1
00:00:02,400 --> 00:00:09,119
Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

2
00:00:09,119 --> 00:00:13,320
Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

3
00:00:13,320 --> 00:00:15,800
Speaker 1: Eastern on Apple card Playing and Broyd Auto with the

4
00:00:15,800 --> 00:00:19,680
Speaker 1: Bloomberg Business app. Listen on demand wherever you get your podcasts,

5
00:00:19,920 --> 00:00:22,280
Speaker 1: or watch us live on YouTube.

6
00:00:23,120 --> 00:00:26,799
Speaker 2: A headline earlier with South Korea declares marshall law. However,

7
00:00:27,040 --> 00:00:30,720
Speaker 2: lawmakers have now voted to request the lifting of the

8
00:00:30,840 --> 00:00:34,120
Speaker 2: marshal law. The president says that marshal law those necessary

9
00:00:34,159 --> 00:00:37,800
Speaker 2: because of political deadlock over the budget. It's confusing, it's

10
00:00:37,800 --> 00:00:40,440
Speaker 2: moving the FX market. We want to get more for

11
00:00:40,720 --> 00:00:44,680
Speaker 2: you joining us now as Dan Daniel ten Kate joining us,

12
00:00:44,720 --> 00:00:51,760
Speaker 2: he's Asia ecogov Executive Editor, Economic Government Executive Editor. Hey Dan,

13
00:00:52,240 --> 00:00:55,080
Speaker 2: can you just help us understand the last twelve hours.

14
00:00:58,160 --> 00:01:00,000
Speaker 3: Yeah, I mean we're still trying to figure it out.

15
00:01:00,040 --> 00:01:04,560
Speaker 3: But essentially the President kind of stunned the nation with

16
00:01:04,680 --> 00:01:09,119
Speaker 3: this late night power grab where he declared martial law

17
00:01:09,480 --> 00:01:12,720
Speaker 3: for the first time in decades and careers a long

18
00:01:12,840 --> 00:01:19,640
Speaker 3: history of that and essentially banned all political activity, banned parliament, etc.

19
00:01:20,840 --> 00:01:23,680
Speaker 3: Claiming there were North Korea sympathizers that he had to

20
00:01:23,720 --> 00:01:29,080
Speaker 3: take down. In reality, he lost the parliament election in April,

21
00:01:29,160 --> 00:01:32,200
Speaker 3: and ever since then he hasn't had a majority in Parliament,

22
00:01:32,840 --> 00:01:36,280
Speaker 3: and the opposition party is doing what opposition parties do

23
00:01:36,360 --> 00:01:39,320
Speaker 3: around the world, which is, you know, try and block

24
00:01:39,400 --> 00:01:42,880
Speaker 3: his initiatives and push their own initiatives through. So he's

25
00:01:42,880 --> 00:01:46,440
Speaker 3: had a bit of divided government there. It sort of

26
00:01:46,520 --> 00:01:48,440
Speaker 3: came to a head with a vote on the budget.

27
00:01:48,600 --> 00:01:54,040
Speaker 3: They were demanding different things and then he just pulled

28
00:01:54,080 --> 00:01:58,080
Speaker 3: this move which even his own party is condemning at

29
00:01:58,120 --> 00:02:01,600
Speaker 3: the moment. So you had opposition and lawmakers race to Parliament.

30
00:02:01,800 --> 00:02:07,400
Speaker 3: They voted to ask him to withdraw the requests from

31
00:02:07,400 --> 00:02:11,480
Speaker 3: martial law. According to the constitution, that means he must

32
00:02:11,520 --> 00:02:15,720
Speaker 3: comply with the request. There is some legal ambiguity now

33
00:02:15,760 --> 00:02:18,320
Speaker 3: that they're trying to work through. We haven't heard from

34
00:02:18,400 --> 00:02:21,640
Speaker 3: him since parliament voted, so we're not sure if he'll comply.

35
00:02:22,600 --> 00:02:24,600
Speaker 3: But people are coming on the streets. There was some

36
00:02:24,680 --> 00:02:30,840
Speaker 3: clashes with police. Overall fairly calm on the streets that

37
00:02:31,280 --> 00:02:35,280
Speaker 3: we could see right now. But the big question now

38
00:02:35,320 --> 00:02:38,240
Speaker 3: is whether he'll comply and drop this whole thing.

39
00:02:39,280 --> 00:02:42,280
Speaker 4: I have to ask the question, Danielle, but who has

40
00:02:42,360 --> 00:02:47,399
Speaker 4: the support of the armed forces of South Korea.

41
00:02:48,120 --> 00:02:53,919
Speaker 3: Well, that's a big question right now. You know, it's

42
00:02:54,000 --> 00:02:56,920
Speaker 3: unclear if the army is going to back him to

43
00:02:56,960 --> 00:02:59,280
Speaker 3: the extent if you get mass protests, are they going

44
00:02:59,360 --> 00:03:02,000
Speaker 3: to you know, started shooting in the streets or something

45
00:03:02,040 --> 00:03:04,640
Speaker 3: like that. I mean, that's that's a big question. And

46
00:03:04,680 --> 00:03:07,600
Speaker 3: we've seen in Asia a couple other places where the

47
00:03:07,680 --> 00:03:10,560
Speaker 3: army has refused to do that. This year. Bangladesh in particular,

48
00:03:10,800 --> 00:03:15,480
Speaker 3: was was one. It doesn't appear like it's coming to

49
00:03:15,520 --> 00:03:18,079
Speaker 3: that yet. Well, we'll have to see with the next

50
00:03:18,200 --> 00:03:23,280
Speaker 3: and a few hours in days spring, but that that's

51
00:03:23,440 --> 00:03:24,240
Speaker 3: an open question.

