Speaker 1: P and L is brought to you by proper Cloth,
Speaker 1: a leader in men's custom shirts, with proprietary smart sized
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Speaker 1: order your first custom shirt today. Welcome to the Bloomberg
Speaker 1: P and L Podcast. I'm Pim Fox. Along with my
Speaker 1: co host Lisa Abramowitz. Each day we bring you the
Speaker 1: most important, noteworthy, and useful interviews for you and your money,
Speaker 1: whether at the grocery store or the trading floor. Find
Speaker 1: the Bloomberg P and L Podcast on iTunes, SoundCloud and
Speaker 1: at Bloomberg dot com. I want to talk about the
Speaker 1: treasury market and what happened to the foreign buyer. I
Speaker 1: am so happy to bring in Jim Vogel, interest rate
Speaker 1: strategists at ft N Financial, A fantastic analysts. I read
Speaker 1: his reports every day. Jim, I would love to get
Speaker 1: your take first off on whether we're starting to see
Speaker 1: foreign investors come back to the U. S. Treasury market
Speaker 1: after abandoning it in December. Not yet on a large scale.
Speaker 1: What we're really seeing is some buying when we get
Speaker 1: these odd currency fluctuations, but it's not enough necessarily to
Speaker 1: say that the foreign buyers are back. So, in other words,
Speaker 1: even though there is a higher proportion of indirect buyers
Speaker 1: at some of the recent auctions, in other words, that's
Speaker 1: usually a category that includes foreign money, but also that
Speaker 1: includes hedge funds. It's been increasing, but it doesn't necessarily
Speaker 1: represent that China and Japan are coming back. No, not
Speaker 1: yet in the kind of support that the treasury market
Speaker 1: became accustomed to over the last five to six years. Hey, Jim,
Speaker 1: could you just comment on what's going on with the
Speaker 1: US dollar? And and and am I correct in thinking
Speaker 1: that we saw this big searche in dollar since the
Speaker 1: November election and that after the new year we still
Speaker 1: saw some strength. But then they started to be conversation
Speaker 1: aations about you know, how long things would take in
Speaker 1: taxes and interest? Right, what can you tell us about
Speaker 1: the sort of trajectory of the dollar. The dollar is
Speaker 1: still going to regain some of its strength, but it
Speaker 1: was way too strong in December because for a while
Speaker 1: people feared that the Fed was falling behind the potential
Speaker 1: of the Trump slash Republican stimulus that everybody was talking about.
Speaker 1: It became part of the Trump trade, and so on
Speaker 1: that basis, if the FED was behind, then they would
Speaker 1: have to catch up, say with a big increase or
Speaker 1: a quick increase at the March meeting. That thinking from
Speaker 1: December has totally wilted, particularly after we saw average hourly
Speaker 1: earnings growth revisions last week. So there's this debate right
Speaker 1: now that's been going on, which is, are we headed
Speaker 1: toward an inflationary reflationary time period or are you going
Speaker 1: to see treasury yields go back down in the wake
Speaker 1: of disappointing growth. Where are you weigh on this? Uh,
Speaker 1: We're going to stabilize inflation once we move past a
Speaker 1: couple of other uh, the next couple of months that
Speaker 1: are going to see increases in the indexes. And but
Speaker 1: we are not really set for say the ten year
Speaker 1: to go back to the two percent level when people
Speaker 1: were less concerned about inflation. Uh. It's still an early
Speaker 1: days in the Trump administration, and the people that believe
Speaker 1: tips are the right place to be are hurting this week,
Speaker 1: but they have certainly been winning and are ready to
Speaker 1: commit more capital to that market. How much does the
Speaker 1: foreign bid that we were talking about earlier play into
Speaker 1: your thesis? For the most part, do we see the
Speaker 1: overseas UH fixed income investor staying focused primarily in the
Speaker 1: European market. Right now. We do not see them as
Speaker 1: major players in the US, except when there's a risk
Speaker 1: style event that may come over from EU banking or
Speaker 1: other matters such as that. So we're back up for
Speaker 1: a little bit. No, when you say that they're focused
Speaker 1: on on the on the EU, are they looking to
Speaker 1: buy German debt French debt now that yields have risen there?
