1 00:00:03,400 --> 00:00:07,040 Speaker 1: This is Bloomberg Surveillance. One of the reasons for wanting 2 00:00:07,080 --> 00:00:09,640 Speaker 1: to adjust policy rates higher is that if we do 3 00:00:09,840 --> 00:00:12,040 Speaker 1: n into trouble, there's room to ease. I think it's 4 00:00:12,119 --> 00:00:14,720 Speaker 1: clear that we should be expecting further eating for the 5 00:00:14,720 --> 00:00:17,720 Speaker 1: europe Seco Bank, and we should probably be expecting further 6 00:00:17,800 --> 00:00:20,119 Speaker 1: eating for the Bank of Japan's. One of the concerns 7 00:00:20,160 --> 00:00:23,440 Speaker 1: expressed for markets is a lack of global growth, and 8 00:00:23,520 --> 00:00:26,440 Speaker 1: it really is showing up now and now. Put Bloomberg 9 00:00:26,480 --> 00:00:30,240 Speaker 1: Surveillance your link to the world of economics, finance and 10 00:00:30,360 --> 00:00:34,000 Speaker 1: investment on Bloomberg Radio. Good running everyone, Michael McKee and 11 00:00:34,080 --> 00:00:36,960 Speaker 1: Tom Keane, Bloomberg Surveillance. Who welcome all of you worldwide, 12 00:00:36,960 --> 00:00:40,840 Speaker 1: Bloomberg Radio Plus. What a great Crystal Clear of the show, 13 00:00:40,960 --> 00:00:44,040 Speaker 1: all the shows on Bloomberg Radio. Crystal Clear Bloomberg twelve 14 00:00:44,080 --> 00:00:48,760 Speaker 1: hundred Boston, Good Morning sixty the Bay Area in San Francisco, 15 00:00:49,040 --> 00:00:51,519 Speaker 1: Corey Johnson telling me the weather out there has been 16 00:00:51,560 --> 00:00:58,200 Speaker 1: just extraordinary recently. Good Morning Bloomberg FM, Washington, of course 17 00:00:58,240 --> 00:01:01,040 Speaker 1: here in New York and nitionwide years next m Channel 18 00:01:01,040 --> 00:01:04,160 Speaker 1: one nineteen Howard Marks coming up in a moment that's 19 00:01:04,280 --> 00:01:08,840 Speaker 1: always very important where we try to get uncommon sense 20 00:01:09,319 --> 00:01:12,679 Speaker 1: from a thoughtful investor. That's the goal, at least. First 21 00:01:12,680 --> 00:01:16,080 Speaker 1: Foreign Exchange of Forex brief brought you by Interactive Brokers, 22 00:01:16,120 --> 00:01:19,280 Speaker 1: winner of FX Weeks two thousand fifteen award for the 23 00:01:19,319 --> 00:01:23,640 Speaker 1: Best Retail Forex Trading Platform. Visit ib AT, I b 24 00:01:23,760 --> 00:01:27,319 Speaker 1: k R dot com slash four x. I'm watching Paso 25 00:01:28,200 --> 00:01:31,679 Speaker 1: is a proxy stronger Mexican Peso UH in the last 26 00:01:31,720 --> 00:01:35,440 Speaker 1: number of days as emerging markets calm in the churn 27 00:01:35,480 --> 00:01:37,920 Speaker 1: that we have mid February eighteen point one five yen 28 00:01:38,040 --> 00:01:42,520 Speaker 1: stronger one eight eight Euro weaker, Sterling weaker as well. Well, 29 00:01:42,560 --> 00:01:45,319 Speaker 1: i'd say incorrected. Sterling shows a little bit of gain 30 00:01:45,400 --> 00:01:49,960 Speaker 1: one eight here as a prime minister migrates to Brussels 31 00:01:49,960 --> 00:01:54,040 Speaker 1: on Brexit, we will exit right now to the equity markets. 32 00:01:54,080 --> 00:01:59,120 Speaker 1: Walmart ten year track record four point five percent per year. 33 00:01:59,240 --> 00:02:02,000 Speaker 1: David that doesn't get it done doesn't know it's certainly 34 00:02:02,360 --> 00:02:05,360 Speaker 1: the latest outlook for Walmart didn't get done either. Before 35 00:02:05,360 --> 00:02:07,440 Speaker 1: we get to that, though, we should point out there's 36 00:02:07,440 --> 00:02:12,040 Speaker 1: some breaking news IBM agreeing to buy Trouven Health Analytics 37 00:02:12,080 --> 00:02:15,680 Speaker 1: for two point six billion dollars. It's the fourth health 38 00:02:15,760 --> 00:02:19,000 Speaker 1: data related acquisition at IBM and less than a year 39 00:02:19,320 --> 00:02:22,880 Speaker 1: and the biggest deal since Jennie Remati took over as 40 00:02:22,919 --> 00:02:26,680 Speaker 1: IBMS chief executive three years ago. And IBM shares are 41 00:02:26,800 --> 00:02:30,000 Speaker 1: up two and a half percent in early trading. Now 42 00:02:30,040 --> 00:02:34,079 Speaker 1: we'll turn to Walmart, down four percent. The world's largest 43 00:02:34,120 --> 00:02:38,040 Speaker 1: retailer said this year's sales will be relatively flat warm wart. 44 00:02:38,120 --> 00:02:40,639 Speaker 1: Walmart had expected sales to rise as much as four 45 00:02:40,760 --> 00:02:43,679 Speaker 1: percent UH this year. Company attributed the cut to a 46 00:02:43,840 --> 00:02:47,359 Speaker 1: stronger dollar and a push to close under performing locations. 47 00:02:47,760 --> 00:02:50,840 Speaker 1: And then Parago down seven and a half percent. The 48 00:02:50,919 --> 00:02:54,640 Speaker 1: generic drugmaker's fourth quarter revenue and adjusted earnings failed to 49 00:02:54,680 --> 00:02:58,000 Speaker 1: meet analyst average estimates in the Bloomberg survey. Parago said 50 00:02:58,000 --> 00:03:01,919 Speaker 1: it plans to exit some brand aim consumer healthcare products, 51 00:03:02,240 --> 00:03:06,600 Speaker 1: an area that it only recently entered, and video, though 52 00:03:06,720 --> 00:03:09,120 Speaker 1: up eight percent, the biggest maker of graphics, ships made 53 00:03:09,120 --> 00:03:12,280 Speaker 1: a fiscal first quarter revenue forecast to beat estimates. Sustained 54 00:03:12,320 --> 00:03:15,639 Speaker 1: demand for gaming computers allowed in video to weather a 55 00:03:15,760 --> 00:03:19,960 Speaker 1: slump in personal computer sales, and speaking of computers and 56 00:03:20,040 --> 00:03:24,280 Speaker 1: software and networking equivalent, Ingram Micro distributes all those products, 57 00:03:24,280 --> 00:03:27,160 Speaker 1: and it shares are up twenty two percent, ingram Micro 58 00:03:27,280 --> 00:03:30,960 Speaker 1: accepting a six billion dollar takeover offer from China's jan 59 00:03:31,120 --> 00:03:36,160 Speaker 1: Jin Jan High Investment Marathon Oil of four percent. The 60 00:03:36,240 --> 00:03:38,440 Speaker 1: energy and producers said a cut investment this year by 61 00:03:38,480 --> 00:03:42,280 Speaker 1: more than fifty and also reduction production. Uh Martha Marathon's 62 00:03:42,280 --> 00:03:44,240 Speaker 1: fourth quarter revenue being estimates and its loss was in 63 00:03:44,320 --> 00:03:47,040 Speaker 1: line with projections. Demon Energy, on the other hand, down 64 00:03:47,120 --> 00:03:49,360 Speaker 1: six percent. The oil gaest producer raised as much as 65 00:03:49,400 --> 00:03:52,080 Speaker 1: one point three billion dollars by selling the equivalent of 66 00:03:52,160 --> 00:03:54,480 Speaker 1: a thirteen and a hand percent stake. A lot going David, 67 00:03:54,480 --> 00:03:56,440 Speaker 1: There's a lot of dynamics going on in oil right now. 68 00:03:56,560 --> 00:04:00,480 Speaker 1: Right oh absolutely, I mean the other day, well you've 69 00:04:00,520 --> 00:04:02,640 Speaker 1: got a few of those, and you've got Warren Buffett 70 00:04:02,720 --> 00:04:06,000 Speaker 1: the stepping up an investment Philip sixty six courtesy at 71 00:04:06,040 --> 00:04:08,600 Speaker 1: Barkshire Hathaway and also moving into Kinder Morgan is sort 72 00:04:08,600 --> 00:04:11,360 Speaker 1: of a related business. Kinder Morgan caught my attention yesterday. 73 00:04:11,480 --> 00:04:14,160 Speaker 1: Right now, Howard Marks of Oakstree, Let's get right to 74 00:04:14,200 --> 00:04:16,719 Speaker 1: it hard. We don't have enough time today and Distress 75 00:04:16,800 --> 00:04:19,920 Speaker 1: Bonds is the moment we're in an opportunity for Mr 76 00:04:20,080 --> 00:04:23,000 Speaker 1: Marks or is it your under the desk, which is no. 77 00:04:23,240 --> 00:04:26,360 Speaker 1: I think that for the long term investor, I think 78 00:04:26,400 --> 00:04:29,559 Speaker 1: it's a very good opportunity. Things are a lot cheaper 79 00:04:29,760 --> 00:04:35,240 Speaker 1: than they were nine months ago, six months ago, UH Negativity, 80 00:04:36,080 --> 00:04:41,560 Speaker 1: Jumy and just Bloomberg version has made its way into 81 00:04:41,640 --> 00:04:44,520 Speaker 1: the market. And we want to buy when mark when 82 00:04:44,600 --> 00:04:46,800 Speaker 1: investors are worried and cautious. We don't want to buy 83 00:04:46,839 --> 00:04:49,960 Speaker 1: when they're optimistic in euphoric and this that makes this 84 00:04:50,040 --> 00:04:52,800 Speaker 1: a much better time. Well, is there something that has 85 00:04:52,880 --> 00:04:55,720 Speaker 1: fundamentally changed in the underlying dynamic of the markets that 86 00:04:55,839 --> 00:04:58,680 Speaker 1: have people panicking or is this irrational? No? I think 87 00:04:58,720 --> 00:05:01,120 Speaker 1: it's irrational. You know. I put out a memo UH 88 00:05:02,560 --> 00:05:05,320 Speaker 1: in January called on the Couch reference the fact that 89 00:05:05,400 --> 00:05:06,960 Speaker 1: the market needs a trip to the shrink once in 90 00:05:06,960 --> 00:05:09,320 Speaker 1: a while, and I said in there that what happens 91 00:05:09,320 --> 00:05:11,440 Speaker 1: in the market is it only looks at the positives, 92 00:05:11,560 --> 00:05:15,000 Speaker 1: and it interprets everything positively as long as it can, 93 00:05:15,640 --> 00:05:17,600 Speaker 1: and then it gives up the ghost and it flips 94 00:05:17,640 --> 00:05:20,120 Speaker 1: one eighty and it starts looking at everything negatively. And 95 00:05:20,240 --> 00:05:22,680 Speaker 1: I think I date that to late China. There was 96 00:05:22,760 --> 00:05:26,719 Speaker 1: a big spike in the VIX and China