WEBVTT - FOMC Minutes, Turkey & Syria, Markets 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Penel podcast. I'm Paul swing you 0:00:05.360 --> 0:00:07.680 along with my co host Lisa Brahma Waits. Each day 0:00:07.720 --> 0:00:10.240 we bring you the most noteworthy and useful interviews for 0:00:10.280 --> 0:00:12.520 you and your money, whether at the grocery store or 0:00:12.560 --> 0:00:15.480 the trading floor. Find a Bloomberg Penl podcast on Apple 0:00:15.520 --> 0:00:17.960 podcast or wherever you listen to podcasts, as well as 0:00:17.960 --> 0:00:25.439 at Bloomberg dot com. We are awaiting the minutes from 0:00:25.480 --> 0:00:28.040 the last f O MC meeting. They are due out 0:00:28.080 --> 0:00:31.200 today at two pm Eastern time. Although we have a 0:00:31.200 --> 0:00:33.919 good sense of what will probably be the headline here 0:00:33.920 --> 0:00:36.120 and will have to do with the expansion of the 0:00:36.120 --> 0:00:39.320 balance sheet that will not by any means be called 0:00:39.400 --> 0:00:43.080 quantitative easing by Fed officials. Joining us here in our 0:00:43.080 --> 0:00:46.320 interactive broker studios is Phil Blancado. He is chief executive 0:00:46.360 --> 0:00:50.199 officer for Leidenburg Salmon Asset Management funds UH and I 0:00:50.440 --> 0:00:53.240 I want to start their Phil the idea that the 0:00:53.360 --> 0:00:56.440 Fed seems to be poised to expand the balance sheet 0:00:56.480 --> 0:00:59.120 in short order, according to what j. Pali said yesterday, 0:00:59.640 --> 0:01:02.840 but this is not necessarily part of any sort of easing. 0:01:03.320 --> 0:01:05.600 Do you buy that well? I think he said clearly 0:01:05.640 --> 0:01:09.000 this is not que profoundly more than once. Actually I 0:01:09.040 --> 0:01:11.200 agree with that for a minute. I would give the 0:01:11.200 --> 0:01:13.400 FED credit on this front. That we took a three 0:01:13.440 --> 0:01:15.880 trillion dollar balance sheet and reduced it down to one 0:01:15.920 --> 0:01:18.160 point four and in that process there were going to 0:01:18.240 --> 0:01:20.320 be some hiccups along the way, and I think this 0:01:20.400 --> 0:01:22.399 is the one thing we can point to that they 0:01:22.400 --> 0:01:23.959 got to where they wanted to be. They want to 0:01:23.959 --> 0:01:25.960 where they the right amount of cash on hand to 0:01:26.080 --> 0:01:28.959 be backing up the reserves, backing up the banking system, 0:01:29.000 --> 0:01:30.960 and now they've reached where Okay, we probably went a 0:01:30.959 --> 0:01:32.600 little too far to tune of a hundred and fifty 0:01:32.720 --> 0:01:35.480 two billion dollars, and then that would solve this problem. 0:01:35.480 --> 0:01:37.640 I don't think there's a systemic problem. Also had a 0:01:37.680 --> 0:01:39.839 little bit of the calendar involved. Also had a little 0:01:39.840 --> 0:01:41.240 bit to do with how much banks are going to 0:01:41.319 --> 0:01:43.440 loan to each other. So the FEDS doing what it's 0:01:43.440 --> 0:01:46.160 supposed to do, which is fixed these disruptions in the market. 0:01:46.240 --> 0:01:47.840 I'm okay with what happened that. I don't think it's 0:01:47.840 --> 0:01:49.920 a big deal, so Phil, the expectation is that the 0:01:50.400 --> 0:01:52.960 FED will continue to ease maybe at the end of 0:01:53.200 --> 0:01:56.160 this month. I kind of argument, however, might be, you know, 0:01:56.200 --> 0:01:58.560 what do they really need to the economies? You know 0:01:58.800 --> 0:02:01.560 pretty doing pretty well. Yes, yes we know manufacturing this week, 0:02:01.600 --> 0:02:04.040 but the consumers still hanging in there. Isn't it better 0:02:04.080 --> 0:02:06.640 to save our ammunition for later if and when the 0:02:06.680 --> 0:02:11.680 economy perhaps weekends. Further to the Chairman's comments just today 0:02:11.720 --> 0:02:14.400 that the US economy is actually pretty good, there's nothing 0:02:14.520 --> 0:02:16.840 hot in the economy, and I would agree on both fronts. 