1 00:00:00,240 --> 00:00:02,440 Speaker 1: This is Bloomberg Wall Street Week. 2 00:00:02,480 --> 00:00:04,400 Speaker 2: I mean may not have an overall recession. We're having 3 00:00:04,400 --> 00:00:06,760 Speaker 2: a rolling recession. Econy of roll looks pretty strongly. It 4 00:00:06,800 --> 00:00:07,680 Speaker 2: is when it comes to jobs. 5 00:00:07,720 --> 00:00:09,840 Speaker 1: The financial stories that shape our world. 6 00:00:09,960 --> 00:00:13,640 Speaker 2: Three major regional bank failures send shockwaves through the banking system. 7 00:00:13,680 --> 00:00:15,480 Speaker 2: We're all trying to figure out what to make of 8 00:00:15,600 --> 00:00:17,000 Speaker 2: generative AI. 9 00:00:16,920 --> 00:00:19,280 Speaker 1: Through the eyes of the most influential voices. 10 00:00:19,440 --> 00:00:22,400 Speaker 2: Welcome down, Doctor Paul Krugman, Ryan moynihan, a Bank of America. 11 00:00:22,560 --> 00:00:25,279 Speaker 2: Debro Lair of the Paulson Institute, well then Hubbard of 12 00:00:25,280 --> 00:00:26,280 Speaker 2: the Columbia Business School. 13 00:00:26,280 --> 00:00:30,160 Speaker 1: Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 14 00:00:30,440 --> 00:00:34,200 Speaker 2: Realignment for the Chinese economy, for banks, for the Walt 15 00:00:34,240 --> 00:00:38,159 Speaker 2: Disney Company, and for college football. This is Bloomberg Wall 16 00:00:38,159 --> 00:00:42,600 Speaker 2: Street Week. I'm David Weston this week, Rick Reader of Blackrock. 17 00:00:42,800 --> 00:00:46,600 Speaker 2: I'm investing for no landing at all. Even could you. 18 00:00:46,600 --> 00:00:49,199 Speaker 3: Have a technical recession, I just think like you'd have 19 00:00:49,200 --> 00:00:51,760 Speaker 3: to wake people up and tell them because you're operating 20 00:00:51,800 --> 00:00:53,479 Speaker 3: at such a high level in the economy. 21 00:00:54,040 --> 00:00:56,720 Speaker 2: Deborah Lair from the Paulson Institute on the ups and 22 00:00:56,880 --> 00:00:58,600 Speaker 2: downs of US relations with China. 23 00:00:59,360 --> 00:01:03,360 Speaker 4: They're is a reconsideration in Western economies and looking at 24 00:01:03,400 --> 00:01:06,200 Speaker 4: what their relationship is economically with China. 25 00:01:06,600 --> 00:01:09,880 Speaker 2: And George Pine a ruined capital on making money out 26 00:01:09,880 --> 00:01:10,880 Speaker 2: of college football. 27 00:01:11,440 --> 00:01:14,560 Speaker 5: It's run by a very fragmented industry and so it's 28 00:01:14,560 --> 00:01:20,960 Speaker 5: a bit unwielding. 29 00:01:28,920 --> 00:01:31,720 Speaker 2: For most of global Wall Street, it was a quiet week, 30 00:01:32,120 --> 00:01:35,520 Speaker 2: with trading volumes down as many enjoyed some time away 31 00:01:35,520 --> 00:01:38,960 Speaker 2: from their Bloomberg terminals getting ready for what comes next. 32 00:01:39,200 --> 00:01:42,480 Speaker 2: But over in Beijing, things weren't quite so quiet when 33 00:01:42,520 --> 00:01:46,360 Speaker 2: new numbers came in pointing toward deflation and confirming how 34 00:01:46,400 --> 00:01:48,720 Speaker 2: hard it may be to get growth back to the 35 00:01:48,800 --> 00:01:53,120 Speaker 2: levels prison G wants. What China you seeking deflation? For sure? 36 00:01:53,480 --> 00:01:54,720 Speaker 2: The question is how long? 37 00:01:55,160 --> 00:01:57,600 Speaker 6: And I think he's up to the policy miki. 38 00:01:58,040 --> 00:02:00,440 Speaker 2: While they react with accordingly to the it's called on 39 00:02:00,440 --> 00:02:03,800 Speaker 2: the monitory eting. While the United States didn't make things 40 00:02:03,840 --> 00:02:09,079 Speaker 2: any easier by imposing those long awaited outbound investment restrictions, we. 41 00:02:09,120 --> 00:02:13,440 Speaker 7: Will compete with them, and we should be competing with 42 00:02:13,480 --> 00:02:17,520 Speaker 7: them outside this executive order, and we will cooperate with 43 00:02:17,639 --> 00:02:20,000 Speaker 7: them on things like climates. 44 00:02:20,440 --> 00:02:22,560 Speaker 2: Banks had a bit of a rocky week as well 45 00:02:22,760 --> 00:02:24,920 Speaker 2: as you as mid size banks got hit with the 46 00:02:25,000 --> 00:02:26,399 Speaker 2: Moody's downgrade. 47 00:02:26,880 --> 00:02:29,360 Speaker 8: Now the big super regional banks are going to be. 48 00:02:29,480 --> 00:02:32,560 Speaker 3: A little more tightly regulated, and that actually is a 49 00:02:32,600 --> 00:02:34,040 Speaker 3: tailwind for bond investors. 50 00:02:34,360 --> 00:02:37,880 Speaker 2: And Italian banks faced a windfall profits tax that tanked 51 00:02:38,000 --> 00:02:41,640 Speaker 2: their stocks before the government backed off a bit. The 52 00:02:41,680 --> 00:02:44,440 Speaker 2: Walt Disney Company announced its earnings in the midst of 53 00:02:44,440 --> 00:02:47,120 Speaker 2: a mid course correction, with an awful lot on the 54 00:02:47,200 --> 00:02:49,960 Speaker 2: line for the world's largest entertainment company. 55 00:02:50,600 --> 00:02:54,680 Speaker 9: While Linear remains highly profitable for Disney today, the trends 56 00:02:54,720 --> 00:02:58,280 Speaker 9: being fueled by cord cutting are unmistakable, and as I've 57 00:02:58,320 --> 00:03:02,160 Speaker 9: stated before, we're thinking of expansively in considering a variety 58 00:03:02,200 --> 00:03:03,280 Speaker 9: of strategic options. 59 00:03:04,280 --> 00:03:09,680 Speaker 2: And college football continued its conference shake up, with USC, UCLA, Oregon, 60 00:03:09,760 --> 00:03:12,680 Speaker 2: and Washington all going to the Big ten, leaving the 61 00:03:12,720 --> 00:03:16,960 Speaker 2: Pac twelve out in the coals. US CPI numbers came 62 00:03:16,960 --> 00:03:20,560 Speaker 2: in just as predicted, with headline prices up two tenths 63 00:03:20,600 --> 00:03:24,200 Speaker 2: percent or three point two percent year over year, while 64 00:03:24,320 --> 00:03:27,800 Speaker 2: core came down just a bit to four point seven percent. 65 00:03:28,560 --> 00:03:30,680 Speaker 3: As the bond traders would say, this one was on 66 00:03:30,720 --> 00:03:32,800 Speaker 3: the screws came in right as forecast. 67 00:03:34,840 --> 00:03:38,360 Speaker 2: Both those encouraging CPI numbers on Thursday ran right into 68 00:03:38,440 --> 00:03:41,240 Speaker 2: higher than expected PPI numbers on Friday, even as the 69 00:03:41,280 --> 00:03:44,640 Speaker 2: University of Michigan told us that inflation expectations overall continue 70 00:03:44,640 --> 00:03:47,400 Speaker 2: to come down. The markets reacted all this by going 71 00:03:47,480 --> 00:03:49,240 Speaker 2: up and going down over the course of the week, 72 00:03:49,320 --> 00:03:51,880 Speaker 2: ending up more down than up, with the S and 73 00:03:51,920 --> 00:03:54,040 Speaker 2: P five hundred down three tens p percent for the 74 00:03:54,080 --> 00:03:56,520 Speaker 2: week ending at forty four to sixty four, while the 75 00:03:56,600 --> 00:03:59,920 Speaker 2: Nasdaq had another tough week, down one point nine percent, 76 00:04:00,120 --> 00:04:02,680 Speaker 2: making it the longest string of down weeks so far 77 00:04:02,800 --> 00:04:06,040 Speaker 2: this year. While the yield on the tenure ended up twelve, 78 00:04:06,440 --> 00:04:08,840 Speaker 2: it went up twelve basis points at four point one 79 00:04:08,840 --> 00:04:10,920 Speaker 2: point six. Here to sort it all out for us 80 00:04:10,920 --> 00:04:16,040 Speaker 2: are Lysanne Saunders, Charles Schwab, chief investment strategists, and Kristin Burdly. 81 00:04:16,160 --> 00:04:19,320 Speaker 2: She is a city head of North American investors. So Chris, 82 00:04:19,400 --> 00:04:21,520 Speaker 2: let's start with you here. What did you make out 83 00:04:21,560 --> 00:04:23,520 Speaker 2: of what we saw this week? There was a lot 84 00:04:23,520 --> 00:04:25,799 Speaker 2: of back and forth about where inflation's going and therefore 85 00:04:25,839 --> 00:04:26,640 Speaker 2: what the Fed's going to do. 86 00:04:27,080 --> 00:04:28,800 Speaker 10: Yeah, so I think what we saw this week kind 87 00:04:28,800 --> 00:04:31,760 Speaker 10: of a continuation of last week. Is understanding and trying 88 00:04:31,800 --> 00:04:34,800 Speaker 10: to break down what are the expectations really for rates 89 00:04:34,800 --> 00:04:37,320 Speaker 10: in terms of our rates going to be higher for longer? 90 00:04:37,839 --> 00:04:39,920 Speaker 2: So what about from your point of view, Lise Anne, 91 00:04:40,560 --> 00:04:43,039 Speaker 2: higher for longer? How much higher and how much longer? 