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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside

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Speaker 1: my co host Matt Miller.

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Speaker 2: Every business day, we bring you interviews from CEOs, market pros,

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Speaker 2: and Bloomberg experts, along with essential market moving news.

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Speaker 1: Find the Bloomberg Markets Podcast on Apple Podcasts or wherever

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Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast.

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Speaker 1: Right now, let's go to the banks. Alison Williams joins us,

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Speaker 1: Hermit Chan joins us as well. Alison covers the big banks,

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Speaker 1: Herman Chan the regional banks. We had some stress tests

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Speaker 1: and they do that for bloom Bloomberg Intelligence. Allison, let's

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Speaker 1: let's start with you. What did we learn from the

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Speaker 1: stress test results yesterday and what does it mean for

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Speaker 1: some of the big banks?

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Speaker 3: I mean, really, what we learned from these tests are

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Speaker 3: what the firm's capital requirements and their flexibility are for

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Speaker 3: the coming year and so these it's sort of interesting

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Speaker 3: because last year, based on the result, capital requirements went

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Speaker 3: up eighty two one hundred basis points for Bank America

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Speaker 3: JP Morgan City. That was very unexpected. They had to

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Speaker 3: manage their round sheet to get to those levels. And

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Speaker 3: this year we still started the reverse for JP, Morgan,

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Speaker 3: Bank America and Goldman Sacks. So really those three banks

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Speaker 3: the big winners, if you will, in terms of capital flexibility.

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Speaker 3: Their capital requirements are likely coming down of the three

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Speaker 3: when we take into account what's happening in early twenty

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Speaker 3: twenty four. Goldman looks best, but I think the best

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Speaker 3: news that we got was for JP, Morgan, Wells, Fargo,

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Speaker 3: Morgan Stanley also a little bit more flexible on capital.

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Speaker 4: Whereas City looks worse.

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Speaker 3: And the reason why I'm using the term capital flexibility

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Speaker 3: and not buybacks is because we still have two a

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Speaker 3: couple of things coming. So Basil three endgame is certainly

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Speaker 3: one of those, and we think that that as well

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Speaker 3: as the uncertainty the economy, which is the other factor,

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Speaker 3: is going to keep the banks a little bit conservative

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Speaker 3: on buybacks.

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Speaker 4: So they have the flexibility.

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Speaker 3: We're probably going to see some good deviden increase is

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Speaker 3: you know, for everyone except for perhaps City on Friday.

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Speaker 3: But the good news is it gives them a little

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Speaker 3: bit more flexibility.

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Speaker 5: Herman, I want to bring you into this conversation because

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Speaker 5: you particularly focused on the regional banks. What did you

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Speaker 5: take away from this?

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Speaker 6: That's right, So it's pretty much of a different story

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Speaker 6: than what Alison just articulated. The regionals are already pausing

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Speaker 6: buybacks because of expected tougher regulations on the regionals after

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Speaker 6: the fallout from the failures of SVB and Signature and

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Speaker 6: First Republic. So the banks are already not buying back

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Speaker 6: any stocks on the regional bank side, so they're already pausing.

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Speaker 6: So it's a bit of a different story. I would

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Speaker 6: say that in terms of the winners and losers for

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Speaker 6: the regionals, citizens looks a bit weaker and surprised with

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Speaker 6: weaker performance with the higher capital requirements, and M and

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Speaker 6: C would be on the positive side with a bit

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Speaker 6: better result versus the last year.

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Speaker 5: So do we have potentially tougher ahead when it comes

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Speaker 5: to the regionals.

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Speaker 7: That's right.

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Speaker 6: So you would expect higher capital requirements, you would expect

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Speaker 6: higher liquidier requirements, and so this is the stressed US

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Speaker 6: was really just the first step in a series of

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Speaker 6: tougher capital rules that are coming down the pike for

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Speaker 6: the regional So it's the outcome of the stressed US.

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Speaker 6: This year for the regions was less of a news story,

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Speaker 6: but more of the regions are already pulling back, and

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Speaker 6: this will just sort of reinforce that fact.

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Speaker 1: Allison. What's next for these big banks is they think

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Speaker 1: about their capital return strategies going forward. What do they

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Speaker 1: need to do and what can they do?

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Speaker 3: So I guess, you know, sort of the next event

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Speaker 3: will be Friday when some of the banks do announced

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Speaker 3: dividend increases. As I said, probably will still conservative on

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Speaker 3: buybacks because the next thing, from a regulatory point of

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Speaker 3: view is Buzzle three endgame. This is something we've been

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Speaker 3: waiting for. We think it probably could come any time now.

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Speaker 3: There's been various reports and actually in some testimony of

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Speaker 3: how did confirm that the endgame could potentially raise capital

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Speaker 3: requirements by twenty percent for these banks. And so keep

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Speaker 3: in mind that this the changes will take place over

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Speaker 3: they'll be faced in over time. The banks have again

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Speaker 3: bigger capital cushions for everybody except for a city.

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Speaker 4: Based on the numbers today and.

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Speaker 3: With earnings, it's completely manageable.

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Speaker 1: Up in here. I mean it just haven't they Aren't

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Speaker 1: they over regulated? Aren't they over capitalized? If I'm Jamie Diamond,

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Speaker 1: don't just push back and say, all right, great financial

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Speaker 1: crisis was a long time ago. Guys, We're much better positioned.

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Speaker 3: Just stop, I think Jamie, I mean, he has definitely

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Speaker 3: been pushing back, and I think you know, one of

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Speaker 3: the things he brought up an Investor Day is something

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Speaker 3: I alluded to earlier. Capital requirement is something so critical

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Speaker 3: for the banks, and yet it's changing every year. So

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Speaker 3: imagine running your business with with sort of a key

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Speaker 3: metric of health changing every year. You know, one year

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Speaker 3: it's up one hundred basis points, it's down one hundred

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Speaker 3: basis points.

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Speaker 4: That shows that that the stress test is sort of flawed.

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Speaker 3: And then you know several other things that people are

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Speaker 3: pointing out in terms of you know, what the test

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Speaker 3: measures and what actually happened in March, what the real

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Speaker 3: results are. So really the test has only come to

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Speaker 3: mean you know, what's the requirement year to year for

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Speaker 3: the banks, and you know, maybe there is a better

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Speaker 3: way to have sort of a permanent hurdle. And to

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Speaker 3: your point, Jamie pushes pushes back on some of the regulation.

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Speaker 4: It's just can we have clarity and consistency?

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Speaker 7: All right?

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Speaker 1: Alison Herman chan Allison Williams, both from Bloomberg Intelligence, giving

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Speaker 1: us some a few minutes of their time on this

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Speaker 1: important time for the banks, whether the stress test. We

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Speaker 1: think forgetting a few minutes for you folks.

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Speaker 8: You're listening to the tape. Can's our live program, Bloomberg

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Speaker 8: Markets weekdays at ten am Eastern on Bloomberg dot Com,

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Speaker 8: on demand wherever you get your podcasts.

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Speaker 5: Jess Mitten and Paul Sweeney Here in the Interactive Broker Studio,

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Speaker 5: I want to get straight to our next guest, Jackie Bow,

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Speaker 5: who's managing partner at Chatham Financial, joining us on Zoom. Jackie,

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Speaker 5: I want to pick your brain about We've obviously had

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Speaker 5: a ton of central bankers speaking this week, but we've

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Speaker 5: seen continued divergence when we're looking at the inflation numbers.

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Speaker 5: When we're looking at the US versus say, what's been

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Speaker 5: happening in the UK? Why is there such a stark

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Speaker 5: difference there?

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Speaker 9: Hi, very good morning. As I think in the UK

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Speaker 9: there certainly seems to be an issue with a bit

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Speaker 9: more persistent inflation than we've seen in the US, and

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Speaker 9: parts of the reason for that is we are nice

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Speaker 9: seeing here in the UK evidence of what we call

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Speaker 9: a price wage spiral, where those higher inflation numbers that

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Speaker 9: we've seen all year are becoming firmly embedded into wages.

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Speaker 9: And the data that we had last week in the

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Speaker 9: UK and confirmed that, you know, with the service sectored

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Speaker 9: inflation in particular, which is much more related to the

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Speaker 9: cost of labor, really pushing up the overall inflation numbers.

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Speaker 9: So the expectation that inflation would start to come down

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Speaker 9: this year that's where Central Bank was forecasting, now looks

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Speaker 9: to be overly optimistic.

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Speaker 1: All right, So we actually had I'm just looking at

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Speaker 1: some of the some of your notes here. The core

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Speaker 1: inflation rose from six point eight percent in April to

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Speaker 1: seven point one percent in May. That's the highest level

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Speaker 1: since nineteen ninety two. What's really driving it for our

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Speaker 1: good friends.

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Speaker 9: In the UK, Well, I think what the headlines would

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Speaker 9: would direct he too, is actually what we're seeing in

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Speaker 9: terms of food price inflation. But I think that's a

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Speaker 9: bit of a diversion because in fact food, well it's

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Speaker 9: food and non alcoholic beverages is the category within the

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Speaker 9: index only really makes up about twelve percent of the basket.

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Speaker 9: So again that's where all the headline is coming from.

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Speaker 9: Food inflation in the UK is high. It's like eighteen percent,

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Speaker 9: but that isn't really what's driving it. As I say,

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Speaker 9: it's much more becoming embedded through the wages. And if

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Speaker 9: you look at where average earnings have been going on

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Speaker 9: the wages cycle, that's where we're seeing the more persistent

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Speaker 9: impact of inflation.

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Speaker 5: So Jackie, does this mean we could actually see even

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Speaker 5: higher rates when we're looking at the UK versus other

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Speaker 5: major central banks across the world.

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Speaker 9: Yeah, for sure. And I think you know the Bank

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Speaker 9: of England mood fifty basis points last week, and right

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Speaker 9: up until probably two days before the meeting, there was

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Speaker 9: an expectation they would raise twenty five and then we

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Speaker 9: head back to back that wage data and then ultimately

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Speaker 9: that CPI data that you referred to, and they decided

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Speaker 9: to move fifty and they certainly have got room to go.

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Speaker 9: The market is looking at rates in the UK, you know,

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Speaker 9: above six percent, maybe even up to six twenty five,

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Speaker 9: and as the Bank of England continue to change when

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Speaker 9: we are expecting to get inflation back to targets so

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Speaker 9: back to that two percent, the market is becoming less

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Speaker 9: convinced that the Bank of England's industry increases or having

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Speaker 9: the effect that they need to have on inflation.

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Speaker 1: So is there any evidence, Jackie, is there any talk

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Speaker 1: within the City of London that maybe Brexit is having

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Speaker 1: some impact here on the UK economy that may be

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Speaker 1: exacerbating some of the challenges.

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Speaker 9: Again, some of the headlines might direct you towards that

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Speaker 9: as a reason, but when you dig into the data

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Speaker 9: in a bit more detailed, there's really little evidence of that.

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Speaker 9: The increased costs at the border, shall we say, is

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Speaker 9: adding a small amount to UK goods, both intermedia and

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Speaker 9: final goods, but in the grand scheme of where those

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Speaker 9: inflation numbers are, it's actually quite minuscule.

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Speaker 5: One thing I've been curious about, whether we're talking about

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Speaker 5: the Bank of England or the Federal Reserve, is when

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Speaker 5: we're looking at these terminal rates, is there a particular

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Speaker 5: level where it would get to to where it could

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Speaker 5: potentially break the economy lead to a recession or is

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Speaker 5: it a particular threshold of leaving it at a particular

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Speaker 5: terminal rate for a significant amount of time. That could

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Speaker 5: then turn that issue to what could that mean for

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Speaker 5: global growth and that particular economy in that point.

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Speaker 9: Yeah, and that's an interesting question because I think the

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Speaker 9: impact of the higher interest rates across those different markets.

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Speaker 9: Is the mechanism by which they feed through to the

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Speaker 9: real economy is very different, and part of that is

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Speaker 9: the complete structured differences in our mortgage market. So here

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Speaker 9: in the UK we basically have what I call an

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Speaker 9: adjustable rate mortgage markets, in that people either choose variable

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Speaker 9: rates or they choose fixed strates, but for very short

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Speaker 9: periods of time, so maybe three, four or five years.

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Speaker 9: So as those in rates increase, you have this kind

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Speaker 9: of lag effect as households have to refinance their mortgages

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Speaker 9: at much higher rates. And that's when you start to

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Speaker 9: really get the tightening in terms of consumer budgets and

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Speaker 9: discretionary spend every month. And we haven't seen that yet,

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Speaker 9: so you know, there's still consumer confidence is still quite high,

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Speaker 9: and that's partly related to the strength of the labor market.

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Speaker 9: But as those interest rate increases start to really feed

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Speaker 9: through into the mortgage market and consumer spending through the

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Speaker 9: end of twenty twenty three, then I think the risk

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Speaker 9: of recession becomes very real for the UK.

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Speaker 1: All right, Jackie, let's jump across the English Channel get

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Speaker 1: onto the continent here. What did you hear from ECB

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Speaker 1: Central Banker Christine Legard from Portugal this week stand it

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Speaker 1: again pretty adamant that there's more work to do there.

