WEBVTT - Mark Attanasio on Market Volatility and Sports Investing

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News.

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<v Speaker 2>Welcome back to Bloomberg Markets.

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<v Speaker 3>I'm Shinali Basik here with Romaine Bostek live at the

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<v Speaker 3>Milkan Institute Global Conference. Now we're joined here by Mark

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<v Speaker 3>at Nacio. Of course you might know him as a brewers,

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<v Speaker 3>owner of the mill markety, but if you also know

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<v Speaker 3>him as the co founder of Press and Capital Group,

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<v Speaker 3>so steeped in credit markets.

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<v Speaker 2>First, let's take a big step back.

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<v Speaker 3>We're talking about how I think this might be the

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<v Speaker 3>busiest Milk and I have been in my career. It's

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<v Speaker 3>because you had the Treasury secretary year, you had Elon

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<v Speaker 3>Musk here overnight, and a lot of talks about a

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<v Speaker 3>valatle economic environment. How do you make sense of it

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<v Speaker 3>all to your investors and to your colleagues across the industry.

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<v Speaker 2>Well, volatility, and thanks again for having me on. It's

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<v Speaker 2>always interesting to mark year to year how things are going.

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<v Speaker 2>Last year, all the questions were about how do you

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<v Speaker 2>deal with stability and what about lower interest rates? So

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<v Speaker 2>we don't have the challenges of stability anymore, you know,

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<v Speaker 2>I think one of the things you do in certain

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<v Speaker 2>times like this is you step back and you kind

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<v Speaker 2>of assess things because while there's a lot of you know,

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<v Speaker 2>day to day volatility which affects you in the public

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<v Speaker 2>markets as private investors in Preston's eighty percent private capital

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<v Speaker 2>and as you know, more loans than equity adjacent, we

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<v Speaker 2>can just see how it all plays out. So the

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<v Speaker 2>Secretary of the Treasury today was talking about this three

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<v Speaker 2>part plan right for lower taxes, less regulation, and addressing

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<v Speaker 2>trade and balances. And I was at a reception that

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<v Speaker 2>he spoke at yesterday. He spoke a little more off

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<v Speaker 2>the record, but I'll put it on the record now

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<v Speaker 2>about how that you know, maybe you could even address

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<v Speaker 2>that holistically and that it should all come together and work,

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<v Speaker 2>and you know it might now it Donald Reagan, I believe,

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<v Speaker 2>tried the same thing, and it's not so easy, especially

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<v Speaker 2>now because the world really is truly global and we're

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<v Speaker 2>sort of you know, uncoupling that a little bit. But

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<v Speaker 2>you know, maybe maybe this will all come together and

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<v Speaker 2>work out well for the country. Clearly things that swung

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<v Speaker 2>too far in the other direction, you know, economically in

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<v Speaker 2>terms of trade and balances, and it's getting addressed.

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<v Speaker 4>Do you think that we're going to see a little

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<v Speaker 4>bit more stability out of Washington as we get.

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<v Speaker 2>Deeper into the year, well, I think you've already started

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<v Speaker 2>to see that Washington pays attention to the markets, as

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<v Speaker 2>you had sharp moves, especially in the bond market that

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<v Speaker 2>raised some concerns. And you know, I think the Treasury

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<v Speaker 2>Secretary is quite measured, and I think he does have

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<v Speaker 2>the presidency here, which is which is a good thing.

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<v Speaker 2>And of course most of Wall Street is a fan

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<v Speaker 2>of Jerome Powell. So the fact that whether he's going

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<v Speaker 2>to stay on as affecture or not now for at

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<v Speaker 2>least for now is off the table. Is a constructive film.

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<v Speaker 3>But one issue I'm saying Scott Bess intends to move

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<v Speaker 3>the markets, particularly the bond market. But you're seeing a

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<v Speaker 3>rise upward in the ten year, you know, over the

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<v Speaker 3>last three days and back, as we said here today

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<v Speaker 3>we're at four thirty five, so higher regardless of all

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<v Speaker 3>the veteroric that has been passed around over the last

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<v Speaker 3>couple of days. So what do you make of this

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<v Speaker 3>higher for longer scenarios in the bond market? And are

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<v Speaker 3>you worried that the bond market is starting to shake

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<v Speaker 3>off any relief that taxes might bring to the broader

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<v Speaker 3>physical story of the United States.

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<v Speaker 2>Well Son all, a higher for longer has been somewhat

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<v Speaker 2>the theme for a long time now, and again the

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<v Speaker 2>bond market hyperventilates over twenty basis point moves. Wasn't that

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<v Speaker 2>long ago that we were worried that higher for longer

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<v Speaker 2>meant hundreds of basis point moves. I went to a

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<v Speaker 2>private dinner Jamie Diamond had and that the concern was

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<v Speaker 2>that a seven percent, you know, reference rate, that we

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<v Speaker 2>have a lot of default. So we're nowhere near that.

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<v Speaker 2>And all of this is very constructive for private lenders

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<v Speaker 2>because it sets a high floor for us to earn

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<v Speaker 2>a spread over. And I talked about this last year.

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<v Speaker 2>So our investors enjoy having an embedded portfolio that continues

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<v Speaker 2>to have high yeels since most of it is floating rate.