0:02:17.280 --> 0:02:20.640 When your consumer is gainfully employed at a historical level 0:02:20.639 --> 0:02:23.720 of loads of unemployment, you're seeing wages will be a 0:02:23.760 --> 0:02:26.200 bit modestly but still going higher. It's hard for me 0:02:26.240 --> 0:02:28.960 to understand why we feel this dramatic need to cut 0:02:28.960 --> 0:02:31.680 to your points save it for later. Now, I would say, 0:02:31.960 --> 0:02:34.200 what the Fed funds rate is higher than the tenure. 0:02:34.240 --> 0:02:37.000 That concerns me. I'd rather see those flat. Why. I 0:02:37.000 --> 0:02:39.240 want to see more stimulus on both sides of the curve, 0:02:39.320 --> 0:02:40.840 not just a short end of the curve. So for 0:02:40.880 --> 0:02:43.239 that reason I could see another quarter point coming out 0:02:43.280 --> 0:02:46.040 That makes sense to me. But beyond that, why use 0:02:46.120 --> 0:02:48.680 up that ammunition? Now use up that firepower when you 0:02:48.760 --> 0:02:51.399 might need it if something dressed it happens down the road. 0:02:52.360 --> 0:02:54.119 So what are you buying right now? That's a great 0:02:54.200 --> 0:02:56.760 question for me. I still want to rotate towards. For 0:02:56.919 --> 0:02:59.040 First of all, in your equity portfolios, we're up over 0:02:59.800 --> 0:03:01.520 near there on the SMP five D. Give or take 0:03:01.560 --> 0:03:03.480 a point or two. Take some profit. I think we've 0:03:03.480 --> 0:03:06.280 forgotten about rule one on one. You're in October, you've 0:03:06.280 --> 0:03:08.120 made a lot of money. Take someone at the table. 0:03:08.400 --> 0:03:11.240 Then rotate towards two places. First, short term fixed income 0:03:11.280 --> 0:03:13.839 is yielding over two percent. That's a panacea. Right now. 0:03:14.040 --> 0:03:16.520 You're doing really well by hiding out in your shirt reserves. 0:03:16.520 --> 0:03:19.040 Nothing wrong with waiting for this to resolve yourself, whether 0:03:19.040 --> 0:03:21.440 it's the tariff battle or something along those lines. But 0:03:21.480 --> 0:03:23.840 add to that, where your opportunities are, you could still 0:03:23.880 --> 0:03:27.120 go into that staple sector, albeit carefully, and find those 0:03:27.200 --> 0:03:29.280 quality names they're going to earn your income. Whether it's 0:03:29.280 --> 0:03:31.600 a cost co, whether it's a Walmart. You could even 0:03:31.639 --> 0:03:34.360 look at something like a tech company that's got a 0:03:34.440 --> 0:03:36.680 value bent to it, like a Microsoft, or even to 0:03:36.760 --> 0:03:39.680 a degree to a degree, Apple, who has had really 0:03:39.680 --> 0:03:42.480 spectacular that to come out recently. Where you're but you're 0:03:42.480 --> 0:03:45.080 getting paid a nice dividend, So that's where your rotate now. 0:03:45.560 --> 0:03:48.480 So you know the we have the trade delegation from 0:03:48.560 --> 0:03:52.400 China coming into Washington, the negotiations start tomorrow. What do 0:03:52.400 --> 0:03:55.200 you think the market's kind of discounting right now? Is 0:03:55.240 --> 0:03:56.560 it released a trade because that's been one of the 0:03:56.560 --> 0:03:58.720 big issues that that's been whipping the market around, one 0:03:58.760 --> 0:04:01.040 of my favorite topics. I think there is this expectation 0:04:01.080 --> 0:04:02.520 that this is going to get solved in the blank 0:04:02.560 --> 0:04:05.800 of and I I think that's really a reach. There's 0:04:05.840 --> 0:04:08.240 just too many movies, too many people who are actually 0:04:08.280 --> 0:04:11.080 expecting an easy solution at this point. Well, here's why 0:04:11.120 --> 0:04:13.560 I think that. Look at the market's reaction just today. 0:04:13.600 --> 0:04:15.760 I mean, grant the light volume day, but we watch 0:04:15.840 --> 0:04:18.880 these crazy minuscule headlines and we're up two hundred, down 0:04:18.880 --> 0:04:21.360 two hundred, and I'm saying to myself, there must be 0:04:21.400 --> 0:04:24.400 some enigma of people out there that think that this 0:04:24.440 --> 0:04:26.560 is going to get solved instantly. That's just not gonna 0:04:26.600 --> 0:04:29.160 work that way. Whether it's the election cycle, whether it's 0:04:29.200 --> 0:04:33.080 China wanted to solve this on intellectual property issue, or 0:04:33.120 --> 0:04:35.320 it's just what the next president mayor man, all of 0:04:35.360 --> 0:04:37.960 these components, I think This is a multi year issue, 0:04:38.000 --> 0:04:40.200 not a multi month issue, and for that reason we're 0:04:40.200 --> 0:04:42.360 gonna be stuck with this for a while. I want 0:04:42.400 --> 0:04:44.400 to ask you a question that I've been thinking about 0:04:44.440 --> 0:04:48.640 all morning, which is at a time of an everything rally. 