1
00:00:02,640 --> 00:00:05,360
Speaker 1: Welcome to the Bloomberg Penl podcast. I'm Paul Swinge. You,

2
00:00:05,360 --> 00:00:07,680
Speaker 1: along with my co host Lisa Brahma wits 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 --> 00:00:17,959
Speaker 1: podcast or wherever you listen to podcasts, as well as

7
00:00:17,960 --> 00:00:23,280
Speaker 1: at Bloomberg dot com. Well, one of my favorite media companies,

8
00:00:23,280 --> 00:00:27,639
Speaker 1: Discovery Communications, reported better than expected results second quarter results.

9
00:00:27,760 --> 00:00:30,160
Speaker 1: UH stock is actually up about one point two percent today,

10
00:00:30,200 --> 00:00:33,440
Speaker 1: up about almost for UH the year. To help us

11
00:00:33,479 --> 00:00:36,600
Speaker 1: break down the numbers four Discovery Communications and kind of

12
00:00:36,600 --> 00:00:39,440
Speaker 1: the future growth drivers for the Compner's company, We're welcome.

13
00:00:39,840 --> 00:00:43,800
Speaker 1: Gunner viden Fells, chief financial officer for Discovery Communications. He

14
00:00:43,880 --> 00:00:46,280
Speaker 1: joins us live on our Bloomberg eleven three of studios. Gonner,

15
00:00:46,360 --> 00:00:48,760
Speaker 1: thanks so much for being here and for dealing with

16
00:00:48,800 --> 00:00:52,280
Speaker 1: my pronunciation. Um. First of all, just kind of just

17
00:00:52,360 --> 00:00:55,400
Speaker 1: kind of breakdown kind of what what you really experienced

18
00:00:55,440 --> 00:00:57,280
Speaker 1: there in a second quarter looks like against some pretty

19
00:00:57,280 --> 00:01:00,400
Speaker 1: good results relative to the street expectations. Oh look, I

20
00:01:00,400 --> 00:01:02,520
Speaker 1: mean bottom line is it was a great quarter. I'm

21
00:01:02,560 --> 00:01:05,720
Speaker 1: really really happy with what we delivered UM, you know,

22
00:01:05,720 --> 00:01:08,520
Speaker 1: because it chose two things. Number One, the core business

23
00:01:08,640 --> 00:01:11,440
Speaker 1: is in much better shape than people think, and I

24
00:01:11,520 --> 00:01:13,880
Speaker 1: do see a lot of longevity that might surprise some people.

25
00:01:14,480 --> 00:01:17,959
Speaker 1: Number Two, we're also seeing some first you know, results

26
00:01:17,959 --> 00:01:20,480
Speaker 1: coming in from our investments on the digital side, so

27
00:01:20,600 --> 00:01:23,039
Speaker 1: that's been helping revenue growth. And uh you know, we

28
00:01:23,040 --> 00:01:25,640
Speaker 1: we just guided to an actcelebration in in revenue growth

29
00:01:25,680 --> 00:01:27,440
Speaker 1: for the next quarter. So that's that's that's a great,

30
00:01:27,680 --> 00:01:30,920
Speaker 1: great result at this stage in the industry. And uh,

31
00:01:30,959 --> 00:01:33,520
Speaker 1: you know, the the the bottom line is we're delivering

32
00:01:33,800 --> 00:01:37,720
Speaker 1: top of industry performance, accelerating revenues, UH, peer group leading

33
00:01:37,760 --> 00:01:40,920
Speaker 1: margins UM, and we're delivering on our promises. Women like

34
00:01:41,040 --> 00:01:43,720
Speaker 1: to watch houses get remodeled, and they like to watch

35
00:01:43,760 --> 00:01:48,200
Speaker 1: people throw down in a cooking competition. H GTV, Food Network, TLC,

36
00:01:48,440 --> 00:01:52,280
Speaker 1: all of these are very commonly watched by women. Interestingly,

37
00:01:52,320 --> 00:01:55,520
Speaker 1: we learned that Gunner's favorite show was The Deadliest Catch,

38
00:01:55,560 --> 00:01:58,360
Speaker 1: which I love the idea of UM and we've been

39
00:01:58,360 --> 00:02:00,720
Speaker 1: talking about sharks. But but moving forward, I think one

40
00:02:00,800 --> 00:02:03,840
Speaker 1: big question for all media companies is distribution and whether

41
00:02:03,880 --> 00:02:06,840
Speaker 1: you plan to go direct to consumer and how how

42
00:02:06,920 --> 00:02:10,119
Speaker 1: you plan to to roll that kind of product out. Yeah. Look,

43
00:02:10,160 --> 00:02:11,760
Speaker 1: I mean we've always said we we want to go

44
00:02:11,840 --> 00:02:14,880
Speaker 1: for a maximum possible distribution, and uh, you know, over

45
00:02:14,919 --> 00:02:18,320
Speaker 1: the past twelve to eighteen months, were now the most

46
00:02:18,360 --> 00:02:22,000
Speaker 1: widely distributed media company across the traditional and the virtual

47
00:02:22,320 --> 00:02:25,480
Speaker 1: MVPD environment. That's I mean, that's that's a major achievement

48
00:02:25,600 --> 00:02:27,520
Speaker 1: over the past couple of What does that mean that

49
00:02:27,560 --> 00:02:30,200
Speaker 1: you just do sling in Hulu and Netflix exactly, so

50
00:02:30,480 --> 00:02:34,920
Speaker 1: you've got the broadest reach, got exclusive your cable satellite, Uh,

51
00:02:34,960 --> 00:02:38,440
Speaker 1: you know, over the top, We're we're on all relevant

52
00:02:38,480 --> 00:02:41,440
Speaker 1: platforms and you know, as you said, women like to

53
00:02:41,440 --> 00:02:44,720
Speaker 1: watch our portfolio. Not a lot of people understand that

54
00:02:44,800 --> 00:02:47,400
Speaker 1: Discovery is the number one TV company in the US

55
00:02:47,440 --> 00:02:50,560
Speaker 1: across all of cable broadcasts for for female audiences. You

56
00:02:50,600 --> 00:02:53,280
Speaker 1: know that that's that's a pretty powerful position. Uh. Speaks

57
00:02:53,320 --> 00:02:55,520
Speaker 1: to the value of the content and um, you know

58
00:02:55,520 --> 00:02:58,640
Speaker 1: that's why we also feel very well positioned. Uh you

59
00:02:58,639 --> 00:03:00,679
Speaker 1: know as audiences move in to an O, T, T

60
00:03:00,800 --> 00:03:03,800
Speaker 1: and directed consumer world. Uh. You know, obviously that's still

61
00:03:03,919 --> 00:03:06,200
Speaker 1: early stage, but we have started deploying a lot of

62
00:03:06,240 --> 00:03:09,679
Speaker 1: capital into the build out of our global director consumer platform.

