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Speaker 1: Hello, and welcome to The Credit Edge, a weekly markets podcast.

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Speaker 1: My name is James Crombie. I'm a senior editor at Bloomberg.

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Speaker 1: Today's guests are Jill Shah, who covers leverage finance for

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Speaker 1: Bloomberg News in New York. We're delighted to have you

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Speaker 1: on the show.

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Speaker 2: Thanks for having me.

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Speaker 1: We're also very pleased to welcome Rob Schiffman, who covers

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Speaker 1: tech for Bloomberg Intelligence, also in New York. Favorite part

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Speaker 1: of my day, Tech is my life Call me. That's

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Speaker 1: what it says on Rob's biopage on the Bloomberg terminal.

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Speaker 1: We'll be coming back to tech and a little bit.

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Speaker 1: Lots of exciting stuff going on in that sector right now,

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Speaker 1: and Rob's all over it, so I look forward to

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Speaker 1: chatting with him in a bit. But first, Jill Shah

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Speaker 1: with Bloomberg News, you've been digging deep into credit market risks.

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Speaker 1: First Republic was the most recent blow up in the

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Speaker 1: financial sector, and I was listening to the panels that

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Speaker 1: this year's Milkene conference in Beverly Hills. Everyone said it

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Speaker 1: was going to be okay, the banking crisis is over,

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Speaker 1: but it really doesn't seem that way. I mean Western

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Speaker 1: Alliance and pack wests have also come under a lot

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Speaker 1: of pressure. Maybe the bankers are protesting too much. A

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Speaker 1: lot of companies are running into trouble at the moment,

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Speaker 1: with interest rates rising and the economy slowing down, potentially

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Speaker 1: tipping into recession. Inflation and volatility in the financial sector

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Speaker 1: don't help. A lot of regional banks are really struggling

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Speaker 1: right now, a corporate credit crunch is starting. According to

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Speaker 1: your headline, Jill, what's the level of stress right now

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Speaker 1: in credit markets? What should we be worried about?

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Speaker 2: I think the biggest sign of this stress in credit

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Speaker 2: markets right now is actually among small businesses. So we

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Speaker 2: have a ton of data, survey data that shows that

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Speaker 2: small businesses are facing the toughest lending conditions they've seen

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Speaker 2: in some time. And that's also showing up in bankruptcy rates.

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Speaker 2: So bankruptcies among small businesses have spiked. If you look

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Speaker 2: at sort of the businesses that are one hundred million

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Speaker 2: in assets and above, they have sort of the highest

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Speaker 2: bankruptcy rates among the private companies. So that's really a

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Speaker 2: sign that some of this interest rate hiking is catching up,

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Speaker 2: Inflation is catching up, and now you know these businesses

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Speaker 2: really depend on regional banks for lending, including cn I loans,

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Speaker 2: So we know that regional banks are also tightening their

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Speaker 2: standards and that's going to hit those businesses first.

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Speaker 1: So small businesses, what do we mean by that? Are

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Speaker 1: these mum and pop corner stores or is it bigger

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Speaker 1: than that? What are we talking about when we talk

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Speaker 1: about small businesses?

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Speaker 2: So the bankruptcy data, sorry I said one hundred million,

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Speaker 2: and I meant with at least ten million in assets.

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Speaker 2: So these are really important businesses to the economy. People

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Speaker 2: don't know this, but a large percentage of Americans are

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Speaker 2: employed by small business and it's important to look at that.

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Speaker 2: And these stresses are you know, forecasted to spread soon

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Speaker 2: to larger corporate credit markets, the kinds that you and

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Speaker 2: I deal with, such as high heal bonds and leverage

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Speaker 2: loans as well.

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Speaker 1: So the stress at the bottom somehow rises to the top.

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Speaker 1: Credit is getting tight to all around, everyone is suffering.

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Speaker 1: What are the signs that things they are actually getting worse?

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Speaker 2: I think that the spike this first quarter was notable.

