1 00:00:00,120 --> 00:00:13,200 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 2 00:00:13,240 --> 00:00:17,560 Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern 3 00:00:17,680 --> 00:00:21,880 Speaker 1: on Applecarplayer, Android Auto with the Bloomberg Business App. Listen 4 00:00:21,920 --> 00:00:25,000 Speaker 1: on demand wherever you get your podcasts, or watch us 5 00:00:25,120 --> 00:00:26,239 Speaker 1: live on YouTube. 6 00:00:26,640 --> 00:00:27,280 Speaker 2: This is a join. 7 00:00:27,360 --> 00:00:30,520 Speaker 3: Nick Kolis joins us right now, thrilled that it could 8 00:00:30,560 --> 00:00:31,760 Speaker 3: be with us. First of all, let me tell you 9 00:00:31,800 --> 00:00:34,040 Speaker 3: about the jobs report coming up on Friday. It's at 10 00:00:34,040 --> 00:00:36,680 Speaker 3: eight thirty, and that means here at a thirty on 11 00:00:36,720 --> 00:00:39,920 Speaker 3: our economic indicators. They're brought to you by Commonwealth Join. 12 00:00:40,000 --> 00:00:44,159 Speaker 3: Over two thousand independent financial advisors are taking control of 13 00:00:44,200 --> 00:00:48,800 Speaker 3: their growth with advisor centric support, future ready technologies. Grow 14 00:00:48,880 --> 00:00:52,720 Speaker 3: on your own terms with a partner dedicated to your success. 15 00:00:52,760 --> 00:00:56,920 Speaker 3: Go to Commonwealth dot com to learn how we got 16 00:00:56,960 --> 00:00:59,120 Speaker 3: to cover up something first. I mean people go to 17 00:00:59,160 --> 00:01:02,800 Speaker 3: way to school and you know, they, you know, like 18 00:01:02,800 --> 00:01:05,960 Speaker 3: they they're like it's good when there's other schools around. 19 00:01:06,640 --> 00:01:09,560 Speaker 3: So if you go to Haverford like you did, and 20 00:01:09,600 --> 00:01:15,800 Speaker 3: you're studying absolutely bizarre majors like Nick Coolis, did you 21 00:01:16,040 --> 00:01:19,959 Speaker 3: end up You're walking the two miles Turnbridge Road to 22 00:01:20,000 --> 00:01:23,679 Speaker 3: College Avenue to Haverford Road. You're going north, deep north 23 00:01:23,720 --> 00:01:26,800 Speaker 3: to Brynmar to studies. Did you do most of you 24 00:01:26,880 --> 00:01:30,000 Speaker 3: studying at Brynmar? Yes, that was where I majored Seven 25 00:01:30,120 --> 00:01:30,839 Speaker 3: Sisters School. 26 00:01:31,000 --> 00:01:34,280 Speaker 4: They had the best archaeology undergrad program in the country 27 00:01:34,319 --> 00:01:36,440 Speaker 4: when I was applying the schools, and so I studied 28 00:01:36,440 --> 00:01:39,080 Speaker 4: with the very best people in the field for four years. 29 00:01:39,080 --> 00:01:41,960 Speaker 5: It was awesome women there, it is there. 30 00:01:42,240 --> 00:01:45,280 Speaker 4: Yes, Haverford had gone co ed three years before I 31 00:01:45,280 --> 00:01:47,360 Speaker 4: got there. I saw the last all male class graduates, 32 00:01:47,920 --> 00:01:51,760 Speaker 4: and then Brynmar was was single sex obviously, and so 33 00:01:51,880 --> 00:01:53,320 Speaker 4: it was an interesting dynamic. 34 00:01:53,440 --> 00:01:55,680 Speaker 3: I'll see what you did there, Okay, I mean it's 35 00:01:55,360 --> 00:01:58,800 Speaker 3: a it's a plethora of people. You're Jody Lurie. You 36 00:01:58,840 --> 00:02:02,120 Speaker 3: know Britmar Grey shows off sometimes without the horse. 37 00:02:02,440 --> 00:02:04,720 Speaker 2: Yep. But this is a Philadelphia thing. 38 00:02:04,720 --> 00:02:08,639 Speaker 3: Do you have any perspective on the Pennsylvania vote coming up? 39 00:02:09,040 --> 00:02:12,120 Speaker 3: The axis of Philadelphia out to Pittsburgh havn't been a 40 00:02:12,160 --> 00:02:14,280 Speaker 3: mainline academic. 41 00:02:14,240 --> 00:02:17,000 Speaker 4: Mainline is sort of like Manhattan. It is its own 42 00:02:17,080 --> 00:02:18,359 Speaker 4: little isolated world. 43 00:02:18,480 --> 00:02:22,680 Speaker 3: So no, do you think it's definitive within the election. 44 00:02:22,840 --> 00:02:24,840 Speaker 3: I don't hear a lot of people talking about it. 45 00:02:25,120 --> 00:02:28,360 Speaker 2: No, no, it's okay. Let's go to your research on 46 00:02:28,400 --> 00:02:28,919 Speaker 2: Nick Coolas. 47 00:02:28,919 --> 00:02:31,040 Speaker 3: Of course, we protect the copyright of all I guess 48 00:02:31,080 --> 00:02:34,160 Speaker 3: get it from Nick Colis at Data Trek Research. You 49 00:02:34,200 --> 00:02:39,680 Speaker 3: have a stunning industry sector chart that in red shows 50 00:02:39,720 --> 00:02:44,160 Speaker 3: you the max overweight of technology. What does Nick Colis 51 00:02:44,160 --> 00:02:47,800 Speaker 3: do with the reality of a persistent tech overweight. 52 00:02:48,240 --> 00:02:50,560 Speaker 4: Yes, it is dramatic, and it's obviously we're talking about 53 00:02:50,560 --> 00:02:53,160 Speaker 4: the SP five hundred versus anything else, any other index 54 00:02:53,200 --> 00:02:57,760 Speaker 4: anywhere in the world, MSCI Europe, Japan, Emerging Markets, everything. 55 00:02:58,800 --> 00:03:01,839 Speaker 4: Tech is a heavyweight in the US more than anyplace else. 56 00:03:01,880 --> 00:03:03,760 Speaker 4: And the bottom line is you have to live with it. 57 00:03:04,120 --> 00:03:06,680 Speaker 4: And there's a reason why these companies have gotten so big. 58 00:03:06,760 --> 00:03:10,720 Speaker 4: They are disruptive innovators at scale, and they own most 59 00:03:10,720 --> 00:03:13,400 Speaker 4: of the Internet, and it's really hard to back away 60 00:03:13,400 --> 00:03:15,720 Speaker 4: from that. Here in the US we talk about it 61 00:03:15,720 --> 00:03:17,760 Speaker 4: a lot as a negative. When I visit clients in Europe, 62 00:03:17,880 --> 00:03:21,080 Speaker 4: everybody resolutely thinks it's a positive, and they think, thank 63 00:03:21,120 --> 00:03:23,400 Speaker 4: God for US equities, because if there weren't for the 64 00:03:23,480 --> 00:03:26,400 Speaker 4: s people five hundred, I'd be stuck owning MSCI Europe 65 00:03:26,600 --> 00:03:29,720 Speaker 4: earning five to eight percent instead of owning the US, 66 00:03:29,760 --> 00:03:32,560 Speaker 4: which is compounding at thirteen. So we think of it 67 00:03:32,560 --> 00:03:34,920 Speaker 4: as a problem here, nobody else sins it's a problem. 68 00:03:35,000 --> 00:03:37,600 Speaker 5: And it's funny because my personal opinion is one of 69 00:03:37,600 --> 00:03:39,600 Speaker 5: the reasons we have such a robust tech business is 70 00:03:39,600 --> 00:03:43,040 Speaker 5: because of the government. The government has historically taken a 71 00:03:43,120 --> 00:03:46,640 Speaker 5: light touch to regulating technology, which I in my opinion, 72 00:03:46,640 --> 00:03:49,840 Speaker 5: has allowed silicon value to become Silicon Valley, whereas in Europe, 73 00:03:49,920 --> 00:03:53,160 Speaker 5: I've got SAP, I've got ASML, and I think that's 74 00:03:53,360 --> 00:03:59,600 Speaker 5: kind of it. Okay, So we'll see how that plays 75 00:03:59,600 --> 00:04:01,880 Speaker 5: out going for You've got something in your note which 76 00:04:01,880 --> 00:04:05,400 Speaker 5: Tom reference offshore gambling odds on the presidential elections. 77 00:04:06,040 --> 00:04:06,880 Speaker 2: Are they important? 78 00:04:07,080 --> 00:04:08,200 Speaker 5: Are they impacting the market? 79 00:04:08,480 --> 00:04:08,960 Speaker 2: It's funny. 80 00:04:08,960 --> 00:04:12,160 Speaker 4: I've followed prediction markets for years back to predict it, 81 00:04:12,280 --> 00:04:16,240 Speaker 4: some of the Iowa original Iowa analysis, and I've never 82 00:04:16,279 --> 00:04:18,599 Speaker 4: seen as much interest in this as right now in 83 00:04:18,640 --> 00:04:21,640 Speaker 4: this election. The prediction markets, the bank markets are really 84 00:04:21,680 --> 00:04:25,640 Speaker 4: blown up, and I wonder how isolated or insulated they 85 00:04:25,640 --> 00:04:28,200 Speaker 4: are from influence from people who know that they are 86 00:04:28,200 --> 00:04:29,560 Speaker 4: now affecting capital markets. 87 00:04:29,640 --> 00:04:32,680 Speaker 3: Well, there's people putting gazillions of dollar trades into one 88 00:04:32,720 --> 00:04:35,359 Speaker 3: of the predicted markets, Nick Coleas, is it you? 89 00:04:36,480 --> 00:04:40,040 Speaker 4: Sadly it is not me. Polymarket is the big market 90 00:04:40,080 --> 00:04:42,440 Speaker 4: for that. And I think there's been reports of a 91 00:04:42,480 --> 00:04:46,000 Speaker 4: whale buying between thirty and forty million dollars or Trump trades. 