1 00:00:05,800 --> 00:00:08,360 Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim 2 00:00:08,400 --> 00:00:11,440 Speaker 1: Fox along with my co host Lisa Bramowitz. Each day 3 00:00:11,480 --> 00:00:15,000 Speaker 1: we bring you the most important, noteworthy, and useful interviews 4 00:00:15,040 --> 00:00:17,520 Speaker 1: for you and your money, whether you're at the grocery 5 00:00:17,560 --> 00:00:20,560 Speaker 1: store or the trading floor. Find the Bloomberg p m 6 00:00:20,680 --> 00:00:32,360 Speaker 1: L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. 7 00:00:32,400 --> 00:00:34,839 Speaker 1: I'm excited to bring in Bob English. He's an executive 8 00:00:34,840 --> 00:00:38,880 Speaker 1: director at republic e n dot Org. It's a nonprofit 9 00:00:38,960 --> 00:00:41,919 Speaker 1: climate change group that he founded. He is also a 10 00:00:41,960 --> 00:00:45,960 Speaker 1: former South Carolina Republican congressman both in the nineties and 11 00:00:46,040 --> 00:00:48,720 Speaker 1: the two thousands, and a former climate change denier who 12 00:00:48,720 --> 00:00:51,880 Speaker 1: has turned into an environmental activist. Bob, thank you so 13 00:00:51,960 --> 00:00:54,120 Speaker 1: much for joining us on this day when we are 14 00:00:54,120 --> 00:00:57,440 Speaker 1: going to receive, ostensibly at three pm today New York time, 15 00:00:57,920 --> 00:01:00,400 Speaker 1: a decision from President Trump and whether or not the 16 00:01:00,480 --> 00:01:04,360 Speaker 1: US will remain part of the Paris Accord. Bob, I 17 00:01:04,400 --> 00:01:07,520 Speaker 1: want to get started with the reaction that you faced 18 00:01:07,920 --> 00:01:10,720 Speaker 1: when you changed your mind and went from being a 19 00:01:10,760 --> 00:01:15,000 Speaker 1: climate change denier UH to somebody who is actively advocating 20 00:01:15,040 --> 00:01:18,120 Speaker 1: the need to change practices in order to preserve the environment. 21 00:01:18,400 --> 00:01:21,160 Speaker 1: Why do you think you got so much pushback from 22 00:01:21,319 --> 00:01:25,399 Speaker 1: fellow conservatives. Well, unfortunately, Lisa, that was during the midst 23 00:01:25,440 --> 00:01:28,639 Speaker 1: of the Great Recession, and so probably not good timing 24 00:01:28,680 --> 00:01:32,040 Speaker 1: on la part. But but you know, when I came 25 00:01:32,080 --> 00:01:34,680 Speaker 1: to that conviction that really this is real and something 26 00:01:34,720 --> 00:01:38,440 Speaker 1: we need to attend to, UM, I had to had 27 00:01:38,440 --> 00:01:40,639 Speaker 1: to do that. But UM, I think it's a different 28 00:01:40,680 --> 00:01:45,280 Speaker 1: situation now and numbers of Congress who are conservative, truly conservative, 29 00:01:46,120 --> 00:01:48,520 Speaker 1: UM can do this more safely than I did it 30 00:01:49,080 --> 00:01:53,000 Speaker 1: back in the days of the Great Recession, because when 31 00:01:53,000 --> 00:01:56,280 Speaker 1: you did it, it costs you your seat, no right 32 00:01:56,360 --> 00:01:58,720 Speaker 1: at that, plus some other heresies that I had committed 33 00:01:58,720 --> 00:02:02,680 Speaker 1: but against became Republican orthodox at the time. You know, 34 00:02:02,680 --> 00:02:06,360 Speaker 1: when it tribes under pressure, orthodox he becomes very important. 