Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
Speaker 1: my co host Matt Miller. Every business day, we bring
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
Speaker 1: with essential market moving news on the Bloomberg Markets Podcast,
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
Speaker 1: at Bloomberg dot com slash podcast supply chain. It's been
Speaker 1: one of our favorite topics to talk about during in
Speaker 1: the last several years. Boy, it got ugly there towards
Speaker 1: the beginning of the pandemic um, but now it seems
Speaker 1: to be getting better. And we talked to Jeans Siroca.
Speaker 1: He's the CEO of the Port of l A. He
Speaker 1: always gives us a good sense of what's going on
Speaker 1: there because the Port of l A is huge and
Speaker 1: particularly coming from that Asia trade. Gene, thanks so much
Speaker 1: for joining us here. Um, give us a sense of
Speaker 1: how that things are at your port, how many ships
Speaker 1: are waiting in harbor, how's the port itself, the railroads,
Speaker 1: the trucks, what's your dashboard looked like, how's it all
Speaker 1: playing out? Good morning, Paul, and that the backlog is
Speaker 1: it's in Los Angeles effectively left us back in August.
Speaker 1: We all left five of the first seven months of
Speaker 1: the year going box for box with that all top number.
Speaker 1: In two thousand one, we had the peak season come
Speaker 1: in early June and July. We're are best on record
Speaker 1: in a hundred and fifteen years. Then the next porter
Speaker 1: has got a little bit nervous ongoing dock workers in
Speaker 1: negotiations and shift the cargo to the east into Gulf Coast.
Speaker 1: We've got about late capacity today. So so what does
Speaker 1: shipping look like right now? I mean, we're getting into
Speaker 1: the holiday season, right the pandemics over for the western world.
Speaker 1: Are we seeing um, you know, peak traffic right now?
Speaker 1: Are you expecting to get busy this month? No, I
Speaker 1: don't think. Again, a little bit earlier that that traditional
Speaker 1: import and export manager didn't want to get into the
Speaker 1: teeth of supply chain and port congestion all over again
Speaker 1: for the third year in a row. They were a
Speaker 1: little conservative, hedged Brock cargo in early to pad those
Speaker 1: transit times, to make sure indoor states were realized and
Speaker 1: make sure they stayed away from any potential labor disruption
Speaker 1: which was not going to happen. Both the employers Association
Speaker 1: and the dock Workers Union put out two joint media
Speaker 1: releases simply stated they won't strike and they won't walk
Speaker 1: out labor. Yet that's been tough to convince the American
Speaker 1: cargo owner. Hey, Jean, we're hearing reports really over the
Speaker 1: last several days that finally Japan. I mean, I'm sorry,
Speaker 1: China maybe reopening here. I've maybe in response to some
Speaker 1: of the protests, but if China is really going to reopen,
Speaker 1: how do you guys kind of you know, get ready
Speaker 1: for that, because that my sense will be there a
Speaker 1: lot more sailings and coming out of China. Maybe possibly,
Speaker 1: But we never saw the precipitous drop that some observers
Speaker 1: called for, even with the third and fifth waves of
Speaker 1: COVID variants or the shutdowns that really clamped down on
Speaker 1: my old hometown of Shanghai. Full were months on end
Speaker 1: the central government and ports, specifically the Young Shan Deep
Speaker 1: Seaport in Shanghai, prioritize their long haul cargo. That meant
Speaker 1: that our goods were gonna come in unabated. We saw
Speaker 1: a little bit of a dip, a little pick up,
Speaker 1: and obviously there were examples of what the lockdown meant
Speaker 1: a subassembly, manufacturing and transportation, but no real impact. I
Speaker 1: don't expect a crush of cargo coming our way either
Speaker 1: because of this reopening. No. Yeah. In fact, Bloomberg Business
Speaker 1: we put out a story and they have indicators for
Speaker 1: each port at the port of l a Um, Singapore,
Speaker 1: Hong Kong. All blow normal right now, which is strange,
Speaker 1: I guess with unless you consider the fact that everybody
Speaker 1: is looking towards a recession and there's a war um
Speaker 1: waging in Eastern Europe. Do you expect a pick up
Speaker 1: in three um? Do you think we need the war
Speaker 1: to and what's the story there? Well, there's a lot
Speaker 1: that's got to be fixed overall. Again in the supply chain,
Speaker 1: every day something happens that gives us pause or creates
Speaker 1: an ability for us to pivot and move forward. I
Speaker 1: read the article this morning coming off of the supply
Speaker 1: lines email that I get every day. Realistically speaking, what
Speaker 1: we see right now is that you had in the US,
Speaker 1: you had a lot of inventory and it was mismatched
Speaker 1: with us as consumers. Folks started buying just in case,
Speaker 1: no longer just in time. The warehouses in southern California,
Speaker 1: of which we boast two billion square feet are still
Speaker 1: filled to the gills. So this time of holiday season,
Speaker 1: trying to push out all of that excess inventory, in
Speaker 1: many cases at discounted levels and have a reset at
Speaker 1: the beginning of the year for a more normal omni
Speaker 1: channel distribution and proturement network. Seems to be what we're
Speaker 1: looking at right now. But again, folks are wringing their hands.
Speaker 1: Is it recession? Interest rates going up? With said due
Speaker 1: next There's a lot on our plate in that economic equation.
Speaker 1: All right, Jean, good stuff. As always, we always appreciate
Speaker 1: getting your thoughts here. Jean Stroka. He is the CEO
Speaker 1: of the Port of Los Angeles, giving a sense of
Speaker 1: kind of how things are going on supply chain route
Speaker 1: as we We've been talking to Jean all throughout this pandemic.
Speaker 1: We're all in on reading the billboard for Bild American
Speaker 1: Mutual and we're down there at their headquarters with with
Speaker 1: the CEO, John McCarthy here the CEO and Sean. Before
Speaker 1: we get into it, I just want to tell you
Speaker 1: a little story about Paul, my co host here. So
Speaker 1: he started in UH financial Services on Wall Street like
Speaker 1: the day after Black Friday in right great timing. And
Speaker 1: he's of the generation that wanted, you know, big paychecks
Speaker 1: and worked, uh you know, wake until sleep to get them. Um,
Speaker 1: no other life besides Wall Street and earning money. I
Speaker 1: asked somebody did with this first bonus because I figured
Speaker 1: most people like take their first bonus and go buy
Speaker 1: a roll lex or something. He bought Muni's very smart, exactly.
