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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside

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Speaker 1: my co host Matt Miller. Every business day we bring

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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along

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Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast

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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and

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Speaker 1: at Bloomberg dot com slash podcast. If you want to

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Speaker 1: talk Wall Street, why not? That's one of my favorite topics.

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Speaker 1: We can roundtable this seing at this A lot going

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Speaker 1: on the street as always, and we want to bring

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Speaker 1: together some of the smartest minds we have on all

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Speaker 1: things Wall Street. We do that with Shanalie Bassett Bloomberg

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Speaker 1: News and Alison William She's a senior banks analyst at

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Speaker 1: Bloomberg Intelligence. Shanali joins us here in our Bloomberg Interactive

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Speaker 1: Broker studio, and Alison joins us on the phone. SHINALI

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Speaker 1: a lot of news coming out of the street over

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Speaker 1: the last few days. I want to focus just on headcount.

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Speaker 1: What are the banks doing these days? I mean, deal

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Speaker 1: flow in twenty twenty two very tough to come by.

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Speaker 1: Trading better, but deal flow tough to come by. Same

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Speaker 1: kind of year to date. I'm kind of surprised I

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Speaker 1: haven't seen bigger layoffs. What are you hearing from your

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Speaker 1: context on the street? Listen, A lot of these bankers

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Speaker 1: say that there's pent up demand. Big corporations want to

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Speaker 1: do strategic things, but they're strapped on money, number one,

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Speaker 1: and they're also strapped on the ability to make these

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Speaker 1: really big strategic decisions in the middle of so much uncertainty,

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Speaker 1: particularly with a pace of interest rate increases in the

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Speaker 1: United States. So with that uncertainty, they don't want to

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Speaker 1: lay people off because things would come back, but they

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Speaker 1: have not. They don't look like they're going to come

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Speaker 1: back in full force anytime soon. So they're finding other

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Speaker 1: things to do because they expect that things like activism

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Speaker 1: will force spinoffs. Remember places like Elliott Paul Singer has

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Speaker 1: raised record amounts of money, so there's a chance that

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Speaker 1: they can do other things. You know. I don't even

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Speaker 1: know where to begin on the Wall Street beat, just

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Speaker 1: because I feel like this week has been literally drinking

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Speaker 1: out of a fire hose or attempting to at least

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Speaker 1: with the Wall Street story. But one of the most

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Speaker 1: read on the Bloomberg terminal stories today is JP Morgan

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Speaker 1: and blaming Just Staley for their tides with Epstein, demanding

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Speaker 1: eight years of pay. Walk us through the story. Of course,

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Speaker 1: it's of interest a lot, not just for Wall Street audience,

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Speaker 1: but everyone that's been following the story. Yeah, and this

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Speaker 1: has been going on for a while, but really it's

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Speaker 1: hit a new climax, if you will, where you have

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Speaker 1: JP Morgan suing Jeff Staley, who is a former Jamie

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Speaker 1: Diamond protege, a star banker, former CEO of Barclays. JP

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Speaker 1: Morgan itself was sued a couple of times over the

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Speaker 1: Epstein debacle because Epstein, Jeffrey Epstein, was a client of

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Speaker 1: the bank. And now what you have Jamie Diamond and

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Speaker 1: JP Morgan really doing now is really separating themselves from

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Speaker 1: Jeff Staley's own actions within the bank. And I would

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Speaker 1: say that Just Staley himself has really denied a lot

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Speaker 1: of the allegations against him. The suit spot forward against

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Speaker 1: JP Morgan were from the US Virgin Islands, which has

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Speaker 1: been leading a lot of this litigation when it comes

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Speaker 1: to Just Dally and Jeffrey Epstein, as well as a

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Speaker 1: woman identified by Jane Doe who says she was a

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Speaker 1: victim of Jeffrey Epstein so very closely watched Saga and

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Speaker 1: Tokuti's point, a lot of money at stake. Yeah, absolutely.

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Speaker 1: As Alison Williams Bloomberg Intelligence, what are your thoughts, Allison,

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Speaker 1: as you talk to all these big banks that you've

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Speaker 1: covered for for decades, what did they think about twenty

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Speaker 1: twenty three. Is there going to be any meaningful rebound

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Speaker 1: in activity there? I know the trading business has been

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Speaker 1: pretty solid, but the advisory business and some of the

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Speaker 1: capital raising business has not. Yeah, that's been I think

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Speaker 1: the disappointment to start the year. And to Hinali's point,

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Speaker 1: I think that most of the banks were sort of

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Speaker 1: bank or hoarding. I guess, as we say, not willing

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Speaker 1: to let go of all the bankers after they had

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Speaker 1: to quickly do all these hires in twenty twenty one,

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Speaker 1: and so they're a little bit reticent to start doing cutbacks.

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Speaker 1: There was a lot of hope, and I think the

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Speaker 1: disappointing thing is that even though the markets were sort

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Speaker 1: of have had a strong rally or had a strong

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Speaker 1: rally going, you know, starting at the end of last

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Speaker 1: year into January, the IPO issuance has still been really dismal.

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Speaker 1: M and A is really dismal, and so I think

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Speaker 1: that's why you're starting to see some things bubble up.

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Speaker 1: This is normally the strongest seasonal quarter, and I think,

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Speaker 1: you know, what we really need is clarity on the

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Speaker 1: macro environment. So even though the stocks have rallied, some

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Speaker 1: of the expectations for those who want to come to

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Speaker 1: market are still a little bit too high, and they've

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Speaker 1: been and they've been hazard into sort of execute. So

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Speaker 1: the pipelines are still there, but equity M and A disappointing.

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Speaker 1: The one bright spot, if you will, has been in

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Speaker 1: the debt capital markets business. We heard from City Group

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Speaker 1: yesterday they're expect you know, the industry while it's down

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Speaker 1: about forty percent in the first quarter. So that's that's

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Speaker 1: better than the down fifty percent that we've been seeing,

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Speaker 1: but only modestly and has to do with comparisons. But

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Speaker 1: the one bright spot is the debt issuance. We have

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Speaker 1: seen some companies coming to market, especially on the investment rate.

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Speaker 1: I want to piggyback off of what Alison is saying

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Speaker 1: because there's one deal that's being talked about today that

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Speaker 1: is kind of hot, and that is the Uber leverage loan. Remember,

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Speaker 1: Morgan Stanley is really leading that. Uber's a long time

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Speaker 1: client and Morgan Stanley it's trading at thirty four dollars

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Speaker 1: to share, remember when public closer to forty. So really

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Speaker 1: this has been a tough trade. But Morgan Stanley, you know,

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Speaker 1: as a lead underwriter and now is helping bring a

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Speaker 1: leverage loan offering back to the table. They had a

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Speaker 1: leverage loan offering last month that had seemingly high demand.

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Speaker 1: You can see it, Paul, investors are still searching for yield.

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Speaker 1: I am dying to know how this plays out. But

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Speaker 1: remember Morgan Stanley is also hung with a lot of

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Speaker 1: that Twitter debt, so it's meaningful to watch them come

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Speaker 1: out in the market again with a company like Uber.

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Speaker 1: Can we just take a moment to appreciate Uber and

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Speaker 1: the Uber news today because in this story, Ridehilling Company

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Speaker 1: looking to raise seven hundred and sixty million dollars from

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Speaker 1: that sale, and that's separate from them considering to spend

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Speaker 1: off their freight logistics division. So interesting stuff going on

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Speaker 1: over at Uber. Well, let's bring it back to the

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Speaker 1: banks if we can. Allison tell us a little bit

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Speaker 1: about the trade here, because it feels fairly intuitive that

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Speaker 1: if you were looking at higher rates for the economy,

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Speaker 1: six percent, I believe is now the base keys for

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Speaker 1: a lot of economists out there, not the consensus yet,

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Speaker 1: but we're getting there. Does the automatic translation for the

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Speaker 1: bank sector simply mean more interest profit? So that's what

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Speaker 1: it's meant so far. So rising rates has been really

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Speaker 1: a boon to the net interest income. But I think

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Speaker 1: the damper that we're going to see in twenty twenty

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Speaker 1: three is that the cost side of the equation now

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Speaker 1: is starting to go up. So in the early days

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Speaker 1: rising from zero interest rates, that we got the lift

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Speaker 1: on the yield side of the equation, and that's really

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Speaker 1: been strong, and bangs really haven't had to sort of

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Speaker 1: lift their deposits rates because we were coming off of

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Speaker 1: such a low base. But now we are seeing that.

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Speaker 1: We started to see that sort of late last year,

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Speaker 1: and we think we're going to continue to see that

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Speaker 1: this year. I think that's sort of well understood at

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Speaker 1: this point in terms of the expectations for a net

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Speaker 1: interest income. But it's really you know, the credit losses

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Speaker 1: side of the equation, the long growth side of the

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Speaker 1: equation that investors are focusing on and then you know,

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Speaker 1: looking at interest rates, I think that you know, what

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Speaker 1: we've heard from managements is we really do need the

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Speaker 1: FED to stop hiking, to get sort of more economic,

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Speaker 1: to get a little bit more certainty on where the

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Speaker 1: economy is going. You know, Alison, if I were starting

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Speaker 1: my career overget on Wall Street as a young person,

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Speaker 1: I'd go right the private equity That's just where I

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Speaker 1: think some amazing returns can still be had. What's your outlook,

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Speaker 1: you know, give us a kind of for the private

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Speaker 1: equity business, and then over the next twelve to eighteen months. Yeah,

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Speaker 1: so private equity, you know they have I mean, the

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Speaker 1: amount of money they have raised has been incredible, Even

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Speaker 1: those managements have become you know, a little bit more hesitant.

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Speaker 1: But it's really I mean within private markets, it's really

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Speaker 1: the private credit side where we've seen some of the

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Speaker 1: biggest boom in turns of fundraising, and we expect that

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Speaker 1: to continue this year. To your point, a little bit

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Speaker 1: more activity going on on that side of things versus

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Speaker 1: versus the trading desks, where we're expecting to see lower

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Speaker 1: revenue again compared to last year. All right, good stuff,

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Speaker 1: A little Wall Street round table. There. We do that

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Speaker 1: with Shinali Basset of Bloomberg News and Alison Williams and

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Speaker 1: Bloomberg Intelligence. She covers the banks. She's been doing that

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Speaker 1: for decades here Bloomberg and then before that at Morgan

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Speaker 1: Stanley Investment Management where they were big shareholders a lot

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Speaker 1: of the big financial institutions. So we'd love to get

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Speaker 1: her perspective here. Well, we're just talking to Alison Williams

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Speaker 1: and Bloomberg Intelligence since she was talking about deal flow

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Speaker 1: really being slow, and I guess that happens when interest

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Speaker 1: rates rise, it gets a little bit more expensive to

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Speaker 1: get deals done. Let's talk to somebody who's actually right

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Speaker 1: in it, Hip Deep Randy Swimmer. He's co head of

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Speaker 1: senior Lending and senior managing director Churchill Asset Management, and Randy,

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Speaker 1: we like to talk to you about kind of what's

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Speaker 1: going on in the deal flow world. You know, mid

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Speaker 1: market deals, not necessarily the ones the big blockbusters, but

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Speaker 1: a lot of the bid market deals that really rely

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Speaker 1: on senior lending, leverage, lending, all that kind of stuff

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Speaker 1: that you guys do. There's a bunch of private credit

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Speaker 1: folks out there that are putting money into the space,

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Speaker 1: it's kind of tough to get deals done, I guess

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Speaker 1: when interest rates aren't zero. So talk to us about

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Speaker 1: what you're seeing in the marketplace. So, yeah, January was

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Speaker 1: actually a busy month. We actually led ten deals. That

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Speaker 1: was the most of any direct lender in January. Now

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Speaker 1: it was one month February busy as well, having gotten

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Speaker 1: the final numbers. Yet, what we're seeing is that general

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Speaker 1: flow to your point in M and A is off

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Speaker 1: from last year at this time, part because of what's

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Speaker 1: going on with interest rates, in part because of the

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Speaker 1: lack of a straight line at the FED. I. You know,

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Speaker 1: we all got thinking, hey, seventy five, fifty twenty five,

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Speaker 1: they're going to do twenty five again and then maybe

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Speaker 1: hold off all of a sudden years floating fifty basis points.