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Speaker 9: Yeah, I mean, the ECB have absolutely left the door

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Speaker 9: wide open for further rate increases. In fact, their guidance,

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Speaker 9: I believe has been pretty clear, and part of the

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Speaker 9: question about the credibility of central banks and whether the

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Speaker 9: markets believe them is really around that guidance that they give.

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Speaker 9: So the ECB certainly have more room to go in

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Speaker 9: terms of rate increases. Back to your earlier points, where

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Speaker 9: that terminal rate peaks out currently looks to be quite

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Speaker 9: substantially below where the UK rates will be. You know,

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Speaker 9: if you think again, if you go back to that

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Speaker 9: six to six twenty five, for the UK euro rates

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Speaker 9: are not expected to really go above four percent.

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Speaker 5: So can the US economy remain more insulated from what

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Speaker 5: we're seeing with these other inflationary factors when we're looking

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Speaker 5: beyond the pond? Or is the global economy just so

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Speaker 5: interconnected that eventually that could also potentially hurt the US?

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Speaker 9: Yeah, I mean, the comments I was making about the

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Speaker 9: structure of the mortgage market is quite imported, and obviously

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Speaker 9: the US being you know that the agency has been

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Speaker 9: such a big part of the mortgage market with people

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Speaker 9: taking very long dated fixed strates, that doesn't impact consumer

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Speaker 9: spending quite so much. And you know, we've seen inflation

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Speaker 9: in the US literally ticked down every single month as

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Speaker 9: you you know, you start, it's been very stark that

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Speaker 9: the difference between the US and other markets.

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Speaker 4: I think for the.

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Speaker 9: US in terms of growth and potential risks to the

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Speaker 9: growth in the future maybe comes down to a bit

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Speaker 9: more about those sort of global relations with China. You know,

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Speaker 9: the supply chain that comes from China globally is still

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Speaker 9: huge in terms of intermedia and final goods, and if

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Speaker 9: those relationships continue to deteriorate and that those products that

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Speaker 9: come out into the global market are cut off for

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Speaker 9: whatever reason, then you will see issues across global growth

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Speaker 9: in the US will suffer from that too.

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Speaker 7: All right.

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Speaker 1: You put all that together, Jackie, and your responsibility is

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Speaker 1: you're Middle East in Africa. Where are you suggesting or

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Speaker 1: some of the more attractive opportunities here.

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Speaker 9: So I think there's still a price adjustment process happening

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Speaker 9: across both the public markets as well as the private

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Speaker 9: real asset markets, which is where I'm focused. So a

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Speaker 9: lot of the work we do is within commercial, real estate,

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Speaker 9: private equity, and it still feels that it we're in

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Speaker 9: a risk off situation that there's not a lot of

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Speaker 9: not a lot of excitement for new investments, and I

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Speaker 9: think that will continue through twenty twenty three. So in

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Speaker 9: a risk off situation, of course, that's more positive for

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Speaker 9: risk free assets and public bond markets. I do think

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Speaker 9: there are some glimmers within other markets where it looks

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Speaker 9: like assets are getting undervalued because there's this more sort

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Speaker 9: of gloomy outlook, and it might be a case of

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Speaker 9: just trying to pick through that debris to find the

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Speaker 9: ones that have been unfairly punished. But I think in

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Speaker 9: general it will continue to be a risk of few

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Speaker 9: for the rest of this year.

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Speaker 5: All Right, Jackie Bowie, thank you so much for joining

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Speaker 5: us managing partner at chatt and Financial. Bringing it down, Paul,

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Speaker 5: As you know, we've gotten so many updates this week

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Speaker 5: from these central bankers when we're talking about the Bank

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Speaker 5: of England to the Federal Reserve, obviously the Bank of

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Speaker 5: Japan as well, So it's going to be really interesting

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Speaker 5: because we were just talking about that update to the

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Speaker 5: first quarter GDP numbers.

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Speaker 8: You're listening to the tape. Can's our live program Bloomberg

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Speaker 8: Markets weekdays at ten am Eastern on Bloomberg Radio, the

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Speaker 8: tune in app, Bloomberg dot Com, and.

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Speaker 8: flagship New York station. Just say Alexa play Bloomberg eleven thirty.

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Speaker 1: All right, to our next guest, Chris Whalen. He's a

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Speaker 1: chairman of Whalen Global Advisors. Chris, You've had a lot

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Speaker 1: of experience on the street, worked all over the street.

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Speaker 1: You've been, you know, just kind of out there and

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Speaker 1: with some really strong opinions. I'd love to get your

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Speaker 1: thoughts just kind of what we heard from the central

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Speaker 1: bankers this week. It was a week of just central

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Speaker 1: bankers speak. We had a big conference over in Portugal

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Speaker 1: with the some of the big central bankers here. What's

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Speaker 1: your takeaway what we're hearing from again the central bankers

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Speaker 1: around the world.

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Speaker 10: Well, I think two things they're trying to get back

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Speaker 10: on message. The message was central bankers are managing the

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Speaker 10: process well and they are hoping and I mean hoping

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Speaker 10: that another event does not occur that shakes confidence, because

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Speaker 10: that's really what they're about, that's their stock in trade,

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Speaker 10: is keeping the public confident that there is a hand

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Speaker 10: on the tiller and that we are going in the

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Speaker 10: right direction. So I think, you know, for all of them,

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Speaker 10: the tough part is there's so much to your conversation

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Speaker 10: right liquidity in the system, that the economies aren't really

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Speaker 10: slowing down. I mean, look at housing. We're at seven

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Speaker 10: percent mortgages and we're still right mortgages mostly purchased. But

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Speaker 10: that's okay. You know the world has not ended.

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Speaker 5: So then how are you advising your clients to position?

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Speaker 10: Well, honestly, I think we are seeing the end of

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Speaker 10: the rate increased trade. It's very hard for the FED

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Speaker 10: to get rates to go much higher if they're not

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Speaker 10: going to sell bonds. It's just technically impossible. So I

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Speaker 10: think they are trying to convince everybody that they can

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Speaker 10: still raise rates further to address inflation. But I think

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Speaker 10: the inflation is largely from non monetary factors. I mean,

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Speaker 10: other than the metic cash they dumped into the system,

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Speaker 10: which is an issue. And you see the FED being

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Speaker 10: criticized by the BIS by a number of people in

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Speaker 10: Europe for going big because that's the issue. How do

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Speaker 10: you control inflation when you still have trillions of dollars

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Speaker 10: in pent up demand and also the cash to meet

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Speaker 10: that demand. That, to me is the issue. You don't

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Speaker 10: hear people talking about it. Also, a lot of the

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Speaker 10: cash slashing around the system is just refinancing of existing debt.

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Speaker 10: It does not necessarily drive growth and employment.

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Speaker 1: Hey, Chris, you know after the year we all had

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Speaker 1: in twenty twenty two where there was just no place

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Speaker 1: to hide equities fixed in time, you got crush kind

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Speaker 1: of no matter where you were. I can sit into

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Speaker 1: your treasury note here four point eighty five percent. Why

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Speaker 1: don't I just do that? There's no shame in doing that.

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Speaker 1: I can go to the beach play off. What's wrong

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Speaker 1: with that?

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Speaker 5: No?

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Speaker 10: And I did that myself. I took a huge gain

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Speaker 10: in video I had gotten in, you know, when it

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Speaker 10: was down hundreds of dollars, and I stepped out just

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Speaker 10: below four hundred. I had to. It was too big

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Speaker 10: in my portfolio. And I still have some exposure. But

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Speaker 10: it's a gift. The Fed has given people gifts through

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Speaker 10: monetary policy. And to me, you know, to your question

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Speaker 10: about what I tell my clients, I'm getting ready to

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Speaker 10: shift to the long duration trade last couple of years.

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Speaker 10: Who made the money people that were short duration, people

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Speaker 10: who bought mortgage servicing, for example. But I think it's

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Speaker 10: time to be selling those assets.

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Speaker 5: I really do longer duration. What about tech gross stocks, Well,

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Speaker 5: I don't know.

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Speaker 10: Should I step back into Nvidio for you?

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Speaker 7: You know?

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Speaker 10: And I love that stock, don't get me wrong, But

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Speaker 10: I think as a trader, and it's an investor when

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Speaker 10: you're staring at one hundred and sixty percent game to

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Speaker 10: your point, right, and I dumped it into T bills.

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Speaker 10: I own a lot of bank preferms. I am buying

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Speaker 10: at bs now because when rates fall, if you buy

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Speaker 10: a ginmy may at seventy five and you start getting

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Speaker 10: pre payments at par, that's a beautiful thing, you know.

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Speaker 10: So there are some trades out there that I think

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Speaker 10: are staring us in the face. But to your earlier

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Speaker 10: point about risk in twenty twenty two being a difficult year, yes,

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Speaker 10: it was a difficult year because people are so focused

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Speaker 10: on short term and they're not looking at the big picture.

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Speaker 10: They're not saying where should we be next? So let

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Speaker 10: me give you an example. People are getting ready for

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Speaker 10: the non performing loan trade again, both in commercial and residential.

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Speaker 10: But there's some other interesting things going on in the

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Speaker 10: background that I think are very interesting for investors. My

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Speaker 10: clients are institutional. I talked to banks, I talked to

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Speaker 10: mortgage issuers and reads. So that's my work, and what

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Speaker 10: I'm telling them is it's time to position for falling rates,

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Speaker 10: higher volumes, but also you know, to be careful of

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Speaker 10: things like mortgage servicing. It six times annual cash flow,

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Speaker 10: that's a little high. Those assets are more like four. Okay,

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Speaker 10: So the Fed has ejected a lot of fluff into

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Speaker 10: these markets. JP at one and a half times book,

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Speaker 10: is that at a distressed price? No, of course not.

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Speaker 10: We just did a piece on Comerica's nothing wrong with

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Speaker 10: this bank except for j. Powell. That's the only problem

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Speaker 10: with co America, you know, And you have this market

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Speaker 10: that's a washing debt. Janet Yellen, we really I think

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Speaker 10: in strange times, it's like we wound the clock back

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Speaker 10: one hundred years and it's nineteen twenty three and we're

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Speaker 10: going through the deflation of the Underworld War One and

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Speaker 10: all sorts of speculative craziness around the country.

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Speaker 5: As we just got off of the bank stress test results.

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Speaker 5: Back in March, we were talking about how New York

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Speaker 5: Community Bank was a great stock to own. Do you

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Speaker 5: still feel that way?

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Speaker 10: Oh yeah, I've been buying more.

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Speaker 7: Yeah.

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Speaker 10: Baby, it's a great story.

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Speaker 7: You know.

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Speaker 10: It was a sleepy New York bank that was mostly

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Speaker 10: focused on multi family, not particularly well managed in a

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Speaker 10: sense of taking advantage of those branches in the relationship

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Speaker 10: that they had with their customers. Then they buy flag Star,

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Speaker 10: so they get back in the mortgage in a big way,

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Speaker 10: and they're now a national service er with enormous liquidity.

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Speaker 10: And then they buy the deposits and a lot of

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Speaker 10: assets from Signature Bank. I think it's a great story.

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Speaker 10: I think it's one of the strongest regional banks in

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Speaker 10: the US today.

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Speaker 1: And what did you take away from the stress tests?

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Speaker 1: I mean, are these Are you depending that the banks

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Speaker 1: have enough regulation they don't need any more, or how

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Speaker 1: do you think about that?

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Speaker 10: We need people who think about market risk instead of

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Speaker 10: capital and credit risk. If you look at credit today,

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Speaker 10: US consumers are pristine. There's no problem in housing when

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Speaker 10: it comes to residential commercial. Yes, this is commercial's time.

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Speaker 10: Think of it that way. We're going to have lots

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Speaker 10: of fun with commercial. But overall, what do we have

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Speaker 10: to worry about. We have to worry about banks managing

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Speaker 10: market risk and liquidity risk. It's not about capital. While

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Speaker 10: i'm mister Bard, I think he does a great job,

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Speaker 10: he's still fighting the last one. We have to orient

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Speaker 10: regulators on managing risk that's largely caused by central banks.

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Speaker 10: And because they're dealing with very large numbers, banks get

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Speaker 10: swamped and you could see some reeds tip over too.

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Speaker 10: It's a tough time right now with leverage findings. All

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Speaker 10: of them are hurting because of spreads and wire spreads

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Speaker 10: so messed up because the FED bought nine trillion dollars

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Speaker 10: for those securities. Okay, just look at the old curve.

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Speaker 10: I drew a little picture with SOMA and I put

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Speaker 10: it on top of my Bloomberg chart, and that kind

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Speaker 10: of makes the point that, you know, maybe we'll use

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Speaker 10: visualizations to communicate with people in Washington. But I worry

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Speaker 10: about the Fed. We have all these brilliant people with

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Speaker 10: PhDs and economics and they don't understand bondmath. They think, oh,

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Speaker 10: we could raise you know, FED funds another hundred bases points. No, No,

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Speaker 10: we gotta have a new approach. I think and to me,

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Speaker 10: what do you do? You make people think about duration,

440
00:24:04,480 --> 00:24:08,919
Speaker 10: You make bank management think about duration and articulate what

441
00:24:09,000 --> 00:24:12,679
Speaker 10: their strategy is every month. Okay, and then you use

442
00:24:12,760 --> 00:24:15,439
Speaker 10: the public data. And when you see somebody with fifteen

443
00:24:15,520 --> 00:24:19,280
Speaker 10: percent of assets and mortgage packs right well, America, you

444
00:24:19,320 --> 00:24:21,520
Speaker 10: know you have a problem. We've got to look at

445
00:24:21,520 --> 00:24:22,200
Speaker 10: the data.