reported bad 97 00:05:26,800 --> 00:05:33,039 Speaker 1: economic news, declining market, uh, surprising devaluation, and people freaked 98 00:05:33,080 --> 00:05:35,400 Speaker 1: out and they and you know in the in the 99 00:05:35,480 --> 00:05:39,280 Speaker 1: memo there was a cartoon and uh newscaster saying that 100 00:05:39,360 --> 00:05:41,760 Speaker 1: everything that was good for the market yesterday was bad 101 00:05:41,839 --> 00:05:46,280 Speaker 1: for it today. And that's the way these things go. No, 102 00:05:46,520 --> 00:05:50,640 Speaker 1: no vote. But but the thing is that you know, 103 00:05:51,000 --> 00:05:55,680 Speaker 1: people are in the market. People are rarely objective, clinical 104 00:05:55,800 --> 00:05:59,880 Speaker 1: and rational, and they go to extremes and on my opinion, 105 00:06:00,240 --> 00:06:04,039 Speaker 1: they went from optimistic to pessimistic. Now I'm not saying 106 00:06:04,080 --> 00:06:07,120 Speaker 1: that I've got to become more pessimistic Michael Uh, but 107 00:06:07,839 --> 00:06:11,840 Speaker 1: I'd rather buy him today than than six months ago. Now, 108 00:06:12,080 --> 00:06:16,440 Speaker 1: you Bloomberg News notes accurately that you you made a 109 00:06:16,720 --> 00:06:18,760 Speaker 1: lot of money off an investment with Jeffrey good Luck 110 00:06:18,760 --> 00:06:21,400 Speaker 1: when he started a double line. But is the bond 111 00:06:21,440 --> 00:06:24,440 Speaker 1: market is still going to pay? Even with Mr Goodluck's 112 00:06:24,440 --> 00:06:26,360 Speaker 1: wonderful track record? Is a bond market is still gonna 113 00:06:26,360 --> 00:06:28,920 Speaker 1: pay like it has the last few years? Or now 114 00:06:29,080 --> 00:06:32,600 Speaker 1: is it squeezing out the pennies because we've come so far. 115 00:06:33,920 --> 00:06:38,160 Speaker 1: I think that a highly skilled manager, which is what 116 00:06:38,320 --> 00:06:43,760 Speaker 1: I think jeff is, will always be in demand. People 117 00:06:43,839 --> 00:06:46,760 Speaker 1: have money. They want to turn that money into more money. 118 00:06:47,320 --> 00:06:49,680 Speaker 1: Hopefully they want to do it safely. The people who 119 00:06:49,720 --> 00:06:52,320 Speaker 1: can do that will be in demand and their companies 120 00:06:52,360 --> 00:06:55,520 Speaker 1: will be profitable. By the way, we haven't cashed that 121 00:06:55,640 --> 00:06:58,320 Speaker 1: investment yet, so you know, this is the This is 122 00:06:58,400 --> 00:07:01,160 Speaker 1: the this is the appreciation. Some people say we're looking 123 00:07:01,200 --> 00:07:04,120 Speaker 1: at right, but we're not. I don't claim to have 124 00:07:04,200 --> 00:07:07,840 Speaker 1: pocketed that kind of money within within the work and 125 00:07:08,080 --> 00:07:11,800 Speaker 1: and I know Jeff quite well within his mathiness and 126 00:07:12,000 --> 00:07:16,360 Speaker 1: the phrase you just used highly skilled. Does the institutional 127 00:07:16,640 --> 00:07:21,600 Speaker 1: by side in the hedge fund world have the intellectual chops? 128 00:07:21,720 --> 00:07:26,720 Speaker 1: Given the competition for yield and spread analysis? There are 129 00:07:26,800 --> 00:07:30,440 Speaker 1: there a few people like Howard Marks and Jeff Gunlock 130 00:07:30,520 --> 00:07:36,200 Speaker 1: out there. Are you pretty impressed by the intellectual contingency? Um? 131 00:07:38,120 --> 00:07:45,000 Speaker 1: You know, Tom on average people are average? Um and uh. Historically, 132 00:07:45,400 --> 00:07:48,000 Speaker 1: the average institutional investor, I'm not talking about the bond world. 133 00:07:48,000 --> 00:07:50,560 Speaker 1: I'm talking about the investment world. The average institutional investor 134 00:07:50,640 --> 00:07:55,000 Speaker 1: has done about average. Uh. So my comments are with 135 00:07:55,120 --> 00:07:59,400 Speaker 1: regard to the rare exceptional person and and I think 136 00:07:59,440 --> 00:08:02,920 Speaker 1: Jeff is person, and I think that the exceptional person 137 00:08:03,080 --> 00:08:07,760 Speaker 1: will always uh be successful. What makes an exceptional investor. 138 00:08:08,760 --> 00:08:15,760 Speaker 1: In my book The Most Important Thing, Chapter one plug music, right, 139 00:08:16,960 --> 00:08:19,760 Speaker 1: But chapter one says the most important thing is second 140 00:08:19,840 --> 00:08:23,200 Speaker 1: level thinking, and the exceptional person see thing that the 141 00:08:23,280 --> 00:08:26,160 Speaker 1: average person doesn't see and sees them differently. And if 142 00:08:26,200 --> 00:08:29,200 Speaker 1: you want to perform exceptionally, you have to think and 143 00:08:29,360 --> 00:08:32,839 Speaker 1: see exceptionally. So the first level thinker says it's a 144 00:08:33,000 --> 00:08:36,280 Speaker 1: great company, you should buy the stock. The second level 145 00:08:36,400 --> 00:08:39,440 Speaker 1: thinker says, it's a great company, but it's not as 146 00:08:39,480 --> 00:08:42,360 Speaker 1: great as everybody thinks. You should sell the stock. You see, 147 00:08:42,679 --> 00:08:45,480 Speaker 1: it's it's like the second derivative than calculus. You have 148 00:08:45,600 --> 00:08:47,760 Speaker 1: to take your stock is gonna go up because everybody 149 00:08:47,800 --> 00:08:49,800 Speaker 1: thinks it's great, but I can see the weaknesses. So 150 00:08:49,920 --> 00:08:51,760 Speaker 1: I'm gonna get on the other side of Howard how 151 00:08:52,080 --> 00:08:54,600 Speaker 1: we're a hockey show. What that means is Gretzky went 152 00:08:54,640 --> 00:08:57,200 Speaker 1: to where the puck was gonna be right. We'll see 153 00:08:57,240 --> 00:09:00,280 Speaker 1: the basic idea, but within the model that you've god, 154 00:09:00,880 --> 00:09:04,040 Speaker 1: I would suggest the winners recently have been people with 155 00:09:04,240 --> 00:09:09,680 Speaker 1: really acute dynamics, taking multi asset and cross asset analysis 156 00:09:10,320 --> 00:09:12,320 Speaker 1: and being able to look at that and then as 157 00:09:12,360 --> 00:09:16,720 Speaker 1: you say, filter forward to where we're gonna be Yeah. Well, 158 00:09:17,480 --> 00:09:20,320 Speaker 1: Sid Coddle, who was a professor at Columbia fifty years ago, 159 00:09:20,400 --> 00:09:23,400 Speaker 1: said the investment is the discipline of relative selection. In 160 00:09:23,480 --> 00:09:28,040 Speaker 1: other words, what that's what you're a cross market term. 161 00:09:28,640 --> 00:09:32,199 Speaker 1: Should everybody read security analysis? Graham dog Coddle, Well, I 162 00:09:32,280 --> 00:09:34,440 Speaker 1: think they should. Yeah. To me, it's a right of past. 163 00:09:34,520 --> 00:09:36,400 Speaker 1: You have to read it to understand a more static 164 00:09:36,880 --> 00:09:39,120 Speaker 1: railroad time. By the way, in oh five or six 165 00:09:39,280 --> 00:09:42,920 Speaker 1: we reissued the n edition. It's I think the new 166 00:09:43,000 --> 00:09:45,640 Speaker 1: one is more readable. So I'd recommend that you shameless 167 00:09:45,679 --> 00:09:48,640 Speaker 1: plug while we're playing. Should they read the Yield books 168 00:09:48,640 --> 00:09:51,520 Speaker 1: Sydney and Homer? I think if they want to know 169 00:09:51,600 --> 00:09:53,840 Speaker 1: how bonds work, if you wanted all buds, you gotta 170 00:09:53,880 --> 00:09:57,160 Speaker 1: go back to the seminal literature. Do you know you 171 00:09:57,240 --> 00:09:58,679 Speaker 1: have to have? By the way, you know, if I 172 00:09:58,760 --> 00:10:02,079 Speaker 1: believe Tom is that most people who participate in the 173 00:10:02,120 --> 00:10:06,960 Speaker 1: markets don't really understand how profits are made. Uh. They 174 00:10:07,080 --> 00:10:09,400 Speaker 1: just think, well, you buy something that's gonna go up tomorrow, 175 00:10:10,280 --> 00:10:11,880 Speaker 1: but you have to know what's gonna make it go 176 00:10:12,040 --> 00:10:14,920 Speaker 1: up tomorrow in the relative nature? Can we go on 177 00:10:15,080 --> 00:10:16,839 Speaker 1: like for three hours with Howard and I think we 178 00:10:16,920 --> 00:10:19,880 Speaker 1: could do, Howard Marks, thank you for stopping by today 179 00:10:19,960 --> 00:10:22,599 Speaker 1: with oak Tree um. And we didn't even get to 180 00:10:22,640 --> 00:10:26,120 Speaker 1: the basic idea of coupon or total return within where 181 00:10:26,160 --> 00:10:28,880 Speaker 1: we are within bonds the futures of five. There's just 182 00:10:28,920 --> 00:10:31,240 Speaker 1: a churn to the screen, Howard Marks, taking the rest 183 00:10:31,320 --> 00:10:35,840 Speaker 1: of the day off stour for Barrel and West Texas 184 00:10:35,920 --> 00:10:39,800 Speaker 1: up sins, Brent crewed up a dollar thirty five six 185 00:10:40,160 --> 00:10:44,120 Speaker 1: and just again a churn within this uh the stronger yeah, 186 00:10:44,120 --> 00:10:46,800 Speaker 1: and one thirteen eighty nine in the year O one 187 00:10:46,960 --> 00:10:53,880 Speaker 1: ten eighty three. Now let's check in with Michael bar 188 00:10:54,040 --> 00:10:56,800 Speaker 1: and get the latest world in national headlines. Michael, my time, 189 00:10:56,840 --> 00:10:59,720 Speaker 1: Thank you very much. President Barack Obama will announce today 190 00:10:59,760 --> 00:11:01,920 Speaker 1: they he will be traveling to Cuba in mid March. 