1 00:00:02,400 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,800 --> 00:00:14,880 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Paul Sweeney along 3 00:00:14,880 --> 00:00:17,240 Speaker 2: with Tom Keene. Join us each day for insight from 4 00:00:17,239 --> 00:00:20,760 Speaker 2: the best in economics, geopolitics, finance, and investment. You can 5 00:00:20,800 --> 00:00:24,439 Speaker 2: also watch the show live on YouTube. Visit the Bloomberg 6 00:00:24,480 --> 00:00:27,760 Speaker 2: Podcast channel on YouTube to see the show weekday mornings 7 00:00:27,760 --> 00:00:30,360 Speaker 2: from seven to ten Eastern Remark Global Headquarters in New 8 00:00:30,440 --> 00:00:33,720 Speaker 2: York City. Subscribe to the podcast on Apple, Spotify, or 9 00:00:33,760 --> 00:00:36,800 Speaker 2: anywhere else you listen, and as always on Bloomberg Radio, 10 00:00:36,880 --> 00:00:39,360 Speaker 2: the Bloomberg Terminal, and the Bloomberg Business App. And liz 11 00:00:39,360 --> 00:00:41,400 Speaker 2: Anne Sanders, she's not sitting one hundred eighty nine bion 12 00:00:41,440 --> 00:00:41,840 Speaker 2: os a cash. 13 00:00:41,880 --> 00:00:42,520 Speaker 3: She puts it to work. 14 00:00:42,560 --> 00:00:46,600 Speaker 2: Liz Ane Sonder's chief investment strategist for Charles Schwab. I 15 00:00:46,600 --> 00:00:48,839 Speaker 2: don't know, Lizanne, if you're sitting one hundred and eighty 16 00:00:48,920 --> 00:00:51,640 Speaker 2: nine billion dollars of cash this morning, what would you 17 00:00:51,680 --> 00:00:52,159 Speaker 2: do with it? 18 00:00:53,040 --> 00:00:53,199 Speaker 3: Oh? 19 00:00:53,280 --> 00:00:55,160 Speaker 4: Bill and Chill, I kind of agree with that, but 20 00:00:55,800 --> 00:00:59,120 Speaker 4: you know the real answer to that, leaving Warren, Buffett 21 00:00:59,120 --> 00:01:01,520 Speaker 4: and Berkshire. How theway is, you know, we also have 22 00:01:02,480 --> 00:01:04,880 Speaker 4: a decent size in terms of client assets at what 23 00:01:05,000 --> 00:01:08,520 Speaker 4: nine point one trillion dollars. But the answer to ascid 24 00:01:08,560 --> 00:01:11,520 Speaker 4: allocation how much to have in cash? That's obviously specific 25 00:01:11,600 --> 00:01:15,880 Speaker 4: to each investor. There's no sort of blanket comment about that. 26 00:01:15,920 --> 00:01:20,880 Speaker 4: But there's income and fixed income and therein lies this story. 27 00:01:21,640 --> 00:01:23,640 Speaker 5: So there in lies the story lives. It's great to 28 00:01:23,680 --> 00:01:26,959 Speaker 5: see you. So Lzianne, where does that leave us? 29 00:01:27,000 --> 00:01:27,160 Speaker 6: Then? 30 00:01:27,280 --> 00:01:29,479 Speaker 5: How long does that story go on for? 31 00:01:30,959 --> 00:01:33,240 Speaker 4: Well, I think you know. Key to the equity market 32 00:01:33,480 --> 00:01:35,960 Speaker 4: is more on the longer end of the bond spectrum. 33 00:01:36,000 --> 00:01:39,520 Speaker 4: You've seen this pretty tight inverse relationship between the ten 34 00:01:39,600 --> 00:01:44,000 Speaker 4: year yield and the US equity market, and the really 35 00:01:44,080 --> 00:01:47,360 Speaker 4: acute inverse correlation dates back to the middle part of 36 00:01:47,480 --> 00:01:50,280 Speaker 4: last year when you saw the big move up in 37 00:01:50,320 --> 00:01:52,760 Speaker 4: the ten year yield from sub four percent to five 38 00:01:52,800 --> 00:01:56,120 Speaker 4: percent from late July to late October, and that led 39 00:01:56,160 --> 00:01:59,280 Speaker 4: to almost during the exact same period of time, a 40 00:01:59,360 --> 00:02:02,000 Speaker 4: ten percent in the s and p twelve percent in 41 00:02:02,080 --> 00:02:05,080 Speaker 4: the Nasdaq, and then of course yield started to move down, 42 00:02:05,120 --> 00:02:06,920 Speaker 4: and the early part of that moved down, it was 43 00:02:06,960 --> 00:02:09,800 Speaker 4: to the benefit of equal weight, it was to the 44 00:02:09,840 --> 00:02:13,480 Speaker 4: benefit of small caps, and then we saw the yield 45 00:02:13,600 --> 00:02:16,919 Speaker 4: move up from three point eight to more recently four 46 00:02:16,960 --> 00:02:20,760 Speaker 4: point seven. The first part of that was largely to 47 00:02:20,840 --> 00:02:24,359 Speaker 4: the detriment of smaller cap stocks of equal weight sort 48 00:02:24,400 --> 00:02:26,560 Speaker 4: of down the spectrum, But then when you got up 49 00:02:26,560 --> 00:02:29,639 Speaker 4: to the four to seven it obviously caused some trouble 50 00:02:29,680 --> 00:02:32,360 Speaker 4: for the market more broadly. Now I think we're back 51 00:02:32,360 --> 00:02:35,000 Speaker 4: in that more nuanced part of the cycle where moves 52 00:02:35,080 --> 00:02:37,639 Speaker 4: up and down and yields is likely to have more 53 00:02:37,639 --> 00:02:40,080 Speaker 4: of a direct impact down the cap spectrum, where you 54 00:02:40,120 --> 00:02:43,480 Speaker 4: have the zombie companies, the companies that are more at 55 00:02:43,480 --> 00:02:45,799 Speaker 4: the mercy of what happens with yields. You know, you've 56 00:02:45,800 --> 00:02:48,680 Speaker 4: been reporting on it a lot this morning. Many of 57 00:02:48,680 --> 00:02:52,560 Speaker 4: the larger companies earn more interest on their cash and 58 00:02:52,600 --> 00:02:55,200 Speaker 4: they pay interest on debt. So I still think that 59 00:02:55,280 --> 00:02:58,480 Speaker 4: the bond market is in large part in the driver's 60 00:02:58,480 --> 00:03:01,359 Speaker 4: seat for the equity market market, even more so than 61 00:03:01,919 --> 00:03:04,679 Speaker 4: this parlor game of when's the Fed, you know, going 62 00:03:04,720 --> 00:03:09,000 Speaker 4: to cut rates? When's the first meeting? And how quickly 63 00:03:09,080 --> 00:03:09,960 Speaker 4: and how many. 64 00:03:10,480 --> 00:03:12,760 Speaker 2: Lizenne, We're I guess about eighty percent away through the 65 00:03:12,760 --> 00:03:14,680 Speaker 2: earnings for the S and P five hundred here any 66 00:03:14,960 --> 00:03:16,839 Speaker 2: takeaways for you one way or the other. 