1 00:00:02,640 --> 00:00:05,320 Speaker 1: Welcome to the Bloomberg Penl podcast on Paul Swing You. 2 00:00:05,360 --> 00:00:07,640 Speaker 1: Along with my co host Lisa Brahma Waits, each day 3 00:00:07,720 --> 00:00:10,240 Speaker 1: we bring you the most noteworthy and useful interviews for 4 00:00:10,280 --> 00:00:12,520 Speaker 1: you and your money, whether at the grocery store or 5 00:00:12,560 --> 00:00:15,480 Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple 6 00:00:15,520 --> 00:00:17,959 Speaker 1: podcast or wherever you listen to podcasts, as well as 7 00:00:17,960 --> 00:00:23,040 Speaker 1: at Bloomberg dot com. Well, the trade tensions between the 8 00:00:23,120 --> 00:00:26,200 Speaker 1: U S and China just took another notch up again 9 00:00:26,280 --> 00:00:29,560 Speaker 1: today as the Trump administration is moving ahead with discussions 10 00:00:29,600 --> 00:00:33,919 Speaker 1: around possible restrictions on capital flows into China. To get 11 00:00:33,920 --> 00:00:36,880 Speaker 1: the latest, we welcome Brendan Murray. Brendan covers all things 12 00:00:36,920 --> 00:00:40,240 Speaker 1: trade for Bloomberg News. He joins us from our London bureau. Brendan, 13 00:00:40,240 --> 00:00:42,120 Speaker 1: thanks so much for joining us. It seems like again 14 00:00:42,120 --> 00:00:45,280 Speaker 1: this is a just another piece of news in the 15 00:00:45,400 --> 00:00:48,360 Speaker 1: back and forth between US and China on trade issues. 16 00:00:48,400 --> 00:00:52,680 Speaker 1: Talk to us about this capital inflow issue, right, So, 17 00:00:52,720 --> 00:00:55,080 Speaker 1: this is an issue that we reported on about ten 18 00:00:55,160 --> 00:00:58,800 Speaker 1: days ago that there were broad range of things that 19 00:00:58,840 --> 00:01:03,480 Speaker 1: the administration wanted to to to basically restrict US investments 20 00:01:03,480 --> 00:01:06,199 Speaker 1: in Chinese assets, whether those be stocks or real estate 21 00:01:06,280 --> 00:01:09,240 Speaker 1: or other kinds of holdings. What we're reporting today is 22 00:01:09,280 --> 00:01:12,200 Speaker 1: that that that search or that that that those plans 23 00:01:12,200 --> 00:01:15,520 Speaker 1: have narrowed to uh, the kinds of investments that US 24 00:01:15,600 --> 00:01:19,480 Speaker 1: government retirement funds would make in things like Chinese stocks. 25 00:01:19,520 --> 00:01:23,040 Speaker 1: If that, if those opportunities were made available available to them, 26 00:01:23,040 --> 00:01:26,160 Speaker 1: and they and they will be UH coming in. So 27 00:01:26,200 --> 00:01:29,280 Speaker 1: there is a time pressure that the administration is working 28 00:01:29,360 --> 00:01:33,840 Speaker 1: under there. I mean, basically, we're talk start Thursday, continue 29 00:01:33,840 --> 00:01:36,759 Speaker 1: on Friday, and it's this They're supposed to be uh, 30 00:01:36,800 --> 00:01:38,680 Speaker 1: these are supposed to be the days of happy talk, 31 00:01:38,959 --> 00:01:41,520 Speaker 1: saying you know, these are the olive branches I'm bringing 32 00:01:41,560 --> 00:01:46,240 Speaker 1: into UH into these negotiations. Instead, we're seeing escalation, escalation, 33 00:01:46,319 --> 00:01:49,880 Speaker 1: and more escalation. Days of happy talk. And meanwhile we 34 00:01:49,920 --> 00:01:54,000 Speaker 1: are getting a blacklist of Chinese tech companies, the biggest 35 00:01:54,000 --> 00:01:57,280 Speaker 1: hot button isssue you could imagine, and the US is 36 00:01:57,320 --> 00:02:01,240 Speaker 1: citing human rights violations. Do you have a sense, Brendan, 37 00:02:01,520 --> 00:02:04,720 Speaker 1: of why this is coming now as we are supposed 38 00:02:04,720 --> 00:02:08,080 Speaker 1: to be hearing happy talk. Well, it's it's really hard 39 00:02:08,120 --> 00:02:12,560 Speaker 1: to understand the coordination that's going on here. You're talking 40 00:02:12,600 --> 00:02:17,079 Speaker 1: about multiple agencies in the case of the of the 41 00:02:17,120 --> 00:02:20,120 Speaker 1: blacklisting the Commerce Department. Uh, you know, the talks are 42 00:02:20,120 --> 00:02:23,440 Speaker 1: actually led by the US Trade representative. You had the 43 00:02:23,480 --> 00:02:26,880 Speaker 1: President himself saying yesterday that he was hopeful that things 44 00:02:26,919 --> 00:02:29,000 Speaker 1: could you know, things would come together for a deal. 45 00:02:29,080 --> 00:02:31,280 Speaker 1: So are you saying that this could be actually just 46 00:02:31,320 --> 00:02:34,440 Speaker 1: an unhappy coincidence as far as timing goes that that 47 00:02:34,560 --> 00:02:37,240 Speaker 1: this is absolutely could be unrelated in the Commis Department's 48 00:02:37,280 --> 00:02:39,320 Speaker 1: been working on this for a long time. Well, I'm 49 00:02:39,360 --> 00:02:41,360 Speaker 1: not going to get into that. I'm not gonna you know, 50 00:02:41,600 --> 00:02:43,520 Speaker 1: pretend to know what's going on in the minds of 51 00:02:43,520 --> 00:02:46,680 Speaker 1: the people, uh in the administration, who are who are 52 00:02:46,760 --> 00:02:50,120 Speaker 1: rolling these things out, um, you know, and whether they 53 00:02:50,120 --> 00:02:53,520 Speaker 1: are uh you know, accidental or or on purpose. But 54 00:02:54,240 --> 00:02:58,040 Speaker 1: what we're seeing is a lot of puzzling uh moves 55 00:02:58,280 --> 00:03:00,640 Speaker 1: in terms of timing. If indeed you do want to 56 00:03:00,639 --> 00:03:04,600 Speaker 1: secure some sort of deal with China, so Brendan, the 57 00:03:05,000 --> 00:03:09,280 Speaker 1: Chinese has said, quote stay tuned for retaliation over the 58 00:03:09,360 --> 00:03:12,280 Speaker 1: U S tech blacklist. What is the expectation for what 59 00:03:12,400 --> 00:03:15,040 Speaker 1: China might do in response? Well, there's a number of 60 00:03:15,080 --> 00:03:17,200 Speaker 1: things that they could do, but basically they could start 61 00:03:17,200 --> 00:03:21,080 Speaker 1: to make uh you know, the lives of American exact 62 00:03:21,080 --> 00:03:24,720 Speaker 1: business executives who are operating in China more difficult. Um, 63 00:03:24,760 --> 00:03:29,560 Speaker 1: you know, unannounced visits from regulators, and you know, are 64 00:03:29,560 --> 00:03:32,120 Speaker 1: are the kinds of things that uh, you know that 65 00:03:32,120 --> 00:03:34,639 Speaker 1: that that people would worry about. Um. But there's a 66 00:03:34,639 --> 00:03:38,680 Speaker 1: whole range of things, uh that you know that in 67 00:03:38,800 --> 00:03:42,720 Speaker 1: terms of reciprotaliating against the U S blacklists that China 68 00:03:42,760 --> 00:03:45,520 Speaker 1: could do that they haven't announced yet that they they 69 00:03:45,560 --> 00:03:48,840 Speaker 1: pride themselves on not being you know, knee jerk reactionists. 