35 00:02:06,360 --> 00:02:10,120 Speaker 1: And so because you're circling the wagons to protect this 36 00:02:10,200 --> 00:02:13,239 Speaker 1: food supply the tribe. Right. But now that the economy 37 00:02:13,320 --> 00:02:18,120 Speaker 1: is doing better and people are seeing, um, the results 38 00:02:18,160 --> 00:02:23,040 Speaker 1: of how how how renewables can really feed into the grid, well, 39 00:02:23,240 --> 00:02:26,760 Speaker 1: how we can repower our lives, how this is really 40 00:02:26,800 --> 00:02:32,440 Speaker 1: pretty exciting free enterprise opportunity, then then they can they 41 00:02:32,440 --> 00:02:35,320 Speaker 1: can state it differently and it would be a different 42 00:02:35,360 --> 00:02:37,919 Speaker 1: reaction than what I got, Like I said in the 43 00:02:38,000 --> 00:02:40,440 Speaker 1: dark days of the Great Recession. Well, you know, I 44 00:02:40,480 --> 00:02:42,200 Speaker 1: just want to follow up with that because I'm wondering 45 00:02:42,240 --> 00:02:44,520 Speaker 1: maybe you can offer some insight. I mean if you 46 00:02:45,160 --> 00:02:48,280 Speaker 1: not you personally, but if one is describing himself as 47 00:02:48,360 --> 00:02:52,680 Speaker 1: a conservative, why not air on the side of caution 48 00:02:53,000 --> 00:02:56,520 Speaker 1: and whether climate change is man made or not, why 49 00:02:56,600 --> 00:03:01,320 Speaker 1: not take action in order to mitigate it's deleterious effects. 50 00:03:01,360 --> 00:03:04,120 Speaker 1: I mean, wouldn't you want to side on the you know, 51 00:03:04,240 --> 00:03:08,080 Speaker 1: with caution and protect the environment even if it wasn't 52 00:03:08,360 --> 00:03:11,960 Speaker 1: man made. Oh? Absolutely. In fact, I like to tell 53 00:03:12,000 --> 00:03:16,799 Speaker 1: audiences sometime here's a fresh twenty bill for anybody who 54 00:03:16,800 --> 00:03:21,720 Speaker 1: will call their insurance company and cancel your homeowners insurance 55 00:03:21,800 --> 00:03:25,680 Speaker 1: just for tonight, because I'm pretty sure your housing gonna 56 00:03:25,680 --> 00:03:30,120 Speaker 1: burn down tonight, and the this twenty dollars it's worth 57 00:03:30,200 --> 00:03:34,720 Speaker 1: more than the probability of your house burning tonight. Anybody 58 00:03:34,760 --> 00:03:36,880 Speaker 1: take the offer. You know, nobody can take the offer 59 00:03:36,960 --> 00:03:41,800 Speaker 1: right because you buy insurance like sexuaries. The George Schultz 60 00:03:41,880 --> 00:03:45,440 Speaker 1: likes to say against things that you that could be 61 00:03:45,480 --> 00:03:49,400 Speaker 1: really catastrophic, And the key to it is whether it's 62 00:03:49,440 --> 00:03:52,440 Speaker 1: affordable insurance. And the reality is, there is a way 63 00:03:52,480 --> 00:03:57,360 Speaker 1: to make this affordable, to make essentially affordable climate insurance 64 00:03:57,960 --> 00:04:02,360 Speaker 1: by doing a tax swap, taxing income, putting a tax 65 00:04:02,400 --> 00:04:06,200 Speaker 1: on carbon dioxide, making it an apply to imports. So 66 00:04:06,360 --> 00:04:10,480 Speaker 1: the whole world follows American leadership and essentially you buy 67 00:04:10,520 --> 00:04:15,640 Speaker 1: this insurance policy that that protects us against the downside 68 00:04:15,720 --> 00:04:20,040 Speaker 1: risk and it is significant of the effects of climate change. Well, Bob, 69 00:04:20,120 --> 00:04:23,160 Speaker 1: I imagine that you still are in communication with a 70 00:04:23,240 --> 00:04:27,320 Speaker 1: number of Republican leaders in Congress currently. Are there many 71 00:04:27,400 --> 00:04:31,000 Speaker 1: others who feel