1 00:00:02,720 --> 00:00:10,560 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,560 --> 00:00:14,520 Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 3 00:00:14,560 --> 00:00:18,520 Speaker 1: Eastern on Applecarplay and Android Auto with the Bloomberg Business App. 4 00:00:18,600 --> 00:00:21,840 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:21,920 --> 00:00:23,040 Speaker 1: us live on YouTube. 6 00:00:24,239 --> 00:00:27,600 Speaker 2: Big news in the world of kind of digital advertising, 7 00:00:27,640 --> 00:00:32,920 Speaker 2: Google partially loses US advertising tech anti trust case. So 8 00:00:32,960 --> 00:00:36,240 Speaker 2: a federal judge found Google guilty of illegally monopolizing online 9 00:00:36,240 --> 00:00:41,559 Speaker 2: advertising technology markets for advertising exchanges and tools used by websites, 10 00:00:41,680 --> 00:00:43,600 Speaker 2: websites to sell ad space. To figure out what all 11 00:00:43,680 --> 00:00:45,599 Speaker 2: that means, We've got some smart people who do this. 12 00:00:45,640 --> 00:00:49,320 Speaker 2: We have people Bloomberg Intelligence that just look at litigation 13 00:00:50,320 --> 00:00:52,559 Speaker 2: and what it means for certain companies because that can 14 00:00:52,640 --> 00:00:55,640 Speaker 2: move stocks in a big, big way. We've got a 15 00:00:55,640 --> 00:00:57,840 Speaker 2: couple of voices. You're the one, you know, Jennifer Ree, 16 00:00:57,880 --> 00:01:00,880 Speaker 2: a Bloomberg Intelligence senior litigation analys Talk to her for 17 00:01:01,280 --> 00:01:02,760 Speaker 2: a long time. She helps us out on a lot 18 00:01:02,800 --> 00:01:04,840 Speaker 2: of these big cases. Now we've got another voice as 19 00:01:04,840 --> 00:01:08,760 Speaker 2: well on Bloomberg Intelligence, Justin Turci, Bloomberg Intelligence Antitrust, Litigation 20 00:01:08,800 --> 00:01:13,200 Speaker 2: and policychanneles. He's down there in d C. Right now, Jen, 21 00:01:13,240 --> 00:01:15,840 Speaker 2: talk to us about Google here. What's the what did 22 00:01:15,880 --> 00:01:16,839 Speaker 2: the court find here? 23 00:01:17,280 --> 00:01:20,119 Speaker 3: Yeah, you know, this is a really complicated case, honestly, Paul. 24 00:01:20,800 --> 00:01:22,959 Speaker 4: Google has these products which you refer to. 25 00:01:23,040 --> 00:01:25,319 Speaker 3: It's called the ad tech stack, and it's not something 26 00:01:25,400 --> 00:01:28,120 Speaker 3: you know, normal consumers know about, but it's a series 27 00:01:28,160 --> 00:01:31,920 Speaker 3: of software from start to finish whereby publishers and advertisers 28 00:01:31,959 --> 00:01:34,320 Speaker 3: can come together to sell and buy space on the Internet. 29 00:01:34,480 --> 00:01:37,600 Speaker 3: Right And it's important because it's moving very quickly and 30 00:01:37,959 --> 00:01:41,000 Speaker 3: lining up the ads properly, you know, with the consumers 31 00:01:41,040 --> 00:01:44,000 Speaker 3: that should see those ads. Google actually has, through a 32 00:01:44,040 --> 00:01:47,039 Speaker 3: series of acquisitions and some of its own products, control 33 00:01:47,080 --> 00:01:50,520 Speaker 3: over that entire stack. It has competitors for certain pieces, 34 00:01:50,680 --> 00:01:52,400 Speaker 3: but it's one of the only ones that has. 35 00:01:52,240 --> 00:01:52,920 Speaker 4: All the pieces. 36 00:01:52,920 --> 00:01:55,960 Speaker 3: And so the allegation here was that Google was manipulating 37 00:01:56,000 --> 00:01:58,800 Speaker 3: its control over some very desirable pieces of the stack 38 00:01:59,080 --> 00:02:02,240 Speaker 3: to force publisher and advertisers to use all of its products, 39 00:02:02,400 --> 00:02:05,120 Speaker 3: taking fees all along the way, and basically naming its 40 00:02:05,160 --> 00:02:07,800 Speaker 3: price because it had these must have products. So what 41 00:02:07,840 --> 00:02:10,359 Speaker 3: this judge found was that for some of those products, 42 00:02:10,440 --> 00:02:13,120 Speaker 3: one on the publisher side, the publisher ad server, and 43 00:02:13,160 --> 00:02:15,200 Speaker 3: then the ad exchange that sits right in the middle 44 00:02:15,240 --> 00:02:17,919 Speaker 3: and does the auction between the advertiser and the publisher. 45 00:02:18,240 --> 00:02:21,320 Speaker 3: That Google was monopolizing both of those products and also 46 00:02:21,480 --> 00:02:25,280 Speaker 3: illegally tying them together. Meaning hey, publishers and advertisers, if 47 00:02:25,280 --> 00:02:27,400 Speaker 3: you want to use our ad exchange where we have 48 00:02:27,440 --> 00:02:30,600 Speaker 3: these really desirable advertisers, you have to use our publisher 49 00:02:30,600 --> 00:02:32,840 Speaker 3: ad server and therefore we keep our ninety percent or 50 00:02:32,840 --> 00:02:33,639 Speaker 3: so market share. 51 00:02:34,040 --> 00:02:36,960 Speaker 5: All right, justin let's bring you in here to just 52 00:02:37,000 --> 00:02:41,040 Speaker 5: get your take on the context of Google, because this 53 00:02:41,080 --> 00:02:43,520 Speaker 5: isn't the first time that there's been an ANATRUS case 54 00:02:43,919 --> 00:02:47,600 Speaker 5: against Google. What did you make of this decision? 55 00:02:48,560 --> 00:02:51,040 Speaker 6: Yeah? Absolutely, And I think Jen really hit the nail 56 00:02:51,040 --> 00:02:53,880 Speaker 6: on the head here. You know, this is obviously compounding 57 00:02:53,919 --> 00:02:56,160 Speaker 6: the search ruling that came out last year, and we're 58 00:02:56,160 --> 00:02:58,880 Speaker 6: heading too a remedy's phase on that case this coming Monday. 