63
00:03:10,320 --> 00:03:13,120
Speaker 1: We've hired a team. Peter Farisee joined us from from

64
00:03:13,160 --> 00:03:18,160
Speaker 1: Amazon really knowing you know, how to build those products. Well,

65
00:03:18,280 --> 00:03:20,560
Speaker 1: you know, I've given guidance to about three or four

66
00:03:20,600 --> 00:03:23,960
Speaker 1: hundred million negative a bit of contributions for the year. Um.

67
00:03:24,000 --> 00:03:25,960
Speaker 1: You know that's you know, that's somewhere in the five

68
00:03:26,680 --> 00:03:29,280
Speaker 1: range of our underlying profit. You know, it's not betting

69
00:03:29,280 --> 00:03:31,440
Speaker 1: the farm, but it's material and enough to help us

70
00:03:31,720 --> 00:03:34,000
Speaker 1: make a difference. And keep in mind, we're in a

71
00:03:34,120 --> 00:03:36,440
Speaker 1: so much better position to roll this out. We've got

72
00:03:36,440 --> 00:03:38,840
Speaker 1: this global footprint, boots on the ground and every relevant

73
00:03:38,920 --> 00:03:41,880
Speaker 1: territory across the globe. We're reaching four close to four

74
00:03:41,960 --> 00:03:45,400
Speaker 1: hundred million homes every day with with our products, so

75
00:03:45,480 --> 00:03:49,400
Speaker 1: you know, when it comes to acquiring UH subscribers promoting

76
00:03:49,400 --> 00:03:52,680
Speaker 1: these products, we're in a very very powerful starting position.

77
00:03:53,000 --> 00:03:54,760
Speaker 1: So gunn are. One of the things that maybe a

78
00:03:54,760 --> 00:03:57,040
Speaker 1: lot of people don't know about Discovery Communications is that

79
00:03:57,120 --> 00:04:00,240
Speaker 1: outside of North America, you guys are very big in ports.

80
00:04:00,280 --> 00:04:04,520
Speaker 1: You've made some very big bets Eurosport Olympics rights outside

81
00:04:04,560 --> 00:04:06,800
Speaker 1: of North America, he had a big deal. I guess

82
00:04:06,920 --> 00:04:08,760
Speaker 1: most recently be with the with the p g A,

83
00:04:09,440 --> 00:04:12,280
Speaker 1: so you know, making a big bet on sports. But

84
00:04:12,320 --> 00:04:15,360
Speaker 1: we've actually seen some investors have read that sports rights

85
00:04:15,600 --> 00:04:17,800
Speaker 1: in sports viewing has kind of peaked. How do you

86
00:04:17,880 --> 00:04:21,320
Speaker 1: view your investment in sports globally? Well, two things. Number one,

87
00:04:21,839 --> 00:04:24,480
Speaker 1: the market is very different, uh, you know between the

88
00:04:24,560 --> 00:04:27,040
Speaker 1: US and the rest of the world, because we've never

89
00:04:27,120 --> 00:04:30,080
Speaker 1: had this sort of stuffing of h of sports into

90
00:04:30,080 --> 00:04:32,520
Speaker 1: the mainstream you know basic bundle that we're seeing here

91
00:04:32,520 --> 00:04:34,280
Speaker 1: in the U s which which is leading uh and

92
00:04:34,480 --> 00:04:37,120
Speaker 1: and really driving the court cutting now uh, you know,

93
00:04:37,240 --> 00:04:39,520
Speaker 1: in many international markets there's just no court to cut.

94
00:04:39,560 --> 00:04:41,120
Speaker 1: And part of that, part of the reason behind that

95
00:04:41,200 --> 00:04:43,560
Speaker 1: is that that in many markets sports is more of

96
00:04:43,560 --> 00:04:46,560
Speaker 1: an ala carte product, so not as overpriced as as

97
00:04:46,560 --> 00:04:49,160
Speaker 1: in the US. Um Number two is for US, uh,

98
00:04:49,240 --> 00:04:51,000
Speaker 1: you know, we're not going after these sort of you know,

99
00:04:51,080 --> 00:04:54,320
Speaker 1: top tier premium rights where you're paying up crazy inflation

100
00:04:54,400 --> 00:04:57,120
Speaker 1: every three years. We're trying to go for you know,

101
00:04:57,240 --> 00:05:00,640
Speaker 1: very attractive but a little more niche content, and we're

102
00:05:00,680 --> 00:05:03,599
Speaker 1: going for as as broad a global coverage as we

103
00:05:03,640 --> 00:05:05,840
Speaker 1: can get and for long term deals pick the p

104
00:05:05,920 --> 00:05:08,440
Speaker 1: G E to where as an example, you know, we're

105
00:05:08,440 --> 00:05:11,560
Speaker 1: we're in that business for twelve years. We've got all

106
00:05:11,600 --> 00:05:14,240
Speaker 1: of the all of the world outside of the US,

107
00:05:14,279 --> 00:05:17,040
Speaker 1: so that gives us time to really build out a

108
00:05:17,440 --> 00:05:20,520
Speaker 1: global product without having to sort of chase rights renewals

109
00:05:20,560 --> 00:05:22,479
Speaker 1: every two or three years. And one thing I also

110
00:05:22,520 --> 00:05:24,560
Speaker 1: want to point out, and the Olympics may be the

111
00:05:24,600 --> 00:05:28,200
Speaker 1: greatest example for that again long term deal. Uh, you know,

112
00:05:28,240 --> 00:05:30,800
Speaker 1: eight years all of Europe, and we have a very

113
00:05:30,880 --> 00:05:34,560
Speaker 1: unique ability to essentially orchestrate all kinds of different revenue

114
00:05:34,560 --> 00:05:36,839
Speaker 1: streams to maximize the value of this I P that

115
00:05:36,880 --> 00:05:39,960
Speaker 1: no one else has. Uh. In some markets we will

116
00:05:39,960 --> 00:05:42,760
Speaker 1: sub license because there's public service broadcasters that with deep

117
00:05:42,760 --> 00:05:45,240
Speaker 1: pockets that just paid crazy amounts for some of those rights.

118
00:05:45,240 --> 00:05:47,760
Speaker 1: And others we have our own broadcast stations. Will you

119
00:05:47,760 --> 00:05:51,839
Speaker 1: know we did more than viewership on on in Norway

120
00:05:51,839 --> 00:05:54,520
Speaker 1: on some of the Winter Olympics events and in other

121
00:05:54,560 --> 00:05:57,120
Speaker 1: markets you know, we'll we'll go in hard with our

122
00:05:57,160 --> 00:05:59,560
Speaker 1: own O T T product on the mobile devices, etcetera.

