Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Lisa Abram Woyd's
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Speaker 1: In the bond space right now, it is always important
Speaker 1: to check in with Greg Peters. He's the co cio
Speaker 1: at PIGEM Fixed Income and far more has a mantle
Speaker 1: at home with all sorts of investment managers of the
Speaker 1: year in fixed income. Greg, thank you for joining us.
Speaker 1: Just as you rewrite the twelve thirty one outlook for PIGIM,
Speaker 1: you do this on March thirty one. What do you
Speaker 1: adjust to look forward within a fixed income portfolio? Yeah, so,
Speaker 1: I think what you adjust is the probability of our recession.
Speaker 1: So we were actually reasonably optimistic that the fit could
Speaker 1: achieve a soft landing as still possibility Tom, for sure,
Speaker 1: but I think the probability of a recession is much
Speaker 1: higher today, just given what's occurring in the banking space.
Speaker 1: So you know, I think the theme that continues from
Speaker 1: last year into this year is one of uncertainty that
Speaker 1: you basically have a set of scenarios and bimodal trimodal
Speaker 1: type of outcomes and makes it a very difficult space
Speaker 1: to navigate. And I think as a consequential see volatility
Speaker 1: quite pa which actually great opportunities at the same time.
Speaker 1: So it's one of these things with overall macro pictures cloudy,
Speaker 1: but we're seeing a lot of opportunities within the space.
Speaker 1: Greg Peters, a global law Street wants to know from you,
Speaker 1: and I guess it's pjam in general. But let's go
Speaker 1: to Greg Peters, what's the new duration forward? I mean,
Speaker 1: what point? And the maturity curve is a comfortable place
Speaker 1: to be given endless algebraic epsilon given the reality of uncertainty. Well,
Speaker 1: so you know, it is continued on your outlook, of course,
Speaker 1: but I do believe that rates are too high over
Speaker 1: the medium long term that will be remedied over time. Effectively,
Speaker 1: if you're worried about a recession, then adding duration, having
Speaker 1: risk out the curve via duration is a very good
Speaker 1: place to be and The question you have to ask
Speaker 1: yourself as an investor is do you think the tenure
Speaker 1: yield will be this called three and a half percent
Speaker 1: five years forward? Three years forward? And if the answer
Speaker 1: is no, I think will be lower than you know
Speaker 1: whether the volatility and ad duration. So what do you
Speaker 1: make greg if you think that rates are going to
Speaker 1: be longer higher? For our brother acts to say, if
Speaker 1: you think that rates are going to be lower for
Speaker 1: a longer period of time, then what is the FED
Speaker 1: getting wrong? How do you push back against the Fed
Speaker 1: to reserve? It keeps saying we're going to keep rates
Speaker 1: elevated and we see inflation as a serious concern. Yeah,
Speaker 1: but inflation is a serious concern. So one of the
Speaker 1: gets the other. So in order to get rates lower
Speaker 1: over time, central banks have to be viewed as inflation fighters.
Speaker 1: If they lose that credibility and then rates will just
Speaker 1: naturally rise. So one big gets the other Lisa, And
Speaker 1: so it's really critical for the FED and other central
Speaker 1: banks to be viewed as vigilant around inflation because credibility
Speaker 1: is based off that, and if central banks lose that credibility,
Speaker 1: they lose the ability to actually kind of manage the
Speaker 1: yield curve if you would, so, so it's really important
Speaker 1: to get it right or the near term and if
Speaker 1: anything air on the side of you know, reducing eliminating
Speaker 1: inflation in the system, I think that's a job number one. Okay.
Speaker 1: So given that, do you think that rates are too
Speaker 1: high on the longer end or on the shorter end?
Speaker 1: In other words, do you think that this market has
Speaker 1: been overly aggressive with pricing out rate hikes and basically
Speaker 1: saying to the Fed you're done and oh yeah, you're
Speaker 1: going to cut rates by almost one hundred basis points
Speaker 1: in the next twelve months. I do. I think the
Speaker 1: markets are way too optimistic around the notion of rate cuts.
