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

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

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

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

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

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Speaker 1: at Bloomberg dot com slash podcast. We're gonna check in

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Speaker 1: with Kevin Brand. Kevin's a Defense policy ann also Bloomberg Intelligence.

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Speaker 1: I don't know Kevin, and I thought I knew everyone

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Speaker 1: at BI. That's because he just recently joined. He's at

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Speaker 1: twenty nine year Navy vetter. Whoa, I mean, what's up

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Speaker 1: with that? Kevin? Twenty nine years? Thank you for your service. Yeah,

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Speaker 1: thank you for your service. But twenty nine years, I mean,

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Speaker 1: you got it. You had to be the old guy, right, Yeah.

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Speaker 1: I couldn't figure out what I was gonna do when

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Speaker 1: I grew up. Kevin, You're you've been in this defense

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Speaker 1: game a long time in the Navy, with experience in

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Speaker 1: security strategy. You've got so much experience. When you look

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Speaker 1: back on this last year in Ukraine, what are some

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Speaker 1: of your key takeaways? Yeah, I tell you it's it's

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Speaker 1: really sad. You know, we here, we are one year

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Speaker 1: into the conflict, and this is a you know, a

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Speaker 1: war of choice by by mister Putin just to satisfy

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Speaker 1: his zone ego, kind of restore the borders of what

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Speaker 1: he sees as the former Soviet Empire, and he's caused,

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Speaker 1: you know, untold suffering on the country of Ukraine. We're

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Speaker 1: talking about one trillion dollars in potential infrastructure repairs that

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Speaker 1: have to be done to the country, Over eight million refugees,

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Speaker 1: primarily in Poland and Germany, five million displaced persons, you know,

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Speaker 1: thousands of deaths, Yeah, hundreds of thousands of deaths on

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Speaker 1: both sides, all for really a war of choice, completely unnecessary,

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Speaker 1: just tragic. But my question, Kevin is who could possibly

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Speaker 1: see an end to this? I've seen, I've read so

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Speaker 1: many stories over the past few days about how this

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Speaker 1: war is going to end, what it's going to take

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Speaker 1: for this war to end, and I just can't imagine

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Speaker 1: one year into it, people are willing to write that

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Speaker 1: we were in Vietnam for at least seven or eight years, right, right,

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Speaker 1: we were in Afghanistan for thirteen years. Now they're different

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Speaker 1: they're all different situations. But Russia was in Afghanistan for

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Speaker 1: nine years during their conflict. Why would anybody think, especially

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Speaker 1: with Vladimir Putin, who acts to you know, somewhere between

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Speaker 1: you know, a megalomaniac dictator and a cornered animal, why

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Speaker 1: would anyone think he has any reason to get out

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Speaker 1: other than total loss for him. Yeah, I think that's

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Speaker 1: the difficulty here. I mean this is this is definitely

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Speaker 1: a choice by Putin to have invaded Ukraine. I think

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Speaker 1: there's some difficulty associated with the US geopolitical position and

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Speaker 1: that of our Western allies that we didn't really be

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Speaker 1: more forceful in twenty fourteen during the annexation of Crimea.

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Speaker 1: I think that's set a precedent. Unfortunately, the precedent here

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Speaker 1: that is most important, and what I think is most

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Speaker 1: important for the international community, is upholding this standard that

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Speaker 1: we're not going to allow countries to forcibly change borders,

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Speaker 1: to force their will on others by using military force.

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Speaker 1: That's an Interestion state, I think is galvanized Europe. I

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Speaker 1: think it's very positive to see NATO coming together the

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Speaker 1: you know, Finland and Sweden about ready to join NATO.

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Speaker 1: Turkey willing to reintertalks. That's positive. But as far as

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Speaker 1: what convinces Putin to a band of this, he has

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Speaker 1: to fundamentally be defeated on the battlefield first and foremost.

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Speaker 1: He needs to be defeated personally. I can't imagine that

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Speaker 1: he backs away from this until he's thrown out of

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Speaker 1: office or dies. Yeah, I think this is going to

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Speaker 1: be very difficult. If you look at mister Putin, he

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Speaker 1: seems to have secured his power base. He's definitely an oligarch,

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Speaker 1: you know, he's a dictator authoritarian government. Absent some sort

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Speaker 1: of popular revolt, it's going to be very difficult to

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Speaker 1: remove him from power. So the only way to stop

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Speaker 1: this invasion is mister Putin's internal calculation has to be

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Speaker 1: that he can no longer achieve his results, and that

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Speaker 1: means the West really has to provide for Ukrainians defense,

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Speaker 1: and Ukraine must secure their borders and repel the Russian

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Speaker 1: from their territorial kevin Land space. What role do you

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Speaker 1: think China should play, will play, could play in the

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Speaker 1: netcoming year. Yeah, that's a great question. This is you know,

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Speaker 1: this is a very important international political contest. We have

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Speaker 1: authoritarian regimes out there revisionist powers who are wanting to

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Speaker 1: use force to achieve their national will. The West, the

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Speaker 1: international community has to stand up to that. When you

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Speaker 1: look at China ran to a lesser extent in North Korea.

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Speaker 1: The West has to galvanize international support to punish those

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Speaker 1: sort of behaviors. I think it's positive development that China

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Speaker 1: has so far not provided obstensibly lethal aid, but it

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Speaker 1: would be. It would be. One of the things I

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Speaker 1: think we need to see is China step up to

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Speaker 1: the plate and be a little bit more proactive besides

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Speaker 1: just offering a piece plan, be more proactive in pushing

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Speaker 1: back against Russia, both in the United Nations Security Council

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Speaker 1: and sort of internationally public diplomacy. Peace boys. Hey, Kevin,

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Speaker 1: we also have Maria todayo joining us. She's Bloomberg Television.

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Speaker 1: She is reporting today live from Kiev. Lets live from Kiev.

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Speaker 1: Let's bring Maria in. Maria, thank you so much for

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Speaker 1: joining us. Um. I know you've spent a lot of

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Speaker 1: time in Kiev, in Poland on trains interacting with Ukrainians.

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Speaker 1: What's the mood today one year in what is their

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Speaker 1: level of resolve? Hopefully we have Maria, but sometimes she's

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Speaker 1: in war zone. Yeah, no, it doesn't sound well. First

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Speaker 1: of all, your microphones off, okay, thank you. And second

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Speaker 1: of all, we're we don't have Maria now. She is

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Speaker 1: in the capitol and it is Fortress city, so it

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Speaker 1: doesn't I don't think that we have any kind of

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Speaker 1: war zone issues, but we do have your typical global

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Speaker 1: telecommunications problems. Producer Eric mullis as we got her back. Maria.

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Speaker 1: You have been after I think a seventeen hour train

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Speaker 1: reporting live from the capital of Ukraine, Kiev, and Paul

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Speaker 1: was wondering, you know, the people that you talk to

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Speaker 1: on the train, the people that you talk to in

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Speaker 1: the streets, what's what's there feeling? One Ye're in yes,

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Speaker 1: and listen. I have to apologize because I know the

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Speaker 1: lines are dropping, but really this is also part of it,

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Speaker 1: is the reality of it. And we're not even using

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Speaker 1: our real phones here pretty much for security essentially. I think,

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Speaker 1: to me, what is just incredible of the story is,

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Speaker 1: you know, you get on this train from Poland and

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Speaker 1: then you're making your way to Ukraine, and then at

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Speaker 1: one point I catch myself thinking, wow, it's one am

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Speaker 1: in the morning. This train is full. You know, you're

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Speaker 1: in this little carriage with four other people, and then

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Speaker 1: it just hits you. You know, we're all women here.

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Speaker 1: And then at that point you ask why are you

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Speaker 1: going there to this women? And then what's your situation?

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Speaker 1: And then they tell you, well, I'm either going to

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Speaker 1: see a relative where I'm going back to my husband,

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Speaker 1: or I had to come to Poland because there is

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Speaker 1: no visa process in Ukraine. And that's when it really

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Speaker 1: hid to the men cannot leave. It's the women that

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Speaker 1: are going in and out to their country. A lot

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Speaker 1: of these world husbands are fighting or they expect that

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Speaker 1: they will be called to some extent to fight this year,

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Speaker 1: particularly in the spring. And then you get to Ukraine

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Speaker 1: and the reality hit too. You see the first man

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Speaker 1: actually that you interact for many hours, or all dressed

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Speaker 1: in military year. They ask for your papers for passports,

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Speaker 1: they let you in, and then of course from that

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Speaker 1: point on you start to see the scenery. As you

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Speaker 1: enter kivs Bucha. We don't know the massacre that happened there.

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Speaker 1: Then you go into Rapine, which is just outside and

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Speaker 1: there was active fighting there, and that's when you really

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Speaker 1: realize the Russians were just so close to Kiev. Then

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Speaker 1: you see the airports that they had to blow up.

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Speaker 1: Remember the initial plan from the Russians was to take

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Speaker 1: hold of the airports and helicopter people from Belarus into Ukraine.

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Speaker 1: And that's the reality of the war. I think yesterday

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Speaker 1: for us on PubL the reality check. You see it firsthand,

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Speaker 1: and you're on this train and the train next to

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Speaker 1: you it's ready to send the weapons. And this is

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Speaker 1: a train that's really next to you as you're making

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Speaker 1: your way into Ukraine for seventeen hours. The airspace obviously

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Speaker 1: shut now for a year because of the missile strikes.

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Speaker 1: I think for today we heard already from Pricedent Lanski,

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Speaker 1: who was given out medals in the morning, to the

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Speaker 1: army again repeating the reason why we'll starts standing a

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Speaker 1: year later is because of our army and they have

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Speaker 1: beat in blood. So that I'm here, Slanski's here, is

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Speaker 1: the press that we're all here reporting this. It's because

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Speaker 1: of the huge fight that the army has put up

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Speaker 1: with a lot of weapons from the West. Sure, but

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Speaker 1: the reality is the soldiers that are dying there. And

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Speaker 1: the one thing that also really caught my eyes when

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Speaker 1: you look at Ukrainian TV the way they present this

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Speaker 1: is not the one year mark. It's not the one

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Speaker 1: year anniversary. What they say is one year now to victory.

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Speaker 1: All right, Maria Today, reporting live from Kiev. I know

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Speaker 1: you spoke with the mayor this morning, Vitali Klitschko, So

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Speaker 1: I want to talk to you about that later. We

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Speaker 1: can get you back on the program. And then Kevin

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Speaker 1: Brand he is Defense Policy and Bloomberg Intelligence, We're going

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Speaker 1: to get you back as well, because this is obviously

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Speaker 1: such an important issue geo politically, and we definitely want

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Speaker 1: to get all caught up on the one year anniversary

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Speaker 1: of this tragic war. How do we keep supplying Ukraine?