similarly to you at this point, Yeah, 72 00:04:31,080 --> 00:04:33,240 Speaker 1: and a lot of them are in the process of 73 00:04:33,279 --> 00:04:36,359 Speaker 1: figuring out can they come out on this, you know, 74 00:04:36,440 --> 00:04:38,360 Speaker 1: and really it is a little bit like coming out 75 00:04:39,040 --> 00:04:42,120 Speaker 1: to come out on climates, um and so. But that's 76 00:04:42,200 --> 00:04:44,719 Speaker 1: that's going to change. Just is this is that other 77 00:04:44,760 --> 00:04:47,839 Speaker 1: matter change. This is changing. People are realizing that, of 78 00:04:47,839 --> 00:04:51,480 Speaker 1: course you've got a problem here, and up until now, 79 00:04:51,520 --> 00:04:54,320 Speaker 1: what conservatives have heard is that's a big government is 80 00:04:54,360 --> 00:04:56,599 Speaker 1: going to solve it. Once they hear that there's a 81 00:04:56,640 --> 00:04:59,760 Speaker 1: small government way to do this, then they can they 82 00:04:59,760 --> 00:05:02,200 Speaker 1: can open to it. Right. Well, but Bob, I think 83 00:05:02,200 --> 00:05:05,440 Speaker 1: that one of the main criticisms on behalf of conservatives 84 00:05:05,480 --> 00:05:08,400 Speaker 1: against some of these agreements is that they impede free 85 00:05:08,400 --> 00:05:11,880 Speaker 1: market activities and that they basically put a thumb on 86 00:05:11,920 --> 00:05:15,760 Speaker 1: a weight on a scale. Uh, simply on a belief, 87 00:05:15,800 --> 00:05:18,840 Speaker 1: but not necessarily Uh. With the knowledge of this will 88 00:05:18,880 --> 00:05:23,360 Speaker 1: definitely make everything better. Yeah. Well actually yeah, if you 89 00:05:23,440 --> 00:05:26,480 Speaker 1: really believe in free markets, as I do and as 90 00:05:26,520 --> 00:05:29,400 Speaker 1: we do it republic Ean dot Org, then you want 91 00:05:29,480 --> 00:05:33,360 Speaker 1: all the cost in on all the fuels and all 92 00:05:33,400 --> 00:05:38,040 Speaker 1: the subsidies removed, and on that level playing field. We 93 00:05:38,120 --> 00:05:42,360 Speaker 1: believe that free enterprise can deliver innovation faster than government 94 00:05:42,400 --> 00:05:46,040 Speaker 1: mandates or fickle tax in centers could ever imagine. And 95 00:05:46,080 --> 00:05:51,000 Speaker 1: so a true belief in free markets says, okay, all 96 00:05:51,080 --> 00:05:55,359 Speaker 1: costs in, all subsidies out, and then compete, right, And 97 00:05:55,400 --> 00:05:57,680 Speaker 1: so the government's only role is to be the honest 98 00:05:57,720 --> 00:06:01,599 Speaker 1: cop on the beat that says that enforces that that 99 00:06:01,800 --> 00:06:05,280 Speaker 1: level playing field. Indeed, all right, well, thanks very much, 100 00:06:05,440 --> 00:06:07,880 Speaker 1: Bob English. We look forward to hearing you hearing from 101 00:06:07,880 --> 00:06:11,000 Speaker 1: you in the future. Bob English is the executive director 102 00:06:11,080 --> 00:06:14,200 Speaker 1: of republic E n dot Org. It is a nonprofit 103 00:06:14,279 --> 00:06:18,479 Speaker 1: climate change advocacy group. He's also a former GOP and 104 00:06:18,560 --> 00:06:35,919 Speaker 1: congressman from South Carolina's fourth congressional district. Well, the Miami Marlins, 105 00:06:35,960 --> 00:06:39,560 Speaker 1: they didn't necessarily take on the Philadelphia Phillies yesterday in 106 00:06:39,640 --> 00:06:43,320 Speaker 1: an empty stadium, but it was pretty close. About fIF 107 00:06:43,800 --> 00:06:48,000 Speaker 1: hundred and ninety fans one thousand, five nine fans were 108 00:06:48,080 --> 00:06:51,480 Speaker 1: in the stadium at Marlins Park for the afternoon game. 109 00:06:51,520 --> 00:06:54,160 Speaker 1: So why would anyone want to buy a major League 110 00:06:54,200 --> 00:06:56,800 Speaker 1: baseball team? Well, here to tell us is Chris Russo. 