Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney. Alongside
Speaker 1: my co host Matt Miller. Every business day, we bring
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
Speaker 1: at Bloomberg dot com slash podcast. The labor market continues
Speaker 1: to improve. The job's claims numbers today continues to show
Speaker 1: a week over week improvement. How about those teens. It's
Speaker 1: you know, at the end of the school year, kids
Speaker 1: entering the summer workforce. What's the marketplace like for them?
Speaker 1: Barry rid Holds, Bloomberg Opinion columnists and host of Masters
Speaker 1: in Business on Bloomberg Radio is also founder, chairman and
Speaker 1: chief investment officer rid Holds Wealth Management. He's got some
Speaker 1: thoughts on that. So for all those teenagers, Barry, there's
Speaker 1: got to be lots of jobs out there, right, It's
Speaker 1: just a question of what am I gonna get paid? Yeah,
Speaker 1: there there are a ton of jobs there. And and
Speaker 1: when you look at teenage employment, especially the labor participation rate,
Speaker 1: this is at a thirteen year high. Um. But it's
Speaker 1: way down. There's this really interesting generational story that's taken
Speaker 1: place pretty much over the past thirty years. The labor
Speaker 1: teen participation rate has fallen, and and I argue that
Speaker 1: it's fallen as minimum wage lagged behind things like inflation
Speaker 1: or productivity, or corporate profits or executive comp and at
Speaker 1: a certain point, teenagers say, wait, in pre crisis, pre
Speaker 1: in two thousand seven, you want to pay me five
Speaker 1: dollars in fifteen cents an hour before you know FICA
Speaker 1: and and taxes. Most kids just turned around and say
Speaker 1: it's not worth it to do that. And you could
Speaker 1: see that reflected in the participation right now. Funny thing,
Speaker 1: the minimum wage went up in O eight oh nine
Speaker 1: and twenty ten, and not coincidentally, from at seven and
Speaker 1: a quarter and up, which is a bump from where
Speaker 1: it was. The labor participation rate of teenagers started to
Speaker 1: tick up. And here's the craziest thing. Unlike most other
Speaker 1: participation rates, it's now higher than it was pre pandemic.
Speaker 1: So maybe the kids are bored, they want to get
Speaker 1: out of the house, They're tired of looking at mom, dad, brother, sister,
Speaker 1: and say, let me, let me just see a change
Speaker 1: of pace. But all of this just keeps coming back
Speaker 1: to wages. Wages are table stakes. If you can't offer
Speaker 1: a competitive wage, your your potential pool of applicants are
Speaker 1: going to be tiny. And I mentioned the Pittsburgh Gazette
Speaker 1: article about an ice cream parlor that doubled their wages
Speaker 1: from seven to fifteen dollars. Usually they put on an
Speaker 1: air they get two or three applicants. At fifteen an hour,
Speaker 1: they got a thousand applicants. So wages are every thing
Speaker 1: the kids, no, right, I actually, to be honest, Barry,
Speaker 1: when I was a kid, my parents were just like,
Speaker 1: you're getting a job. It wasn't really my choice. You know.
Speaker 1: It was like I had to do something I wasn't
Speaker 1: allowed to not you could see that in that participation, right, Listen,
Speaker 1: I had a paper out when I was twelve. I
Speaker 1: was mowing lawns and shoveling snow at fourteen, fifteen, sixteen,
Speaker 1: And by the time I got to college, you know,
Speaker 1: I was waiting tables and and tending bar or short
Speaker 1: order chefs way back when. But that's a generational thing,
Speaker 1: and five ten fifteen, let's say, ten fifteen years ago,
Speaker 1: that wasn't what the standard was it's get an internship,
Speaker 1: work on your extracurricular activities, get into a better college,
Speaker 1: get get into a better um internship program, and first job.
Speaker 1: The focus shifted away from earning a living then to
Speaker 1: what are you going to do over the lifetime earnings?
Speaker 1: You can see, Barry, what do you think I mean?