446
00:24:22,320 --> 00:24:26,480
Speaker 5: Right definitely is right there, right well. Chris Whalen, thank

447
00:24:26,520 --> 00:24:30,760
Speaker 5: you so much for joining us, Chairman of Whalen Global Advisors,

448
00:24:30,800 --> 00:24:33,359
Speaker 5: walking us through some of these bank calls. Paul, very

449
00:24:33,359 --> 00:24:35,040
Speaker 5: important and once again looking at the S and P

450
00:24:35,160 --> 00:24:38,679
Speaker 5: five hundred financials leading the way this morning up more

451
00:24:38,760 --> 00:24:41,320
Speaker 5: than one percent, so keeping a close eye on that

452
00:24:41,400 --> 00:24:44,120
Speaker 5: and obviously those stress tests for the banks coming in

453
00:24:44,440 --> 00:24:45,680
Speaker 5: better than expected.

454
00:24:47,320 --> 00:24:50,720
Speaker 8: You're listening to the Team Ken's our line program, Bloomberg

455
00:24:50,760 --> 00:24:54,159
Speaker 8: Markets weekdays at ten am Eastern on Bloomberg dot Com,

456
00:24:54,200 --> 00:24:57,359
Speaker 8: the iHeartRadio app and the Bloomberg Business app, or listen

457
00:24:57,440 --> 00:24:59,480
Speaker 8: on demand wherever you get your podcast.

458
00:25:01,119 --> 00:25:04,480
Speaker 5: Jessminton, Paul Sweene here in the Interactive Brokers studio, and

459
00:25:04,520 --> 00:25:07,280
Speaker 5: I'm excited because our next guest, Paul is in studio

460
00:25:07,640 --> 00:25:11,320
Speaker 5: with us, speaking with Robert Teeter, head of investment policy

461
00:25:11,359 --> 00:25:15,840
Speaker 5: and Strategy at Silvercrest's asset Management. And I know, Robert,

462
00:25:15,880 --> 00:25:18,760
Speaker 5: you've been focusing a lot, obviously on what's been happening

463
00:25:18,800 --> 00:25:21,399
Speaker 5: with the Central bank speak this week, but also the

464
00:25:21,440 --> 00:25:24,199
Speaker 5: headwinds that rates have been facing on some of this commentary.

465
00:25:24,440 --> 00:25:26,919
Speaker 5: What's your take from what we heard from these major

466
00:25:27,480 --> 00:25:29,680
Speaker 5: when you're thinking about Pale to Christine.

467
00:25:29,359 --> 00:25:32,199
Speaker 11: Legard, Yes, I think while we got the pause and

468
00:25:32,280 --> 00:25:34,160
Speaker 11: rates that folks were looking for, we've had a lot

469
00:25:34,160 --> 00:25:36,600
Speaker 11: of pushback from the Fed in terms of hawkish commentary,

470
00:25:36,600 --> 00:25:38,200
Speaker 11: and some of that came through in the past couple

471
00:25:38,200 --> 00:25:40,440
Speaker 11: of days, and for me, it raises the question again

472
00:25:40,520 --> 00:25:43,200
Speaker 11: of is the FED targeting inflation or are they targeting

473
00:25:43,240 --> 00:25:45,960
Speaker 11: the economy? And so I think they've moved back into

474
00:25:45,960 --> 00:25:48,480
Speaker 11: that mode of perhaps talking about targeting the economy a

475
00:25:48,520 --> 00:25:50,840
Speaker 11: little bit and wanting to see some slow down there

476
00:25:50,880 --> 00:25:51,800
Speaker 11: before they ease up.

477
00:25:52,240 --> 00:25:54,639
Speaker 1: We get some good economic data today, I mean, the

478
00:25:54,640 --> 00:25:56,919
Speaker 1: economy is in pretty good shape. If I'm the Federal Reserve,

479
00:25:57,440 --> 00:25:59,800
Speaker 1: I can talk tough here like I have been talking tough.

480
00:26:00,240 --> 00:26:02,480
Speaker 11: Yes, I think that's spot on, and that's the way

481
00:26:02,480 --> 00:26:03,320
Speaker 11: I've been interpreting it.

482
00:26:03,359 --> 00:26:03,640
Speaker 10: As well.

483
00:26:03,640 --> 00:26:05,800
Speaker 11: They've had a license to talk tough if you will.

484
00:26:05,840 --> 00:26:07,920
Speaker 11: They've been able to do that. They haven't caused a

485
00:26:07,960 --> 00:26:10,480
Speaker 11: problem in the economy, and the tug of war continues.

486
00:26:10,520 --> 00:26:12,800
Speaker 11: You know, inflation's been falling quite a bit, but the

487
00:26:12,840 --> 00:26:15,080
Speaker 11: Fed's been able to keep up these increases in hawkish

488
00:26:15,160 --> 00:26:17,520
Speaker 11: talk and put the pressure on killing inflation for the

489
00:26:17,560 --> 00:26:18,359
Speaker 11: long term.

490
00:26:18,160 --> 00:26:22,240
Speaker 5: As the Federal Reserve in Droom Pale not gotten enough

491
00:26:22,320 --> 00:26:24,560
Speaker 5: credit for what they've been able to engineer over the

492
00:26:24,560 --> 00:26:27,800
Speaker 5: past year, especially obviously CPI is the Fed's preferred gauge.

493
00:26:27,800 --> 00:26:29,760
Speaker 5: But when you think of June of last year, CPI

494
00:26:29,800 --> 00:26:32,439
Speaker 5: at nine point one percent, now you're looking at what

495
00:26:32,480 --> 00:26:35,760
Speaker 5: would be around four percent for that and obviously the

496
00:26:35,800 --> 00:26:38,400
Speaker 5: trajectory of the stock market since last October.

497
00:26:38,760 --> 00:26:40,720
Speaker 11: I think that's a very fair point. I think because

498
00:26:40,720 --> 00:26:42,240
Speaker 11: the Fed got off to a bit of a rocky

499
00:26:42,280 --> 00:26:45,159
Speaker 11: start with the Great Hike cycle, a lot of folks

500
00:26:45,200 --> 00:26:47,520
Speaker 11: not knock them down a bit in terms of credibility,

501
00:26:47,520 --> 00:26:49,639
Speaker 11: but they've built that up a lot, and in my opinion,

502
00:26:49,680 --> 00:26:51,880
Speaker 11: the Fed's earned a lot of credibility here with inflation

503
00:26:52,000 --> 00:26:54,320
Speaker 11: coming down a lot, for a lot of the reasons

504
00:26:54,320 --> 00:26:57,040
Speaker 11: that they've mentioned as well as remaining tough and resolute

505
00:26:57,040 --> 00:26:59,080
Speaker 11: in their fight on inflation, and so they've been able

506
00:26:59,119 --> 00:27:01,560
Speaker 11: to do that without killing the economy. I think they

507
00:27:01,600 --> 00:27:04,080
Speaker 11: deserve a lot of credit for that. I also think

508
00:27:04,080 --> 00:27:05,920
Speaker 11: it builds in a lot of flexibility for the FED

509
00:27:06,000 --> 00:27:08,640
Speaker 11: because the economy is okay, and because inflation has come

510
00:27:08,680 --> 00:27:11,439
Speaker 11: down pretty clearly. Should they need to, they do have

511
00:27:11,480 --> 00:27:13,880
Speaker 11: the flexibility to pause for an extended time or even

512
00:27:13,960 --> 00:27:15,200
Speaker 11: cut if that need emerges.

513
00:27:16,359 --> 00:27:18,639
Speaker 1: Earnings, I think earning still matter. I'm part of the

514
00:27:18,680 --> 00:27:20,639
Speaker 1: old school here. I know it's not just the FED here.

515
00:27:20,680 --> 00:27:22,760
Speaker 1: We're gonna have earning kicking off in a couple of weeks.

516
00:27:22,760 --> 00:27:22,960
Speaker 10: Here.

517
00:27:24,000 --> 00:27:26,200
Speaker 1: A couple questions here, One, what are you looking for?

518
00:27:26,520 --> 00:27:29,200
Speaker 1: And two how much earnings risk, if any, is there

519
00:27:29,240 --> 00:27:30,679
Speaker 1: still in this market? Do you think so?

520
00:27:31,080 --> 00:27:33,280
Speaker 11: I'm looking forward to earnings because I think it may

521
00:27:33,320 --> 00:27:35,440
Speaker 11: give us a little bit of a tailwind here. We've

522
00:27:35,520 --> 00:27:38,720
Speaker 11: seen earnings estimates stabilized, tick up even just a little bit,

523
00:27:39,320 --> 00:27:42,000
Speaker 11: because we've had the economy coming in stronger than expected.

524
00:27:42,000 --> 00:27:44,800
Speaker 11: The data today shows that as well. The revenue side

525
00:27:44,800 --> 00:27:46,960
Speaker 11: of the equation for companies is probably a bit better

526
00:27:47,000 --> 00:27:49,919
Speaker 11: than had been forecast in those expectations, and on the

527
00:27:49,960 --> 00:27:53,760
Speaker 11: same time, you have an environment where cost controls have

528
00:27:53,880 --> 00:27:56,840
Speaker 11: been implemented. So companies have been fearful of recession for

529
00:27:56,880 --> 00:27:59,040
Speaker 11: a while and have been very cautious on the cost side.

530
00:27:59,080 --> 00:28:01,879
Speaker 11: So I don't want to sam overly optimistic on earning season,

531
00:28:01,880 --> 00:28:03,040
Speaker 11: but I do think it could give us a bit

532
00:28:03,080 --> 00:28:04,479
Speaker 11: of a boost. I'm looking forward to it.

533
00:28:04,720 --> 00:28:07,359
Speaker 5: I was speaking with Marion Bartel's who's the chief investment

534
00:28:07,400 --> 00:28:09,720
Speaker 5: strategist over at Sanctuary Wealth, and she was talking about

535
00:28:09,720 --> 00:28:14,159
Speaker 5: how typically when CEOs start getting very loud about their concerns,

536
00:28:14,240 --> 00:28:16,960
Speaker 5: that's when it should raise some alarm bells. It seems

537
00:28:17,000 --> 00:28:19,280
Speaker 5: like so far, when you're thinking kind of on a

538
00:28:19,320 --> 00:28:23,000
Speaker 5: company by company basis on aggregate, it doesn't seem like

539
00:28:23,000 --> 00:28:25,000
Speaker 5: we're at that point yet. So would that be more

540
00:28:25,040 --> 00:28:28,479
Speaker 5: of an optimistic sign going into this earning season Obviously

541
00:28:28,480 --> 00:28:30,480
Speaker 5: how that ties into the trajectory of the economy.

542
00:28:30,600 --> 00:28:31,640
Speaker 1: Yeah, it's a good observation.

543
00:28:31,760 --> 00:28:34,840
Speaker 11: We've certainly had these rolling fears of recession for some time,

544
00:28:34,920 --> 00:28:36,800
Speaker 11: so dating back to the beginning of last year when

545
00:28:36,800 --> 00:28:39,640
Speaker 11: we had slightly negative economic growth for two quarters, so

546
00:28:39,720 --> 00:28:42,680
Speaker 11: people have been preparing for this recession for quite a while,

547
00:28:42,720 --> 00:28:44,560
Speaker 11: and it hasn't been there, and so I just keep

548
00:28:44,600 --> 00:28:47,120
Speaker 11: looking through the underlying data, both real time and estimates

549
00:28:47,160 --> 00:28:49,800
Speaker 11: on the economy, and it shows to me that we

550
00:28:49,840 --> 00:28:52,320
Speaker 11: still have slightly positive economic growth. So I think that

551
00:28:52,320 --> 00:28:54,560
Speaker 11: bodes well for the revenue side on earning and.

552
00:28:54,520 --> 00:28:58,240
Speaker 5: Also the consumer obviously being more than two thirds of GDP.

553
00:28:58,400 --> 00:29:01,760
Speaker 5: We saw those upward revisions being partly not just exports,

554
00:29:01,800 --> 00:29:04,640
Speaker 5: but also by the consumer. So when you're thinking about

555
00:29:04,640 --> 00:29:08,320
Speaker 5: different sectors when we're looking at an earnings perspective, especially

556
00:29:08,320 --> 00:29:10,880
Speaker 5: just Bloomberg Intelligence marking up those results, when we're looking

557
00:29:10,880 --> 00:29:13,360
Speaker 5: at discretionary which obviously a lot of pressure it was

558
00:29:13,440 --> 00:29:16,920
Speaker 5: under last year, as well as some aspects of staples

559
00:29:16,960 --> 00:29:20,240
Speaker 5: not necessarily packaged good companies. Obviously General Mills was warning

560
00:29:20,240 --> 00:29:22,600
Speaker 5: on this, But what's kind of your thought as far

561
00:29:22,640 --> 00:29:26,040
Speaker 5: as some of these more consumer oriented type companies when

562
00:29:26,040 --> 00:29:28,600
Speaker 5: you are having some of them like General Mills saying

563
00:29:28,840 --> 00:29:31,400
Speaker 5: we don't think we can continue to pass on these

564
00:29:31,440 --> 00:29:32,920
Speaker 5: costs to consumers right now.

