Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
Speaker 1: my co host Matt Miller.
Speaker 2: Every business day we bring you interviews from CEOs, market pros,
Speaker 2: and Bloomberg experts, along with essential market moving news.
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Speaker 1: All right, let's get to the news of the day.
Speaker 1: It comes out of Washington, d C. Of course, former
Speaker 1: President Trump charged over secret documents, and which is a
Speaker 1: first for an ex president. We want to round table
Speaker 1: this thing. We're going to do that today with Bloomberg
Speaker 1: Law host June Garasso. She's going to join us here
Speaker 1: in the studio, and Ann Mary Hordern Bloomberg Washington Carsponey
Speaker 1: usually in DC. Up here in New York at our
Speaker 1: Bloomberg Interactive Broker Studio. We appreciate getting both June and
Speaker 1: Anne Marie here and let's start with you. This feels different.
Speaker 1: I mean, it's federal. Can you put in context what's
Speaker 1: the feeling coming out of Washington, DC?
Speaker 3: Well, this is definitely different. First former US president to
Speaker 3: be tried with committing federal crime. This is a case
Speaker 3: that even Trump's own Attorney General, Bill Barr, has talked
Speaker 3: about for months, really that this is going to be
Speaker 3: the more serious of the case. Also said it was
Speaker 3: almost one of Trump's own making. He said recently on
Speaker 3: CBS this morning. He was there two days ago. He
Speaker 3: said Trump was the one there, his words, jerking around
Speaker 3: the DOJ when he could have just given up these
Speaker 3: documents that the National Archives wanted. And then you look
Speaker 3: at and June definitely will be able to speak to
Speaker 3: this more. The indictment what we're seeing so far, Obviously
Speaker 3: it's under seal that could be made public today, though
Speaker 3: it contains these seven charges, and some of them would
Speaker 3: normally carry I don't think anyone actually thinks that we're
Speaker 3: going to see the president behind bars for a decade,
Speaker 3: but some of them carry potential consequences of ten or
Speaker 3: twenty years behind prison.
Speaker 4: So June, I want to bring you into the conversation
Speaker 4: breakdown more specifically what these charges.
Speaker 5: Are well, and just a reminder that we don't know
Speaker 5: what the charges are specifically. This is all based on sourcing,
Speaker 5: has been under seal and it may not be opened
Speaker 5: until actually until Tuesday, when he reports to the court.
Speaker 5: But it may be open sooner. So there are several
Speaker 5: seven charges. They include wilful retention of national defense information,
Speaker 5: corruptly concealing documents, conspiracy to obstruct justice, and making false statements.
Speaker 5: The conspiracy charge is particularly interesting to me because it
Speaker 5: means that there was someone else. There has to be
Speaker 5: two people involved in a conspiracy, so the prosecutors have
Speaker 5: someone else who they're either going to charge or who
Speaker 5: is going to testify against Trump and one of the
Speaker 5: possible people. When you think about the evidence that they have,
Speaker 5: they don't only have people. They have video and audio evidence.
Speaker 5: And part of the video evidence is a man moving
Speaker 5: boxes into a storage boxes of documents into the storage
Speaker 5: space at marra A Lago the day before the prosecutors
Speaker 5: were set to arrive there. So they have lots of evidence.
Speaker 5: They also have what's kind of incredible. They have an
Speaker 5: audio tape of Trump at his Bedminster golf club waving
Speaker 5: a document around and saying that it was a document
Speaker 5: with sensitive military information related to Iran in his possession,
Speaker 5: and he says that he knows, according to a transcript,
Speaker 5: he knows that he doesn't have the authority to show this.
Speaker 5: So they have lots and lots of evidence.
Speaker 1: Hey, June, I just want to we got one little
Speaker 1: piece of news that started and I guess it's just
Speaker 1: going to come out and drips and drabs. But US
Speaker 1: Judge Aileen Cannon has been assigned to the criminal case.
Speaker 1: And I believe she is a Trump appointee. What does
Speaker 1: that mean to you?
Speaker 5: When I was thinking of why they moved the case
Speaker 5: and the pros and cons of moving the case to Florida,
Speaker 5: I thought, Wow, I hope they don't get Judge Eileen
Speaker 5: Cannon because it's not just that she's a Trump appointee.
Speaker 5: It's that she was the one appointed to be a
Speaker 5: special Master to review the material sees from mar A Lago,
Speaker 5: and she gave some I don't know, head scratching decisions
Speaker 5: that people were sort of shocked by, and one of
Speaker 5: them which prevented the FBI from using the c's classified
Speaker 5: documents as part of their investigation until she completed her review,
Speaker 5: which could take months, and that was ultimately thrown out.
Speaker 5: She was reversed by the Eleventh Circuit and there was
Speaker 5: some sharp language in there about her. So she's in
Speaker 5: it for this initial part. If she stays on it,
Speaker 5: I think the Justice Department will have some problems.
Speaker 4: Annriy want to bring you back into this conversation. How
Speaker 4: does all of this end up impacting his campaign? Is
Speaker 4: he's under indictment once again.
Speaker 3: Yeah, it's going to be an even more wild ride,
Speaker 3: it feels like for the twenty twenty four campaign. So
Speaker 3: initially with the former president, anytime he faces a struggle,
Speaker 3: illegal hurdle, his numbers go up in the polls, and
Speaker 3: also his campaign dollars go up. There's a big question
Speaker 3: about this specifically because of how serious these charges are.