0:04:48.720 --> 0:04:52.040 Yet again, it's not a comfortable everything rally with a 0:04:52.120 --> 0:04:54.280 lot of rotation under the surface, but if you look 0:04:54.279 --> 0:04:58.320 at the averages, it is a very strong performance nonetheless 0:04:58.360 --> 0:05:02.680 in bonds and equities. What's the argument as an active 0:05:02.720 --> 0:05:07.760 manager at that point when the Fed's basically back stopping markets, 0:05:08.400 --> 0:05:12.120 suppressing volatility and forcing people to do things that they're 0:05:12.200 --> 0:05:15.160 uncomfortable with and into assets that are going to keep 0:05:15.240 --> 0:05:18.600 rallying even if they shouldn't be. This is behavioral finance. 0:05:18.600 --> 0:05:22.680 One oh one, my gosh. Rup now on the act 0:05:22.839 --> 0:05:26.200 nearly on the SMP. Take your money off the table. 0:05:26.320 --> 0:05:28.560 We thrilled you made this kind of money this year, 0:05:28.600 --> 0:05:31.200 and rotate to a neutral position because of the point 0:05:31.200 --> 0:05:33.760 you made. Whether you call this a potempan market, whether 0:05:33.800 --> 0:05:36.880 it's financed by the FEB artificial earnings, it's time to 0:05:36.920 --> 0:05:38.839 take some money off the table. Yeah, but the FED 0:05:38.920 --> 0:05:41.240 is still going to be back stopping the market over 0:05:41.279 --> 0:05:43.320 the next couple of months and into next year. So 0:05:43.440 --> 0:05:46.200 my question is you could take out you know, your money, 0:05:46.240 --> 0:05:48.640 but then when you put it back it might actually 0:05:48.800 --> 0:05:52.160 be at an even higher point. Right, neutral not overweight. 0:05:52.279 --> 0:05:55.400 There's the answer to that is don't go underweight, go neutral, 0:05:55.640 --> 0:05:57.520 And by that you're right about the FED. But I 0:05:57.560 --> 0:06:00.159 don't think the FED could stimulate enough to really right 0:06:00.160 --> 0:06:03.000 as is higher. The reality is that the Canarian coal 0:06:03.000 --> 0:06:05.840 mine here is do we get a business procession that 0:06:05.960 --> 0:06:09.040 impacts unemployment and causes consumer confidence to a road. So 0:06:09.120 --> 0:06:11.360 far it hasn't happened, and if it doesn't happen, we're 0:06:11.400 --> 0:06:13.720 gonna trade along in this bound for a while until 0:06:13.720 --> 0:06:15.880 we get a catalyst higher or lower. And for me, 0:06:15.920 --> 0:06:18.360 I don't want to take that political or that economic risk, 0:06:18.400 --> 0:06:21.320 So neutral is a lot safer than overweight. We are 0:06:21.400 --> 0:06:24.240 coming up on earnings starting next week. It's something we 0:06:24.240 --> 0:06:26.320 haven't talked about, probably for because there's been so much 0:06:26.360 --> 0:06:28.880 more on the macro front to talk about. But earnings 0:06:28.920 --> 0:06:32.320 outlook isn't that great. I don't think the earnings necessarily 0:06:32.640 --> 0:06:35.039 are something that supports equities. How are you thinking about 0:06:35.200 --> 0:06:38.000 the echo markets going into earnings? The most important earning 0:06:38.040 --> 0:06:40.520 season in three years. Simply put, this is the one 0:06:40.600 --> 0:06:42.800 that matters. This is the guerrilla because the first two 0:06:42.839 --> 0:06:45.800 we got through, whether they ratcheted down expectations or we 0:06:45.839 --> 0:06:48.240 somehow surpassed it. And I'm less worried about the e 0:06:48.360 --> 0:06:50.359 I'm more worried about the revenue side of the sales side. 0:06:50.640 --> 0:06:53.679 If we can get positive sales momentum plus two plus 0:06:53.720 --> 0:06:55.640 three percent, we're going to survive this because then we 0:06:55.680 --> 0:06:57.520 get into the fourth quarter of the year, we get 0:06:57.520 --> 0:06:59.960 in the last year the presidential cycle, which tendably stimulative. 