92 00:04:46,360 --> 00:04:50,400 Speaker 4: And evidently he's a sophisticated French investor, French trader. And 93 00:04:50,520 --> 00:04:52,960 Speaker 4: I've wondered, and I've written this, I wonder how much 94 00:04:53,040 --> 00:04:57,120 Speaker 4: perhaps people are influencing the Trump contract because they know 95 00:04:57,120 --> 00:04:59,920 Speaker 4: it spills over and to pay so and bank stock 96 00:05:00,240 --> 00:05:02,640 Speaker 4: and the Yell curve and the Lolong end of the 97 00:05:02,680 --> 00:05:05,719 Speaker 4: Yuell curve. I wonder how accurate prediction markets will be 98 00:05:05,800 --> 00:05:06,920 Speaker 4: now that they're hooked up to the rest of the 99 00:05:06,920 --> 00:05:07,640 Speaker 4: financial system. 100 00:05:07,760 --> 00:05:08,159 Speaker 2: Interesting. 101 00:05:08,200 --> 00:05:12,160 Speaker 5: So, I mean, as an investor, how do you think 102 00:05:12,200 --> 00:05:15,560 Speaker 5: about this US election? It feels kind of binary a 103 00:05:15,600 --> 00:05:18,080 Speaker 5: little bit. There's I mean, depending on who wins the election, 104 00:05:18,920 --> 00:05:22,000 Speaker 5: there's different policies there. And is that factoring into your 105 00:05:22,000 --> 00:05:23,120 Speaker 5: investment outlook, the. 106 00:05:23,040 --> 00:05:25,159 Speaker 4: Way we described as the clients was there's a very 107 00:05:25,200 --> 00:05:27,920 Speaker 4: clear set of Trump trades because we saw what happened 108 00:05:27,920 --> 00:05:30,520 Speaker 4: in the market after he won in twenty sixteen. Yell 109 00:05:30,560 --> 00:05:34,440 Speaker 4: curve backed up, financials ripped energy ripped. It's a very 110 00:05:34,440 --> 00:05:37,000 Speaker 4: clear trade, and it's kind of happening right now. There's 111 00:05:37,080 --> 00:05:40,960 Speaker 4: not as clear a Harris or Biden trade because when 112 00:05:41,040 --> 00:05:42,840 Speaker 4: Biden was elected in twenty twenty, we're in the middle 113 00:05:42,839 --> 00:05:45,320 Speaker 4: of the pandemic. The vaccines were rolling out in between 114 00:05:45,360 --> 00:05:47,680 Speaker 4: election day and the rest of the year. There's no 115 00:05:47,800 --> 00:05:50,560 Speaker 4: clear Harris trade, right but there is a clear Trump trade, 116 00:05:50,560 --> 00:05:53,359 Speaker 4: which I think has forced people to say, Okay, at 117 00:05:53,440 --> 00:05:55,520 Speaker 4: least we know what to do if he wins. And 118 00:05:55,560 --> 00:05:57,719 Speaker 4: that's why they've been working at Trump trade because there's 119 00:05:57,720 --> 00:05:59,760 Speaker 4: some clarity there versus no clarity of Harris. 120 00:06:00,080 --> 00:06:00,920 Speaker 2: What are you doing? 121 00:06:01,000 --> 00:06:06,160 Speaker 3: What is the Nick Cholis action to invest new money 122 00:06:06,320 --> 00:06:09,440 Speaker 3: in the stock market? Looking out six months, looking out 123 00:06:09,480 --> 00:06:09,920 Speaker 3: a year. 124 00:06:09,880 --> 00:06:10,400 Speaker 2: Two years. 125 00:06:10,560 --> 00:06:12,240 Speaker 4: Yeah, the way we're looking at it is, let's sort 126 00:06:12,240 --> 00:06:14,160 Speaker 4: of get past the election. So we're talking about, like 127 00:06:14,200 --> 00:06:16,400 Speaker 4: I said, a one to two year timeframe, and there 128 00:06:16,440 --> 00:06:18,000 Speaker 4: the playbook is pretty straightforward. 129 00:06:18,000 --> 00:06:18,440 Speaker 2: For US. 130 00:06:18,680 --> 00:06:22,200 Speaker 4: It's long US equities, it's small caps for a trade, 131 00:06:22,520 --> 00:06:28,000 Speaker 4: it's financials, it's industrials. But really be very careful with Europe, Japan, 132 00:06:28,160 --> 00:06:30,359 Speaker 4: and em because aside from China, there's not a lot 133 00:06:30,440 --> 00:06:31,120 Speaker 4: good going on there. 134 00:06:31,400 --> 00:06:31,800 Speaker 2: Nick you. 135 00:06:31,800 --> 00:06:33,760 Speaker 3: You and I have talked about this before. They're the 136 00:06:33,839 --> 00:06:38,159 Speaker 3: brats out in Silicon Valley. Everything's great. They got ping pong. 137 00:06:38,480 --> 00:06:40,080 Speaker 2: You know what are the football They. 138 00:06:40,000 --> 00:06:43,719 Speaker 3: Got foosball machines in the lobby. Data Truk doesn't have that, folks. 139 00:06:43,800 --> 00:06:45,800 Speaker 3: And all of a sudden they've grown up. Thank you, 140 00:06:45,880 --> 00:06:50,920 Speaker 3: mister Zuckerberg. And we saw yesterday with Google margins coming 141 00:06:50,960 --> 00:06:55,039 Speaker 3: in count excuse me, folks, and gasp went off. The 142 00:06:55,040 --> 00:06:58,440 Speaker 3: plague headcount coming in as well. There's a new sobriety 143 00:06:58,520 --> 00:07:00,920 Speaker 3: in tech. Can you invest in that new sobriety? 144 00:07:01,160 --> 00:07:03,480 Speaker 4: I think it is certainly helpful and improved return on capital, 145 00:07:03,520 --> 00:07:05,960 Speaker 4: It improves margins, It shows that there's some grown ups 146 00:07:06,000 --> 00:07:08,280 Speaker 4: in the room with some discipline, and that's great. But 147 00:07:08,360 --> 00:07:11,600 Speaker 4: ultimately you're buying tech for jen Ai and for the 148 00:07:11,640 --> 00:07:14,320 Speaker 4: next level of autonomous driving and a whole bunch of 149 00:07:14,320 --> 00:07:17,920 Speaker 4: other things. The only thing the market consistently gets wrong 150 00:07:18,480 --> 00:07:21,600 Speaker 4: in any sector is in technology because it's so hard 151 00:07:21,640 --> 00:07:24,000 Speaker 4: to predict the future of technology. So if you look 152 00:07:24,000 --> 00:07:26,960 Speaker 4: at ten year returns, tech has it over everything by 153 00:07:27,000 --> 00:07:30,120 Speaker 4: a wide margin because the market doesn't know what's coming next, 154 00:07:30,120 --> 00:07:31,600 Speaker 4: and every other sector it's a lot harder. 155 00:07:32,560 --> 00:07:34,840 Speaker 5: I've got a FED that's cutting rates. They cut initially 156 00:07:34,920 --> 00:07:38,160 Speaker 5: by fifty basis points. Yet my two year treasury in 157 00:07:38,280 --> 00:07:40,240 Speaker 5: four point one four percent. What happened there? I mean, 158 00:07:40,280 --> 00:07:41,920 Speaker 5: I'm an equity guy, so I have no idea what's 159 00:07:41,960 --> 00:07:42,280 Speaker 5: going on? 160 00:07:42,640 --> 00:07:45,840 Speaker 4: Yeah, the issue is economic growth picked up and it 161 00:07:45,960 --> 00:07:48,040 Speaker 4: still remains strong. We see what with the ADP numbers. 162 00:07:48,040 --> 00:07:50,640 Speaker 4: We see it with the GDP numbers, even though they're 163 00:07:50,640 --> 00:07:53,040 Speaker 4: a little bit light versus expectations are still very robust. 164 00:07:53,480 --> 00:07:57,080 Speaker 3: Let's review that three percent two point nine percent was 165 00:07:57,120 --> 00:07:59,760 Speaker 3: a survey. It comes in two point eight percent, and 166 00:07:59,760 --> 00:08:01,680 Speaker 3: I'm looking at Paul. It's like a big red light 167 00:08:01,720 --> 00:08:07,840 Speaker 3: going on personal consumption three point seven percent most in 168 00:08:07,840 --> 00:08:10,320 Speaker 3: the old days, that's a boom and Coonamy Right, Nick. 169 00:08:10,360 --> 00:08:12,320 Speaker 4: Yes, I mean this is one of those what else 170 00:08:12,360 --> 00:08:14,960 Speaker 4: do you need to know? Kind of reports. You look 171 00:08:15,000 --> 00:08:16,880 Speaker 4: at this and say, fine, I know everything I need 172 00:08:16,920 --> 00:08:18,119 Speaker 4: to know for the next ninety days. 173 00:08:18,960 --> 00:08:20,800 Speaker 5: So what are you doing. I guess in the near 174 00:08:21,640 --> 00:08:24,680 Speaker 5: for the next week, or you're telling clients just de 175 00:08:24,880 --> 00:08:26,480 Speaker 5: risk to the extent you can de risk until we 176 00:08:26,520 --> 00:08:28,080 Speaker 5: figure out what's going to happen in a week. 177 00:08:28,240 --> 00:08:29,960 Speaker 4: We try very hard not to play the game that 178 00:08:30,000 --> 00:08:33,560 Speaker 4: way because some of our clients are traders. My background 179 00:08:33,600 --> 00:08:36,280 Speaker 4: is some degree in trading, so we are telling them, okay, 180 00:08:36,320 --> 00:08:38,320 Speaker 4: this is why yields it backed up, and the financials 181 00:08:38,320 --> 00:08:39,880 Speaker 4: have worked, that energy has worked. So if you're along 182 00:08:39,960 --> 00:08:42,880 Speaker 4: those trades lightened up because who knows. But aside from that, 183 00:08:42,880 --> 00:08:45,000 Speaker 4: we try very hard to say, look, ultimately, like the 184 00:08:45,080 --> 00:08:48,280 Speaker 4: Larry Summers quote is right, Europe's and museum Japan's are 185 00:08:48,320 --> 00:08:52,000 Speaker 4: nursing home, China is a prison, and the US he 186 00:08:52,040 --> 00:08:54,280 Speaker 4: didn't say this, but this is my addendum. The US 187 00:08:54,320 --> 00:09:01,960 Speaker 4: is a business. Larry Summers, Europe, muse, Japan's a nursing home, 188 00:09:02,320 --> 00:09:06,000 Speaker 4: China's a prison. And my addendum to it is America 189 00:09:06,120 --> 00:09:09,040 Speaker 4: is a business. And the reason that American markets work 190 00:09:09,080 --> 00:09:12,560 Speaker 4: better than others is simply because they overwhelm the political side. 191 00:09:12,720 --> 00:09:17,400 Speaker 3: Twenty seconds near Eastern archaeology, can there be a new Syria? 