123
00:05:59,640 --> 00:06:02,080
Speaker 1: So so bottom line is we can slice and dies

124
00:06:02,200 --> 00:06:04,400
Speaker 1: these these rights were in a gatekeeper position and can

125
00:06:04,400 --> 00:06:07,479
Speaker 1: extract so much more value than many others could. Dr

126
00:06:07,520 --> 00:06:09,600
Speaker 1: Gunnar vieden Felt, thank you so much for being with us.

127
00:06:10,400 --> 00:06:14,520
Speaker 1: Dr Gunn viden Fels, I tried, I think it was,

128
00:06:14,640 --> 00:06:16,680
Speaker 1: it was, it was. I mean, our producer did way

129
00:06:16,680 --> 00:06:19,760
Speaker 1: better than I'm gonna Weeden Fells is chief financial officer

130
00:06:19,880 --> 00:06:23,720
Speaker 1: of Discovery Communications, and I gotta say it is amazing

131
00:06:23,720 --> 00:06:41,200
Speaker 1: the popularity of these shows. Yesterday was a bad day

132
00:06:41,240 --> 00:06:43,680
Speaker 1: for risk acids in general, but it was a uniquely

133
00:06:43,880 --> 00:06:47,920
Speaker 1: terrible day for emerging markets, in particular emerging market currencies.

134
00:06:48,080 --> 00:06:50,279
Speaker 1: I'm looking right now at the ms c I Emerging

135
00:06:50,320 --> 00:06:52,880
Speaker 1: Market Currency Index, which had its biggest plunge at one

136
00:06:52,880 --> 00:06:57,280
Speaker 1: points two thousand thirteen. Here to explain what exactly investors

137
00:06:57,320 --> 00:06:59,679
Speaker 1: are the most worried about right now, what they're pricing

138
00:06:59,680 --> 00:07:02,479
Speaker 1: in his Eric Fine, but folio manager focused on emerging

139
00:07:02,520 --> 00:07:06,200
Speaker 1: markets fixed income for van Eck Global, Eric, thank you

140
00:07:06,240 --> 00:07:08,919
Speaker 1: so much for being with us. Let's start there, what

141
00:07:09,120 --> 00:07:12,520
Speaker 1: our investors pricing in with this sell off? Sure? Thanks,

142
00:07:13,040 --> 00:07:14,760
Speaker 1: great question, and I would phrase it as or I

143
00:07:14,760 --> 00:07:18,120
Speaker 1: would my own response would be only beginning to price in?

144
00:07:18,280 --> 00:07:20,600
Speaker 1: And I think, um, there are three big things that

145
00:07:20,640 --> 00:07:22,800
Speaker 1: they're only beginning to price in that are big and

146
00:07:22,960 --> 00:07:26,400
Speaker 1: they map to growth, not rates. I think everything is

147
00:07:26,440 --> 00:07:28,560
Speaker 1: being fewed for the lens rate and not through the

148
00:07:28,600 --> 00:07:31,440
Speaker 1: growth rate. And it's really important. What are they Number One,

149
00:07:31,480 --> 00:07:35,000
Speaker 1: the FED, The USA is a relatively closed economy. If

150
00:07:35,000 --> 00:07:38,600
Speaker 1: it's cutting rates because of issues in the big trading nations,

151
00:07:38,600 --> 00:07:41,600
Speaker 1: Asia and Europe, how's that going to play out. It's

152
00:07:41,600 --> 00:07:43,680
Speaker 1: probably going to play out where US growth ends up

153
00:07:43,720 --> 00:07:46,040
Speaker 1: continuing to do couple and the rest of the world

154
00:07:46,040 --> 00:07:49,160
Speaker 1: growth is weak. That is dollar bullus. That's what we

155
00:07:49,200 --> 00:07:51,280
Speaker 1: saw in the first half of eighteen. That's what we've

156
00:07:51,320 --> 00:07:54,480
Speaker 1: seen for big chunks of chunks of time. And when

157
00:07:54,520 --> 00:07:57,720
Speaker 1: you look and let's let's say the ninety s basis

158
00:07:57,720 --> 00:08:00,760
Speaker 1: points of cuts that are priced in happen or whatever reason, well,

159
00:08:00,760 --> 00:08:04,480
Speaker 1: that's consistent with really weak growth numbers. That's also dollar bullush.

160
00:08:04,640 --> 00:08:07,080
Speaker 1: All these countries that have been encouraged to issue dollar bonds,

161
00:08:07,120 --> 00:08:08,720
Speaker 1: what are they going to do when they see see

162
00:08:08,720 --> 00:08:12,040
Speaker 1: that they're gonna buy dollars first. So the FED context

163
00:08:12,080 --> 00:08:15,120
Speaker 1: is really important. The perfect scenario, the Goldilocks scenarios were

164
00:08:15,120 --> 00:08:18,200
Speaker 1: weak enough and the rest of the world is begins

165
00:08:18,240 --> 00:08:20,600
Speaker 1: to grow just enough. I don't see evidence of it yet.

166
00:08:20,760 --> 00:08:24,160
Speaker 1: China is rightly being very balanced Germany, no whole fiscal

167
00:08:24,200 --> 00:08:26,960
Speaker 1: stimulus US. The elections too far away. So that's the

168
00:08:27,000 --> 00:08:29,360
Speaker 1: big thing. That's number one, the number two, but it

169
00:08:29,360 --> 00:08:33,880
Speaker 1: maps to grow the big picture ideas here are you

170
00:08:33,920 --> 00:08:38,280
Speaker 1: think that necessary? The sell oft didn't go necessarily far enough. Um?

171
00:08:38,440 --> 00:08:42,240
Speaker 1: I think that the market had this general view. Um

172
00:08:42,520 --> 00:08:44,680
Speaker 1: I think that the market was pricing in a rate

173
00:08:44,679 --> 00:08:48,520
Speaker 1: cutting cycle from the Fed. And it may not be,

174
00:08:48,880 --> 00:08:50,600
Speaker 1: and it was pricing at a rate cutting cycle because

175
00:08:50,640 --> 00:08:53,679
Speaker 1: it was too focused on global developments and on rates

176
00:08:53,840 --> 00:08:56,439
Speaker 1: and not on what the Fed's narrow mandate is. Now.