Speaker 1: To me, I don't see that playing out precisely because
Speaker 1: inflation remains quite high. So I don't see the scope
Speaker 1: for central banks, namely the FED here cutting rates in
Speaker 1: the manner that the markets are suggesting. So that seems
Speaker 1: oft to me, quite frankly, and we're leaning against that notion,
Speaker 1: so we don't necessarily see the rate cuts being pricings
Speaker 1: the market coming to fruition. So that's one error the
Speaker 1: market that we think it's completely are. So based on
Speaker 1: what you're saying, which is a short end rates it
Speaker 1: could stay high and even be much higher, and long
Speaker 1: term rates could fall much lower. We're talking about really
Speaker 1: substantial inverted yield curve, perhaps even more than a hundred
Speaker 1: basis points that we saw earlier this year. Is that correct, Greg? Yeah,
Speaker 1: so I think that is the path forward unless you
Speaker 1: really get this harsh recession with inflation coming down pretty
Speaker 1: rapidly than I expect the yield curve to remain inverted
Speaker 1: and continue to get even more inverted. So I still
Speaker 1: have this triple digit target between two tens. I think
Speaker 1: that's where where we land, and that's what we're forecast. Well, yeah,
Speaker 1: I got four questions, Greg, but no time for it.
Speaker 1: Where's the ten year yield a year from now off
Speaker 1: of that triple digit inverted curve? I think there's a
Speaker 1: very good chance that, you know, the tenure just kind
Speaker 1: of moves around, you know, plus or minus twenty basis points.
Speaker 1: So I don't see at this point in time given
Speaker 1: the data, and you guys mentioned how we're so data dependent,
Speaker 1: so it makes it hard to port. But I don't
Speaker 1: really see your radical shift over the near term twelve months.
Speaker 1: But on the ten year part of the firm unless
Speaker 1: you get a real change in the economy, including inflation.
Speaker 1: So those are the big caveats. Of course, Greg Peters,
Speaker 1: thank you so much. With PGIM and PJAM fixed income.
Speaker 1: He is with Renaissance Macro. He is aware we moved
Speaker 1: from an Atlanta GDP NOW number of three point x
Speaker 1: percent under two percent as well, the world turning against
Speaker 1: the optimism of Neil Datta. Neil Dutta, do you like
Speaker 1: the Atlanta GDP NOW statistic? Is it a value? Oh?
Speaker 1: Of course it's a value, Tom. But like anything, your
Speaker 1: assumptions drive your conclusions, and the Atlanta FED number had
Speaker 1: a sharp downward revision yesterday because of the ism manufacturing
Speaker 1: PMI now. The ism manufacturing PMI last I check doesn't
Speaker 1: formally get looked into the GDP calculation. So it's important
Speaker 1: to remember that the GDP NOW estimate is not a
Speaker 1: pure GDP sort of beam counting exercise. Um what does
Speaker 1: go into GDP, by the way, is unit auto sales.
Speaker 1: And auto sales came in a little bit better than
Speaker 1: expected in March, and that tells me that motor vehicles
Speaker 1: consumption on motor vehicles will be a significant boost to
Speaker 1: first quarter GDP and remember that because of the ISM number,
Speaker 1: the Atlanta fe has, you know, had a sharp down
Speaker 1: revision to their durable goods consumption estimates for Q one,
Speaker 1: So you know, it's important to kind of understand how
Speaker 1: these numbers work as opposed to just sort of finally saying,
Speaker 1: look it's down. You know that's not right. It's not
Speaker 1: that easy. Well, we appreciate the analysis of it versus
Speaker 1: it's down or it's up as well. What is the
Speaker 1: state of the American consumer? Now, there's so many cross currents,
Speaker 1: many of us witnessing packed airplanes, buoyant travel, and yet
Speaker 1: real worry about different deciles of the American people. What
Speaker 1: is the state of that consumer? Well, I think the
Speaker 1: most important thing is that the real incomes have been
Speaker 1: climbing and ultimately that is going to plant the seeds
Speaker 1: of future consumer spending. To me, it's really that straightforward.
Speaker 1: And I expect real consumer spending real incomes to continue
Speaker 1: climbing into the second quarter. Remember, natural gas prices have
Speaker 1: come down. That's going to bleed into household utility bills
Speaker 1: over the second quarter. Given the state of the labor market,
Speaker 1: which is still okay, that's going to mean stronger real
Speaker 1: income growth in the second quarter, which will in turn
Speaker 1: support real consumer spending. So I know there's a lot
Speaker 1: of angst around the consumer. And you know, we've gone
Speaker 1: from kind of talking about weird seasonal adjustment factors. Maybe
Speaker 1: it was the warm weather, but you know, at the
Speaker 1: end of the day, when you look at consumer spending
Speaker 1: relative to where it was for the pandemic, it's off
Speaker 1: the charts. So I think the Bears still have a
Speaker 1: lot of explaining to do, and you know, I don't
Speaker 1: really think the consumer is about to fall off the
Speaker 1: cliff here. Well, Neil, we've got to make note here
Speaker 1: you've been dead on about the lack of recession and
Speaker 1: the resiliency of the American consumer. The zeitgeist right now,
Speaker 1: Neil Datta is you know, off Adam two's's essay in
Speaker 1: the Financial Times is a new respect for nominal GDP,
Speaker 1: which is at real GDP with a movable dynamic of
Speaker 1: inflation overlaid on top of it. Now you've got nominal GDP,
Speaker 1: you've got incomes, whether real or top line, and then
Speaker 1: it boosts right into corporate revenues as well, maybe giving
Speaker 1: us a buoyant stock market. What does nominal GDP do
Speaker 1: over the next nine months. I think the underlying trend
Speaker 1: of nominal growth is around five to six percent, which
Speaker 1: makes you know, these sort of calls that basically overlay
Speaker 1: like corporate earnings over on the im sort of pointless.