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Speaker 1: That's a little bit of a surprise. Maybe he's just

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Speaker 1: trying to be job on the market down. But generally speaking,

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Speaker 1: in private credit and private equity, the capital is long term,

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Speaker 1: and these private equity sponsors that we work with, and

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Speaker 1: in general indirect lending have raised capital over a long

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Speaker 1: period of time with strategies that are not short term.

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Speaker 1: So they have in their pipeline deals that they've been

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Speaker 1: working on for months and months and months, and they're

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Speaker 1: coming to us increasing numbers now as they get the

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Speaker 1: sense that the economy is strong. Because one of the

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Speaker 1: things that people are missing is how strong businesses are

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Speaker 1: that are in defensive sector. So healthcare, technology, software. Our portfolio,

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Speaker 1: which is mostly defensive, is up revenue wise the entire

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Speaker 1: portfolio thirty percent over last year, cash flows a little

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Speaker 1: less twenty nine percent. What's driving that is these businesses

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Speaker 1: that are more to be are in a very different

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Speaker 1: slip stream than consumer focused high cap acts in some

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Speaker 1: areas with high commodity costs or high wage costs. Those

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Speaker 1: businesses are really driving the economy right now. They're driving

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Speaker 1: job growth as we've seen with wage pressures. And I

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Speaker 1: think in general that part of the business defensive sectors

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Speaker 1: the private equity sponsors are focused on is going to

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Speaker 1: be very active this year. Now. M and A flow

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Speaker 1: will be short of what it was last year because

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Speaker 1: last year, a year ago, we had zero interest rates.

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Speaker 1: Amazingly right we kid hadn't started raising yet. But I

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Speaker 1: think the other thing that's going on is the sellers

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Speaker 1: of these companies are looking just like if you're going

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Speaker 1: to sell your apartment and you're looking at the right price.

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Speaker 1: They're saying, you know what, get all the papers ready,

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Speaker 1: get my mortgage papers ready to get it all ready

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Speaker 1: to go, and then if I've seen opening, I'm going

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Speaker 1: to go for it. So I think the second half

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Speaker 1: of the year is poised for a huge rebound. Well,

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Speaker 1: how does that kind of square with say M and

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Speaker 1: A activity, for example, it feels like a lot of

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Speaker 1: the price deals lately have been driven by acquisitions. Yes,

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Speaker 1: and I think that is a tried and true technique

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Speaker 1: that private ape sponsors have to build these businesses up.

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Speaker 1: The M and A flow, as I mentioned, is slower,

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Speaker 1: but I think what's going on is there's a sense

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Speaker 1: of what can we need, what we need to do

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Speaker 1: if we have to finance these businesses. Paul, to your

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Speaker 1: question about interest rates, So let's say they raise another

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Speaker 1: fifty basis points. That gets you to five and a

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Speaker 1: quarter from four to seventy five. You know, the average

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Speaker 1: FED funds rate of the last sixty years was five

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Speaker 1: and a half, so even we're not even at the

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Speaker 1: at the average yet June of two thousand and seven

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Speaker 1: it reached five and a half percent, so we're not

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Speaker 1: quite at that point, I don't think. And by the way,

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Speaker 1: the economy is in much better shape today than it

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Speaker 1: was back then, and the banks are in much better shape.

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Speaker 1: So that's the other thing that's going on. The private sector.

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Speaker 1: Direct lenders are taking huge share from the banks right now.

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Speaker 1: We just did the numbers, sixty one by ratio of

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Speaker 1: sixty one to four, direct enders are doing more deals

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Speaker 1: than the banks are doing year to date. That's a

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Speaker 1: fifteen to one margin, okay. So what it means is

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Speaker 1: for the deals that are getting done, even though the

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Speaker 1: volume is half, folks like Churchill are doing them. So actually,

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Speaker 1: our investors and by the way, I've done the tour

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Speaker 1: in the last month since I saw you last of

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Speaker 1: these sort of capitals of the world, so as in

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Speaker 1: Tokyo's in Munich and last week this past week, I

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Speaker 1: was in Baltimore, Okay. And our clients are seeing two things.

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Speaker 1: One how's the portfolio holding up with the higher interest rates?

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Speaker 1: And two what's going to happen with deal flow? Are

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Speaker 1: you going to give me continue to invest my money?

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Speaker 1: On the deal flows side, we're saying yeah, we're actually

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Speaker 1: seeing based on January and early returns on February we're

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Speaker 1: seeing plenty of flow on the portfolios side. What's interesting

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Speaker 1: is because these defensive sectors or businesses that are actually

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Speaker 1: doing well, we're actually seeing more upgrades in our portfolio

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Speaker 1: than downgrades, and the performance of these businesses continues to

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Speaker 1: be strong. Now, we did a proform of study of

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Speaker 1: the portfolio if the FED goes to six percent, and

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Speaker 1: we found that if you perform at that, interest coverage

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Speaker 1: still remains solid around two times. I asked my portfolio

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Speaker 1: menasor okay, and this was a question investor had, all Right,

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Speaker 1: how many of your companies will be below one time

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Speaker 1: interest coverage? And the answer was, on a perform at

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Speaker 1: basis only one percent. That's pretty strong, Okay. That means

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Speaker 1: that a very small number of those companies will not

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Speaker 1: make their interests. Now. Of course they're going to be

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Speaker 1: growing the meantime, so we're not worried. But this is

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Speaker 1: I think there's there's a glass half full approach here

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Speaker 1: that we're taking that we're seeing, which we're getting the

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Speaker 1: message out to our investors that we've actually think this

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Speaker 1: is a good time to be in private credit. All right,

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Speaker 1: So if I you know, back when interest rates for zero,

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Speaker 1: i'd come to Churchill Asset Management, I give you my

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Speaker 1: money because you guys would get me yield. Now I

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Speaker 1: can park my money into your treasury and get five percent.

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Speaker 1: What does that do to your capital raising? Yeah, you

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Speaker 1: can do that. You know, we don't view private credit

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Speaker 1: as a timing issue because we've been getting seven percent

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Speaker 1: year in, year out as a as an unlevered return

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Speaker 1: for investors for seventeen years. It's up now, no question

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Speaker 1: about it. And what we're telling investors and they're asking

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Speaker 1: this like, you know, well if we come in now,

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Speaker 1: you know, are we missing out on to your point,

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Speaker 1: corporate investment? Great bonds? The challenge with bonds right now

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Speaker 1: is that what happens if interest rates continue to go up?

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Speaker 1: What if the Fed pushes rates up higher and new

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Speaker 1: buy bonds. Now, the other thing that I'm hearing is

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Speaker 1: that the risk premium is not there in a lot

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Speaker 1: of the corporate bond market because it's if you get

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Speaker 1: five percent on treasuries, you're only getting six percent on corporates.

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Speaker 1: Is that enough? So if you play this private credit

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Speaker 1: game with senior loans, it's twelve percent. You know, that's

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Speaker 1: first of all, it's floating rates. So if rates keep

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Speaker 1: going up, you're going to do better. Second of all,

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Speaker 1: it's not correlated to the rest of the market. If

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Speaker 1: we have supervolatility in the second third quarter. I'd like

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Speaker 1: to think of private credit as kind of the noise

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Speaker 1: cancelation headphones for the capital markets. Whatever is going on

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Speaker 1: the markets, you're not going to feel that because these

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Speaker 1: are again long term capital no ratings, the marks are

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Speaker 1: private and so that stability is the kind of thing

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Speaker 1: that these investors from based on my tour of those capitals,

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Speaker 1: are really asking for. All right, good stuff. Randy really

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Speaker 1: appreciate chatting with you get a good sense of what's

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Speaker 1: going on out there in a private credit business. And

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Speaker 1: we talk about private equity, but as Matt and I

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Speaker 1: have been saying, as we've been talking to Randy for

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Speaker 1: a while here, the private credit space is just so

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Speaker 1: active and it's just amazing to me how quickly that

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Speaker 1: business has grown. And Randy had some good stats there.

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Speaker 1: Randy Swimmer, he's co head of senior lending and he's

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Speaker 1: the senior managing director at Churchill Asset Management. Private credit

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Speaker 1: lending to private equity firms a lot of times who

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Speaker 1: are getting deals done in the mid market space a

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Speaker 1: lot of opportunity that I think for a lot of

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Speaker 1: people maybe flies under the radar a little bit, but

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Speaker 1: they've been getting great returns for a long time and

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Speaker 1: it's just an interesting part of the market. So we

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Speaker 1: like to check in with Randy every once in a a

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Speaker 1: while and he comes into our Bloomberg Interactive Broker studio. Well,

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Speaker 1: there's a long way to go until the next presidential election,

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Speaker 1: but many political organizations are already ramping up efforts. In particular,

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Speaker 1: some are focusing on the Latino vote and working out

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Speaker 1: the best approach to electoral issues that matter most to

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Speaker 1: this growing population. Let's get more on that effort now

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Speaker 1: and a special report from Bloomberg's Lisa Mateo. The political

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Speaker 1: divide among Latino voters is seeing a subtle shift to

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Speaker 1: the Grand Old Party. Exit polls from twenty twenty two

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Speaker 1: showed Democrats one about sixty percent of Latino's overall down

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Speaker 1: from sixty five percent in twenty twenty, and with Latinos

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Speaker 1: making up more than thirty million of the country's registered voters,

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Speaker 1: the push to capture their support continues to grow. There

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Speaker 1: is now a microscope on our community that has not

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Speaker 1: existed before. Yvonne Gautierrez is managing director for Latino Victory,

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Speaker 1: an organization dedicated to building political power in the Latino community.

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Speaker 1: Because in twenty twenty, we did see some small county

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Speaker 1: and regions, you know, that did have a hired Republican

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Speaker 1: turnout vote, but that was not emblematic really across the board.