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<v Speaker 3>So you mind, let's switch gears for a second here,

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<v Speaker 3>because in addition to your world as an investor in

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<v Speaker 3>thread of markets, you are bury from it. A sports investor,

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<v Speaker 3>you got in a lot earlier than a lot of

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<v Speaker 3>you're a private investment bibles have gotten in. We were

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<v Speaker 3>talking about the Brewers. I'm actually curious now that we're

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<v Speaker 3>talking about some of the off the record conversations about

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<v Speaker 3>how you think that the live golf situation is going.

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<v Speaker 2>To play out, so that that would count as a

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<v Speaker 2>high inside fast fold with me trying to hit. Look,

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<v Speaker 2>I've been constructive in this for a while, going back

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<v Speaker 2>to when you know John Henry. First of all, I

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<v Speaker 2>should say, who runs you know, the CEO of Famway

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<v Speaker 2>and they owned Liverpool and the Red Sox and the Penguins.

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<v Speaker 2>He did a brilliant job in structuring this and he

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<v Speaker 2>really focused on it. And so from my standpoint, which

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<v Speaker 2>was now a couple of years ago, I felt like

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<v Speaker 2>the best athletes want to compete against the best. They

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<v Speaker 2>always do. It's the reason Shoeyo Tani a number of

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<v Speaker 2>the Japanese players are coming to playing the major leagues

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<v Speaker 2>now because you know, you want to test yourself. And

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<v Speaker 2>so I always felt there was a reason for the

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<v Speaker 2>two sides to come together. I think that you know,

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<v Speaker 2>the prince in Saudi would like to see something work out,

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<v Speaker 2>although what they've done is quite impressive. And you know,

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<v Speaker 2>we now have a president who is an avid golfer

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<v Speaker 2>and absolutely wants to see this work. So you know,

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<v Speaker 2>you have a lot of folks who want to see

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<v Speaker 2>it work, but it's still complex to put it, to

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<v Speaker 2>put Humpty Dumpty back together a little bit, and that's complicated.

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<v Speaker 2>As an investor, I like complicated situations because you know,

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<v Speaker 2>most people shy away from them, and that's where you

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<v Speaker 2>can create value.

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<v Speaker 4>Well as an investor, particularly in sports. I mean, you

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<v Speaker 4>have a lot of portfolio investors now looking for an

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<v Speaker 4>entry point into the world of sports, sports as an

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<v Speaker 4>asset class, if you will. What happens for those folks,

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<v Speaker 4>those folks that aren't the mark out in ostios that

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<v Speaker 4>can sort of buy the actual entire team. Are they

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<v Speaker 4>going to have an opportunity to buy a slice of

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<v Speaker 4>some of these teams or these leagues.

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<v Speaker 2>Yeah, they will remain and in a couple of ways. Actually,

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<v Speaker 2>now there's a lot more liquidity in the secondary market,

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<v Speaker 2>and at these valuations, very few people can you know,

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<v Speaker 2>Josh Hiris can figure out how to buy the Washington Commanders,

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<v Speaker 2>but you know, at six point six billion dollars, kind

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<v Speaker 2>of a big ticket for most folks. And so, but

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<v Speaker 2>you can now buy pieces of teams. So both I

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<v Speaker 2>believe the Dolphins and the Eagles put evaluation at eight

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<v Speaker 2>billion dollars, and so pieces of it off. In those cases,

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<v Speaker 2>the NFL has approved funds to do that, so high

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<v Speaker 2>net worth individuals can get involved in funds. But there's

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<v Speaker 2>also secondary opportunities. And now I believe, like Morgan Stanley

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<v Speaker 2>for example, is coming up with an ETF for sports

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<v Speaker 2>broad You know, if you look at the sports ecosystem broadly,

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<v Speaker 2>and it's three trillion dollars, it's not just teams and leagues,

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<v Speaker 2>it's media, it's you know, betting, it's infrastructure, and and

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<v Speaker 2>then it's you know, it's even companies that provide equipment

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<v Speaker 2>those industries. So there's now how they're going to create

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<v Speaker 2>an index I'll be curious to.

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<v Speaker 4>That's what I'm curious about too. And then you got

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<v Speaker 4>the whole fan issues, right if you have a bad

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<v Speaker 4>game or bad uh season, does everyone just sell everything?

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<v Speaker 2>You know, you see at least in collectibles and we

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<v Speaker 2>you know, I just this is just hitting me. You

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<v Speaker 2>actually have the prices of collectible cards trade based on

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<v Speaker 2>how the player does that year. That's not really the

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<v Speaker 2>long term value.

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<v Speaker 4>Of the card.

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<v Speaker 2>So obviously vintage cards you have to worry about that

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<v Speaker 2>with Babe Ruth, but you know, Mike Traps cards trade

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<v Speaker 2>up and down depending on whether he's injury. That's but

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<v Speaker 2>it'll be easting to see if that happens with sports investment.

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<v Speaker 2>All right, Mark really appreciate it.

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<v Speaker 4>We'll let you get back to it. Mark on a nasal,

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<v Speaker 4>the co founder of Crescent Capital,