1 00:00:00,800 --> 00:00:04,040 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 2 00:00:04,040 --> 00:00:06,920 Speaker 1: my co host Matt Miller. Every business day, we bring 3 00:00:06,960 --> 00:00:11,520 Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along 4 00:00:11,520 --> 00:00:15,600 Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast 5 00:00:15,600 --> 00:00:18,439 Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:22,439 Speaker 1: at Bloomberg dot com slash podcast. So you know, I 7 00:00:22,480 --> 00:00:24,840 Speaker 1: got lead class cow here in the studio. He covers 8 00:00:24,840 --> 00:00:28,280 Speaker 1: all the transportation, all the logistics, so he's the blame 9 00:00:28,360 --> 00:00:30,080 Speaker 1: for all the supply chain stuff. But he does that 10 00:00:30,160 --> 00:00:32,159 Speaker 1: for Bloomberg Intelligence. And I was just telling him, I 11 00:00:32,200 --> 00:00:35,840 Speaker 1: just read this book book Everything, which is a book 12 00:00:36,159 --> 00:00:39,839 Speaker 1: basically about the global container shipping business. And it was 13 00:00:39,880 --> 00:00:42,120 Speaker 1: a summer beach read on the Jersey Shore because you 14 00:00:42,200 --> 00:00:43,760 Speaker 1: look at these big ships off the coast of the 15 00:00:43,840 --> 00:00:45,519 Speaker 1: Jersey Shore and you think about it, and it got 16 00:00:45,560 --> 00:00:47,760 Speaker 1: me thinking, that's a tough business. Boy, I mean, that 17 00:00:47,920 --> 00:00:50,360 Speaker 1: is a tough business. And I saw that Marsk, you know, 18 00:00:50,400 --> 00:00:52,479 Speaker 1: one of the biggest container shipping companies. They reported some 19 00:00:52,560 --> 00:00:55,120 Speaker 1: numbers today. Lee, talk to us about Marsk and then 20 00:00:55,480 --> 00:00:57,440 Speaker 1: help us think about where we are in this global 21 00:00:57,440 --> 00:01:01,160 Speaker 1: supply chain challenge that really is a global sure shures 22 00:01:01,160 --> 00:01:04,080 Speaker 1: omarics because like the number one and number two global 23 00:01:04,120 --> 00:01:06,880 Speaker 1: container liner depending on the day in the month. Um. 24 00:01:06,959 --> 00:01:09,360 Speaker 1: But you know, they reported great earnings and a lot 25 00:01:09,360 --> 00:01:11,320 Speaker 1: of that had to do with going on their ocean business, 26 00:01:11,400 --> 00:01:14,280 Speaker 1: which is really cool to what they are, and that's 27 00:01:14,319 --> 00:01:17,600 Speaker 1: been driven by really really strong contractual rates. Um. You know. 28 00:01:17,640 --> 00:01:19,760 Speaker 1: What we have seen though, is that you know, we're 29 00:01:19,760 --> 00:01:22,399 Speaker 1: probably at peak earnings for these kind of container liner 30 00:01:22,840 --> 00:01:25,480 Speaker 1: companies and rates are gonna get a lot weaker. And 31 00:01:25,520 --> 00:01:27,920 Speaker 1: the spot market rates are down around seventy eight percent 32 00:01:28,080 --> 00:01:30,399 Speaker 1: year of a year, where at levels that we haven't 33 00:01:30,440 --> 00:01:32,800 Speaker 1: seen since they move a lot, don't they do. It's 34 00:01:32,840 --> 00:01:35,240 Speaker 1: it's and its because it's it's a really common I mean, 35 00:01:35,480 --> 00:01:37,880 Speaker 1: the liners won't tell you this, but it's a commoditized business. 36 00:01:37,880 --> 00:01:39,560 Speaker 1: You know. They they ship a box from point A 37 00:01:39,680 --> 00:01:42,959 Speaker 1: to point b uh, and the lower price, the lowest price, 38 00:01:43,040 --> 00:01:45,560 Speaker 1: that's the new price. And so it's it happens to 39 00:01:45,600 --> 00:01:47,560 Speaker 1: be a very irrational market because a lot of the 40 00:01:47,600 --> 00:01:51,360 Speaker 1: players are are subsidized if you will, by uh, you know, 41 00:01:51,600 --> 00:01:53,880 Speaker 1: the country of origin of where they are. Because most 42 00:01:53,880 --> 00:01:56,720 Speaker 1: of the players are the major players are based out 43 00:01:56,720 --> 00:01:59,000 Speaker 1: of Asia. There's a couple of large European players that 44 00:01:59,040 --> 00:02:00,760 Speaker 1: are a little more I would call them disciplined and 45 00:02:00,840 --> 00:02:03,160 Speaker 1: rational when it comes to pricing. So you know, we 46 00:02:03,240 --> 00:02:07,520 Speaker 1: expect like we're sailing past peak earnings. Uh, and you 47 00:02:07,520 --> 00:02:08,720 Speaker 1: know next year is going to be a lot more 48 00:02:08,760 --> 00:02:13,400 Speaker 1: challenging because of that irrational behavior. There's a great chart 49 00:02:13,680 --> 00:02:16,200 Speaker 1: rolling around in the Bloomber terminal somewhere the shows these 50 00:02:16,240 --> 00:02:19,320 Speaker 1: container freight rates just completely making a U turn and 51 00:02:19,360 --> 00:02:21,320 Speaker 1: they're now back to I want to say, pre pandemic 52 00:02:21,400 --> 00:02:26,120 Speaker 1: levels are almost there. Um what happened to where in 53 00:02:26,160 --> 00:02:29,680 Speaker 1: a supply chain crisis Bush, by the way, has not 54 00:02:29,720 --> 00:02:31,840 Speaker 1: been fixed yet as far as I as far as 55 00:02:31,840 --> 00:02:34,240 Speaker 1: I understand, So why are these freight rates coming down 56 00:02:34,280 --> 00:02:39,280 Speaker 1: if there's still this premium in theory to to bring 57 00:02:39,320 --> 00:02:41,720 Speaker 1: things from abroad? Yeah, I mean it really has. It 58 00:02:41,800 --> 00:02:45,119 Speaker 1: stems first and foremost from demand. So demand is off. 59 00:02:45,200 --> 00:02:47,760 Speaker 1: So typically around now is what we call the peak 60 00:02:47,800 --> 00:02:50,440 Speaker 1: season for freight as like retailers get ready for Christmas 61 00:02:50,880 --> 00:02:52,679 Speaker 1: UH and the holidays, and as you know, a lot 62 00:02:52,680 --> 00:02:55,760 Speaker 1: of like large big box retailers are complaining about their 63 00:02:55,760 --> 00:02:58,160 Speaker 1: inventory is a little too high. Uh and then you 64 00:02:58,200 --> 00:03:01,280 Speaker 1: have that you throw on top of that high inflation. Uh. 65 00:03:01,320 --> 00:03:04,600 Speaker 1: So the you know, the consumer has been relatively uh resilient. 66 00:03:04,960 --> 00:03:07,080 Speaker 1: But the reality is is this peak season is going 67 00:03:07,120 --> 00:03:09,680 Speaker 1: to be very muted. There might be a little bit 68 00:03:09,680 --> 00:03:13,040 Speaker 1: of of of a benefit not for the liner industry, 69 00:03:13,080 --> 00:03:16,160 Speaker 1: but maybe for the trucking industry, um, you know in December. 70 00:03:16,680 --> 00:03:19,880 Speaker 1: But you know, all expectations are is the peak is 71 00:03:19,880 --> 00:03:21,920 Speaker 1: pretty much a wash this year. And some of that 72 00:03:21,960 --> 00:03:24,760 Speaker 1: has to do with, um, you know, the demand trends 73 00:03:24,800 --> 00:03:26,480 Speaker 1: that I talked about, but also a lot of it 74 00:03:26,480 --> 00:03:28,760 Speaker 1: has to do with last year. The comparables were just 75 00:03:28,880 --> 00:03:32,080 Speaker 1: off the chart. So all right, you covered not only 76 00:03:32,120 --> 00:03:35,320 Speaker 1: you cover the whole transportation supply chain, if you will, 77 00:03:35,400 --> 00:03:39,600 Speaker 1: the big uh ocean going ships that the railroads, the trucks, 78 00:03:39,640 --> 00:03:41,960 Speaker 1: the whole thing. Let's talk about the railroads here. I 79 00:03:42,000 --> 00:03:46,280 Speaker 1: get my container into a port, Um, are the rails 80 00:03:46,280 --> 00:03:48,200 Speaker 1: prepared to get it to where it needs to go 81 00:03:48,280 --> 00:03:50,200 Speaker 1: in a timely fashion and in a way that they 82 00:03:50,200 --> 00:03:53,240 Speaker 1: can make money. Yeah? So the rails are you know, 83 00:03:53,280 --> 00:03:55,960 Speaker 1: one of the one of the best businesses in my opinion, 84 00:03:56,360 --> 00:03:59,400 Speaker 1: with freight transportation. You know, they have really high margin business. 