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Speaker 1: It seems like they're just going through munitions as you

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Speaker 1: would expect. Do we and the West have the capability

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Speaker 1: to continue to replenish their bullets and shells and tanks

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Speaker 1: and all that kind of stuff. Well, I think for

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Speaker 1: the short term absolutely, you know, we really don't have

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Speaker 1: a choice in this matter. It's sort of an existential

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Speaker 1: threat to Ukraine, and really the only thing that's bolstering

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Speaker 1: their defense forces is the Western weapons that are flowing in,

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Speaker 1: including some of the former Soviet Bloc countries that still

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Speaker 1: have some Eastern former Soviet sort of slide weapons that

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Speaker 1: we're able to do to kind of keep them in

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Speaker 1: the game. But that's the critical thing as we look

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Speaker 1: forward at this, you know, barring a return of the

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Speaker 1: Russian advance or that if they're able to get better

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Speaker 1: and moved into territory, what we really have to prepare

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Speaker 1: for is the Ukrainian counter offensive, which is probably going

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Speaker 1: to kick off later to spring, and so the importance

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Speaker 1: of getting those arms and weapons into Ukraine and get

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Speaker 1: them trained up ready to use them before that spring

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Speaker 1: offensive kicks off is kind of the number one problem

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Speaker 1: right now. I imagine that the US military just has

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Speaker 1: amazing capabilities in terms of supply chain management, and we

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Speaker 1: have the tools to get everything there right I mean,

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Speaker 1: we have more aircraft carriers and anybody else than everybody

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Speaker 1: else in the world combined, I believe. So is that

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Speaker 1: what's happening right now? Are we utilizing the Army and

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Speaker 1: the Navy to get them the gear that they need

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Speaker 1: as quickly as possible. Well, I think you've got a

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Speaker 1: combination of a couple things. So we're energizing the contractor base.

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Speaker 1: There's lots of security assistance dollars that are on contract

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Speaker 1: right now to get industry to ramp up production both

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Speaker 1: to resupply the US arsenal. Plus we'll also have the

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Speaker 1: ability to move weapons from the US arsenal these presidential

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Speaker 1: drawdowns that you've heard about, and move actually US weapons

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Speaker 1: stocks in through the supply chain and get those two Ukraine,

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Speaker 1: not to mention what's already the NATO countries are providing,

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Speaker 1: So there's enough arms and ammunitions to keep Ukraine's supply,

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Speaker 1: but we are starting to dip down into US and

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Speaker 1: NATO inventories. How concerned are you, Kevin about I mean,

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Speaker 1: this is clearly a well in some ways, it's a

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Speaker 1: proxy war between Russia and NATO. Right, How concerned are

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Speaker 1: you that that escalates into a hot war because I

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Speaker 1: feel like we've been watching China, but it looks like

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Speaker 1: this could be an an active threat that happens even

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Speaker 1: even sooner. No, this is serious concern. I think everyone

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Speaker 1: is watching that closely, and there's always a risk of

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Speaker 1: escalation when you get in and Russia has been clearly

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Speaker 1: signaling that they're unhappy with what the West is doing.

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Speaker 1: But you know, I think the West has made its

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Speaker 1: position clear. This is about the defense of Ukraine. This

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Speaker 1: is about Russia's unprovoked aggression against Ukraine, the violation of

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Speaker 1: territory borders, and this is what the international community stands

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Speaker 1: up for. Right non interference in the international affairs of others,

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Speaker 1: no forceful movement of borders by use of military force.

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Speaker 1: And so these are core international principles that are at

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Speaker 1: stake here, and the West really does need to step up, Kevin,

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Speaker 1: I guess in terms of stepping up, the next big,

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Speaker 1: big leap would be providing air cover, air force jets

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Speaker 1: F sixteens. What are the pros and cons that you

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Speaker 1: think our leaders are weighing right now, and how do

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Speaker 1: you think that's what we'll play out? Well, I think

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Speaker 1: you hit the nail on the head earlier. There's always

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Speaker 1: a risk of escalation. You know, what sort of weapon

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Speaker 1: systems do we bring? What is Russer's response to that?

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Speaker 1: I think we've had sort of an incremental approach to this,

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Speaker 1: increasing arms, longer range, arms, more lethal aid. I think

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Speaker 1: air support is next. When you think about a Ukrainian

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Speaker 1: offensive that's upcoming, you really have to have a combination

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Speaker 1: of infantry supported by armor, artillery and air support, not

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Speaker 1: just unmanned airs and sort of reconnaissance because golos you

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Speaker 1: need to have tact fighters that can provide close air

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Speaker 1: support to those troops. So I think it's inevitable. The

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Speaker 1: question is just a matter of time before the West

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Speaker 1: commits to that. Do we always have to pre announce

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Speaker 1: this stuff? Is that a part of, you know, avoiding escalation?

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Speaker 1: We say we're going to do it, we float that balloon,

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Speaker 1: and then we eventually do. Or is it possible that

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Speaker 1: we give them give the Ukrainians fighter jets to use

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Speaker 1: in the offensive without telling anybody and upping the element

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Speaker 1: of surprise. It's possible, But you know, these sort of

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Speaker 1: deliberations are so complex. Inside the National Security Council, they're

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Speaker 1: weighing the pros and cons are looking at the risk

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Speaker 1: of escalation. It's very, very hard to hide these moves.

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Speaker 1: So even if we didn't announce them publicly, which I

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Speaker 1: think would be a mistake, but even if we didn't,

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Speaker 1: Russia would clearly know that we're doing it. The information

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Speaker 1: would get out. So I think it's really the deliberate

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Speaker 1: process by which the NSC and the White House, the

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Speaker 1: Administration needs to go through, work with our NATO partners,

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Speaker 1: and then term of what the best air assets to

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Speaker 1: provide are from an intelligence perspective, Kevin, how do you

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Speaker 1: what do you believe or how good do you think

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Speaker 1: our capabilities are in that part of the world. And

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Speaker 1: are we providing intelligence support for the Ukrainians? Absolutely, I

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Speaker 1: think that's one of the key things that we're actually

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Speaker 1: providing the Ukrainians besides the arms in Western is that

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Speaker 1: intelligence support. I mean, they clearly know the adversary better

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Speaker 1: than any of us. They're on the ground, they're there,

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Speaker 1: But the non technical means that we have the satellite

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Speaker 1: sort of surveillance, the overflight capability that we have the UAVs,

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Speaker 1: we are providing pretty critical intelligence that helps them tactically

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Speaker 1: and operationally make decisions on the ground as to where

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Speaker 1: they need to defend, where Russia is massing troops, where

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Speaker 1: they need to reallocate resources. And I think that's absolutely

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Speaker 1: critical to Ukraine's defense. You got your master's National Security

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Speaker 1: policy from the National War College US Naval War College.

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Speaker 1: How much did they talk about China then and how

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Speaker 1: much of a threat do you think China is now?

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Speaker 1: Because I know an Air Force general recently said we

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Speaker 1: could have war with them in twenty twenty five. Absolutely,

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Speaker 1: so China, China and Russia. I mean China to the

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Speaker 1: most part has been sort of the premiere up and

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Speaker 1: coming long term strategic competitor for the United States least

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Speaker 1: going back fifteen twenty years in military parlance. The national

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Speaker 1: security establishment really focused on that more recently in the

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Speaker 1: last ten years. But absolutely that's the up and coming

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Speaker 1: challenge that we've got from a great power competition perspective. Hey, Kevin,

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Speaker 1: we're fortune once again have Maria todayo joining us live

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Speaker 1: from Kiev, so we want to go to her. Maria,

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Speaker 1: thanks so much for you know, dialing, and we know

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Speaker 1: it's hectic there. I believe you recently sat down with

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Speaker 1: the mayor of Fatal. Yeah, the mayor of Kiev. Could

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Speaker 1: you tell us just gives a little color about what

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Speaker 1: you learn from your discussion. Yeah, and he was here

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Speaker 1: this morning with us a clitch car. Obviously, you know

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Speaker 1: the two others. At this point, they've become something of

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Speaker 1: a popular icon here and they have been also in

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Speaker 1: a number of European countries because they speak for German,

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Speaker 1: and they have it pretty smart in fact, to reach

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Speaker 1: out to Germany and speak in Germany and reach out

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Speaker 1: to the German media because they knew that a lot

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Speaker 1: of the weapons, the key to unlock the heavy weapons

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Speaker 1: would be in Berlin. Which also speaks to the fact

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Speaker 1: that when you look overall at the Ukrainian government and

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Speaker 1: Zelenski's doing this in real time, he was doing a

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Speaker 1: press conference a lot of international media. When you look

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Speaker 1: at the foreign minister who's speaking today at the United Nations,

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Speaker 1: it's almost this new generation of Ukrainian politicians who get

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Speaker 1: very well that they need to have a big media

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Speaker 1: presence and that they need to gather message across and

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Speaker 1: this was something that for Zelenski was obvious for day one.

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Speaker 1: If they wanted to really survive, they needed to make

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Speaker 1: this a global story. And it has been now for

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Speaker 1: a year now we are seeing pictures presences like the

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Speaker 1: cell the cell phone call has dropped, and as Maria

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Speaker 1: told us, you know, she and U producer Oliver Krook

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Speaker 1: traveled into Ukraine. They had to uh leave their actual

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Speaker 1: you know, personal cell phones and business cell phones at

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Speaker 1: the border, so they took in m communication devices that

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Speaker 1: are not necessarily reliable. Hopefully we can get her back.

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Speaker 1: But she was talking about the importance of you know,

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Speaker 1: the clich goes have have been huge Kevin in in

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Speaker 1: building support as well as obviously Zelenski. Do you think

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Speaker 1: that that support still is the popular support still um

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Speaker 1: as big as it was when this war started a

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Speaker 1: year ago? Has it waned at all? No? You know,

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Speaker 1: it's always difficult to tell, and that's always a risk

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Speaker 1: that you lose popular support and backing and that you know,

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Speaker 1: the implications go with that in a democratic uh, you know,

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Speaker 1: environment is difficult in order to maintain support. But I

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Speaker 1: would say, actually, what we've seen as a strengthening the

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Speaker 1: uniting of NATO and the uniting of Europe behind this

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Speaker 1: and behind the international principles involved. So I actually look

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Speaker 1: at this as a very positive sort of step forward.