177
00:08:56,600 --> 00:08:59,640
Speaker 1: They may have bought some insurance, but we're relatively closed

178
00:08:59,640 --> 00:09:03,119
Speaker 1: economy that's not as affected by these big negative developments

179
00:09:03,120 --> 00:09:06,200
Speaker 1: that they are specifically citing. Just a good chance that

180
00:09:06,280 --> 00:09:08,320
Speaker 1: we end up in a divergent scenario where the US

181
00:09:08,400 --> 00:09:12,160
Speaker 1: is doing okay, rest of world isn't. And put put differently,

182
00:09:12,160 --> 00:09:13,920
Speaker 1: what are they gonna hiking rates? What does that do

183
00:09:14,000 --> 00:09:16,600
Speaker 1: for China trade? Sorry? Cutting rates? What does that do

184
00:09:16,679 --> 00:09:19,480
Speaker 1: for that? Right? Right? Right? And and the dynamic is

185
00:09:19,559 --> 00:09:23,520
Speaker 1: unusual because this on the second big issue, which is trade,

186
00:09:23,559 --> 00:09:27,960
Speaker 1: is cutting rates If that's the response to what many

187
00:09:28,000 --> 00:09:31,600
Speaker 1: think is bad trade policy, that encourages that, and the

188
00:09:31,600 --> 00:09:34,199
Speaker 1: Hong Kong situation obviously encourages a harder line. So the

189
00:09:34,280 --> 00:09:37,080
Speaker 1: dynamic so the FED is the context. Trade is the

190
00:09:37,120 --> 00:09:39,880
Speaker 1: second pigure. I mentioned the third one. But you have

191
00:09:39,880 --> 00:09:43,000
Speaker 1: a question, Well, let's just the news today or less

192
00:09:43,800 --> 00:09:46,720
Speaker 1: four hours. UM, now that China has been named a

193
00:09:46,760 --> 00:09:50,240
Speaker 1: currency manipulator? Do we care about that? Do emerging market

194
00:09:50,520 --> 00:09:53,480
Speaker 1: care about that? Well? The facts are they care the

195
00:09:54,080 --> 00:09:56,600
Speaker 1: pretty much every facts other than Lira where there's direct

196
00:09:56,640 --> 00:10:00,280
Speaker 1: state intervention, most likely um cared, so they do care. UM.

197
00:10:00,320 --> 00:10:03,920
Speaker 1: It's a bellweather currency, it's held UM so. I think

198
00:10:03,920 --> 00:10:06,160
Speaker 1: there are two ways of answering it. The narrow way

199
00:10:06,400 --> 00:10:10,079
Speaker 1: is no, what happens? I am a for issues of

200
00:10:10,160 --> 00:10:15,000
Speaker 1: report UM. There are possible restrictions on OPEC. It's a state.

201
00:10:15,240 --> 00:10:18,560
Speaker 1: US state agency can guarantee lending, UM limits its loans

202
00:10:18,640 --> 00:10:22,400
Speaker 1: or a stop from very narrow symbolically though, it's it's

203
00:10:22,559 --> 00:10:27,400
Speaker 1: it's uh, it's important. My broader question is who wants

204
00:10:27,640 --> 00:10:33,560
Speaker 1: their currency stronger? Argentina other than Argentina. I could come

205
00:10:33,600 --> 00:10:35,280
Speaker 1: up with a bunch, but yeah, but that kind of

206
00:10:35,280 --> 00:10:37,360
Speaker 1: proves the point. But yeah, who wants their currency stronger?

207
00:10:37,400 --> 00:10:39,160
Speaker 1: This is this is where the rubber hits the road,

208
00:10:39,400 --> 00:10:42,000
Speaker 1: and this is where traditionally what's the central This gets

209
00:10:42,000 --> 00:10:43,640
Speaker 1: to the level of central marks what center are going

210
00:10:43,679 --> 00:10:47,959
Speaker 1: to do by foreign currency denominated assets of another country. Okay,

211
00:10:48,080 --> 00:10:50,960
Speaker 1: so you buy emerging markets fixed income for a living,

212
00:10:51,000 --> 00:10:53,720
Speaker 1: and you're coming in here expressing a lot of concern

213
00:10:53,760 --> 00:10:55,800
Speaker 1: about the entirety of an asset class. So what are

214
00:10:55,840 --> 00:10:58,120
Speaker 1: you buying? Yes, great question, Great way, friend. What I

215
00:10:58,160 --> 00:11:01,679
Speaker 1: always tell people is if when if your choices for

216
00:11:01,720 --> 00:11:04,520
Speaker 1: emerging markets boiled down to you waking up in the

217
00:11:04,520 --> 00:11:07,760
Speaker 1: morning and thinking about President she and Trump and the FED,

218
00:11:08,240 --> 00:11:11,880
Speaker 1: then that's an issue. Um Why because there are categories

219
00:11:11,920 --> 00:11:14,600
Speaker 1: of I M bonds that are vulnerable to that. There's

220
00:11:14,640 --> 00:11:17,920
Speaker 1: a big chunk that are low yielding Polish government bonds

221
00:11:17,920 --> 00:11:20,280
Speaker 1: and local currency at two percent, Chinese government bonds at

222
00:11:21,320 --> 00:11:25,480
Speaker 1: Mexico in dollars at three and a half, Russia. No,

223
00:11:25,720 --> 00:11:29,240
Speaker 1: I'm saying those are the ones where if we're correct

224
00:11:29,360 --> 00:11:31,680
Speaker 1: and on one of the two big scenarios that the

225
00:11:31,760 --> 00:11:34,680
Speaker 1: FED is not on an easy cycle and that there's

226
00:11:34,760 --> 00:11:37,720
Speaker 1: upside risk to yield, those are that's a whole category

227
00:11:37,800 --> 00:11:40,600
Speaker 1: VM depth that's very vulnerable. It's over a third. Then

228
00:11:40,640 --> 00:11:46,200
Speaker 1: there's another category that is vulnerable UM to rising spread duration,

229
00:11:46,520 --> 00:11:49,280
Speaker 1: let's say, because because there's risk that the FED is

230
00:11:49,440 --> 00:11:51,000
Speaker 1: growing but the rest of the world is doing poorly,

231
00:11:51,520 --> 00:11:54,319
Speaker 1: so they're not doing any better. Rates are going higher,

232
00:11:54,520 --> 00:11:57,160
Speaker 1: so you better be darn sure that your spread is

233
00:11:57,160 --> 00:11:59,600
Speaker 1: coming down for idiosyncratic reasons. And there are a lot

234
00:11:59,640 --> 00:12:02,040
Speaker 1: of country treas that don't fit nicely in that world.