0:07:00.240 --> 0:07:01.960 Fourth quote of tends to be a big buying season 0:07:02.000 --> 0:07:04.599 as we all know, Holidays, Santa clas Rally, blah blah blah. 0:07:05.000 --> 0:07:06.840 So if we can get through this earning seven, we're 0:07:06.839 --> 0:07:09.360 gonna be okay. But the key is if we go 0:07:09.520 --> 0:07:12.360 negative on sales and earnings, it could be very problematic. 0:07:12.360 --> 0:07:14.000 From markets. I could see it's giving back a good 0:07:14.800 --> 0:07:17.360 percent would not surprise me at all. Phil Blancada, thank 0:07:17.360 --> 0:07:19.560 you so much for joining us. Well. You apppreciate you 0:07:19.640 --> 0:07:21.760 coming and sharing your thoughts. Fills the chief executive officer 0:07:21.840 --> 0:07:25.080 for laden Berg tom and Asset Management Funds. Braving the 0:07:25.200 --> 0:07:26.960 rain here in New York City, joining us here in 0:07:26.960 --> 0:07:30.440 a Bloomberg Interactive broker studio giving us some thoughts on 0:07:30.640 --> 0:07:47.000 the markets. Yeah, I want to shift gears to the 0:07:47.080 --> 0:07:51.440 bankrupt utility in California, PG and E. It has come 0:07:51.520 --> 0:07:54.680 up with a new defense against wildfires, simply shutting down 0:07:54.840 --> 0:07:58.040 joining us now Kick Conneledge Senior Industrials and Utility is 0:07:58.040 --> 0:08:01.680 analyst for Bloomberg Intelligence. Is this a viable solution to 0:08:01.720 --> 0:08:04.160 basically just say to everybody, Hey, guys, you know what, 0:08:04.320 --> 0:08:06.119 the risk of fire is high, So we're just gonna 0:08:06.120 --> 0:08:08.360 shut down your energy for a couple of days and 0:08:08.520 --> 0:08:11.119 uh just you know, we're not responsible for any fires 0:08:11.120 --> 0:08:13.640 because we're not operating. Well. We're going to find out 0:08:13.680 --> 0:08:17.520 how viable it is, obviously, but I think it's to 0:08:17.680 --> 0:08:21.559 my mind, it's it's clearly in the context of uh 0:08:21.880 --> 0:08:25.200 we lost billions and billions of dollars and we went 0:08:25.240 --> 0:08:30.280 bankrupt by having the electricity on uh in in these conditions, right, 0:08:30.360 --> 0:08:33.120 so that you know, there's I don't think there's any 0:08:33.120 --> 0:08:36.319 way to tell from the outside. Are they being quote 0:08:36.360 --> 0:08:41.880 unquote too cautious or overly you know, aware of possibilities. 0:08:41.960 --> 0:08:44.240 Is there a one percent chance that something could happen 0:08:44.320 --> 0:08:47.160 or a ten percent chance obviously that would that would 0:08:47.200 --> 0:08:49.320 make a big difference. But they're clearly airing on the 0:08:49.360 --> 0:08:53.760 side of caution and trying not to burn down the 0:08:53.880 --> 0:08:56.800 whole counties the way they've done before. Well, I've seen 0:08:56.840 --> 0:08:59.640 the map of the the outage area, um and it's 0:08:59.640 --> 0:09:02.120 just a huge part of the you know, the central 0:09:02.200 --> 0:09:05.319 northern part of the state and impact a lot of people. 0:09:06.320 --> 0:09:09.640 Is there any precedent for this happening before? I think 0:09:09.679 --> 0:09:13.400 they're on on a smaller scale, There's definitely been these 0:09:13.520 --> 0:09:16.959 kinds of situations. I mean, utilities do it to some 0:09:17.080 --> 0:09:20.479 extent a lot of the time when there are floods 0:09:20.600 --> 0:09:25.080 and other you know, problematic situations where there are live 0:09:25.160 --> 0:09:27.959 wires in you know that could really hurt people. Is 0:09:28.160 --> 0:09:31.280 it just the up to PGEN or the utilities to 0:09:31.320 --> 0:09:33.400 decide when and how and they do it or do 0:09:33.440 --> 0:09:35.679 they have to get approval from the regulators? It's almost like, hey, 0:09:35.679 --> 0:09:39.440 who's watching out for the homeowners and who are people 0:09:39.440 --> 0:09:42.640 who need electricity? Uh? My understanding is they can do 0:09:42.720 --> 0:09:45.680 it on their own. They're the experts. They have to, 0:09:45.960 --> 0:09:50.360 but they certainly have people potentially second guessing them. If 0:09:50.360 --> 0:09:55.320 they keep doing it consistently and enough people feel like 0:09:55.480 --> 0:09:59.200 it wasn't a problem and they're making it a problem. 