Speaker 1: I mean, um, it's all in the market. I mean
Speaker 1: the sort of earnings recession that the bears have kind
Speaker 1: of been talking about. I mean, to me, it's very
Speaker 1: difficult to get a steeper earnings recession from this at
Speaker 1: this point, because nominal incomes are running, nominal growth is
Speaker 1: running five to six percent. At the same time, keep
Speaker 1: in mind that the dollar is off about six and
Speaker 1: a half percent over the last six months or so.
Speaker 1: That's also a teal one for corporate earnings. And importantly,
Speaker 1: in my world, it's a it's a tale went for
Speaker 1: real export activity over the next year. So, um, a
Speaker 1: lot of what's traded in the markets are you know,
Speaker 1: large multinationals that do a lot of business overseas. And
Speaker 1: if the global economy is looking a bit better than
Speaker 1: it did last year, and which I think is really
Speaker 1: frankly undeniable, then then that's gonna that's gonna bleed into
Speaker 1: corporate earnings, which should support you know US equity price.
Speaker 1: Now done to one more question, we've better run after
Speaker 1: Brussels here in the historic moment for Europe. But first
Speaker 1: to you, finally here on the fed derby all of
Speaker 1: the gloom that's out there, the FED has to adapt
Speaker 1: in a responsible, data dependent way. What data matters for
Speaker 1: them on the road to May. Third, Well, I mean
Speaker 1: this is going to sound, you know, pretty obvious, I think,
Speaker 1: But to me it's it's employment and inflation. And remember
Speaker 1: we only get one jobs number between now and the
Speaker 1: May meeting, and I think that's really not enough time
Speaker 1: for them to assess the fallout from what we saw
Speaker 1: in the middle of March with the banking stresses that
Speaker 1: that flared out. Now that being said, the consensus and
Speaker 1: the FED are assuming a sudden stop in the economy.
Speaker 1: Recession is imminent. We're about to fall off the cliff.
Speaker 1: I mean, these are the sort of things that you
Speaker 1: hear about, you know, from the consensus economics community. I
Speaker 1: utterly reject that view. I think the economy is not collapsing.
Speaker 1: We're probably growing at potential, and that's going to mean
Speaker 1: that the unemployment rate is not going to rise in
Speaker 1: a way that everyone expects and that ultimately leaves inflation
Speaker 1: I think unresolved, frankly, and that's why I think, you know,
Speaker 1: give it till June. We got a couple more jobs numbers.
Speaker 1: At that point we'll see that, you know, we're still
Speaker 1: cranking out a number of jobs, and ultimately I think
Speaker 1: that's going to mean the next FED move will be
Speaker 1: a hike. Neil Dada, thank you so much for joining
Speaker 1: us too brief a visit this morning. He is with
Speaker 1: Renaissance and Macro Research. She's been a resilient bull Lean
Speaker 1: forward and listen to Barbara Reinhard of Voya Investment Management.
Speaker 1: Are you still bullish? You have to the move off
Speaker 1: of October? We are. We still bullish because we believe
Speaker 1: that the SPB banking crisis really gave the central banks
Speaker 1: an opportunity to reassess they have muscle memory on what
Speaker 1: a systemic crisis looks like. While the FED raised race
Speaker 1: said its last meeting, we think this gives it an
Speaker 1: opportunity to slow down some of its hawkishness, who were
Speaker 1: only talking about fifty basis points hyke just a month ago.
Speaker 1: They only did twenty five. And you're seeing some relief
Speaker 1: on inflation, Jamie Diamond in his letter this morning, and
Speaker 1: I've just skimmed through it, folks, We're all right, you know,
Speaker 1: I'll go and read the whole thing tonight over a
Speaker 1: beverage of my choice. Mister Diamond says, maybe with SVB
Speaker 1: we have some form of and these are my own words,
Speaker 1: paradigm shift. How do you shift your equity investment given
Speaker 1: the shock that we had systemically. It may seem peculiar,
Speaker 1: but you know what, the big rally off of the bottom,
Speaker 1: it was participated on very strongly by the international equity markets,
Speaker 1: so developed international Europe and emerging markets were some of
Speaker 1: the big gainers off of that bottom of the October low.