Speaker 1: Clipping coupons is what he does on the weekends. He
Speaker 1: just sits by the pool and clips his coupons eggs
Speaker 1: and it's been it's been a good ride. Build American Mutual, Sean,
Speaker 1: thanks so much for having us down here and your
Speaker 1: lovely offices down here in tour the Liberty Street. What
Speaker 1: do you guys do it? Build American Mutual? So we
Speaker 1: are municipal bond ensure. We're double A rated by standing
Speaker 1: in ports, and we guarantee, so you ensure municipal bond issuers.
Speaker 1: We don't you think of it this way. It's a
Speaker 1: little like if you have a child who's gone to
Speaker 1: college takes out a student loan. You want him to
Speaker 1: get a job, you want him to pay it back,
Speaker 1: but if he doesn't, you're on the hook because you've
Speaker 1: co signed the loan. Think, Okay, what what we're doing
Speaker 1: is we're guaranteeing to make sure that timely payment of
Speaker 1: principle and interest when due. For the investors, well, I
Speaker 1: know where my guys sleep at night, so if they
Speaker 1: don't pay anywhere to find him talk to us about
Speaker 1: the municipal bond market. Um, just today, it's been such
Speaker 1: a rough year for fixed income, double digit declines across
Speaker 1: the entire fixed income space. Talks about the musical bond market.
Speaker 1: So I think right now it's a tale of two markets. Uh.
Speaker 1: This year, there was a hundred um uh billion dollars
Speaker 1: of outflows from the municipal market in the first part
Speaker 1: of the year, and that's really a transition from very
Speaker 1: low interest rates of last year in the beginning of
Speaker 1: this year to hire interest rates now. And so what
Speaker 1: we're seeing at this moment as a re entry of
Speaker 1: municipal investors back into the market. And I have to think,
Speaker 1: what does the municipal market do. It finances eighty percent
Speaker 1: of essential infrastructure. So when you think about infrastructure, it's
Speaker 1: state and local governments that are financing that. There are
Speaker 1: right now four trillion dollars of municipal bonds that are outstanding,
Speaker 1: and and and of that, if you just try to
Speaker 1: put a sense for whom who buy? Who are the
Speaker 1: issuers there? They are state and local governments. They're fifty
Speaker 1: thousand individual issuers state and local governments, which means that
Speaker 1: there are you know, about five times the total number
Speaker 1: of different issuers than there are in the New York
Speaker 1: Stock Exchange in the NASTAC put together. So it's a
Speaker 1: huge mark it but it's also one that is traditionally
Speaker 1: very staid. Right. Um, towns and cities are gonna always
Speaker 1: have financing needs, They constantly need to issue debt um
Speaker 1: and they rarely default. And then when you step in
Speaker 1: and ensure their bonds, investors can be sure they're not
Speaker 1: going to default or if they do, you know you'll
Speaker 1: catch them fall. So um, that's a hunder percent, right,
Speaker 1: I mean, really, what we're focused on is, uh two things.
Speaker 1: Essential public purpose is state and local governments issuing for hospitals, bridges, tunnels, roads, um,
Speaker 1: and and that they don't default often. But what we're
Speaker 1: doing is three things, credit default protection, greater liquidity for
Speaker 1: those municipal bonds, and greater price protection. So those bonds
Speaker 1: traded a more stable level. But what I'm getting at
Speaker 1: those there's typically not so much volatility. This has been
Speaker 1: a very odd year for muni's, right, has been for
Speaker 1: the whole market, But traditionally muni's trade a little bit
Speaker 1: differently than definitely corporate debt and even treasuries. That's correct, UH,
Speaker 1: and that's really because if you think about who are
Speaker 1: the buyers of municipal bonds, it's households. It's mutual funds
Speaker 1: that represent households. So it's people who are buying UH
Speaker 1: bonds that have a long UH maturity, and so they're
Speaker 1: doing that for their portfolios for greater stability and and
Speaker 1: less volatility than other potential investments like equities. So during
Speaker 1: this pandemic, we've seen coming out of Watchington a big
Speaker 1: infrastructure bill, and I'm guessing a lot of that's got
Speaker 1: to be financed in the municipal bond market. Have you
Speaker 1: started to see activity tied with that at all or
Speaker 1: is that something still to come. So I think the
Speaker 1: past at one point one trillion dollar package, but the
Speaker 1: bipartisan bill, and I think what's going to happen in
Speaker 1: the municipal bond market is a lot of those programs
Speaker 1: are match funded. So if you think about if you're
Speaker 1: gonna borrow to repair your roads and it's repaired just
Speaker 1: as much as build new things. If you think about
Speaker 1: really what's going on UM from New York City, well,
Speaker 1: they's an opportunity. Yeah, So if you think about how
Speaker 1: much UH gets to be invested UM, the federal program
Speaker 1: is a matched fund program, so that if you want
Speaker 1: to borrow fifty million dollars from that program, you're gonna
Speaker 1: issue fifty million dollars worth of municipal bonds in order
Speaker 1: to make that project a reality. And so right now
Speaker 1: that money has been approved, it's now just starting to
Speaker 1: roll out into the market. And so my our estimation
Speaker 1: would be that that that activity will really take hold
Speaker 1: in the next couple of years. But this means so
Speaker 1: I have always thought or or this year, you know
Speaker 1: now that these municipalities are so cash rich, maybe they
Speaker 1: don't need to issue as many bonds. But you're saying
Speaker 1: that a lot of that money came with issuance UH concurrent.
Speaker 1: So think about it this way. What's happened this year,
Speaker 1: particularly for for volume is UH. It's about three hundred
Speaker 1: and sixty billion dollars volume of issuance this year, Um,
Speaker 1: they're virtual. No refinancings, so normally about the market or refinancings.
Speaker 1: As interest rates have gone up, refinancings have gone down.
Speaker 1: But the important thing to remember is that essential projects
Speaker 1: still have to be built, Existing facilities have to be repaired,
Speaker 1: and so the market has a steady issuance going forward,
Speaker 1: and we project that that's going to be the same
Speaker 1: for the next you know, five ten years. As a
Speaker 1: former banker, I've always told companies, you know, borrow when
Speaker 1: you can, raise capital when you can, and not when
Speaker 1: you need it. But it's not necessarily the case in
Speaker 1: municipal bond space. There they don't market time. It's is
Speaker 1: my understanding. They raise money when they need it, correct,
Speaker 1: you know, So as you look at can you do
Speaker 1: you have the municipality saying I'm going to issue in
Speaker 1: three for a bridge that we're building. Did they did
Speaker 1: they give you that kind of visibility or is it
Speaker 1: there's a long term process in order to come to
Speaker 1: the market for for new for large new projects. So
Speaker 1: if you think about any town, a town in Connecticut,
Speaker 1: a town in Nevada, when they decided they're going to
Speaker 1: build a new town hall or they're gonna put in
Speaker 1: new sidewalks. They go through a planning process, they go
Speaker 1: through the approval process. Remember these things are paid from
Speaker 1: taxes at a local level, so they go through an
Speaker 1: approval process, they design what they're going to build, and
Speaker 1: then they issue the bonds. In most circumstances, municipalities have
Speaker 1: a financial advisor that represents them and putting the transaction together,
Speaker 1: and then they hire an underwriter UM, you know, like
Speaker 1: City Bank or or Bank of America to uh, you know,
Speaker 1: bring those bonds to market and sell them to investors.