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Speaker 1: And Kevin, realistically, what do other NATO countries, what can

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Speaker 1: they provide? What are they providing? How much can we

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Speaker 1: as a you know, really depend upon them for real material? Yeah?

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Speaker 1: So I think there's two things. There's one, there's the

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Speaker 1: international support, the aligning of NATO sort of the getting

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Speaker 1: back to basics as to what the alliance is for,

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Speaker 1: and that's absolutely critical. The second thing is this stepping

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Speaker 1: up in the defense budgets the nations across the NATO

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Speaker 1: are coming back to their two percent pledges. They're plussing

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Speaker 1: up their defense budgets. That's great for the Alliance. The

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Speaker 1: third thing, though, to your point directly, is they have

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Speaker 1: tons of arms and ammunition available, especially small arms. That

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Speaker 1: is critical for the infantry sup fight infantry fight. They

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Speaker 1: have the ability to provide non technical means. They have

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Speaker 1: the ability to provide logistic support. They have the ability

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Speaker 1: to provide humanitarian support. All that comes together, I think

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Speaker 1: and provides a very important backing for Ukraine. All Right,

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Speaker 1: we have Maria today, O back. I believe Maria, if

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Speaker 1: you're there, talk to us about the push for fighter jets.

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Speaker 1: I know that Ukraine has been not only behind obviously publicly,

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Speaker 1: but also behind the scenes on a daily basis trying

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Speaker 1: to get air support. Yeah. Absolutely. And you know, Matt,

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Speaker 1: when you listen to the Ukrainian FOREM Minister at the

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Speaker 1: Midriku level, who's just before the United Nations, he says,

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Speaker 1: Ukraine when this board started had a checklist almost of

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Speaker 1: the seven things that they needed, the seven type of

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Speaker 1: weapons that they needed, and he says, at this point

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Speaker 1: we've crossed six. The red lines have been crossed repeatedly.

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Speaker 1: Remember there was major fear of tanks. And funnily enough,

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Speaker 1: they're now making their way from Poland into Ukraine. And

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Speaker 1: it's funny. When I was on the train, see that

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Speaker 1: in the train to Poland to Ukraine, there's another lane,

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Speaker 1: huge lane where all of this equipment is just crossing

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Speaker 1: the border. And that's when it really hits you that

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Speaker 1: this is real and these weapons are massive. They're enormous.

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Speaker 1: Seeing the one thing they need is alluded to is

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Speaker 1: the fighter jets. This is still an open debate and

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Speaker 1: Ukrainians will say the rational for this is that they

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Speaker 1: want to make a big push to get back essentially

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Speaker 1: the twenty percent around the country that Russia right now

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Speaker 1: controls and the east and going down to the south.

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Speaker 1: And to do that, they argue, you need to have

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Speaker 1: a position from the ear that allows your soldiers to

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Speaker 1: move in freely and obviously with less of confrontation with

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Speaker 1: trips on the ground. And they also say the long

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Speaker 1: range missiles also do that. They provide cover and support

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Speaker 1: two soldiers that are on the ground. It's very difficult

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Speaker 1: to make inroads if you don't have the backup from

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Speaker 1: aviation and the long range missiles this is an ongoing story,

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Speaker 1: but they continue to push for it. And if you

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Speaker 1: look at the track record, you know, Matt I would

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Speaker 1: not be surprised if they get them again. They had

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Speaker 1: seven things they wanted, they have six for the time being. Hey, Maria,

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Speaker 1: can you give us the latest what you're hearing from

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Speaker 1: government officials about casualties, casualty rates, expectations. Kind of because

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Speaker 1: we're again one year into this. Look, this is the

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Speaker 1: biggest secret and you understand why for Ukrainians to put

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Speaker 1: out a number of dead soldiers, to put out a

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Speaker 1: total number of population that here we all know the

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Speaker 1: number is probably great and it is a big number.

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Speaker 1: And this is the secrecy that goes on in every

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Speaker 1: war in US is Ukraine, in any war, the act

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Speaker 1: of government will do everything that I can to make

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Speaker 1: sure that those numbers be precisive for that effective moral. Understandably,

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Speaker 1: we've lost Maria yet again. So it's just kind of

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Speaker 1: what we've become accustomed to in Kiev because communications there

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Speaker 1: are very tenuous at best. Um, Kevin, as we just

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Speaker 1: heard from Maria, you know, the the you know, the

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Speaker 1: the push is to get some aircraft in there, so um,

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Speaker 1: you know, we'll have to see how that plays out.

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Speaker 1: But we just want to thank Kevin Brand, defense policy

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Speaker 1: annalyst for Bloomberg Intelligence, joining us on the phone from

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Speaker 1: marsh in DC and Maria TODAYO on the ground in

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Speaker 1: Kiev was some on the ground reporting. We appreciate both

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Speaker 1: there and again, Matt, this one year anniversary of the

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Speaker 1: invasion by Russia of Ukraine. Yeah, and it's interesting to

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Speaker 1: also hear from Maria not only about travel into Kiev

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Speaker 1: and the mood on the ground there, but about the

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Speaker 1: push for more weaponry and the armor that she sees

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Speaker 1: rolling in, and to hear from Kevin as well about

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Speaker 1: the counter offensive that we expect to come in the

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Speaker 1: not too distant future. That's what the armors rolling in

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Speaker 1: there for. And I guess the question now is how

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Speaker 1: much damage they can do and how quickly they can

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Speaker 1: do it in order to hurt the Russian offensive and

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Speaker 1: to hurt Russian morale. But the market is certainly saying,

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Speaker 1: all right, this inflation is here. It's a little bit

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Speaker 1: hotter than we thought. That means fed's going to be

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Speaker 1: potentially higher for longer, and that's kind of what we're

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Speaker 1: seeing in the market here. The snp off one points

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Speaker 1: percent the two year treasury again, we've touched four point

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Speaker 1: eight two percent. We're now at four point seven nine

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Speaker 1: percent on the two year. Let's bring in somebody who

429
00:23:07,280 --> 00:23:10,520
Speaker 1: does this stuff for a living. Alex Schalloff, cohead of

430
00:23:10,680 --> 00:23:15,000
Speaker 1: investment Strategies at Bernstein Private Wealth Management. Alex, thanks so

431
00:23:15,119 --> 00:23:17,359
Speaker 1: much for joining us here. God, we've looked back on

432
00:23:17,400 --> 00:23:20,120
Speaker 1: twenty twenty two. It was ugly. I don't care where

433
00:23:20,119 --> 00:23:23,000
Speaker 1: you are. Equities, fixed income, tough time, tough time to

434
00:23:23,080 --> 00:23:25,560
Speaker 1: make money. Here we are in twenty twenty three, started

435
00:23:25,560 --> 00:23:28,600
Speaker 1: off a little bit pretty darn good in January. What

436
00:23:28,680 --> 00:23:32,440
Speaker 1: are you telling your clients these days? I think, good morning, guys.

437
00:23:32,680 --> 00:23:35,200
Speaker 1: I think we're probably a little bit ahead of ourselves

438
00:23:35,200 --> 00:23:37,160
Speaker 1: with where we were in January, and I think people

439
00:23:37,160 --> 00:23:42,320
Speaker 1: can acknowledge that it seemed as though nothing had changed

440
00:23:42,359 --> 00:23:46,240
Speaker 1: from twelve thirty one through one thirty one, and in

441
00:23:46,280 --> 00:23:49,240
Speaker 1: the month we had outstanding returns in stocks and bonds.

442
00:23:49,280 --> 00:23:53,040
Speaker 1: So our clients were scratching their heads, just like we were, saying,

443
00:23:53,520 --> 00:23:56,840
Speaker 1: this doesn't feel right, and we're probably a little bit

444
00:23:56,840 --> 00:24:00,159
Speaker 1: ahead of ourselves. The good news is, like you said

445
00:24:00,200 --> 00:24:02,040
Speaker 1: in twenty twenty two, it's really hard to make money

446
00:24:02,040 --> 00:24:04,760
Speaker 1: in stocks and bonds. But when you moved outside of

447
00:24:04,800 --> 00:24:07,919
Speaker 1: traditional markets, there was a lot of opportunity and frankly,

448
00:24:07,960 --> 00:24:11,560
Speaker 1: a lot of money to be made. So where and

449
00:24:12,040 --> 00:24:15,479
Speaker 1: is that still a good trade? Yeah? The alternative space

450
00:24:15,680 --> 00:24:18,480
Speaker 1: is still a trade. And when we say alternatives, we

451
00:24:18,520 --> 00:24:22,080
Speaker 1: think about real estate, we think about private equity, private lending.

452
00:24:22,440 --> 00:24:26,919
Speaker 1: Even hedge funds made money last year. So even hedge

453
00:24:26,920 --> 00:24:30,000
Speaker 1: funds made money. I love it. Even Head even those

454
00:24:30,040 --> 00:24:32,320
Speaker 1: guys made money. Remember when they were the masters of

455
00:24:32,359 --> 00:24:35,720
Speaker 1: the universe. Yea, listen, it's weird. I'm in Los Angeles.

456
00:24:35,720 --> 00:24:37,960
Speaker 1: I got a blizzard warning this morning, so the world

457
00:24:38,080 --> 00:24:41,000
Speaker 1: is not normal. We just have to acknowledge that. But look,

458
00:24:41,359 --> 00:24:44,920
Speaker 1: you could make if you were able to take some

459
00:24:45,000 --> 00:24:48,120
Speaker 1: illiquidity on, you could make a lot more money than

460
00:24:48,520 --> 00:24:51,800
Speaker 1: was available in the public markets. And that continues today.

461
00:24:52,160 --> 00:24:54,560
Speaker 1: When I see markets read today, what that says is

462
00:24:55,080 --> 00:24:58,119
Speaker 1: there's a lot of anxiety out there. There's uncertainty, and

463
00:24:58,200 --> 00:25:00,879
Speaker 1: when people want their money every single moment of the

464
00:25:01,000 --> 00:25:03,240
Speaker 1: day and you're willing to say, you know what, I

465
00:25:03,280 --> 00:25:05,960
Speaker 1: don't need it tomorrow or next week or even next month. Yeah,

466
00:25:06,000 --> 00:25:09,120
Speaker 1: there's an interesting trade there. So where do we go here.

