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Speaker 2: Joining us now with JP Morgan with his leadership and
Speaker 2: fixed income is Bob Michael. Why is the bond market
Speaker 2: so calm? I look at sofur swaps recovering. I look
Speaker 2: at the ten year real yield really coming in in
Speaker 2: a responsible way? Why is the world turned upside down?
Speaker 2: Accepted at Piers bonds?
Speaker 3: Before I answer that, Tom, I have a bone to
Speaker 3: pick with you. As a New Englander, you should know
Speaker 3: that New Hampshire actually has the highest quality black flies.
Speaker 3: They do the more temperate climate the lakes. Vacationers and
Speaker 3: blackflies go there by choice and.
Speaker 2: Now a surveillance audible as well. It is widely understood
Speaker 2: the blackflies of Boden are far more vicious than what
Speaker 2: you see in the burbs of Cold me. You know,
Speaker 2: there's just no question about it. I was once in
Speaker 2: a car. This is ancient history. I got out of
Speaker 2: the car the flies were so bad we just got
Speaker 2: back in the car and left. Thank you for that
Speaker 2: vision of knowing. Michael. Why is there a Colm in
Speaker 2: the market your world?
Speaker 3: Because a couple of things have happened. The first thing
Speaker 3: that happened is the deleveraging pass through the system, the
Speaker 3: forcing of levered investors who had swap trades on who
Speaker 3: were short Europe along the US. All these other things
Speaker 3: got squeezed out of the system. It took yields very high,
Speaker 3: it's deep in the curve, and then it was done.
Speaker 3: All the false narratives out there were proven to be false.
Speaker 3: The thought that foreign official official institutions we're selling treasuries
Speaker 3: was just nonsense. When you look at the Fed's custody data,
Speaker 3: they actually increase their position. And then you had some blinking.
Speaker 3: You've had a couple FED officials acknowledge that yes, they
Speaker 3: have a dual mandate and if something happens in the
Speaker 3: employment market, they'd be poised to step in. And you
Speaker 3: had the administration coming out saying, hey, you know what,
Speaker 3: we're open to talks and we're looking to negotiate. All
Speaker 3: those things created Colm and now have created a reversal
Speaker 3: in the bond market.
Speaker 4: What's the bond market saying about this US economy, Bob Azer,
Speaker 4: I keep hearing strategies coming. Are economists raising their prospects
Speaker 4: and their odds for recession?
Speaker 5: What's the bond market telling you?
Speaker 3: The bond market's telling us watch out as things stand.
Speaker 3: If the tariffs go through as they're currently spec out,
Speaker 3: the ninety days passes and there's only some moderate compromise,
Speaker 3: the US is going into recession. I think our economist
Speaker 3: Mike Faroli has made that clear. He's got the back
Speaker 3: half of this year at minus half a percent real GDP.
Speaker 3: When you look at things like tips break evens, they're
Speaker 3: down below or right around two percent. They're not at
Speaker 3: the four percent that everyone's talking about where inflation is
Speaker 3: going to be. The market realizes that a one time
Speaker 3: price reset and inflation will kill top line demand, aggregate
Speaker 3: final demand, and will go barreling into recession, and then
Speaker 3: all the pricing will fade.
Speaker 5: So does that suggest in a fix and co market?
Speaker 4: I really don't want to take much credit risk here today.
Speaker 4: I want to stick to you, stick to the treasury
Speaker 4: market and clip that coupon.
Speaker 3: You can take good quality credit risk. It doesn't I've
Speaker 3: heard a lot of people come on and say, no,
Speaker 3: you've got to be high quality. We're at the top
Speaker 3: of the capital structure. If you own any equities, then
Speaker 3: you should be owning the debt of the companies that
Speaker 3: you own, and a lot of them are below investment grade.
Speaker 3: The key is to find companies that can actually make
Speaker 3: it through a period of taxation with higher prices on
Speaker 3: their input costs and then some loss and demand destruction
Speaker 3: in their sales. There are a lot of companies in
Speaker 3: the investment grade space that will be fine. There's no
Speaker 3: aherea there, and the majority of the high yield market,
Speaker 3: you know, ninety seven plus percent of it will be fined.
Speaker 2: Okay, I'm going to go here because I know you're
Speaker 2: a expert in it. Folks, they did mark to market
Speaker 2: because that's what you did in the nineteenth century. And
Speaker 2: they said FDR down in nineteen thirty eight and said
Speaker 2: this ain't working out, and we changed measuring everything every day,
Speaker 2: every Friday, every moment on Wall Street. It went away,
Speaker 2: and then we brought it back, and we had the
Speaker 2: same challenges within the banking system. Should we be marketing
Speaker 2: to market private equity and private credit or did they
Speaker 2: get a pass in the Bob Michael world.
Speaker 3: I think there's a shadow system there that does mark
Speaker 3: them to market. And I think this is going to
Speaker 3: be highlighted this year because, as you well know, they're
Speaker 3: an awful lot of plans who have expenses to pay.
Speaker 3: Maybe you're a pension fund, you have retirey benefits, maybe
Speaker 3: you're insurance company, you have claims to pay. Maybe your
Speaker 3: university endowment and you've got to run your school and
Speaker 3: your funding's been pulled. And now you're looking at your portfolio.
Speaker 3: What was in alt and a liquid seems not to
Speaker 3: have moved in price, and everything in the public markets
Speaker 3: at one point was down five to fifteen twenty percent,
Speaker 3: but the only thing you could sell was what was down.
Speaker 3: I think you're going to see one some rebalancing and
Speaker 3: two some calls about greater liquidity space.
Speaker 2: Well, this is really important. And radio you don't see this,
Speaker 2: but on YouTube cardinal rule of thumb, when a global
Speaker 2: Wall Street leader puts their hands up and starts measuring things,
Speaker 2: that's when you lean forward and really listen. How big
Speaker 2: is the haircut? Can you estimate for US blended private equity,
Speaker 2: given institution? How much? What's the hit going to be?
Speaker 2: I haven't number in my head.
Speaker 3: Yeah, you know the numbers that have been thrown out
Speaker 3: there are around fifteen percent. Yes, but but there is
Speaker 3: an awful lot of capital that's forum that's gone into
Speaker 3: the secondary space. So I don't think there's going to
Speaker 3: be anything near that headcut, that haircut. I think a
Speaker 3: lot of capital is there dry powder, It will absorb it.