0:09:59.720 --> 0:10:02.959 U uh. And especially if bad things happen to people, 0:10:03.040 --> 0:10:06.960 like medical devices go you know, go off and can't 0:10:07.000 --> 0:10:11.360 be helped and so on, then they will have that uh, 0:10:11.400 --> 0:10:14.559 you know, that fallout from from other people. Yeah, and 0:10:14.600 --> 0:10:16.480 then there is this that the director of the Climate 0:10:16.600 --> 0:10:20.040 Energy Policy Program at Stanford University estimated that the economic 0:10:20.120 --> 0:10:22.920 impact could rise to as much as two point six 0:10:23.000 --> 0:10:27.120 billion dollars for PG and ease blackout for just two days. 0:10:27.200 --> 0:10:30.360 So there is a sort of economic bleed through in 0:10:30.400 --> 0:10:33.960 addition to just the inconvenience. I have to wonder, though, 0:10:34.679 --> 0:10:37.319 why is it that they have to put the the 0:10:37.640 --> 0:10:40.720 the area at risk of a fire with their with 0:10:40.800 --> 0:10:44.400 their infrastructure. I mean, I don't understand exactly. Are there 0:10:44.480 --> 0:10:47.560 just live wires next to trees hanging out there? I mean, 0:10:47.960 --> 0:10:53.199 that's basically it is that northern California is an especially 0:10:54.040 --> 0:10:59.040 um problematic area to have big industrial operations. And there's 0:10:59.040 --> 0:11:01.520 a lot of mountains, that's a lot of trees, there's 0:11:01.640 --> 0:11:06.840 a lot of you know, steep uh. There's a lot 0:11:06.880 --> 0:11:11.640 of of towns in remote areas, So there's a lot 0:11:11.679 --> 0:11:14.720 of wires going all over the place. If you want 0:11:14.760 --> 0:11:19.040 to have wires, you know that that go to where 0:11:19.040 --> 0:11:21.920 people are as opposed to having people run their own 0:11:22.000 --> 0:11:26.240 generator or their own rooftop solars. So arguably that would 0:11:26.320 --> 0:11:30.439 be kind of a a better solution someday. But obviously 0:11:30.480 --> 0:11:33.920 we're talking about hundreds of thousands of customers, millions of 0:11:34.440 --> 0:11:36.760 people being affected by this. It's not going to happen 0:11:36.760 --> 0:11:39.800 overnight if they did fix it that way. So real quick, 0:11:40.000 --> 0:11:41.880 um kid, just give us a sense of how pg 0:11:42.000 --> 0:11:44.360 n E is doing right now. I know they're still 0:11:44.360 --> 0:11:49.760 in bankruptcy. How are they? You know, everybody um is 0:11:49.920 --> 0:11:52.840 has their eye on June next year, which is when 0:11:53.440 --> 0:11:55.560 uh they have to be out of bankruptcy if they're 0:11:55.559 --> 0:12:01.240 going to take advantage of the multibillion dollar um fun 0:12:01.400 --> 0:12:04.200 that the state is set up. So they're going back 0:12:04.200 --> 0:12:07.600 and forth with the victims of the fires, with the 0:12:07.600 --> 0:12:14.040 bond holders over potentially reaching some settlement at some point here. Uh. 0:12:14.080 --> 0:12:17.920 You know, it's an intricate uh process in bankruptcy. But 0:12:18.320 --> 0:12:21.720 it looks for now like the current shareholders of PGNI 0:12:21.840 --> 0:12:27.160 have the their own exclusivity still in place. But you know, 0:12:27.280 --> 0:12:30.160 the judge ultimately makes that decision, and that's coming up 0:12:30.880 --> 0:12:33.840 judge any day. He's supposed to make a decision on 0:12:34.000 --> 0:12:37.440 whether they keep exclusivity. Uh, and that would you know, 0:12:37.600 --> 0:12:39.719 tend to lean in one direction or the other to 0:12:39.840 --> 0:12:43.800 the you know, outside bondholders or the shareholders. Okay, kick 0:12:43.880 --> 0:12:45.760 kind of LEDs. Thanks so much for joining us kid 0:12:45.760 --> 0:12:49.200 as a senior industrials and utilities animals for Bloomberg Intelligence, 0:12:49.280 --> 0:12:52.439 joining us here in