85 00:03:59,760 --> 00:04:03,080 Speaker 1: I've to see the barrier's entry are pretty high. No one, 86 00:04:03,440 --> 00:04:07,240 Speaker 1: no one laying down track in North America. But what 87 00:04:07,320 --> 00:04:09,840 Speaker 1: the Rails they're the problems that they were facing really 88 00:04:09,880 --> 00:04:12,480 Speaker 1: has to do with labor. Uh. You know, a they 89 00:04:12,520 --> 00:04:16,760 Speaker 1: had a tentative agreement that wasn't ratified by two unions 90 00:04:16,760 --> 00:04:19,200 Speaker 1: and there's a true there's a real risk of of 91 00:04:19,200 --> 00:04:22,480 Speaker 1: of a of a strike in mid November. We think 92 00:04:22,520 --> 00:04:25,599 Speaker 1: that risk is pretty darn low. Um. And what the 93 00:04:25,680 --> 00:04:28,919 Speaker 1: Rails have been doing over the last i'd say, since 94 00:04:29,000 --> 00:04:33,680 Speaker 1: the depth of the pandemic, is trying to resource their 95 00:04:33,720 --> 00:04:36,920 Speaker 1: networks through hiring and training new employees. And what they 96 00:04:36,920 --> 00:04:40,200 Speaker 1: found is, you know, in in cycles passed, they would, uh, 97 00:04:40,200 --> 00:04:42,480 Speaker 1: they would furlough their employees and they call them back 98 00:04:42,520 --> 00:04:44,159 Speaker 1: up and the employees whould want to come back. But 99 00:04:44,240 --> 00:04:47,040 Speaker 1: this time around, for some reason, the employers are like, yeah, 100 00:04:47,160 --> 00:04:49,560 Speaker 1: I've had enough of being a railroader. I'm gonna go 101 00:04:49,640 --> 00:04:52,239 Speaker 1: work in a warehouse, or I'm gonna go do something else, 102 00:04:52,600 --> 00:04:55,480 Speaker 1: or maybe I'm gonna retire early. Who knows, because you know, 103 00:04:55,839 --> 00:04:58,120 Speaker 1: you know, it is a hard job. It's outside, so 104 00:04:58,160 --> 00:05:02,520 Speaker 1: you're in the hundred degree heat, the zero a degree cold, UM, 105 00:05:02,560 --> 00:05:05,839 Speaker 1: but you know it is is a very well paid, unionized, 106 00:05:06,000 --> 00:05:11,680 Speaker 1: unionized job. Thank you, Paul coming to my rescue with 107 00:05:11,680 --> 00:05:14,600 Speaker 1: the mike. UM. Some of these issues that haven't been 108 00:05:14,600 --> 00:05:17,680 Speaker 1: solved yet from from the rail strike perspective that UM 109 00:05:17,720 --> 00:05:19,920 Speaker 1: that we were just talking about. I believe, correct me 110 00:05:19,960 --> 00:05:22,320 Speaker 1: if I'm wrong. I think November nine, the next day 111 00:05:22,600 --> 00:05:25,839 Speaker 1: that we're looking for. Um, if the kind of voting 112 00:05:25,880 --> 00:05:29,240 Speaker 1: and negotiations don't fully go through, what are the ripple 113 00:05:29,279 --> 00:05:32,240 Speaker 1: effects here? How bad could it get? I mean, you 114 00:05:32,279 --> 00:05:33,960 Speaker 1: know the stats that I've seen, and I'm sure a 115 00:05:34,000 --> 00:05:35,760 Speaker 1: lot of people have seen that are listening to this, 116 00:05:35,880 --> 00:05:38,599 Speaker 1: it's it could cost the economy two billion dollars a day. 117 00:05:39,279 --> 00:05:41,320 Speaker 1: So no one wants that. I mean, the unions don't 118 00:05:41,360 --> 00:05:44,560 Speaker 1: want that, the railroads don't want that, our politicians don't 119 00:05:44,600 --> 00:05:47,120 Speaker 1: want that. I don't want that. UM. You know, so 120 00:05:47,279 --> 00:05:50,120 Speaker 1: it will really muck up supply Chaine, just at a 121 00:05:50,160 --> 00:05:54,320 Speaker 1: time when supply chains are trying to normalize, UM, and 122 00:05:54,320 --> 00:05:57,120 Speaker 1: the speed of that normalization is really being driven by 123 00:05:57,200 --> 00:06:00,360 Speaker 1: labor availability. And you know that's why we're you know, uh, 124 00:06:00,560 --> 00:06:03,080 Speaker 1: you know, Paul, we're talking off the air before like 125 00:06:03,120 --> 00:06:05,360 Speaker 1: why We're not using the R word. It is because 126 00:06:05,440 --> 00:06:08,960 Speaker 1: you know, the consumer is still pretty resilient. Um. You know, 127 00:06:09,440 --> 00:06:13,400 Speaker 1: you might get a recession that is shallow uh and short, 128 00:06:13,880 --> 00:06:15,919 Speaker 1: but the end of the day, you know, freight demand 129 00:06:16,080 --> 00:06:18,880 Speaker 1: doesn't look terrible. Over the next twelve months, it may 130 00:06:18,920 --> 00:06:21,000 Speaker 1: not be as great as it was last year, which 131 00:06:21,000 --> 00:06:24,479 Speaker 1: again right reopening, it was a real, real tough comp Alright, Lee, 132 00:06:24,560 --> 00:06:26,560 Speaker 1: great Stuff has always loved getting you here in our 133 00:06:26,600 --> 00:06:28,960 Speaker 1: Bloomberg Interactor broken studio. Even better to get a gold 134 00:06:29,000 --> 00:06:32,160 Speaker 1: star for that, Lee Glasgow, sector head senior annalys He 135 00:06:32,200 --> 00:06:36,320 Speaker 1: comes all the freight transportation logistics, think freight containers, railroads, 136 00:06:36,400 --> 00:06:38,839 Speaker 1: trucks and everything uh in between. He does that for 137 00:06:38,839 --> 00:06:41,680 Speaker 1: Bloomberg Intelligence to be doing that on Wall Street four decades, 138 00:06:41,720 --> 00:06:47,520 Speaker 1: so we appreciate getting his insights here. All right, this 139 00:06:47,560 --> 00:06:49,200 Speaker 1: is what you do or this is what I do? 140 00:06:49,240 --> 00:06:51,480 Speaker 1: What I want to talk fixed income? I go, I end, 141 00:06:51,640 --> 00:06:53,720 Speaker 1: go on the Bloomberg terminal. That gets me the Bloomberg 142 00:06:53,720 --> 00:06:57,120 Speaker 1: Index browser. I scrolled down to the Bloomberg u S 143 00:06:57,160 --> 00:07:02,880 Speaker 1: Aggregate Total return Value unhedged index four bonds. It's a 144 00:07:03,040 --> 00:07:06,840 Speaker 1: fifteen point five percent this year and fixed income nerves 145 00:07:06,880 --> 00:07:10,200 Speaker 1: tell me that has never happened. So of course I 146 00:07:10,240 --> 00:07:12,280 Speaker 1: feel like I got to jump in the deep end 147 00:07:12,280 --> 00:07:14,600 Speaker 1: of the pool both feet and start buying. But let 148 00:07:14,600 --> 00:07:16,840 Speaker 1: me check with the professional before I do that. Natalie 149 00:07:16,840 --> 00:07:19,640 Speaker 1: treviorth I, head of investment grade credit Strategy of Paident 150 00:07:19,640 --> 00:07:22,880 Speaker 1: and Regal, joins us. So, Natalie, it's got to be 151 00:07:22,920 --> 00:07:25,840 Speaker 1: the mother of all times to buy fixed income today? 152 00:07:26,000 --> 00:07:29,200 Speaker 1: Am my writer wrong on that one? I think you're 153 00:07:29,240 --> 00:07:32,360 Speaker 1: absolutely right. It's never been more attractive. The only issue 154 00:07:32,400 --> 00:07:34,640 Speaker 1: is that keeps getting more and more attractive every day, 155 00:07:34,760 --> 00:07:37,480 Speaker 1: so you continue to see these negative returns roll in. 156 00:07:38,840 --> 00:07:41,400 Speaker 1: So what's kind of just give us as we now 157 00:07:41,440 --> 00:07:44,720 Speaker 1: have you know, nine ten months of hindsight here for 158 00:07:44,840 --> 00:07:47,120 Speaker 1: the fixed income market. How did we get to this 159 00:07:47,200 --> 00:07:49,800 Speaker 1: point here and how did it become like? Again, smart 160 00:07:49,800 --> 00:07:51,840 Speaker 1: people like you tell me we've never seen this in 161 00:07:51,920 --> 00:07:55,680 Speaker 1: fixed income before. Yeah, so we are priced for the 162 00:07:55,760 --> 00:07:58,200 Speaker 1: perfection and credit at the end of two thousand and 163 00:07:58,240 --> 00:08:02,240 Speaker 1: twenty one, weet very anemic credit spread, particularly in the 164 00:08:02,240 --> 00:08:04,000 Speaker 1: front end of the curve. It was hard to even 165 00:08:04,040 --> 00:08:06,480 Speaker 1: get half a percent and yield, and this forced some 166 00:08:06,520 --> 00:08:09,440 Speaker 1: investors down the credit spectrum from investment grade down to 167 00:08:09,560 --> 00:08:12,920 Speaker 1: high yield to clos. But what we see now is 168 00:08:12,960 --> 00:08:15,320 Speaker 1: really a rate driven move by all of the said 169 00:08:15,360 --> 00:08:18,240 Speaker 1: hikes so far that has driven these negative returns, and 170 00:08:18,280 --> 00:08:20,240 Speaker 1: I think it's gone a lot further than people were 171 00:08:20,280 --> 00:08:23,080 Speaker 1: anticipating at the beginning of the year. And as we 172 00:08:23,120 --> 00:08:25,720 Speaker 1: get closer to the end of the hiking cycle, it 173 00:08:25,800 --> 00:08:28,440 Speaker 1: feels like investors are getting a little bit more confident 174 00:08:28,480 --> 00:08:31,600 Speaker 1: about wanting to redip their toes into the fixed income market. 