111 00:06:56,920 --> 00:07:00,000 Speaker 1: He is the head of the sports practice at Hulhand Loki. Chris, 112 00:07:00,000 --> 00:07:02,280 Speaker 1: thanks for coming into the studio, Thanks for having me. 113 00:07:02,360 --> 00:07:04,320 Speaker 1: So tell me about the Marlins, because I mean this, 114 00:07:04,480 --> 00:07:07,760 Speaker 1: there's been a bidding war for the Marlins. But why 115 00:07:07,800 --> 00:07:10,680 Speaker 1: a bidding war for team that can can't even draw 116 00:07:10,760 --> 00:07:13,840 Speaker 1: two thou spectators. Well, there's certainly have been a lot 117 00:07:13,880 --> 00:07:17,480 Speaker 1: of reports over the past months about potential bids from 118 00:07:17,640 --> 00:07:21,640 Speaker 1: Derek Jeter and Jeb Bush from Mitt Bromney's son, And 119 00:07:21,680 --> 00:07:24,320 Speaker 1: part of the appeal is for these professional sports teams, 120 00:07:24,320 --> 00:07:27,080 Speaker 1: they become pretty good businesses. The rights fees that are 121 00:07:27,080 --> 00:07:31,440 Speaker 1: being paid by television have grown dramatically, Sponsorship has grown, 122 00:07:31,520 --> 00:07:33,960 Speaker 1: licensing has grown, and the reality of it is there's 123 00:07:34,000 --> 00:07:37,040 Speaker 1: a real scarcity of teams available. The Marlins is practically 124 00:07:37,040 --> 00:07:39,600 Speaker 1: the only team that appears to be available, and there's 125 00:07:39,600 --> 00:07:41,240 Speaker 1: really only been a couple of deals in the last 126 00:07:41,240 --> 00:07:43,800 Speaker 1: two years among the four major leagues, So there's really 127 00:07:43,840 --> 00:07:46,600 Speaker 1: a scarcity factor that drives the interest in some of 128 00:07:46,640 --> 00:07:51,280 Speaker 1: these clubs. Let's say a team does want to examine 129 00:07:51,320 --> 00:07:54,600 Speaker 1: the field for a buyer. Do you have a set 130 00:07:54,680 --> 00:07:58,240 Speaker 1: field of potential buyers out there or is that sort 131 00:07:58,280 --> 00:08:01,600 Speaker 1: of approaching anyone who has a certain amount of net 132 00:08:01,640 --> 00:08:03,960 Speaker 1: income or a certain amount of wealth above a certain 133 00:08:04,000 --> 00:08:07,160 Speaker 1: amount and then they've become a candidate. In recent years, 134 00:08:07,200 --> 00:08:11,480 Speaker 1: the buyers have tended to be hedge fund owners, UH, 135 00:08:11,600 --> 00:08:15,920 Speaker 1: technology owners and business people, high net worth individuals, and 136 00:08:15,920 --> 00:08:18,160 Speaker 1: there's a universe of folks that have either tried to 137 00:08:18,200 --> 00:08:21,760 Speaker 1: buy previous teams or have expressed public interest that are 138 00:08:21,800 --> 00:08:24,000 Speaker 1: typically the first ones at bat when a team like 139 00:08:24,040 --> 00:08:26,520 Speaker 1: this comes up. You need a lot of wealth and 140 00:08:26,520 --> 00:08:28,400 Speaker 1: and you need a lot of wealth in a relatively 141 00:08:28,440 --> 00:08:30,400 Speaker 1: few amount of people. So it does kind of limit 142 00:08:30,440 --> 00:08:33,440 Speaker 1: the field, all right, limiting the field, but