Speaker 3: Potentially how the other candidates, now it's much wider field
Speaker 3: in terms of Republican nominations, how they react. What you
Speaker 3: already are seeing is I think one individual only came
Speaker 3: out and said they would pardon the former president, Vivik Ramaswami.
Speaker 3: He came out and said that's what he would do,
Speaker 3: and then others are taking a more moderate tone. Chris Christie,
Speaker 3: we know that he's almost running this race to just
Speaker 3: bash Trump, but he did say let's see the facts.
Speaker 3: I think all candidates will come out and say they're
Speaker 3: presumed innocent like all defendants. But a big question and
Speaker 3: a litmus test for every nominee. Now, every question they're
Speaker 3: going to get whether they show up in Iowa, New Hampshire,
Speaker 3: South Carolina, is will you pardon the former president?
Speaker 6: Okay?
Speaker 3: And that's going to now shape I think a lot
Speaker 3: of the Republican field.
Speaker 1: June can you give us. I know we haven't even
Speaker 1: seen the indictment, but on these types of cases, a
Speaker 1: sense of timing, how does this play out? And just
Speaker 1: to follow on Ann Mary's comments about the election, is
Speaker 1: this some thing a six month process, a twelve month process,
Speaker 1: a multi year process.
Speaker 5: It's not multi year, And I mean it depends on
Speaker 5: how many motions there are before how I assume the
Speaker 5: Trump team is going to try to slow the process
Speaker 5: down with motions. Now, what's interesting is what the prosecution
Speaker 5: did here. In order to prevent some of the most
Speaker 5: weight emotions, which would be a motion to change venue,
Speaker 5: they decided to go from Washington, d c. Where the
Speaker 5: grand jury was hearing evidence for months, to Florida so
Speaker 5: that the defense wouldn't be able to raise that as
Speaker 5: a reason to slow things down, throw the case out
Speaker 5: and move it somewhere else. But I mean it could
Speaker 5: come before the before the election. There's no doubt that
Speaker 5: it could. There's also the other case in New York,
Speaker 5: which has which is I think supposed to go March.
Speaker 5: But and then you have in July or August. Do
Speaker 5: you have the district attorney in Fulton County going to
Speaker 5: announce possible charges against Trump. So you're going to have
Speaker 5: all these judges, you know, jockeying and trying to figure
Speaker 5: out when they could have a trial. So but it
Speaker 5: could happen before before the election for sure.
Speaker 4: And Marie, any sort of indication from your sources about
Speaker 4: what the chances are for an actual conviction on this, No,
Speaker 4: I don't think we're even closer to that point.
Speaker 3: There's one I think interesting wrinkle and June can definitely
Speaker 3: speak to this is I think everyone going into this
Speaker 3: thought it was going to be in Washington, in Washington, DC,
Speaker 3: And this is almost a coup for the former president
Speaker 3: that it's happening in Florida. This is his home turf.
Speaker 3: He has tremendous amount of support in Florida. He won
Speaker 3: that state. And I think if it was going to
Speaker 3: the trial was going to be and the case was
Speaker 3: going to be conducted of Washington, his team had already
Speaker 3: said they would try to move it to Florida, and
Speaker 3: already they're already it's starting in Florida June. Actually, I
Speaker 3: wonder do you think that them coming out and moving
Speaker 3: it to Florida helps the former president or because they
Speaker 3: wanted to motion to move it, it actually takes one
Speaker 3: of their tools out of the toolbox.
Speaker 5: Well it's sort of a double edged sword because it
Speaker 5: takes one of the tools out of their toolbox, which
Speaker 5: would slow things down, But at the same time, it
Speaker 5: puts him in a really favorable venue. You know, as
Speaker 5: you said, Floridians voted for voted for Trump, and you
Speaker 5: know he but he will not be able to say
Speaker 5: the things he said about the New York jury during
Speaker 5: the Eugene Carroll trial, how they were all against him,
Speaker 5: and he'll take that, will take his that talking point away.
Speaker 5: But yeah, I think it's I think it was a
Speaker 5: calculated move by the prosecutors. They want to move the
Speaker 5: case along, so they want to avoid that venue challenge,
Speaker 5: but at the same time, the jury pool is not
Speaker 5: going to be as favorable to them, I think, although
Speaker 5: they are in Miami.
Speaker 3: So but it could potentially move to West Pump.
Speaker 5: Each Yes, it could, it could. This is all up
Speaker 5: in the air. Who decides that, Well, there might be
Speaker 5: motions by the defense to move it. And right now
Speaker 5: I'm not too sure where the judge Cannon is.
Speaker 1: I'm not sure.
Speaker 5: I'm not sure because we just found out about her
Speaker 5: a few minutes ago. So this is moving so quickly.
Speaker 5: But you know, there could be a motion to move it,
Speaker 5: or they could just decide that that's the better venue
Speaker 5: for it because that's where mar A Lago is.
Speaker 1: So so, Henriy, what have we heard, if anything, from
Speaker 1: the Biden administration. What do we expect to hear from
Speaker 1: the Biden administration? How do we think they're going to
Speaker 1: play this whole thing?
Speaker 3: So Biden was asked about this yesterday he was giving
Speaker 3: a press conference with Richie Suneck of the UK, and
Speaker 3: of course reporters always want to ask about the hot
Speaker 3: story of the day, and he dismissed any of these
Speaker 3: suggestions that a potential indictment of the former president would
Speaker 3: potentially be politically motivated, because that's what the Republicans are
Speaker 3: really going to want to coalesce around this message. And
Speaker 3: you already seen some conservative networks of news saying it's
Speaker 3: Biden's doj going after the former president. So Biden said,
Speaker 3: you'll notice I have never once, one single time, suggested
Speaker 3: the Justice Department what they should do or not do
Speaker 3: relative to bring in charge or not bring a charge.