191 00:11:02,440 --> 00:11:04,560 Speaker 1: It will be the first time in almost nine decades 192 00:11:04,640 --> 00:11:07,640 Speaker 1: that a US president has visited the island. Stop would 193 00:11:07,640 --> 00:11:10,440 Speaker 1: be part of a broader trip to Latin America. Vice 194 00:11:10,480 --> 00:11:13,600 Speaker 1: President Joe Biden says President Obama is looking to nominate 195 00:11:13,679 --> 00:11:17,840 Speaker 1: someone who's had passed support from Republicans to replace late 196 00:11:17,880 --> 00:11:21,440 Speaker 1: Supreme Court Justice Anton and Scalia. Biden told Minnesota Public 197 00:11:21,559 --> 00:11:24,240 Speaker 1: Radio today the President is not going to be able 198 00:11:24,280 --> 00:11:26,760 Speaker 1: to pick the most liberal jurist in the nation and 199 00:11:26,920 --> 00:11:30,720 Speaker 1: put them on the court. Republican presidential candidate Donald Trump 200 00:11:31,080 --> 00:11:34,040 Speaker 1: has a nineteen point lead over Ted Cruz in the 201 00:11:34,120 --> 00:11:38,640 Speaker 1: latest Bloomberg Politics poll ahead of Saturday South Carolina primary. Meanwhile, 202 00:11:38,760 --> 00:11:42,000 Speaker 1: Cruz is leading all candidates in the scramble for oil 203 00:11:42,040 --> 00:11:46,600 Speaker 1: industry campaign cash, surpassing Jeff Bush. Global News twenty four 204 00:11:46,640 --> 00:11:49,560 Speaker 1: hours a day and powered by our two hundred journalists 205 00:11:49,800 --> 00:11:51,920 Speaker 1: and more than a hundred fifty news bureaus from around 206 00:11:51,920 --> 00:11:54,640 Speaker 1: the world. I'm Michael Barr, Mike Tom and Michael, Thanks 207 00:11:54,640 --> 00:11:57,880 Speaker 1: so much. Good morning Bloomberg two hund Boston six bar At, 208 00:11:57,920 --> 00:12:01,080 Speaker 1: Corey Johnson and Carol Masser. Come a lot in an hour. 209 00:12:01,440 --> 00:12:07,880 Speaker 1: Bloomberg Surveillance Marcot Drivers brought you by your Mercedes Benz 210 00:12:07,920 --> 00:12:09,920 Speaker 1: Tri State Dealer. When it comes to winter elements, put 211 00:12:09,960 --> 00:12:12,520 Speaker 1: your best four wheels forward with Mercedes Benz Formatic All 212 00:12:12,520 --> 00:12:14,720 Speaker 1: wheel Drive. Is it your Mercedes Benz Tri State Dealer 213 00:12:14,880 --> 00:12:24,400 Speaker 1: for a test drive today? Global Business News twenty four 214 00:12:24,440 --> 00:12:27,480 Speaker 1: hours a day at Bloomberg dot Com, the Radio plus 215 00:12:27,600 --> 00:12:30,719 Speaker 1: Mobile Act and on your radio. This is a Bloomberg 216 00:12:30,800 --> 00:12:34,120 Speaker 1: Business Flash and I'm Karen Moscow. This updates brought to 217 00:12:34,160 --> 00:12:36,920 Speaker 1: you by Interactive Brokers and CME Group. If you're looking 218 00:12:37,000 --> 00:12:40,640 Speaker 1: for global futures contracts with low trading costs, look no further. 219 00:12:41,000 --> 00:12:43,960 Speaker 1: Interactive Brokers is the industry leader. Learn more at interactive 220 00:12:44,000 --> 00:12:47,400 Speaker 1: brokers dot com slash CME Group. The relief for allie 221 00:12:47,440 --> 00:12:49,840 Speaker 1: that stuff through US equities is entering a fourth day 222 00:12:49,880 --> 00:12:53,320 Speaker 1: with US Dock Index futures higher, SNP E Mini futures 223 00:12:53,360 --> 00:12:55,719 Speaker 1: of five points, Dowie Mini futures of fifty eight, and 224 00:12:55,800 --> 00:12:59,280 Speaker 1: nast DOCUMENTI futures up sixteen. The acts in Germany's up 225 00:12:59,280 --> 00:13:02,080 Speaker 1: one point six are said, can your treasury that'll change 226 00:13:02,080 --> 00:13:04,960 Speaker 1: the yield one point one percent? Nine mix screwed oil 227 00:13:05,040 --> 00:13:06,840 Speaker 1: up three and a half percent or at dollar six 228 00:13:08,280 --> 00:13:10,640 Speaker 1: barrel co my school down four tenths per cent or 229 00:13:10,679 --> 00:13:13,480 Speaker 1: four dollar seventy cents to twelve or six seventy announced 230 00:13:13,760 --> 00:13:16,120 Speaker 1: the Euro at dollar ten seventy nine. The end one 231 00:13:16,240 --> 00:13:19,520 Speaker 1: thirteen point eight nine. That's a Bloomberg business flash. Tom 232 00:13:19,600 --> 00:13:22,880 Speaker 1: and Mike, Karen, thanks so much. We just spoke with 233 00:13:22,960 --> 00:13:28,400 Speaker 1: Howard Marks about creative investment in distress debt. Working in 234 00:13:28,480 --> 00:13:32,360 Speaker 1: the more institutional world is a legendary market. Patel working 235 00:13:32,400 --> 00:13:36,560 Speaker 1: with Will's Fargo Asset Management and she joins us. Now, Margie, 236 00:13:36,640 --> 00:13:39,880 Speaker 1: how much fun of the last three months, Ben, Well, 237 00:13:40,040 --> 00:13:43,520 Speaker 1: they've been pretty pretty fun because I've basically been out 238 00:13:43,559 --> 00:13:46,560 Speaker 1: of the really bottomed tier that's gotten very, very hurt. 239 00:13:47,679 --> 00:13:50,599 Speaker 1: So it's an opportunity. Now, how do you and this 240 00:13:50,800 --> 00:13:54,319 Speaker 1: is something that's come up in conversation after conversation, how 241 00:13:54,440 --> 00:13:59,599 Speaker 1: do you manage cash is a productive asset in a 242 00:13:59,720 --> 00:14:05,520 Speaker 1: person spectus based mutual fund? How do you do that? Well, 243 00:14:05,600 --> 00:14:08,720 Speaker 1: I don't have a long cash personally. UM. I feel 244 00:14:08,760 --> 00:14:11,320 Speaker 1: I have other liquid bonds that I could meet any 245 00:14:11,559 --> 00:14:15,000 Speaker 1: unexpected outflow. Um. Other people have a strategy of holding 246 00:14:15,040 --> 00:14:17,720 Speaker 1: more cash. But with cash basically at zero, it seems 247 00:14:18,000 --> 00:14:20,480 Speaker 1: we're better off going to a name we think can 248 00:14:20,520 --> 00:14:22,800 Speaker 1: survive and have some liquidity. If we need to sell, 249 00:14:22,880 --> 00:14:28,720 Speaker 1: we could sell. That's a big question in the academic 250 00:14:28,800 --> 00:14:31,560 Speaker 1: debate over the markets these days, whether or not there 251 00:14:31,640 --> 00:14:35,880 Speaker 1: is enough liquidity and if you could sell, would you 252 00:14:36,000 --> 00:14:38,600 Speaker 1: find buyers in a crisis? That that seems to be 253 00:14:38,680 --> 00:14:42,960 Speaker 1: the question. Well, there's always buyers for the better quality, 254 00:14:43,400 --> 00:14:46,360 Speaker 1: more scarce merchandise, always always, and maybe a little bit 255 00:14:46,440 --> 00:14:50,160 Speaker 1: lower than the quote. But they're always buyers there, particularly 256 00:14:50,200 --> 00:14:52,240 Speaker 1: when you think that in the whole high old market 257 00:14:52,640 --> 00:14:55,200 Speaker 1: mutual funds and maybe only a quarter and there may 258 00:14:55,240 --> 00:14:57,840 Speaker 1: be fift the market is made up of long term 259 00:14:57,920 --> 00:15:01,840 Speaker 1: buyers who buy the good stuff, meaning pension funds, insurance companies. 260 00:15:02,040 --> 00:15:04,920 Speaker 1: They're always there standing in the wings waiting to take advantage. 261 00:15:05,200 --> 00:15:07,400 Speaker 1: And the in the bottom to your stuff, there really 262 00:15:07,520 --> 00:15:11,400 Speaker 1: is no bid because the whole vaulter investing extremely investors 263 00:15:11,560 --> 00:15:14,200 Speaker 1: have just disappeared. So so this is the money, beautifully, 264 00:15:14,280 --> 00:15:16,160 Speaker 1: said Mike. That was a great question. When's got to 265 00:15:16,200 --> 00:15:21,480 Speaker 1: a brilliant answer, then, Marguie Pateel, do our listeners through 266 00:15:21,640 --> 00:15:26,800 Speaker 1: you take the opportunity to migrate to lesser quality material 267 00:15:27,440 --> 00:15:29,600 Speaker 1: or do you just have to avoid it right now? 268 00:15:30,480 --> 00:15:32,640 Speaker 1: You have to avoid it right now. I think less 269 00:15:32,720 --> 00:15:36,240 Speaker 1: will continue to be more lower coupon, better quality issues 270 00:15:36,320 --> 00:15:39,760 Speaker 1: will continue to outperform the big yelders because you won't 271 00:15:39,800 --> 00:15:41,840 Speaker 1: have that risk of principal loss which is going to 272 00:15:41,920 --> 00:15:44,960 Speaker 1: occur in a lot of lower to your names. Do 273 00:15:45,120 --> 00:15:50,560 Speaker 1: you think that treasury rate you're gonna go significantly though, Well, 274 00:15:50,640 --> 00:15:52,760 Speaker 1: I've been thinking the ten years in a one and 275 00:15:52,800 --> 00:15:55,720 Speaker 1: a half two and a half trading band, and that's 276 00:15:55,760 --> 00:15:57,320 Speaker 1: where we've been, and I think that's where we're going 277 00:15:57,400 --> 00:16:00,120 Speaker 1: to stay. And I think we're likely to plug the 278 00:16:00,200 --> 00:16:02,840 Speaker 1: lower levels of that before we get to two and 279 00:16:02,880 --> 00:16:05,920 Speaker 1: a half actually, and I think it'll move really pretty 280 00:16:06,000 --> 00:16:08,800 Speaker 1: much unrelated to what happens in high yield, they're they're 281 00:16:08,840 --> 00:16:13,720 Speaker 1: really pretty much de linked at this point, Margie, within 282 00:16:13,840 --> 00:16:16,560 Speaker 1: the coupon, and I didn't get to this question Howard Marks, 283 00:16:16,640 --> 00:16:19,200 Speaker 1: and I think for you, as frankly, it's more Germaine, 284 00:16:19,640 --> 00:16:23,120 Speaker 1: are you managing for coupon which is X number of 285 00:16:23,160 --> 00:16:26,200 Speaker 1: basis points of what anybody else can get, or can 286 00:16:26,240 --> 00:16:29,880 Speaker 1: there actually be a total return opportunity if you haven't 287 00:16:29,920 --> 00:16:33,200 Speaker 1: been hurt by the carnage that we've seen. I'm managing 288 00:16:33,280 --> 00:16:36,600 Speaker 1: for total return And that doesn't mean so much capital 289 00:16:36,640 --> 00:16:41,560 Speaker 1: appreciation as capital preservation, just not having any credit accidents 290 00:16:41,920 --> 00:16:45,280 Speaker 1: and earning a modest troupon more than I could get 291 00:16:45,320 --> 00:16:48,440 Speaker 1: an investment grade. There's, in other words, of defensive strategy. Still, 292 00:16:48,680 --> 00:16:54,600 Speaker 1: Michael McKee was at a jargon alert. What's a credit accident? Well, 293 00:16:54,720 --> 00:16:57,080 Speaker 1: that's when a credit that you weren't really watching or 294 00:16:57,120 --> 00:16:59,720 Speaker 1: you thought it was pretty much money good announces very 295 00:16:59,800 --> 00:17:03,240 Speaker 1: very negative mood and you suddenly lose tenantor points overnight. 