67 00:03:17,840 --> 00:03:20,800 Speaker 4: Yeah, So the beat rate on earnings is above the 68 00:03:20,840 --> 00:03:23,560 Speaker 4: long term average, but below the average over the last 69 00:03:23,680 --> 00:03:26,840 Speaker 4: four quarters, although the percent by which companies have beaten 70 00:03:27,520 --> 00:03:30,880 Speaker 4: is decent, but it's the top line number where the 71 00:03:30,880 --> 00:03:35,600 Speaker 4: beat rate has been well below long term and shorter term. 72 00:03:36,000 --> 00:03:38,240 Speaker 4: So I think the real key is the companies that 73 00:03:38,320 --> 00:03:41,080 Speaker 4: have been beating on the bottom line. Particularly if they 74 00:03:41,080 --> 00:03:43,880 Speaker 4: haven't beaten on the top line, it's largely because of 75 00:03:44,480 --> 00:03:47,480 Speaker 4: cost cutting methods in order to protect margins, so I 76 00:03:47,480 --> 00:03:50,240 Speaker 4: think that's part of the underlying story. But we are 77 00:03:50,240 --> 00:03:52,200 Speaker 4: looking at about a ten percent growth rate, and that 78 00:03:52,240 --> 00:03:55,520 Speaker 4: excludes the big one time charge for Bristol Myers Squib 79 00:03:55,520 --> 00:03:57,640 Speaker 4: It would be two or three percentage points lower than that, 80 00:03:57,720 --> 00:04:00,920 Speaker 4: but since that's one company, one time nature, I'm using 81 00:04:00,960 --> 00:04:04,240 Speaker 4: more the ten percent number. But we're not seeing much 82 00:04:04,320 --> 00:04:08,640 Speaker 4: movement in terms of extrapolating that better than expected first 83 00:04:08,680 --> 00:04:11,320 Speaker 4: quarter into the latter part of the year. So I 84 00:04:11,400 --> 00:04:13,480 Speaker 4: still think the outlooks are important. And then, as has 85 00:04:13,480 --> 00:04:17,680 Speaker 4: been the case in recent quarters, companies stocks of companies 86 00:04:17,720 --> 00:04:22,880 Speaker 4: that have missed earnings are getting disproportionately hurt relative to 87 00:04:22,960 --> 00:04:27,919 Speaker 4: the reward accrue to companies outperforming expectations, so it just 88 00:04:27,960 --> 00:04:29,839 Speaker 4: tells you that the market's in a little bit of 89 00:04:29,839 --> 00:04:30,679 Speaker 4: a skittish state. 90 00:04:30,920 --> 00:04:33,120 Speaker 5: Yeah, I mean sometimes those drops like I'm on the 91 00:04:33,120 --> 00:04:36,240 Speaker 5: closing bell, we report earnings and man, sometimes that punishment 92 00:04:36,360 --> 00:04:39,039 Speaker 5: as an understatement, so we like a little bit tab 93 00:04:39,160 --> 00:04:40,720 Speaker 5: in two bill and chill. I've been trying to come 94 00:04:40,800 --> 00:04:43,000 Speaker 5: up with something really clever and it's not happening, but 95 00:04:43,040 --> 00:04:46,640 Speaker 5: like large and lush like? Is it large caps and bust? 96 00:04:46,920 --> 00:04:47,000 Speaker 6: Like? 97 00:04:47,120 --> 00:04:47,400 Speaker 3: Is that? 98 00:04:47,520 --> 00:04:49,800 Speaker 5: Is that where you have to just I think it's Yeah. 99 00:04:49,839 --> 00:04:53,560 Speaker 4: I think where the factor focus needs to be in 100 00:04:53,640 --> 00:04:57,160 Speaker 4: things like interest cover strength and balance sheet strong, free 101 00:04:57,160 --> 00:05:00,719 Speaker 4: cash flow to enterprise value. High return on equity does 102 00:05:00,800 --> 00:05:04,000 Speaker 4: tend to generally correlate up the cap spectrum, but that 103 00:05:04,040 --> 00:05:08,760 Speaker 4: doesn't mean that there aren't opportunities outside of those megacap areas. 104 00:05:08,760 --> 00:05:10,800 Speaker 4: And that's why we continue to think you want to 105 00:05:10,839 --> 00:05:14,840 Speaker 4: have that factor orientation around some of those characteristics that 106 00:05:15,000 --> 00:05:18,000 Speaker 4: I just mentioned. I think what you really want to 107 00:05:18,040 --> 00:05:22,960 Speaker 4: avoid is the ultra low quality zombie company not profitable 108 00:05:23,240 --> 00:05:26,000 Speaker 4: segment within indexes like the Wrestle two thousand. 109 00:05:26,880 --> 00:05:29,600 Speaker 2: Listen and talk to us about valuation. What's your call here. 110 00:05:30,400 --> 00:05:31,720 Speaker 2: You know, we've had a big run up off those 111 00:05:31,760 --> 00:05:34,400 Speaker 2: October lows and the stock prices. Earnings, as you mentioned, 112 00:05:34,440 --> 00:05:36,920 Speaker 2: have come in better than expected. Is that enough to 113 00:05:36,920 --> 00:05:38,000 Speaker 2: support valuations here? 114 00:05:38,960 --> 00:05:39,120 Speaker 3: Well? 115 00:05:39,200 --> 00:05:41,479 Speaker 4: Last year was a year where at the at least 116 00:05:41,520 --> 00:05:44,360 Speaker 4: at the index level, the market did quite well, but 117 00:05:44,480 --> 00:05:46,839 Speaker 4: we had very little learnings growth. So most of last 118 00:05:46,920 --> 00:05:50,320 Speaker 4: year was valuation expansion. The recent draw down that we 119 00:05:50,400 --> 00:05:52,240 Speaker 4: got in the S and P and the nasdact to 120 00:05:52,320 --> 00:05:55,640 Speaker 4: a greater degree indexes like the Wrestle two thousand, that 121 00:05:55,920 --> 00:06:00,000 Speaker 4: was largely multiple contraction. Because we're now in positive earnings territory, 122 00:06:00,279 --> 00:06:04,000 Speaker 4: although importantly not for the Rustle, we're still in negative territory. 123 00:06:04,160 --> 00:06:06,760 Speaker 4: So valuations are on the rich end of the spectrum. 124 00:06:06,800 --> 00:06:09,640 Speaker 4: But as I always say, much like I say about sentiment, 125 00:06:10,400 --> 00:06:13,720 Speaker 4: valuation is a terrible market timing pool. You could talk 126 00:06:13,760 --> 00:06:17,000 Speaker 4: about it as a backdrop. Markets are still fairly rich, 127 00:06:17,160 --> 00:06:20,520 Speaker 4: but that is not the same thing as it's sending 128 00:06:20,560 --> 00:06:23,520 Speaker 4: a message that you need to sell stocks because of 129 00:06:23,640 --> 00:06:27,120 Speaker 4: rich valuation. Valuations can get rich, centement can get frothy, 130 00:06:27,160 --> 00:06:28,800 Speaker 4: and it can stay that way for quite some time. 131 00:06:28,839 --> 00:06:31,040 Speaker 4: As we all learned in the late nineteen nineties, yep. 132 00:06:31,080 --> 00:06:33,480 Speaker 3: Absolutely all right, Luzanne, thank you so much for joining us. 133 00:06:33,480 --> 00:06:36,440 Speaker 2: As always, Lizzie Saunders, folks, she is a chief investment 134 00:06:36,520 --> 00:06:38,359 Speaker 2: strategist at Charles Schwabi. 135 00:06:38,360 --> 00:06:40,080 Speaker 3: Appreciate getting a few minutes of her time. 136 00:06:50,600 --> 00:06:53,080 Speaker 5: We have lots of FEDS speak out today, three two 137 00:06:53,120 --> 00:06:55,800 Speaker 5: FED speakers, eleven this week. Those are really going to 138 00:06:55,839 --> 00:06:58,280 Speaker 5: be the main event. We also have some ECV speakers 139 00:06:58,800 --> 00:07:01,880 Speaker 5: talking today as well, talking about how rates will be 140 00:07:01,960 --> 00:07:05,520 Speaker 5: lowered gradually over time. One is looking at three interest 141 00:07:05,640 --> 00:07:09,480 Speaker 5: rate cuts so far this year and again saying that 142 00:07:09,640 --> 00:07:13,320 Speaker 5: the ECB is independent of FED decisions and that the 143 00:07:13,440 --> 00:07:16,040 Speaker 5: impact will be contained on the euro Area. Let's get 144 00:07:16,080 --> 00:07:18,840 Speaker 5: more insight into all this. Jackie Bowie is managing partner 145 00:07:18,880 --> 00:07:24,200 Speaker 5: and head of EA firm Chatham Financial. Jackie, do you 146 00:07:24,280 --> 00:07:26,120 Speaker 5: do you agree with that idea that, look, the ECB 147 00:07:26,240 --> 00:07:28,240 Speaker 5: can cut three times, if they can do what they want, 148 00:07:28,400 --> 00:07:30,880 Speaker 5: the ECB in Europe is going to be relatively insulated, 149 00:07:31,000 --> 00:07:31,640 Speaker 5: no problems. 