1 00:00:05,080 --> 00:00:07,200 Speaker 1: This is the Bloomberg Surveillance Podcast. 2 00:00:07,680 --> 00:00:10,799 Speaker 2: I'm Lisa abrahmoids along with Tom Keen and Jonathan Ferrell. 3 00:00:11,160 --> 00:00:15,280 Speaker 2: Join us each day for insight from the best in economics, geopolitics, 4 00:00:15,320 --> 00:00:16,440 Speaker 2: finance and investment. 5 00:00:16,760 --> 00:00:18,760 Speaker 1: Subscribe to Bloomberg Surveillance. 6 00:00:18,320 --> 00:00:21,840 Speaker 2: On demand on Apple, Spotify and anywhere you get your podcasts, 7 00:00:22,160 --> 00:00:25,200 Speaker 2: and always on Bloomberg dot com, the Bloomberg Terminal, and 8 00:00:25,200 --> 00:00:26,440 Speaker 2: the Bloomberg Business App. 9 00:00:26,640 --> 00:00:28,880 Speaker 3: I've been looking forward to this conversation. Liz An Son 10 00:00:28,960 --> 00:00:30,720 Speaker 3: is the chief Investments trying to just a chold swap 11 00:00:30,800 --> 00:00:32,839 Speaker 3: joins us right now. Lizan, I've been looking forward to 12 00:00:32,920 --> 00:00:34,720 Speaker 3: it because we're not going to talk about self landing, 13 00:00:34,760 --> 00:00:37,080 Speaker 3: hard landing, no landing, none of that. We're going to 14 00:00:37,159 --> 00:00:38,839 Speaker 3: talk about what you and a team have been focused 15 00:00:38,880 --> 00:00:41,720 Speaker 3: on now for a while, and that's rolling recessions. That 16 00:00:41,840 --> 00:00:44,320 Speaker 3: is a framework, Lizen. Why is that so important for you? 17 00:00:44,640 --> 00:00:45,280 Speaker 3: That nuance? 18 00:00:46,440 --> 00:00:48,319 Speaker 4: Well, first of all, this is a unique cycle. That's 19 00:00:48,320 --> 00:00:51,760 Speaker 4: the ultimate understatement. I think taking a nuanced approach is important, 20 00:00:51,760 --> 00:00:54,160 Speaker 4: and we've been using that term for quite some time. 21 00:00:54,200 --> 00:00:56,760 Speaker 4: I think the only other person that I know that's 22 00:00:56,800 --> 00:00:59,400 Speaker 4: been using as long as we have is Ed yard Denny, 23 00:00:59,480 --> 00:01:01,560 Speaker 4: and not that we want to rehash the last three 24 00:01:01,560 --> 00:01:03,240 Speaker 4: and a half years, but if you think about the 25 00:01:03,400 --> 00:01:06,560 Speaker 4: stimulus fuel demand surge coming out of the worst part 26 00:01:06,560 --> 00:01:09,720 Speaker 4: of the pandemic, all of that demand and money associated 27 00:01:09,760 --> 00:01:11,600 Speaker 4: with it was funneled into the good side of the 28 00:01:11,600 --> 00:01:14,600 Speaker 4: economy because we had no access to services. That was 29 00:01:14,640 --> 00:01:17,200 Speaker 4: where the inflation problem first began on the good side 30 00:01:17,200 --> 00:01:20,959 Speaker 4: of the economy, exacerbated by the supply chain disruptions. But 31 00:01:21,080 --> 00:01:23,440 Speaker 4: fast forward to the more recent period, we've gone into 32 00:01:23,480 --> 00:01:27,960 Speaker 4: hard landing recessions for housing, manufacturing, a lot of housing related, 33 00:01:28,280 --> 00:01:31,760 Speaker 4: many of the consumer product areas that were big beneficiaries 34 00:01:31,800 --> 00:01:35,240 Speaker 4: of the lockdown, and we've gone from inflation to disinflation 35 00:01:35,319 --> 00:01:38,319 Speaker 4: to deflation in many of the goods categories. We've just 36 00:01:38,400 --> 00:01:41,920 Speaker 4: had the later offsetting strength on the services side. Same 37 00:01:41,920 --> 00:01:45,320 Speaker 4: thing as rolled through in terms of inflation. So to me, 38 00:01:45,440 --> 00:01:47,960 Speaker 4: best case scenario is not really soft landing that Schuberti 39 00:01:48,040 --> 00:01:50,280 Speaker 4: sailed for many important segments of the economy. 40 00:01:50,560 --> 00:01:52,600 Speaker 5: It's a continued roll through where if. 41 00:01:52,440 --> 00:01:54,720 Speaker 4: In when services in the labor market get hit, you 42 00:01:54,800 --> 00:01:58,320 Speaker 4: have found stability and maybe even some improvement in those 43 00:01:58,360 --> 00:01:59,800 Speaker 4: areas that have already taken their hit. 44 00:02:00,080 --> 00:02:02,200 Speaker 1: Lezan, love your nuance. Let's build on that. 45 00:02:02,560 --> 00:02:06,040 Speaker 2: Where are you seeing opportunities that might have hit bottom 46 00:02:06,120 --> 00:02:08,360 Speaker 2: that you want to be investing in now, In particular 47 00:02:08,400 --> 00:02:11,400 Speaker 2: sectors that you think already have rolled through, they're hard 48 00:02:11,480 --> 00:02:12,840 Speaker 2: landing and are now buys. 49 00:02:14,160 --> 00:02:16,840 Speaker 4: I still think that investors are better off taking a 50 00:02:16,880 --> 00:02:20,240 Speaker 4: factor based approach as opposed to a monolithic sector based approach, 51 00:02:20,600 --> 00:02:22,520 Speaker 4: But we have made some adjustments in terms of the 52 00:02:22,520 --> 00:02:24,480 Speaker 4: foot factors that we're focused on. As you know we've 53 00:02:24,520 --> 00:02:28,040 Speaker 4: talked about it on this program. We have been emphasizing 54 00:02:28,280 --> 00:02:31,079 Speaker 4: stay up in quality with factors like interest coverage and 55 00:02:31,160 --> 00:02:34,400 Speaker 4: strong return on equity and strong balance sheet, but also 56 00:02:34,440 --> 00:02:38,440 Speaker 4: growthy factors like positive earnings, revisions and surprises. But I 57 00:02:38,440 --> 00:02:41,640 Speaker 4: think you want to now add kind of evaluation kicker 58 00:02:41,800 --> 00:02:45,560 Speaker 4: into the mix because this year was characterized by all 59 00:02:45,639 --> 00:02:49,200 Speaker 4: multiple expansion, no earnings growth. We see in the last 60 00:02:49,240 --> 00:02:51,720 Speaker 4: month that there is money itching to move out of 61 00:02:51,720 --> 00:02:55,200 Speaker 4: the Magnificent seven to find opportunities down the cap spectrum. 62 00:02:55,440 --> 00:03:00,280 Speaker 4: And you have seen some lower quality characteristics to of 63 00:03:00,320 --> 00:03:02,880 Speaker 4: what has rallied. I think you want to fade that 64 00:03:03,360 --> 00:03:06,560 Speaker 4: and continue to lean into quality. But you can find 65 00:03:06,600 --> 00:03:10,560 Speaker 4: it across the spectrum of sectors and also outside that. 66 00:03:11,000 --> 00:03:12,560 Speaker 5: Group of just the Magnificent seven. 67 00:03:12,720 --> 00:03:15,359 Speaker 2: So you said something Lezen talking about how people are 68 00:03:15,440 --> 00:03:17,480 Speaker 2: itching to take the money that they've put into the 69 00:03:17,480 --> 00:03:20,520 Speaker 2: Magnificent seven and put it to work elsewhere that might 70 00:03:20,600 --> 00:03:23,919 Speaker 2: be at a lower valuation. How big is that wave 71 00:03:23,960 --> 00:03:26,640 Speaker 2: of people is to get out of the Magnificent seven. 72 00:03:26,760 --> 00:03:29,160 Speaker 2: Is this something that could cause an underperformance or is 73 00:03:29,160 --> 00:03:31,760 Speaker 2: it just simply there's just been so much money people 74 00:03:31,800 --> 00:03:33,880 Speaker 2: are looking for other ideas well. 75 00:03:34,120 --> 00:03:37,520 Speaker 4: So far, so good in terms of the rotational nature 76 00:03:37,760 --> 00:03:41,160 Speaker 4: of this easing of some of the excesses, You've seen 77 00:03:41,520 --> 00:03:43,880 Speaker 4: some pullback in the Magnificent seven. The rest of two 78 00:03:43,960 --> 00:03:47,520 Speaker 4: thousand SMP equal weight is outperforming the SMP over the 79 00:03:47,520 --> 00:03:48,800 Speaker 4: past month or so. 80 00:03:48,840 --> 00:03:50,600 Speaker 5: It's happened in kind of a stealth way. 81 00:03:50,880 --> 00:03:54,440 Speaker 4: That's obviously the best way to go through a corrective 82 00:03:54,480 --> 00:03:56,520 Speaker 4: phase of excesses versus. 83 00:03:56,280 --> 00:03:57,640 Speaker 5: The bottom falling out all at once. 84 00:03:57,720 --> 00:04:01,360 Speaker 4: What concerns me, particularly once we get past the year 85 00:04:01,480 --> 00:04:05,120 Speaker 4: end seasonality, is that there is an incredible amount of overlap, 86 00:04:05,240 --> 00:04:08,520 Speaker 4: especially in the large institutional world and the hedge fund world, 87 00:04:09,000 --> 00:04:12,040 Speaker 4: in terms of ownership of not just the magnificent seven 88 00:04:12,280 --> 00:04:13,320 Speaker 4: but up. 89 00:04:13,160 --> 00:04:16,280 Speaker 5: The cap spectrum, and that you know. 90 00:04:16,200 --> 00:04:18,760 Speaker 4: If we get some sort of catalyst and it unleashes 91 00:04:19,600 --> 00:04:23,400 Speaker 4: more frenzy around selling, I think maybe the hit would 92 00:04:23,400 --> 00:04:26,159 Speaker 4: have to be larger, but I do think absent that 93 00:04:26,200 --> 00:04:30,360 Speaker 4: we could continue to see a broadening out via rotation 94 00:04:31,080 --> 00:04:36,159 Speaker 4: again as opposed to some significant crack occurring in the market. 