1 00:00:00,800 --> 00:00:04,040 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 2 00:00:04,040 --> 00:00:06,920 Speaker 1: my co host Matt Miller. Every business day, we bring 3 00:00:06,960 --> 00:00:11,520 Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along 4 00:00:11,560 --> 00:00:15,600 Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast 5 00:00:15,640 --> 00:00:18,479 Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:22,919 Speaker 1: at Bloomberg dot com slash podcast. John was just mentioning oil, Matt. 7 00:00:22,960 --> 00:00:25,520 Speaker 1: I'm looking at Brent crude here, sixty seven dollars sixty 8 00:00:25,600 --> 00:00:29,960 Speaker 1: four cents a barrel, up about one point eight four plus. 9 00:00:30,120 --> 00:00:32,040 Speaker 1: You know I also mentioned earlier, Matt, that article I 10 00:00:32,080 --> 00:00:35,360 Speaker 1: saw on Bloomberg terminal four dollars a gallon, UH to 11 00:00:35,400 --> 00:00:37,520 Speaker 1: fill up your car if you live in the state 12 00:00:37,560 --> 00:00:41,239 Speaker 1: of California. Energy pushing higher. Let's get behind the drivers 13 00:00:41,280 --> 00:00:44,360 Speaker 1: of this crucial commodity. We do that the Virginia Regina 14 00:00:44,440 --> 00:00:48,879 Speaker 1: mayor Global Energy head for KPMG Regina, thanks so much 15 00:00:48,920 --> 00:00:51,599 Speaker 1: for joining us here. We're seeing energy prices move up, 16 00:00:51,640 --> 00:00:55,720 Speaker 1: oil move higher. Is this simply a demand play here? 17 00:00:55,920 --> 00:00:58,000 Speaker 1: As more and more vaccines get into arms on a 18 00:00:58,040 --> 00:01:01,120 Speaker 1: global basis, the expectation is that the demand for oil 19 00:01:01,120 --> 00:01:05,360 Speaker 1: will be rising as well. Clearly it is a big 20 00:01:05,800 --> 00:01:07,840 Speaker 1: A big part of the story is demand and how 21 00:01:07,920 --> 00:01:12,560 Speaker 1: quickly demand has recovered. You know, prices are incredible and 22 00:01:12,680 --> 00:01:15,120 Speaker 1: very buoyant, but I like to take people back to 23 00:01:15,240 --> 00:01:18,240 Speaker 1: where were we one year ago this month, when w 24 00:01:18,360 --> 00:01:21,680 Speaker 1: t I settled in negative territory, and now look at 25 00:01:21,680 --> 00:01:24,040 Speaker 1: where we are, and I think there's still upward momentum 26 00:01:24,640 --> 00:01:28,600 Speaker 1: because we're seeing some potential supply disruptions and it's still 27 00:01:28,600 --> 00:01:30,800 Speaker 1: a question of how quickly opec plus is going to 28 00:01:30,840 --> 00:01:34,200 Speaker 1: bring back those surplus barrels into the market. And in addition, 29 00:01:34,680 --> 00:01:38,399 Speaker 1: the world seems to have worked through the billion plus 30 00:01:38,560 --> 00:01:42,720 Speaker 1: supply overhang that we predicted a year ago, so I'm excited. 31 00:01:42,800 --> 00:01:45,640 Speaker 1: It's very buoyant. I wouldn't have predicted these fundamentals even 32 00:01:45,680 --> 00:01:49,560 Speaker 1: six months ago, but the industry is quite quite favorable. 33 00:01:50,560 --> 00:01:56,280 Speaker 1: How much of cramp on demand is the tragedy that 34 00:01:56,280 --> 00:02:02,680 Speaker 1: we're seeing play out in India truly a tragic event um, 35 00:02:03,720 --> 00:02:07,200 Speaker 1: and and that will have an impact on global demand. 36 00:02:07,520 --> 00:02:11,359 Speaker 1: But I think the the overall global demand story from 37 00:02:11,480 --> 00:02:16,000 Speaker 1: places like the US and China are overcoming the tragedy 38 00:02:16,040 --> 00:02:18,040 Speaker 1: that we're seeing in India as well as you know, 39 00:02:18,040 --> 00:02:20,800 Speaker 1: the challenges that we're seeing in other strong fuels markets 40 00:02:20,840 --> 00:02:23,840 Speaker 1: like Brazil. The market seems to be very bullish that 41 00:02:23,919 --> 00:02:27,440 Speaker 1: demand will continue to increase. We've got summer driving season 42 00:02:27,520 --> 00:02:30,800 Speaker 1: coming up, We've got summer vacation season coming up. People 43 00:02:30,840 --> 00:02:32,640 Speaker 1: are trying to countries are trying to look at ways 44 00:02:32,639 --> 00:02:34,840 Speaker 1: that they can open up their borders. So even my 45 00:02:34,880 --> 00:02:38,760 Speaker 1: refining clients that were pretty pessimistic about gasoline demand return 46 00:02:39,040 --> 00:02:42,520 Speaker 1: and jet fuel demand return are are actually quite optimistic 47 00:02:42,520 --> 00:02:47,560 Speaker 1: as they look into and definitely into alright, Regina. So 48 00:02:48,080 --> 00:02:51,800 Speaker 1: the demand side seems pretty solid improving. Let's talk about 49 00:02:51,800 --> 00:02:55,680 Speaker 1: the supply side here. Talk to us about OPEC plus 50 00:02:55,800 --> 00:02:59,200 Speaker 1: and the pressure on some of those key members of 51 00:02:59,200 --> 00:03:04,640 Speaker 1: OPEC plus start ramping up production. Yeah, so it's interesting 52 00:03:04,680 --> 00:03:07,280 Speaker 1: that OPEC plus decided not to have the meeting that 53 00:03:07,320 --> 00:03:09,320 Speaker 1: they were going to have today. I think that shows 54 00:03:09,320 --> 00:03:12,000 Speaker 1: that they're very confident in their strategy and they're very 55 00:03:12,000 --> 00:03:15,200 Speaker 1: confident in the commitment that they have and a part 56 00:03:15,200 --> 00:03:20,079 Speaker 1: of the members to retain the cuts and slowly trickle 57 00:03:20,160 --> 00:03:23,720 Speaker 1: those barrels back into the market. Um, there is still 58 00:03:23,800 --> 00:03:26,079 Speaker 1: even after the two million barrels per day come back 59 00:03:26,120 --> 00:03:28,200 Speaker 1: into the market, that they've committed will come back by 60 00:03:28,200 --> 00:03:30,680 Speaker 1: the end of July. There's still six million barrels per 61 00:03:30,760 --> 00:03:33,200 Speaker 1: day that they're still sitting on, So that is the 62 00:03:33,280 --> 00:03:37,640 Speaker 1: governor against a huge price spike, and how they trickle 63 00:03:37,760 --> 00:03:41,600 Speaker 1: that back will be will be interesting. The sixty range 64 00:03:41,640 --> 00:03:44,680 Speaker 1: that we're in now is not enough to balance the 65 00:03:44,680 --> 00:03:47,000 Speaker 1: budgets of all of those OPEC plus nations, but it 66 00:03:47,200 --> 00:03:50,119 Speaker 1: is a nice buffer that's building on their financial reserves. 