Speaker 1: So if you're ensuring an issue, do you guys have
Speaker 1: to perform credit analysis yourself to decide how much your
Speaker 1: charge for that? Absolutely. The vast majority of the people
Speaker 1: you see here are our credit analysts, and so we
Speaker 1: spend all of our time, our credit committee needs every year,
Speaker 1: every day think about what's happening. So what we're doing
Speaker 1: is UM making a credit decision to guarantee the bond.
Speaker 1: And I think about it this way. Our kind of
Speaker 1: insurance is unique because we don't you know, there is
Speaker 1: no waiver. We pay first and then mitigate later so
Speaker 1: that the investor knows they're going to get their payment
Speaker 1: when when they expected to get it, and that's fundamentally
Speaker 1: important to what we do. So our process of not
Speaker 1: only underwriting the transactions when they come to market, but
Speaker 1: surveiling them UH is an important part. So we we
Speaker 1: watch those municipal bond issues um until they mature. And
Speaker 1: that's something that the investors can take comfort in and frankly,
Speaker 1: the issuers take comfort in. Historically, have you guys done
Speaker 1: in terms of losses or just risk from these questions?
Speaker 1: So we've been in business eleven years. I've been in
Speaker 1: in the bonding trans business for a very very long time.
Speaker 1: We have issued a hundred and fifteen billion dollars worth
Speaker 1: the transactions. We've had no default. I'll take that. So
Speaker 1: that's some good credit analysts around here. I'm surrounded by
Speaker 1: these sharp credit analyst guys. Good stuff, all right, Sean,
Speaker 1: thanks so much for having us here. Sean McCarthy, he's
Speaker 1: build American Mutual, he's a chief executive officer. We never
Speaker 1: got to ask about work from home. We gotta talk
Speaker 1: to him during the break because I gotta know if
Speaker 1: all these guys came in today just because we're here
Speaker 1: just to see us to three days a week everybody's
Speaker 1: in the office. That's kind of where we're rotated around.
Speaker 1: And that's the thing. And the one final thing I
Speaker 1: just mentioned is that we're a mutual. So the people
Speaker 1: who are are stakeholders and own the company are the
Speaker 1: five thousand municipalities that have taken our insurance. Okay, that's important,
Speaker 1: that's important. All right, good stuff, all right, Sean McCarthy,
Speaker 1: great stuff. Built American Mutual Chief a bacont of officer. Bam,
Speaker 1: there you go, thanks for being here. Let's talk about
Speaker 1: municipal finance financing big cities, and boy, there's not too
Speaker 1: many bigger than the City of Chicago. Jenny Kwang Bennett
Speaker 1: joins us. She's a chief finance officer for the City
Speaker 1: of Chicago. Jenny, thanks so much for joining us here
Speaker 1: at the Build American Mutual Offices. Talk to us about
Speaker 1: the financial situation, the financial health, the financial um, you know,
Speaker 1: outlook for the city of Chicago. Great city, one of
Speaker 1: the America's great cities. Talked to us about Chicago. Sure, absolutely,
Speaker 1: and thank you for having me. Always happy to talk
Speaker 1: about the city of Chicago and its financial turnaround. Um,
Speaker 1: you don't have to take my word for it. Although
Speaker 1: I will speak to some of the financial improvements at
Speaker 1: the city, but very importantly, the City of Chicago has
Speaker 1: achieved ten rating upgrades across various credits at the City
Speaker 1: of Chicago plus two outlook upgrades UM too Positive over
Speaker 1: the last four months, and it's a demonstration of the
Speaker 1: financial turnaround that the city is in right now. The
Speaker 1: upgrades have spanned the city's GEO STSC credit UM, the
Speaker 1: Airport credit, the water and Sewer credits UH, the o'hared
Speaker 1: midway credits, and all of that for the first time
Speaker 1: in six to twelve UM. It's a lot of financial
Speaker 1: improvement at the city. In particular, the corporate fund credit
Speaker 1: UM has seen structural balance now UM for the first
Speaker 1: time in decades. We have climbed a pension ramp that
Speaker 1: has included one point eight billion dollars and increased UH
Speaker 1: pension funding over the last three years. And very importantly,
Speaker 1: we have found a way to do all of that
Speaker 1: in the midst of a pandemic. And so it's a
Speaker 1: very important turnaround for the city in terms of all
Speaker 1: of the financial metrics that rating analysts follow on a
Speaker 1: regular basis. UM. Very importantly, we've also climbed our debt ramp,
Speaker 1: which allows us to advertize somewhere between three hundreds of
Speaker 1: four hundred million dollars in principle a year. UM. That's
Speaker 1: reduced our overall debt burden by three quarters of a
Speaker 1: billion dollars UM over the last three years. And by
Speaker 1: way of perspective, the City of Chicago has twenty six
Speaker 1: billion dollars of debt outstanding. UM. In general, we are
Speaker 1: one of the top ten issues and municipal debt in
Speaker 1: the market. And so UM, it's a there's a There
Speaker 1: are a lot of financial metric improvements that have occurred
Speaker 1: over the last three years, in particular during Mayor Lightfoots administration, UM,
Speaker 1: but also over the course of decades for the City
Speaker 1: of Chicago that has led to this moment where UM,
Speaker 1: we're getting recognition across the board by the rating agencies.