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Speaker 2: Some of the survey data that shows that owners are

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Speaker 2: having more business owners are having more trouble accessing credit

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Speaker 2: and you know, really the main sign is going to

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Speaker 2: come in May when we get the Senior Loan Officer Survey,

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Speaker 2: which is a FED data point that's really going to

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Speaker 2: show sort of how what the pullback and lending is

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Speaker 2: going to look like. For now, we do have to

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Speaker 2: rely on some of this survey data and it doesn't

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Speaker 2: look too good.

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Speaker 1: And when we say the spike, what are we talking

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Speaker 1: about the spike in bankruptcies? The spike in just general stress,

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Speaker 1: But how are we measuring that?

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Speaker 2: It's bankruptcies among private companies that have really spiked. So

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Speaker 2: just one data point here, you know, they jump to

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Speaker 2: an average of seven point eight each week by late February,

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Speaker 2: and the peak in the pandemic was four point five,

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Speaker 2: So that's quite a sizable increase.

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Speaker 1: Definitely worrying. Is it two thousand and eight all over again?

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Speaker 2: I don't quite think so yet, you know, so far

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Speaker 2: the obviously we do see signs of more regional banks

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Speaker 2: going under, but it has been fairly contained and the

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Speaker 2: bigger banks have done Okay. That said, some of the

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Speaker 2: bigger banks are bracing for more bad loans. So we

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Speaker 2: saw city groups say that they were going to double

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Speaker 2: what they'd set aside for bad loans. Morgan Stanley is

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Speaker 2: quadrupling those provisions for credit losses. It's not as widespread

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Speaker 2: as it was in two thousand and eight, so that's

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Speaker 2: why most people are calling it a crunch or a

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Speaker 2: contraction rather than a crisis.

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Speaker 1: But there are certainly some resemblances. I mean, I remember

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Speaker 1: the dark days of two thousand and eight very well.

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Speaker 1: I'm sure rub does as well. But you know, we

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Speaker 1: have a lot of stress on the banking sector. We've

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Speaker 1: got pressure from rising rates, and then there's this whole

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Speaker 1: debt ceiling debate which is extremely worrying and seemingly worse

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Speaker 1: than it has been in previous years. Are there other

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Speaker 1: triggers that you think, you know, we should be looking

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Speaker 1: out for, other events that we should be watching for,

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Speaker 1: other things that might tip us over the edge.

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Speaker 2: Certainly a more banks failing would be like a big,

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Speaker 2: big trigger in this arena. There's a good amount of

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Speaker 2: stress in that sector. You know, most regional banks are

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Speaker 2: facing funding and deposit pressure. They're really worried about liquidity,

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Speaker 2: and so the more banks we see sort of succumb

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Speaker 2: to that pressure, you know, that's going to impact their lending,

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Speaker 2: their books the customers and businesses that rely on them.

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Speaker 1: And yet every time we see it blow up, even

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Speaker 1: credit sweet mark, it's just come bouncing right back. Sod

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Speaker 1: be very interesting to watch what really pushes us over

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Speaker 1: this time?

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Speaker 2: Yeah, it's funny that right now, if you do look

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Speaker 2: at the corporate credit markets, the junk market and the

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Speaker 2: leverage loan market, they appear to be shrugging off some

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Speaker 2: of this risk, and most of that is a technical.

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Speaker 2: So there's been a supply demand and balance in those markets.

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Speaker 2: Investors are sitting on a lot of cash and they're

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Speaker 2: eager to deploy it. So so far, you know, though

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Speaker 2: we've seen obviously the default rates tick up in those

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Speaker 2: markets too. They're not really quite close to long term averages,

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Speaker 2: but people do expect that that's going to change. And

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Speaker 2: another thing to point out is that, you know, while

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Speaker 2: the high old market has gotten stronger in terms of composition,

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Speaker 2: higher quality, better rated names, the leverage loan market has not.

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Speaker 2: In fact, the companies that are sitting at that b

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Speaker 2: cuspy you know, about to tip over into triple C

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Speaker 2: category are at the highest and some time about twenty

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Speaker 2: five percent. And remember, once you tip into that triple

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Speaker 2: C category, you are effectively cut off from a large

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Speaker 2: amount of your buyer base, and so those companies are

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Speaker 2: really going to face a lot of trouble refinancing and

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Speaker 2: those maturity walls. They've been sort of pretty far out

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Speaker 2: so far, but they're coming up quickly.