our Bloomberg Interactive Broker studio getting 0:12:52.559 --> 0:12:56.040 update on PGEN and potentially and shutting down power for 0:12:56.160 --> 0:12:57.679 you know, half million homes. And there are all these 0:12:57.720 --> 0:13:00.480 images of people going to grocery stores and wocking up 0:13:00.480 --> 0:13:03.320 on flashlights. I was thinking to myself though, I mean, 0:13:03.520 --> 0:13:07.160 what if somebody lights a candle to get light during 0:13:07.200 --> 0:13:10.839 a high fire period because they don't have electricity. I mean, 0:13:11.200 --> 0:13:13.600 my mind was going a little a little while exactly 0:13:13.600 --> 0:13:15.400 We'll see how this goes. I suspect that maybe a 0:13:15.400 --> 0:13:17.720 little bit of an experiment here to see how it goes. 0:13:18.120 --> 0:13:20.800 But clearly the liability has been major for those utilities 0:13:20.840 --> 0:13:34.240 out there. Blimberg reported earlier today that Turkey did begin 0:13:34.320 --> 0:13:37.800 their offensive into Syria after the US said that it 0:13:37.840 --> 0:13:41.400 was going to withdraw. Now there are reports that there 0:13:41.400 --> 0:13:44.920 are rockets being shot from Syria towards Turkey. Joining US 0:13:44.920 --> 0:13:49.240 now is Ali Cenar, president of the Turkish Heritage Organization, Ali, 0:13:49.280 --> 0:13:51.200 thank you so much for joining US. I want to 0:13:51.240 --> 0:13:55.320 just start with what has Turkey's role traditionally been with 0:13:55.480 --> 0:13:58.640 Syria and given some of the turmoil that we've seen 0:13:58.760 --> 0:14:02.520 in that nation. It's government. Sure, as you know, there's 0:14:02.600 --> 0:14:05.560 a war going on over six seven years in Syria 0:14:06.200 --> 0:14:10.199 and Turkey is one of the country that's suffering from 0:14:10.280 --> 0:14:13.959 the Syria of war. Turkeys hosting over three point six 0:14:14.000 --> 0:14:20.320 million Syrian refugees and ISIS attack fourteen times to Turkey 0:14:20.440 --> 0:14:24.560 and lost three hundred four lives by ISIS attacks. So 0:14:24.640 --> 0:14:28.920 Turkey is fighting against terrorism for many years and Turkey 0:14:28.920 --> 0:14:33.600 at the national security concern from the neighborhood. That's why 0:14:33.640 --> 0:14:40.000 this operation was needed by the Turkish government and with 0:14:40.120 --> 0:14:45.400 the Trump administration decisions, they gave the green light Turkey's 0:14:45.680 --> 0:14:49.760 operation in Syria. Ali, you know, one, if you could 0:14:49.960 --> 0:14:52.880 just give us a sense of what the goals are 0:14:52.880 --> 0:14:57.760 are of the Turkish government with this operation. Sure, So 0:14:57.840 --> 0:15:02.280 the operation will NERA line is terror threats against Turkey. 0:15:02.440 --> 0:15:06.240 That me talk about terror threats. As you know, YPG 0:15:06.720 --> 0:15:09.120 is linked to p k K, which is a terrorist 0:15:09.280 --> 0:15:14.720 organization recognized by United States and European Union. So Turkey 0:15:14.960 --> 0:15:18.040 is saying that suing course label as as Sarian course, 0:15:18.120 --> 0:15:22.760 but it's a terrorist organization. So Turkey feels the threat 0:15:23.000 --> 0:15:25.640 from YPG, which is them two p k K. So 0:15:25.760 --> 0:15:29.880 the aim is to naturalize the terror threats in Syria. 0:15:30.040 --> 0:15:34.160 The second objective is led to establishment of a safe 0:15:34.160 --> 0:15:38.120 song they play that can be a facilitation the return 0:15:38.160 --> 0:15:41.720 of serial refugees to their host As I said, there 0:15:41.760 --> 0:15:45.440 are over three point six million serial refugees and it's 0:15:45.480 --> 0:15:50.080 the cost of forty billion dollars to Turkey. So Turkey 0:15:50.160 --> 0:15:54.000 wants the Sudian refugees to go back to their homeland. 0:15:54.440 --> 0:15:57.680 Therefore this operation will also help them to go back 0:15:57.680 --> 0:16:02.560 to their own country. How much involvement are you expecting 0:16:03.040 --> 0:16:07.840 from some Turkish allies I'm thinking about, for example of Russia. 