192 00:09:18,800 --> 00:09:19,439 Speaker 6: Ooh? 193 00:09:20,160 --> 00:09:22,280 Speaker 4: I think what archaeologies haven't win anything else is that 194 00:09:22,360 --> 00:09:25,320 Speaker 4: empires rise and fall, but they're very unpredictable, and you 195 00:09:25,360 --> 00:09:27,800 Speaker 4: can have empires that go two thousand years, like Egypt. 196 00:09:28,320 --> 00:09:30,760 Speaker 4: So it's fascile to say, Okay, the Rooman empire only 197 00:09:30,840 --> 00:09:33,360 Speaker 4: lasts a couple hundred years. There are examples of things 198 00:09:33,440 --> 00:09:35,040 Speaker 4: lasting a really long time. 199 00:09:35,240 --> 00:09:39,160 Speaker 3: Nick Cools, including Bloomberg Surveillance. Nick Cools, thank you so much. 200 00:09:39,559 --> 00:09:41,600 Speaker 2: Data tech research just really really important. 201 00:09:41,640 --> 00:09:48,520 Speaker 3: We'll feature him in single Best Idea our podcasts out today. 202 00:09:50,800 --> 00:09:54,640 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us Live 203 00:09:54,760 --> 00:09:58,080 Speaker 1: weekday afternoons from seven to ten am. Easter Listen on 204 00:09:58,120 --> 00:10:01,360 Speaker 1: Apple car Play and Androt Auto with a Bloomberg business app, 205 00:10:01,480 --> 00:10:03,280 Speaker 1: or what's just live on YouTube. 206 00:10:03,400 --> 00:10:08,560 Speaker 3: I'm looking at Google pre pandemic thirty one billion in 207 00:10:08,640 --> 00:10:11,520 Speaker 3: free cash flow. We got a model here many if 208 00:10:11,600 --> 00:10:14,320 Speaker 3: Singh's got a model of seventy six billion, it's like 209 00:10:14,360 --> 00:10:17,400 Speaker 3: a double plus yea coming out of the pandemic. Are 210 00:10:17,400 --> 00:10:20,679 Speaker 3: they hiding how successful they are? Is the bottom line? 211 00:10:20,760 --> 00:10:23,719 Speaker 3: We're gonna see it with Microsoft today, Apple tomorrow. They 212 00:10:23,760 --> 00:10:28,200 Speaker 3: really don't want Washington to know how big and how 213 00:10:28,240 --> 00:10:29,600 Speaker 3: fast they're growing, do they? 214 00:10:29,880 --> 00:10:30,080 Speaker 2: Yeah? 215 00:10:30,120 --> 00:10:32,679 Speaker 7: And they know how to turn on the dials when 216 00:10:32,720 --> 00:10:34,960 Speaker 7: it comes to top line or free cash flow. And 217 00:10:35,000 --> 00:10:37,520 Speaker 7: that's what they showed last night is the. 218 00:10:37,559 --> 00:10:41,000 Speaker 3: Merging build out versus employee headcout was an active. 219 00:10:40,760 --> 00:10:43,600 Speaker 7: Gay, Yeah, I mean all the new In fact, twenty 220 00:10:43,640 --> 00:10:47,000 Speaker 7: five percent of new code is written by AI. For 221 00:10:47,120 --> 00:10:50,480 Speaker 7: a company of Google scale to say, twenty five percent 222 00:10:50,520 --> 00:10:53,520 Speaker 7: of new code is written by AI. That just goes 223 00:10:53,559 --> 00:10:56,480 Speaker 7: to show how far ahead they are when it comes 224 00:10:56,480 --> 00:10:59,640 Speaker 7: to deploying these technologies, and then what it means for 225 00:10:59,679 --> 00:11:03,120 Speaker 7: the head count going forward. I mean, these companies will 226 00:11:03,200 --> 00:11:05,840 Speaker 7: not grow headcount at least in the next two three. 227 00:11:05,720 --> 00:11:08,240 Speaker 3: So you know, we hear anecdotally. Paul and I read 228 00:11:08,320 --> 00:11:09,959 Speaker 3: on the weekend. Paul's at the beach, He's got a 229 00:11:10,120 --> 00:11:13,280 Speaker 3: vest bice're having the morning coffee and we're reading the 230 00:11:13,400 --> 00:11:16,160 Speaker 3: tech and software engineers or having trouble getting jobs. 231 00:11:16,480 --> 00:11:18,000 Speaker 2: Can you say it's because of AI? 232 00:11:18,640 --> 00:11:21,520 Speaker 7: They will certainly be more efficient and there won't be 233 00:11:21,600 --> 00:11:24,520 Speaker 7: as many jobs at the same time. I think what 234 00:11:24,600 --> 00:11:27,720 Speaker 7: he called that was everyone is more productive when it 235 00:11:27,760 --> 00:11:31,120 Speaker 7: comes to writing code as a result of this, And yes, 236 00:11:31,240 --> 00:11:35,520 Speaker 7: that translates into some jobs changing because of you know, 237 00:11:35,559 --> 00:11:38,880 Speaker 7: the dynamic that code can be completed by AI system. 238 00:11:39,520 --> 00:11:43,920 Speaker 5: I think code can do like newscasts John Tucker's jobs AI. 239 00:11:45,320 --> 00:11:46,600 Speaker 4: We tried that in the. 240 00:11:46,559 --> 00:11:48,680 Speaker 2: Old building or some version of it, and it was 241 00:11:48,720 --> 00:11:49,800 Speaker 2: just as a disaster. 242 00:11:50,040 --> 00:11:53,600 Speaker 5: Man, we talked about Alphabet. It's still the search business. 243 00:11:53,760 --> 00:11:56,360 Speaker 5: And I think I'm looking at the stock it's only 244 00:11:56,440 --> 00:11:58,360 Speaker 5: up twenty percent year to date because I think some 245 00:11:58,400 --> 00:12:02,000 Speaker 5: investors are concerned about the core search business and the 246 00:12:02,040 --> 00:12:04,559 Speaker 5: threat from AI. What did you hear last night from 247 00:12:04,559 --> 00:12:05,840 Speaker 5: the company about that issue? 248 00:12:05,960 --> 00:12:09,120 Speaker 7: I mean for business. So for two hundred billion dollar 249 00:12:09,200 --> 00:12:12,079 Speaker 7: run rate growing double digits, that just goes to show 250 00:12:12,080 --> 00:12:15,520 Speaker 7: that that threat was just a narrative. It's really not 251 00:12:15,640 --> 00:12:19,199 Speaker 7: translating into any AD dollars going away. And what they 252 00:12:19,240 --> 00:12:22,600 Speaker 7: call that was the lengthening of engagement when it comes 253 00:12:22,600 --> 00:12:25,800 Speaker 7: to search. Typically, with the traditional search, you would see 254 00:12:25,840 --> 00:12:27,840 Speaker 7: the blue links, they'll show you an AD, you will 255 00:12:27,880 --> 00:12:31,480 Speaker 7: go to the publisher website. Now people are engaging in 256 00:12:31,520 --> 00:12:34,200 Speaker 7: a more complex way. That's what they said, that the 257 00:12:34,320 --> 00:12:39,000 Speaker 7: time spent in searching, the complexity of queries is getting bigger, 258 00:12:39,240 --> 00:12:42,480 Speaker 7: and that is what's helping their AD loads when it 259 00:12:42,520 --> 00:12:44,600 Speaker 7: comes to you know, the overall at revenue. 260 00:12:44,679 --> 00:12:46,520 Speaker 3: Man, if we don't care, the only reason you're here 261 00:12:46,679 --> 00:12:50,680 Speaker 3: is Paul in my in John Tucker's entire future is 262 00:12:50,760 --> 00:12:53,199 Speaker 3: based on this bet on YouTube. We said good morning, 263 00:12:53,240 --> 00:12:58,320 Speaker 3: and we value everyone. Yeah, subscribing to Bloomberg podcasts on YouTube. 264 00:12:58,320 --> 00:13:01,800 Speaker 3: Michael Nathans suggests YouTube swings to profit this year. Was 265 00:13:01,840 --> 00:13:06,199 Speaker 3: there evidence there that John Tucker's making profit YouTube? 266 00:13:06,400 --> 00:13:10,320 Speaker 7: Yes. In fact, along with the cloud acceleration from twenty 267 00:13:10,640 --> 00:13:14,680 Speaker 7: nine to thirty five percent, this quarter, YouTube subscriptions grew 268 00:13:14,760 --> 00:13:17,920 Speaker 7: twenty eight percent. Just think about it. It's a fifteen 269 00:13:17,960 --> 00:13:21,600 Speaker 7: billion dollar plus run rate business. Just a subscriptions piece. 270 00:13:21,640 --> 00:13:24,400 Speaker 7: I'm taking out the YouTube ads, which is another forty 271 00:13:24,440 --> 00:13:29,440 Speaker 7: billion dollars. Subscriptions piece grew twenty eight percent. Now compare 272 00:13:29,480 --> 00:13:32,680 Speaker 7: that to Netflix. I mean, it's growing midteens, fifteen percent 273 00:13:33,040 --> 00:13:35,920 Speaker 7: higher run rate, but still that just goes to show 274 00:13:36,000 --> 00:13:39,680 Speaker 7: how much traction they have with YouTube. So clearly that's working. 275 00:13:39,880 --> 00:13:40,240 Speaker 4: All right. 