70 00:03:48,840 --> 00:03:50,920 Speaker 1: So it may take a couple of days before we 71 00:03:50,960 --> 00:03:53,120 Speaker 1: see that it maybe ours we we just don't know. 72 00:03:53,480 --> 00:03:56,000 Speaker 1: Is there a sense that there could be a Chinese 73 00:03:56,080 --> 00:03:59,080 Speaker 1: blacklist that you might find a company such as you know, 74 00:03:59,200 --> 00:04:01,720 Speaker 1: some of the big US companies on there. Uh, there's 75 00:04:01,840 --> 00:04:05,280 Speaker 1: there's uh, there's that potential for sure. You know, FedEx 76 00:04:05,360 --> 00:04:08,520 Speaker 1: has has a lot of operations in in China, and 77 00:04:08,640 --> 00:04:10,880 Speaker 1: you know there's some speculation and there has been in 78 00:04:10,880 --> 00:04:14,200 Speaker 1: the past that you know that they could become you know, 79 00:04:14,200 --> 00:04:17,920 Speaker 1: swept up in this. So who knows what how far 80 00:04:18,080 --> 00:04:20,440 Speaker 1: China is going to go in this retaliation and and 81 00:04:20,480 --> 00:04:23,200 Speaker 1: you know, you know, this could all be posturing ahead 82 00:04:23,200 --> 00:04:26,360 Speaker 1: of the ahead of these talks. So, uh, if there's 83 00:04:26,360 --> 00:04:28,960 Speaker 1: this way too many moving pieces right now, and and 84 00:04:28,960 --> 00:04:31,520 Speaker 1: and very difficult to predict how how things will turn 85 00:04:31,560 --> 00:04:34,320 Speaker 1: out the people you speak to, is there a sense 86 00:04:34,600 --> 00:04:38,359 Speaker 1: that there even could be some sort of narrow deal 87 00:04:38,839 --> 00:04:42,200 Speaker 1: that is reached that could actually have weight and carry 88 00:04:42,200 --> 00:04:46,120 Speaker 1: through based on the individuals coming and doing the negotiating here. Well, 89 00:04:46,120 --> 00:04:48,120 Speaker 1: that's what we reported a couple of days ago, that 90 00:04:48,120 --> 00:04:51,359 Speaker 1: that that the Chinese officials were coming to town, to 91 00:04:51,440 --> 00:04:54,640 Speaker 1: Washington for you know, what's what's been described as a 92 00:04:54,680 --> 00:04:57,800 Speaker 1: mini deal. Um, you know, a few uh you know, 93 00:04:58,160 --> 00:05:02,000 Speaker 1: pledges to buy us agriculture good in exchange for you know, 94 00:05:02,360 --> 00:05:04,560 Speaker 1: taking a couple of those companies off the blacklists and 95 00:05:04,600 --> 00:05:07,479 Speaker 1: things like that. So there are there is there is 96 00:05:07,560 --> 00:05:10,159 Speaker 1: some silver lining that you know, that that that the 97 00:05:10,160 --> 00:05:14,000 Speaker 1: two sides could could get together and salvage something. But 98 00:05:14,200 --> 00:05:17,760 Speaker 1: the but the atmosphere right now, the atmospherics around you know, 99 00:05:18,200 --> 00:05:20,840 Speaker 1: anything positive coming out of it are not great right now. 100 00:05:21,279 --> 00:05:23,600 Speaker 1: Brendon Murray, thank you so much for joining us, and 101 00:05:23,680 --> 00:05:25,960 Speaker 1: I'm sure we will be speaking with you again. Brendan 102 00:05:26,040 --> 00:05:29,680 Speaker 1: Murray covers all things trade for us here at Bloomberg News, 103 00:05:29,760 --> 00:05:47,120 Speaker 1: joining us from our London bureau. Well, it is clearly 104 00:05:47,160 --> 00:05:50,400 Speaker 1: a risk off day today for financial markets, driven in 105 00:05:50,520 --> 00:05:53,960 Speaker 1: large part by continued uncertainty about trade and what that 106 00:05:54,040 --> 00:05:57,000 Speaker 1: uncertainty may do to global economic growth and investors as 107 00:05:57,040 --> 00:05:58,800 Speaker 1: they look at the US figure out trying to figure 108 00:05:58,839 --> 00:06:02,440 Speaker 1: out what can the to reserve due to perhaps offset 109 00:06:02,520 --> 00:06:06,159 Speaker 1: some of the slowing growth brought about by trade tensions. 110 00:06:06,160 --> 00:06:08,200 Speaker 1: To get a sense of that, we welcome our good 111 00:06:08,200 --> 00:06:11,279 Speaker 1: friend Ira Jersey. He's a chief US interest rate strategist 112 00:06:11,279 --> 00:06:14,320 Speaker 1: for Bloomberg Intelligence. Join us on the phone from bi's 113 00:06:14,320 --> 00:06:17,680 Speaker 1: headquarters in Princeton, New Jersey. So again, you know, kind 114 00:06:17,720 --> 00:06:20,039 Speaker 1: of rearing its ugly head again as this whole economic 115 00:06:20,080 --> 00:06:23,800 Speaker 1: growth uncertainty and driven in large part by some trade concerns, 116 00:06:23,839 --> 00:06:27,039 Speaker 1: and obviously that is on the Fed's mind. How do 117 00:06:27,080 --> 00:06:29,640 Speaker 1: you think they are viewing kind of the slowing growth 118 00:06:29,680 --> 00:06:33,279 Speaker 1: they're seeing globally. Yeah, I think I think chere Powell 119 00:06:33,320 --> 00:06:35,760 Speaker 1: said it at the last press conference, um, and actually 120 00:06:35,800 --> 00:06:38,520 Speaker 1: the last several press conferences, is they look at the 121 00:06:38,520 --> 00:06:42,120 Speaker 1: whole economic situation, whether it's being driven by you know, 122 00:06:42,240 --> 00:06:45,200 Speaker 1: kind of artificial trade tensions that are driven by politics 123 00:06:45,240 --> 00:06:49,200 Speaker 1: more than actual you know, free markets and letting um 124 00:06:49,320 --> 00:06:52,120 Speaker 1: economic reality do its thing. So I think that that 125 00:06:52,200 --> 00:06:53,960 Speaker 1: the FED is going to have to be easy, and 126 00:06:54,000 --> 00:06:56,680 Speaker 1: they're going to continue to be easy. The markets basically 127 00:06:56,720 --> 00:07:00,839 Speaker 1: priced for two hikes over their next three FED meetings. Um, 128 00:07:01,240 --> 00:07:02,880 Speaker 1: you know, I think the markets already kind of set 129 00:07:02,960 --> 00:07:05,040 Speaker 1: up for that. I think the the issue that the 130 00:07:05,040 --> 00:07:07,839 Speaker 1: FED has at this point is they can only do 131 00:07:08,120 --> 00:07:10,960 Speaker 1: monetary policy. They can't do fiscal policy, they can't do 132 00:07:11,040 --> 00:07:14,000 Speaker 1: tax policy, they can't do any of the other, um, 133 00:07:14,320 --> 00:07:18,280 Speaker 1: other types of policies that might actually help the economic situation. 