52
00:03:25,480 --> 00:03:30,120
Speaker 2: So I guess okay, let's just pretend that the president says, okay,

53
00:03:30,200 --> 00:03:33,720
Speaker 2: you guys are repealing martial law. Fine, then what happens

54
00:03:33,760 --> 00:03:36,720
Speaker 2: because we're still clearly at a standstill, and clearly this

55
00:03:36,840 --> 00:03:40,360
Speaker 2: is a big negotiating tactic that the president was using

56
00:03:40,480 --> 00:03:43,640
Speaker 2: to get his agenda passed. So then what happens if

57
00:03:43,640 --> 00:03:46,240
Speaker 2: the government is in paralysis? What gives.

58
00:03:48,040 --> 00:03:51,200
Speaker 3: Well, I mean they were, they were negotiating about it,

59
00:03:51,320 --> 00:03:55,400
Speaker 3: so you know, his his his view of paralysis and

60
00:03:55,400 --> 00:03:57,400
Speaker 3: and what's actually taking place on the ground. There are

61
00:03:57,400 --> 00:04:01,000
Speaker 3: two different things it looks. So you know, there's already

62
00:04:01,000 --> 00:04:04,400
Speaker 3: people calling for him to be impeached after this. His

63
00:04:04,440 --> 00:04:09,520
Speaker 3: own ruling party is condemning his move. He's very unpopular anyway,

64
00:04:10,800 --> 00:04:14,320
Speaker 3: so you know, it's very likely we could see support

65
00:04:14,560 --> 00:04:18,040
Speaker 3: and tun and he could be impeached and turn out

66
00:04:18,040 --> 00:04:21,760
Speaker 3: of office that way. That looks the way it's going,

67
00:04:21,880 --> 00:04:24,160
Speaker 3: unless the army worked to back him and he worked

68
00:04:24,200 --> 00:04:27,400
Speaker 3: to kind of bend the constitution, which you know, so

69
00:04:27,480 --> 00:04:30,920
Speaker 3: far we haven't seen that. We're pariously on the brink

70
00:04:30,960 --> 00:04:31,160
Speaker 3: of that.

71
00:04:31,600 --> 00:04:33,960
Speaker 4: My gosh, all right, Daniel, thank you so much for

72
00:04:34,040 --> 00:04:34,520
Speaker 4: your reporting.

73
00:04:34,520 --> 00:04:35,200
Speaker 5: Really appreciate it.

74
00:04:35,320 --> 00:04:39,320
Speaker 4: Daniel ten Kate he is Asia Economic and Government Executive

75
00:04:39,400 --> 00:04:41,200
Speaker 4: editor for Bloomberg News.

76
00:04:41,200 --> 00:04:43,239
Speaker 5: He is based in Hong Kong.

77
00:04:44,120 --> 00:04:46,000
Speaker 4: For those of you that have a terminal, Top go

78
00:04:46,920 --> 00:04:50,400
Speaker 4: and you kind of get t live and boy, this

79
00:04:50,560 --> 00:04:53,040
Speaker 4: top Live blog is kind of that's where we're getting

80
00:04:53,040 --> 00:04:55,640
Speaker 4: all information, real up to date information from reporters on

81
00:04:55,680 --> 00:04:58,320
Speaker 4: the ground in that part of the world here, so

82
00:04:58,360 --> 00:05:01,200
Speaker 4: we will certainly keep you off the time date on that.

83
00:05:02,640 --> 00:05:06,520
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

84
00:05:06,600 --> 00:05:10,120
Speaker 1: weekdays at ten am Eastern on applecard Play and Android

85
00:05:10,160 --> 00:05:12,919
Speaker 1: Auto with a Bloomberg Business Act. You can also listen

86
00:05:13,040 --> 00:05:16,120
Speaker 1: live on Amazon Alexa from our flagship New York station.

87
00:05:16,480 --> 00:05:19,239
Speaker 1: Just say Alexa play Bloomberg eleven thirty.

88
00:05:20,640 --> 00:05:22,800
Speaker 2: All right, let's get the market. Then take here with

89
00:05:22,880 --> 00:05:28,800
Speaker 2: Nancy Tangler, CEO and CIO of Laffler Tangler Laffer Tangler Investments. Nancy,

90
00:05:29,040 --> 00:05:32,679
Speaker 2: I keep reading about how there's so much money in stocks.

91
00:05:32,760 --> 00:05:36,040
Speaker 2: We're still in a US exceptionalism kind of situation, but

92
00:05:36,080 --> 00:05:37,680
Speaker 2: no one wants to pull the trigger and like sell

93
00:05:37,720 --> 00:05:39,280
Speaker 2: and go somewhere else. What are you guys doing?

94
00:05:39,600 --> 00:05:42,360
Speaker 6: Yeah, well, we still like the US best best house

95
00:05:42,400 --> 00:05:45,280
Speaker 6: on the block in terms of earning's growth, in terms

96
00:05:45,279 --> 00:05:49,680
Speaker 6: of productivity, in terms of technological innovation, and the valuations

97
00:05:49,720 --> 00:05:52,719
Speaker 6: despite all the handwringing, are not super out of line.

98
00:05:52,760 --> 00:05:55,839
Speaker 6: I mean, you've got look at the equal weighted pees

99
00:05:55,960 --> 00:06:00,080
Speaker 6: eighteen times forward earnings. Historically it's average seventeen and a half.