296 00:17:03,800 --> 00:17:08,800 Speaker 1: We call that Bloomberg surveillance, Margie being wrong that you 297 00:17:08,880 --> 00:17:11,200 Speaker 1: couldn't survive if you didn't have a good acronym for it. 298 00:17:11,600 --> 00:17:17,000 Speaker 1: Credit accident is a good one. Uh. How correlated do 299 00:17:17,160 --> 00:17:20,639 Speaker 1: you see markets going forward? Here? We've been talking in 300 00:17:20,800 --> 00:17:24,160 Speaker 1: recent days about you know, this one to one correlation 301 00:17:24,200 --> 00:17:26,440 Speaker 1: among all these essay classes that seems to have finally 302 00:17:26,560 --> 00:17:30,400 Speaker 1: broken this week. But how true was that? How true 303 00:17:30,480 --> 00:17:32,800 Speaker 1: is it going to be going forward? You know, I 304 00:17:32,880 --> 00:17:36,080 Speaker 1: think correlations between asset classes a lot of times is 305 00:17:36,200 --> 00:17:40,120 Speaker 1: just happenstance, happened for a specific purpose, and you can't 306 00:17:40,160 --> 00:17:43,040 Speaker 1: really put that into the future to determine how asset 307 00:17:43,240 --> 00:17:46,440 Speaker 1: classes work together, because I think the fundamentals are driving 308 00:17:46,480 --> 00:17:48,560 Speaker 1: different things. You know, for example, you've had a big 309 00:17:48,640 --> 00:17:51,200 Speaker 1: jump up in equities over the last few days, how 310 00:17:51,320 --> 00:17:54,879 Speaker 1: yield has had a modest, modest cue basis point improvement. 311 00:17:55,200 --> 00:17:57,359 Speaker 1: So that's a great example that they really aren't very 312 00:17:57,440 --> 00:18:02,240 Speaker 1: closely correlated. People have and saying oil has been driving 313 00:18:02,520 --> 00:18:06,919 Speaker 1: has been the tailweighting the dog. Is that a relationship 314 00:18:07,000 --> 00:18:10,720 Speaker 1: that's going to hold well. I think low oil prices 315 00:18:10,760 --> 00:18:12,719 Speaker 1: are going to continue the way on the bottom part 316 00:18:12,760 --> 00:18:15,600 Speaker 1: of the high yelled market, and that's where the majority 317 00:18:15,600 --> 00:18:17,800 Speaker 1: of defaults are going to be. I don't see any 318 00:18:17,920 --> 00:18:20,920 Speaker 1: change there. I think that the outlook for oil is 319 00:18:21,280 --> 00:18:25,960 Speaker 1: still pretty dire and will basically be in that range. 320 00:18:26,080 --> 00:18:29,720 Speaker 1: What is the pricing then, of garbage oil debt versus 321 00:18:29,880 --> 00:18:34,040 Speaker 1: better qualities survivor oil debt? Is that an opportunity to 322 00:18:34,200 --> 00:18:38,760 Speaker 1: rotate into famous names with their bonds. I think even 323 00:18:38,800 --> 00:18:41,200 Speaker 1: the famous names are going to be under pressure. I 324 00:18:41,280 --> 00:18:45,600 Speaker 1: think their values reflect higher oil prices of Barnescy. But 325 00:18:45,760 --> 00:18:48,920 Speaker 1: there is a theory that if you pick the right 326 00:18:49,080 --> 00:18:53,040 Speaker 1: distressed energy bonds, you'll still get paid because they will 327 00:18:53,080 --> 00:18:55,840 Speaker 1: be assumed by the buyers that there won't be so 328 00:18:55,960 --> 00:18:59,680 Speaker 1: many so many bankruptcies as there will be forced sales. Oh, 329 00:18:59,840 --> 00:19:02,840 Speaker 1: I really really don't think we're going to see people 330 00:19:02,880 --> 00:19:06,600 Speaker 1: get bailed out by distress companies selling to another purchaser. 331 00:19:06,880 --> 00:19:09,440 Speaker 1: And the reason is simply they took on too much 332 00:19:09,520 --> 00:19:12,679 Speaker 1: depth and they paid way too much for the properties 333 00:19:12,720 --> 00:19:14,600 Speaker 1: that they bought. You know, assuming oil would be eighty 334 00:19:14,640 --> 00:19:17,280 Speaker 1: do a hundred dollars forever. So I think the recovery 335 00:19:17,800 --> 00:19:20,440 Speaker 1: value is going to be ten cents on the dollar. 336 00:19:21,000 --> 00:19:23,920 Speaker 1: No good companies trying to come in, and by those companies, Margaret, 337 00:19:23,920 --> 00:19:25,560 Speaker 1: we get more out of you in four minutes than 338 00:19:25,600 --> 00:19:29,080 Speaker 1: any other guests. Absolutely fabulous, Margaret Patel with those Fargo 339 00:19:29,119 --> 00:19:31,280 Speaker 1: Asset Management Mike, I put that out on Twitter. That 340 00:19:31,400 --> 00:19:35,200 Speaker 1: was so important, her idea of better quality oil, debt struggling. 341 00:19:35,320 --> 00:19:38,440 Speaker 1: She would still avoid it, armed as the garbage is 342 00:19:38,520 --> 00:19:41,960 Speaker 1: harmed as well. What a world I I you know 343 00:19:42,280 --> 00:19:44,680 Speaker 1: ten years ago, would you say we'll be looking and 344 00:19:44,920 --> 00:19:48,600 Speaker 1: five is a total return? Now? West Texas thirty one 345 00:19:48,720 --> 00:19:53,160 Speaker 1: sixty six up three three percent. Brent is almost three 346 00:19:53,240 --> 00:19:56,480 Speaker 1: percent on the day they are up what we call 347 00:19:56,840 --> 00:20:00,480 Speaker 1: a stick, that's jargon for one dollar. Stay with us, 348 00:20:00,520 --> 00:20:07,320 Speaker 1: Bloomberg Surveillance. We are kinding down to the opening bill, 349 00:20:07,359 --> 00:20:09,399 Speaker 1: brought to you by the refine Jeep Grand Cherokee Overland. 350 00:20:09,440 --> 00:20:11,800 Speaker 1: It continues to raise the bar with its luxurious interior 351 00:20:11,840 --> 00:20:14,199 Speaker 1: and legendary four by four capability. Drive one at your 352 00:20:14,240 --> 00:20:17,359 Speaker 1: local chief dealer today, Jee the official vehicle at Killington Resort, 353 00:20:20,760 --> 00:20:28,000 Speaker 1: Broadcasting live to New York. Crooomberg eleventh to Washington, d C. 354 00:20:28,200 --> 00:20:33,440 Speaker 1: Bloomberg to Boston, Bloomberg, Well Wnder to San Francisco, Bloomberg 355 00:20:33,560 --> 00:20:36,680 Speaker 1: Nie Sat to the Country Serious at San General one 356 00:20:36,760 --> 00:20:40,280 Speaker 1: ninety and around the glow the Bloomberg Radio plus Aben 357 00:20:40,359 --> 00:20:44,720 Speaker 1: Boomberg dot com. This is Bloomberg Surveillance. Good morning. I'm 358 00:20:44,760 --> 00:20:47,480 Speaker 1: Karen Moscow along with Tom Keene and Michael McKee and 359 00:20:47,520 --> 00:20:50,000 Speaker 1: the opening bell. Brought to you by se I Imagine, 360 00:20:50,000 --> 00:20:53,480 Speaker 1: a global operating platform designed to deliver a differentiated and 361 00:20:53,560 --> 00:20:57,240 Speaker 1: technologically rich investor experience. Find out how I see I 362 00:20:57,320 --> 00:21:00,560 Speaker 1: can help you succeed at se S dot com slash Imagine. 363 00:21:00,920 --> 00:21:03,840 Speaker 1: Stocks higher in the open. The SNP five tenth of 364 00:21:03,920 --> 00:21:06,600 Speaker 1: upper cent or two points to nineteen twenty nine. Dow 365 00:21:06,720 --> 00:21:09,240 Speaker 1: Jones Industrial Average up three tenths per cent or forty 366 00:21:09,280 --> 00:21:13,160 Speaker 1: seven points to sixteen thousand, five hundred. NASDAC up three 367 00:21:13,200 --> 00:21:16,280 Speaker 1: tens per cent or twelve points to forty six ten. 368 00:21:16,320 --> 00:21:18,399 Speaker 1: Your treasury is up one thirty second. The yield one 369 00:21:18,440 --> 00:21:20,880 Speaker 1: point eight one percent yield on a two year points 370 00:21:20,920 --> 00:21:23,680 Speaker 1: seven four percent. Non mex screwed oil up three and 371 00:21:23,720 --> 00:21:25,800 Speaker 1: a half percent, or a dollar six to thirty one 372 00:21:25,920 --> 00:21:29,040 Speaker 1: seventy two A barrel comex school down four tenths per center, 373 00:21:29,119 --> 00:21:31,600 Speaker 1: four dollars fifty cents to twelve oh six ninety an 374 00:21:31,640 --> 00:21:34,520 Speaker 1: ounce the euro at dollar ten seventy six, then one 375 00:21:34,600 --> 00:21:38,640 Speaker 1: thirteen point eight five. Tom and Mike Karen, thanks so much. 376 00:21:38,760 --> 00:21:42,119 Speaker 1: I just put out on Bloomberg Radio Plus where the 377 00:21:42,240 --> 00:21:46,880 Speaker 1: a rading yield curve was three years ago, two years ago, whatever, 378 00:21:47,600 --> 00:21:51,040 Speaker 1: and where it is now. Peter Hayes joining us. He 379 00:21:51,160 --> 00:21:55,960 Speaker 1: works for Price the Price to Perfection fund at black Rock. 380 00:21:56,320 --> 00:21:59,000 Speaker 1: I'm kidding. He works at municipal Bounds at black Rock. 381 00:21:59,080 --> 00:22:01,720 Speaker 1: We never have him on an Peter good Morning. Is 382 00:22:01,880 --> 00:22:07,960 Speaker 1: your world? Price to perfection? Price up, yield down, price 383 00:22:08,040 --> 00:22:11,200 Speaker 1: to perfection? It's it's price pretty well hard to define perfection. 