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Speaker 1: Just going back to the bankruptcy point, I mean, just

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Speaker 1: to play Devil's advocate for a minute, isn't this all

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Speaker 1: good for the long term? I mean, a lot of

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Speaker 1: these companies going bus they were zombies that were sort of,

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Speaker 1: you know, roaming through unsustainable capital structures, and they've been

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Speaker 1: going for way too long, just through years and years

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Speaker 1: of cheap debt, just getting more and more unsustainable. And

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Speaker 1: the pandemic certainly hit a lot of them and made

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Speaker 1: things even you know, more precarious. So you know, creative destruction.

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Speaker 1: Let them die, have the money flow to the winners,

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Speaker 1: get the money reallocated to proper productive parts of the economy.

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Speaker 1: I mean, there is obviously an awful social costs, and

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Speaker 1: there's an emotional attachment for people like us that remember

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Speaker 1: radio Shack and all those other great shops to go to.

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Speaker 1: But you know, at the risk of sounding heartless, does

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Speaker 1: it really matter.

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Speaker 2: You know, I think this is going to become the

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Speaker 2: big question. So obviously, to some extent, the FED wants

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Speaker 2: this right. They they want some of some of these

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Speaker 2: names and some of these companies to go bust because

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Speaker 2: they have been relying on an era of interest rates

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Speaker 2: that's been really quite low for so long and money

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Speaker 2: has been quite easy. I think whether that happens in

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Speaker 2: a very sort of severe recessionary way, in a hard

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Speaker 2: landing sort of way, or in a softer path is

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Speaker 2: going to be become the big question. Because if you

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Speaker 2: do have a really tight contraction of lending standards, you

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Speaker 2: do see things like the unemployment rate go up, you

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Speaker 2: do see an impact on the real economy, the main street,

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Speaker 2: and that's going to mean that, like a recovery out

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Speaker 2: of the recession will be tougher and longer.

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Speaker 1: Very interesting. So, before we talk to Rob Shiftman at

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Speaker 1: Bloomberg Intelligence, what's the next big story to watch on

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Speaker 1: your beat? Jill? What else should we be watching for

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Speaker 1: in credit markets?

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Speaker 2: One thing that I've been interested in is, you know,

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Speaker 2: I do cover the leverage loan market specifically, and there

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Speaker 2: are names in the leverage loan market that are loan

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Speaker 2: owned borrowers. So if you think about these borrowers, they're

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Speaker 2: kind of in the leverage line market for the first time.

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Speaker 2: That's the first big corporate credit market that they're accessing.

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Speaker 2: And they only have loans on their balance sheet, which

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Speaker 2: means they're really exposed to interest rates because those loans,

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Speaker 2: of course, are floating rate, and those are largely sponsor

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Speaker 2: owned businesses, meaning they're owned by private equity. They're smaller,

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Speaker 2: and I think that they're going to face some real distress.

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Speaker 2: And you know, right now, the market, according to some

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Speaker 2: data from Morgan Stanley, doesn't seem to be pricing in

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Speaker 2: that risk. So I'm really curious as to whether that

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Speaker 2: becomes a differentiator, you know, loan only borrowers versus bond

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Speaker 2: and loan borrowers. And the other thing to mention is

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Speaker 2: that those loan only borrowers also rely on racional banks, right,

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Speaker 2: so some of the other loans that they're getting are

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Speaker 2: from regional bank lenders in the form of CNI loans

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Speaker 2: and so on. So could it be that they're facing

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Speaker 2: a pressure both from the regional lending side as well

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Speaker 2: as the leverage loan side. And I think we'll see

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Speaker 2: a lot more of that going forward.

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Speaker 1: Great stuff. Jill Shaff from Bloomberg News, thank you so

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Speaker 1: much for joining us, Thanks for having me read all

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Speaker 1: of jill scoops on the Bloomberg terminal and of course

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Speaker 1: at Bloomberg dot com. Moving on to another big topic.

