1 00:00:02,640 --> 00:00:05,320 Speaker 1: Welcome to the Bloomberg Penl Podcast. I'm Paul swing you 2 00:00:05,360 --> 00:00:07,680 Speaker 1: along with my co host Lisa Brahma Waits. Each day 3 00:00:07,720 --> 00:00:10,240 Speaker 1: we bring you the most noteworthy and useful interviews for 4 00:00:10,280 --> 00:00:12,520 Speaker 1: you and your money. Whether at the grocery store or 5 00:00:12,560 --> 00:00:15,480 Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple 6 00:00:15,520 --> 00:00:17,960 Speaker 1: podcast or wherever you listen to podcasts, as well as 7 00:00:17,960 --> 00:00:23,480 Speaker 1: at Bloomberg dot com. One of the big news items 8 00:00:23,560 --> 00:00:26,080 Speaker 1: of the day is Pinterest and the fact that it's 9 00:00:26,079 --> 00:00:28,960 Speaker 1: seeking a valuation of nine billion dollars with its i 10 00:00:29,040 --> 00:00:32,960 Speaker 1: p O that it's currently marketing, which is significantly below 11 00:00:33,280 --> 00:00:36,600 Speaker 1: the valuation of the company back in two thousand seventeen, 12 00:00:37,040 --> 00:00:41,400 Speaker 1: its last private funding round. And without delving into this 13 00:00:41,520 --> 00:00:45,080 Speaker 1: specific company, it is a interesting question what does this 14 00:00:45,200 --> 00:00:49,159 Speaker 1: say about the private financing market? Joining us now Randy Swimmer, 15 00:00:49,200 --> 00:00:51,960 Speaker 1: head of Capital Markets and Originations at Churchill Asset Management, 16 00:00:52,360 --> 00:00:54,760 Speaker 1: UH and I want to start here because it does 17 00:00:54,880 --> 00:00:58,440 Speaker 1: raise questions about whether things are getting a little frothy 18 00:00:58,520 --> 00:01:01,440 Speaker 1: in private capital market. Well, you're at least it's a 19 00:01:01,480 --> 00:01:03,400 Speaker 1: great question. It's the question and a lot of investors 20 00:01:03,400 --> 00:01:07,200 Speaker 1: are asking. It's been difficult when you look at the 21 00:01:07,360 --> 00:01:10,160 Speaker 1: environment that we've been in from an economic perspective and 22 00:01:10,200 --> 00:01:13,640 Speaker 1: a rates perspective since October? Which market are we looking at? 23 00:01:13,840 --> 00:01:16,920 Speaker 1: Are we looking at the economy in October when everyone 24 00:01:17,000 --> 00:01:19,759 Speaker 1: was thinking about rate hikes. Are we looking at December 25 00:01:19,760 --> 00:01:23,080 Speaker 1: when we had correction in the public markets? We're looking 26 00:01:23,080 --> 00:01:27,000 Speaker 1: at January where rates and prices we're on, prices recovering 27 00:01:27,000 --> 00:01:29,679 Speaker 1: and rates on hold. Or are we looking at April 28 00:01:29,880 --> 00:01:33,600 Speaker 1: where we see record dow, we see you know, hundred 29 00:01:33,680 --> 00:01:36,600 Speaker 1: ninety thousand jobs created on Friday, and every all of 30 00:01:36,640 --> 00:01:39,839 Speaker 1: a sudden, the recession is gone. The problem with what 31 00:01:40,280 --> 00:01:43,120 Speaker 1: the public markets are showing us is there's no conviction, 32 00:01:43,160 --> 00:01:45,840 Speaker 1: there's no confidence in the direction of the economy and 33 00:01:45,880 --> 00:01:48,000 Speaker 1: where the markets are going, which is why private credit 34 00:01:48,600 --> 00:01:51,840 Speaker 1: is really focused on companies that don't trade in our business. 35 00:01:51,880 --> 00:01:54,720 Speaker 1: None of the businesses that were investing in our public 36 00:01:54,760 --> 00:01:59,280 Speaker 1: they're all private capital created and supported businesses. And the 37 00:01:59,320 --> 00:02:01,880 Speaker 1: beauty of that is that the volatility is taken away, 38 00:02:02,160 --> 00:02:05,040 Speaker 1: and the worry about the day to day moves of 39 00:02:05,120 --> 00:02:07,520 Speaker 1: the markets and so forth is taken away. So it's 40 00:02:07,600 --> 00:02:09,960 Speaker 1: it's actually a good place to be right now. So, Randy, 41 00:02:09,960 --> 00:02:12,280 Speaker 1: I've noticed that private equity firms. Really, over the last 42 00:02:12,320 --> 00:02:15,840 Speaker 1: several years, I've noticed some raising funds and allocating funds 43 00:02:15,840 --> 00:02:19,360 Speaker 1: to direct lending businesses, kind of bypassing the banks a 44 00:02:19,360 --> 00:02:21,920 Speaker 1: little bit, or helping the lenders that bypass the banks, 45 00:02:22,240 --> 00:02:25,280 Speaker 1: particularly for some middle market companies. What do you think 46 00:02:25,320 --> 00:02:27,920 Speaker 1: about that direct lending to middle markets, That's someplace investors 47 00:02:27,919 --> 00:02:30,120 Speaker 1: should be looking. And that's exactly what we do, Paul. 48 00:02:30,240 --> 00:02:33,560 Speaker 1: Are all of our business is really investing in senior 49 00:02:33,600 --> 00:02:36,519 Speaker 1: debt with middle market companies, all of which are backed 50 00:02:36,560 --> 00:02:38,959 Speaker 1: by private equity firms. The beauty of that is that 51 00:02:39,000 --> 00:02:42,120 Speaker 1: these private equity firms, particularly the ones we're dealing with, 52 00:02:42,240 --> 00:02:46,000 Speaker 1: have experienced in investing equity directly below the senior debt 53 00:02:46,040 --> 00:02:48,440 Speaker 1: that we're investing, and so you've got a cushion there. 54 00:02:48,720 --> 00:02:51,840 Speaker 1: You've also got expertise. These are businesses firms that have 55 00:02:51,880 --> 00:02:56,200 Speaker 1: been investing in these companies and equity over decades, and 56 00:02:56,240 --> 00:02:58,800 Speaker 1: so we have experience over those same decades with these firms. 