384 00:22:11,240 --> 00:22:13,480 Speaker 1: We've certainly had a lot of good performance the end 385 00:22:13,520 --> 00:22:16,280 Speaker 1: of two thousands fifteen so far this year. Remember two 386 00:22:16,320 --> 00:22:19,680 Speaker 1: thousand and fifteen the best performing sixth income as a class, 387 00:22:19,800 --> 00:22:22,040 Speaker 1: and we've seen a lot of that momentum. So I'd 388 00:22:22,080 --> 00:22:24,800 Speaker 1: say we're certainly priced from at least from a relative 389 00:22:24,880 --> 00:22:27,800 Speaker 1: value standpoint, maybe a little less attractively than we were 390 00:22:28,160 --> 00:22:30,000 Speaker 1: in the middle of last year. So then what do 391 00:22:30,080 --> 00:22:32,280 Speaker 1: you do? Do you grab the coupon or do you 392 00:22:32,359 --> 00:22:38,520 Speaker 1: have to be more aggressive, more analytical in protecting capital. 393 00:22:39,400 --> 00:22:41,359 Speaker 1: I think it's actually a great point you bring up 394 00:22:41,400 --> 00:22:44,679 Speaker 1: about to grab the coupon, because that's what needies are about. 395 00:22:45,119 --> 00:22:47,560 Speaker 1: In fact, that's what sixth incomes generally is about. If 396 00:22:47,600 --> 00:22:50,119 Speaker 1: you look at the breakdown and performance last year between 397 00:22:50,200 --> 00:22:53,879 Speaker 1: coupon or income and price at coupon dominated and I 398 00:22:53,920 --> 00:22:55,600 Speaker 1: think that's going to be the theme for this year, 399 00:22:55,680 --> 00:22:58,440 Speaker 1: given we haven't been been on rate outlooks as well. 400 00:22:58,560 --> 00:23:01,080 Speaker 1: So I think how do you maximize is that income 401 00:23:01,160 --> 00:23:03,560 Speaker 1: without taking a lot of risk. We're not advocating going 402 00:23:03,600 --> 00:23:06,240 Speaker 1: out and taking thirty or forty year risk because the 403 00:23:06,280 --> 00:23:08,959 Speaker 1: evaluations we talked about earlier a bit rich. So right 404 00:23:09,000 --> 00:23:10,920 Speaker 1: now the best performing part of the curve where we 405 00:23:11,000 --> 00:23:13,639 Speaker 1: see value isn't the ten to twelve year part of 406 00:23:13,760 --> 00:23:15,600 Speaker 1: the curve. It's a good way to not sit in cash, 407 00:23:15,720 --> 00:23:18,600 Speaker 1: get more income without taking a lot of interest rate risk. 408 00:23:19,200 --> 00:23:22,280 Speaker 1: Is that working in the sense that normally when the 409 00:23:22,320 --> 00:23:25,119 Speaker 1: Fed starts raising rates, you see your biggest moves, the 410 00:23:25,280 --> 00:23:27,400 Speaker 1: biggest impacts at the short end of the curve, which 411 00:23:27,480 --> 00:23:31,680 Speaker 1: they control. The long end is uh not supposed to 412 00:23:31,840 --> 00:23:35,480 Speaker 1: move as it has uh in in this sort of 413 00:23:35,920 --> 00:23:42,000 Speaker 1: world where the neutral real rate is so compressed in 414 00:23:42,160 --> 00:23:45,600 Speaker 1: tast cycles that clearly what takes place as you do 415 00:23:45,720 --> 00:23:48,560 Speaker 1: see a steeping of the curve and then one that's 416 00:23:48,680 --> 00:23:51,359 Speaker 1: prior to the said tightening. Once they begin tightening, the 417 00:23:51,440 --> 00:23:54,080 Speaker 1: curve begins to flatten. The back end comes down because 418 00:23:54,119 --> 00:23:58,760 Speaker 1: inflation expectations get lowered from weaker supposedly weaker economic growth. 419 00:23:58,800 --> 00:24:01,720 Speaker 1: At said policy work, we think this time, you know 420 00:24:01,760 --> 00:24:03,320 Speaker 1: that I hate to say this time is different, but 421 00:24:03,480 --> 00:24:06,160 Speaker 1: this time maybe difference is where we're coming from. First 422 00:24:06,160 --> 00:24:08,639 Speaker 1: of all, at those teams that said is certainly taken 423 00:24:08,640 --> 00:24:11,320 Speaker 1: out of play at least for the next couple of meetings. 424 00:24:11,359 --> 00:24:14,400 Speaker 1: And we just think that the impact and where rache 425 00:24:14,400 --> 00:24:16,639 Speaker 1: you're coming from, and the magnitude and the path that 426 00:24:16,760 --> 00:24:20,800 Speaker 1: SAD policy is likely to be contained in the very 427 00:24:20,920 --> 00:24:23,240 Speaker 1: very front end. So that by mean we mean key bills, 428 00:24:23,320 --> 00:24:26,280 Speaker 1: we mean very short treasury notes, but not out the curve, 429 00:24:26,400 --> 00:24:28,639 Speaker 1: not beyond five or seven years. Peter is you know, 430 00:24:28,880 --> 00:24:33,359 Speaker 1: divorces starting to end in courtrooms about revenue bonds. What's 431 00:24:33,400 --> 00:24:36,399 Speaker 1: the big mistake people are making now? Not in the 432 00:24:36,560 --> 00:24:40,480 Speaker 1: general obligation, full faith and credit space. But in the 433 00:24:40,760 --> 00:24:45,280 Speaker 1: ugly revenue space, is airports my worst nightmare? I don't 434 00:24:45,280 --> 00:24:47,960 Speaker 1: think it is the worst night nightmare if you look 435 00:24:48,000 --> 00:24:50,360 Speaker 1: at you know, especially some of the bigger reports. Let's 436 00:24:50,359 --> 00:24:52,800 Speaker 1: focus on the new works and the San Frances Denver 437 00:24:52,880 --> 00:24:55,880 Speaker 1: Chicago hairs and the Denver's right. I mean, we're we're 438 00:24:55,920 --> 00:24:59,480 Speaker 1: seeing you know, they're considered origination and destination airports. We're 439 00:24:59,520 --> 00:25:03,160 Speaker 1: seeing it. Employment's good, traffic, uh, you know, the number 440 00:25:03,200 --> 00:25:06,320 Speaker 1: of passengers flying seemed to be greator airlines are benefiting 441 00:25:06,400 --> 00:25:08,800 Speaker 1: from lower oil prices. So there's a lot of benefits 442 00:25:09,200 --> 00:25:11,000 Speaker 1: and you get some yield in the revenue part of 443 00:25:11,080 --> 00:25:13,320 Speaker 1: the space. In fact, if you take your argument about 444 00:25:13,359 --> 00:25:17,280 Speaker 1: general obligation versus revenue, the general obligation which was considered 445 00:25:17,359 --> 00:25:20,960 Speaker 1: sanker saying Detroit has shaken the foundation of that thought 446 00:25:21,040 --> 00:25:24,080 Speaker 1: process a little bit. Chicago, Illinois. There's some problems out 447 00:25:24,119 --> 00:25:26,760 Speaker 1: there in the general obligation space. We in fact find 448 00:25:26,800 --> 00:25:30,760 Speaker 1: revenue bonds to be safer because that willingness to pay. 449 00:25:31,840 --> 00:25:33,840 Speaker 1: The question on the revenue what's my yield? Pick up 450 00:25:33,880 --> 00:25:36,600 Speaker 1: ten twenty years out on the revenue piece, you can 451 00:25:36,640 --> 00:25:39,280 Speaker 1: pick up on an a rated bond. You can pick 452 00:25:39,359 --> 00:25:41,680 Speaker 1: up a good for year fifty basis for your fifty 453 00:25:41,680 --> 00:25:44,399 Speaker 1: basis points. Fine, but where's my revenue trap? Right now? 454 00:25:44,520 --> 00:25:46,960 Speaker 1: You talk lovely about airlines and I you know, I 455 00:25:47,040 --> 00:25:49,320 Speaker 1: sort of know where the question is going. Folks. Okay, 456 00:25:49,359 --> 00:25:51,399 Speaker 1: I get that. Where am I? Where where am I? 457 00:25:51,520 --> 00:25:53,760 Speaker 1: I mean, boy, where there's some train wrecks twenty and 458 00:25:53,840 --> 00:25:56,840 Speaker 1: thirty years ago. I think, get to look at just 459 00:25:56,960 --> 00:26:00,320 Speaker 1: you know, the very low rated space, isolated, smaller is tours, 460 00:26:00,359 --> 00:26:02,399 Speaker 1: even going back the airports and some of the regional 461 00:26:02,480 --> 00:26:04,640 Speaker 1: airports perhaps not as strong as some of the big 462 00:26:04,720 --> 00:26:08,600 Speaker 1: origin and origination and destination airports. So it's that question 463 00:26:08,640 --> 00:26:11,000 Speaker 1: of stretching for yield. Do you want to take more 464 00:26:11,040 --> 00:26:13,959 Speaker 1: credit risks, get a little bit more income, But clearly 465 00:26:14,040 --> 00:26:17,440 Speaker 1: there's some traps out there as well. And then even 466 00:26:17,480 --> 00:26:20,040 Speaker 1: in the general obligation space, there's different types of g 467 00:26:20,240 --> 00:26:22,639 Speaker 1: os that some of them would argue is revenue like 468 00:26:23,359 --> 00:26:25,480 Speaker 1: And I think you have to be careful. There's a 469 00:26:25,600 --> 00:26:28,760 Speaker 1: lot of differentiation among credits in the municipal states. What 470 00:26:28,920 --> 00:26:32,960 Speaker 1: about ratings risk going forward? A lot of unfunded pension 471 00:26:33,000 --> 00:26:38,080 Speaker 1: liabilities aren't being fixed by an economy that isn't growing gangbusters? Right? 472 00:26:38,160 --> 00:26:40,120 Speaker 1: That that that's the big risk. That's where we see 473 00:26:40,160 --> 00:26:43,080 Speaker 1: the big divergence in in credit. And you see that 474 00:26:43,200 --> 00:26:46,600 Speaker 1: places like New Jersey, places like Illinois, Chicago. Chicago movies 475 00:26:46,640 --> 00:26:49,040 Speaker 1: down grader than below investment grade for a city of 476 00:26:49,119 --> 00:26:52,320 Speaker 1: that magnitude, third largest metropolitan economy in the US. So 477 00:26:52,880 --> 00:26:55,960 Speaker 1: they're being penalized for not taking action on their pensions. 