Speaker 1: We're seeing anecdotal evidence of wages on the lower end
Speaker 1: of the hiring pool, whether it's McDonald's going to thirteen
Speaker 1: bucks or you know, Amazon, you know, going to fifteen
Speaker 1: dollars here is that just anecdotal or does that really
Speaker 1: signify this, you know, pulling up the bottom of the
Speaker 1: wage scale. It's a good question because very I gotta
Speaker 1: I gotta point out, you know, we haven't really seen
Speaker 1: wage inflation at all. If you look over the last decades, right, everything,
Speaker 1: the price of everything rises butt wages. So so here's
Speaker 1: the here's the issue you're referring to, and it plays
Speaker 1: into both wages and inflation. We have a tendency for
Speaker 1: wage prices to be sticky, and then at a certain
Speaker 1: point it becomes clear that wages are insufficient and you
Speaker 1: get this reset higher. So instead of seeing like an
Speaker 1: annualized increase in wage inflation. You sort of get this
Speaker 1: reset up and then it goes plateaus for a while,
Speaker 1: and you could tell that wages are moving higher, not
Speaker 1: because of the BLS or Census data, but my favorite
Speaker 1: data point is the quits rate. The people with full
Speaker 1: time jobs who are saying to their bosses audio smoas
Speaker 1: and moving on because there are better opportunities at higher wages.
Speaker 1: And if your boss won't give you a raise, someone
Speaker 1: else will. And so the flip side of why can't
Speaker 1: I hire people becomes why can't I retain people? For
Speaker 1: the hiring. I keep saying wages are table stakes, but
Speaker 1: if you want to keep people, it's more than just wages.
Speaker 1: It's some sort of path to equity, profit participation, benefits
Speaker 1: for oh one k things like that. And as we've
Speaker 1: seen over the past year, are you have to give
Speaker 1: people some freedom and control over their working circumstances. Ours
Speaker 1: we got and we got down to the we got
Speaker 1: down to the two minute mark, which means I gotta
Speaker 1: ask you about Ferrari. I speak. It's a new job, right.
Speaker 1: They got a new guy as CEO. He comes from
Speaker 1: wait for it, st micro Electronics. Ferrari, the new guy
Speaker 1: they hired run Ferrari deals with like touch screen interactivity.
Speaker 1: What the heck? Let me let me break this down really,
Speaker 1: really easily, so that even you can understand it. Tesla
Speaker 1: doesn't make cars, they make computers that move, and Ferrari
Speaker 1: has recognized that and said, we have been building so
Speaker 1: much electronics into our all, all of the traction, control,
Speaker 1: over the management, management, all of the which tire is
Speaker 1: going to get, how much power it for vector and
Speaker 1: how much time, how many times a second, how many
Speaker 1: hundreds of times a second? Are we gonna adjust that
Speaker 1: that the electronics become even more important than your favorite
Speaker 1: V twelve and ps. If you think Ferrari is going
Speaker 1: to be internal combustion engine forever, I got some bad
Speaker 1: news for you, Matt. They will eventually go to the faster,
Speaker 1: greener e V and the only thing they're gonna miss
Speaker 1: is the wonderful sound that comes out of those four
Speaker 1: chrome pipes at the back. I don't either, Paul. We're
Speaker 1: gonna buy old Ferrari's. Me and Barry are gonna be
Speaker 1: on bring a Trailer dot com while the rest of
Speaker 1: you are driving brand new electronic whiz kid cars and uh,
Speaker 1: while we still probably won't be able to afford them.
Speaker 1: Great talking to Barry ittt Holtz. As always, this is Bloomberg.
Speaker 1: Now President has revoked the Trump era bands on TikTok
Speaker 1: and we chat we chat in the United States of America.
Speaker 1: Jim Anderson, CEO of Social Flow, is here UM to
Speaker 1: talk with us a little bit about this. And we
Speaker 1: also want to point out here at Bloomberg we use
Speaker 1: social Flow. It's a platform used by Bloomberg for social
Speaker 1: media purposes. So just full disclosure there, we have another
Speaker 1: relationship with Jim. Um, let's get to the TikTok and
Speaker 1: we chat what what were the bands like and what
Speaker 1: does this um revocation mean? I mean kids were still
Speaker 1: using TikTok and we chat in the United States, right, oh,
Speaker 1: without a doubt. And to be clear, this was never
Speaker 1: about TikTok or or we chat chat. It was about
Speaker 1: the US and China relationship. And you know, President Trump
Speaker 1: issues his executive order he said that Bike Dance had
Speaker 1: to sell TikTok and there were various suitors. If you
Speaker 1: remember Microsoft, the Oracle, We're going to buy it. But
Speaker 1: remember the Chinese government ultimately had to approve that sale.