Speaker 1: So no more junk UH debt for the City of Chicago,
Speaker 1: and you've found ways to make an impact socially right
Speaker 1: in term of your debt issuance. Yes, absolutely, um, So
Speaker 1: to your point, Moody's has upgraded us to investment grade,
Speaker 1: and so now the City of Chicago is investment grade
Speaker 1: across all of its credits UM. In addition to that,
Speaker 1: because of the fact that we climbed our debt ramp
Speaker 1: and because of the fact that we've climbed our pension ramp,
Speaker 1: cleared our deferred liabilities, were now able to make historic
Speaker 1: investments in the City of Chicago. UM. There are three
Speaker 1: main investment plans. There's the Chicago Recovery Plan, which is
Speaker 1: one point two billion dollars making some of the most
Speaker 1: historic progressive investments in the city, including the Vacant Law
Speaker 1: Investment Program UM, Affordable Housing, Fleet Decarbonization UM, so on,
Speaker 1: and so forth. There's the Invest Southwest Program, which makes
Speaker 1: two billion dollars of economic development investments in South and
Speaker 1: West Side neighborhoods, largely low income neighborhoods in Chicago. And
Speaker 1: then there's a Chicago Works Program, which is our deferred
Speaker 1: capital maintenance program, streets lighting, UM, typical infrastructure investment. All
Speaker 1: told that six billion dollars of investments that we're making
Speaker 1: and UH. Within that, we've selected a number of projects
Speaker 1: that will make up our inaugural Social Impact Bond issuance,
Speaker 1: which will be coming UM in the next month or so.
Speaker 1: So in the last several years, we've seen some big
Speaker 1: corporate UM residents of Chicago leaves Citadel Boeing talk to
Speaker 1: us about the challenges you as a city have in
Speaker 1: kind of trying to attract and retain UH corporate residents.
Speaker 1: You know, big, big, big companies. Sure, so I would
Speaker 1: offer that UM, although you know we UM, you know
Speaker 1: are stating by the loss of those firms that you
Speaker 1: mentioned in particular UM, the number of jobs impacted our
Speaker 1: very smallest compared to the total number of jobs that
Speaker 1: we've increased over the course of the last few years,
Speaker 1: in particular in the midst of the pandemic. So the
Speaker 1: city of Chicago has seen a hundred and seventy one
Speaker 1: pro Chicago decisions, which we define as headquarters UM or
Speaker 1: corporate relocations that increase their presence in the city of Chicago,
Speaker 1: and that's created around twenty thousand new jobs and which
Speaker 1: then themselves creates another thirty thousand jobs. Some notable recent
Speaker 1: editions includes Google, who has UM add at a new
Speaker 1: UM facility to their existing facility in the west Loop
Speaker 1: that will generate thousands of new jobs for the city.
Speaker 1: Uh kellon UM has announced that they're moving their largest
Speaker 1: division to the city of Chicago, which is their snack
Speaker 1: division around the about eleven billion dollars of revenue and
Speaker 1: then um in addition to that, we also had Kimberly
Speaker 1: Clark make a major corporate relocation as well as UMU
Speaker 1: as as well as Discover, who put their largest call
Speaker 1: center in one of our South Side neighborhoods. Which it
Speaker 1: like working with Illinois because I'm assuming, uh, some of
Speaker 1: the Leavers had concerns about the state more than the
Speaker 1: city of Chicago. Um So, the city of Chicago is
Speaker 1: the largest economic engine within the state of Illinois, and
Speaker 1: we provide a lot of a lot of revenue to
Speaker 1: the state. UM. We did just pass the casino as well,
Speaker 1: which will generate significant value to the state and to
Speaker 1: the city somewhere around five billion dollars in total. Um So,
Speaker 1: there are a lot of ways that we contribute to
Speaker 1: the state. UM. You know, we also spent a lot
Speaker 1: of way. There's going to be a casino in Chicago. Yes,
Speaker 1: there's a new casino in Chicago. It's been authorized. It's
Speaker 1: roundly about a hundred million dollars a year in revenue
Speaker 1: to the city. Um uh. And then another um you know, uh,
Speaker 1: two hundred million or so in revenue to the state
Speaker 1: of Illinois. Talk to us about the crime situation in
Speaker 1: Chicago and how what kind of headwinds that presents to
Speaker 1: the city and kind of what's the administration's planned to
Speaker 1: try to address that. We have, you know, similarsus here
Speaker 1: in New York City, but Chicago seems to get a
Speaker 1: lot of attention. UM So what we're experiencing in terms
Speaker 1: of public safety trends is not dissimilar from what a
Speaker 1: lot of other urban areas face. Um you know. We
Speaker 1: know in the city of Chicago that there has been
Speaker 1: historic segregation, UM and disinvestment in largely low income neighborhoods.
Speaker 1: And so that's why one of the um UH investments
Speaker 1: that we started out with, even before the investment investment
Speaker 1: plans I just mentioned, um you know, was about making
Speaker 1: deeper investments in South and West side neighborhoods in order
Speaker 1: to try to write some of those historic wrongs. What
Speaker 1: that means by way of public safety is that we're
Speaker 1: making the investments that create wrap around services that addresses
Speaker 1: the root causes of violence. So rather than taking a
Speaker 1: policing approach which we know will have immediate impact but
Speaker 1: ultimately won't create transformative change for those neighborhoods. We're taking
Speaker 1: that broader citywide, whole of government approach. What's that? What
Speaker 1: that's resulted in in the top fifting communities that have
Speaker 1: over of the crime in the city of Chicago, Dave
Speaker 1: Steen somewhere between a thirty and fifty percent reduction in crime,
Speaker 1: in particular by way of homicides and shootings, And so
Speaker 1: we know the approach is working. UM. You know, we
Speaker 1: are also working on ramping up recruiting efforts for the
Speaker 1: police department. In the most recent budget we passed, there
Speaker 1: was a hundred million dollars of additional public safety investments
Speaker 1: for UM the police department. In particular. UM there are
Speaker 1: new cell phones being provided to all patrol officers, who
Speaker 1: will then UM have a more efficient way of being
Speaker 1: able to receive calls and understand where calls of service
Speaker 1: have been, file reports in the field. And so a
Speaker 1: lot of investment is being made into in terms of
Speaker 1: both UM direct public safety investments as well as whole
Speaker 1: government investments to help support the public safety in Chicago.
Speaker 1: So I think it's interesting that you're not just in numbers, CFO,
Speaker 1: You're invested in making a difference socially the public schools
Speaker 1: for the cf OF was the CFO of the public schools.
Speaker 1: I think one of the most interesting things about municipal
Speaker 1: finance in general is that what we do is ultimately
Speaker 1: not just about the numbers, but how the math and
Speaker 1: the money ultimately creates investments. UM. I said this in
Speaker 1: a recent speech, where ultimately what we do by way
Speaker 1: of financial stability is so important because it pays for
Speaker 1: the investments that we make. And so the point I
Speaker 1: made earlier about the fact that we've paid down three
Speaker 1: quarters of a billion dollars in debt and are now
Speaker 1: paying down our debt to the tune of three to
Speaker 1: four hundred million a year, those are now investments that
Speaker 1: we can make through the through the various investment programs
Speaker 1: at total about eight billion dollars, we are making some
Speaker 1: of the most historic investments in the City of Chicago
Speaker 1: without increasing our debt burden. And that's because of the
Speaker 1: fact that we have financial stability and a way to
Speaker 1: pay for these investments. Because he knows, by the way,
Speaker 1: I have long been away of raising money UM for municipalities.