0:16:08.160 --> 0:16:11.960 Any idea that there has been speculation that that that 0:16:12.200 --> 0:16:15.800 Vladimir Putin will want to get involved and help Turkey 0:16:15.880 --> 0:16:18.360 out in order to get sort of a foothold in 0:16:18.480 --> 0:16:24.560 a strategically beneficial area. I know today Present ar Don 0:16:24.840 --> 0:16:28.240 and Putting spoke on the phone and gave some information 0:16:28.280 --> 0:16:32.760 about operation, but overalls, I mean lookated Turkey and Russia 0:16:32.880 --> 0:16:36.640 are not on the same page. In Syria. Russia is 0:16:36.680 --> 0:16:41.440 supporting ASSAT and because of the crisis, Russian and ran 0:16:41.560 --> 0:16:45.320 are behind of this IT disaster. So I think Turkyo 0:16:45.360 --> 0:16:50.720 and United States have more the same agenda in the region. 0:16:51.160 --> 0:16:55.120 I don't think Russia is happy with the Turkey's operation, 0:16:55.480 --> 0:16:59.040 but at the same time, Russian troops are not in 0:16:59.120 --> 0:17:02.480 that region. I'm we are talking about operation in northern Syria, 0:17:02.960 --> 0:17:06.680 which is domained by YPG, which is into p k K. 0:17:07.240 --> 0:17:12.720 So as I said this, I think Russia and Turkey partnership. 0:17:13.440 --> 0:17:16.600 I don't think it's working in Syria and which shouldn't be. 0:17:17.440 --> 0:17:21.840 So I know Turkey informed Present Putting, but at the 0:17:21.880 --> 0:17:25.720 same time they're not also happy with the operation. If 0:17:25.800 --> 0:17:28.280 the U. S And Turkey are more aligned when it 0:17:28.280 --> 0:17:31.600 comes to Syria than many people think, why hasn't this 0:17:31.680 --> 0:17:39.320 happened earlier Because Turkey many times explained the concern about YPG, 0:17:39.600 --> 0:17:43.840 which is linked to p KK terrorious organizations, and Turkey 0:17:44.040 --> 0:17:48.320 as United States not support YPG or train them or 0:17:48.600 --> 0:17:53.760 armed them. Turkey also offered to fight against ISIS in 0:17:53.800 --> 0:17:57.680 the region, but United States chose to work with YPG, 0:17:58.320 --> 0:18:02.560 and YPG is clearly working with p k K. They 0:18:02.560 --> 0:18:05.440 are linked to each other. That's why Turkey felt a 0:18:05.520 --> 0:18:08.600 threat and it didn't work out. But at the same time, 0:18:08.800 --> 0:18:12.960 United States and Turkey wants are said to be removed 0:18:13.160 --> 0:18:17.960 and both countries, both NATAL airlines are also we're working 0:18:18.000 --> 0:18:22.080 on it lit crisis, but unfortunately for the Northern Syria, 0:18:22.560 --> 0:18:27.399 two NATAL allies didn't agree on YPG. It just quickly 0:18:27.480 --> 0:18:31.320 thirty seconds. What is the expected duration of this military operation. 0:18:33.640 --> 0:18:37.399 My expectation is at least two to three weeks. I 0:18:37.440 --> 0:18:40.359 know President are Domb you'll be meeting President Trump on 0:18:40.640 --> 0:18:44.320 November thirteen, So till then, I think we might see 0:18:44.320 --> 0:18:48.120 a clear outcome or some results out of this operation. 0:18:48.480 --> 0:18:52.359 But if it takes longer, it's it would be bad 0:18:52.400 --> 0:18:55.800 for Turkey because there's a best semear champion against Turkey 0:18:55.840 --> 0:18:58.320 for this operation. So I don't think it's gonna take 0:18:59.000 --> 0:19:03.439 for many months to complete this operation. Alice, thank you 0:19:03.480 --> 0:19:05.480 so much for joining us. Ali is a president of 0:19:05.520 --> 0:19:08.440 the Turkish Heritage Organization, joining us on the phone, giving 0:19:08.480 --> 0:19:11.560 us his thoughts on the operation taking place just beginning 0:19:11.600 --> 0:19:16.760 today Turkey entering Syria to retake some territory there. As 0:19:16.840 --> 0:19:32.119 Mr Senor explained to us, we are very lucky to 0:19:32.119 --> 0:19:34.240 have with us here in our Bloomberg Gonna Active broker 0:19:34.280 --> 0:19:37.960 studio studios. Noah Gottiner, Chairman and Chief executive Officer of 0:19:38.040 --> 0:19:42.000 Duff and Phelps, which advises the whole host of private 0:19:42.000 --> 0:19:45.560 equity firms and is also a recipient, has been a 0:19:45.560 --> 0:19:48.719 recipient of