Speaker 1: But what we saw in March, we think is an
Speaker 1: important shift. The US outperformed the rest of the world,
Speaker 1: and pretty strongly. So we think that the seven hundred
Speaker 1: basis points of the international markets outperformance of the US
Speaker 1: the past year is largely behind us, and we think
Speaker 1: it's going to be the US that's going to be
Speaker 1: the leader going forward. Barbara, what data are you looking
Speaker 1: at the suggests that the US is doing so much
Speaker 1: better than other nations? And I ask this because George
Speaker 1: Saravellos over at Deutsche Bank put out a note saying
Speaker 1: that European wages are outpacing those in the US for
Speaker 1: the first time in more than a decade. Right, Well,
Speaker 1: that's the thing is, it gives the opportunity, the slowing
Speaker 1: inflation scenario that you have in the US gives the
Speaker 1: central Bank the opportunity to slow their rate hikes even
Speaker 1: possibly pause at their next meeting, and that means that
Speaker 1: the US is likely to be one of those first
Speaker 1: in to fight inflation and one of the first ones
Speaker 1: also to start pausing and then potentially cutting sometime in
Speaker 1: the next year. Remember that first rate pause. When the
Speaker 1: Fed pauses, there's usually a very big counter trend rally
Speaker 1: in equities. You have that also coincidence with very high
Speaker 1: cash levels at mutual funds and also somewhat depress sentiment,
Speaker 1: and it is a very important kind of push forward
Speaker 1: for equities, likely onto new highs. Barbara, I absolutely love
Speaker 1: how you troll all the bears out there and successfully
Speaker 1: because frankly, you have been right basically saying, what's been
Speaker 1: the biggest pain trade since last October? The answer is
Speaker 1: being short stocks for long cash. What do you think
Speaker 1: is going to be the leadership here. Is it going
Speaker 1: to continue to be tech on the heels of that pause,
Speaker 1: or is it going to be broad based? Is this
Speaker 1: really something more holistic and longer lasting. Look, for sure,
Speaker 1: there are parts of the market that are more affected
Speaker 1: by SVB than others. Right there's going to be a
Speaker 1: continued tightening of credit conditions that affects US smallcaps, US
Speaker 1: midcaps much more than it does large caps. But I
Speaker 1: would say they've been so beaten down at this point,
Speaker 1: you're likely to see a broadening out of the equity market.
Speaker 1: And it's going to broaden out from leadership, not only
Speaker 1: from US growth, but take some of the other parts
Speaker 1: of the market, likely the lower cap size along with it.
Speaker 1: I think it's difficult to mount the sustainable rally in
Speaker 1: the early cyclicles at this point, but we do think
Speaker 1: that it's likely indeed to have a very much bigger,
Speaker 1: broader base in terms of capsize. I want to address
Speaker 1: this from Jamie Diamond's letter released an hour ago. I
Speaker 1: assume you did not get an advanced copy. Now I
Speaker 1: did not. There's a banking Numbers's joke, folks, there's a
Speaker 1: banking numbers as well, and down at the bottom. It
Speaker 1: was the next Secretary of Treasury talking about policy, diplomacy
Speaker 1: and that, and in the middle he says, there are
Speaker 1: storm clouds ahead because of the shock we had from
Speaker 1: SVB deposit flows and things. Maybe we don't know right now.
Speaker 1: How do you stay a bull? How do you stay
Speaker 1: in the market on a Friday afternoon? If mister Diamond
Speaker 1: and you suggest there are storm clouds ahead, there are
Speaker 1: always storm clouds ahead. Right You've had this expansion going
Speaker 1: for quite some time in the US if you count
Speaker 1: that the COVID reset in the COVID recession that we
Speaker 1: had wasn't necessarily a classic business cycle contraction. So yes,
Speaker 1: we're further along in the cycle, but there's always storm
Speaker 1: clouds ahead. When you have a five hundred basis point
Speaker 1: tightening in rates like you've had from the Fed over
Speaker 1: the past year, things start to break. We've had things
Speaker 1: breaking for over a year. However, if you do not
Speaker 1: believe the recession is upon us in the next six months,
Speaker 1: and we do not think that there is, equity markets
Speaker 1: tend to do very well in the year up to
Speaker 1: your recession. The raging theme over the weekend, Adam two
Speaker 1: is leading a debate in the FT is the power
Speaker 1: of nominal GDP. Does an inflation juicd nominal GDP mean
Speaker 1: a surprise and revenue growth for American corporations, Well, it
Speaker 1: makes everybody feel better to have faster GPP growth, right.