59 00:02:59,080 --> 00:03:02,400 Speaker 6: But to Jen's point, really this aspect of the ruling 60 00:03:02,480 --> 00:03:05,040 Speaker 6: focusing on the publisher adserver in that exchange that Jen 61 00:03:05,120 --> 00:03:06,960 Speaker 6: said sits in the middle. That is the crux of 62 00:03:07,000 --> 00:03:09,280 Speaker 6: the case here. The government is going to likely ask 63 00:03:09,360 --> 00:03:12,600 Speaker 6: now for divestitures of that publisher adserver and the ad 64 00:03:12,600 --> 00:03:15,040 Speaker 6: exchange in the middle. But I really do question whether 65 00:03:15,160 --> 00:03:17,080 Speaker 6: or not the quarters in a position to order that. 66 00:03:17,480 --> 00:03:19,519 Speaker 6: I think a lot of testimony at the trial which 67 00:03:19,560 --> 00:03:22,760 Speaker 6: I attended, really points to the fact the publishers feel 68 00:03:22,840 --> 00:03:25,560 Speaker 6: reliant on the ad server because the ad exchange in 69 00:03:25,600 --> 00:03:28,480 Speaker 6: the middle then gives them the real time advertising they 70 00:03:28,520 --> 00:03:30,679 Speaker 6: want from Google Ads. So if you sip that court 71 00:03:30,680 --> 00:03:33,160 Speaker 6: in the middle, perhaps you get a remedy that's desirable 72 00:03:33,200 --> 00:03:37,000 Speaker 6: without actually forcing a divestiture either of those properties. 73 00:03:38,120 --> 00:03:40,560 Speaker 2: Justin I just I wonder like at the trial, who 74 00:03:40,640 --> 00:03:42,680 Speaker 2: do they get to get up on the standard say, 75 00:03:43,120 --> 00:03:46,560 Speaker 2: I don't like Google? Doesn't everybody kind of Is anybody 76 00:03:46,640 --> 00:03:50,360 Speaker 2: really complaining about Google and its advertising service? 77 00:03:51,200 --> 00:03:53,880 Speaker 6: Yeah, you know, Paul, I think really who's complaining is 78 00:03:53,920 --> 00:03:56,680 Speaker 6: the publishers who are selling that space on their websites 79 00:03:56,720 --> 00:03:59,400 Speaker 6: through the publisher ad server, right. I think their complaint 80 00:03:59,480 --> 00:04:01,560 Speaker 6: is largely they don't really have a lot of control 81 00:04:01,600 --> 00:04:03,760 Speaker 6: over the kind of ads end up on their website. 82 00:04:03,840 --> 00:04:06,160 Speaker 6: They don't have control over the pricing involved with all 83 00:04:06,160 --> 00:04:08,080 Speaker 6: of that. They don't really like the fees that are 84 00:04:08,080 --> 00:04:09,880 Speaker 6: involved in If they want to use a different add 85 00:04:09,880 --> 00:04:13,000 Speaker 6: ex change in the middle, perhaps and find a lower rate. 86 00:04:13,160 --> 00:04:14,840 Speaker 6: You know that they're paying to get those ads for 87 00:04:15,000 --> 00:04:17,400 Speaker 6: furnish to their website. Don't want to collect a higher fee. 88 00:04:17,520 --> 00:04:19,640 Speaker 6: They're not able to do that if they're really relying 89 00:04:19,720 --> 00:04:22,320 Speaker 6: upon the prices of the policies that Google is using 90 00:04:22,360 --> 00:04:24,400 Speaker 6: to display those ads on their properties. 91 00:04:27,000 --> 00:04:30,920 Speaker 5: What did Google say in response, Well, you know, Google 92 00:04:30,920 --> 00:04:33,599 Speaker 5: would say, look, we have loads of competitors for these products. 93 00:04:33,640 --> 00:04:35,760 Speaker 4: You know, they sort of pick apart the policies that. 94 00:04:37,040 --> 00:04:39,600 Speaker 3: The Department of Justice pointed to, saying that you're forcing 95 00:04:39,680 --> 00:04:41,960 Speaker 3: these companies to use your products, saying no, no, no no, 96 00:04:42,000 --> 00:04:43,719 Speaker 3: based on these policies, they're not forced. 97 00:04:43,880 --> 00:04:45,960 Speaker 4: They have options. They can go to our competitors. 98 00:04:46,000 --> 00:04:48,479 Speaker 3: And by the way, there's this doctrine an antitrust and 99 00:04:48,520 --> 00:04:51,520 Speaker 3: it's called a refusal to deal, and essentially it's a 100 00:04:51,520 --> 00:04:54,600 Speaker 3: big defense that's used by a lot of these companies. Essentially, 101 00:04:54,600 --> 00:04:56,960 Speaker 3: what the refusal to deal doctrine says is that any 102 00:04:56,960 --> 00:04:59,080 Speaker 3: company has the right to deal with who they want 103 00:04:59,120 --> 00:05:01,560 Speaker 3: to and they don't necessarily have to do business with 104 00:05:01,600 --> 00:05:04,440 Speaker 3: their competitors. So, in other words, a competitor ad exchange 105 00:05:04,480 --> 00:05:08,240 Speaker 3: doing working with Google's publisher ad server, and that can 106 00:05:08,440 --> 00:05:11,919 Speaker 3: often work but in certain cases, the conduct of the 107 00:05:11,920 --> 00:05:14,760 Speaker 3: company goes beyond just sort of what's covered by a 108 00:05:14,800 --> 00:05:18,000 Speaker 3: refusal to deal, and it becomes an unreasonable restraint of trade. 109 00:05:18,080 --> 00:05:19,560 Speaker 4: And that's where you sort of get past that. 110 00:05:19,640 --> 00:05:21,719 Speaker 3: So what Google tried to say is, well, this isn't 111 00:05:21,760 --> 00:05:23,960 Speaker 3: unlawful under the intetist laws because we don't have to 112 00:05:23,960 --> 00:05:25,280 Speaker 3: do business with our competitors. 113 00:05:25,760 --> 00:05:26,080 Speaker 7: Folks. 114 00:05:26,080 --> 00:05:29,880 Speaker 2: Here at Bloomberg, we have complete transparency amongst all employees. 115 00:05:29,920 --> 00:05:31,719 Speaker 2: We know where everybody is all the time. It's called 116 00:05:31,720 --> 00:05:34,880 Speaker 2: the outfunction. It's the calendar I look for justin like, 117 00:05:34,880 --> 00:05:37,400 Speaker 2: where is this guy? And he's based in New York, 118 00:05:37,920 --> 00:05:40,040 Speaker 2: but he's down in d C. And I go look 119 00:05:40,080 --> 00:05:42,960 Speaker 2: at his calendar, which is the outfunction, and he's It's 120 00:05:42,960 --> 00:05:47,680 Speaker 2: something called the FIC versus Meta trial, another technology company. 121 00:05:48,480 --> 00:05:50,520 Speaker 2: Why are you down in DC for this trial? What 122 00:05:50,640 --> 00:05:51,200 Speaker 2: is this trial? 