134 00:07:18,600 --> 00:07:20,800 Speaker 1: So they're going to do what they can, but what 135 00:07:20,840 --> 00:07:23,000 Speaker 1: they can do is limited, and the market's already kind 136 00:07:23,000 --> 00:07:25,840 Speaker 1: of priced for for quite a lot of easy And 137 00:07:25,880 --> 00:07:29,480 Speaker 1: there are some FED members who are saying, you guys, 138 00:07:29,480 --> 00:07:33,320 Speaker 1: why are we cutting rates in response to geopolitical uncertainty? 139 00:07:33,400 --> 00:07:37,040 Speaker 1: Just because inflation isn't taking off to exact the degree 140 00:07:37,040 --> 00:07:39,720 Speaker 1: that we like doesn't necessarily mean that this is the 141 00:07:39,760 --> 00:07:43,280 Speaker 1: medicine that's required. How significant of a voice to those 142 00:07:43,280 --> 00:07:46,640 Speaker 1: people have? So I think that obviously they have a 143 00:07:46,720 --> 00:07:48,560 Speaker 1: voice because they sit around the table and you had 144 00:07:48,560 --> 00:07:50,840 Speaker 1: two dissenters who didn't want to cut rates at the 145 00:07:50,960 --> 00:07:56,400 Speaker 1: September meeting. I think that the I think that their 146 00:07:56,480 --> 00:07:59,440 Speaker 1: point that a lot of them are are are making 147 00:07:59,520 --> 00:08:03,040 Speaker 1: is that look, the economy, while while slow is not 148 00:08:03,320 --> 00:08:06,240 Speaker 1: a significant is not terrible yet. And we only have 149 00:08:06,320 --> 00:08:08,400 Speaker 1: so many uh, we only have so many arrows in 150 00:08:08,400 --> 00:08:10,400 Speaker 1: our quiver. So we don't want to use all of 151 00:08:10,400 --> 00:08:13,160 Speaker 1: our arrows now because we know that in the future, 152 00:08:13,200 --> 00:08:15,840 Speaker 1: if we do get a more sustained and larger slowdown, 153 00:08:15,920 --> 00:08:18,560 Speaker 1: we will have to use them. Um. Well, the other 154 00:08:18,640 --> 00:08:20,480 Speaker 1: part of the committee, the people who are the more 155 00:08:20,560 --> 00:08:22,600 Speaker 1: dovish right now and want to keep cutting, say, well, 156 00:08:22,640 --> 00:08:24,680 Speaker 1: we want to cut now because we don't want to 157 00:08:24,680 --> 00:08:27,000 Speaker 1: wait until the economy is already bad in order to 158 00:08:27,040 --> 00:08:28,960 Speaker 1: get in front of this. And and you know they'll 159 00:08:29,000 --> 00:08:32,280 Speaker 1: they'll point to the traditional long and variable legs of 160 00:08:32,320 --> 00:08:35,800 Speaker 1: that monetary policy works in as the evidence for them 161 00:08:35,880 --> 00:08:39,040 Speaker 1: needing to needing to cut now. Um But but either way, 162 00:08:39,320 --> 00:08:40,800 Speaker 1: I mean, even if the FED were to cut a 163 00:08:40,840 --> 00:08:43,120 Speaker 1: little bit more slowly, the market is still going to 164 00:08:43,200 --> 00:08:45,760 Speaker 1: think maybe the terminal rate will be lower than than 165 00:08:45,800 --> 00:08:47,800 Speaker 1: the market's thinking right now. So the market right now 166 00:08:47,880 --> 00:08:50,400 Speaker 1: is thinking the Fed's gonna cut two or three more times, 167 00:08:50,440 --> 00:08:52,960 Speaker 1: and then they're going to stop the I think if 168 00:08:53,000 --> 00:08:55,360 Speaker 1: they were to slow down their number of cuts, the 169 00:08:55,400 --> 00:08:57,520 Speaker 1: market would think, Okay, they're only going to cut every 170 00:08:57,559 --> 00:09:00,720 Speaker 1: other meeting or every third meeting, but they're gonna cut zero, right, 171 00:09:00,760 --> 00:09:04,360 Speaker 1: So that that ends up being a pretty interesting market 172 00:09:04,400 --> 00:09:07,319 Speaker 1: story if ultimately we start the price for that type 173 00:09:07,320 --> 00:09:10,880 Speaker 1: of a FED reaction. So I UM give us your 174 00:09:10,920 --> 00:09:13,480 Speaker 1: sense of how the FED might think about its balance sheet. 175 00:09:13,520 --> 00:09:15,000 Speaker 1: Is there any scenario where you see it kind of 176 00:09:15,040 --> 00:09:18,640 Speaker 1: growing its balance sheet recognizing that perhaps, uh, the interest 177 00:09:18,720 --> 00:09:21,960 Speaker 1: rates arrows and its quivers are are are limited. Well, 178 00:09:22,000 --> 00:09:24,280 Speaker 1: I think that they're going to start increasing your balance 179 00:09:24,280 --> 00:09:27,640 Speaker 1: sheet actually in November, and they'll do that through what 180 00:09:27,800 --> 00:09:30,640 Speaker 1: they'll they'll phrase as organic balance sheet growth, and we 181 00:09:30,720 --> 00:09:34,360 Speaker 1: call it QUWI light. It's not outright quantitative easing, but 182 00:09:34,480 --> 00:09:38,000 Speaker 1: it's the it's their goal is to keep bank reserves 183 00:09:38,040 --> 00:09:41,560 Speaker 1: stable because right now, bank reserves continue to decline because 184 00:09:41,640 --> 00:09:44,240 Speaker 1: other liabilities on the Fed's balance sheet are going up, 185 00:09:44,280 --> 00:09:47,680 Speaker 1: and that and and reserves tends to be the equalizer there. So, 186 00:09:47,880 --> 00:09:49,720 Speaker 1: so we do think that they'll do that. Now, will 187 00:09:49,760 --> 00:09:53,800 Speaker 1: they do large galass it purchases A significant amount of 188 00:09:53,840 --> 00:09:56,960 Speaker 1: buying increased bank reserves. I