Speaker 1: The margin compression story is a real concern, of course
Speaker 1: in the US, But we do believe that there's enough
Speaker 1: that the Fed's going to be able to pause, that
Speaker 1: they've done enough to get inflation under control. And you
Speaker 1: start to see it. You had a much better core
Speaker 1: PC number that was just released, and if you had
Speaker 1: and in South Korea today we saw disinflation there as well, exactly,
Speaker 1: So it could be a world that's going to be
Speaker 1: a wash in slowing inflation at least through the second
Speaker 1: quarter of this year. What we're gonna do here, folks,
Speaker 1: is through all of twenty twenty three, we're gonna put
Speaker 1: Bramo and Reinhard on the desk together here to have
Speaker 1: a dueling debate on the tone of our economic polity
Speaker 1: moving forward. Barbara Reinhard is with Voi Investment Management this morning.
Speaker 1: Where our heads are spinning home in a way. It's
Speaker 1: the name of his new sub stack effort. Richard hass
Speaker 1: joins us on the home and the way, Richard, Let's
Speaker 1: go to the away first. And the way is what
Speaker 1: you when you were at Oberlin a million years ago,
Speaker 1: you were falling asleep on a two pm Thursday afternoon,
Speaker 1: and somebody said, Finland will forever remain neutral. And here
Speaker 1: you and I are looking at Finland to enter NATO.
Speaker 1: How did we get here? Oh, if you had asked
Speaker 1: me that when I was in college, I would have
Speaker 1: said the Cold War was permanent. So much has happened
Speaker 1: that I didn't quite anticipate. I think this is part
Speaker 1: of the unintended consequence of mister Putin's war. People thought
Speaker 1: after the Cold War ended, NATO lacked a rationale. It's one.
Speaker 1: It's old rationale has come back on stilts. And the
Speaker 1: fact that Finland is in NATO, Sweden's moving in that
Speaker 1: direction again. This is what mister Putin has wrought. We
Speaker 1: never could have done it, shall we say? Without him?
Speaker 1: When I look at the map and I don't have
Speaker 1: it in front of me, folks, you know I flunked
Speaker 1: finished geography. But if you come down to the bottom
Speaker 1: near Helsinki and you move over to the east, NATO
Speaker 1: is not all that far from Saint Petersburg, is it?
Speaker 1: It's remarkable we worried about Ukraine being close Condoleeza, Rice, Bill,
Speaker 1: Robert Gates and others pushing back on Ukraine and NATO.
Speaker 1: My word, NATO to Saint Petersburg now is a quick ride, Ambassador,
Speaker 1: isn't it that? And you've also got far more a
Speaker 1: border for Russia to worry about again. Strategically, this makes
Speaker 1: zero sense. I think what it shows from Plutin's point
Speaker 1: of view, either he didn't see this happening, or if
Speaker 1: he did, he didn't much care. Tom he puts he's
Speaker 1: put so much of an emphasis on Ukraine, he's in
Speaker 1: some ways rolled the dice. His own presidency depends upon it. That.
Speaker 1: My guess is, whatever costs he has to pay, whether
Speaker 1: it's manpower, economically, strategically, he's prepared to pay because he's
Speaker 1: put at risk his own political future and the future
Speaker 1: of authoritarian Russian Chris, thank you for the headline. Across
Speaker 1: the Bloomberg Terminal. Finland officially joins NATO is thirty first member.
Speaker 1: Maria too is in Brussels and will be looking for
Speaker 1: ceremony there. I believe in the next hour let us
Speaker 1: turn home of your home and away sub stack effort.
Speaker 1: Retired Ambassador hass Here from the Council on Ford Relations.
Speaker 1: The home event, Well, I've got to go down Fifth
Speaker 1: Avenue plass Trump Tower, and maybe down into Center Street
Speaker 1: as well. Your comments on the bills and the obligations,
Speaker 1: the obligations Richard, the president Trump has to this process
Speaker 1: of indictment and arrangement. Well, Tommy, it's more than an
Speaker 1: obligation to follow the law. Obligations or things you should
Speaker 1: do but don't have to do. And Donald Trump has
Speaker 1: been a serial violator of obligations. The idea of norms,
Speaker 1: the peaceful transfer of political power, the most basic defining
Speaker 1: norm of American democracy. He violated that. Civility he violates
Speaker 1: on a daily basis, is signaling about political violence. Another
Speaker 1: violation the idea of putting country before party or person.