Speaker 3: I know in the private credit space, we look for
Speaker 3: opportunities in secondaries and it's very competitive.
Speaker 2: Well said, yeah, it's Friday, General counsel for JP. Morgan's
Speaker 2: not listening.
Speaker 5: No, that's good chilling out on a Friday. Yeah, getting ready.
Speaker 2: I want you to talk, Bob. And certainly every report
Speaker 2: we've had a surveillance is liquidity's in order, the plumbings
Speaker 2: in order within the American financial system. Where's the leverage?
Speaker 2: The shadow of leverage out there? It amends every ten
Speaker 2: every fifteen years we move to a new leverage. What's
Speaker 2: the new new leverage out there you worry about?
Speaker 3: Well, I think where some of the marginal funding has
Speaker 3: aggregated is clearly in private credit. If you go back
Speaker 3: to two thousand and seven, I don't really recall much
Speaker 3: in the way of private credit except if there was
Speaker 3: some sort of debt exchange or something like that. And
Speaker 3: today estimates are about two trillion dollars, So it's come
Speaker 3: from nowhere to something big. When we look at the
Speaker 3: size of the entire US banking system, the commercial and
Speaker 3: industrial loan book, Paul, you will be able to us
Speaker 3: on that, but that actually is it's three trillion. So
Speaker 3: that's two trillion in borrowing that might have historically gone
Speaker 3: to the public high yield market, the broadly syndicated loan market,
Speaker 3: or two banks. When we look at the public high
Speaker 3: yield market, it looks very clean, even in a fairly
Speaker 3: meaningful recession, thing greater than the Ferole minus half a
Speaker 3: percent for a couple quarters, something closer to one percent.
Speaker 3: We can only get the fault rates up to about
Speaker 3: three percent in the public high yield market, and we
Speaker 3: know there will be more pain. We think that gets
Speaker 3: felt in private credit.
Speaker 2: Now.
Speaker 3: It remains to be seen whether that can all be
Speaker 3: dealt with behind the scenes, but it feels like we're
Speaker 3: about to approach the long way to shake out there.
Speaker 4: Hey, Bob, we were, Tom and I were just talking
Speaker 4: to Megan Graper earlier this morning. She runs Deck Capital
Speaker 4: Markets at Barkley's. If she called you up today and
Speaker 4: she had a new issue in the investment grade market.
Speaker 5: Would you buy that? Are you open to that? In
Speaker 5: all the craziness that's going out there in the world.
Speaker 3: Absolutely, one hundred percent nice because because don't worry. I'm
Speaker 3: sure they have. Yes, Corporate America is going into this
Speaker 3: in really good shape. Profit margins are very compelling. Actually,
Speaker 3: consumer balance sheets are in pretty good shape too, So
Speaker 3: businesses and households can withstand some level of pain on
Speaker 3: taris and investment. Great companies were not all that that
Speaker 3: worried about, and generally they these new deals come with
Speaker 3: a bit of a concession. We have to know what
Speaker 3: the company is, you know what what their industry looks like.
Speaker 3: Where are they issuing all the usual credit research things.
Speaker 3: But yeah, we're buying.
Speaker 2: The president just making comments. These are tape comments, folks
Speaker 2: in Oregona's way to roam in the funeral of the
Speaker 2: Pope gave us presidential statements on negotiations. Everything's wonderful, full everything.
Speaker 2: I think he literally said, it's going to be a
Speaker 2: wealthier nation. The rest of them. America's turned upside down
Speaker 2: here worrying about shipping arrivals in Los Angeles, and that
Speaker 2: if we almost on a Hyagen basis, if we clear
Speaker 2: the market, Bob Michael, is it just like it used
Speaker 2: to be? Do we go to something new here within
Speaker 2: American Wall Street? Or do we if we clear all
Speaker 2: these troubles, do we go back to what we knew?
Speaker 2: What would Paul deep into January?
Speaker 1: Yes?
Speaker 2: I mean do we just revert back to what we knew?
Speaker 3: So we're in an interesting couple months here. As I
Speaker 3: was listening to Lisa talk about the bottom of the
Speaker 3: capital structure, I think they're called equities. I'm not entirely
Speaker 3: sure shape something. One of those markets was up a
Speaker 3: couple tents. I think the NASDAC, you know, the specious companies.
Speaker 3: We're in a period of a couple months where we
Speaker 3: should see good news. Where we're in that ninety day
Speaker 3: delay on tariffs, that pause, You've already had the administration
Speaker 3: come out and tell us good things. Negotiations are underway,
Speaker 3: there are paths to compromise, we're working things out. You've
Speaker 3: got the Federal Reserve out there telling us, yeah, we're
Speaker 3: keeping an eye on the labor market, and you've got
Speaker 3: Secretary Besson out there saying we've got this. There are
Speaker 3: a lot of things we can do in the treasury market.
Speaker 3: So all of those things are calm, which didn't exist
Speaker 3: a couple of weeks ago. The second thing is it's
Speaker 3: too early for the hard data to turn, and we
Speaker 3: fully expect unless there's a meaningful roll back on the
Speaker 3: TWERF policy as it sits now, then the hard data
Speaker 3: will turn. But for now the next couple months, everything
Speaker 3: looks to be smooth selling. I think you could retrace
Speaker 3: all of the selloff of thank you, of March April
Speaker 3: thank you.
Speaker 2: I'm letting on a Friday, we got to I think
Speaker 2: I can get through the week.
Speaker 3: One time I didn't expect to be positive myself.
Speaker 2: One final question, I am so honored to ask you this.
Speaker 2: With Pennsylvania classics including COLSD one four Roman America, we
Speaker 2: will have a funeral this weekend in Rome. I have
Speaker 2: stood in Santa Pudenziana Church three point thirteen AD, built
Speaker 2: on Roman ruins, and it was literally where the Pope
Speaker 2: slept before they built two or three churches before Saint
Speaker 2: Peter's link in this thing that we have within the
Speaker 2: Catholic Church back to biblical times, back to Roman times.
Speaker 2: How do you perceive the Catholic Church back to what
Speaker 2: you studied at Pennsylvania.
Speaker 3: Well, that's way outside of my level of ex perceise.
Speaker 3: I will tell you I've been to the Vatican a
Speaker 3: couple of times, and I'm always impressed. And I do
Speaker 3: see the classics everywhere. I see the Romans laboring away
Speaker 3: constructing a city. It's just spectacular.