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Speaker 1: Democratic Congressman Henry Kuaiyar, who recently won Texas' twenty eighth district,

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Speaker 1: says Republicans have been making a genuine play for the

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Speaker 1: Latino vote. I have not seen this in the younger

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Speaker 1: George Boursh and then Trump and then of course the

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Speaker 1: National Republicans certainly did that this last election. While there

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Speaker 1: wasn't a red wave in the twenty twenty two midterms,

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Speaker 1: Republican Governor ron DeSantis turned heads when he won Florida's

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Speaker 1: heavily Latino counties of Miami, Dade, and Osciola. Ronnie Lucetto

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Speaker 1: National Chairman for the Republican National Hispanic Assembly says DeSantis's

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Speaker 1: stance on COVID lockdowns helped they temporarily lockdown and then

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Speaker 1: opened up immediately and kind of let everybody kind of

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Speaker 1: live their life and make their own decisions into the

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Speaker 1: Hispanic community. Being able to make your own decisions and

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Speaker 1: freedom is one of the most important values that you

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Speaker 1: can have as an American. Teresa Kumar, co founder and

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Speaker 1: president of Voto Latino, says the swift reopening appealed to

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Speaker 1: many Latino business owners. That was for many Latino business

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Speaker 1: owners a lifeline because they don't have any plan B

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Speaker 1: to fall upon. She adds that the age of Hispanic

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Speaker 1: voters in the Sunshine State also played a part. Lord

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Speaker 1: is the only state where young Latino voters will never

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Speaker 1: eclips older Latino voters and they have a tendency of

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Speaker 1: being far more progressive policies. In California, Governor Gavin Newsom

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Speaker 1: was reelected with the support of sixty two percent of

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Speaker 1: Latino voters, but still two points lower than his first

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Speaker 1: election in twenty eighteen, according to the Los Angeles Times.

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Speaker 1: In Pennsylvania, Kumar says Latino support was strong for Democrat

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Speaker 1: John Fetterman in Fetterman's race, and this is according to

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Speaker 1: exip points that came out of March for Our Lives.

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Speaker 1: Seventy nine percent of Latino youth voted for a Democrat

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Speaker 1: in this past election and findings from research firm Equis

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Speaker 1: shows solid support for Democrats from Latino voters in places

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Speaker 1: like Nevada and Arizona in twenty twenty two. Yet still

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Speaker 1: representative Quaar feels the party needs to step up their game.

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Speaker 1: Some of us, for many years have said to the

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Speaker 1: nationals ADCROPO C you know, DNC, and the state parties.

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Speaker 1: We've said, hey, guys, we cannot take Hispanics for granted.

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Speaker 1: You know, Usually the effort was, let's start after Labor Day,

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Speaker 1: you know, sixty days or so before the election, and

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Speaker 1: then let's start pushing that Latino victories. Gautierrez says, politicians

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Speaker 1: need to remember that Latinos are not a monolist. Latinos

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Speaker 1: in Texas and California and Florida are all very different

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Speaker 1: and have very different lived experiences in background, and therefore

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Speaker 1: their votes are going to be different at times. Lucetto

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Speaker 1: points to the topic of abortion and how the support

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Speaker 1: for pro life policies can vary culturally from state to state.

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Speaker 1: You have a large Mexican population in Texas and a

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Speaker 1: illegal voting population of Mexicans in Texas and in Mexico,

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Speaker 1: abortion was really for the most part illegal all the

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Speaker 1: way up until the end of twenty twenty twenty one.

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Speaker 1: So that's a losing battle if you're pushing a pro

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Speaker 1: life policy for a Mexican population. But that didn't work

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Speaker 1: so well when you look at New Mexico, because New

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Speaker 1: Mexico is more of a Spanish Hispanic type of voting block.

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Speaker 1: When it comes to immigration, Latinos are torn between providing

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Speaker 1: a path to citizenship and illegal immigration. A New York

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Speaker 1: Times Siena College pole shows about fifty five percent of

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Speaker 1: Latinos support Democrats on legal immigration and roughly a third

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Speaker 1: support a border wall. The same poll shows that while

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Speaker 1: Democrats maintain a majority of Latino voters, younger male Hispanics,

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Speaker 1: especially in the South, appear to be drifting away from

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Speaker 1: the party due to economic concerns. So could a shift

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Speaker 1: in the Latino vote be significant enough to change the

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Speaker 1: political landscape of swing states with large Latino populations. Absolutely,

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Speaker 1: because you're looking at purple states right now, you know,

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Speaker 1: bluish purple states for the most part, and you flip Arizona,

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Speaker 1: you flipped Nevada, and you start flipping a couple of

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Speaker 1: little districts here and there inside of California, you start

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Speaker 1: making a difference, small steps that could move bigger changes

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Speaker 1: in New York. Lisa Mateo Bloomberg Radio. Good stuff, Lisa

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Speaker 1: Matteo from She's right here on Bloomberg in Actor Broker studio.

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Speaker 1: So we can ask some questions of Lisa. Lisa Mateo,

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Speaker 1: business correspondent from Bloomberg Radio. But those in the New

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Speaker 1: York market, No, Lisa, from her years at Picks eleven

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Speaker 1: Channel eleven anchor reporter for eighteen years, also did some

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Speaker 1: radio gigs at CBS and iHeartMedia, so she knows what

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Speaker 1: she's doing out here. Lisa, thanks so much for this report.

430
00:22:44,040 --> 00:22:46,919
Speaker 1: Is fascinating. Oh. I have to point out too from

431
00:22:46,920 --> 00:22:50,520
Speaker 1: yourhythme the most important part A proud graduate of Rutgers Universe. Yes,

432
00:22:50,840 --> 00:22:53,520
Speaker 1: the state University of New Jersey. Lisa, you did this

433
00:22:53,640 --> 00:22:56,600
Speaker 1: report on Latino votes. It's important today, It's can be

434
00:22:56,640 --> 00:22:59,720
Speaker 1: really important in twenty twenty four. What I found fascinating

435
00:22:59,800 --> 00:23:03,840
Speaker 1: is it's not a monolith, as you say, explain to

436
00:23:03,960 --> 00:23:07,280
Speaker 1: us kind of the differences across the country among the

437
00:23:07,400 --> 00:23:10,840
Speaker 1: Hispanic vote. Yeah, it's also what countries you're from, but

438
00:23:10,920 --> 00:23:12,840
Speaker 1: it also has to do with age, it has to

439
00:23:12,880 --> 00:23:15,919
Speaker 1: do with gender as well. If you think about it, age,

440
00:23:15,960 --> 00:23:19,040
Speaker 1: I mean, that's something that politicians are really going to

441
00:23:19,119 --> 00:23:21,600
Speaker 1: be focused on come the next election in twenty twenty four,

442
00:23:21,960 --> 00:23:24,720
Speaker 1: because you think about it, the ten year difference, Latinos

443
00:23:24,720 --> 00:23:27,159
Speaker 1: are ten years younger than the country overall. If you

444
00:23:27,160 --> 00:23:30,719
Speaker 1: think about age wise, four and a half million Latinos

445
00:23:30,800 --> 00:23:33,119
Speaker 1: are going to be coming into voting age by the

446
00:23:33,160 --> 00:23:36,800
Speaker 1: next elections. So you see where their focus is. And

447
00:23:36,840 --> 00:23:39,520
Speaker 1: it's just such an important thing because a lot of

448
00:23:39,560 --> 00:23:44,359
Speaker 1: the younger Latinos have more progressive issues and thoughts. But

449
00:23:44,440 --> 00:23:46,560
Speaker 1: the problem is that it also switches by gender. So

450
00:23:46,560 --> 00:23:49,400
Speaker 1: when you think about young male Latinos, some of those

451
00:23:49,400 --> 00:23:53,120
Speaker 1: are switching more toward Republican because they're thinking more economy,

452
00:23:53,480 --> 00:23:56,600
Speaker 1: especially in the South, but females are more progressive. So

453
00:23:56,640 --> 00:23:59,159
Speaker 1: I think age is definitely going to be something that

454
00:23:59,160 --> 00:24:00,639
Speaker 1: they're going to be focused on. They're going to be

455
00:24:00,720 --> 00:24:04,119
Speaker 1: investing more, investing earlier, starting earlier. They're already knocking on

456
00:24:04,160 --> 00:24:07,960
Speaker 1: doors getting more Latinos registered to vote now, so yeah,

457
00:24:08,080 --> 00:24:10,600
Speaker 1: what about the twenty twenty four election here, obviously this

458
00:24:10,680 --> 00:24:12,320
Speaker 1: is going to be a major factor. Do we get

459
00:24:12,359 --> 00:24:16,280
Speaker 1: any insight about the next presidential election? They are on

460
00:24:16,480 --> 00:24:18,360
Speaker 1: something that was interesting too. We're talking about the next

461
00:24:18,359 --> 00:24:20,679
Speaker 1: president elential because you have Title forty two. You know

462
00:24:20,760 --> 00:24:23,600
Speaker 1: that's going to be coming to expiring in a few months.

463
00:24:24,000 --> 00:24:28,000
Speaker 1: So immigration was a huge issue, but also something that

464
00:24:28,240 --> 00:24:31,160
Speaker 1: you're seeing starting to shift. So it's interesting to see

465
00:24:31,720 --> 00:24:34,920
Speaker 1: the different ways people are thinking about immigration for Latinos.

466
00:24:34,960 --> 00:24:37,360
Speaker 1: You know that New York Times pole just stuck out

467
00:24:37,359 --> 00:24:41,360
Speaker 1: to me so much. Fifty five percent support the immigration,

468
00:24:41,840 --> 00:24:44,360
Speaker 1: but you have still have that third that is supporting

469
00:24:44,400 --> 00:24:46,679
Speaker 1: that border wall. So see you're starting to see that

470
00:24:46,720 --> 00:24:50,560
Speaker 1: divide there. Yet, what are the big important issues for Latinos?

471
00:24:50,840 --> 00:24:52,920
Speaker 1: Can we boil it down to a couple I think

472
00:24:52,920 --> 00:24:55,760
Speaker 1: there was actually a study by vote to Latino. They

473
00:24:56,280 --> 00:24:58,760
Speaker 1: did a study right before the midterms, and they said

474
00:24:58,800 --> 00:25:02,600
Speaker 1: what issues are important to you? Number one, of course

475
00:25:02,760 --> 00:25:05,760
Speaker 1: was economy. Number two though, was abortion, so you see

476
00:25:05,760 --> 00:25:08,159
Speaker 1: how that younger generation is starting to come in there.