100
00:06:00,440 --> 00:06:02,440
Speaker 6: So we keep going back to our analogy, which we've

101
00:06:02,480 --> 00:06:05,760
Speaker 6: been taking about for almost two years, which is this market,

102
00:06:05,800 --> 00:06:09,160
Speaker 6: this economy is analogous to the nineteen nineties, and we

103
00:06:09,520 --> 00:06:12,440
Speaker 6: see so many similarities. I mean, no analogy is perfect, right,

104
00:06:12,520 --> 00:06:16,400
Speaker 6: but we see so many analogies that line up, and

105
00:06:16,520 --> 00:06:18,920
Speaker 6: that was a time when you had, you know, an

106
00:06:18,920 --> 00:06:23,839
Speaker 6: inverted yield curve of labor shortage, geopolitical tension, you know

107
00:06:23,880 --> 00:06:26,800
Speaker 6: a number of the things that we have today as

108
00:06:26,880 --> 00:06:30,479
Speaker 6: well as high interest rates ten years between five and

109
00:06:30,520 --> 00:06:33,880
Speaker 6: eight percent, fed funds rate above five percent, yet you

110
00:06:33,920 --> 00:06:37,480
Speaker 6: had robust stock returns coexisting with that. So we still

111
00:06:37,480 --> 00:06:40,120
Speaker 6: think you want to be long this market for some time.

112
00:06:40,279 --> 00:06:44,080
Speaker 6: And you know, Europe has dramatically underperformed. The rest of

113
00:06:44,120 --> 00:06:47,039
Speaker 6: world has dramatically underperformed for the last twenty years, and

114
00:06:47,080 --> 00:06:49,120
Speaker 6: I think a lot of that has to do with technology.

115
00:06:49,560 --> 00:06:51,160
Speaker 5: So what is your technology call?

116
00:06:51,279 --> 00:06:51,479
Speaker 1: Here?

117
00:06:51,720 --> 00:06:53,200
Speaker 5: These days? We still like it.

118
00:06:53,200 --> 00:06:55,320
Speaker 6: I mean, you know, I think the MAG seven is

119
00:06:55,360 --> 00:06:58,040
Speaker 6: the MAG seven. But we are still exposed to the

120
00:06:58,120 --> 00:07:01,400
Speaker 6: chip sector and we have been we had been shifting

121
00:07:01,839 --> 00:07:05,400
Speaker 6: to software, so we still like a number of those names.

122
00:07:05,720 --> 00:07:09,000
Speaker 6: Largest holding reports tomorrow which is Oracle, but we own

123
00:07:09,080 --> 00:07:13,240
Speaker 6: Service now Microsoft, we own some Adobe, so we're in

124
00:07:13,360 --> 00:07:16,520
Speaker 6: the space and we think that continues to be where

125
00:07:16,600 --> 00:07:17,040
Speaker 6: you want to be.

126
00:07:17,720 --> 00:07:21,440
Speaker 2: What do you do with the super popular AI plays,

127
00:07:21,520 --> 00:07:23,560
Speaker 2: like like in Nvidia, if you didn't own it, actually

128
00:07:23,600 --> 00:07:24,720
Speaker 2: do you own it? And if you didn't know what

129
00:07:24,760 --> 00:07:26,840
Speaker 2: would do? Okay, would you add or do you just

130
00:07:26,920 --> 00:07:28,400
Speaker 2: kind of put it in there and say, all right,

131
00:07:28,560 --> 00:07:30,080
Speaker 2: you're good, I'm going to go look elsewhere.

132
00:07:30,160 --> 00:07:32,440
Speaker 6: It's such a great question because if you're trained like

133
00:07:32,520 --> 00:07:34,480
Speaker 6: I was as a value investor, you're always waiting for

134
00:07:34,520 --> 00:07:37,440
Speaker 6: the pullback. But if you go back and look at Amazon,

135
00:07:37,560 --> 00:07:41,320
Speaker 6: for example, since IPO in May of ninety seven May fifteenth,

136
00:07:41,640 --> 00:07:45,680
Speaker 6: it's up two hundred and seventy thousand percent. So when

137
00:07:45,800 --> 00:07:48,560
Speaker 6: was it too late to get involved with Amazon? We

138
00:07:48,680 --> 00:07:52,040
Speaker 6: added Nvidia in the summer during the tech the summer

139
00:07:52,080 --> 00:07:54,520
Speaker 6: tech swound, so we missed, you know, a big chunk

140
00:07:54,520 --> 00:07:58,560
Speaker 6: of it. But I think, like Tesla, these are stocks

141
00:07:58,640 --> 00:08:01,720
Speaker 6: that are driving in. You can go back and look

142
00:08:01,720 --> 00:08:05,520
Speaker 6: at Walmart. I mean that stock outperformed for many, many years,

143
00:08:05,880 --> 00:08:08,640
Speaker 6: and so I think this again is where you want

144
00:08:08,640 --> 00:08:11,480
Speaker 6: to be. We owned the and still own the poor

145
00:08:11,520 --> 00:08:16,240
Speaker 6: man's Nvidia, which is Broadcom in our twelve Best Ideas portfolio,

146
00:08:16,320 --> 00:08:18,520
Speaker 6: along with Service now, Microsoft and some of the names

147
00:08:18,560 --> 00:08:19,240
Speaker 6: I already mentioned.

148
00:08:19,280 --> 00:08:21,720
Speaker 4: You mentioned the chip Space have had Intel in the news.