Speaker 2: Bob Michael, thank you so much. What he really is
Speaker 2: going to say is we're going to get a fifty
Speaker 2: eight page and a report letter from the new Pope,
Speaker 2: just like we get from mister Diamond. Mister Michael is
Speaker 2: a JP Morgan.
Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live
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Speaker 2: Without question, the most important conversation of the day for
Speaker 2: Global Wall Street. Let me describe mister Adams to you
Speaker 2: as we talk of this moment in American history. He
Speaker 2: is a student of American history out of the University
Speaker 2: of Kentucky. His public service to Bush Senior, his many
Speaker 2: public services to Bush Junior into a legitimate lobbying effort
Speaker 2: in Washington, and he is the banker's lobbyist in Washington,
Speaker 2: President the chief executive officer of what is called THEIF.
Speaker 2: And the other day he had a modest conversation with
Speaker 2: the Secretary of Treasury Tim just as a general thrilled
Speaker 2: you with us today from the meetings in Washington is
Speaker 2: a general statement, how scared is Global Wall Street? How
Speaker 2: scared is Manhattan Wall Street of this moment in banking? Yeah?
Speaker 6: Sure, Tom, thank you for the intro. It's the best
Speaker 6: intro I've had in a long time. It's such an
Speaker 6: honorary back on your show. I listened to you every day. Look,
Speaker 6: people are worried because of just the enormous uncertainty and
Speaker 6: the daily changes that are coming out of Washington. Although
Speaker 6: I will say this week was a breakout week for
Speaker 6: Secretary Best, and I think he really established himself as
Speaker 6: the anchor voice in this administration, a sober voice or reason.
Speaker 6: And I think the time that the industry spent within
Speaker 6: this week was a calming experience. And I think if
Speaker 6: the administration in the White House will let Scott Secretary
Speaker 6: Best and get out on the front more often, I
Speaker 6: think that would help our industry, and I think it
Speaker 6: would help markets.
Speaker 2: Okay, I'll go with you there. But basically what they
Speaker 2: did they put a cork in the mouth of selected
Speaker 2: other Trump bites. Let's say we continue with the cork
Speaker 2: in the mouth. That's great. Besson asks to talk to
Speaker 2: Trump about what this nation needs first, sing Paul Sweeney
Speaker 2: said this morning, mister Adams is shipping in Los Angeles
Speaker 2: is off a cliff. How far off a cliff do
Speaker 2: your bankers see the American economy?
Speaker 6: Yeah, they're very worried. Obviously, the soft indicators of what
Speaker 6: we've seen initially. I think about Q three, Q four,
Speaker 6: you're going to see real indicators show that the real
Speaker 6: economy is beginning slow. The workers that this administrations say
Speaker 6: they want to help manufacturing factory workers are going to
Speaker 6: get hurt. It doesn't need to happen. I think Secretary
Speaker 6: Bessence again, sober voice or reason. I think if the
Speaker 6: President would listen more to Scott and let him lead
Speaker 6: on these discussions and really put in place a thoughtful policy,
Speaker 6: I think we can avoid the worst. But right now
Speaker 6: it hangs in the balance.
Speaker 5: Jimmy, you're down in our Washington, DC Bureau.
Speaker 4: As we speak, you've been in meeting with some of
Speaker 4: the folks in the IMF, which has been in Washington
Speaker 4: this week.
Speaker 5: What are our global trading partners what are they telling
Speaker 5: you these days?
Speaker 6: Well, first, there was a sigh relief this week when
Speaker 6: the United States and articularly about Secretary Vestent, agreed to
Speaker 6: stay in a leadership role in the Brightwoods Institution, the IMF,
Speaker 6: the World Bank, and other iffies. I think there was
Speaker 6: some concern that the US was going to pull back
Speaker 6: or downsize or try to undermine these institutions. But what
Speaker 6: we heard from the Secretary was a reaffirmation of not
Speaker 6: only the US a belief in these institutions, but they
Speaker 6: want to play a leadership role. They want to get
Speaker 6: back to factory settings. I get that. I actually agree
Speaker 6: with it, so I think a reaffirmation. The second is
Speaker 6: just the uncertainty over trade in tariffs, and that's really
Speaker 6: creating turmoil around the world and enormous uncertainty about the
Speaker 6: trajectory of growth.
Speaker 4: Tim Again, when you talk to your counterparts in DC
Speaker 4: and then the IMF and all our global trading partners,
Speaker 4: is there since that globalization as kind of we've grown
Speaker 4: up with the last I don't know, thirty forty fifty
Speaker 4: sixty years.
Speaker 6: Is that over Well, it certainly feels like we're moving
Speaker 6: into a new chapter. I actually think globalization of the
Speaker 6: last forty fifty years improved a lot of tens of millions,
Speaker 6: if not hundreds of millions of people globally, and actually
Speaker 6: think it was good for the US economy. But they
Speaker 6: had that discussion the last election. Let's move on to
Speaker 6: figure out what what does the next chapter look like?
Speaker 6: And I think we want an outcome that works for
Speaker 6: the United States and works for others. Alliances and trades
Speaker 6: still mattered, David Ricardo Toad is that two hundred and
Speaker 6: fifty years ago. We just need to stay true to
Speaker 6: the lessons we've learned over time. But I understand that
Speaker 6: the US wants a better deal from some countries, including China.
Speaker 6: I get that. Let's move on to that, resolve that
Speaker 6: dispute and then get back to basics.
Speaker 4: Tim, you mentioned China, and obviously that's a huge trading
Speaker 4: partner with the United States.
Speaker 5: Any sense of.
Speaker 4: Kind of what the administration's strategy is as it relates.
Speaker 5: To China at this point.
Speaker 6: Well, so far it's been to try to isolate and
Speaker 6: bludge in a bit. You know, I've been going to
Speaker 6: China for thirty years. I don't know that that's going
Speaker 6: to work. I understand that the President believes in his strategy.
Speaker 6: He's certainly a you know a history of negotiations. So
Speaker 6: we'll see if it works. I think you've got to
Speaker 6: find characteristics. I think that you've got to build an alliance,
Speaker 6: and I think you've got to treat China with respect.
Speaker 6: Trying to bludge in them to come to the table
Speaker 6: hasn't worked in the past. I don't think it's going
Speaker 6: to work this time.