95 00:04:36,240 --> 00:04:38,440 Speaker 3: Lasan, can you help us gauge sentiment? Just sort of 96 00:04:38,440 --> 00:04:41,640 Speaker 3: a bit wittold, least from myself repeatedly that the money 97 00:04:41,720 --> 00:04:42,720 Speaker 3: money market funds. 98 00:04:42,520 --> 00:04:43,600 Speaker 6: Is really really sticky. 99 00:04:44,000 --> 00:04:46,000 Speaker 3: As you look across clients, to the people you speak 100 00:04:46,040 --> 00:04:49,360 Speaker 3: to daily, have they been moving into equities over the 101 00:04:49,440 --> 00:04:49,920 Speaker 3: last month? 102 00:04:49,920 --> 00:04:51,560 Speaker 6: What was that move in November? 103 00:04:51,680 --> 00:04:55,240 Speaker 4: So you've seen some move in equities, But it's actually, 104 00:04:55,279 --> 00:04:59,000 Speaker 4: interestingly within the US equity market been toward areas like 105 00:04:59,120 --> 00:05:02,320 Speaker 4: real estate utilities, and I think that is in keeping 106 00:05:02,360 --> 00:05:06,000 Speaker 4: with expectations of sooner rather than later fed cuts. I'm 107 00:05:06,000 --> 00:05:09,320 Speaker 4: skeptical about that, but that's where the money has gone. 108 00:05:09,320 --> 00:05:13,120 Speaker 4: But sentiment is really interesting because attitudinal sentiment measures have 109 00:05:13,160 --> 00:05:16,920 Speaker 4: gone off the charts of bullishness and very little bearishness. 110 00:05:17,040 --> 00:05:20,840 Speaker 4: Yet even the AAII survey that we get those attitudinal 111 00:05:20,920 --> 00:05:25,120 Speaker 4: bullish bearish readings, the equity exposure of that same cohort 112 00:05:25,200 --> 00:05:28,640 Speaker 4: of investors has actually been coming down. On the other hand, 113 00:05:29,320 --> 00:05:35,080 Speaker 4: active institutional managers have actually been significantly increasing exposure. So 114 00:05:35,480 --> 00:05:38,599 Speaker 4: much like cross currents in the economy, there's even a 115 00:05:38,600 --> 00:05:41,880 Speaker 4: lot of cross currents in terms of sentiment data, and 116 00:05:41,920 --> 00:05:44,839 Speaker 4: it's really a mixed picture, and sentiment is hard to 117 00:05:45,320 --> 00:05:47,520 Speaker 4: It's always hard to use as some market timing tool, 118 00:05:47,560 --> 00:05:51,520 Speaker 4: even at extremes, but it's particularly murky in this environment 119 00:05:51,600 --> 00:05:51,880 Speaker 4: right now. 120 00:05:51,960 --> 00:05:53,159 Speaker 3: Lizen, just a put a bow on it. You did 121 00:05:53,279 --> 00:05:55,440 Speaker 3: just mentioned that that you're skeptical about right cuts. Can 122 00:05:55,480 --> 00:05:58,159 Speaker 3: you just explain that a little bit more, Well. 123 00:05:58,080 --> 00:06:00,839 Speaker 4: The inflation is still above the FEDS target, the labor 124 00:06:00,880 --> 00:06:03,600 Speaker 4: market is hanging in there, the economy is hanging in there. 125 00:06:04,000 --> 00:06:07,080 Speaker 4: How that justifies a pivot from the most aggressive tightening 126 00:06:07,160 --> 00:06:09,560 Speaker 4: cycle to easing as soon as the first quarter of 127 00:06:09,600 --> 00:06:10,080 Speaker 4: next year. 128 00:06:10,520 --> 00:06:11,239 Speaker 5: I don't get it. 129 00:06:11,240 --> 00:06:13,600 Speaker 4: It's possible to find to be easy, but probably because 130 00:06:13,640 --> 00:06:17,279 Speaker 4: there's more economic dislocation between now and then. In addition, 131 00:06:17,680 --> 00:06:20,359 Speaker 4: you had the Fed and Powell specifically pointing to the 132 00:06:20,400 --> 00:06:22,440 Speaker 4: bond market doing a lot of the tightening for the 133 00:06:22,480 --> 00:06:24,400 Speaker 4: FED when you were in the surge and yields up 134 00:06:24,440 --> 00:06:26,880 Speaker 4: to five percent. To me, what would be interesting to 135 00:06:26,920 --> 00:06:29,359 Speaker 4: hear is if they start to say, well, the loosening, 136 00:06:29,360 --> 00:06:32,200 Speaker 4: which is a record one month loosening in financial conditions 137 00:06:32,200 --> 00:06:35,520 Speaker 4: in November, maybe that does some of the loosening for 138 00:06:35,600 --> 00:06:38,120 Speaker 4: the FED. And it wouldn't surprise me if Powell has 139 00:06:38,160 --> 00:06:42,160 Speaker 4: to yet again reinforce the notion that they're not at 140 00:06:42,160 --> 00:06:44,520 Speaker 4: this point considering rate cuts. 141 00:06:44,640 --> 00:06:46,640 Speaker 6: That's the conversation for a week today. Listen. 142 00:06:46,800 --> 00:06:49,120 Speaker 3: Thank you Lizanne Sunders, a child swab one of the 143 00:06:49,200 --> 00:06:56,360 Speaker 3: very best joining us at Amandelinum, head of macro credit 144 00:06:56,400 --> 00:06:58,000 Speaker 3: research at Black Crock Andmanic good. 145 00:06:57,839 --> 00:06:59,599 Speaker 7: Morning, good morning, Thank you both for having me. 146 00:06:59,640 --> 00:07:01,480 Speaker 6: How much money is shift into private markets. 147 00:07:01,720 --> 00:07:04,480 Speaker 7: So our forecast calls for that asset class to grow 148 00:07:04,520 --> 00:07:07,280 Speaker 7: from one point six trillion globally to three and a 149 00:07:07,320 --> 00:07:09,680 Speaker 7: half trillion by the end of twenty twenty eight. So 150 00:07:09,720 --> 00:07:14,760 Speaker 7: that implies a pretty significant continued growth pattern through the 151 00:07:14,800 --> 00:07:17,760 Speaker 7: next five years. There are really four drivers behind that. 152 00:07:17,920 --> 00:07:21,240 Speaker 7: The increase in the addressable market is one of them, 153 00:07:21,240 --> 00:07:24,680 Speaker 7: but it's really investors looking for diversification, borrowers looking for 154 00:07:24,720 --> 00:07:28,320 Speaker 7: certainty of execution, structural shifts in the public markets which 155 00:07:28,320 --> 00:07:31,160 Speaker 7: are now serving larger and larger borrowers, so that renders 156 00:07:31,440 --> 00:07:34,520 Speaker 7: small middle market debt deals ill liquid. And then fourth 157 00:07:34,640 --> 00:07:38,160 Speaker 7: is the opportunity for banks to partner with non banks. 158 00:07:38,200 --> 00:07:41,280 Speaker 7: And also just given the well telegraphed contraction in bank 159 00:07:41,360 --> 00:07:44,560 Speaker 7: lending and tightening of bank lending standards to really fuel 160 00:07:44,560 --> 00:07:46,400 Speaker 7: that growth. And so that's our forecast. 161 00:07:46,600 --> 00:07:49,120 Speaker 2: Was that a really nice way of saying D banking 162 00:07:49,320 --> 00:07:51,679 Speaker 2: that basically private credit is stealing banks lunch. 163 00:07:52,640 --> 00:07:55,360 Speaker 7: I watched all of your great coverage yesterday, and I 164 00:07:55,400 --> 00:07:58,640 Speaker 7: did see the D Banking dialogue. I actually think I 165 00:07:58,680 --> 00:08:01,080 Speaker 7: agree with the comments that banks will remain at the 166 00:08:01,120 --> 00:08:04,320 Speaker 7: center of the lending universe. That said, I think the 167 00:08:04,360 --> 00:08:08,800 Speaker 7: important takeaway is that as private credit has become sizeable 168 00:08:08,880 --> 00:08:12,800 Speaker 7: and scalable in its own right, it can now compete 169 00:08:13,000 --> 00:08:16,160 Speaker 7: against other parts of the market where it wasn't historically. 170 00:08:16,560 --> 00:08:19,160 Speaker 7: And so what we've actually seen are some companies with 171 00:08:19,320 --> 00:08:22,880 Speaker 7: demonstrated access to the public markets choosing to refinance in 172 00:08:22,920 --> 00:08:26,400 Speaker 7: the private markets. I think there's an opportunity for banks 173 00:08:26,400 --> 00:08:28,880 Speaker 7: to partner with non banks in terms of in an 174 00:08:28,960 --> 00:08:32,880 Speaker 7: environment where capital and liquidity rules may change, to partner 175 00:08:33,120 --> 00:08:36,120 Speaker 7: and maybe move some of that lending into other parts 176 00:08:36,160 --> 00:08:39,440 Speaker 7: of the non bank system. Doesn't mean that the risk 177 00:08:39,480 --> 00:08:41,920 Speaker 7: transfer is a negative. It just means that capital is 178 00:08:41,960 --> 00:08:44,480 Speaker 7: being reallocated, just like it did after the financial crisis. 