think that they will do that, 189 00:09:57,000 --> 00:10:00,120 Speaker 1: but they'll wait until interest rates are near zero. We're 190 00:10:00,200 --> 00:10:03,200 Speaker 1: just about at zero, so you'd probably have to see uh, 191 00:10:03,400 --> 00:10:06,640 Speaker 1: the zero lower bound kind of insight again before before 192 00:10:06,679 --> 00:10:07,920 Speaker 1: the FED we do that. So I still think that 193 00:10:07,960 --> 00:10:10,839 Speaker 1: we're probably you know, at the earliest, probably the middle 194 00:10:10,880 --> 00:10:14,400 Speaker 1: of before they start large glass of purchases. But I 195 00:10:14,480 --> 00:10:16,240 Speaker 1: also think that you need to see a much much 196 00:10:16,280 --> 00:10:18,880 Speaker 1: lower economy than we're seeing right now, at least domestically 197 00:10:18,880 --> 00:10:22,760 Speaker 1: in the US. So please Ira look into your crystal ball, 198 00:10:23,160 --> 00:10:26,200 Speaker 1: and it often has information about interest rates in your 199 00:10:26,200 --> 00:10:29,520 Speaker 1: crystal ball because it's a very specific crystal ball, uh, 200 00:10:29,559 --> 00:10:32,319 Speaker 1: and tell us what is the next big move? Is 201 00:10:32,360 --> 00:10:34,880 Speaker 1: it going to be lower or is it going to 202 00:10:34,920 --> 00:10:38,160 Speaker 1: be higher? In benchmark US rates? I think I think 203 00:10:38,200 --> 00:10:42,480 Speaker 1: ten uere yields will probably will probably retest the the 204 00:10:42,720 --> 00:10:45,719 Speaker 1: the dis cycles low. So we're talking about about one 205 00:10:47,120 --> 00:10:51,000 Speaker 1: on on ten year treasuries before before we stabilize, because 206 00:10:51,040 --> 00:10:52,640 Speaker 1: I do think that there's a lot of risks out 207 00:10:52,679 --> 00:10:54,959 Speaker 1: there that the market is going to be um going 208 00:10:55,040 --> 00:10:57,760 Speaker 1: to be thinking about before we can get some stabilization 209 00:10:57,800 --> 00:11:00,719 Speaker 1: in the economy. So the next big move is going 210 00:11:00,800 --> 00:11:04,040 Speaker 1: to be lower one thirties. Right now we are seeing 211 00:11:04,160 --> 00:11:07,599 Speaker 1: ten year yields lower, but still far away from that 212 00:11:07,720 --> 00:11:12,720 Speaker 1: where not far basis points, it's twenty two basis points, 213 00:11:12,800 --> 00:11:15,400 Speaker 1: it felt like so far where at one point five 214 00:11:15,679 --> 00:11:18,880 Speaker 1: percent right now, and we are getting close to those 215 00:11:19,040 --> 00:11:22,720 Speaker 1: whole time lows that we saw back in two thousand. Jersey, 216 00:11:22,720 --> 00:11:24,439 Speaker 1: thank you so much for being with us. iRED Jersey 217 00:11:24,720 --> 00:11:28,760 Speaker 1: chief US interest rate strategist for Bloomberg Intelligence, Chief's chief 218 00:11:28,920 --> 00:11:33,160 Speaker 1: Bloomberg suspenderwear where actually no, he corrected me, he doesn't 219 00:11:33,200 --> 00:11:54,520 Speaker 1: call them suspenders braces. I can know who knows. There 220 00:11:54,640 --> 00:11:56,960 Speaker 1: is a question at a time of record low bond 221 00:11:57,040 --> 00:11:59,760 Speaker 1: yields around the world, do you continue to go with 222 00:12:00,120 --> 00:12:02,800 Speaker 1: the flow and expect yields to go lower on the 223 00:12:02,920 --> 00:12:06,400 Speaker 1: longer term securities? Or do you hide? Do you say 224 00:12:06,559 --> 00:12:09,840 Speaker 1: you know what? This cannot last? Joining us now, Eddie Vataro, 225 00:12:09,960 --> 00:12:12,959 Speaker 1: he is lead portfolio manager of the Ostrowise Total Turn Fund. 226 00:12:13,440 --> 00:12:16,600 Speaker 1: Joining us here in our Bloombergatterer Active Broker Studio. So, Eddie, 227 00:12:16,920 --> 00:12:19,760 Speaker 1: I guess that you know that's one big debate right now? 228 00:12:19,960 --> 00:12:22,480 Speaker 1: Is it time to sort of cash in on the 229 00:12:22,559 --> 00:12:26,839 Speaker 1: flight to longer term securities, sell them by short term notes, 230 00:12:27,240 --> 00:12:31,080 Speaker 1: and hold on. Yeah, absolutely, thanks for having me. Uh. 231 00:12:31,720 --> 00:12:33,600 Speaker 1: You know, when you look at yields and think about 232 00:12:33,640 --> 00:12:36,599 Speaker 1: what an investment in fixed income is, you don't have 233 00:12:36,679 --> 00:12:38,439 Speaker 1: the upside of equities or you have some kind of 234 00:12:38,480 --> 00:12:42,160 Speaker 1: asymmetric upside for for buying a cash flow that is 235 00:12:42,200 --> 00:12:44,360 Speaker 1: going to pay you part at the end. So frankly, 236 00:12:44,400 --> 00:12:46,320 Speaker 1: when you're buying a tenure treasury, now you're looking at 237 00:12:46,320 --> 00:12:49,400 Speaker 1: a one fifty yield that's from a long term perspective, 238 00:12:49,440 --> 00:12:52,720 Speaker 1: a pretty unattractive investment. If you think that yield can 239 00:12:52,760 --> 00:12:55,439 Speaker 1: go lower, sure you you follow along, but I think 240 00:12:55,600 --> 00:12:57,920 Speaker 1: you know, for folks that have more of a a 241 00:12:58,040 --> 00:13:00,720 Speaker 1: longer term view of the markets, you know, these rate 242 00:13:00,800 --> 00:13:03,880 Speaker 1: levels are not not compelling entry points for fixed income investment. 