149
00:08:21,720 --> 00:08:24,760
Speaker 4: With mister Gelsinger, we now blim we're reporting that he

150
00:08:24,840 --> 00:08:27,360
Speaker 4: was forced out by the board here. What's your take

151
00:08:27,880 --> 00:08:30,480
Speaker 4: on Intel, because we all grew up with Intel as

152
00:08:30,520 --> 00:08:31,280
Speaker 4: being a leader.

153
00:08:31,400 --> 00:08:34,320
Speaker 5: Now obviously they are not. Can they get the mojo

154
00:08:34,360 --> 00:08:34,800
Speaker 5: back at all?

155
00:08:34,800 --> 00:08:38,400
Speaker 6: Do you think, Paul, I'm not optimistic. I think go

156
00:08:38,480 --> 00:08:41,959
Speaker 6: back to Xerox, who developed the mouse but did not

157
00:08:42,120 --> 00:08:46,000
Speaker 6: commercialize it. So Microsoft and Apple commercialized it and then

158
00:08:46,000 --> 00:08:49,160
Speaker 6: they lost their innovative edge. I think Intel is so

159
00:08:49,280 --> 00:08:52,199
Speaker 6: far behind at this point. We sold it about three

160
00:08:52,280 --> 00:08:53,920
Speaker 6: years ago because it was clear to me that he

161
00:08:54,400 --> 00:08:58,280
Speaker 6: didn't have the leadership chops to turn the thing around. Instead,

162
00:08:58,320 --> 00:09:02,319
Speaker 6: he went to Washington with his in hand and got

163
00:09:02,480 --> 00:09:04,920
Speaker 6: you attempted to get money, which he did. But now

164
00:09:04,960 --> 00:09:07,600
Speaker 6: you've got to deliver and the foundry business is losing money.

165
00:09:08,080 --> 00:09:11,480
Speaker 6: But the money from Washington is contingent on having a

166
00:09:11,480 --> 00:09:14,439
Speaker 6: foundry business. It wasn't just Pat, I mean, Bob Swan

167
00:09:14,520 --> 00:09:16,800
Speaker 6: ran the company sort of as a placeholder for a

168
00:09:16,840 --> 00:09:19,840
Speaker 6: couple three years, and there was a time when we

169
00:09:19,960 --> 00:09:23,840
Speaker 6: used to joke that AMD existed simply to ensure that

170
00:09:23,880 --> 00:09:26,640
Speaker 6: Microsoft didn't have a monopoly. And look how that has

171
00:09:26,679 --> 00:09:29,040
Speaker 6: shifted with the right leadership. So I think in a

172
00:09:29,080 --> 00:09:31,840
Speaker 6: bull market there are much better places to be and

173
00:09:31,880 --> 00:09:34,160
Speaker 6: you're not even getting paid to wait via the dividend

174
00:09:34,280 --> 00:09:34,959
Speaker 6: any longer.

175
00:09:35,080 --> 00:09:37,280
Speaker 2: So that's sort of your call on tech. You mentioned

176
00:09:37,280 --> 00:09:39,079
Speaker 2: Walmart a couple of times. What other stocks are on

177
00:09:39,120 --> 00:09:39,960
Speaker 2: your radar right now?

178
00:09:40,280 --> 00:09:41,040
Speaker 5: We like a lot.

179
00:09:41,080 --> 00:09:45,000
Speaker 6: We're overweight industrial and industrials and consumer discretionary, and our

180
00:09:45,040 --> 00:09:48,240
Speaker 6: theme is old economy companies that have pivoted to the

181
00:09:48,280 --> 00:09:49,319
Speaker 6: right technologies.

182
00:09:49,600 --> 00:09:50,000
Speaker 7: So in.

183
00:09:51,640 --> 00:09:54,960
Speaker 6: I'm sorry, in industrials, think of Quantus Services, which is

184
00:09:55,480 --> 00:09:58,720
Speaker 6: PWR and Emerson Electric. Those are names that we own,

185
00:09:59,000 --> 00:10:01,640
Speaker 6: along with a number of the fence names. But that's

186
00:10:01,800 --> 00:10:05,280
Speaker 6: that's where we're focused in that space. In consumer discretionary,

187
00:10:05,679 --> 00:10:09,080
Speaker 6: we like, you know, some of the usual suspects, but

188
00:10:09,240 --> 00:10:13,319
Speaker 6: included in that is home Depot and Chipotle, which are

189
00:10:13,320 --> 00:10:16,400
Speaker 6: both in our twelve Best Ideas portfolio, as well as Amazon,

190
00:10:16,720 --> 00:10:18,680
Speaker 6: which is in our twelve Best Ideas portfolio.

191
00:10:18,800 --> 00:10:22,120
Speaker 4: Did you guys change your investment outlook approach the day

192
00:10:22,120 --> 00:10:23,520
Speaker 4: after the election last month?

193
00:10:23,600 --> 00:10:24,439
Speaker 5: Did anything change?

194
00:10:24,679 --> 00:10:24,760
Speaker 7: No?

195
00:10:24,920 --> 00:10:27,960
Speaker 6: We anticipated, I mean as much as you could. And

196
00:10:28,880 --> 00:10:31,079
Speaker 6: you know, I always tell our clients because we've got

197
00:10:31,080 --> 00:10:33,480
Speaker 6: on both sides of the spectrum, right, don't invest your

198
00:10:33,520 --> 00:10:36,840
Speaker 6: politics by great companies that you can own for a lifetime.

199
00:10:37,080 --> 00:10:39,760
Speaker 6: So we've been kind of shifting in the summer during

200
00:10:39,800 --> 00:10:42,719
Speaker 6: the second summer tech swoon in a two years in

201
00:10:42,800 --> 00:10:46,200
Speaker 6: a row, and then broadening out over the last year.