Speaker 1: Now there's weed, and I wonder what you think about that,
Speaker 1: because it's legal in Illinois, right, and you must be
Speaker 1: able to generate significant revenue. Um. Does that some of
Speaker 1: that go to Chicago or is it all to the state?
Speaker 1: How's that work? So the majority of the money does
Speaker 1: go to the state. We do see some of that money,
Speaker 1: uh come to us for public safety. The amount isn't large,
Speaker 1: but we do receive some portion of money, UM by
Speaker 1: way of casinos. Um. You know, it is going to
Speaker 1: generate significant revenue for our police and fire pension funds.
Speaker 1: But in addition to that, it's already happening. Um, it's
Speaker 1: all going to Indiana at this point. And so the
Speaker 1: Chicago casino we expect will Repaytriot approximately a hundred ninety
Speaker 1: million dollars of gaming activity back to the city UM,
Speaker 1: which ultimately allows us to pay for Illinois essential services
Speaker 1: as opposed to essential services in other states. All right,
Speaker 1: great stuff, Jenny Wonk Bennett, chief Financial Officer for the
Speaker 1: City of Chicago, joining us. Live here at our Build
Speaker 1: America Mutual Headquarters. Maybe we are back in the Build
Speaker 1: American Mutual Headquarters in lovely Lower Manhattan. I've been I
Speaker 1: spent a lot of my career down here. There's some
Speaker 1: good folks down here. We're talking municipal bonds. We're talking
Speaker 1: muic bond market. We've got some pros here at the table,
Speaker 1: literally at the round table. Glenn McGowan, he's coheaded municipal
Speaker 1: Underwriting at RBC Capital Markets and kind of dank head
Speaker 1: of municipal trading at City. Uh. They're here. They're all
Speaker 1: in on this municipal bond market. Guys, thanks so much
Speaker 1: for joining us. Really appreciate it. Glenn. Let's just start
Speaker 1: with you, Um, what are municipalities doing? Are they? Are
Speaker 1: they active this year? I mean, there's been such a
Speaker 1: brutal year in the fixed income markets. But what have
Speaker 1: your clients been telling you about maybe their appetite for
Speaker 1: getting into this market. Yeah, sure, Paul, good, good question.
Speaker 1: I would say that, you know, in general, it's been
Speaker 1: a very light year in terms of supply. You know,
Speaker 1: we're coming off of the lightest month of November since
Speaker 1: n and you're to date issuance right now right around
Speaker 1: three hundred and sixty billion, that's down about eighteen percent
Speaker 1: year over year. And I think, you know, for a
Speaker 1: good chunk of this year, governmental issuers were indicating that
Speaker 1: tax or ce were strong and a fair amount of
Speaker 1: federal aid was still sitting on their balance sheets, and
Speaker 1: so the need to access the capital markets was was reduced.
Speaker 1: And I think you have some other sectors that have
Speaker 1: been accessing capital and in different formats. A lot of
Speaker 1: healthcare issseurs have been resorting more to private placements. And
Speaker 1: so the net effect of that, and when you think
Speaker 1: about the increase in interest rates over the course of
Speaker 1: this year, you know, you've had less taxable refunding activity.
Speaker 1: The net result of all that is a significantly lower
Speaker 1: pace of issuance over the course of this year. So,
Speaker 1: as I mentioned about three hundred and sixty billion of
Speaker 1: total issuance, what's interesting is if you net out about
Speaker 1: twenty one and a half billion of private placements, you know,
Speaker 1: you're looking at about three hundred and thirty nine billion
Speaker 1: of publicly issued municipal bonds so far this year. Was
Speaker 1: that compared to you know, the the pace of privates
Speaker 1: is fairly consistent with last year. I think it was
Speaker 1: about twenty two billion or some. I mean overall, what
Speaker 1: were you seeing in one or if we saw three
Speaker 1: sixty this year, is that a lot or a little? Yeah,
Speaker 1: it's it's it's a little. We were in the kind
Speaker 1: of mid fours in the last two years for sure,
Speaker 1: And so as we project ahead to next year, you know,
Speaker 1: with this interest rate environment being I think fairly consistent,
Speaker 1: and you can certainly build a case that as the
Speaker 1: Fed eventually wraps up its tightening process in the first
Speaker 1: quarter and the first quarter of next year, UM, you know,
Speaker 1: and and with economic growth expected to start to move
Speaker 1: into some sort of a recession, that you could you know,
Speaker 1: you could make a case pretty easily for marginally lower
Speaker 1: rates by the end of next year. But we're anticipating
Speaker 1: a pretty consistent pace of issuance as we move into
Speaker 1: next year. So a little scarcity there. You run Glenn
Speaker 1: Underwriting at RBC, having you run Muni Trading at City,
Speaker 1: what does that scarcity mean for your business? Thanks for
Speaker 1: having me a great question. Uh, you know, the primary
Speaker 1: supply being lower has certainly I think helped to mitigate
Speaker 1: some of the challenges we've seen in the market this year. UM.
Speaker 1: The main uh headwind for us really has been the
Speaker 1: mutual fund outflows that have really been UM consistent throughout
Speaker 1: the course of the year. We're going on. UM. I
Speaker 1: think it was forty four weeks of consecutive outflows out
Speaker 1: of mutual funds UM, which UM you know has certainly
Speaker 1: uh provided a head wind. UM. So the fact that
Speaker 1: there hasn't been a huge primary acclendar to kind of
Speaker 1: compete with the selling that mutual funds have had to
Speaker 1: do UM has helped the secondary function probably a little
Speaker 1: more smoothly. Why are those outflows happening? Is it tax
Speaker 1: loss harvesting or are people converting to E T F
Speaker 1: s U great question. I think you probably have to
Speaker 1: dimension a little bit beginning of the year versus now.
Speaker 1: I think initially, uh, you know, January, February, March April,
Speaker 1: I think it was driven largely by uh, inflationary concerns.
Speaker 1: I think UM a FED that was hawkish than it
Speaker 1: had been in quite some time. You know, you had
Speaker 1: Chairman Pale throughout one saying that inflation was transitory. UH.
Speaker 1: It was pretty clear early in two that was not
Speaker 1: the case, and he really dialed up the hawkish DRICK.