477
00:25:08,440 --> 00:25:11,119
Speaker 1: And number three was gun reform. So those were the

478
00:25:11,119 --> 00:25:14,240
Speaker 1: top three right before the midterms. And it's interesting right

479
00:25:14,240 --> 00:25:16,400
Speaker 1: before the midterms, But I want to talk about participation

480
00:25:16,600 --> 00:25:20,120
Speaker 1: from the Latino votes specifically, because these issues can matter,

481
00:25:20,160 --> 00:25:22,560
Speaker 1: but if you're not actually shown up at the polls,

482
00:25:22,680 --> 00:25:25,800
Speaker 1: then those issues don't matter. It talks about you. Yeah,

483
00:25:25,800 --> 00:25:28,639
Speaker 1: there's thirty million registered Latino voters, so you think about it,

484
00:25:28,680 --> 00:25:30,800
Speaker 1: but you have to turn out to the polls. And

485
00:25:30,880 --> 00:25:34,000
Speaker 1: just like you're saying, so, that's why they're starting those initiatives,

486
00:25:34,000 --> 00:25:35,960
Speaker 1: are going door to door. They're starting to get people

487
00:25:36,000 --> 00:25:40,800
Speaker 1: out there to recognize their importance of their voice. And

488
00:25:40,840 --> 00:25:42,960
Speaker 1: that's really what they're focus on. How do you reach them?

489
00:25:43,040 --> 00:25:45,840
Speaker 1: Is it Univision, Telemundo, is it digital media? How did

490
00:25:45,840 --> 00:25:48,280
Speaker 1: these politicians try to reach this community? Well, it's funny.

491
00:25:48,320 --> 00:25:49,680
Speaker 1: I was talking to a lot of them about that

492
00:25:49,720 --> 00:25:52,000
Speaker 1: and they said, what they're doing now, it's rather than

493
00:25:52,040 --> 00:25:54,520
Speaker 1: putting a lot of the big money behind let's say

494
00:25:54,520 --> 00:25:59,000
Speaker 1: advertising or things like that, they're going into these smaller organizations.

495
00:25:59,040 --> 00:26:02,679
Speaker 1: They're going to for example, auto shows, they're going to

496
00:26:02,880 --> 00:26:06,240
Speaker 1: you know, certain dances, like different things where they can

497
00:26:06,359 --> 00:26:08,800
Speaker 1: really get in and talk to people, shake hands, go

498
00:26:08,920 --> 00:26:11,200
Speaker 1: one on one, you know, rather than just a big

499
00:26:11,440 --> 00:26:15,320
Speaker 1: advertisement place somewhere. You know, across media, they're going into

500
00:26:15,320 --> 00:26:18,000
Speaker 1: the communities and talking with people one on one. Fascinating.

501
00:26:18,040 --> 00:26:20,479
Speaker 1: It's going to be you know, I follow this story

502
00:26:20,520 --> 00:26:22,520
Speaker 1: for a lot of time I spent a lot of

503
00:26:22,520 --> 00:26:25,119
Speaker 1: time with Univision and some of the Spanish language media companies,

504
00:26:25,119 --> 00:26:28,280
Speaker 1: and it's a big growing part of the population and

505
00:26:28,320 --> 00:26:32,720
Speaker 1: an influential one economically and politically. So it's great to

506
00:26:32,720 --> 00:26:35,199
Speaker 1: get this reporting. Lisa Matteo, she's a business correspondent for

507
00:26:35,280 --> 00:26:38,400
Speaker 1: Bloomberg Radio, joining us here live on our Bloomberg Interactive

508
00:26:38,400 --> 00:26:41,520
Speaker 1: a broker studio with an important story. As we start

509
00:26:41,680 --> 00:26:45,240
Speaker 1: barreling towards that twenty twenty four presidential election, we're gonna

510
00:26:45,240 --> 00:26:49,760
Speaker 1: have a lot more stories like that. A lot of

511
00:26:50,040 --> 00:26:52,560
Speaker 1: news out there on the cryptospace, and not a lot

512
00:26:52,600 --> 00:26:57,080
Speaker 1: of it's very good. The ripple effect from FTX implosion

513
00:26:57,760 --> 00:26:59,720
Speaker 1: is kind of finding its way to the banks, you know,

514
00:27:00,040 --> 00:27:05,040
Speaker 1: talk about Silvergate Financial, Silicon Valley Bank. Lots of issues

515
00:27:05,080 --> 00:27:07,159
Speaker 1: out there, not many of them good. Let's check in

516
00:27:07,200 --> 00:27:11,800
Speaker 1: with Mike mcloone's senior macro strategist for Bloomberg Intelligence here. So, Mike, again,

517
00:27:11,840 --> 00:27:14,560
Speaker 1: it seems like the ripple effect from FTX is kind

518
00:27:14,600 --> 00:27:17,760
Speaker 1: of hitting some of the financial institutions here. How do

519
00:27:17,800 --> 00:27:20,760
Speaker 1: you and others in the cryptospace read what we're seeing

520
00:27:20,960 --> 00:27:23,320
Speaker 1: from the banking side of the equation. Hey, Paul Well.

521
00:27:23,359 --> 00:27:25,919
Speaker 1: I think it's a classic worn buff at the tide's

522
00:27:25,960 --> 00:27:28,000
Speaker 1: going out and find out who's wearing clothes. The key

523
00:27:28,000 --> 00:27:30,520
Speaker 1: point is I don't think we're done yet with finding

524
00:27:30,520 --> 00:27:33,200
Speaker 1: out who wasn't wearing clothes. So Silvergate, on the back

525
00:27:33,240 --> 00:27:35,720
Speaker 1: of FTX, on the back of Celsius, the things, we

526
00:27:35,800 --> 00:27:38,120
Speaker 1: can just keep going down the line. And it all

527
00:27:38,119 --> 00:27:41,440
Speaker 1: predicated in the fact that markets went down, not just cryptos.

528
00:27:41,440 --> 00:27:43,680
Speaker 1: So I think the greater risk here is there is

529
00:27:43,720 --> 00:27:47,040
Speaker 1: going to be more contains from this. Prices are more

530
00:27:47,080 --> 00:27:49,720
Speaker 1: likely to go lower. But it's not just cryptos, it's everything.

531
00:27:49,720 --> 00:27:52,399
Speaker 1: Remember the FED is still tightening, and but I think

532
00:27:52,440 --> 00:27:56,040
Speaker 1: the good thingle commodomis will get some good, hopefully astute regulation.

533
00:27:56,520 --> 00:27:59,399
Speaker 1: Bitcoin is still known as being the outsider. It's not

534
00:27:59,440 --> 00:28:02,320
Speaker 1: as secure, it's clear the commandity. But I'll end with this.

535
00:28:02,400 --> 00:28:05,320
Speaker 1: The key point is next Thursday is the one year

536
00:28:05,320 --> 00:28:08,320
Speaker 1: anniversary of the first rate hike, and that takes the

537
00:28:08,359 --> 00:28:10,760
Speaker 1: big macro here is the FET is still tightening rates.

538
00:28:10,760 --> 00:28:12,359
Speaker 1: It's only been a year less than the year that

539
00:28:12,480 --> 00:28:14,560
Speaker 1: rates are still zero, so we're seeing that trickle down

540
00:28:14,600 --> 00:28:16,960
Speaker 1: and cryptos are the fastest horse in the race going

541
00:28:16,960 --> 00:28:19,880
Speaker 1: down the most, Mike, it feels like as we hear

542
00:28:19,920 --> 00:28:23,199
Speaker 1: about the news coming out of Gemini, coming out of

543
00:28:23,240 --> 00:28:25,960
Speaker 1: silver Gate, it feels like it wasn't just FTX that

544
00:28:26,040 --> 00:28:28,119
Speaker 1: kind of created this ripple effect. It goes back further

545
00:28:28,440 --> 00:28:31,720
Speaker 1: to the three arrows capital saga as well. How many

546
00:28:31,760 --> 00:28:36,480
Speaker 1: more shoes are there left to drop from clearing out? Well,

547
00:28:36,480 --> 00:28:39,440
Speaker 1: that's Critio's exact appropriate question, and my fear and just

548
00:28:39,480 --> 00:28:41,760
Speaker 1: being realistic, is there's probably going to be more because

549
00:28:41,800 --> 00:28:44,080
Speaker 1: I do expect in the macro we might not have

550
00:28:44,120 --> 00:28:46,360
Speaker 1: put in the bottom in most risk assets. And that's

551
00:28:46,400 --> 00:28:48,680
Speaker 1: just by being simple and find what the fet is

552
00:28:48,680 --> 00:28:51,280
Speaker 1: telling us. They are still tightening. We've had this bounce

553
00:28:51,320 --> 00:28:53,600
Speaker 1: in bitcoin from fifteen to twenty five. I did point

554
00:28:53,600 --> 00:28:56,560
Speaker 1: out twenty five significant resistance. If you're tactical, you should

555
00:28:56,560 --> 00:28:59,040
Speaker 1: boy be selling it. And if that happens, we're going

556
00:28:59,080 --> 00:29:00,760
Speaker 1: to see more of the questions what's next. But what

557
00:29:00,800 --> 00:29:03,720
Speaker 1: we're seeing lately is most major institutions are going out

558
00:29:03,760 --> 00:29:06,200
Speaker 1: and claiming, you know, saying we don't not have exposure

559
00:29:06,240 --> 00:29:09,880
Speaker 1: to the bad actors. But I'm afraid there's still more.

560
00:29:10,040 --> 00:29:11,960
Speaker 1: I mean, I just don't know how to quantify that

561
00:29:12,000 --> 00:29:14,160
Speaker 1: it's more difficult as people who really dig in to

562
00:29:14,240 --> 00:29:16,440
Speaker 1: me that being the macro strategist, I point out that

563
00:29:17,400 --> 00:29:20,000
Speaker 1: I see rolling over in most diss assets. I see

564
00:29:20,120 --> 00:29:23,719
Speaker 1: something I've never seen before, that we have the bloomer

565
00:29:23,760 --> 00:29:26,000
Speaker 1: commandity next down twenty percent and the FED still tightening.

566
00:29:26,040 --> 00:29:29,920
Speaker 1: So cryptos are more likely to suffer the fastest horse

567
00:29:29,920 --> 00:29:31,440
Speaker 1: in the race. But one thing I'll point out too

568
00:29:31,520 --> 00:29:33,960
Speaker 1: is the key. My key seem at the beginning of

569
00:29:34,080 --> 00:29:37,200
Speaker 1: years watching Ethereum a little bit in the number two cryptos.

570
00:29:37,240 --> 00:29:40,120
Speaker 1: The key levels that watch are A thousand to two thousand,

571
00:29:40,400 --> 00:29:41,920
Speaker 1: and it's still stuck in the middle of that range,

572
00:29:42,000 --> 00:29:45,480
Speaker 1: just making it difficult for all of us. So my

573
00:29:45,600 --> 00:29:48,480
Speaker 1: gear in the self proclaimed crypto capital, at least in

574
00:29:48,480 --> 00:29:50,560
Speaker 1: the United States, done that down in Miami. What's the

575
00:29:50,600 --> 00:29:55,280
Speaker 1: feeling in the in the community there about crypto just

576
00:29:55,440 --> 00:29:58,480
Speaker 1: broadly defined and maybe just some some things think things

577
00:29:58,480 --> 00:30:03,480
Speaker 1: you're hearing. It's impressive the long term building I'm seen

578
00:30:03,720 --> 00:30:07,360
Speaker 1: from mostly the rational, mature people who are in it

579
00:30:07,440 --> 00:30:10,680
Speaker 1: for a reason and are not the young speculative type

580
00:30:10,680 --> 00:30:14,640
Speaker 1: who just haven't experience for the facts of fiduciary duty before.