179 00:08:44,520 --> 00:08:46,520 Speaker 2: So there is this sort of larger question when you 180 00:08:46,559 --> 00:08:49,640 Speaker 2: say banks will still be the center of the lending universe, 181 00:08:50,200 --> 00:08:52,600 Speaker 2: it raises this question about what that means. There'll be 182 00:08:52,640 --> 00:08:55,559 Speaker 2: the center in terms of maybe organizing some of these transactions, 183 00:08:55,840 --> 00:08:58,560 Speaker 2: but not necessarily the center of profits, not necessarily the 184 00:08:58,600 --> 00:09:01,560 Speaker 2: center of deploying risk and then getting that outsize return 185 00:09:01,640 --> 00:09:03,640 Speaker 2: for some of these private loans. Is that what we're 186 00:09:03,640 --> 00:09:05,520 Speaker 2: saying that they're going to be the center of sort 187 00:09:05,559 --> 00:09:08,960 Speaker 2: of some of the transactional aspects, but that private credit 188 00:09:09,040 --> 00:09:11,160 Speaker 2: firms are going to really get the upside from these 189 00:09:11,200 --> 00:09:12,440 Speaker 2: loans that banks used to capture. 190 00:09:12,840 --> 00:09:16,719 Speaker 7: I mean, I think from the side of the banking relationship, 191 00:09:16,760 --> 00:09:20,120 Speaker 7: they really have a lot of the client relationships, a 192 00:09:20,200 --> 00:09:25,760 Speaker 7: lot of the underwriting expertise. But in an environment where 193 00:09:26,160 --> 00:09:29,080 Speaker 7: risk weighted assets are going up, does it make sense 194 00:09:29,120 --> 00:09:31,920 Speaker 7: to hold all of that capital on the bank balance 195 00:09:31,960 --> 00:09:34,760 Speaker 7: sheet or is there a more capital efficient way to 196 00:09:34,880 --> 00:09:38,640 Speaker 7: do it? I think that's really the shift that we're 197 00:09:38,679 --> 00:09:41,120 Speaker 7: seeing now. Some of these factors have been in place 198 00:09:41,120 --> 00:09:43,360 Speaker 7: for a really long time, going back to the Financial crisis. 199 00:09:43,400 --> 00:09:46,960 Speaker 7: After Dodd Frank was enacted, the public syndicated leverage loan 200 00:09:47,000 --> 00:09:49,280 Speaker 7: markets grew because banks didn't want to keep those loans 201 00:09:49,280 --> 00:09:51,800 Speaker 7: on their balance sheet. Instead they syndicated them out to 202 00:09:51,840 --> 00:09:54,560 Speaker 7: a wide range of investors. That's how the public debt 203 00:09:54,559 --> 00:09:56,560 Speaker 7: markets have been growing for so long. So I think 204 00:09:56,679 --> 00:10:01,440 Speaker 7: that's just it's another sort of iteration of this capital 205 00:10:01,520 --> 00:10:05,480 Speaker 7: allocation that's shifting in response to the regional banking disruption 206 00:10:05,559 --> 00:10:08,360 Speaker 7: in March, in response to the potential rules for Basle 207 00:10:08,360 --> 00:10:11,000 Speaker 7: three endgame, and I think it's probably a longer term shift. 208 00:10:11,040 --> 00:10:12,560 Speaker 7: By the way, I would say, you know, our three 209 00:10:12,559 --> 00:10:15,240 Speaker 7: and a half trillion forecast, it assumes a fifteen percent 210 00:10:15,320 --> 00:10:18,240 Speaker 7: compound annual growth rate. That's actually below the growth rate 211 00:10:18,280 --> 00:10:20,800 Speaker 7: that we've seen over the past five years, and it's 212 00:10:20,800 --> 00:10:22,920 Speaker 7: consistent with the growth rate over the past decade. 213 00:10:23,000 --> 00:10:25,040 Speaker 8: So it sounds large. 214 00:10:24,720 --> 00:10:27,320 Speaker 7: But it's actually a continuation of the trend that's already 215 00:10:27,320 --> 00:10:27,760 Speaker 7: been in place. 216 00:10:27,840 --> 00:10:29,560 Speaker 3: Let's talk about big moves out of the last month. 217 00:10:29,679 --> 00:10:31,720 Speaker 3: Credit spread so much tighter on high yield. I think 218 00:10:31,760 --> 00:10:34,400 Speaker 3: three sixty seven right now, I just want it from 219 00:10:34,440 --> 00:10:36,199 Speaker 3: your perspective, still up in quality, and what do you 220 00:10:36,240 --> 00:10:36,840 Speaker 3: make of this move? 221 00:10:37,040 --> 00:10:39,960 Speaker 7: So, I mean, I think the move it's very It's 222 00:10:40,000 --> 00:10:44,280 Speaker 7: consistent with this kind of year end rally that has 223 00:10:44,360 --> 00:10:49,320 Speaker 7: been fueled by pretty favorable technicals. We've seen issuance pick up, 224 00:10:49,520 --> 00:10:52,440 Speaker 7: but not to a significant extent that it's interfering with 225 00:10:52,520 --> 00:10:56,200 Speaker 7: that tightening. From our perspective, yes, up in quality still 226 00:10:56,240 --> 00:10:56,960 Speaker 7: makes a lot of sense. 227 00:10:57,000 --> 00:10:58,280 Speaker 8: For this really important reason. 228 00:10:58,760 --> 00:11:00,920 Speaker 7: Most of the issuance in twenty twenty three, and I'm 229 00:11:00,920 --> 00:11:03,520 Speaker 7: talking about the left in market has been up in 230 00:11:03,640 --> 00:11:07,040 Speaker 7: quality within that market, so double bes and high single bees. 231 00:11:07,360 --> 00:11:10,200 Speaker 7: The low low end of the quality spectrum, so triple 232 00:11:10,240 --> 00:11:13,120 Speaker 7: c's and low single bees, has really been untested. There's 233 00:11:13,120 --> 00:11:15,679 Speaker 7: been a lot of talk about rate cuts. That's not 234 00:11:15,720 --> 00:11:17,840 Speaker 7: really our base case in the first half. But even 235 00:11:17,880 --> 00:11:19,640 Speaker 7: if we do get a few modest rate cuts, just 236 00:11:19,640 --> 00:11:23,320 Speaker 7: to put that in perspective, the implied refinancing cost on 237 00:11:23,400 --> 00:11:26,080 Speaker 7: average for triple C's is above six hundred basis points. 238 00:11:26,320 --> 00:11:29,240 Speaker 7: For the distressed universe it's above fourteen hundred basis points. 239 00:11:29,360 --> 00:11:31,640 Speaker 7: So this low end of the quality spectrum. Even if 240 00:11:31,679 --> 00:11:34,480 Speaker 7: we get some rate relief, they're still going to be 241 00:11:34,520 --> 00:11:37,120 Speaker 7: refinancing into a much higher cost of capital regime. 242 00:11:37,200 --> 00:11:39,560 Speaker 1: How long can goldilocks lost goldilocks last? 243 00:11:39,559 --> 00:11:39,719 Speaker 2: Then? 244 00:11:40,120 --> 00:11:42,559 Speaker 7: I think it's the title of our one Q outlook 245 00:11:42,600 --> 00:11:45,600 Speaker 7: was a widening divide, and I really think it speaks 246 00:11:45,640 --> 00:11:48,200 Speaker 7: to the dispersion that's evident under the surface and a 247 00:11:48,200 --> 00:11:52,160 Speaker 7: lot of these markets. So for goldilocks, investment grade goldilocks, 248 00:11:52,679 --> 00:11:55,400 Speaker 7: you know, high quality, high yield, they're in a pretty 249 00:11:55,400 --> 00:11:57,839 Speaker 7: good spot, especially if we can achieve the soft landing. 250 00:11:57,960 --> 00:12:00,000 Speaker 7: If you're a triple C rated credit that has refined 251 00:12:00,080 --> 00:12:02,800 Speaker 7: nancing to do and you're looking at your current coupon 252 00:12:02,960 --> 00:12:04,959 Speaker 7: and then the six hundred basis points that it may 253 00:12:04,960 --> 00:12:07,880 Speaker 7: cost you to refinance in today's market or more much 254 00:12:07,880 --> 00:12:10,080 Speaker 7: different story. It's part of the reason why we expect 255 00:12:10,080 --> 00:12:12,960 Speaker 7: defaults to continue to march higher through the first half 256 00:12:12,960 --> 00:12:15,480 Speaker 7: of next year. It's not not a spike, not a 257 00:12:15,520 --> 00:12:18,840 Speaker 7: significant increase. But I don't think we ask a lot 258 00:12:19,240 --> 00:12:21,160 Speaker 7: have we seen the last of this transition to a 259 00:12:21,240 --> 00:12:22,000 Speaker 7: higher cost of capital. 260 00:12:22,040 --> 00:12:22,959 Speaker 8: I don't believe that we have. 261 00:12:32,880 --> 00:12:35,000 Speaker 6: With us around the table. I'm really placed society brilliant. 262 00:12:35,040 --> 00:12:37,760 Speaker 3: Libby Cantroll, the managing director and head a public policy 263 00:12:37,840 --> 00:12:38,400 Speaker 3: over at PIMCO. 264 00:12:38,440 --> 00:12:41,240 Speaker 6: Libby, good morning. Another big debate for Republicans. 265 00:12:41,440 --> 00:12:41,880 Speaker 8: Big debate? 266 00:12:42,240 --> 00:12:44,640 Speaker 6: Yes, is this the big one? The difference? 267 00:12:45,000 --> 00:12:46,400 Speaker 8: This is the big one? So this may be the 268 00:12:46,480 --> 00:12:46,960 Speaker 8: last one. 269 00:12:47,000 --> 00:12:51,360 Speaker 9: Actually, there's not another debate schedule before Iowa, when voters, 270 00:12:51,360 --> 00:12:53,200 Speaker 9: of course on the Republican side, will go to the 271 00:12:53,280 --> 00:12:58,360 Speaker 9: polls on January fifteenth. Viewership has declined since the first debate. 272 00:12:58,679 --> 00:13:01,320 Speaker 9: That's when we saw sort of top tick of thirteen million. 