276 00:13:40,240 --> 00:13:42,000 Speaker 5: I was using Google Search last night. I'm trying to 277 00:13:42,000 --> 00:13:46,160 Speaker 5: figure out something. What is AI overviews that's coming in? 278 00:13:46,440 --> 00:13:47,640 Speaker 5: I don't know what that is? What is that? 279 00:13:47,840 --> 00:13:51,280 Speaker 7: So basically what they've changed is the search page will 280 00:13:51,280 --> 00:13:55,120 Speaker 7: have a summary of you know, whatever query you have. 281 00:13:55,240 --> 00:13:57,720 Speaker 7: The prompt can be any length, and they show you 282 00:13:57,800 --> 00:14:00,679 Speaker 7: an overview of all the blue line that they are 283 00:14:00,720 --> 00:14:05,560 Speaker 7: showing you underneath that. So they have basically combined generative 284 00:14:05,640 --> 00:14:08,920 Speaker 7: AI along with their traditional search and then that JENNYI 285 00:14:09,080 --> 00:14:10,800 Speaker 7: overview is the generative AI. 286 00:14:11,240 --> 00:14:13,720 Speaker 5: No way, John Tucker's using generative AI. I can just 287 00:14:13,720 --> 00:14:15,760 Speaker 5: tell you that right now, what do you think? 288 00:14:17,200 --> 00:14:20,360 Speaker 7: Maybe I am and I don't know exactly I would 289 00:14:20,440 --> 00:14:21,120 Speaker 7: concur with that. 290 00:14:21,320 --> 00:14:25,360 Speaker 3: Yeah, Microsoft today, what is I mean, it's off your. 291 00:14:25,200 --> 00:14:27,200 Speaker 2: Remit right, you're not following Microsoft. 292 00:14:27,440 --> 00:14:30,320 Speaker 7: I mean, if you're looking at cloud, you have to 293 00:14:30,600 --> 00:14:31,560 Speaker 7: look at Microsoft. 294 00:14:31,760 --> 00:14:33,840 Speaker 2: So what are you looking at here? At four fifteen? 295 00:14:33,960 --> 00:14:37,400 Speaker 7: The Azure growth and the bogie is higher than what 296 00:14:37,480 --> 00:14:40,360 Speaker 7: consensus numbers are, which is thirty one percent growth for 297 00:14:40,600 --> 00:14:43,640 Speaker 7: eighty billion dollars rundread business. I think the bogie is 298 00:14:43,680 --> 00:14:48,160 Speaker 7: thirty four percent because alphabet Google's cloud business grew thirty 299 00:14:48,160 --> 00:14:51,080 Speaker 7: five percent last night. So anything less than that would 300 00:14:51,080 --> 00:14:53,360 Speaker 7: be perceived as somewhat of a share shift. 301 00:14:53,520 --> 00:14:55,320 Speaker 2: So translate this back he's talking to. 302 00:14:58,240 --> 00:15:01,840 Speaker 3: They need to get thirty five percent growth in what part. 303 00:15:01,640 --> 00:15:04,040 Speaker 2: Of my Azure cloud business? 304 00:15:04,040 --> 00:15:07,960 Speaker 7: Azure Azure Okay, yes, and that's a much so think 305 00:15:08,000 --> 00:15:11,680 Speaker 7: of Google Cloud as a forty five billion dollar rundred business. 306 00:15:12,320 --> 00:15:15,840 Speaker 7: Azure Cloud is an eighty billion dollar rundred business, and 307 00:15:15,920 --> 00:15:19,040 Speaker 7: Amazon Awls is one hundred and five billion dollar runder. 308 00:15:19,160 --> 00:15:22,400 Speaker 5: The regulators have no idea what's going on. There's no 309 00:15:22,560 --> 00:15:24,000 Speaker 5: way to put this genius. 310 00:15:24,280 --> 00:15:26,960 Speaker 7: That's the big risk when it comes to alphabet So 311 00:15:26,960 --> 00:15:30,160 Speaker 7: sounder pitch I last night did call out that risk 312 00:15:30,200 --> 00:15:33,080 Speaker 7: off you know, the DOJA cases and what it could 313 00:15:33,120 --> 00:15:35,120 Speaker 7: mean for the company, and that is the big risk. 314 00:15:35,520 --> 00:15:38,080 Speaker 3: One hundred billion to eighty billion, I think you said 315 00:15:38,160 --> 00:15:41,600 Speaker 3: forty billion, Yeah, added up, and all this stuff we're 316 00:15:41,640 --> 00:15:45,360 Speaker 3: talking about runs on electricity, I believe. I mean, we're 317 00:15:45,360 --> 00:15:48,720 Speaker 3: directly LinkedIn near at our world headquarters folks to Staten Island. 318 00:15:48,960 --> 00:15:51,160 Speaker 3: When mister Bloomberg turns on the lights in the morning, 319 00:15:51,200 --> 00:15:54,840 Speaker 3: Staten Island dims, I get it. Where's all the electrical 320 00:15:54,880 --> 00:15:57,760 Speaker 3: generation for the one hundred and eighty two hundred and 321 00:15:57,760 --> 00:16:00,600 Speaker 3: twenty billion dollars of business talking. 322 00:16:00,400 --> 00:16:03,080 Speaker 7: About I mean the in fact, Google did mention last 323 00:16:03,120 --> 00:16:06,800 Speaker 7: night they are investing in nuclear reactors or some of their. 324 00:16:06,840 --> 00:16:08,880 Speaker 2: User referbed like three Mile Island. 325 00:16:09,160 --> 00:16:11,880 Speaker 7: I mean, these are and they're doing it in partnership. 326 00:16:12,000 --> 00:16:14,960 Speaker 7: So it's not all Google, but clearly that's part of 327 00:16:15,000 --> 00:16:18,200 Speaker 7: the capex, the thirteen billion dollars in capex they invent. 328 00:16:19,320 --> 00:16:22,000 Speaker 7: Some of it is going towards building new data centers 329 00:16:22,080 --> 00:16:22,960 Speaker 7: and adding new and. 330 00:16:22,960 --> 00:16:24,840 Speaker 3: They need water to cool, so they're going to go 331 00:16:24,880 --> 00:16:27,760 Speaker 3: between John Tucker's house and the restaurant right at the ferry. 332 00:16:28,640 --> 00:16:30,040 Speaker 3: I mean, is that where the is that where the 333 00:16:30,040 --> 00:16:30,680 Speaker 3: plant's going? 334 00:16:31,560 --> 00:16:33,080 Speaker 2: Yeah, right in my backyard. 335 00:16:34,080 --> 00:16:37,160 Speaker 5: The S and P five hundred utilities index this year, 336 00:16:37,440 --> 00:16:37,800 Speaker 5: that's up. 337 00:16:38,680 --> 00:16:42,440 Speaker 2: Yeah, utility, it's amazing. Plus the dividend, and I feel 338 00:16:42,480 --> 00:16:46,280 Speaker 2: we haven't covered it. Can Eric, can you make a note? 339 00:16:46,280 --> 00:16:48,640 Speaker 3: We got to get a bunch of utility animals in 340 00:16:48,680 --> 00:16:51,320 Speaker 3: here to talk about man deeps world. 341 00:16:51,520 --> 00:16:54,760 Speaker 2: This is exciting. Did you expect this five years ago? 342 00:16:54,840 --> 00:16:58,440 Speaker 7: Mandeep, We're talking about one gigawatt data center. I mean 343 00:16:58,480 --> 00:17:02,040 Speaker 7: just think about it. Right now, we're at twenty megawatts, 344 00:17:02,320 --> 00:17:06,040 Speaker 7: one gigawak data center. Yes, I did not expect this 345 00:17:06,160 --> 00:17:07,119 Speaker 7: coming back quickly. 346 00:17:07,280 --> 00:17:11,720 Speaker 2: So a gigawat, yeah, okay, that's a lot. 347 00:17:11,760 --> 00:17:15,480 Speaker 3: One point two one gigawatts can power more than ten 348 00:17:15,560 --> 00:17:20,320 Speaker 3: million light bulbs and they're all burntout in jud Tucker's basement. 349 00:17:20,760 --> 00:17:23,240 Speaker 7: It can probably power the entire New York City if 350 00:17:23,280 --> 00:17:24,400 Speaker 7: you think about it, you know. 351 00:17:24,520 --> 00:17:25,280 Speaker 2: A gigaway. 352 00:17:25,440 --> 00:17:28,960 Speaker 5: Yeah, it's like physics with Mandy coming out of Silicon 353 00:17:29,040 --> 00:17:30,000 Speaker 5: down Gerarm. 354 00:17:29,680 --> 00:17:31,720 Speaker 8: Okay, you get wet to give you an email coming 355 00:17:31,760 --> 00:17:34,160 Speaker 8: in here. They're worried about it getting back. You're gonna 356 00:17:34,160 --> 00:17:36,640 Speaker 8: be ready for Wimbledon. You're going to be ready for Wimbledon. 357 00:17:37,400 --> 00:17:39,880 Speaker 8: We'll talk. We gets a free time your way. 358 00:17:40,040 --> 00:17:41,320 Speaker 3: I want to talk to you about I had the 359 00:17:41,440 --> 00:17:45,639 Speaker 3: honor of seeing vj Armatrov with Borg. It is peak 360 00:17:45,680 --> 00:17:48,320 Speaker 3: at Forest Hills, and I really want to get time 361 00:17:48,359 --> 00:17:51,240 Speaker 3: to talk to you about that man deep sing there 362 00:17:51,240 --> 00:17:52,840 Speaker 3: in the middle earning season this. 363 00:17:53,080 --> 00:17:57,520 Speaker 1: Here's the Bloomberg Surveillance Podcast. Listen live each weekday starting 364 00:17:57,520 --> 00:18:00,840 Speaker 1: at seven am Eastern on Apple car Playrod Auto with 365 00:18:00,880 --> 00:18:03,840 Speaker 1: a Bloomberg Business app. You can also listen live on 366 00:18:03,920 --> 00:18:07,240 Speaker 1: Amazon Alexa from our flagship New York station, Just Say 367 00:18:07,280 --> 00:18:09,560 Speaker 1: Alexa playing Bloomberg eleven thirty. 368 00:18:09,680 --> 00:18:10,159 Speaker 2: When I was in. 369 00:18:10,240 --> 00:18:14,800 Speaker 3: Rome recently, this was really front in center, the international 370 00:18:14,880 --> 00:18:19,280 Speaker 3: view of a America's fractured politics, whatever your belief. Lindsay 371 00:18:19,359 --> 00:18:22,360 Speaker 3: Newman working with Ian Bremer over at G zero, over 372 00:18:22,400 --> 00:18:24,240 Speaker 3: at Eurasia Group. We're thrilled she could. 373 00:18:24,160 --> 00:18:26,080 Speaker 2: Join us right now, doctor Newman. 