Speaker 1: I mean where where are they focused? Yeah, for the
Speaker 1: most part, they're focused on Germany and France, and then
Speaker 1: everything else keys off those relationships there. And so the
Speaker 1: big news in addition to the treasury rally this week
Speaker 1: is that both German and French tenure yields have returned
Speaker 1: to roughly their two month average. Do you see the
Speaker 1: rally continuing unfortunately for a bit longer, Yes, because we
Speaker 1: still have to retain firmer footing, and when we have
Speaker 1: the big sell off in December, we totally bypassed this
Speaker 1: area between two thirty and two thirty five. There are
Speaker 1: no technical indicators for traders to go, oh, finally we've
Speaker 1: reached here and now we can start selling again. And
Speaker 1: until we just sort of leach out some of this
Speaker 1: dollar trade and a couple of other points, we can
Speaker 1: stay below to th D seven on tens UH into
Speaker 1: next week. Jim, what do you think is a likely
Speaker 1: outcome for year and ten year treasury yields? We're still
Speaker 1: in the two five to fifty camp. We don't see
Speaker 1: to the extent that rates spike in the at some
Speaker 1: point as we look at FED or possibly UH stimulus
Speaker 1: from the fiscal side in Washington, they could go up to,
Speaker 1: say to sixty, but we believe they'll come back down
Speaker 1: because there's people are looking at the federal UM picture
Speaker 1: on a linear basis and not with all the different
Speaker 1: ramifications that follow any particular Washington UM fiscal move. The
Speaker 1: other really big topic that people have been talking about
Speaker 1: in the bond world is whether the Federal Reserve will
Speaker 1: start to unwind their four point five trillion dollar balance sheet.
Speaker 1: There's been discussion about whether they'll start doing that as
Speaker 1: soon as early later this year. There's also been discussion
Speaker 1: about whether they focus more on their mortgage holdings or
Speaker 1: their treasury holdings. Where do you weigh in on this?
Speaker 1: We believe that we will look far more at their
Speaker 1: treasury holdings. Uh, there are four hundred billion dollars of
Speaker 1: treasuries that have to be reinvested in two thousand and eighteen.
Speaker 1: So that's the far more immediate um UH horizon that
Speaker 1: requires a policy decision, and we think they'll be looking
Speaker 1: at it very closely in the second half of this
Speaker 1: year to at least communicate to the market a fairly
Speaker 1: detailed plan. Kim, is there any plan for if the
Speaker 1: economy is currently at its peak, end will either plateau
Speaker 1: or we will see a slowdown? Uh, there is nothing
Speaker 1: in the broader numbers that indicate that we've peaked. The
Speaker 1: sort of the worst trend that we've got is the
Speaker 1: fourth quarter personal consumption grew at two and a half
Speaker 1: percent versus the six quarter average of two point eight.
Speaker 1: But but that's still quite reasonable given um the FEDS
Speaker 1: goal of continued um solid growth in the US economy.
Speaker 1: That's still ahead of their formal forecast. So you think
Speaker 1: that things are kind of just going to be steady
Speaker 1: throughout the year, What do you think? What's what's the
Speaker 1: biggest potential surprise on the horizon that could change your view? Uh.