273 00:13:01,679 --> 00:13:04,360 Speaker 9: The last debate was around seven million, So we'll see 274 00:13:04,360 --> 00:13:06,439 Speaker 9: if people are even paying attention to this. I think 275 00:13:06,440 --> 00:13:10,160 Speaker 9: the real question, though John is does can Nicky Haley 276 00:13:10,240 --> 00:13:13,200 Speaker 9: have another breakout moment? Does this sort of sustain the 277 00:13:13,240 --> 00:13:15,600 Speaker 9: momentum that she has both in terms of the polling 278 00:13:15,679 --> 00:13:18,800 Speaker 9: but very importantly in terms of the donors, And that 279 00:13:18,840 --> 00:13:21,000 Speaker 9: remains an open question. I think that the other three 280 00:13:21,040 --> 00:13:22,959 Speaker 9: folks on the debate stage will be sort of attacking 281 00:13:23,040 --> 00:13:26,560 Speaker 9: Nicki Haley. I think Nicki Heley will be attacking President Trump, 282 00:13:26,679 --> 00:13:30,439 Speaker 9: so it should be raucous as usual. But does it 283 00:13:30,480 --> 00:13:32,480 Speaker 9: actually make a difference. I think that's the open question. 284 00:13:32,600 --> 00:13:35,640 Speaker 1: What's the chance that you see another Biden Trump matchup. 285 00:13:35,800 --> 00:13:38,240 Speaker 9: Well, so you know, what we're guiding our clients too, 286 00:13:38,520 --> 00:13:40,800 Speaker 9: is one is that Biden will be the nominee. 287 00:13:41,200 --> 00:13:42,960 Speaker 8: This sort of idea that there. 288 00:13:42,880 --> 00:13:47,640 Speaker 9: Is some great cabal at the convention that will unseat him. 289 00:13:47,679 --> 00:13:49,199 Speaker 8: We just do not think as founded. 290 00:13:49,640 --> 00:13:53,000 Speaker 9: Senator bros from Louisiana, who had served with Joe Biden 291 00:13:53,040 --> 00:13:56,400 Speaker 9: in the Senate, said, as long as President Biden is breathing, 292 00:13:56,480 --> 00:13:58,280 Speaker 9: he is running. And I think that is something we 293 00:13:58,280 --> 00:14:01,760 Speaker 9: should just you know, take take for what it is. 294 00:14:02,080 --> 00:14:04,360 Speaker 8: You know, on the Republican side, obviously, if. 295 00:14:04,240 --> 00:14:07,080 Speaker 9: The primaries were held tomorrow, it looks like Trump would 296 00:14:07,160 --> 00:14:10,000 Speaker 9: be the nominee. They're not going to be held tomorrow. 297 00:14:10,040 --> 00:14:12,960 Speaker 9: They're held in around forty days. And what we've seen 298 00:14:13,000 --> 00:14:15,560 Speaker 9: with Iowa and New Hampshire is that things can change. 299 00:14:16,160 --> 00:14:18,719 Speaker 9: They haven't really changed in terms of dictating who the 300 00:14:18,760 --> 00:14:22,320 Speaker 9: nominee is since two thousand and eight when Obama, who 301 00:14:22,360 --> 00:14:24,600 Speaker 9: was sort of underperforming all of the polls, that really 302 00:14:24,600 --> 00:14:26,840 Speaker 9: outperformed in both Iowa and New Hampshire and was able 303 00:14:26,880 --> 00:14:29,840 Speaker 9: to get the momentum to the nomination. So a lot 304 00:14:29,920 --> 00:14:33,360 Speaker 9: can still happen, but as of now, if you were saying, 305 00:14:33,400 --> 00:14:35,760 Speaker 9: if the primaries were held tomorrow, it would be another 306 00:14:35,800 --> 00:14:39,000 Speaker 9: Biden Trump rematch, and you know, ironically, I'll just say, 307 00:14:39,040 --> 00:14:41,120 Speaker 9: is that seventy percent of Americans don't want that. 308 00:14:41,880 --> 00:14:43,480 Speaker 2: So that's the reason why I think it got so 309 00:14:43,560 --> 00:14:47,040 Speaker 2: much attention yesterday when Joe Biden said if it wasn't 310 00:14:47,080 --> 00:14:49,000 Speaker 2: for Donald Trump, he wouldn't be running again. 311 00:14:49,640 --> 00:14:50,520 Speaker 1: What do you make of that? 312 00:14:50,560 --> 00:14:53,120 Speaker 2: Do you make that if NICKI Haley is the nominee 313 00:14:53,120 --> 00:14:56,320 Speaker 2: for the Republican side, that there is a chance that 314 00:14:56,400 --> 00:14:58,240 Speaker 2: Joe Biden would step down and pave the way for 315 00:14:58,320 --> 00:14:58,880 Speaker 2: somebody else. 316 00:14:59,280 --> 00:15:02,600 Speaker 9: So his his pressure ap really watched that back last 317 00:15:02,680 --> 00:15:04,640 Speaker 9: night after those comments were made. They were made, of 318 00:15:04,640 --> 00:15:07,680 Speaker 9: course in private at a fundraiser, so was maybe I 319 00:15:07,680 --> 00:15:11,040 Speaker 9: think they're saying taken out of context. You know. However, 320 00:15:11,560 --> 00:15:13,760 Speaker 9: you know, this is something that President Biden has been 321 00:15:13,800 --> 00:15:15,920 Speaker 9: saying since he was a candidate in twenty twenty, that 322 00:15:15,920 --> 00:15:18,800 Speaker 9: that's why he was running the first time, and so 323 00:15:18,840 --> 00:15:23,000 Speaker 9: this is somewhat consistent with that messaging. However, if Trump 324 00:15:23,080 --> 00:15:26,040 Speaker 9: does not get the nomination, I still think that President 325 00:15:26,080 --> 00:15:30,000 Speaker 9: Biden is the incumbent president. He believes that he really 326 00:15:30,040 --> 00:15:33,000 Speaker 9: has a record both on the economy and then foreign 327 00:15:33,080 --> 00:15:36,520 Speaker 9: policy to feel confident to run on. So we are 328 00:15:36,520 --> 00:15:39,480 Speaker 9: not getting sort of any indication from folks close to 329 00:15:39,520 --> 00:15:42,520 Speaker 9: the Biden world that he is, that he's not running. 330 00:15:42,560 --> 00:15:43,160 Speaker 8: He is running. 331 00:15:43,280 --> 00:15:44,080 Speaker 6: We've been all appreciate. 332 00:15:44,120 --> 00:15:46,600 Speaker 3: I think we could all benefit from a delegation oudication 333 00:15:46,760 --> 00:15:48,000 Speaker 3: rules clinic from you. 334 00:15:48,640 --> 00:15:51,520 Speaker 6: How have things changed for Republican primary. 335 00:15:51,240 --> 00:15:54,560 Speaker 9: Especially as a non Yes, a US citizen, So I 336 00:15:54,640 --> 00:15:56,160 Speaker 9: appreciate you on that question. 337 00:15:57,000 --> 00:15:59,000 Speaker 8: Yeah, so this is important. 338 00:15:59,120 --> 00:16:01,440 Speaker 9: It's like very wants and a lot of our client's 339 00:16:01,480 --> 00:16:03,000 Speaker 9: eyes understandably glazed over. 340 00:16:03,440 --> 00:16:05,920 Speaker 8: But to get the nomination, it's just a delegate game. 341 00:16:05,960 --> 00:16:08,040 Speaker 9: You need to get fifty percent of the delegates at 342 00:16:08,080 --> 00:16:10,680 Speaker 9: stake on the Republican side and the Democratic side. The 343 00:16:10,720 --> 00:16:13,160 Speaker 9: Republican side is the real story here, though, because the 344 00:16:13,560 --> 00:16:17,560 Speaker 9: Trump campaign much more organized than it was in twenty sixteen. 345 00:16:17,560 --> 00:16:21,960 Speaker 9: By their own emission, they have now systematically changed the 346 00:16:21,960 --> 00:16:25,480 Speaker 9: way that states allocate delegate rules to benefit him as 347 00:16:25,520 --> 00:16:28,120 Speaker 9: long as it's a crowded field, meaning that he They've 348 00:16:28,240 --> 00:16:30,760 Speaker 9: changed the rules to what's called winner take all, So 349 00:16:30,960 --> 00:16:33,600 Speaker 9: as long as President Trump is winning a plurality of 350 00:16:33,640 --> 00:16:35,960 Speaker 9: the vote in many states, he will get one hundred 351 00:16:36,000 --> 00:16:38,840 Speaker 9: percent of the delegates, and the punchline for all of 352 00:16:38,920 --> 00:16:41,320 Speaker 9: us is that that makes it much easier for him 353 00:16:41,320 --> 00:16:43,920 Speaker 9: to get the nomination much more quickly. So I would 354 00:16:44,040 --> 00:16:46,920 Speaker 9: argue that by March fifth, which is Super Tuesday, we'll 355 00:16:46,960 --> 00:16:49,520 Speaker 9: have had forty five percent of the delegates at stake 356 00:16:49,560 --> 00:16:52,240 Speaker 9: being voted on, we likely will have a very good 357 00:16:52,240 --> 00:16:54,960 Speaker 9: idea of who's going to be the nominee or whether. 