123 00:05:52,040 --> 00:05:52,280 Speaker 8: Oh? 124 00:05:52,360 --> 00:05:54,400 Speaker 6: You know, this is a topic of the week. I 125 00:05:54,440 --> 00:05:57,400 Speaker 6: feel like Paul, right, So the f suing Meta right 126 00:05:57,440 --> 00:05:59,880 Speaker 6: now is seeking a divestiture of Instagram. And what's that 127 00:06:00,400 --> 00:06:03,400 Speaker 6: huge for the as the acro actual acquisitions of those 128 00:06:03,440 --> 00:06:06,120 Speaker 6: companies that are arguing with anti competitive but as we 129 00:06:06,200 --> 00:06:08,600 Speaker 6: all know, they've on these properties now for well over 130 00:06:08,720 --> 00:06:11,960 Speaker 6: a decade, and I have to say, seeing Zuckerberg on 131 00:06:12,000 --> 00:06:13,960 Speaker 6: this stand in the last few days at sestimony has 132 00:06:13,960 --> 00:06:16,880 Speaker 6: been really, really strong. He did a great job sending 133 00:06:16,880 --> 00:06:19,320 Speaker 6: off a lot of the criticisms coming from the suc 134 00:06:19,800 --> 00:06:21,719 Speaker 6: whose case. I think we both saw Jenna and I 135 00:06:22,400 --> 00:06:25,159 Speaker 6: was already not necessarily the strongest. There's a lot of 136 00:06:25,200 --> 00:06:27,880 Speaker 6: holes there. I don't think they really defined the marketplace 137 00:06:27,920 --> 00:06:31,760 Speaker 6: the right way in terms of positioning Meta as a monopolist. 138 00:06:31,880 --> 00:06:35,040 Speaker 6: So there's a lot going on. It's big tech on trial. 139 00:06:35,080 --> 00:06:37,560 Speaker 6: I think everywhere you look these days, that's right. 140 00:06:37,600 --> 00:06:40,640 Speaker 2: And now it's not just Jen, We've got a bigger 141 00:06:40,640 --> 00:06:44,200 Speaker 2: team of litigation analysts. Jen, as you sit back here 142 00:06:44,520 --> 00:06:48,080 Speaker 2: in your experience, are these tech companies I've risk? Do 143 00:06:48,120 --> 00:06:49,840 Speaker 2: you think from the courts? 144 00:06:50,240 --> 00:06:52,599 Speaker 4: Absolutely? Look, you know you're at risk? 145 00:06:52,960 --> 00:06:55,840 Speaker 3: He There are liability decisions now, two of them against Google, right, 146 00:06:55,880 --> 00:06:58,320 Speaker 3: and in both cases the Department of Justice is going 147 00:06:58,360 --> 00:07:00,560 Speaker 3: to ask a judge to force it to sell assets. 148 00:07:01,720 --> 00:07:04,440 Speaker 3: As long as that's out there, those companies are at risk. Now, 149 00:07:04,680 --> 00:07:07,000 Speaker 3: would I bet that that's what can happen? No, I 150 00:07:07,040 --> 00:07:09,159 Speaker 3: don't think that. In the Search case, which has a 151 00:07:09,200 --> 00:07:12,040 Speaker 3: remedy hearing starting Monday, Google will be forced to sell Chrome. 152 00:07:12,080 --> 00:07:14,240 Speaker 3: And I don't actually believe in this ad tech case 153 00:07:14,400 --> 00:07:17,120 Speaker 3: that they'll be forced to sell off the publisher, ad. 154 00:07:17,760 --> 00:07:19,160 Speaker 4: Server or the ad exchange. 155 00:07:19,320 --> 00:07:21,480 Speaker 3: But they're at risk of course, because you have no 156 00:07:21,600 --> 00:07:24,200 Speaker 3: idea what a judge is going to do. I should 157 00:07:24,240 --> 00:07:28,320 Speaker 3: say that the remedy hearings will take place, decision will 158 00:07:28,320 --> 00:07:29,920 Speaker 3: be made, and at that point Google will appeal. 159 00:07:30,160 --> 00:07:33,920 Speaker 2: All right, Jen Fantastic, I tell you, folks, Bloomberg Intelligence, 160 00:07:33,920 --> 00:07:39,120 Speaker 2: it's not just stocks bonds. We've got litigation antitrust research 161 00:07:39,160 --> 00:07:43,320 Speaker 2: at bi go. This stuff moves stocks. If you're a 162 00:07:43,400 --> 00:07:47,000 Speaker 2: technology investor, you have to have an opinion on what 163 00:07:47,160 --> 00:07:50,280 Speaker 2: the antitrust risk is for some of these big tech names, 164 00:07:50,280 --> 00:07:54,200 Speaker 2: whether it's Amazon, Meta, Google, And we've got experience anti 165 00:07:54,200 --> 00:07:58,040 Speaker 2: trust attorneys writing this research for our Bloomberg customers on 166 00:07:58,200 --> 00:08:02,400 Speaker 2: b I go. It is awesome, some stuff justin terracy. Jenniferree. 167 00:08:02,440 --> 00:08:05,400 Speaker 2: They are Bloomberg anti trust analyts for Bloomberg Intelligence. We 168 00:08:05,520 --> 00:08:07,520 Speaker 2: got them and we had them in studio today giving 169 00:08:07,560 --> 00:08:10,880 Speaker 2: us some opinions on Google and METI can't get it 170 00:08:10,920 --> 00:08:11,520 Speaker 2: anywhere else. 171 00:08:13,240 --> 00:08:16,960 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 172 00:08:17,040 --> 00:08:20,400 Speaker 1: weekdays at ten am Eastern on Applecarclay, and Android Auto 173 00:08:20,520 --> 00:08:23,600 Speaker 1: with the Bloomberg Business App. Listen on demand wherever you 174 00:08:23,640 --> 00:08:26,600 Speaker 1: get your podcasts, or watch us live on YouTube. 175 00:08:27,320 --> 00:08:30,320 Speaker 2: Well, the stock story of the day to the downside 176 00:08:30,400 --> 00:08:33,680 Speaker 2: is United Healthcare. This stock is down twenty two percent. 177 00:08:33,760 --> 00:08:37,160 Speaker 2: That's the most in twenty five years after they cut 178 00:08:37,200 --> 00:08:41,480 Speaker 2: their forecast, and you know it's their first earnings missing 179 00:08:41,720 --> 00:08:46,360 Speaker 2: over a decade, so really shocking the investors in that stock, 180 00:08:46,360 --> 00:08:49,319 Speaker 2: as well as the insurance space overall. So let's get 181 00:08:49,360 --> 00:08:52,079 Speaker 2: some clear analysis on this. Glenn Losaf joins us Bloomberg 182 00:08:52,120 --> 00:08:55,920 Speaker 2: Intelligence senior equity analysts covering these insurance companies. Glenn talk 183 00:08:55,960 --> 00:08:59,840 Speaker 2: to us about United Healthcare. What happened today? 184 00:09:00,240 --> 00:09:05,199 Speaker 9: High So United reported one Q results which were largely 185 00:09:05,240 --> 00:09:08,959 Speaker 9: expected to be in line by the consensus inputting us, 186 00:09:09,040 --> 00:09:13,560 Speaker 9: and the company basically cut guidance by twelve percent. 187 00:09:13,640 --> 00:09:14,480 Speaker 7: I believe. 