175 00:08:31,640 --> 00:08:33,000 Speaker 1: To know, the two year at four and a half 176 00:08:33,040 --> 00:08:36,040 Speaker 1: to send is looking pretty attractive. Natalie, I love that 177 00:08:36,080 --> 00:08:38,440 Speaker 1: you brought up the negative yielding debt because it really 178 00:08:38,480 --> 00:08:40,040 Speaker 1: wasn't that long ago. Is only a year and year 179 00:08:40,040 --> 00:08:43,280 Speaker 1: and a half ago. Now you can actually make money 180 00:08:43,280 --> 00:08:45,360 Speaker 1: by having the privilege of lending to a lot of 181 00:08:45,360 --> 00:08:48,480 Speaker 1: these sovereign at governments. But I have to ask, in 182 00:08:48,480 --> 00:08:50,240 Speaker 1: this year and year and a half the amount of 183 00:08:50,280 --> 00:08:54,360 Speaker 1: bond volatility, is that not discouraging in itself to hop 184 00:08:54,360 --> 00:08:59,480 Speaker 1: into the bond market. Yeah, that bond volatility that we've 185 00:08:59,520 --> 00:09:02,680 Speaker 1: seen in spreads has been a little bit discouraging, But 186 00:09:02,800 --> 00:09:05,480 Speaker 1: you would think that as the absolute yield rise as 187 00:09:05,520 --> 00:09:08,720 Speaker 1: an underlying treasury rates that investors should demand a higher 188 00:09:08,800 --> 00:09:13,679 Speaker 1: risk premium for dipping down from treasuries into corporate. So 189 00:09:13,800 --> 00:09:16,800 Speaker 1: I mean, I look at the two year here four 190 00:09:16,840 --> 00:09:20,840 Speaker 1: point five. There's no real reason to take any extra 191 00:09:20,920 --> 00:09:24,319 Speaker 1: risk by going out on the yield curve? Is there? Well, 192 00:09:24,360 --> 00:09:26,360 Speaker 1: there is if you think things are going to get 193 00:09:26,360 --> 00:09:28,280 Speaker 1: better and with the said is able to walk a 194 00:09:28,360 --> 00:09:30,840 Speaker 1: straight of soft landing because you can get six percent 195 00:09:30,920 --> 00:09:34,160 Speaker 1: by staying in pretty high quality front and investment, great corporate. 196 00:09:34,760 --> 00:09:36,800 Speaker 1: So if we were to get a pause soon in 197 00:09:36,840 --> 00:09:39,640 Speaker 1: the SuDS hiking cycle, and if credit spreads were to 198 00:09:40,000 --> 00:09:42,840 Speaker 1: um tight and next year, you could actually get incremental 199 00:09:42,880 --> 00:09:46,040 Speaker 1: positive return by taking that extra risk by moving into 200 00:09:46,120 --> 00:09:49,920 Speaker 1: credit as opposed to treasuries alone. Well, Paul brings up 201 00:09:50,080 --> 00:09:51,640 Speaker 1: the two year, and if actually look at the two 202 00:09:51,720 --> 00:09:53,400 Speaker 1: year in the ten year and they kind of overlay 203 00:09:53,400 --> 00:09:57,160 Speaker 1: it would say the terminal rates of what five percent, 204 00:09:57,240 --> 00:09:59,839 Speaker 1: which is now being priced in peak in March three, 205 00:10:00,120 --> 00:10:02,280 Speaker 1: it kind of seems like there's still a long way 206 00:10:02,360 --> 00:10:05,040 Speaker 1: to go when it comes to the yield. How high 207 00:10:05,120 --> 00:10:08,920 Speaker 1: can it go? Well, we think the curve can remain 208 00:10:09,120 --> 00:10:11,760 Speaker 1: inverted for a while, so it wouldn't be too surprising 209 00:10:11,800 --> 00:10:13,520 Speaker 1: to see the two year move up higher to that 210 00:10:13,600 --> 00:10:16,800 Speaker 1: five percent, particularly, we think that that's gonna pause at 211 00:10:16,800 --> 00:10:19,920 Speaker 1: this higher range. But we are seeing some investors who 212 00:10:19,960 --> 00:10:24,160 Speaker 1: are anticipating cuts eventually, maybe not next year but the 213 00:10:24,200 --> 00:10:26,800 Speaker 1: following year, and think locking in four percent on the 214 00:10:26,840 --> 00:10:28,960 Speaker 1: ten year plus adding some credit spread on top of 215 00:10:28,960 --> 00:10:32,480 Speaker 1: that is still attractive to locking longer term higher yields 216 00:10:32,600 --> 00:10:36,600 Speaker 1: rather than before the reinvesting in a couple of years. Natalie, 217 00:10:36,640 --> 00:10:39,120 Speaker 1: I started my career and as a credit research guy 218 00:10:39,160 --> 00:10:40,839 Speaker 1: at the Chase Manhattan Bank. Do I have to break 219 00:10:40,880 --> 00:10:44,000 Speaker 1: out some of my old credit models if I'm worried 220 00:10:44,000 --> 00:10:47,640 Speaker 1: about a recession here and credit quality and all that stuff. Well, 221 00:10:47,640 --> 00:10:51,000 Speaker 1: the good news is credit fundamentals are still actually pretty strong. 222 00:10:51,160 --> 00:10:53,480 Speaker 1: Some of the negative news that we're seen in the 223 00:10:53,559 --> 00:10:56,559 Speaker 1: equity market, such as dividend cuts are slowing down a 224 00:10:56,640 --> 00:11:00,920 Speaker 1: share buybacks are actually positive for bondholders. Companies are really 225 00:11:00,960 --> 00:11:03,240 Speaker 1: focused on managing their balance sheets and want to keep 226 00:11:03,360 --> 00:11:05,560 Speaker 1: leverage and checked, so we don't think there's actually going 227 00:11:05,600 --> 00:11:08,600 Speaker 1: to be a big downgrade wave here um as companies 228 00:11:08,679 --> 00:11:11,200 Speaker 1: really want to make sure that they're maintaining their investment 229 00:11:11,240 --> 00:11:17,400 Speaker 1: grade ratings. I thought we were done. We're not. Let 230 00:11:17,400 --> 00:11:20,480 Speaker 1: me ask you about simply the high yield market here, 231 00:11:20,520 --> 00:11:23,200 Speaker 1: there seems to be some divergence in terms of the 232 00:11:23,240 --> 00:11:29,199 Speaker 1: commodity moves and commodity forecasts. If you are perhaps forecasting 233 00:11:29,200 --> 00:11:31,800 Speaker 1: a recession, a lot of these oil prices and oil 234 00:11:31,840 --> 00:11:34,120 Speaker 1: contracts were the first to fall, of the first to collapse. 235 00:11:34,440 --> 00:11:38,199 Speaker 1: What does that do to high yield? Yeah, we think 236 00:11:38,240 --> 00:11:40,240 Speaker 1: that could be a little bit challenging for high yield, 237 00:11:40,240 --> 00:11:42,520 Speaker 1: but we are not forecasting the collapse. And the energy 238 00:11:42,559 --> 00:11:44,480 Speaker 1: prices we think they stay kind of in this a 239 00:11:44,600 --> 00:11:47,000 Speaker 1: D range or higher, and at this level of these 240 00:11:47,000 --> 00:11:49,800 Speaker 1: companies are still are still throwing off quite a bit 241 00:11:49,840 --> 00:11:52,160 Speaker 1: of free cash flow. We do think a lot of 242 00:11:52,320 --> 00:11:56,439 Speaker 1: energy bonds of already priced in these um strong markets, 243 00:11:56,440 --> 00:11:58,360 Speaker 1: So we think there could be some potential downside, but 244 00:11:58,360 --> 00:12:00,320 Speaker 1: we don't think there's gonna be another wave of down 245 00:12:00,400 --> 00:12:04,480 Speaker 1: grades like you saw immediately post the pandemic. All right, Natalie, 246 00:12:04,559 --> 00:12:07,960 Speaker 1: great stuff. Really appreciate getting some of your time this morning, Natalie. 247 00:12:08,040 --> 00:12:13,040 Speaker 1: Natalie Trevis, head of investment grade credit strategy at Paid 248 00:12:13,040 --> 00:12:19,240 Speaker 1: and Regals. All right, let's talk technology here. You know, 249 00:12:19,240 --> 00:12:22,880 Speaker 1: we had tech earnings over the last week. Broadly defined, 250 00:12:22,960 --> 00:12:26,640 Speaker 1: they were disappointing particularly have any advertising exposure. And it 251 00:12:26,760 --> 00:12:28,160 Speaker 1: kind of got me thinking, is there's gonna be a 252 00:12:28,200 --> 00:12:30,520 Speaker 1: little bit of a reset in this market about how 253 00:12:30,520 --> 00:12:33,320 Speaker 1: the market thinks about technology. So let's bring an Anora Rana. 254 00:12:33,520 --> 00:12:36,440 Speaker 1: He's a senior software I T Services animlysts for Bloomberg Intelligence, 255 00:12:36,520 --> 00:12:39,240 Speaker 1: joining us here in our Bloomberg Interactive Broker studio. So 256 00:12:39,760 --> 00:12:42,760 Speaker 1: you know, I think really antorwag. Since the Great Financial Crisis, 257 00:12:43,240 --> 00:12:47,360 Speaker 1: tech broadly defined has led this market higher. It's been 258 00:12:47,559 --> 00:12:51,480 Speaker 1: the leader. It's had the premium valuation, the premium performance. 