Speaker 3: He said, I'm honest. We also need to remember the
Speaker 3: current president is also facing a special counsel inquiry into
Speaker 3: his documents that's still pending. But Vice President Mike Penn's
Speaker 3: former vice president his was actually concluded, there's very different
Speaker 3: You could draw a lot of parallels because everyone has
Speaker 3: these documents at home, but there's very different cases. I
Speaker 3: think Biden and Pence really wanted to get rid of them,
Speaker 3: while many were saying Trump.
Speaker 5: Wanted to keep them. And as she said, what the
Speaker 5: Trump people have been saying, what Trump has been saying,
Speaker 5: this prosecution is by the Biden administration. All these different
Speaker 5: things about the witch hunt that's going to play. That's
Speaker 5: for the court of public opinion, that's for the jury
Speaker 5: pool that's out there, but that is not going to
Speaker 5: happen in court. As we've seen case after case, those
Speaker 5: kinds of discussions just don't take place and don't have
Speaker 5: an effect.
Speaker 1: We're going to be talking to you, Drewne. A lot
Speaker 1: I think are the coming days, weeks, and months. All right,
Speaker 1: I want to thank Bloomberg Law host June Grasso and
Speaker 1: Bloomberg Watching correspondent Ann Marie Hordern, both here in our
Speaker 1: studios starting to get some initial analysis on what is
Speaker 1: going to be a very complex case.
Speaker 6: Here, you're listening to the team Ken's are live program
Speaker 6: Bloomberg Markets weekdays at ten am eastering on Bloomberg dot com,
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Speaker 1: Let's just go right to the bond market. And why not,
Speaker 1: because again I've been saying you can after twenty twenty two,
Speaker 1: just when you got crushing equities, crush bonds. Four point
Speaker 1: six percent in a two year bond seems pretty good
Speaker 1: to me for the treasury market.
Speaker 4: It definitely is, especially after the pain last year and
Speaker 4: looking ahead to next week's FED meeting. Look at these
Speaker 4: swap traders pricing in a roughly one third chance that
Speaker 4: we're going to see a FED hike next Yeah.
Speaker 1: Absolutely, so that'll be top of mine next week and
Speaker 1: we'll have full coverage of that. Let's check with Natalie Trevithik,
Speaker 1: She's head of investment grade credit strategy at paid and regal. So, Natalie,
Speaker 1: what do you think about my trade. I'm just going
Speaker 1: to go put some money in a two year Treasury note.
Speaker 7: I think that's a great trade, Paul, But I advise
Speaker 7: even going into corporate bond you get five and a
Speaker 7: half percent, so it's worth that minimal incremental risk to
Speaker 7: go into corporates.
Speaker 4: So, Natalie, what is the bond market telling us about
Speaker 4: the direction of the economy at this point in what
Speaker 4: it can mean for the FED decision next week.
Speaker 7: I think it's telling us that we're in pretty good shape.
Speaker 7: We've seen a pretty big rally in corporate bonds or
Speaker 7: almost back to the levels they were at the beginning
Speaker 7: of the year pre the banking crisis, and we've seen
Speaker 7: a big recovery in both banking spreads and equities, particularly
Speaker 7: among the regionals. That gives us some confidence.
Speaker 4: So in the.
Speaker 1: Investment grade space, Natalie, kind of how are you thinking
Speaker 1: about things? Are you going sector bi sector? Are you
Speaker 1: focusing more on duration? How are you guys approaching the
Speaker 1: investment grade space these days?
Speaker 7: Yeah, it's a number of items. Definitely duration. We're seeing
Speaker 7: more demand for the long end of the curve. Even
Speaker 7: though those the front end, as you mentioned, is very attractive,
Speaker 7: we aren't sure how long it's going to last for
Speaker 7: so investors really want to lock in these ten and
Speaker 7: thirty year yields at these higher levels, and with corporate
Speaker 7: bond you're getting close to six percent there. Among the
Speaker 7: sectors we do like communications technology. We think banking has
Speaker 7: a little bit more to run, particularly in some of
Speaker 7: the regionals, and those are most attractive in the front
Speaker 7: end of the curve.
Speaker 4: What are you hearing from clients at this point as
Speaker 4: far as what their concerns are, and maybe concerns maybe
Speaker 4: they had at the beginning of the year, not so
Speaker 4: much at this point.
Speaker 7: Yeah, the concerns at the beginning of the year was
Speaker 7: the recession, and they were already pricing in FED cuts
Speaker 7: and that's not going to be the case. We don't
Speaker 7: think right now. They're concerned about all of this treasury supply.
Speaker 7: We're likely to get posts to debt sealing resolution. People
Speaker 7: are talking anywhere from five hundred billion to a trillion
Speaker 7: of T bill supply this summer, and they're worried that
Speaker 7: mini crowd out investments in other places, such as corporate bonds.
Speaker 1: So Natalie. One of the challenges for investors is trying
Speaker 1: to get a sense of where this economy really is going.
Speaker 1: So you know, when your analysts come to you or
Speaker 1: your pms come to you with an idea, do you
Speaker 1: ask them, Hey, have you run your recession model? And
Speaker 1: if so, how does this credit fair? Are Is that
Speaker 1: top of mind for you guys?