private equity funding itself and has grown as 0:19:48.760 --> 0:19:51.480 a result of it. So uh a great bird's eye 0:19:51.560 --> 0:19:54.760 view into the market at a time of growing emphasis 0:19:54.840 --> 0:19:58.160 on it, certainly by way of the Business Week cover 0:19:58.640 --> 0:20:01.920 feature on private this week. No, I want to start 0:20:02.000 --> 0:20:05.600 with the idea that we're seeing so many companies that 0:20:05.640 --> 0:20:10.359 are going that are moving from private to public seeing 0:20:10.359 --> 0:20:13.800 a rocky road, and whether there's any significance to that. 0:20:14.520 --> 0:20:17.040 What do you think the main takeaway should be? Well? 0:20:17.080 --> 0:20:21.240 I think that, um, you have seen some difficult situations, Lisa, 0:20:21.400 --> 0:20:24.679 with public offerings that have not done well, and I 0:20:24.720 --> 0:20:27.800 think that what the public has woken up to is 0:20:27.840 --> 0:20:31.159 they want to see a path to profitability. It's no 0:20:31.240 --> 0:20:35.080 longer great just to keep losing money. It's okay if 0:20:35.119 --> 0:20:38.000 there's a way to become profitable and to have a 0:20:38.359 --> 0:20:41.240 profitable model. I think there's also right now, as the 0:20:41.280 --> 0:20:45.600 exuberance has died down, a much greater focus on good 0:20:45.680 --> 0:20:49.439 governance and transparency. Those things kind of got lost in 0:20:49.520 --> 0:20:52.640 all the excitement of the heady public offerings, but now 0:20:52.680 --> 0:20:55.640 people are focused on that. So no, when I look 0:20:55.640 --> 0:20:58.639 at the private equity business, UM, it seems to me 0:20:58.680 --> 0:21:00.640 I've been a Wall Street almost third earty years. It's 0:21:00.680 --> 0:21:02.760 kind of the one of the last bastions where you 0:21:02.760 --> 0:21:07.080 can make outsized returns UM. One of the concerns, however, 0:21:07.359 --> 0:21:10.240 is there's a lot of money slashing around in private equity. Word, 0:21:10.240 --> 0:21:12.640 every time we open the paper, look at the Bloomberg terminal, 0:21:12.680 --> 0:21:16.320 is another multibillion dollar fund being raised. My concern, I 0:21:16.320 --> 0:21:18.480 think some concerning a lot investors is too much money 0:21:18.760 --> 0:21:21.040 chasing too few deals, pushing valuations of how do you 0:21:21.119 --> 0:21:24.040 view the market right now? Well, Paul, that's absolutely right. 0:21:24.119 --> 0:21:28.119 More money has come into the industry. Private equity in 0:21:28.119 --> 0:21:29.800 in in a way is almost a victim of its 0:21:29.840 --> 0:21:33.239 own success. It's done well, it's generated great returns and 0:21:33.280 --> 0:21:37.800 money has kept flowing into private equity. That's caused prices 0:21:37.880 --> 0:21:41.080 to go up, and that's put pressure on private equity 0:21:41.119 --> 0:21:45.240 firms to really find different ways to create value on 0:21:45.320 --> 0:21:48.400 their investments and really focus on growth. So the old 0:21:48.480 --> 0:21:51.760 days of just cut cutting costs and getting the low 0:21:51.800 --> 0:21:55.720 hanging fruit isn't sufficient to generate the returns that private 0:21:55.720 --> 0:21:58.800 equity needs to generate today. So I want to dig 0:21:58.800 --> 0:22:00.199 in a little bit to some of the sect ers 0:22:00.240 --> 0:22:03.280 and where some of your clients are seeing opportunities right now. 0:22:03.320 --> 0:22:05.480 I was speaking with James Gellard, chairman and CEO of 0:22:05.560 --> 0:22:08.720 Rapid Ratings, and he was saying that there are a 0:22:08.760 --> 0:22:11.480 whole slew of companies that are probably overvalued in the 0:22:11.520 --> 0:22:15.840 private space, particularly what within the energy sector. Are actually no, 0:22:15.960 --> 0:22:18.639 he didn't say energy, tech and biotech. He said energy. 0:22:18.680 --> 0:22:21.160 He actually sees an opportunity given how beating up it's gotten. 0:22:21.640 --> 0:22:24.480 Are you hearing something similar from your clients that they're 0:22:24.480 --> 0:22:27.840 trying to steer steer clear from tech and biotech names 0:22:27.880 --> 0:22:33.560