374 00:18:26,119 --> 00:18:29,760 Speaker 3: The view from sixty thousand feet, What does the first 375 00:18:29,880 --> 00:18:34,639 Speaker 3: G seven meeting look like, daresay russia'sttens G eight. What 376 00:18:34,720 --> 00:18:37,800 Speaker 3: does the first G seven meeting look like for President 377 00:18:37,880 --> 00:18:39,720 Speaker 3: Trump or President Harris? 378 00:18:41,240 --> 00:18:44,040 Speaker 9: Well, as you know, John, we're just a few days 379 00:18:44,080 --> 00:18:46,720 Speaker 9: af from his election, and it has been a turbulent, 380 00:18:46,840 --> 00:18:51,840 Speaker 9: tumultuous one. We've had Donald Trump, former President Trump suggesting 381 00:18:51,880 --> 00:18:55,320 Speaker 9: that should he win this election on Tuesday, which remains 382 00:18:55,320 --> 00:18:58,280 Speaker 9: a dead heat in anyone's game, that he would immediately 383 00:18:58,400 --> 00:19:01,399 Speaker 9: begin the process of bringing the parties together in the 384 00:19:01,520 --> 00:19:04,680 Speaker 9: Ukraine Russia conflict and seeing if he could bring a 385 00:19:04,720 --> 00:19:07,000 Speaker 9: resolution to it. He says, the US is on the 386 00:19:07,040 --> 00:19:10,040 Speaker 9: brink of World War three. Those are the stakes as 387 00:19:10,080 --> 00:19:12,320 Speaker 9: he sees them, So we would have to expect a 388 00:19:12,400 --> 00:19:13,800 Speaker 9: lively G seven G eight. 389 00:19:13,920 --> 00:19:15,960 Speaker 10: As you say, should it. 390 00:19:15,880 --> 00:19:19,280 Speaker 9: Be Trump Harris, you know, as you know, the big 391 00:19:19,320 --> 00:19:22,280 Speaker 9: threadline and I feel it too, is that it's a 392 00:19:22,280 --> 00:19:26,080 Speaker 9: bit of an unknown. She has tried to associate herself 393 00:19:26,119 --> 00:19:30,359 Speaker 9: with Biden administration's successes, perceive successes. She has tried to 394 00:19:30,400 --> 00:19:33,240 Speaker 9: distance herself from those areas where it may have fallen short. 395 00:19:33,280 --> 00:19:36,000 Speaker 9: Of course, Trump is always talking about Afghanistan, and Afghanistan 396 00:19:36,080 --> 00:19:39,320 Speaker 9: is a key sticking point on US foreign policy. But 397 00:19:39,400 --> 00:19:41,600 Speaker 9: there's a lot of unknown there on what a Harris 398 00:19:41,680 --> 00:19:44,159 Speaker 9: presidency would mean on foreign policy, and we have to 399 00:19:44,200 --> 00:19:46,240 Speaker 9: expect it would look a lot like what we've seen 400 00:19:46,280 --> 00:19:49,439 Speaker 9: before from the Democrats. So those allies in the G 401 00:19:49,560 --> 00:19:52,639 Speaker 9: seven would be the important partners for the US. 402 00:19:52,400 --> 00:19:55,280 Speaker 5: Doctor Newman, are we going to know at nine or 403 00:19:55,280 --> 00:19:58,919 Speaker 5: ten o'clock at night on November fifth who our president is? 404 00:19:59,480 --> 00:20:01,240 Speaker 5: If not, how long do we have to wait? 405 00:20:02,760 --> 00:20:03,520 Speaker 10: It's a great question. 406 00:20:03,560 --> 00:20:05,119 Speaker 9: I mean nine o'clock at night for me sitting here 407 00:20:05,119 --> 00:20:07,520 Speaker 9: in London, absolutely, not night o'clock at night for you 408 00:20:07,640 --> 00:20:10,800 Speaker 9: sitting over there. I think the answer is still no. 409 00:20:11,720 --> 00:20:14,080 Speaker 9: You know, this race is a toss up at the 410 00:20:14,160 --> 00:20:18,000 Speaker 9: national level. Trump has now erased Harris's lead that she's 411 00:20:18,000 --> 00:20:20,879 Speaker 9: held essentially since building her case in the race in 412 00:20:20,880 --> 00:20:23,560 Speaker 9: when she entered in July. We know that each one 413 00:20:23,560 --> 00:20:25,639 Speaker 9: of these swing states is also a toss up and 414 00:20:25,680 --> 00:20:28,159 Speaker 9: have traded back and forth. So if anyone tells you 415 00:20:28,200 --> 00:20:31,120 Speaker 9: they know where this race stands today, you know, either 416 00:20:31,200 --> 00:20:33,920 Speaker 9: back away and close the door or run towards them perhaps. 417 00:20:34,119 --> 00:20:35,600 Speaker 9: But what I would just say, there are a couple 418 00:20:35,680 --> 00:20:38,120 Speaker 9: of signals we can be watching. There's the momentum, which 419 00:20:38,119 --> 00:20:41,600 Speaker 9: I've already talked about. There's this anti incommency sentiment that 420 00:20:41,640 --> 00:20:44,320 Speaker 9: has circled the world. Right, we've all been saying, oh, 421 00:20:44,359 --> 00:20:45,960 Speaker 9: this is the year of elections. A half of the 422 00:20:46,000 --> 00:20:49,360 Speaker 9: world's population, we'll be voting. Harris may very well get 423 00:20:49,359 --> 00:20:51,600 Speaker 9: caught up in that, because voters may want change, they 424 00:20:51,640 --> 00:20:54,480 Speaker 9: feeling their pocketbooks are lighter. And then the early voting 425 00:20:54,480 --> 00:20:57,240 Speaker 9: signals that we're already seeing are interesting. Fifty three million 426 00:20:57,320 --> 00:21:01,280 Speaker 9: have already voted. There is some indication that perhaps Democrats 427 00:21:01,320 --> 00:21:04,800 Speaker 9: are ahead on that have had more votes casts, and 428 00:21:05,000 --> 00:21:08,600 Speaker 9: interestingly enough, women may have voted more so already than 429 00:21:09,280 --> 00:21:11,199 Speaker 9: Democrats feel that that gender gap is going to. 430 00:21:11,200 --> 00:21:13,320 Speaker 10: Be critical for them. But I think the short answer 431 00:21:13,359 --> 00:21:15,000 Speaker 10: out of my lung is no, we're not going to 432 00:21:15,000 --> 00:21:15,960 Speaker 10: know at nine o'clock at night. 433 00:21:16,480 --> 00:21:20,960 Speaker 3: For Trump's supporters and frankly Harris supporters as well, there 434 00:21:21,000 --> 00:21:25,200 Speaker 3: seems to be a primal scream to find a Harris 435 00:21:25,480 --> 00:21:30,800 Speaker 3: foreign policy that is distinctive and differenced or nuanced from 436 00:21:30,800 --> 00:21:33,159 Speaker 3: a Biden foreign policy. 437 00:21:33,320 --> 00:21:34,359 Speaker 2: Is it out there? 438 00:21:34,560 --> 00:21:38,600 Speaker 3: Does it exist, this distinction of a new change in 439 00:21:38,680 --> 00:21:40,399 Speaker 3: foreign policy. 440 00:21:41,240 --> 00:21:43,520 Speaker 9: I think you're absolutely right that there is a desire 441 00:21:43,680 --> 00:21:46,480 Speaker 9: for change in foreign policy. I think it is not 442 00:21:46,600 --> 00:21:49,880 Speaker 9: out there yet. But one point that I always come 443 00:21:49,920 --> 00:21:53,280 Speaker 9: back to is personnel. We are not going to have 444 00:21:53,320 --> 00:21:55,440 Speaker 9: the same personnel around Harris. 445 00:21:55,680 --> 00:21:57,560 Speaker 10: Should she win the presidency. 446 00:21:57,119 --> 00:21:58,439 Speaker 2: She will read hire for Lincoln. 447 00:21:58,560 --> 00:22:01,479 Speaker 9: Foreign policy is not going to I think it's very 448 00:22:01,520 --> 00:22:04,080 Speaker 9: unlikely that shor we hire Blncoln. I think Burns is 449 00:22:04,119 --> 00:22:06,160 Speaker 9: a likely familiar face that we'll see again. 450 00:22:06,720 --> 00:22:08,560 Speaker 10: But it's not going to be Jake Sullivan. It's not 451 00:22:08,560 --> 00:22:09,800 Speaker 10: going to be Anthony Blincoln. 452 00:22:10,320 --> 00:22:12,719 Speaker 9: It will be a new cast of characters, some who 453 00:22:12,800 --> 00:22:15,320 Speaker 9: have had ties to the say the Obama administration. But 454 00:22:15,359 --> 00:22:18,000 Speaker 9: the personnel is personal, and I think it will shape 455 00:22:18,000 --> 00:22:18,640 Speaker 9: form policy. 456 00:22:19,480 --> 00:22:22,399 Speaker 5: So how about down ballot voting? What do we know 457 00:22:22,440 --> 00:22:24,640 Speaker 5: about that these days? Because I mean, we need to 458 00:22:24,680 --> 00:22:27,680 Speaker 5: be able to call Congress at some point next week. 459 00:22:28,000 --> 00:22:28,720 Speaker 5: How is that looking? 460 00:22:30,119 --> 00:22:32,320 Speaker 10: Yeah, I mean, look, it's also been very close. 461 00:22:32,600 --> 00:22:34,600 Speaker 9: I think the expectation there is that we're going to 462 00:22:34,640 --> 00:22:37,520 Speaker 9: see some split in the in the you know, in 463 00:22:37,560 --> 00:22:40,520 Speaker 9: the two houses, and that is going to affect whoever 464 00:22:40,600 --> 00:22:43,080 Speaker 9: holds you know, whoever holds the White House. And we 465 00:22:43,200 --> 00:22:46,480 Speaker 9: know that, you know, last night Harris was talking at 466 00:22:46,520 --> 00:22:49,520 Speaker 9: that very stunning event at the Ellipse, you know, brought 467 00:22:49,520 --> 00:22:53,040 Speaker 9: seventy five thousand people out, got under Donald Trump's fingernails 468 00:22:53,640 --> 00:22:56,119 Speaker 9: with all those people. But she was talking about national 469 00:22:56,160 --> 00:23:00,680 Speaker 9: security and the way forward. But you know she's talking 470 00:23:00,720 --> 00:23:03,639 Speaker 9: about immigration reform. How is she going to get immigration reform? 