Speaker 7: Exactly? Even though recession may still be you know, six
Speaker 7: months to a year out, if it does come, we
Speaker 7: are definitely running our recession models. How are these companies
Speaker 7: going to do? Fortunately, most companies have been well prepared.
Speaker 7: This is the most well telegraphed recession potentially coming, so
Speaker 7: they have started already to cut their cappex or cut
Speaker 7: dividends or share buybacks where necessary. So many companies are
Speaker 7: defensively positioned. We've actually seen a number of upgrades back
Speaker 7: to investment grade from high yield this year, such as
Speaker 7: Occidental Petroleum recently.
Speaker 4: When it comes to this concern about how the US
Speaker 4: debt deal would potentially trigger this one trillion dollar liquidity crunch,
Speaker 4: especially when we're looking at what's happening in bond market,
Speaker 4: what's your take on that.
Speaker 7: I think it may be overblown because globally, investors are
Speaker 7: still flush with cash. We see that in the corporate market,
Speaker 7: where deals are like five times subscribed. Yesterday we had
Speaker 7: US Bank Corporate in the market with three and a
Speaker 7: half billion, and they actually had eighteen billion of demand
Speaker 7: for that deal. So it seems like the market will
Speaker 7: be able to absorb all of this T bill issuance.
Speaker 1: Yeah, that's kind of where I wanted to go. Natalie's
Speaker 1: kind of the new issue market. As a former banker myself,
Speaker 1: I always like to see deals, the deal flow and
Speaker 1: who's coming to market and what kind of pricing they're getting, So,
Speaker 1: you know, even the rates are higher, it seems like
Speaker 1: new issuance is still pretty active. Is your phone ringing
Speaker 1: off the hook from our friends on Wall Street?
Speaker 7: Yeah? Absolutely, The new issue market has been very active. First,
Speaker 7: there was a surge of issuance trying to get ahead
Speaker 7: of the debt ceiling, and the banks were kind of
Speaker 7: locked out of the market for a little while there
Speaker 7: in March and April. Now that the debt ceiling is over,
Speaker 7: we've seen banks come back with huge issuance twenty seven
Speaker 7: billion this week, though there's still about forty percent under
Speaker 7: the rate of issuance they had in twenty twenty two,
Speaker 7: so we still expect to see a lot more supply,
Speaker 7: But now that regionals have been able to access to
Speaker 7: the markets this week, we think smaller regionals will start
Speaker 7: to come.
Speaker 1: And how about that when you see some of these
Speaker 1: new deals, are they investor friendly in a sense that
Speaker 1: that some strong covenants in there or do you get
Speaker 1: a sense that it's more the leverage is on a
Speaker 1: part of the issue. Where are we in the market
Speaker 1: right now?
Speaker 7: Yeah, an investment grade, there's generally not that strong covenants,
Speaker 7: but we are seeing investors push back on the high
Speaker 7: yield market to make sure the covenants are a little
Speaker 7: bit stronger.
Speaker 8: Here.
Speaker 7: We are seeing better concessions though in terms of pricing,
Speaker 7: and they're leaving a little bit on the table so
Speaker 7: that these deals perform in the secondary market.
Speaker 4: I have to ask you about the yield curve. What
Speaker 4: do you think this is telling us about the economy.
Speaker 7: Yeah, it's not a good sign. It's definitely a recession indicator,
Speaker 7: even though we aren't as inverted as we were in
Speaker 7: two tens previously. But I also think you know that
Speaker 7: the Fed's going to leave rates higher for longer, probably
Speaker 7: until twenty twenty four, and there's always the risk that
Speaker 7: the FED may have broken something, and we really haven't
Speaker 7: had a long enough of a timeline to see all
Speaker 7: of these factions take place in the marketplace. The Silicon
Speaker 7: Valley Bank failure was definitely one indication that the FED
Speaker 7: may have gone too far.
Speaker 1: Now, do you guys invest solely in the US or
Speaker 1: do you go outside of the US as well?
Speaker 7: No, we invest globally, lots of emerging markets. We have
Speaker 7: a very dedicated team here on that.
Speaker 1: All right, so let's go there a little bit. When
Speaker 1: you think outside of the US borders, kind of how
Speaker 1: do you kind of prioritize where you guys are looking.
Speaker 7: We're looking at countries with stable governments. We're also looking
Speaker 7: at oil importers versus oil exporters. We're following the election
Speaker 7: cycle which is going on, so it's really bifurcated across
Speaker 7: from markets and.
Speaker 4: We're talking about exporters versus importers for crude and things
Speaker 4: like that. Is it obviously that correlation with what we've seen,
Speaker 4: especially with oil prices in the US around when you're
Speaker 4: thinking about that sort of seventy dollars threshold there and
Speaker 4: what that could mean for the opportunities in those particular
Speaker 4: emerging markets exactly.
Speaker 7: And we do think seventy dollars is close to a floor,
Speaker 7: so we aren't foreseeing a crash in oil, so we
Speaker 7: think the man is likely going to hold up fairly well.
Speaker 7: But it also depends on the depth of the recession
Speaker 7: if we get one.
Speaker 1: So when you think about emerging markets, I'm not sure.
Speaker 1: And this is equities, it's credit, it's you know, you
Speaker 1: think about China. It's such a big part of the MSCI,
Speaker 1: I mean, is there How do you think about emerging markets?