565
00:29:33,160 --> 00:29:35,600
Speaker 11: Right It's a super interesting environment there. And one of

566
00:29:35,640 --> 00:29:37,600
Speaker 11: the things that I've been optimistic on has been on

567
00:29:37,680 --> 00:29:40,760
Speaker 11: the theme of following the consumer and following the revenue,

568
00:29:40,800 --> 00:29:43,200
Speaker 11: and so from a sector basis, I do think most

569
00:29:43,200 --> 00:29:46,960
Speaker 11: parts of consumer look pretty encouraging here. Similarly, in industrials,

570
00:29:46,960 --> 00:29:49,440
Speaker 11: I think you have some strength from reshoring and manufacturing

571
00:29:49,440 --> 00:29:51,840
Speaker 11: build that's been going on, and there's certainly a technology

572
00:29:51,920 --> 00:29:54,200
Speaker 11: upgrade cycle. So you put those three sectors together and

573
00:29:54,240 --> 00:29:57,520
Speaker 11: they all have some tailwinds in terms of revenue opportunity.

574
00:29:57,800 --> 00:30:00,280
Speaker 11: I do think the interesting dynamic with companies is been

575
00:30:00,520 --> 00:30:03,520
Speaker 11: at a company level, how they're managing through those situations.

576
00:30:03,560 --> 00:30:07,680
Speaker 11: So we had people fearful of inflation causing profit margin collapse.

577
00:30:07,680 --> 00:30:10,560
Speaker 11: We now have people fearful of inflation coming down causing

578
00:30:10,600 --> 00:30:13,400
Speaker 11: profit margin collapse. But companies buy and large have been

579
00:30:13,520 --> 00:30:15,760
Speaker 11: very dynamic in their responses and done a great job

580
00:30:15,800 --> 00:30:18,880
Speaker 11: in terms of managing through a really rapidly changing cycle

581
00:30:18,880 --> 00:30:22,120
Speaker 11: in terms of both prices and their inputs. So I

582
00:30:22,120 --> 00:30:25,000
Speaker 11: think I'm pretty optimistic in terms of how margins hold

583
00:30:25,000 --> 00:30:26,800
Speaker 11: together here. Companies have done a pretty good job.

584
00:30:27,200 --> 00:30:30,280
Speaker 1: So with Silverquest asset management, I think you, guys, folks

585
00:30:30,320 --> 00:30:33,840
Speaker 1: in part on global manager sourcing, what do you look

586
00:30:33,880 --> 00:30:36,240
Speaker 1: for in managers these days?

587
00:30:36,480 --> 00:30:39,880
Speaker 11: Yes, So that's a fun question that I could ramble

588
00:30:39,880 --> 00:30:41,200
Speaker 11: on for a long time, but I'll give you the

589
00:30:41,200 --> 00:30:44,600
Speaker 11: concise answer. So thematically, we look for three things when

590
00:30:44,640 --> 00:30:47,840
Speaker 11: we're looking for an investment manager. One is more concentrated

591
00:30:47,880 --> 00:30:50,520
Speaker 11: positions than normal. One is a longer term holding period

592
00:30:50,560 --> 00:30:52,840
Speaker 11: than normal than one is avoiding going from worse to first.

593
00:30:52,840 --> 00:30:56,440
Speaker 11: And our research shows that those three attributes really lend

594
00:30:56,480 --> 00:30:59,600
Speaker 11: themselves well to quality stock selection with a bias towards

595
00:30:59,640 --> 00:31:02,040
Speaker 11: fundament that tends to work over time, we tend to

596
00:31:02,040 --> 00:31:04,280
Speaker 11: find managers outperform when they do those three things.

597
00:31:04,360 --> 00:31:06,480
Speaker 5: Are there any specific stocks you can talk about that

598
00:31:06,520 --> 00:31:09,000
Speaker 5: you're buying or selling or maybe on an interview level.

599
00:31:09,320 --> 00:31:11,400
Speaker 11: Yeah, So I don't comment on a stock level, but

600
00:31:11,400 --> 00:31:14,520
Speaker 11: from a sector basis, I am pretty intrigued and optimistic

601
00:31:14,560 --> 00:31:17,520
Speaker 11: from the earnings backdrop for consumer discretionary as you alluded to,

602
00:31:17,680 --> 00:31:21,640
Speaker 11: perhaps some parts of staples, as well as industrials and technology.

603
00:31:21,120 --> 00:31:25,240
Speaker 5: When it comes to discretionary, because there's so many different

604
00:31:25,240 --> 00:31:29,360
Speaker 5: sub industries. If you're thinking about home builders, automakers, evs,

605
00:31:29,800 --> 00:31:33,520
Speaker 5: obviously retailers. Is there a particular group with a discretionary

606
00:31:33,520 --> 00:31:34,320
Speaker 5: that stands out to you?

607
00:31:34,600 --> 00:31:34,800
Speaker 7: Yeah.

608
00:31:34,840 --> 00:31:37,040
Speaker 11: One of the things that I've found the most compelling

609
00:31:37,160 --> 00:31:39,440
Speaker 11: is the areas that have still been seeing pent up demands.

610
00:31:39,440 --> 00:31:41,080
Speaker 11: So when you look at some of those spots, like

611
00:31:41,480 --> 00:31:44,440
Speaker 11: in leisure and airlines and hotels and hospitality and things,

612
00:31:44,600 --> 00:31:46,760
Speaker 11: that still continues to be going strong, and you see

613
00:31:46,800 --> 00:31:48,560
Speaker 11: it in the data and you see it anecdotally. You know,

614
00:31:48,640 --> 00:31:51,280
Speaker 11: anytime anyone gets out and travels these days, things are

615
00:31:51,320 --> 00:31:53,400
Speaker 11: pretty crowded and pretty busy. But we also see that

616
00:31:53,440 --> 00:31:55,240
Speaker 11: in the data. So if you look at mobility data,

617
00:31:55,240 --> 00:31:57,800
Speaker 11: if you look at where people are spending money, more

618
00:31:57,840 --> 00:31:59,920
Speaker 11: people employed in the country than have ever been before,

619
00:32:00,240 --> 00:32:02,040
Speaker 11: and they're happy to be out and about doing things,

620
00:32:02,040 --> 00:32:05,280
Speaker 11: And to me, that leads to those segments within discussionary.

621
00:32:04,760 --> 00:32:07,280
Speaker 5: So do you think people have just been too gloom

622
00:32:07,320 --> 00:32:10,560
Speaker 5: and doom coming into this year? Obviously, but now six

623
00:32:10,600 --> 00:32:13,280
Speaker 5: months into this year, heading into the second half, do

624
00:32:13,320 --> 00:32:17,280
Speaker 5: we need to maybe rethink those sort of recessionary projections

625
00:32:17,280 --> 00:32:20,240
Speaker 5: that was almost seems very well telegraphed for so many people.

626
00:32:20,440 --> 00:32:22,479
Speaker 11: Yes, I do think that's a large part of it.

627
00:32:22,560 --> 00:32:24,480
Speaker 11: I think one of the dynamics that happened was we

628
00:32:24,560 --> 00:32:27,800
Speaker 11: had such a strong boom bus cycle that when the

629
00:32:27,840 --> 00:32:31,240
Speaker 11: momentum on the economy started slowing down, that instantly triggered

630
00:32:31,240 --> 00:32:34,440
Speaker 11: a lot of indicators for future upcoming recession. Well, at

631
00:32:34,480 --> 00:32:36,360
Speaker 11: the same time, if you looked at what was actually

632
00:32:36,400 --> 00:32:39,640
Speaker 11: going on in terms of data and employment, the stability

633
00:32:39,720 --> 00:32:41,560
Speaker 11: was there. So my take all along had been that

634
00:32:41,680 --> 00:32:45,160
Speaker 11: economic momentum has been and continues to slow, but slowing

635
00:32:45,200 --> 00:32:47,520
Speaker 11: back down to a low positive rate of growth, rather

636
00:32:47,560 --> 00:32:49,640
Speaker 11: than dropping at the pace that it had been coming

637
00:32:49,640 --> 00:32:52,120
Speaker 11: off of that really high momentum out of the boom

638
00:32:52,120 --> 00:32:52,680
Speaker 11: bus cycle.

639
00:32:53,200 --> 00:32:57,040
Speaker 1: You know, we've had this kind of magnificent seven, if

640
00:32:57,080 --> 00:32:59,320
Speaker 1: you will, stocks kind of leading the way. Is it

641
00:32:59,440 --> 00:33:02,320
Speaker 1: worth trying to go out there and look for value stocks?

642
00:33:02,520 --> 00:33:03,280
Speaker 1: God forbidden.

643
00:33:03,720 --> 00:33:06,240
Speaker 11: I do think that there's some value and value, although

644
00:33:06,440 --> 00:33:09,320
Speaker 11: in my opinion it's more of a sector exercise than

645
00:33:09,360 --> 00:33:11,600
Speaker 11: a value versus growth exercise, and part of that is

646
00:33:11,600 --> 00:33:14,920
Speaker 11: because of how companies are managing through different cycles. But

647
00:33:14,960 --> 00:33:16,680
Speaker 11: I do think there's some value in small cap here.

648
00:33:16,720 --> 00:33:18,680
Speaker 11: That's an area where there's a lot of underperformers, but

649
00:33:18,720 --> 00:33:22,040
Speaker 11: there are some great companies that have been underappreciated. We

650
00:33:22,080 --> 00:33:24,560
Speaker 11: saw Breadth improving a little bit after the debt ceiling.

651
00:33:24,600 --> 00:33:26,400
Speaker 11: That was one of the things that we looked to

652
00:33:26,640 --> 00:33:28,880
Speaker 11: was would breadth improve after that and it did, and

653
00:33:28,920 --> 00:33:30,600
Speaker 11: so that's a bit encouraging as well that you might

654
00:33:30,640 --> 00:33:31,960
Speaker 11: have some money flowing back into that.

655
00:33:31,920 --> 00:33:35,400
Speaker 5: Space in small caps obviously being the ones we're under pressure,

656
00:33:35,520 --> 00:33:38,360
Speaker 5: but they typically lead the way before large caps, so

657
00:33:38,400 --> 00:33:40,600
Speaker 5: I feel like that's obviously going to be a key

658
00:33:41,200 --> 00:33:43,240
Speaker 5: area of the market to keep an eye on. We

659
00:33:43,280 --> 00:33:46,360
Speaker 5: only have about twenty seconds to left. But what's the

660
00:33:46,360 --> 00:33:48,640
Speaker 5: top question you hear from your clients right now?

661
00:33:49,040 --> 00:33:51,240
Speaker 11: That is a great question. I think it still comes

662
00:33:51,280 --> 00:33:53,880
Speaker 11: back to the FED cycle and inflation. That is still

663
00:33:54,000 --> 00:33:56,040
Speaker 11: very much number one on top of people's minds.

664
00:33:56,280 --> 00:33:58,400
Speaker 5: That's good to know, I mean, not surprisingly, right, Paul,

665
00:33:58,440 --> 00:34:00,680
Speaker 5: when it comes to this, And then what we will

666
00:34:00,720 --> 00:34:03,120
Speaker 5: have that FED meeting coming up at the end of

667
00:34:03,200 --> 00:34:06,600
Speaker 5: July on the twenty fifth and twenty sixth, with that decision,

668
00:34:06,640 --> 00:34:09,160
Speaker 5: so all eyes will be focused on that jobs day

669
00:34:09,440 --> 00:34:12,760
Speaker 5: next Friday, average hourly earnings will be greatly in focus.

670
00:34:12,800 --> 00:34:14,600
Speaker 5: And then the week after that we'll get another update

671
00:34:14,640 --> 00:34:17,080
Speaker 5: on July twelfth when it comes to CPI. So Robert Teeter,

672
00:34:17,280 --> 00:34:19,400
Speaker 5: thank you so much for joining us head of Investment

673
00:34:19,400 --> 00:34:23,880
Speaker 5: Policy and Strategy Group at Silvercress Asset Management and taking

674
00:34:23,880 --> 00:34:25,560
Speaker 5: a look and a little check here on the market's

675
00:34:25,600 --> 00:34:28,960
Speaker 5: SMP five hundred up marginally, as well as the Nasdaq

676
00:34:29,080 --> 00:34:29,760
Speaker 5: one hundred.

677
00:34:30,080 --> 00:34:33,200
Speaker 8: You're listening to the tape Cat's are live program Bloomberg

678
00:34:33,280 --> 00:34:36,880
Speaker 8: Markets weekdays at ten am Eastern on Bloomberg Radio, the

679
00:34:36,920 --> 00:34:39,000
Speaker 8: tune in app, Bloomberg dot Com.

680
00:34:38,719 --> 00:34:40,160
Speaker 7: And the Bloomberg Business App.

681
00:34:40,200 --> 00:34:43,000
Speaker 8: You can also listen live on Amazon Alexa from our

682
00:34:43,040 --> 00:34:47,440
Speaker 8: flagship New York station, Just say Alexa play Bloomberg eleven thirty.

683
00:34:49,160 --> 00:34:52,040
Speaker 1: Let's move over to talking about some of these consumer names.