92 00:04:44,400 --> 00:04:46,960 Speaker 11: So I think you know that's where the disconnect to 93 00:04:47,000 --> 00:04:50,039 Speaker 11: some degree still exists in terms of market expectations. Yes, 94 00:04:50,480 --> 00:04:53,640 Speaker 11: the market has pushed out rate cuts into twenty twenty four, 95 00:04:53,720 --> 00:04:56,440 Speaker 11: but as of now you're looking at five cuts being 96 00:04:56,960 --> 00:05:00,520 Speaker 11: priced in, and under a scenario even if you continue 97 00:05:00,520 --> 00:05:03,880 Speaker 11: with disinflation where you don't see the kind of cracks 98 00:05:03,920 --> 00:05:06,080 Speaker 11: in the labor market. That not that the FED is 99 00:05:06,600 --> 00:05:10,200 Speaker 11: gunning for, but it's certainly in their forecasts. If the 100 00:05:10,279 --> 00:05:12,400 Speaker 11: labor market stays tight and you don't see a hit 101 00:05:12,440 --> 00:05:15,200 Speaker 11: to growth, it's hard to imagine what the scenario would 102 00:05:15,200 --> 00:05:17,680 Speaker 11: be under which the FED would see a green light 103 00:05:18,320 --> 00:05:22,120 Speaker 11: for cutting rates versus just staying on hold. And you 104 00:05:22,200 --> 00:05:26,200 Speaker 11: had Williams Out, New York Fed President Williams Out talking 105 00:05:26,240 --> 00:05:31,400 Speaker 11: about the relationship between inflation if it continues to come 106 00:05:31,480 --> 00:05:37,000 Speaker 11: down and the fact that growth stays fairly strong and 107 00:05:37,160 --> 00:05:40,960 Speaker 11: real rates start to rise, that could be a situation 108 00:05:41,080 --> 00:05:43,920 Speaker 11: where the Fed says, Okay, we're now getting more restricted 109 00:05:43,920 --> 00:05:44,960 Speaker 11: than we would like to be. 110 00:05:45,720 --> 00:05:47,360 Speaker 2: What do you think about the banks right now. 111 00:05:48,240 --> 00:05:52,159 Speaker 11: Well, it's been a unique rally since the October lows. 112 00:05:52,680 --> 00:05:55,320 Speaker 11: If you use the simple definition of plus twenty percent, 113 00:05:55,440 --> 00:05:58,960 Speaker 11: you're in a bull market without really any participation on 114 00:05:59,040 --> 00:06:02,080 Speaker 11: the part of the the banks, which is unusual, and 115 00:06:02,160 --> 00:06:05,040 Speaker 11: I think for sustainability and a move higher, you're going 116 00:06:05,040 --> 00:06:09,400 Speaker 11: to need some participation. Obviously, there's also been that bifurcation 117 00:06:09,520 --> 00:06:14,520 Speaker 11: between the larger banks that came through the banking used 118 00:06:14,600 --> 00:06:19,560 Speaker 11: Jamie Diamond's word incident in March in much better shape 119 00:06:19,600 --> 00:06:22,680 Speaker 11: than the smaller regional banks. And you have the kind 120 00:06:22,680 --> 00:06:25,360 Speaker 11: of doubler triple whammy in the case of the smaller 121 00:06:25,360 --> 00:06:28,560 Speaker 11: and regional banks with the recent downgrade, the fact that 122 00:06:28,600 --> 00:06:33,440 Speaker 11: you've had the deposit flight, and just concerns about commercial 123 00:06:33,440 --> 00:06:36,880 Speaker 11: real estate, which the exposure within the regional and smaller 124 00:06:36,920 --> 00:06:39,920 Speaker 11: banks is much higher to commercial real estate and the 125 00:06:39,960 --> 00:06:42,960 Speaker 11: woes in the office side than the large banks. So 126 00:06:44,320 --> 00:06:46,240 Speaker 11: we're not out of the woods yet, but I think 127 00:06:46,480 --> 00:06:51,159 Speaker 11: the waves from the March problems have clearly died down. 128 00:06:51,680 --> 00:06:53,400 Speaker 2: Chris, what from your point of view, we did have 129 00:06:53,440 --> 00:06:56,560 Speaker 2: that Moody's downgrade on some smaller and regional banks here, 130 00:06:56,760 --> 00:06:59,359 Speaker 2: and they do have as Lininju said, they've got ansual 131 00:06:59,400 --> 00:07:01,280 Speaker 2: you have to pay more deposits that I used to 132 00:07:01,279 --> 00:07:04,080 Speaker 2: pay before. And there is the commercial real estate issue 133 00:07:04,120 --> 00:07:06,400 Speaker 2: looking out there that we're told is more issue for 134 00:07:06,480 --> 00:07:08,159 Speaker 2: regional banks. How big a problem is it? 135 00:07:08,400 --> 00:07:09,800 Speaker 10: Yeah, So I think there's a couple of things to 136 00:07:09,800 --> 00:07:11,400 Speaker 10: look at when it comes to the regional banks that 137 00:07:11,480 --> 00:07:14,200 Speaker 10: are just and it's a question around the underlying strategy, 138 00:07:14,240 --> 00:07:15,840 Speaker 10: because I don't think you can look at all of 139 00:07:15,880 --> 00:07:18,360 Speaker 10: the banks in the same way, but you certainly can 140 00:07:18,400 --> 00:07:22,600 Speaker 10: delineate between the large JASIB banks versus the regional banks. 141 00:07:22,920 --> 00:07:25,800 Speaker 10: And it's a question around so one, what is really 142 00:07:25,880 --> 00:07:29,440 Speaker 10: pressure on profitability? So we were talking about capital requirements 143 00:07:29,640 --> 00:07:33,600 Speaker 10: in Brian Moyahn's comments, but then looking to even just 144 00:07:33,680 --> 00:07:37,040 Speaker 10: flows away from deposits into T bills with the very 145 00:07:37,080 --> 00:07:41,000 Speaker 10: attractive yield and money market funds, that puts pressure in 146 00:07:41,080 --> 00:07:43,520 Speaker 10: terms of profitability. And then if we break down the 147 00:07:43,520 --> 00:07:47,120 Speaker 10: commercial real estate market, so banks overall, so looking across 148 00:07:47,160 --> 00:07:51,080 Speaker 10: the entire sector, are about fifty four percent of that market, 149 00:07:51,880 --> 00:07:55,000 Speaker 10: and then you have about seventy percent within that are 150 00:07:55,040 --> 00:07:58,440 Speaker 10: the smaller regional banks. And so when we look into 151 00:07:58,920 --> 00:08:01,320 Speaker 10: if we're in a higher inter straight environment for longer, 152 00:08:01,320 --> 00:08:04,000 Speaker 10: if we go into twenty twenty four, this is something 153 00:08:04,000 --> 00:08:06,880 Speaker 10: that could put pressure, especially on those banks that have 154 00:08:07,080 --> 00:08:10,400 Speaker 10: high levels of exposure to that sector. And one last comment, 155 00:08:10,680 --> 00:08:13,120 Speaker 10: it's not just all commercial real estate. It really is 156 00:08:13,120 --> 00:08:16,280 Speaker 10: a function of we have to delineate both regionally as 157 00:08:16,280 --> 00:08:19,440 Speaker 10: well as within that space where you're looking to areas. 158 00:08:19,560 --> 00:08:21,640 Speaker 10: Really it's office space more than anything else. 159 00:08:22,120 --> 00:08:23,840 Speaker 2: Listen, I wonder from your point of view, there is 160 00:08:23,840 --> 00:08:26,600 Speaker 2: the issue for the group of banks and whether you 161 00:08:26,640 --> 00:08:29,400 Speaker 2: invest in their stocks or not. But there's also the 162 00:08:29,480 --> 00:08:31,640 Speaker 2: larger question about the growth for the economy. I mean, 163 00:08:31,680 --> 00:08:33,600 Speaker 2: can we grow the economy the way we need to 164 00:08:33,600 --> 00:08:35,959 Speaker 2: to really support the stock market, for example, if the 165 00:08:36,000 --> 00:08:37,800 Speaker 2: banks don't feel like and lend as much. 166 00:08:38,960 --> 00:08:39,200 Speaker 12: Well. 167 00:08:39,320 --> 00:08:41,800 Speaker 11: That goes back to sort of the classics of what 168 00:08:41,880 --> 00:08:44,679 Speaker 11: happens when you go through an economic cycle. When you 169 00:08:44,760 --> 00:08:48,480 Speaker 11: have tighter monetary policy via a FED hiking cycle, and 170 00:08:48,480 --> 00:08:51,160 Speaker 11: of course this has been the most aggressive one. On 171 00:08:51,200 --> 00:08:54,199 Speaker 11: the upside in about forty years, you get a significantly 172 00:08:54,200 --> 00:08:57,600 Speaker 11: inverted yield curve like we have gotten it doesn't immediately 173 00:08:57,760 --> 00:09:01,400 Speaker 11: start to crimp lending. But even before or Silicon Valley 174 00:09:01,400 --> 00:09:05,160 Speaker 11: Bank failing in March, the FEDS slews, you know, Senior 175 00:09:05,200 --> 00:09:08,800 Speaker 11: Loan Officer opinion survey showed that credit conditions have tightened 176 00:09:08,800 --> 00:09:12,800 Speaker 11: into recession territory. So, given the old line of credit 177 00:09:12,840 --> 00:09:15,360 Speaker 11: is the lifeblood of an economy, as it starts to 178 00:09:15,400 --> 00:09:19,680 Speaker 11: feed through with long and variable legs, it ultimately does 179 00:09:19,760 --> 00:09:23,360 Speaker 11: start to crimp economic growth via that investment cycle. We 180 00:09:23,440 --> 00:09:26,320 Speaker 11: haven't seen it in earnest yet, but to suggest that 181 00:09:26,400 --> 00:09:28,960 Speaker 11: this time is different and we're not going to is 182 00:09:29,120 --> 00:09:31,080 Speaker 11: probably to complace in an assumption. 