478 00:26:56,720 --> 00:26:58,680 Speaker 1: The question everybody has it, how do you fix the 479 00:26:58,720 --> 00:27:00,960 Speaker 1: pension problem? There has to be some type of pension 480 00:27:01,040 --> 00:27:04,399 Speaker 1: reform or you have to increase taxes to pay for it. 481 00:27:04,680 --> 00:27:06,800 Speaker 1: Right now, nobody wants to do either one. So in 482 00:27:06,840 --> 00:27:09,560 Speaker 1: the meantime you have a lot of downward pressure on 483 00:27:09,640 --> 00:27:11,920 Speaker 1: those entities that have big pension problems. I mean, I'm 484 00:27:11,920 --> 00:27:15,840 Speaker 1: looking at the nine folks and nine year bullet bund Chicago, 485 00:27:15,960 --> 00:27:21,480 Speaker 1: the fives of four point. That really shows the Yanks, 486 00:27:21,560 --> 00:27:25,840 Speaker 1: doesn't it. Ye. Yeah, it's a lot of yield for 487 00:27:26,200 --> 00:27:28,400 Speaker 1: a city of that size. And some of that comes 488 00:27:28,440 --> 00:27:31,600 Speaker 1: down to the political dysfunction. It's hard to we can 489 00:27:31,640 --> 00:27:33,159 Speaker 1: look at balance sheets so we can come to the 490 00:27:33,200 --> 00:27:36,600 Speaker 1: credit determination, hard to predict the political atmosphere, really hard 491 00:27:36,640 --> 00:27:38,800 Speaker 1: to know what they're going to do, Mike, we should 492 00:27:38,800 --> 00:27:41,720 Speaker 1: talk about price as well. Here you've enjoyed losing three 493 00:27:41,800 --> 00:27:44,920 Speaker 1: dollars on your bond one oh five to one two 494 00:27:45,520 --> 00:27:50,320 Speaker 1: over the last six weeks. Yes, um, as you've captured 495 00:27:50,359 --> 00:27:52,879 Speaker 1: your four point six weeks. It's been it's been an 496 00:27:52,920 --> 00:27:56,080 Speaker 1: interesting six weeks. But is that going to turn around? Havan? 497 00:27:56,800 --> 00:28:00,480 Speaker 1: Do we we're getting beyond that? I presume. I think 498 00:28:00,520 --> 00:28:03,040 Speaker 1: it's a lot. You know, what's your expectation for rape 499 00:28:03,119 --> 00:28:05,560 Speaker 1: going forward? Do you believe the US economy is really 500 00:28:05,600 --> 00:28:08,640 Speaker 1: slipping into a recession. The market was beginning to price 501 00:28:08,720 --> 00:28:11,800 Speaker 1: that in last week when tenure traderies were pushing down 502 00:28:11,880 --> 00:28:14,960 Speaker 1: towards one fifty. Now we're backing up again, saying, okay, 503 00:28:15,000 --> 00:28:17,680 Speaker 1: maybe the economy isn't as bad as as we thought. 504 00:28:17,760 --> 00:28:20,920 Speaker 1: From a municipal standpoint. Some of that performance we talked 505 00:28:20,920 --> 00:28:23,400 Speaker 1: about earlier, we're likely to give a little bit about back. 506 00:28:23,440 --> 00:28:25,680 Speaker 1: In fact, we've given about thirty basis points back over 507 00:28:25,720 --> 00:28:27,800 Speaker 1: the last couple of trading sessions. Were coming into a 508 00:28:27,920 --> 00:28:30,760 Speaker 1: period of time when we see increased issuance. That's sometimes 509 00:28:30,840 --> 00:28:33,520 Speaker 1: a good time to to buy, let the market digest 510 00:28:33,640 --> 00:28:36,840 Speaker 1: that adjust accordingly, and then blocking some of those yields 511 00:28:36,880 --> 00:28:39,240 Speaker 1: we talked about. Here's thirty seconds left. You're in the 512 00:28:39,360 --> 00:28:42,440 Speaker 1: nineties percentile, one year back, and then one of the 513 00:28:42,520 --> 00:28:46,480 Speaker 1: black Rock closed in UH funds your ninety eight percentile 514 00:28:46,600 --> 00:28:48,720 Speaker 1: last year. Do you just take the year off when 515 00:28:48,760 --> 00:28:52,400 Speaker 1: you do that now we were trying to take the 516 00:28:52,520 --> 00:28:55,200 Speaker 1: year off. You know, the closed end funds are are 517 00:28:55,560 --> 00:28:58,840 Speaker 1: a little bit different animal because they're traded obviously stock 518 00:28:58,920 --> 00:29:00,840 Speaker 1: price equity exchange. As you have to look at the 519 00:29:01,040 --> 00:29:03,920 Speaker 1: distinction between nav I think closed and fun. They're all 520 00:29:03,920 --> 00:29:07,120 Speaker 1: about maximizing income, maximizing exposure out in the long end 521 00:29:07,160 --> 00:29:10,800 Speaker 1: of the curve. Congratulations on a two thousand fifteen Peter 522 00:29:10,880 --> 00:29:14,200 Speaker 1: Hayes is with black Rock as we advantage of tax 523 00:29:14,360 --> 00:29:18,760 Speaker 1: free bonds. All you need to know within the indeterminate 524 00:29:18,920 --> 00:29:20,800 Speaker 1: nature of the week. I got green and red on 525 00:29:20,840 --> 00:29:23,880 Speaker 1: the screen the dial up fourteen points of VIX two 526 00:29:23,880 --> 00:29:27,440 Speaker 1: point four three SFP five hundred down one point seven 527 00:29:27,560 --> 00:29:32,120 Speaker 1: zero tiny teen sweets points nineteen on the sp That 528 00:29:32,240 --> 00:29:38,080 Speaker 1: really shows a lot about the jumble. This hour of 529 00:29:38,200 --> 00:29:41,160 Speaker 1: Surveillance brought to you by Westchester subar U. Visit Westchester 530 00:29:41,240 --> 00:29:44,360 Speaker 1: subar u dot com. Here's Michael Barr with news headline 531 00:29:44,760 --> 00:29:47,040 Speaker 1: Mike Tom thank you very much. President Obama took to 532 00:29:47,120 --> 00:29:50,160 Speaker 1: Twitter to say next month, I'll travel to Cuba to 533 00:29:50,320 --> 00:29:53,880 Speaker 1: advance our progress in an effort that can improve the 534 00:29:54,000 --> 00:29:57,479 Speaker 1: lives of the Cuban people. The last time a sitting 535 00:29:57,600 --> 00:30:01,920 Speaker 1: president visited Havanna was back in nineteen when Calvin Coolidge 536 00:30:01,960 --> 00:30:06,160 Speaker 1: was in office. To Republican presidential candidates have already commented 537 00:30:06,400 --> 00:30:09,920 Speaker 1: on President Obama's Cuban trip. Ted Cruz, whose father fled 538 00:30:10,000 --> 00:30:12,960 Speaker 1: Cuba in the nineteen fifties, says the president should not 539 00:30:13,240 --> 00:30:16,200 Speaker 1: visit Havana while the Castro family is still in power. 540 00:30:16,680 --> 00:30:20,040 Speaker 1: Marco Rubio, and of the child of Cuman immigrants, calls 541 00:30:20,040 --> 00:30:24,800 Speaker 1: the Cuban regime and anti American communist dictaindership. Vice President 542 00:30:24,880 --> 00:30:26,880 Speaker 1: Joe Biden is giving a hint of what kind of 543 00:30:26,920 --> 00:30:30,440 Speaker 1: Supreme Court nominee President Obama might pick to replace late 544 00:30:30,520 --> 00:30:34,280 Speaker 1: Justice Anton and Scalia. Biden tells Minnesota Public Radio that 545 00:30:34,400 --> 00:30:37,720 Speaker 1: the President, in order to get someone confirmed, is not 546 00:30:37,920 --> 00:30:40,160 Speaker 1: going to pick the most liberal jurist in the nation 547 00:30:40,440 --> 00:30:43,280 Speaker 1: and put them on the court. This should be someone 548 00:30:43,880 --> 00:30:48,160 Speaker 1: who in fact is a consensus and whereby we can 549 00:30:48,240 --> 00:30:53,200 Speaker 1: generate enough support to get a person test. Toyota is 550 00:30:53,240 --> 00:30:56,520 Speaker 1: recalling about one point one million sports utility vehicles in 551 00:30:56,560 --> 00:30:59,400 Speaker 1: the US because of seat belts that might fail in 552 00:30:59,440 --> 00:31:02,479 Speaker 1: a crash. Global News twenty four hours a day, powered 553 00:31:02,520 --> 00:31:05,520 Speaker 1: by our twenty four hundred journalists more than a hundred 554 00:31:05,600 --> 00:31:08,520 Speaker 1: fifty news bureaus from around the world. I'm Michael Barr. 555 00:31:08,840 --> 00:31:11,400 Speaker 1: To Michael, thanks so much to stay with us. Michael 556 00:31:11,440 --> 00:31:15,280 Speaker 1: McKee and Tom Keene. We do economics, finance, investment, and 557 00:31:15,440 --> 00:31:22,760 Speaker 1: international relations. Stay with us. Bloomberg Surveillance Bloomberg's Avillance is 558 00:31:22,800 --> 00:31:25,200 Speaker 1: brought you by Fairly Dickinson University. Boost your career by 559 00:31:25,240 --> 00:31:27,760 Speaker 1: getting CFP certified atfter you named one of the great 560 00:31:27,800 --> 00:31:32,560 Speaker 1: schools for financial planning. Classes begin February four. Visit FTERU 561 00:31:32,680 --> 00:31:39,560 Speaker 1: dot etiu slash FP. Global Business News twenty four hours 562 00:31:39,600 --> 00:31:42,720 Speaker 1: a day, if Bloomberg dot com, the radio plus mobile 563 00:31:42,720 --> 00:31:46,040 Speaker 1: app and on your radio. This is a Bloomberg Business 564 00:31:46,120 --> 00:31:49,000 Speaker 1: Flash and I'm Karen Moscow. This updates brought to you 565 00:31:49,120 --> 00:31:52,520 Speaker 1: by National Realty Returns on cash and rented real estate. 