57 00:02:58,840 --> 00:03:01,480 Speaker 1: I think it's it's a right now again, given what's 58 00:03:01,480 --> 00:03:03,760 Speaker 1: going on in the economy, which is actually pretty constructive 59 00:03:03,760 --> 00:03:06,720 Speaker 1: for credit. I think about where we are, two rates, 60 00:03:07,320 --> 00:03:12,040 Speaker 1: two percent inflation, a less than four percent unemployment rate. 61 00:03:12,360 --> 00:03:14,280 Speaker 1: This is very constructive or credit, and I think in 62 00:03:14,320 --> 00:03:17,079 Speaker 1: general people are feeling that right now. So there has 63 00:03:17,120 --> 00:03:19,200 Speaker 1: been a lot of money that has gone into private 64 00:03:19,200 --> 00:03:22,000 Speaker 1: credit for exactly the proposition that you just put out there, 65 00:03:22,000 --> 00:03:24,079 Speaker 1: the idea that you're not going to have the day 66 00:03:24,080 --> 00:03:26,919 Speaker 1: to day volatility you can invest long term. Often there 67 00:03:27,040 --> 00:03:29,239 Speaker 1: is a cushion if you're investing in the debt of 68 00:03:29,280 --> 00:03:33,639 Speaker 1: some kind of private equity underneath it. All of that said, 69 00:03:33,800 --> 00:03:37,200 Speaker 1: I have to wonder whether this time, at the very least, 70 00:03:37,240 --> 00:03:39,040 Speaker 1: returns are going to be much lower than they have 71 00:03:39,160 --> 00:03:42,160 Speaker 1: been historically, given how much money has been coming in, 72 00:03:42,640 --> 00:03:46,240 Speaker 1: given how much liquidity is slashing around. So what's your 73 00:03:46,280 --> 00:03:49,560 Speaker 1: view that are you telling investors to lower their expectations 74 00:03:49,560 --> 00:03:54,360 Speaker 1: for returns. No, Actually, what what we're saying is that returns, 75 00:03:54,840 --> 00:03:57,440 Speaker 1: particularly for our business, have been very steady over the 76 00:03:57,520 --> 00:04:00,360 Speaker 1: last you know, fifteen years that we've been invest in 77 00:04:00,440 --> 00:04:03,520 Speaker 1: capital um. And yes, you're absolutely rightly. So there's a 78 00:04:03,520 --> 00:04:06,440 Speaker 1: lot of capital coming into private credit as a asset class, 79 00:04:06,480 --> 00:04:10,120 Speaker 1: as a generalistic class um hundred billion dollars according to 80 00:04:10,240 --> 00:04:13,440 Speaker 1: some figures, But the vast majority that is going to 81 00:04:13,640 --> 00:04:19,320 Speaker 1: higher yield strategies, more opportunistic credit, junior capital, and so forth. 82 00:04:19,400 --> 00:04:21,599 Speaker 1: We're at the senior debt level, and that's kind of 83 00:04:21,640 --> 00:04:23,600 Speaker 1: a if you look at the industry as as an 84 00:04:23,640 --> 00:04:26,120 Speaker 1: overall matter, it's kind of in that seven to nine 85 00:04:26,160 --> 00:04:31,760 Speaker 1: percent unlevered yield. That's a very conservative, low risk proposition, 86 00:04:31,839 --> 00:04:34,800 Speaker 1: and there's plenty of investors who like that. Given where 87 00:04:35,040 --> 00:04:36,720 Speaker 1: going on the rest of the market. What kind of 88 00:04:36,760 --> 00:04:38,920 Speaker 1: companies are you lending to? It's a great question. So 89 00:04:38,960 --> 00:04:41,159 Speaker 1: most of the businesses we're lending to our business to 90 00:04:41,279 --> 00:04:46,279 Speaker 1: business companies. Very few of them have direct exposure to 91 00:04:46,080 --> 00:04:48,120 Speaker 1: the consumer. And that's a good thing as far as 92 00:04:48,160 --> 00:04:50,960 Speaker 1: we're concerned, because sometimes consumer taste come and go. But 93 00:04:51,040 --> 00:04:54,680 Speaker 1: businesses are really focused right now on revenue cycle and 94 00:04:54,720 --> 00:04:57,360 Speaker 1: cost cycle. So what's going on if revenues are generally 95 00:04:57,400 --> 00:04:59,839 Speaker 1: flat and then this is a sort of a flattish GDP. 96 00:05:00,600 --> 00:05:03,560 Speaker 1: How do I make money more money, improve my cash flows, 97 00:05:03,760 --> 00:05:06,000 Speaker 1: I cut costs. And a lot of the companies that 98 00:05:06,040 --> 00:05:09,640 Speaker 1: were lending to our businesses that are servicing those businesses 99 00:05:09,640 --> 00:05:11,640 Speaker 1: who were trying to cut costs. So it's actually in 100 00:05:11,680 --> 00:05:13,920 Speaker 1: any economic cycle, it's actually a good place to be 101 00:05:14,520 --> 00:05:19,480 Speaker 1: so we are ten years into this economic expansion. Um 102 00:05:19,600 --> 00:05:21,599 Speaker 1: how much more so as you think about your position, 103 00:05:21,640 --> 00:05:25,479 Speaker 1: your portfolio, how do you put new money to work today? 104 00:05:25,640 --> 00:05:27,320 Speaker 1: And people are worried about that. Yeah, Paul, it's a 105 00:05:27,360 --> 00:05:29,400 Speaker 1: great question. And what what Since you don't know when 106 00:05:29,440 --> 00:05:31,000 Speaker 1: the recession is going to be and if you ask 107 00:05:31,120 --> 00:05:33,680 Speaker 1: twenty people, they'll give you twenty different answers. We assume 108 00:05:33,720 --> 00:05:36,080 Speaker 1: it's going to be next year. We model into every 109 00:05:36,120 --> 00:05:39,720 Speaker 1: investment that we do recession, and we look at these 110 00:05:39,760 --> 00:05:42,640 Speaker 1: business and say, Okay, if we were lending to this business, 111 00:05:42,760 --> 00:05:45,040 Speaker 1: what would it look like next year if we hit 112 00:05:45,080 --> 00:05:50,040 Speaker 1: a recession and this company's revenues go down by how 113 00:05:50,080 --> 00:05:52,360 Speaker 1: does it manage? And the ones that we don't get 114 00:05:52,400 --> 00:05:55,400 Speaker 1: excited about at leasta to your question, our businesses that 115 00:05:55,480 --> 00:05:58,400 Speaker 1: have high cap acts, that are more cyclical and less 116 00:05:58,400 --> 00:06:01,640 Speaker 1: defensive and that would suffer for significantly in a downturn. 117 00:06:02,040 --> 00:06:04,800 Speaker 1: Twenty seconds. Do you think that there are pockets of 118 00:06:04,960 --> 00:06:08,360 Speaker 1: the middle market and private lending market that are overheated 119 00:06:08,440 --> 00:06:11,960 Speaker 1: and you just avoid them. Well, we're not focused on 120 00:06:12,000 --> 00:06:14,800 Speaker 1: the broadly syndicated market as one example, and that's an 121 00:06:14,839 --> 00:06:18,320 Speaker 1: area that tends to be more volatile because as capital 122 00:06:18,560 --> 00:06:21,400 Speaker 1: comes and goes, and we've seen it actually going over 123 00:06:21,400 --> 00:06:23,920 Speaker 1: the last six months because when rates were going down, 124 00:06:24,240 --> 00:06:26,839 Speaker 1: people were looking for fixed income. So we tend to 125 00:06:26,839 --> 00:06:29,040 Speaker 1: stay away from the larger companies that are more liquid 126 00:06:29,040 --> 00:06:31,000 Speaker 1: and focus on again what we talked about, which is 127 00:06:31,040 --> 00:06:35,640 Speaker 1: the non correlated, less volatile middle market. Randy Schrember, thank 128 00:06:35,640 --> 00:06:38,080 Speaker 1: you so much. Randy is senior managing director and head 129 00:06:38,080 --> 00:06:40,880 Speaker 1: of origination in Capital markets and the Churchill Asset Management. 