183 00:09:31,280 --> 00:09:33,640 Speaker 2: There's also, I think, Chris, a question of supply demand. 184 00:09:33,760 --> 00:09:35,440 Speaker 2: Is it a matter if there's not the credit to 185 00:09:35,480 --> 00:09:37,600 Speaker 2: extend or is there the demand for the credit other 186 00:09:37,679 --> 00:09:40,240 Speaker 2: businesses asking to borrow as much as they were before. 187 00:09:40,400 --> 00:09:42,840 Speaker 10: Yeah, So I think that that is a question. And 188 00:09:42,920 --> 00:09:45,520 Speaker 10: also it's both demand side. So when you look at 189 00:09:45,840 --> 00:09:48,920 Speaker 10: just the overall like particularly within commercial real estate, and 190 00:09:48,960 --> 00:09:51,920 Speaker 10: you look at volumes in terms of origination, that's fallen 191 00:09:51,960 --> 00:09:54,040 Speaker 10: down substantially. I mean you're looking at year over year 192 00:09:54,120 --> 00:09:56,680 Speaker 10: numbers close to sixty percent. But I think the more 193 00:09:56,720 --> 00:09:59,119 Speaker 10: interesting question that we're getting a lot from our investors. 194 00:09:59,520 --> 00:10:02,520 Speaker 10: Is actually, when you look at these sectors that have lagged, 195 00:10:02,800 --> 00:10:05,760 Speaker 10: are they a buy at these levels? For financials, I 196 00:10:05,800 --> 00:10:07,960 Speaker 10: would say go in the direction of preferreds, which is 197 00:10:08,040 --> 00:10:11,360 Speaker 10: really a play on the balance sheet as opposed to 198 00:10:11,440 --> 00:10:13,440 Speaker 10: the equity which could be challenged from some of these 199 00:10:13,480 --> 00:10:14,800 Speaker 10: profitability considerations. 200 00:10:14,840 --> 00:10:17,640 Speaker 2: So interesting. Thank you so much, Chris. That's Christian Ridderly 201 00:10:17,800 --> 00:10:20,840 Speaker 2: of City and liz Anne Saunders of Charles Schwab. Always 202 00:10:20,880 --> 00:10:22,000 Speaker 2: great to have them with us. 203 00:10:23,720 --> 00:10:24,160 Speaker 8: Coming up. 204 00:10:24,200 --> 00:10:27,480 Speaker 2: As China struggles to get going again, the US added 205 00:10:27,520 --> 00:10:30,760 Speaker 2: more restrictions on investment in the Middle Kingdom. We've talked 206 00:10:30,760 --> 00:10:33,520 Speaker 2: with Debora Lair of the Pulse and Institutes on prospects 207 00:10:33,520 --> 00:10:35,880 Speaker 2: for the second largest economy in the world. 208 00:10:36,600 --> 00:10:39,360 Speaker 4: The world has really been very focused, I think, on 209 00:10:39,400 --> 00:10:41,720 Speaker 4: how to deal with a strong China, and now we 210 00:10:41,800 --> 00:10:44,160 Speaker 4: haven't really thought through some of the implications of the 211 00:10:44,200 --> 00:10:44,840 Speaker 4: weak China. 212 00:10:45,120 --> 00:10:47,280 Speaker 2: That's next on Wall Street Week on Bloomberg. 213 00:10:49,720 --> 00:10:53,960 Speaker 1: This is Bloomberg Wall Street Week with David Weston from 214 00:10:54,080 --> 00:11:00,520 Speaker 1: Bloomberg Radio. 215 00:11:01,720 --> 00:11:04,840 Speaker 2: China, its economy has grown faster than any in the 216 00:11:05,000 --> 00:11:07,600 Speaker 2: history of the world and is either at number one 217 00:11:07,920 --> 00:11:10,559 Speaker 2: or number two to the United States, depending on how 218 00:11:10,600 --> 00:11:12,959 Speaker 2: you measure it. According to Graham Allison of. 219 00:11:12,960 --> 00:11:17,720 Speaker 12: Harvard, China is not just a rising power. China has risen. 220 00:11:18,520 --> 00:11:24,080 Speaker 12: China is now seriously rivaling the US in virtually every domain. 221 00:11:24,600 --> 00:11:27,480 Speaker 2: But despite all the progress made, there are questions about 222 00:11:27,480 --> 00:11:31,079 Speaker 2: whether China can continue its economic miracle, at least at 223 00:11:31,080 --> 00:11:34,560 Speaker 2: the same pace. Economic numbers have been coming in weaker 224 00:11:34,600 --> 00:11:35,400 Speaker 2: than expected. 225 00:11:36,000 --> 00:11:38,360 Speaker 8: We're not going to see China go back to where 226 00:11:38,360 --> 00:11:38,720 Speaker 8: it was. 227 00:11:39,400 --> 00:11:43,840 Speaker 2: It's a very big component of the global economy, raising 228 00:11:43,880 --> 00:11:47,280 Speaker 2: some doubts from Michelle Lamb of Society General about whether 229 00:11:47,400 --> 00:11:50,000 Speaker 2: China can grow at the five percent pace it's set 230 00:11:50,040 --> 00:11:51,240 Speaker 2: for itself this year. 231 00:11:52,040 --> 00:11:55,640 Speaker 13: Destansirisk and I think that primarily comes from the property. 232 00:11:55,320 --> 00:11:58,640 Speaker 2: Sector, and hopes of government stimulus to keep things going 233 00:11:58,679 --> 00:12:01,200 Speaker 2: are not as bright as they might have been because 234 00:12:01,200 --> 00:12:02,040 Speaker 2: of all that debt. 235 00:12:02,679 --> 00:12:05,400 Speaker 13: Talking about China's debt situation, I think is a long 236 00:12:05,440 --> 00:12:08,760 Speaker 13: standing structural issue, and it's no surprise that China is 237 00:12:08,800 --> 00:12:12,480 Speaker 13: facing a very big debt problem, and it's precisely one 238 00:12:12,480 --> 00:12:15,720 Speaker 13: of the reasons we don't see very aggressive stimulus coming 239 00:12:15,720 --> 00:12:16,360 Speaker 13: from China. 240 00:12:16,920 --> 00:12:19,840 Speaker 2: On top of all the internal issues, China also confronts 241 00:12:19,840 --> 00:12:23,160 Speaker 2: a United States imposing new restrictions on trade and investment, 242 00:12:23,520 --> 00:12:26,760 Speaker 2: whether it's export controls on shipments of technology to China 243 00:12:27,400 --> 00:12:30,680 Speaker 2: or those limits on outbound investment into China. President Biden 244 00:12:30,679 --> 00:12:32,400 Speaker 2: announced this week the. 245 00:12:32,480 --> 00:12:34,640 Speaker 7: Goal of this executive order is to make sure that 246 00:12:34,679 --> 00:12:37,200 Speaker 7: we're limiting the ability of financial. 247 00:12:36,720 --> 00:12:38,960 Speaker 8: Flows and then know how it often. 248 00:12:38,640 --> 00:12:42,040 Speaker 14: Goes alongside those financial flows, to give countries of concerning 249 00:12:42,080 --> 00:12:44,640 Speaker 14: the ability to get around the things that we're trying 250 00:12:44,640 --> 00:12:47,040 Speaker 14: to prevent them from getting access to, like the most 251 00:12:47,080 --> 00:12:47,680 Speaker 14: advanced of my. 252 00:12:47,720 --> 00:12:51,600 Speaker 2: Productors, leaving investors to grapple with what to do and 253 00:12:51,760 --> 00:12:55,160 Speaker 2: not do with an economy simply too big to ignore. 254 00:12:56,080 --> 00:12:59,600 Speaker 2: You can't rule out China. Since I started to go 255 00:12:59,640 --> 00:13:05,800 Speaker 2: to China nineteen eighty four, per gap at income increased 256 00:13:05,800 --> 00:13:09,160 Speaker 2: by twenty eight times. It's a power, and it's a 257 00:13:09,200 --> 00:13:13,440 Speaker 2: smart power. And to take us through where we are 258 00:13:13,520 --> 00:13:16,000 Speaker 2: with China right now, we turn to our non resident 259 00:13:16,080 --> 00:13:18,760 Speaker 2: expert here at Wall Street Week on China. She's Deborah Lair. 260 00:13:19,080 --> 00:13:21,640 Speaker 2: She is Vice chair of the Paulson Institute as well 261 00:13:21,679 --> 00:13:25,520 Speaker 2: as being CEO of Edelman Global Advisory. Deborah, great to 262 00:13:25,520 --> 00:13:28,199 Speaker 2: have you back on it always is we are hearing 263 00:13:28,240 --> 00:13:30,079 Speaker 2: a lot coming out of China right now. We had 264 00:13:30,160 --> 00:13:33,120 Speaker 2: numbers this week which were not very encouraging. Perhaps some 265 00:13:33,240 --> 00:13:36,320 Speaker 2: deflation going on. Certainly their trade is down. What is 266 00:13:36,360 --> 00:13:38,440 Speaker 2: your sense of what's happening? What are the important things 267 00:13:38,480 --> 00:13:40,640 Speaker 2: we should be looking at in China right now? 268 00:13:41,960 --> 00:13:44,679 Speaker 4: Well, so nice to see you again, David, and definitely 269 00:13:44,760 --> 00:13:48,840 Speaker 4: she Jmping has a lot on his plate. The world 270 00:13:48,880 --> 00:13:51,400 Speaker 4: has really been very focused, i think, on how to 271 00:13:51,440 --> 00:13:54,160 Speaker 4: deal with a strong China, and now we haven't really 272 00:13:54,160 --> 00:13:56,520 Speaker 4: thought through some of the implications of a week China. 