Speaker 1: So I think earlier in the year it was a
Speaker 1: function of fear more than anything just rising rates. UM.
Speaker 1: I think as we've transitioned later in the year, I
Speaker 1: think you're probably seeing more of that tax laws selling, UH,
Speaker 1: some of that money is probably going into e t
Speaker 1: f s as you mentioned, I think some of that's
Speaker 1: probably also going into direct retail. You just buying municipal
Speaker 1: bonds direct off the screens because you know those those
Speaker 1: securities are offering significantly more yield than they've offered him
Speaker 1: quite some time, especially on the longer end of the curve. Hey, Glenn,
Speaker 1: tell me about the underrating side of the business. Do
Speaker 1: your bankers sit at there in their offices and pick
Speaker 1: up the phone when a municipality says I need to
Speaker 1: build a bridge, or are you guys out there pitching business.
Speaker 1: Do you go to, like, I don't know, the city
Speaker 1: of Camden, New Jersey and say, boy, you guys need
Speaker 1: to pay of your roads. Here's a bond. So I
Speaker 1: would say that most of the bankers that that we know,
Speaker 1: and most of the bankers that the large firms are
Speaker 1: out pitching constantly, and it's it's not really just about
Speaker 1: trying to find the next deal, but trying to be
Speaker 1: thoughtful about, you know, their client subjectives. In the context
Speaker 1: of the capital markets, where can you finance infrastructure? Where
Speaker 1: can you build out a hospital project? You know, how
Speaker 1: can you manage your your obligations to the public and
Speaker 1: provide the goods and services that are necessary in the
Speaker 1: context of the market. And so you know, most of
Speaker 1: the bankers that we work with are are constantly you know,
Speaker 1: out coming up with ideas, pitching those ideas to clients
Speaker 1: and their advisors. Uh. You know, but I think there's
Speaker 1: a certain subset of the issue where base right now
Speaker 1: that just doesn't have as much need for capital. Now
Speaker 1: that could change as we head into a rocky economic
Speaker 1: environment next year. Um, you know, And I think you
Speaker 1: can also make a case that with gridlock in Washington,
Speaker 1: d C. Split control of Congress, you know, we're probably
Speaker 1: not going to get much help out of the federal
Speaker 1: government in terms of financing infrastructure. So that could be
Speaker 1: another area that may be you know, shouldered by state
Speaker 1: and local governments in terms of needing to Kevin, I'm
Speaker 1: a big trader of municipal bonds. I've got a huge portfolio.
Speaker 1: I need to unload some city of Cherry Hill bonds.
Speaker 1: I come in to your trading desk. What kind of
Speaker 1: market you can make for me? You get liquidity to
Speaker 1: really step up and get my trade done? Oh yeah, absolutely,
Speaker 1: it's this Cherry Holl New Jersey, Yeah, Jersey, So yes,
Speaker 1: absolutely for Cherryhill. Uh yeah, we um, we take a
Speaker 1: lot of risks in the municipal space. Are balance she
Speaker 1: you know, generally speaking, UM runs well in excessive a
Speaker 1: billion bonds. So um, we're active on a daily basis, UM,
Speaker 1: whether it's the kind of microlot space ten twenty pound
Speaker 1: pieces all the way up to block size tens twenties
Speaker 1: and uh you know, so we are. We're in the market,
Speaker 1: we're active and um, you know it's been it's been
Speaker 1: a fun year to trade. Frankly, volatility makes things a
Speaker 1: lot more interesting. Yeah. Absolutely, So what's next year look like?
Speaker 1: I mean, after the ridiculously terrifying screens that we had
Speaker 1: to look at all year, you know, I end go
Speaker 1: on the Bloomberg shows, the massive losses all the way
Speaker 1: across fixed income, UM, is next year better? I think so? Personally.
Speaker 1: I mean, you know, when you look at the muni market,
Speaker 1: it's actually been been pretty stable overall since about May
Speaker 1: of next year. UM, So the first four months or
Speaker 1: so it was really um where the vast majority of
Speaker 1: the pain took place, and and the meaning market the
Speaker 1: one thing it's it's pretty good at, is it can
Speaker 1: adjust pretty violently to get to valuations at which people
Speaker 1: are going to step in to buy it. And and
Speaker 1: that's really what I would say happen in April May
Speaker 1: as we got to yield levels where you know, you
Speaker 1: could buy longer dated paper twenty to thirty year final
Speaker 1: maturity usually ten year calls double ayer better rated, uh
Speaker 1: anywhere from a four to four and a half yield,
Speaker 1: which you know, if you're in a high tech state
Speaker 1: like New York in a high tax bracket, you know
Speaker 1: you'd be talking about taxable equivalent yields of eight to
Speaker 1: nine percent even in lower tax states and uh you know,
Speaker 1: um lower tax brackets that you're still talking five and
Speaker 1: a half to seven and a half percent on a
Speaker 1: taxable equivalent basis for super high quality assets. You know,
Speaker 1: that's a pretty compelling return for for retail investor. Football
Speaker 1: your ball, your bond still getting called uh no, not
Speaker 1: as much, but they were getting because this summer you
Speaker 1: were like crying about it every day. I mean, you know,
Speaker 1: and then I got to go to the block desk
Speaker 1: at city. I'm not going to the retail desk to
Speaker 1: move my moon. Um so Glenn Infrastructure Act. It was
Speaker 1: like a jillion and one dollars. How do you guys
Speaker 1: think about that as a strategy for the next couple
Speaker 1: of years in terms of talking to your clients, Presumably
Speaker 1: they're gonna be having opportunities to fund maybe more projects
Speaker 1: than they thought. Yeah, I think the burden of financing
Speaker 1: public infrastructures, as I mentioned before, we're gonna be shouldered
Speaker 1: more and more by our issuer base. I have been
Speaker 1: a little bit underwhelmed by some of the provisions in
Speaker 1: the various legislation that's passed in terms of what it's
Speaker 1: done for the municipal bond market. Simple things that could
Speaker 1: have provided relief valves for our issue where base tax
Speaker 1: exempt advance for fundings that never really happened. Uh, you know,
Speaker 1: a reintroduction of the BABS like program never really happened.
Speaker 1: And so I think the burden is going to continue
Speaker 1: to be shoulder by our issue where Base. I think
Speaker 1: that could you know, lead some to conclude that maybe
Speaker 1: you see an uptick and issuance, but are our thought
Speaker 1: for next year is kind of a stable billion dollar
Speaker 1: type of total supply type environment. It's hard to see
Speaker 1: in this economic environment, in this rate environment that dramatically changing,
Speaker 1: at least in our view. How do you work with BAM.
