Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: We'll begin this sound with stock slower and Crewed rising
Speaker 2: as peace talks in the Middle East remain idle. Eric
Speaker 2: Cancer of Molus and Company writing, energy dependence and domestic
Speaker 2: production are key to insulating the US from global shocks.
Speaker 2: Eric Johns to now for more. Eric, good morning. It's
Speaker 2: good to see you. That's great to be here in
Speaker 2: the present. It's tough in the future. Things looking better.
Speaker 2: Recording to financial markets, what's going to shake this market
Speaker 2: after such a powerful forward looking mindset?
Speaker 3: You know, Look, if you think about where we are,
Speaker 3: and I know the discussion around the table this morning
Speaker 3: has been the incredible resilience of the American economy. And
Speaker 3: I think that if you look at it, a lot
Speaker 3: of it has to do with some shock absorbers that, frankly,
Speaker 3: the Trump administration in Washington has been put into place.
Speaker 3: You've just experienced big tax refunds that came out of
Speaker 3: the one big, beautiful bill. You now have a shock absorber,
Speaker 3: if you will, that is going to be afforded to
Speaker 3: the corporate community in the terms of one hundred and
Speaker 3: sixty billion dollar tairaff refunds. You've got actions on the
Speaker 3: part of this president said Hey, we're going to go
Speaker 3: and ease this oil crunch by releasing more strategic petroleum reserves,
Speaker 3: the waivers on the Russian oil, and ultimately you've got
Speaker 3: a very pro business administration in Washington, so you've got
Speaker 3: a regulatory construct that is much more constructive than we've
Speaker 3: had in the past. So I think all that helps
Speaker 3: when you see these earnings, helps explain where we are.
Speaker 2: Do you think underestimating the momentum going into this war?
Speaker 3: Well, I do think so, and I think that there's
Speaker 3: not been a lot of credit given to this construct,
Speaker 3: the policy construct we've operated in. Certainly, the liquidity that's
Speaker 3: out there with a high end consumer has not abated yet.
Speaker 3: But look, I don't think we've necessarily gotten to peak
Speaker 3: shortage yet. And just as your guests have been discussing
Speaker 3: on the show this morning, I do think that we've
Speaker 3: got real uncertainty as to where and how you're going
Speaker 3: to see these oil flows were resumed so that you
Speaker 3: can get back to normal.
Speaker 1: Blackstunge just came out with earnings, so they said this
Speaker 1: is going to be the year of the IPO. They
Speaker 1: still think it's going to be an unprecedented year for IPOs.
Speaker 1: We've heard that from a number of companies that mergers
Speaker 1: and acquisitions going incredibly strong. When you talk to companies
Speaker 1: given the uncertainty out there that you just reflected, how
Speaker 1: much are people willing to carry through with some of
Speaker 1: these plans given that things could change a lot in
Speaker 1: the next couple of months.
Speaker 3: I think, you know, the market's clearly looking through the
Speaker 3: short term uncertainty in the golf I mean, there's no
Speaker 3: question about that, and it's undergraded by the earnings. But
Speaker 3: you know, if you look at the forces that have
Speaker 3: been at work, and I talked about some of the
Speaker 3: policy forces, but if you see in the commercial world
Speaker 3: and where companies are with this technological revolution that we're
Speaker 3: experiencing with the AI boom, you know, companies are thinking
Speaker 3: how am I going to position myself boards and manage
Speaker 3: when are saying, hey, what do we have to do
Speaker 3: to take advantage of this? And you've got that tailwind
Speaker 3: that continues to push forward in terms of people saying, hey,
Speaker 3: maybe we should transact, maybe we should accomplish more scale
Speaker 3: in order to take advantage of this situation. And then
Speaker 3: obviously in the world of private equity, you constantly have
Speaker 3: this need of recycling capital, You constantly have a need
Speaker 3: for return of liquidity to the LPs. That hasn't gone
Speaker 3: away either. So in many ways, the structural pillars that
Speaker 3: have supported the environment to transact have not gone away either.
Speaker 1: So you don't think that what we're seeing right now
Speaker 1: in the Middle East is going to deter the pace
Speaker 1: and frankly, the pipeline that people were talking about, which
Speaker 1: was unprecedented heading into this year.
Speaker 3: Well, I mean, look, there's no question that there're going
Speaker 3: to be specific areas. I mean, individuals, entities in the
Speaker 3: Middle East are certainly not in the same state of
Speaker 3: mind as they were eight weeks ago. So there are
Speaker 3: going to be geographies, and they're going to be certain areas.
Speaker 3: I mean, with the AI situation and private credit and software,
Speaker 3: certainly that's going to have an impact right now. But
Speaker 3: that I think is a short term sort of thought.
Speaker 3: That longer term, you've got these structural tailwinds that are
Speaker 3: continued to propel people's willingness to say, hey, we want
Speaker 3: to do something. Things are moving too rapidly.
Speaker 2: So many people in this industry are incentivized to keep
Speaker 2: on bouncing. We could say three of the biggest ipis
Speaker 2: we've ever seen in the history of this country, Open Eye,
Speaker 2: an thro pick SpaceX Old in the next nine months, and.
Speaker 1: It potentially could change the dynamic that we've seen in
Speaker 1: terms of assets in the US, where people were talking
Speaker 1: about a scarcity of stocks and the buybacks that have
Speaker 1: been going on for so long, and suddenly we're going
Speaker 1: to see the biggest expansion of US equities public equities
Speaker 1: that we've seen in many, many years. So there are
Speaker 1: a lot of structural questions that are facing this market
Speaker 1: later this year.