273 00:13:57,280 --> 00:13:59,400 Speaker 4: When we look at what is happening in the real 274 00:13:59,520 --> 00:14:02,920 Speaker 4: estate market, there are still major challenges ahead. And this 275 00:14:03,000 --> 00:14:06,599 Speaker 4: is critically important because it's one of the main sources 276 00:14:06,800 --> 00:14:10,400 Speaker 4: of investment for most Chinese and so if the market 277 00:14:10,440 --> 00:14:13,319 Speaker 4: is not doing well there, it has a significant impact 278 00:14:13,800 --> 00:14:19,520 Speaker 4: on growth and investment opportunities. To local debt, this is 279 00:14:19,560 --> 00:14:22,680 Speaker 4: something that policy makers have been tracking for a long time, 280 00:14:22,760 --> 00:14:27,480 Speaker 4: and COVID just made it worse. A lot of this debt, 281 00:14:27,560 --> 00:14:30,160 Speaker 4: and this is what's really concerning, is off the books, 282 00:14:30,240 --> 00:14:32,760 Speaker 4: and so it's very hard to even track and be 283 00:14:32,880 --> 00:14:36,520 Speaker 4: aware of. And it relates to how the Center is 284 00:14:36,560 --> 00:14:39,720 Speaker 4: dealing with and forcing a lot of these local governments 285 00:14:39,760 --> 00:14:42,720 Speaker 4: to take on unfunded mandates. And their main source of 286 00:14:42,760 --> 00:14:46,000 Speaker 4: revenue previously was from the real estate market, and so 287 00:14:46,080 --> 00:14:49,800 Speaker 4: if they haven't had access to revenues coming from the 288 00:14:49,840 --> 00:14:50,320 Speaker 4: sales of. 289 00:14:50,280 --> 00:14:52,360 Speaker 6: Real estate, they have to look for other sources. 290 00:14:53,040 --> 00:14:55,680 Speaker 4: It's a big concern enough for Sigenping to be sending 291 00:14:55,720 --> 00:14:59,520 Speaker 4: down policy enforcement teams, which you would think after all 292 00:14:59,560 --> 00:15:02,120 Speaker 4: this time in office, he wouldn't have to do anymore. 293 00:15:02,600 --> 00:15:05,720 Speaker 4: But it shows the concern that they have with local 294 00:15:05,720 --> 00:15:10,280 Speaker 4: officials and their willingness to actually follow mandates coming from Beijing. 295 00:15:11,040 --> 00:15:13,720 Speaker 4: And then to top that, you have weakness in the 296 00:15:13,760 --> 00:15:17,440 Speaker 4: local banks, which again are lending to the local governments 297 00:15:17,520 --> 00:15:19,400 Speaker 4: and to the local real estate market. 298 00:15:20,040 --> 00:15:22,560 Speaker 6: Top that with youth unemployment. 299 00:15:23,000 --> 00:15:25,240 Speaker 4: For many in China, this is the source of their 300 00:15:25,320 --> 00:15:28,200 Speaker 4: retirement plan, the fact that their children are going to 301 00:15:28,200 --> 00:15:29,400 Speaker 4: be working and supporting the. 302 00:15:29,360 --> 00:15:30,720 Speaker 6: Parents and the grandparents. 303 00:15:31,280 --> 00:15:35,080 Speaker 4: And the numbers are over twenty percent, the unofficial numbers 304 00:15:35,120 --> 00:15:37,360 Speaker 4: are believed to be significantly higher than that. 305 00:15:38,360 --> 00:15:41,240 Speaker 2: Is President gy at this point solving this problem for 306 00:15:41,360 --> 00:15:43,800 Speaker 2: the economics of it, or is he solving it for 307 00:15:43,800 --> 00:15:46,080 Speaker 2: the ideology of it? Because some of his rhetoric has 308 00:15:46,120 --> 00:15:49,440 Speaker 2: indicated he actually may care more about the party and 309 00:15:49,480 --> 00:15:52,680 Speaker 2: the party rigor in the private sector than he cares 310 00:15:52,680 --> 00:15:53,680 Speaker 2: about the economics of it. 311 00:15:53,840 --> 00:15:55,040 Speaker 6: Well, that's an excellent question. 312 00:15:55,400 --> 00:15:59,400 Speaker 4: He certainly has been very focused on using the party 313 00:15:59,440 --> 00:16:03,080 Speaker 4: as the means to govern, whether it's through the government itself, 314 00:16:03,080 --> 00:16:06,160 Speaker 4: whether it's to the military, whether it's to the judiciary. 315 00:16:06,600 --> 00:16:08,360 Speaker 6: It's the party that's supreme. 316 00:16:08,360 --> 00:16:11,640 Speaker 4: And he has tried to create an ideology and a 317 00:16:11,800 --> 00:16:15,680 Speaker 4: unity through that. We see in the new structuring of 318 00:16:15,840 --> 00:16:18,760 Speaker 4: the government that it's all the party committees who are 319 00:16:18,760 --> 00:16:22,280 Speaker 4: actually setting economic policy, and the government more and more 320 00:16:22,400 --> 00:16:27,440 Speaker 4: is just an implementer. So as we see these difficulties 321 00:16:27,440 --> 00:16:30,360 Speaker 4: in the government, these weaknesses in the ability to create 322 00:16:30,440 --> 00:16:35,200 Speaker 4: jobs for the youth, in the challenges in attracting direct 323 00:16:35,240 --> 00:16:40,120 Speaker 4: foreign investment or venture capital or private equity, the big 324 00:16:40,200 --> 00:16:43,680 Speaker 4: question will be whether she jen being pivots and focuses 325 00:16:43,800 --> 00:16:47,240 Speaker 4: more on market opening in creating the confidence and the 326 00:16:47,280 --> 00:16:51,360 Speaker 4: conditions to continue to attract foreign business, which is necessary 327 00:16:51,400 --> 00:16:53,640 Speaker 4: if he's going to continue to grow his economy. He 328 00:16:53,760 --> 00:16:57,160 Speaker 4: can't do it without foreign business being present. 329 00:16:58,000 --> 00:16:59,520 Speaker 6: We've seen him pivot before. 330 00:16:59,600 --> 00:17:01,920 Speaker 4: We saw how quickly he was willing to pivot at 331 00:17:01,920 --> 00:17:05,520 Speaker 4: the end of COVID in opening up to the rest 332 00:17:05,520 --> 00:17:08,840 Speaker 4: of the world, and we're starting to see signs that 333 00:17:08,920 --> 00:17:14,199 Speaker 4: he's beginning to reconsider some of his economic policies to 334 00:17:14,359 --> 00:17:18,240 Speaker 4: be more open and change that emphasis from such a 335 00:17:18,240 --> 00:17:20,639 Speaker 4: focus on the party, not that it's ever going to 336 00:17:20,640 --> 00:17:24,760 Speaker 4: go away, but to really be focused more on providing opportunities. 337 00:17:25,320 --> 00:17:27,639 Speaker 4: Look at what he's been doing in technology and the 338 00:17:27,680 --> 00:17:32,120 Speaker 4: opportunities now and encouraging platform companies and the tech executives 339 00:17:32,160 --> 00:17:35,440 Speaker 4: to be innovative where it wasn't that long ago when 340 00:17:35,440 --> 00:17:36,920 Speaker 4: they were one of the top targets. 341 00:17:37,200 --> 00:17:39,240 Speaker 2: President G may decide that he wants to be more 342 00:17:39,240 --> 00:17:40,600 Speaker 2: open the rest of the world. Is the rest of 343 00:17:40,640 --> 00:17:42,840 Speaker 2: the world open to President G at this point? Certainly 344 00:17:42,880 --> 00:17:45,440 Speaker 2: the United States and the West seems to be taking 345 00:17:45,440 --> 00:17:48,120 Speaker 2: some actions, including this week with the restrictions on outbound 346 00:17:48,160 --> 00:17:52,000 Speaker 2: investment into China. We see various actions being taken. To 347 00:17:52,000 --> 00:17:54,560 Speaker 2: what extent does that hamper what President you can do? 348 00:17:54,600 --> 00:17:56,879 Speaker 2: As you know so well, Deborah, foreign direct investment is 349 00:17:56,920 --> 00:18:01,000 Speaker 2: down rather substantially into China, it is, and I. 350 00:18:01,000 --> 00:18:03,880 Speaker 4: Think one of the biggest questions is around confidence. Confidence 351 00:18:03,920 --> 00:18:07,640 Speaker 4: in China and its leadership. Obviously, the United States has 352 00:18:07,680 --> 00:18:10,360 Speaker 4: to stay very focused on its national security, and these 353 00:18:10,400 --> 00:18:15,199 Speaker 4: outbound investment regulations are limited to areas that it's concerned 354 00:18:15,359 --> 00:18:19,719 Speaker 4: that we might be creating competitors to our own national 355 00:18:19,720 --> 00:18:23,560 Speaker 4: security interests. I think it's going to be important to 356 00:18:23,600 --> 00:18:27,080 Speaker 4: watch if other countries do the same. There definitely is 357 00:18:27,119 --> 00:18:30,240 Speaker 4: a reconsideration in Western economies and looking at what their 358 00:18:30,280 --> 00:18:32,399 Speaker 4: relationship is economically with China. 