684
00:34:52,080 --> 00:34:54,919
Speaker 1: I'm thinking these are some of the industries that I love.

685
00:34:54,960 --> 00:34:59,600
Speaker 1: I'm thinking cruises, I'm thinking gaming, ie casinos and all

686
00:34:59,640 --> 00:35:02,479
Speaker 1: the yeah, fun stuff, hotels, motels. We got a nice

687
00:35:02,560 --> 00:35:05,759
Speaker 1: round table here. Jonathan Levin, he's an opinion columnist for

688
00:35:06,000 --> 00:35:08,480
Speaker 1: Bloomberg News and Brian Egger. He's a senior analyst. He

689
00:35:08,480 --> 00:35:11,240
Speaker 1: covers all the gaming, lodging, cruising, all the fun stuff.

690
00:35:11,280 --> 00:35:14,919
Speaker 1: Somehow he's built a career on this. John, Let's start

691
00:35:14,920 --> 00:35:17,520
Speaker 1: with you. You got you had a column out today kind

692
00:35:17,520 --> 00:35:20,920
Speaker 1: of looking at the Carnival results and how the stock traded,

693
00:35:20,960 --> 00:35:24,359
Speaker 1: but you kind of expanded that out to this may

694
00:35:24,400 --> 00:35:27,800
Speaker 1: be represented what we might see during this earning season,

695
00:35:27,960 --> 00:35:30,960
Speaker 1: How did you view the Carnival numbers and the markets response.

696
00:35:31,880 --> 00:35:34,799
Speaker 12: Yeah, I just thought the reaction was was really fascinating

697
00:35:34,800 --> 00:35:39,280
Speaker 12: because the numbers come out on Monday, you know, surface level,

698
00:35:39,520 --> 00:35:44,640
Speaker 12: I thought they were really good, very very encouraging. But

699
00:35:44,920 --> 00:35:48,880
Speaker 12: the stock sells off in a big way, and everybody

700
00:35:48,920 --> 00:35:51,239
Speaker 12: sort of assumes, well, it's you know, it must have

701
00:35:51,280 --> 00:35:54,359
Speaker 12: been by the rumor, sell the news. But the very

702
00:35:54,400 --> 00:35:59,120
Speaker 12: next day the stock bounces right back, recovers everything that

703
00:35:59,480 --> 00:36:03,440
Speaker 12: it lost, and then on Wednesday, uh has uh has

704
00:36:03,600 --> 00:36:04,759
Speaker 12: another huge day.

705
00:36:05,120 --> 00:36:05,520
Speaker 7: Uh.

706
00:36:05,760 --> 00:36:10,120
Speaker 12: And so it's now trading well above where it was

707
00:36:10,200 --> 00:36:13,880
Speaker 12: before the earnings, And I just feel like, uh, you know,

708
00:36:14,200 --> 00:36:18,200
Speaker 12: this quirky series of events is a little bit representative

709
00:36:18,200 --> 00:36:20,760
Speaker 12: of where we are in this in this funny market.

710
00:36:21,360 --> 00:36:23,720
Speaker 12: You know, there's been this big run up in stocks.

711
00:36:24,440 --> 00:36:27,400
Speaker 12: Not a lot of people tend to trust it a lot.

712
00:36:28,200 --> 00:36:32,600
Speaker 12: If anybody was sort of fortunate enough to profit from

713
00:36:32,640 --> 00:36:36,239
Speaker 12: this recent rally, they're kind of saying like, maybe I

714
00:36:36,360 --> 00:36:39,480
Speaker 12: just got lucky here, Maybe it's maybe it's time to

715
00:36:39,480 --> 00:36:42,040
Speaker 12: to take some profits. And so I think there's an

716
00:36:42,040 --> 00:36:46,799
Speaker 12: inclination to sell at the first sign of trouble or

717
00:36:47,880 --> 00:36:50,879
Speaker 12: you know, as as we say, uh, you know, by

718
00:36:50,920 --> 00:36:53,840
Speaker 12: the rumor, but then hurry, Harry, hurry to uh to

719
00:36:54,080 --> 00:36:57,319
Speaker 12: sell the news. And as Carnival shows, you know, there's

720
00:36:58,040 --> 00:36:59,880
Speaker 12: there's some risk in that knee jerk reaction.

721
00:37:00,520 --> 00:37:03,600
Speaker 5: Brian want to bring you into this conversation because whenever

722
00:37:03,680 --> 00:37:07,680
Speaker 5: we need to know anything about cruise liners, we're obviously

723
00:37:07,760 --> 00:37:10,120
Speaker 5: going to go to you, Paul and I. When it

724
00:37:10,160 --> 00:37:14,319
Speaker 5: comes to Carnival in particular, some profit challenges there, but

725
00:37:14,320 --> 00:37:17,120
Speaker 5: then they still saw a lot of optimism on the bookings.

726
00:37:17,239 --> 00:37:19,560
Speaker 5: How do you square it away with what they've seen

727
00:37:19,560 --> 00:37:22,160
Speaker 5: obviously the rebound that we've seen in some of these

728
00:37:22,239 --> 00:37:24,440
Speaker 5: stocks in that particular corner of the market.

729
00:37:24,600 --> 00:37:26,120
Speaker 13: So I've seen this as kind of like a three

730
00:37:26,200 --> 00:37:28,960
Speaker 13: phase recovery, if you will, in terms of what drive sentiment.

731
00:37:29,040 --> 00:37:32,200
Speaker 13: First you had recovering from that long suspension, that long

732
00:37:32,280 --> 00:37:36,120
Speaker 13: pause with now ebitdoc per capacity day yields back to

733
00:37:36,120 --> 00:37:38,919
Speaker 13: where it was before the pandemic. Next stage, right now

734
00:37:38,920 --> 00:37:42,160
Speaker 13: we've got bookings and pricing looking really strong, so the

735
00:37:42,200 --> 00:37:45,360
Speaker 13: consumer is holding up. I think that next test will be,

736
00:37:45,880 --> 00:37:48,560
Speaker 13: to Jonathan's point, is one that they can achieve their

737
00:37:48,600 --> 00:37:52,080
Speaker 13: long term goals, which is by twenty twenty six back

738
00:37:52,120 --> 00:37:56,520
Speaker 13: to double digit returns on invested capital, increasing their ebitor

739
00:37:56,600 --> 00:37:59,000
Speaker 13: capacity day by fifty percent. They've laid out some very

740
00:37:59,000 --> 00:38:02,319
Speaker 13: specific benchmarks by twenty twenty six, and I think that

741
00:38:02,360 --> 00:38:05,400
Speaker 13: will really frame sentiment going forward.

742
00:38:05,719 --> 00:38:07,960
Speaker 1: Jonathan, we got I gotta ask, are you a cruiser?

743
00:38:09,960 --> 00:38:11,879
Speaker 12: Well, so I'll tell you I went on my very

744
00:38:11,920 --> 00:38:17,040
Speaker 12: first cruise, at least as an adult, when it was

745
00:38:17,080 --> 00:38:21,200
Speaker 12: the first Royal Caribbean cruise back after the pandemic, and

746
00:38:21,239 --> 00:38:23,200
Speaker 12: I did it as a Bloomberg journalist.

747
00:38:23,480 --> 00:38:26,279
Speaker 1: Oh oh, I see, which is so okay? You kind

748
00:38:26,280 --> 00:38:28,440
Speaker 1: of all right? Sor right? So Jonathan, this you know,

749
00:38:28,520 --> 00:38:30,200
Speaker 1: when you think about kind of how these stocks are

750
00:38:30,200 --> 00:38:32,680
Speaker 1: trading because this is going to be an important earning season,

751
00:38:32,960 --> 00:38:34,799
Speaker 1: is what we're hearing from a lot of strategist here.

752
00:38:34,800 --> 00:38:37,319
Speaker 1: But well, he get to economic data today that says

753
00:38:37,360 --> 00:38:41,040
Speaker 1: economy is pretty strong. What do you think corporate America

754
00:38:41,080 --> 00:38:43,040
Speaker 1: needs to do during this earning season to kind of

755
00:38:43,800 --> 00:38:46,319
Speaker 1: just keep moving forward here? Because as you mentioned in

756
00:38:46,360 --> 00:38:49,120
Speaker 1: your column here with Carnival, it was all over the place.

757
00:38:50,560 --> 00:38:53,399
Speaker 12: Yeah, I mean so obviously, you know, the trouble here

758
00:38:53,560 --> 00:38:57,440
Speaker 12: is that the bar is very high so you know,

759
00:38:57,600 --> 00:39:00,760
Speaker 12: traders analysts are going to struggle to answer the question

760
00:39:00,960 --> 00:39:05,000
Speaker 12: like how good is good enough? With pricing being as

761
00:39:05,040 --> 00:39:07,480
Speaker 12: strong as it is today. So you just look at

762
00:39:07,520 --> 00:39:10,520
Speaker 12: like what the cell side strategists have been saying for

763
00:39:10,600 --> 00:39:12,960
Speaker 12: the market as a whole. Most of them had their

764
00:39:13,040 --> 00:39:16,240
Speaker 12: year end twenty twenty three targets around forty one hundred.

765
00:39:16,480 --> 00:39:20,880
Speaker 12: So as we're trading above forty three hundred here you

766
00:39:20,920 --> 00:39:23,680
Speaker 12: say to yourself, you're gonna have to do a little

767
00:39:23,719 --> 00:39:27,719
Speaker 12: bit better than good to keep up this momentum.

768
00:39:28,160 --> 00:39:30,719
Speaker 4: Is it possible?

769
00:39:31,160 --> 00:39:32,080
Speaker 7: I think maybe?

770
00:39:32,160 --> 00:39:35,480
Speaker 12: You know, I mean, the macro data has been really really,

771
00:39:36,760 --> 00:39:38,799
Speaker 12: you know, nothing short of phenomenal. You have to say,

772
00:39:38,840 --> 00:39:42,360
Speaker 12: if you look over at that Bloomberg Economics Surprise Index,

773
00:39:43,360 --> 00:39:48,880
Speaker 12: it's the highest it's been in quite some time. You know,

774
00:39:49,480 --> 00:39:53,120
Speaker 12: just you know, a lot of upside surprises on the

775
00:39:53,160 --> 00:39:56,400
Speaker 12: macro and we may just see that filter down to

776
00:39:56,480 --> 00:39:57,600
Speaker 12: companies bottom lines.

777
00:39:58,120 --> 00:40:01,719
Speaker 5: Brian, what about some of carnival rivals when you're thinking

778
00:40:01,719 --> 00:40:06,120
Speaker 5: about Norwegian World Caribbean, how do they fare right now?

779
00:40:06,520 --> 00:40:09,319
Speaker 13: I mean also quite strong. I think across the white

780
00:40:09,360 --> 00:40:14,680
Speaker 13: swath of consumer leisure casinos, hotels, and cruise lines, the

781
00:40:15,200 --> 00:40:20,480
Speaker 13: leisure consumer of entertainment has really been quite resilient and

782
00:40:20,520 --> 00:40:22,799
Speaker 13: that remains the case. Whether or not that will remain

783
00:40:22,880 --> 00:40:25,680
Speaker 13: the case if we have a more significant economic downturn,

784
00:40:25,960 --> 00:40:28,160
Speaker 13: that will be a test, but we really are doing so.

785
00:40:28,320 --> 00:40:30,840
Speaker 13: When the cruises, you do have the benefit of relatively

786
00:40:30,880 --> 00:40:34,520
Speaker 13: moderate supply growth, fuel efficients used to offset some of

787
00:40:34,560 --> 00:40:39,239
Speaker 13: the rise and fuel costs, and some real strategic redeployment,

788
00:40:39,920 --> 00:40:42,880
Speaker 13: and in the case of Carnival, just a big deleveraging program.

789
00:40:42,920 --> 00:40:45,799
Speaker 13: So that's really what helps them with wind in their sales.

790
00:40:45,800 --> 00:40:47,239
Speaker 1: All right, I can't let you go here with that.

791
00:40:47,320 --> 00:40:50,719
Speaker 1: Talking about the gaming business, how are things Number one

792
00:40:51,000 --> 00:40:54,680
Speaker 1: on the strip in Vegas and number two in Macau?

793
00:40:55,000 --> 00:40:59,160
Speaker 13: Yeah, it was a nice pivot to casinos. Overall quite strong.

794
00:40:59,200 --> 00:41:02,440
Speaker 13: I mean Macau has suffered because of the long standing

795
00:41:02,480 --> 00:41:05,000
Speaker 13: travel restrictions and the ban on VP junk at credit,

796
00:41:05,320 --> 00:41:08,080
Speaker 13: but the mass business is beginning to come back. Vegas

797
00:41:08,120 --> 00:41:09,840
Speaker 13: looks quite strong. I mean the good news there is

798
00:41:09,840 --> 00:41:11,239
Speaker 13: not only do you have the leisure element, but you

799
00:41:11,280 --> 00:41:14,960
Speaker 13: also have, unlike cruise lines, the business element and conventions

800
00:41:14,960 --> 00:41:16,200
Speaker 13: seem to be back at full force.