67 00:03:50,280 --> 00:03:52,200 Speaker 1: But I could see them trying to push it to 68 00:03:52,240 --> 00:03:54,680 Speaker 1: see can we get Brent over the seventy dollar mark 69 00:03:54,880 --> 00:03:59,120 Speaker 1: before we start more actively putting those withheld barrels back 70 00:03:59,160 --> 00:04:02,000 Speaker 1: into the market. What do OPEC nations need to balance 71 00:04:02,040 --> 00:04:07,040 Speaker 1: the budget? The most estimates are that it's in the 72 00:04:07,080 --> 00:04:10,400 Speaker 1: eighties UM for most of the countries. So I but 73 00:04:10,480 --> 00:04:13,280 Speaker 1: I don't think the world can survive that. I think 74 00:04:13,280 --> 00:04:15,920 Speaker 1: there will be a lot of pressure on the OPEC 75 00:04:15,960 --> 00:04:19,080 Speaker 1: plus countries. You already saw it a couple of months 76 00:04:19,120 --> 00:04:22,760 Speaker 1: ago with calls from the Biden administration into Saudi Arabia 77 00:04:22,800 --> 00:04:25,080 Speaker 1: as well as calls from the Indian government into Saudi 78 00:04:25,120 --> 00:04:28,560 Speaker 1: Arabia that we can't have crude oil price be too hot. 79 00:04:28,839 --> 00:04:31,919 Speaker 1: You mentioned that it's four dollars per gallon in California. 80 00:04:32,080 --> 00:04:34,960 Speaker 1: The average retail price for gasoline in the US right 81 00:04:34,960 --> 00:04:38,240 Speaker 1: now is almost three dollars, and that's for all grades 82 00:04:38,760 --> 00:04:41,240 Speaker 1: in all markets. So I think we're sort of at 83 00:04:41,279 --> 00:04:44,320 Speaker 1: that tipping point. Seventy for Brent might be as high 84 00:04:44,400 --> 00:04:47,640 Speaker 1: as people feel comfortable. Um, but I think they're really 85 00:04:47,760 --> 00:04:51,359 Speaker 1: enjoying threading the needle by keeping things relatively stable in 86 00:04:51,360 --> 00:04:53,800 Speaker 1: the high sixties, which makes them more comfortable with their 87 00:04:53,839 --> 00:04:56,240 Speaker 1: board looking position. Three dollars a gallon would be a 88 00:04:56,320 --> 00:04:58,560 Speaker 1: dream come true for me here in Berlin. I would 89 00:04:58,600 --> 00:05:01,440 Speaker 1: drive so much if I had three dollars per game. 90 00:05:01,560 --> 00:05:06,160 Speaker 1: What is it's it's it's about seven and change, I 91 00:05:06,200 --> 00:05:09,120 Speaker 1: think right, it's um, I mean I tank up with 92 00:05:09,160 --> 00:05:11,960 Speaker 1: shell V power, of course, because I care about my engine. 93 00:05:13,320 --> 00:05:17,480 Speaker 1: All right, all right, So let's talk about the shale patch. 94 00:05:18,279 --> 00:05:19,920 Speaker 1: Are we gonna start to see some of these share 95 00:05:19,960 --> 00:05:23,279 Speaker 1: patch producers ramping up production and maybe mucking up the 96 00:05:23,279 --> 00:05:27,159 Speaker 1: works a little bit? I don't think so. And you know, 97 00:05:27,279 --> 00:05:31,280 Speaker 1: you never say never with the with US exuberants around 98 00:05:31,440 --> 00:05:33,599 Speaker 1: oil production, right that's in our d n A and 99 00:05:33,640 --> 00:05:35,880 Speaker 1: I sit in Texas and I definitely don't pay as 100 00:05:35,960 --> 00:05:38,840 Speaker 1: much as you do for your kathleen, um, but they 101 00:05:38,839 --> 00:05:43,240 Speaker 1: are making commitments to their shareholders that the the returns 102 00:05:43,320 --> 00:05:45,760 Speaker 1: above some of you even said above forty dollars per 103 00:05:45,800 --> 00:05:48,479 Speaker 1: barrel will be returned in terms of dividend growth to 104 00:05:48,560 --> 00:05:51,480 Speaker 1: their shareholders. That could be a very strong message if 105 00:05:51,480 --> 00:05:53,920 Speaker 1: we take those profits and instead of funneling it all 106 00:05:53,920 --> 00:05:56,800 Speaker 1: into captics, we pay down debt and we return that 107 00:05:56,880 --> 00:05:59,920 Speaker 1: cash to the shareholders in the form of dividends. That's 108 00:06:00,000 --> 00:06:02,320 Speaker 1: a story that all of the large ones have told 109 00:06:02,360 --> 00:06:05,760 Speaker 1: to the marketplace, and I expect them to hold to that. 110 00:06:06,480 --> 00:06:09,200 Speaker 1: And I think OPEC plus will be watching rig counts 111 00:06:09,200 --> 00:06:12,120 Speaker 1: and US activity. Rick counts have had held very stable, 112 00:06:12,800 --> 00:06:15,960 Speaker 1: so most predictions are we might get to twelve million 113 00:06:15,960 --> 00:06:19,159 Speaker 1: barrels per day by the end of but I don't 114 00:06:19,160 --> 00:06:21,400 Speaker 1: think we'll see the thirteen million barrels per day or 115 00:06:21,480 --> 00:06:24,240 Speaker 1: higher and the exuberance that we saw in the shale 116 00:06:24,279 --> 00:06:26,599 Speaker 1: patch to quote mark up the works as you put it. 117 00:06:27,000 --> 00:06:28,680 Speaker 1: By the way, I sit in Berlin, which is why 118 00:06:28,720 --> 00:06:32,120 Speaker 1: my gas prices are so high. Um, Regina, let me 119 00:06:32,120 --> 00:06:34,120 