Speaker 1: Where where do you find opportunities? Do you even think
Speaker 1: about China or do you kind of stay a little
Speaker 1: bit more close to home.
Speaker 7: Yeah, China's a pretty bifurcated market because there's a very
Speaker 7: high quality end of the spectrum where you have such
Speaker 7: as the Ali Baba's and ten Cent good investment grade credits,
Speaker 7: and then you have the Chinese property market, which we're
Speaker 7: still a little bit cautious on. So it really starts
Speaker 7: to get down to a name by name basis even
Speaker 7: within these emerging markets.
Speaker 4: Something I wanted to get your take on because we're
Speaker 4: going to get another update on the CFTC data this
Speaker 4: afternoon around three point thirty, and I noticed, particularly in
Speaker 4: the bond market, when it comes to the shorting that's
Speaker 4: happening on the US ten year, it's at a very
Speaker 4: extreme positioning. Usually that happens when investors are thinking that
Speaker 4: yields potentially betting that they would go higher. But such
Speaker 4: extreme positioning, when I've talked to some sources, think that
Speaker 4: might have the opposite effect, ended up pushing yields lower
Speaker 4: and then maybe supporting more equity prices. Why do you
Speaker 4: think we're seeing such extreme shorting happening on the ten
Speaker 4: year right now?
Speaker 7: Yeah, it's a bit of a mystery. I think there's
Speaker 7: all this positioning and jockeying ahead of the FED meeting,
Speaker 7: But it does seem that, like post these sped decisions,
Speaker 7: sometimes the bond market moves in opposite directions than what
Speaker 7: you would expect by the statements, and some of that's
Speaker 7: driven by the short positioning being offset afterwards.
Speaker 1: All right, Natalie, for me, next Wednesday is Flag Day,
Speaker 1: but for others in the market, it's it's FED Day.
Speaker 1: What is your foot or reserve going to do?
Speaker 7: Do you think it's But we think there's a strong
Speaker 7: likelihood they make a one or two more times, so
Speaker 7: the July meeting is very active.
Speaker 1: All right, Natalie, thank you so much. We appreciate that.
Speaker 1: Natalie Trevithick, head of investment grade credit Strategy at Payden
Speaker 1: and Regal.
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Speaker 1: bonds that I did my best. It's not nearly as
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Speaker 1: and he knows it's Thursday. He knows it's eleven nine Friday.
Speaker 1: He knows it's eleven oh nine, and he jumps right
Speaker 1: in because he knows that's time for muni's Joe Myisk
Speaker 1: joins us here in the Bloomberg Interactive Brokers to studio.
Speaker 1: He is the head of all our municipal research. Joe,
Speaker 1: what's happening at there? We've got rates moving higher. What's
Speaker 1: going on in the world of municipal bonds?
Speaker 8: You know, we have a lot of stuff, But the
Speaker 8: biggest news I think this week was we uh snapped
Speaker 8: the sixteen week streak of outflows, outflows into municipal outflows
Speaker 8: from municipal bond funds. We saw four and sixty million
Speaker 8: come in this week.
Speaker 4: It's the catalyst there.
Speaker 8: We're getting higher yields, We're getting this this higher coupons
Speaker 8: out there. There's also, let's face it, the relief from
Speaker 8: the you know, the debt limit you know being passed.
Speaker 8: So there there is that very much that you know,
Speaker 8: things are it looks like things are. There's more it's
Speaker 8: more constructive as the analysts.
Speaker 1: Why were there so many we of outflows?
Speaker 8: Oh, you know, there was everything to worry about. First
Speaker 8: of all, you have the FED and there still is
Speaker 8: uncertainty about the FED because you know, we're caring stories
Speaker 8: about you know, FED is probably gonna uh you know
Speaker 8: pause next week. Well perhaps not. So there's still a
Speaker 8: lot of uncertainty in that area. Uh, And that's that
Speaker 8: was the biggest reason for the outflows. There was also
Speaker 8: you know, the debt limit's been hanging over the market
Speaker 8: now for probably month and a half, two months, so
Speaker 8: you know, between those two things, that's why people were
Speaker 8: clearing out. And you know, two we had, you know,
Speaker 8: you were getting loads of deals priced with two three percent,
Speaker 8: four percent coupons, not exactly h enticing. But now fives
Speaker 8: five and a half's we're kind of back to really
Speaker 8: formula of and higher.
Speaker 1: I gotta call my guys.
Speaker 6: We're kind of back.
Speaker 1: Jersey's coming out with any stuff that kind of cooping.
Speaker 1: I'm jumping back in the market.
Speaker 8: Oh yeah, but but now you know, five percent coupons
Speaker 8: and you know we're in uh you know, I want
Speaker 8: to say it's a it's a better place. Plus, you know,
Speaker 8: right now, very little volume in our market. You know,
Speaker 8: I think we're down. We're about one hundred and fifty billion,
Speaker 8: which is off about twenty percent. And if you're talking
Speaker 8: about number of Issues are probably off thirty percent. So
Speaker 8: there's not exactly a lot of.
Speaker 1: Pressure, is that because rates have gone up and Issues
Speaker 1: don't want to sell those?
Speaker 6: Right?
Speaker 1: Yeah? But I thought, I thought the issues you've always
Speaker 1: told us they don't care what they got to pay.
Speaker 8: Well, they know if they have to come to market,
Speaker 8: they'll come to market. But so many of them don't
Speaker 8: have to come to market because they a lot of
Speaker 8: them still have the COVID relief money, or a portion
Speaker 8: of it. It still hasn't all been allocated.