801
00:41:17,000 --> 00:41:18,480
Speaker 1: Blair, what do you think the risk is to this

802
00:41:18,600 --> 00:41:21,160
Speaker 1: market here. As we kind of come into earnings here,

803
00:41:21,239 --> 00:41:23,120
Speaker 1: I mean, you know, the S and P five hundreds

804
00:41:23,120 --> 00:41:25,320
Speaker 1: to two hundred and twenty eight dollars a share roughly

805
00:41:25,880 --> 00:41:28,680
Speaker 1: for twenty twenty three, some folks will come into this

806
00:41:28,760 --> 00:41:31,399
Speaker 1: studio and say, hey, two hundred dollars is not off

807
00:41:31,400 --> 00:41:34,040
Speaker 1: the table, maybe even sub two hundred dollars in earnings.

808
00:41:34,080 --> 00:41:35,200
Speaker 1: There's earnings risk here.

809
00:41:35,719 --> 00:41:36,440
Speaker 10: What do you hear?

810
00:41:40,280 --> 00:41:45,440
Speaker 12: Jonathan, Yeah, sorry, Jonathan, Yeah, what is the what is

811
00:41:45,440 --> 00:41:48,160
Speaker 12: the earnings risk? I mean, coming into twenty twenty three,

812
00:41:48,200 --> 00:41:50,440
Speaker 12: I got I gotta say. I was certainly in the

813
00:41:50,480 --> 00:41:55,279
Speaker 12: camp of, you know, if we think we're going into

814
00:41:55,320 --> 00:41:59,680
Speaker 12: a recession, you know, two hundred twenty dollars seems awfully rich.

815
00:42:00,120 --> 00:42:03,680
Speaker 12: But all of the economic data that we've get gotten

816
00:42:03,760 --> 00:42:07,600
Speaker 12: recently suggests to me that if we're going into a downturn,

817
00:42:07,760 --> 00:42:11,040
Speaker 12: it's just not happening next month. It's not happening probably

818
00:42:11,360 --> 00:42:15,319
Speaker 12: three months from now. We've seen the professional economists, the

819
00:42:15,320 --> 00:42:21,880
Speaker 12: professional forecasting community sort of steadily bumped back their recession calls.

820
00:42:22,920 --> 00:42:24,520
Speaker 12: You know, a lot of people thought it would start

821
00:42:24,520 --> 00:42:28,280
Speaker 12: in three Q. Now most people see sort of flat

822
00:42:28,320 --> 00:42:32,400
Speaker 12: growth in three Q. Bumping back any recession calls to

823
00:42:32,600 --> 00:42:35,520
Speaker 12: four Q So you know, all of that, I think,

824
00:42:36,000 --> 00:42:39,399
Speaker 12: you know trickles right down to companies bottom lines. If

825
00:42:39,400 --> 00:42:44,200
Speaker 12: the macro economy is holding up and we know people

826
00:42:44,239 --> 00:42:48,560
Speaker 12: are going on cruise ships, it's hard to believe that,

827
00:42:49,719 --> 00:42:54,160
Speaker 12: you know, we're in for some massive downside surprise this

828
00:42:54,280 --> 00:42:56,200
Speaker 12: quarter or even next quarter.

829
00:42:56,440 --> 00:42:58,600
Speaker 5: And Brian, obviously, what does that tell us about the

830
00:42:58,600 --> 00:43:01,239
Speaker 5: consumer if there's still to spend money at all of this?

831
00:43:01,480 --> 00:43:03,120
Speaker 13: Yeah, the consumers hanging in there. I mean, what we

832
00:43:03,160 --> 00:43:06,000
Speaker 13: see for Carnival at least now, are the bookings for

833
00:43:06,040 --> 00:43:08,759
Speaker 13: the second quarter or seventeen percent above where they were

834
00:43:08,800 --> 00:43:09,600
Speaker 13: in twenty nineteen.

835
00:43:09,800 --> 00:43:10,040
Speaker 7: Wow.

836
00:43:10,080 --> 00:43:13,120
Speaker 13: We see ticket price is really quite strong, and we

837
00:43:13,160 --> 00:43:16,520
Speaker 13: see a nice backlog of customer deposits, people paying for

838
00:43:16,600 --> 00:43:19,319
Speaker 13: cruises in advance. The key thing for them is can

839
00:43:19,360 --> 00:43:21,760
Speaker 13: they hold up? Can ticket price and yield growth continue

840
00:43:21,800 --> 00:43:27,120
Speaker 13: to outpace inflation and things like port charges, travel expenses,

841
00:43:27,200 --> 00:43:30,200
Speaker 13: advertising costs. As long as they can maintain that balance

842
00:43:30,239 --> 00:43:34,200
Speaker 13: and generate incremental cash flow per unit of capacity, this

843
00:43:34,280 --> 00:43:36,640
Speaker 13: can continue. But obviously we're going to keep a close

844
00:43:36,680 --> 00:43:37,080
Speaker 13: watch on.

845
00:43:37,040 --> 00:43:39,800
Speaker 5: The economy, right, so that's going to be really important

846
00:43:39,840 --> 00:43:41,880
Speaker 5: to keep our eyes on. So I'm really glad that

847
00:43:41,920 --> 00:43:44,680
Speaker 5: both of you were able to join us. Brianeger, senior

848
00:43:44,719 --> 00:43:49,160
Speaker 5: Gaming and logging in list at Bloomberg Intelligence, who was

849
00:43:49,239 --> 00:43:51,640
Speaker 5: just speaking with us as well, and so that's going

850
00:43:51,680 --> 00:43:53,439
Speaker 5: to be really important. Paul, and we're taking a look

851
00:43:53,480 --> 00:43:55,959
Speaker 5: at all of this. Also, we had Jonathan Levin, who's

852
00:43:55,960 --> 00:43:58,520
Speaker 5: an opinion columns with The Bloomberg News, discussing Carnival.

853
00:43:58,840 --> 00:44:01,960
Speaker 8: You're listening to the tape cans our live program, Bloomberg

854
00:44:02,000 --> 00:44:05,600
Speaker 8: Markets weekdays at ten am Eastern on Bloomberg Radio, the

855
00:44:05,640 --> 00:44:08,920
Speaker 8: tune in app, Bloomberg dot Com, and the Bloomberg Business App.

856
00:44:08,920 --> 00:44:11,759
Speaker 8: You can also listen live on Amazon Alexa from our

857
00:44:11,760 --> 00:44:18,440
Speaker 8: flagship New York station, Just say Alexa play Bloomberg eleven thirty, jess.

858
00:44:18,200 --> 00:44:21,840
Speaker 5: Man and Paul Sweeney here in the Bloomberg Interactive Brokers Studio.

859
00:44:21,960 --> 00:44:23,680
Speaker 5: Up next, we want to get straight to our next guest,

860
00:44:23,760 --> 00:44:27,839
Speaker 5: Nancy Curtain, Partner Global CIO and head of Investment Advisory

861
00:44:27,880 --> 00:44:31,680
Speaker 5: at Altman Titaman Global, And Nancy, thank you so much

862
00:44:31,719 --> 00:44:34,600
Speaker 5: for joining us. We did get an update on the

863
00:44:34,640 --> 00:44:38,880
Speaker 5: first quarter GDP numbers being uppardly revised, driven by strength

864
00:44:39,000 --> 00:44:42,359
Speaker 5: in consumer spending. What's your take when you're looking at

865
00:44:42,400 --> 00:44:45,200
Speaker 5: the trajectory of the US economy versus what we're seeing globally.

866
00:44:46,480 --> 00:44:50,160
Speaker 14: Look, the US has been a lot stronger than expectations.

867
00:44:50,200 --> 00:44:53,040
Speaker 14: This is something that we expected as we entered the year.

868
00:44:53,880 --> 00:44:56,520
Speaker 14: But the recent number that came out this morning, which

869
00:44:56,600 --> 00:44:59,240
Speaker 14: is of course the third revision of the first quarter

870
00:44:59,320 --> 00:45:03,479
Speaker 14: GPP in the United States was super strong, right, came

871
00:45:03,520 --> 00:45:06,680
Speaker 14: in revised up two percent. But the real surprise there

872
00:45:07,320 --> 00:45:10,480
Speaker 14: was the consumer is alive and well, there's no recession

873
00:45:10,520 --> 00:45:13,600
Speaker 14: going on with the consumer. In the first quarter, consumption

874
00:45:13,840 --> 00:45:17,680
Speaker 14: was up four point two percent versus one percent in

875
00:45:17,719 --> 00:45:21,600
Speaker 14: the fourth quarter of last year, and we see signs

876
00:45:22,280 --> 00:45:27,080
Speaker 14: that this consumer resilience is continuing into the second quarter,

877
00:45:27,120 --> 00:45:30,120
Speaker 14: which we expect to be pretty decent here. And so

878
00:45:30,160 --> 00:45:32,799
Speaker 14: I think one of the surprises of this year, which

879
00:45:32,840 --> 00:45:36,240
Speaker 14: is always why markets climb that proverbial wall of worry,

880
00:45:36,920 --> 00:45:40,080
Speaker 14: is that GDP has been stronger than expected, not just

881
00:45:40,120 --> 00:45:43,960
Speaker 14: the United States, but actually globally, and in particular it's

882
00:45:44,000 --> 00:45:46,960
Speaker 14: been the consumer that is added to that strength.

883
00:45:47,640 --> 00:45:50,480
Speaker 1: So globally, Nancy, where are you guys finding I guess

884
00:45:51,160 --> 00:45:55,320
Speaker 1: the most opportunity these days? Maybe geographically by ass a class.

885
00:45:55,320 --> 00:45:57,240
Speaker 1: Where are you spending most of your time these days?

886
00:45:57,960 --> 00:46:01,520
Speaker 14: So you know, we used our exposure to the United

887
00:46:01,600 --> 00:46:05,719
Speaker 14: States last year, so we would have a globally diversified portfolio,

888
00:46:06,400 --> 00:46:09,520
Speaker 14: and I think that's proven to give us both diversification

889
00:46:09,680 --> 00:46:12,640
Speaker 14: benefits and also return as well. So we all know

890
00:46:12,760 --> 00:46:15,520
Speaker 14: that the US market is up fourteen percent now, Stix

891
00:46:15,680 --> 00:46:18,759
Speaker 14: up thirty percent. Okay, very strong, and we can come

892
00:46:18,800 --> 00:46:21,080
Speaker 14: back and talk about some of the reasons, but I

893
00:46:21,120 --> 00:46:25,040
Speaker 14: think less well known maybe or US investors not focusing

894
00:46:25,080 --> 00:46:29,000
Speaker 14: on it, as euro stocks is up close to seventeen percent,

895
00:46:29,560 --> 00:46:34,120
Speaker 14: Japan in local currencies up twenty seven percent, So leaning

896
00:46:34,160 --> 00:46:36,080
Speaker 14: into the rest of the world has actually been a

897
00:46:36,080 --> 00:46:39,880
Speaker 14: fruitful strategy. Then it's mean that we've diversified some of

898
00:46:39,920 --> 00:46:43,799
Speaker 14: the concentration risk in the United States. So we like

899
00:46:43,880 --> 00:46:45,600
Speaker 14: the rest of the world, we want to have a

900
00:46:45,680 --> 00:46:51,080
Speaker 14: globally diversified portfolio, and more recently, within the United States,

901
00:46:51,400 --> 00:46:54,200
Speaker 14: I would say more recently we've moved to a slight overweight,

902
00:46:54,239 --> 00:46:57,480
Speaker 14: which is going to sound a bit controversial, and given

903
00:46:57,480 --> 00:46:59,759
Speaker 14: some of the news of the FED and ongoing tight

904
00:47:00,440 --> 00:47:05,840
Speaker 14: i'd say we're constructively optimistic or cautiously optimistic, which is

905
00:47:05,880 --> 00:47:10,279
Speaker 14: to say, we're leading into those areas of underperformance MidCap

906
00:47:10,360 --> 00:47:14,920
Speaker 14: and value which are trading at multi decade lows versus

907
00:47:14,920 --> 00:47:19,799
Speaker 14: their traditional metrics, and multi decade lows versus large cap

908
00:47:19,840 --> 00:47:22,600
Speaker 14: as well. So we think the market breath will improve

909
00:47:22,680 --> 00:47:25,680
Speaker 14: in the United States. So we still like the US market,

910
00:47:26,080 --> 00:47:29,200
Speaker 14: but also we have exposure to rest of world, which

911
00:47:29,280 --> 00:47:31,239
Speaker 14: is done pretty nicely here as well.

912
00:47:31,400 --> 00:47:34,600
Speaker 5: So more optimistic nancy when it comes to this market

913
00:47:34,680 --> 00:47:37,400
Speaker 5: breadth debate that a lot of people have been having.

914
00:47:37,560 --> 00:47:39,759
Speaker 5: What about when it comes to small caps? You brought

915
00:47:39,800 --> 00:47:41,440
Speaker 5: up midcaps, what about small caps?