471 00:23:03,680 --> 00:23:05,440 Speaker 9: You know, no president has been able to get say, 472 00:23:05,440 --> 00:23:09,320 Speaker 9: massive immigration reform through the Houses because of these divisions 473 00:23:09,320 --> 00:23:11,560 Speaker 9: that we see both within the Houses and across the houses. 474 00:23:11,840 --> 00:23:15,760 Speaker 3: Does foreign policy matter inside the voting booth, sitting at 475 00:23:15,800 --> 00:23:18,719 Speaker 3: your kitchen table writing in the ballot? 476 00:23:18,800 --> 00:23:19,359 Speaker 2: Is there any. 477 00:23:19,280 --> 00:23:22,800 Speaker 3: Evidence of foreign policy matters? Or it does all domestic 478 00:23:22,880 --> 00:23:23,680 Speaker 3: at the end of the day. 479 00:23:24,840 --> 00:23:26,960 Speaker 9: We've all seen, I mean, there's been a million articles 480 00:23:27,000 --> 00:23:29,479 Speaker 9: that we've seen about how foreign policy never matters. How 481 00:23:29,480 --> 00:23:31,200 Speaker 9: it does matter this time around. I promise you it 482 00:23:31,240 --> 00:23:32,199 Speaker 9: matters this time around. 483 00:23:32,520 --> 00:23:33,480 Speaker 10: You know, Donald. 484 00:23:33,160 --> 00:23:36,359 Speaker 9: Trump this weekend, speaking at Madison Square Garden said he 485 00:23:36,440 --> 00:23:38,760 Speaker 9: opened with this question, are you better off today than 486 00:23:38,800 --> 00:23:39,680 Speaker 9: you were four years ago? 487 00:23:40,200 --> 00:23:41,760 Speaker 10: That is what matters to voters the selection. 488 00:23:43,000 --> 00:23:44,760 Speaker 9: You know the fact that he thinks that they might 489 00:23:44,800 --> 00:23:46,840 Speaker 9: be on the brink of World War two, that's of interest. 490 00:23:46,960 --> 00:23:49,000 Speaker 9: But we know the top issues here, the top issues 491 00:23:49,040 --> 00:23:52,560 Speaker 9: for voters are the economy, inflation, immigration. If you call 492 00:23:52,600 --> 00:23:55,840 Speaker 9: immigration form policy, then maybe you've got a slight asterisk there. 493 00:23:56,440 --> 00:23:58,679 Speaker 9: But what matters to people is how they're feeling in 494 00:23:58,720 --> 00:24:02,520 Speaker 9: their pocketbooks, in their teching accounts, when they look around 495 00:24:02,560 --> 00:24:03,480 Speaker 9: their friends and family. 496 00:24:04,440 --> 00:24:07,199 Speaker 5: Are we now at a new normal, lindsay is to 497 00:24:07,320 --> 00:24:12,040 Speaker 5: the electorate? Is it split fifty to fifty just now? 498 00:24:12,080 --> 00:24:14,119 Speaker 5: Going forward? I mean, it doesn't seem It seems like 499 00:24:14,160 --> 00:24:17,840 Speaker 5: the lines are so drawn and so set that I'm 500 00:24:17,880 --> 00:24:21,200 Speaker 5: not sure how that changes in you know, cycles going forward. 501 00:24:22,520 --> 00:24:23,760 Speaker 10: Yeah, it's a great point, Paul. 502 00:24:23,800 --> 00:24:25,640 Speaker 9: I mean, I've been writing a lot about what I 503 00:24:25,680 --> 00:24:29,440 Speaker 9: was calling radicalization, which is just this idea that American 504 00:24:29,520 --> 00:24:32,119 Speaker 9: voters are moving towards the polls and not towards the center. 505 00:24:32,160 --> 00:24:34,840 Speaker 9: We know that Democrats and Republicans don't share facts. We 506 00:24:34,960 --> 00:24:36,840 Speaker 9: know that they don't have a lot of love loss 507 00:24:36,840 --> 00:24:39,680 Speaker 9: between them. We are at a hyperpolarized moment. I think 508 00:24:39,680 --> 00:24:43,760 Speaker 9: it's a generational hyperpolarized moment. Generations get me long, And 509 00:24:43,880 --> 00:24:46,120 Speaker 9: it's distinctly possible that this is just where we are 510 00:24:46,160 --> 00:24:48,560 Speaker 9: for the next couple of cycles. Because we're not seeing 511 00:24:48,640 --> 00:24:50,960 Speaker 9: you know, we're not seeing a retrenchment back towards the center. 512 00:24:51,000 --> 00:24:54,160 Speaker 9: We're not seeing a big poll in either parties towards 513 00:24:54,240 --> 00:24:55,880 Speaker 9: the middle. That's just not the trend line. 514 00:24:56,680 --> 00:24:59,200 Speaker 3: I was talking to the Roman is one of my 515 00:24:59,240 --> 00:25:01,879 Speaker 3: great editorials advisors. Roman and I were going back and 516 00:25:01,920 --> 00:25:04,879 Speaker 3: forth on the David Brooks essay that was out a 517 00:25:04,920 --> 00:25:07,520 Speaker 3: week and a half ago, ten days ago, on just 518 00:25:07,560 --> 00:25:10,520 Speaker 3: what you're talking about, doctor Newman, which is a polarization, 519 00:25:11,240 --> 00:25:14,760 Speaker 3: and yet, like Reagan and Ford, Ron Reagan to get 520 00:25:14,760 --> 00:25:17,840 Speaker 3: elected move to the middle in the next six days. 521 00:25:17,880 --> 00:25:19,480 Speaker 2: I mean, the President Trump's got. 522 00:25:19,320 --> 00:25:23,960 Speaker 3: A method, let's be honest. Vice President Harris is or 523 00:25:24,080 --> 00:25:26,879 Speaker 3: any tendency to move to the middle. 524 00:25:28,640 --> 00:25:31,600 Speaker 9: I think what Vice President Harris's campaign has tried to 525 00:25:31,640 --> 00:25:35,040 Speaker 9: do is to leave it open to interpretation that she 526 00:25:35,160 --> 00:25:38,480 Speaker 9: wants you to see yourself in her candidacy. That's why 527 00:25:38,520 --> 00:25:41,560 Speaker 9: we don't see her drilling down on policy, you know, 528 00:25:41,680 --> 00:25:45,480 Speaker 9: despite the efforts to probe, despite the interest in understanding. 529 00:25:45,520 --> 00:25:47,719 Speaker 9: As you asked me earlier, you know what really is 530 00:25:47,800 --> 00:25:50,840 Speaker 9: the what is that they're there on foreign policy? And 531 00:25:50,880 --> 00:25:54,159 Speaker 9: I think it's because we are going She's going to 532 00:25:54,160 --> 00:25:56,399 Speaker 9: craft it as she goes Once if she if she 533 00:25:56,480 --> 00:25:59,640 Speaker 9: wins this election. I don't expect us to see more 534 00:25:59,640 --> 00:26:02,639 Speaker 9: of the filled in though on policy, either domestic or 535 00:26:02,680 --> 00:26:04,000 Speaker 9: foreign policy in the days ahead. 536 00:26:04,000 --> 00:26:05,600 Speaker 2: From her son, don't be a stranger. 537 00:26:05,680 --> 00:26:07,840 Speaker 3: Bring the Bremmer guy along with the next time. Lindsay 538 00:26:07,880 --> 00:26:10,960 Speaker 3: Newman with your raising group A gzero media from London 539 00:26:11,320 --> 00:26:16,000 Speaker 3: this morning. Really informative there, whatever your politics. 540 00:26:22,200 --> 00:26:26,520 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 541 00:26:26,600 --> 00:26:30,119 Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto 542 00:26:30,200 --> 00:26:33,000 Speaker 1: with the Bloomberg Business app. You can also watch us 543 00:26:33,080 --> 00:26:37,080 Speaker 1: live every weekday on YouTube and always on the Bloomberg terminal. 544 00:26:37,359 --> 00:26:40,600 Speaker 3: This is what surveillance is about, folks. We've codified this 545 00:26:41,320 --> 00:26:46,080 Speaker 3: decades ago. I can't say enough about We move when 546 00:26:46,119 --> 00:26:47,280 Speaker 3: the story moves. 547 00:26:47,400 --> 00:26:48,040 Speaker 2: Joining us. 548 00:26:48,119 --> 00:26:51,199 Speaker 3: In fourteen minutes, Woo Jin Hoe will join us. He 549 00:26:51,280 --> 00:26:56,240 Speaker 3: is expert on super micro computer with Bloomberg Intelligence. Are 550 00:26:56,320 --> 00:26:58,560 Speaker 3: thrilled he's freed up as schedule to speak to us. Paul, 551 00:26:58,600 --> 00:27:01,280 Speaker 3: why don't you bring a guest in here? On the 552 00:27:01,320 --> 00:27:03,920 Speaker 3: shadows of private credit. 553 00:27:03,880 --> 00:27:05,960 Speaker 5: I tell you this is again. I've kind of been 554 00:27:05,960 --> 00:27:07,960 Speaker 5: in this investment game for thirty five years. One of 555 00:27:07,960 --> 00:27:10,919 Speaker 5: the most amazing developments to me, has been in addition 556 00:27:11,000 --> 00:27:14,159 Speaker 5: to ETFs, this private credit business all grew up with 557 00:27:14,240 --> 00:27:17,800 Speaker 5: private equity, but private credit has become just an extraordinary 558 00:27:17,880 --> 00:27:21,520 Speaker 5: alternative investment opportunity for a lot of investors, particularly after 559 00:27:21,560 --> 00:27:23,600 Speaker 5: the Great Financial Crisis when some of the banks were 560 00:27:23,600 --> 00:27:25,639 Speaker 5: pulling back on their lending. And kind of what I 561 00:27:25,680 --> 00:27:27,320 Speaker 5: know about this business I learned from our next guest, 562 00:27:27,400 --> 00:27:31,520 Speaker 5: Randy Schumer, vice Chairman, Investor Solutions Group, Churchill Asset Management, 563 00:27:31,640 --> 00:27:36,440 Speaker 5: most notably from the JP Morgan Chase corporate banking business 564 00:27:36,520 --> 00:27:37,800 Speaker 5: and loan syndication business. 