Speaker 2: We've struggled with reality versus hype. I'd like your view
Speaker 2: on that. When I say everyone's incentivized to keep on bouncing,
Speaker 2: it's a little bit of snock in that as well.
Speaker 2: I think everyone's incentivized to things are maybe better than
Speaker 2: they are at the same time because they've once got
Speaker 2: to make some money later this year, particularly off those
Speaker 2: three big IPOs. Potentially, what is real and what is
Speaker 2: hypen What.
Speaker 3: Is real is we are we have sort of an
Speaker 3: error of revolution right now. You think about sort of
Speaker 3: the geopolitical revolution, the trade revolution that's come into play
Speaker 3: with this present. You think about the technological revolution that
Speaker 3: we are experiencing all these forces are coming to bear.
Speaker 3: That really is the reality. People are trying to understand
Speaker 3: how the best position themselves, their capital, their companies to
Speaker 3: take on these new times. And I think that is reality,
Speaker 3: and there is incentive for sure to try and benefit
Speaker 3: from a lot of a lot of the changes.
Speaker 2: You call them forces. Other people might call it friction.
Speaker 2: And with that increased friction comes increased costs. What's your
Speaker 2: reaction to that, Well, I.
Speaker 3: Mean, I do think it's increased costs if you do
Speaker 3: it the old way. If you're going to go in
Speaker 3: and try and embrace the new way, that's where everyone's
Speaker 3: trying to get to. And that's exactly the point. That's
Speaker 3: the dynamic. Whether you call it friction or whether you
Speaker 3: call it, you know, a tailwind or a force, that
Speaker 3: is the mechanism that is saying to people, hey, we
Speaker 3: need to stand up, look at where the opportunities are,
Speaker 3: otherwise we're going to be left by hand.
Speaker 2: Which is why there is such an aggressive, forward looking
Speaker 2: mindset in this market right now. We spoke to Jim's
Speaker 2: out of Apollo in the last month several weeks ago.
Speaker 2: He sat in your chair and he said, we all
Speaker 2: need to take a walk, because in six months time,
Speaker 2: we won't even be talking about the crisis in the Middle least,
Speaker 2: we'll be talking about how wide open financial markets are,
Speaker 2: how much dealmaking we'll we get getting done. I can't
Speaker 2: remember the full list from Jim, but it went something
Speaker 2: like that, you agree with that.
Speaker 3: I one hundred percent agree with that. And again, I
Speaker 3: do think you've got a regulatory construct. You've got the SEC,
Speaker 3: You've got the FTC, the DOJA, You've got all these
Speaker 3: you know, regulators in Washington that are primed to want
Speaker 3: to help the growth in this economy.
Speaker 1: Do you think that in this environment it's appropriate for
Speaker 1: the government to take a stake and say a struggling
Speaker 1: airline maker, like an airline operator like Spirit Given the
Speaker 1: fact that most people are saying this is a short
Speaker 1: term issue that you can look through.
Speaker 3: Well, look, there's a difference between what this administration has
Speaker 3: has implemented its policy on critical sectors, you know, critical sectors,
Speaker 3: whether they be those that are central to the discussions
Speaker 3: with China. How do we go make our supply chain secure?
Speaker 3: How do we make sure we have a biopma supply
Speaker 3: chain here so the next time we've got a shortage
Speaker 3: or a pandemic. We're not relying on China for inputs
Speaker 3: for our drugs. I mean, I do think that there
Speaker 3: is almost a bipartisan recognition that, hey, we got to
Speaker 3: do that. I'm not so sure that there is a
Speaker 3: bipartisan recognition that hey, we've got to step in and
Speaker 3: help whatever domestic industry there is. And you know, we'll
Speaker 3: have to see whether these discussions come to fruition and
Speaker 3: what the reasoning, what the reasoning is, mind.
Speaker 2: I mean, what happened to the Republican pency?
Speaker 3: Come on, listen right now, Jonathan's not a good topic
Speaker 3: with me because I just experienced in my state of
Speaker 3: Virginia a very very narrow loss in a very extreme
Speaker 3: partisan gerrymandering that the other side put into place. And
Speaker 3: I do think people are going to have a reaction
Speaker 3: and there will be a backlash to some of the
Speaker 3: extremity that's going on.
Speaker 2: You think that'll showup in a bit sense.
Speaker 3: Well, I hope so, because there was no question where
Speaker 3: the intensity was on the part of the two sides
Speaker 3: in Virginia on Tuesday. They were on my side because
Speaker 3: of the extremity and the just insane.
Speaker 2: I don't know all the words, both parties guilty of that.
Speaker 2: Why was this Differentia, Well.
Speaker 3: This one in Virginia. You have to get granular and specific,
Speaker 3: but it was thirty six changes to the law. There
Speaker 3: was a waiver of the constitution just four or five
Speaker 3: years so that they could go against Trump and respond
Speaker 3: to his alleged moves. I mean these things, most people
Speaker 3: are not living that partisan lens. And I do think
Speaker 3: allultimately people are going to be worried about how they
Speaker 3: get ahead in their life. And I think this discussion
Speaker 3: about prices and gas pump prices, that's what is going
Speaker 3: to ultimately determine all of this as well as the
Speaker 3: outcome of the midterms. Is are we going to get
Speaker 3: these prices of the pump down?
Speaker 2: Eric, it's going to see you, It's going to catch up.
Speaker 2: Thank you, sir, as always, Eric Cantade of Molus and Company.