130 00:06:40,880 --> 00:06:43,560 Speaker 1: He joined us here live in our Bloomberg Interactive Broker studio. 131 00:06:44,040 --> 00:06:57,560 Speaker 1: Thank you so much. This week may still be the 132 00:06:57,600 --> 00:07:00,479 Speaker 1: week when the United Kingdom leaves the EU, but for 133 00:07:00,520 --> 00:07:03,440 Speaker 1: the time being, everything is the same as it ever was, 134 00:07:03,960 --> 00:07:05,960 Speaker 1: and it is hard to avoid the sense that the 135 00:07:06,000 --> 00:07:08,960 Speaker 1: country is on our road to nowhere. Words written by 136 00:07:08,960 --> 00:07:11,840 Speaker 1: our very own John Author's Bloomberg Senior editor from Markets 137 00:07:11,840 --> 00:07:14,280 Speaker 1: and a Bloomberg Opinion calumnist, joining us here in our 138 00:07:14,320 --> 00:07:17,560 Speaker 1: Interactive Broker studios. John, thank you so much for being 139 00:07:17,680 --> 00:07:21,120 Speaker 1: with us. So let's start there, especially given the fact 140 00:07:21,120 --> 00:07:23,560 Speaker 1: that you just came back from the UK. Yes, well, 141 00:07:23,560 --> 00:07:25,320 Speaker 1: I was in UK for what we thought was going 142 00:07:25,360 --> 00:07:28,000 Speaker 1: to be the week that Britain would actually leave, which 143 00:07:28,040 --> 00:07:31,040 Speaker 1: was obviously all set up to be a very exciting 144 00:07:31,440 --> 00:07:33,360 Speaker 1: week in British history. It just turned out to be 145 00:07:33,840 --> 00:07:38,640 Speaker 1: rather an aggravated damp squib, plenty of drama, sound and 146 00:07:38,680 --> 00:07:42,120 Speaker 1: fury signifying nothing, and then this last week just gone. 147 00:07:42,120 --> 00:07:45,000 Speaker 1: I've been in Italy, another country the country in Europe 148 00:07:45,080 --> 00:07:50,360 Speaker 1: very interestingly where the EU is least popular if you 149 00:07:50,400 --> 00:07:53,760 Speaker 1: don't include the UK. A lot of Italians have fed 150 00:07:53,840 --> 00:07:55,640 Speaker 1: up with the EU, and there's sort of good reasons 151 00:07:55,640 --> 00:07:57,880 Speaker 1: why that might be the case. But if you look 152 00:07:57,880 --> 00:08:00,400 Speaker 1: at the opinion polls, the number who actually he wants 153 00:08:00,440 --> 00:08:04,720 Speaker 1: to leave the EU is declining, probably because they're seeing 154 00:08:04,760 --> 00:08:07,320 Speaker 1: what a pathetic mess the British are making of it. 155 00:08:08,000 --> 00:08:10,440 Speaker 1: So it's interesting, John. One of the things I read 156 00:08:10,480 --> 00:08:13,720 Speaker 1: all the time is that the European Union is having 157 00:08:13,800 --> 00:08:17,560 Speaker 1: its elections there. They're coming up and apparently the UK 158 00:08:17,720 --> 00:08:19,400 Speaker 1: does not want to be involved, and maybe the EU 159 00:08:19,480 --> 00:08:23,360 Speaker 1: does not want the UK involved. Why. Okay, this is 160 00:08:23,440 --> 00:08:26,800 Speaker 1: the elections for the European Parliament, which many people argue 161 00:08:26,840 --> 00:08:28,440 Speaker 1: needs to have more power than it does, but it 162 00:08:28,520 --> 00:08:32,640 Speaker 1: still has considerable power within the frame the institutional framework 163 00:08:32,800 --> 00:08:35,959 Speaker 1: of the EU. The elections are at the end of May. 164 00:08:36,040 --> 00:08:42,520 Speaker 1: And it's broadly similar to Congress. Every country gets a 165 00:08:42,559 --> 00:08:47,480 Speaker 1: certain number of representatives, broadly in relation to its population. Now, 166 00:08:47,679 --> 00:08:52,079 Speaker 1: the UK announced via the Article fifty process more than 167 00:08:52,120 --> 00:08:53,720 Speaker 1: two years ago now that it was going to be 168 00:08:53,800 --> 00:08:58,880 Speaker 1: out in time for these elections. So in American terms, 169 00:08:59,000 --> 00:09:03,559 Speaker 1: it's like Texas or some really big state has succeeded 170 00:09:04,280 --> 00:09:09,080 Speaker 1: and the remaining seats have been reapportioned between all the 171 00:09:09,080 --> 00:09:13,880 Speaker 1: other countries of the EU. So if Britain now decides, 172 00:09:14,160 --> 00:09:17,400 Speaker 1: after all, to be in an election in the in 173 00:09:17,440 --> 00:09:20,280 Speaker 1: the election, and it's difficult to see how they can 174 00:09:20,559 --> 00:09:24,160 Speaker 1: not be in the be represented in the European Parliament. 175 00:09:24,200 --> 00:09:25,640 Speaker 1: If they're going to be a member of the European 176 00:09:25,760 --> 00:09:31,120 Speaker 1: Union after ma, then that means for everywhere else in Europe. 177 00:09:31,960 --> 00:09:35,280 Speaker 1: Suddenly all the party bosses and all the people running 178 00:09:35,280 --> 00:09:39,959 Speaker 1: elections will have to re draw their maps and choose 179 00:09:40,000 --> 00:09:42,959 Speaker 1: which candidates aren't going to be candidates after all. It's 180 00:09:43,000 --> 00:09:46,040 Speaker 1: like Vermont thinking he had two representatives in Congress and 181 00:09:46,080 --> 00:09:48,200 Speaker 1: then suddenly discovering the last minute that Texas was going 182 00:09:48,240 --> 00:09:49,960 Speaker 1: to take part after all, and it was only gonna 183 00:09:49,960 --> 00:09:52,120 Speaker 1: have one. How do you sort that one? Out and 184 00:09:52,120 --> 00:09:54,280 Speaker 1: then in the case of Britain, none of the parties 185 00:09:54,320 --> 00:09:57,600 Speaker 1: are ready for this. Obviously there's a risk that something 186 00:09:57,679 --> 00:10:01,320 Speaker 1: strange could happen, which particularly the MO it means far 187 00:10:01,400 --> 00:10:04,200 Speaker 1: right people could get in, far left people could get in. 188 00:10:04,720 --> 00:10:08,719 Speaker 1: This could be a real horrible mess within Britain. This 189 00:10:08,800 --> 00:10:12,760 Speaker 1: is fascinating to me because it highlights just how improbable 190 00:10:12,880 --> 00:10:17,920 Speaker 1: another referendum is. Because if there is a someone in 191 00:10:18,040 --> 00:10:21,400 Speaker 1: leadership in Britain, if it's not Theresa May, whoever follows her, 192 00:10:22,120 --> 00:10:26,440 Speaker 1: who is practical and pragmatic, sees this scenario, They're not 193 00:10:26,480 --> 00:10:30,199 Speaker 1: going to call