Speaker 1: The biggest that would be a more coherent action plan
Speaker 1: from Washington, where the White House and Congress are moving
Speaker 1: together very quickly. Um to say accomplished, say corporate tax
Speaker 1: reform in significant detail, not necessarily pass it, but have
Speaker 1: it out there on a two hundred day calendar, as
Speaker 1: opposed to what people like to talk about in terms
Speaker 1: of the one hundred day calendar. Interesting, very good. Thanks
Speaker 1: for pinpointing that. Jim Vogel. He is interest rate strategist
Speaker 1: for FTN Financial, joining us from Memphis at Tennessee. While
Speaker 1: we want expertise in the world of technology media, well
Speaker 1: turned to only one person, Paul Sweeney, US director of
Speaker 1: Research and senior Media Internet Analyst for Bloomberg Intelligence. I
Speaker 1: urge you to go to b I go on the
Speaker 1: Bloomberg for a variety of detailed reports and insights into
Speaker 1: a variety of industries. Paul Sweeney, where do you want
Speaker 1: to start? You want to do Disney or you want
Speaker 1: to do uh Time Warner and the A. T. T. Combo.
Speaker 1: I think Disney is usually the most fun story to
Speaker 1: talk about. And you know they had a kind of
Speaker 1: a mixed quarter last night. Uh they beat on the
Speaker 1: EPs line, but they missed on revenue and the ESPN numbers.
Speaker 1: You know, we're still a little bit soft and uh,
Speaker 1: and that's kind of a problem because their cost based
Speaker 1: continues to go up. At ESPN, sports rights continue to
Speaker 1: go up. In fact, they are in the first year
Speaker 1: of new NBA contract, which is six million dollars of
Speaker 1: incremental expenditures for them. So the cost of sports rights
Speaker 1: continues to go up. And that's obviously you know, ESPN
Speaker 1: has has the monopoly there, but the revenue trends remain
Speaker 1: challenge at ESPN. They're dealing with chord cutting, they're dealing
Speaker 1: with skinny bundles, and they have to figure out a
Speaker 1: way to kind of tap into the digital growth opportunities
Speaker 1: for ESPN. But ESPN still has a very steady and
Speaker 1: desirable group of viewers. No, I mean, this isn't exactly
Speaker 1: something that's going to go away. I know, it's it's
Speaker 1: by far the most valuable cable network out there, and
Speaker 1: it continues to grow revenue and profits continue to grow,
Speaker 1: just at a slower growth rate um and so again
Speaker 1: some investors at work, certainly, but it's you know, it's
Speaker 1: it's half almost half the operating profit of the Walt
Speaker 1: Disney Company. So it's a major driver of of the company.
Speaker 1: So the question for the Walt Disney Company, like all
Speaker 1: kick cable networks, is you know, how do they bring
Speaker 1: their content direct to consumers? Uh, you know, through some
Speaker 1: type of streaming service. UM. It looks like people are
Speaker 1: on the margin cutting the cord. So you have to
Speaker 1: think about new ways to reach your consumers with your content.
Speaker 1: And you know, we've seen some examples like HBO has
Speaker 1: taken Hbo direct to consumers. It's called HBO now and
Speaker 1: you can subscribe to it directly, and you know, and
Speaker 1: we're off to see, you know what ESPN decides to do.
Speaker 1: You know, Paul, there's been some speculation that Disney might
Speaker 1: spin off ESPN as its own entity. What do you
Speaker 1: think the likelihood of that is. I think in a
Speaker 1: near to intermediate term, that's very unlikely. Um. This is
Speaker 1: still again half of the almost half of the operating
Speaker 1: profit of the company here, so it's a major part
Speaker 1: of the business. UM and it's still a extraordinarily valuable
Speaker 1: part of the business. Throws off tremendous amounts of free
Speaker 1: cash flow. But I think to the extent that they
Speaker 1: ever get to the point where, you know, the growth rate,
Speaker 1: you know, turns materially negative and it ends up being
Speaker 1: a real drag on the valuation, which I don't think
Speaker 1: it is now. Then clearly there will be an opportunity
Speaker 1: to to spin this asset out, and there'll be a
Speaker 1: lot of demand for that, but I don't think that's
Speaker 1: anything in the near term. Paul, I wonder if there's
Speaker 1: anybody that has access to the Internet that doesn't either
Speaker 1: pay a telephone company or a k able company some money.