565 00:27:37,800 --> 00:27:39,640 Speaker 6: That's a long time ago, Paul. 566 00:27:39,720 --> 00:27:41,720 Speaker 5: That's where you learn credit, and that's where I learned 567 00:27:41,720 --> 00:27:45,119 Speaker 5: my credit chops there at Chase Manhattan Bank, Randy. We 568 00:27:45,200 --> 00:27:48,119 Speaker 5: got interest rates coming down, although they old curve is steepening, 569 00:27:48,200 --> 00:27:50,879 Speaker 5: but interest rates generally coming down the Feds lowering rates. 570 00:27:51,200 --> 00:27:54,080 Speaker 5: What does that mean for the private credit business? 571 00:27:54,160 --> 00:27:56,480 Speaker 6: By the way, a shout out to James Crombie and 572 00:27:56,800 --> 00:27:59,520 Speaker 6: your Credit Edge podcast. I'll be if you want sixty 573 00:27:59,520 --> 00:28:02,480 Speaker 6: minutes of Me and private Credit to tune in tomorrow 574 00:28:02,480 --> 00:28:07,840 Speaker 6: for that. So, yeah, rates are probably coming down spreads 575 00:28:07,840 --> 00:28:11,560 Speaker 6: across this credit spectrum. As you guys have reported are tightening. 576 00:28:12,080 --> 00:28:16,439 Speaker 6: The Bloomberg High Yield spread index is below three percent. 577 00:28:16,720 --> 00:28:19,200 Speaker 6: I mean, that's a little bit nutty when you look 578 00:28:19,240 --> 00:28:22,120 Speaker 6: at what you know, the potential risks over the next 579 00:28:22,160 --> 00:28:26,000 Speaker 6: six months are. But really, capital markets are wide open, 580 00:28:26,520 --> 00:28:29,560 Speaker 6: and in the midst of all this, private credit is 581 00:28:29,640 --> 00:28:33,359 Speaker 6: actually according to JP Morrigan report that they put out 582 00:28:33,760 --> 00:28:36,879 Speaker 6: a couple of days ago, credit spreads in private credit 583 00:28:36,920 --> 00:28:40,000 Speaker 6: have actually increased by twenty five basis points. Now, let's 584 00:28:40,000 --> 00:28:42,160 Speaker 6: think about that in the context of everything going on. 585 00:28:42,880 --> 00:28:46,480 Speaker 6: Part of what's going on is that the broadly syndicated market, 586 00:28:46,520 --> 00:28:50,520 Speaker 6: which we know has been more active this year than ever, 587 00:28:51,080 --> 00:28:54,000 Speaker 6: has been able to affect the large cap market, the 588 00:28:54,080 --> 00:28:56,960 Speaker 6: large mintal market deals. But in the traditional middle market, 589 00:28:56,960 --> 00:28:59,800 Speaker 6: in the in the direct lending market that we churchills 590 00:28:59,840 --> 00:29:02,800 Speaker 6: in spreads have actually gone up a little bit. Why 591 00:29:02,920 --> 00:29:05,240 Speaker 6: is that deal flow is starting to come back? I 592 00:29:05,240 --> 00:29:08,760 Speaker 6: always like bringing stats into you guys. Every month, Global 593 00:29:08,880 --> 00:29:11,600 Speaker 6: m and A up quarter over quarter by nine percent 594 00:29:11,640 --> 00:29:15,560 Speaker 6: according to S and P year over year twenty three percent. 595 00:29:15,640 --> 00:29:19,360 Speaker 6: So as deal flow increases, people can be more picky, 596 00:29:19,520 --> 00:29:21,880 Speaker 6: so they like us say, he you know, I'd rather 597 00:29:21,920 --> 00:29:25,160 Speaker 6: take something a little more spread, A little more protections 598 00:29:25,160 --> 00:29:28,720 Speaker 6: for our investors, So spreads are actually coming up. The 599 00:29:28,760 --> 00:29:31,560 Speaker 6: other thing that's going on is the ill liquidity premium 600 00:29:31,600 --> 00:29:36,320 Speaker 6: between liquid markets. The Brothers indicate loan market private credit 601 00:29:36,600 --> 00:29:39,440 Speaker 6: is actually widened to a five month high, so very 602 00:29:39,480 --> 00:29:41,160 Speaker 6: attractive for investors right now, right where. 603 00:29:41,040 --> 00:29:43,360 Speaker 3: I want to go to. I want to explain, Randy, 604 00:29:43,360 --> 00:29:47,440 Speaker 3: you're the best to do this. Everybody's concerned, even people 605 00:29:47,680 --> 00:29:53,000 Speaker 3: supporting private equity private credit. We intuitively get in private equity, 606 00:29:53,160 --> 00:29:56,040 Speaker 3: you buy something, it's locked up for seven years whatever, 607 00:29:56,920 --> 00:29:58,600 Speaker 3: you got to wait to get out. Then when you 608 00:29:58,640 --> 00:30:02,160 Speaker 3: get out, you can't get out. It's intuitive inequity, it's 609 00:30:02,240 --> 00:30:05,640 Speaker 3: not in your world. Now you just discovered that what 610 00:30:05,760 --> 00:30:08,920 Speaker 3: is the lock up in private credit that needs to 611 00:30:08,960 --> 00:30:13,360 Speaker 3: be analyzed, studied, calmed, or concerned about. 612 00:30:13,520 --> 00:30:15,960 Speaker 6: Yeah, so you're pointing to the issue of liquidity, right, 613 00:30:16,000 --> 00:30:20,719 Speaker 6: and illiquidity which has tended to be viewed as a 614 00:30:20,800 --> 00:30:24,800 Speaker 6: negative in markets that are very correlated, and we saw 615 00:30:24,840 --> 00:30:26,800 Speaker 6: that in spades, you know twenty two and a little 616 00:30:26,840 --> 00:30:28,880 Speaker 6: bit in twenty three. Tends to be a negative for 617 00:30:28,920 --> 00:30:32,440 Speaker 6: investors because they don't they want something that's an alternative 618 00:30:32,480 --> 00:30:35,560 Speaker 6: to the correlated assets of public equities and fixed income, 619 00:30:35,600 --> 00:30:39,040 Speaker 6: and so they seek alternatives, including private capital, to get 620 00:30:39,200 --> 00:30:42,800 Speaker 6: a little bit more calm during periods of stress and turmoil. 621 00:30:43,040 --> 00:30:47,240 Speaker 6: So what's happening for private credit investors is that the 622 00:30:47,680 --> 00:30:51,160 Speaker 6: valuations associated with our loans tend to be a lot 623 00:30:51,200 --> 00:30:55,480 Speaker 6: more stable during periods of volatility. And so what they're 624 00:30:55,560 --> 00:30:58,080 Speaker 6: trading for in terms of lack of being able to 625 00:30:58,120 --> 00:31:02,200 Speaker 6: trade on demand is the ability that during a crisis 626 00:31:02,600 --> 00:31:06,720 Speaker 6: they don't see the kinds of moves and prices. Oh yeah, 627 00:31:06,800 --> 00:31:09,840 Speaker 6: all of our loans are valued by third party agencies, 628 00:31:10,600 --> 00:31:13,240 Speaker 6: you know, and and so it's not just us value, 629 00:31:13,360 --> 00:31:16,200 Speaker 6: but they're they're valued by by others as well as 630 00:31:16,200 --> 00:31:19,000 Speaker 6: the fundamentals of these companies. It's not they're not traded 631 00:31:19,040 --> 00:31:21,080 Speaker 6: the way that you know, the broadly syndicated loans are. 632 00:31:21,400 --> 00:31:23,840 Speaker 6: But the fundamental difference I think now is that with 633 00:31:23,920 --> 00:31:26,840 Speaker 6: the m and a market opening up, these loans are 634 00:31:27,040 --> 00:31:29,360 Speaker 6: going to start to trade more often in the sense 635 00:31:29,400 --> 00:31:31,040 Speaker 6: that deals are going to start to get done and 636 00:31:31,560 --> 00:31:35,400 Speaker 6: refinanced private equity, which has been stalled to your point 637 00:31:36,120 --> 00:31:38,880 Speaker 6: because capital has been locked in with these deals where 638 00:31:39,640 --> 00:31:43,360 Speaker 6: LPs are stuck because they haven't seen realizations. Now those 639 00:31:43,400 --> 00:31:45,520 Speaker 6: realizations are going to start to come and I think 640 00:31:45,520 --> 00:31:47,000 Speaker 6: we're going to see more of that next year. 641 00:31:47,240 --> 00:31:49,400 Speaker 5: You guys get a gajillion pitch books coming through your 642 00:31:49,440 --> 00:31:52,880 Speaker 5: door every year. How do you screen them? 643 00:31:52,880 --> 00:31:53,960 Speaker 2: What? 644 00:31:53,960 --> 00:31:55,080 Speaker 5: What do you like these days? 645 00:31:55,320 --> 00:31:59,040 Speaker 6: Well, we get about a thousand deals a year coming 646 00:31:59,040 --> 00:32:01,720 Speaker 6: from our private equity friends. Where As I've told you before, 647 00:32:01,720 --> 00:32:03,720 Speaker 6: we're an investor in their funds. So these are kind 648 00:32:03,720 --> 00:32:07,920 Speaker 6: of pre screen transactions. We could probably do all of 649 00:32:07,920 --> 00:32:10,200 Speaker 6: them and be fine, but some of them fit better 650 00:32:10,200 --> 00:32:15,000 Speaker 6: into our credit book, right So some are more equity 651 00:32:15,200 --> 00:32:18,160 Speaker 6: like high growth, and in the credit world, as you know, 652 00:32:18,240 --> 00:32:20,280 Speaker 6: you're getting paid principal and interest, so you just want 653 00:32:20,280 --> 00:32:22,680 Speaker 6: to be you know, it's not being first or second, 654 00:32:22,720 --> 00:32:26,120 Speaker 6: it's finishing the race. What we're looking for is kind 655 00:32:26,120 --> 00:32:28,680 Speaker 6: of what we've been looking for, which is defensive industries, 656 00:32:29,360 --> 00:32:33,920 Speaker 6: sectors such as you mentioned, accounting firms, accounting firms, regional firms. 