for another referendum. One would would certainly 194 00:10:30,200 --> 00:10:32,640 Speaker 1: think not. The one thing I would say very clearly 195 00:10:32,679 --> 00:10:38,720 Speaker 1: is another election, given that we like it's somewhat different 196 00:10:38,720 --> 00:10:40,920 Speaker 1: from the American system. But broadly speaking, we have two 197 00:10:40,960 --> 00:10:45,720 Speaker 1: major parties and neither of those parties coheres at all 198 00:10:45,720 --> 00:10:47,520 Speaker 1: with the one critical issue at the moment, which is 199 00:10:47,640 --> 00:10:50,000 Speaker 1: should we stay or stay in the EU will leave it? 200 00:10:50,160 --> 00:10:54,199 Speaker 1: There were Therefore, a general election is the last way 201 00:10:54,720 --> 00:10:58,680 Speaker 1: to actually decide that question. A number of the most 202 00:10:58,720 --> 00:11:01,640 Speaker 1: prominent people on either side of the of the issue 203 00:11:02,000 --> 00:11:06,160 Speaker 1: represent constituencies where the majority was against them in the referendum, 204 00:11:06,880 --> 00:11:11,920 Speaker 1: so using a real election isn't going to work. That said, yes, 205 00:11:12,720 --> 00:11:17,360 Speaker 1: you can see why people including those including full disclosure myself, 206 00:11:17,360 --> 00:11:20,520 Speaker 1: who would like the UK to remain. After all, you 207 00:11:20,600 --> 00:11:23,680 Speaker 1: can't realistically see how we would remain unless there is 208 00:11:23,760 --> 00:11:28,160 Speaker 1: some democratic mandate for that. I would never suggest that 209 00:11:28,200 --> 00:11:31,560 Speaker 1: we could change our minds without making being clear that 210 00:11:31,600 --> 00:11:34,640 Speaker 1: the country's wholly changed his mind. But how on earth 211 00:11:34,679 --> 00:11:37,319 Speaker 1: do we How on earth do we get I've been 212 00:11:37,360 --> 00:11:40,360 Speaker 1: falling for this since the day Brexit was announced, which 213 00:11:40,400 --> 00:11:43,800 Speaker 1: is okay, let's do it do over here a second referendum. 214 00:11:44,200 --> 00:11:47,520 Speaker 1: This has got to be getting some momentum back because 215 00:11:47,840 --> 00:11:51,240 Speaker 1: nothing else appears to have any kind of support. At 216 00:11:51,280 --> 00:11:53,040 Speaker 1: Leasta's shaking her head. No. So we go back and 217 00:11:53,040 --> 00:11:56,480 Speaker 1: forth and we're not I mean, but no, but but 218 00:11:56,559 --> 00:12:00,000 Speaker 1: I think that to to to John's point, you can't 219 00:12:00,080 --> 00:12:02,760 Speaker 1: go back at this point. There is no going back, right, 220 00:12:02,800 --> 00:12:05,800 Speaker 1: you can't undo what has been done. And my question 221 00:12:05,880 --> 00:12:10,120 Speaker 1: is just what's the least bad option right now, given 222 00:12:10,120 --> 00:12:13,400 Speaker 1: the fact that another referendum is looking increasingly unlikely because 223 00:12:13,520 --> 00:12:16,640 Speaker 1: of this political backdrop in the u U, among many 224 00:12:16,640 --> 00:12:19,920 Speaker 1: other issues. Well, it's exactly it's a. It's a horrible 225 00:12:19,960 --> 00:12:24,200 Speaker 1: mess what Terisa May is looking for. And this I 226 00:12:24,240 --> 00:12:26,760 Speaker 1: hope that gives some perspective on why the issue at 227 00:12:26,760 --> 00:12:30,480 Speaker 1: the moment is how big another extension the British get. 228 00:12:30,960 --> 00:12:34,120 Speaker 1: She's looking for the shortest extensions she can get away 229 00:12:34,160 --> 00:12:36,960 Speaker 1: with to try to bodge something in the time available, 230 00:12:36,960 --> 00:12:39,920 Speaker 1: which therefore means without a general election or a referendum, 231 00:12:39,960 --> 00:12:43,520 Speaker 1: you can't organize one that quickly. We've now worked out 232 00:12:43,520 --> 00:12:47,000 Speaker 1: that the European Parliament doesn't get seated until it's not 233 00:12:47,040 --> 00:12:48,720 Speaker 1: as big a delay as you get here in the States, 234 00:12:48,720 --> 00:12:50,679 Speaker 1: but it's another week or two after the election, so 235 00:12:50,920 --> 00:12:53,720 Speaker 1: maybe we could stay until the day before they get seated, 236 00:12:53,920 --> 00:12:58,200 Speaker 1: before before formerly extinct. That's why she wants a short break. 237 00:12:59,240 --> 00:13:03,280 Speaker 1: If we don't have anything other than that short break. Basically, 238 00:13:03,800 --> 00:13:05,920 Speaker 1: there's no sense in it being much less than about 239 00:13:06,000 --> 00:13:09,880 Speaker 1: two years and the europe Europe just tells the whole 240 00:13:09,920 --> 00:13:12,040 Speaker 1: of the once proud nation of Britain to go away 241 00:13:12,040 --> 00:13:15,160 Speaker 1: and sort itself out again from scratch because it doesn't 242 00:13:15,160 --> 00:13:18,600 Speaker 1: know what it's doing. To some extent, and I've seen analogies. 243 00:13:18,640 --> 00:13:22,080 Speaker 1: It's interesting, one or two quite famous pro brexity as 244 00:13:22,080 --> 00:13:25,680 Speaker 1: are beginning to say this. It's similar to the kind 245 00:13:25,720 --> 00:13:28,280 Speaker 1: of advice you would give to somebody who's going through 246 00:13:28,280 --> 00:13:33,679 Speaker 1: a relationship breakup. Just don't make any big life decisions 247 00:13:33,720 --> 00:13:37,800 Speaker 1: while you're this disturbed, while you're this upset, And in 248 00:13:37,840 --> 00:13:40,839 Speaker 1: the same way, because the whole country is politically coming 249 00:13:40,840 --> 00:13:45,080 Speaker 1: to something approaching, you know, a nervous breakdown, a marital breakdown, 250 00:13:45,080 --> 00:13:47,679 Speaker 1: this is just not the time to make big decisions 251 00:13:47,720 --> 00:13:50,600 Speaker 1: about the future of the country. So therefore take a 252 00:13:50,640 --> 00:13:53,120 Speaker 1: two year break. Well, I don't know, John, you were 253 00:13:53,120 --> 00:13:55,360 Speaker 1: in London last week. Tom Keene was in London last week. 254 00:13:55,400 --> 00:13:56,839 Speaker 1: I can't believe the two of you couldn't have fixed 255 00:13:56,840 --> 00:13:58,680 Speaker 1: this while you already. I thought that was the plan 256 00:13:58,760 --> 00:14:02,000 Speaker 1: a long. The marital problem, Tom King is just what 257 00:14:02,040 --> 00:14:05,480 Speaker 1: we need. We can elect