916
00:47:42,400 --> 00:47:47,640
Speaker 14: We just think the MidCap index has more quality companies

917
00:47:48,200 --> 00:47:51,279
Speaker 14: with lower levels of leverage than small cap. But I

918
00:47:51,320 --> 00:47:55,120
Speaker 14: would make the same argument small cap is pretty attractively valued,

919
00:47:55,560 --> 00:47:59,160
Speaker 14: small cap, MidCap value. These are all the sectors that

920
00:47:59,239 --> 00:48:03,040
Speaker 14: have been ignored by investors as they focus on generative

921
00:48:03,080 --> 00:48:05,520
Speaker 14: AI and of course the tech sector, which has driven

922
00:48:05,600 --> 00:48:08,600
Speaker 14: the rallies so far here today. But we just think

923
00:48:08,640 --> 00:48:11,319
Speaker 14: there's more of a quality bias to the MidCap. We

924
00:48:11,400 --> 00:48:15,600
Speaker 14: also see a long term secular theme in MidCap, which

925
00:48:15,640 --> 00:48:19,880
Speaker 14: is the onshoring of supply chains bringing manufacturing back home. Again,

926
00:48:20,360 --> 00:48:24,000
Speaker 14: and also companies focus on automation. Cap X was up

927
00:48:24,040 --> 00:48:27,279
Speaker 14: about four percent in the first half of this year.

928
00:48:27,719 --> 00:48:31,080
Speaker 14: And we think these are tailwinds for the MidCap sector,

929
00:48:31,239 --> 00:48:34,320
Speaker 14: which is I said, trades at very very attractive valuations

930
00:48:34,640 --> 00:48:38,120
Speaker 14: versus its own history, and versus large caps as well.

931
00:48:38,360 --> 00:48:41,160
Speaker 1: Nancy, I know during your career you've amassed a lot

932
00:48:41,200 --> 00:48:45,839
Speaker 1: of experience in alternative assets. How do alternatives fit into

933
00:48:45,880 --> 00:48:47,520
Speaker 1: your outlook these days?

934
00:48:48,760 --> 00:48:51,840
Speaker 14: So our client base is ultra high net worth and

935
00:48:51,880 --> 00:48:55,560
Speaker 14: therefore and foundations as well, and so they have a

936
00:48:55,719 --> 00:48:59,040
Speaker 14: longer term time horizon. So when I talk about alternatives,

937
00:48:59,120 --> 00:49:02,480
Speaker 14: I think it's really appropriate for our client base as

938
00:49:02,480 --> 00:49:05,600
Speaker 14: I said, that has a mass, perhaps more wealth than

939
00:49:05,600 --> 00:49:08,480
Speaker 14: a long term time horizon, etc. Because many of these

940
00:49:08,520 --> 00:49:14,800
Speaker 14: alternatives come, we think we've enhanced return and interesting return characteristics,

941
00:49:15,080 --> 00:49:17,319
Speaker 14: but also with a degree of illiquidity, so they need

942
00:49:17,360 --> 00:49:21,160
Speaker 14: to be appropriate obviously to client circumstance. Okay, so what

943
00:49:21,200 --> 00:49:24,440
Speaker 14: do we like in alternatives? We think it's very interesting

944
00:49:24,520 --> 00:49:27,040
Speaker 14: time for private credit. It's one of the things we'll

945
00:49:27,040 --> 00:49:30,840
Speaker 14: be initiating, reducing some of our exposure to the shorter

946
00:49:31,040 --> 00:49:33,680
Speaker 14: end where we've made very nice money. Thank you, very

947
00:49:33,719 --> 00:49:36,560
Speaker 14: much yields a prison, etc. But we think we can

948
00:49:36,600 --> 00:49:40,520
Speaker 14: get double that in private credit. We like real estate,

949
00:49:40,920 --> 00:49:43,319
Speaker 14: particularly what we're going to call long hold real estate,

950
00:49:43,360 --> 00:49:46,759
Speaker 14: which we think for US taxpayers can bring some very

951
00:49:46,760 --> 00:49:50,440
Speaker 14: interesting tax benefits but also benefits from the supply demand

952
00:49:50,960 --> 00:49:54,680
Speaker 14: in balance in airs like residential real estate with good

953
00:49:54,719 --> 00:49:58,040
Speaker 14: tax benefits, good inflation protection. And then we like private

954
00:49:58,080 --> 00:50:02,720
Speaker 14: equity as well, csure to buy out managers, growth and venture.

955
00:50:03,360 --> 00:50:06,920
Speaker 14: We think, by the way, the generative AI, many of

956
00:50:06,920 --> 00:50:09,840
Speaker 14: what i'll call the killer apps probably still to come

957
00:50:10,239 --> 00:50:12,920
Speaker 14: or either on the drawing board or in many of

958
00:50:12,960 --> 00:50:16,480
Speaker 14: the private sector today in growth and venture portfolios. And

959
00:50:16,600 --> 00:50:19,920
Speaker 14: so we like this compliment of being able to play

960
00:50:19,960 --> 00:50:25,080
Speaker 14: clearly technology and public markets, but also the digitalization climate,

961
00:50:25,120 --> 00:50:30,240
Speaker 14: imperative decarbonization technologies, lots of tailwinds we think also happening

962
00:50:30,280 --> 00:50:31,560
Speaker 14: in private markets as well.

963
00:50:31,719 --> 00:50:33,839
Speaker 5: He Nancy, What are some of the top questions you're

964
00:50:33,880 --> 00:50:36,279
Speaker 5: getting from clients at this point when you do have

965
00:50:36,360 --> 00:50:40,080
Speaker 5: this ongoing sort of divergence where people were trying to

966
00:50:40,120 --> 00:50:43,520
Speaker 5: telegraph recession coming, but then you have a lot of

967
00:50:43,520 --> 00:50:46,680
Speaker 5: this economic data, especially the GDP data this morning, seeing

968
00:50:46,719 --> 00:50:47,960
Speaker 5: the contrary to that.

969
00:50:49,520 --> 00:50:51,920
Speaker 14: So we have said from the very beginning of the

970
00:50:52,040 --> 00:50:55,600
Speaker 14: year that we want to remain invested. State invested is

971
00:50:55,719 --> 00:50:58,959
Speaker 14: hugely important. It means I think most people didn't see

972
00:50:59,040 --> 00:51:01,440
Speaker 14: this rally, at least to the extent of this rally,

973
00:51:01,920 --> 00:51:04,799
Speaker 14: and so we've remained invested. We haven't tried to time

974
00:51:04,920 --> 00:51:08,000
Speaker 14: market super important. But we've also said we thought that

975
00:51:08,080 --> 00:51:11,000
Speaker 14: twenty twenty three would be a better year for risk assets.

976
00:51:11,400 --> 00:51:15,319
Speaker 14: And we said that because look back to back declines

977
00:51:15,360 --> 00:51:19,080
Speaker 14: in both bonds and stock markets super unusual happens about

978
00:51:19,120 --> 00:51:21,400
Speaker 14: two percent of the time in over one hundred years.

979
00:51:21,880 --> 00:51:25,520
Speaker 14: We also said that the third slash going into fourth

980
00:51:25,560 --> 00:51:28,799
Speaker 14: year of a presidential cycle tends to be good, particularly

981
00:51:29,200 --> 00:51:32,239
Speaker 14: for US risk assets. But finally, we've begun the year

982
00:51:32,280 --> 00:51:37,760
Speaker 14: by saying investors are super cautious. Everyone was cautiously positioned

983
00:51:37,800 --> 00:51:41,680
Speaker 14: bearish got even more bearish obviously after the banking stresses

984
00:51:42,000 --> 00:51:44,840
Speaker 14: and what we said to clients, look on any good news,

985
00:51:45,360 --> 00:51:47,680
Speaker 14: we think these markets could rally here. And of course

986
00:51:47,719 --> 00:51:49,680
Speaker 14: we've had a lot of good news right. Growth has

987
00:51:49,680 --> 00:51:54,240
Speaker 14: been better than expected. Q one earnings better than expected. Obviously,

988
00:51:54,320 --> 00:51:59,680
Speaker 14: this transformational technology in the form of generative AI super interesting. Again,

989
00:51:59,719 --> 00:52:03,160
Speaker 14: maybe evaluations on certain stocks have risen too much again,

990
00:52:03,200 --> 00:52:06,480
Speaker 14: but we think it has very very significant long term implications.

991
00:52:06,600 --> 00:52:08,360
Speaker 14: And then we got through that crazy debt deal in

992
00:52:08,360 --> 00:52:11,279
Speaker 14: the States without too much fiscal drag and pushed up

993
00:52:11,320 --> 00:52:14,440
Speaker 14: the whole discussion to twenty twenty five to talk about again.

994
00:52:14,600 --> 00:52:16,839
Speaker 14: So there's been a lot of good news here. And

995
00:52:16,880 --> 00:52:20,840
Speaker 14: we said to investors' markets, climb a proverbial wall of worry.

996
00:52:21,719 --> 00:52:23,760
Speaker 14: And we've had a lot of good news and actually

997
00:52:23,760 --> 00:52:26,680
Speaker 14: we think we could have some good news looking forward ahead.

998
00:52:26,680 --> 00:52:28,480
Speaker 1: But I'll hang on to that one, all right, Nancy,

999
00:52:28,560 --> 00:52:32,000
Speaker 1: Just real quick, we heard from again more inflation concerns

1000
00:52:32,040 --> 00:52:34,439
Speaker 1: in the UK. How does that you got about thirty seconds?

1001
00:52:34,440 --> 00:52:36,080
Speaker 1: How does it impact kind of your view of the

1002
00:52:36,320 --> 00:52:36,839
Speaker 1: UK here?

1003
00:52:37,880 --> 00:52:38,080
Speaker 8: UK?

1004
00:52:38,239 --> 00:52:41,520
Speaker 14: I'm going to put in the special child department. UK

1005
00:52:42,160 --> 00:52:46,000
Speaker 14: has some issues with related to Brexit. The composition of

1006
00:52:46,040 --> 00:52:50,279
Speaker 14: the stock market very very energy intensive, banking intensive, and

1007
00:52:50,640 --> 00:52:53,960
Speaker 14: it's been had very very sticky inflation. We think that

1008
00:52:54,320 --> 00:52:57,560
Speaker 14: the UK could continue to raise rates, probably likely to

1009
00:52:57,640 --> 00:53:00,239
Speaker 14: go into a deeper recession. That is not our you

1010
00:53:00,560 --> 00:53:04,200
Speaker 14: about Europe, United States and Japan, by the way, So

1011
00:53:04,320 --> 00:53:08,839
Speaker 14: we have a more constructively optimistic view on those other

1012
00:53:08,920 --> 00:53:11,160
Speaker 14: markets UK special child. Let me put it that way.

1013
00:53:11,280 --> 00:53:13,600
Speaker 1: That's right, Okay, That's what we heard from some others

1014
00:53:13,640 --> 00:53:16,239
Speaker 1: as well. Nancy Curtain, thank you so much for joining us.

1015
00:53:16,360 --> 00:53:19,960
Speaker 1: Nancy Curtain, she's a partner Global CIO and head of

1016
00:53:20,160 --> 00:53:25,120
Speaker 1: Investment Advisory at ALTI Titaman Global. Interesting take there on

1017
00:53:25,200 --> 00:53:26,359
Speaker 1: a Global View.

1018
00:53:26,840 --> 00:53:29,960
Speaker 8: You're listening to the tape cats our live program Bloomberg

1019
00:53:30,040 --> 00:53:33,640
Speaker 8: Markets weekdays at ten am Eastern on Bloomberg Radio, the

1020
00:53:33,680 --> 00:53:35,640
Speaker 8: tune in app, Bloomberg dot Com, and.

1021
00:53:35,600 --> 00:53:36,919
Speaker 7: The Bloomberg Business App.

1022
00:53:36,960 --> 00:53:39,759
Speaker 8: You can also listen live on Amazon Alexa from our

1023
00:53:39,800 --> 00:53:46,320
Speaker 8: flagship New York station, Just Say Alexa play Bloomberg eleven thirty, Jess.

1024
00:53:46,040 --> 00:53:49,960
Speaker 5: Mitt and Paul Sweeney here in the Bloomberg Interactive Brokers Studio.

1025
00:53:50,120 --> 00:53:52,560
Speaker 5: And up next we have Stacy Stephenson, the CEO of

1026
00:53:52,640 --> 00:53:56,879
Speaker 5: Family Equality, joining us to talk about the latest here

1027
00:53:56,960 --> 00:53:59,919
Speaker 5: when it comes to as far as what this could

1028
00:54:00,120 --> 00:54:03,920
Speaker 5: mean when we're looking at companies, especially being less vocal

1029
00:54:03,960 --> 00:54:07,239
Speaker 5: when it comes to pride munch during this anti LGBTQ

1030
00:54:07,400 --> 00:54:09,879
Speaker 5: outcry right now. But Stacey, I wanted to start off

1031
00:54:09,880 --> 00:54:12,560
Speaker 5: first with you as far as your take here when

1032
00:54:12,600 --> 00:54:14,920
Speaker 5: we're looking at some of these Supreme Court rulings that

1033
00:54:14,960 --> 00:54:16,680
Speaker 5: are coming out.

1034
00:54:17,360 --> 00:54:19,520
Speaker 15: Yeah, first, thanks for having me.

1035
00:54:19,960 --> 00:54:24,080
Speaker 16: You know, when I think about the affirmative affirmative action

1036
00:54:24,239 --> 00:54:27,359
Speaker 16: case that just came down, the first thing that came

1037
00:54:27,400 --> 00:54:29,840
Speaker 16: to mind for me is that this is hate wrapped

1038
00:54:29,840 --> 00:54:30,520
Speaker 16: in legallees.