188 00:09:15,960 --> 00:09:19,959 Speaker 9: Initial guidance was also the sort of seem conservative relative 189 00:09:20,000 --> 00:09:25,320 Speaker 9: to their long term target, and now the new updated 190 00:09:25,520 --> 00:09:29,200 Speaker 9: adjusted guidance is showing a decline of about five percent 191 00:09:29,360 --> 00:09:32,280 Speaker 9: year over year. The main reason for it is the 192 00:09:32,360 --> 00:09:40,680 Speaker 9: company highlighted that Medicare members are seeking twice as much 193 00:09:40,840 --> 00:09:44,680 Speaker 9: here as they did the same period last year, which 194 00:09:44,760 --> 00:09:47,400 Speaker 9: obviously drives costs and so on so forth. 195 00:09:47,880 --> 00:09:51,240 Speaker 5: Yeah, they said at least. John Tozy of Bloomberg News 196 00:09:51,240 --> 00:09:54,319 Speaker 5: his reporting says that the company said it was blindsided 197 00:09:54,520 --> 00:09:59,800 Speaker 5: by rising medical costs. Is that surprising that a medical 198 00:09:59,800 --> 00:10:03,960 Speaker 5: and sure would be blindsided by these costs? Isn't this 199 00:10:04,040 --> 00:10:05,000 Speaker 5: the business that they're in. 200 00:10:06,720 --> 00:10:09,800 Speaker 7: Well, it's not surprising. 201 00:10:09,960 --> 00:10:14,559 Speaker 9: It happens from time to time, but the impact, based 202 00:10:14,600 --> 00:10:19,520 Speaker 9: on the guidance cut is more than anyone could have expected, 203 00:10:19,559 --> 00:10:20,400 Speaker 9: including them. 204 00:10:20,679 --> 00:10:22,200 Speaker 7: Insurers usually look. 205 00:10:22,080 --> 00:10:26,000 Speaker 9: At the trends of previous years to sort of forecast 206 00:10:26,080 --> 00:10:30,080 Speaker 9: what the medical costs would be in the upcoming year. 207 00:10:30,640 --> 00:10:35,120 Speaker 9: And obviously, if it happens that all of a sudden, 208 00:10:35,720 --> 00:10:39,400 Speaker 9: you know, I need more care this year versus last year, 209 00:10:39,559 --> 00:10:42,560 Speaker 9: you know, people getting older, maybe some people deforted, maybe 210 00:10:42,600 --> 00:10:44,600 Speaker 9: some people changed plans. 211 00:10:46,200 --> 00:10:48,800 Speaker 7: You know, medical costs, care demand goes. 212 00:10:48,600 --> 00:10:52,840 Speaker 9: Up, and with that, costs go up and impacting health 213 00:10:52,880 --> 00:10:58,000 Speaker 9: insurers like United. So it's it's surprising, but it happens, 214 00:10:58,440 --> 00:11:00,679 Speaker 9: maybe not to the degree that we're seeing. 215 00:11:01,960 --> 00:11:02,720 Speaker 7: The time around. 216 00:11:03,440 --> 00:11:08,080 Speaker 2: What drives rising medical costs for somebody like United I 217 00:11:08,120 --> 00:11:11,040 Speaker 2: mean they're the eight hundred pound gorilla in this whole industry. 218 00:11:11,559 --> 00:11:17,160 Speaker 2: What's happening, Well, it's basically it's pretty easy. 219 00:11:17,440 --> 00:11:20,280 Speaker 9: You know, more people are seeking more care, that's what's 220 00:11:20,440 --> 00:11:24,880 Speaker 9: driving the costs. People getting sicker, you know, with age, 221 00:11:25,200 --> 00:11:28,120 Speaker 9: are people differing care from last year to this year 222 00:11:28,160 --> 00:11:33,760 Speaker 9: for example, That increases costs on the sort of the 223 00:11:33,800 --> 00:11:36,959 Speaker 9: other side of the care demand. You know, more people 224 00:11:37,040 --> 00:11:42,080 Speaker 9: are getting prescription drugs for example, more people are interested 225 00:11:42,160 --> 00:11:45,880 Speaker 9: in preventive care versus reactive care sort of, you know, 226 00:11:47,080 --> 00:11:51,320 Speaker 9: just going more often for chapobs, stuff like that drives. 227 00:11:52,520 --> 00:11:53,160 Speaker 7: The costs. 228 00:11:53,200 --> 00:11:57,400 Speaker 9: But it is surprising that sort of this significant jump 229 00:11:58,720 --> 00:12:00,320 Speaker 9: relative to expects. 230 00:12:00,760 --> 00:12:04,600 Speaker 5: Where does United Health go from here? I mean just 231 00:12:04,760 --> 00:12:08,040 Speaker 5: on a stock level, I mean, falling in its biggest 232 00:12:08,320 --> 00:12:13,480 Speaker 5: drop since nineteen ninety nine. Does that move look overdone 233 00:12:13,720 --> 00:12:14,040 Speaker 5: to you? 234 00:12:15,679 --> 00:12:19,760 Speaker 9: We're basically we're not supposed to sort of comment down 235 00:12:19,920 --> 00:12:23,160 Speaker 9: price targets, as you will know, but basically the stock 236 00:12:23,240 --> 00:12:26,160 Speaker 9: is down about twenty two percent as of right now. 237 00:12:26,760 --> 00:12:31,079 Speaker 9: If we take a look at the guidance cut, which 238 00:12:31,200 --> 00:12:34,840 Speaker 9: was three dollars and fifty cents from the previous guidance 239 00:12:34,960 --> 00:12:39,440 Speaker 9: and apply sort of historical multiple over the last five years. 240 00:12:39,480 --> 00:12:43,120 Speaker 9: The downside should be about, you know, maybe sixty percent 241 00:12:43,160 --> 00:12:46,720 Speaker 9: of what it is right now, about eighty dollars or so. 242 00:12:46,720 --> 00:12:50,280 Speaker 9: So based on that, it's probably an overreaction just because 243 00:12:50,679 --> 00:12:54,040 Speaker 9: things like this don't usually happen to someone like United, 244 00:12:54,080 --> 00:12:56,360 Speaker 9: as you mentioned, the eight hundred pounds debilla in the 245 00:12:56,400 --> 00:13:03,960 Speaker 9: space and probably the most solid people in the business. 246 00:13:03,240 --> 00:13:06,240 Speaker 7: But it is what it is. 247 00:13:06,280 --> 00:13:09,520 Speaker 9: A market sort of quotes Sis on view on where 248 00:13:09,559 --> 00:13:11,120 Speaker 9: the step should should trade. 249 00:13:11,240 --> 00:13:13,480 Speaker 2: I'm're going at the ANR function for you United Healthcare 250 00:13:13,520 --> 00:13:16,120 Speaker 2: twenty seven buy ratings on the street, one hold rating, 251 00:13:16,400 --> 00:13:21,280 Speaker 2: one sell. No ratings changes today given this move in 252 00:13:21,360 --> 00:13:26,079 Speaker 2: the stock. Great job, guys. Glenlosa, senior equerianos for Bloomberg Intelligence, 253 00:13:26,520 --> 00:13:27,520 Speaker 2: joining us here. 254 00:13:29,280 --> 00:13:33,000 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 255 00:13:33,080 --> 00:13:36,160 Speaker 1: weekdays at ten am Eastern on Apple Coarclay and Android 256 00:13:36,200 --> 00:13:39,480 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 257 00:13:39,559 --> 00:13:42,680 Speaker 1: you get your podcasts, or watch us live on YouTube. 