467
00:25:09,119 --> 00:25:12,480
Speaker 1: I mean, you know, the sixty forty portfolio did not

468
00:25:12,640 --> 00:25:15,760
Speaker 1: work last year. So you talk your clients, are you

469
00:25:16,040 --> 00:25:19,120
Speaker 1: are you heavier in risk assets? Here are you saying,

470
00:25:19,160 --> 00:25:20,800
Speaker 1: hey boy, we can actually make some money in the

471
00:25:20,880 --> 00:25:23,399
Speaker 1: fist income space. You can park your money into your

472
00:25:23,400 --> 00:25:27,280
Speaker 1: paper and get four point eight percent. Where are you

473
00:25:27,359 --> 00:25:30,760
Speaker 1: kind of pushing people these days? Are leading them? Well,

474
00:25:30,800 --> 00:25:33,199
Speaker 1: it comes back to this idea of alternative investments, of

475
00:25:33,280 --> 00:25:37,560
Speaker 1: having things outside of traditional stocks and bonds. So again,

476
00:25:37,640 --> 00:25:41,760
Speaker 1: private equity, private debt a big part of our solution

477
00:25:42,000 --> 00:25:45,120
Speaker 1: and it's worked. But if somebody says, look, I am

478
00:25:45,200 --> 00:25:48,199
Speaker 1: looking for that traditional portfolio. I need access to my

479
00:25:48,680 --> 00:25:53,040
Speaker 1: to liquidity for spending, there's an interesting opportunity that exists

480
00:25:53,040 --> 00:25:56,920
Speaker 1: today in municipal bonds for sure. You know you talked

481
00:25:56,920 --> 00:25:59,960
Speaker 1: about treasuries generating more yield. I would look because most

482
00:26:00,040 --> 00:26:02,800
Speaker 1: to our clients are at the highest marginal bracket. They

483
00:26:02,880 --> 00:26:05,520
Speaker 1: want that tax free income, and in exists today immunis.

484
00:26:06,359 --> 00:26:09,399
Speaker 1: We saw a nice move in January, giving them some

485
00:26:09,560 --> 00:26:12,680
Speaker 1: back this month. But again that's normal. And if all

486
00:26:12,720 --> 00:26:15,360
Speaker 1: you're concerned about is cash flow in the yield, it's

487
00:26:15,440 --> 00:26:20,520
Speaker 1: juicy today. So Alex in terms of the alternatives, again,

488
00:26:22,119 --> 00:26:24,360
Speaker 1: how out there on the risk premium do you get.

489
00:26:24,400 --> 00:26:28,080
Speaker 1: Are you out there buying timber for your clients or

490
00:26:28,240 --> 00:26:32,840
Speaker 1: is it more private equity hedge fund type stuff. You

491
00:26:32,840 --> 00:26:34,879
Speaker 1: could do both. I mean, I think right down the

492
00:26:34,920 --> 00:26:38,760
Speaker 1: middle of the fairway core type of cash flow centric

493
00:26:38,840 --> 00:26:43,320
Speaker 1: real estate is interesting. We're about to see a significant

494
00:26:43,320 --> 00:26:45,680
Speaker 1: shake up in the commercial real estate market given what's

495
00:26:45,680 --> 00:26:47,880
Speaker 1: gone on in rates and just having some dry powder

496
00:26:48,280 --> 00:26:49,960
Speaker 1: there to take advantage of it. I don't think you

497
00:26:50,000 --> 00:26:53,000
Speaker 1: need to do anything exotic or special to win there.

498
00:26:53,480 --> 00:26:56,040
Speaker 1: I think in private equity it's really you know, we've

499
00:26:56,080 --> 00:26:59,239
Speaker 1: done a good job of staying out of venture just

500
00:26:59,280 --> 00:27:01,320
Speaker 1: because we felt like it was frothy the last couple

501
00:27:01,359 --> 00:27:05,240
Speaker 1: of years. Now it's interesting prices have started to correct there,

502
00:27:06,040 --> 00:27:07,960
Speaker 1: and so I think, you look, you don't need to

503
00:27:08,119 --> 00:27:11,240
Speaker 1: overreach to win in the private markets today. There's a

504
00:27:11,240 --> 00:27:15,640
Speaker 1: lot of opportunity in terms of what you expect from

505
00:27:15,880 --> 00:27:18,240
Speaker 1: on the inflation front, what you expect from the Fed.

506
00:27:19,040 --> 00:27:23,400
Speaker 1: We got it hotter than expected PCE core deflator this

507
00:27:23,480 --> 00:27:26,439
Speaker 1: morning year over year four point seven percent. We were

508
00:27:26,480 --> 00:27:29,520
Speaker 1: looking for four point three percent, and that's up from

509
00:27:29,520 --> 00:27:33,120
Speaker 1: the four point six percent we had last month. That's

510
00:27:33,119 --> 00:27:35,720
Speaker 1: even up from the revised up from the four point

511
00:27:35,800 --> 00:27:38,720
Speaker 1: four percent. Anyway, it just looks like inflation is not

512
00:27:38,840 --> 00:27:41,879
Speaker 1: cooling down at the rate that this market expected. What

513
00:27:41,960 --> 00:27:44,560
Speaker 1: does that mean the Fed has to do well. I

514
00:27:44,640 --> 00:27:47,280
Speaker 1: think everyone's been saying this morning, it's higher for longer.

515
00:27:47,320 --> 00:27:51,280
Speaker 1: I don't think that's a surprise. Really. What's interesting is

516
00:27:51,280 --> 00:27:54,919
Speaker 1: the narrative change from hard landing versus soft landing to

517
00:27:55,040 --> 00:27:58,800
Speaker 1: now potentially no landing. I think, on the positive side,

518
00:27:58,800 --> 00:28:02,160
Speaker 1: this is an economy that's moving. You know, you can't

519
00:28:02,160 --> 00:28:05,280
Speaker 1: get a restaurant reservation, you can't get a hotel reservation,

520
00:28:05,880 --> 00:28:08,760
Speaker 1: you can't get a concert ticket. You know, you can't

521
00:28:08,760 --> 00:28:11,800
Speaker 1: get an ev there's a there's still is a massive

522
00:28:11,840 --> 00:28:15,720
Speaker 1: amount of demand. You can't get a Dodge Challenger, Hellcat,

523
00:28:16,040 --> 00:28:19,840
Speaker 1: Red Eye, right, go old school, that's right, each wealth.

524
00:28:20,920 --> 00:28:24,480
Speaker 1: But look that the point is people are spending, and

525
00:28:24,640 --> 00:28:27,040
Speaker 1: you know, we can sit around in a restaurant waiting

526
00:28:27,080 --> 00:28:28,840
Speaker 1: for a table and say, wow, this is a real

527
00:28:28,920 --> 00:28:31,639
Speaker 1: recession here. I can't get a table for you know,

528
00:28:31,760 --> 00:28:33,520
Speaker 1: it's gonna take me seven weeks, and I can get

529
00:28:33,560 --> 00:28:35,840
Speaker 1: a table at nine thirty on a Monday night. I mean,

530
00:28:35,840 --> 00:28:38,520
Speaker 1: people are really spending. So I don't think it's reasonable

531
00:28:38,560 --> 00:28:41,640
Speaker 1: for any of us to expect that inflation levels are

532
00:28:41,640 --> 00:28:44,160
Speaker 1: going to come down in the near future, but they're

533
00:28:44,160 --> 00:28:48,160
Speaker 1: going to trend lower over time. And look, the real question.

534
00:28:48,200 --> 00:28:51,480
Speaker 1: I know people within bursting or asking this, And a

535
00:28:51,520 --> 00:28:55,959
Speaker 1: colleague was on the counterpart on television this morning, just

536
00:28:56,040 --> 00:28:59,320
Speaker 1: talking about this idea that while it doesn't look like

537
00:28:59,320 --> 00:29:01,600
Speaker 1: it's going to bend today, it will bend in the future.

538
00:29:02,120 --> 00:29:04,640
Speaker 1: And so it's maybe it's not the first half of

539
00:29:04,680 --> 00:29:06,480
Speaker 1: the year, and maybe it's Q three and Q four

540
00:29:06,560 --> 00:29:09,000
Speaker 1: frankly where we start to see some relief. But as

541
00:29:09,000 --> 00:29:12,160
Speaker 1: long as the economy is steaming as it is, then

542
00:29:12,320 --> 00:29:15,360
Speaker 1: we can get through here again with a no landing scenario.

543
00:29:15,440 --> 00:29:18,160
Speaker 1: It's a it's a new idea. So do we do

544
00:29:18,240 --> 00:29:22,120
Speaker 1: the economics team at Bernstein, have they taken the recession

545
00:29:22,200 --> 00:29:25,600
Speaker 1: risk kind of off the table? No? No, no, Actually

546
00:29:26,200 --> 00:29:29,120
Speaker 1: they're in our base case, which is fifty percent of

547
00:29:29,200 --> 00:29:32,400
Speaker 1: the outcomes that we see in our forecast, we've got

548
00:29:32,480 --> 00:29:37,040
Speaker 1: a mild recession, and then our bear case, another twenty

549
00:29:37,040 --> 00:29:40,440
Speaker 1: five percent likelihood is more moderate recession. So I'd actually

550
00:29:40,480 --> 00:29:43,920
Speaker 1: say this is new. This is new. Our our forecast

551
00:29:43,960 --> 00:29:47,800
Speaker 1: still calls base case that will be in a mild recession.