358 00:16:54,760 --> 00:16:56,800 Speaker 8: It's going to be more of a competitive two person race. 359 00:16:56,840 --> 00:16:58,320 Speaker 3: As you said, so we know there's four people on 360 00:16:58,360 --> 00:17:01,240 Speaker 3: the stage. Later is on the calendar where that for 361 00:17:01,600 --> 00:17:03,760 Speaker 3: needs to become one to change the outcome of this. 362 00:17:03,840 --> 00:17:05,199 Speaker 9: Well, I think there are a lot of folks on 363 00:17:05,200 --> 00:17:06,760 Speaker 9: both the Republican side and then also some of the 364 00:17:06,760 --> 00:17:09,159 Speaker 9: Democratic side. As you've seen, there's some now Democratic donors 365 00:17:09,200 --> 00:17:13,600 Speaker 9: who are you know, donating to Nicki Haley sort of interesting, 366 00:17:14,200 --> 00:17:18,320 Speaker 9: unprecedented in many ways, who are trying to argue for 367 00:17:18,359 --> 00:17:20,600 Speaker 9: a Chris Christy to say drop out of the race 368 00:17:21,000 --> 00:17:23,840 Speaker 9: before Iowa. You know, John, I think what we've seen 369 00:17:23,840 --> 00:17:26,280 Speaker 9: though before is that again so much can change. That 370 00:17:26,359 --> 00:17:30,440 Speaker 9: much of this is unprecedented, particularly given what we might 371 00:17:30,480 --> 00:17:34,240 Speaker 9: be facing, which is you know, two incumbent presidents effectively 372 00:17:34,280 --> 00:17:36,639 Speaker 9: running against each other. So you know, I don't think 373 00:17:36,680 --> 00:17:39,359 Speaker 9: there's a drop dead date, but I do think that 374 00:17:39,400 --> 00:17:41,520 Speaker 9: it needs to become a two person race sort of 375 00:17:41,520 --> 00:17:42,560 Speaker 9: by South Carolina. 376 00:17:42,640 --> 00:17:45,320 Speaker 8: That's February twenty fourth. So I think the bottom. 377 00:17:45,040 --> 00:17:47,359 Speaker 9: Line for kind of the markets and for investors is 378 00:17:47,359 --> 00:17:49,600 Speaker 9: that the next seventy five days really matters. 379 00:17:49,640 --> 00:17:50,840 Speaker 8: We will have a very good. 380 00:17:50,640 --> 00:17:53,920 Speaker 9: Idea by sort of South Carolina by Super Tuesday, which 381 00:17:53,920 --> 00:17:56,520 Speaker 9: is March fifth, whether this is going to be President 382 00:17:56,560 --> 00:17:58,440 Speaker 9: Trump Biden or whether it's going to be more of 383 00:17:58,480 --> 00:18:01,439 Speaker 9: a two person race between Nicky Haley and Trump. 384 00:18:01,560 --> 00:18:03,040 Speaker 2: In those seventy five days, we're going to be dealing 385 00:18:03,080 --> 00:18:05,600 Speaker 2: with a couple of deadlines for funding the government. Before 386 00:18:05,640 --> 00:18:07,359 Speaker 2: I let you go, we keep talking about where is 387 00:18:07,400 --> 00:18:09,919 Speaker 2: the leverage. The leverage is in the US government. I 388 00:18:09,920 --> 00:18:12,679 Speaker 2: then you figure something out in order to keep operating. 389 00:18:13,359 --> 00:18:16,040 Speaker 2: How are you advising people in the market to understand 390 00:18:16,400 --> 00:18:19,240 Speaker 2: what's happening, what the likelihood of a shutdown is, what 391 00:18:19,280 --> 00:18:21,840 Speaker 2: that means in terms of the growing risk frankly that 392 00:18:21,840 --> 00:18:23,800 Speaker 2: it's been attributed to in markets. 393 00:18:24,040 --> 00:18:26,280 Speaker 9: Yeah, So mean I think that two things. One is 394 00:18:26,280 --> 00:18:27,880 Speaker 9: that this is not the dead ceiling, right. The debt 395 00:18:27,920 --> 00:18:31,959 Speaker 9: ceiling was existential for the markets that has been fortunately 396 00:18:31,960 --> 00:18:36,359 Speaker 9: addressed until January or February of twenty twenty five. This 397 00:18:36,440 --> 00:18:39,480 Speaker 9: is really the most foundational function of Congress is just 398 00:18:39,480 --> 00:18:43,160 Speaker 9: to keep the lights on. They keep kicking the can 399 00:18:43,240 --> 00:18:45,439 Speaker 9: down the road, Lisa, does it really matter if they 400 00:18:45,480 --> 00:18:48,359 Speaker 9: shut down the government? Probably not if it's not for 401 00:18:48,359 --> 00:18:50,600 Speaker 9: a sustained period of time, But if it does go 402 00:18:50,680 --> 00:18:52,280 Speaker 9: on for weeks, then we don't get some of the 403 00:18:52,280 --> 00:18:55,159 Speaker 9: economic data, then it could actually start hurting the economy. 404 00:18:55,400 --> 00:18:57,040 Speaker 9: But I think this is just sort of noise. But 405 00:18:57,080 --> 00:19:00,240 Speaker 9: I think the punchline here from a fiscal perspective is 406 00:19:00,240 --> 00:19:03,200 Speaker 9: this effectively funds of government at the same levels as 407 00:19:03,320 --> 00:19:06,400 Speaker 9: last year, and what we're not We're not going. 408 00:19:06,320 --> 00:19:07,560 Speaker 8: To see any more physical stimulus. 409 00:19:07,600 --> 00:19:10,480 Speaker 9: And I think the threshold for any sort of stimulus, 410 00:19:10,800 --> 00:19:12,440 Speaker 9: even if we do go into recession. 411 00:19:12,440 --> 00:19:14,320 Speaker 8: I know your previous guest was pretty sang one about 412 00:19:14,320 --> 00:19:14,760 Speaker 8: the economy. 413 00:19:14,800 --> 00:19:17,080 Speaker 9: I think we maybe we as as bond investors, are 414 00:19:17,080 --> 00:19:19,720 Speaker 9: a little less so, but the threshold for. 415 00:19:19,720 --> 00:19:21,720 Speaker 8: Any sort of fiscal stimus is going to be very high. 416 00:19:21,720 --> 00:19:24,119 Speaker 9: So we think the government probably will be funded probably 417 00:19:24,160 --> 00:19:26,640 Speaker 9: at the last moment, but again from a market's perspective, 418 00:19:26,640 --> 00:19:27,120 Speaker 9: we're not sure. 419 00:19:27,160 --> 00:19:29,040 Speaker 8: We're there's more noise than really anything. 420 00:19:29,000 --> 00:19:32,080 Speaker 3: It's always the way, isn't it. Equities, hopes and dreams, bonds, 421 00:19:32,080 --> 00:19:33,600 Speaker 3: fares and nightmassy. 422 00:19:33,359 --> 00:19:33,560 Speaker 10: Do you know? 423 00:19:34,720 --> 00:19:37,800 Speaker 3: Yeah, obviously obviously, Well yeah, thank you, thanks, good to 424 00:19:37,800 --> 00:19:39,200 Speaker 3: see it. Great to catch you out let me cant 425 00:19:39,240 --> 00:19:45,720 Speaker 3: with their Pimcoke. I'm pleased to say that John, I 426 00:19:45,720 --> 00:19:48,119 Speaker 3: guess now is Elliot Akerman, the US Marine Corps veteran 427 00:19:48,359 --> 00:19:51,800 Speaker 3: and former White House fellow. Ali wonderful to hear from you, sir. 428 00:19:51,880 --> 00:19:55,120 Speaker 3: Always appreciate your perspective and your deep experience. Let's start 429 00:19:55,160 --> 00:19:57,200 Speaker 3: with that experience. Can you describe for our audience the 430 00:19:57,240 --> 00:19:59,679 Speaker 3: type of urban combat taking place right. 431 00:19:59,520 --> 00:20:02,960 Speaker 11: Now, the urban commet that we're seeing in Gaza. You know, 432 00:20:03,040 --> 00:20:06,439 Speaker 11: it's that happens really at a very close quarters, you know, 433 00:20:06,600 --> 00:20:10,320 Speaker 11: street by street, house by house, room to room. As 434 00:20:10,320 --> 00:20:12,000 Speaker 11: I think I've said on this show, eating in an 435 00:20:12,080 --> 00:20:14,359 Speaker 11: urban fight is like it's like being in a knife 436 00:20:14,359 --> 00:20:17,480 Speaker 11: fight in a phone booth. So it also takes away 437 00:20:17,520 --> 00:20:21,359 Speaker 11: that the advantage that high tech militaries have, and I 438 00:20:21,400 --> 00:20:23,280 Speaker 11: think we're seeing that play out and also oftentimes it's 439 00:20:23,320 --> 00:20:26,439 Speaker 11: very very messy. And one of the greatest casualties in 440 00:20:26,440 --> 00:20:28,760 Speaker 11: an urban fight is the city that the fight is 441 00:20:28,760 --> 00:20:29,320 Speaker 11: taking place. 442 00:20:29,320 --> 00:20:31,840 Speaker 12: And I think we're seeing that today as you. 443 00:20:31,760 --> 00:20:34,840 Speaker 11: Know, vast parts of Gaza are are being turned to 444 00:20:34,920 --> 00:20:35,520 Speaker 11: rubble and. 445 00:20:35,480 --> 00:20:36,600 Speaker 6: The civilians who lived there. 446 00:20:37,040 --> 00:20:39,399 Speaker 3: So let's discuss that, given the type of combat that 447 00:20:39,480 --> 00:20:41,080 Speaker 3: was seeing at the moment, how on earth do you 448 00:20:41,119 --> 00:20:43,960 Speaker 3: prevent the tragic loss of civilian life we've seen. 449 00:20:46,000 --> 00:20:48,919 Speaker 11: You know, It's extremely difficult, and that factors into the 450 00:20:49,119 --> 00:20:52,960 Speaker 11: into the calculus on on both sides. A fundamental to 451 00:20:53,000 --> 00:20:55,400 Speaker 11: you know, Hamas's attack on October seventh was they knew 452 00:20:55,400 --> 00:20:58,119 Speaker 11: that they were going to force the Israeli's hands to 453 00:20:58,160 --> 00:21:01,040 Speaker 11: fight them inside Gaza, which would lead to civilian casualties, 454 00:21:01,160 --> 00:21:05,639 Speaker 11: which would lead to much more attention being placed in 455 00:21:05,640 --> 00:21:09,240 Speaker 11: the Palestinian cause in the world, and also a significant 456 00:21:09,240 --> 00:21:11,199 Speaker 11: international outcry to and the fighting. 