581
00:30:14,680 --> 00:30:18,680
Speaker 1: So I sense from most people here that okay, this

582
00:30:18,760 --> 00:30:21,560
Speaker 1: is rough, but it's just part of any nascent crypto asset.

583
00:30:21,560 --> 00:30:23,640
Speaker 1: And if you just look at the last low and bitcoin,

584
00:30:24,080 --> 00:30:27,240
Speaker 1: it was around eighteen nineteen, around four to five thousand,

585
00:30:27,280 --> 00:30:29,640
Speaker 1: and here we are twenty one thousand, So where is

586
00:30:29,640 --> 00:30:32,200
Speaker 1: it going forward? And then it's just all the building

587
00:30:32,280 --> 00:30:34,880
Speaker 1: in the space and one thing that's unstoppable. It's been

588
00:30:34,880 --> 00:30:38,600
Speaker 1: happening lately with this Gray Gray Scale Bitcoin Trust GBTC

589
00:30:38,720 --> 00:30:41,840
Speaker 1: and it's lawsuit. With this litigation with the SEC, they

590
00:30:41,840 --> 00:30:44,120
Speaker 1: are much more likely to win that case now, which

591
00:30:44,120 --> 00:30:47,000
Speaker 1: should be the trickle down that Okay, these incumbents are here.

592
00:30:47,040 --> 00:30:50,360
Speaker 1: This is just the example of rap lead advancing technology

593
00:30:50,440 --> 00:30:52,600
Speaker 1: taking over and just kind of have to adopt it

594
00:30:52,680 --> 00:30:54,760
Speaker 1: or risk falling behind in the meantime though it's a

595
00:30:54,760 --> 00:30:58,600
Speaker 1: bear market. Well, we actually had the Gray Scale CEO,

596
00:30:58,880 --> 00:31:01,920
Speaker 1: Michael Shnheim the one PM yesterday, a very exciting interview

597
00:31:01,920 --> 00:31:03,960
Speaker 1: and one of the questions we asked him was are

598
00:31:04,040 --> 00:31:08,400
Speaker 1: you worried about kind of a flow of redemptions when

599
00:31:08,400 --> 00:31:11,160
Speaker 1: it comes to just kind of the fun flow in GBTC.

600
00:31:11,280 --> 00:31:14,080
Speaker 1: He didn't really give a straight answer, but Mike, are

601
00:31:14,080 --> 00:31:17,320
Speaker 1: you worried about that. No, what I see in GBTC

602
00:31:17,560 --> 00:31:20,560
Speaker 1: is most people are seen is somewhat is distressed debt

603
00:31:20,600 --> 00:31:23,440
Speaker 1: with a high probability of going back to par So

604
00:31:23,680 --> 00:31:27,680
Speaker 1: the discount got into the extreme of around fifty percent.

605
00:31:28,000 --> 00:31:30,520
Speaker 1: Right now it's thirty four percent. And if our when

606
00:31:30,600 --> 00:31:32,040
Speaker 1: I think it's going to be an evilent, they're going

607
00:31:32,040 --> 00:31:33,760
Speaker 1: to become an ETF. I think they almost have to

608
00:31:33,840 --> 00:31:36,040
Speaker 1: because it's happening in every a lot of other countries.

609
00:31:36,240 --> 00:31:38,560
Speaker 1: That's going to go back to zero. This question is

610
00:31:38,560 --> 00:31:40,280
Speaker 1: why do you why you know so? I think it's

611
00:31:40,320 --> 00:31:44,200
Speaker 1: more likely GBTC is put in a low than Bitcoin

612
00:31:44,280 --> 00:31:48,760
Speaker 1: has because that extreme discount and the probability that they

613
00:31:48,840 --> 00:31:51,280
Speaker 1: will become an ETF and win this case. But that's

614
00:31:51,320 --> 00:31:53,320
Speaker 1: gonna be a while. Mike. In addition to all the

615
00:31:53,360 --> 00:31:56,920
Speaker 1: crypto work you do, your day job is commodities an

616
00:31:57,040 --> 00:32:01,040
Speaker 1: i'll strategists here with the FED seemingly continuing to raise

617
00:32:01,080 --> 00:32:03,400
Speaker 1: the interest race, what's the what are you talking to

618
00:32:03,440 --> 00:32:06,560
Speaker 1: your commodity clients about. The most of these days sell rallies.

619
00:32:06,760 --> 00:32:09,880
Speaker 1: I'm enjoying and that's been you know, I was too

620
00:32:09,880 --> 00:32:11,760
Speaker 1: early on that last year, but it's just a key

621
00:32:11,840 --> 00:32:14,960
Speaker 1: fact of commodities, particularly crude oil Paul. They are the

622
00:32:15,000 --> 00:32:19,360
Speaker 1: world's most significantly autocore correlating assets, and when they go

623
00:32:19,480 --> 00:32:21,640
Speaker 1: up a lot, they basically their own enemies. And that's

624
00:32:21,680 --> 00:32:25,440
Speaker 1: proving proving true now. So we look at wt A,

625
00:32:25,520 --> 00:32:27,600
Speaker 1: crud oils down thirty percent, down in the air, natural

626
00:32:27,600 --> 00:32:29,320
Speaker 1: gas is dropped to the same price that traded in

627
00:32:29,440 --> 00:32:32,080
Speaker 1: nineteen ninety, and the FED is still tightening, and there's

628
00:32:32,080 --> 00:32:35,120
Speaker 1: the consensus that China the Man will bring commodies up.

629
00:32:35,200 --> 00:32:37,920
Speaker 1: My ruling commodities is fade to consensus because it's already

630
00:32:37,960 --> 00:32:42,120
Speaker 1: in the market. Expect a severe normal commodity correction, Expect

631
00:32:42,160 --> 00:32:43,840
Speaker 1: prices to go much lower. And a key fact I

632
00:32:43,880 --> 00:32:45,560
Speaker 1: point out earlier it is just the fact that the

633
00:32:45,560 --> 00:32:47,960
Speaker 1: Bloomer Commodity index is still down twenty percent on a

634
00:32:48,000 --> 00:32:50,320
Speaker 1: one year basis, and the FED is still tightening I've

635
00:32:50,360 --> 00:32:52,400
Speaker 1: never seen. This means you should look to sell any

636
00:32:52,480 --> 00:32:54,440
Speaker 1: kind of rallies in commodities, and one of the one

637
00:32:54,480 --> 00:32:57,800
Speaker 1: that's closest to the SF five hundred copper copper if

638
00:32:57,840 --> 00:33:01,040
Speaker 1: you if you it's basically the same price SMP five hundred,

639
00:33:01,080 --> 00:33:03,880
Speaker 1: if you multidivide the SP five hundred by a thousand,

640
00:33:03,920 --> 00:33:07,240
Speaker 1: it's right about four, and I fully expect it's more

641
00:33:07,280 --> 00:33:10,720
Speaker 1: likely to go to three than five. We'll put this

642
00:33:10,800 --> 00:33:13,480
Speaker 1: into perspective orse with a copper story, because it felt

643
00:33:13,520 --> 00:33:16,160
Speaker 1: like with this China reopening, it was a no brainer

644
00:33:16,520 --> 00:33:19,040
Speaker 1: that copper had this massive bowl case where did it

645
00:33:19,080 --> 00:33:22,360
Speaker 1: go thirty seconds exactly in creating exactly no brainers. We

646
00:33:22,400 --> 00:33:24,240
Speaker 1: know what that means to do the opposite, So copper

647
00:33:24,280 --> 00:33:26,760
Speaker 1: got a little cheap last year. It's the world's most

648
00:33:26,760 --> 00:33:29,560
Speaker 1: significant industrial metal, and it's heading lower. In my view,

649
00:33:29,560 --> 00:33:31,520
Speaker 1: it's found ten percent on a one year basis. I

650
00:33:31,600 --> 00:33:34,040
Speaker 1: think it's more likely to head towards three and it's

651
00:33:34,120 --> 00:33:36,720
Speaker 1: very unlikely to go back above five. It's got to

652
00:33:36,760 --> 00:33:40,080
Speaker 1: get through this recession, which is inevitable if you look

653
00:33:40,080 --> 00:33:43,160
Speaker 1: at the yield curve in the US. Mike mclogan clear

654
00:33:43,280 --> 00:33:47,200
Speaker 1: concise calls as always Mike McLoone, senior macro strategist for

655
00:33:47,400 --> 00:33:52,560
Speaker 1: Bloomberg Intelligence in Miami, Florida, which is the self proclaimed

656
00:33:52,600 --> 00:33:57,760
Speaker 1: in my mind, capital of all things crypt Though all

657
00:33:57,800 --> 00:34:00,560
Speaker 1: this may be the conversation of the day, particularly feen

658
00:34:00,720 --> 00:34:02,880
Speaker 1: tech geeks out there, we're in a round table to

659
00:34:02,920 --> 00:34:05,600
Speaker 1: seeing talk all things tech, focus on Apple, computer on

660
00:34:05,720 --> 00:34:09,640
Speaker 1: Aragrana Senior Tech Annalso Bloomberg Intelligence joins us as well

661
00:34:09,680 --> 00:34:13,080
Speaker 1: as Mark German, reporter with Bloomberg News, and then we'll

662
00:34:13,120 --> 00:34:14,520
Speaker 1: talk a little tech here. And Mark, I want to

663
00:34:14,560 --> 00:34:18,319
Speaker 1: start with you talk to us about Apple and their

664
00:34:18,400 --> 00:34:21,759
Speaker 1: view of India as an opportunity here. Whenever I think

665
00:34:21,800 --> 00:34:24,239
Speaker 1: of Apple in India, I think, boy, don't they have

666
00:34:24,320 --> 00:34:27,920
Speaker 1: to bring in a lower priced model. How do you

667
00:34:27,920 --> 00:34:31,680
Speaker 1: think they're viewing it? India, in Apple's view, could be

668
00:34:31,719 --> 00:34:34,920
Speaker 1: the company's next China. Right If you remember, China was

669
00:34:34,920 --> 00:34:38,520
Speaker 1: a very small market for Apple only about fifteen years ago, right,

670
00:34:38,719 --> 00:34:41,000
Speaker 1: But when Apple went to a larger sized iPhone with

671
00:34:41,040 --> 00:34:46,080
Speaker 1: the iPhone six plus back in twenty fourteen, things really escalated.

672
00:34:46,280 --> 00:34:49,080
Speaker 1: And Apple sees India in the same way. Right now,

673
00:34:49,160 --> 00:34:51,400
Speaker 1: China brings in about seventy five billion a here in

674
00:34:51,440 --> 00:34:54,760
Speaker 1: revenue for Apple. That's nearly a fourth of overall annual revenues.

675
00:34:55,160 --> 00:34:57,680
Speaker 1: They want India to eventually be the same might take

676
00:34:57,680 --> 00:35:00,600
Speaker 1: ten twenty thirty years, but that's what they're t push towards.