him, elect him Prime Minister, 258 00:14:05,480 --> 00:14:09,240 Speaker 1: and then then we'll be where you get Certainly, certainly 259 00:14:09,280 --> 00:14:13,520 Speaker 1: the misunderstanding of the Irish question would never have happened anyway. Yes, 260 00:14:13,640 --> 00:14:17,559 Speaker 1: so just real quick twenty seconds. Does Teresa May's government 261 00:14:17,679 --> 00:14:21,360 Speaker 1: survive this? It survives the next few weeks because there's 262 00:14:21,400 --> 00:14:25,320 Speaker 1: no other alternative. To the extent that Terisu May has 263 00:14:25,360 --> 00:14:27,960 Speaker 1: a government, I'm not sure it's even survived. At this point, 264 00:14:28,680 --> 00:14:32,480 Speaker 1: it's almost purely one it's going to say, one man 265 00:14:32,600 --> 00:14:34,840 Speaker 1: for himself from at least at least we've at least 266 00:14:34,840 --> 00:14:39,360 Speaker 1: we've got broader, broader gender representation in British politics, right, 267 00:14:39,440 --> 00:14:42,680 Speaker 1: but one person at this point is almost one person 268 00:14:42,720 --> 00:14:45,120 Speaker 1: for themselves. Well, the good thing about the Brexit, it's 269 00:14:45,160 --> 00:14:47,680 Speaker 1: like the Full Employment Act for for for John here, 270 00:14:47,760 --> 00:14:50,480 Speaker 1: John Arthur's I mean, we always need him to explain 271 00:14:50,520 --> 00:14:53,040 Speaker 1: things to us. What's going on the best at it, 272 00:14:53,640 --> 00:14:56,360 Speaker 1: I've got to say, yes, you explain the whole European 273 00:14:56,360 --> 00:14:59,080 Speaker 1: Parliament election things. So now I get that. So John 274 00:14:59,160 --> 00:15:01,480 Speaker 1: Arthur's senior editor their Bloomberg Markets, joining us here in 275 00:15:01,480 --> 00:15:05,080 Speaker 1: a Bloomberg interactor broker's studio, trying to bring us up 276 00:15:05,080 --> 00:15:08,360 Speaker 1: to date on all things Brexit, which is just never 277 00:15:08,600 --> 00:15:10,760 Speaker 1: ending and that must be very difficult for the folks 278 00:15:10,760 --> 00:15:24,480 Speaker 1: in the UK. Well, April is Autism Awareness Month and 279 00:15:24,520 --> 00:15:28,360 Speaker 1: help us deal explain and discuss this issue. We're very 280 00:15:28,400 --> 00:15:31,600 Speaker 1: fortunate to welcome our next guest, Charles Massimo, CEO of 281 00:15:31,680 --> 00:15:36,400 Speaker 1: c j M Wealth Management, also founder of Autism Communities. Charles, 282 00:15:36,840 --> 00:15:39,160 Speaker 1: thank you so much for joining us on the phone. 283 00:15:39,400 --> 00:15:41,320 Speaker 1: Can just first just tell us a little bit about 284 00:15:41,400 --> 00:15:45,360 Speaker 1: your involvement with autism and why it's so important to you. Sure, well, 285 00:15:45,360 --> 00:15:48,120 Speaker 1: thanks for having me um. I have two nineteen year 286 00:15:48,120 --> 00:15:51,960 Speaker 1: old boys that were diagnosed with autism when they were 287 00:15:52,000 --> 00:15:54,880 Speaker 1: around a year and a half, and very early on 288 00:15:55,000 --> 00:15:57,880 Speaker 1: I started wondering what's going to happen um for them 289 00:15:57,880 --> 00:16:00,320 Speaker 1: in their future and where they're going to live. So 290 00:16:00,600 --> 00:16:04,960 Speaker 1: that's what that's where autism community started, is providing an 291 00:16:05,240 --> 00:16:09,800 Speaker 1: opportunity for adults with autism to live independently outside outside 292 00:16:09,800 --> 00:16:12,800 Speaker 1: of their parents homes. Just for people who may not 293 00:16:12,880 --> 00:16:14,760 Speaker 1: be familiar with it. Can you give us a sense 294 00:16:14,840 --> 00:16:19,320 Speaker 1: of the scope of autism just sort of increase in 295 00:16:19,440 --> 00:16:24,360 Speaker 1: diagnoses and the degree to which there is assistance for 296 00:16:24,560 --> 00:16:27,320 Speaker 1: people when they are younger, but at a certain point 297 00:16:27,880 --> 00:16:31,640 Speaker 1: it gets more challenging to find that help. Yah. That's 298 00:16:31,760 --> 00:16:34,000 Speaker 1: that's a great point. When when you factor this and 299 00:16:34,080 --> 00:16:36,920 Speaker 1: that every eleven minutes child is born who will be 300 00:16:37,000 --> 00:16:41,160 Speaker 1: diagnosed with autism. That's the number that is astonishing. And 301 00:16:41,240 --> 00:16:45,320 Speaker 1: right now there's over five million people in this country 302 00:16:45,360 --> 00:16:49,360 Speaker 1: with intellectual disabilities such such as autism. And to your point, 303 00:16:49,680 --> 00:16:52,800 Speaker 1: up until twenty one the support is really good, Um 304 00:16:53,000 --> 00:16:55,600 Speaker 1: the most specially New York State has gotten very good 305 00:16:55,640 --> 00:16:58,320 Speaker 1: in providing supports. But at the twenty one those supports 306 00:16:58,400 --> 00:17:01,880 Speaker 1: drop off a cliff and there's probably not one parent 307 00:17:02,040 --> 00:17:04,520 Speaker 1: that you'll speak to that won't tell you that the 308 00:17:04,640 --> 00:17:06,760 Speaker 1: number one concern is is where is my son and 309 00:17:06,880 --> 00:17:09,800 Speaker 1: daughter going to live when we can no longer care 310 00:17:09,880 --> 00:17:12,959 Speaker 1: for them? And that's a major epidemic that this country 311 00:17:13,000 --> 00:17:17,320 Speaker 1: needs to address. Charles tell us, how so there's autism communities. 