Speaker 2: Tim Adams with us the IF after his conversation with
Speaker 2: the Secretary of Treasury, just a terrific perspective not only
Speaker 2: on our banking industry and the people he represents with
Speaker 2: the IIF, but also of course with his Kentucky and
Speaker 2: the Republican Party. Tim Adams, let me shift gears with
Speaker 2: you right now, and this is going to go out
Speaker 2: of your sense of Kentucky. Kessius Marcellus Clay started a
Speaker 2: Republican Party a few years ago in Kentucky out of
Speaker 2: the Civil War, and you know, it was an old
Speaker 2: style Kentucky party, and then it goes on to what
Speaker 2: you lived with a Bush family. There was a certain
Speaker 2: character to a Republican Party at Walker's Point in Kennebunkport
Speaker 2: that's been blown up. Just look at the Oval office
Speaker 2: with the gold and then you know, I probably think
Speaker 2: got Tim adams portrait up there and all the rest
Speaker 2: Tim Adams. What does the old Republican Party do? Do
Speaker 2: they vote Democrat? Is there a third party here? What
Speaker 2: does your Republican Party do in the next four years?
Speaker 6: Well, if you remember Bush forty one, who I worked
Speaker 6: for as a young White House staffer, talked about a kinder,
Speaker 6: gentler country, and I think that's true. And I had
Speaker 6: the honor working for Bush forty three as well, and
Speaker 6: they believed in real decorum. Look, I think there are
Speaker 6: a lot of people across the country trying to figure
Speaker 6: out which of the two boxes they fit in. I
Speaker 6: just would like to find a party that wants to
Speaker 6: be pro growth, pro business, pro capital formation, pro risk taking,
Speaker 6: that believes in trade. As I said about two hundred
Speaker 6: fifty years of experience, that trade actually makes us wealthier. Right,
Speaker 6: So that's what I'm looking for. And you know, there's
Speaker 6: no reason why the Republican Party can't offer that or
Speaker 6: the Democratic Party right now. I think the Democratic Party
Speaker 6: is a bit lost, but there's an opportunity to reinvent themselves.
Speaker 2: Avestant of the Treasury worked for sous years ago. He
Speaker 2: seems to be able to work with everyone. Marco Rubio,
Speaker 2: I would suggest Tim Adams as someone iif and the
Speaker 2: bankers can deal with. These are more traditional Republican in
Speaker 2: this Donning Brook around. Look at the economists covered this
Speaker 2: week of the Bandaged Eagle. Tim Adams, are you looking
Speaker 2: to Secretary Rubio and bestent for leadership to help the
Speaker 2: president get back to where we were? Yes?
Speaker 6: Absolutely, And look you've got great leadership on the Capitol Hill.
Speaker 6: Chairman of Finished Services Committee, French Hill I spoke with
Speaker 6: this week, known him for thirty years. Also that way,
Speaker 6: Bill Haggerty, Dave McCormick. There are people on Capitol Hill.
Speaker 6: They're Senators and House members that I think also believe
Speaker 6: in engagement, free trade and just cap aformation and growth.
Speaker 6: We need a pro growth strategy.
Speaker 2: Yeah, I'm Paul, I got eight more quests jump exactly,
Speaker 2: Tim and I are going to start talking about Henry
Speaker 2: Clay in a moment.
Speaker 4: All save this, Hey, Tim, talk to us about regulatory
Speaker 4: policy here. How do you think this administration is kind
Speaker 4: of just viewing how they want to regulate US commerce.
Speaker 4: I mean, there was a belief at the election that
Speaker 4: this is going to be a pro growth administration, maybe
Speaker 4: a little bit light handed as it relates to regulation.
Speaker 5: How do you think that's developing here?
Speaker 6: Yeah, I think they do. I think philosophically that's exactly
Speaker 6: where they want to go. Now you have to do
Speaker 6: on a sector best sector basis, and we're seeing in
Speaker 6: the energy sector a real push as he said, you know, drill, baby, drill,
Speaker 6: let's find ways to increase oil and gas production on
Speaker 6: top of the US being already the largest oil producer
Speaker 6: at thirteen point two million barrels a day. So I
Speaker 6: think that's true. On financial services, they're finding their way through.
Speaker 6: I think we'll get to a good point. It really
Speaker 6: depends on the sector. I do think they do want
Speaker 6: to focus on the regulation.
Speaker 2: Tim Adams is the new method of communication for bankers,
Speaker 2: not through Tim Adams if but they have to appear
Speaker 2: on Fox TV because that's what the president watches, is
Speaker 2: that what we've become.
Speaker 6: Well, Jamie is a unique individual and he's a larger
Speaker 6: life figure, and I think he's a great voice and
Speaker 6: a great face for not only the financial service industry,
Speaker 6: but for industry generally. I think it was a brilliant
Speaker 6: move of him to go where he knew the president
Speaker 6: would be watching. And so I'm a big Jamie fan.
Speaker 6: I think we, all of us, all of our voices
Speaker 6: need to be heard in all variety of places. In
Speaker 6: Gleen Bloomberg. You are such an important medium. So we're
Speaker 6: all out there every day.
Speaker 2: He's just looking for Red Sox tickets, Tim, Tim, I
Speaker 2: look at this and again there's the international component. Please
Speaker 2: tell me what the European bankers through the if what
Speaker 2: they observe in Washington.
Speaker 6: Well, look, they want to know where financial regulation is going.
Speaker 6: The Basle process, the Bazle three we've been working on
Speaker 6: for fifteen years. Is there some resolution, is it coming?
Speaker 6: What does it mean? And what does that mean for Europe.
Speaker 6: But I'll tell you this Trump shock I think has
Speaker 6: been a wake up call for Europe. I actually think
Speaker 6: there's an opportunity for Europe to seize the moment and
Speaker 6: put in place policies they will create capital formation, job creation,
Speaker 6: and they can grow. They certainly need a defense industrial base,
Speaker 6: a security industrial base. Europe's moment is here. Can they
Speaker 6: seize it? I don't know, but what I heard this
Speaker 6: week from European officials they know it and there are
Speaker 6: some here that want to move forward.
Speaker 4: And tim I mean along those lines, you know, I
Speaker 4: think a lot of folks feel like, Okay, Germany can
Speaker 4: certainly step up and make those types of investments.