150 00:07:33,200 --> 00:07:33,360 Speaker 3: Yeah. 151 00:07:33,440 --> 00:07:38,560 Speaker 7: There certainly seems to be some transatlantic divergence and monetary policy, 152 00:07:39,440 --> 00:07:42,920 Speaker 7: and that really reflects the very different economic conditions in 153 00:07:43,000 --> 00:07:45,920 Speaker 7: the US versus Urope. You know, we've been talking a 154 00:07:46,120 --> 00:07:49,240 Speaker 7: year about the strength of the US economy. You know, 155 00:07:49,360 --> 00:07:52,280 Speaker 7: despite all those rate increases in the last two years, 156 00:07:52,320 --> 00:07:55,480 Speaker 7: the economy has been very resilient. In the Euro Area, 157 00:07:56,040 --> 00:07:59,400 Speaker 7: it's the opposite, the economies are extremely weak. The UK 158 00:07:59,600 --> 00:08:01,880 Speaker 7: had the COVI session at the end of last year, 159 00:08:02,360 --> 00:08:05,320 Speaker 7: so the divergence and monetary policy I think reflects those 160 00:08:05,440 --> 00:08:06,920 Speaker 7: underlying economic conditions. 161 00:08:07,920 --> 00:08:10,720 Speaker 2: So Jackie, let's start with the UK. What is the 162 00:08:10,800 --> 00:08:13,160 Speaker 2: Bank of England saying these days? What does a market 163 00:08:13,280 --> 00:08:15,600 Speaker 2: believe the Bank of England will do. 164 00:08:17,240 --> 00:08:17,440 Speaker 3: Well? 165 00:08:17,520 --> 00:08:20,280 Speaker 7: There's certainly an expectation that a rate cut is coming 166 00:08:21,080 --> 00:08:23,080 Speaker 7: early in the summer. So we have the Bank of 167 00:08:23,120 --> 00:08:26,160 Speaker 7: England meeting and this week, so we'll get the announcement 168 00:08:26,240 --> 00:08:29,120 Speaker 7: on the ninth of May. The market is really now 169 00:08:29,200 --> 00:08:32,800 Speaker 7: pricing in a hold for this meeting and the first 170 00:08:32,880 --> 00:08:36,120 Speaker 7: cut to come slightly later. And I guess that's been 171 00:08:36,160 --> 00:08:38,720 Speaker 7: the story all year with all the central banks, where 172 00:08:39,200 --> 00:08:42,520 Speaker 7: you know, the FED and the ECB and the Bank 173 00:08:42,559 --> 00:08:45,800 Speaker 7: of England. We were all expecting these quite significant rate 174 00:08:45,880 --> 00:08:48,679 Speaker 7: cuts to come, and what's happened is the timing of 175 00:08:48,720 --> 00:08:51,559 Speaker 7: the first cut is getting pushed further out and the 176 00:08:51,720 --> 00:08:54,760 Speaker 7: extent of the cuts being reduced down is to save 177 00:08:54,840 --> 00:08:56,200 Speaker 7: story for the Bank of England. 178 00:08:56,600 --> 00:08:59,640 Speaker 5: But you know, come May nineteenth, there could be a 179 00:08:59,720 --> 00:09:03,160 Speaker 5: save in Europe that will help growth and maybe boost inflation. 180 00:09:03,400 --> 00:09:05,800 Speaker 5: What is that. She goes by the name of Taylor Swift. 181 00:09:06,000 --> 00:09:09,640 Speaker 5: Oh boy, and I say that jokingly, but there was 182 00:09:09,679 --> 00:09:13,000 Speaker 5: an argument that Taylor Swift's concert schedule in the US 183 00:09:13,120 --> 00:09:15,800 Speaker 5: last year did a tremendous amount for the economy, and 184 00:09:15,880 --> 00:09:18,360 Speaker 5: many economists have actually put numbers on it. She kicks 185 00:09:18,400 --> 00:09:22,319 Speaker 5: off for European tour May ninth. Do you think it's 186 00:09:22,360 --> 00:09:26,559 Speaker 5: going to materially help like services spending, really help boost 187 00:09:26,600 --> 00:09:29,440 Speaker 5: growth or at least provide a floor. Joking but serious question. 188 00:09:31,040 --> 00:09:33,199 Speaker 7: Well, interestingly, if you look at the two sides of 189 00:09:33,240 --> 00:09:37,000 Speaker 7: the economy, between the manufacturing industrial side and the services 190 00:09:37,120 --> 00:09:40,520 Speaker 7: sector side, the services sector side has actually been holding 191 00:09:40,679 --> 00:09:44,200 Speaker 7: up slightly better. And that's the argument as to why 192 00:09:44,280 --> 00:09:47,719 Speaker 7: inflation hasn't come down quite so much across Europe, and 193 00:09:47,880 --> 00:09:51,320 Speaker 7: that that services sector wage inflation has been slightly sticky. 194 00:09:51,840 --> 00:09:54,360 Speaker 7: So if we get the Taylor Swift about here in Europe, 195 00:09:54,520 --> 00:09:57,319 Speaker 7: actually it's on the wrong side of the economy. What 196 00:09:57,480 --> 00:10:02,640 Speaker 7: the European economy, especially Germany, is an improvement in the 197 00:10:02,880 --> 00:10:05,560 Speaker 7: heavy industrial construction side of the economy. 198 00:10:06,040 --> 00:10:09,120 Speaker 2: So Todd gives an update Jackie on on Germany. We 199 00:10:09,800 --> 00:10:12,400 Speaker 2: know that that's a challenging situation. They have kind of 200 00:10:12,440 --> 00:10:16,760 Speaker 2: the double whammy, the exposure to Russian from the energy perspective, 201 00:10:16,760 --> 00:10:19,280 Speaker 2: and then number two, they're you know, exposure to China 202 00:10:19,400 --> 00:10:22,320 Speaker 2: on the export side. Where is the German economy now 203 00:10:22,360 --> 00:10:25,600 Speaker 2: and how are the how's the European Center Bank viewing Germany. 204 00:10:26,840 --> 00:10:30,040 Speaker 7: Yeah, so there has been some flash data just in 205 00:10:30,120 --> 00:10:33,320 Speaker 7: the last few weeks which is showing a little bit 206 00:10:33,440 --> 00:10:37,320 Speaker 7: of signs of recovery, but it's very marginal and generally, 207 00:10:37,800 --> 00:10:40,240 Speaker 7: you know, economists are still seeing this isn't the start 208 00:10:40,320 --> 00:10:43,600 Speaker 7: of a recovery trend. And you've hit on the exact 209 00:10:43,679 --> 00:10:47,720 Speaker 7: two points. Germany's getting squeezed. They have They're very dependent 210 00:10:47,920 --> 00:10:53,000 Speaker 7: on energy coming from elsewhere Russia pre the war. Those 211 00:10:53,160 --> 00:10:56,079 Speaker 7: energy prices now they know and year increase in those 212 00:10:56,120 --> 00:10:59,120 Speaker 7: prices is coming back down, but they're still quite inflated. 213 00:10:59,440 --> 00:11:02,240 Speaker 7: And as you is an expert led economy led by 214 00:11:03,120 --> 00:11:06,160 Speaker 7: heavy industrial, the auto sector, and where you're going to 215 00:11:06,160 --> 00:11:08,480 Speaker 7: have a whole other conversation about the EB market and 216 00:11:08,559 --> 00:11:11,240 Speaker 7: what's happening there. But Germany's really stuck in the middle. 217 00:11:11,600 --> 00:11:14,120 Speaker 7: So you're right, the European Central Bank has a bit 218 00:11:14,160 --> 00:11:18,400 Speaker 7: of a dilemma because the peripheral European economy, so poachspin 219 00:11:18,440 --> 00:11:23,199 Speaker 7: in Italy, are actually doing a bit better service sector tourism, 220 00:11:23,800 --> 00:11:27,280 Speaker 7: but then the biggest economy in Germany obviously not doing 221 00:11:27,360 --> 00:11:30,280 Speaker 7: quite so well. So trying to find a monetary policy 222 00:11:30,360 --> 00:11:34,520 Speaker 7: stance that can fit both those scenarios is pretty challenging. 