202
00:10:46,320 --> 00:10:48,800
Speaker 6: And I think, you know, we run a clean energy

203
00:10:48,840 --> 00:10:51,640
Speaker 6: infrastructure strategy, but we had it with oil. So I

204
00:10:51,679 --> 00:10:53,920
Speaker 6: think there's there's a you know, it's a little cynical

205
00:10:53,960 --> 00:10:56,600
Speaker 6: that you need that bridge. And so I think there

206
00:10:56,600 --> 00:10:58,160
Speaker 6: are a lot of ways to make money no matter

207
00:10:58,200 --> 00:11:01,080
Speaker 6: who's in office, and so that that's been our.

208
00:11:01,000 --> 00:11:06,640
Speaker 2: Focus for consumer discretionary in particular. Do tariffs raise your

209
00:11:06,640 --> 00:11:07,600
Speaker 2: eyebrows at all?

210
00:11:08,440 --> 00:11:11,520
Speaker 6: I think, Alex, I think it's mostly rhetoric. I mean,

211
00:11:11,559 --> 00:11:14,040
Speaker 6: I know that he uses this as a negotiating tactic.

212
00:11:14,080 --> 00:11:18,319
Speaker 6: We know that from last administration. Could it be problematic?

213
00:11:18,440 --> 00:11:20,600
Speaker 6: I mean, I think the costs just get passed along

214
00:11:20,640 --> 00:11:24,120
Speaker 6: to the consumer, so that has its own implications for inflation.

215
00:11:24,720 --> 00:11:27,439
Speaker 6: But I just don't I just don't see this president

216
00:11:27,480 --> 00:11:31,559
Speaker 6: is so this elect president elect is so focused on

217
00:11:32,160 --> 00:11:34,559
Speaker 6: the markets. I don't think there are going to be

218
00:11:34,600 --> 00:11:38,800
Speaker 6: policies that are designed to cause problems for US companies.

219
00:11:39,000 --> 00:11:40,960
Speaker 6: So that's speculation.

220
00:11:41,080 --> 00:11:43,319
Speaker 4: Folks on the East coast, This is what some folks

221
00:11:43,360 --> 00:11:46,079
Speaker 4: on East coast do they winter in Florida and they

222
00:11:46,080 --> 00:11:47,440
Speaker 4: summer you know, in New Hampton's or.

223
00:11:47,480 --> 00:11:50,720
Speaker 5: Something like nor If you're on't a west, Oh yeah,

224
00:11:50,760 --> 00:11:54,800
Speaker 5: you summer Lake Tahoe and winter in Lake Scottsdale. That's

225
00:11:54,800 --> 00:11:55,400
Speaker 5: how it's done.

226
00:11:55,240 --> 00:11:57,920
Speaker 2: Out o It doesn't it get cold in Scottsdale?

227
00:11:58,000 --> 00:11:59,080
Speaker 6: Yeah, does a little bit.

228
00:11:59,160 --> 00:12:01,320
Speaker 2: But what has cold mean? It doesn't mean this.

229
00:12:01,760 --> 00:12:04,960
Speaker 6: It means, oh, it's forty five degrees outside. I better

230
00:12:05,000 --> 00:12:06,880
Speaker 6: put on another down jacket over my.

231
00:12:06,880 --> 00:12:08,800
Speaker 5: Downvest because you're like fifteen minutes.

232
00:12:08,840 --> 00:12:12,479
Speaker 6: You're wrecked for every other climate when you live in Scottsdale.

233
00:12:12,520 --> 00:12:14,360
Speaker 2: Yeah, yeah, Scotstdale. Isn't it like? You know, you start

234
00:12:14,400 --> 00:12:15,880
Speaker 2: out the morning in a thirty degrees and then it

235
00:12:15,880 --> 00:12:17,800
Speaker 2: gets to be eighty and then it goes back to fifty.

236
00:12:17,880 --> 00:12:21,160
Speaker 2: I can't it's too much. You know, as a woman,

237
00:12:21,200 --> 00:12:23,040
Speaker 2: you already carry a big person. It's heavy, and now

238
00:12:23,080 --> 00:12:26,120
Speaker 2: you got to carry layers, layers, that's what it's too hard.

239
00:12:26,559 --> 00:12:28,439
Speaker 4: Nancy, thank you so much for joining us here in

240
00:12:28,480 --> 00:12:31,520
Speaker 4: our studio. Nancy Tangler, she's the CEOP and she's investment

241
00:12:31,559 --> 00:12:36,240
Speaker 4: officer Laffert Tangler Investments again coming in from the West

242
00:12:36,600 --> 00:12:39,440
Speaker 4: to bring us some of her thoughts on you're.

243
00:12:39,360 --> 00:12:43,600
Speaker 1: Listening to the Bloomberg Intelligence Podcast. Catch us live weekdays

244
00:12:43,640 --> 00:12:46,160
Speaker 1: at ten am Eastern on Apple card Playing and Broyd

245
00:12:46,200 --> 00:12:49,240
Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever

246
00:12:49,320 --> 00:12:52,480
Speaker 1: you get your podcasts, or watch us live on YouTube.

247
00:12:54,240 --> 00:12:56,520
Speaker 2: Joining us now in studio is Sarah Samuels, head of

248
00:12:56,600 --> 00:13:01,360
Speaker 2: Investment Manager Research over at n EPC. She's a partner

249
00:13:01,440 --> 00:13:03,959
Speaker 2: over there and oversees the firm's forty five person investment

250
00:13:04,040 --> 00:13:07,920
Speaker 2: manager selection team across private equity, private debt, private real estate,

251
00:13:08,000 --> 00:13:11,720
Speaker 2: real assets, hedge funds, and public markets. Sarah, it's great

252
00:13:11,720 --> 00:13:13,280
Speaker 2: to have you in studio. Thank you for joining us.

