that where the cash flows go is where 715 00:39:39,600 --> 00:39:42,160 Speaker 1: we should be looking, Um, we want to make sure 716 00:39:42,200 --> 00:39:45,800 Speaker 1: that we're getting paid for taking those risks. And you know, 717 00:39:46,200 --> 00:39:48,799 Speaker 1: as E. S. G goes, it's it's embedded in our 718 00:39:48,840 --> 00:39:51,520 Speaker 1: process and I think that that's you know, key to 719 00:39:51,920 --> 00:39:55,480 Speaker 1: to the analysis. Well, good to have you on come back, 720 00:39:55,520 --> 00:39:58,560 Speaker 1: because we'd love to continue this conversation. Jason Green black 721 00:39:58,640 --> 00:40:03,200 Speaker 1: Over at American Century Investments. Thanks for listening to Bloomberg 722 00:40:03,280 --> 00:40:06,920 Speaker 1: Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg 723 00:40:07,000 --> 00:40:08,799 Speaker 1: dot com, and you can also listen to our radio 724 00:40:08,880 --> 00:40:11,439 Speaker 1: show at two pm Eastern on Bloomberg Radio or watch 725 00:40:11,520 --> 00:40:13,839 Speaker 1: us on YouTube. Search to Bloomberg Global News