566 00:31:52,560 --> 00:31:55,080 Speaker 1: Find them at n r i A dot net u 567 00:31:55,280 --> 00:31:58,080 Speaker 1: S stocks. They have turned a lower This after the 568 00:31:58,200 --> 00:32:00,600 Speaker 1: S and P five hundreds, strongest three day advance in 569 00:32:00,680 --> 00:32:04,000 Speaker 1: almost six months. We checked the markets every fifteen minutes 570 00:32:04,040 --> 00:32:07,080 Speaker 1: throughout the trading day. On Bloomberg SNP five hundred down 571 00:32:07,080 --> 00:32:09,160 Speaker 1: two tenths per cent or about four points out in 572 00:32:09,240 --> 00:32:12,680 Speaker 1: nineteen twenty three, Dow Jones Industrial Average little change down 573 00:32:12,800 --> 00:32:15,680 Speaker 1: one point to sixteen thousand, four hundred fifty two. Then 574 00:32:15,720 --> 00:32:17,960 Speaker 1: as DACT down three tenths per center, twelve points to 575 00:32:18,040 --> 00:32:21,480 Speaker 1: forty two ten. Your treasury up seven thirty seconds. The 576 00:32:21,560 --> 00:32:24,200 Speaker 1: YELP one point seven nine percent yield on the two 577 00:32:24,280 --> 00:32:27,400 Speaker 1: year point seven three percent Nimex screwde oil up two 578 00:32:27,400 --> 00:32:29,880 Speaker 1: point four percent or seventy three cents to thirty one 579 00:32:29,960 --> 00:32:32,400 Speaker 1: thirty nine a barrel comex goal down a tenth of 580 00:32:32,440 --> 00:32:34,680 Speaker 1: upper cent or a dollar sixty to twelve O nine 581 00:32:34,760 --> 00:32:37,960 Speaker 1: seventy announced the euro another eleven oh three begin one 582 00:32:38,040 --> 00:32:42,480 Speaker 1: thirteen point six six. Americans expectations for the economy declined 583 00:32:42,480 --> 00:32:45,320 Speaker 1: in February to a three month low. Is optimism, propelled 584 00:32:45,400 --> 00:32:47,760 Speaker 1: by job growth in cheaper gasoline at the start of 585 00:32:47,800 --> 00:32:51,120 Speaker 1: the year faded. A monthly measure tracking the economic outlook 586 00:32:51,160 --> 00:32:54,080 Speaker 1: dropped to forty two point five from a January reading 587 00:32:54,120 --> 00:32:56,440 Speaker 1: of forty seven that was the highest and seven months 588 00:32:56,840 --> 00:32:59,920 Speaker 1: this according to data from the Bloomberg Consumer Comfort Index 589 00:33:00,360 --> 00:33:02,840 Speaker 1: and in video the best performer in the SNP five 590 00:33:03,240 --> 00:33:06,840 Speaker 1: today out more than eleven percent after it predicted sales 591 00:33:06,920 --> 00:33:10,040 Speaker 1: that may exceed analysts estimates. That's a Bloomberg business flash, 592 00:33:10,160 --> 00:33:15,600 Speaker 1: Tom and Mike Houston, Karen, thank you, Houston. We have 593 00:33:15,720 --> 00:33:19,680 Speaker 1: a problem joining us now, Peter Elliott, Bloomberg reserve the 594 00:33:19,800 --> 00:33:23,880 Speaker 1: outrage of Houston rating higher than the New York City 595 00:33:24,760 --> 00:33:30,160 Speaker 1: food World. According to The Washington Post, this article shock 596 00:33:30,240 --> 00:33:33,280 Speaker 1: and Awe, Coast to coast, Shock and Coast to coast. 597 00:33:33,720 --> 00:33:37,040 Speaker 1: The guys credit the eight and twoundred seventy restaurants two 598 00:33:37,080 --> 00:33:40,040 Speaker 1: hundred You know, so do I. But um I don't 599 00:33:40,080 --> 00:33:46,040 Speaker 1: agree with him Houston. Yeah, it's yeah, yeah, this is 600 00:33:46,120 --> 00:33:48,800 Speaker 1: a first of all a piece. Um bye bye. Tom 601 00:33:48,920 --> 00:33:52,960 Speaker 1: Seton was a wonderful writer in college. And uh, you know, 602 00:33:53,040 --> 00:33:55,040 Speaker 1: I actually see more of this about the whole list 603 00:33:55,240 --> 00:33:59,160 Speaker 1: listization of the world. That everything winds up in the 604 00:33:59,240 --> 00:34:01,240 Speaker 1: top ten list. I mean it is it is just 605 00:34:01,480 --> 00:34:05,160 Speaker 1: sort of ludicrous to argue that New York City, Uh what, 606 00:34:05,480 --> 00:34:07,920 Speaker 1: you're an economist, So it's the third largest economy in 607 00:34:07,960 --> 00:34:10,360 Speaker 1: the globe or something New York City is is somehow, 608 00:34:10,640 --> 00:34:14,319 Speaker 1: somehow ranks below Houston as as a food city. Um, 609 00:34:14,480 --> 00:34:16,400 Speaker 1: this is the thing for any any New York or 610 00:34:16,400 --> 00:34:18,919 Speaker 1: anybody who's coming to our beloved city by the sea. 611 00:34:19,960 --> 00:34:21,680 Speaker 1: I always say the same thing. If you start at 612 00:34:21,680 --> 00:34:24,560 Speaker 1: a hundred and twenty street and walk down any of 613 00:34:24,640 --> 00:34:27,120 Speaker 1: our avenues, you'll see more food in more places, in 614 00:34:27,239 --> 00:34:31,359 Speaker 1: more styles, at actually more reasonable prices than still any 615 00:34:31,480 --> 00:34:35,000 Speaker 1: place on Earth. If you just walk down second Avenue, 616 00:34:35,120 --> 00:34:37,960 Speaker 1: from its entire length and breadth, you see more than 617 00:34:38,239 --> 00:34:42,880 Speaker 1: than Washington, Houston, Atlanta, Charleston, any of these cities. Is 618 00:34:42,960 --> 00:34:47,160 Speaker 1: it fun to talk about how Portland and Atlanta, Charleston 619 00:34:47,239 --> 00:34:51,760 Speaker 1: and Houston have have come to to be food cities 620 00:34:51,880 --> 00:34:54,920 Speaker 1: as well? Um? Absolutely, But in no way do I 621 00:34:55,000 --> 00:34:58,359 Speaker 1: think that New York isn't anybody lost It's it's it's crown. Well, 622 00:34:58,480 --> 00:35:00,160 Speaker 1: as someone who used to live in washingt And for 623 00:35:00,200 --> 00:35:01,840 Speaker 1: a long time, I can tell you that for a 624 00:35:01,920 --> 00:35:06,160 Speaker 1: long time, Washington, uh could not even claim to be 625 00:35:06,440 --> 00:35:09,560 Speaker 1: a food city, li alone to put itself on a list. Well, there, 626 00:35:09,560 --> 00:35:11,640 Speaker 1: you'd be wrong. There, You'd be wrong. My friend, Washington 627 00:35:11,719 --> 00:35:16,719 Speaker 1: has come in I mean just Jose Undress alone. But 628 00:35:16,840 --> 00:35:18,760 Speaker 1: this is the other thing. I think that it's interesting 629 00:35:18,800 --> 00:35:20,719 Speaker 1: about this, and it may say a great deal about 630 00:35:20,760 --> 00:35:24,480 Speaker 1: what's happening in this country right now. New York remains 631 00:35:25,080 --> 00:35:27,200 Speaker 1: one of the few cities in the world that remains 632 00:35:27,239 --> 00:35:31,600 Speaker 1: a late city that works from morning to lunch, to 633 00:35:31,880 --> 00:35:35,279 Speaker 1: afternoon to cocktails to dinner. In Los Angeles, which has 634 00:35:35,680 --> 00:35:39,200 Speaker 1: really changed, like Washington has really changed, I can absolutely 635 00:35:39,280 --> 00:35:42,279 Speaker 1: assure you that even the hottest restaurant in town is 636 00:35:42,360 --> 00:35:45,719 Speaker 1: empty at nine o'clock at night. So you know, all 637 00:35:45,719 --> 00:35:48,040 Speaker 1: of these cities share something in common and that they 638 00:35:48,120 --> 00:35:50,640 Speaker 1: do not have. They have great new restaurants, they have 639 00:35:50,760 --> 00:35:53,400 Speaker 1: wonderful new restaurants scenes, but in no way do they 640 00:35:53,480 --> 00:35:56,320 Speaker 1: have that kind of round the clock circulation that a 641 00:35:56,400 --> 00:35:59,120 Speaker 1: city like New York has. I can't even think of 642 00:35:59,160 --> 00:36:01,839 Speaker 1: another city except maybe Hong Kong that has that kind 643 00:36:01,920 --> 00:36:05,360 Speaker 1: of has that kind of open door policy. Leaving aside 644 00:36:05,400 --> 00:36:11,440 Speaker 1: the silliness of creating a list, Topping his list is Portland, Oregon. 645 00:36:11,600 --> 00:36:14,160 Speaker 1: And you have had many very nice things to say 646 00:36:14,160 --> 00:36:16,680 Speaker 1: about exactly I have. I have many nice things to 647 00:36:16,760 --> 00:36:20,279 Speaker 1: say about all of these cities, amongst them Houston, though 648 00:36:20,320 --> 00:36:22,840 Speaker 1: probably probably less of Portland, is certainly one of my 649 00:36:23,360 --> 00:36:26,280 Speaker 1: my favorite food cities at the moment. So is Austin, Texas, 650 00:36:26,560 --> 00:36:29,279 Speaker 1: so is Los Angeles. There's more interesting things happening. So 651 00:36:29,360 --> 00:36:31,480 Speaker 1: it brings up the thing we often talk about, which 652 00:36:31,560 --> 00:36:35,040 Speaker 1: is what is making UH cities like Los Angeles and 653 00:36:35,280 --> 00:36:39,279 Speaker 1: Portland and Washington and Houston suddenly become relevant in the 654 00:36:39,360 --> 00:36:41,000 Speaker 1: food world, and that is is that many of them 655 00:36:41,280 --> 00:36:45,640 Speaker 1: really truly are being driven out of New York because 656 00:36:45,680 --> 00:36:47,560 Speaker 1: of the high price of it. Now, that doesn't mean 657 00:36:47,600 --> 00:36:49,719 Speaker 1: that New York that excuse me, that doesn't mean that 658 00:36:49,800 --> 00:36:53,560 Speaker 1: Portland and Los Angeles and Washington don't have similar problems 659 00:36:53,600 --> 00:36:55,840 Speaker 1: with high rent and service and all that kind of stuff. 660 00:36:56,040 --> 00:36:58,440 Speaker 1: But New York it has become critical cat underwheares. But 661 00:36:58,480 --> 00:37:00,759 Speaker 1: you're so good, we can do this. Port House is 662 00:37:01,120 --> 00:37:04,360 Speaker 1: iconic at the time Warner Center. It's like a CNN 663 00:37:04,480 --> 00:37:06,520 Speaker 1: hang out and all that. It's a great steak and 664 00:37:06,600 --> 00:37:08,600 Speaker 1: there's a view of the side of that and they're 665 00:37:08,600 --> 00:37:13,800 Speaker 1: closing it for renovations. What's the Peter Elliott formula to 666 00:37:13,960 --> 00:37:17,640 Speaker 1: do renovations right? Because what I see is they do women. 