359 00:18:32,520 --> 00:18:34,080 Speaker 6: It's not to say that companies. 360 00:18:33,720 --> 00:18:37,199 Speaker 4: Aren't investing there and continuing to do business there, but 361 00:18:37,840 --> 00:18:40,560 Speaker 4: more and more we hear they're looking at China for China, 362 00:18:41,040 --> 00:18:42,879 Speaker 4: and then they're looking at the rest of the world. 363 00:18:43,200 --> 00:18:46,480 Speaker 4: Some of China's own policies, including its national Security law, 364 00:18:46,520 --> 00:18:50,800 Speaker 4: are really emphasizing that fact because it's a very murky area, 365 00:18:50,880 --> 00:18:54,160 Speaker 4: particularly when it comes to issues like data, and more 366 00:18:54,160 --> 00:18:57,560 Speaker 4: and more companies are looking at how they can create 367 00:18:57,680 --> 00:19:01,919 Speaker 4: an island in China for data and not have it 368 00:19:01,960 --> 00:19:05,040 Speaker 4: linked into the rest of the world, and those issues, 369 00:19:05,119 --> 00:19:08,159 Speaker 4: even though they may sound small right now, start to 370 00:19:08,200 --> 00:19:11,560 Speaker 4: have a ripple effect in how CEOs and others are 371 00:19:11,560 --> 00:19:13,080 Speaker 4: making their investment decisions. 372 00:19:13,160 --> 00:19:14,440 Speaker 6: And this is one of the reasons. 373 00:19:14,440 --> 00:19:18,720 Speaker 4: It's not just these geopolitical restrictions that we're seeing that 374 00:19:18,760 --> 00:19:20,760 Speaker 4: are limiting direct foreign investment in China. 375 00:19:20,800 --> 00:19:22,080 Speaker 6: It's some of China's own. 376 00:19:21,960 --> 00:19:26,600 Speaker 4: Policies that are causing a concern within I think the 377 00:19:26,640 --> 00:19:27,720 Speaker 4: foreign business community. 378 00:19:27,960 --> 00:19:28,200 Speaker 8: Debor. 379 00:19:28,280 --> 00:19:30,000 Speaker 2: It's always a pleasure, really a treat to have you 380 00:19:30,040 --> 00:19:32,679 Speaker 2: with us. As tebro Laire, she's a CEO of Edelman 381 00:19:32,840 --> 00:19:37,760 Speaker 2: Global Advisory. Coming up. It looks like we may not 382 00:19:37,840 --> 00:19:40,600 Speaker 2: get that recession after all. What does that do for 383 00:19:40,720 --> 00:19:44,719 Speaker 2: all our investing plans based on worst case scenarios, Well, 384 00:19:44,760 --> 00:19:46,240 Speaker 2: its rit reader a black rock. 385 00:19:46,920 --> 00:19:50,920 Speaker 8: My base case is that inflation is moderating. Those real 386 00:19:51,000 --> 00:19:52,840 Speaker 8: rates we talked about, should. 387 00:19:52,480 --> 00:19:55,160 Speaker 3: Come down with a FED that starts that is now 388 00:19:55,200 --> 00:19:57,720 Speaker 3: stable and will start cutting rates. So I think the 389 00:19:58,040 --> 00:20:00,399 Speaker 3: equity market next year will get a nice boosh from 390 00:20:00,440 --> 00:20:02,200 Speaker 3: what I think will lead a reduction of the interest rate. 391 00:20:02,520 --> 00:20:04,840 Speaker 2: That's next on Wall Street Week on Bloomberg. 392 00:20:06,240 --> 00:20:10,400 Speaker 1: This is Bloomberg Wall Street Week with David Weston from 393 00:20:10,560 --> 00:20:14,320 Speaker 1: Bloomberg Radio. 394 00:20:17,320 --> 00:20:20,760 Speaker 15: That is definitely not the fed's intent and has not 395 00:20:20,840 --> 00:20:23,760 Speaker 15: been the FEDS intent throughout this expansion. We raised interest 396 00:20:23,840 --> 00:20:26,399 Speaker 15: rates in ninety four to five without the intent of 397 00:20:26,480 --> 00:20:29,480 Speaker 15: causing recession. For sure, and we didn't, and the FED 398 00:20:29,560 --> 00:20:32,639 Speaker 15: is trying to do a duplicate of that soft landing 399 00:20:32,680 --> 00:20:34,040 Speaker 15: now not to cause a recession. 400 00:20:36,119 --> 00:20:38,720 Speaker 2: That was former FED Vice Chair Alan Blinder on Wall 401 00:20:38,720 --> 00:20:41,400 Speaker 2: Street Week back in January of two thousand, a little 402 00:20:41,440 --> 00:20:43,480 Speaker 2: more than a year before the US went into a 403 00:20:43,520 --> 00:20:46,680 Speaker 2: recession following a series of rate hikes. But that was then, 404 00:20:46,920 --> 00:20:48,880 Speaker 2: and this is now to bring us up to date 405 00:20:48,920 --> 00:20:51,159 Speaker 2: on whether the current interest rate policy is likely to 406 00:20:51,160 --> 00:20:53,760 Speaker 2: give us a similar recession. Welcome back to Rick Reader. 407 00:20:53,760 --> 00:20:57,159 Speaker 2: He's Blackrock CIO for Global fixed Income and head of 408 00:20:57,200 --> 00:20:59,919 Speaker 2: its Global Allocation Investment team. Rick, great to have you 409 00:21:00,160 --> 00:21:02,840 Speaker 2: on Wall Street. Ras, So, where are we right now? 410 00:21:03,240 --> 00:21:05,760 Speaker 2: Not too long ago, a lot of economists, including FED 411 00:21:05,800 --> 00:21:08,160 Speaker 2: economists as well as Bank of America others, were saying 412 00:21:08,160 --> 00:21:10,560 Speaker 2: we're going to recession. They've all changed their mind. Where 413 00:21:10,560 --> 00:21:10,840 Speaker 2: are you? 414 00:21:12,040 --> 00:21:12,560 Speaker 8: So? I think? 415 00:21:12,600 --> 00:21:15,000 Speaker 3: And I did a presentation a while ago I'd called 416 00:21:15,000 --> 00:21:18,639 Speaker 3: the US economy the polyurethane economy because of how resilient 417 00:21:18,680 --> 00:21:20,600 Speaker 3: it is, like one of those temperpedic matches, and how 418 00:21:20,640 --> 00:21:23,199 Speaker 3: resilient it is that is very hard to dent it. 419 00:21:23,600 --> 00:21:25,560 Speaker 8: And you think about I mean the economy today. 420 00:21:25,400 --> 00:21:28,800 Speaker 3: Versus twenty years ago, seventy percent consumption seventy percent services. 421 00:21:28,960 --> 00:21:30,320 Speaker 8: Think about to create a recession. 422 00:21:30,359 --> 00:21:32,879 Speaker 3: If you're seventy percent services, which are amazingly stable, they 423 00:21:32,880 --> 00:21:35,880 Speaker 3: don't go into recession. Your goods far to your economy, 424 00:21:35,880 --> 00:21:39,000 Speaker 3: which now fractioning of the economy has to really become devastated. 425 00:21:39,400 --> 00:21:42,120 Speaker 3: The other side of it, I think people misinterpret US 426 00:21:42,160 --> 00:21:44,359 Speaker 3: economy is not as interrast rate sensitive as well as 427 00:21:44,359 --> 00:21:47,200 Speaker 3: twenty thirty years ago. People have locked in their mortgages already, 428 00:21:47,480 --> 00:21:50,960 Speaker 3: the banking system runs differently, commercial real estate gets hurt, 429 00:21:51,920 --> 00:21:54,320 Speaker 3: companies have turned out their debt. They don't rely on 430 00:21:55,200 --> 00:21:56,920 Speaker 3: the front end of the yield curve like they used 431 00:21:56,960 --> 00:21:59,280 Speaker 3: to have FED funds rate. And then the last point 432 00:21:59,359 --> 00:22:02,760 Speaker 3: is the big spenders on CAPAX and US economy are 433 00:22:02,800 --> 00:22:06,920 Speaker 3: companies tech companies. They're not big borrowers. So I think 434 00:22:06,960 --> 00:22:09,960 Speaker 3: people overestimate. When the FED raisers rates this much, you 435 00:22:10,080 --> 00:22:12,960 Speaker 3: hurt parts of the economy, the regional banks, of small banks, 436 00:22:13,000 --> 00:22:15,240 Speaker 3: your commercial real estate, but the rest of the economy 437 00:22:15,280 --> 00:22:17,640 Speaker 3: is amazingly resilient to it. 438 00:22:17,680 --> 00:22:20,280 Speaker 2: So it's fascinating. I guess the answer is the question 439 00:22:20,320 --> 00:22:21,960 Speaker 2: of why so do you feel got it wrong? Is 440 00:22:22,000 --> 00:22:24,280 Speaker 2: they had the wrong model. Do we have to revise 441 00:22:24,320 --> 00:22:27,240 Speaker 2: our economic models going forward for the reasons you just identified. 442 00:22:27,240 --> 00:22:29,360 Speaker 2: It's a different economy there was twenty years. 443 00:22:29,160 --> 00:22:30,920 Speaker 3: Ago one hundred percent by the way, now it's a 444 00:22:30,920 --> 00:22:33,280 Speaker 3: different economy today. So we try and model and project 445 00:22:33,280 --> 00:22:36,040 Speaker 3: what inflation is going to look like two three years hence. 