Speaker 1: And that always seemed wildly unlikely. You know, so really
Speaker 1: this is less about regulation of big tech and more
Speaker 1: about the U. S. Relationship with China expressed through big
Speaker 1: tech A Jim. It's the expectation not in Silicon Valley,
Speaker 1: that Biden administration will in fact dial down the rhetoric
Speaker 1: in terms of maybe some of the regulatory concerns about
Speaker 1: big tech that we're really starting to ramp up during
Speaker 1: towards the end of the Trump presidency. Yeah, for sure,
Speaker 1: dialing down the rhetoric. I mean, it doesn't take too
Speaker 1: much of an expert a server to to look and
Speaker 1: see that. You know, President Biden governs in a very
Speaker 1: different fashion than President Trump did. But I wouldn't, you know, confuse,
Speaker 1: you know, dial down rhetoric with a lack of substance.
Speaker 1: I think there's really something still quite substantive here, and
Speaker 1: that's because the U. S. China relationship and competitive nature
Speaker 1: of that relationship is still very very much in place.
Speaker 1: So the fact that he revoked the executive order in
Speaker 1: some ways was inevitable because it was a fairly dubious
Speaker 1: executive order. I think the subsequent court filings and all
Speaker 1: suggested that there was a long battle to be had
Speaker 1: with that executive order. So rather than fight a losing battle,
Speaker 1: I think he just decided quite quite understandably to just
Speaker 1: revoke it. But you know that that doesn't mean this
Speaker 1: is over. I think there's still a substantial and legitimate
Speaker 1: concern about a Chinese company owning data about U. S
Speaker 1: citizens and that's not gone away. Yeah. That, well, that
Speaker 1: definitely hasn't gone away. And we see other concerns around.
Speaker 1: For example, the peace cable UM I think, is just
Speaker 1: reaching the southern coast of France and Google isn't going
Speaker 1: to use it, Amazon is not going to use it.
Speaker 1: How is this all gonna work out? Because no doubt
Speaker 1: Huawei shares data with the Chinese government if they have
Speaker 1: to write, I would assume some US big US tech
Speaker 1: companies probably do the same with US. Yeah. Well, and
Speaker 1: that's a great point too, because we were seeing you know,
Speaker 1: situations where people are you know, being compelled under court
Speaker 1: order to provide data and the companies will fight it, etcetera.
Speaker 1: So you know, two different you know ideologies that work there.
Speaker 1: One is very you know, authoritarians and the other is
Speaker 1: is more of a democracy or a public So I
Speaker 1: don't know that I can give you an answer to that,
Speaker 1: But I will say that this is just one of
Speaker 1: many battles we're going to see. And the thing that
Speaker 1: my mind makes it so unique is just how wildly
Speaker 1: popular TikTok continues to be. I mean it it is
Speaker 1: red hot. It's got the attention of young people. Um,
Speaker 1: it's proven quite difficult for competitors to harness the same
Speaker 1: level of creativity. So you might think that, oh, TikTok
Speaker 1: is is doomed. You know, it's a bit of a
Speaker 1: strong statement, but you know, with all of this regulatory
Speaker 1: overhang and concern about presidential executive orders, you might think
Speaker 1: that it's not relevant. But in many ways, TikTok is
Speaker 1: more relevant than ever too young people who who quite
Speaker 1: honestly don't really care about the geopolitical political implications. They
Speaker 1: just like a fun app. So what do you think
Speaker 1: the future is for TikTok. It's still owned by Byte Dance, right,
Speaker 1: I mean, is this think they could spun out or
Speaker 1: I p O somewhere or again, as you mentioned, it's
Speaker 1: just become so popular. Yeah, I think it depends on
Speaker 1: whether the Chinese government ultimately would like to harvest the
Speaker 1: economic value or use it to make a political point,
Speaker 1: and my guess is um that they're not, you know,
Speaker 1: sort of eager to just harness a couple of billion
Speaker 1: dollars of economic excited. Maybe more than a couple of
Speaker 1: billion if the I POD or spun it out to
Speaker 1: another owner. I mean, it could be worth tens of
Speaker 1: billions of dollars. But the Chinese government's got lots of money.