457 00:21:11,560 --> 00:21:12,560 Speaker 12: And so, you know, I. 458 00:21:12,560 --> 00:21:14,720 Speaker 11: Think the one thing that we can see when we're 459 00:21:14,760 --> 00:21:17,680 Speaker 11: looking at what is going on in Gaza is that, 460 00:21:17,720 --> 00:21:20,439 Speaker 11: at least thus far, it would seem that it has 461 00:21:20,480 --> 00:21:22,920 Speaker 11: preceded exactly according to Hamas's plan. 462 00:21:23,480 --> 00:21:25,000 Speaker 1: Given that Elliott how much longer. 463 00:21:25,000 --> 00:21:28,040 Speaker 2: Do you think that Israel has from a political perception 464 00:21:28,440 --> 00:21:32,440 Speaker 2: standpoint as well as just their own aims before they're. 465 00:21:32,240 --> 00:21:32,840 Speaker 1: Going to stop. 466 00:21:35,560 --> 00:21:40,640 Speaker 11: You know, the aims of the Israeli government, as they've articulated, 467 00:21:40,760 --> 00:21:43,960 Speaker 11: is the complete annihilation of Hamas. I think one of 468 00:21:44,000 --> 00:21:46,400 Speaker 11: the things that's difficult is that's an extremely high bar 469 00:21:46,560 --> 00:21:51,560 Speaker 11: to completely destroy a terrorist organization, as opposed to degrade 470 00:21:51,600 --> 00:21:54,280 Speaker 11: its capabilities or make it so it's no longer a threat. 471 00:21:55,280 --> 00:21:58,600 Speaker 11: So if that is their stated objective, I think they're 472 00:21:58,640 --> 00:22:00,800 Speaker 11: in some ways probably setting themselves up for failure because 473 00:22:00,800 --> 00:22:02,640 Speaker 11: it's difficult to see how they are going to completely 474 00:22:03,240 --> 00:22:05,560 Speaker 11: destroy every single number of Hamas from the face of 475 00:22:05,600 --> 00:22:08,359 Speaker 11: the earth, particularly as many of them are not in Gaza, 476 00:22:08,440 --> 00:22:10,359 Speaker 11: you know. And the other issue that complicates factors that 477 00:22:10,400 --> 00:22:12,680 Speaker 11: we can't forget about is there's a significant number of 478 00:22:12,760 --> 00:22:17,119 Speaker 11: hostages still inside Gaza, so the Israelis can't finish this 479 00:22:17,200 --> 00:22:21,320 Speaker 11: operation until those hostages have been freed. So, unfortunately, I 480 00:22:21,320 --> 00:22:23,280 Speaker 11: think this is going to go on quite a bit longer, 481 00:22:23,280 --> 00:22:26,400 Speaker 11: but every day that it extends, it becomes politically much 482 00:22:26,440 --> 00:22:27,800 Speaker 11: more costly for the Israelis. 483 00:22:28,040 --> 00:22:31,399 Speaker 2: Do you agree with Secretary of Defense to late Austin 484 00:22:31,400 --> 00:22:34,119 Speaker 2: when he basically said that the fear here is that 485 00:22:34,200 --> 00:22:36,399 Speaker 2: Israel setting itself up for a strategic defeat. 486 00:22:39,000 --> 00:22:40,240 Speaker 12: I think that is certainly. 487 00:22:40,600 --> 00:22:42,959 Speaker 11: I don't know that they are going to end up 488 00:22:42,960 --> 00:22:45,400 Speaker 11: in a strategic defeat, but I think if the Israelis 489 00:22:45,480 --> 00:22:48,080 Speaker 11: lose sight of the fact that war is always fought 490 00:22:48,119 --> 00:22:51,600 Speaker 11: on two planes, both the tactical of the operational, what's 491 00:22:51,600 --> 00:22:54,000 Speaker 11: happening on the ground, you know, how much of Gods 492 00:22:54,119 --> 00:22:58,640 Speaker 11: is being taken or retaken, but also the political, how 493 00:22:58,680 --> 00:23:02,240 Speaker 11: those actions are perceive and so you know, history is 494 00:23:02,320 --> 00:23:05,480 Speaker 11: littered with cases of nations and armies that won the 495 00:23:05,520 --> 00:23:07,840 Speaker 11: battle but lost the war. And I think the Israelis 496 00:23:07,880 --> 00:23:09,840 Speaker 11: need to be very mindful that they don't place themselves 497 00:23:09,840 --> 00:23:10,520 Speaker 11: in that situation. 498 00:23:10,680 --> 00:23:13,680 Speaker 3: And we've been through a period of really intense diplomacy. 499 00:23:13,720 --> 00:23:16,440 Speaker 3: We've seen that over the last two months, how elevated. Still, 500 00:23:16,480 --> 00:23:18,880 Speaker 3: do you think the odds are they brought a conflict 501 00:23:18,880 --> 00:23:19,439 Speaker 3: in the region. 502 00:23:22,480 --> 00:23:24,919 Speaker 11: I think they've certainly lessened, but I think we absolutely 503 00:23:24,960 --> 00:23:29,240 Speaker 11: want to keep our eye on any actions it seems 504 00:23:29,359 --> 00:23:32,159 Speaker 11: that they could spread the conflict. You know, as you know, 505 00:23:32,240 --> 00:23:34,920 Speaker 11: the United States, as you know, a very significant military 506 00:23:34,960 --> 00:23:38,920 Speaker 11: presence there. We've surged naval assets into the Mediterranean Sea, 507 00:23:39,320 --> 00:23:44,280 Speaker 11: all signaling very strongly to the Iranians not to spread 508 00:23:44,280 --> 00:23:46,680 Speaker 11: this conflict or engage in those actions. But we've also 509 00:23:46,720 --> 00:23:50,320 Speaker 11: seen simultaneously that the Iranians have been attacking US forces abroad, 510 00:23:50,560 --> 00:23:53,920 Speaker 11: that there are many instances of provocation, and not only 511 00:23:53,920 --> 00:23:56,359 Speaker 11: our leaders but also our troops on the ground had 512 00:23:56,359 --> 00:23:59,680 Speaker 11: to be very very mindful that their actions could have 513 00:24:00,119 --> 00:24:03,440 Speaker 11: TGIC consequences. So I don't think it does not seem 514 00:24:03,440 --> 00:24:05,720 Speaker 11: as though the conflict is going to spread, but it's 515 00:24:05,760 --> 00:24:06,760 Speaker 11: still on a hair trigger. 516 00:24:06,920 --> 00:24:09,600 Speaker 3: This is a conversation about a direct conflict. I just wonder, 517 00:24:09,640 --> 00:24:12,080 Speaker 3: from your perspective, in your opinion, Elio, whether you think 518 00:24:12,119 --> 00:24:14,960 Speaker 3: we're already in a proxy war with Iran. 519 00:24:17,480 --> 00:24:18,440 Speaker 12: I think we certainly are. 520 00:24:18,560 --> 00:24:21,359 Speaker 11: But we've been in a proxy war with Iran for 521 00:24:21,359 --> 00:24:24,760 Speaker 11: for decades now, and it is. 522 00:24:24,720 --> 00:24:26,040 Speaker 12: Just waxed and waned. 523 00:24:26,080 --> 00:24:27,720 Speaker 11: I mean, I mean, I'm a veteran of the wars 524 00:24:27,800 --> 00:24:32,199 Speaker 11: in Iraq and Afghanistan, and both those conflicts we were 525 00:24:32,200 --> 00:24:35,040 Speaker 11: fighting a proxy war with Iran, and about those conflicts, 526 00:24:35,280 --> 00:24:37,199 Speaker 11: you know, so the American service member I was, you know, 527 00:24:37,600 --> 00:24:40,679 Speaker 11: having to dodge IEDs built by Iran and having to 528 00:24:40,720 --> 00:24:45,400 Speaker 11: deal with Coudes Force paramilitaries who are operating or Iranian 529 00:24:45,480 --> 00:24:47,800 Speaker 11: in those theaters. So we've been fighting that war for 530 00:24:47,840 --> 00:24:51,080 Speaker 11: a long long time. But it's very important that as 531 00:24:51,080 --> 00:24:53,800 Speaker 11: you know, you know, it doesn't escalate into an all 532 00:24:53,800 --> 00:24:56,720 Speaker 11: out conflagration across the Middle East, particularly as we have 533 00:24:56,760 --> 00:24:58,240 Speaker 11: another war going on in Ukraine. 534 00:24:58,280 --> 00:25:00,280 Speaker 12: So these are you know, these are dangerous times where they. 535 00:25:00,240 --> 00:25:02,560 Speaker 2: I'm glad you brought that up as a former American 536 00:25:02,600 --> 00:25:05,760 Speaker 2: service member, as someone who's actually served and seeing the threat, 537 00:25:06,080 --> 00:25:09,080 Speaker 2: what is your sense of this increasing isolationism or the 538 00:25:09,119 --> 00:25:12,879 Speaker 2: increasing fight over funding for some of these conflicts. 539 00:25:12,880 --> 00:25:14,520 Speaker 1: Do you think that it's a valid one or. 540 00:25:14,480 --> 00:25:17,800 Speaker 2: Do you think that that's really our retracement from the 541 00:25:17,920 --> 00:25:19,480 Speaker 2: role that you served for. 542 00:25:21,680 --> 00:25:23,040 Speaker 12: Because I think that. 543 00:25:24,560 --> 00:25:28,720 Speaker 11: There should always be robust debate in this country about 544 00:25:28,760 --> 00:25:31,520 Speaker 11: issues of war and peace, and I think that is 545 00:25:31,600 --> 00:25:32,359 Speaker 11: very very healthy. 