258 00:13:43,240 --> 00:13:45,840 Speaker 2: All right, this morning, President Trump posted on True Social 259 00:13:46,000 --> 00:13:50,920 Speaker 2: that quote, How's termination cannot come quickly enough? End quote. However, 260 00:13:51,000 --> 00:13:54,800 Speaker 2: yesterday at the Economic Club of Chicago, Federal chair FED 261 00:13:54,840 --> 00:13:58,360 Speaker 2: Reserve Chairman j Pale stressed the importance of the fed's 262 00:13:58,440 --> 00:14:03,600 Speaker 2: independence and it's quote broad support across both political parties 263 00:14:03,920 --> 00:14:06,240 Speaker 2: are So we'll get a little sense here from FED 264 00:14:06,320 --> 00:14:08,160 Speaker 2: Chairman shape Pal. Let's take a listen to his comments. 265 00:14:08,520 --> 00:14:12,880 Speaker 10: Our independence as a matter of law, Congress has in 266 00:14:12,920 --> 00:14:16,360 Speaker 10: our statute we're not removable except for cause we serve 267 00:14:16,520 --> 00:14:24,320 Speaker 10: very long terms, seemingly endless terms. So it's we're protecting 268 00:14:24,440 --> 00:14:27,000 Speaker 10: protected in the law. So you know, Congress could change 269 00:14:27,040 --> 00:14:29,120 Speaker 10: that law, but there's I don't think there's any danger 270 00:14:29,120 --> 00:14:34,120 Speaker 10: of that. FED independence has pretty broad support across both 271 00:14:34,160 --> 00:14:35,080 Speaker 10: political parties. 272 00:14:35,720 --> 00:14:36,080 Speaker 7: All right. 273 00:14:36,120 --> 00:14:38,840 Speaker 2: That was Beedchairman Jpale speaking at the Economic Club of 274 00:14:38,920 --> 00:14:42,720 Speaker 2: Chicago yesterday. Our own Michael McKee was there giving us 275 00:14:42,720 --> 00:14:46,880 Speaker 2: some live reporting there. But certainly President Trump's tweet this 276 00:14:46,880 --> 00:14:48,640 Speaker 2: morning got some attention from a lot of folks that 277 00:14:48,720 --> 00:14:50,800 Speaker 2: look at the FED and look at the treasure market, 278 00:14:50,800 --> 00:14:53,520 Speaker 2: look at interest rates in the US economy. Irid Jersey 279 00:14:53,560 --> 00:14:56,479 Speaker 2: joints as chief US interest rate Strategists for Bloomberg Intelligence. 280 00:14:57,080 --> 00:14:59,200 Speaker 2: I raight, I'm sure you've been talking to a lot 281 00:14:59,200 --> 00:15:01,840 Speaker 2: of your institutional uster clients this morning. What did they 282 00:15:01,880 --> 00:15:05,640 Speaker 2: make of the President's comments there on social media? 283 00:15:05,960 --> 00:15:08,480 Speaker 11: Yeah, I mean a lot of people are just you know, 284 00:15:09,000 --> 00:15:11,120 Speaker 11: I think that there's a scapegoating going on, right, Like 285 00:15:11,400 --> 00:15:13,680 Speaker 11: President Trump might say that, oh, I want to get 286 00:15:13,760 --> 00:15:15,800 Speaker 11: rid of J. Powell because I want to cut interest rates. 287 00:15:15,840 --> 00:15:18,560 Speaker 11: But I think there's also an acknowledgment that in doing 288 00:15:18,600 --> 00:15:23,640 Speaker 11: so creates certain risks to the economy. And I think 289 00:15:23,640 --> 00:15:27,680 Speaker 11: from the administration standpoint, having a scapegoat on the economic 290 00:15:27,720 --> 00:15:32,000 Speaker 11: outcomes is convenient. Right, So if the economy does fall 291 00:15:32,000 --> 00:15:34,680 Speaker 11: into recession later this year, they can say, well, look, 292 00:15:34,720 --> 00:15:37,200 Speaker 11: you know Powell was They can point to this tweet 293 00:15:37,280 --> 00:15:39,640 Speaker 11: and say, well, the President said that he was going 294 00:15:39,680 --> 00:15:42,760 Speaker 11: to be too late, and in fact he was right. 295 00:15:43,080 --> 00:15:45,160 Speaker 11: And then if the economy chugs along, you can take 296 00:15:45,200 --> 00:15:47,920 Speaker 11: credit saying that all of the fiscal policies that you're 297 00:15:47,960 --> 00:15:51,280 Speaker 11: doing is supporting the economy. So I think that there's 298 00:15:52,040 --> 00:15:56,240 Speaker 11: there's a political convenience here potentially that that JA Powell 299 00:15:56,280 --> 00:16:00,160 Speaker 11: remaining in office can support the administration in some some 300 00:16:00,200 --> 00:16:01,240 Speaker 11: way in public opinion. 301 00:16:01,800 --> 00:16:06,320 Speaker 5: So ara does Trump actually have the ability to remove 302 00:16:06,760 --> 00:16:11,040 Speaker 5: Powell from his seat as the chairman of the Federal Reserve. 303 00:16:11,400 --> 00:16:13,880 Speaker 5: And well, I'm not how much longer is Powell there. 304 00:16:14,720 --> 00:16:17,680 Speaker 11: I'm not a constitutional lawyer, so J. Powell probably knows 305 00:16:17,720 --> 00:16:20,280 Speaker 11: better because he is an attorney. But there are some 306 00:16:20,520 --> 00:16:22,800 Speaker 11: I would suggest that folks maybe go look at some 307 00:16:22,880 --> 00:16:25,960 Speaker 11: of Elliott Stein's work here at Bloomberg Intelligence, because he's 308 00:16:26,000 --> 00:16:30,600 Speaker 11: been following this very closely as to the different court 309 00:16:30,680 --> 00:16:35,240 Speaker 11: decisions that will lead to independent chairs and directors of 310 00:16:35,840 --> 00:16:39,440 Speaker 11: independent agencies, whether or not the president can can actually 311 00:16:39,440 --> 00:16:42,040 Speaker 11: fire them, and what cause means, like how is caused 312 00:16:42,080 --> 00:16:45,440 Speaker 11: to fined? That's something that's the Supreme Court is probably 313 00:16:45,480 --> 00:16:48,240 Speaker 11: is going to be taking up and depending on how 314 00:16:48,280 --> 00:16:50,440 Speaker 11: that goes will depend on whether or not the President 315 00:16:50,440 --> 00:16:53,640 Speaker 11: Trump does. Now, let me say, from an economist standpoint, 316 00:16:53,640 --> 00:16:56,200 Speaker 11: and you know I'm an economist by training, not an attorney. 