253
00:13:13,400 --> 00:13:15,360
Speaker 7: Thank you very much. It's a pleasure to see you again.

254
00:13:15,480 --> 00:13:17,400
Speaker 2: You too, So little see public markets side for a

255
00:13:17,440 --> 00:13:19,120
Speaker 2: sec because we get plenty of guys with their calls

256
00:13:19,120 --> 00:13:21,599
Speaker 2: blah blah blah. Let's talk about the private market. What

257
00:13:21,679 --> 00:13:23,679
Speaker 2: do you think is going to the hotspots are going

258
00:13:23,720 --> 00:13:24,439
Speaker 2: to be for next year?

259
00:13:24,840 --> 00:13:27,480
Speaker 7: Well, you know, just to set the stage for what's

260
00:13:27,559 --> 00:13:32,199
Speaker 7: on limited partners minds, institutional investors' minds today. They're really

261
00:13:32,400 --> 00:13:35,760
Speaker 7: not seeing the distribution activity that they typically have, so

262
00:13:36,160 --> 00:13:38,600
Speaker 7: distribution to paid in capital is not coming back at

263
00:13:38,600 --> 00:13:40,880
Speaker 7: the pace that they had modeled out, and what that

264
00:13:41,000 --> 00:13:43,280
Speaker 7: means is that there are fewer dollars to commit to

265
00:13:43,559 --> 00:13:46,920
Speaker 7: future funds because it's an equation, it's a closed loop system.

266
00:13:46,960 --> 00:13:50,480
Speaker 7: There isn't unlimited capital. And so we're really hoping that

267
00:13:50,640 --> 00:13:54,880
Speaker 7: we see deal activity and distributions and transaction activity begin

268
00:13:55,040 --> 00:13:57,240
Speaker 7: to pick up in twenty twenty five, and I think

269
00:13:57,280 --> 00:14:00,800
Speaker 7: that it will. We are seeing lower interest rate, which

270
00:14:00,880 --> 00:14:05,000
Speaker 7: helps with the deal economics. We are seeing better valuations,

271
00:14:05,360 --> 00:14:09,320
Speaker 7: and you know, we may see some simulative policy and.

272
00:14:09,400 --> 00:14:12,600
Speaker 4: It looks like from a I guess just maybe from

273
00:14:12,640 --> 00:14:17,160
Speaker 4: a tax perspective, there may be some easier tax treatment

274
00:14:17,200 --> 00:14:19,480
Speaker 4: for some of these gains that some of the limited

275
00:14:19,480 --> 00:14:19,960
Speaker 4: partners have.

276
00:14:20,560 --> 00:14:24,520
Speaker 5: Do you expect this new administration to foster more deal flow?

277
00:14:24,560 --> 00:14:26,560
Speaker 4: We have seen some reporting on that, do you, guys,

278
00:14:26,680 --> 00:14:29,920
Speaker 4: from your perspective, expectancy increase deal flow, whether it's IPOs,

279
00:14:29,920 --> 00:14:32,280
Speaker 4: whether it's and a emdeon.

280
00:14:32,880 --> 00:14:34,880
Speaker 7: Yes. So there are a number of ways that these

281
00:14:34,960 --> 00:14:38,840
Speaker 7: things can happen, that these deals can can actually be executed.

282
00:14:38,920 --> 00:14:41,520
Speaker 7: There's obviously the IPO market which is open today but

283
00:14:41,680 --> 00:14:44,760
Speaker 7: not being tapped broadly because buyers and sellers are not

284
00:14:45,080 --> 00:14:49,600
Speaker 7: the meeting in the middle on price. There are strategic investments,

285
00:14:49,760 --> 00:14:52,920
Speaker 7: so selling to corporations, and we are still seeing a

286
00:14:53,000 --> 00:14:55,280
Speaker 7: lot of that. And then there's sponsored a sponsor, which

287
00:14:55,360 --> 00:14:57,840
Speaker 7: is a private markets firm buying something from another private

288
00:14:57,880 --> 00:15:01,240
Speaker 7: markets firm. And so if we see the more favorable

289
00:15:01,280 --> 00:15:05,800
Speaker 7: tax treatment, if we see lower interest rates, more easy

290
00:15:05,880 --> 00:15:11,240
Speaker 7: antitrust stances as well as regulatory then I think that

291
00:15:11,360 --> 00:15:13,760
Speaker 7: it could be quite a bit easier for smaller companies

292
00:15:13,800 --> 00:15:18,120
Speaker 7: in particular, to either go public or to grow their earnings.

293
00:15:18,320 --> 00:15:20,640
Speaker 2: So typically when I talk to someone in private equity,

294
00:15:20,680 --> 00:15:22,320
Speaker 2: they're like, oh, well, you know it's a vintage, so

295
00:15:22,400 --> 00:15:23,920
Speaker 2: it's a long term, right, So you're gonna give us

296
00:15:23,920 --> 00:15:25,440
Speaker 2: money now, you don't get it back for ten years.