677
00:35:00,680 --> 00:35:03,040
Speaker 1: And so in order to do that, they're making India

678
00:35:03,040 --> 00:35:05,879
Speaker 1: it's own dedicated sales region within the company its own

679
00:35:05,920 --> 00:35:09,960
Speaker 1: operational region, separating it out of Europe right in Africa

680
00:35:10,000 --> 00:35:12,799
Speaker 1: and the Middle Eastditerranean where it was bundled before. And

681
00:35:12,840 --> 00:35:15,240
Speaker 1: they think this is really going to help push growth

682
00:35:15,239 --> 00:35:19,000
Speaker 1: and more resources there. Hop into this conversation put some

683
00:35:19,120 --> 00:35:22,280
Speaker 1: numbers on it for us, this supply chain shift. Essentially,

684
00:35:22,320 --> 00:35:25,120
Speaker 1: you're the shift that Mark is really outlining. What kind

685
00:35:25,120 --> 00:35:28,000
Speaker 1: of impact does that have on the fundamentals at a

686
00:35:28,040 --> 00:35:30,360
Speaker 1: time when I feel like Tim Cook's real legacy was

687
00:35:30,480 --> 00:35:34,200
Speaker 1: securing the supply chain. Oh yeah, from a supply chain

688
00:35:34,239 --> 00:35:36,279
Speaker 1: point of view, India, you know, will become a big

689
00:35:36,280 --> 00:35:38,600
Speaker 1: part of it, but that may take some time. But

690
00:35:38,680 --> 00:35:41,399
Speaker 1: I cannot agree more with what Mark is talking here.

691
00:35:42,080 --> 00:35:45,760
Speaker 1: India from a numbers point of view, should and could

692
00:35:45,800 --> 00:35:48,239
Speaker 1: be a very big market for Apple down the road,

693
00:35:48,600 --> 00:35:51,880
Speaker 1: and largely because the population size is there. And the

694
00:35:51,880 --> 00:35:54,400
Speaker 1: only question you have to really think about is, you know,

695
00:35:54,440 --> 00:35:57,600
Speaker 1: at what paces the middle class becoming more and more richer,

696
00:35:57,719 --> 00:36:00,440
Speaker 1: because frankly, I don't think Apple is going to go

697
00:36:00,480 --> 00:36:02,600
Speaker 1: down the value chain and come up with the lower

698
00:36:02,600 --> 00:36:06,000
Speaker 1: price model. I think the population in India has to

699
00:36:06,000 --> 00:36:09,920
Speaker 1: get richer in order to afford that, and Mark, I mean,

700
00:36:09,960 --> 00:36:12,600
Speaker 1: I guess is that something that you think Apple is

701
00:36:12,920 --> 00:36:15,239
Speaker 1: ready to I'm not sure wait for or is that

702
00:36:15,320 --> 00:36:21,080
Speaker 1: something they anticipate having that India market evolved like Anoraga suggesting, Yeah,

703
00:36:21,120 --> 00:36:23,000
Speaker 1: I agree with the honor Rug. Apple's not going to

704
00:36:23,040 --> 00:36:25,319
Speaker 1: go down market. They're not going to come out with

705
00:36:25,400 --> 00:36:28,279
Speaker 1: lower price devices for a specific market. What they are

706
00:36:28,320 --> 00:36:29,759
Speaker 1: going to do is they're going to keep coming out

707
00:36:29,800 --> 00:36:32,880
Speaker 1: with the new types of Spellman plans, new trade in programs,

708
00:36:32,960 --> 00:36:35,920
Speaker 1: other new promotions that don't change the cost to the

709
00:36:35,960 --> 00:36:38,640
Speaker 1: phone right per se, but makes it a lot more

710
00:36:38,680 --> 00:36:41,640
Speaker 1: attainable for people in markets like India. So you're going

711
00:36:41,680 --> 00:36:44,719
Speaker 1: to see that, well, Mark, talk to us a little

712
00:36:44,719 --> 00:36:46,520
Speaker 1: bit again. You talked about the products as well. But

713
00:36:46,600 --> 00:36:50,040
Speaker 1: it's interesting that Apple is shifting to India up yet.

714
00:36:50,239 --> 00:36:54,080
Speaker 1: I don't think it's they're They're not the main dominant

715
00:36:54,760 --> 00:36:58,480
Speaker 1: kind of product maker in that market. It's still Samsung,

716
00:36:58,560 --> 00:37:02,120
Speaker 1: right Yeah. Apple definitely is not the dominant player in

717
00:37:02,120 --> 00:37:05,680
Speaker 1: India and that gives them a big growth opportunity long term. Right.

718
00:37:05,920 --> 00:37:10,640
Speaker 1: The dominant players there are Samsung phones from shao Me,

719
00:37:11,000 --> 00:37:14,640
Speaker 1: Huawei and other players. These are the Chinese brands a

720
00:37:14,680 --> 00:37:16,839
Speaker 1: lot of times these phones can sell for sub four

721
00:37:16,920 --> 00:37:19,160
Speaker 1: hundred dollars, and I think that makes that much more

722
00:37:19,200 --> 00:37:22,920
Speaker 1: attainable combined with installment programs in a place like India,

723
00:37:22,960 --> 00:37:26,399
Speaker 1: which is obviously an emerging market. But I do think

724
00:37:26,400 --> 00:37:28,720
Speaker 1: Apple is going to do whatever it can marketing wise,

725
00:37:29,400 --> 00:37:33,600
Speaker 1: promotional wise in order to make the iPhone a bit

726
00:37:34,160 --> 00:37:37,160
Speaker 1: of a better purchase in India, right, maybe bundle it

727
00:37:37,200 --> 00:37:40,200
Speaker 1: with other products and services and such. So I do

728
00:37:40,239 --> 00:37:42,680
Speaker 1: think they will eventually get it done. You know, five

729
00:37:42,760 --> 00:37:45,759
Speaker 1: G is just still so nascent in India, and it's

730
00:37:45,760 --> 00:37:48,080
Speaker 1: still you know, nascent for Apple itself. They only went

731
00:37:48,120 --> 00:37:51,000
Speaker 1: into the five G market two years ago. So I

732
00:37:51,040 --> 00:37:53,279
Speaker 1: do think they have a long term growth path there.

733
00:37:53,600 --> 00:37:55,680
Speaker 1: And of course, you know, we do believe that Apple's

734
00:37:55,719 --> 00:37:58,040
Speaker 1: not going to go down market, but if they decided

735
00:37:58,160 --> 00:38:01,080
Speaker 1: to sort of hit that lever can go down market.

736
00:38:01,320 --> 00:38:04,520
Speaker 1: Release you know, a new version of the iPhone SE

737
00:38:04,719 --> 00:38:06,840
Speaker 1: just for India, or a new version of the iPhone

738
00:38:06,920 --> 00:38:09,520
Speaker 1: SE which right now is four hundred and fifty dollars

739
00:38:09,920 --> 00:38:13,399
Speaker 1: that has you know, better attributes, bigger screen, five G, etc.

740
00:38:14,480 --> 00:38:16,279
Speaker 1: I think that could be successful there with the right

741
00:38:16,320 --> 00:38:18,840
Speaker 1: marketing program behind it. Hey, and Rod talk to us

742
00:38:18,840 --> 00:38:21,600
Speaker 1: about the air pod business for Apple. I have my

743
00:38:21,680 --> 00:38:24,600
Speaker 1: AirPods and the problem is they don't stay in my ear.

744
00:38:24,680 --> 00:38:27,680
Speaker 1: So I know the product design is perfect at Apple,

745
00:38:27,840 --> 00:38:30,960
Speaker 1: so the problem must be my ear. But tell me

746
00:38:31,000 --> 00:38:35,000
Speaker 1: about the iPod business from a financial perspective. Yeah, I

747
00:38:35,520 --> 00:38:37,560
Speaker 1: was really intrigued with it a few days ago when

748
00:38:37,600 --> 00:38:39,600
Speaker 1: I when I you know, am mine ended up in

749
00:38:39,600 --> 00:38:42,440
Speaker 1: the washing machine, and you know, I ended up spending

750
00:38:42,440 --> 00:38:45,480
Speaker 1: two hundred forty nine dollars for it, plus the plan

751
00:38:45,560 --> 00:38:48,160
Speaker 1: of twenty nine bucks. And I said, started looking at

752
00:38:48,160 --> 00:38:51,400
Speaker 1: the numbers. Before the pandemic, the attached right foot iPhone

753
00:38:51,440 --> 00:38:54,880
Speaker 1: was about twenty percent off of the you know, currently

754
00:38:54,880 --> 00:38:57,279
Speaker 1: it's somewhere around thirty eight forty percent. And then in

755
00:38:57,320 --> 00:39:00,840
Speaker 1: the most recent survey that we did for and the users,

756
00:39:01,200 --> 00:39:04,000
Speaker 1: we saw sixty two percent attach rate. And you know,

757
00:39:04,040 --> 00:39:06,160
Speaker 1: we are modeling that over the next seven eight years,

758
00:39:06,280 --> 00:39:09,319
Speaker 1: the whole world moves into that rollm off close to

759
00:39:09,360 --> 00:39:12,960
Speaker 1: a sixty percent attach rate. Wait that's the case. What

760
00:39:12,960 --> 00:39:16,319
Speaker 1: does that mean? I mean every iPhone users? You're an

761
00:39:16,360 --> 00:39:18,960
Speaker 1: iPhone user, do you have a do you have an

762
00:39:19,000 --> 00:39:22,440
Speaker 1: air part or not? Believe me, I landed in Chicago

763
00:39:22,520 --> 00:39:25,960
Speaker 1: last Monday, and I looked around the plane. There wasn't

764
00:39:25,960 --> 00:39:28,279
Speaker 1: one human being in that plane that didn't have an

765
00:39:28,280 --> 00:39:31,280
Speaker 1: air part along with it. So sixty person is probably

766
00:39:31,320 --> 00:39:34,520
Speaker 1: conservative in my wife. But if that happens, you know,

767
00:39:34,640 --> 00:39:37,800
Speaker 1: airpart become the third biggest category, you know, for for

768
00:39:37,960 --> 00:39:40,799
Speaker 1: Apple down the road, and frank you speaking, you're gonna

769
00:39:40,840 --> 00:39:44,000
Speaker 1: lose them. They're gonna fall in water. Your replacement cycle

770
00:39:44,520 --> 00:39:47,760
Speaker 1: is going to be far faster than an iPhone. And

771
00:39:48,239 --> 00:39:50,640
Speaker 1: you know, it's just it's just a beautiful product. Frankly

772
00:39:51,360 --> 00:39:53,319
Speaker 1: doesn't stay in my ear, So what does it say

773
00:39:53,320 --> 00:39:55,920
Speaker 1: about my ears? I guess that's the question. Hey, Mark,

774
00:39:56,560 --> 00:39:59,200
Speaker 1: I'd love to get the latest reporting from you. I'm

775
00:39:59,280 --> 00:40:03,040
Speaker 1: kind of what's the feeling in Cupertino about China, both

776
00:40:03,080 --> 00:40:06,439
Speaker 1: as a supplier and as an end of market. What's