Speaker 1: We're talking about like cable operators, whether it's Comcast or Charters, Spectrum, Verizon,
Speaker 1: so on. Right. Well, and unless you're a millennial, so
Speaker 1: the younger demos are in fact are kind of corded
Speaker 1: never's if you will. They've never signed up to any
Speaker 1: kind of pay TV service. Um. And so the question is,
Speaker 1: you know, how do you reach those people? Um? And
Speaker 1: there's actually that that percentage of the population is actually growing,
Speaker 1: the folks that do not pay it's a small percentage today,
Speaker 1: but it's growing. Where do they get their service? Where
Speaker 1: do they get their connection to the internet? Just public WiFi? Well,
Speaker 1: they'll get it, yeah, you're right, So they'll they'll either
Speaker 1: get a public WiFi or maybe they'll just subscribe to
Speaker 1: a standalone you know, uh, broadband connection through a cable
Speaker 1: company or through a telephone company. But the question is
Speaker 1: will they pay for a big video product, and that
Speaker 1: you know, on the margin, the millennials tend not to
Speaker 1: be doing that. But again, if you're isn't that what
Speaker 1: T mobile I was gonna say, isn't that what T
Speaker 1: Mobile was trying to do by giving away? We're not
Speaker 1: giving away, but like getting you unlimited video for certain
Speaker 1: types of video. Fair does Disney needed that kind of
Speaker 1: more direct pipe into people's homes? I think they do
Speaker 1: um and I think they're moving, but they're moving more
Speaker 1: slowly than others are. And the reason to moving more
Speaker 1: slowly is because they have more to lose. They get
Speaker 1: almost seven dollars per subscriber per month for ninety millions
Speaker 1: subscribers to ESPN. It's hard to walk away from that
Speaker 1: order even potentially cannibalize that business. So that that's why
Speaker 1: they've been more reluctant to do that versus some other companies.
Speaker 1: But you know, you take a look at a T
Speaker 1: and T. One of the big reasons that they bought
Speaker 1: a Time Warner is because they have you know, so
Speaker 1: many wire line and wireless customer relationships, but they don't
Speaker 1: have any content and so that's why they stepped up
Speaker 1: to pay eighty five billion dollars for Time Warner. Well,
Speaker 1: talking about Time Warner, they have a strategy that perhaps
Speaker 1: others will adopt, squeezing cable and satellite distributors for more
Speaker 1: and more money. And this is one of the reasons
Speaker 1: why they reported better than expected earnings. Correct. Yeah, the
Speaker 1: numbers came in a very very strong for them, a
Speaker 1: good good quarter for them, which is nice for a
Speaker 1: T and t um. The big driver for Time Warner
Speaker 1: was the fact that they did continue you to have
Speaker 1: strong affiliate feed growth in their cable networks and that
Speaker 1: about affiliate feed growth year of a year, which is
Speaker 1: by far the best in the industry. What was driving
Speaker 1: that is they just over the last two to three
Speaker 1: years renegotiated most of their distribution contracts with the cable
Speaker 1: companies and the satellite companies and they were able to
Speaker 1: get big increases. The reason they were able to get
Speaker 1: big increases is because they just invested a ton of
Speaker 1: money in their programming, particularly sports programming, uh the NBA,
Speaker 1: in the n c a A. Uh So they put
Speaker 1: their money where their mouth is. And then they turned
Speaker 1: around the distributors and they're like, Okay, we're giving you
Speaker 1: better content. We want to get paid more, and they did.
Speaker 1: Thank you so much. Paul Sweeney, director of North American
Speaker 1: Research and media analyst for Bloomberg Intelligence. P and L
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Speaker 1: made Smarter. Pim Fox, I know that you've been looking to,
Speaker 1: uh potentially buy a Jaguar Land Rover. If you want
Speaker 1: to do it, you need to buy it soon because
Speaker 1: it could cost seventeen dollars more than it costs Now.
Speaker 1: I want to bring in somebody knows all about this.