235
00:12:02,040 --> 00:12:05,200
Speaker 1: I put scom in South Africa, UM, I'd even put

236
00:12:05,280 --> 00:12:07,959
Speaker 1: Mexico um the sovereign and then although that's also got

237
00:12:07,960 --> 00:12:11,600
Speaker 1: a low yield problem. Those so those categories are the

238
00:12:11,640 --> 00:12:14,200
Speaker 1: vulnerable ones. Those are big parts of what people think

239
00:12:14,200 --> 00:12:17,679
Speaker 1: of as emerging markets. However, there is a large category

240
00:12:17,960 --> 00:12:21,440
Speaker 1: that's very idiosyncratic and that has strong reformist governments. They

241
00:12:21,480 --> 00:12:25,640
Speaker 1: are paying high yields Ukraine. I've been looking at Ukraine

242
00:12:25,640 --> 00:12:27,600
Speaker 1: for over two decades. I have never seen a more

243
00:12:27,600 --> 00:12:30,920
Speaker 1: reformist government has likely to have I m F support

244
00:12:31,559 --> 00:12:36,240
Speaker 1: eight percent yields. Brazil much lower yields, very reformist government,

245
00:12:36,400 --> 00:12:38,160
Speaker 1: but it's a net credit or doesn't mean that there

246
00:12:38,160 --> 00:12:41,240
Speaker 1: aren't problems in Brazil. They mapped to the currency, but

247
00:12:41,640 --> 00:12:45,840
Speaker 1: dollar denominated long dated bonds of petrobrass at five percent yields,

248
00:12:45,880 --> 00:12:49,800
Speaker 1: that's attractive that can respond to this environment. So if

249
00:12:49,840 --> 00:12:52,920
Speaker 1: your general answers, so if my broadest answers, it's about

250
00:12:52,920 --> 00:12:56,200
Speaker 1: growth not rates. And my narrow answer is if what

251
00:12:56,320 --> 00:12:58,240
Speaker 1: E M means to you is waking up in the

252
00:12:58,280 --> 00:13:01,120
Speaker 1: morning and thinking about j Pal and the presidents of

253
00:13:01,200 --> 00:13:06,080
Speaker 1: China and Russia. Sorry, President US, be cautious, right. There

254
00:13:06,080 --> 00:13:07,640
Speaker 1: are a lot of things that are issues, but if

255
00:13:07,679 --> 00:13:09,520
Speaker 1: you can be selective, there are a lot of great

256
00:13:09,559 --> 00:13:12,800
Speaker 1: things in EM and the bottom the biggest context is

257
00:13:13,040 --> 00:13:16,000
Speaker 1: the efficient frontier based on fifteen years of history, says

258
00:13:16,040 --> 00:13:19,280
Speaker 1: the best category of EM bonds including all categories, were

259
00:13:19,320 --> 00:13:22,520
Speaker 1: from treasuries to global act of corporates. People are under

260
00:13:22,559 --> 00:13:26,280
Speaker 1: invested in EM generally if it means piling into generic stuff,

261
00:13:26,400 --> 00:13:28,199
Speaker 1: I just told you my answer. But if you can

262
00:13:28,240 --> 00:13:30,040
Speaker 1: be tactical and find the right way to express it,

263
00:13:30,080 --> 00:13:32,480
Speaker 1: there are plenty of opportunities in EM. Eric Fine, thank

264
00:13:32,520 --> 00:13:35,560
Speaker 1: you so much for joining us. Eric Fine, portfolio manager

265
00:13:35,720 --> 00:13:38,440
Speaker 1: covers all thing emerging markets fixed income strategy for van

266
00:13:38,520 --> 00:13:41,800
Speaker 1: Neck Global. Joining us here in our Bloomberg Interactive Broker studio,

267
00:13:56,400 --> 00:13:59,400
Speaker 1: Let's bring in Paul Gates senior research analysts focus on

268
00:13:59,440 --> 00:14:03,800
Speaker 1: European medals and mining to uh, to really understand what's

269
00:14:03,920 --> 00:14:06,160
Speaker 1: driving the declines that we've seen in metals. Is this

270
00:14:06,320 --> 00:14:11,480
Speaker 1: just concerned about escalating trade wars? Um, Hi, good oftening,

271
00:14:11,520 --> 00:14:14,360
Speaker 1: good morning. Look you know in in in the short end,

272
00:14:14,480 --> 00:14:16,000
Speaker 1: the answer to that is yes. I mean clearly what

273
00:14:16,040 --> 00:14:18,520
Speaker 1: we've seen over the last you know, over the last

274
00:14:18,559 --> 00:14:21,800
Speaker 1: few days is uh. You know, copper respond to the

275
00:14:21,840 --> 00:14:24,440
Speaker 1: sort of macro the risk off sort of trade, right, um,

276
00:14:24,480 --> 00:14:26,840
Speaker 1: And your sort of point about dr copper. People use

277
00:14:26,920 --> 00:14:30,080
Speaker 1: the copper rice, you know, for for whatever reason to articulate,

278
00:14:30,440 --> 00:14:33,920
Speaker 1: you know, a view that they have around around around

279
00:14:33,920 --> 00:14:36,400
Speaker 1: global growth. It's liquid, it's easier to trade. You know,

280
00:14:36,440 --> 00:14:39,960
Speaker 1: people can get into and out of it fairly, fairly easily. However,

281
00:14:40,080 --> 00:14:41,840
Speaker 1: I mean, I think the other point, however, you've got

282
00:14:41,840 --> 00:14:43,440
Speaker 1: to sort of look at, however, is if you were

283
00:14:43,440 --> 00:14:46,400
Speaker 1: to look beyond copper. So let's say another elemy traded

284
00:14:46,440 --> 00:14:49,320
Speaker 1: commodity like nickel that's actually up today, that's been on

285
00:14:49,320 --> 00:14:51,320
Speaker 1: a bit of a bull run for the last for

286
00:14:51,320 --> 00:14:54,480
Speaker 1: the last few months, and that sort of defined you know,

287
00:14:54,600 --> 00:14:57,680
Speaker 1: the negativity around the sort of macros endment to actually

288
00:14:57,680 --> 00:15:00,440
Speaker 1: post some pretty significant gains. So what we're sort of

289
00:15:00,440 --> 00:15:02,840
Speaker 1: seeing in these commodities is something of a mixed back.

290
00:15:03,160 --> 00:15:07,920
Speaker 1: You know, the the economic fundamentals eventually will trump essentially

291
00:15:08,320 --> 00:15:12,320
Speaker 1: or overtake the risk offs, you know, trade and the

292
00:15:12,400 --> 00:15:15,720
Speaker 1: risk off sentiment, and you'll actually see supply demand fundamental

293
00:15:15,760 --> 00:15:18,000
Speaker 1: start to matter. But in the immediate short term for

294
00:15:18,040 --> 00:15:20,960
Speaker 1: a commodity like copper, there's no immediate deficit, and so

295
00:15:21,000 --> 00:15:23,040
Speaker 1: people are using it as a proxy for global trade.