Speaker 1: I'm not sure they say necessarily want to say, hey,
Speaker 1: let's let's just get tens of billions. I think they
Speaker 1: want to continue to use their position and the stay
Speaker 1: their their effective control over an asset's so popular in
Speaker 1: the U. S as as more of a geopolitical chip.
Speaker 1: So I would expect this to continue. And ultimately there
Speaker 1: may very well be something that comes out of the
Speaker 1: Biden administration that actually forces the same thing that President
Speaker 1: Trump was trying to do at the time, which is
Speaker 1: to force a divestiture. That wouldn't surprise me at all. Well,
Speaker 1: and the Biden administration could put some pressure itself on
Speaker 1: our own big social media platforms. Right, just got about
Speaker 1: ten seconds here, Jim, Oh, yeah, and that will continue, right.
Speaker 1: Antitrust and privacy are the two big dimensions there, and
Speaker 1: those are not going away Facebook, Punch and center on
Speaker 1: those all right. Jim, thanks so much for joining us.
Speaker 1: We always appreciate chatting with you. Getting the latest from
Speaker 1: some of the big tech platforms out there, and again
Speaker 1: good news for TikTok for sure. Jim Anderson, CEO of
Speaker 1: Social Flow, joining us here and again looking at the
Speaker 1: markets again. Still you know Hire today and led by
Speaker 1: the NASTAC one hundred. That's up seven tenths of one percent,
Speaker 1: So a little bit of a move into those tech
Speaker 1: names we are seeing again. Lots of economic data. This
Speaker 1: morning's CPI came in a little bit higher than expected,
Speaker 1: stoking some concerns about inflation into this market place. Let's
Speaker 1: check in with Chris Zacarelli. He's the chief investment officer
Speaker 1: for Independent Advisers Alliance Today about seven billion dollars in
Speaker 1: assets under management. Chris, thanks so much for joining us here.
Speaker 1: You've got the economic data this morning. Did that make
Speaker 1: you think that this FED is likely to begin tapering
Speaker 1: sooner rather than later. Well, the FET is definitely considering
Speaker 1: tapering at some point, and with the FED meeting next
Speaker 1: next week, we're we're thinking now is the time to
Speaker 1: start positioning for that. So whether they start the communication
Speaker 1: process for tapering next week or potentially more likely in
Speaker 1: August during the Jackson Whole symposium, we know they're going
Speaker 1: to be talking about tapering very shortly, and so I
Speaker 1: think looking at these inflation numbers, clearly the FAT has
Speaker 1: to be watching what's happened the last couple of months.
Speaker 1: They've been communicating pretty effectively that they're going to look
Speaker 1: through a lot of these inflation numbers. So I don't
Speaker 1: know that this morning's print is necessarily going to change
Speaker 1: their game plan. But for all those people who think
Speaker 1: inflation is going to be transitory and not sticky, as
Speaker 1: we continue to see these prints every single month, it's
Speaker 1: got at least put some doubt in your mind and
Speaker 1: take away a little bit of that conviction. So I think,
Speaker 1: if anything, that would be the one change at the
Speaker 1: margin that that I would expect out of today's now words,
Speaker 1: Let's say, what does transitory look like? It's transitory like um,
Speaker 1: three to six months, or is transitory like a year
Speaker 1: or two? You know in our in our minds, transitory
Speaker 1: would be less than a year. I think you asked
Speaker 1: that question of of a hundred people, and you'll get
Speaker 1: close to a hundred answers. I think everyone has has
Speaker 1: their own range of what transitory is. I think a
Speaker 1: FED is deliberately been vague about what transitory means in
Speaker 1: order to give themselves a little bit more room to
Speaker 1: work with. But if anything, they've said time and again
Speaker 1: that they're willing to allow inflation to run a little
Speaker 1: bit hotter hotter than they normally would. They're much more
Speaker 1: focused on the labor part of their dual mandate than
Speaker 1: they are in the price stability part of their two
Speaker 1: dual mandate. So for our mind, if we see these
Speaker 1: types of prints going over the course of more than
Speaker 1: six months, that would definitely be a concern to us.