Speaker 1: just ask you quickly. We only got thirty seconds here. 120 00:06:34,440 --> 00:06:38,920 Speaker 1: But having noted that, does the electric vehicle push do 121 00:06:39,080 --> 00:06:43,159 Speaker 1: anything to hurt demand in the near term. Not in 122 00:06:43,200 --> 00:06:48,360 Speaker 1: the near term. It only degrades about two um uh 123 00:06:49,120 --> 00:06:53,200 Speaker 1: gallons of total fuel, and so we only see maybe 124 00:06:53,200 --> 00:06:57,080 Speaker 1: a million two a couple million barrels per day coming 125 00:06:57,080 --> 00:07:00,080 Speaker 1: off in the next five years from v penetration, and 126 00:07:00,360 --> 00:07:03,839 Speaker 1: so it's just a drop in the proverbial bucket. I see, 127 00:07:03,880 --> 00:07:05,520 Speaker 1: all right, Well that's what I thought, but I just 128 00:07:05,520 --> 00:07:08,040 Speaker 1: wanted to get it confirmed by the experts. There are 129 00:07:08,400 --> 00:07:11,720 Speaker 1: a bunch of electric vehicles whizzing around here, but obviously 130 00:07:11,760 --> 00:07:16,080 Speaker 1: it's not even close to um the majority, not not 131 00:07:16,160 --> 00:07:19,800 Speaker 1: even close to half. When I'm in California, I see 132 00:07:19,840 --> 00:07:23,040 Speaker 1: a lot more than really much more prevalent. Well, maybe 133 00:07:23,200 --> 00:07:27,640 Speaker 1: California is the future. Man, Regina, thanks very much for 134 00:07:27,720 --> 00:07:32,160 Speaker 1: joining us. Regina Mayor, their global energy head at KPMG 135 00:07:32,520 --> 00:07:36,880 Speaker 1: talking to us about UM, this commodity price, the games, 136 00:07:37,200 --> 00:07:40,560 Speaker 1: maybe transitory. We're waiting for FED chair J. Powell. This 137 00:07:40,800 --> 00:07:47,320 Speaker 1: is Bloomberg. Let's bring in now Stephen Kine. He is 138 00:07:47,400 --> 00:07:51,240 Speaker 1: the group managing director and a portfolio manager at tc W. 139 00:07:52,000 --> 00:07:54,600 Speaker 1: They have about two hundred fifty three billion dollars in 140 00:07:54,720 --> 00:07:57,960 Speaker 1: assets under management. I know Paul when he was working 141 00:07:58,480 --> 00:08:01,320 Speaker 1: in the finance sector. You must a musty when you 142 00:08:01,360 --> 00:08:04,040 Speaker 1: go to stop out there every time he was on 143 00:08:04,080 --> 00:08:07,600 Speaker 1: the on the best coast. Stephen, UM, big day today, 144 00:08:07,680 --> 00:08:09,720 Speaker 1: right because we had kicked off the day with news 145 00:08:09,720 --> 00:08:13,920 Speaker 1: about the Biden tax plan, which is very big, and 146 00:08:14,040 --> 00:08:18,920 Speaker 1: we're gonna finish the session with the Fed. Um. These 147 00:08:18,960 --> 00:08:23,240 Speaker 1: two pillars to me seem key for your business. What 148 00:08:23,280 --> 00:08:27,160 Speaker 1: do you make of the current environment? Uh? Well, what 149 00:08:27,280 --> 00:08:30,000 Speaker 1: I would say, I think you're you're dead on. As 150 00:08:30,000 --> 00:08:33,120 Speaker 1: a matter of fact, I think the bigger point as 151 00:08:33,120 --> 00:08:35,640 Speaker 1: we think about the markets in general is the markets 152 00:08:35,640 --> 00:08:39,000 Speaker 1: are always affected by fiscal and monetary policy. But I 153 00:08:39,040 --> 00:08:42,480 Speaker 1: think given the degree of involvement of the government currently 154 00:08:42,800 --> 00:08:45,800 Speaker 1: not only in the uh COVID era, but as we 155 00:08:45,880 --> 00:08:48,640 Speaker 1: move forward and the degree of involvement by the FED, 156 00:08:48,679 --> 00:08:50,439 Speaker 1: I don't think the capital markets have ever been as 157 00:08:50,679 --> 00:08:55,360 Speaker 1: as driven and influenced um by my policy right now. 158 00:08:55,440 --> 00:08:59,559 Speaker 1: So UM, in terms of today and what's going on. Um, 159 00:09:00,040 --> 00:09:02,240 Speaker 1: you know, I don't think there's much to talk about 160 00:09:02,240 --> 00:09:04,080 Speaker 1: in terms of the FED. I think it's it's going 161 00:09:04,120 --> 00:09:06,520 Speaker 1: to be a bit of a snoozer. I wouldn't hold 162 00:09:06,840 --> 00:09:09,000 Speaker 1: your breath for anything significant out of the Fed. The 163 00:09:09,040 --> 00:09:12,720 Speaker 1: Fed is extremely duvish. They've changed their framework, as they've 164 00:09:12,800 --> 00:09:16,200 Speaker 1: articulated uh numerous times to be outcome driven and not 165 00:09:16,320 --> 00:09:20,760 Speaker 1: outlook out uh look driven. And therefore, given that inflation 166 00:09:20,840 --> 00:09:23,200 Speaker 1: is running far below the two plus percent that they're 167 00:09:23,200 --> 00:09:27,760 Speaker 1: looking to see for a stain period and unemployment it's six, um, 168 00:09:27,800 --> 00:09:30,200 Speaker 1: it would be shocking to see the Fed do anything 169 00:09:30,240 --> 00:09:33,840 Speaker 1: but maybe tweak the language on on the current you know, 170 00:09:33,880 --> 00:09:38,560 Speaker 1: statements around the current economic environment. UM. On the fiscal side, um, yeah, 171 00:09:38,559 --> 00:09:41,600 Speaker 1: this is developing. It seems to be one big package 172 00:09:41,640 --> 00:09:45,360 Speaker 1: after another. What's changing now is those packages are now 173 00:09:45,400 --> 00:09:50,560 Speaker 1: being balanced to some degree with potential tax increases. And 174 00:09:50,600 --> 00:09:53,400 Speaker 1: we'll just have to see how things go. But if 175 00:09:53,400 --> 00:09:56,520 Speaker 1: it goes in this direction, uh, not to get to 176 00:09:56,920 --> 00:10:01,960 Speaker 1: uh uh you know uh loud about this, but you know, 177 00:10:02,000 --> 00:10:05,640 Speaker 1: we could be entering an era bigger government um, and 178 00:10:05,800 --> 00:10:07,920 Speaker 1: you know that could have bigger implications for for the 179 00:10:07,920 --> 00:10:11,680 Speaker 1: economy long term. Alright, So, given where we are in 180 00:10:11,920 --> 00:10:14,679 Speaker 1: the cycle here, Stephen, we have this reopening trade, if 181 00:10:14,679 --> 00:10:17,280 Speaker 1: you will, We have in a comminent date of federal reserve. 