296
00:15:23,600 --> 00:15:26,600
Speaker 1: We're speaking with Paul Gates, senior research analysts for Sanford Burns,

297
00:15:27,040 --> 00:15:29,600
Speaker 1: calling in from London. Paul, thanks so much again for

298
00:15:29,680 --> 00:15:32,800
Speaker 1: joining us. Just wondering kind of as we think about copper,

299
00:15:33,120 --> 00:15:35,320
Speaker 1: give us a sense of the supply and demand model

300
00:15:35,360 --> 00:15:37,080
Speaker 1: that you see playing out here. I'm just looking at

301
00:15:37,080 --> 00:15:39,640
Speaker 1: the charts. Lisa mentioned kind of an ugly chart, but

302
00:15:39,720 --> 00:15:42,920
Speaker 1: what's your sense on the supplied demand dynamics for that metal.

303
00:15:43,880 --> 00:15:45,360
Speaker 1: I mean, if you actually look at the sort of

304
00:15:45,360 --> 00:15:47,760
Speaker 1: fundamentals and you say, look, you know, supply demand as

305
00:15:47,800 --> 00:15:49,640
Speaker 1: you as you talk to what you see at the

306
00:15:49,680 --> 00:15:51,720
Speaker 1: moment is a market that's actually in deficit, not a

307
00:15:51,800 --> 00:15:54,960
Speaker 1: huge deficit, but slight deficit. Moreover, if you're to look at,

308
00:15:55,000 --> 00:15:57,840
Speaker 1: for example, the position of the lem me say, for example,

309
00:15:57,920 --> 00:16:00,440
Speaker 1: terminal market inventories. If you look at them of metal

310
00:16:00,480 --> 00:16:03,760
Speaker 1: that's available on either you know, LM, Shanghai, COMEX, you

311
00:16:03,760 --> 00:16:06,680
Speaker 1: know you're dealing with very very little metal actually available.

312
00:16:06,760 --> 00:16:09,840
Speaker 1: Only about six or seven days worth of infantry is

313
00:16:10,160 --> 00:16:14,160
Speaker 1: actually sort of there. So from the fundamental supply demand perspective,

314
00:16:14,400 --> 00:16:16,400
Speaker 1: the industry is actually sort of looking pretty you know,

315
00:16:16,480 --> 00:16:19,440
Speaker 1: pretty pretty healthy. Moreover, if you would have rolled this

316
00:16:19,640 --> 00:16:22,720
Speaker 1: forward a few years, what you start to see as

317
00:16:22,760 --> 00:16:26,680
Speaker 1: an industry whose fundamentals tightened up dramatically today's kind of

318
00:16:26,760 --> 00:16:29,840
Speaker 1: copper price, it's very very difficult to invest in any

319
00:16:29,880 --> 00:16:32,800
Speaker 1: new form of supply. It's uneconomic to build a new

320
00:16:32,840 --> 00:16:35,520
Speaker 1: copper mind certainly on economic if what you're aiming for

321
00:16:35,840 --> 00:16:38,080
Speaker 1: is one of these larger, more complex or bodies that

322
00:16:38,120 --> 00:16:40,920
Speaker 1: have been developed over the you know, over the last

323
00:16:40,920 --> 00:16:44,120
Speaker 1: few years. So really there isn't any supply growth. Demand

324
00:16:44,200 --> 00:16:47,040
Speaker 1: growth continues to track, you know, at least in a

325
00:16:47,080 --> 00:16:49,320
Speaker 1: trend sense, what it's always done, which is to sort

326
00:16:49,320 --> 00:16:52,840
Speaker 1: of you know, follow global industrial production. So you roll

327
00:16:52,920 --> 00:16:54,880
Speaker 1: this out a few years and it's you know, almost

328
00:16:54,920 --> 00:16:57,520
Speaker 1: inevitable that we're going to see the copper price rally

329
00:16:57,600 --> 00:17:00,880
Speaker 1: from rally from here. However, of course the immediate short

330
00:17:00,960 --> 00:17:04,000
Speaker 1: term people aren't interested in, you know, the fundamentals. All

331
00:17:04,040 --> 00:17:07,320
Speaker 1: they're interested in is the ability to articulate a negative

332
00:17:07,400 --> 00:17:09,520
Speaker 1: view on for example, you know, the the R and

333
00:17:09,560 --> 00:17:13,600
Speaker 1: B Chinese growth uh and and trade sentiment and the

334
00:17:13,680 --> 00:17:16,760
Speaker 1: copper prices a convenient means by which they can do so. Paul,

335
00:17:17,119 --> 00:17:19,640
Speaker 1: really quick, thirty seconds here, which medal are you most

336
00:17:19,640 --> 00:17:23,320
Speaker 1: bullish on? Then over the next six months, Over the

337
00:17:23,359 --> 00:17:25,440
Speaker 1: next six months would certainly be bullish on copy. We'd

338
00:17:25,480 --> 00:17:27,880
Speaker 1: expect to see her recovery there. I think going into

339
00:17:27,960 --> 00:17:30,760
Speaker 1: the going into the seasonal trade at the end of

340
00:17:30,760 --> 00:17:32,439
Speaker 1: the year, there's a case to be made, you know,

341
00:17:32,480 --> 00:17:34,680
Speaker 1: even for a commodity like iron are that has had

342
00:17:34,720 --> 00:17:37,200
Speaker 1: something of you know, had a very dramatic sort of

343
00:17:37,240 --> 00:17:40,720
Speaker 1: bull run. We also continue to be supportive for commodity

344
00:17:40,760 --> 00:17:43,640
Speaker 1: like nickel and something like palladium as well. Paul Gay,

345
00:17:43,680 --> 00:17:45,639
Speaker 1: thank you so much for joining us Paul Gate as

346
00:17:45,640 --> 00:17:48,679
Speaker 1: a senior research channels covering European medals and mining for

347
00:17:48,800 --> 00:18:05,479
Speaker 1: Sanford Bernstein based in London. We appreciate your comment if

348
00:18:05,560 --> 00:18:08,400
Speaker 1: we talk fixed income. We talked to Ira Jersey, chief

349
00:18:08,480 --> 00:18:11,840
Speaker 1: US interest rate strategist for Bloomberg Intelligence, we should start

350
00:18:11,880 --> 00:18:15,840
Speaker 1: with yields that touch the lowest in the US yesterday

351
00:18:15,880 --> 00:18:18,160
Speaker 1: all the price action. I want to start a little

352
00:18:18,160 --> 00:18:20,440
Speaker 1: bit differently though, because we got that op ed in

353
00:18:20,480 --> 00:18:23,639
Speaker 1: the Wall Street Journal of former FED chairs saying that

354
00:18:23,680 --> 00:18:26,520
Speaker 1: it was really important to have an independent FED. Meanwhile,

355
00:18:26,840 --> 00:18:29,480
Speaker 1: James Bullard spoke to the a f P. He's a St.