259 00:12:52,440 --> 00:12:54,960 Speaker 1: Is that narrative? Is that changed in the last week 260 00:12:55,000 --> 00:12:58,080 Speaker 1: to ten days. Yes, I think the biggest thing is 261 00:12:58,120 --> 00:13:01,600 Speaker 1: way does it welcome from evaluation interview. We have seen 262 00:13:01,760 --> 00:13:04,880 Speaker 1: massive spending in technology over the last five years. The 263 00:13:04,920 --> 00:13:08,640 Speaker 1: pandemic spread it up, so companies were spending quite a 264 00:13:08,640 --> 00:13:11,400 Speaker 1: bit on that. Then now when you see a recession 265 00:13:11,400 --> 00:13:14,199 Speaker 1: on the horizon, you do pull back a little bit. 266 00:13:14,280 --> 00:13:16,840 Speaker 1: Now you pull back, you sage, you put back hardware, 267 00:13:16,840 --> 00:13:20,600 Speaker 1: equipment upgrades, you pull back software. All of those things happened. 268 00:13:21,160 --> 00:13:22,880 Speaker 1: But you know, one of the things we would say 269 00:13:22,960 --> 00:13:25,320 Speaker 1: is our biggest thing has been in the last six 270 00:13:25,320 --> 00:13:28,600 Speaker 1: months we saw no revision estimates. That was our biggest 271 00:13:28,640 --> 00:13:31,559 Speaker 1: complaint going in that we have not seen any revision 272 00:13:31,559 --> 00:13:33,960 Speaker 1: of estimates. And one of the numbers I will highlight 273 00:13:34,080 --> 00:13:37,080 Speaker 1: is in November of last year, when market was really 274 00:13:37,120 --> 00:13:40,360 Speaker 1: at top, market was expecting let's say, for Microsoft, two 275 00:13:40,679 --> 00:13:44,319 Speaker 1: thirty six billion dollars in revenue for calendar of three 276 00:13:44,880 --> 00:13:47,079 Speaker 1: Tell about a month ago. Tell about I would say 277 00:13:47,120 --> 00:13:49,959 Speaker 1: three weeks ago. They were still expecting that number too 278 00:13:50,200 --> 00:13:52,360 Speaker 1: to be there. And I checked it last night. It's 279 00:13:52,360 --> 00:13:55,880 Speaker 1: gone down to ten billion dollar reduction about a four. 280 00:13:56,400 --> 00:13:58,640 Speaker 1: So so we are seeing numbers come down now. I 281 00:13:58,640 --> 00:14:00,520 Speaker 1: think this is the time when side is going to 282 00:14:00,600 --> 00:14:02,760 Speaker 1: take the numbers down, and I think that's what will 283 00:14:03,120 --> 00:14:06,360 Speaker 1: drive the reset. Well, if you what does what does 284 00:14:06,360 --> 00:14:09,079 Speaker 1: the reset look like? Then? I mean, are we looking 285 00:14:09,120 --> 00:14:13,760 Speaker 1: at valuations that are coming back to I wanna perhaps 286 00:14:15,080 --> 00:14:17,559 Speaker 1: even then we were thought that tech was borderline in 287 00:14:17,600 --> 00:14:19,760 Speaker 1: a bubble. What does it look like? I would argue 288 00:14:19,800 --> 00:14:22,160 Speaker 1: that now we are well below our pre pandemic levels 289 00:14:22,160 --> 00:14:25,280 Speaker 1: at this point for all the technology stocks, including software, 290 00:14:25,560 --> 00:14:28,240 Speaker 1: you know, Microsoft, Apple, all these companies. The thing that 291 00:14:28,280 --> 00:14:30,120 Speaker 1: I do want to highlight is, let's say, for the 292 00:14:30,120 --> 00:14:32,560 Speaker 1: sake of argument. For a company like Microsoft that has 293 00:14:32,600 --> 00:14:35,600 Speaker 1: grown three to five years at about fifteen six in 294 00:14:35,600 --> 00:14:38,280 Speaker 1: constant currency, they're still going to grow eight to ten 295 00:14:38,320 --> 00:14:41,480 Speaker 1: percent over the next twelve months too, and then the 296 00:14:41,560 --> 00:14:43,800 Speaker 1: year after that when it rebound comes back, it's going 297 00:14:43,840 --> 00:14:46,600 Speaker 1: to come back actually stronger, because you just cannot live 298 00:14:46,640 --> 00:14:49,360 Speaker 1: without upgrading some of this stuff. So it's a pause 299 00:14:49,400 --> 00:14:51,640 Speaker 1: we're going to see for the next twelve months, but 300 00:14:52,120 --> 00:14:54,400 Speaker 1: you know, I'll be a very optimistic about a bounce back. 301 00:14:55,280 --> 00:14:57,920 Speaker 1: How about you know, I know the backbone of Bloomer 302 00:14:58,000 --> 00:15:01,400 Speaker 1: Intelligence research is the data. We have the best data 303 00:15:01,440 --> 00:15:03,920 Speaker 1: on Wall Street. We spend a lot of money for 304 00:15:04,040 --> 00:15:06,360 Speaker 1: this data. And for you guys in the tech space, 305 00:15:06,640 --> 00:15:08,840 Speaker 1: one of your sources, I knows I d C and 306 00:15:08,880 --> 00:15:10,960 Speaker 1: they've got just kind of industry leading data as it 307 00:15:10,960 --> 00:15:14,960 Speaker 1: relates to all amounts of spending across the technology stack. 308 00:15:15,000 --> 00:15:17,480 Speaker 1: What are they saying over the next several years in 309 00:15:17,560 --> 00:15:19,760 Speaker 1: terms of tech tech span given what we've just experienced 310 00:15:19,800 --> 00:15:21,920 Speaker 1: over the last few years. So, I mean, I've built 311 00:15:21,960 --> 00:15:23,920 Speaker 1: my own mental model which I can explain, and I 312 00:15:23,920 --> 00:15:26,320 Speaker 1: think I DC is, you know, somewhere plus or minus 313 00:15:26,320 --> 00:15:28,160 Speaker 1: two percent on that. The way I look at it. 314 00:15:28,240 --> 00:15:29,800 Speaker 1: If the if the global world is going to grow 315 00:15:29,800 --> 00:15:32,520 Speaker 1: at two to three, technology spending is going to be 316 00:15:32,520 --> 00:15:34,240 Speaker 1: two to three times. So that so let's say four 317 00:15:34,280 --> 00:15:36,880 Speaker 1: to nine pc um in that hardware is going to 318 00:15:36,920 --> 00:15:39,280 Speaker 1: be low single digits. Software is going to be ten 319 00:15:39,320 --> 00:15:41,600 Speaker 1: percent plus, and service is going to be around five 320 00:15:41,640 --> 00:15:45,040 Speaker 1: to seven percent. So software is the key driver there 321 00:15:45,080 --> 00:15:47,160 Speaker 1: in double digits. And and in fact, you could look 322 00:15:47,200 --> 00:15:50,360 Speaker 1: at any company today's salesforce service now you will still 323 00:15:50,400 --> 00:15:55,040 Speaker 1: see estimates above for this service now above, so we 324 00:15:55,120 --> 00:15:57,760 Speaker 1: have a long way to go before we reach maturation 325 00:15:58,160 --> 00:16:02,320 Speaker 1: in the software growth rates. What about kind of great 326 00:16:02,360 --> 00:16:05,520 Speaker 1: sensitivity here? A lot of these big tech names were 327 00:16:05,880 --> 00:16:08,600 Speaker 1: kind of the poster child of if the Fed hikes, 328 00:16:08,640 --> 00:16:11,080 Speaker 1: these are the first names you sell. And and although 329 00:16:11,240 --> 00:16:13,960 Speaker 1: that made sense when you have these massive balance sheets 330 00:16:13,960 --> 00:16:17,880 Speaker 1: and all this cash and all this liquidity, what happens 331 00:16:17,960 --> 00:16:21,320 Speaker 1: now some of that cash has been deployed and the 332 00:16:21,440 --> 00:16:24,160 Speaker 1: rates market is kind of peeking and kind of stalling out. 333 00:16:24,240 --> 00:16:28,080 Speaker 1: Doesn't that mean that tech should be now? I would 334 00:16:28,080 --> 00:16:31,080 Speaker 1: say that the day we get this news that the 335 00:16:31,120 --> 00:16:33,800 Speaker 1: pivot is there, we're gonna have one hell of a 336 00:16:33,880 --> 00:16:36,880 Speaker 1: tech rally. Now, I don't know when that day. I mean, 337 00:16:37,000 --> 00:16:39,880 Speaker 1: I don't know, I don't That's the thing I cannot predict. 