Speaker 4: So what about when we were talking about SVB and
Speaker 4: when it came to that seven billion dollar Beauni portfolio
Speaker 4: seen as basically requiring this sort of deep concession. What's
Speaker 4: happening with that?
Speaker 8: Well, I think it was black Rock is running the
Speaker 8: UH is running the municipal bond auctions, and I know
Speaker 8: they've sold off a good portion of that already. But
Speaker 8: they're not gonna you know, they're gonna dole it out
Speaker 8: a little at a time. You don't, uh, you know,
Speaker 8: just say all I wants, Oh, here you go, mini market,
Speaker 8: here's you know these billions for you. No, it's a
Speaker 8: little bit. We'll dole it out that way. But you know,
Speaker 8: as we quoted an analyst this week saying, uh, you know,
Speaker 8: the banks were really caught holding a lot of low
Speaker 8: coupon stuff, you know, two percent, three percent, and all
Speaker 8: I took a big hit with the Fed, you know,
Speaker 8: making its move the last couple of years.
Speaker 1: All right, let's talk one of my favorite topics, which
Speaker 1: is Las Vegas. Professional sports teams have been flocking there
Speaker 1: over the last several years. First we had the hockey team.
Speaker 1: I can't even think that at the end the finals,
Speaker 1: I think, I don't know. And then I watched and
Speaker 1: then football there the Raiders, and now the Oakland A's
Speaker 1: are coming down. They need a stadium, Joe, and I'm
Speaker 1: just guessing that this is going to require a little
Speaker 1: bit of public financing.
Speaker 8: Oh yeah, we have at least three hundred and eighty
Speaker 8: million dollars in various subsidies and tax breaks and infrastructure
Speaker 8: construction that are rolled in there. It's the total. I
Speaker 8: think it's a one point five billion stadium. We've been
Speaker 8: calling it.
Speaker 6: And uh, this week.
Speaker 8: We had Max Adler right about the Nevada lawmakers have
Speaker 8: been called back into session second special session to discuss
Speaker 8: the financing package for the as I I am in
Speaker 8: no talent that this is going to pass. Yeah, because
Speaker 8: Las Vegas is just such a.
Speaker 1: They're printing money out there. I can't imagine this won't
Speaker 1: get approved.
Speaker 8: No, I I yeah, this is this is, This has gone.
Speaker 4: Through any sort of timetable as far as when we
Speaker 4: could find out when that may happen.
Speaker 8: Oh, this is going to be uh you know, certainly
Speaker 8: within the next couple of weeks. And then they you know,
Speaker 8: set up the various parts of it, including the actual
Speaker 8: bond issue, which I know that mister Sweeney.
Speaker 1: Wants to got a part of totally. I mean, I'm
Speaker 1: just looking. I've been to a couple of Yankee games
Speaker 1: out in the Oakland Stadium. Man, that thing is ancient.
Speaker 1: I mean it is rough, and nobody goes to those games.
Speaker 1: It's not as bad as Tampa Bay maybe, but boy,
Speaker 1: it is rough out there. But and it's for such
Speaker 1: a great city. It's just brutal. But I think we're
Speaker 1: finding out in that Bay Area market can't really support
Speaker 1: two franchises, whether it's football, whether it's baseball.
Speaker 4: That's what it looks like.
Speaker 1: Yeah, but you know the Warriors, you know, they moved
Speaker 1: to a great new arena, in downtown San Francisco, right
Speaker 1: by the water, right by the pack Bell Park, which
Speaker 1: is I'm not sure what it's called anymore, but so
Speaker 1: that's a great area downtown San Francisco. But it looks like,
Speaker 1: you know, the age, you're going to Vegas and the
Speaker 1: public's gonna pay.
Speaker 9: Up little bit here.
Speaker 1: Oh yeah, and I think that I bet you those
Speaker 1: bonds will be snapped up.
Speaker 8: Oh easily. You know. In fact, I wrote about a
Speaker 8: bond issue out today, call them out today for the
Speaker 8: El Paso Chihuahuas. Whoa triple a El Pasoxes.
Speaker 4: Yes they were.
Speaker 8: They were going into the action today fifteen games back
Speaker 8: in third place behind the Oklahoma City Dodgers.
Speaker 1: So they're coming up with the bond deficiently.
Speaker 8: Yeah, they sold bonds earlier on for dis service savings.
Speaker 8: But could you imagine, you know, you get your you know,
Speaker 8: you're making your way up in the minors, and and
Speaker 8: you get to say, I'm a chiuaa cha.
Speaker 1: All right, So how are the fund flows into muni's.
Speaker 1: Are you talked to that that we have some funds
Speaker 1: for the first time coming back in Do you expect
Speaker 1: that to continue or one of the folks in the
Speaker 1: market talking ylloid, I.
Speaker 8: Would expect it to be coming back in now. And
Speaker 8: you know, as I say, you have higher yields, there's
Speaker 8: relief over the DEAT limit being passed, and you know
Speaker 8: you do have year to date. I know you're always
Speaker 8: as this performance over two percent.
Speaker 1: Over two percent, and that's you know, and then you
Speaker 1: get the tax adjustment there it's even better, say stuff.
Speaker 8: So yeah, so I would expect that we're going to
Speaker 8: see more inflows. And there's nothing on the horizon. I mean,
Speaker 8: there's no big muni disaster on the horizon, you know
Speaker 8: that throw people off the game.