Speaker 1: I would say, in many ways, his whole career is
Speaker 1: a violation of that obligation. The law, though, is something else,
Speaker 1: so we have a system for dealing with it. That's
Speaker 1: why we have courts and the light. Obligations though, or
Speaker 1: something citizens have to insist upon, and that brings it
Speaker 1: all back to the ballot Box. He could well be
Speaker 1: the Republican nominee. I think what this indictment has done
Speaker 1: in some ways is frozen the other Republican candidates. It
Speaker 1: increases the odds Nonald Trump is the Republican nominee. And
Speaker 1: let's be brutally honest. If Donald Trump is the Republican nominee, Tom,
Speaker 1: he's one of the two most likely people to be
Speaker 1: the next president of the United States. Richard Hass I
Speaker 1: don't want to be inflammatory here, and I want to
Speaker 1: take the arc up to eighteen sixty. It can be Kansas,
Speaker 1: Nebraska and the rest. But there's a mood there now
Speaker 1: of disunion of a nation. Not that would break up.
Speaker 1: I just don't want to go there, but of this
Speaker 1: absolute polarization we see with the president former president's poll
Speaker 1: ratings and such, with your people at CFR, how close
Speaker 1: are we to a dialogue of disunion, if not outright disunion.
Speaker 1: I'm not worried about formal disunion. I agree with you, Tom,
Speaker 1: but we already have very shepherd Americas. The red versus
Speaker 1: blue look at life expectancy, the differences between red and
Speaker 1: blue states. You look at him. People now are really
Speaker 1: separated by geography, by religion by what cable shows they watch.
Speaker 1: That really worries me. Increasingly America, which is a country
Speaker 1: founded on ideas, we no longer have a common set
Speaker 1: of ideas. It's one of the many prices we pay
Speaker 1: for not teaching civics in our schools. We're not requiring civics.
Speaker 1: I'm not worried about a civil war, Tom, but I
Speaker 1: am worried about something else. You were teasing me about
Speaker 1: my ambassadorial hot I was the us envoid in Northern Ireland.
Speaker 1: This spring we marked twenty five years since the so
Speaker 1: called Troubles. The political and violence in Northern Ireland pretty
Speaker 1: much came to an end. I worry about an American
Speaker 1: version of the Troubles, where we could have fairly frequent,
Speaker 1: decentralized political violence in this gunloaded country of ours. That
Speaker 1: is not something we can dismiss. How would the troubles
Speaker 1: of Ireland been different? And of course this is with
Speaker 1: a wonderful Irish movie that was Oscar Worthy this year.
Speaker 1: How would the troubles Richard Hass have been different if
Speaker 1: we'd had Twitter at the time, would have been much worse.
Speaker 1: What Twitter does is it's called social media, Tom, It's
Speaker 1: not serious media. It's not factual media. So Twitter allows
Speaker 1: people to traffic in thissinformation or selective information. That's what
Speaker 1: social media does, and it's really dangerous. It reinforces the
Speaker 1: tribalism of any society. And you know, our democracy is
Speaker 1: two and a half centuries old. We're celebrating the declaration
Speaker 1: of independence in three years. It's two US or fiftieth anniversary.
Speaker 1: We were not made in some ways for the age
Speaker 1: of social media. I look where we are, Richard Haas,
Speaker 1: And of course the import today in a toggle switch.
Speaker 1: Here a president that will go to arrayment, be peaceful, quiet.
Speaker 1: But he speaks tonight from our lago. What would you
Speaker 1: want to hear from President Trump tonight from mara lago. Look,
Speaker 1: what I would want to hear him do is put
Speaker 1: country first, to talk about the importance of the law
Speaker 1: of the legal process, that he'll respect it, not to
Speaker 1: attack judges, not to attack prosecutors, to basically part of
Speaker 1: what makes America America is the rule, rule of laws.
Speaker 1: Basic Tom. For all the business people watching your show,
Speaker 1: this is it's the oxygen of American society. What I
Speaker 1: would like to see Donald Trump do is respect the
Speaker 1: rule of law. Richard to finish up here, Let's come
Speaker 1: full circle here as we looked away and then home.
Speaker 1: The center tendency of two twenty two was a shock
Speaker 1: of February, and Vladimir Putin he has to be thunderstruck today,
Speaker 1: and not only what he sees in the United States
Speaker 1: and the events in the island of Manhattan, but what
Speaker 1: he sees in Finland as well. How would you presume
Speaker 1: someone so cloistered in the Kremlin, how would you presume
Speaker 1: he will respond to these new twenty twenty three shocks.