312 00:17:17,480 --> 00:17:19,760 Speaker 1: What is the solution or part of the solution that 313 00:17:19,840 --> 00:17:23,080 Speaker 1: you think you have, Well, what we're trying, what we 314 00:17:23,119 --> 00:17:25,640 Speaker 1: are doing our mission, Our mission really is to provide 315 00:17:25,680 --> 00:17:30,040 Speaker 1: support and opportunities for adults with autism to live outside 316 00:17:30,040 --> 00:17:34,000 Speaker 1: their homes in a really an integrated community. So we're 317 00:17:34,040 --> 00:17:37,640 Speaker 1: teaming up with developers currently throughout Long Island where within 318 00:17:37,760 --> 00:17:40,399 Speaker 1: each development we're going to have a number of residents 319 00:17:40,520 --> 00:17:45,080 Speaker 1: tend to twelve residents live in the truly integrated community 320 00:17:45,240 --> 00:17:48,879 Speaker 1: with the opportunity to really enhance every part of their life. 321 00:17:49,119 --> 00:17:52,440 Speaker 1: Instead of living in a group home that's isolated from 322 00:17:52,440 --> 00:17:55,199 Speaker 1: a community. We want to provide them an opportunity to 323 00:17:55,200 --> 00:17:58,920 Speaker 1: truly be integrated into a community, Charles. It raises a 324 00:17:59,000 --> 00:18:01,480 Speaker 1: question when you see you're working with developers and you 325 00:18:01,520 --> 00:18:04,720 Speaker 1: are a wealth manager right for your day job, and 326 00:18:05,000 --> 00:18:08,600 Speaker 1: so I want to sort of, uh talk about just 327 00:18:09,200 --> 00:18:11,919 Speaker 1: the fact that there is actually an opportunity here for 328 00:18:12,040 --> 00:18:15,760 Speaker 1: people to basically you know, make a difference and also 329 00:18:16,400 --> 00:18:20,560 Speaker 1: invested something that's that's necessary and and in demand, right, 330 00:18:20,600 --> 00:18:26,320 Speaker 1: I mean, there's there's sort of a cross purpose here now. Well, well, absolutely, Again, 331 00:18:26,359 --> 00:18:30,000 Speaker 1: the demand is huge when you factor over fifty five 332 00:18:30,160 --> 00:18:32,720 Speaker 1: percent of adults with autism live with their parents until 333 00:18:32,760 --> 00:18:36,520 Speaker 1: their parents die, and then it becomes a crisis situation. 334 00:18:37,080 --> 00:18:40,120 Speaker 1: And if you think about the cost of housing, especially 335 00:18:40,119 --> 00:18:42,800 Speaker 1: where we are in Long Island, New York, in all 336 00:18:42,800 --> 00:18:45,560 Speaker 1: of New York State, the cost of providing housing for 337 00:18:45,560 --> 00:18:48,320 Speaker 1: a family with a child with autism is about a 338 00:18:48,400 --> 00:18:51,320 Speaker 1: hundred and fifty to two hundred thousand dollars a year. 339 00:18:52,200 --> 00:18:54,439 Speaker 1: And that's the crisis. And that's why we're trying to 340 00:18:54,520 --> 00:18:58,440 Speaker 1: provide an affordable solution, teaming up with developers that recognize 341 00:18:58,920 --> 00:19:02,040 Speaker 1: that this is in the with affordable housing and some 342 00:19:02,160 --> 00:19:06,360 Speaker 1: other creative programs that we're working and partnering with local developers. 343 00:19:06,600 --> 00:19:09,760 Speaker 1: The goal is not only provide housing, but to provide 344 00:19:09,800 --> 00:19:13,560 Speaker 1: affordable housing to every family. So, Charles, you mentioned that 345 00:19:14,000 --> 00:19:16,720 Speaker 1: the costa which is just staggering. Um, talk to us 346 00:19:16,720 --> 00:19:18,600 Speaker 1: about the fundraiser you have coming up and how you 347 00:19:18,640 --> 00:19:21,360 Speaker 1: hope that will will help the process. Yeah. Well, as 348 00:19:21,359 --> 00:19:24,479 Speaker 1: a grassroots organization, you know, we we rely on on 349 00:19:24,600 --> 00:19:28,320 Speaker 1: donations from individuals and we're having a great fundraiser on 350 00:19:28,359 --> 00:19:32,480 Speaker 1: Friday this Friday, April twelve at Chateaubriyan in called place. 351 00:19:33,040 --> 00:19:36,280 Speaker 1: We did it last year was called um Um Boogie Nights, 352 00:19:36,280 --> 00:19:38,320 Speaker 1: and we it was so successful that people said, hey, 353 00:19:38,320 --> 00:19:40,199 Speaker 1: you need to do it again. So we're doing Boogie 354 00:19:40,320 --> 00:19:43,840 Speaker 1: Nights the Remix again this Friday, April twelve, from seven 355 00:19:44,240 --> 00:19:47,439 Speaker 1: pm to eleven thirty. And it's gonna be a band 356 00:19:47,480 --> 00:19:50,919 Speaker 1: that seventies band of full dinner, some raffles and really 357 00:19:51,400 --> 00:19:55,040 Speaker 1: a night to come out and support an organization and 358 00:19:55,080 --> 00:19:57,960 Speaker 1: a mission that is so needed, not just in Long Island, 359 00:19:57,960 --> 00:20:01,359 Speaker 1: but really throughout this country. Thank you so much for 360 00:20:01,400 --> 00:20:04,760 Speaker 1: being with us. Charles Masimo is the chief executive officer 361 00:20:04,800 --> 00:20:09,480 Speaker 1: of c JM Wealth Manager, founder of Autism Communities. They 362 00:20:09,560 --> 00:20:13,760 Speaker 1: do have the fund raiser this Friday night, Boogie night, uh, 363 00:20:13,760 --> 00:20:16,600 Speaker 1: and it's going to be held at Chateau Briand in 364 00:20:16,840 --> 00:20:21,920 Speaker 1: Carl Place. For more information, Autism Communities dot org. Autism 365 00:20:22,000 --> 00:20:24,960 Speaker 1: Communities dot org for more information, and just to give 366 00:20:25,000 --> 00:20:27,040 Speaker 1: you a sense of the scope of the problem. Uh, 367 00:20:27,119 --> 00:20:31,040 Speaker 1: the direct and indirect services as well as productivity costs 368 00:20:31,080 --> 00:20:34,159 Speaker 1: of autism were pegged a price tag of up to 369 00:20:34,359 --> 00:20:38,400 Speaker 1: three hundred and sixty seven billion dollars for this according 370 00:20:38,440 --> 00:20:42,800 Speaker 1: to one study, at least so a huge cost issue 371 00:20:42,960 --> 00:20:45,560 Speaker 1: here in addition to just the human issue of how 372 00:20:45,600 --> 00:20:49,440 Speaker 1: to make people uh integrate into society as as easily 373 00:20:49,840 --> 00:20:53,520 Speaker 1: and and wonderfully as possible in a way that does 374 00:20:53,680 --> 00:20:56,480 Speaker 1: allow them to be productive members of the society. Yeah, 375 00:20:56,480 --> 00:20:58,320 Speaker 1: I'm so glad we had Charles on today because it 376 00:20:58,400 --> 00:21:00,520 Speaker 1: just highlights an issue that maybe we don't think about, 377 00:21:00,640 --> 00:21:03,600 Speaker 1: which is the adult life of the folks um with 378 00:21:03,680 --> 00:21:06,359 Speaker 1: autism and and and how they are cared for, and 379 00:21:06,400 --> 00:21:09,280 Speaker 1: how they are integrated and to what extent into society. 