317 00:16:56,960 --> 00:17:02,400 Speaker 11: There's a vast literature on why central bank independence tends 318 00:17:02,440 --> 00:17:05,840 Speaker 11: to have better inflation outcomes. Doesn't necessarily a better growth outcomes, 319 00:17:05,840 --> 00:17:08,800 Speaker 11: but has better inflation outcomes. So the idea that you 320 00:17:09,080 --> 00:17:11,320 Speaker 11: are going to take away the FEDS independence and have 321 00:17:12,119 --> 00:17:16,360 Speaker 11: an executive branch. The executive branch ultimately run monetary policy 322 00:17:16,440 --> 00:17:19,080 Speaker 11: probably means that you're going to have monetary policy that's 323 00:17:19,119 --> 00:17:22,359 Speaker 11: easier than it should be at certain times, and that 324 00:17:22,400 --> 00:17:25,679 Speaker 11: means that overall you could wind up having inflation and 325 00:17:25,720 --> 00:17:28,960 Speaker 11: prices running a little bit hotter than it would if 326 00:17:29,000 --> 00:17:31,160 Speaker 11: you had an independent central bank. Now does that mean 327 00:17:31,160 --> 00:17:34,159 Speaker 11: that you get the nineteen seventy style inflation. Probably not. 328 00:17:34,400 --> 00:17:36,480 Speaker 11: But at the same time, you can have inflation running 329 00:17:36,480 --> 00:17:38,520 Speaker 11: a three and a half percent or four percent instead 330 00:17:38,560 --> 00:17:41,439 Speaker 11: of a two And I think that's that's kind of 331 00:17:41,440 --> 00:17:44,280 Speaker 11: a choice that both the courts, the American people, and 332 00:17:44,320 --> 00:17:46,800 Speaker 11: the administration are ultimately going to have to make, even 333 00:17:46,840 --> 00:17:50,280 Speaker 11: if even if Chair Powell can be removed by for. 334 00:17:50,400 --> 00:17:54,520 Speaker 2: Cause, I got about thirty seconds left, the ECB cut 335 00:17:54,560 --> 00:17:56,800 Speaker 2: rates against today. If I'm President Trump, I'm saying, where's 336 00:17:56,800 --> 00:17:58,720 Speaker 2: my fedsherman? Why is he not cutting rates? 337 00:17:58,800 --> 00:17:59,399 Speaker 7: Is that valid? 338 00:18:00,160 --> 00:18:01,919 Speaker 2: Well, a little bit and a little bit not. 339 00:18:02,080 --> 00:18:04,040 Speaker 11: I mean, I think J. Powell laid it out yesterday. 340 00:18:04,200 --> 00:18:08,160 Speaker 11: And look, the FED has two mandates. The ECB has won. 341 00:18:08,200 --> 00:18:10,399 Speaker 11: The ECB's job is to make sure that you have 342 00:18:10,440 --> 00:18:12,920 Speaker 11: stable prices, and if prices are falling, and if there's 343 00:18:13,240 --> 00:18:16,520 Speaker 11: other problems and growth is slipping, you cut interest rates. 344 00:18:17,520 --> 00:18:19,360 Speaker 11: And if you look at the US economy right now. 345 00:18:19,359 --> 00:18:22,760 Speaker 11: We still have one hundred and fifty thousand jobs per month, 346 00:18:22,800 --> 00:18:26,760 Speaker 11: we still have rising wages. Retail sales weren't great, but 347 00:18:26,800 --> 00:18:30,080 Speaker 11: they were fine, and so it's not obvious that the 348 00:18:30,160 --> 00:18:33,080 Speaker 11: United States is slipping into a recession imminently. And I 349 00:18:33,080 --> 00:18:35,080 Speaker 11: think that's the reason why the Fed is sitting on 350 00:18:35,119 --> 00:18:38,200 Speaker 11: its hands, because it also doesn't know what inflation is 351 00:18:38,200 --> 00:18:41,639 Speaker 11: going to do because of tariffs and inflation expectations have 352 00:18:41,720 --> 00:18:43,560 Speaker 11: been rising. If you just look at the University of 353 00:18:43,600 --> 00:18:47,919 Speaker 11: Michigan Sentiment survey, it shows, hey, maybe inflation expectations are 354 00:18:48,000 --> 00:18:50,159 Speaker 11: way too high. So if you're the Fed, you have 355 00:18:50,240 --> 00:18:51,640 Speaker 11: to balance those two mandates. 356 00:18:52,080 --> 00:18:54,080 Speaker 2: A Eric, thanks so much for joining us. Appreciate it. 357 00:18:54,320 --> 00:18:57,000 Speaker 2: Sorry about your aston Villa team not making it. Our 358 00:18:57,160 --> 00:19:01,280 Speaker 2: Jersey chief US Interest Rates Strategies Bloomberg Intelligencies there in Princeton, 359 00:19:01,359 --> 00:19:01,919 Speaker 2: New Jersey. 360 00:19:03,560 --> 00:19:07,280 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 361 00:19:07,359 --> 00:19:10,440 Speaker 1: weekdays at ten am Eastern on Apple Coarclay and Android 362 00:19:10,440 --> 00:19:13,760 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 363 00:19:13,840 --> 00:19:16,960 Speaker 1: you get your podcasts, or watch us live on YouTube. 364 00:19:17,440 --> 00:19:19,280 Speaker 2: We had some movement from the European Central Bank this 365 00:19:19,320 --> 00:19:21,880 Speaker 2: morning cutting rates again. I think the market's even discounting 366 00:19:21,880 --> 00:19:24,880 Speaker 2: another rate cut in June. Hugh Worthington joins us Bloomberg 367 00:19:24,920 --> 00:19:28,879 Speaker 2: Intelligence European rates strategist here what you learn from the 368 00:19:28,960 --> 00:19:31,320 Speaker 2: European Central Bank this morning in their actions? 369 00:19:32,920 --> 00:19:35,440 Speaker 8: Yeah, so we had on the face of it, they 370 00:19:35,480 --> 00:19:38,800 Speaker 8: came out with their statements just what about an hour 371 00:19:38,880 --> 00:19:41,679 Speaker 8: or so ago saying that they'd actually removed the idea 372 00:19:41,760 --> 00:19:46,399 Speaker 8: that after the today's rate cut, the rates were still restrictive, 373 00:19:46,480 --> 00:19:49,720 Speaker 8: which is initially seen by some as being a little 374 00:19:49,720 --> 00:19:52,640 Speaker 8: bit on the hawksh side, But actually the actual press 375 00:19:52,680 --> 00:19:57,000 Speaker 8: statement and then the press conference itself very much focused 376 00:19:57,040 --> 00:19:59,760 Speaker 8: on this whole idea of the huge amount of uncertainty 377 00:19:59,800 --> 00:20:03,640 Speaker 8: that he's facing in particularly in the face of Trump tarifs. 