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Speaker 1: As I mentioned earlier, we are very fortunate to have

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Speaker 1: with us Rob Schiffman from Bloomberg Intelligence, who covers technology.

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Speaker 1: What's going on with tech? Rob? We're only hearing bad

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Speaker 1: news at the moment, not just from the banks, Meta Lift, Amazon,

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Speaker 1: They're all announcing layoffs. IBM CEO said thirty percent of

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Speaker 1: back office jobs could be replaced by AI and automation

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Speaker 1: over the next five years. What signals are we getting

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Speaker 1: from earnings right now?

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Speaker 3: Rob?

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Speaker 1: Is it all bad?

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Speaker 3: Well? James podcast are supposed to be uplifting, So let's

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Speaker 3: move away from this depressing concern conversation and get into

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Speaker 3: a little a few things that are a little bit

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Speaker 3: more positive. Quite frankly, I've been bullish on the tech

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Speaker 3: space since I started covering it about one hundred years ago,

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Speaker 3: and I would say at this point in time, I've

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Speaker 3: never been more bull bush on tech credit than I

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Speaker 3: am today. You know, In fact, I think a lot

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Speaker 3: of the things that you just mentioned are are a

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Speaker 3: little bit more looking backwards than looking forwards, and some

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Speaker 3: of those backwards looking views, like layoffs, mean that future

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Speaker 3: profits and cash flow are going to be higher. I'm

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Speaker 3: actually starting to see with first quarter earnings signs of

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Speaker 3: a trough, indications that we're starting to bottom out. And

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Speaker 3: quite frankly, part of the reason why we've seen much

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Speaker 3: such a massive equity rally to start the year is

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Speaker 3: because expectations got so low. People love to go overboard

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Speaker 3: when thinking about the good or the bad. We're seeing

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Speaker 3: a real bounce back because numbers and sentiment are improving.

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Speaker 3: So I think there's actually a lot more upside here

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Speaker 3: than there is downside.

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Speaker 1: So but aren't we just kicking a can there?

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Speaker 2: Rob?

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Speaker 1: I mean, the last quarter wasn't as bad as expected,

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Speaker 1: But how does the rest of the year look into recession?

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Speaker 1: Markets are getting tougher, as Jill says, credit is getting

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Speaker 1: tied to inflation, is going to hit consumer demand. Why

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Speaker 1: should we be hopeful?

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Speaker 3: Well, listen, you know, returns in credit are a matter

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Speaker 3: of multiple things. It's duration, its rates, it's spreads. You know,

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Speaker 3: we're seeing total returns across the board, high yield and

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Speaker 3: IG positive this year, So let's get away from the

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Speaker 3: doom and gloom that everything is so bad. From a

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Speaker 3: spread perspective, we're sort of flat, which implies that we

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Speaker 3: probably got too wide last year. I think you're right.

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Speaker 3: From a fundamental perspective, we're going to continue to see

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Speaker 3: year over year declines across the board for top line EBIT,

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Speaker 3: DAH and free cash flow. But again, as analysts, what

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Speaker 3: we're doing is we're looking forward. I think the you know,

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Speaker 3: we're we're again we're seeing green shoots of of increased

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Speaker 3: demand returning. I'll just give you one example. Uber just

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Speaker 3: reported and they had their best quarter of all time.

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Speaker 3: You would think if we're heading into a recession, fewer

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Speaker 3: and fewer people would be utilizing the service economy, and

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Speaker 3: in fact it's not that case. Maybe people are buying

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Speaker 3: less refrigerators, maybe people are buying less cars, and even

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Speaker 3: for the short term, maybe enterprise customers are buying less

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Speaker 3: cloud services. But there are some sub segments of the

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Speaker 3: tech space that are still doing extraordinarily well. And it's

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Speaker 3: not all ride shares. You know Uber's dominating left, but

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Speaker 3: you're seeing bits and pieces of that across the board,

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Speaker 3: showing improvement. You know, even from the cloud perspective, the

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Speaker 3: rates of growth that we're seeing are meaningfully lower than

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Speaker 3: they were in the past, but they're still positive. And

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Speaker 3: what that means for credit is that free cash flow

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Speaker 3: is still being crankd doubt. I think, actually we're going

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Speaker 3: to go from this. How much worse are we going

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Speaker 3: to get? What recessionary pressures are we going to see?