446 00:22:36,480 --> 00:22:37,680 Speaker 8: Let alone for the next year. 447 00:22:37,960 --> 00:22:40,359 Speaker 3: Think about now how the economy is evolving around AI 448 00:22:40,480 --> 00:22:44,240 Speaker 3: and productivity and how jobs are going to evolve. Very 449 00:22:44,280 --> 00:22:46,760 Speaker 3: hard to think about economies. People look at the analog 450 00:22:46,840 --> 00:22:48,680 Speaker 3: from ten years ago, twenty years ago, and what happens 451 00:22:48,720 --> 00:22:49,440 Speaker 3: when rates move? 452 00:22:49,840 --> 00:22:50,800 Speaker 8: I think you have to look. 453 00:22:50,800 --> 00:22:52,359 Speaker 3: I mean, we're trying to spend more time on as 454 00:22:52,440 --> 00:22:55,919 Speaker 3: environmental conditions that you're operating within and what impacts it 455 00:22:56,040 --> 00:22:57,840 Speaker 3: in other way, you know, you talk about we have 456 00:22:58,000 --> 00:23:00,480 Speaker 3: a need for more people the unemployed and rates this 457 00:23:00,600 --> 00:23:02,800 Speaker 3: that three and a half percent is a structural reason. 458 00:23:03,359 --> 00:23:04,920 Speaker 3: You look at and we've talked about on your show 459 00:23:04,920 --> 00:23:06,200 Speaker 3: a bunch of times. You look at the number of 460 00:23:06,240 --> 00:23:10,640 Speaker 3: people hired for healthcare, education, not interest rates sensitive. There's 461 00:23:10,680 --> 00:23:13,720 Speaker 3: a shortage leisure, hospitality, hotels, restaurants, there are shortage of 462 00:23:13,760 --> 00:23:16,280 Speaker 3: people when you have a three and a half percent unemployment. 463 00:23:16,359 --> 00:23:17,280 Speaker 8: Because it's structural. 464 00:23:17,960 --> 00:23:21,960 Speaker 3: It's pretty hard for the economy at good wages, pretty 465 00:23:21,960 --> 00:23:23,679 Speaker 3: hard for the economy to go into a deep percession, 466 00:23:23,720 --> 00:23:25,200 Speaker 3: win so much the economy's consumption. 467 00:23:25,520 --> 00:23:28,120 Speaker 2: So so let's take a look at the investment profile. 468 00:23:28,240 --> 00:23:31,920 Speaker 2: Given what you've just said, where does the ten year 469 00:23:31,960 --> 00:23:34,520 Speaker 2: want to be? Because so many investment divisions are really 470 00:23:34,600 --> 00:23:36,760 Speaker 2: keyed off of where the tenure yield is. Where does 471 00:23:36,800 --> 00:23:38,200 Speaker 2: it want to be right now? Because I hear people 472 00:23:38,200 --> 00:23:40,840 Speaker 2: saying in the mid threes, low threes. I hear people 473 00:23:40,880 --> 00:23:41,720 Speaker 2: say in the mid fours. 474 00:23:42,680 --> 00:23:45,200 Speaker 3: So you know, I think, you know, around four percent 475 00:23:45,280 --> 00:23:47,439 Speaker 3: I think is a reasonable resting place. 476 00:23:47,520 --> 00:23:48,600 Speaker 8: You know. My sense is there's a. 477 00:23:48,600 --> 00:23:51,639 Speaker 3: Couple of a couple of factors that work against one another. 478 00:23:51,640 --> 00:23:54,800 Speaker 3: First one is treasury is issuing an amazing amount of supply. 479 00:23:54,960 --> 00:23:58,400 Speaker 3: We're going through the issues and the Treasuries just announced 480 00:23:58,400 --> 00:23:58,840 Speaker 3: they're going to. 481 00:23:58,760 --> 00:23:59,399 Speaker 8: Increase the supply. 482 00:23:59,520 --> 00:24:02,159 Speaker 3: Longer on the curve, they relied on immense amounts of 483 00:24:02,200 --> 00:24:02,800 Speaker 3: treasury bills. 484 00:24:02,840 --> 00:24:04,680 Speaker 8: You're seeing it's almost almost. 485 00:24:04,359 --> 00:24:07,760 Speaker 3: Three hundred billion a week gross supply, not net, but gross. 486 00:24:07,440 --> 00:24:08,560 Speaker 8: Supply of treasure bills. 487 00:24:08,720 --> 00:24:10,760 Speaker 3: So you're gonna get more supply, so that tends to 488 00:24:10,840 --> 00:24:12,119 Speaker 3: push rates a bit higher. 489 00:24:12,480 --> 00:24:15,280 Speaker 8: However, inflation is coming down. 490 00:24:15,320 --> 00:24:16,880 Speaker 3: You look at the CPI data, and I was looking 491 00:24:16,920 --> 00:24:21,199 Speaker 3: at the three month moving average of core CPI. If 492 00:24:21,280 --> 00:24:23,400 Speaker 3: you if you strip out some of the use this 493 00:24:23,800 --> 00:24:24,800 Speaker 3: funky used car. 494 00:24:24,680 --> 00:24:26,200 Speaker 8: Stuff, is only one percent. 495 00:24:26,560 --> 00:24:28,640 Speaker 3: So now you take okay, so it's actually one point 496 00:24:28,680 --> 00:24:31,560 Speaker 3: one percent three month moving average, So you say, okay, 497 00:24:31,560 --> 00:24:34,800 Speaker 3: a tenure. Note now the real rate net of inflation, 498 00:24:35,720 --> 00:24:37,520 Speaker 3: it's not bad. I mean the level on tenure. So 499 00:24:37,600 --> 00:24:39,520 Speaker 3: I don't think we're going very far. I think the 500 00:24:39,560 --> 00:24:41,639 Speaker 3: supply could push ten years a bit higher. If you 501 00:24:41,640 --> 00:24:43,040 Speaker 3: said to me where we're going to be six months 502 00:24:43,040 --> 00:24:44,760 Speaker 3: from now, nine months, around a year from now, I 503 00:24:44,800 --> 00:24:46,920 Speaker 3: think the ten year is going to migrate lower because 504 00:24:46,960 --> 00:24:48,879 Speaker 3: if you believe that inflation is coming down, which I 505 00:24:48,920 --> 00:24:51,439 Speaker 3: think is right, then the ten years should start to 506 00:24:51,480 --> 00:24:53,320 Speaker 3: move closer to three to three and a quarter. And 507 00:24:53,359 --> 00:24:55,359 Speaker 3: I think we'll see that next year. But you know, 508 00:24:55,400 --> 00:24:58,200 Speaker 3: for the next couple of months, it's sticky at these levels. 509 00:24:58,240 --> 00:25:00,640 Speaker 2: We had so many debates about hard landing soft lending. 510 00:25:00,680 --> 00:25:02,760 Speaker 2: What kind of landing you suggest me, we may not 511 00:25:02,760 --> 00:25:05,880 Speaker 2: have it landing at all. So given that does that 512 00:25:06,040 --> 00:25:08,760 Speaker 2: change your investment outlook right now? Does it change how 513 00:25:08,840 --> 00:25:09,879 Speaker 2: you invest your money? 514 00:25:10,200 --> 00:25:11,600 Speaker 8: So I say one thing about it. 515 00:25:11,600 --> 00:25:14,720 Speaker 3: I mean, I think the economy is moderating from extraordinary 516 00:25:15,520 --> 00:25:18,680 Speaker 3: twelve point three percent nomenal GDP and twenty one seven 517 00:25:18,720 --> 00:25:21,320 Speaker 3: and change percent and twenty two that is unbelievable. I'm 518 00:25:21,320 --> 00:25:23,919 Speaker 3: not saying we can't slow a bit. And you know, 519 00:25:23,960 --> 00:25:26,760 Speaker 3: even could you have a technical recession. I just think 520 00:25:26,800 --> 00:25:28,359 Speaker 3: like you'd have to wake people up and tell them 521 00:25:28,600 --> 00:25:31,440 Speaker 3: because you're operating at such a high level in the economy. 522 00:25:31,480 --> 00:25:33,480 Speaker 3: So how do we think about it? I said, I 523 00:25:33,520 --> 00:25:35,520 Speaker 3: think there are a lot of you know, equities that 524 00:25:35,560 --> 00:25:37,760 Speaker 3: make sense today. The equity markets had a really good run. 525 00:25:38,000 --> 00:25:40,520 Speaker 3: Seven stocks, eight stocks have driven it. There are a 526 00:25:40,560 --> 00:25:42,640 Speaker 3: lot of companies if you believe the economy is stable. 527 00:25:42,680 --> 00:25:45,080 Speaker 3: You can buy a lot of businesses that traded three, 528 00:25:45,280 --> 00:25:48,320 Speaker 3: four or five times cash flow if you believe the 529 00:25:48,359 --> 00:25:52,639 Speaker 3: economy stable, autos, airlines, home builders, some of the energy 530 00:25:52,680 --> 00:25:54,800 Speaker 3: infrastructure traded. 531 00:25:54,520 --> 00:25:57,200 Speaker 8: Pretty low multiple. So I like gowning the equity market. 532 00:25:57,280 --> 00:25:58,800 Speaker 8: So I like running portfolios. 533 00:25:59,160 --> 00:26:01,920 Speaker 3: I think you have upside inequities and then you can 534 00:26:02,000 --> 00:26:04,159 Speaker 3: create amazing amounts of carry the front end I. 535 00:26:04,119 --> 00:26:05,600 Speaker 8: Can talk about the front end the yield curve. 536 00:26:06,000 --> 00:26:08,600 Speaker 3: You can buy commercial paper pine six percent if you 537 00:26:08,640 --> 00:26:11,040 Speaker 3: can create a six and then own some equity. And 538 00:26:11,080 --> 00:26:12,359 Speaker 3: by the way, I guess your point about do I 539 00:26:12,400 --> 00:26:14,000 Speaker 3: need to own a lot of ten or thirty year 540 00:26:14,040 --> 00:26:17,639 Speaker 3: treasuries that at four I don't know, not that interesting. 