378 00:20:03,680 --> 00:20:05,840 Speaker 8: And you've got to remember, you know, the Eurozone runs 379 00:20:05,880 --> 00:20:09,880 Speaker 8: about about a two hundred billion euro trade surplus with America, 380 00:20:10,320 --> 00:20:12,439 Speaker 8: and the focus was of, you know, very much on 381 00:20:12,480 --> 00:20:14,240 Speaker 8: those They just have no idea what's going on. They 382 00:20:14,320 --> 00:20:16,480 Speaker 8: didn't didn't feel they'd have a strong idea what was 383 00:20:16,520 --> 00:20:19,679 Speaker 8: going on anymore by by the June meeting, and as 384 00:20:19,720 --> 00:20:22,159 Speaker 8: a result, as you say, now we've actually got a 385 00:20:22,200 --> 00:20:25,280 Speaker 8: selves to the point where, yeah, another cut is which 386 00:20:25,320 --> 00:20:26,879 Speaker 8: would be I think the sort of the seventh or 387 00:20:26,880 --> 00:20:29,160 Speaker 8: eighth on the trot now would be be ninety percent 388 00:20:29,240 --> 00:20:32,399 Speaker 8: priced in June, so which which seems pretty reagonal. As 389 00:20:32,400 --> 00:20:35,960 Speaker 8: a result, we had a situation where yields were sort 390 00:20:35,960 --> 00:20:37,679 Speaker 8: of edging up on the day, and now you've got 391 00:20:37,720 --> 00:20:40,280 Speaker 8: the two year yield in Germany down five point seven 392 00:20:40,280 --> 00:20:42,800 Speaker 8: basis points in the day, it's one point seven percent, 393 00:20:42,960 --> 00:20:45,960 Speaker 8: So you know that's a pretty dubbish outcome in the end. 394 00:20:46,200 --> 00:20:47,960 Speaker 5: Yeah, I wanted to ask a little bit more just 395 00:20:48,040 --> 00:20:52,240 Speaker 5: about the reaction in the markets. I mean, US yields 396 00:20:52,320 --> 00:20:53,840 Speaker 5: are a little bit higher. I don't know if you're 397 00:20:53,840 --> 00:20:57,960 Speaker 5: seeing any contagion of this ECB move into the US 398 00:20:58,080 --> 00:21:00,679 Speaker 5: or this looks like a piece of news that's just 399 00:21:00,840 --> 00:21:03,200 Speaker 5: contained inside the EU. 400 00:21:04,800 --> 00:21:09,280 Speaker 8: I think it's the rate. Outlook in the EU VERSUS 401 00:21:09,359 --> 00:21:14,040 Speaker 8: America is enormously different. America obviously faces something possibly of 402 00:21:14,520 --> 00:21:18,639 Speaker 8: a self inflicted short term inflation shock, but in Europe 403 00:21:18,720 --> 00:21:20,920 Speaker 8: I think the outlook is very different. Indeed, if anything, 404 00:21:21,119 --> 00:21:23,720 Speaker 8: you know we're actually looking at so inflation for last 405 00:21:23,720 --> 00:21:26,000 Speaker 8: month came out around two point two percent is very 406 00:21:26,000 --> 00:21:28,199 Speaker 8: close to their target of two percent. But if anything, 407 00:21:28,240 --> 00:21:31,120 Speaker 8: you know, things like energy prices where they where they struck. 408 00:21:31,240 --> 00:21:34,800 Speaker 8: Expectations of forecasts for inflation later in the year are 409 00:21:34,840 --> 00:21:36,679 Speaker 8: now much much lower than we're both in terms of 410 00:21:36,680 --> 00:21:40,159 Speaker 8: oil and in terms of things like gas prices, and 411 00:21:40,240 --> 00:21:44,119 Speaker 8: if anything, the ECB is probably facing more deflation concerned 412 00:21:44,119 --> 00:21:47,200 Speaker 8: and undershooting their inflation targets later in the year rather 413 00:21:47,240 --> 00:21:50,520 Speaker 8: than you know, the what looks like possibly a very 414 00:21:50,520 --> 00:21:53,320 Speaker 8: different situation in America. So we're looking at very very 415 00:21:53,320 --> 00:21:58,200 Speaker 8: different markets, you know, currently and very different rate outlooks 416 00:21:58,200 --> 00:21:58,800 Speaker 8: as a result. 417 00:21:59,320 --> 00:22:02,000 Speaker 2: Red headline just crossing the Bloomberg terminal right now. Philadelphia 418 00:22:02,000 --> 00:22:06,399 Speaker 2: FED names Chicago FEDS Anna Paulson as president, So a 419 00:22:06,440 --> 00:22:08,679 Speaker 2: new president of the Philadelphia Fed will have some more 420 00:22:08,760 --> 00:22:12,640 Speaker 2: reporting on that in just a moment, Hugh, how concerned 421 00:22:12,680 --> 00:22:15,640 Speaker 2: are the folks in Europe about this tariff policy coming 422 00:22:15,640 --> 00:22:17,399 Speaker 2: out of the US. The person on the street and 423 00:22:17,440 --> 00:22:18,760 Speaker 2: you're sitting in the pub tonight. 424 00:22:21,359 --> 00:22:24,000 Speaker 8: Sitting in the pub tonight, maybe the sort of people 425 00:22:24,000 --> 00:22:25,800 Speaker 8: that I go to the pub with there is there's 426 00:22:25,840 --> 00:22:29,520 Speaker 8: a lot of concern, But generally on you know, in London, 427 00:22:29,880 --> 00:22:31,560 Speaker 8: I would say people are probably looking at the moment 428 00:22:31,560 --> 00:22:34,879 Speaker 8: the headlines today more about that they think that a 429 00:22:34,920 --> 00:22:36,840 Speaker 8: trade deal with the UK is possibly two or three 430 00:22:36,880 --> 00:22:39,360 Speaker 8: weeks away. I think a trade deal with Europe though, 431 00:22:39,480 --> 00:22:41,359 Speaker 8: is going to be you know, a lot more difficult, because, 432 00:22:41,520 --> 00:22:43,600 Speaker 8: as I say, the trade with the UK is more 433 00:22:43,640 --> 00:22:45,760 Speaker 8: or less in balance. But the problem you've got is 434 00:22:45,760 --> 00:22:47,720 Speaker 8: in Europe is you know, they really run a two 435 00:22:47,760 --> 00:22:51,520 Speaker 8: hundred billion euro trade surplus with America. One hundred billion 436 00:22:51,520 --> 00:22:54,960 Speaker 8: of that is in Germany alone, So you know, they 437 00:22:55,680 --> 00:22:58,240 Speaker 8: is I think people are much more concerned probably in 438 00:22:58,280 --> 00:23:01,080 Speaker 8: Europe as to as to you know, and the capriciousness 439 00:23:01,119 --> 00:23:03,199 Speaker 8: of Donald Trump with those sorts of numbers that you 440 00:23:03,240 --> 00:23:06,520 Speaker 8: look about look around, as to how easy it would 441 00:23:06,520 --> 00:23:09,400 Speaker 8: be probably to find a deal. And they