338 00:16:39,920 --> 00:16:41,960 Speaker 1: But um, that's gonna happen. I mean, it may not 339 00:16:42,040 --> 00:16:45,360 Speaker 1: happen now, six months, twelve months, even longo, but that's 340 00:16:45,360 --> 00:16:48,560 Speaker 1: the day we're going to have this conversation because all 341 00:16:48,640 --> 00:16:52,520 Speaker 1: these companies are very resistant to any kind of a 342 00:16:52,560 --> 00:16:54,920 Speaker 1: downtown and because of the work that they do. But 343 00:16:55,120 --> 00:16:57,840 Speaker 1: we're already there. If you're looking at the market expectations, 344 00:16:57,840 --> 00:17:01,960 Speaker 1: they're already stalling out at five in March. And there's 345 00:17:01,960 --> 00:17:03,760 Speaker 1: an argument here that that's going to create some sort 346 00:17:03,760 --> 00:17:07,040 Speaker 1: of floor for the equity market. But does that mean 347 00:17:07,040 --> 00:17:09,560 Speaker 1: that tech leads that, Oh, it has to there is 348 00:17:09,600 --> 00:17:12,040 Speaker 1: no no other way because that has the highest beta. 349 00:17:12,240 --> 00:17:14,280 Speaker 1: Those are the ones that were killed more. That's where 350 00:17:14,320 --> 00:17:17,879 Speaker 1: the discount rate really, you know, completely demolished the valuations 351 00:17:17,880 --> 00:17:20,719 Speaker 1: of it. But I think, in in conjunction with what 352 00:17:20,760 --> 00:17:24,400 Speaker 1: I said to Paul earlier, the revenue estimates and and 353 00:17:24,400 --> 00:17:27,240 Speaker 1: and profit estimates needs to come down, and I think 354 00:17:27,240 --> 00:17:28,960 Speaker 1: they started to come down. I think, you know, it 355 00:17:28,960 --> 00:17:31,000 Speaker 1: could be another month or so when we see a 356 00:17:31,000 --> 00:17:33,359 Speaker 1: bottom for that. I think that couple with the rates 357 00:17:33,440 --> 00:17:35,520 Speaker 1: is what drives the market. Opted all right, let's talk 358 00:17:35,520 --> 00:17:39,840 Speaker 1: about Microsoft um sat Natla Nadella, I think is one 359 00:17:39,840 --> 00:17:42,560 Speaker 1: of the most under believe it or not, you know, 360 00:17:42,560 --> 00:17:45,760 Speaker 1: the undervalued or under recognized folks out in silicon value 361 00:17:45,760 --> 00:17:47,840 Speaker 1: what he's done with that company. But I'm looking at 362 00:17:47,840 --> 00:17:50,399 Speaker 1: the f A function for Microsoft and a little bit 363 00:17:50,400 --> 00:17:52,240 Speaker 1: of a slow down and growth in the twenty three 364 00:17:52,280 --> 00:17:55,520 Speaker 1: consensu assessments eight and a half percent, presumably bacon in 365 00:17:55,560 --> 00:17:58,760 Speaker 1: some type of recession. But then you look at six 366 00:17:58,880 --> 00:18:02,800 Speaker 1: Wall Streets still predicting thirteen percent revenue growth. That's pretty 367 00:18:02,880 --> 00:18:05,960 Speaker 1: darn good, is that. I would argue that it's going 368 00:18:06,000 --> 00:18:08,439 Speaker 1: to be better than that, because it's going to be 369 00:18:08,520 --> 00:18:11,720 Speaker 1: close to six. If I do not look at any 370 00:18:11,720 --> 00:18:14,240 Speaker 1: effects headwinds at that point, we are assuming, you know, 371 00:18:14,320 --> 00:18:17,199 Speaker 1: dollar cannot get stronger, you know, forever at that at 372 00:18:17,200 --> 00:18:19,399 Speaker 1: that end. But even if I was to exclude this, 373 00:18:19,800 --> 00:18:21,800 Speaker 1: because we saw this during the pandemic, if you were 374 00:18:21,840 --> 00:18:24,119 Speaker 1: to go look at the data during the pandemic, and 375 00:18:24,119 --> 00:18:26,880 Speaker 1: we published a note on this yesterday, that cloud growth 376 00:18:26,960 --> 00:18:29,560 Speaker 1: rates dipped quite a bit in the four quarters since 377 00:18:29,600 --> 00:18:32,360 Speaker 1: the pandemic started, and the year after that growth rates 378 00:18:32,400 --> 00:18:35,240 Speaker 1: picked up. In that cloud business, which is very unusual 379 00:18:35,320 --> 00:18:37,639 Speaker 1: because the size of that business is very large. So 380 00:18:37,720 --> 00:18:40,159 Speaker 1: for growth rates to accelerate, and we think that's going 381 00:18:40,240 --> 00:18:43,960 Speaker 1: the same thing is going to happen going into twenty four. Well, 382 00:18:44,359 --> 00:18:47,680 Speaker 1: talking about cloud adoption here because I think, um, your 383 00:18:47,720 --> 00:18:51,040 Speaker 1: colleague Man deep Thing actually talked about the fact that 384 00:18:51,080 --> 00:18:53,199 Speaker 1: this is a market. I don't want to mess up 385 00:18:53,200 --> 00:18:55,000 Speaker 1: the numbers here, but this is a market that has 386 00:18:55,160 --> 00:18:57,840 Speaker 1: I want to like four or five, like a billion 387 00:18:57,960 --> 00:19:00,879 Speaker 1: or trillion or some sort of big, big, big number, 388 00:19:01,080 --> 00:19:04,159 Speaker 1: but that only a fraction of it has really been unlocked. 389 00:19:04,200 --> 00:19:05,800 Speaker 1: But a lot of that is because a lot of 390 00:19:05,800 --> 00:19:08,920 Speaker 1: these companies haven't actually adopted it fully. About thirty seconds here, 391 00:19:09,400 --> 00:19:11,640 Speaker 1: how long is it gonna take to adopt fully? It's 392 00:19:11,760 --> 00:19:13,720 Speaker 1: it's just going to be taken a lease to decade 393 00:19:13,880 --> 00:19:16,280 Speaker 1: to get dinner. So we are looking at a decade 394 00:19:16,280 --> 00:19:19,480 Speaker 1: of very strong cloud growth. The growth rates will be decelerate, 395 00:19:19,520 --> 00:19:21,200 Speaker 1: but but it's going to take at least to decade. 396 00:19:21,400 --> 00:19:23,720 Speaker 1: All right, I don't know great stuff, appreciate it always. 397 00:19:23,760 --> 00:19:26,480 Speaker 1: We let to getting the overview of the text base 398 00:19:26,520 --> 00:19:29,560 Speaker 1: and then digging down into some individual names. I guess 399 00:19:29,560 --> 00:19:31,600 Speaker 1: the key issue for a lot of people, is will 400 00:19:31,800 --> 00:19:35,600 Speaker 1: the tech sector continued to be a leading sector in 401 00:19:35,840 --> 00:19:38,679 Speaker 1: this equity market when we get a turn upward or 402 00:19:38,760 --> 00:19:40,879 Speaker 1: has that been rerated? On a Rock still feels bullish 403 00:19:40,920 --> 00:19:43,480 Speaker 1: about the text space on Rock Ron senior Software and 404 00:19:43,480 --> 00:19:50,359 Speaker 1: I T Services analyst for Bloomberg in intelligence. I'm gonna 405 00:19:50,480 --> 00:19:55,560 Speaker 1: mis some ignorance here. C v S Healthcore, not CBS Television, 406 00:19:55,680 --> 00:19:58,280 Speaker 1: which is a company I've followed forever, but CBS the 407 00:19:58,359 --> 00:20:02,560 Speaker 1: healthcare company. I did know how big this company is. 408 00:20:02,600 --> 00:20:06,720 Speaker 1: I mean it's a hundred and thirty billion in market capitalization. 409 00:20:07,000 --> 00:20:10,120 Speaker 1: I mean it's got like three hundred thousand employees. Uh. 410 00:20:10,240 --> 00:20:12,720 Speaker 1: Just a huge company, and it's just a big, big 411 00:20:12,760 --> 00:20:15,480 Speaker 1: player in the healthcare space. And I need to do 412 00:20:15,600 --> 00:20:17,679 Speaker 1: some more work on this thing. But anyway, they reported 413 00:20:17,720 --> 00:20:20,480 Speaker 1: some numbers today, some good numbers. There's also some news 414 00:20:20,520 --> 00:20:24,040 Speaker 1: out there about an opioid uh tenant to twelve billion 415 00:20:24,080 --> 00:20:25,480 Speaker 1: dollar opio a pack. So we need to get a 416 00:20:25,480 --> 00:20:27,800 Speaker 1: little bit smarter on this company. Uh, And so we 417 00:20:27,840 --> 00:20:29,879 Speaker 1: asked Jonathan Palmer to come in near. Jonathan Palmer is 418 00:20:29,880 --> 00:20:32,480 Speaker 1: a senior equity research analysts and team leader for the 419 00:20:32,520 --> 00:20:35,240 Speaker 1: healthcare team at Bloomberg Intelligence. He's been covering the stock 420 00:20:35,280 --> 00:20:38,879 Speaker 1: in this sector for decades. Here, Johnathan, give us you 421 00:20:38,880 --> 00:20:40,600 Speaker 1: know again, I don't know anything about this company. What 422 00:20:40,640 --> 00:20:42,879 Speaker 1: do I like? One or two sentences? What is this company? 423 00:20:42,880 --> 00:20:46,000 Speaker 1: Why do I need to know more about it? Sure, Pauls, 424 00:20:46,000 --> 00:20:48,680 Speaker 1: thanks for having me on. So CBS has really transformed 425 00:20:48,680 --> 00:20:51,000 Speaker 1: itself for the last two decades. I mean, traditionally it 426 00:20:51,040 --> 00:20:53,840 Speaker 1: was a retail pharmacy and that's what I called a 427 00:20:53,920 --> 00:20:56,600 Speaker 1: PBM to help manage drug benefits. And then a couple 428 00:20:56,640 --> 00:20:59,600 Speaker 1: of years ago they purchased the big insurre at to 429 00:20:59,720 --> 00:21:04,560 Speaker 1: now become this three legged stool of healthcare retail PBM insurance. 430 00:21:05,040 --> 00:21:07,879 Speaker 1: And really what they're trying to do is become, you know, 431 00:21:07,920 --> 00:21:11,840 Speaker 1: a provider of healthcare services across the spectrum and and 432 00:21:11,960 --> 00:21:14,320 Speaker 1: you know, come into people's home and provide them services 433 00:21:14,359 --> 00:21:16,720 Speaker 1: at these retail locations. And they have a really big 434 00:21:16,720 --> 00:21:19,439 Speaker 1: push lately, although they haven't executed on this plan. They 435 00:21:19,440 --> 00:21:22,600 Speaker 1: want to move into primary care visa V like Amazon 436 00:21:22,880 --> 00:21:27,480 Speaker 1: and one Medical. Well, what is the difference then, I mean, 437 00:21:27,800 --> 00:21:29,840 Speaker 1: in our commercial break, you're just talking about how we 438 00:21:29,880 --> 00:21:32,560 Speaker 1: all kind of think of CVS is still the pharmacy business. 