243 00:13:04,280 --> 00:13:06,880 Speaker 1: So what does what do you think the average fixed 244 00:13:06,880 --> 00:13:10,240 Speaker 1: income investor is doing or should be doing in this market? Here? 245 00:13:10,280 --> 00:13:12,760 Speaker 1: Do you get go down in credit quality looking for 246 00:13:13,000 --> 00:13:15,880 Speaker 1: yield and hope the economy stays pretty firm? What do 247 00:13:15,920 --> 00:13:18,120 Speaker 1: you do? And I think I think the economy is 248 00:13:18,160 --> 00:13:19,720 Speaker 1: going to stay firm, but I think it's a little 249 00:13:19,720 --> 00:13:22,400 Speaker 1: bit risky to go down in credit quality uh, just 250 00:13:22,559 --> 00:13:24,760 Speaker 1: in a hunt for yield. There's certainly some names as 251 00:13:24,800 --> 00:13:28,400 Speaker 1: you go down in quality that have redeeming qualities as 252 00:13:28,440 --> 00:13:30,800 Speaker 1: investments that you want to be invested in. But when 253 00:13:30,840 --> 00:13:33,000 Speaker 1: you're looking at at the market as a whole, I 254 00:13:33,080 --> 00:13:34,920 Speaker 1: think you need to be very careful about what names 255 00:13:35,000 --> 00:13:38,400 Speaker 1: you pick. Uh. And I would recommend kind of shortening 256 00:13:38,440 --> 00:13:41,839 Speaker 1: and yield taking whatever positive return the market gives, you know, 257 00:13:41,960 --> 00:13:45,120 Speaker 1: waiting for rates to recast down the road to make 258 00:13:45,160 --> 00:13:49,160 Speaker 1: a longer term investment. What's the catalyst for higher rates? Well, 259 00:13:49,200 --> 00:13:51,160 Speaker 1: we had that catalyst a couple of years ago, but 260 00:13:51,200 --> 00:13:54,520 Speaker 1: obviously the tides have turned. H. We need some resolution 261 00:13:54,559 --> 00:13:56,720 Speaker 1: to what's going on in terms of all the unrest 262 00:13:56,800 --> 00:13:59,920 Speaker 1: that we have with our headlines, whether it's tweets, brexit, 263 00:14:00,040 --> 00:14:03,640 Speaker 1: it obviously the trade situation with China is has kind 264 00:14:03,679 --> 00:14:07,280 Speaker 1: of cast upaul across all fixed income markets. You need 265 00:14:07,400 --> 00:14:10,640 Speaker 1: some resolution or some hope of resolution, uh, to kind 266 00:14:10,679 --> 00:14:12,920 Speaker 1: of come back to the four. I would argue that 267 00:14:12,960 --> 00:14:14,600 Speaker 1: what we've seen in the US so far, as we've 268 00:14:14,600 --> 00:14:17,200 Speaker 1: seen rate cuts that have been more protective rather than 269 00:14:17,280 --> 00:14:20,680 Speaker 1: actually reflective of our economy. But if we if we 270 00:14:20,720 --> 00:14:24,840 Speaker 1: continue to see decreased sentiment. If we continue to see 271 00:14:25,520 --> 00:14:28,480 Speaker 1: markets that that are on edge, uh, you know, we're 272 00:14:28,520 --> 00:14:30,800 Speaker 1: gonna have lower rates for a while. We really need 273 00:14:30,880 --> 00:14:33,600 Speaker 1: to see some resolution to that. So again, getting some 274 00:14:33,680 --> 00:14:36,560 Speaker 1: resolution to some of the bigger macro issues in the interim. 275 00:14:36,560 --> 00:14:39,680 Speaker 1: I mean, how do you think about allocation between investment 276 00:14:39,760 --> 00:14:43,160 Speaker 1: grade and high yield and so on and so forth. Yeah, 277 00:14:43,200 --> 00:14:45,040 Speaker 1: I mean I think investment grade is a good place 278 00:14:45,120 --> 00:14:47,760 Speaker 1: to be. Within investment grade. I actually like mortgages here 279 00:14:47,800 --> 00:14:51,360 Speaker 1: against corporates and treasuries. I think that some of the 280 00:14:51,440 --> 00:14:55,080 Speaker 1: fears of refinance risk that that go into mortgage valuations 281 00:14:55,160 --> 00:14:58,280 Speaker 1: are I think a little bit overdone. But again, I 282 00:14:58,320 --> 00:15:00,120 Speaker 1: think it's important to pick your spots with mortgage is 283 00:15:00,200 --> 00:15:01,800 Speaker 1: you don't have the credit risk, you don't have to 284 00:15:01,840 --> 00:15:03,720 Speaker 1: worry if you're going to be made whole on your investment, 285 00:15:04,080 --> 00:15:06,440 Speaker 1: which is a nice quality about mbs, and you you 286 00:15:06,560 --> 00:15:09,880 Speaker 1: do get paid incremental yield there. But I think corporates 287 00:15:09,920 --> 00:15:12,120 Speaker 1: offer value too, as long as you focus on names 288 00:15:12,160 --> 00:15:14,240 Speaker 1: that make more sense, that are that are more stable. 289 00:15:14,640 --> 00:15:17,120 Speaker 1: So here's the conundrum. Right now, we have seen an 290 00:15:17,120 --> 00:15:20,560 Speaker 1: incredibly bifurcated credit market where you see the higher quality 291 00:15:20,720 --> 00:15:25,800 Speaker 1: names have done better, right, so you're getting even less yield. 292 00:15:26,480 --> 00:15:30,160 Speaker 1: So any rally that you get in those securities, where 293 00:15:30,200 --> 00:15:32,840 Speaker 1: does it come from. Well, at this point it comes 294 00:15:32,840 --> 00:15:35,400 Speaker 1: from treasury yields, which are already quite deflated as they are. 295 00:15:35,840 --> 00:15:38,920 Speaker 1: So when you go into these higher quality names, are 296 00:15:39,000 --> 00:15:42,760 Speaker 1: you looking for returns or are you looking for avoiding losses? 297 00:15:43,680 --> 00:15:46,320 Speaker 1: It's really you certainly are looking to avoid losses, and 298 00:15:46,400 --> 00:15:49,360 Speaker 1: you are getting some incremental return by owning a high 299 00:15:49,400 --> 00:15:52,040 Speaker 1: grade corporate instead of a treasury. So you might earn 300 00:15:52,200 --> 00:15:56,200 Speaker 1: you know, fifty basis points over a duration match treasury, 301 00:15:56,680 --> 00:15:58,600 Speaker 1: which with your levels where they are, that is a 302 00:15:58,960 --> 00:16:03,760 Speaker 1: compelling opportunity. So it doesn't really matter necessarily whether you 303 00:16:03,840 --> 00:16:06,200 Speaker 1: think that they are going to necessarily gain value on 304 00:16:06,320 --> 00:16:10,200 Speaker 1: a price level, meaning that they will continue to do better. Uh. 305 00:16:10,600 --> 00:16:13,240 Speaker 1: It more just matters that you get that extra incremental yield. 306 00:16:13,280 --> 00:16:15,480 Speaker 1: To my getting that correctly, Yeah, I think you can 307 00:16:15,560 --> 00:16:17,160 Speaker 1: look at it that way. I just think that the 308 00:16:17,640 --> 00:16:19,960 Speaker 1: you know, one of the things that's come up is 309 00:16:20,480 --> 00:16:23,400 Speaker 1: this notion of negative yields globally, and we've seen them 310 00:16:23,440 --> 00:16:25,000 Speaker 1: in Europe and we haven't seen them in the US. 311 00:16:25,640 --> 00:16:28,560 Speaker 1: And you know, the notion of of investing in longer 312 00:16:28,640 --> 00:16:31,440 Speaker 1: duration the US now requires you to think that that 313 00:16:31,640 --> 00:16:33,680 Speaker 1: is something that could be in our realm of possibility 314 00:16:33,760 --> 00:16:35,480 Speaker 1: down the road. I don't think it can happen in 315 00:16:35,520 --> 00:16:38,200 Speaker 1: the US for reasons that are related to the structural 316 00:16:38,280 --> 00:16:41,080 Speaker 1: composition of the US bond market, including the big component 317 00:16:41,160 --> 00:16:44,680 Speaker 1: that is mortgages, which adds a lot of supply to 318 00:16:44,720 --> 00:16:47,440 Speaker 1: the market when interest rates fall. We don't see that globally. 