definitely feel 442 00:23:09,400 --> 00:23:11,639 Speaker 8: like that at the ECBLL as I say they are. 443 00:23:11,840 --> 00:23:14,119 Speaker 8: They've made very clear at the meeting today that you know, 444 00:23:14,160 --> 00:23:16,159 Speaker 8: come the next early June meeting, they don't feel like 445 00:23:16,160 --> 00:23:18,880 Speaker 8: they're going to be in any way better in the way, 446 00:23:18,880 --> 00:23:20,520 Speaker 8: any way, shape or form ast to exactly where they 447 00:23:20,600 --> 00:23:22,159 Speaker 8: where tarifs are going to be and what's going to 448 00:23:22,280 --> 00:23:22,600 Speaker 8: hit them. 449 00:23:23,200 --> 00:23:27,200 Speaker 5: So what would get in the way of that final 450 00:23:28,000 --> 00:23:29,399 Speaker 5: cut in June. 451 00:23:32,440 --> 00:23:34,600 Speaker 8: I don't think a great deal perfectly, honest. I mean, 452 00:23:34,680 --> 00:23:38,240 Speaker 8: I can't see. You know, a few weeks ago, everybody 453 00:23:38,440 --> 00:23:40,280 Speaker 8: was focused on where do you think the neutral rate 454 00:23:40,400 --> 00:23:43,040 Speaker 8: is going to be in Europe? And they were saying, oh, 455 00:23:43,240 --> 00:23:44,840 Speaker 8: some would be one point seventy five and two point 456 00:23:44,880 --> 00:23:47,320 Speaker 8: two five percent, And then the tone today's meeting was 457 00:23:47,400 --> 00:23:49,560 Speaker 8: just one of complete uncertainty. You are at sort of 458 00:23:49,640 --> 00:23:52,199 Speaker 8: tear up the idea of where neutral rates could possibly be. 459 00:23:52,720 --> 00:23:55,959 Speaker 8: People are adjusting their rate expectations down. I think you're 460 00:23:55,960 --> 00:23:59,600 Speaker 8: probably looking at you know, as I say, at the moment, 461 00:23:59,600 --> 00:24:03,160 Speaker 8: the market pricing a rate of around one point seventy 462 00:24:03,160 --> 00:24:05,360 Speaker 8: five percent by year end, but they're also pricing aban 463 00:24:05,400 --> 00:24:06,959 Speaker 8: a seventy five percent chances that could be coming down 464 00:24:07,000 --> 00:24:08,919 Speaker 8: to one point five percent, And I think that that 465 00:24:08,960 --> 00:24:13,240 Speaker 8: seems you know, certainly, you know almost well, it's our expectation, 466 00:24:13,480 --> 00:24:14,879 Speaker 8: and I think that's where we are going to end 467 00:24:14,920 --> 00:24:18,920 Speaker 8: up with with with rates, where with rates markets going 468 00:24:18,920 --> 00:24:20,960 Speaker 8: to be pricing, you know, by come that June meeting 469 00:24:20,960 --> 00:24:21,600 Speaker 8: out of thought. 470 00:24:22,440 --> 00:24:24,480 Speaker 2: A couple of weeks ago, we're talking about Germany and 471 00:24:24,520 --> 00:24:28,560 Speaker 2: some other European countries reinflating their economies with fiscal stimulus, 472 00:24:28,600 --> 00:24:32,439 Speaker 2: you know, infrastructure defense, is that still a story that 473 00:24:32,480 --> 00:24:34,360 Speaker 2: you talk to clients about, Oh. 474 00:24:34,359 --> 00:24:36,720 Speaker 8: Yeah, one hundred percent. You know that there is a 475 00:24:36,720 --> 00:24:39,440 Speaker 8: lot of fiscal splods are going to be coming, particularly 476 00:24:39,600 --> 00:24:41,600 Speaker 8: in Germany, but it's going to take an awfully long 477 00:24:41,600 --> 00:24:43,040 Speaker 8: time to put that together. That's not going to be 478 00:24:43,080 --> 00:24:45,360 Speaker 8: a story really friendly for this year, probably not even 479 00:24:45,400 --> 00:24:47,120 Speaker 8: next year. You know, it's going to be something which 480 00:24:47,160 --> 00:24:48,520 Speaker 8: is going to take years and years and years. Now 481 00:24:48,640 --> 00:24:52,399 Speaker 8: now that may well be something that means that the 482 00:24:52,720 --> 00:24:56,800 Speaker 8: outlook for for for rates could be a little bit 483 00:24:56,800 --> 00:24:59,480 Speaker 8: more volatile, but really it's going to be sort of 484 00:24:59,480 --> 00:25:03,119 Speaker 8: in years two to three onwards rather than than the 485 00:25:03,200 --> 00:25:05,240 Speaker 8: very short term. In the very short term, the impact 486 00:25:05,320 --> 00:25:07,159 Speaker 8: is going to be there's very little growth around in Europe. 487 00:25:07,280 --> 00:25:09,639 Speaker 8: The Bundesbank currently expects growth in Germany to be a 488 00:25:09,680 --> 00:25:12,600 Speaker 8: out zero point two percent in twenty twenty five, and 489 00:25:12,640 --> 00:25:15,000 Speaker 8: that's actually was from from one percent just a few 490 00:25:15,040 --> 00:25:17,000 Speaker 8: months ago. So I think the very short term, yes, 491 00:25:17,000 --> 00:25:19,760 Speaker 8: there is going to be fiscal spending and infrastructure spending, 492 00:25:20,200 --> 00:25:21,879 Speaker 8: but it's going to take probably this is going to 493 00:25:21,880 --> 00:25:24,000 Speaker 8: be like a nine ten year project and it's going 494 00:25:24,040 --> 00:25:25,119 Speaker 8: to take a long time for it to come through. 495 00:25:25,160 --> 00:25:26,280 Speaker 8: It's not going to be coming through in the first 496 00:25:26,280 --> 00:25:28,840 Speaker 8: couple in the next couple of years, that much, all. 497 00:25:28,800 --> 00:25:30,679 Speaker 2: Right, Hugh, thanks so much for joining us. Always appreciate 498 00:25:30,680 --> 00:25:33,320 Speaker 2: getting a few months of your time. Hugh Worthington, Bloomberg Intelligence, 499 00:25:33,680 --> 00:25:35,760 Speaker 2: European Rates Strategist. 500 00:25:36,200 --> 00:25:40,879 Speaker 1: This is the Bloomberg Intelligence podcast, available on Apple, Spotify, 501 00:25:41,080 --> 00:25:44,560 Speaker 1: and anywhere else you get your podcasts. Listen live each 502 00:25:44,600 --> 00:25:48,320 Speaker 1: weekday ten am to noon Eastern on Bloomberg dot Com, 503 00:25:48,480 --> 00:25:52,000 Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app. 504 00:25:52,440 --> 00:25:55,360 Speaker 1: You can also watch us live every weekday on YouTube 505 00:25:55,760 --> 00:25:57,960 Speaker 1: and always on the Bloomberg terminal.