Speaker 1: Alan Baum, principle at Baum and Associates, a Michigan based
Speaker 1: research firm that just did a study looking at how
Speaker 1: much auto prices could increase as a result of the
Speaker 1: border tax. Some pretty big numbers, huh, Allan, yeah, and
Speaker 1: Tim that seventeen thousand may not to pass. That's what
Speaker 1: the numbers say in terms of our analysis. Obviously, companies
Speaker 1: will make their own decisions on what the how they
Speaker 1: would price their product, right, But the point stands that
Speaker 1: basically the border tax will make it a lot more
Speaker 1: expensive for some companies, and more so than than others.
Speaker 1: For example, Volvo or Mitsubishi or Volkswagen would face a
Speaker 1: bigger challenge than say Ford or General Motors, right, And
Speaker 1: it's based upon where they make their product, the price
Speaker 1: of the product, and how much of the product, even
Speaker 1: if it's made in the US, is imported. Um and
Speaker 1: so Jaguars obviously and land Rover obviously on the far
Speaker 1: end there because their products are imported and their high price. Well, Alan,
Speaker 1: for the record, I'm I'm all. I'm a public transport person,
Speaker 1: so I I just gaze into the windows of the showrooms.
Speaker 1: But if I were to gaze under the hood, I
Speaker 1: might find that most of what's in there, at least
Speaker 1: some of it anyway, was be made in Cana the
Speaker 1: in Mexico, right, because GM and other automakers are still
Speaker 1: facing this uncertainty because of the president's vow to institute
Speaker 1: this border tax. And from the Center of Automotive Research,
Speaker 1: they say that's seventies six percent of the seating and
Speaker 1: interior trim come from outside the US. Electronics more than
Speaker 1: six engine. I mean, if you want to break system,
Speaker 1: chances are it's you know, might come from overseas or
Speaker 1: somewhere outside the US. What are they going to do
Speaker 1: to change that? That's a big deal. And of course
Speaker 1: it's based upon labor UH and scale and so you
Speaker 1: want to do UH, you know, for the kind of
Speaker 1: investment that you're gonna be making there, you're gonna make
Speaker 1: large volumes and so yes, that is clearly the the issue.
Speaker 1: The other thing that that our study showed is a
Speaker 1: company like Sword UH that makes small and midsize cars
Speaker 1: UH in Mexico, as opposed to f C A UH
Speaker 1: and UH and GM both make large pickups. A company
Speaker 1: like Ford is better off because the value of the
Speaker 1: products they're shipping from Mexico is less than that of
Speaker 1: f C A UH and UH and GM. So that's
Speaker 1: why you've seen Forward perhaps being a little more supportive
Speaker 1: of this concept, although obviously all auto companies would prefer
Speaker 1: to have their cost reduced um particularly their tax rates,
Speaker 1: which seems to be something that's that's being considered, and
Speaker 1: not have their taxes increased in the form of this
Speaker 1: border tax. You know, I gotta say, on one level,
Speaker 1: your study shows exactly why some people want this border tax,
Speaker 1: because it essentially would incentivize these overseas companies to either
Speaker 1: move jobs here removing the potential tax, or else not
Speaker 1: be competitive in the same way. I mean, isn't that
Speaker 1: exactly the point? Well, yeah, I mean, I'll be slee.