541 00:26:18,040 --> 00:26:19,600 Speaker 3: But I can buy a lot of front end, a 542 00:26:19,600 --> 00:26:22,080 Speaker 3: lot of yield, and then buy some equity and so 543 00:26:22,160 --> 00:26:24,520 Speaker 3: get some upside with some real income and. 544 00:26:24,560 --> 00:26:28,080 Speaker 2: The equity front Talk about the discount rate, because we're 545 00:26:28,160 --> 00:26:32,080 Speaker 2: up now north of five right. Some people think it's 546 00:26:32,080 --> 00:26:34,480 Speaker 2: going to come back down next year fairly quickly. Other 547 00:26:34,480 --> 00:26:36,880 Speaker 2: people think it may stay up there. That really affects 548 00:26:36,880 --> 00:26:38,920 Speaker 2: the value of those equities and the valuations you're talking about, 549 00:26:38,920 --> 00:26:39,960 Speaker 2: doesn't it one hundred percent? 550 00:26:40,040 --> 00:26:42,840 Speaker 3: And so, by the way, my base case is that 551 00:26:42,880 --> 00:26:46,520 Speaker 3: inflation is moderating. Those real rates we talked about should 552 00:26:46,520 --> 00:26:49,520 Speaker 3: come down with a FED that starts that is now stable, 553 00:26:49,560 --> 00:26:52,480 Speaker 3: and we'll start cutting rates. So I think the equity 554 00:26:52,480 --> 00:26:54,560 Speaker 3: market next year will get a nice boost from what 555 00:26:54,600 --> 00:26:55,240 Speaker 3: I think will be a. 556 00:26:55,160 --> 00:26:56,200 Speaker 8: Reduction of the interest rate. 557 00:26:56,320 --> 00:26:58,680 Speaker 3: By the way, credit spreads are also really tight. Companies 558 00:26:58,680 --> 00:27:02,440 Speaker 3: don't borrow if they borrow off of their spread to treasuries, 559 00:27:02,480 --> 00:27:04,840 Speaker 3: and it's they're pretty tight. So the discount rate is 560 00:27:05,240 --> 00:27:08,679 Speaker 3: it's not bad today for equities, but it is my senses, 561 00:27:08,720 --> 00:27:09,960 Speaker 3: it's going to come down from here. 562 00:27:10,080 --> 00:27:13,359 Speaker 2: So you went anticipating Fed cutting rates next year, I 563 00:27:13,359 --> 00:27:14,680 Speaker 2: mean how early and how much? 564 00:27:15,320 --> 00:27:17,439 Speaker 3: I mean, I think the FED would like to stay 565 00:27:17,440 --> 00:27:19,800 Speaker 3: on hold for a period of time. But I think 566 00:27:19,840 --> 00:27:21,880 Speaker 3: as you get into the second half of the year, 567 00:27:23,000 --> 00:27:25,959 Speaker 3: and you know, maybe earlier, if inflation accelerates quicker, you know, 568 00:27:26,040 --> 00:27:29,200 Speaker 3: can you do start to do twenty five's a meeting. 569 00:27:29,400 --> 00:27:31,199 Speaker 8: I think so. I think so. I think these are 570 00:27:31,440 --> 00:27:32,879 Speaker 8: I think these restrictive rates. 571 00:27:33,840 --> 00:27:36,040 Speaker 3: You know, my senses, I talk about your show a 572 00:27:36,080 --> 00:27:38,920 Speaker 3: lot there because of the economy is not as interest 573 00:27:38,960 --> 00:27:41,720 Speaker 3: rates sense have used to be. Those restrictive interest rates 574 00:27:41,800 --> 00:27:45,000 Speaker 3: really hurt small banks, They really hurt commercial real estate, 575 00:27:45,040 --> 00:27:47,520 Speaker 3: They hurt targeted parts of the economy which quite frankly, 576 00:27:47,560 --> 00:27:49,600 Speaker 3: I think have been overdone. And the other thing they 577 00:27:49,680 --> 00:27:52,680 Speaker 3: really hurt is the US government is running over thirty 578 00:27:52,720 --> 00:27:56,199 Speaker 3: trillion a debt. The Treasury has usually borrowed as treasury 579 00:27:56,200 --> 00:27:58,399 Speaker 3: bills at zero, with a huge part of their of 580 00:27:58,440 --> 00:28:00,560 Speaker 3: their borrowing scheme is zero. 581 00:28:00,640 --> 00:28:02,280 Speaker 8: Now it's at five and a half percent. 582 00:28:02,960 --> 00:28:06,040 Speaker 3: The debt service in this country will choke the amount 583 00:28:06,119 --> 00:28:08,840 Speaker 3: of fiscal spend that we can have in the country. 584 00:28:09,119 --> 00:28:11,479 Speaker 3: The FED needs to bring the raid down so that 585 00:28:11,560 --> 00:28:13,160 Speaker 3: we don't create too onerous a. 586 00:28:13,119 --> 00:28:14,960 Speaker 8: Problem in terms of debt service in the country. 587 00:28:15,160 --> 00:28:16,920 Speaker 2: Since we last got to talk about on Wall Street week, 588 00:28:16,920 --> 00:28:20,359 Speaker 2: you've got a new gig. It's an ETFEH tell us 589 00:28:20,400 --> 00:28:22,439 Speaker 2: about ETF and why you're doing. What's the itch that 590 00:28:22,440 --> 00:28:24,160 Speaker 2: you're trying to scratch that hasn't been scratched. 591 00:28:24,320 --> 00:28:28,120 Speaker 3: So there is I mean explosion of ETFs. People use 592 00:28:28,160 --> 00:28:30,080 Speaker 3: them in so many different ways. You can trade them 593 00:28:30,080 --> 00:28:33,520 Speaker 3: all day. They're tax efficient money ways. 594 00:28:33,760 --> 00:28:35,040 Speaker 8: People like to put them in models. 595 00:28:35,119 --> 00:28:37,040 Speaker 3: They said, I've got this ETF, they can they buy 596 00:28:37,080 --> 00:28:38,320 Speaker 3: and sell anyway. 597 00:28:38,360 --> 00:28:38,880 Speaker 8: So we've been. 598 00:28:38,800 --> 00:28:41,120 Speaker 3: Asked to do an active ETF, and so there's been 599 00:28:41,280 --> 00:28:45,320 Speaker 3: a tremendous growth of passive ETFs, both in credit and rates, 600 00:28:45,360 --> 00:28:48,320 Speaker 3: et cetera. And now you're seeing more than people want active, 601 00:28:48,400 --> 00:28:52,120 Speaker 3: so give me. In fixed income, most managers outperform indices 602 00:28:53,200 --> 00:28:55,959 Speaker 3: consistently over time for a variety of reasons. There's sixty 603 00:28:56,000 --> 00:28:59,240 Speaker 3: eight thousand fixed income securities. Compare that to the S 604 00:28:59,320 --> 00:29:02,640 Speaker 3: and P five hundred. There's so many tools we have, 605 00:29:02,800 --> 00:29:04,720 Speaker 3: and so people have asked for gosh, i'd love to 606 00:29:04,720 --> 00:29:08,840 Speaker 3: get the exposure in an ETF form. Give me something 607 00:29:08,880 --> 00:29:10,959 Speaker 3: that can get me a little bit more juice. And 608 00:29:11,000 --> 00:29:13,160 Speaker 3: so in this new one we're doing called Bink, you know, 609 00:29:13,200 --> 00:29:15,600 Speaker 3: we've got it's a seven percent yield. You know, we 610 00:29:15,760 --> 00:29:19,080 Speaker 3: manage you know, sometimes we're in securitized assets, sometimes we're 611 00:29:19,120 --> 00:29:22,520 Speaker 3: in high yield. We're moving around tactically credit investment, great 612 00:29:22,520 --> 00:29:24,520 Speaker 3: credit and to get that sort of yield and then 613 00:29:24,560 --> 00:29:28,040 Speaker 3: have somebody it's hard as an individual to buy securitized assets. 614 00:29:28,040 --> 00:29:30,880 Speaker 3: You can buy clos or commercial mortgages to many people 615 00:29:30,920 --> 00:29:33,880 Speaker 3: like evaluating the collaterals hard and so you know, we've 616 00:29:33,880 --> 00:29:37,200 Speaker 3: been doing it for a million years, and so anyway, 617 00:29:37,200 --> 00:29:39,520 Speaker 3: it's becoming really attractive and there's a lot of excitement 618 00:29:39,520 --> 00:29:40,200 Speaker 3: around it. 619 00:29:40,240 --> 00:29:42,880 Speaker 2: Thanks you so much. That is Rick Reader of Blackrock 620 00:29:45,120 --> 00:29:47,480 Speaker 2: coming up. A dollar doesn't buy what it used to. 621 00:29:47,920 --> 00:29:50,040 Speaker 2: We go through a list of how much things cost 622 00:29:50,120 --> 00:29:53,720 Speaker 2: these days, from sports teams to ups drivers to a 623 00:29:53,840 --> 00:29:54,960 Speaker 2: reservation at REOs. 624 00:29:55,560 --> 00:30:03,920 Speaker 16: That's next on Wall Street Week on Bloomberg, this is 625 00:30:04,000 --> 00:30:10,120 Speaker 16: Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 626 00:30:15,720 --> 00:30:18,000 Speaker 2: This is Wall Street Week. I'm David Weston. The world 627 00:30:18,000 --> 00:30:21,640 Speaker 2: of college football continues to reinvent itself as this week, 628 00:30:21,680 --> 00:30:25,640 Speaker 2: four more schools USC, UCLA, Washington, and Oregon left the 629 00:30:25,640 --> 00:30:28,400 Speaker 2: PAC twelve conference to join the Big Ten, rounding that 630 00:30:28,640 --> 00:30:31,880 Speaker 2: ten number up to an even eighteen. To explain what's 631 00:30:31,920 --> 00:30:34,480 Speaker 2: going on, Welcome out George Pine, founder and CEO of 632 00:30:34,560 --> 00:30:36,880 Speaker 2: Ruined Capital. Where does this all end? We're gonna end 633 00:30:36,920 --> 00:30:39,160 Speaker 2: up with two super conferences as three super conferences. 