Speaker 5: Maybe even Poland, I've heard.
Speaker 4: Because just given their geography relative visa the Russia.
Speaker 5: But how about the rest of Europe.
Speaker 4: I'm thinking, you know, Italy, Spain, Portugal, I mean, what
Speaker 4: can they realistically do in terms of, you know, investment
Speaker 4: in their infrastructure, in their defense.
Speaker 6: Well, you're right, Germany, after decades of a dorm and
Speaker 6: see in terms of a new investment, is ready to spend.
Speaker 6: I think the Chancellor Mertz will take over May seventh.
Speaker 6: He's got a great, great vision. I was in Warsaw
Speaker 6: two weeks ago. As you said, Poland is really a
Speaker 6: great intellectual leader in terms of growth and capitalism, the
Speaker 6: Baltic States, the Nordics. I met with Spanish officials yesterday.
Speaker 6: I think Spain has an enormous story to tell. Rapid
Speaker 6: economic growth in Spain, and so there is some upside.
Speaker 6: Many of them have physical challenges, they have large debt
Speaker 6: to GDP, they have large deficits, so they've got to
Speaker 6: work through fiscal But I think there's an option for
Speaker 6: a mindset that the private sector, not the public sector,
Speaker 6: the private sector can play a growth leading role.
Speaker 2: Tim Adams Kentucky rebuild to beat Paul Sweeney's Duke. I mean,
Speaker 2: can Mark quote, can Mark Pope get it done at
Speaker 2: Kentucky's So they finally walloped Duke?
Speaker 6: Well, you know, we beat Duke this year in the
Speaker 6: regular season. It was a big win for Mark Pope.
Speaker 6: I think he's got a great team he's gonna put
Speaker 6: on the floor next year. I like him. I think
Speaker 6: he's a real deal, and the players like him as well.
Speaker 2: Tim Adams generous of to spend this time with us
Speaker 2: this morning with the IF, and of course that really
Speaker 2: important interview conversation with Secretary Bessett here a few days
Speaker 2: ago which truly moved the markets.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 1: with the Bloomberg Business app. You can also listen live
Speaker 1: on Amazon Alexa from our flagship New York station. Just
Speaker 1: say Alexa play Bloomberg eleven thirty.
Speaker 2: Filmmakers in the Full Frame Documentary Film Festival. That's a
Speaker 2: course at.
Speaker 5: Duke at Duke and parents paid good tition.
Speaker 2: That pays you to study duration and convexity.
Speaker 5: But somehow she's made a good career. I don't know
Speaker 5: how she did it.
Speaker 4: Meghan Graper joins, she really appreciate you coming into our studio.
Speaker 4: Here's global head of Debt capital Markets at Barkley's.
Speaker 5: Meghan, thank you so much for joining us here.
Speaker 4: If I want to fund a leverage buyout in the
Speaker 4: debt capital markets, can you do that for me?
Speaker 5: We can? We can.
Speaker 7: In fact, I think there are signs of life in
Speaker 7: the investment grade world, in particular a market that seems
Speaker 7: reasonably unshaken relative to what we're seeing play out and
Speaker 7: other asset classes. And part of this is tied to
Speaker 7: I think, you know, a reopening of the market. You
Speaker 7: need to see supply to beget supply, and there is
Speaker 7: confidence in cash to be deployed, and so the you know,
Speaker 7: supply demand and balance. I think helping drive.
Speaker 2: That let me get to the soap opera right now
Speaker 2: in Rubinstein You know, do I mean there's no selling
Speaker 2: in private equity private debt? I mean they can cool
Speaker 2: concollect it. Other institutions are selling private equity. Now discuss
Speaker 2: what's it mean from your desk?
Speaker 7: It means a cash rotation and so there's ample liquidity.
Speaker 7: You can see it in the order books we had
Speaker 7: this week, So we've had a functional new issue market.
Speaker 7: You sawt you know Kender Morgan deal with seventeen billion
Speaker 7: of demand this week, Walmart topping twenty one billion. We
Speaker 7: did a deal for the Republic of Austria and Europe
Speaker 7: sixty three billion in demand for seven billion dollar trans
Speaker 7: So cash is gravitating to save havens.
Speaker 2: I hate you. She doesn't know. I bought the Austria
Speaker 2: in one hundred year at the top of the market.
Speaker 2: It went down seventy four percent.
Speaker 4: What are your clients telling you these days, Megan? When
Speaker 4: you talk to them, if you bring a new issue
Speaker 4: to the market, how do they feel about Are they
Speaker 4: asking for more return or are they asking for tougher covenants?
Speaker 4: Are they concerned about just the world in general, or
Speaker 4: is there so much money on the sidelines so they're
Speaker 4: just throwing it at your issuers.
Speaker 7: You know, I've yet to see an investor that would
Speaker 7: say they're bullish here, So that is the challenge.
Speaker 5: I think.
Speaker 7: You know, ultimately there there is a amount of cash
Speaker 7: coming into investors' hands that needs to be redeployed, and
Speaker 7: they are looking for safe harbors. Investment grade is proving
Speaker 7: to be that. You've got four hundred billion in coupon
Speaker 7: income and the wall of COVID debt maturing. So even
Speaker 7: as we keep monitoring these lipper data outflows, which certainly
Speaker 7: need to be scrutinized, I think they're indicative of sort
Speaker 7: of psychology of market and sentiment. There is a willing
Speaker 7: and there is opportunity that volatility is presenting in the
Speaker 7: long end of the curve. And with yields that are
Speaker 7: now you know, upwards of six percent without having to
Speaker 7: take a lot of credit.
Speaker 4: Risk, I guess your world has kind of readjusted to
Speaker 4: you know, a ten year at four thirty that type
Speaker 4: of thing, as opposed to years for fifteen years we
Speaker 4: had no interest rates has had issuers and investors kind
Speaker 4: of said, Okay, this is the new normal. Now, this
Speaker 4: is actually what a normal capital markets and the debt
Speaker 4: side looks like, yeah, it's.