Speaker 1: Mr Trump is is being responsive to the issues in
Speaker 1: his campaign. The companies, of course, are less excited by
Speaker 1: that because this is a global industry. They've been working
Speaker 1: on that premise for years. Uh. And if we talk
Speaker 1: about the Detroit Three, they are in fact making fewer
Speaker 1: and fewer of their vehicles, not just in the US
Speaker 1: but in North America because they're looking at ways to
Speaker 1: improve their position across the globe. And the companies that
Speaker 1: are based in Japan and Germany are in fact coming
Speaker 1: here to produce because they're looking to do the same thing,
Speaker 1: except in reverse, and that is increase their position here
Speaker 1: in North America. Would that be a much more intelligent
Speaker 1: way to move in your in your estimate, Well, those
Speaker 1: have been the rules of the game. That's what automakers
Speaker 1: and for that matter, businesses across the board have been doing,
Speaker 1: uh to to capitalize. I mean, you know, the obvious
Speaker 1: growth in the automotive market in terms of volume is
Speaker 1: not in North America, and for that matter, it's not
Speaker 1: in Western Europe China. It's in China, and it's in
Speaker 1: Eastern Europe, and so that's that's where the development is
Speaker 1: coming now. The difference, of course, is the North American market,
Speaker 1: particularly US, remains incredibly profitable relative to those markets, and
Speaker 1: so obviously companies are very interested and attached to this market,
Speaker 1: which of course is a good thing for us here
Speaker 1: in the US particularly. I was just gonna say, particularly
Speaker 1: if you're making pickup trucks and SUVs, that's correct. On
Speaker 1: the other hand, uh, you uh, you don't want to
Speaker 1: be making one set of products for North America and
Speaker 1: one set of products for the rest of the world.
Speaker 1: I seem to remember a bankruptcy or two that happened
Speaker 1: in a few years back where that was part of
Speaker 1: the problem. Thank you very much. Alan Baum is a
Speaker 1: principle at Baum and Associates based in Michigan, doing a
Speaker 1: lot of research on the automobile industry and visa. It
Speaker 1: will be interest think to see how the Republican tax
Speaker 1: plan actually moves forward, because they're getting a lot of
Speaker 1: pushback from like, for example, automobile dealers. Will be interesting
Speaker 1: also to see how much the foreign automakers have a
Speaker 1: voice into the White House. Well, I'm gonna I'm gonna
Speaker 1: give a round number. I'm going to give a round number,
Speaker 1: well almost round number A hundred and two. That is
Speaker 1: the ranking for company. It's not around number I said.
Speaker 1: It's not around number A hundred and fifty. Maybe it
Speaker 1: would be the round number, but it is okay, a
Speaker 1: hundred fifty second place. Molus ranks in global equity. Tell
Speaker 1: people what right is a boutique firm? And somehow they
Speaker 1: managed to win the assignment to manage the most coveted
Speaker 1: I p O of this century arguably. I want to
Speaker 1: bring in Ruth Avid. She's an IPO and deals reported
Speaker 1: for Bloomberg in London. Ruth, how did Bollas get this. Hi,
Speaker 1: that's a great question, since everyone has been trying their
Speaker 1: hardest to get on this deal. And I think you
Speaker 1: know you've you've heard of banks going and pitching this
Speaker 1: for months, and we had something last month saying that
Speaker 1: ever Cohen Mollis had been shortlisted. But keep in mind
Speaker 1: that these are just the boutique banks that are getting
Speaker 1: on the mandate, right, they're also speaking to the global
Speaker 1: investment banks, so the Goldman Sachs and hsbcs and city
Speaker 1: groups of the world to get more of them in.
Speaker 1: I mean, you're talking about a company that says it's
Speaker 1: going to have a valuation of two trillion dollars, So
Speaker 1: you'd imagine even if they list like a five percent stick,
Speaker 1: that's a hundred billion I p o. And, as you said,
Speaker 1: probably the largest of the century. Um, it's gonna take
Speaker 1: a lot of banks and a lot of people to
Speaker 1: get it over the line. Can you give a little
Speaker 1: detail of the people involved in making this decision and
Speaker 1: how this is going to affect the other investment banks.