319 00:16:47,480 --> 00:16:49,440 Speaker 1: We only see it in the US, which is part 320 00:16:49,480 --> 00:16:51,920 Speaker 1: of the reason I think domestic rights are higher than 321 00:16:51,920 --> 00:16:55,160 Speaker 1: they are globally, part of the reason. But that being said, 322 00:16:55,480 --> 00:16:57,680 Speaker 1: you know, I I prefer to stay defensive, and I 323 00:16:57,760 --> 00:17:00,880 Speaker 1: do think that. Uh, if you buy a shorter maturity, 324 00:17:00,960 --> 00:17:03,440 Speaker 1: high quality names and you know, book a two two 325 00:17:03,440 --> 00:17:05,520 Speaker 1: and a half percent return in the short term, that's fine. 326 00:17:05,840 --> 00:17:08,240 Speaker 1: That's not fine for me at least knows I want. 327 00:17:08,359 --> 00:17:11,000 Speaker 1: I'm willing to take risk. So where should I go 328 00:17:11,119 --> 00:17:14,320 Speaker 1: for a little bit more return than to two? Does 329 00:17:14,359 --> 00:17:18,440 Speaker 1: it have to stay within fixed income? Yes, that could 330 00:17:18,440 --> 00:17:21,720 Speaker 1: be a little trickier. Um. You know, like I said, 331 00:17:21,760 --> 00:17:23,959 Speaker 1: if if if you have some acumen with picking uh 332 00:17:24,200 --> 00:17:28,960 Speaker 1: specific securities, UH, if you're looking at funds, I would 333 00:17:29,000 --> 00:17:32,600 Speaker 1: probably look at at at active funds that have demonstrated 334 00:17:32,600 --> 00:17:35,600 Speaker 1: and ability to pick securities that are down in credit 335 00:17:35,720 --> 00:17:38,359 Speaker 1: that that could be compelling, that give you more yield 336 00:17:38,440 --> 00:17:41,119 Speaker 1: than investment grade might give you. But again, it's really 337 00:17:41,160 --> 00:17:45,280 Speaker 1: gonna come down to UH, finding individual securities or names 338 00:17:45,320 --> 00:17:48,600 Speaker 1: that make the most sense in this market, because you 339 00:17:48,680 --> 00:17:50,520 Speaker 1: know you do not want to just category of the 340 00:17:50,640 --> 00:17:53,919 Speaker 1: ranch for yield. Eddie Vataro, thanks so much for joining us. 341 00:17:54,000 --> 00:17:57,080 Speaker 1: Eddie is the lead portfolio manager of Osterwise Total Return 342 00:17:57,160 --> 00:17:59,280 Speaker 1: Fund based in San Francisco, but joining us live here 343 00:17:59,600 --> 00:18:02,080 Speaker 1: in our Boberg Interactive Broker studio, giving us some thoughts 344 00:18:02,160 --> 00:18:04,080 Speaker 1: on the fixed income market. As we heard earlier with 345 00:18:04,160 --> 00:18:07,879 Speaker 1: John Michael Waite from Bloomberg talking to Many Roman from Pimco, 346 00:18:08,400 --> 00:18:11,320 Speaker 1: not an easy market to make that this is this 347 00:18:11,440 --> 00:18:13,520 Speaker 1: is a tough market and the question is you just 348 00:18:13,680 --> 00:18:18,159 Speaker 1: go for I guess cash preservation, yes, and take your 349 00:18:18,160 --> 00:18:35,040 Speaker 1: two percent yell and book it. The fallout just keeps 350 00:18:35,240 --> 00:18:38,040 Speaker 1: deepening when we look over to China, and when it 351 00:18:38,160 --> 00:18:41,800 Speaker 1: comes to the NBA, it was supposed to be the 352 00:18:41,920 --> 00:18:45,639 Speaker 1: first US league to host games in China, those may 353 00:18:45,720 --> 00:18:48,960 Speaker 1: now be torpedoed. Joining us now in our Bloomberg inta 354 00:18:48,960 --> 00:18:51,840 Speaker 1: active broker studios is Evan Novi Williams, a sports business 355 00:18:51,920 --> 00:18:55,640 Speaker 1: reporter and for us here at Bloomberg News. Evan, what's 356 00:18:55,680 --> 00:18:58,880 Speaker 1: the latest here on this sort of blowing up controversy 357 00:18:59,080 --> 00:19:01,840 Speaker 1: over the NBA in China. Yeah, so the NBA right 358 00:19:01,920 --> 00:19:05,200 Speaker 1: now is in Tokyo nearby. You know, they're playing games 359 00:19:05,280 --> 00:19:07,359 Speaker 1: right now in Japan. So Adam Silver has been talking 360 00:19:07,520 --> 00:19:10,000 Speaker 1: kind of in the night here in the US, trying 361 00:19:10,040 --> 00:19:12,280 Speaker 1: to clarify his position in the position to the league, 362 00:19:12,760 --> 00:19:15,440 Speaker 1: and overnight he made it clear that you know, he 363 00:19:15,680 --> 00:19:18,959 Speaker 1: was not he was not trying to criticize Darryl Moorey's 364 00:19:19,040 --> 00:19:21,800 Speaker 1: right to say whatever he wants to say about protests 365 00:19:21,840 --> 00:19:24,159 Speaker 1: in Hong Kong. And as a results, CCTV, which is 366 00:19:24,200 --> 00:19:26,840 Speaker 1: the state run TV network in China, the one that 367 00:19:27,000 --> 00:19:29,520 Speaker 1: was going to be broadcasting these two preseason games coming 368 00:19:29,600 --> 00:19:31,760 Speaker 1: up later this week in China, they announced that they 369 00:19:31,760 --> 00:19:34,520 Speaker 1: would not be broadcasting either of those games, which is 370 00:19:34,520 --> 00:19:36,600 Speaker 1: a pretty big deal. Right. So, so that's kind of 371 00:19:36,640 --> 00:19:39,040 Speaker 1: where we are right now. Adam Silver is kind of 372 00:19:39,080 --> 00:19:41,080 Speaker 1: in damage control, and as a result of what he 373 00:19:41,200 --> 00:19:44,520 Speaker 1: is saying, there's been more retribution coming from from from 374 00:19:44,600 --> 00:19:47,280 Speaker 1: Chinese businesses. I mean, he is Adam Silver is in it. 375 00:19:47,960 --> 00:19:50,880 Speaker 1: To me, it seems like an incredibly difficult decision. Give 376 00:19:50,960 --> 00:19:53,879 Speaker 1: us a sense of kind of how important China is 377 00:19:54,080 --> 00:19:56,600 Speaker 1: to the NBA. Seems like they've got a much bigger 378 00:19:56,600 --> 00:19:58,840 Speaker 1: presence there than any of the other big US sports. Yeah, 379 00:19:58,840 --> 00:20:01,880 Speaker 1: I would call Adam's position and impossible right now, Yeah, 380 00:20:01,960 --> 00:20:04,760 Speaker 1: and beyond difficult. Yeah. So, just to give you some 381 00:20:04,880 --> 00:20:07,120 Speaker 1: numbers real quick, the the amount of people in China 382 00:20:07,200 --> 00:20:10,639 Speaker 1: that watched NBA content last year eight hundred million people, right, 383 00:20:10,680 --> 00:20:12,840 Speaker 1: So that's two and a half times the entire population 384 00:20:13,240 --> 00:20:16,920 Speaker 1: of the US. The addressable market in China is enormous, 385 00:20:17,280 --> 00:20:19,800 Speaker 1: and the NBA is the most popular league there. And 386 00:20:19,920 --> 00:20:22,800 Speaker 1: I ironically, Darryl Morey, who works for the Rockets, the 387 00:20:22,880 --> 00:20:25,560 Speaker 1: Rockets are the most popular team of the n B 388 00:20:25,720 --> 00:20:28,520 Speaker 1: a um in China. But yeah, so you know that 389 00:20:28,640 --> 00:20:33,280 Speaker 1: the NBA has billion dollar broadcast deals in China from 390 00:20:33,320 --> 00:20:35,560 Speaker 1: the digital and the TV side. There are a number 391 00:20:35,640 --> 00:20:38,040 Speaker 1: of sponsors companies that are based in China that that 392 00:20:38,320 --> 00:20:40,840 Speaker 1: partner with both the league as a whole and with 393 00:20:40,920 --> 00:20:43,720 Speaker 1: individual teams. I mean, it's it's not an exaggeration to 394 00:20:43,760 --> 00:20:45,720 Speaker 1: say that NBA China, which is kind of what they 395 00:20:45,760 --> 00:20:47,760 Speaker 1: incorporated in two thousand and eight, that that is a 396 00:20:47,800 --> 00:20:51,000 Speaker 1: billion dollar enterprise and moving forward ten or fifteen years 397 00:20:51,040 --> 00:20:54,680 Speaker 1: could be multiple, multiple billions. Is it surprising to people 398 00:20:54,920 --> 00:21:00,320 Speaker 1: within the industry that one tweet from one manager could 399 00:21:00,720 --> 00:21:04,240 Speaker 1: drive this degree of backlash from China? Yeah, I think 400 00:21:04,320 --> 00:21:07,119 Speaker 1: I think it is. And you know, the criticism of 401 00:21:07,119 --> 00:21:08,920 Speaker 1: a lot of the criticism that the NBA is getting 402 00:21:09,000 --> 00:21:11,840 Speaker 1: right now is that, you know, players and coaches and 403 00:21:11,920 --> 00:21:16,000 Speaker 1: even general managers are very outspoken often about political issues 404 00:21:16,040 --> 00:21:18,280 Speaker 1: in the US, and the n f NBA has been 405 00:21:18,560 --> 00:21:21,120 Speaker 1: encouraging of their you know, they're right to speak out 406 00:21:21,200 --> 00:21:23,200 Speaker 1: and the things that they're saying. Uh, And it does 407 00:21:23,280 --> 00:21:25,000 Speaker 1: seem I think for a lot of people that, you know, 408 00:21:25,080 --> 00:21:27,880 Speaker 1: the quick backlash that came after Daryl Mori's tweet, which 409 00:21:27,880 --> 00:21:30,040 Speaker 1: he deleted, I believe just a couple of minutes after 410 00:21:30,119 --> 00:21:32,760 Speaker 1: he sent it, um that they might not be giving 411 00:21:32,880 --> 00:21:35,480 Speaker 1: him the same kind of leeway that they often give 412 00:21:35,480 --> 00:21:38,040 Speaker 1: their players and coaches for for for political issues here 413 00:21:38,080 --> 00:21:40,399 Speaker 1: in the US. I think the one major difference is 414 00:21:40,480 --> 00:21:46,119 Speaker 1: that the backlash came so quickly from Chinese businesses that 415 00:21:46,800 --> 00:21:49,159 Speaker 1: unlike the backlash that I'm sure they've seen when the 416 00:21:49,240 --> 00:21:51,959 Speaker 1: Miami Heat take the floor with I Can't Breathe t shirts, etcetera. 417 00:21:52,200 --> 00:21:55,199 Speaker 1: The backlash came so quickly that everybody, all the stakeholders 418 00:21:55,200 --> 00:21:57,320 Speaker 1: in the NBA felt like they also had had to 419 00:21:57,400 --> 00:21:59,680 Speaker 1: react as quickly as as well. One group that I 420 00:21:59,720 --> 00:22:02,920 Speaker 1: haven't they heard that much from is owners in the 421 00:22:03,080 --> 00:22:06,960 Speaker 1: league other than Josie, the owner of the Brooklyn Nets 422 00:22:07,000 --> 00:22:09,520 Speaker 1: and is a Chinese American. In full disclosure, he's a 423 00:22:09,560 --> 00:22:11,359 Speaker 1: personal friend of mine. But he came out with a 424 00:22:11,840 --> 00:22:15,000 Speaker 1: statement trying to explain I think maybe the how the 425 00:22:15,119 --> 00:22:17,720 Speaker 1: view from the Chinese side, how the Chinese viewing this, 426 00:22:17,840 --> 00:22:19,639 Speaker 1: and trying to maybe build a little bit of a 427 00:22:19,720 --> 00:22:22,400 Speaker 1: bridge there. But other than that, hadn't really heard much 428 00:22:22,600 --> 00:22:24,840 Speaker 1: from the owners. Yeah, Joe has been as you said, 429 00:22:24,880 --> 00:22:27,160 Speaker 1: you know, he put out a seven fifty word letter 430 00:22:27,400 --> 00:22:30,280 Speaker 1: essentially detailing the kind of the historical grievances that a 431 00:22:30,359 --> 00:22:34,120 Speaker 1: lot of mainland Chinese people feel against, you know, imperialism 432 00:22:34,200 --> 00:22:37,560 Speaker 1: and also their own you know, right to to territorial sovereignty. Um. 433 00:22:37,720 --> 00:22:41,200 Speaker 1: My guess is that most NBA owners are thinking, I 434 00:22:41,240 --> 00:22:42,959 Speaker 1: don't want to get anywhere near this thing. I mean, 435 00:22:43,359 --> 00:22:46,320 Speaker 1: generally speaking, where the NBA wants to be on issues 436 00:22:46,400 --> 00:22:48,680 Speaker 1: like this is neutral. And the only way that you 437 00:22:48,720 --> 00:22:51,120 Speaker 1: can be neutral is if you don't say anything at all, Right, 438 00:22:51,200 --> 00:22:54,920 Speaker 1: And unfortunately Darryl tweeting meant that the league had to 439 00:22:54,960 --> 00:22:59,199 Speaker 1: say something and therefore had to take aside in some capacity. 