657 00:32:34,520 --> 00:32:37,600 Speaker 6: In this business we're going around right now very steady atty. 658 00:32:38,040 --> 00:32:40,360 Speaker 6: Doesn't matter what the tax rates or taraffs are, you 659 00:32:40,440 --> 00:32:43,040 Speaker 6: still need five fall and life al So I think 660 00:32:43,080 --> 00:32:45,880 Speaker 6: that business services are really good right right now in 661 00:32:46,000 --> 00:32:47,320 Speaker 6: terms of what we're seeing. 662 00:32:47,200 --> 00:32:49,680 Speaker 2: With Churchill asset management or industry. We're with us right now. 663 00:32:49,720 --> 00:32:52,280 Speaker 3: I'm looking to Google up ten dollars to a one 664 00:32:52,440 --> 00:32:55,680 Speaker 3: seventy nine and off the trading range, going back to Midsummer, 665 00:32:55,760 --> 00:32:58,600 Speaker 3: I'm going to call it that was where Sweeney took three. 666 00:32:58,480 --> 00:33:01,280 Speaker 2: Fridays in a row off back then. 667 00:33:01,560 --> 00:33:05,240 Speaker 3: There are three point eight standard deviations. I think we 668 00:33:05,320 --> 00:33:07,600 Speaker 3: can say surge is appropriate. 669 00:33:07,680 --> 00:33:10,360 Speaker 5: Yes, surge is appropriate. Rannie, talk to us about the 670 00:33:10,400 --> 00:33:12,240 Speaker 5: private equity world. What are you seeing from your private 671 00:33:12,240 --> 00:33:15,040 Speaker 5: equity clients in terms of deal flow. When we hear 672 00:33:15,240 --> 00:33:18,000 Speaker 5: Jamie Diamond and Brian moynihanda the big you know Wall 673 00:33:18,040 --> 00:33:21,000 Speaker 5: Street banks thing, you know, activities picking up, they feel 674 00:33:21,080 --> 00:33:22,320 Speaker 5: more bullish about activity. 675 00:33:22,360 --> 00:33:22,840 Speaker 2: Are you seeing that? 676 00:33:23,200 --> 00:33:23,480 Speaker 4: Yeah? 677 00:33:23,520 --> 00:33:27,000 Speaker 6: So our platform, so we do private credit. We have 678 00:33:27,200 --> 00:33:30,400 Speaker 6: a junior capital co invest and fund to fund business. 679 00:33:30,400 --> 00:33:32,920 Speaker 6: We also have a secondary's business which is actually one 680 00:33:32,960 --> 00:33:34,959 Speaker 6: of our fastest growing And going to the point that 681 00:33:35,000 --> 00:33:38,400 Speaker 6: Tom mentioned about liquidity when these investors and some of 682 00:33:38,440 --> 00:33:42,200 Speaker 6: the gps are stuck, the secondary's market has been one 683 00:33:42,240 --> 00:33:45,440 Speaker 6: of the fastest growing in the private equity space because 684 00:33:45,520 --> 00:33:48,200 Speaker 6: realizations are slow and so if you're an investor in 685 00:33:48,240 --> 00:33:50,960 Speaker 6: a fund or if you're a GP with a sponsor, 686 00:33:51,240 --> 00:33:53,160 Speaker 6: you're kind of looking for ways out, and you can 687 00:33:53,200 --> 00:33:56,000 Speaker 6: create liquidity through the investments that you have and the 688 00:33:56,040 --> 00:34:00,280 Speaker 6: portfolios that you created, because the enterprise value that's there 689 00:34:00,800 --> 00:34:03,640 Speaker 6: is being tapped by firms like Churchill to be able 690 00:34:03,640 --> 00:34:07,120 Speaker 6: to help them access liquidity when otherwise they couldn't. So 691 00:34:07,160 --> 00:34:11,200 Speaker 6: the sophistication and technology in private equity now has changed 692 00:34:11,239 --> 00:34:13,680 Speaker 6: so much since the old days when you basically had 693 00:34:13,680 --> 00:34:16,040 Speaker 6: a portfolio company. If it's stuck and you can't sell it, 694 00:34:16,120 --> 00:34:19,959 Speaker 6: that's it. But today you can actually transfer value into, 695 00:34:20,000 --> 00:34:23,719 Speaker 6: for example, another fund that you control. So these co 696 00:34:23,800 --> 00:34:25,279 Speaker 6: invest vehicles are read. 697 00:34:26,040 --> 00:34:28,279 Speaker 3: Give us a comparison yield. I think it's something I'm 698 00:34:28,320 --> 00:34:32,920 Speaker 3: ignorant about. What's a blended yield of a private credit 699 00:34:33,000 --> 00:34:38,400 Speaker 3: Churchill transaction versus high yield versus four point x percent 700 00:34:38,440 --> 00:34:38,879 Speaker 3: ten years? 701 00:34:39,040 --> 00:34:41,600 Speaker 6: Yeah, so I mentioned I mentioned the illiquidity premium. So 702 00:34:41,640 --> 00:34:45,760 Speaker 6: you're about two hundred basis points differential in private credit 703 00:34:45,800 --> 00:34:49,880 Speaker 6: relative to liquid loans number one, So you're probably another 704 00:34:49,960 --> 00:34:53,120 Speaker 6: fifty one hundred basis points above the high yield bond market. Okay, 705 00:34:53,160 --> 00:34:56,399 Speaker 6: because think about where your high Bloomberg spreads are, right 706 00:34:56,440 --> 00:34:59,840 Speaker 6: now and then if you look at private equity, depending 707 00:34:59,880 --> 00:35:03,160 Speaker 6: on you know, and we're sort of a top tier 708 00:35:03,200 --> 00:35:06,240 Speaker 6: investor focusing on top tier firms, you're looking at twenty 709 00:35:06,400 --> 00:35:09,359 Speaker 6: plus percent returns for the best private equity sponsor. So 710 00:35:09,800 --> 00:35:12,440 Speaker 6: you have the ability as an investor to choose with 711 00:35:12,920 --> 00:35:17,200 Speaker 6: our platform, you know, stream of income that's safe because 712 00:35:17,239 --> 00:35:20,000 Speaker 6: you're top of the capital structure, secured by all the 713 00:35:20,040 --> 00:35:23,040 Speaker 6: assets senior credit. But then you can migrate up the 714 00:35:23,120 --> 00:35:26,319 Speaker 6: risk spectrum to get more yield. And what investors are 715 00:35:26,320 --> 00:35:29,120 Speaker 6: looking now for is how do you adapt in the 716 00:35:29,120 --> 00:35:31,800 Speaker 6: current climate. How do you adapt when things are uncertain? 717 00:35:31,800 --> 00:35:34,560 Speaker 6: How do you adapt when markets can be volatile? And 718 00:35:34,920 --> 00:35:37,120 Speaker 6: there's a safe harbor that's been created and that's why 719 00:35:37,120 --> 00:35:39,560 Speaker 6: you're seeing the growth that you're doing real quick. 720 00:35:39,960 --> 00:35:42,759 Speaker 5: One of things regulations I see the FTC and the 721 00:35:42,840 --> 00:35:44,840 Speaker 5: DJ blocking a lot of the big deals. Are you 722 00:35:44,840 --> 00:35:45,960 Speaker 5: seeing that as a headwind? 723 00:35:46,440 --> 00:35:48,480 Speaker 6: Well, again, you know, private credit tends to be a 724 00:35:48,520 --> 00:35:52,279 Speaker 6: little bit of a different environment because these companies are 725 00:35:52,280 --> 00:35:55,200 Speaker 6: privately held, they're not raided, they're not traded, and private 726 00:35:55,200 --> 00:35:58,160 Speaker 6: acty sponsors have been looking at industries that they like 727 00:35:58,960 --> 00:36:02,000 Speaker 6: for like a decade that are smaller these and medium 728 00:36:02,040 --> 00:36:05,719 Speaker 6: sized companies. These are companies are small. Yeah, exactly, that 729 00:36:05,760 --> 00:36:06,160 Speaker 6: makes sense. 730 00:36:06,280 --> 00:36:07,960 Speaker 2: You're doing the James Cromby. 731 00:36:07,840 --> 00:36:09,520 Speaker 6: Yeah Podcast tomorrow. Check it out. 732 00:36:09,800 --> 00:36:11,600 Speaker 2: Check it out, folks. This is Cromby is like the 733 00:36:11,640 --> 00:36:12,879 Speaker 2: real deal. Credit Edge. 734 00:36:12,920 --> 00:36:15,759 Speaker 3: I'm taking notes from from Credit Edge. I'm taking notes 735 00:36:15,800 --> 00:36:17,400 Speaker 3: from from James Crimby. 736 00:36:17,840 --> 00:36:19,520 Speaker 2: That's really special for Global Wall Street. 737 00:36:19,560 --> 00:36:22,319 Speaker 3: Randa Schummer, Churchill, Will James Crabby look for that of 738 00:36:22,320 --> 00:36:24,520 Speaker 3: course at Bloomberg Podcast. 739 00:36:25,320 --> 00:36:29,799 Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify, 740 00:36:29,960 --> 00:36:34,080 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 741 00:36:34,160 --> 00:36:37,239 Speaker 1: seven to ten am Eastern on Bloomberg dot Com, the 742 00:36:37,360 --> 00:36:41,120 Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You 743 00:36:41,160 --> 00:36:44,480 Speaker 1: can also watch us live every weekday on YouTube and 744 00:36:44,600 --> 00:36:46,200 Speaker 1: always on the Bloomberg terminal.