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Speaker 3: To what is big tech going to do with their

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Speaker 3: cash in the second half of the year or in

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Speaker 3: twenty twenty four. We're already starting to see evidence that

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Speaker 3: excess cash is building. Alphabet announced a seventy billion dollar

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Speaker 3: addition to their buy back program. Meta announced a forty

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Speaker 3: billion dollar edition to their buyback program. We're seeing companies

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Speaker 3: access the credit markets as not like this is two

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Speaker 3: thousand and eight but like this is two thousand and eighteen.

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Speaker 3: The market is wide open for funding. Tens of billions

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Speaker 3: of dollars are available, albeit at higher costs of capital,

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Speaker 3: but not enough to change what I think is momentum

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Speaker 3: of excess free cash flow means we're going to actually

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Speaker 3: see more M and A and larger shareholder returns in

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Speaker 3: the second half of the year.

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Speaker 1: I do want to get back to that funding issue.

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Speaker 1: But before we do it, other than who else does

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Speaker 1: well in this kind of environment? Is it just the utilities?

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Speaker 1: I mean, I'm obsessed by my phone. I've got it

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Speaker 1: in my hand. I have to have it. I have

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Speaker 1: to pay for that. But what other tech companies do well?

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Speaker 3: Listen, it's a matter of relative. When you're talking about

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Speaker 3: doing well, it's a matter of relative. You know, if

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Speaker 3: Apple sells a couple hundred million iPhones this quarter and

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Speaker 3: it's ten million iPhones less than they did last quarter,

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Speaker 3: is that bad Well? From an equity perspective, maybe it's

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Speaker 3: it's it's bad because it's all about growth and rates

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Speaker 3: of growth. From a credit perspective, it's all about cash generation.

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Speaker 3: And I think that we have never seen tech credits

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Speaker 3: rated as high as they are today. We just came

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Speaker 3: through a multi year cycle of nothing but upgrades, and

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Speaker 3: we're seeing little to few downgrades. In fact, we did

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Speaker 3: a webinar with SMP's global tech team and they indicated

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Speaker 3: that not one low triple B name on their on

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Speaker 3: their radar screen is at risk to going to junk

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Speaker 3: and and and what that means is that everybody here

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Speaker 3: is doing well. I don't care if it's a semiconductor

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Speaker 3: name from a m D to Nvidia that's seeing short

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Speaker 3: term declines in revenue. In a very quick period of time,

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Speaker 3: cycles turn and those those cycles in the tech space

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Speaker 3: are not two to three years, they're two to three quarters.

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Speaker 3: And I think we're gonna see in the second quarter

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Speaker 3: probably a trough of fundamentals. So, whether it's semiconductors, whether

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Speaker 3: it's cloud businesses, even even social media and advertising rated

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Speaker 3: businesses like Meta or search like Google, you're gonna see

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Speaker 3: meaningful second half improvement because we're already starting to see that.

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Speaker 3: Once once managements start talking about seeing the bottom, it

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Speaker 3: generally means we've seen the bottom, and it takes a

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Speaker 3: little bit of time for the market to sort of

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Speaker 3: catch up to that because they want to see some evidence.

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Speaker 3: But I'm actually again seeing it, whether it's services, software, hardware, semis,

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Speaker 3: almost across the board, we're seeing improvement. There are still

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Speaker 3: some pockets, you know, in memory chips for instance, that

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Speaker 3: are still weak, PC sales that are still weak, but

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Speaker 3: in general, you know, big cap tech is so well diversified.

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Speaker 3: It's only a few companies that are are really struggling

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Speaker 3: with those issues. So I just think it's line on

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Speaker 3: them by light item. There's much there's much more upside

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Speaker 3: reward than downside risk.

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Speaker 1: There's nothing out there you devoid in tons of companies.