439 00:21:32,680 --> 00:21:38,080 Speaker 1: It's evolved from from that vision. What could it turn into? Sure? 440 00:21:38,119 --> 00:21:40,640 Speaker 1: So I think their their vision is that they want 441 00:21:40,640 --> 00:21:44,080 Speaker 1: to be a provider of healthcare services across the spectrum 442 00:21:44,119 --> 00:21:46,919 Speaker 1: and continuum, and you know, they want to have you 443 00:21:47,000 --> 00:21:49,320 Speaker 1: in their network in one form or another, whether that's 444 00:21:49,359 --> 00:21:52,399 Speaker 1: in their pharmacy, you know, hopefully down the road in 445 00:21:52,440 --> 00:21:56,119 Speaker 1: one of their doctor's offices and really help, uh, you know, 446 00:21:56,200 --> 00:21:59,760 Speaker 1: manage that evolution of a patient's care. So they reported 447 00:21:59,840 --> 00:22:03,119 Speaker 1: num Is today stock is trading up, uh IT stocks 448 00:22:03,119 --> 00:22:05,639 Speaker 1: only down like four this year, so out performing the market. 449 00:22:05,760 --> 00:22:08,000 Speaker 1: Talk to us about kind of what they reported today 450 00:22:08,080 --> 00:22:11,040 Speaker 1: and kind of what's the call on the stock. Yeah, 451 00:22:11,080 --> 00:22:13,360 Speaker 1: so the numbers today were pretty good. There was each 452 00:22:13,359 --> 00:22:15,639 Speaker 1: of the three businesses performed pretty well, a little bit 453 00:22:15,640 --> 00:22:19,600 Speaker 1: above expectations. Really, the big question coming into today was, 454 00:22:19,680 --> 00:22:22,720 Speaker 1: you know, what does their outer year growth profile look like. 455 00:22:23,200 --> 00:22:25,240 Speaker 1: They have had a plan in place where they expected 456 00:22:25,280 --> 00:22:27,359 Speaker 1: to get to double digit EPs growth by two thousand 457 00:22:27,440 --> 00:22:30,920 Speaker 1: twenty four. They've had a couple of setbacks lately. Uh 458 00:22:31,040 --> 00:22:35,200 Speaker 1: they had some unfavorable rankings in their medicare plans and 459 00:22:35,320 --> 00:22:38,159 Speaker 1: um More recently, they lost a big PBM contract u 460 00:22:38,520 --> 00:22:41,719 Speaker 1: from one of their peers, UH Sentien, And so there 461 00:22:41,760 --> 00:22:45,120 Speaker 1: was a question whether that double digit EPs targets still stood, 462 00:22:45,680 --> 00:22:48,359 Speaker 1: and they released guidance this morning on a permanent guidance 463 00:22:48,440 --> 00:22:50,680 Speaker 1: on on two thousand, twenty three. Um, they're gonna be 464 00:22:50,720 --> 00:22:52,919 Speaker 1: high single digit EPs growth, which is in line with 465 00:22:52,960 --> 00:22:54,960 Speaker 1: what they said, and they still planned to reach that 466 00:22:54,960 --> 00:22:58,320 Speaker 1: double digit target in twenty four and it might come 467 00:22:58,720 --> 00:23:02,040 Speaker 1: through a couple different flavors. It might be through acquisitions, 468 00:23:02,160 --> 00:23:03,880 Speaker 1: or they might be buying back a lot of stock 469 00:23:03,960 --> 00:23:05,960 Speaker 1: to get to that. I'm just looking at the f 470 00:23:06,119 --> 00:23:07,879 Speaker 1: A functional on the Bloomberg terminal kind of gives you 471 00:23:07,880 --> 00:23:09,800 Speaker 1: the consensus of what's out there from all the sales 472 00:23:09,840 --> 00:23:13,680 Speaker 1: side UH and four it's eight point seven EPs scrolls 473 00:23:13,720 --> 00:23:17,320 Speaker 1: in the streets a little bit cautious. They're also a 474 00:23:17,359 --> 00:23:21,240 Speaker 1: story out today. You want to get your comment on CVS, Walmart, 475 00:23:21,400 --> 00:23:25,359 Speaker 1: Walgreens reach tentative twelve billion dollar opioid pack. Give us 476 00:23:25,359 --> 00:23:27,920 Speaker 1: the background here and and kind of this good news 477 00:23:28,000 --> 00:23:30,159 Speaker 1: for the company. This is great news for the company. 478 00:23:30,400 --> 00:23:33,159 Speaker 1: You know, the opioid issue has been overhanging, not so 479 00:23:33,240 --> 00:23:36,080 Speaker 1: much for the pharmacies but the drug distributors for really 480 00:23:36,119 --> 00:23:38,679 Speaker 1: the last almost five to ten years, and they were 481 00:23:38,720 --> 00:23:42,199 Speaker 1: really the first targets of these legal actions. And so 482 00:23:42,240 --> 00:23:44,240 Speaker 1: the distributors settled at the beginning of this year for 483 00:23:44,280 --> 00:23:47,760 Speaker 1: about twenty billion dollars between the big three three like 484 00:23:47,840 --> 00:23:52,000 Speaker 1: their McKesson, Amerisource, Bergen, and Cardinal Health. And so it's 485 00:23:52,040 --> 00:23:54,960 Speaker 1: interesting to think about, you know, the the d a 486 00:23:55,119 --> 00:23:57,280 Speaker 1: s and attorney generals in these various states. You know, 487 00:23:57,359 --> 00:23:59,879 Speaker 1: we're going after people who could pay. And my thinking 488 00:24:00,040 --> 00:24:02,359 Speaker 1: always that, well, we have CBS, we have Walgreens, we 489 00:24:02,400 --> 00:24:04,359 Speaker 1: have Walmart. These are all pretty big companies in their 490 00:24:04,400 --> 00:24:07,680 Speaker 1: ability to pay is there, And and now we've turned 491 00:24:07,680 --> 00:24:09,679 Speaker 1: around and we've got a settlement, and so you know, 492 00:24:09,720 --> 00:24:11,960 Speaker 1: I think what was an overhanging and unknown for a 493 00:24:11,960 --> 00:24:15,640 Speaker 1: little while now has some clarity and visibility. And for CBS, 494 00:24:15,680 --> 00:24:18,360 Speaker 1: it's five billion dollars over ten years. That's a very 495 00:24:18,400 --> 00:24:23,600 Speaker 1: manageable number. Well, you mentioned Walmart as well. Walmart is 496 00:24:23,680 --> 00:24:26,160 Speaker 1: not the only company to want kind of their their 497 00:24:26,160 --> 00:24:29,120 Speaker 1: foot in healthcare. We've got Amazon, We've had Berkshire Hathaway 498 00:24:29,160 --> 00:24:32,080 Speaker 1: as well, JP Morgan. I think at one point, is 499 00:24:32,119 --> 00:24:34,960 Speaker 1: it fair to compare CBS is kind of broader vision 500 00:24:35,000 --> 00:24:39,240 Speaker 1: to some of these um MAYA capped companies. It's interesting 501 00:24:39,240 --> 00:24:42,359 Speaker 1: because I think everybody who is looking at the consumer 502 00:24:42,480 --> 00:24:45,640 Speaker 1: is thinking that healthcare is there, you know, next obvious extension, 503 00:24:45,680 --> 00:24:48,200 Speaker 1: and that's why you have Walmart and Amazon going there. 504 00:24:48,520 --> 00:24:50,920 Speaker 1: I think CBS sees that that same vision as well, 505 00:24:51,119 --> 00:24:54,280 Speaker 1: the consumer driven healthcare piece. But I think you know 506 00:24:54,320 --> 00:24:56,160 Speaker 1: where they're a little bit different. Is there a more 507 00:24:56,200 --> 00:25:00,720 Speaker 1: traditional healthcare provider Visa v their PBM and ensure and 508 00:25:00,760 --> 00:25:03,240 Speaker 1: they look at their peer United Healthcare, which is the 509 00:25:03,240 --> 00:25:06,359 Speaker 1: biggest insurer, and how they've more moved more to become 510 00:25:06,400 --> 00:25:10,200 Speaker 1: more ingrained into the healthcare system, buying practices, buying facilities, 511 00:25:10,480 --> 00:25:15,120 Speaker 1: you know, really managing patient end to end. So real 512 00:25:15,200 --> 00:25:17,800 Speaker 1: quicker thir thirty seconds. If we're going into a recession, 513 00:25:17,800 --> 00:25:20,399 Speaker 1: do I want to own healthcare stocks? You're asking a 514 00:25:20,440 --> 00:25:24,680 Speaker 1: healthcare analysts health care of the tagline is healthcare is 515 00:25:24,720 --> 00:25:27,439 Speaker 1: extremely defensive, and I mean, I think we've seen that 516 00:25:27,440 --> 00:25:30,119 Speaker 1: play out in a number of recessionary environments. You know, 517 00:25:30,160 --> 00:25:32,240 Speaker 1: people still get sick, they still go to the doctor, 518 00:25:32,320 --> 00:25:35,440 Speaker 1: they still take drugs. You know that these are all 519 00:25:35,440 --> 00:25:40,560 Speaker 1: pretty defensive sectors of the healthcare space. All right, good, stuff. Yeah, 520 00:25:40,640 --> 00:25:43,560 Speaker 1: I mean, you know, Bloomberg Intelligence folks, B I go 521 00:25:43,680 --> 00:25:45,320 Speaker 1: on the terminal. If you've got a terminal in front 522 00:25:45,359 --> 00:25:47,360 Speaker 1: of you, B I go, and what you're gonna get 523 00:25:47,359 --> 00:25:51,440 Speaker 1: there is world class investment research, equity research, credit research, 524 00:25:51,520 --> 00:25:54,640 Speaker 1: and lots lots more. And we've got people like Jonathan Palmer, 525 00:25:54,720 --> 00:25:57,880 Speaker 1: each a season Wall Street anald's standing behind this research, 526 00:25:57,920 --> 00:26:00,320 Speaker 1: writing this research. They have some of that this best 527 00:26:00,440 --> 00:26:03,960 Speaker 1: data in the business that informs their research. So, uh, 528 00:26:04,080 --> 00:26:06,760 Speaker 1: if you need to get real smart on a topic 529 00:26:06,840 --> 00:26:09,639 Speaker 1: on a stock like I do on CBS, b I 530 00:26:09,800 --> 00:26:12,440 Speaker 1: go is your place to go. And we thank Jonathan Palmer. 