Speaker 1: By the way, when you're talking to an issuer, um,
Speaker 1: how do you partner up with the two of them? Sure,
Speaker 1: so you know, BAM provides credit enhancement for our issue
Speaker 1: where base and so the net result there is issuers
Speaker 1: purchasing insurance in the new issue market to buy down
Speaker 1: a lower yield. We also use it in the secondary
Speaker 1: market sometimes we have investors that want to ensure a bond,
Speaker 1: whether it's for a portfolio defense strategy or for a
Speaker 1: for you know, for more tactical trading strategy. So we're
Speaker 1: frequent counterparts with BAM and the new issue market. In
Speaker 1: the secondary market, it's all about trying to find value
Speaker 1: for credit enhancement and we've been pretty active in that regard.
Speaker 1: All right, folks, thanks so much for joining us here.
Speaker 1: We had Glenn McGowan, co head of Municipal Underwriting an
Speaker 1: RBC Capital Markets, and Kevin Dankworth. He's had a municipal
Speaker 1: trading at City. Has to be just a joy of
Speaker 1: a day for you. I mean, we're doing nothing but
Speaker 1: municipal bonds, no cars, you know, none of that crypto
Speaker 1: stuff we're talking munsiccible bonds. But it's honestly, it's heaven
Speaker 1: for you, isn't it It is? It's great. All goes
Speaker 1: home and he just swims in the pool full municipal bonds.
Speaker 1: He's been building it up ever since he was a
Speaker 1: little kid. The first thing he asked for for Christmas.
Speaker 1: I wanted a red Rider BB gun and Paul wanted
Speaker 1: municipal bonds and the coupons that I can clip. Eric
Speaker 1: Kazaski joins his He's senior US missible strategist. He's here
Speaker 1: at Bloomberg Intelligence. Chris Spergotti Managing Director and Senior VP
Speaker 1: of Municipal Investments at Valley National Bank. These guys are
Speaker 1: live here at the Build American Mutual headquarters here in
Speaker 1: Lower Manhattan. Eric, thanks which and uh, you know, Chris,
Speaker 1: thanks so much for joining us here. Eric, man, you
Speaker 1: guys have had a brutal year in municipals. Maybe not
Speaker 1: as bad as some other spots and fixed income, but
Speaker 1: assuming clients actually pick up the phone when you call,
Speaker 1: what are they saying about three? Well, I think they're
Speaker 1: excited based on the last thirty forty five days, right,
Speaker 1: We've had four and a half five percent returns. But
Speaker 1: I think the real spot high old Muni's almost six
Speaker 1: and a half returns over the last thirty five days,
Speaker 1: pretty good start to head into three and there's a
Speaker 1: little bit of runway there for a positive performance. How
Speaker 1: does high yield munies work? Are they still backed by
Speaker 1: Build America Mutual? Because I feel safe in case you
Speaker 1: should feel safe. But I think that there are probably
Speaker 1: things that maybe like some of the insurance companies really
Speaker 1: don't want to touch because there's a lot of hair
Speaker 1: on some of these deals. Look take American Dreams Mall,
Speaker 1: for instance, right tapping into the reserves once again. At
Speaker 1: some point they're going to run out of reserves to
Speaker 1: tap right, But that means more risk, more spread for
Speaker 1: investors who are willing to sort of wait in there.
Speaker 1: I've still never been there. Our next remote we have
Speaker 1: to go to the American dream Mall. When when you
Speaker 1: look at um A bond and and issuance, what do
Speaker 1: you guys look for, Like, what's your criteria? Typically? I
Speaker 1: mean generally what we're doing is sticking to the higher
Speaker 1: investment great stuff. For most of the things that we do,
Speaker 1: we're looking for something that's liquid enough that we can
Speaker 1: turn around and get some velocity in terms of selling
Speaker 1: it and trading and generating a little bit of revenue
Speaker 1: in the short term as well. It ultimately comes down
Speaker 1: to quality qualities. Job one. You know, keep it liquid,
Speaker 1: keep it something people will be willing to put their
Speaker 1: money into and feel safe about. Um. If we kind
Speaker 1: of step out into the uncomfortable land of high yield,
Speaker 1: sometimes it gets a little sketch here and it's a
Speaker 1: little bit of a different trade, which is fine. You
Speaker 1: just got to kind of be aware of that and
Speaker 1: know what you're doing. So you're at Valley National Bank,
Speaker 1: Lovely Wayne, New Jersey. Do you fight missial bonds like
Speaker 1: all over the country or yes, yes, your National National.
Speaker 1: We don't care where. We just happen to be located
Speaker 1: in Jersey. Okay. So, and when you look at a
Speaker 1: bond out there, I mean does that have to have
Speaker 1: a certain rating, does that have to have a certain
Speaker 1: criteria or I mean it's something they're insured. Yeah, it
Speaker 1: helps definitely. Like like when when I look at a company,
Speaker 1: if I want to do business with it, I I
Speaker 1: spent a lot of time with management, for example, But
Speaker 1: you don't necessarily do that with bond. You just kind
Speaker 1: of look at the ratings some financials. Rings. You look
Speaker 1: at some financials, you want to do a little deep
Speaker 1: dive and understand where the revenues are coming from. Is
Speaker 1: it a geo what is the what is the collection
Speaker 1: has been on a geo debt with regard to tax
Speaker 1: is uh in the past two year period. For argument's sake,
Speaker 1: it's looking at the sales tax revenue. How do those
Speaker 1: sales Texas collections look? You know, you kind of look
Speaker 1: through and read through debt coverage ratios, kind of some
Speaker 1: of the boring stuff that's lessening. I mean, we just
Speaker 1: talked to Jenny Wong Bennett. She's the CFO for the
Speaker 1: City of Chicago, and previously you would have been like, okay, Um,
Speaker 1: Illinois like the most corrupt state in the entire country,
Speaker 1: even giving New Jersey a run for its money, right,
Speaker 1: and um, all of these businesses are just moving out
Speaker 1: like gangbusters going down to Florida, are going um to
Speaker 1: other states? Who who who? I moved out? Bowing and yeah,
Speaker 1: but a bunch of moving back in. So yeah, and
Speaker 1: now it's starting to look good, at least from what
Speaker 1: we hear uh from Jenny. Um, they're just climbing back
Speaker 1: up the ladder. They don't have any junk anymore. So
Speaker 1: do you like Chicago? I like it for a trade.