Speaker 1: I think investors are taking into account of fact that
Speaker 1: this is a big coup for Mulist and there's going
Speaker 1: to be you know, I mean it is the It
Speaker 1: is the government which will have a big say in
Speaker 1: who gets the mandates and what kind of do we
Speaker 1: know the people? For example, I mean do we know
Speaker 1: the key people involved in making this happen? I mean
Speaker 1: this is a relationship business. Yes. I mean if you're saying,
Speaker 1: is ken Molly's pitching strongly? Yes, and he's doing a
Speaker 1: great job at it, Like I just want to know
Speaker 1: more about him. You want to know, like who did
Speaker 1: he who do you have dinner with? Exactly? Just or well,
Speaker 1: so I know a lot of the people came from
Speaker 1: ups for example originally, Ruth. What I'm curious about is
Speaker 1: what how much are the fees potentially that we're talking
Speaker 1: about here, I mean, just to give a sense of
Speaker 1: just how much bankers were salivating over this deal. So
Speaker 1: typically I po fees are about two point five to
Speaker 1: three percent of the deals size. But that's just you know,
Speaker 1: that's just the overall numbers and not something to get
Speaker 1: too excited about. Because state deals, and this is one
Speaker 1: thing that whether it doesn't matter what market you're in,
Speaker 1: a government deal is going to pay you much less
Speaker 1: than a private company. So it's more of the prestige,
Speaker 1: right and it's more of them, like oftentimes the underwriters
Speaker 1: that would not be moreless, but the other big banks
Speaker 1: managed to make money by getting commissions from the investors
Speaker 1: that they bring in. So you'd imagine that fees would
Speaker 1: probably be on government deals they're less than a percentage,
Speaker 1: and then they'd be split between so many banks. But
Speaker 1: this is going to help moreless when they go and
Speaker 1: pitch for other roles. I mean, this is the biggest
Speaker 1: I p or the biggest deal that they've ever done. Well,
Speaker 1: this is well, this is certainly helping their stock today.
Speaker 1: I mean the stock is you know, a dollar five
Speaker 1: or thirty six seven. This is a stock that was trading,
Speaker 1: you know, in thirty four now we're up to thirty six.
Speaker 1: It seems that there's a model, is it or a a reason?
Speaker 1: Is it because was the people behind you know, just
Speaker 1: can since he owns you know, he's party owner of
Speaker 1: the of the company, does that have anything to do
Speaker 1: that what made them select this particular? Ken Mollis, I
Speaker 1: think the it's not just I mean, so I don't
Speaker 1: think it is just a relationship story. I think it's
Speaker 1: also them looking at the other banks that were pitching
Speaker 1: and trying to figure out which one would be the
Speaker 1: best for what they want to do, which one would
Speaker 1: be the would fit with what the Saudi government is
Speaker 1: saying best, because you know, for instance, we know that
Speaker 1: Rothschild and Lazard. I've also been speaking to them and
Speaker 1: typically those are the kind of boutique banks that get
Speaker 1: in there. But they weren't on this deal at all.
Speaker 1: I mean even last week last month when we were
Speaker 1: talking about banks being shotlisted, it was ever Coen Mollis.
Speaker 1: So they probably wanted a bank that is not very
Speaker 1: well known and where they think even to an extent
Speaker 1: they may be able to avoid leaks and have them
Speaker 1: working in secrecy on this that that probably wasn't so successful.
Speaker 1: Um and and so now these banks are going to
Speaker 1: be working the bigger investment banks when they come in
Speaker 1: and managing everything and trying to get this deal off
Speaker 1: the ground. But keep in mind, this is not going
Speaker 1: to happen until the first or second quarter of two
Speaker 1: thousand and eighteen. And that's an optimistic prediction. So the
Speaker 1: great I mean, the investors are that are coming into
Speaker 1: the stock today are making a long term bed and
Speaker 1: and well, I guess we'll have to see what happens
Speaker 1: you say that this want to take place until the
Speaker 1: first quarter. Well, yeah, first, second, third, yes, but it's
Speaker 1: it's not a two thousand seventeen deal, is what I'm
Speaker 1: trying to say. Yeah, got it. Yeah, it's already priced in.
Speaker 1: Thank you very much for illuminating all this for us.
Speaker 1: Sir Ruth David I p O and deals reporter for Bloomberg.
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