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Speaker 3: Well, yeah, there's. You know, there's a few smaller names

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Speaker 3: that we generally don't like. Again in the memory space,

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Speaker 3: names like Western, Dige and Seagate are going to continue

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Speaker 3: to struggle. But in general, listen, I'm more of a

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Speaker 3: big cap sort of guy, and from big cap credit,

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Speaker 3: the real downside is relative upside. Tech already trades really

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Speaker 3: tight to everything else. So the way that tech generally

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Speaker 3: outperforms is when people are worried about the banking industry,

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Speaker 3: people are worrying about lending standards, people are worried about

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Speaker 3: other names going out of business, and volatility increases. So

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Speaker 3: tech is really the new safe haven. Quite frankly, it's

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Speaker 3: the old safe haven, and people don't think about it

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Speaker 3: that way because they generally think about equities and volatility.

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Speaker 3: But when it comes to credit, the trading ranges are

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Speaker 3: much lower, so tech will underperform when credit markets are rallying.

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Speaker 3: They'll outperform where credit markets are selling off. So if

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Speaker 3: Jill's right, and you know, there's pockets of weakness across

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Speaker 3: banking that's going to affect a lot of different players.

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Speaker 3: It's probably going to it could grow from some of

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Speaker 3: these smaller players to some of these even larger ig

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Speaker 3: yield names. But that's where tech will benefit and outperform.

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Speaker 1: You mentioned that generating a lot of cash, but you

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Speaker 1: know MESA just raised eight and a half billion dollars

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Speaker 1: in the bond market. Yeah, why raise debt now? I

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Speaker 1: mean funding costs of double since the start of last year.

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Speaker 1: Why pay up when you don't really need the money.

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Speaker 3: Yeah, I'm going to say a phrase that hopefully becomes

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Speaker 3: a catchphrase because no one's probably ever heard this before,

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Speaker 3: but you borrow money when you can, not when you

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Speaker 3: have to. You know, people should write that down. People

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Speaker 3: are going to use that in the future. So listen.

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Speaker 3: The cost of capital has gone up by a couple

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Speaker 3: hundred basis points over the last two years, not because

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Speaker 3: of spread movements but because of the FED. But when

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Speaker 3: you think about a weighted average cost of capital for

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Speaker 3: a large cap tech it's basically zero, at least from

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Speaker 3: the debt perspective. So what is what are names like

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Speaker 3: Meta doing? Well? The reason why they want extra capital

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Speaker 3: is because they're boosting their share buybacks. They're more than

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Speaker 3: willing to spend more money on buybacks than free cash

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Speaker 3: flow and lever the balance sheet because they can utilize

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Speaker 3: their double ratings at a really, really low cost. In fact,

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Speaker 3: what it says is how confident they are in the

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Speaker 3: future of their business that they can lever up now

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Speaker 3: because over time, through EBITDAGH growth, they can eventually de lever.

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Speaker 3: And that's been the pattern with big tech. I mean,

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Speaker 3: why does Apple keep borrowing? You know, why do they

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Speaker 3: have over one hundred billion dollars a debt when they're

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Speaker 3: generating you know, seventy eighty ninety billion dollars a year

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Speaker 3: of free cash because they're gonna they're gonna give shareholders

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Speaker 3: back more than that because they can because they're every

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Speaker 3: single year. You know, we use this analogy a couple

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Speaker 3: of years ago. It's like going out for dinner and

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Speaker 3: you get a glass of wine and you're halfway done,

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Speaker 3: and the waiter comes back and he refills your glass.

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Speaker 3: That's that's big tech cash flow, So you know, it

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Speaker 3: just keeps getting refilled. So the cost of capital right

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Speaker 3: now it's higher than it was, but it's still really

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Speaker 3: really cheap. I wouldn't be surprised if we continue to

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Speaker 3: see this. This is you know, names like that are

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Speaker 3: not like an Intel where they actually have real business

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Speaker 3: struggles because capex is so high. You know, the vast

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Speaker 3: majority of names, whether it's Microsoft or Apple, Broadcom, you

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Speaker 3: know they're barring money because you know they're they're making

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Speaker 3: cost of capital plays, and they're doing it primarily to

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Speaker 3: boost their stock. The beauty for me is from a

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Speaker 3: credit perspective that leverage really doesn't go that much higher,

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Speaker 3: and you don't see credit volatility if you do. Whenever

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Speaker 3: we see pockets of volatility, whether it's true m and

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Speaker 3: A or people get scared because of buybacks. You know

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Speaker 3: that's generally one when we want to double down on credit.