Speaker 1: Obviously unhappy about Finland, but he will be in some
Speaker 1: ways feeling good about events here reinforces his sense Tom
Speaker 1: that time is on his side, that the United States
Speaker 1: and European support for Ukraine is eventually weak. It will
Speaker 1: cause Putin to dig in his heels. You had, Leslie,
Speaker 1: were even talking about it before. A lot of our
Speaker 1: allies are uneasy about a return of Trump or trumps
Speaker 1: Um and all that means. But for somebody like Putin,
Speaker 1: for Sheej and Ping for some others in the Middle East,
Speaker 1: they will welcome the possibility of our going on back
Speaker 1: to the future. Here. I said this a couple of
Speaker 1: years ago folks. Richard hass The World was the book
Speaker 1: of the summer. It was the summer book you threw
Speaker 1: in an older child and said, shut up and read this.
Speaker 1: And a bill of obligations follows right behind. It is
Speaker 1: first class on civics needed in America. Richard hass is
Speaker 1: with a Council on Foreign Relations in his sub stack
Speaker 1: effort is home in a way, Lisa, how'd your bracket
Speaker 1: work out? I think I failed. March Madness took over
Speaker 1: in a very different way. Considering the past couple of
Speaker 1: weeks and everything we've been will dealing with Tom feel better? Lisa,
Speaker 1: Your bracket was better than my bracket. We have a
Speaker 1: wonderful annual ritual here at Bloomberg within Brackets, which is
Speaker 1: various worthies commit to charity and support and there's always
Speaker 1: a winner. It's something to do with a parquet floor.
Speaker 1: Steve Paliuca's senior advisor at Bank Capitol, co owner of
Speaker 1: the Boston Celtics. Mister Paliuca was the winner of the
Speaker 1: Bloomberg Brackets for a cause. He corrected, How did the
Speaker 1: hell did he do this? He picked Ukon to win
Speaker 1: March Madness. The Huskies dazzled seventy six to fifty nine
Speaker 1: and a win over San Diego State, and of course
Speaker 1: of one million dollar brackets for a cause pot will
Speaker 1: go to mister Paliuca's charity, Reform Alliance, a charity helping
Speaker 1: people get out of prison and move on to constructive
Speaker 1: at jobs. I do have to note here in a
Speaker 1: careful review, because we provide transparency here at Bloomberg. We
Speaker 1: went from grower to Pallyuca A Peter Grower, Lisa Peter Rour.
Speaker 1: It came in here underperforming. I guess is how well
Speaker 1: constructively put that Bill Ackman Jay Clayton together. That's the
Speaker 1: first time they've ever been together. Underperforming, as they say,
Speaker 1: dazzling up higher. Cliff assess respectable one, Michael Bloomberg, Lisa
Speaker 1: did better than good and we noticed Jonathan Gray at
Speaker 1: Blackstone among others, all aced out by Steve Paliuca. Steve,
Speaker 1: what in the ether did you do to win this bracket?
Speaker 1: What did you see? Is it like the day to
Speaker 1: day grind of the Celtics means that you've got it
Speaker 1: all figured out? I wish I was the case. I
Speaker 1: think I was just lucky and happy to have the
Speaker 1: money go to the inform Alliance. As you said, it's
Speaker 1: an amazing charity set up by Robert Kraft and Michael
Speaker 1: Rubin to get prisoners work. And we have four million
Speaker 1: people on parole in the system and really needs to
Speaker 1: be reformed and rehab So I'm very grateful to Bloomberg
Speaker 1: and grateful to the basketball gods that helped me this year.
Speaker 1: The basketball gods gave us as well. And I'm not
Speaker 1: up to speed on this, Stevens. If I'm out of turn,
Speaker 1: say so. Boy did the women to deliver Attorney this year?
Speaker 1: It seemed to be a real turning point where America
Speaker 1: paid attention in a new way to women's NCAA basketball. Absolutely,
Speaker 1: I think all the women's sports are getting more attention.