182 00:10:17,320 --> 00:10:20,760 Speaker 1: We have fiscal stimulus, perhaps partially offset by taxes. What 183 00:10:20,800 --> 00:10:23,800 Speaker 1: are some of the sectors that TCW is looking at, 184 00:10:23,840 --> 00:10:27,000 Speaker 1: know and your unconstrained fund do you do top down 185 00:10:27,040 --> 00:10:30,280 Speaker 1: but also a lot of bottoms up work as well? Yeah? Yeah, 186 00:10:30,360 --> 00:10:34,040 Speaker 1: So kind of the good news bad news for UM 187 00:10:34,120 --> 00:10:37,120 Speaker 1: for the credit sectors is that the good news is 188 00:10:37,160 --> 00:10:41,040 Speaker 1: we do have significant fundamental tail winds in terms of 189 00:10:41,040 --> 00:10:44,600 Speaker 1: strong economic growth and good operating leverage for businesses. There's 190 00:10:44,600 --> 00:10:46,560 Speaker 1: gonna be a lot of good earnings and cash flow 191 00:10:46,559 --> 00:10:49,400 Speaker 1: and all those good things that tend to support risk taking. 192 00:10:49,880 --> 00:10:53,440 Speaker 1: The bad news is that's already in the markets. Spreads 193 00:10:53,480 --> 00:10:56,520 Speaker 1: are extremely tight. The the overall yield and the high 194 00:10:56,559 --> 00:11:00,679 Speaker 1: yield market is just under four percent, So you're really 195 00:11:00,720 --> 00:11:04,200 Speaker 1: not getting paid, uh for for taking a ton of risks. 196 00:11:04,240 --> 00:11:08,400 Speaker 1: So as we look at sectors UM, we are up 197 00:11:08,400 --> 00:11:12,160 Speaker 1: in quality just due to the value and UM. One 198 00:11:12,160 --> 00:11:14,760 Speaker 1: of the sectors that we think offers probably the best 199 00:11:14,880 --> 00:11:18,560 Speaker 1: risk return is the highest quality sector outside of treasuries, 200 00:11:18,559 --> 00:11:22,000 Speaker 1: which is agency mortgage backed securities. And the reason for 201 00:11:22,040 --> 00:11:25,040 Speaker 1: that is that it's a FED controlled asset. UM they're 202 00:11:25,040 --> 00:11:27,960 Speaker 1: buying forty billion a month and therefore really controlling the 203 00:11:28,000 --> 00:11:31,880 Speaker 1: price and the spread. And then the second reason, and 204 00:11:31,960 --> 00:11:34,120 Speaker 1: what makes them really attractive to us is to buy 205 00:11:34,120 --> 00:11:37,559 Speaker 1: them in the forward or tb a market where, due 206 00:11:37,640 --> 00:11:39,240 Speaker 1: to the fact that the Fed's buying up all the 207 00:11:39,280 --> 00:11:44,800 Speaker 1: net supply of production of agency mortgages, the financing rate 208 00:11:45,200 --> 00:11:48,800 Speaker 1: to to not own the mortgages but roll them forward 209 00:11:48,840 --> 00:11:51,839 Speaker 1: in the forward market is extremely attractive. It's it's minus 210 00:11:51,880 --> 00:11:54,319 Speaker 1: seventy basis points, so you're picking up one and a 211 00:11:54,400 --> 00:11:57,160 Speaker 1: half to two percent spread to treasuries for a risk 212 00:11:57,240 --> 00:12:00,880 Speaker 1: free credit, risk free asset that is controlled by the FED. 213 00:12:00,960 --> 00:12:03,360 Speaker 1: That's you know, double the spread that you get from 214 00:12:03,360 --> 00:12:06,000 Speaker 1: investment great corporate bond. So we'd start there and then 215 00:12:06,440 --> 00:12:08,640 Speaker 1: from there we would, uh, you know, go to other 216 00:12:08,679 --> 00:12:11,960 Speaker 1: areas of the securitized market where you can stay relatively 217 00:12:12,040 --> 00:12:14,680 Speaker 1: high in quality, double A, triple A in the non 218 00:12:14,720 --> 00:12:19,640 Speaker 1: agency mortgage market, in the CLO market collateralized loan obligation UM, 219 00:12:19,679 --> 00:12:22,400 Speaker 1: and you can get spreads in the mid one, you know, 220 00:12:22,440 --> 00:12:24,720 Speaker 1: far better than you can do in the corporate bond 221 00:12:24,720 --> 00:12:31,240 Speaker 1: market with uh, you know, with reasonable volatility. When is 222 00:12:31,360 --> 00:12:34,640 Speaker 1: the FED I'm going to be interesting, you know, we 223 00:12:34,720 --> 00:12:37,559 Speaker 1: we had UM some people start to talk about talking 224 00:12:37,600 --> 00:12:41,560 Speaker 1: about tapering and expecting that to happen towards the end 225 00:12:41,600 --> 00:12:44,360 Speaker 1: of this year. Does that time frame make sense to you? 226 00:12:44,360 --> 00:12:47,040 Speaker 1: You know, I think it's I think it depends on 227 00:12:47,559 --> 00:12:50,600 Speaker 1: what happens in the economy and with inflation. UM. People 228 00:12:50,640 --> 00:12:54,920 Speaker 1: tend to be focusing on the the Jackson Hole meeting 229 00:12:55,080 --> 00:12:58,200 Speaker 1: or time period is when they might start to introduce it, 230 00:12:58,200 --> 00:13:00,600 Speaker 1: and certainly that's it's good. At time frame is any, 231 00:13:00,600 --> 00:13:02,200 Speaker 1: but it really sort of depends on how things go. 232 00:13:02,320 --> 00:13:06,160 Speaker 1: I think the FED is if the mark financial conditions 233 00:13:06,200 --> 00:13:09,400 Speaker 1: stay loose, UM, I think the Fed will probably sit 234 00:13:09,440 --> 00:13:11,319 Speaker 1: on its hands as long as it wants. If things 235 00:13:11,960 --> 00:13:15,160 Speaker 1: start to get volatile at the market starts to um 236 00:13:15,679 --> 