Speaker 1: I don't like it for a longer term. I'm still
Speaker 1: worried about the pension situation there. There there pensions. They've
Speaker 1: they've righted that ship. There's some challenges down the road
Speaker 1: they can still occur. Um. I think they weathered this
Speaker 1: tour very well with getting money through COVID from the
Speaker 1: federal government. Um. But that train is gonna stop arriving
Speaker 1: at the station and they've got to make sure that
Speaker 1: they got their ducks in a row. Isn't that this
Speaker 1: case with every major city? Don't all gigantic cities have
Speaker 1: huge pension of the underfunded pension obligations. Look, and we're
Speaker 1: just seeing this right outside of Philadelphia. City of Chester, right,
Speaker 1: they just declared bankruptcy because of their pensions. But I
Speaker 1: think that's sort of more the not the norm. You know,
Speaker 1: Chris is a little worried about Chicago. I'm less worried.
Speaker 1: I think they're going to figure out a way to
Speaker 1: keep kicking that can down the road, and it's gonna
Speaker 1: be something we're still gonna be talking about thirty years
Speaker 1: from now Chicago. It's Illinois. Eric, we had a big
Speaker 1: infrastructure plan not too long ago, like a gazillion dollars.
Speaker 1: I think is the cf a term. How does the
Speaker 1: unicipal bond market the investors that you talked to, how
Speaker 1: did they think about that? That? Is there a play
Speaker 1: there's or a trade there. I think there's a lot
Speaker 1: less refinancing, a lot less refinancing. And I was gonna say,
Speaker 1: it's all rates driven, right, doesn't matter like how much
Speaker 1: infrastructure money is floating around. Right, If the markets aren't
Speaker 1: cooperative and rates aren't cooperative at the time to jump
Speaker 1: into the market, those plans are going to get put off.
Speaker 1: Fun that's sort of a cooking, you know, taking time
Speaker 1: for the federal government subsidies to sort of flow through
Speaker 1: to the cities. But we're not seeing that right now.
Speaker 1: So you know, as I think about the municipal bond market,
Speaker 1: I mean it's I think it's a pretty consistent market,
Speaker 1: lower risk. But then you taught me about this taxable
Speaker 1: high yield market. How do you invet you invest in
Speaker 1: a taxable high old market. Not so much in the
Speaker 1: high yield. We were generally in the higher grade in
Speaker 1: terms of taxable market. It's it's an up and coming market.
Speaker 1: I mean, it's really kind of expanded. It's gotten much
Speaker 1: bigger in the past several years. We had appeared in
Speaker 1: two thousand and ten where the Build American program really
Speaker 1: kind of brought a lot of attention to it and
Speaker 1: that was really kind of cool and really exciting to
Speaker 1: kind of get involved with, and a lot of people
Speaker 1: kind of benefited from that. And now we're seeing the
Speaker 1: follow on effects of way down the road that it's
Speaker 1: actually a market people are starting to pay more attention to.
Speaker 1: But Eric really still has to sell you on it,
Speaker 1: like Chicago. Oh yeah, So Eric, what's what's kind of
Speaker 1: as you I know, you have Bloomberg intelligence. You guys
Speaker 1: are all either having written or are eating outlooks. What's
Speaker 1: some of the key takeaways from your outlook? I think
Speaker 1: that you know, Muni's are done sort of getting beaten
Speaker 1: into the ground for the time being. And I know
Speaker 1: that's probably not the most technical of c f A terms,
Speaker 1: but uh, you know, like you said, it's been a
Speaker 1: brutal ten months eleven months, and I think the tide
Speaker 1: is really getting ready to turn here. We're constructive on
Speaker 1: credit state and local governments. They have a lot of
Speaker 1: money in their coffers still, uh, and tax questions are
Speaker 1: still strong, you know, whether the economy tips into a
Speaker 1: recession or not. I really think that's sort of beyond
Speaker 1: the point because they have the ability to raise taxes, right,
Speaker 1: So unless you're you know, in dire dire straits financially,
Speaker 1: I understand it's unpopular, but they can still do it,
Speaker 1: right yeah? Yeah? Um, So what matters more than where
Speaker 1: the economy goes or what the Fed does in terms
Speaker 1: of rates? I think rates right now because we're a
Speaker 1: supplying demander of the market, and if you're keeping supply
Speaker 1: on the sidelines right, you're you're going to impact the
Speaker 1: mini market in a big way and we saw that
Speaker 1: this year. So Eric, what do you expect then? I mean,
Speaker 1: we're talking about a higher terminal rate every week? Um,
Speaker 1: I think right now the markets pricing in like five
Speaker 1: and a quarter. What what are you looking at? Well?
Speaker 1: I mean I think our rate strategist is around five percent, um,
Speaker 1: you know, as far as terminal rate projection. But I
Speaker 1: think the bigger issue is if we keep seeing these
Speaker 1: strong economic prints come out, it's just going to prolong
Speaker 1: the pain for rates going into next year. So, Chris,
Speaker 1: for you and your team at the Valley National Bank,
Speaker 1: what are some of the opportunities for for you guys?
Speaker 1: Where do you think you might have some places to
Speaker 1: put some money to work? You know, I think one
Speaker 1: of the things that we've started to look at lately
Speaker 1: is kind of coming down the curve a little bit. Honestly,
Speaker 1: it's not it's not super exciting. It's not the most
Speaker 1: biggest way to get bang for the buck. But these
Speaker 1: short call bonds to two to five year type of
Speaker 1: call structure for a ten year UH final maturity, you
Speaker 1: can get a lot of added value over where you
Speaker 1: can get for a tern bond with two to three
Speaker 1: years to maturity. So you really can kind of beat
Speaker 1: it up and get a lot of performance out of
Speaker 1: it that way without risk. And it's like, again, people
Speaker 1: don't look immunities because they want a safe product. It's like,
Speaker 1: here's the way to get added benefit, added exposure, added participation,
Speaker 1: and added yield without a ton of extra risk. It's
Speaker 1: a it's kind of an easy way to do it,
Speaker 1: all right, good stuff of Spagotti. He's managing director, Senior
Speaker 1: vice president Municipal investments with Valley National Bank in Lovely Wayne,
Speaker 1: New Jersey. Eric Kazaski, senior US municipal strategist with Bloomberg Intelligence,
Speaker 1: in like equally lovely Princeton, New Jersey. So these guys
Speaker 1: are got New Jersey. Uh covered right at home here? Yeah,
Speaker 1: absolutely New Jersey boys kind of bringing it together. Thanks
Speaker 1: for listening to the Bloomberg Markets podcast. You can subscribe
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Speaker 1: platform you prefer. I'm Matt Miller. I'm on Twitter at
Speaker 1: Matt Miller, three pt on Fall Sweeney. I'm on Twitter
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