Speaker 1: People love to watch sports, and the level of competition
Speaker 1: was probably the best ever in the women's tournament. The
Speaker 1: woman Clark was just just electric out there. Fantastic final, Steve,
Speaker 1: an important day for all of the global Wall Street
Speaker 1: and particularly American Wall Street. James Diamond and team at
Speaker 1: JP Morgan publish a letter They speak there of the
Speaker 1: storm clouds to come. This is mister Diamond and his
Speaker 1: team looking at SVB in the banking crisis, how did
Speaker 1: the storm clouds look from Boston this morning. Well, as
Speaker 1: you know time, we've talked about this before, lots of
Speaker 1: lots of tough dynamics right now, the war in Ukraine,
Speaker 1: oil prices going up, interest rates gapping up, which has
Speaker 1: caused some of these problems, so you know, we're definitely
Speaker 1: heading into murky waters. The good news is there's still
Speaker 1: a lot of jobs out there. Technology is coming back,
Speaker 1: biotech is growing, so we have some pockets of good
Speaker 1: things happening. But we're in the midst of a correction
Speaker 1: where we basically had a ten year kind of growth
Speaker 1: bubble based on cheap money, and it's going to be
Speaker 1: painful to come out of that. What's the distinction, Steve,
Speaker 1: between a credit crunch and just credit tightening as many
Speaker 1: people see ongoing right now. Well, a credit crunch would
Speaker 1: be that just a total lack of liquidity, and I
Speaker 1: think right now you're just seeing tightening and again we're
Speaker 1: getting back to normalized interest rates. For most of my career,
Speaker 1: interest rates have been four and a half to five percent.
Speaker 1: Only in the last twelve or thirteen years have they
Speaker 1: gapped down. And that cheap money has brought a lot
Speaker 1: of prosperity, But now we're kind of paying the price
Speaker 1: for having that long time cheap money. But we're seeing
Speaker 1: a tightening now. I don't think we're seeing a crunch
Speaker 1: the banks, given that Bank of America, we're very well
Speaker 1: capitalized today, which is the reason why a lot of
Speaker 1: people are saying they can still take out credit cards,
Speaker 1: they can still take out loans, especially if they have
Speaker 1: good credit, and banks are continuing to lend to businesses,
Speaker 1: they continue to hire in a major way. As an investor,
Speaker 1: does this make debt look much more valuable than even
Speaker 1: the equity side of the balance sheet as an investor,
Speaker 1: simply because they can pay back their debts. But perhaps
Speaker 1: equity needs a reevaluation. Well, again, it's to me, I
Speaker 1: step back. It's basically based on the price you pay
Speaker 1: for the asset. So so we've been in periods in
Speaker 1: private equity where debt levels are ten percent equitycent debt.
Speaker 1: Those days are gone. Deals are much more conservatively financed,
Speaker 1: so the dead bird is not as high these days.
Speaker 1: These are sixty debt fifty percent is common in today structures.
Speaker 1: Debt is still available for good deals, and deals have repriced,
Speaker 1: so you're now seeing some opportunities in tech sector and
Speaker 1: other companies that are backed down to reasonal evaluations based
Speaker 1: on what you're seeing in the day to day of
Speaker 1: the companies that you work with and that you see
Speaker 1: and the fans that go in droves to all of
Speaker 1: the games and continue to spend money. Do you feel
Speaker 1: like people who are calling for a recession are perhaps
Speaker 1: misguided or do you think that you are seeing a
Speaker 1: real softening that's borne out by empirical data. We have
Speaker 1: not seen the empirical data yet showing dramatic softening. Air
Speaker 1: airlines are still full, restaurants are still full. So we've
Speaker 1: not seen that in our in our companies. You know,
Speaker 1: it can be to common, especially with the expensive money
Speaker 1: out there and pull back into credit markets. But but
Speaker 1: right now consumers are still out there and uh, and
Speaker 1: we haven't seen highly highly negative data. I'm worried about
Speaker 1: the recent oil price increasing that that is going to
Speaker 1: increase inflation and is that going to bring us even
Speaker 1: higher interest rates? But but right now we're I think
Speaker 1: in an uncertain period and maybe heading towards obsessions, but
Speaker 1: hopefully it's soft landing. Steve, I got to go back
Speaker 1: for a number of days here, the basic the basic
Speaker 1: idea here of what the Celtics did to the box.
Speaker 1: I mean this is on the edge of what Yukon
Speaker 1: did throughout this entire tournament. Are the Celtics destined this
Speaker 1: year like University at Connecticut? I certainly hope. So we
Speaker 1: have a great bunch of players, really great on and
Speaker 1: off the court, and they really pulled together and had
Speaker 1: fantastic game against Milwaukee. Milwaukee is a great team. Um So,
Speaker 1: as they say in the in the in the in
Speaker 1: the in the K one hundred years sports analogy, he's
Speaker 1: got to take one game at a time, and that's
Speaker 1: what they're doing and having fun together and hopefully winning
Speaker 1: out the rest of the season and doing great playoffs.
Speaker 1: So we're excited. We're really excited to step Paleoka there
Speaker 1: with the charity of Robert Craft of the New England Patriots.
Speaker 1: Here is he is the winner of our bracket this year.
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Speaker 1: the Bloomberg Terminal. Thanks for listening. I'm Lisa Abramowitz, and
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