440 00:22:59,320 --> 00:23:01,960 Speaker 1: You know, so in Adam Silver's ideal world, like Darryl 441 00:23:02,000 --> 00:23:04,480 Speaker 1: never says anything, he never said, nobody ever says anything 442 00:23:04,520 --> 00:23:07,639 Speaker 1: about it, and it continues on in its unifying kind 443 00:23:07,680 --> 00:23:10,280 Speaker 1: of neutral way. Um, And yeah, I think that's kind 444 00:23:10,280 --> 00:23:11,680 Speaker 1: of part of the problem. So I don't think I 445 00:23:11,720 --> 00:23:14,480 Speaker 1: don't think you're gonna hear many NBA owners waited on 446 00:23:14,560 --> 00:23:16,399 Speaker 1: this because it's kind of impossible to do it in 447 00:23:16,440 --> 00:23:19,040 Speaker 1: a way that doesn't lean one way or the other. 448 00:23:19,200 --> 00:23:21,040 Speaker 1: And as we've seen in the past couple of days, 449 00:23:21,440 --> 00:23:23,919 Speaker 1: leaning one way or the other is bound to anger 450 00:23:24,400 --> 00:23:26,800 Speaker 1: a lot of people either way. What's the sort of 451 00:23:27,359 --> 00:23:32,200 Speaker 1: pushback going to be within China if these games are canceled. Yeah, 452 00:23:32,240 --> 00:23:34,600 Speaker 1: so that's a great question. And right now, the NBA 453 00:23:34,720 --> 00:23:36,679 Speaker 1: as we speak, is still planning to play these two 454 00:23:36,720 --> 00:23:42,040 Speaker 1: preseason games on Thursday, and Saturday in China. Uh, my guests, 455 00:23:42,240 --> 00:23:43,920 Speaker 1: if I had to kind of read through what I 456 00:23:44,040 --> 00:23:46,359 Speaker 1: think is in the Crystal Ball, I think the NBA 457 00:23:46,520 --> 00:23:49,479 Speaker 1: ends up being okay long term in China. I mean, 458 00:23:49,560 --> 00:23:52,040 Speaker 1: basketball is tremendously popular. I don't think the sport is 459 00:23:52,080 --> 00:23:54,920 Speaker 1: gonna lose popularity. Where I would be concerned is that 460 00:23:54,960 --> 00:23:57,680 Speaker 1: there's a good chance that the Rockets, who enjoyed, you know, 461 00:23:57,920 --> 00:24:00,800 Speaker 1: dating back to Yeoming's time, through Racy McGrady and now 462 00:24:00,920 --> 00:24:02,840 Speaker 1: James Harden, they have been one of, if not the 463 00:24:02,960 --> 00:24:05,479 Speaker 1: most popular teams in China. I do wonder if if 464 00:24:05,520 --> 00:24:07,879 Speaker 1: they may lose that mantle, and that if we were 465 00:24:07,960 --> 00:24:10,040 Speaker 1: to look back on this incident three or four years 466 00:24:10,080 --> 00:24:12,080 Speaker 1: from now, the truth may be that the NBA is 467 00:24:12,119 --> 00:24:14,119 Speaker 1: just as popular and their business is just as vibrant 468 00:24:14,160 --> 00:24:16,800 Speaker 1: in China. However, a lot of the people who were 469 00:24:16,880 --> 00:24:19,480 Speaker 1: die hard Rockets fans are now rooting for maybe Joe's 470 00:24:19,600 --> 00:24:22,240 Speaker 1: Ties team, the Brooklyn Nets, maybe are rooting for the 471 00:24:22,359 --> 00:24:25,200 Speaker 1: Lakers because they like Lebron. That they may lose some 472 00:24:25,320 --> 00:24:28,960 Speaker 1: fans and also lose sponsors and partners in China, but 473 00:24:29,119 --> 00:24:30,800 Speaker 1: but that the end result for the league as a 474 00:24:30,880 --> 00:24:33,119 Speaker 1: whole maybe not as bad as it looks right now. 475 00:24:33,480 --> 00:24:35,240 Speaker 1: What we've got, it's interesting, got the Nets and the 476 00:24:35,359 --> 00:24:38,639 Speaker 1: Lakers over there now and and do you expect it 477 00:24:38,680 --> 00:24:40,120 Speaker 1: seems like there might be some news over the next 478 00:24:40,160 --> 00:24:42,879 Speaker 1: few days, So stay tuned, right because absolutely, yeah. I mean, 479 00:24:43,240 --> 00:24:45,119 Speaker 1: I think there is a decent chance that these games 480 00:24:45,440 --> 00:24:48,639 Speaker 1: end up not happening. Um. I think everybody in in 481 00:24:49,040 --> 00:24:51,000 Speaker 1: my world, and I think a lot of fans out 482 00:24:51,040 --> 00:24:53,199 Speaker 1: there are waiting for it to sear what Lebron has 483 00:24:53,280 --> 00:24:55,639 Speaker 1: to say. And you can promise you that that if 484 00:24:55,680 --> 00:24:57,560 Speaker 1: these games do happen, he will be addressing the media 485 00:24:57,600 --> 00:25:01,040 Speaker 1: in some capacity when he when he's over there. Adam Silver, 486 00:25:01,400 --> 00:25:03,119 Speaker 1: you know, as of right now, is planning to fly 487 00:25:03,400 --> 00:25:06,680 Speaker 1: to Shanghai. I believe later today or maybe even tomorrow, 488 00:25:07,040 --> 00:25:09,760 Speaker 1: he will have to talk even more. We'll hear more 489 00:25:09,880 --> 00:25:12,879 Speaker 1: about this, as you know. The NBA's executives and its 490 00:25:12,920 --> 00:25:14,800 Speaker 1: biggest stars land in China in the next couple of 491 00:25:14,880 --> 00:25:18,080 Speaker 1: couple of hours. Evan Novide Williams, sports business reporter for 492 00:25:18,119 --> 00:25:20,439 Speaker 1: Bloomberg News, Thank you so much. Evan joins us here 493 00:25:20,440 --> 00:25:23,479 Speaker 1: in our Bloomberg Interactive Broker Studios. Note that you can 494 00:25:23,560 --> 00:25:26,840 Speaker 1: tune into the Business of Sports with Evan, Scott Sashnik 495 00:25:26,880 --> 00:25:29,359 Speaker 1: and Michael Barr throughout the weekend on Bloomberg Radio. Check 496 00:25:29,400 --> 00:25:33,480 Speaker 1: out the podcast anytime at Bloomberg dot com and at iTunes. 497 00:25:34,000 --> 00:25:36,200 Speaker 1: Thanks for listening to the Bloomberg P and L podcast. 498 00:25:36,400 --> 00:25:39,000 Speaker 1: You can subscribe and listen to interviews at Apple Podcasts 499 00:25:39,080 --> 00:25:42,119 Speaker 1: or whatever podcast platform you prefer. Paul Sweeney, I'm on 500 00:25:42,200 --> 00:25:44,800 Speaker 1: Twitter at pt Sweeney. I'm Lisa abram Boy. It's I'm 501 00:25:44,800 --> 00:25:47,680 Speaker 1: on Twitter at Lisa A. Bram Woyit's one before the podcast. 502 00:25:47,720 --> 00:25:50,280 Speaker 1: You can always catch us worldwide. I'm Bloomberg Radio.