356
00:18:29,520 --> 00:18:32,119
Speaker 1: Louis FED president, and he said that the FED has

357
00:18:32,200 --> 00:18:35,560
Speaker 1: to avoid uh sort of responding in with rate cuts

358
00:18:35,600 --> 00:18:38,440
Speaker 1: every time there's a tit for tat in the trade war.

359
00:18:38,800 --> 00:18:42,359
Speaker 1: This seems to indicate there's a pushback to the assumption

360
00:18:42,400 --> 00:18:44,919
Speaker 1: in markets that the FED will respond with deeper cuts

361
00:18:45,080 --> 00:18:47,640
Speaker 1: to the trade uncertainty. Ira, what's your take on this? Yeah,

362
00:18:47,680 --> 00:18:50,600
Speaker 1: I think that James Bullard is probably the first of

363
00:18:51,040 --> 00:18:52,840
Speaker 1: probably a few FED speakers that are going to come

364
00:18:52,880 --> 00:18:54,840
Speaker 1: out over the next couple of weeks and talk about

365
00:18:55,240 --> 00:18:57,920
Speaker 1: that we're looking at the real economy and we're looking at,

366
00:18:57,960 --> 00:19:01,320
Speaker 1: you know, how trade and trade tensions might impact the

367
00:19:01,359 --> 00:19:03,520
Speaker 1: real economy going forward, and that's what we're going to

368
00:19:03,600 --> 00:19:06,800
Speaker 1: react to we're not reacting to headlines, were not reacting

369
00:19:06,840 --> 00:19:09,760
Speaker 1: to tweets. We're going to react more to the kind

370
00:19:09,760 --> 00:19:11,480
Speaker 1: of the the boots on the ground and the normal

371
00:19:11,520 --> 00:19:13,040
Speaker 1: things that they look at. And I think that the

372
00:19:13,160 --> 00:19:16,960
Speaker 1: cut that occurred in July was in part um that

373
00:19:17,119 --> 00:19:19,640
Speaker 1: they had the ammunition because there was increased in certainty

374
00:19:19,640 --> 00:19:23,320
Speaker 1: about the economic outlook. There is slowing global growth and

375
00:19:23,359 --> 00:19:25,680
Speaker 1: when you look at some survey indicators like I s

376
00:19:25,800 --> 00:19:29,199
Speaker 1: M new orders, they're teetering on the edge of growth

377
00:19:29,240 --> 00:19:32,399
Speaker 1: actually going negative. So um, so that's something that the

378
00:19:32,400 --> 00:19:34,240
Speaker 1: FED wants again in front of. So you know, the

379
00:19:34,240 --> 00:19:37,440
Speaker 1: other thing that he said that that President Bullard mentioned

380
00:19:37,520 --> 00:19:39,520
Speaker 1: was he's going to be looking at incoming data. So

381
00:19:39,560 --> 00:19:43,360
Speaker 1: it's really about data and then data expectations regardless of

382
00:19:43,840 --> 00:19:46,600
Speaker 1: you know, what either the president wants or maybe what

383
00:19:46,680 --> 00:19:49,720
Speaker 1: even what the markets expecting. So I I'm looking at

384
00:19:49,720 --> 00:19:52,920
Speaker 1: the tenure treasury right now one point seven five, one

385
00:19:52,920 --> 00:19:55,760
Speaker 1: point seven six, and I know that they and when

386
00:19:55,760 --> 00:19:57,800
Speaker 1: I look at the futures, the markets pricing in three,

387
00:19:58,119 --> 00:20:01,200
Speaker 1: I guess more more likely four rap cuts going forward.

388
00:20:01,240 --> 00:20:04,720
Speaker 1: What is the market seeing that perhaps the feed is

389
00:20:04,760 --> 00:20:07,000
Speaker 1: not and maybe some observers are not seeing as it

390
00:20:07,040 --> 00:20:09,399
Speaker 1: relates the economy. Well, yeah, yeah, I think that the

391
00:20:09,440 --> 00:20:14,840
Speaker 1: market really is looking forward to additional and firstly uncertainty,

392
00:20:14,840 --> 00:20:17,320
Speaker 1: but also much slower growth and also you know, kind

393
00:20:17,359 --> 00:20:21,359
Speaker 1: of easier, easier monetary policy globally, So the idea that

394
00:20:21,440 --> 00:20:25,720
Speaker 1: the ECB might be starting a new round of quantitative easing,

395
00:20:25,840 --> 00:20:28,000
Speaker 1: so a lot of a lot more asset purchases, as

396
00:20:28,040 --> 00:20:31,879
Speaker 1: well as maybe another deposit rate cut in September. So

397
00:20:31,960 --> 00:20:33,720
Speaker 1: all of those things I think are weighing on on

398
00:20:33,760 --> 00:20:36,439
Speaker 1: the market. So the market was pricing in for another

399
00:20:36,680 --> 00:20:39,440
Speaker 1: for basically what we are now about a month ago,

400
00:20:39,520 --> 00:20:41,760
Speaker 1: and then things kind of got better, at least from

401
00:20:41,760 --> 00:20:44,840
Speaker 1: a sentiment perspective, and then you know, over the last

402
00:20:44,880 --> 00:20:48,520
Speaker 1: week they've gotten really four days, they've gotten significantly worse,

403
00:20:48,640 --> 00:20:51,560
Speaker 1: and and it's it's all about sentiment, I think, in

404
00:20:51,680 --> 00:20:54,760
Speaker 1: the market right now. So we could easily take back um.

405
00:20:54,920 --> 00:20:57,600
Speaker 1: So right now we're we're priced for another four cuts

406
00:20:57,600 --> 00:20:59,639
Speaker 1: by the end of next year, by the end of

407
00:20:59,680 --> 00:21:02,080
Speaker 1: twenty twenty, so two more this year to next year,

408
00:21:02,280 --> 00:21:04,480
Speaker 1: but we could easily take one or two of those

409
00:21:04,520 --> 00:21:08,080
Speaker 1: back in in a heartbeat. Basically, if say trade tensions

410
00:21:08,240 --> 00:21:12,040
Speaker 1: end up end up being um being resolved to say

411
00:21:12,080 --> 00:21:15,399
Speaker 1: at the beginning of sometime in September, when the US

412
00:21:15,440 --> 00:21:17,680
Speaker 1: and China have these talks, and you know, that will

413
00:21:17,760 --> 00:21:20,280
Speaker 1: change that sentiment very quickly. So it's one thing for

414
00:21:20,359 --> 00:21:23,200
Speaker 1: Jimbler to come out and say that the FED can't

415
00:21:23,240 --> 00:21:25,800
Speaker 1: respond to every t tit for tat in the trade war.