00:13:18,559 Speaker 1: worry about inflation more than today, you could you could 237 00:13:18,559 --> 00:13:21,920 Speaker 1: see the Fed move that time frame up a little bit. Hey, Steven, 238 00:13:21,920 --> 00:13:24,440 Speaker 1: thanks so much for joining us. We really appreciate getting 239 00:13:24,480 --> 00:13:27,840 Speaker 1: your insights and thoughts there. Stephen Kane, Group Managing Director, 240 00:13:27,920 --> 00:13:34,040 Speaker 1: Portfolio manager at t c W. As more and more 241 00:13:34,120 --> 00:13:36,520 Speaker 1: people in this country get vaccinated, we're starting to see 242 00:13:36,520 --> 00:13:40,240 Speaker 1: economic activity pick up the reopening trade, if you will. 243 00:13:40,280 --> 00:13:42,760 Speaker 1: We're starting to see that in the economic data. Are 244 00:13:42,800 --> 00:13:45,320 Speaker 1: we seeing it on Main Street America? Let's check in 245 00:13:45,360 --> 00:13:47,640 Speaker 1: with Don McCree. He is vice chairman and the head 246 00:13:47,640 --> 00:13:50,680 Speaker 1: of Commercial Banking for Citizens Financial Group that's the New 247 00:13:50,760 --> 00:13:53,640 Speaker 1: York Stock Exchange listed financial services company onto the CIBIL 248 00:13:53,720 --> 00:13:56,640 Speaker 1: cf G. Don thanks so much for joining us here. 249 00:13:56,640 --> 00:13:59,120 Speaker 1: I'd love to get a feeling from you as you 250 00:13:59,160 --> 00:14:02,680 Speaker 1: talk to your clients, the businesses, the small emit sized 251 00:14:02,720 --> 00:14:06,120 Speaker 1: businesses that you guys deal with. Are they investing in 252 00:14:06,160 --> 00:14:08,680 Speaker 1: their businesses? Are they seeing a pickup in business activity? 253 00:14:09,800 --> 00:14:11,520 Speaker 1: You know, it couldn't be here fall it's a tuck 254 00:14:11,559 --> 00:14:15,600 Speaker 1: you again. UM. We we're definitely seeing indications across the 255 00:14:15,600 --> 00:14:18,800 Speaker 1: board of of companies coming out of their dormancy stage, 256 00:14:18,800 --> 00:14:21,360 Speaker 1: at the stage as I would call it UM, not 257 00:14:21,360 --> 00:14:24,320 Speaker 1: not huge amounts of investment going on, but beginning to 258 00:14:24,680 --> 00:14:26,160 Speaker 1: see it in the form of a little bit more 259 00:14:26,200 --> 00:14:28,880 Speaker 1: loan growth than we had seen before UM and certainly 260 00:14:28,920 --> 00:14:31,440 Speaker 1: seeing it in terms of the results of companies. Results 261 00:14:31,440 --> 00:14:34,960 Speaker 1: are generally coming in broadly much stronger than we expected 262 00:14:35,000 --> 00:14:38,560 Speaker 1: as as revenue lines recover UM and companies begin to 263 00:14:38,600 --> 00:14:40,720 Speaker 1: get back to business. And of course it's it's at 264 00:14:40,760 --> 00:14:44,280 Speaker 1: different speeds in different parts of the country UM, with 265 00:14:44,280 --> 00:14:46,560 Speaker 1: with some of the southern states opening more quickly through 266 00:14:46,600 --> 00:14:49,400 Speaker 1: the outdoor activity UM in the Northern States, but we're 267 00:14:49,400 --> 00:14:52,400 Speaker 1: seeing it up north. Also, what kind of loan demand 268 00:14:52,640 --> 00:14:55,400 Speaker 1: are you seeing and what kind of loan demand do 269 00:14:55,480 --> 00:14:59,200 Speaker 1: you forecast throughout the year. Loan loan demand on the 270 00:14:59,240 --> 00:15:02,040 Speaker 1: commercial side, that's been relatively muted, and I think part 271 00:15:02,120 --> 00:15:06,000 Speaker 1: of that is due to the significant securities issue instead 272 00:15:06,000 --> 00:15:09,040 Speaker 1: of taken place over the last year or so. Companies 273 00:15:09,080 --> 00:15:13,040 Speaker 1: are pretty flushed with liquidity, particularly the midsized companies UM, 274 00:15:13,040 --> 00:15:15,360 Speaker 1: and there's lots of deposits sitting in the banking system. 275 00:15:15,400 --> 00:15:17,720 Speaker 1: So what I would expect is to see some of 276 00:15:17,760 --> 00:15:21,000 Speaker 1: that excess liquidity burned down before we begin to see 277 00:15:21,000 --> 00:15:24,360 Speaker 1: loan demand. What our what our base cases is really 278 00:15:24,400 --> 00:15:26,440 Speaker 1: the second half of the year, we expect to see 279 00:15:26,960 --> 00:15:29,640 Speaker 1: UH loan growth on the On the commercial side, we 280 00:15:29,720 --> 00:15:35,520 Speaker 1: are seeing quite significant transactional activity, both in support of 281 00:15:35,520 --> 00:15:37,840 Speaker 1: of M and A and then other corporate events that 282 00:15:37,880 --> 00:15:41,320 Speaker 1: are beginning to materialize. So really record activity in the 283 00:15:41,360 --> 00:15:45,520 Speaker 1: syndicated loan markets and continued record activity in the in 284 00:15:45,560 --> 00:15:48,040 Speaker 1: the bond markets. Don I'd love to get a sense 285 00:15:48,040 --> 00:15:50,880 Speaker 1: of kind of maybe the credit quality out there. It's 286 00:15:50,880 --> 00:15:55,600 Speaker 1: been obviously a very difficult period for corporate America. What's 287 00:15:55,640 --> 00:15:58,120 Speaker 1: the credit quality of your portfolio right here? Are you 288 00:15:58,200 --> 00:16:02,240 Speaker 1: seeing any cracks in there? Uh? It feels good. It 289 00:16:02,280 --> 00:16:04,040 Speaker 1: feels a lot better than it felt a year ago. 290 00:16:04,680 --> 00:16:07,520 Speaker 1: And you saw most banks including US released reserves in 291 00:16:07,560 --> 00:16:10,680 Speaker 1: the first quarter, and that's an indication that the credit 292 00:16:10,760 --> 00:16:13,760 Speaker 1: is improving across the board. We still have a ways 293 00:16:13,800 --> 00:16:16,280 Speaker 1: to go and things like you