546 00:25:32,400 --> 00:25:33,840 Speaker 12: However, I also. 547 00:25:33,680 --> 00:25:36,480 Speaker 11: Think that, you know, those debates should occur in a 548 00:25:36,520 --> 00:25:39,200 Speaker 11: functional as opposed to a dysfunctional way. They should occur 549 00:25:39,240 --> 00:25:42,639 Speaker 11: in a way that has a very clear eyed or 550 00:25:42,640 --> 00:25:44,800 Speaker 11: it takes a very clear eyed view of the world 551 00:25:44,920 --> 00:25:49,080 Speaker 11: beyond our shores and isn't naive of the place of 552 00:25:49,119 --> 00:25:52,239 Speaker 11: America in the world. So, you know, I don't think 553 00:25:52,280 --> 00:25:54,800 Speaker 11: it's inappropriate for members of Congress to be debating how 554 00:25:54,880 --> 00:25:56,600 Speaker 11: long and how much the United States is going to 555 00:25:56,600 --> 00:25:59,760 Speaker 11: spend on these wars. But I also think if there's 556 00:25:59,760 --> 00:26:02,400 Speaker 11: some of idea that the US can just retreat within 557 00:26:02,440 --> 00:26:04,760 Speaker 11: its borders and that's going to be the best interest 558 00:26:04,800 --> 00:26:06,600 Speaker 11: of this country. I mean, you know, we've seen that, 559 00:26:07,200 --> 00:26:09,080 Speaker 11: we've seen that play out before, and it doesn't play 560 00:26:09,080 --> 00:26:10,720 Speaker 11: out to the best interests of the United States. 561 00:26:10,800 --> 00:26:13,119 Speaker 2: You're implying, Elliott that the debate right now is not healthy. 562 00:26:13,280 --> 00:26:14,920 Speaker 2: What would a healthy debate look like? And why is 563 00:26:14,960 --> 00:26:16,800 Speaker 2: what we're seeing right now not healthy? 564 00:26:17,960 --> 00:26:20,320 Speaker 11: So I think there's a degree of brenksmanship that's going on. 565 00:26:21,080 --> 00:26:24,960 Speaker 11: And I think that braksmanship of you know, buying aid 566 00:26:25,000 --> 00:26:29,520 Speaker 11: packages together the much of the dysfunction that we've seen 567 00:26:29,560 --> 00:26:34,000 Speaker 11: them in Congress where we no longer where Congress no 568 00:26:34,040 --> 00:26:36,400 Speaker 11: longers exists with the culture, and I'm olding to remember 569 00:26:36,440 --> 00:26:40,399 Speaker 11: this culture in which most people operated under a mode 570 00:26:40,400 --> 00:26:43,280 Speaker 11: of that you know, America's differences ended at our shores, 571 00:26:43,320 --> 00:26:46,600 Speaker 11: and we projected ourselves abroad, we projected ourselves as a 572 00:26:46,640 --> 00:26:47,440 Speaker 11: unified country. 573 00:26:47,600 --> 00:26:49,679 Speaker 12: I mean, now we know that our allies, you know, 574 00:26:49,720 --> 00:26:50,439 Speaker 12: have different you know. 575 00:26:50,440 --> 00:26:53,400 Speaker 11: They prefer republican or a democratic administration and have policies 576 00:26:53,440 --> 00:26:54,320 Speaker 11: that they set for both. 577 00:26:54,560 --> 00:26:55,199 Speaker 12: So I think there's the. 578 00:26:55,480 --> 00:27:00,119 Speaker 11: Overall fractiousness in our country is hurting the efficacy of 579 00:27:00,160 --> 00:27:01,080 Speaker 11: our foreign policy. 580 00:27:01,520 --> 00:27:04,360 Speaker 3: So that's what I mean, Ellie, thank you, sir Vio Clarity, 581 00:27:04,359 --> 00:27:07,159 Speaker 3: Ellie Aikman. I'm the latest on the situation in the 582 00:27:07,160 --> 00:27:09,280 Speaker 3: Middle East and with Ukraine and rest as well. 583 00:27:19,480 --> 00:27:20,360 Speaker 1: I'm so pleased to say. 584 00:27:20,440 --> 00:27:23,480 Speaker 2: Joining me right now is David Rubinstein. I want to 585 00:27:23,480 --> 00:27:25,880 Speaker 2: pick up on that point that Bill was saying, which 586 00:27:25,920 --> 00:27:29,159 Speaker 2: is his activism as now not in a corporate boardroom 587 00:27:29,240 --> 00:27:30,360 Speaker 2: but on college campuses. 588 00:27:30,359 --> 00:27:32,400 Speaker 1: And we heard this yesterday from Mark Rowan of Apollo. 589 00:27:32,480 --> 00:27:35,919 Speaker 2: How much you hearing that increasingly from some of your peers. 590 00:27:36,320 --> 00:27:39,119 Speaker 10: Well, there's no doubt that Bill Ackman doesn't need to 591 00:27:39,119 --> 00:27:41,400 Speaker 10: be an activist in investing anymore, because, as he said 592 00:27:41,400 --> 00:27:43,639 Speaker 10: in the interview, he wasn't that well known when he 593 00:27:43,680 --> 00:27:46,160 Speaker 10: was an activist, and therefore he had to get attention, 594 00:27:46,240 --> 00:27:48,560 Speaker 10: and doing activist kind of things got people's attention. Now 595 00:27:48,560 --> 00:27:51,800 Speaker 10: he's pretty well known, so he can avoid that part 596 00:27:51,800 --> 00:27:56,040 Speaker 10: of his investing process. In terms of College and Harvard, 597 00:27:56,040 --> 00:28:00,440 Speaker 10: he has been very active with his letter to Clouding 598 00:28:00,440 --> 00:28:03,040 Speaker 10: Gay and Mark Rowan has been very active at Penn 599 00:28:03,040 --> 00:28:05,439 Speaker 10: as well, and a number of other business people have 600 00:28:05,520 --> 00:28:07,600 Speaker 10: been active. There's no doubt that there's a lot of 601 00:28:07,640 --> 00:28:11,360 Speaker 10: concern in the business but other communities about what's going 602 00:28:11,400 --> 00:28:14,360 Speaker 10: on in college campuses. And as we all know, it's 603 00:28:14,359 --> 00:28:17,000 Speaker 10: not a pleasant situation to be Jewish student in some 604 00:28:17,040 --> 00:28:21,000 Speaker 10: campuses these days, or to be a Muslim student some 605 00:28:21,040 --> 00:28:23,280 Speaker 10: campus has been a problem as well. So I don't 606 00:28:23,320 --> 00:28:25,320 Speaker 10: think there's a perfect answer. We're not going to solve 607 00:28:25,359 --> 00:28:27,719 Speaker 10: it overnight. It's going to take some time for all 608 00:28:27,760 --> 00:28:29,480 Speaker 10: these colleges to kind of figure out what the right 609 00:28:29,520 --> 00:28:30,080 Speaker 10: balance is. 610 00:28:30,600 --> 00:28:33,240 Speaker 2: Do you get a sense that there is something specific 611 00:28:33,240 --> 00:28:36,160 Speaker 2: that people are asking for that goes beyond a statement 612 00:28:36,200 --> 00:28:40,400 Speaker 2: on anti Semitism or Islamophobia and goes more to the 613 00:28:40,520 --> 00:28:44,600 Speaker 2: nature of conversation at certain universities. 614 00:28:45,080 --> 00:28:48,480 Speaker 10: Well, at certain universities, I would say on the left, 615 00:28:48,680 --> 00:28:50,959 Speaker 10: far left are far right. There's not a lot of 616 00:28:51,240 --> 00:28:54,480 Speaker 10: room for people who disagree. Some campuses are far left, 617 00:28:54,480 --> 00:28:57,360 Speaker 10: some are maybe more conservative, and people who disagree with 618 00:28:57,400 --> 00:29:00,440 Speaker 10: the conventional or the majority view, don't get the kind 619 00:29:00,440 --> 00:29:03,480 Speaker 10: of support that they might want to receive from the 620 00:29:03,520 --> 00:29:07,200 Speaker 10: college presidences or universities. In some cases, Harvard is seen 621 00:29:07,240 --> 00:29:09,720 Speaker 10: by people in Congress who said yesterday in the hearing 622 00:29:10,000 --> 00:29:12,600 Speaker 10: that is seen as far left. Maybe it is, maybe 623 00:29:12,640 --> 00:29:14,480 Speaker 10: it isn't. I was on the board of Harvard for 624 00:29:14,560 --> 00:29:16,800 Speaker 10: many years, and I think Harvard tries to do the 625 00:29:16,800 --> 00:29:19,440 Speaker 10: best it can. But it's a very large campus, very diverse. 626 00:29:19,960 --> 00:29:22,240 Speaker 10: The president of university has done as good a job 627 00:29:22,280 --> 00:29:24,120 Speaker 10: as she can in a very short period of time 628 00:29:24,360 --> 00:29:26,480 Speaker 10: dealing with these issues, but nobody is going to be 629 00:29:26,520 --> 00:29:28,040 Speaker 10: able to solve this problem overnight. 630 00:29:28,160 --> 00:29:30,680 Speaker 2: You're also on the University of Chicago board, and full disclosure, 631 00:29:30,760 --> 00:29:33,000 Speaker 2: I attended there, so if I'm biased, I just want 632 00:29:33,040 --> 00:29:37,280 Speaker 2: to be completely transparent. There is this question about whether 633 00:29:37,320 --> 00:29:40,160 Speaker 2: it's appropriate for a university to take a stand at 634 00:29:40,200 --> 00:29:42,920 Speaker 2: all on any social issue, or just to let the 635 00:29:43,080 --> 00:29:47,200 Speaker 2: individual professors and students have their own voices rather than 636 00:29:47,520 --> 00:29:49,520 Speaker 2: have some sort of collective voice that you have to 637 00:29:49,520 --> 00:29:49,920 Speaker 2: stay within. 