297
00:15:25,560 --> 00:15:27,640
Speaker 2: Like it's fine, Like everything will sort itself out in

298
00:15:27,680 --> 00:15:29,680
Speaker 2: ten years. And then we get to today and then

299
00:15:30,360 --> 00:15:32,160
Speaker 2: I want my money back. It's been ten years and

300
00:15:32,200 --> 00:15:35,560
Speaker 2: it's hard to get that cash back. Does that interrupt

301
00:15:35,680 --> 00:15:39,120
Speaker 2: the popularity of private equity or even a private credit

302
00:15:39,200 --> 00:15:41,800
Speaker 2: at this point, or are these things that are just managed.

303
00:15:41,840 --> 00:15:43,800
Speaker 7: It's a great question. There's a lot to it, So

304
00:15:43,960 --> 00:15:47,040
Speaker 7: it doesn't interrupt the popularity because there is still a

305
00:15:47,120 --> 00:15:50,800
Speaker 7: pretty meaningful premium for private market investments over public markets,

306
00:15:51,080 --> 00:15:53,760
Speaker 7: and public markets alone are not going to get institutions

307
00:15:53,840 --> 00:15:56,360
Speaker 7: to where they need to be. Many institutions haven't expect

308
00:15:56,400 --> 00:15:59,400
Speaker 7: a return of six seven eight percent nomenal, and we're expecting,

309
00:15:59,760 --> 00:16:03,680
Speaker 7: you know, mid single digit returns for US equities, for example,

310
00:16:03,720 --> 00:16:06,360
Speaker 7: over the next ten years, whereas in the private markets,

311
00:16:06,400 --> 00:16:08,359
Speaker 7: we're expecting double digit returns.

312
00:16:09,280 --> 00:16:12,560
Speaker 2: Double digit like ten eleven, twelve percent, or like more

313
00:16:12,600 --> 00:16:14,040
Speaker 2: than that. Orpends on the area.

314
00:16:14,200 --> 00:16:16,240
Speaker 7: So for something like private debt, and there are a

315
00:16:16,440 --> 00:16:19,880
Speaker 7: variety of different flavors in there. There's subordinated capital, there's

316
00:16:20,360 --> 00:16:23,720
Speaker 7: you know, direct lending, which is a lower returning asset today,

317
00:16:23,760 --> 00:16:26,000
Speaker 7: there's a lot of capital in there, there's distress, and

318
00:16:26,040 --> 00:16:28,440
Speaker 7: then there's opportunistic which we're really excited about. And that's

319
00:16:28,480 --> 00:16:31,560
Speaker 7: a catch all term for really creative financing solutions. So

320
00:16:31,680 --> 00:16:34,880
Speaker 7: that's either providing so being a liquidity provider is what

321
00:16:35,120 --> 00:16:37,880
Speaker 7: we are most excited about, both in this year, in

322
00:16:37,960 --> 00:16:40,840
Speaker 7: twenty twenty four and next year. That could be providing

323
00:16:40,880 --> 00:16:44,040
Speaker 7: creative financing solutions for GPS to get capital back to LPs.

324
00:16:44,200 --> 00:16:46,800
Speaker 7: It could be being a lender to real estate, you know,

325
00:16:47,080 --> 00:16:50,920
Speaker 7: with real estate debt through private debt, or by investing

326
00:16:51,120 --> 00:16:54,160
Speaker 7: in secondaries and providing liquidity to GPS and LPs alike.

327
00:16:54,480 --> 00:16:57,560
Speaker 4: Are you surprised we haven't had more IPO activity in

328
00:16:57,600 --> 00:16:59,280
Speaker 4: twenty twenty four and the S and p's of twenty

329
00:16:59,320 --> 00:17:01,080
Speaker 4: five percent back in the day, I would have been

330
00:17:01,120 --> 00:17:02,000
Speaker 4: ripping companies.

331
00:17:01,760 --> 00:17:03,120
Speaker 5: Out of look into the marketplaces.

332
00:17:03,640 --> 00:17:06,600
Speaker 4: I mean, we get a ten percent move in the market,

333
00:17:06,760 --> 00:17:09,520
Speaker 4: we're on the phone straight for thirty six hours calling everybody.

334
00:17:09,800 --> 00:17:14,040
Speaker 7: So I have IPO activity has honestly not historically been

335
00:17:14,160 --> 00:17:17,320
Speaker 7: the line's share of exits, so but it is very

336
00:17:17,400 --> 00:17:19,800
Speaker 7: important and it is open. So I think it's really

337
00:17:19,840 --> 00:17:23,439
Speaker 7: interesting that we haven't seen more companies price and go public.

338
00:17:24,280 --> 00:17:27,480
Speaker 7: Many cases, especially in venture capital, the last round financing

339
00:17:27,760 --> 00:17:31,399
Speaker 7: is the valu valuation methodology that is used, and that

340
00:17:31,520 --> 00:17:35,160
Speaker 7: last round of financing won't reset until they price another round,

341
00:17:35,480 --> 00:17:37,800
Speaker 7: and so we are seeing lots of companies that are

342
00:17:37,840 --> 00:17:41,560
Speaker 7: held at valuations that are not actually reasonable and there

343
00:17:41,600 --> 00:17:42,720
Speaker 7: will need to be a reconing.

344
00:17:43,560 --> 00:17:46,960
Speaker 2: Where in say, private credit is the most interesting, and

345
00:17:47,040 --> 00:17:49,440
Speaker 2: how do you look at it? Is it like industry

346
00:17:49,560 --> 00:17:53,240
Speaker 2: based is in how do you break it down into buckets?