know, service businesses like 294 00:16:16,360 --> 00:16:19,440 Speaker 1: hotels and restaurants who were only beginning to recover as 295 00:16:19,480 --> 00:16:22,960 Speaker 1: the vaccines, uh take take hold across the country. But 296 00:16:23,320 --> 00:16:27,120 Speaker 1: we're seeing every indicator of credit is improving. And you know, 297 00:16:27,160 --> 00:16:29,680 Speaker 1: we had you know, billions and billions on watch a 298 00:16:29,760 --> 00:16:33,120 Speaker 1: year ago and that's down by about seventy in terms 299 00:16:33,120 --> 00:16:36,120 Speaker 1: of a total amount of credit that we're we're still 300 00:16:36,200 --> 00:16:40,400 Speaker 1: working through the back ends of the pandemic risks. What 301 00:16:40,440 --> 00:16:42,760 Speaker 1: are your net interest margins look like? And what can 302 00:16:42,840 --> 00:16:46,480 Speaker 1: you do in a in an environment like this? You know, 303 00:16:46,560 --> 00:16:49,760 Speaker 1: we we were very deliberate around how we price credit. 304 00:16:49,800 --> 00:16:52,000 Speaker 1: Our Our net interest margin actually held up well in 305 00:16:52,040 --> 00:16:55,600 Speaker 1: the first quarter um as we as we achieved slightly 306 00:16:55,640 --> 00:16:59,120 Speaker 1: better spreads on our lending than we expected to by 307 00:16:59,200 --> 00:17:01,840 Speaker 1: being disciplined, really because we were able to lower our 308 00:17:02,120 --> 00:17:05,639 Speaker 1: deposit costs aggressively UM and with the with the amount 309 00:17:05,640 --> 00:17:07,960 Speaker 1: of liquidity that's in the system, both on the consumer 310 00:17:08,000 --> 00:17:11,000 Speaker 1: side and on the commercial side. UM, there's just a 311 00:17:11,119 --> 00:17:15,720 Speaker 1: very attractive deposit UH costs to financial institutions right now. 312 00:17:15,960 --> 00:17:17,639 Speaker 1: You know that could compress a little bit as we 313 00:17:17,680 --> 00:17:20,960 Speaker 1: go forward, but we're very focused on maintaining that interest margin. 314 00:17:21,000 --> 00:17:22,919 Speaker 1: And of course, if you see a little bit of 315 00:17:22,960 --> 00:17:25,240 Speaker 1: uptick in the tenure like we're seeing over the last 316 00:17:25,240 --> 00:17:27,280 Speaker 1: couple of weeks, that helps a little bit in terms 317 00:17:27,280 --> 00:17:32,240 Speaker 1: of doing interest margining DON in your business in the 318 00:17:32,359 --> 00:17:35,639 Speaker 1: commercial banking business, are you guys looking for M and 319 00:17:35,680 --> 00:17:39,040 Speaker 1: A opportunities to grow? Is that something that's in UH 320 00:17:39,040 --> 00:17:41,320 Speaker 1: in the space that you compete in. Is that something 321 00:17:41,359 --> 00:17:44,960 Speaker 1: you're looking to do with the strategic vision going forward. Yes, 322 00:17:45,040 --> 00:17:47,560 Speaker 1: so so a couple of different things. We we actually 323 00:17:47,760 --> 00:17:51,080 Speaker 1: have acquired three merger and acquisition firms over the last 324 00:17:51,080 --> 00:17:54,320 Speaker 1: three years. UM. Our M and A activity for our 325 00:17:54,359 --> 00:17:57,880 Speaker 1: clients is at record levels right now. UM. It's it's 326 00:17:57,960 --> 00:18:02,760 Speaker 1: really concentrated in changes ownership, where private companies are selling 327 00:18:02,800 --> 00:18:06,520 Speaker 1: themselves to take advantage of what has relatively attracted multiples 328 00:18:06,560 --> 00:18:10,560 Speaker 1: and very very attractive financing markets. So the macros on 329 00:18:10,760 --> 00:18:13,359 Speaker 1: the on the client side are quite good and on 330 00:18:13,440 --> 00:18:15,760 Speaker 1: the M and A side are quite good. Right now 331 00:18:16,359 --> 00:18:19,200 Speaker 1: for us, we're really focused on, you know, small add 332 00:18:19,200 --> 00:18:22,600 Speaker 1: ons to the portfolio like we've been doing. We're constantly 333 00:18:22,640 --> 00:18:25,040 Speaker 1: looking and what we really try to do is is 334 00:18:25,080 --> 00:18:28,560 Speaker 1: build industry expertise by bringing on corporate finance and M 335 00:18:28,560 --> 00:18:31,320 Speaker 1: and A expertise that we can differentiate with our clients 336 00:18:31,400 --> 00:18:34,080 Speaker 1: versus competition. Don, what about clients who want to avoid 337 00:18:34,119 --> 00:18:38,000 Speaker 1: the step up basis changes? I mean, Um, these tax 338 00:18:38,320 --> 00:18:41,840 Speaker 1: plan changes are significant. Must be significant to your wealthy 339 00:18:41,840 --> 00:18:45,520 Speaker 1: clients and institutions. Yeah, they you know, the their their 340 00:18:45,600 --> 00:18:48,480 Speaker 1: their proposals at this point, so there will see where 341 00:18:48,480 --> 00:18:51,119 Speaker 1: they land. But I would expect some some form of 342 00:18:51,160 --> 00:18:54,720 Speaker 1: increases of taxes. It's definitely accelerating things on the M 343 00:18:54,720 --> 00:18:56,959 Speaker 1: and A side. So if we were, if we were 344 00:18:57,000 --> 00:18:59,800 Speaker 1: in a robust market before the proposals that came out 345 00:18:59,840 --> 00:19:03,600 Speaker 1: of the administration, I think people are looking to UM too. 346 00:19:03,760 --> 00:19:06,200 Speaker 1: If if they're sellers, they're looking to sell their companies 347 00:19:06,280 --> 00:19:10,080 Speaker 1: probably within the calendar year of two thousand one. Don, 348 00:19:10,119 --> 00:19:12,679 Speaker 1: thanks so much, great to get your insight you have 349 00:19:13,040 --> 00:19:15,119 Speaker 1: a really unique point of view that I think is 350 00:19:15,119 --> 00:19:18,800 Speaker 1: helpful for everybody looking at this market. Don McCree is 351 00:19:18,880 --> 00:19:21,680 Speaker 1: the vice chair and the head of commercial banking at 352 00:19:21,720 --> 00:19:29,560 Speaker 1: Citizens Financial Group. Really a policy day today in addition 353 00:19:29,600 --> 00:19:31,399 Speaker 1: to earnings, Matt, you know, we've got the Federal Reserve 354 00:19:31,440 --> 00:19:33,520 Speaker 1: it too was John was just mentioning, which Bloomberg will 355 00:19:33,520 --> 00:19:36,800 Speaker 1: bring you as well as President Biden's speech at nine 356 00:19:36,800 --> 00:19:39,680 Speaker 1: pm Wall Street time again Walls, Bloomberg will be bringing 357 00:19:39,720 --> 00:19:42,960 Speaker 1: that to you. So a lot of policy initiatives here 358 00:19:43,000 --> 00:19:45,720 Speaker 1: that are likely to have a, you know, pretty significant 359 00:19:45,720 --> 00:19:49,800 Speaker 1: impact on this economic recovery as this reopening begins to 360 00:19:49,880 --> 00:19:53,440 Speaker 1: really accelerate here in the US. Yeah. Absolutely. Let's check 361 00:19:53,440 --> 00:19:55,960 Speaker 1: in right now with someone who knows a little bit 362 00:19:56,000 --> 00:20:00,600 Speaker 1: more about, um, the policy and effects. Casey Matthews joins 363 00:20:00,640 --> 00:20:03,840 Speaker 1: US Chief Investment Officer at U m B on what 364 00:20:03,880 --> 00:20:06,359 Speaker 1: we could get from these tax changes. In Casey, I 365 00:20:06,400 --> 00:20:10,040 Speaker 1: want to start first with the with the arguments, Um, 366 00:20:10,080 --> 00:20:13,560 Speaker 1: if this had happened ten years ago, you would have 367 00:20:13,600 --> 00:20:17,760 Speaker 1: heard freshwater economists go absolutely nuts with the jump in 368 00:20:18,160 --> 00:20:20,600 Speaker 1: a capital gains tax, even if it is for people 369 00:20:20,640 --> 00:20:22,280 Speaker 1: who are in more than a million dollars a year. 370 00:20:22,720 --> 00:20:25,400 Speaker 1: But as it is, it doesn't seem like there are 371 00:20:25,440 --> 00:20:28,720 Speaker 1: any more freshwater economists with any cloud. At least all 372 00:20:28,760 --> 00:20:33,400 Speaker 1: of the economists who have influenced these days are um 373 00:20:33,440 --> 00:20:37,800 Speaker 1: of the salt water variety or more um Kynesian. So 374 00:20:38,880 --> 00:20:43,520 Speaker 1: where is the pushback on this? Well, good morning, you know, 375 00:20:43,720 --> 00:20:49,159 Speaker 1: I don't think there's much pushback because our takeaway is 376 00:20:49,880 --> 00:20:55,320 Speaker 1: taxes don't drive economic activity. There's all kinds of data 377 00:20:55,320 --> 00:20:57,440 Speaker 1: out there. Even though every cycle, you know, you talk 378 00:20:57,480 --> 00:21:01,320 Speaker 1: about your years ago, every economic cycle, every potential tax 379 00:21:01,359 --> 00:21:06,200 Speaker 1: policy change has its own set of nuances. But yeah, 380 00:21:06,200 --> 00:21:11,000 Speaker 1: we know and economists know that. One the academic research 381 00:21:11,080 --> 00:21:14,840 Speaker 1: says tax policy doesn't drive economic activity, and we can 382 00:21:15,080 --> 00:21:18,359 Speaker 1: use the fiscal multiplier to prove that. And that is 383 00:21:18,400 --> 00:21:21,840 Speaker 1: the bang for the buck that each government, that the 384 00:21:21,880 --> 00:21:26,200 Speaker 1: government spends for stimulus, what happens if they spend a dollar, 385 00:21:26,280 --> 00:21:29,160 Speaker 1: do we get more than a dollar of economic activity? 386 00:21:29,480 --> 00:21:32,880 Speaker 1: And the data shows us that low and behold direct 387 00:21:32,920 --> 00:21:36,480 Speaker 1: purchases of goods and services has the highest potential the 388 00:21:36,480 --> 00:21:40,240 Speaker 1: biggest bang for its buck to stimulate the economy. The 389 00:21:40,400 --> 00:21:45,560 Speaker 1: lowest initiative would be corporate tax cuts and tax cuts 390 00:21:45,600 --> 00:21:50,640 Speaker 1: for um, high way earners. So this stuff doesn't impact 391 00:21:50,920 --> 00:21:53,280 Speaker 1: economic activity at all. It's not a catalyst, it's not 392 00:21:53,320 --> 00:21:58,480 Speaker 1: a driver. All right, Casey, how much do you think, uh, 393 00:21:58,520 --> 00:22:02,679 Speaker 1: these tax increases, the post tax increases are economically based 394 00:22:02,680 --> 00:22:06,280 Speaker 1: i e. To pay in part for President Biden's fiscal 395 00:22:06,359 --> 00:22:10,480 Speaker 1: stimulus plans. And how much is maybe social i e. 396 00:22:11,000 --> 00:22:15,119 Speaker 1: Trying to deal with the income inequality, wealth inequality, the 397 00:22:15,119 --> 00:22:20,200 Speaker 1: redistribution type of issue. How do you think about that? Well, 398 00:22:20,240 --> 00:22:22,400 Speaker 1: I would go back and look at the empirical evidence 399 00:22:22,560 --> 00:22:25,480 Speaker 1: that we've seen tax policy changes before, and some of 400 00:22:25,520 --> 00:22:28,720 Speaker 1: these things just um. I think it was Mark Twain 401 00:22:28,800 --> 00:22:31,639 Speaker 1: who said maybe history doesn't repeat itself. Maybe at rhymes, 402 00:22:31,680 --> 00:22:34,320 Speaker 1: but we hear a lot of rhyming right now. Right. 403 00:22:34,720 --> 00:22:40,359 Speaker 1: So back in UH was President Clinton who changed the 404 00:22:40,440 --> 00:22:44,360 Speaker 1: highest marginal tax bracket for individuals from to thirty nine 405 00:22:44,400 --> 00:22:48,399 Speaker 1: point six. He bumped up corporate taxes a little bit, right, So, 406 00:22:48,480 --> 00:22:50,680 Speaker 1: I don't know. I think it was for economic reasons 407 00:22:51,560 --> 00:22:54,080 Speaker 1: were trying to do. That was the Deficit Reduction Act 408 00:22:55,359 --> 00:22:57,720 Speaker 1: in Lowell Behold that had little impact on the economy 409 00:22:58,000 --> 00:23:01,480 Speaker 1: and no impact on markets. And we saw it again 410 00:23:01,520 --> 00:23:04,840 Speaker 1: in two thousand and thirteen. Of course, President Obama changed 411 00:23:04,880 --> 00:23:08,480 Speaker 1: the top marginal tax bracket on those making over four 412 00:23:08,520 --> 00:23:10,720 Speaker 1: and thousand dollars a year, So you can see this rhyming. 