531 00:26:12,440 --> 00:26:14,560 Speaker 1: He's a senior equity research channels. He's a team leader 532 00:26:14,920 --> 00:26:18,760 Speaker 1: leading our healthcare research at Bloomberg Intelligence and ed joined 533 00:26:18,800 --> 00:26:20,639 Speaker 1: us here in a Bloomberg Interactive broker studio. So what 534 00:26:20,680 --> 00:26:26,879 Speaker 1: does he get a gold star just talking to Shannali 535 00:26:26,960 --> 00:26:29,480 Speaker 1: Bassk Bloomberg News. She covers all things Wall Street. Course 536 00:26:29,520 --> 00:26:31,199 Speaker 1: she would talk on and choose down at Miami to 537 00:26:31,400 --> 00:26:34,720 Speaker 1: private equity sware down there. So we're talking private equity, 538 00:26:34,760 --> 00:26:37,600 Speaker 1: private credit. Uh So our next guest fits right in 539 00:26:37,640 --> 00:26:40,600 Speaker 1: their Randy Swimmer, co head of Senior Lending and senior 540 00:26:40,600 --> 00:26:43,560 Speaker 1: managing director at Churchill Asset Management. They do that private 541 00:26:43,600 --> 00:26:47,200 Speaker 1: credit stuff over there. So, Randy, how does your business 542 00:26:47,440 --> 00:26:51,800 Speaker 1: perform in a world of rising interest rates? You're in 543 00:26:51,800 --> 00:26:55,840 Speaker 1: the credit business, So senior dead is floating great instrument. 544 00:26:56,000 --> 00:26:59,760 Speaker 1: So it improves let's go up, total yields go up. 545 00:27:00,200 --> 00:27:02,400 Speaker 1: We've been waiting for this moment for a long long time. 546 00:27:03,080 --> 00:27:06,160 Speaker 1: But it's also less volatile because these are smaller companies. 547 00:27:06,200 --> 00:27:09,520 Speaker 1: They don't trade, so it's obviously an improvement with higher rates, 548 00:27:09,560 --> 00:27:12,520 Speaker 1: but it's also great for the kind of headline volatility 549 00:27:12,560 --> 00:27:14,680 Speaker 1: that we've been subject to for a long time. That's 550 00:27:14,720 --> 00:27:18,280 Speaker 1: also something that investors appreciate because when you look at 551 00:27:18,320 --> 00:27:22,159 Speaker 1: public UH assets such as fixed income in public equities, 552 00:27:22,600 --> 00:27:25,840 Speaker 1: they have been very correlated, which is not helpful. If 553 00:27:25,840 --> 00:27:30,480 Speaker 1: you're sixty forty allocated portfolio. Everything's going down together. And 554 00:27:30,560 --> 00:27:34,360 Speaker 1: you've seen the other asselete classes performance here today, it's 555 00:27:34,359 --> 00:27:37,080 Speaker 1: been in the red. It's it's kind of ugly. Private 556 00:27:37,080 --> 00:27:39,800 Speaker 1: credit in general has been doing really well UM and 557 00:27:39,880 --> 00:27:46,040 Speaker 1: so that's that's the advantage. Floating rate, less correlated, better structure, security, security, 558 00:27:46,040 --> 00:27:49,480 Speaker 1: and so forth. Randy, it is FED day, Happy FAED day. 559 00:27:51,240 --> 00:27:53,919 Speaker 1: UH do we see a pivot today? I don't think so. 560 00:27:53,960 --> 00:27:58,280 Speaker 1: There's been so much invested by the Fed in keeping 561 00:27:58,480 --> 00:28:01,440 Speaker 1: on and and making sure that the market believes that 562 00:28:01,520 --> 00:28:05,480 Speaker 1: their fight against inflation is real. Um. The data that 563 00:28:05,520 --> 00:28:08,440 Speaker 1: has been coming out has been pretty bullish in terms 564 00:28:08,520 --> 00:28:11,960 Speaker 1: of the economic strength. You're you're talking about GDP for 565 00:28:12,000 --> 00:28:15,200 Speaker 1: the third quarter of two point six percent. That's pretty strong. Yeah, 566 00:28:15,240 --> 00:28:19,520 Speaker 1: there were some export data that helped that. Job openings 567 00:28:19,560 --> 00:28:23,280 Speaker 1: continue to go up. Unemployment, you know, still is low, 568 00:28:23,440 --> 00:28:25,679 Speaker 1: the labor market is tight, wages are going up. I 569 00:28:25,680 --> 00:28:28,159 Speaker 1: mean you're talking about you know, I've been calling it 570 00:28:28,200 --> 00:28:31,199 Speaker 1: a precession all your Well, you're welcome to you that 571 00:28:31,320 --> 00:28:36,639 Speaker 1: term because yeah, thank you. UM. But because in a precession, 572 00:28:36,680 --> 00:28:39,280 Speaker 1: we think that a recession is coming. Everybody's predicting something 573 00:28:39,320 --> 00:28:42,280 Speaker 1: next year. But the economics right now are too strong. 574 00:28:42,920 --> 00:28:47,000 Speaker 1: So your business, you tend to finance, you know, private 575 00:28:47,000 --> 00:28:50,480 Speaker 1: equity deals, mid market type of deals. Give us a 576 00:28:50,520 --> 00:28:54,320 Speaker 1: kind of typical deal for Churchill Asset Management. Sure, so 577 00:28:54,560 --> 00:28:58,680 Speaker 1: we have private equity sponsor relationships that come to us 578 00:28:58,800 --> 00:29:02,959 Speaker 1: for UH to solve multiple of variety of solutions up 579 00:29:02,960 --> 00:29:05,520 Speaker 1: and down the capital structure. So they'll come to say, hey, 580 00:29:05,520 --> 00:29:09,080 Speaker 1: we're looking at a very interesting commercial landscaping business. You know, 581 00:29:09,120 --> 00:29:13,600 Speaker 1: thirty five million, but the revenues um. The great thing 582 00:29:13,600 --> 00:29:16,240 Speaker 1: about commercial landscaping is in real estate, even if there's 583 00:29:16,240 --> 00:29:18,360 Speaker 1: no one in the building, somebody has always got to 584 00:29:18,400 --> 00:29:21,720 Speaker 1: be cutting the lawn, mowing the grass, hedge hedge clipping, 585 00:29:22,040 --> 00:29:24,680 Speaker 1: by the way, different kind of hedge fund uh and 586 00:29:24,680 --> 00:29:27,800 Speaker 1: and uh snow plowing. And so that's a kind of 587 00:29:27,840 --> 00:29:31,920 Speaker 1: business that is steady eddy throughout any season and any cycle. Um. 588 00:29:32,000 --> 00:29:33,840 Speaker 1: And with a good sponsor that's going to put in 589 00:29:34,040 --> 00:29:37,880 Speaker 1: fifty equity into the deal below you, it's an attractive 590 00:29:37,920 --> 00:29:41,840 Speaker 1: investment for our investors because they're protected and then the 591 00:29:41,880 --> 00:29:45,960 Speaker 1: debt itself has covenants, so if the performance deteriorates, we're 592 00:29:45,960 --> 00:29:48,960 Speaker 1: back at the table negotiating. Plus, the private equity sponsors 593 00:29:48,960 --> 00:29:52,640 Speaker 1: that we deal with, they focus and specialized in defensive sectors, 594 00:29:52,680 --> 00:29:56,320 Speaker 1: so healthcare, technology, business services, all of which have been 595 00:29:56,360 --> 00:29:58,920 Speaker 1: doing very very well through COVID and we expect would 596 00:29:58,920 --> 00:30:02,120 Speaker 1: do well during recession. So just ask this Questiontionale, but 597 00:30:02,120 --> 00:30:03,960 Speaker 1: I'm gonna ask it to you is won't get your take. 598 00:30:04,600 --> 00:30:07,240 Speaker 1: I believe there's a consensus that the private markets operated 599 00:30:07,280 --> 00:30:09,880 Speaker 1: a little bit of a lag relative to the public markets. 