552
00:29:47,840 --> 00:29:50,200
Speaker 1: But it'll be one of those recessions where you really

553
00:29:50,240 --> 00:29:51,920
Speaker 1: don't know if you're in or if you're out, And

554
00:29:51,920 --> 00:29:53,680
Speaker 1: then a year later they'll come back and say, oh,

555
00:29:53,760 --> 00:29:57,880
Speaker 1: remember Q four twenty two and Q one twenty three. Yeah, guys,

556
00:29:57,880 --> 00:30:00,600
Speaker 1: we actually were in recession. So it's it's not going

557
00:30:00,640 --> 00:30:03,560
Speaker 1: to feel like a normal recession. It's gonna be one

558
00:30:03,560 --> 00:30:05,360
Speaker 1: of the weirdest recessions will be in. But no, the

559
00:30:05,400 --> 00:30:07,760
Speaker 1: base case is still a mild recession. Alex got a

560
00:30:07,840 --> 00:30:11,560
Speaker 1: question from a listener writing in, and I hope you're

561
00:30:11,600 --> 00:30:14,680
Speaker 1: not friends with anybody on the f OMC because that

562
00:30:14,760 --> 00:30:18,440
Speaker 1: could taint your answer. So do you feel like the

563
00:30:18,480 --> 00:30:21,360
Speaker 1: FED has the guts to surprise the market with an

564
00:30:21,360 --> 00:30:25,520
Speaker 1: intermeding hike or MBS sales or will the market front

565
00:30:25,600 --> 00:30:30,960
Speaker 1: run the FED in perpetuity? Wow, I think all of

566
00:30:31,040 --> 00:30:35,920
Speaker 1: us have learned a lesson around FED guessing we're all

567
00:30:35,960 --> 00:30:40,440
Speaker 1: hoping that cherre Powell doesn't have the will to crush

568
00:30:40,520 --> 00:30:44,760
Speaker 1: the US economy and that they do break early. But

569
00:30:44,760 --> 00:30:47,240
Speaker 1: but the MBS side is interesting. But we've had the

570
00:30:47,320 --> 00:30:50,080
Speaker 1: reduction and balance sheet going on in the background. Two

571
00:30:50,160 --> 00:30:52,160
Speaker 1: years ago, that was a huge deal. Everyone was saying,

572
00:30:52,160 --> 00:30:53,480
Speaker 1: when is it going to happen, How is it going

573
00:30:53,560 --> 00:30:57,400
Speaker 1: to happen? And quietly it has been happening, and that's

574
00:30:57,400 --> 00:31:00,360
Speaker 1: something that's been lost. But if I were to answer

575
00:31:00,440 --> 00:31:02,200
Speaker 1: the question directly, because that's what we try to do

576
00:31:02,280 --> 00:31:06,240
Speaker 1: answer questions, I would say, I think the FED is

577
00:31:06,440 --> 00:31:11,000
Speaker 1: We think the FED is likely to pause before inflation

578
00:31:11,040 --> 00:31:13,400
Speaker 1: certainly gets to that two percent long run number. Alex,

579
00:31:13,400 --> 00:31:16,760
Speaker 1: you mentioned you're in Los Angeles. There weather issues aside,

580
00:31:16,760 --> 00:31:18,760
Speaker 1: and I did see some video of some snow by

581
00:31:18,760 --> 00:31:21,520
Speaker 1: the Hollywood sign, which I've never seen before. What's the

582
00:31:21,560 --> 00:31:24,640
Speaker 1: feeling in the LA market are in terms of the economy,

583
00:31:24,720 --> 00:31:26,920
Speaker 1: in terms of the outlook that that type of thing.

584
00:31:28,560 --> 00:31:31,840
Speaker 1: It is much like the rest of the country. It's

585
00:31:32,000 --> 00:31:36,600
Speaker 1: it's the economy is working. The parking garage and the

586
00:31:36,600 --> 00:31:40,120
Speaker 1: office buildings are full. People are coming back to the office.

587
00:31:40,240 --> 00:31:43,360
Speaker 1: There are not as many cranes as there are in Miami,

588
00:31:43,400 --> 00:31:46,600
Speaker 1: but there's a lot of construction activity. New home sales

589
00:31:46,720 --> 00:31:49,600
Speaker 1: continue to be tight. There's not a lot of inventory.

590
00:31:49,800 --> 00:31:52,360
Speaker 1: Some of it's related to California in the PROP thirteen.

591
00:31:52,920 --> 00:31:57,160
Speaker 1: But frankly, you know, there's so much home equity today

592
00:31:57,280 --> 00:32:01,560
Speaker 1: that didn't exist in prior periods pre recession in the past,

593
00:32:02,160 --> 00:32:04,680
Speaker 1: that the housing market is quite strong again on that

594
00:32:04,760 --> 00:32:09,000
Speaker 1: lack of inventory. So, you know, California, there's been lots

595
00:32:09,000 --> 00:32:11,440
Speaker 1: and lots of calls for it to be over, the

596
00:32:11,520 --> 00:32:14,040
Speaker 1: story to be over, the people leaving because of taxes,

597
00:32:15,160 --> 00:32:17,440
Speaker 1: you know, again back to restaurant reservations. I wish people

598
00:32:17,440 --> 00:32:22,240
Speaker 1: would leave. It's moving, all right. Alex kuran On, get

599
00:32:22,240 --> 00:32:26,240
Speaker 1: out of here, Get out of Austin, Texas. Alex Chalaf, Co,

600
00:32:26,440 --> 00:32:33,800
Speaker 1: head of Investment Strategies at Bernstein Private Wealth Management. We

601
00:32:33,920 --> 00:32:38,560
Speaker 1: have a killer panel in here in the Bloomberg Interactive

602
00:32:38,560 --> 00:32:43,120
Speaker 1: Broker studio. Listeners may know that I have with Katie

603
00:32:43,160 --> 00:32:47,120
Speaker 1: Greifeld and Eric Palcunas an ETF program. Wait, what day

604
00:32:47,160 --> 00:32:49,080
Speaker 1: do we do that? We do that on Mondays, sometimes

605
00:32:49,080 --> 00:32:53,160
Speaker 1: on Wednesdays. That's right, Mondays and Wednesdays, sometimes even Thursdays.

606
00:32:53,200 --> 00:32:55,120
Speaker 1: I think it's happened in the past. But anyway, one

607
00:32:55,160 --> 00:32:58,080
Speaker 1: PM in the afternoon and one of my favorite guests

608
00:32:58,080 --> 00:33:01,240
Speaker 1: just joined me and Katie in the studio, Joanna Glegis

609
00:33:01,320 --> 00:33:03,760
Speaker 1: joins Us. She's a co founder of bond Blocks, one

610
00:33:03,800 --> 00:33:09,600
Speaker 1: of I think the really innovative ETF providers that I

611
00:33:09,640 --> 00:33:12,880
Speaker 1: guess appeared out of the blue last year. Not out

612
00:33:12,880 --> 00:33:15,480
Speaker 1: of the blue, right, Joanna, because you've had experienced a

613
00:33:15,680 --> 00:33:17,640
Speaker 1: couple of the biggest ECF firms in the world. But

614
00:33:18,440 --> 00:33:20,800
Speaker 1: all right, so let's talk first of all about what

615
00:33:20,840 --> 00:33:24,720
Speaker 1: you're seeing in the flows and you focus your products.

616
00:33:24,760 --> 00:33:27,400
Speaker 1: You have nineteen ETFs focused really on the fixed income

617
00:33:27,480 --> 00:33:29,920
Speaker 1: world and nobody else does that, and then you cut

618
00:33:30,000 --> 00:33:32,520
Speaker 1: them into different slices so you can see what's happening

619
00:33:32,520 --> 00:33:35,920
Speaker 1: in high yield, what's happening and ig What are you

620
00:33:35,960 --> 00:33:38,720
Speaker 1: seeing right now? Yeah, so I think, as you would imagine,

621
00:33:38,720 --> 00:33:41,200
Speaker 1: we're seeing a lot of flow and interest on the

622
00:33:41,280 --> 00:33:45,240
Speaker 1: shorter end of the curve, especially in treasuries, so that

623
00:33:45,280 --> 00:33:50,040
Speaker 1: and also in short credit funds are taking on flow

624
00:33:50,680 --> 00:33:52,120
Speaker 1: just in the last few weeks. But it's kind of

625
00:33:52,160 --> 00:33:54,360
Speaker 1: depends on what week you're talking about, because in the

626
00:33:54,400 --> 00:33:58,560
Speaker 1: beginning of the year, maybe if you looked back ninety days,

627
00:33:58,600 --> 00:34:01,960
Speaker 1: you saw a big risk SCNE trade in high yield,

628
00:34:02,040 --> 00:34:04,200
Speaker 1: and so some of that we saw some coming off

629
00:34:04,280 --> 00:34:06,360
Speaker 1: last week. I think the markets are just trying to

630
00:34:06,400 --> 00:34:08,239
Speaker 1: absorb and ETFs are always are great poor to call

631
00:34:08,320 --> 00:34:10,359
Speaker 1: to see where people are moving around in their risk.

632
00:34:10,719 --> 00:34:12,839
Speaker 1: But we see, you know, mostly you're seeing things coming

633
00:34:12,880 --> 00:34:15,160
Speaker 1: in on the shorter end and on the you know,

634
00:34:15,560 --> 00:34:18,600
Speaker 1: less risky side. What's going to happen next week? Do

635
00:34:18,640 --> 00:34:20,359
Speaker 1: you think if it is a week by week. I mean,

636
00:34:20,360 --> 00:34:22,520
Speaker 1: it feels like just in the last few hours we

637
00:34:22,600 --> 00:34:26,879
Speaker 1: had so many hawkish data points, hawkish noises coming from

638
00:34:26,880 --> 00:34:29,759
Speaker 1: FED members, etc. Yeah, I mean, I will pull out

639
00:34:29,760 --> 00:34:31,799
Speaker 1: my crystal ball and tell you right now exactly what's

640
00:34:31,800 --> 00:34:34,560
Speaker 1: going to happen next week. But we tend to focus

641
00:34:34,640 --> 00:34:37,200
Speaker 1: on structurally what's going on in fixed income. And that's

642
00:34:37,239 --> 00:34:39,919
Speaker 1: why bomb Blocks was launched, is because we felt like

643
00:34:40,320 --> 00:34:43,480
Speaker 1: these markets, these modern markets are going to be so

644
00:34:43,600 --> 00:34:45,640
Speaker 1: different from the last ten years, in the last couple

645
00:34:45,680 --> 00:34:49,080
Speaker 1: decades and going forward. When we think about next week,

646
00:34:49,120 --> 00:34:52,040
Speaker 1: this week, the beginning of January, we're just thinking about

647
00:34:52,080 --> 00:34:55,520
Speaker 1: exposures for clients, and so it's it's not something we

648
00:34:55,560 --> 00:34:57,640
Speaker 1: try to make a call on. We try to give people,

649
00:34:57,960 --> 00:35:02,320
Speaker 1: you know, exposures into credit and exposures onto onto treasuries

650
00:35:02,360 --> 00:35:06,879
Speaker 1: for them to play duration credit risk. And I don't

651
00:35:06,920 --> 00:35:10,080
Speaker 1: think that. In talking to clients, you know, everybody's looking

652
00:35:10,080 --> 00:35:11,560
Speaker 1: to make a call for the bottom or a call

653
00:35:11,640 --> 00:35:13,120
Speaker 1: for this week or next week. It's just been too

654
00:35:13,120 --> 00:35:16,520
Speaker 1: hard to predictives and too volatile for people to It

655
00:35:16,560 --> 00:35:18,120
Speaker 1: really has been at the short end. I look at

656
00:35:18,200 --> 00:35:20,560
Speaker 1: X one has the X one and x HL I

657
00:35:20,719 --> 00:35:24,239
Speaker 1: have the biggest flows right, which is YEP year to date,

658
00:35:25,239 --> 00:35:28,040
Speaker 1: which is what one year duration is six month duration YEP,

659
00:35:28,320 --> 00:35:31,080
Speaker 1: so one year duration and six months duration. They're precise

660
00:35:31,320 --> 00:35:34,360
Speaker 1: duration tools, and I think that that's been really resonating

661
00:35:34,360 --> 00:35:37,640
Speaker 1: with clients in this market. And since it looks like

662
00:35:37,680 --> 00:35:40,239
Speaker 1: the FED and we just were looking at some data

663
00:35:40,280 --> 00:35:42,440
Speaker 1: that like the market is now pricing in more rate

664
00:35:42,520 --> 00:35:45,319
Speaker 1: hikes than the FED is until we hear more from them.