Speaker 1: All Right, I'm gonna call my guy to make sure
Speaker 1: he's on the lookout for some new Jersey muni's I
Speaker 1: like to say, coupons. I'm hearing about it exactly, Joe.
Speaker 1: I guess what, No, that's it. That's it. The end
Speaker 1: of our time together for this week. Joe Misich he
Speaker 1: covers all things municipal bonds for Bloomberg Briefs for our
Speaker 1: weekly update, which we always save for Friday. On the
Speaker 1: municipal bond market against the host of return this year
Speaker 1: after twenty twenty two, or the whole fixed income space
Speaker 1: was just ravaged in terms of negative performance. We're going
Speaker 1: more coming up. This is Bloomberg.
Speaker 6: You're listening to the team Ken's our live program Bloomberg
Speaker 6: Markets weekdays at ten am Eastern on Bloomberg dot Com,
Speaker 6: the iHeartRadio app, and the Bloomberg Business App, or listen
Speaker 6: on demand wherever you get your podcasts.
Speaker 1: You know, just when we want to talk about the
Speaker 1: worlds of technology and media coming together, we've got some
Speaker 1: good people to talk to.
Speaker 4: Want to see our next guest exactly.
Speaker 1: Mark Dougas president's CEO of Mountain Joints, is here.
Speaker 4: Hey.
Speaker 1: Mark, I want to ask you about what, to me
Speaker 1: has been one of the bigger news stories of this week,
Speaker 1: which is the merger of the PGA Tour and Live Golf.
Speaker 1: I mean, it just shocked the world of golf. It
Speaker 1: shocked the people who follow the business of golf, and
Speaker 1: I bet it was kind of a shock to some
Speaker 1: of their media partners as well. What's your take from
Speaker 1: your perspective and kind of the media slash tech zeitgeist.
Speaker 9: Yeah, so, first thing, I think if you spend time
Speaker 9: in the Middle East, I coincidentally have been in Dubai
Speaker 9: for ten the last ten days and this part of
Speaker 9: the world is just absolutely booming. It started with Dubai.
Speaker 9: I actually went to Dohag Guitar this week, which is
Speaker 9: also a much more traditional city than Guitar, but also booming.
Speaker 9: The people there are very happy, at least everyone I
Speaker 9: talked to was laughing and just really happy. And so
Speaker 9: it's very different on the ground than the image I
Speaker 9: think that folks have of the Middle East. And there's
Speaker 9: been a lot of evolution over the last two decades,
Speaker 9: and so Saudi Arabia is following that lead. All of
Speaker 9: a sudden, it's becoming kind of trying to become a
Speaker 9: tourism location. Obviously, I think for a lot of people
Speaker 9: in America that's kind of like not the first place
Speaker 9: that come the mind for where to go to a vacation,
Speaker 9: but they, I think, are determined to spend literally hundreds
Speaker 9: of billions of dollars to you know, kind of adjust
Speaker 9: their cultures, their their image, and to make Saudi Arabia,
Speaker 9: long with Dubai cant Are another city, is kind of
Speaker 9: an attractive place to go. And I think this deal
Speaker 9: the reason I said all that, I think this deal
Speaker 9: is essentially a part of that, and in fact, the
Speaker 9: amount of money involved in a deal is almost like
Speaker 9: a rounding era in terms of the entire investment that
Speaker 9: they're determined, Like there are single buildings in Dubai that
Speaker 9: costs the value of this deal. So so, I mean,
Speaker 9: I think it's great for the game of golf, Turning
Speaker 9: golf into a you know, kind of more of a
Speaker 9: team sport, making the players be a little less prize
Speaker 9: oriented in terms of how they make money and more
Speaker 9: kind of salary plus bonus oriented. I think it's great
Speaker 9: for the players, and I think it's going to expand
Speaker 9: the game. It's going to take some time, but I
Speaker 9: think it's going to we turn this game into something
Speaker 9: that a lot of people see as a more serious
Speaker 9: sport for the people who are not currently followers of God.
Speaker 1: What's the feeling, Yeah, well, what's the what's the feeling
Speaker 1: over there? Mark from some of the negative response that
Speaker 1: we've seen about just live golf in general, the role
Speaker 1: of the Saudis and live Golf, and and some of
Speaker 1: the feedback from even some big players like Roy McElroy
Speaker 1: and and those that didn't have not to date supported
Speaker 1: live what's the feeling over there in the Middle East
Speaker 1: about that?
Speaker 2: Yeah?
Speaker 9: I think they, I think they understand it, but they
Speaker 9: think that Americans are kind of looking in the past.
Speaker 9: You know, most of like I said, the tourism here
Speaker 9: and the people you see are more from Europe. You
Speaker 9: don't really see a lot of American as many Americans
Speaker 9: walking around. So I think they their perspective is, look,
Speaker 9: we you know, we we we've blended our culture with
Speaker 9: Western culture and and do so We've made ourselves way
Speaker 9: more attractive to Europe and that will eventually happen to
Speaker 9: America as they as they you know, like meet us
Speaker 9: as individuals and realize that we are very friendly to
Speaker 9: the to the rest of the world and not this
Speaker 9: kind of extremist.
Speaker 1: Image and actions.
Speaker 9: You know, you can that that happened in the past.
Speaker 9: So so I think they think time will will make
Speaker 9: this work, and and they're patient, they're they're ready to
Speaker 9: invest the time and the money to make it happen.
Speaker 4: Since you work in the advertising software type space, what
Speaker 4: do you think a deal like this could mean, particularly
Speaker 4: for advertisers moving forward.