223 00:11:35,000 --> 00:11:39,000 Speaker 5: What's interesting, though, is that President Jijenping didn't go to Germany, 224 00:11:39,600 --> 00:11:42,160 Speaker 5: so I went to France and then going to Hungary, 225 00:11:42,559 --> 00:11:46,360 Speaker 5: basically other countries that have a tangentile tie in essence 226 00:11:46,640 --> 00:11:49,520 Speaker 5: to rush up. Do you make anything of the fact 227 00:11:49,720 --> 00:11:51,640 Speaker 5: that president did not go to Germany. 228 00:11:53,480 --> 00:11:56,120 Speaker 7: I didn't read into that too much. I'm sure there 229 00:11:56,200 --> 00:11:59,719 Speaker 7: might have been an underlying message there, but certainly in 230 00:11:59,800 --> 00:12:03,160 Speaker 7: the in the London headlines this morning, it was very 231 00:12:03,280 --> 00:12:07,480 Speaker 7: much all around, you know, the Chinese French relationship and 232 00:12:07,600 --> 00:12:10,199 Speaker 7: how this could be, you know, a bell weather for 233 00:12:10,520 --> 00:12:12,640 Speaker 7: China and the rest of Europe. It seems like a 234 00:12:12,679 --> 00:12:14,839 Speaker 7: bit of a leap to take it to that conclusion, 235 00:12:14,920 --> 00:12:17,960 Speaker 7: but certainly that's the way it's being reported here in London. 236 00:12:17,720 --> 00:12:21,240 Speaker 2: To you, all right, Jackie, Given that background, that central 237 00:12:21,280 --> 00:12:25,199 Speaker 2: bank background across Europe, where are your clients when you 238 00:12:25,280 --> 00:12:28,400 Speaker 2: talk to them, were they most comfortable allocating capital these days? 239 00:12:29,920 --> 00:12:33,760 Speaker 7: Well, Chatham really works and much more in the private 240 00:12:33,880 --> 00:12:36,960 Speaker 7: capital markets. So we have a lot of clients who 241 00:12:37,040 --> 00:12:41,199 Speaker 7: are heavily invested into real assets, so real estate and 242 00:12:41,400 --> 00:12:46,560 Speaker 7: private equity infrastructure. There certainly is still a fairly negative 243 00:12:46,679 --> 00:12:50,000 Speaker 7: view on big parts of real estate across Europe, and 244 00:12:50,120 --> 00:12:53,280 Speaker 7: that's completely related to where these interest rates are, you know, 245 00:12:53,440 --> 00:12:56,640 Speaker 7: combination of the valuation of those assets and also the 246 00:12:56,760 --> 00:13:00,240 Speaker 7: cost of debt to borrow to fund new investments. So 247 00:13:00,440 --> 00:13:03,600 Speaker 7: still quite a bit of negative sentiment there. I would 248 00:13:03,679 --> 00:13:05,920 Speaker 7: say that on the other side, what we would call 249 00:13:05,960 --> 00:13:09,760 Speaker 7: the infrastructure assets, so that's everything that sits within renewable 250 00:13:09,920 --> 00:13:14,280 Speaker 7: energy and big public sected infrastructure. That's certainly where we're 251 00:13:14,360 --> 00:13:19,360 Speaker 7: seeing clients raising you capital and allocating into those alternative 252 00:13:19,520 --> 00:13:23,160 Speaker 7: energy and infrastructure sectors. So anything in the public markets 253 00:13:23,240 --> 00:13:25,880 Speaker 7: that also relates to that, I would say, is where 254 00:13:26,000 --> 00:13:27,199 Speaker 7: capital is being allocated. 255 00:13:27,760 --> 00:13:29,400 Speaker 5: What are your clients most worried about then? 256 00:13:29,480 --> 00:13:33,160 Speaker 7: Right now, refinancing debt at higher rates. 257 00:13:33,000 --> 00:13:35,760 Speaker 5: Of interest and when is that going to come down? Yet, 258 00:13:35,960 --> 00:13:38,240 Speaker 5: it's a fair point, and when does that strike for them? 259 00:13:39,840 --> 00:13:42,319 Speaker 7: It will be the second half of this year. So 260 00:13:42,760 --> 00:13:46,280 Speaker 7: there's been there was a little half tongue in cheap 261 00:13:46,320 --> 00:13:49,439 Speaker 7: phrase about in real estate that you just had to 262 00:13:49,520 --> 00:13:52,880 Speaker 7: stay alive until twenty five and that would mean that 263 00:13:53,000 --> 00:13:55,320 Speaker 7: interests were coming back down and you would be able 264 00:13:55,320 --> 00:13:58,480 Speaker 7: to refinance. Now that is correct. The interest rates will 265 00:13:58,559 --> 00:14:01,400 Speaker 7: be lower in twenty twenty five than beware at their 266 00:14:01,440 --> 00:14:04,120 Speaker 7: peak of twenty three, but they're still going to be 267 00:14:04,280 --> 00:14:07,920 Speaker 7: significantly higher than they were at the origination of some 268 00:14:08,080 --> 00:14:12,559 Speaker 7: of those loans. So this refinancing avalanche, as it's being described, 269 00:14:12,840 --> 00:14:15,160 Speaker 7: will really start to hit the second half of this 270 00:14:15,360 --> 00:14:17,599 Speaker 7: year and in the next year. So there's been a 271 00:14:17,760 --> 00:14:21,440 Speaker 7: little bit of a delay of some of those borrowers 272 00:14:21,600 --> 00:14:24,440 Speaker 7: refinancing as they wait to see what the interst rate 273 00:14:24,560 --> 00:14:26,160 Speaker 7: market looks like in the second half. 274 00:14:27,000 --> 00:14:29,280 Speaker 5: All right, Jackie, thanks a lot, We really appreciate it. 275 00:14:29,280 --> 00:14:31,560 Speaker 5: Thank you for your time today. Jackie Bowie, Managing partner 276 00:14:31,640 --> 00:14:35,480 Speaker 5: at Chatham joining us there on Europe the UK. What 277 00:14:35,640 --> 00:14:42,120 Speaker 5: clients are worried about? You're in T bills. You're making 278 00:14:42,240 --> 00:14:44,360 Speaker 5: two million dollars a minute, and by you, I mean 279 00:14:44,480 --> 00:14:47,440 Speaker 5: one the general investor. I would love to make two 280 00:14:47,480 --> 00:14:50,440 Speaker 5: million dollars a minute. Here with more is even devitt 281 00:14:50,680 --> 00:14:54,640 Speaker 5: a cheap global market. It is over at Monetta, even 282 00:14:54,960 --> 00:14:57,320 Speaker 5: T bill and chill. When you're taking a look at 283 00:14:57,320 --> 00:14:59,520 Speaker 5: treasury paying at two million dollars a minute, what do 284 00:14:59,560 --> 00:15:02,520 Speaker 5: you make of that? It's where we have been. Cash 285 00:15:02,640 --> 00:15:03,520 Speaker 5: is no longer trash. 286 00:15:03,600 --> 00:15:06,000 Speaker 6: It's a great place to stash money and to sit 287 00:15:06,080 --> 00:15:08,920 Speaker 6: on dry powder. That has certainly been the case for 288 00:15:09,080 --> 00:15:12,960 Speaker 6: the last eighteen months. However, we've seen investors get a 289 00:15:12,960 --> 00:15:16,080 Speaker 6: little certain about that, especially with the FOMO we've seen 290 00:15:16,120 --> 00:15:20,960 Speaker 6: around equity markets and inflation staying hi that hash yield. Remember, 291 00:15:21,080 --> 00:15:24,400 Speaker 6: after inflation what we're thinking about isn't quite as compelling, 292 00:15:24,800 --> 00:15:27,960 Speaker 6: but it has put pressure on bond substitutes, so things 293 00:15:28,120 --> 00:15:32,280 Speaker 6: like infrastructure, real estate, defensive stocks, they are all suffering 294 00:15:32,360 --> 00:15:34,360 Speaker 6: from this. But as we can see from the rally 295 00:15:34,400 --> 00:15:37,440 Speaker 6: in markets, it isn't making any dent in the desire 296 00:15:37,600 --> 00:15:41,120 Speaker 6: for growth participation and some of those higher octane stocks 297 00:15:41,680 --> 00:15:42,560 Speaker 6: you know, I saw over. 298 00:15:42,400 --> 00:15:45,480 Speaker 2: The weekend that out West and Tahoe the skiers. I 299 00:15:45,520 --> 00:15:47,200 Speaker 2: got like two or three feet of snow over the weekend. 