665
00:35:45,680 --> 00:35:48,920
Speaker 1: But like going forward, clients have looked at the shorter

666
00:35:49,040 --> 00:35:51,400
Speaker 1: end but also wanting to manage and control their duration

667
00:35:51,440 --> 00:35:55,680
Speaker 1: exposures very precisely. Duration has been your highest inflow products really,

668
00:35:55,719 --> 00:35:59,879
Speaker 1: I mean it's way above and beyond triple C or

669
00:36:00,320 --> 00:36:03,080
Speaker 1: high yield. If I look at the top five in

670
00:36:03,200 --> 00:36:06,160
Speaker 1: terms of your to date flows, it's one, six months,

671
00:36:06,520 --> 00:36:10,080
Speaker 1: two years, five years, seven years. So investors are really

672
00:36:10,200 --> 00:36:12,560
Speaker 1: using the duration products are really using in duration products,

673
00:36:12,600 --> 00:36:14,279
Speaker 1: and they're going on different points of the curve, which

674
00:36:14,320 --> 00:36:16,400
Speaker 1: we find really interesting, and they're able to reflect their

675
00:36:16,480 --> 00:36:19,160
Speaker 1: views across the products set. But you know, it's just

676
00:36:19,200 --> 00:36:22,320
Speaker 1: this simple notion that, like it is not twenty twenty

677
00:36:22,320 --> 00:36:24,800
Speaker 1: two interest rates moved four hundred and twenty five basis

678
00:36:24,800 --> 00:36:27,399
Speaker 1: points last year. The curve has moved. There's so much

679
00:36:27,440 --> 00:36:30,480
Speaker 1: you can do, at least in the treasury market right now,

680
00:36:30,520 --> 00:36:32,560
Speaker 1: and people are taking advantage of it. We launched these

681
00:36:32,560 --> 00:36:36,280
Speaker 1: in September and they immediately start to resonate with clients.

682
00:36:36,360 --> 00:36:40,560
Speaker 1: So obviously the duration products really a hit. You have

683
00:36:40,719 --> 00:36:43,400
Speaker 1: nineteen funds and it's really interesting. It covers a broad

684
00:36:43,520 --> 00:36:45,960
Speaker 1: swath of fixed income markets. It's not just treasuries. You

685
00:36:46,000 --> 00:36:48,359
Speaker 1: have an emerging markets fund which has done really well.

686
00:36:48,400 --> 00:36:51,600
Speaker 1: Then you have the rating specific and the sector specific

687
00:36:51,640 --> 00:36:54,640
Speaker 1: funds over the past year. Because you've been in business

688
00:36:54,640 --> 00:36:56,959
Speaker 1: for about a year now, are there any funds any

689
00:36:56,960 --> 00:36:59,919
Speaker 1: areas that have struggled in ways you didn't expect why?

690
00:37:00,000 --> 00:37:02,800
Speaker 1: I think all the volatilility last year and the correlation

691
00:37:02,840 --> 00:37:05,120
Speaker 1: between equities and fixed income was just really hard for

692
00:37:05,120 --> 00:37:07,799
Speaker 1: everyone to absorb the first half of the year, you know,

693
00:37:08,080 --> 00:37:10,160
Speaker 1: we saw a lot of de risking, and then towards

694
00:37:10,200 --> 00:37:12,560
Speaker 1: the fourth quarter, we saw people and our clients talking

695
00:37:12,560 --> 00:37:16,480
Speaker 1: about getting back into credit, and so, you know, everywhere

696
00:37:16,600 --> 00:37:20,440
Speaker 1: was hard last year. What's so interesting this year is

697
00:37:20,480 --> 00:37:23,480
Speaker 1: that one thing we heard consistently last year is I'm

698
00:37:23,480 --> 00:37:26,520
Speaker 1: waiting for a certain spread in credit to happen before

699
00:37:26,560 --> 00:37:29,840
Speaker 1: I come back in and it didn't materialize at you know,

700
00:37:30,000 --> 00:37:33,319
Speaker 1: levels of distress that people were expecting. So you know,

701
00:37:33,440 --> 00:37:36,840
Speaker 1: think about like GFC and other times in the pandemic.

702
00:37:37,080 --> 00:37:39,160
Speaker 1: You know, you're you're going to upwards of a thousand

703
00:37:39,239 --> 00:37:43,000
Speaker 1: basis points if spread in high yield or other areas

704
00:37:43,000 --> 00:37:45,760
Speaker 1: in credit, and that didn't materialize. We're still like hovering

705
00:37:45,840 --> 00:37:49,080
Speaker 1: around five five hundred basis points. And so we found

706
00:37:49,120 --> 00:37:51,759
Speaker 1: it's interesting that clients have sort of had to realize

707
00:37:51,800 --> 00:37:54,320
Speaker 1: that calling the bottom here or waiting for that distress,

708
00:37:54,400 --> 00:37:56,880
Speaker 1: that that's starting to lessen and alleviate in their in

709
00:37:56,920 --> 00:37:59,600
Speaker 1: their opinion. So for twenty twenty three, I mean, granted

710
00:37:59,600 --> 00:38:02,200
Speaker 1: the last few weeks had sort of extended the concern,

711
00:38:02,960 --> 00:38:05,000
Speaker 1: we're sort of we have more information that maybe the

712
00:38:05,120 --> 00:38:08,200
Speaker 1: deeper session and the fundamentals of companies are stronger than

713
00:38:08,200 --> 00:38:10,399
Speaker 1: we think and there's a lot of resilience. So that's

714
00:38:10,440 --> 00:38:12,479
Speaker 1: one thing we think didn't go the way we thought

715
00:38:12,480 --> 00:38:14,680
Speaker 1: it would last year, where clients were looking for a

716
00:38:14,760 --> 00:38:18,840
Speaker 1: much deeper distress levels than appeared. Paul, she has a

717
00:38:18,920 --> 00:38:21,319
Speaker 1: crystal ball out. You can ask her anything you want.

718
00:38:21,440 --> 00:38:24,040
Speaker 1: I want to ask her, is are you seeing flows

719
00:38:24,080 --> 00:38:27,600
Speaker 1: into high yield? Because the reason I ask is, you

720
00:38:27,640 --> 00:38:30,759
Speaker 1: know the recession call. It seems to be still out there,

721
00:38:30,760 --> 00:38:32,759
Speaker 1: but maybe not as strong as it was a few

722
00:38:32,920 --> 00:38:36,040
Speaker 1: months ago. Maybe it all depends on what the Fed does, right,

723
00:38:36,040 --> 00:38:38,479
Speaker 1: because even if we like we just talked to Alex

724
00:38:38,480 --> 00:38:40,399
Speaker 1: shall Off and he says, you know what, you can't

725
00:38:40,440 --> 00:38:43,400
Speaker 1: get a dinner reservation until seven weeks out, nine thirty

726
00:38:43,400 --> 00:38:45,920
Speaker 1: on a Monday. There's no way you're getting an EV

727
00:38:46,200 --> 00:38:48,440
Speaker 1: without paying a premium. And I can't even get my

728
00:38:48,480 --> 00:38:53,319
Speaker 1: Dodge Challenger. So this economy is hot, but that just

729
00:38:53,360 --> 00:38:57,200
Speaker 1: means the Fed has to keep raising rates and hold

730
00:38:57,239 --> 00:38:59,600
Speaker 1: higher for longer. So would you be calling for the

731
00:38:59,640 --> 00:39:02,840
Speaker 1: eventual recession. I've just been listening to it for the

732
00:39:02,840 --> 00:39:05,560
Speaker 1: most part, Pala says. But the eventual recession could hit harder,

733
00:39:05,600 --> 00:39:07,480
Speaker 1: could hit harder. So I mean, does that mean you're

734
00:39:07,480 --> 00:39:09,399
Speaker 1: not seeing people wanting to get into these high yield

735
00:39:09,440 --> 00:39:12,320
Speaker 1: funds that you have. Yeah, so I think that there's

736
00:39:12,360 --> 00:39:14,919
Speaker 1: there are certain trades where we're seeing risks come back

737
00:39:14,920 --> 00:39:17,440
Speaker 1: into portfolios. I think what we will see is that

738
00:39:17,480 --> 00:39:19,799
Speaker 1: people will build their high yield portfolios and their cutit

739
00:39:19,800 --> 00:39:22,000
Speaker 1: portfolios differently than they have in the past. Maybe they

740
00:39:22,000 --> 00:39:26,640
Speaker 1: don't go as broad they general high yeld index or

741
00:39:26,640 --> 00:39:28,960
Speaker 1: a high old ETF has ten eleven percent of triple

742
00:39:29,040 --> 00:39:31,560
Speaker 1: C maybe you want to be more precise there. But

743
00:39:31,600 --> 00:39:34,279
Speaker 1: we like to also focus on the industry sectors in

744
00:39:34,360 --> 00:39:36,800
Speaker 1: high old because they're very different. There's a thousand basis

745
00:39:36,840 --> 00:39:40,120
Speaker 1: points of difference in the highest performance sector last year

746
00:39:40,160 --> 00:39:42,640
Speaker 1: and the worst performance sector last year. That was energy

747
00:39:42,640 --> 00:39:46,040
Speaker 1: and healthcare. And today, you know, we think when we

748
00:39:46,040 --> 00:39:49,960
Speaker 1: can be really positive construction constructive on industries that have

749
00:39:50,239 --> 00:39:54,040
Speaker 1: cash flow now and are less focused on growth than

750
00:39:54,400 --> 00:39:58,040
Speaker 1: having cash flow now. So that's energy, industrials, financials, and

751
00:39:58,120 --> 00:40:01,680
Speaker 1: so we just you shouldn't look fixed income as a

752
00:40:01,719 --> 00:40:05,160
Speaker 1: big swath. You should be looking for opportunities introsectors of

753
00:40:06,040 --> 00:40:08,640
Speaker 1: fixed income, and then obviously in credit look into industry

754
00:40:08,680 --> 00:40:13,200
Speaker 1: sectors ratings. There's lots of opportunity and differentiation, good stuff.