638 00:29:50,000 --> 00:29:51,840 Speaker 1: Do you think that that is the way to go well? 639 00:29:51,840 --> 00:29:54,840 Speaker 10: With the same issue CEO's face, Should corporations be taking 640 00:29:54,920 --> 00:29:57,520 Speaker 10: positions on these kind of issues. Sometimes they do, sometimes 641 00:29:57,520 --> 00:30:00,520 Speaker 10: they don't. Universities are places where young people are generally 642 00:30:01,080 --> 00:30:03,320 Speaker 10: allowed to grow and experience what life is going to 643 00:30:03,320 --> 00:30:05,520 Speaker 10: be about when they leave campuses, and they tend to 644 00:30:05,520 --> 00:30:09,160 Speaker 10: be sometimes more shrill and certain things they might be 645 00:30:09,200 --> 00:30:11,760 Speaker 10: when they become an adult. I think at the Universe Chicago, 646 00:30:12,000 --> 00:30:14,440 Speaker 10: we've had a long standing one hundred year policy of 647 00:30:14,520 --> 00:30:17,360 Speaker 10: basically letting people say what they want, has provided that 648 00:30:17,360 --> 00:30:21,680 Speaker 10: they don't do anything that harms anybody else or incites violence. 649 00:30:21,880 --> 00:30:23,920 Speaker 10: But there's been a lot of free speech at univer Chicago, 650 00:30:23,920 --> 00:30:25,320 Speaker 10: and I think that's a great tradition there. 651 00:30:25,680 --> 00:30:27,240 Speaker 2: Do you think that going forward there's going to be 652 00:30:27,240 --> 00:30:31,200 Speaker 2: any change in response to some of the pressure, Given. 653 00:30:30,960 --> 00:30:34,440 Speaker 10: The pressure that we have seen now, I suspect something 654 00:30:34,480 --> 00:30:36,960 Speaker 10: will happen, but I don't know that Congress will do anything. 655 00:30:36,960 --> 00:30:39,400 Speaker 10: I think the university boards are probably going to be 656 00:30:39,440 --> 00:30:41,520 Speaker 10: more sensitive to these issues. There is going to be 657 00:30:41,520 --> 00:30:43,960 Speaker 10: more security for certain students there, for sure, But I 658 00:30:43,960 --> 00:30:47,160 Speaker 10: think there'll be more of a move towards a University 659 00:30:47,160 --> 00:30:49,480 Speaker 10: of Chicago approach where more people are allowed to say 660 00:30:49,520 --> 00:30:52,000 Speaker 10: what they think without feeling that if they say something 661 00:30:52,000 --> 00:30:54,840 Speaker 10: that's unpopular. They'll be criticized or harmed physically. 662 00:30:55,560 --> 00:30:59,000 Speaker 2: Just besides this particular issue with Bill Lackman, he's also 663 00:30:59,040 --> 00:31:01,840 Speaker 2: been vocal about investing in treasures just to shift a 664 00:31:01,880 --> 00:31:04,560 Speaker 2: little bit to the investment side. And I am curious 665 00:31:04,600 --> 00:31:07,240 Speaker 2: if you're starting to hear this more that certain hedge 666 00:31:07,240 --> 00:31:11,400 Speaker 2: funds that maybe are struggling to get an edge in 667 00:31:11,440 --> 00:31:14,720 Speaker 2: public markets are just making bull trades on the path 668 00:31:14,720 --> 00:31:15,960 Speaker 2: of interest rates. 669 00:31:15,480 --> 00:31:17,840 Speaker 1: How much you're hearing that well. 670 00:31:17,840 --> 00:31:19,720 Speaker 10: Bill Ackman said in the interview is that he doesn't 671 00:31:19,840 --> 00:31:22,959 Speaker 10: generally doesn't make big macro bets. That's not what he 672 00:31:23,000 --> 00:31:26,520 Speaker 10: generally does. He generally makes bets on companies. But in 673 00:31:26,560 --> 00:31:28,720 Speaker 10: a couple of times in his history he has made 674 00:31:29,120 --> 00:31:32,239 Speaker 10: macro bets and some have worked out extremely well. And 675 00:31:32,360 --> 00:31:34,600 Speaker 10: he's made one not two year long ago, where he 676 00:31:34,600 --> 00:31:36,440 Speaker 10: made a couple of billion dollar I mean, I guess 677 00:31:36,480 --> 00:31:38,720 Speaker 10: it was a two billion dollar profit on a relatively 678 00:31:38,720 --> 00:31:41,440 Speaker 10: modest investment in a relatively short period of time. That's 679 00:31:41,480 --> 00:31:43,920 Speaker 10: hard to do. This time, he's made a bet, in effect, 680 00:31:44,120 --> 00:31:46,640 Speaker 10: that the treasury rate will go down, or the interest 681 00:31:46,680 --> 00:31:49,280 Speaker 10: rate will go down, the Fed will lower interest rates 682 00:31:49,480 --> 00:31:52,080 Speaker 10: sooner than the conventional wisdom thinks, and I assume he's 683 00:31:52,120 --> 00:31:53,840 Speaker 10: structured it so that if they do, he'll make a 684 00:31:53,880 --> 00:31:54,680 Speaker 10: fair amount of money. 685 00:31:54,760 --> 00:31:56,680 Speaker 2: And I'm assuming that right now he's pretty happy with 686 00:31:56,680 --> 00:31:59,520 Speaker 2: what he's seeing because the market's coming along to his view. 687 00:32:00,080 --> 00:32:03,160 Speaker 10: Conventional wisdom today is that the Fed is likely to 688 00:32:03,200 --> 00:32:06,440 Speaker 10: cut interest rates sooner than maybe people thought a month ago. 689 00:32:07,200 --> 00:32:09,080 Speaker 10: Right now, I think the Fed doesn't want to get 690 00:32:09,120 --> 00:32:11,400 Speaker 10: into the election season, So if they're going to cut rates, 691 00:32:11,400 --> 00:32:12,880 Speaker 10: they're probably not going to do it too close to 692 00:32:12,880 --> 00:32:14,680 Speaker 10: the presidential election, so they probably would have to do 693 00:32:14,720 --> 00:32:15,280 Speaker 10: it sooner. 694 00:32:16,040 --> 00:32:18,120 Speaker 1: Meanwhile, just want to bring this to you. 695 00:32:18,200 --> 00:32:21,080 Speaker 2: Just Breaking City Group is reporting some figures and what 696 00:32:21,120 --> 00:32:23,280 Speaker 2: they expect, and they say that fourth quarter trading revenue 697 00:32:23,320 --> 00:32:25,920 Speaker 2: is expected to drop fifteen to twenty percent compared to 698 00:32:25,960 --> 00:32:28,680 Speaker 2: the third quarter, and you can see as the CFO 699 00:32:28,920 --> 00:32:31,800 Speaker 2: does talk, you can see shares falling. 700 00:32:32,040 --> 00:32:32,880 Speaker 1: This really does. 701 00:32:32,720 --> 00:32:34,720 Speaker 2: Speak to this sense that there isn't going to be 702 00:32:34,760 --> 00:32:38,479 Speaker 2: the same kind of opportunity to make profits for some 703 00:32:38,520 --> 00:32:41,240 Speaker 2: of these firms as there has been earlier in this year. 704 00:32:41,280 --> 00:32:43,760 Speaker 2: That basically this is what they're going to pitch when 705 00:32:43,800 --> 00:32:47,000 Speaker 2: they CEOs go down to Washington, DC and start saying, 706 00:32:47,000 --> 00:32:49,200 Speaker 2: you know, maybe we earned record profits, but we're going 707 00:32:49,240 --> 00:32:51,920 Speaker 2: to lose it to people like you, David Rubens, sign 708 00:32:52,000 --> 00:32:53,520 Speaker 2: at private credit and private equity. 709 00:32:53,560 --> 00:32:55,040 Speaker 1: What do you make of some of these arguments. 710 00:32:55,240 --> 00:32:57,800 Speaker 10: I'm not worrying too much about the large banks. They 711 00:32:57,800 --> 00:32:59,640 Speaker 10: can take care of themselves. I'm sure they'll do well. 712 00:33:00,000 --> 00:33:01,760 Speaker 10: Interest rates go up or down. There's no doubt when 713 00:33:01,760 --> 00:33:04,360 Speaker 10: interest rates go up, they tend to make more money. Historically, 714 00:33:04,520 --> 00:33:06,800 Speaker 10: if interest rates go down, they're very smart. They'll find 715 00:33:06,800 --> 00:33:09,560 Speaker 10: other ways to make money. Private equity firms and private 716 00:33:09,560 --> 00:33:12,080 Speaker 10: credit firms have done quite well generally over the last 717 00:33:12,160 --> 00:33:13,959 Speaker 10: ten twenty years or so, and we have a lot 718 00:33:13,960 --> 00:33:15,840 Speaker 10: of very smart people. We'll try to figure out how 719 00:33:15,840 --> 00:33:18,280 Speaker 10: to navigate whatever interest rate environment we have. 720 00:33:18,800 --> 00:33:21,040 Speaker 1: David Rubenstein, it's always a pleasure. Thank you so much 721 00:33:21,080 --> 00:33:21,560 Speaker 1: for being on. 722 00:33:21,640 --> 00:33:25,080 Speaker 2: Subscribe to the Bloomberg Surveillance podcast on Apple, Spotify, and 723 00:33:25,120 --> 00:33:28,560 Speaker 2: anywhere else you get your podcasts. Listen live every weekday 724 00:33:28,600 --> 00:33:31,160 Speaker 2: starting at seven am Eastern, on Bloomberg dot Com, the 725 00:33:31,240 --> 00:33:33,480 Speaker 2: iHeartRadio app, tune In, and the. 726 00:33:33,440 --> 00:33:34,600 Speaker 1: Bloomberg Business App. 727 00:33:34,880 --> 00:33:38,200 Speaker 2: You can watch us live on Bloomberg Television and always 728 00:33:38,280 --> 00:33:41,680 Speaker 2: on the Bloomberg terminal. Thanks for listening. I'm Lisa Abramowitz, 729 00:33:41,720 --> 00:33:42,800 Speaker 2: and this is Bloomberg