634 00:30:39,160 --> 00:30:43,080 Speaker 5: I don't know, you do feel more pressure for consolidation. 635 00:30:43,520 --> 00:30:46,480 Speaker 5: I think what's unusual. First of all, college football is 636 00:30:46,480 --> 00:30:49,680 Speaker 5: the number two sport in America, and it's a big business. 637 00:30:49,680 --> 00:30:53,960 Speaker 5: It's a multifaceted and it's run by a very fragmented industry, 638 00:30:54,360 --> 00:30:56,760 Speaker 5: and so it's a bit unwielding, and I think what 639 00:30:56,840 --> 00:31:00,360 Speaker 5: you see is that the suppliers and TV networks have 640 00:31:00,440 --> 00:31:03,480 Speaker 5: a bigger say because of the fragmentation and the lack 641 00:31:03,520 --> 00:31:07,040 Speaker 5: of really a unified vision or leadership in college sports. 642 00:31:07,080 --> 00:31:09,040 Speaker 5: So therefore it's a little bit of the wild West. 643 00:31:09,240 --> 00:31:11,479 Speaker 2: Who is running it? Is it college presidents? Is it 644 00:31:11,480 --> 00:31:15,560 Speaker 2: ourthletic directors. Is it the television providers? Is it the 645 00:31:15,640 --> 00:31:16,840 Speaker 2: Congress who's running it? 646 00:31:16,720 --> 00:31:20,840 Speaker 5: It's really the college presidents of the individual universities. But 647 00:31:20,960 --> 00:31:25,200 Speaker 5: as you've seen, they're not always loyal either. USCUSLA leaving 648 00:31:25,240 --> 00:31:27,640 Speaker 5: the packs well a conference that has been around since 649 00:31:28,600 --> 00:31:33,640 Speaker 5: nineteen fifteen, right, and so it's very fragmented and self interested. 650 00:31:33,920 --> 00:31:37,120 Speaker 5: There isn't a unifying group that looks out for college 651 00:31:37,120 --> 00:31:40,200 Speaker 5: sports and it has the ability to lead college football. 652 00:31:40,440 --> 00:31:42,120 Speaker 2: George, great, you have at Walshert week. Thank you so 653 00:31:42,200 --> 00:31:45,680 Speaker 2: much for being here. That's George Pine a ruined capital. Finally, 654 00:31:45,840 --> 00:31:49,040 Speaker 2: one more thought. Money may not buy you happiness, but 655 00:31:49,120 --> 00:31:51,920 Speaker 2: at this point, what can it buy you? The CPI 656 00:31:52,040 --> 00:31:55,080 Speaker 2: this week confirmed that inflation is slowing in the United States, 657 00:31:55,120 --> 00:31:57,880 Speaker 2: but it's still pretty high, which got us wondering what 658 00:31:58,000 --> 00:32:01,360 Speaker 2: money can still buy you in this time of higher prices. 659 00:32:01,840 --> 00:32:03,959 Speaker 2: We learned this week that it can't buy you a 660 00:32:04,000 --> 00:32:07,800 Speaker 2: fifth World Championship in women's soccer or football as the 661 00:32:07,800 --> 00:32:09,960 Speaker 2: rest of the world calls it, when the US team 662 00:32:10,080 --> 00:32:13,080 Speaker 2: lost to Sweden, but will still get a pay raise 663 00:32:13,160 --> 00:32:15,680 Speaker 2: because of its agreement to split the pot with the. 664 00:32:15,640 --> 00:32:18,760 Speaker 14: Men Women's World Cup is performing quite well. We're starting 665 00:32:18,760 --> 00:32:21,000 Speaker 14: to see increasing. 666 00:32:20,560 --> 00:32:24,280 Speaker 17: Traction, double digit traction as the tournament progresses. 667 00:32:24,480 --> 00:32:27,320 Speaker 2: Enough money will buy you an NFL team, but the 668 00:32:27,440 --> 00:32:30,520 Speaker 2: price is going up, with estimates out this week saying 669 00:32:30,560 --> 00:32:34,000 Speaker 2: it would take a cool nine point two billion dollars 670 00:32:34,200 --> 00:32:36,640 Speaker 2: to get the Dallas Cowboys. That's if Jerry Jones were 671 00:32:36,640 --> 00:32:39,040 Speaker 2: willing to sell it, and that's despite the fact that 672 00:32:39,120 --> 00:32:42,360 Speaker 2: they haven't won a Super Bowl since nineteen ninety six. 673 00:32:43,080 --> 00:32:45,480 Speaker 2: We also learned that enough money about one hundred and 674 00:32:45,520 --> 00:32:48,960 Speaker 2: seventy thousand dollars including benefits, can buy you a UPS 675 00:32:49,040 --> 00:32:51,520 Speaker 2: driver for a year under the new contract with the 676 00:32:51,520 --> 00:32:53,760 Speaker 2: team Stirs, though it may be coming out of the 677 00:32:53,800 --> 00:32:55,840 Speaker 2: pockets of UPS shareholders. 678 00:32:56,120 --> 00:32:58,960 Speaker 17: The difference is that UPS has been negotiating this contract, 679 00:32:58,960 --> 00:33:02,080 Speaker 17: which has been a big over The cost inflation from 680 00:33:02,160 --> 00:33:04,520 Speaker 17: the contract in year one is quite high. 681 00:33:04,560 --> 00:33:06,600 Speaker 8: We're estimating mid high single. 682 00:33:06,360 --> 00:33:09,480 Speaker 17: Digits, whereas Fatex is now transitioning to more of a 683 00:33:09,600 --> 00:33:13,040 Speaker 17: structuring of their ground in express businesses and their costs 684 00:33:13,080 --> 00:33:14,240 Speaker 17: or moving the other way around. 685 00:33:14,640 --> 00:33:16,960 Speaker 2: About two or three thousand dollars will buy you a 686 00:33:17,080 --> 00:33:20,360 Speaker 2: quiet luxury code from Norwegian wool, so you can look 687 00:33:20,600 --> 00:33:23,720 Speaker 2: just like one of the roy family on succession. 688 00:33:24,280 --> 00:33:26,360 Speaker 18: So when you talk about quiet luxury, you know, I 689 00:33:26,400 --> 00:33:28,240 Speaker 18: don't think that's anything all that new. I think most 690 00:33:28,240 --> 00:33:30,520 Speaker 18: of us and most people in the audience who really 691 00:33:30,680 --> 00:33:34,000 Speaker 18: have their own story to tell, they want their brand 692 00:33:34,040 --> 00:33:36,720 Speaker 18: to be the one that's being warned, not another company's brand. 693 00:33:36,920 --> 00:33:40,120 Speaker 2: For something between two and twenty five million dollars, you 694 00:33:40,200 --> 00:33:42,800 Speaker 2: can get a luxury condo at the Cortland in West 695 00:33:42,920 --> 00:33:45,720 Speaker 2: Chelsea and Manhattan and they will throw in not one, 696 00:33:45,920 --> 00:33:49,240 Speaker 2: but two pools, one for swimming laps and one for 697 00:33:49,440 --> 00:33:52,920 Speaker 2: just splashing around. No amount of money will get you 698 00:33:52,960 --> 00:33:56,400 Speaker 2: a reservation at exclusive New York Italian restaurant REOs. For that, 699 00:33:56,760 --> 00:33:58,320 Speaker 2: you need to be one of the regulars who own 700 00:33:58,400 --> 00:34:01,840 Speaker 2: their own tables pretty much in perpetuity. But if you 701 00:34:01,840 --> 00:34:04,120 Speaker 2: can't get someone to take you as their guests, you 702 00:34:04,160 --> 00:34:07,440 Speaker 2: can always just buy a jar of Rayo's tasty pasta 703 00:34:07,440 --> 00:34:10,360 Speaker 2: sauce to enjoy it home and Campbell's Soup this week 704 00:34:10,400 --> 00:34:12,680 Speaker 2: agreed to pay two point seven billion dollars for the 705 00:34:12,680 --> 00:34:16,040 Speaker 2: privilege of bringing you that Rao sauce, and this year 706 00:34:16,120 --> 00:34:18,920 Speaker 2: Steve Cohen is proving there is one more thing you 707 00:34:19,000 --> 00:34:21,520 Speaker 2: cannot buy, no matter how much you're willing to pay, 708 00:34:22,000 --> 00:34:25,800 Speaker 2: a championship baseball team, as his record breaking spending on 709 00:34:25,840 --> 00:34:28,600 Speaker 2: the New York Mets has taken him and his team 710 00:34:28,840 --> 00:34:29,720 Speaker 2: nowhere fast. 711 00:34:30,239 --> 00:34:33,000 Speaker 14: Free agency is really expensive, okay. If you want to 712 00:34:33,000 --> 00:34:36,200 Speaker 14: feel a good team from free agency, that's what it costs. 713 00:34:36,280 --> 00:34:38,359 Speaker 6: If you want to field, you know. 714 00:34:38,480 --> 00:34:42,120 Speaker 14: Fill all the positions with hopefully quality players, okay. And 715 00:34:42,239 --> 00:34:45,719 Speaker 14: sometimes you can get it right, and sometimes you know, 716 00:34:46,800 --> 00:34:47,560 Speaker 14: things go wrong. 717 00:34:48,160 --> 00:34:50,680 Speaker 2: I'll say so, that does it for this episode of 718 00:34:50,719 --> 00:34:53,520 Speaker 2: Wall Street Week. I'm David Weston. This is Bloomberg. See 719 00:34:53,520 --> 00:34:54,040 Speaker 2: you next week.