Speaker 1: It's possible to FED would let that run a little
Speaker 1: bit longer. But the longer the definition of transitory, the
Speaker 1: longer we're going to be in this this state of flux.
Speaker 1: And I think the more volatility that that um brings
Speaker 1: to the situation, which is which is why they need
Speaker 1: to really kind of button that up. All right, Chris,
Speaker 1: giving that background, where are you guys doing some work today?
Speaker 1: Where do you see some opportunities? So for us, an
Speaker 1: interesting area is still the financials. So whether that's the
Speaker 1: regional banks or the larger money sending money money center banks.
Speaker 1: The financials are really showing some weakness from a technical
Speaker 1: point of view, but from evaluation point of view, there's
Speaker 1: they're still cheap to where they've been historically. So we
Speaker 1: think within the financials, if the economy continues to do
Speaker 1: well and interest rates they anchored, financials should do okay.
Speaker 1: And I think we're going to see some buying opportunities
Speaker 1: in the next few months within financials as people continue
Speaker 1: to see interest rates being very staying stuck very low. However,
Speaker 1: if interest rates start going higher again, that's great for financials.
Speaker 1: So we think financials are are well priced. We think
Speaker 1: there's some weakness at least in terms of the technicals.
Speaker 1: So I pick your spots, and I think you're gonna
Speaker 1: see some financials go on sale. But we see that
Speaker 1: as heads you do okay, tales you do very well,
Speaker 1: and so we like the risk rewards set up at
Speaker 1: least within within that end street. So again thinking about
Speaker 1: some opportunities here, you know, again the concern is that
Speaker 1: the FED is going to need to raise rates here. Um,
Speaker 1: given that scenario, are there parts of the market that
Speaker 1: you just think you're gonna be really rocked when and
Speaker 1: if that happens, well, if interest rates start going higher,
Speaker 1: and again that's more likely to be at the ten
Speaker 1: year or third year range, we're gonna see longer term
Speaker 1: insestrates move higher through through the market. Tapering is one
Speaker 1: way that could happen, and and a shift and sentiment
Speaker 1: is another way. As far as short term rates, with
Speaker 1: the when the Fed will begin raising, I think most
Speaker 1: people believe that's a year or two out at the earliest,
Speaker 1: even as inflation starts to heat up. So we think
Speaker 1: if longer term interest rates go higher again through either
Speaker 1: taper discussions or just because the bond market changes the
Speaker 1: narrative for how how high they think rates will will
Speaker 1: go in the future and how much economic growth and
Speaker 1: inflation rates higher. We think technology shares and high price
Speaker 1: price to earn shares are are the parts of the
Speaker 1: market that are are most vulnerable in that case, and
Speaker 1: so those those are areas of the market i'd be
Speaker 1: careful on. You want to right size your positions in
Speaker 1: those longer duration stocks, so to speak. You know that, um,
Speaker 1: the narrative that this is a very dangerous moment for
Speaker 1: central banks has really gained a lot of pace. Um.
Speaker 1: We heard that from Andy Haldane, chief economists at the
Speaker 1: Bank of England. We have heard Martin folkirts Land down,
Speaker 1: Peter Hooper at Deutsche Bank saying, you know, inflation could
Speaker 1: be more than just transitory and uh. Bill Dudley wrote
Speaker 1: for Bloomberg Opinion that the problem with this is this
Speaker 1: overheating is that when it's time to turn around, the
Speaker 1: Fed's gonna have to raise rates quickly, more quickly than
Speaker 1: people are ready for, and faster and uh and higher
Speaker 1: than people may be ready for, and that could bring
Speaker 1: about a full blown recession. It's like a turn on
Speaker 1: a dime kind of situation. Is that a concern you
Speaker 1: think that's gaining a lot more traction. I don't know
Speaker 1: that has gained as extraction as it should. It's a
Speaker 1: concern that we share. We are also in that camp that, um.