Speaker 7: Picking and choosing your spots on the curve, so that
Speaker 7: is certainly a choice. I think for investors, the underlying
Speaker 7: yield is what's fueling the bid. So you're talking about,
Speaker 7: you know, some of the highest all in yields that
Speaker 7: you could achieve in the long end of the curve,
Speaker 7: upwards of six percent for a single a long piece
Speaker 7: data debt, and in triple bs is closer to six
Speaker 7: point three. So but on the issuer side, they're looking
Speaker 7: at spreads, they're still at all time tights. So we've
Speaker 7: seen a ten basis point retlacement and credit spreads this week,
Speaker 7: which just tells you that you know, there is money
Speaker 7: pulling in at a time where yes, credit spreads are
Speaker 7: twenty five wider on the year, but underlying rates in
Speaker 7: the front end of the curve are forty to fifty lower,
Speaker 7: So you're all in cost of funding Actually isn't materially
Speaker 7: worse than you were at the start.
Speaker 2: You're too young. But did your dad or grandpa did
Speaker 2: they show you the SMP blue Book.
Speaker 7: We were a medical family. I was standing over my
Speaker 7: dad in an o R doing cardiac surgery procedures so
Speaker 7: finance was another world from that medical Listen.
Speaker 2: Ten, you're attained, Mimosa. Maybe get Megan Raper through this.
Speaker 2: Megan Draper with us here in your community, rascin nation.
Speaker 2: Good morning worldwide and particularly to the continent of Europe.
Speaker 2: In your afternoon on YouTube, subscribe to Bloomberg Podcasts. Okay,
Speaker 2: any equity zeitgeist right now. Institutions not Barclay's total panic.
Speaker 2: Everybody's doing this, doing that in retails by the dip,
Speaker 2: keep it going. Is it the same retail institution dichotomy
Speaker 2: in fixed income?
Speaker 7: Well, the one thing we've been monitoring is that twenty
Speaker 7: two percent of investment grade credit is owned by non
Speaker 7: US investors. And so the fear factor, particularly as we
Speaker 7: looked at some of the moves in the bond market,
Speaker 7: and you know, the the you know, suggestion was that
Speaker 7: maybe we were seeing investors hair back. That's in fact
Speaker 7: not the case.
Speaker 2: We look, it's not happening.
Speaker 7: It's not happening. You can see it in the raid auctions.
Speaker 7: We just got the allotment data for the April auctions,
Speaker 7: So tens and thirties actually saw a month of a
Speaker 7: month increase in terms of foreign participation. That's true in
Speaker 7: these new issue order books as well. So we are
Speaker 7: bringing deals to market that twenty two percent holding is
Speaker 7: still you know, there's no shortage of demand from Asia,
Speaker 7: from the Middle East and from Europe helping to underpin
Speaker 7: some of these functional markets.
Speaker 4: How do you compete against private credit or how has
Speaker 4: the private credit market impacted your business?
Speaker 7: I mean private credit is a bit more opaque and
Speaker 7: it does feel like more of a bespoke market. And
Speaker 7: so if you're an investor in this day and age,
Speaker 7: what's what's differ in the secondary market. Why everyone takes
Speaker 7: their lead from the primary is you're in good company.
Speaker 7: If you're in the new issue market, you're not a
Speaker 7: singular investor making a singular decision. A lot of private
Speaker 7: credit is actually more finite number of players helping to
Speaker 7: drive activity.
Speaker 2: If you're alongside one.
Speaker 7: Hundred and fifty other accounts in a twenty billion dollar
Speaker 7: order book, you're feeling more confident that at a market
Speaker 7: that's difficult to think about where is fair value, If
Speaker 7: you're alongside of a multitude of other savvy investors, you're
Speaker 7: feeling greater conviction about fair value.
Speaker 2: David from Camden Yard's emails and I'm kidding folks, But
Speaker 2: if you were to talk to mister Rubinstein right now,
Speaker 2: are the endowments to locked up an alternative investments? Esoteric alternatives?
Speaker 2: Should they be looking at the joyous liquidity of Meghan
Speaker 2: Draper at Arclay's.
Speaker 7: I think we're seeing that rotation happen. So if you're
Speaker 7: looking for safe have in trades, particularly in the front
Speaker 7: end of the curve, it's an easy place to find
Speaker 7: a cash surrogate and wait for more sustained stability because
Speaker 7: you know, even if there's a criminal dealmaking out there,
Speaker 7: the risk is that this growth landscape is going to contract,
Speaker 7: particularly as you move into the second half. So it's
Speaker 7: a good place to sort of part cash and wait
Speaker 7: things out and still without taking much credit risk pick
Speaker 7: up in criminal yield.
Speaker 2: The movie of my childhood was David Lean Lawrence of Arabia.
Speaker 2: I mean it was just it was jaw dropping as
Speaker 2: a kid. What was the movie of your childhood that
Speaker 2: made you do film it?
Speaker 6: Do well?
Speaker 7: I started out as a documentary filmmaker, and so it
Speaker 7: was really more evaluating and critiquing different personality types, which
Speaker 7: is actually somewhat apropos as you think about trying to
Speaker 7: evaluate different investors and issuers and how they're approaching markets.
Speaker 8: C Z.
Speaker 2: The Greek movie.
Speaker 5: You got to see that? What is that?
Speaker 2: The one every Academy award, like nineteen seventy seventy one.
Speaker 2: It was this incredibly it was before documentary. It's this
Speaker 2: incredibly violent movie about one of the Greek revolutions.
Speaker 9: All Right, I'm on it.
Speaker 2: Yeah, very cool Z.
Speaker 5: Just a that's like a John Tucker reference. Lisa comes
Speaker 5: out of nowhere.
Speaker 7: Something to watch on an international sign.
Speaker 2: Are you based in New York or does Barkleys have
Speaker 2: you with a British accent in London?
Speaker 7: No, I'm based in New York, but I'm all over
Speaker 7: the globe. I was in Texas yesterday. I'm flying to
Speaker 7: Switzer on Sunday.
Speaker 2: You talked to Michael They're going to move to New
Speaker 2: York Stock Exchange to Texas.
Speaker 7: There's a there's a you know, decent amount of conviction
Speaker 7: that there's sort of ample, ample opportunities for you know,
Speaker 7: high quality names where our fundamentals are in good shape
Speaker 7: and where they have access to markets. So it's a
Speaker 7: tale of two cities. There's definitely you know, issuers that
Speaker 7: are cash rich and happy to sit this out for
Speaker 7: a period of times. With some of our pipeline has
Speaker 7: moved to late q Q two Q three, there are
Speaker 7: others though there's a thirty five billion dollars backlog slated
Speaker 7: for next week. So we're going to build on the
Speaker 7: momentum we saw this week with twenty five billion getting done,
Speaker 7: twenty five billion getting done at new issue concessions that
Speaker 7: are three bases points, with over subscriptions that are upwards
Speaker 7: of five times.