1039
00:54:31,600 --> 00:54:33,080
Speaker 15: And so this Supreme Court.

1040
00:54:32,880 --> 00:54:37,480
Speaker 16: Overturning yet another long standing precedent is devastating and it's worrisome.

1041
00:54:38,280 --> 00:54:40,959
Speaker 16: And you know, this is just yet another concerning court

1042
00:54:41,200 --> 00:54:44,360
Speaker 16: Supreme Court decision at a time when LGBTQ plus folks

1043
00:54:44,400 --> 00:54:45,560
Speaker 16: and marginalized folks are.

1044
00:54:45,560 --> 00:54:47,920
Speaker 15: Under attack in this country. It's very worrisome.

1045
00:54:49,200 --> 00:54:52,440
Speaker 1: How concerned are you, Stacy, that you know this ruling

1046
00:54:52,520 --> 00:54:55,640
Speaker 1: will not just be in effect academia, but will go

1047
00:54:55,760 --> 00:54:59,960
Speaker 1: permeate through other parts of society, whether it's the workplace

1048
00:55:00,680 --> 00:55:02,120
Speaker 1: or other areas as well.

1049
00:55:03,520 --> 00:55:05,000
Speaker 15: I'm extremely concerned about that.

1050
00:55:05,800 --> 00:55:08,799
Speaker 16: Right, this is set a precedent, and you know, much

1051
00:55:08,840 --> 00:55:11,480
Speaker 16: like when Roe was overturned, we saw that too. So

1052
00:55:11,640 --> 00:55:15,680
Speaker 16: this could certainly start permeating and expanding not in just academia,

1053
00:55:15,719 --> 00:55:18,440
Speaker 16: but start to seep into corporate America, started to seep

1054
00:55:18,440 --> 00:55:19,520
Speaker 16: in other sectors.

1055
00:55:19,560 --> 00:55:20,719
Speaker 15: And that's very concerning.

1056
00:55:21,120 --> 00:55:23,440
Speaker 16: One thing I will say is that we are not

1057
00:55:23,480 --> 00:55:25,520
Speaker 16: going to retreat, and our partners who are working in

1058
00:55:25,560 --> 00:55:29,080
Speaker 16: academia will continue to fight. And on the LGBTQ plus side,

1059
00:55:29,239 --> 00:55:31,839
Speaker 16: obviously we're watching this very closely. But one thing that

1060
00:55:31,960 --> 00:55:34,320
Speaker 16: I think is very important is that we will not retreat.

1061
00:55:34,360 --> 00:55:36,680
Speaker 16: We have to continue to fight. And at the same time,

1062
00:55:36,760 --> 00:55:40,359
Speaker 16: you're really realistic about this could start to seep into

1063
00:55:40,360 --> 00:55:41,680
Speaker 16: other sector's decisions like this.

1064
00:55:42,000 --> 00:55:45,399
Speaker 5: Stacey, talk to us more about family equality and what

1065
00:55:45,440 --> 00:55:46,040
Speaker 5: you do there.

1066
00:55:47,080 --> 00:55:53,280
Speaker 16: Sure you know, family is foundational to America, to American values,

1067
00:55:53,760 --> 00:55:59,000
Speaker 16: and every person in this country deserves the right to family. However,

1068
00:55:59,040 --> 00:56:02,160
Speaker 16: that is not the experiences so many LGBTQ plus people

1069
00:56:02,239 --> 00:56:04,600
Speaker 16: who want to create a family, who want to sustain

1070
00:56:04,640 --> 00:56:07,160
Speaker 16: a family, who want to have children. That is the

1071
00:56:07,160 --> 00:56:10,360
Speaker 16: work of family equality. For forty four years, we have

1072
00:56:10,440 --> 00:56:15,040
Speaker 16: been fighting for LGBTQ plus people to find to form.

1073
00:56:14,800 --> 00:56:16,040
Speaker 15: And sustain our families.

1074
00:56:16,360 --> 00:56:18,839
Speaker 16: And what we do is essentially ensure that we can

1075
00:56:18,840 --> 00:56:23,400
Speaker 16: create our families without social, without legal, and without economic barriers.

1076
00:56:23,560 --> 00:56:26,279
Speaker 15: And we've been doing that work since nineteen seventy nine.

1077
00:56:26,920 --> 00:56:30,000
Speaker 1: How do you do that, because it seems like today

1078
00:56:30,040 --> 00:56:33,600
Speaker 1: maybe tougher than it's ever been, particularly in certain parts

1079
00:56:33,600 --> 00:56:37,479
Speaker 1: of the country, certain states. Give us a practical case

1080
00:56:37,520 --> 00:56:39,359
Speaker 1: of how you actually try to do that.

1081
00:56:40,360 --> 00:56:43,759
Speaker 16: Sure a practical case would be, for example, we know

1082
00:56:43,960 --> 00:56:48,960
Speaker 16: that we are seeing just a plethora of LGBTQ plus

1083
00:56:49,120 --> 00:56:52,239
Speaker 16: rhetoric and laws being introduced or passed in the state

1084
00:56:52,280 --> 00:56:55,680
Speaker 16: of Florida. For example, one of the strategies that we

1085
00:56:55,800 --> 00:56:59,600
Speaker 16: employed is that we, along with some other plaintiffs, are

1086
00:56:59,640 --> 00:57:02,600
Speaker 16: now taking the State of Florida or the Department of

1087
00:57:02,600 --> 00:57:06,879
Speaker 16: Florida Education to court over there. Don't say gay bill there,

1088
00:57:06,960 --> 00:57:10,960
Speaker 16: don't say gay law it because it's frankly unconstitutional. And

1089
00:57:11,000 --> 00:57:15,320
Speaker 16: so when we can actually enter into lawsuits and to

1090
00:57:15,600 --> 00:57:19,920
Speaker 16: conversations like that, that not only signals to families in

1091
00:57:19,960 --> 00:57:22,240
Speaker 16: Florida that we are there for them, but it also

1092
00:57:22,360 --> 00:57:24,120
Speaker 16: helps to move the needle. We're gonna have to get

1093
00:57:24,160 --> 00:57:27,520
Speaker 16: really aggressive now, and we have over five hundred anti

1094
00:57:27,640 --> 00:57:30,320
Speaker 16: LGBTQ plus bills that have been introduced across the country.

1095
00:57:30,880 --> 00:57:33,320
Speaker 16: Those strategies have changed. I mean, I think twenty eighteen

1096
00:57:33,360 --> 00:57:35,320
Speaker 16: we only saw forty one bills. Now we're up to

1097
00:57:35,400 --> 00:57:38,040
Speaker 16: five hundred. They've changed their strategy, So now we have

1098
00:57:38,080 --> 00:57:40,280
Speaker 16: to change our strategy, but a practical example would be

1099
00:57:40,320 --> 00:57:42,760
Speaker 16: our lawsuit in Florida.

1100
00:57:42,160 --> 00:57:46,640
Speaker 5: And talk to us more about these inclusive hiring efforts

1101
00:57:46,680 --> 00:57:49,960
Speaker 5: that are really helped to be geared directed toward families.

1102
00:57:50,040 --> 00:57:53,840
Speaker 5: And obviously when we've seen larger corporations, we've heard about

1103
00:57:53,840 --> 00:57:59,640
Speaker 5: Target obviously having those particular backlash recently, and basically just

1104
00:57:59,640 --> 00:58:02,040
Speaker 5: looking at as far as what this means for hiring, recruiting,

1105
00:58:02,080 --> 00:58:04,200
Speaker 5: and some of the repercussions this could have there.

1106
00:58:05,720 --> 00:58:08,560
Speaker 17: I mean, you know, you want inclusive policies, you want

1107
00:58:08,560 --> 00:58:11,960
Speaker 17: to hire people who are from marginalized communities. Yet we

1108
00:58:12,040 --> 00:58:17,560
Speaker 17: see organizations who are retreating, if you will, or understanding

1109
00:58:17,560 --> 00:58:18,160
Speaker 17: that there's.

1110
00:58:17,920 --> 00:58:19,880
Speaker 16: No more what I call a middle ground. I feel

1111
00:58:19,880 --> 00:58:21,480
Speaker 16: like there used to be a middle ground where corporate

1112
00:58:21,560 --> 00:58:24,600
Speaker 16: Muerica could sort of satisfy both sides. That middle ground

1113
00:58:24,600 --> 00:58:27,040
Speaker 16: does not exist anymore, and what I see is going

1114
00:58:27,080 --> 00:58:31,560
Speaker 16: to be a shrinking pipeline, a shrinking pipeline of individuals

1115
00:58:31,600 --> 00:58:34,960
Speaker 16: who would you know, I've built be comfortable with applying

1116
00:58:35,000 --> 00:58:37,600
Speaker 16: for places like Target and others. I think those folks

1117
00:58:37,680 --> 00:58:41,000
Speaker 16: are going to think twice before working at organizations like this.

1118
00:58:41,440 --> 00:58:44,760
Speaker 16: So now we've caused another issue, right, by retreating, now

1119
00:58:44,800 --> 00:58:47,200
Speaker 16: we effectively as shrunk the pipeline in terms of those

1120
00:58:47,280 --> 00:58:50,920
Speaker 16: organizations or those people rather who would otherwise be hired

1121
00:58:51,040 --> 00:58:53,920
Speaker 16: or even see these organizations as a viable place to work.

1122
00:58:54,720 --> 00:58:57,320
Speaker 1: So, Stacey, what's your take on what we saw or

1123
00:58:57,360 --> 00:58:59,720
Speaker 1: what we are seeing with between Disney and the state

1124
00:58:59,760 --> 00:59:00,000
Speaker 1: of FAFE.

1125
00:59:03,800 --> 00:59:07,240
Speaker 16: I can't necessarily speak to that, but what I will

1126
00:59:07,280 --> 00:59:08,160
Speaker 16: say is that.

1127
00:59:08,480 --> 00:59:11,720
Speaker 1: Disney just just representative of corporate America. There's a company

1128
00:59:11,720 --> 00:59:14,440
Speaker 1: who tried to step up and you know, obviously felt

1129
00:59:14,480 --> 00:59:17,000
Speaker 1: some backlash, and that's Almighty Disney, That's Mickey Mouse.

1130
00:59:17,600 --> 00:59:18,600
Speaker 15: Yeah, this is Mickey Mouse.

1131
00:59:18,760 --> 00:59:20,760
Speaker 16: But you know what I will say is about Disney

1132
00:59:20,800 --> 00:59:23,000
Speaker 16: and others, is that I feel like there isn't there's

1133
00:59:23,040 --> 00:59:25,840
Speaker 16: an evolution that is happening with corporations. And so we

1134
00:59:25,960 --> 00:59:30,120
Speaker 16: know that Disney had some backlash, they retreated, There was

1135
00:59:30,160 --> 00:59:34,040
Speaker 16: a whole plethora of negatives that came out of that, and.

1136
00:59:33,960 --> 00:59:35,840
Speaker 15: Then we saw Disney take a shift.

1137
00:59:36,280 --> 00:59:38,400
Speaker 16: And I think that's exactly what's going to happen, is

1138
00:59:38,400 --> 00:59:42,760
Speaker 16: that these organizations, oftentimes thinking about revenue, thinking about I

1139
00:59:42,800 --> 00:59:46,320
Speaker 16: think trying to please everybody, will oftentimes retreat.

1140
00:59:46,720 --> 00:59:48,800
Speaker 15: But if they are really connected to their values.

1141
00:59:48,840 --> 00:59:51,919
Speaker 16: If they really are walking the walk and talking the talk,

1142
00:59:52,160 --> 00:59:52,840
Speaker 16: then we will.

1143
00:59:52,640 --> 00:59:53,520
Speaker 15: See that shift.

1144
00:59:53,680 --> 00:59:56,840
Speaker 16: And I'm hoping that we will see that with other organizations,

1145
00:59:56,840 --> 00:59:59,040
Speaker 16: because you're going to have to make a decision, and

1146
00:59:59,120 --> 01:00:01,720
Speaker 16: I often say that either you are foreign quality or

1147
01:00:01,720 --> 01:00:04,240
Speaker 16: you're not, and you can't take a middle.

1148
01:00:04,040 --> 01:00:07,120
Speaker 1: Groil Stacy, thanks so much for joining us. Really appreciate

1149
01:00:07,120 --> 01:00:10,800
Speaker 1: getting a few minutes of your time. Stacy Stevenson, CEO

1150
01:00:10,960 --> 01:00:14,320
Speaker 1: of Family Equality.

1151
01:00:15,640 --> 01:00:18,760
Speaker 2: Thanks for listening to the Bloomberg Markets podcast. You can

1152
01:00:18,760 --> 01:00:22,560
Speaker 2: subscribe and listen to interviews at Apple Podcasts or whatever

1153
01:00:22,640 --> 01:00:26,360
Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter

1154
01:00:26,560 --> 01:00:28,640
Speaker 2: at Matt Miller nineteen seventy three.

1155
01:00:28,920 --> 01:00:31,320
Speaker 1: And I'm Fall Sweeney. I'm on Twitter at pt Sweeney.

1156
01:00:31,440 --> 01:00:34,120
Speaker 1: Before the podcast, you can always catch us worldwide at

1157
01:00:34,120 --> 01:00:35,880
Speaker 1: Bloomberg Radio.