777
00:40:06,520 --> 00:40:09,839
Speaker 1: the latest thinking. I think Apple is pretty confident in

778
00:40:09,840 --> 00:40:13,400
Speaker 1: its supply chain in China. I think they have seen

779
00:40:14,160 --> 00:40:17,560
Speaker 1: the Chinese supply chain be pretty strong and pretty resilient

780
00:40:18,120 --> 00:40:20,960
Speaker 1: other than the last four years. So it's taken some

781
00:40:21,040 --> 00:40:23,319
Speaker 1: time for them to really wrap their heads around this

782
00:40:23,360 --> 00:40:25,719
Speaker 1: idea that this whole supply chain they spent twenty five

783
00:40:25,800 --> 00:40:29,960
Speaker 1: years building, you know, really has faced criticism recently, has

784
00:40:30,000 --> 00:40:33,759
Speaker 1: faced issues. And really you can chop it up really

785
00:40:33,800 --> 00:40:37,759
Speaker 1: to the tariffs issue in twenty eight, twenty nineteen, right,

786
00:40:37,840 --> 00:40:40,360
Speaker 1: and then you can connect it to COVID as well,

787
00:40:40,480 --> 00:40:43,719
Speaker 1: and those two factors really with a string of bad

788
00:40:43,800 --> 00:40:47,040
Speaker 1: luck and COVID zero policies in China, you know, really,

789
00:40:47,440 --> 00:40:49,920
Speaker 1: you know, weaken that supply chain a little bit in

790
00:40:49,960 --> 00:40:52,799
Speaker 1: the eyes of investors and some And so I don't

791
00:40:52,840 --> 00:40:55,160
Speaker 1: think Apple is going to shift away from China as

792
00:40:55,239 --> 00:40:59,120
Speaker 1: people think. I think that the Chinese supply chain is

793
00:40:59,200 --> 00:41:02,600
Speaker 1: here to stay. But I have a big caveat whereas

794
00:41:02,640 --> 00:41:06,400
Speaker 1: I think Apple is going to double up and really

795
00:41:07,080 --> 00:41:14,960
Speaker 1: build additional supply chains, different manufacturing final assembly facilities in India, Vietnam, Thailand, Malaysia, Cork,

796
00:41:15,040 --> 00:41:18,479
Speaker 1: Ireland and really expand there. So if there are further

797
00:41:18,520 --> 00:41:22,560
Speaker 1: issues in the Chinese supply chain, they have backups in place. Mark,

798
00:41:22,680 --> 00:41:24,400
Speaker 1: let's go to a different part of the business here,

799
00:41:24,520 --> 00:41:29,359
Speaker 1: Apple TV are what's the growth case for Apple TV

800
00:41:29,600 --> 00:41:31,600
Speaker 1: at a time when a lot of streaming companies, a

801
00:41:31,600 --> 00:41:35,239
Speaker 1: lot of media giants really struggling. Yeah, the growth case

802
00:41:35,320 --> 00:41:38,680
Speaker 1: is really the price at seven dollars a month. Apple

803
00:41:38,760 --> 00:41:41,640
Speaker 1: is still well under the price points you're seeing of

804
00:41:41,719 --> 00:41:45,719
Speaker 1: Netflix and HBO Max and those bundles there. I think

805
00:41:45,760 --> 00:41:49,640
Speaker 1: if Apple further pushes Apple TV Plus in terms of

806
00:41:49,960 --> 00:41:52,600
Speaker 1: bundles their Apple or One bundles they included in the

807
00:41:52,640 --> 00:41:55,359
Speaker 1: price point of some of their other products, I think

808
00:41:55,360 --> 00:41:58,080
Speaker 1: it could be Okay. One new thing they're trying is

809
00:41:58,080 --> 00:42:01,680
Speaker 1: they're sort of building this temper very back catalog of content.

810
00:42:01,760 --> 00:42:03,879
Speaker 1: So they have their originals, which is what you're paying for,

811
00:42:04,320 --> 00:42:07,280
Speaker 1: but you also you get about six of these random

812
00:42:07,320 --> 00:42:11,240
Speaker 1: iTunes movies, usually the same ones that are streaming on Netflix,

813
00:42:11,840 --> 00:42:14,680
Speaker 1: included with TV plus. So if they continue to expand that,

814
00:42:14,800 --> 00:42:17,560
Speaker 1: it makes TV plus quite a bit of a better offering.

815
00:42:17,880 --> 00:42:20,239
Speaker 1: They have not marketed that. They don't advertise it. It's

816
00:42:20,239 --> 00:42:22,520
Speaker 1: not advertised as part of the price point every month,

817
00:42:22,920 --> 00:42:25,080
Speaker 1: but I think that's something they're testing right now. And

818
00:42:25,080 --> 00:42:27,239
Speaker 1: if they continue pulling that lever and make it a

819
00:42:27,239 --> 00:42:29,680
Speaker 1: bigger part of the package, I think TV plus could

820
00:42:29,680 --> 00:42:32,719
Speaker 1: be quite successful. Hey fit finished up with you here?

821
00:42:32,880 --> 00:42:36,160
Speaker 1: What's the bear case for the stock? Apple? Thirty seven

822
00:42:36,200 --> 00:42:38,360
Speaker 1: buys eight holds and only two cells. Is there a

823
00:42:38,400 --> 00:42:41,480
Speaker 1: bearcase for Apple? The big case is really you know,

824
00:42:41,719 --> 00:42:44,320
Speaker 1: China is the biggest bearcase frankly, and then that's really

825
00:42:44,400 --> 00:42:48,680
Speaker 1: what you know, I get scared about. I think that's

826
00:42:48,760 --> 00:42:51,200
Speaker 1: one idea. But the second part also is, for the

827
00:42:51,280 --> 00:42:54,040
Speaker 1: long period of time, Apple's been growing sales at a

828
00:42:54,040 --> 00:42:56,080
Speaker 1: clip of about ten percent per year, let's say for

829
00:42:56,160 --> 00:42:58,600
Speaker 1: the last several years. We don't think that's going to

830
00:42:58,640 --> 00:43:01,480
Speaker 1: happen anymore. It's going to be high single digit growth

831
00:43:01,560 --> 00:43:04,200
Speaker 1: fade stock. And as you know, I mean, you know,

832
00:43:04,239 --> 00:43:06,080
Speaker 1: what multiple are you going to pay for a stock

833
00:43:06,120 --> 00:43:07,880
Speaker 1: at that time? I think there is a lot of

834
00:43:07,920 --> 00:43:10,200
Speaker 1: discussion about valuation. We have done a lot of work

835
00:43:10,239 --> 00:43:12,600
Speaker 1: on that area. I think those are the two areas

836
00:43:12,640 --> 00:43:15,520
Speaker 1: that I hear the most criticism about. All Right, good stuff,

837
00:43:15,840 --> 00:43:19,200
Speaker 1: Really appreciate getting you too, smart folks together on a

838
00:43:19,280 --> 00:43:21,920
Speaker 1: rock ran A, senior tech analysts with Bloomberg Intelligence and

839
00:43:22,000 --> 00:43:27,640
Speaker 1: Mark German, reporter for Bloomberg News covering all things technology.

840
00:43:28,280 --> 00:43:30,839
Speaker 1: Twenty twenty two was a year to forget for risk

841
00:43:30,920 --> 00:43:34,160
Speaker 1: on investors at sixty forty stock portfolio nowhere to hide

842
00:43:34,640 --> 00:43:36,840
Speaker 1: This year kind of an up and down, really strong

843
00:43:36,920 --> 00:43:39,600
Speaker 1: januarying for some bond investors. Some of the best January,

844
00:43:39,480 --> 00:43:42,279
Speaker 1: they've they've ever seen and then kind of given it

845
00:43:42,320 --> 00:43:44,880
Speaker 1: back in February. So where do we go from here?

846
00:43:44,920 --> 00:43:47,680
Speaker 1: Let's check out with Mike Smith. He's a senior portfolio

847
00:43:47,719 --> 00:43:52,279
Speaker 1: manager Offspring Discovery smid cap Growth Fund and for those

848
00:43:52,320 --> 00:43:54,239
Speaker 1: of you not in the know out there, Smith is

849
00:43:54,280 --> 00:43:57,080
Speaker 1: kind of a combination between small cap and MidCap. You

850
00:43:57,160 --> 00:43:59,279
Speaker 1: put it together and it's a smid cap. So how

851
00:43:59,320 --> 00:44:03,680
Speaker 1: about that? Thanks for joining us here. Let's look forward here.

852
00:44:04,960 --> 00:44:07,759
Speaker 1: How are you guys approaching this market? Are you do

853
00:44:07,800 --> 00:44:10,520
Speaker 1: you feel like you're held hostage by the Federal Reserve

854
00:44:10,600 --> 00:44:13,279
Speaker 1: or do you still feel like there's ways to make

855
00:44:13,320 --> 00:44:17,320
Speaker 1: money here and maybe add some value. Hey, Paul, good afternoon.

856
00:44:17,400 --> 00:44:20,520
Speaker 1: Thanks for having me on. I think there's definitely reasons

857
00:44:20,520 --> 00:44:25,279
Speaker 1: to be hopeful and optimistic. You know, starting with what

858
00:44:25,320 --> 00:44:27,239
Speaker 1: you just said, there was a lot of damage done

859
00:44:27,480 --> 00:44:31,680
Speaker 1: last year, and we entered this year with the post

860
00:44:31,760 --> 00:44:35,400
Speaker 1: year that last year's paying is this year's opportunity, and

861
00:44:35,400 --> 00:44:37,359
Speaker 1: that's starting to play out a little bit. I think

862
00:44:38,200 --> 00:44:42,239
Speaker 1: it's reasonable to expect a choppy year and some ups

863
00:44:42,320 --> 00:44:45,680
Speaker 1: and downs as we move forward. But you know, what

864
00:44:45,719 --> 00:44:51,319
Speaker 1: we see is there's a divergence and fundamentals that that

865
00:44:51,480 --> 00:44:54,440
Speaker 1: is starting to reappear. When you look at the universe

866
00:44:54,719 --> 00:44:57,280
Speaker 1: of growth companies that we focus on and you compare

867
00:44:57,360 --> 00:45:02,760
Speaker 1: that to the broader market, fundamentals are superior on three fronts.

868
00:45:02,920 --> 00:45:07,080
Speaker 1: The growth differential is actually as wide as it's been

869
00:45:07,120 --> 00:45:10,280
Speaker 1: in quite some time, about two times the ten year average.

870
00:45:11,520 --> 00:45:15,920
Speaker 1: There's superior margins and returns, and there's also increasing evidence

871
00:45:15,960 --> 00:45:20,640
Speaker 1: of superior resilience. The rate at which estimates are being

872
00:45:20,640 --> 00:45:25,040
Speaker 1: cut and revide lower for growth companies, you know, is

873
00:45:25,120 --> 00:45:27,360
Speaker 1: less than what we're seeing for the rest of the universe.

874
00:45:27,400 --> 00:45:32,279
Speaker 1: And you know, typically you pay a premium for better fundamentals.