755
00:40:13,200 --> 00:40:14,880
Speaker 1: We could talk ETFs. That's why you guys have a

756
00:40:14,880 --> 00:40:18,480
Speaker 1: show about etips because you could just go into this topic.

757
00:40:19,840 --> 00:40:23,520
Speaker 1: Well currently thirty minutes currently TVD. I'm looking at a

758
00:40:23,520 --> 00:40:25,720
Speaker 1: little bit of expansion. Are you looking at an expansion?

759
00:40:25,760 --> 00:40:28,759
Speaker 1: All right? Well, if you're looking for it, Johanna Gaylagos, Uh, Diegos,

760
00:40:28,800 --> 00:40:31,920
Speaker 1: I'm sorry, co founder Joins is it? How do your

761
00:40:31,920 --> 00:40:35,960
Speaker 1: parents say it? Diegos? Yeah, I'm going, oh, okay, that's good.

762
00:40:36,200 --> 00:40:39,040
Speaker 1: I like that Spanish. Yeah. Katie Greifeld, that's easy. I've

763
00:40:39,080 --> 00:40:41,040
Speaker 1: been down with that for a long time. No problems there,

764
00:40:41,480 --> 00:40:44,759
Speaker 1: joining us talking about ETF's great stuff. Bond blocks is

765
00:40:44,880 --> 00:40:51,600
Speaker 1: the company, join us a co founder there, we'll talk

766
00:40:51,680 --> 00:40:57,359
Speaker 1: tech talk, MNA have the regulators. They're coming down on

767
00:40:57,360 --> 00:40:58,960
Speaker 1: some of these big deals. It's tough to get some

768
00:40:59,040 --> 00:41:00,800
Speaker 1: of these deals done. So we want to bring in

769
00:41:00,880 --> 00:41:04,719
Speaker 1: gen Rye. She covers all anti trust stuff for Bloomberg Intelligence.

770
00:41:05,040 --> 00:41:07,680
Speaker 1: Is the expert here, and I want to talk about

771
00:41:07,719 --> 00:41:10,640
Speaker 1: some of these bigger deals. Adobe Figma that's a twenty

772
00:41:10,640 --> 00:41:13,799
Speaker 1: billion dollar deal. We've got Microsoft and Activision. So Jen

773
00:41:14,440 --> 00:41:17,680
Speaker 1: talk to us about how the regulators, the DJ the

774
00:41:17,800 --> 00:41:20,440
Speaker 1: Federal Trade Commission, how are they looking at big tech deals?

775
00:41:20,440 --> 00:41:22,439
Speaker 1: Can you get a deal done today? You know it's

776
00:41:22,440 --> 00:41:24,279
Speaker 1: going to be a really rough year, I think for

777
00:41:24,360 --> 00:41:27,399
Speaker 1: tech and other industries too, but right the focus is tech.

778
00:41:27,880 --> 00:41:30,160
Speaker 1: I think the regulators today are trying to make up

779
00:41:30,200 --> 00:41:32,680
Speaker 1: for lost time. I think they believe they allowed far

780
00:41:32,719 --> 00:41:35,160
Speaker 1: too many transactions in the last ten years or so

781
00:41:35,480 --> 00:41:37,680
Speaker 1: to clear through, either all the way through or with

782
00:41:37,760 --> 00:41:40,359
Speaker 1: some sort of a divestment to settle the case, and

783
00:41:40,440 --> 00:41:43,480
Speaker 1: that what's happened is we've created these giant companies with

784
00:41:43,600 --> 00:41:46,520
Speaker 1: just too much power and too much dominance today. So

785
00:41:46,960 --> 00:41:48,600
Speaker 1: you know, they're trying to make up for lost time.

786
00:41:48,640 --> 00:41:51,400
Speaker 1: They're looking at these deals really carefully. They're going to

787
00:41:51,480 --> 00:41:54,680
Speaker 1: be more interventionist, they're less likely to settle, and they're

788
00:41:54,719 --> 00:41:56,960
Speaker 1: a lot more likely to challenge deals even if they

789
00:41:57,000 --> 00:42:00,600
Speaker 1: have a hard roading chord. I mean, it seems like

790
00:42:01,080 --> 00:42:04,560
Speaker 1: they can regulators can stop deals, but I wonder if

791
00:42:04,600 --> 00:42:09,240
Speaker 1: they had the power that they once did. If I'm correct,

792
00:42:09,239 --> 00:42:12,120
Speaker 1: the last big breakup we saw was mob Bell and

793
00:42:12,600 --> 00:42:15,560
Speaker 1: I mean we were kids then, right, So eighty four

794
00:42:15,800 --> 00:42:19,960
Speaker 1: have they done anything like that since because they seem

795
00:42:20,040 --> 00:42:22,880
Speaker 1: to have designs on Google in that right, in that

796
00:42:22,920 --> 00:42:26,640
Speaker 1: sense absolutely so they almost did with Microsoft, that would

797
00:42:26,640 --> 00:42:28,520
Speaker 1: have been them next occasion, right, that was in the

798
00:42:28,600 --> 00:42:31,759
Speaker 1: nineteen nineties early two thousand. They actually did get a

799
00:42:31,800 --> 00:42:35,000
Speaker 1: lower court order for Microsoft to break itself apart, but

800
00:42:35,080 --> 00:42:38,799
Speaker 1: then the appellate court reversed some things, put question on

801
00:42:38,840 --> 00:42:42,000
Speaker 1: that remedy and it settled, ultimately settled, and that didn't happen.

802
00:42:42,040 --> 00:42:44,400
Speaker 1: So that was the last time they came close. I

803
00:42:44,440 --> 00:42:47,400
Speaker 1: think the DOJ right now is really gunning for Google.

804
00:42:47,760 --> 00:42:50,640
Speaker 1: You know, they have two lawsuits there maybe another there

805
00:42:50,680 --> 00:42:52,920
Speaker 1: actually could be two others that come from the DOJ,

806
00:42:53,280 --> 00:42:55,400
Speaker 1: and I think they're really gunning for some sort of

807
00:42:55,440 --> 00:42:58,279
Speaker 1: an order that businesses are broken off. It doesn't mean

808
00:42:58,320 --> 00:43:00,680
Speaker 1: they're going to win that, You're right, It's really hard

809
00:43:00,960 --> 00:43:03,720
Speaker 1: to win something like that in court. It's a drastic remedy,

810
00:43:03,760 --> 00:43:06,719
Speaker 1: and sometimes there are less drastic remedies that can fix

811
00:43:06,800 --> 00:43:09,239
Speaker 1: the problem. Was it very different back then? You I

812
00:43:09,239 --> 00:43:13,440
Speaker 1: mean knowing that we were, you know, all playing you know,

813
00:43:13,520 --> 00:43:18,120
Speaker 1: four square kickball time. Was it a different environment where

814
00:43:18,200 --> 00:43:22,080
Speaker 1: government had more power than giant corporations because it seems

815
00:43:22,120 --> 00:43:24,920
Speaker 1: like now the opposite is true. I think the treatment

816
00:43:24,960 --> 00:43:28,960
Speaker 1: of antitrust laws changed over the years. Right. Earlier in time,

817
00:43:29,080 --> 00:43:33,120
Speaker 1: antitrust was more interventionist. The way the judges would interpret

818
00:43:33,160 --> 00:43:36,000
Speaker 1: the law when cases were brought by private parties or

819
00:43:36,000 --> 00:43:39,719
Speaker 1: by the government was less business friendly. But then doctrine

820
00:43:39,719 --> 00:43:42,640
Speaker 1: developed over time by economists. It's sort of called the

821
00:43:42,719 --> 00:43:44,960
Speaker 1: Chicago school because a lot of the thought came from

822
00:43:44,960 --> 00:43:48,960
Speaker 1: the University of Chicago that we needed to look at

823
00:43:49,000 --> 00:43:52,600
Speaker 1: efficiencies a little bit differently, and that sometimes deals can

824
00:43:52,680 --> 00:43:56,040
Speaker 1: be pro competitive and efficient because of what they do

825
00:43:56,120 --> 00:43:58,960
Speaker 1: for those companies and products that could be brought to market,

826
00:43:59,040 --> 00:44:02,520
Speaker 1: more innovation, things like that, And judges started to adopt

827
00:44:02,560 --> 00:44:05,280
Speaker 1: that kind of philosophy and became much more business friendly.