380 00:21:09,280 --> 00:21:11,440 Speaker 1: And that boy, that cost you mentioned annual cost of 381 00:21:11,440 --> 00:21:14,639 Speaker 1: a hundred two dollars a year is just staggering. So 382 00:21:14,720 --> 00:21:17,520 Speaker 1: you can see the need for these types of fundraisers 383 00:21:17,520 --> 00:21:30,520 Speaker 1: and this type of support ten years into this cycle 384 00:21:30,560 --> 00:21:34,359 Speaker 1: of economic expansion has investors wondering how much is left. 385 00:21:34,920 --> 00:21:37,679 Speaker 1: Help us get an answer to that. We welcome our 386 00:21:37,720 --> 00:21:41,080 Speaker 1: next guest, Joe Bruce Weellis. Joe's a senior economists at RSM. 387 00:21:41,160 --> 00:21:43,520 Speaker 1: He joins us live here on our interactive broker studio 388 00:21:43,680 --> 00:21:47,080 Speaker 1: in New York. Joe, welcome, thanks for coming here. So again, 389 00:21:47,119 --> 00:21:50,400 Speaker 1: a couple of weeks ago, we had the yield curve invert, 390 00:21:50,600 --> 00:21:53,919 Speaker 1: however briefly, and that obviously race concerns among a lot 391 00:21:54,000 --> 00:21:58,240 Speaker 1: of investors about a significant economic slowdown. Do you see that? Okay, 392 00:21:58,280 --> 00:22:01,120 Speaker 1: so the economy is definitely disselled ratted, but our recession 393 00:22:01,240 --> 00:22:03,560 Speaker 1: is just not in the cards this year unless the 394 00:22:03,560 --> 00:22:06,680 Speaker 1: Trump administration or the Fed makes a major mistake. So 395 00:22:06,720 --> 00:22:08,320 Speaker 1: there are two ways to look at this. One is 396 00:22:08,359 --> 00:22:10,080 Speaker 1: if you want to look at the policy sensitive curve 397 00:22:10,560 --> 00:22:13,560 Speaker 1: ten ten year less three months, al right, what you 398 00:22:13,600 --> 00:22:15,600 Speaker 1: need to do if you're a Bloomberg terminal subscriber, though, 399 00:22:16,000 --> 00:22:19,520 Speaker 1: strip that out, look at those risk neutral yields. If 400 00:22:19,520 --> 00:22:22,400 Speaker 1: you look at the ten year less one year, stripping 401 00:22:22,400 --> 00:22:25,480 Speaker 1: out the risk premiums, the yeld curves still still positive. 402 00:22:25,560 --> 00:22:28,840 Speaker 1: We're just not there yet in terms of a recession. Okay, 403 00:22:28,920 --> 00:22:31,760 Speaker 1: so this is something JP Morgan eliminated it today as well, 404 00:22:31,760 --> 00:22:34,040 Speaker 1: where they're basically saying people are looking at the wrong 405 00:22:34,119 --> 00:22:36,920 Speaker 1: yield curve when they look at that gap between ten 406 00:22:37,040 --> 00:22:39,800 Speaker 1: year and three month yields. What is the yield curve 407 00:22:39,880 --> 00:22:43,320 Speaker 1: you should be looking at determine whether there really is 408 00:22:43,400 --> 00:22:46,480 Speaker 1: some sort of warning sign being flashed by the If 409 00:22:46,480 --> 00:22:48,080 Speaker 1: you're gonna hold a gun in my head and say, hey, 410 00:22:48,119 --> 00:22:49,720 Speaker 1: you have to choose right now, I'm not going to 411 00:22:49,800 --> 00:22:53,159 Speaker 1: hold a gun to her Hopelese. You're on live radio. 412 00:22:53,240 --> 00:22:56,040 Speaker 1: I am not holding a gun to Joe's head right now. 413 00:22:56,119 --> 00:22:57,399 Speaker 1: Go on, all right, So what you want to do 414 00:22:57,440 --> 00:22:59,400 Speaker 1: again is you're gonna look at the ten year less 415 00:22:59,440 --> 00:23:02,480 Speaker 1: one year, stripping out the term premium risk. That's going 416 00:23:02,520 --> 00:23:05,320 Speaker 1: to give you a pure look at the yield curve 417 00:23:05,440 --> 00:23:10,120 Speaker 1: and what it tells you is, yeah, growth slowed, recession today. No. Now, 418 00:23:10,160 --> 00:23:13,600 Speaker 1: if we start throwing tariffs on all auto imports, if 419 00:23:13,600 --> 00:23:16,280 Speaker 1: we tear up NAFTA, we can have a very different discussion. 420 00:23:16,560 --> 00:23:18,880 Speaker 1: So let's go to go there a little bit geopolitical 421 00:23:18,960 --> 00:23:22,120 Speaker 1: risk to what extent is you know, the economic slowdown 422 00:23:22,160 --> 00:23:25,880 Speaker 1: in Europe which is probably being exacerbated clearly by Brexit, 423 00:23:26,119 --> 00:23:30,000 Speaker 1: um the trade issues with China, slowing growth in China. 424 00:23:30,160 --> 00:23:32,479 Speaker 1: How much of some of those geopolitical issues inform your 425 00:23:32,560 --> 00:23:34,000 Speaker 1: view of the U S. Economy. I just spent two 426 00:23:34,000 --> 00:23:36,520 Speaker 1: weeks in London. We've got a pretty big exposure there 427 00:23:36,560 --> 00:23:38,919 Speaker 1: in terms of our firm in the UK and in Europe. 428 00:23:39,160 --> 00:23:42,960 Speaker 1: It's as serious as a heart attack. Okay. Germany was 429 00:23:43,000 --> 00:23:47,800 Speaker 1: the collateral damage from the U S. China trade spat. 430 00:23:48,280 --> 00:23:51,160 Speaker 1: Their industrial production turned over last year and it's just negative. 431 00:23:51,280 --> 00:23:54,639 Speaker 1: Their manufacturing sectors going through contraction right now. Are they 432 00:23:54,680 --> 00:23:59,000 Speaker 1: at an intercession? No, but their recessions doorstep. Clearly things 433 00:23:59,040 --> 00:24:02,360 Speaker 1: in the UK have deteriorated. No one's in charge there 434 00:24:02,440 --> 00:24:06,119 Speaker 1: right now. They're just meandering from day to day. The 435 00:24:06,240 --> 00:24:10,360 Speaker 1: uncertainty tax levied on that economy from Brexit is significant. 436 00:24:10,640 --> 00:24:13,280 Speaker 1: You know, fixed business investment was down three point seven 437 00:24:13,480 --> 00:24:15,800 Speaker 1: and the fourth quarter of last year you have that happened, 438 00:24:15,960 --> 00:24:18,160 Speaker 1: You're going to see that economy slow bub below one percent. 439 00:24:18,240 --> 00:24:21,080 Speaker 1: It's exactly what's happened. There's a question, though, especially with 440 00:24:21,160 --> 00:24:23,720 Speaker 1: respect to Germany, how much is this due to China 441 00:24:23,800 --> 00:24:29,720 Speaker 1: slow down? Right? Because that's a huge export destination. And 442 00:24:29,760 --> 00:24:32,359 Speaker 1: how much does that escapegoat though? Well, so here's what 443 00:24:32,359 --> 00:24:33,640 Speaker 1: I think. You know, if you're gonna take, you're gonna 444 00:24:33,680 --> 00:24:35,920 Speaker 1: run your aggression. Right, you're an economist. What are you 445 00:24:35,960 --> 00:24:39,560 Speaker 1: gonna get? You're gonna get two things you're gonna get. Well, 446 00:24:39,640 --> 00:24:42,120 Speaker 1: you should be, Lisa, you've been here long enough. All right, 447 00:24:42,160 --> 00:24:48,000 Speaker 1: thank you? Alright, alright, alright, alright, alright. So look, what 448 00:24:48,080 --> 00:24:50,840 Speaker 1: you're gonna see is is definitely a decrease in demand 449 