413 00:23:10,880 --> 00:23:13,639 Speaker 1: And even in nineteen Apartment two thousand thirteen, I mentioned 414 00:23:13,680 --> 00:23:16,600 Speaker 1: that these cycles have their own nuances. The tenure Treasury 415 00:23:16,720 --> 00:23:20,480 Speaker 1: rate went from one point seven to three percent that year. 416 00:23:21,080 --> 00:23:23,440 Speaker 1: But she would think would be negative for markets, negative 417 00:23:23,480 --> 00:23:27,000 Speaker 1: for economic growth, so I would probably be in the 418 00:23:27,080 --> 00:23:28,960 Speaker 1: economic camp. I think what they're trying to do is 419 00:23:29,000 --> 00:23:32,879 Speaker 1: just pay for the stimulus to make sure we um 420 00:23:32,920 --> 00:23:35,680 Speaker 1: get out of the COVID recession, stay out of it, 421 00:23:36,119 --> 00:23:38,679 Speaker 1: and get back to a sense of normalcy. One of 422 00:23:38,680 --> 00:23:40,920 Speaker 1: the things, one of the changes were likely to see. 423 00:23:40,960 --> 00:23:44,359 Speaker 1: We just spoke with Don McCree over a Citizens Financial 424 00:23:44,440 --> 00:23:48,600 Speaker 1: and he told us private companies now are looking to 425 00:23:48,600 --> 00:23:51,160 Speaker 1: to sell in this calendar year, a lot of them 426 00:23:51,200 --> 00:23:55,199 Speaker 1: to avoid things like step up basis changes. You know, 427 00:23:55,720 --> 00:23:57,480 Speaker 1: if you're gonna get danged, or your kids are gonna 428 00:23:57,480 --> 00:23:59,399 Speaker 1: get danged when you when you pass it onto them, 429 00:23:59,400 --> 00:24:01,560 Speaker 1: you may as well sell and deal with it in 430 00:24:01,560 --> 00:24:04,159 Speaker 1: a different way. Do you see that kind of behavior 431 00:24:04,359 --> 00:24:09,160 Speaker 1: changing some of it? Yes. Of course, with these smaller 432 00:24:09,240 --> 00:24:13,320 Speaker 1: family owned business. I don't think it's driven again by uh, 433 00:24:13,520 --> 00:24:18,359 Speaker 1: capital gain taxes or the elimination of the stept up 434 00:24:18,480 --> 00:24:21,159 Speaker 1: cost spaces. The family wants to run the business and 435 00:24:21,160 --> 00:24:23,880 Speaker 1: they feel good about it. They're just going to row harder, 436 00:24:23,920 --> 00:24:26,399 Speaker 1: if you will, case some more tax in row harder. 437 00:24:26,720 --> 00:24:30,440 Speaker 1: But I would tell you the the empirical evidence suggests 438 00:24:30,520 --> 00:24:35,120 Speaker 1: you see some behavior changes. So back in when capital 439 00:24:35,160 --> 00:24:39,800 Speaker 1: gain tax rates were increased, you saw realized capital gains 440 00:24:39,800 --> 00:24:43,240 Speaker 1: surged by And this isn't the public markets the same 441 00:24:43,280 --> 00:24:44,800 Speaker 1: thing in two thousand and twelve, but there was a 442 00:24:44,880 --> 00:24:49,639 Speaker 1: change in the capital gain tax rate, realized gains increased by. 443 00:24:50,800 --> 00:24:54,159 Speaker 1: So yes, you do see a slight change of behavior 444 00:24:54,920 --> 00:24:57,639 Speaker 1: when you have some of these tax policies. But you 445 00:24:57,640 --> 00:25:00,720 Speaker 1: don't see a drop an investment because that's the concern, 446 00:25:00,960 --> 00:25:04,520 Speaker 1: the sort of awesome concern, not at all. Because here's 447 00:25:04,520 --> 00:25:06,359 Speaker 1: the thing. I mean, of course, when we talk to 448 00:25:06,359 --> 00:25:09,639 Speaker 1: our clients, a lot of small business owners if the 449 00:25:09,720 --> 00:25:13,199 Speaker 1: tax policy change changes to some degree, are they going 450 00:25:13,280 --> 00:25:15,879 Speaker 1: to sell risk based assets? What you think about it? 451 00:25:15,960 --> 00:25:18,560 Speaker 1: Just using the SMP as a proxy. Last year we 452 00:25:18,640 --> 00:25:22,879 Speaker 1: made this year, we're up eleven. You're gonna sell those assets? 453 00:25:23,160 --> 00:25:25,600 Speaker 1: To avoid some type of tax to what go by 454 00:25:25,600 --> 00:25:29,800 Speaker 1: a tenure treasury at one point six ten year yield? Right, 455 00:25:30,000 --> 00:25:32,679 Speaker 1: I don't think so? All right. Veriously, we will pay 456 00:25:32,720 --> 00:25:35,720 Speaker 1: attention certainly to the Feds for noon, and obviously President 457 00:25:35,960 --> 00:25:38,920 Speaker 1: Biden tonight to get a handle on his tax plans. 458 00:25:39,000 --> 00:25:43,240 Speaker 1: Casey Matthews, economist and chief investment officer for U m 459 00:25:43,320 --> 00:25:46,000 Speaker 1: B Bank giving us his thoughts, and certainly we will 460 00:25:46,040 --> 00:25:49,200 Speaker 1: cover both of those later on today and this evening. 461 00:25:49,200 --> 00:25:52,040 Speaker 1: This is bloom Work. Thanks for listening to the Bloomberg 462 00:25:52,160 --> 00:25:55,560 Speaker 1: Markets podcast. You can subscribe and listen to interviews with 463 00:25:55,600 --> 00:26:00,440 Speaker 1: Apple Podcasts or whatever podcast platform you prefer. I'm Miller. 464 00:26:00,680 --> 00:26:04,560 Speaker 1: I'm on Twitter at Matt Miller three, and I fall 465 00:26:04,600 --> 00:26:07,480 Speaker 1: Sweeney I'm on Twitter at pt Sweeney. Before the podcast, 466 00:26:07,520 --> 00:26:10,000 Speaker 1: you can always catch us worldwide at Bloomberg Radio.