Speaker 1: The idea that the FED is going to play this
Speaker 1: perfectly keep inflation in check while the economy reopens, I
Speaker 1: think is a is a stretch. And I think for
Speaker 1: all those people who are keeping interest rates as low
Speaker 1: as they are buying that tenure today and keep knocking
Speaker 1: down those rates, that's a big article of faith from
Speaker 1: from our point of view, and one that we don't
Speaker 1: have as much conviction and as clearly a lot of
Speaker 1: bond market investors have. We think there's a really big
Speaker 1: difference between uh an extraordinary amount of quantitative easing, which
Speaker 1: was done after the global financial crisis. Sure M two
Speaker 1: can jump up astronomically, but as long as the velocity
Speaker 1: of money collapses, you can get away with so much
Speaker 1: quantitative easing without seeing a lot of inflation. But what's
Speaker 1: different this time around is we've got so much fiscal
Speaker 1: stimulus in addition to the monetary stimulus, and that's something
Speaker 1: we're surprised that the market is not seemed to not
Speaker 1: be taking into consideration the idea of putting trillions of
Speaker 1: dollars into the hands of consumers, especially those lower income consumers,
Speaker 1: we're much more likely to spend it. We think that's
Speaker 1: where the risk lies. It's not that we have so
Speaker 1: much quantitative easing. It is that we have quantitative easing
Speaker 1: on top of trillions of dollars a fiscal stimulus. And
Speaker 1: I'm not the only person who's who's making this point.
Speaker 1: I think there are others who are starting to talk
Speaker 1: about it. But if I think that narrative is the
Speaker 1: one that I haven't seen really take off, and I'm
Speaker 1: surprised about it, I would think, And that much fiscal
Speaker 1: stimulus on top of monetary stimulus is why inflation is
Speaker 1: much more of a risk than it ever was in
Speaker 1: two thousand nine, two thousand ten, and even into the
Speaker 1: Taper chance. Chris, have a valuation here again setting new
Speaker 1: highs in this marketplace. Yes, earnings have been very good
Speaker 1: for the past couple of quarters. How do you view evaluation?
Speaker 1: Is that a concern for you and for this market?
Speaker 1: I think where the market's price right now, at least
Speaker 1: using the SMPI as a proxy, you have to be
Speaker 1: aware that that valuations are elevated now. I think within
Speaker 1: the SMP five you have to look at kind of
Speaker 1: the the index composition, and because so much of the
Speaker 1: index is heavily weighted towards technology and communication shares, a
Speaker 1: lot of those companies are businesses that are that deserve
Speaker 1: those valuations. So I think evaluation in and of itself
Speaker 1: is not a concern for us, but it's something that
Speaker 1: we're keeping in mind. It's definitely a necessary condition, all right, Chris,
Speaker 1: thanks so much for joining us. Chris Scarelly, chief investment
Speaker 1: officer for Independent Advisor Alliance. Let's get over now to
Speaker 1: Ted Swimmer, head of Corporate Finance and Capital Market at
Speaker 1: Citizens speak Capital Markets at Citizens, because we had um
Speaker 1: first off, Ted, really interesting no doubt from the SEC
Speaker 1: yesterday that Gary Gensler has instructed his staff to well
Speaker 1: make markets work better is the broad order, But UM
Speaker 1: talking really to to his staff about market makers and um,
Speaker 1: you know, buying fund thos. What do you think about
Speaker 1: the changes we should see? Well, thank first of all,
Speaker 1: thanks for having me this morning. We're seeing some very
Speaker 1: positive fund flows in the businesses that we're working on.
Speaker 1: We're seeing a lot of investor demand. Loan and bond
Speaker 1: side of the businesses seem to be taking off. We
Speaker 1: feel like the markets are incredibly accommodative now for future
Speaker 1: for transactions in the second half of the year. First
Speaker 1: half of the year has been very aggressive already, but
Speaker 1: not a ton of new business coming in, not a
Speaker 1: ton of new l B O s or acquisition related deals.
Speaker 1: But we're feeling like the pipelines are building rapidly in
Speaker 1: the second half of the year and we think the
Speaker 1: markets will be very accommodated for it. So what are
Speaker 1: some sectors ted that you're seeing some of the activity.
Speaker 1: And again I think just from the public equity markets,
Speaker 1: a lot of investors have been piling into some of
Speaker 1: the cyclical areas of the market that will benefit from reopening.