00:24:50,880 --> 00:24:53,040 Speaker 1: from China. But what you're also going to see is 450 00:24:53,080 --> 00:24:57,159 Speaker 1: an endogenous result due to the problems at Folkswagen and 451 00:24:57,200 --> 00:25:01,480 Speaker 1: the shifting two more emissions friendly environmental target. So you 452 00:25:01,520 --> 00:25:04,000 Speaker 1: get you get both external and external, and then they're 453 00:25:04,000 --> 00:25:06,879 Speaker 1: both fair. If you're really sort of an optimist, you say, well, 454 00:25:06,920 --> 00:25:09,840 Speaker 1: it's not the Chinese, They're not really the cause of it. Um, 455 00:25:09,880 --> 00:25:12,000 Speaker 1: it's what we did here. And the truth is it's 456 00:25:12,000 --> 00:25:14,720 Speaker 1: a little bit of both. But don't discount the disruption 457 00:25:14,720 --> 00:25:17,760 Speaker 1: of those global supply chains due to the tradespat between 458 00:25:17,760 --> 00:25:20,000 Speaker 1: the U S and China. We spent trillions of dollars 459 00:25:20,000 --> 00:25:22,320 Speaker 1: building them over twenty five years ago, and no one 460 00:25:22,760 --> 00:25:25,639 Speaker 1: has an actor accurate and predictive model of what the 461 00:25:25,680 --> 00:25:28,040 Speaker 1: global economy looks like if you being to unwind those 462 00:25:28,040 --> 00:25:30,160 Speaker 1: supply chains. So I was gonna ask you, what are 463 00:25:30,160 --> 00:25:32,200 Speaker 1: we not, what are we missing? What are we in 464 00:25:32,280 --> 00:25:35,080 Speaker 1: terms of our economics soft landing in the US to 465 00:25:35,280 --> 00:25:38,159 Speaker 1: two GDP? What could come out of left field and 466 00:25:38,200 --> 00:25:40,399 Speaker 1: just kind of shock the system and maybe push us 467 00:25:40,400 --> 00:25:43,320 Speaker 1: into that recession. Well, it's the national populism wave that's 468 00:25:43,320 --> 00:25:45,800 Speaker 1: sweeping the world. This is in the economies are doing 469 00:25:45,840 --> 00:25:48,440 Speaker 1: fine if you leave them alone. It's policy that's causing 470 00:25:48,480 --> 00:25:52,159 Speaker 1: the problem. And right now, the deglobalization in some cases, 471 00:25:52,200 --> 00:25:55,720 Speaker 1: the definancialization is the endogenous shock that you're going to 472 00:25:55,840 --> 00:25:59,680 Speaker 1: see hit some of these economies if the leaders choose 473 00:25:59,720 --> 00:26:01,359 Speaker 1: to pull push forward on them. And that's a big 474 00:26:01,400 --> 00:26:03,479 Speaker 1: gift right now. But here's the thing. People have been 475 00:26:03,520 --> 00:26:06,160 Speaker 1: saying this since President Trump was elected. Frankly, they've been 476 00:26:06,200 --> 00:26:08,000 Speaker 1: saying this since the Brexit vote. They've been saying this 477 00:26:08,040 --> 00:26:11,480 Speaker 1: for a while. And I'm struck by the fact that 478 00:26:11,680 --> 00:26:14,959 Speaker 1: the economic data isn't necessarily so clear cut. It's not 479 00:26:15,000 --> 00:26:18,760 Speaker 1: necessarily bearing out that you're seeing the direct correlation between 480 00:26:18,800 --> 00:26:22,639 Speaker 1: some of the populist movements and a severe decline in 481 00:26:22,720 --> 00:26:24,760 Speaker 1: economic growth. So so what do you say to people 482 00:26:24,760 --> 00:26:28,280 Speaker 1: who say, show me, shall prove it to me? Eighteen 483 00:26:29,280 --> 00:26:31,600 Speaker 1: at the end of the second quarters were in early June. 484 00:26:31,600 --> 00:26:33,680 Speaker 1: The economy is at a four point two percent growth trend. 485 00:26:34,040 --> 00:26:36,240 Speaker 1: We finished the year to two percent growth trend, and 486 00:26:36,280 --> 00:26:38,040 Speaker 1: if things sort of don't change, we're gonna be at 487 00:26:38,040 --> 00:26:41,920 Speaker 1: one percent here in the quarter with downside risk. So clearly, 488 00:26:42,480 --> 00:26:45,840 Speaker 1: once those trade measures which impacted the economy with the 489 00:26:45,920 --> 00:26:49,400 Speaker 1: six to nine month lag started to show up, what happened. 490 00:26:49,560 --> 00:26:51,480 Speaker 1: The economy slowed. And what are you hearing out of 491 00:26:51,520 --> 00:26:53,600 Speaker 1: the White House right now? What did you hear from 492 00:26:53,680 --> 00:26:55,879 Speaker 1: Mr cudlo on on the you know the Sunday shows 493 00:26:56,000 --> 00:27:00,560 Speaker 1: they want at fifty basis got Really, you're gonna do 494 00:27:00,600 --> 00:27:03,480 Speaker 1: that with two fifty basis points left? If there's a 495 00:27:03,520 --> 00:27:06,840 Speaker 1: recession anytime on your watch and your second administration, you're 496 00:27:06,840 --> 00:27:10,400 Speaker 1: gonna blow your AMMO now okay, So yeah, yeah, there 497 00:27:10,480 --> 00:27:13,320 Speaker 1: there's something there. So in other words, the slowdown that 498 00:27:13,320 --> 00:27:16,439 Speaker 1: we're seeing in the US momentum you're saying is very 499 00:27:16,480 --> 00:27:19,240 Speaker 1: much due to the trade policies. Uh and and sort 500 00:27:19,280 --> 00:27:23,560 Speaker 1: of the populist and Anti two. Look, we're going to 501 00:27:23,560 --> 00:27:26,040 Speaker 1: shift off a long term regime. You're gonna have that 502 00:27:26,080 --> 00:27:28,280 Speaker 1: sort of regime change. You're gonna have some disruption. You're 503 00:27:28,280 --> 00:27:30,919 Speaker 1: seeing a play out in real time. Joe bra Sellis, 504 00:27:31,000 --> 00:27:32,560 Speaker 1: thank you so much for being with us anytime. Thank 505 00:27:32,600 --> 00:27:35,399 Speaker 1: you guys, fabulous having you on. Joe Grascellus is senior 506 00:27:35,440 --> 00:27:38,080 Speaker 1: economist at R s M, joining us here in our 507 00:27:38,200 --> 00:27:42,520 Speaker 1: Bloomberg Interactive Brokers studios. Thanks for listening to the Bloomberg 508 00:27:42,560 --> 00:27:44,800 Speaker 1: P and L podcast. You can subscribe and listen to 509 00:27:44,800 --> 00:27:48,080 Speaker 1: interviews at Apple Podcasts or whatever podcast platform you prefer. 510 00:27:48,440 --> 00:27:51,240 Speaker 1: Paul Sweeney, I'm on Twitter at pt Sweeney. I'm Lisa 511 00:27:51,240 --> 00:27:53,880 Speaker 1: abram Woyds. I'm on Twitter at Lisa A. Bramwoit's one 512 00:27:54,080 --> 00:27:56,639 Speaker 1: before the podcast. You can always catch us worldwide on 513 00:27:56,720 --> 00:27:57,560 Speaker 1: Bloomberg Radio.