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Speaker 1: Stop buybacks. So they're good for equity holders, but don't

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Speaker 1: the bond holders end up losing.

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Speaker 3: Well, it's not a mat necessarily a win lose game.

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Speaker 3: It could be a win win. I would prefer, obviously

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Speaker 3: for companies to use their capital to invest back in

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Speaker 3: the business and grow cash flow or by cash flow

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Speaker 3: generating assets via M and A. But the reality is

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Speaker 3: there are so many regulatory headwinds that it's very difficult

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Speaker 3: to do a scale size transaction that will make a

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Speaker 3: difference without the government sticking their nose in and saying no.

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Speaker 3: We're seeing it with Microsoft and Activision right now. It

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Speaker 3: seems like, you know, the the UK government is looking

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Speaker 3: years ahead about cloud gaming being a gating factor when

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Speaker 3: it's just not one today. And I think companies are

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Speaker 3: just getting shyer in terms of using capital for M

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Speaker 3: and A because it ties them up for a year,

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Speaker 3: creates regulatory headaches, and it can't focus on their business.

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Speaker 3: So the simple thing is is giving it back without

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Speaker 3: impacting the balance sheet. And the government thought they can

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Speaker 3: get ahead of this by putting on a buyback tax

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Speaker 3: of one percent, and it hasn't stopped anybody. So unless

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Speaker 3: they raise that buyback tax, you know, something closer to

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Speaker 3: ten percent, I think that's going to be the pattern.

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Speaker 3: And during this this cycle of massive shareholder returns, the

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Speaker 3: largest buyback cycle in the history of corporate credit. Again,

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Speaker 3: we've seen nothing but credit upgrades. And when you look

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Speaker 3: across the highest rated names across the entire High Grade Index,

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Speaker 3: it's not going to be very long before you get

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Speaker 3: to all of these tech names. You know, it's no

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Speaker 3: longer banks, it's no longer the exon mobiles and Jay

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Speaker 3: and Jay's of the world. It's Microsoft, it's Amazon, it's Apple,

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Speaker 3: it's even Meta. You know, if you're putting together amount

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Speaker 3: rushmore credit, it's going to be primarily tech heavy, then

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Speaker 3: it's going to be anything else.

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Speaker 1: It all sounds very, very rosy, and that's why I

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Speaker 1: love talking to you. Robbie'll the least downbeat credit person

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Speaker 1: out there, and it's always uplifting to hear your words.

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Speaker 1: But what really keeps you up worrying at night? I mean,

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Speaker 1: what are the risks you have to as a credit

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Speaker 1: guy be worried about something?

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Speaker 3: Yeah, of course, you know. I think it's really is

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Speaker 3: this more much more of a macro issue. I don't

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Speaker 3: think there's a on a company specific risk, at least

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Speaker 3: within my world. But what I'm I'm really fearful of

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Speaker 3: is that there's some underlying black swan tail risk. And primarily,

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Speaker 3: you know, we always come back to where we started

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Speaker 3: with the banking sector, like if banks are not landing,

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Speaker 3: if banks are failing, the whole house of cards crumble.

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Speaker 3: So I worry about banks, I worry about war, I

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Speaker 3: worry about existential threats more so than idiosyncratic.

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Speaker 1: That's how those things don't happen. Thank you very much,

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Speaker 1: Rob Schiffman of Bloomberg Intelligence. You can read all of

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Speaker 1: his analysis on the Bloomberg Terminal or just call him.

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Speaker 1: Tech is his life, after all. And thanks again to

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Speaker 1: Jail Shaff from Bloomberg News. Read all of her scoops

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Speaker 1: on the Terminal and at Bloomberg dot com. I'm James Crumby.

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Speaker 1: It's been a pleasure having you. See you next week

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Speaker 1: on the Credit Edge.