300 00:15:47,200 --> 00:15:48,960 Speaker 2: They're gonna be skiing to like July fourth here, And 301 00:15:49,080 --> 00:15:53,640 Speaker 2: that was picked up by Ethan. How do you equate 302 00:15:53,840 --> 00:15:57,640 Speaker 2: the snowfall out west to your market? Call Ethan, it's funny. 303 00:15:57,840 --> 00:16:00,400 Speaker 6: I always look for parallels in real life, and we've 304 00:16:00,480 --> 00:16:01,520 Speaker 6: had a bit of a surprise. 305 00:16:02,280 --> 00:16:02,880 Speaker 5: I love skiing. 306 00:16:02,920 --> 00:16:04,800 Speaker 6: I wouldn't say I'm an expert, but I do love it. 307 00:16:05,240 --> 00:16:07,440 Speaker 6: And just what they've said about the I follow all 308 00:16:07,480 --> 00:16:09,880 Speaker 6: the ski resorts and they're saying as long as possible, 309 00:16:10,120 --> 00:16:12,480 Speaker 6: They're staying open as long as possible, and that's that 310 00:16:12,640 --> 00:16:15,680 Speaker 6: open ended the joy that the Springs skiers see. I 311 00:16:15,800 --> 00:16:18,360 Speaker 6: saw parallel to that with some of the rhetoric from 312 00:16:18,400 --> 00:16:20,880 Speaker 6: the FED at last week's meeting that they will leave 313 00:16:20,960 --> 00:16:23,640 Speaker 6: rates high essentially as long as possible. So there's going 314 00:16:23,760 --> 00:16:26,640 Speaker 6: to be not much certainty in terms of the timing 315 00:16:26,720 --> 00:16:30,560 Speaker 6: of rate cuts. And just like the snowpack is looking 316 00:16:30,600 --> 00:16:32,760 Speaker 6: at one hundred and thirty percent of its medium, we 317 00:16:32,880 --> 00:16:35,400 Speaker 6: still have inflation at one hundred and thirty percent of 318 00:16:35,520 --> 00:16:38,480 Speaker 6: its average, so it's around three percent, whereas we would 319 00:16:38,480 --> 00:16:40,360 Speaker 6: hope it'd get closer to just two percent. That's at 320 00:16:40,440 --> 00:16:43,640 Speaker 6: least the target. So we're not there yet. Some are 321 00:16:43,720 --> 00:16:46,640 Speaker 6: making hay and the ski slopes. But for the FED, 322 00:16:46,840 --> 00:16:49,760 Speaker 6: it's that open endedness of it, which I thought didn't 323 00:16:49,800 --> 00:16:50,960 Speaker 6: seem to spook markets. 324 00:16:51,040 --> 00:16:51,720 Speaker 5: I thought it would. 325 00:16:51,800 --> 00:16:55,200 Speaker 6: Actually markets have been surprisingly resilient. I even thought that 326 00:16:55,320 --> 00:16:58,800 Speaker 6: the jobs number on Friday not being as robust would 327 00:16:58,840 --> 00:17:02,080 Speaker 6: spook markets. To have had the opposite effect, and that 328 00:17:02,200 --> 00:17:04,840 Speaker 6: markets seem to have taken from that that the pressure 329 00:17:04,880 --> 00:17:08,800 Speaker 6: on labor is going to be more subdued, that lead 330 00:17:08,880 --> 00:17:11,440 Speaker 6: in to the inflation point is going to be less 331 00:17:11,440 --> 00:17:13,359 Speaker 6: of an issue, and then maybe we will get to 332 00:17:13,440 --> 00:17:16,760 Speaker 6: that soft landing no landing scenario that they've been thinking about. 333 00:17:17,119 --> 00:17:20,240 Speaker 6: So Marcus just seemed to be incredibly resilient. Like the 334 00:17:20,320 --> 00:17:21,600 Speaker 6: snow resorts right now. 335 00:17:21,680 --> 00:17:23,119 Speaker 5: Is is it weird to get snow. 336 00:17:22,960 --> 00:17:25,359 Speaker 3: In May like that? No, No, it is crazy out there. 337 00:17:25,359 --> 00:17:28,119 Speaker 2: They've had some good snow. But when it snows in Tahoe, 338 00:17:28,440 --> 00:17:30,919 Speaker 2: it snows huge because you get the stormsure off the ocean, right, 339 00:17:31,000 --> 00:17:31,840 Speaker 2: So that's not weird. 340 00:17:32,200 --> 00:17:35,560 Speaker 5: But keeping rates this low with the data may be weird. 341 00:17:35,800 --> 00:17:38,520 Speaker 5: I mean this high, I should say, like this high 342 00:17:38,640 --> 00:17:40,640 Speaker 5: versus the data, Like, is that weird? Is that sort 343 00:17:40,680 --> 00:17:44,159 Speaker 5: of an anomaly that financial conditions, for example, continuing to 344 00:17:44,200 --> 00:17:46,080 Speaker 5: get looser. You take a look at sluice in your 345 00:17:46,119 --> 00:17:49,120 Speaker 5: loan Office of Survey and lending standards aren't as tight 346 00:17:49,200 --> 00:17:51,240 Speaker 5: as they might have been other times in the cycle, Like, 347 00:17:51,320 --> 00:17:53,480 Speaker 5: that's weird, No, it is. 348 00:17:53,560 --> 00:17:55,639 Speaker 6: I mean it's interesting. I think that the Fed right 349 00:17:55,680 --> 00:17:58,119 Speaker 6: now is looking at the inflation number, looking at this 350 00:17:58,359 --> 00:18:01,320 Speaker 6: ongoing tightening that they're doing behind the scenes by slowing 351 00:18:01,359 --> 00:18:03,679 Speaker 6: their purchases and actually trying to offload part of their 352 00:18:03,720 --> 00:18:06,439 Speaker 6: balance sheet. So that is a tightening measure. So they 353 00:18:06,480 --> 00:18:10,080 Speaker 6: really are continuing to tighten, and as inflation falls, those 354 00:18:10,119 --> 00:18:13,320 Speaker 6: interest rates will start to pinch more. And simply the 355 00:18:13,359 --> 00:18:15,760 Speaker 6: fact that the longer these high rates are in effect, 356 00:18:16,080 --> 00:18:18,879 Speaker 6: the more consumers and companies will be forced to refinance, 357 00:18:19,119 --> 00:18:21,680 Speaker 6: so that transmission effect is going to start to bite 358 00:18:21,800 --> 00:18:24,640 Speaker 6: even more. So even though they're doing nothing, it's still 359 00:18:24,680 --> 00:18:28,040 Speaker 6: a pretty tight environment. And the question is how long 360 00:18:28,119 --> 00:18:32,000 Speaker 6: can consumers stick with that? And you know, we're already 361 00:18:32,040 --> 00:18:35,200 Speaker 6: feeling the cumulative effect of inflation that hasn't gone away. 362 00:18:35,280 --> 00:18:37,960 Speaker 6: We're seeing the gas price increased at the pumps, and 363 00:18:38,080 --> 00:18:41,920 Speaker 6: this geopolitical uncertainty that is just swirling in the background, 364 00:18:42,080 --> 00:18:45,200 Speaker 6: and as the US election nears, it's going to get 365 00:18:45,320 --> 00:18:48,680 Speaker 6: more and more noisy there, not only domestically, but it 366 00:18:48,760 --> 00:18:50,440 Speaker 6: seems unfortunately internationally. 