347
00:17:53,560 --> 00:17:57,160
Speaker 7: Yeah, so we are looking at things like distressed debt,

348
00:17:57,200 --> 00:18:00,520
Speaker 7: which is really looking to take advantage of the type

349
00:18:00,560 --> 00:18:03,600
Speaker 7: of financially not necessarily like sector based right now. Well,

350
00:18:03,680 --> 00:18:05,800
Speaker 7: and then we're also you know, pretty interested in as

351
00:18:05,920 --> 00:18:12,199
Speaker 7: a backed lending, so abl investing, and so there are

352
00:18:12,440 --> 00:18:14,080
Speaker 7: there are a number of other areas and ways to

353
00:18:14,119 --> 00:18:17,119
Speaker 7: play this, but I would say that direct blending is

354
00:18:17,560 --> 00:18:20,640
Speaker 7: becoming more and more mainstream and less of a premium there.

355
00:18:21,280 --> 00:18:24,440
Speaker 4: When I got to the board at a large university,

356
00:18:24,480 --> 00:18:26,480
Speaker 4: I was shocked to see how much is allocated to

357
00:18:26,520 --> 00:18:30,320
Speaker 4: private getting in private alternatives broadly defined, not the ten

358
00:18:30,359 --> 00:18:33,360
Speaker 4: to fifteen percent that I grew up with, forty yes

359
00:18:33,640 --> 00:18:34,000
Speaker 4: and more.

360
00:18:34,240 --> 00:18:36,199
Speaker 7: And I've been in that set. I've worked at an

361
00:18:36,280 --> 00:18:37,520
Speaker 7: endowment and like, so.

362
00:18:37,680 --> 00:18:39,920
Speaker 5: In twenty twenty two comes along twenty twenty three, I'm like,

363
00:18:40,080 --> 00:18:40,880
Speaker 5: we're the marks down.

364
00:18:40,960 --> 00:18:41,160
Speaker 3: Kids.

365
00:18:41,760 --> 00:18:42,720
Speaker 5: Didn't get a mark down.

366
00:18:43,280 --> 00:18:46,200
Speaker 4: It's such a scam that private business they don't mark

367
00:18:46,680 --> 00:18:48,600
Speaker 4: That's why I'm so shocked that they allocate so.

368
00:18:48,720 --> 00:18:49,200
Speaker 5: Much to that.

369
00:18:49,800 --> 00:18:54,160
Speaker 4: Is that A Are you surprised that universities have taken

370
00:18:54,200 --> 00:18:55,560
Speaker 4: such an aggressive.

371
00:18:55,280 --> 00:18:57,240
Speaker 5: View of their portfolios of really its alternatives.

372
00:18:57,600 --> 00:19:01,360
Speaker 7: I'm not surprised. As I mentioned earlier, the return premium

373
00:19:01,560 --> 00:19:04,600
Speaker 7: is there over public markets. You do need a chief

374
00:19:04,640 --> 00:19:07,960
Speaker 7: investment officer mindset when you're allocating capital to private equity.

375
00:19:08,200 --> 00:19:09,600
Speaker 7: So you don't want to lock up your capital in

376
00:19:09,760 --> 00:19:11,960
Speaker 7: just any investment. You want to make sure that you're

377
00:19:12,000 --> 00:19:13,840
Speaker 7: being paid to lock up your capital, and you can

378
00:19:13,920 --> 00:19:16,600
Speaker 7: do that looking at public market equivalents or other measures.

379
00:19:17,440 --> 00:19:21,880
Speaker 7: And you know, these universities and public pensions for that matter,

380
00:19:21,920 --> 00:19:24,440
Speaker 7: have pretty lofty return targets and they need to get there.

381
00:19:24,640 --> 00:19:26,080
Speaker 7: The thing to look at is how much of the

382
00:19:26,080 --> 00:19:29,000
Speaker 7: operating budget is the institution supporting? Is it thirty forty

383
00:19:29,080 --> 00:19:31,399
Speaker 7: fifty percent? And if it is, then be really careful

384
00:19:31,440 --> 00:19:33,680
Speaker 7: with your liquidity guardrails. And that's something that we do

385
00:19:33,760 --> 00:19:36,080
Speaker 7: for our clients at ANYPC. It's a number of simple

386
00:19:36,160 --> 00:19:38,639
Speaker 7: but very powerful metrics. Understand if we get out over

387
00:19:38,720 --> 00:19:40,680
Speaker 7: our skis, and if we had those in place prior

388
00:19:40,760 --> 00:19:42,680
Speaker 7: to two thousand and eight, a lot of heartache would

389
00:19:42,680 --> 00:19:43,280
Speaker 7: have been avoided.

390
00:19:44,119 --> 00:19:46,640
Speaker 2: That's really interesting, Hey, Sarah, really great stuff. I really

391
00:19:46,680 --> 00:19:48,720
Speaker 2: appreciate you. How you coming in, Sarah Samuels. We will

392
00:19:48,760 --> 00:19:51,400
Speaker 2: definitely be seeing you soon joining us from an EPC.

393
00:19:51,640 --> 00:19:52,640
Speaker 2: Thank you so very much.

394
00:19:53,040 --> 00:19:57,640
Speaker 1: This is the Bloomberg Intelligence Podcast, available on apples, potter Pie,

395
00:19:57,760 --> 00:20:00,640
Speaker 1: and anywhere else you can get your podcasts. Usen live

396
00:20:00,760 --> 00:20:04,120
Speaker 1: each weekday ten am tonoon Eastern on Bloomberg dot com,

397
00:20:04,480 --> 00:20:07,840
Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app.

398
00:20:07,960 --> 00:20:10,960
Speaker 1: You can also watch us live every weekday on YouTube

399
00:20:11,200 --> 00:20:12,960
Speaker 1: and always on the Bloomberg terminal