Speaker 9: Yes, Well, all the big money in sports actually comes
Speaker 9: from things like TV rights and when you talk to
Speaker 9: like some of the biggest agencies, the biggest issue they
Speaker 9: always have is getting more sports content. They want their
Speaker 9: advertisers want to advertise against more sports. So I'm talking
Speaker 9: like the WPPS and Group and and agent the big
Speaker 9: agency holding companies. So you know, the sport needs to
Speaker 9: kind of live up to the vision in the steel.
Speaker 9: But I think people are very encouraged by one interesting thing.
Speaker 9: We've been playing with a mound and this is almost
Speaker 9: like just an internal project. We look at a golf
Speaker 9: game and we look at and we go look at
Speaker 9: all that advertising space, like it's just all that green
Speaker 9: on the screen. And we've been we've been playing with
Speaker 9: ads that just like like show up on the on
Speaker 9: the lawn like just I think, so there's a lot
Speaker 9: of fun you can have with the technology, like by
Speaker 9: creating a space. But I think people anywhere you can
Speaker 9: get more sports content to advertise against, you're gonna get
Speaker 9: enthusiasm from advertisers. And that is you know where the big,
Speaker 9: big money comes in sports. It's like the huge sports deals,
Speaker 9: especially if golf starts to become more of a team
Speaker 9: sport than less of a little less of an individual sport.
Speaker 1: So to that end, I mean you're tight with the
Speaker 1: advertising community, the tech community, the intersection of that type
Speaker 1: of thing we had. Are you surprised we haven't seen
Speaker 1: you know more, you know, a tech company of size
Speaker 1: jump into the deep end of the pool and really
Speaker 1: get into content. So for example, you know, try to
Speaker 1: really bid for a major NFL package or Sunday package
Speaker 1: or something like that. I think about like Amazon Prime
Speaker 1: for example. You know, they've got a huge block of subscribers,
Speaker 1: They've they've got you know, bottomless pit of of of money.
Speaker 1: They're they're into the you know that the content business.
Speaker 1: But what one could argue they're not in commensuratey size.
Speaker 1: How do you think about that?
Speaker 9: Yeah, I think the the economics on that are just
Speaker 9: not very attractive. I mean, it makes sense for the
Speaker 9: big content networks like an NBC and others to bid
Speaker 9: on things like the Olympics and the bid on you
Speaker 9: know kind of NFL and so forth. But I think
Speaker 9: it's much harder to get Netflix. I think Netflix is
Speaker 9: kind of one of the prime examples. They've never had
Speaker 9: sports to my knowledge any right, well, what they've done
Speaker 9: an end a round on sports. I just was on
Speaker 9: I just literally locked into my Netflix account and they
Speaker 9: have like they have Formula one. They you know, an
Speaker 9: annual series. They now have one on bike racing, the
Speaker 9: Tourder France, and so they've come into it at much
Speaker 9: lower costs and ironically have helped expand those sports without
Speaker 9: having to commit literally billions of dollars to do it.
Speaker 9: I just don't think the economics fit. The economics at
Speaker 9: tech companies typically love which is very high margin with
Speaker 9: relatively low investment. So it's going to take some time
Speaker 9: before they jumped into the content game, where it's very
Speaker 9: high investment and arguably much much lower margin to you know,
Speaker 9: high much higher risk to get there.
Speaker 4: So the ad tier for Prime Video streaming service at Amazon,
Speaker 4: that's going to be tough.
Speaker 9: Yeah, I think Prime that I don't think that's much
Speaker 9: of a news story. I mean the one of the last.
Speaker 9: The thing about Prime the single biggest issue and that
Speaker 9: this is coming directly from executives at Amazon, you know,
Speaker 9: and conversations on that. The single biggest issue is most
Speaker 9: prom subscribers don't know they have Prime Video. They just
Speaker 9: literally don't know they got they got Prime because they
Speaker 9: want fastest shipping and free shipping on every order they did,
Speaker 9: and then it's and so they their single biggest issue
Speaker 9: like the Prime does advertise the advertisement or the remind
Speaker 9: you that you have access to Prime Video. So I
Speaker 9: think so it's kind of a very unique situation. And
Speaker 9: to a certain extent, I think that them having an
Speaker 9: ad supported tier maybe as much as like you need
Speaker 9: your subscribers to put some skin in the game for
Speaker 9: the actual video, Like if you want them to know
Speaker 9: they have it, they have to maybe pay for it,
Speaker 9: you know. I think that's what they're paying for. So
Speaker 9: I think Prime is just a very unusual content source,
Speaker 9: and Amazon clearly watched offset some of the costs and
Speaker 9: get more like knowledgeable adoption of Prime Video as opposed
Speaker 9: to like this time is currently mostly passive adoption of it.
Speaker 1: All right, Mark, always good to check in with you.
Speaker 1: We appreciate you making a time all the way from
Speaker 1: the Middle East. Mark Douglas, President and CEO of Mountain,
Speaker 1: just talking about the confluence continued confluence of technology and media.
Speaker 2: Thanks for listening to the Bloomberg Markets podcast. You can
Speaker 2: subscribe and listen to interviews in Apple Podcasts or whatever
Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter
Speaker 2: at Matt Miller nineteen seventy three and on fall Sweeney.
Speaker 1: I'm on Twitter at pt sweeney Before the podcast. You
Speaker 1: can always catch us worldwide at Bloomberg Radio