367 00:18:50,800 --> 00:18:52,720 Speaker 5: So I do see quite a lot of. 368 00:18:52,800 --> 00:18:56,360 Speaker 6: Risks there to this market resilience, and as you said, 369 00:18:56,440 --> 00:18:58,880 Speaker 6: there isn't really that loosening that look to kick off 370 00:18:58,880 --> 00:18:59,800 Speaker 6: anytime soon. 371 00:19:00,560 --> 00:19:04,639 Speaker 2: Given that background, Even where are you suggesting your clients 372 00:19:04,680 --> 00:19:06,120 Speaker 2: allocate capital these days? 373 00:19:07,160 --> 00:19:10,520 Speaker 6: We're definitely more interesting to hear just the notes from 374 00:19:10,560 --> 00:19:14,439 Speaker 6: Warren Buffett about AI and clearly this concentration in markets 375 00:19:14,520 --> 00:19:17,680 Speaker 6: around AI and technology. We can't ignore that we've never 376 00:19:17,800 --> 00:19:21,080 Speaker 6: had a strict thematic approach. We've always been believers in 377 00:19:21,200 --> 00:19:24,399 Speaker 6: more of a core, broad based approach. We were encouraged 378 00:19:24,480 --> 00:19:27,440 Speaker 6: by some of the sectors that rallied in the first quarter. 379 00:19:27,680 --> 00:19:30,040 Speaker 6: It was pretty much across the board, we had strong performance. 380 00:19:30,359 --> 00:19:33,520 Speaker 6: We're also encouraged by a suggestion that a cut in rates, 381 00:19:33,520 --> 00:19:35,919 Speaker 6: when it finally does happen, will be good for mid 382 00:19:36,000 --> 00:19:38,600 Speaker 6: cap and small cap stocks, so that should then again 383 00:19:38,880 --> 00:19:41,719 Speaker 6: add some breath to this rally, which has been very 384 00:19:41,840 --> 00:19:45,080 Speaker 6: large cap focused. So we're pretty keen on equities still 385 00:19:45,520 --> 00:19:48,600 Speaker 6: as before, we've always been diversifying. Right now, around real 386 00:19:48,720 --> 00:19:51,080 Speaker 6: estate we're a little hesitant. We haven't seen the movement 387 00:19:51,160 --> 00:19:53,960 Speaker 6: and prices to suggest we're at of bottom yet, so 388 00:19:54,119 --> 00:19:56,520 Speaker 6: real estate we'd be more hesitant. But as far as 389 00:19:56,720 --> 00:19:59,879 Speaker 6: picking sectors. Another thing we're exploring is around just how 390 00:20:00,040 --> 00:20:03,240 Speaker 6: digital assets are maturing. We're taking a look at Bitcoin 391 00:20:03,320 --> 00:20:06,400 Speaker 6: two point zero. We're still on the education phase. There's 392 00:20:06,440 --> 00:20:09,320 Speaker 6: a lot to learn about how that behaves in a portfolio. 393 00:20:09,920 --> 00:20:12,159 Speaker 6: But since Warren Buffett seems to think that this is 394 00:20:12,200 --> 00:20:15,800 Speaker 6: a casino economy that we're in, we need to know 395 00:20:16,000 --> 00:20:18,280 Speaker 6: what the odds are at that casino and to try 396 00:20:18,280 --> 00:20:20,760 Speaker 6: to put a little bit of fundamental research behind the 397 00:20:20,840 --> 00:20:24,399 Speaker 6: kind of red black conundrum that investors may feel they're facing. 398 00:20:24,680 --> 00:20:26,640 Speaker 5: Which pairs to the point that Paul and I talked 399 00:20:26,680 --> 00:20:29,480 Speaker 5: about Friday, that David Busters is allowing some gambling when 400 00:20:29,520 --> 00:20:33,320 Speaker 5: it comes to physical stuff in their restaurant's total side note, 401 00:20:33,400 --> 00:20:35,480 Speaker 5: But nonetheless, I would put money on myself for ski 402 00:20:35,560 --> 00:20:39,480 Speaker 5: ball versus Paul. But you know, whatever you mentioned, even 403 00:20:39,880 --> 00:20:43,040 Speaker 5: small cap stocks, for example, if the FED does wind 404 00:20:43,119 --> 00:20:45,119 Speaker 5: up cutting, does that mean you expect that to be 405 00:20:45,200 --> 00:20:48,399 Speaker 5: more of a normalization versus the economy struggling. Therefore I 406 00:20:48,520 --> 00:20:51,560 Speaker 5: must cut. Therefore, small caps make sense, I. 407 00:20:51,560 --> 00:20:52,040 Speaker 3: Would think so. 408 00:20:52,200 --> 00:20:54,000 Speaker 6: I mean, small caps have really been on the back 409 00:20:54,080 --> 00:20:56,199 Speaker 6: foot for a long time. They've got very little attention. 410 00:20:56,640 --> 00:20:58,760 Speaker 6: They've never seen that kind of rally. They would have 411 00:20:58,840 --> 00:21:03,119 Speaker 6: been pinched by inflation, less pricing power, high interstrates, just 412 00:21:03,600 --> 00:21:07,720 Speaker 6: generally less leverage at the bank with banks, with credit providers. 413 00:21:08,040 --> 00:21:09,840 Speaker 6: The one thing that might have been good for small 414 00:21:09,920 --> 00:21:11,840 Speaker 6: cap stocks recently would have been the M and A 415 00:21:12,400 --> 00:21:17,000 Speaker 6: trend which is around this just simply acquisitions by large conglomerates. 416 00:21:17,240 --> 00:21:19,080 Speaker 6: They would have been trying to buy up some stocks. 417 00:21:19,160 --> 00:21:22,960 Speaker 6: So a few tailwinds that mostly headwinds. Yes, I would 418 00:21:22,960 --> 00:21:25,800 Speaker 6: think that they will do well if the economy remains 419 00:21:25,800 --> 00:21:29,600 Speaker 6: strong and the FED does a normalizing rate cut. Clearly, 420 00:21:29,680 --> 00:21:32,760 Speaker 6: if we're in economic woes, that will be hard for 421 00:21:32,840 --> 00:21:35,720 Speaker 6: small caps. The mom and pop shop generally doesn't do 422 00:21:35,840 --> 00:21:38,600 Speaker 6: well in that environment. So it's not a very high 423 00:21:38,680 --> 00:21:42,240 Speaker 6: conviction call, I'll have to say, but it is relating 424 00:21:42,359 --> 00:21:45,119 Speaker 6: to just a reversion to the mean, some kind of 425 00:21:45,200 --> 00:21:51,200 Speaker 6: normalization as to how these sectors and cap that segments perform, right, Thank. 426 00:21:51,080 --> 00:21:52,080 Speaker 3: You, so much for joining us. 427 00:21:52,119 --> 00:22:07,280 Speaker 2: Ethan Devit, chief global market strategists at Moneta groupment all right, folks, 428 00:22:07,280 --> 00:22:09,280 Speaker 2: you're deadly look at the front pages around the world at. 429 00:22:09,200 --> 00:22:11,240 Speaker 3: Least some MATEO. What do you got first today? 430 00:22:11,320 --> 00:22:13,200 Speaker 5: All right, it was something we were talking about earlier. 431 00:22:13,560 --> 00:22:16,399 Speaker 1: You mentioned it too, Alex. The Boeing spacecraft set to 432 00:22:16,520 --> 00:22:19,280 Speaker 1: carry the astronauts for the first time tonight. So it's 433 00:22:19,359 --> 00:22:22,479 Speaker 1: the Starliner blasting off ten thirty four pm Eastern from 434 00:22:22,560 --> 00:22:26,000 Speaker 1: Florida two astronauts of the International Space Station. They're going 435 00:22:26,040 --> 00:22:28,399 Speaker 1: to return them to Earth about a week after. But 436 00:22:28,520 --> 00:22:30,960 Speaker 1: it's really going to test whether it's ready to handle 437 00:22:31,040 --> 00:22:34,480 Speaker 1: like these NASA missions. But it's it's been a struggle. 438 00:22:34,600 --> 00:22:36,800 Speaker 1: The project led to a one point four billion dollar 439 00:22:36,880 --> 00:22:38,560 Speaker 1: accounting losses for Boeing. 