Speaker 2: Megan, Thank you, Megan Graper with Barkley's driving all their
Speaker 2: at market work.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Apple Corplay and Android
Speaker 1: Auto with the Bloomberg Business app. You can also watch
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Speaker 1: Bloomberg terminal.
Speaker 2: This is like, you know, Leslie's in and we're going
Speaker 2: to talk about liquefied natural gas, and all of a sudden,
Speaker 2: you know, it's like, okay, we'll do it, and it's
Speaker 2: interesting and all that. She's with Energy Vista and we're
Speaker 2: gonna look at liquefied natural gas and it liquefies. It
Speaker 2: negative two hundred and thirty degrees Fahrenheite, and the the
Speaker 2: equation is C two h six or something. I flunked
Speaker 2: it in chemistry. I'm sorry, except you're the most important
Speaker 2: interview of the day.
Speaker 5: Good time.
Speaker 2: All of a sudden, your world is front and center
Speaker 2: with US, China, US Europe. So the boats go to China,
Speaker 2: but your boats with LNG may turn around and go
Speaker 2: to Europe. Do I have that right?
Speaker 8: So they already stopped flowing to China since February, actually,
Speaker 8: both for economic reasons and the fifteen tariffs that happened
Speaker 8: at that time. But we've seen that China has used
Speaker 8: its retaliation from the beginning. It's geopolitical lever that it
Speaker 8: has on US energy from the beginning, same as last time,
Speaker 8: like the first trade war, China has stopped importing US
Speaker 8: lergy for a couple of months until the trade deal happened,
Speaker 8: and then despite their imports of US elergy. So I
Speaker 8: think that China is using its coercive diplomacy retaliation right now.
Speaker 8: But the deal is still on the.
Speaker 2: Table, I should say, Leslie Poultic, Goesman, I didn't energy
Speaker 2: so correctly, Paul put me in the timeout chair. Leslie
Speaker 2: Poultic Gosman with US from energy. Big deal. So it is.
Speaker 5: And how do you think when you think about the global.
Speaker 4: Trade here we're talking about tariffs with so many different
Speaker 4: countries and so many different products and services. How do
Speaker 4: you see energy industry think about a world where free
Speaker 4: trade maybe on the decline.
Speaker 8: So, Paul, let me ask you a question. What's in
Speaker 8: common between Alaska and shipping? So they were both mentioned
Speaker 8: in the Speech of the State of the Union earlier
Speaker 8: this year. And this is the card that South Korea
Speaker 8: can play. So all the countries right now they are
Speaker 8: looking at all cross agencies, cross sectors, what they can
Speaker 8: come to the table with the US and infrastructure. Shipping
Speaker 8: is going to be big on the table in South
Speaker 8: Korea has a competitive advantage here and they can bring
Speaker 8: they can buy also more US energy imports and potentially
Speaker 8: from the Alaska project that everybody is talking about.
Speaker 2: Basic one, an allergy ship that's not going to China.
Speaker 2: Can it go through the Paramat Canal? They fit through
Speaker 2: the Panama Canal.
Speaker 8: Yes they can. But all twenty twenty four, most of
Speaker 8: the LNG tankers from the US have avoided the Panama
Speaker 8: Canal because of the bottleneck re rooted around the Cape
Speaker 8: of Good Hope, but it made more sense anyway economically
Speaker 8: to send it to Europe, and Europe was the largest
Speaker 8: market for US O engerins.
Speaker 2: Where does it come out of the East Coast is
Speaker 2: a golf American excuse Gulf of America. Sorry, where's the
Speaker 2: major LNG depot in Texas, Louisiana?
Speaker 8: All around the US golf.
Speaker 2: Coast Rotterdam or do they go to France?
Speaker 8: From they go to France, Belgium, the UK, Turkeys like
Speaker 8: the all along the Mediterranean, the Netherlands, Germany.
Speaker 2: What Secretary was going to do with this?
Speaker 8: With your world of lerg So I think that it's
Speaker 8: a logical avenue to play this card because the US
Speaker 8: wants to sell more of it, unleash the American gold,
Speaker 8: and Europe needs it right now to keep Russia and
Speaker 8: gas and energy at bay. And so there is a
Speaker 8: common ground of understanding here and US Energy. Yes, the
Speaker 8: permitting barrier has been removed, but US energy still needs
Speaker 8: to be built if new projects come along, and the
Speaker 8: financing is really challenging for this new project, and the
Speaker 8: US needs to sell if there is no market, you know,
Speaker 8: there is no exports, but.
Speaker 4: Don't we I think that liquified natural gas. I came
Speaker 4: to understand the importance of it during when Russia invaded
Speaker 4: Ukraine and that shut off a source of energy for
Speaker 4: Europe and so our the US. Liquified natural gas became
Speaker 4: so much more valuable and so much more important. But
Speaker 4: isn't the problem in the US is we don't have
Speaker 4: necessarily the pipelines to get it to the ports in
Speaker 4: Galveston or wherever we.
Speaker 5: Need to get it to.
Speaker 8: Yeah, so you're you're you know, you're raising an important
Speaker 8: part of the equation that infrastructure in the US. More
Speaker 8: infrastructure needs to be built on the pipeline side. So
Speaker 8: it all depends what is the source of the gas
Speaker 8: for this energy? Is it associated gas from you know,
Speaker 8: oil production, or it's dry gas? So that will be
Speaker 8: important in the future.
Speaker 2: Well, I had twenty seconds Michael Barr's trumpet at the
Speaker 2: BIT as clearly as I can. An energy tanker is
Speaker 2: two football fields and there's only twenty five people on board.
Speaker 8: No, I don't even know exactly what's the crew. But
Speaker 8: I can give you another data points. Please, how many
Speaker 8: US flagships do we have?
Speaker 5: Like almost none? Right, exactly exactly.
Speaker 8: I think we have only one new one that recently
Speaker 8: dropped a cargo in Puerto Rico that was like the
Speaker 8: only recent ones that we had. And globally speaking, eighty
Speaker 8: percent of the trade is on the ocean. How many
Speaker 8: US ships all together that we have only eighty yep
Speaker 8: that can do global trade.