Speaker 1: What are you seeing from the corporate finance, the capital markets,
Speaker 1: the UH specialized loan market. What are you seeing there
Speaker 1: in terms of sector demand so so far in the
Speaker 1: first half of year. That UH, the debt markets, which
Speaker 1: tend to be more backwards looking and forwards looking. UH,
Speaker 1: we saw a lot of deals in the healthcare and
Speaker 1: tech markets, given that those markets were not as much
Speaker 1: affected by the COVID environment last year, So revenues and
Speaker 1: EPO DOC continue to improve, making a very very easy
Speaker 1: to do debt transactions in those markets. As we see
Speaker 1: the second a half year picking up and earnings picking
Speaker 1: up in more of the cyclicals, I will see more
Speaker 1: cyclical deals done in the second half of the year,
Speaker 1: but the first half of the year has really been
Speaker 1: dominated more by technology and healthcaretil related transactions. Do you
Speaker 1: have any concerns about inflation. I mean, we're starting to
Speaker 1: hear some big names in economics voice concerns about the
Speaker 1: possibility that it may not be transitory. We we do
Speaker 1: have some I mean it's it's not an overwhelming concern,
Speaker 1: but we're in the companies that we bank, we're starting
Speaker 1: to see inflation take off. We're started a few all
Speaker 1: the consumer pinch a little bit on the inflation side
Speaker 1: of the business. From an inflation perspective. Uh you know,
Speaker 1: the bond market has seen some gets seems to get
Speaker 1: concerned about inflation and then papers off, and because there's
Speaker 1: still so much demand on that side of the market.
Speaker 1: I think it's out there. I think, well, I think
Speaker 1: our bank thinks it's going to hit at some point.
Speaker 1: It's not an immediate concern, but looking out tools to
Speaker 1: eighteen months, I certainly think it's going to be part
Speaker 1: of the discussion on everything we're doing. Talk to us
Speaker 1: just real quickly about private equity ted kind of are
Speaker 1: they driving deal flow out there and kind of the
Speaker 1: small mid market part of the market. Absolutely, private equity
Speaker 1: is becoming, not becoming, is the dominant force in the
Speaker 1: upper middle markets uh D fifty million dollar eve dot
Speaker 1: type transactions. We're seeing a lot of private equities obviously
Speaker 1: stay on the sidelines from a new business perspective last year,
Speaker 1: and that market is hot right now. From from both
Speaker 1: the selling perspective, we're seeing a number of p sell
Speaker 1: some firms, but the main buyer out there is the
Speaker 1: PE market. A number of middle market companies we're seeing
Speaker 1: wanting to sell. Given I think they looked over the
Speaker 1: precipice last year during COVID, got nervous see the potential
Speaker 1: change in the capital gains tax next year, and I
Speaker 1: think they want to They want to have a liquidity event,
Speaker 1: and private equities the dominant buyer. The debt markets are
Speaker 1: certainly whether it's private BED or public BET is certainly
Speaker 1: accommodated or those transactions to occur. And I think we'll
Speaker 1: see the second half of the year dominated by by
Speaker 1: eminent by private equity snatching up opportunities. Obviously, we saw
Speaker 1: a couple of those deals announced last week, and uh,
Speaker 1: I think we'll see that as a continuing trend through
Speaker 1: the third and fourth quarter of this year. Hey, Ted,
Speaker 1: thanks so much for joining us. We really appreciate you
Speaker 1: taking the time. They're giving us some thoughts on the
Speaker 1: capital markets there, uh remain hot, likely to get even
Speaker 1: hotter in the second half of the year, says Mr
Speaker 1: Swimmer Ted Swimmer, head of Corporate Finance and Capital Markets
Speaker 1: at Citizens. Good to get a sense of kind of
Speaker 1: how things are going out there in the deal flow.
Speaker 1: We've seen some big, big deals, obviously strategic M and
Speaker 1: A transactions, but small and mid market also doing well
Speaker 1: and very active. Thanks for listening to the Bloomberg Markets podcast.
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Speaker 1: on Twitter at Matt Miller, three pt on Fall Sweeney.
Speaker 1: I'm on Twitter at pt Sweeney Before the podcast. You
Speaker 1: can always catch us worldwide at Bloomberg Radio