440 00:22:39,359 --> 00:22:40,360 Speaker 3: But it could be good news. 441 00:22:40,440 --> 00:22:42,639 Speaker 1: I mean, Boeing could use some good news, right it's 442 00:22:42,680 --> 00:22:45,040 Speaker 1: facing all the safety issues with its airline business. 443 00:22:46,160 --> 00:22:47,960 Speaker 5: But yeah, this is this is happening tonight. 444 00:22:48,080 --> 00:22:50,840 Speaker 2: So if I'm an astronaut and my little nervous getting 445 00:22:50,840 --> 00:22:53,120 Speaker 2: on it, I don't know, I don't. 446 00:22:53,119 --> 00:22:54,480 Speaker 5: I mean, I think if you're an astronaut, are you 447 00:22:54,600 --> 00:22:57,360 Speaker 5: kind of used to these things from I mean apparently 448 00:22:57,600 --> 00:22:59,760 Speaker 5: Boeing has around a one and a half billion dollars 449 00:23:00,040 --> 00:23:03,280 Speaker 5: extra costs to cover these starliner and delays some technical problems, 450 00:23:03,320 --> 00:23:06,840 Speaker 5: and you would hope that they would all be sussed out. Also, 451 00:23:06,880 --> 00:23:09,919 Speaker 5: I didn't know this, but the Ula rocket is partly 452 00:23:10,040 --> 00:23:12,240 Speaker 5: owned by Boeing and Lockheed Martin. So I just thought 453 00:23:12,240 --> 00:23:14,080 Speaker 5: that was really interesting. And they're both thinking about trying 454 00:23:14,080 --> 00:23:17,120 Speaker 5: to like spin off that steak in in this Pentagon 455 00:23:17,200 --> 00:23:19,560 Speaker 5: and contractor, but it hasn't happened yet. I just found 456 00:23:19,560 --> 00:23:20,800 Speaker 5: that interesting. Also in terms of. 457 00:23:22,400 --> 00:23:24,119 Speaker 3: I'm not allowed to know what he works on. 458 00:23:24,720 --> 00:23:29,399 Speaker 5: Really, Yes, he's on I need to know basis. 459 00:23:29,520 --> 00:23:32,200 Speaker 3: Yeah, he tells me you don't need to know that something. 460 00:23:32,200 --> 00:23:34,480 Speaker 5: I was like, Okay, I'm sure he savors that. He 461 00:23:34,560 --> 00:23:35,359 Speaker 5: savors that away. 462 00:23:35,359 --> 00:23:36,440 Speaker 3: I still pay for his phone bill. 463 00:23:36,440 --> 00:23:38,600 Speaker 5: Will oh that might stop. 464 00:23:38,880 --> 00:23:39,240 Speaker 3: I don't know. 465 00:23:39,440 --> 00:23:42,159 Speaker 5: I feel like that. And the Netflix, that's a little schedule. 466 00:23:42,240 --> 00:23:42,960 Speaker 3: I think we took care of that. 467 00:23:43,119 --> 00:23:45,040 Speaker 5: I'm definitely looking forward to that. That's going to be 468 00:23:45,119 --> 00:23:47,440 Speaker 5: super fun just to see how that all goes. Lisa, 469 00:23:47,520 --> 00:23:48,359 Speaker 5: what else are you interested? 470 00:23:48,560 --> 00:23:48,600 Speaker 2: So? 471 00:23:48,720 --> 00:23:50,600 Speaker 1: This is what Paul is right up your alley with 472 00:23:50,680 --> 00:23:53,280 Speaker 1: the paramount. This is The New York Times said that 473 00:23:53,400 --> 00:23:56,719 Speaker 1: since those guidance talks ended that a special committee their 474 00:23:56,760 --> 00:23:58,960 Speaker 1: Paramounts Board of directors, they signed off to begin deal 475 00:23:59,040 --> 00:24:02,960 Speaker 1: talks with Sony Pick Entertainment Apollo. You remember last week 476 00:24:03,000 --> 00:24:04,960 Speaker 1: they bid that offer for the company around twenty six 477 00:24:05,080 --> 00:24:05,960 Speaker 1: billion in cash. 478 00:24:06,760 --> 00:24:07,920 Speaker 3: So, well, Steve, who this goes? 479 00:24:08,000 --> 00:24:10,840 Speaker 1: You know they if they'll push further for negotiations with 480 00:24:10,920 --> 00:24:12,880 Speaker 1: sky Dance two on top of this, So it's kind 481 00:24:12,880 --> 00:24:14,800 Speaker 1: of opening it up, opening up the bidding. 482 00:24:15,040 --> 00:24:17,280 Speaker 2: Yeah, this one feels more real to me. You've got 483 00:24:17,320 --> 00:24:20,760 Speaker 2: a real teagic player and Sony. You've got a real 484 00:24:20,840 --> 00:24:23,399 Speaker 2: financial player and Apollo, So you think they can come 485 00:24:23,480 --> 00:24:24,000 Speaker 2: up with the money. 486 00:24:24,080 --> 00:24:25,640 Speaker 3: You think they can add value there. 487 00:24:25,640 --> 00:24:27,800 Speaker 2: I don't know what the regulatory environment is for putting 488 00:24:28,240 --> 00:24:32,880 Speaker 2: two big studios, the Sony Studio and the Paramount Studio together. 489 00:24:32,880 --> 00:24:35,440 Speaker 3: I'm sure there's gonna be some regulatory review there. But 490 00:24:35,560 --> 00:24:37,360 Speaker 3: this one feels a little bit more real. 491 00:24:37,480 --> 00:24:41,639 Speaker 2: The question comes down to will this deal result in 492 00:24:41,720 --> 00:24:45,520 Speaker 2: a premium pay to Sherry Redstone and her controlling shares. 493 00:24:45,600 --> 00:24:48,840 Speaker 2: That's what she wants, and will she get it in 494 00:24:48,920 --> 00:24:49,560 Speaker 2: this transaction? 495 00:24:49,600 --> 00:24:49,719 Speaker 5: Well? 496 00:24:49,720 --> 00:24:50,120 Speaker 3: Off to see. 497 00:24:50,320 --> 00:24:53,639 Speaker 5: Apparently, the Financial Times They're reported that James Cameron on 498 00:24:53,800 --> 00:24:57,280 Speaker 5: Ari Emmanuel are actually backing the sky Dance bid. Whether 499 00:24:57,359 --> 00:25:00,280 Speaker 5: or not that actually means something material isn't great, but 500 00:25:00,359 --> 00:25:01,480 Speaker 5: they both came out in favor of. 501 00:25:01,480 --> 00:25:04,320 Speaker 3: That, both players. But they're not in this realm. 502 00:25:04,520 --> 00:25:07,199 Speaker 2: In this I think you need some seriously deep pockets 503 00:25:07,240 --> 00:25:10,080 Speaker 2: like Apollo and some serious strategic value like Sony could work. 504 00:25:10,080 --> 00:25:11,640 Speaker 5: I say, I wonder if sky Dance would come back. 505 00:25:11,680 --> 00:25:13,000 Speaker 3: I mean, yes, sweetened the deal. 506 00:25:13,119 --> 00:25:14,360 Speaker 5: Could they sweeten it anymore? 507 00:25:14,840 --> 00:25:18,800 Speaker 3: You who knows? Did you go to the movies this weekend? 508 00:25:18,800 --> 00:25:20,080 Speaker 5: That's what I want to ask you, guys. Did you 509 00:25:20,119 --> 00:25:21,800 Speaker 5: know what I really wanted to see? Fall? 510 00:25:21,880 --> 00:25:22,080 Speaker 3: Guys? 511 00:25:22,160 --> 00:25:24,959 Speaker 5: Okay, there you go. And you're not the only one 512 00:25:24,960 --> 00:25:28,040 Speaker 5: who did not see The Fall. It's a Ryan Gosling. 513 00:25:28,440 --> 00:25:32,680 Speaker 5: Ryan Gosling, Yes, he plays like this action star. But 514 00:25:33,240 --> 00:25:34,879 Speaker 5: it didn't do well at the box office. 515 00:25:34,960 --> 00:25:36,800 Speaker 1: So it was one hundred and twenty five million dollar 516 00:25:36,840 --> 00:25:40,280 Speaker 1: production Comcast Universal Pictures. It brought him just twenty eight 517 00:25:40,320 --> 00:25:43,040 Speaker 1: and a half million domestic box office over the weekend. 