875
00:45:32,400 --> 00:45:35,320
Speaker 1: You pay a higher price for better growth, better margin,

876
00:45:35,560 --> 00:45:39,560
Speaker 1: and more resilience. But last year that premium went away.

877
00:45:40,000 --> 00:45:43,400
Speaker 1: And so what we think re emerges is a reward

878
00:45:43,520 --> 00:45:49,080
Speaker 1: for patient and optimistic investors who are willing to take

879
00:45:49,120 --> 00:45:52,120
Speaker 1: some risk and try to navigate the chop you want

880
00:45:52,560 --> 00:45:55,839
Speaker 1: sat waters that we're all sailing through. So where where

881
00:45:55,840 --> 00:45:57,480
Speaker 1: are we are? Where are you guys in terms of

882
00:45:57,640 --> 00:46:00,400
Speaker 1: your view of valuation if you want to get you know,

883
00:46:00,520 --> 00:46:05,040
Speaker 1: until your portfolio more towards growth companies. Where is the

884
00:46:05,080 --> 00:46:09,320
Speaker 1: kind of the valuation play we think valuation overall is

885
00:46:09,640 --> 00:46:13,040
Speaker 1: about average for growth stocks, so you know, it got

886
00:46:13,120 --> 00:46:15,960
Speaker 1: quite extended. That's part of what contributed to the pain

887
00:46:16,239 --> 00:46:19,120
Speaker 1: in the first half of last year. We're not at

888
00:46:19,160 --> 00:46:21,560
Speaker 1: all time lows, but we're at a fair value where

889
00:46:21,600 --> 00:46:25,640
Speaker 1: you can be rewarded for investing in those superior fundamentals.

890
00:46:26,280 --> 00:46:28,680
Speaker 1: And I think in terms of where you find opportunity,

891
00:46:28,719 --> 00:46:32,040
Speaker 1: it's broad based. I think one of the most interesting

892
00:46:32,080 --> 00:46:36,400
Speaker 1: things that's going on is technology cycles through different industries

893
00:46:36,440 --> 00:46:39,919
Speaker 1: and is adopted by all different types of businesses. It's

894
00:46:40,000 --> 00:46:43,520
Speaker 1: creating winners and losers and companies with superior growth and

895
00:46:43,880 --> 00:46:47,120
Speaker 1: lots of different places. So give us a sense, are

896
00:46:47,120 --> 00:46:52,040
Speaker 1: there some sectors you like at the moment. Yeah, the

897
00:46:52,320 --> 00:46:57,520
Speaker 1: most interesting opportunities that we see are in technology, consumer,

898
00:46:57,560 --> 00:47:02,640
Speaker 1: and healthcare. Those are the three sectors where fundamental differentials

899
00:47:02,640 --> 00:47:06,440
Speaker 1: get rewarded. It's very hard in places like energy and

900
00:47:07,200 --> 00:47:12,160
Speaker 1: interstensitive financials to make money based on fundamentals. You get

901
00:47:12,200 --> 00:47:15,080
Speaker 1: paid for getting the oil price right or the yield

902
00:47:15,080 --> 00:47:19,800
Speaker 1: curve right. We avoid those sectors and dive into opportunities

903
00:47:19,800 --> 00:47:23,360
Speaker 1: where the differences in the quality of the business matter.

904
00:47:24,160 --> 00:47:27,920
Speaker 1: You've got a name here that you guys like Mercado Libre.

905
00:47:28,560 --> 00:47:31,040
Speaker 1: I've heard that name before. It's a really interesting story.

906
00:47:31,160 --> 00:47:35,040
Speaker 1: Tell us about it. Yeah, Mercado Libre is essentially both

907
00:47:35,200 --> 00:47:39,560
Speaker 1: the Amazon and PayPal of Latin America. And you know,

908
00:47:39,560 --> 00:47:42,600
Speaker 1: it's early days in the markets where they do business

909
00:47:42,600 --> 00:47:45,400
Speaker 1: in terms of the adoption of e commerce and digital payments,

910
00:47:46,320 --> 00:47:49,480
Speaker 1: and the value proposition to the end user, the consumer

911
00:47:50,080 --> 00:47:54,200
Speaker 1: is meaningfully better, you know. I regardless of the economic regime,

912
00:47:54,239 --> 00:47:57,520
Speaker 1: people pay for better, They pay for more convenience, they

913
00:47:57,560 --> 00:48:02,040
Speaker 1: pay for less friction, more safe transactions. And so the

914
00:48:02,120 --> 00:48:05,840
Speaker 1: growth dynamics that they're seeing, which are quite explosive, are

915
00:48:05,840 --> 00:48:09,600
Speaker 1: primarily driven by that value proposition and the under penetration

916
00:48:10,200 --> 00:48:15,600
Speaker 1: of e commerce and digital payments. So you mentioned healthcare before.

917
00:48:15,640 --> 00:48:18,480
Speaker 1: How do you guys play healthcare? Do you go into

918
00:48:19,160 --> 00:48:22,279
Speaker 1: the services side, the pharmacide, the biotech side. How do

919
00:48:22,320 --> 00:48:25,760
Speaker 1: you guys like to get exposure to healthcare? You know, again,

920
00:48:25,840 --> 00:48:28,799
Speaker 1: I think it starts with the value proposition and what

921
00:48:28,840 --> 00:48:32,399
Speaker 1: does each individual business enable. As we sit here today

922
00:48:32,440 --> 00:48:35,640
Speaker 1: in the United States, We've never spent more on healthcare,

923
00:48:35,800 --> 00:48:39,160
Speaker 1: and the system has never been more complicated and more broken.

924
00:48:39,560 --> 00:48:42,880
Speaker 1: And so any business that brings a solution to the

925
00:48:42,920 --> 00:48:46,960
Speaker 1: table that saves lives or saved dollars, we think as

926
00:48:46,960 --> 00:48:50,279
Speaker 1: a long runway for growth. And so when you look

927
00:48:50,320 --> 00:48:53,240
Speaker 1: at you know, companies like Inspire Medical Systems as an example,

928
00:48:54,080 --> 00:48:57,080
Speaker 1: you know, what they enable is an alternative that's better

929
00:48:57,120 --> 00:49:00,359
Speaker 1: for the patient who wants to wear a map getting

930
00:49:00,400 --> 00:49:01,960
Speaker 1: night to deal with their sleep apnean if you don't

931
00:49:02,000 --> 00:49:06,399
Speaker 1: have to, and if you get better results with less

932
00:49:06,440 --> 00:49:09,759
Speaker 1: inconvenience or at a lower cost, you know, there's wide

933
00:49:09,760 --> 00:49:13,400
Speaker 1: adoption and so um, you know there are multiple examples

934
00:49:13,440 --> 00:49:15,799
Speaker 1: of that throughout our portfolio. But again, it all comes

935
00:49:15,800 --> 00:49:21,319
Speaker 1: back to enabling something better. That's the common denominator. So, Dan,

936
00:49:21,480 --> 00:49:25,120
Speaker 1: on the macro side, how concerned are you that that

937
00:49:25,280 --> 00:49:30,000
Speaker 1: we are in a higher rate for longer potentially an

938
00:49:30,200 --> 00:49:33,480
Speaker 1: environment And how do you guys feel about that? At Allspring?

939
00:49:35,640 --> 00:49:38,560
Speaker 1: You know it's your crystal ball is as good as

940
00:49:38,600 --> 00:49:41,520
Speaker 1: mine when it comes to where rates settle and what

941
00:49:41,640 --> 00:49:44,319
Speaker 1: the FED does from here, I think it's clear there's

942
00:49:44,320 --> 00:49:48,400
Speaker 1: a commitment to kill inflation, and the BED couldn't be

943
00:49:48,440 --> 00:49:50,920
Speaker 1: more clear about where they stand on that. So we

944
00:49:51,000 --> 00:49:55,120
Speaker 1: have to be humble in processing what that means. But um,

945
00:49:55,280 --> 00:49:57,919
Speaker 1: you know at the end of the day, we have

946
00:49:58,760 --> 00:50:00,960
Speaker 1: an amount of debt in our country. We have a

947
00:50:00,960 --> 00:50:06,080
Speaker 1: lot of bad demographics in the developed economies, including the

948
00:50:06,160 --> 00:50:08,720
Speaker 1: United States. Those are both two big overhangs on growth.

949
00:50:09,960 --> 00:50:14,520
Speaker 1: You know, it's hard to see a scenario where it

950
00:50:14,560 --> 00:50:16,960
Speaker 1: takes a long time to kill inflation. It takes a

951
00:50:16,960 --> 00:50:20,320
Speaker 1: long time to restrain growth growth, because they're structural horses

952
00:50:20,320 --> 00:50:23,680
Speaker 1: that are going to cause those restraints or constraints to

953
00:50:23,680 --> 00:50:27,879
Speaker 1: happen anyways. So you know, I think time will tell

954
00:50:27,920 --> 00:50:30,280
Speaker 1: as we moved through the year. I'm not looking for

955
00:50:30,640 --> 00:50:33,359
Speaker 1: a big upside surprise that rates have come way down,

956
00:50:33,440 --> 00:50:36,440
Speaker 1: but I think it's quite possible. We've seen the highs

957
00:50:36,520 --> 00:50:38,880
Speaker 1: and we just need to bide our time now to

958
00:50:38,880 --> 00:50:40,960
Speaker 1: get to the other side of the cycle. All right, Mike,

959
00:50:41,280 --> 00:50:43,399
Speaker 1: I always appreciate get a couple of minutes of your time,

960
00:50:43,440 --> 00:50:47,400
Speaker 1: Mike Smith. He's a senior portfolio manager at all Spring Discovery.

961
00:50:47,440 --> 00:50:50,759
Speaker 1: It's a smidcap growth fund, small MidCap growth and all

962
00:50:50,800 --> 00:50:55,040
Speaker 1: Spring is a former Strong Capital which was an absolute

963
00:50:55,400 --> 00:50:58,239
Speaker 1: must stop when you want it to go to the

964
00:50:58,239 --> 00:51:01,480
Speaker 1: Midwest and see institutional investors strong out there that the

965
00:51:01,560 --> 00:51:05,120
Speaker 1: burbs of Milwaukee, Wisconsin, which pound for pound, I think Milwaukee,

966
00:51:05,160 --> 00:51:07,560
Speaker 1: Wisconsin might have some of the best money managers out there.

967
00:51:07,800 --> 00:51:10,879
Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can

968
00:51:10,920 --> 00:51:14,680
Speaker 1: subscribe and listen to interviews of Apple Podcasts or whatever

969
00:51:14,760 --> 00:51:18,440
Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on Twitter

970
00:51:18,680 --> 00:51:21,960
Speaker 1: at Matt Miller nineteen seventy three, and I'm Fall Sweeney.

971
00:51:22,000 --> 00:51:24,600
Speaker 1: I'm on Twitter at pt Sweeney. Before the podcast, you

972
00:51:24,600 --> 00:51:27,320
Speaker 1: can always catch us worldwide at Bloomberg Radio.