416
00:21:26,040 --> 00:21:28,200
Speaker 1: It's another thing for j Powell, the FED chair, to

417
00:21:28,320 --> 00:21:30,560
Speaker 1: come out and say that. And I'm wondering, especially in

418
00:21:30,640 --> 00:21:32,639
Speaker 1: light of that op ed that was printed in the

419
00:21:32,640 --> 00:21:35,639
Speaker 1: Wall Street Journal, I'm wondering, is there a growing fear

420
00:21:35,920 --> 00:21:38,520
Speaker 1: that J. Powell is not independent, that he will cave

421
00:21:38,560 --> 00:21:42,480
Speaker 1: to market sentiment and market expectations and the pressure to

422
00:21:42,720 --> 00:21:45,520
Speaker 1: be overly easy at a time when the economy still

423
00:21:45,520 --> 00:21:47,960
Speaker 1: looks good. Well, I think we give a little bit

424
00:21:48,000 --> 00:21:50,439
Speaker 1: too much credit to the FED chair. I think, you know,

425
00:21:50,920 --> 00:21:53,199
Speaker 1: you know, Alan Greenspan was probably the first kind of

426
00:21:53,240 --> 00:21:57,359
Speaker 1: imperial chair of the of the Federal Reserve. UM. So

427
00:21:57,440 --> 00:21:59,879
Speaker 1: I think at this point there there are people like

428
00:22:00,080 --> 00:22:03,080
Speaker 1: Richard Clarda, for example, who he's not going to be

429
00:22:03,080 --> 00:22:06,160
Speaker 1: beholden to tweets and he's not going to be uh,

430
00:22:06,200 --> 00:22:08,840
Speaker 1: He's gonna look at data within his own, his own

431
00:22:08,880 --> 00:22:13,040
Speaker 1: monetary policy framework and make his decision based on on

432
00:22:13,080 --> 00:22:16,359
Speaker 1: that reason. He's uh, so, I think it's not J.

433
00:22:16,520 --> 00:22:18,320
Speaker 1: Powell that that you have to worry about, but it's

434
00:22:18,480 --> 00:22:20,320
Speaker 1: you know, how how how much are all of the

435
00:22:20,359 --> 00:22:23,359
Speaker 1: other members of the FOMC influence And I suspect that

436
00:22:23,400 --> 00:22:26,000
Speaker 1: most of them have big enough egos, personalities and our

437
00:22:26,040 --> 00:22:30,040
Speaker 1: type of personalities that that while they're they're not going

438
00:22:30,080 --> 00:22:32,639
Speaker 1: to be immune to you know, some of the chatter

439
00:22:32,760 --> 00:22:35,600
Speaker 1: by by people in the administration, they are going to

440
00:22:35,920 --> 00:22:39,240
Speaker 1: ultimately act independent and in how they believe they could

441
00:22:39,240 --> 00:22:42,920
Speaker 1: best serve the the economy of the United States. So, I,

442
00:22:42,920 --> 00:22:46,360
Speaker 1: I know, interest rate geeks like yourself model this stuff out.

443
00:22:46,400 --> 00:22:49,040
Speaker 1: Where do you think the tenure treasury yield should be

444
00:22:49,119 --> 00:22:53,480
Speaker 1: given economic data? Are you okay with that? I prefer

445
00:22:53,600 --> 00:22:57,399
Speaker 1: to be called a nerd but o um, the so,

446
00:22:57,680 --> 00:23:00,480
Speaker 1: so our model has fair value right now just based

447
00:23:00,480 --> 00:23:03,760
Speaker 1: on where economic conditions are at a little bit over

448
00:23:03,800 --> 00:23:06,360
Speaker 1: two percent, closer to two and a quarter percent. So

449
00:23:06,520 --> 00:23:09,399
Speaker 1: you know, we are very rich to where where our

450
00:23:09,480 --> 00:23:13,440
Speaker 1: work says is fair value what the markets pricing right now? Um,

451
00:23:13,480 --> 00:23:15,639
Speaker 1: if you if you just plug things into our fundamental

452
00:23:15,640 --> 00:23:19,280
Speaker 1: fair value model. UH, it's pricing basically stagnant growth. So

453
00:23:19,440 --> 00:23:22,159
Speaker 1: we have not a recession, but we have zero GDP

454
00:23:22,320 --> 00:23:25,520
Speaker 1: growth priced in as well as the Federal Reserve starting

455
00:23:26,080 --> 00:23:28,439
Speaker 1: what we're dubbing is QWI light, so so the Federal

456
00:23:28,480 --> 00:23:32,000
Speaker 1: Reserve starting to keep reserve balances constant and do some

457
00:23:32,040 --> 00:23:35,320
Speaker 1: modest bond buying. So so that's why I say, like,

458
00:23:35,440 --> 00:23:38,840
Speaker 1: we have this big uncertainty premium built into the bond

459
00:23:38,880 --> 00:23:41,639
Speaker 1: market right now. And just like we got here very

460
00:23:41,720 --> 00:23:44,000
Speaker 1: quickly in three days, we rallied you know, thirty five

461
00:23:44,040 --> 00:23:46,600
Speaker 1: basis points. We could easily undo all of that in

462
00:23:46,840 --> 00:23:49,120
Speaker 1: just a few days as well, if there's some sort

463
00:23:49,119 --> 00:23:52,760
Speaker 1: of certainty that's built into some of the expectations for

464
00:23:52,800 --> 00:23:55,600
Speaker 1: the economy and UH, and the the trade tensions going forward.

465
00:23:56,000 --> 00:24:00,200
Speaker 1: Our Jersey thank you so much. Our resident interest rate

466
00:24:00,240 --> 00:24:04,200
Speaker 1: a NERD is the preferred term. Excuse you totally went

467
00:24:05,040 --> 00:24:07,959
Speaker 1: way off the reservation there, exactly. Chief US Interest Rate

468
00:24:07,960 --> 00:24:10,200
Speaker 1: strategist for Bloomberg Intelligence and joining us on the phone

469
00:24:10,200 --> 00:24:13,240
Speaker 1: from Princeton, New Jersey. We appreciate that. Thanks for listening

470
00:24:13,280 --> 00:24:15,680
Speaker 1: to the Bloomberg P and L podcast. You can subscribe

471
00:24:15,680 --> 00:24:18,480
Speaker 1: and listen to interviews at Apple Podcasts or whatever podcast

472
00:24:18,520 --> 00:24:22,040
Speaker 1: platform you prefer. Paul Sweeney, I'm on Twitter at pt Sweeney.

473
00:24:22,119 --> 00:24:24,359
Speaker 1: I'm Lisa abram Woyit's I'm on Twitter at Lisa A.

474
00:24:24,400 --> 00:24:27,000
Speaker 1: Bram Wits one before the podcast, you can always catch

475
00:24:27,080 --> 00:24:28,879
Speaker 1: us worldwide. I'm Bloomberg Radio