518 00:25:43,600 --> 00:25:45,879 Speaker 1: I mean, you thought he brought in the boost for Barbie, 519 00:25:45,960 --> 00:25:47,320 Speaker 1: but it didn't do it with this one. 520 00:25:47,400 --> 00:25:52,720 Speaker 5: I will see it okay, that weekend. I mean you 521 00:25:52,760 --> 00:25:55,800 Speaker 5: got Emily Blunt, Ryan Gosling and Hannah Wattingham. I mean, 522 00:25:55,840 --> 00:25:57,960 Speaker 5: I don't know what more you could possibly want. You 523 00:25:58,040 --> 00:26:01,760 Speaker 5: get cheesy romance, you get things going. This movie was 524 00:26:02,119 --> 00:26:03,800 Speaker 5: literally made for Alex Steele. 525 00:26:04,560 --> 00:26:06,640 Speaker 3: Yet you did not go. Yeah, you did not watch 526 00:26:06,680 --> 00:26:10,719 Speaker 3: the Derby this weekend. To do this weekend? What did 527 00:26:10,760 --> 00:26:10,920 Speaker 3: I do? 528 00:26:11,040 --> 00:26:15,400 Speaker 5: I did some Blandis and I slept on Saturday. Oh, 529 00:26:15,480 --> 00:26:17,480 Speaker 5: I played a skey ball. I played sky Ball on 530 00:26:17,640 --> 00:26:21,320 Speaker 5: Saturday with my daughter in Industry City. That's good. So 531 00:26:21,480 --> 00:26:23,640 Speaker 5: this is Paul and I. We both like the ski ball. 532 00:26:23,760 --> 00:26:26,639 Speaker 5: So I got a couple of thousands to. 533 00:26:26,640 --> 00:26:29,320 Speaker 2: Get Alex down to the Jersey shore this summer. People 534 00:26:29,400 --> 00:26:30,960 Speaker 2: forward to walk a little sky ball, I tell you 535 00:26:31,080 --> 00:26:33,560 Speaker 2: if so. The question is, will any movie this summer 536 00:26:33,920 --> 00:26:35,080 Speaker 2: make a billion dollars in box? 537 00:26:35,600 --> 00:26:37,520 Speaker 1: I mean they said there's too big. There's inside Out 538 00:26:37,560 --> 00:26:39,600 Speaker 1: to which might be a maybe you'll take your daughter 539 00:26:39,760 --> 00:26:42,320 Speaker 1: that one. And then there's also Deadpool and Wolverine. 540 00:26:43,040 --> 00:26:48,159 Speaker 5: So Deadpool, sorry, I can talk for like hours, I 541 00:26:48,200 --> 00:26:50,880 Speaker 5: mean Deadpool Wolverine. I will like take the day off work. 542 00:26:51,080 --> 00:26:54,800 Speaker 5: I will like stay overnight like I hustled to see. 543 00:26:54,680 --> 00:26:56,800 Speaker 3: This movie and who's Who's the Deadpool Day? 544 00:26:56,880 --> 00:27:01,240 Speaker 5: He's the other Ryan, the other Ryan Ryan. Both from Canada. 545 00:27:01,560 --> 00:27:04,240 Speaker 5: Both really funny. Not for the kids, both definitely. 546 00:27:04,680 --> 00:27:04,840 Speaker 3: I know. 547 00:27:04,920 --> 00:27:06,879 Speaker 5: I think that the rumor is that Taylor Swift is 548 00:27:06,880 --> 00:27:09,560 Speaker 5: supposed to be in that, So that makes my daughter 549 00:27:09,960 --> 00:27:13,080 Speaker 5: really really really excited to go see it and we're like, sorry, kid, 550 00:27:13,280 --> 00:27:16,040 Speaker 5: like there, why is it are? It's like r plus 551 00:27:16,359 --> 00:27:20,119 Speaker 5: it was like not freaking really okay, imagine all the 552 00:27:20,200 --> 00:27:23,119 Speaker 5: cursing and anything inappropriate is in this movie, which is 553 00:27:23,240 --> 00:27:24,160 Speaker 5: why it's so good. 554 00:27:24,960 --> 00:27:25,239 Speaker 2: All right. 555 00:27:27,720 --> 00:27:30,640 Speaker 1: Last thing, Yeah, ABC News president Kime Godwin stepping down. 556 00:27:31,600 --> 00:27:33,359 Speaker 1: This was a big thing that came out Sunday night. 557 00:27:33,480 --> 00:27:36,200 Speaker 1: She sent an email out to staffers. She was named 558 00:27:36,200 --> 00:27:38,840 Speaker 1: president twenty twenty one. She worked for CBS before that. 559 00:27:39,680 --> 00:27:41,840 Speaker 1: They don't know who's going to take over from here on. 560 00:27:42,160 --> 00:27:44,640 Speaker 1: But it was a tough role, like it just said, 561 00:27:44,640 --> 00:27:47,320 Speaker 1: there was. It was a cutthroat, toxic work environment. That's 562 00:27:47,320 --> 00:27:50,560 Speaker 1: where people were saying, good morning America. Ratings kind of 563 00:27:50,600 --> 00:27:52,760 Speaker 1: went down a bit, but it's. 564 00:27:52,680 --> 00:27:53,960 Speaker 3: Tough, all right, ABC News. 565 00:27:54,000 --> 00:27:55,960 Speaker 2: I mean it's you know, you wonder where in the 566 00:27:56,040 --> 00:27:59,800 Speaker 2: world of streaming and cord cutting, and you know where 567 00:28:00,119 --> 00:28:04,159 Speaker 2: the investment in broadcast network you tell me, yeah, I 568 00:28:04,280 --> 00:28:06,159 Speaker 2: know it used to be Obviously, it used to be. 569 00:28:06,320 --> 00:28:08,760 Speaker 2: The real pride and joy of a network was your 570 00:28:08,800 --> 00:28:13,280 Speaker 2: news organization, whether it's CBS, ABC, at NBC. But now, 571 00:28:13,320 --> 00:28:16,160 Speaker 2: with you know, declining viewership due to cord cutting, what's 572 00:28:16,200 --> 00:28:18,440 Speaker 2: the investment that those businesses require? 573 00:28:18,800 --> 00:28:21,400 Speaker 3: You know, I don't know. And so that's interesting there, 574 00:28:21,600 --> 00:28:21,879 Speaker 3: and it's it. 575 00:28:21,920 --> 00:28:23,840 Speaker 1: They just did a lot of restructuring in February, so 576 00:28:23,920 --> 00:28:26,840 Speaker 1: it took a lot of away of her management type. 577 00:28:27,520 --> 00:28:30,040 Speaker 5: Okay, this is also very difficult because you need the 578 00:28:30,600 --> 00:28:32,440 Speaker 5: you need the day to day stuff to feed the 579 00:28:32,520 --> 00:28:35,760 Speaker 5: content to feed the beast for streaming and for digital, right, 580 00:28:36,160 --> 00:28:38,360 Speaker 5: but it can't just be that and you need so 581 00:28:38,960 --> 00:28:41,040 Speaker 5: what that balance is I don't I don't think anyone's 582 00:28:41,040 --> 00:28:41,560 Speaker 5: figured that out. 583 00:28:41,640 --> 00:28:44,760 Speaker 3: Podcasts, but now we're runing around. 584 00:28:45,040 --> 00:28:47,360 Speaker 5: Yeah, but then it's only podcast and something's got to give. 585 00:28:47,400 --> 00:28:50,040 Speaker 5: Everyone gets a podcast, you'll dilute it, I know, exactly. 586 00:28:50,200 --> 00:28:53,040 Speaker 2: All right, Lisa Miteo with the newspapers, thank you very much. 587 00:28:53,080 --> 00:28:56,360 Speaker 2: We appreciate that. This is the Bloomberg Surveillance podcast bringing 588 00:28:56,400 --> 00:28:59,480 Speaker 2: you the best in economics. Geopolitics, finance, and investment. You 589 00:28:59,520 --> 00:29:02,800 Speaker 2: can also watch the show live on YouTube. Visit the 590 00:29:02,800 --> 00:29:06,200 Speaker 2: Bloomberg Podcast channel on YouTube to see the show weekday 591 00:29:06,240 --> 00:29:08,960 Speaker 2: mornings from seven to ten Eastern from our global headquarters 592 00:29:09,000 --> 00:29:12,200 Speaker 2: in New York City. Subscribe to the podcast on Apple, Spotify, 593 00:29:12,400 --> 00:29:15,600 Speaker 2: or anywhere else you listen, and as always, on Bloomberg Radio, 594 00:29:15,680 --> 00:29:17,800 Speaker 2: the Bloomberg Terminal, and the Bloomberg Business app.