Speaker 2: This is great. Yeah, so I've more seven minutes with Leslie,
Speaker 2: Paul and the whole thing. Can you come back?
Speaker 5: I can come back.
Speaker 2: Thank you, Thank you for having me. Less Paul goes
Speaker 2: with Ergie Vista.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Apple Corplay and Android
Speaker 1: Auto with the Bloomberg Business app. You can also listen
Speaker 1: live on Amazon Alexa from our flagship New York station,
Speaker 1: Just say Alexa play Bloomberg eleven thirty perfect for my.
Speaker 2: Beverage of choice. Lisa was out on YouTube on the
Speaker 2: live chat. She want selling the newspapers. Oh something that
Speaker 2: we're going to get to it, not now, but something
Speaker 2: about ice cubes.
Speaker 6: And I love that.
Speaker 9: Okay, First, I want to start with We've been talking
Speaker 9: about so many companies, right industries being affected by China tariffs.
Speaker 9: The Wall Street Journal is pointing to another one. Baby
Speaker 9: strollers and baby products.
Speaker 5: Not on the market.
Speaker 9: Sorry, producer Eric, I know he's definitely in the market.
Speaker 9: The problem is that there are strict product safety standards
Speaker 9: with US that the US government requires, So products like
Speaker 9: shoes and clothing they're not regulated as closely as the
Speaker 9: baby products. So you have companies that are looking for
Speaker 9: places where they can get one the products, but to
Speaker 9: also meet those regulations. So that's why a lot of
Speaker 9: them returned to China. So to give you an idea
Speaker 9: of the impact today, ninety five percent of imported strollers
Speaker 9: come from China. I did not realize that three quarters
Speaker 9: of toys and infant furniture like cribs come from China.
Speaker 2: Why is this a surprise?
Speaker 3: We know this.
Speaker 9: I did not realize it was ninety five percent. So
Speaker 9: the question is, right, how much more is it going
Speaker 9: to cost me? So you have these strollers that are
Speaker 9: like nine hundred dollars so you could tackle stop stop.
Speaker 2: Giuseppe has the fancy one. Giuseppe has a door best
Speaker 2: in it and stroller combo which is seven thousand dollars.
Speaker 5: All we'll suspension.
Speaker 2: That's all. One of the in laws bought it. I
Speaker 2: think it was her in law. You know her parents
Speaker 2: bought it. What a racket they.
Speaker 5: Could close four hundred dollars more.
Speaker 2: Can you imagine back in the old strollers you picked
Speaker 2: them up at Walmart for forty nine bucks.
Speaker 5: Act, we have the twin strollers for their twins.
Speaker 4: Okay, we had the side by side and the front
Speaker 4: and back depending that's a big investment.
Speaker 2: Yes.
Speaker 6: Next, please.
Speaker 9: Have either of you is used chat jept?
Speaker 5: Have you used it?
Speaker 9: Engaged with it at all?
Speaker 2: Seen?
Speaker 5: Okay? Well, if you do.
Speaker 9: The question is do you put prompts in there like
Speaker 9: please and thank you to chat chept? So if you do,
Speaker 9: it's like an etiquette question, but it's also a money
Speaker 9: question because apparently it costs money just for that little
Speaker 9: extra prompt. Sam Haltman, he's the CEO of open AI.
Speaker 9: He talked about it because someone asked him on X
Speaker 9: you know how much money is open ai losing an
Speaker 9: electricity costs from people adding just an extra pleaser thank you,
Speaker 9: and he responded, tens of millions of dollars well spent,
Speaker 9: though he said, you never know. So the reason and
Speaker 9: this is really what because New York Time they spoke
Speaker 9: to experts. They say every additional word and ask increases
Speaker 9: the cost.
Speaker 5: For a server.
Speaker 9: So it involves like electrons moving through transitions very you
Speaker 9: know deep, and that needs energy. So that's the whole thing.
Speaker 9: So if you add an extra thank you, it tacks
Speaker 9: on extra money, but you're also being kind at the
Speaker 9: same time.
Speaker 2: So I think when I was in college is closer
Speaker 2: to Benjamin Franklin, yes, than it is now. I remember
Speaker 2: the stacks and you couldn't stand You talked about Boulder
Speaker 2: earlier in the in the Colorado Stacks. I think it
Speaker 2: was Baker. I can't remember. You couldn't stand up, you know,
Speaker 2: the floors, and it was musty and shaper and incense
Speaker 2: and other things besides in.
Speaker 9: Google, can I stop there, I'll give you you can
Speaker 9: mast up there.
Speaker 5: Okay.
Speaker 9: So, if you're enjoying a fancy cocktail somewhere, maybe on
Speaker 9: the Jersey Shore, maybe in Rome, maybe you're.
Speaker 5: Enjoining the squad taverns, would.
Speaker 9: You here's the question, though, would you pay an extra
Speaker 9: seventeen dollars for an ice cube from Greenland? Because a
Speaker 9: lot of people are doing it, Okay, entrepreneurs, they're heading
Speaker 9: to Greenland, they're harvesting all the ice.
Speaker 5: Is because the Trump he sees.
Speaker 2: It.
Speaker 5: There you go, right, Okay, I get it now.
Speaker 9: It's they're marketing and they're saying it's cleaner, it's denser
Speaker 9: because it's been compressing the glacier for like one hundred
Speaker 9: thousand years.
Speaker 5: Weather science back set up. It's up for debate.
Speaker 9: But people are paying one hundred dollars for six ice cubes.
Speaker 5: It's crazy.
Speaker 9: There's also vodka being made with glacial melt water on
Speaker 9: top of it, so it's growing. You have the government
Speaker 9: kind of approving about thirteen licenses to certain companies to
Speaker 9: do this, to harvest it.
Speaker 2: Let's cut to the chase. Yes, we go to surveillance.
Speaker 2: Tito's expert Paul Sweeney and those sugar in Tito's right,
Speaker 2: I don't know.
Speaker 5: It's Austin, Texas.
Speaker 2: Yeah, how kind do you want to kid? Come up
Speaker 2: with a tequila like George?
Speaker 4: Yeah, exacting that I'm not saying a hundred bucks for
Speaker 4: an ice crea.
Speaker 2: Lisa Materio, thank you so much. Just find yourself. I
Speaker 2: don't know today.
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