667 00:37:17,640 --> 00:37:20,719 Speaker 1: They always lose the magic of any given restaurant. Um. 668 00:37:20,840 --> 00:37:25,040 Speaker 1: That is an interesting point. Porter Porterhouse is a restaurant in, 669 00:37:25,239 --> 00:37:28,319 Speaker 1: as you say, the Time Warner Center, and actually one 670 00:37:28,400 --> 00:37:31,800 Speaker 1: of the few really successful ones. It's really intriguing for 671 00:37:31,920 --> 00:37:34,040 Speaker 1: all the mess of the restaurants that have gone on there, 672 00:37:34,080 --> 00:37:37,160 Speaker 1: from the stuff going on in per Se too. Reasons 673 00:37:37,200 --> 00:37:38,800 Speaker 1: why people don't want to go through a mall to 674 00:37:38,880 --> 00:37:41,520 Speaker 1: get to Massa to spend you know, a zillion dollars 675 00:37:41,560 --> 00:37:45,160 Speaker 1: on sushi um Porterhouses. Michael Almonica. Michael Almonica was the 676 00:37:45,239 --> 00:37:48,600 Speaker 1: chef at Windows on the World tragically um also at 677 00:37:48,640 --> 00:37:52,640 Speaker 1: twenty one Club. Just a classic New York guy, you know, 678 00:37:52,719 --> 00:37:54,600 Speaker 1: Michael Almonica is just one of the one of the 679 00:37:54,680 --> 00:37:57,359 Speaker 1: great New York chefs. He just does his job, gets 680 00:37:57,440 --> 00:38:00,120 Speaker 1: the steak out, has a nice, exactly happy act. What 681 00:38:00,200 --> 00:38:02,360 Speaker 1: it's like. He's just like a little old school, a 682 00:38:02,400 --> 00:38:05,759 Speaker 1: little new school um and and he's terrific. Now, the 683 00:38:05,800 --> 00:38:07,640 Speaker 1: good news about this, and your point about that, is 684 00:38:07,719 --> 00:38:09,640 Speaker 1: that what's he going to do with the Time Warner 685 00:38:09,680 --> 00:38:11,399 Speaker 1: Space that's going to change it so much? It's still 686 00:38:11,520 --> 00:38:15,759 Speaker 1: going to look like the Time Warner Center. So I mean, 687 00:38:15,840 --> 00:38:18,960 Speaker 1: I think you're probably right that even though, um, you know, 688 00:38:19,080 --> 00:38:21,000 Speaker 1: he may mess something up along the way or take 689 00:38:21,040 --> 00:38:23,279 Speaker 1: its thing. The reason people are going there for his 690 00:38:23,440 --> 00:38:25,680 Speaker 1: food and for the view, and that it's just a 691 00:38:25,800 --> 00:38:29,160 Speaker 1: very very convenient place. Um, kind of at the crossroads 692 00:38:29,239 --> 00:38:33,000 Speaker 1: of New York media. So I hope he won't mess 693 00:38:33,040 --> 00:38:35,080 Speaker 1: it up. And I can't really imagine that he would. 694 00:38:35,080 --> 00:38:37,720 Speaker 1: I'm sure it's just like freshening it up like an airline. 695 00:38:37,800 --> 00:38:40,960 Speaker 1: But in London, the Covent Garden Hotel, wonderful hotel near 696 00:38:41,000 --> 00:38:44,680 Speaker 1: the Seven Dials, they're renovating. And the guy said to me, 697 00:38:44,760 --> 00:38:48,759 Speaker 1: they're doing the bar or whatever out what's the treaddow 698 00:38:49,480 --> 00:38:53,800 Speaker 1: in the madness of your world? Between moving drinks and 699 00:38:53,920 --> 00:38:56,719 Speaker 1: moving food. The answers still make a bigger bar, is 700 00:38:56,760 --> 00:39:00,560 Speaker 1: make a bigger buck. The answer is, also, Mr coconomists 701 00:39:00,719 --> 00:39:04,840 Speaker 1: or dual economists, is just it's it's it's capitalism in it. 702 00:39:05,040 --> 00:39:08,840 Speaker 1: It's just the pressure to stay new is so intense, 703 00:39:08,960 --> 00:39:11,200 Speaker 1: and the and the wear and tear that restaurants and 704 00:39:11,320 --> 00:39:12,960 Speaker 1: hotels cat. How many times have you been in a 705 00:39:13,000 --> 00:39:15,560 Speaker 1: hotel that says, gosh, this place, has they've been updated 706 00:39:15,640 --> 00:39:19,839 Speaker 1: since you know what? N But in truth, a year 707 00:39:19,880 --> 00:39:21,680 Speaker 1: in the life of a restaurant, or the year in 708 00:39:21,680 --> 00:39:25,000 Speaker 1: the life of a restaurateur can be very hard, so 709 00:39:25,480 --> 00:39:28,320 Speaker 1: it's really important that they keep up and make it 710 00:39:28,400 --> 00:39:31,960 Speaker 1: look new and the old old fashioned thing. Sira matcons 711 00:39:32,040 --> 00:39:34,239 Speaker 1: Cerc always used to say, the first thing that you know, 712 00:39:34,360 --> 00:39:36,120 Speaker 1: clients do is look to see if there's wear and 713 00:39:36,160 --> 00:39:38,040 Speaker 1: tear on the chairs, and that can be a reason 714 00:39:38,120 --> 00:39:41,240 Speaker 1: that they never come back. You know, it's a relentless business, 715 00:39:41,280 --> 00:39:42,759 Speaker 1: so you really do have to make sure that you 716 00:39:42,880 --> 00:39:47,320 Speaker 1: are keeping up and nobody finds holes in your upholstery. 717 00:39:47,880 --> 00:39:50,359 Speaker 1: We uh, we were just talking with John Tish um 718 00:39:51,360 --> 00:39:53,560 Speaker 1: the Tish from the Lowest Corporation, who pointed out that 719 00:39:53,880 --> 00:39:56,680 Speaker 1: coming up is the South Beach Wine and Food Festival. 720 00:39:57,080 --> 00:40:00,200 Speaker 1: I imagine that you will. We will be there, ah, 721 00:40:00,360 --> 00:40:03,239 Speaker 1: And he was just telling us how amazed he was 722 00:40:03,360 --> 00:40:07,040 Speaker 1: that and how much that thing has grown. He remembers 723 00:40:07,360 --> 00:40:11,200 Speaker 1: the first one in a parking lot at Florida International University. Yes, well, there, 724 00:40:11,360 --> 00:40:14,160 Speaker 1: there you have it, and let us not forget that. Um. 725 00:40:14,719 --> 00:40:17,120 Speaker 1: Mr Tish owns the Lowes Hotel, which is the center 726 00:40:17,239 --> 00:40:20,160 Speaker 1: of the South Beach Wine and Food Festival, so he 727 00:40:20,280 --> 00:40:23,520 Speaker 1: has quite an interest in making sure that uh it is. 728 00:40:23,680 --> 00:40:25,960 Speaker 1: It is well received and and going to be bigger 729 00:40:26,000 --> 00:40:27,960 Speaker 1: and better and ever. It is amazing what's happened. It 730 00:40:28,080 --> 00:40:30,600 Speaker 1: was indeed was very very small, and now was something 731 00:40:30,680 --> 00:40:34,719 Speaker 1: like thousand people. Um, what's interesting to me about the 732 00:40:34,800 --> 00:40:37,680 Speaker 1: South Beach Wine and Food Festival. But um, besides the 733 00:40:37,719 --> 00:40:40,640 Speaker 1: fact that its concentration is so specific, is its breadth 734 00:40:41,040 --> 00:40:43,839 Speaker 1: that it used to be a very food network related thing. 735 00:40:43,920 --> 00:40:47,680 Speaker 1: You're talking about Rachel Ray and Jarrell and Hamburgers and 736 00:40:47,760 --> 00:40:50,160 Speaker 1: all of that stuff. But um, what it's really that 737 00:40:50,280 --> 00:40:54,680 Speaker 1: you can draw serious talent kind of this what Tom 738 00:40:54,920 --> 00:40:58,200 Speaker 1: would call snooty you know Copenhagen, you know Rene red 739 00:40:58,239 --> 00:41:00,880 Speaker 1: Zeppe and alex Adela and all the these kind of highbrow, 740 00:41:01,400 --> 00:41:06,120 Speaker 1: uh super specific chefs are also going to South Beach 741 00:41:06,160 --> 00:41:08,839 Speaker 1: Winding Food Festival this year. They have particularly locked out 742 00:41:08,840 --> 00:41:10,759 Speaker 1: because the weather stinks, so everybody wants to be there. 743 00:41:10,880 --> 00:41:14,520 Speaker 1: We started with Houston. Let's close out with Houston, two 744 00:41:14,640 --> 00:41:18,120 Speaker 1: or five these street is. I mentioned this to somebody 745 00:41:18,120 --> 00:41:19,440 Speaker 1: the other They said, where should I go for the 746 00:41:19,480 --> 00:41:22,680 Speaker 1: real New York And I said, Cats is delic still 747 00:41:22,719 --> 00:41:25,520 Speaker 1: doing Cats. Cats is still wonderfully. So it's rusting Daughters 748 00:41:25,640 --> 00:41:27,840 Speaker 1: and as we as we speak, we should we should 749 00:41:27,880 --> 00:41:30,920 Speaker 1: maybe start maybe should have started here. Carnegie Deli is 750 00:41:31,000 --> 00:41:36,320 Speaker 1: reopened in New York City. Is a strong word. I 751 00:41:36,360 --> 00:41:38,680 Speaker 1: mean when you you're down to Barney green Grass, Russ 752 00:41:38,719 --> 00:41:42,239 Speaker 1: and Daughters, cats Is and now Carnegie. So no that 753 00:41:42,600 --> 00:41:46,399 Speaker 1: that the diner is definitely a dying breed. Um which 754 00:41:46,480 --> 00:41:49,080 Speaker 1: is which is sad for for New York. But Catsas 755 00:41:49,160 --> 00:41:52,120 Speaker 1: is still a wonderful place. And and Russ and Daughters, 756 00:41:52,160 --> 00:41:54,440 Speaker 1: which is not only taking it but refined it and 757 00:41:54,560 --> 00:41:57,279 Speaker 1: expanded it. Um, they're probably the ones to look at 758 00:41:57,320 --> 00:42:00,200 Speaker 1: in the diner category right now. Cats Is Deli during 759 00:42:00,239 --> 00:42:02,600 Speaker 1: twenty seven years, which is how long Peter Elliott has 760 00:42:02,640 --> 00:42:05,440 Speaker 1: done Bloomberg Reserve. We think this is two weeks in 761 00:42:05,480 --> 00:42:07,200 Speaker 1: a row. This is too much, Peter Elliot, Where do 762 00:42:07,200 --> 00:42:10,200 Speaker 1: you travel to next? I'm I'm so sorry to hear that. 763 00:42:10,239 --> 00:42:11,880 Speaker 1: I'm off to I'm off to a great foods at 764 00:42:11,920 --> 00:42:14,640 Speaker 1: the San Francisco. Very good San Francisco. We said, good morning, 765 00:42:14,680 --> 00:42:18,440 Speaker 1: Bloomberg six the Bay Area. We announced you when C. 766 00:42:18,719 --> 00:42:22,960 Speaker 1: Johnson and C. Masser will attend for your early morning 767 00:42:23,080 --> 00:42:26,719 Speaker 1: San Francisco and of course worldwide. I'm Bloomberg or Radio 768 00:42:26,800 --> 00:42:29,520 Speaker 1: looking forward that Peter Elliot, thank you um so much. 769 00:42:29,560 --> 00:42:32,680 Speaker 1: A mixed market again indeterminates that would have been using 770 00:42:33,120 --> 00:42:36,319 Speaker 1: oh the dal of twelve SP five undicles the other 771 00:42:36,360 --> 00:42:39,799 Speaker 1: way negative two. We are produced by Yu n Our, 772 00:42:39,800 --> 00:42:45,400 Speaker 1: Global Technical Director, can Folio Next Carol Massa, Corey Johnson 773 00:42:45,480 --> 00:42:46,600 Speaker 1: Stay with Bloomberg Radio