600 00:30:10,440 --> 00:30:13,120 Speaker 1: If there is a reckoning in the public markets, which 601 00:30:13,200 --> 00:30:15,800 Speaker 1: arguably there already has been for the past ten months 602 00:30:15,840 --> 00:30:19,200 Speaker 1: of equity carnage, does that mean the private markets are 603 00:30:19,280 --> 00:30:21,200 Speaker 1: due for one as well. Yeah. I don't think it's 604 00:30:21,240 --> 00:30:24,840 Speaker 1: so much a lag. It's that it's operating um with 605 00:30:24,840 --> 00:30:28,920 Speaker 1: with different parameters. Because these companies are private, unrated, and 606 00:30:28,960 --> 00:30:33,200 Speaker 1: the debt doesn't trade, you don't see the obvious reaction. 607 00:30:33,400 --> 00:30:36,400 Speaker 1: So if you know the markets public equity markets are down, 608 00:30:36,520 --> 00:30:40,320 Speaker 1: you see an instant reaction in the bond markets, for example, 609 00:30:40,800 --> 00:30:42,920 Speaker 1: you don't see that. It's not that it's lagging, it's 610 00:30:42,960 --> 00:30:45,600 Speaker 1: just that it responds to different things. Because these companies 611 00:30:45,640 --> 00:30:48,480 Speaker 1: are private, and the advantage of private credit, which is 612 00:30:48,520 --> 00:30:50,960 Speaker 1: what the issuers and investors are seeing right now, is 613 00:30:51,360 --> 00:30:53,680 Speaker 1: headline risk will go up and down, and you'll see 614 00:30:53,680 --> 00:30:56,080 Speaker 1: the public equity markets, for example, go up five hundred 615 00:30:56,120 --> 00:30:58,880 Speaker 1: points one day, down five the next day with no 616 00:30:59,240 --> 00:31:02,840 Speaker 1: discernible diff for instant data. The private private credit markets 617 00:31:02,840 --> 00:31:05,600 Speaker 1: and private equity are much more stable, so they tend 618 00:31:05,680 --> 00:31:10,120 Speaker 1: to respond more to long term changes in the economy 619 00:31:10,320 --> 00:31:13,640 Speaker 1: in markets um but that makes them in this world 620 00:31:13,720 --> 00:31:17,800 Speaker 1: of high voltility of very favorite asset class. Um. You know, 621 00:31:17,880 --> 00:31:20,600 Speaker 1: we look at our portfolio right now, it's actually doing 622 00:31:20,600 --> 00:31:22,760 Speaker 1: really well. We have we're three hundred companies in the 623 00:31:22,800 --> 00:31:26,320 Speaker 1: portfolio and and the vast majority of them are performing 624 00:31:26,320 --> 00:31:29,240 Speaker 1: well in terms of revenues and earnings, again because of 625 00:31:29,280 --> 00:31:31,680 Speaker 1: the sectors that they're in, which are defensive. I hear. 626 00:31:32,040 --> 00:31:33,840 Speaker 1: Maybe it's just me, but it seems like over the 627 00:31:33,880 --> 00:31:35,480 Speaker 1: last couple of years, I've heard more and more and 628 00:31:35,520 --> 00:31:38,440 Speaker 1: more about the private credit business and how it's such 629 00:31:38,480 --> 00:31:43,160 Speaker 1: a good business. Um, what's the fundraising environment out that. 630 00:31:43,240 --> 00:31:44,520 Speaker 1: I'm not sure if you guys are in a fundraising 631 00:31:44,520 --> 00:31:46,040 Speaker 1: mode or not, but what's the environment out there for 632 00:31:46,120 --> 00:31:50,360 Speaker 1: raising private credit capital? So we just publicly issued pressure 633 00:31:50,360 --> 00:31:53,360 Speaker 1: release saying that we had raised twelve billion dollars over 634 00:31:53,360 --> 00:31:57,040 Speaker 1: the last twelve eighteen months. So the fund fundraising environment 635 00:31:57,160 --> 00:31:59,960 Speaker 1: for us has been very good. Um. Look right now, 636 00:32:00,040 --> 00:32:03,440 Speaker 1: investors like you all are cautious. They're looking at the signs, 637 00:32:03,480 --> 00:32:05,160 Speaker 1: the kinds of signs that we talked about with the 638 00:32:05,200 --> 00:32:09,520 Speaker 1: economy potential recession, and so everyone's kind of taking that 639 00:32:09,640 --> 00:32:13,480 Speaker 1: extra layer of due diligence of time and thinking, hey, 640 00:32:13,520 --> 00:32:16,880 Speaker 1: what's the rush to do this? Now? We're not market timers. 641 00:32:17,000 --> 00:32:19,400 Speaker 1: We're basically we've been doing this, you know, close to 642 00:32:19,440 --> 00:32:22,760 Speaker 1: twenty years at Churchill or the long track records successfully 643 00:32:22,760 --> 00:32:26,640 Speaker 1: over many cycles are are basically stories. Do this with 644 00:32:26,720 --> 00:32:29,560 Speaker 1: us for the long run because we don't know and 645 00:32:29,640 --> 00:32:31,480 Speaker 1: you don't know when the next recession is going to come. 646 00:32:31,520 --> 00:32:34,600 Speaker 1: So want to you know, hit your wagon to affirm 647 00:32:34,680 --> 00:32:37,040 Speaker 1: and to an asset class that is going to be 648 00:32:37,200 --> 00:32:39,720 Speaker 1: here for the long run, that performs well during all 649 00:32:39,760 --> 00:32:42,680 Speaker 1: the downturns. You know, we had positive returns during the 650 00:32:42,720 --> 00:32:46,719 Speaker 1: o idline crisis. Why not you know, be in that 651 00:32:46,800 --> 00:32:49,040 Speaker 1: and then benefit right now to what I think is 652 00:32:49,040 --> 00:32:51,960 Speaker 1: the best market and private credit for over a decade. 653 00:32:52,000 --> 00:32:56,360 Speaker 1: We're seeing yield to leverage at record highs. We're seeing 654 00:32:56,640 --> 00:33:01,040 Speaker 1: um structures tighter, we're seeing leverage or by a turn 655 00:33:01,120 --> 00:33:03,120 Speaker 1: or more of the Badah. I actually think this is 656 00:33:03,120 --> 00:33:05,440 Speaker 1: a great time to be investing, but you have to 657 00:33:05,440 --> 00:33:08,920 Speaker 1: do it with someone who's been through the downturns before successfully. Well, 658 00:33:08,960 --> 00:33:11,640 Speaker 1: speaking of downturns, go about thirty seconds here, when do 659 00:33:11,720 --> 00:33:14,800 Speaker 1: we see the next one? Well, we were not in 660 00:33:14,800 --> 00:33:18,320 Speaker 1: the business of predicting. We have to predicts. Now. We 661 00:33:18,320 --> 00:33:20,880 Speaker 1: we are always saying it's coming next year. In fact, 662 00:33:20,880 --> 00:33:24,360 Speaker 1: we model a recession in every deal we do for 663 00:33:24,480 --> 00:33:27,000 Speaker 1: next year. So in our investment committee, and we've got 664 00:33:27,000 --> 00:33:29,400 Speaker 1: one this afternoon, I'm sure that will show we're going 665 00:33:29,440 --> 00:33:32,440 Speaker 1: to be intercession next year. If it doesn't happen. My 666 00:33:32,480 --> 00:33:34,680 Speaker 1: personal belief is that it's going to be a softer 667 00:33:34,840 --> 00:33:37,000 Speaker 1: recession than a harder recession. I think it's gonna be 668 00:33:37,040 --> 00:33:39,800 Speaker 1: more like two thousand, two thousand one than O eight 669 00:33:39,800 --> 00:33:43,040 Speaker 1: oh nine. Because the banks and the finishing systems good shape. 670 00:33:43,640 --> 00:33:45,640 Speaker 1: We'll be in good shape no matter what kind of 671 00:33:45,640 --> 00:33:47,960 Speaker 1: recession it is. All right, Randy, good stuff is always 672 00:33:47,960 --> 00:33:50,480 Speaker 1: really appreciate. Making the long commute, oh from your office 673 00:33:50,560 --> 00:33:53,240 Speaker 1: is over here to seven thirty one Lex Randy strmercoh 674 00:33:53,240 --> 00:33:56,320 Speaker 1: Had of Senior Lending. He's a senior managing director Churchill 675 00:33:56,320 --> 00:33:59,320 Speaker 1: Acts Asset Management. Talking about the private credit business, and 676 00:33:59,360 --> 00:34:01,040 Speaker 1: again maybe it's to me, but I've been hearing a 677 00:34:01,080 --> 00:34:04,080 Speaker 1: lot more about the private credit business. It's a good business, 678 00:34:04,120 --> 00:34:06,800 Speaker 1: it's attracting a lot of capital. I'm seeing more and 679 00:34:06,840 --> 00:34:11,640 Speaker 1: more big names kind of get into that space. Thanks 680 00:34:11,640 --> 00:34:15,080 Speaker 1: for listening to the Bloomberg Markets podcast. You can subscribe 681 00:34:15,120 --> 00:34:18,880 Speaker 1: and listen to interviews with Apple Podcasts or whatever podcast 682 00:34:18,880 --> 00:34:22,440 Speaker 1: platform you prefer. I'm Matt Miller. I'm on Twitter at 683 00:34:22,480 --> 00:34:26,279 Speaker 1: Matt Miller three. On Fall Sweeney, I'm on Twitter at 684 00:34:26,320 --> 00:34:29,160 Speaker 1: pt Sweeney. Before the podcast, you can always catch us 685 00:34:29,200 --> 00:34:30,600 Speaker 1: worldwide at Bloomberg Radio