828
00:44:05,520 --> 00:44:08,560
Speaker 1: So over time it became harder in court to try

829
00:44:08,600 --> 00:44:11,560
Speaker 1: to prove that there's actually anti competitive harm being caused

830
00:44:11,600 --> 00:44:14,000
Speaker 1: either by a company acting on its own or by

831
00:44:14,000 --> 00:44:16,360
Speaker 1: a merger. All right, So to excid that we have

832
00:44:16,400 --> 00:44:19,120
Speaker 1: a higher degree of antitrust scrutiny here is that a

833
00:44:19,280 --> 00:44:22,200
Speaker 1: function of the administration in the White House such that

834
00:44:22,280 --> 00:44:24,440
Speaker 1: in two years time, if we get a Republican administration,

835
00:44:25,360 --> 00:44:28,440
Speaker 1: it'll just go the other way again, absolutely, and we

836
00:44:28,480 --> 00:44:31,520
Speaker 1: absolutely have a push by this administration to do something

837
00:44:31,560 --> 00:44:34,319
Speaker 1: about the economy, and part of that something is to

838
00:44:34,320 --> 00:44:39,000
Speaker 1: bolster antitrust enforcement. It could change, absolutely, but I will

839
00:44:39,040 --> 00:44:41,400
Speaker 1: say this that there is a lot of bipartisan interest

840
00:44:41,520 --> 00:44:43,560
Speaker 1: in sort of curbing the power of some of the

841
00:44:43,600 --> 00:44:46,840
Speaker 1: dominant big tech platforms. So it's not necessarily a given

842
00:44:46,880 --> 00:44:49,399
Speaker 1: that if with the next administration as a Republican one

843
00:44:49,440 --> 00:44:52,879
Speaker 1: in the anti trust leadership flips to Republicans, that this

844
00:44:52,960 --> 00:44:55,680
Speaker 1: push won't continue, at least to some extent. How much

845
00:44:55,719 --> 00:44:57,759
Speaker 1: does I mean, I'm a cynic when it comes to

846
00:44:58,160 --> 00:45:01,600
Speaker 1: so I sort of have the view that these companies

847
00:45:01,920 --> 00:45:06,680
Speaker 1: fund all of the congressmen and senators campaigns, and as

848
00:45:06,680 --> 00:45:10,239
Speaker 1: a result, they have these politicians in their pockets. You know,

849
00:45:10,360 --> 00:45:12,319
Speaker 1: I think that there's quite a bit of truth to

850
00:45:12,440 --> 00:45:14,920
Speaker 1: that statement. I happen to be a cynic also, But

851
00:45:15,000 --> 00:45:16,640
Speaker 1: you know, there was a lot of momentum for some

852
00:45:16,719 --> 00:45:20,040
Speaker 1: new laws, antitrust laws that would have targeted and regulated

853
00:45:20,080 --> 00:45:22,440
Speaker 1: big tech platforms, and there was a lot of lobbying

854
00:45:22,480 --> 00:45:25,719
Speaker 1: money put in by some big companies against that, and

855
00:45:25,880 --> 00:45:28,279
Speaker 1: nothing happened. When a lot of people thought something would

856
00:45:28,280 --> 00:45:32,400
Speaker 1: happen last year. It's interesting that they're so. You know,

857
00:45:32,520 --> 00:45:34,600
Speaker 1: lately there's been a lot of talk about what are

858
00:45:34,600 --> 00:45:37,640
Speaker 1: these old Supreme Court justices know about tech? And I

859
00:45:37,680 --> 00:45:41,719
Speaker 1: think that's pretty fascinating. But it's interesting that they would

860
00:45:41,719 --> 00:45:46,200
Speaker 1: go after Microsoft for activision, Like, what are these old

861
00:45:46,320 --> 00:45:49,880
Speaker 1: judges or old regulators know about video games? Why do

862
00:45:49,920 --> 00:45:52,400
Speaker 1: they care about Call of Duty? I know it's a

863
00:45:52,440 --> 00:45:55,680
Speaker 1: big number, right, but who cares if somebody has all

864
00:45:55,719 --> 00:45:57,840
Speaker 1: the video games? It's funny you should say that. I

865
00:45:57,880 --> 00:45:59,520
Speaker 1: spoke on a panel about this, and none of the

866
00:45:59,560 --> 00:46:03,080
Speaker 1: panelists had ever played Call of Duty, so we thought,

867
00:46:03,120 --> 00:46:05,719
Speaker 1: maybe we're not the best. You know, isn't there a

868
00:46:05,719 --> 00:46:08,520
Speaker 1: great story by the way of a couple of justices

869
00:46:08,800 --> 00:46:14,919
Speaker 1: I think Briar was one and Elena Kayden playing Call

870
00:46:14,960 --> 00:46:17,680
Speaker 1: of Duty. They had someone set up the video game

871
00:46:17,760 --> 00:46:21,720
Speaker 1: and bring it down to their quarters. I think Briar

872
00:46:21,840 --> 00:46:24,719
Speaker 1: said it was disgusting and he couldn't believe anybody liked it,

873
00:46:24,760 --> 00:46:29,239
Speaker 1: and Kayden was like, I want to play more. Right. Well,

874
00:46:29,280 --> 00:46:31,439
Speaker 1: you know, the thing is that the agencies are really

875
00:46:31,440 --> 00:46:33,680
Speaker 1: focused on certain kinds of mergers right now, and one

876
00:46:33,680 --> 00:46:36,359
Speaker 1: of them is called vertical right, and Microsoft represents that

877
00:46:36,600 --> 00:46:39,319
Speaker 1: it's where the two companies don't necessarily compete, but they

878
00:46:39,360 --> 00:46:42,480
Speaker 1: have a relationship in this supply chain. Right, So Microsoft

879
00:46:42,560 --> 00:46:45,240
Speaker 1: has consoles, they're sort of a distributor, so to speak,

880
00:46:45,600 --> 00:46:48,839
Speaker 1: of these video games, and Activision makes the games, and

881
00:46:48,880 --> 00:46:50,840
Speaker 1: that is a vertical deal. So it's one of the

882
00:46:50,840 --> 00:46:53,160
Speaker 1: focuses of the agencies right now. And I think this

883
00:46:53,239 --> 00:46:55,279
Speaker 1: was a case where they thought this is a good

884
00:46:55,280 --> 00:46:57,640
Speaker 1: one for us to sort of exercise that kind of

885
00:46:57,719 --> 00:46:59,759
Speaker 1: theory of harm. Well, you know, one of the ones

886
00:46:59,800 --> 00:47:02,640
Speaker 1: that's you're dear to my heart that I couldn't believe

887
00:47:02,719 --> 00:47:06,360
Speaker 1: got approved is Live Nation and Ticketmaster. I mean, you

888
00:47:06,400 --> 00:47:09,360
Speaker 1: take the biggest concert promoter in the world, right and

889
00:47:09,400 --> 00:47:12,960
Speaker 1: you put it together the largest ticketing organization in the world.

890
00:47:13,520 --> 00:47:15,640
Speaker 1: And now, you know, people were saying, I even heard

891
00:47:15,680 --> 00:47:17,320
Speaker 1: President Biden talking about it. You know, I'm going to

892
00:47:18,000 --> 00:47:20,799
Speaker 1: do something to take care of those fees. Somebody has

893
00:47:20,840 --> 00:47:23,600
Speaker 1: to do something. Somebody. Let me tell you something a

894
00:47:23,600 --> 00:47:26,359
Speaker 1: little inside baseball, right Paul worked on that deal, and

895
00:47:26,560 --> 00:47:29,520
Speaker 1: he and the bankers that were on it said, just

896
00:47:29,600 --> 00:47:31,640
Speaker 1: you know, we were surprised that it got We were

897
00:47:31,719 --> 00:47:33,960
Speaker 1: surprised that it got approved. So well, you know, as

898
00:47:34,000 --> 00:47:36,239
Speaker 1: an X former anti trust lawyer, when we saw the

899
00:47:36,280 --> 00:47:39,040
Speaker 1: banker's documents sometimes it really caused us to shake our

900
00:47:39,080 --> 00:47:42,080
Speaker 1: head because the banker documents can cause a lot of trouble, yeah,

901
00:47:42,120 --> 00:47:44,239
Speaker 1: when you're trying to defend a deal. But that kind

902
00:47:44,239 --> 00:47:46,799
Speaker 1: of those are the issue. I mean, if you could

903
00:47:46,920 --> 00:47:50,320
Speaker 1: argue they should be broken up, right, but there's nobody

904
00:47:50,320 --> 00:47:52,760
Speaker 1: really thinks they're going to be broken up because again,

905
00:47:52,920 --> 00:47:55,080
Speaker 1: it's so hard. Now, this is a perfect example of

906
00:47:55,080 --> 00:47:57,120
Speaker 1: what I was talking about at the beginning of this segment.

907
00:47:57,239 --> 00:47:59,480
Speaker 1: This is part of the regret. You know, that is

908
00:47:59,520 --> 00:48:02,080
Speaker 1: one of the deals that likely the DJ today regrets

909
00:48:02,080 --> 00:48:04,560
Speaker 1: that it allowed to go through even with the consent agreement.

910
00:48:05,280 --> 00:48:07,839
Speaker 1: And I believe they're still investigating today and they very

911
00:48:07,840 --> 00:48:09,880
Speaker 1: well could bring a lawsuit to try to break it up.

912
00:48:09,920 --> 00:48:12,200
Speaker 1: But you know, they're facing a judge who knows what

913
00:48:12,280 --> 00:48:13,640
Speaker 1: judge that they're going to go in front. And it

914
00:48:13,760 --> 00:48:15,920
Speaker 1: is a difficult path to do something like that. It's

915
00:48:15,920 --> 00:48:20,200
Speaker 1: the DJ or the FTC the harder one to deal with. Interesting,

916
00:48:20,280 --> 00:48:22,799
Speaker 1: right now, I think they're really aligned. Okay, at one

917
00:48:22,800 --> 00:48:24,839
Speaker 1: point I would have said FTC, but I think now

918
00:48:24,880 --> 00:48:27,759
Speaker 1: they're really aligned. They're doing things the same way. They're

919
00:48:27,760 --> 00:48:31,319
Speaker 1: equally as aggressive. Right now, Okay, great stuff. Here's Matt.

920
00:48:31,400 --> 00:48:35,840
Speaker 1: Here's another great thing about Bloomberg Intelligence. We have world

921
00:48:35,920 --> 00:48:39,719
Speaker 1: class analys to cover litigation. And so when you got

922
00:48:39,760 --> 00:48:42,040
Speaker 1: a big deal and you're worried and you're you're invested

923
00:48:42,080 --> 00:48:44,600
Speaker 1: in Microsoft and you really want to know this deal

924
00:48:44,680 --> 00:48:46,920
Speaker 1: is going to go through, don't talk about financial analysts

925
00:48:46,960 --> 00:48:48,600
Speaker 1: like me want I know, you go to Jen Rie

926
00:48:48,760 --> 00:48:52,719
Speaker 1: and she's the expert. And Bloomberg Intelligence had the foresight

927
00:48:53,040 --> 00:48:55,120
Speaker 1: to make sure that we had these kinds of experts

928
00:48:55,640 --> 00:48:59,520
Speaker 1: available for our clients. Thanks for listening to the Bloomberg

929
00:48:59,600 --> 00:49:03,000
Speaker 1: Markets podcast. You can subscribe and listen to interviews of

930
00:49:03,040 --> 00:49:07,840
Speaker 1: Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller.

931
00:49:08,120 --> 00:49:11,520
Speaker 1: I'm on Twitter at Matt Miller nineteen seventy three. And

932
00:49:11,680 --> 00:49:14,280
Speaker 1: I'm Fall Sweeney. I'm on Twitter at pt Sweeney. Before

933
00:49:14,320 --> 00:49:17,160
Speaker 1: the podcast, you can always catch us worldwide at Bloomberg

934
00:49:17,239 --> 00:49:17,759
Speaker 1: Radio