there's certainly 143 00:08:33,480 --> 00:08:35,200 Speaker 1: a lot of people who want to get in on this, 144 00:08:35,280 --> 00:08:37,360 Speaker 1: at least in terms of being able to stream or 145 00:08:37,400 --> 00:08:42,800 Speaker 1: broadcast sports. Amazon dot Com, Hulu, Netflix, Twitter, Facebook, Are 146 00:08:42,840 --> 00:08:44,960 Speaker 1: they going to drive up the prices for everybody else? 147 00:08:45,280 --> 00:08:50,360 Speaker 1: I believe that those companies again Hulu, as you mentioned Netflix, 148 00:08:50,360 --> 00:08:53,679 Speaker 1: that aren't currently aggressively in sports may ultimately play a 149 00:08:53,760 --> 00:08:58,120 Speaker 1: role there. Uh. Amazon recently acquired NFL rights, Twitter had 150 00:08:58,200 --> 00:09:01,200 Speaker 1: NFL rights last year. Facebook is now streaming baseball games. 151 00:09:01,400 --> 00:09:03,480 Speaker 1: This is really good news for the sports leagues and 152 00:09:03,559 --> 00:09:06,400 Speaker 1: organizations because they now have new bidders in the mix 153 00:09:06,520 --> 00:09:08,440 Speaker 1: who can drive up the prices. You'll still have some 154 00:09:08,480 --> 00:09:11,120 Speaker 1: of the traditional media companies involved in wanting to have 155 00:09:11,200 --> 00:09:13,640 Speaker 1: those game rights, but I think that competition is good 156 00:09:13,640 --> 00:09:16,520 Speaker 1: for the owners. So how much of your job is 157 00:09:16,880 --> 00:09:20,520 Speaker 1: facilitating deals with people purchasing major league teams or minor 158 00:09:20,600 --> 00:09:23,360 Speaker 1: league teams and how much is talking with people in 159 00:09:23,400 --> 00:09:26,880 Speaker 1: the sports universe about investing their wealth, because you also 160 00:09:26,880 --> 00:09:29,280 Speaker 1: you do both, right. We we focus on being an 161 00:09:29,280 --> 00:09:32,640 Speaker 1: advisor on mergers and acquisitions, deals and capital raising, and 162 00:09:32,640 --> 00:09:35,600 Speaker 1: in my particular case, in the sports space, that includes 163 00:09:35,640 --> 00:09:39,240 Speaker 1: not only teams, though that includes sports businesses. Last year 164 00:09:39,280 --> 00:09:42,880 Speaker 1: there were transactions involving companies like Formula one in UFC 165 00:09:43,440 --> 00:09:45,400 Speaker 1: and liar Field Sports, and we were involved in a 166 00:09:45,440 --> 00:09:48,080 Speaker 1: deal involving a company called World Golf Tour that was 167 00:09:48,120 --> 00:09:52,119 Speaker 1: sold to Top Golf. So we advise businesses and potentially 168 00:09:52,160 --> 00:09:55,679 Speaker 1: teams around sports transactions, really around M and A and 169 00:09:55,760 --> 00:09:59,240 Speaker 1: capital raising. So you'd probably have a fantastic view into 170 00:09:59,360 --> 00:10:01,120 Speaker 1: e SP and in some of the woes that we've 171 00:10:01,160 --> 00:10:04,520 Speaker 1: seen there with the viewership going down, do you see 172 00:10:04,679 --> 00:10:08,160 Speaker 1: a similar kind of decrease in interest across the various 173 00:10:08,200 --> 00:10:11,120 Speaker 1: sports businesses that rely on consumers to pay for the 174 00:10:11,160 --> 00:10:14,480 Speaker 1: consumption of sports. I don't think there's a decrease uh 175 00:10:14,480 --> 00:10:17,040 Speaker 1: in interest in sports or even paying for sports. I 176 00:10:17,040 --> 00:10:19,040 Speaker 1: think it's going to be done differently over time. I 177 00:10:19,040 --> 00:10:21,720 Speaker 1: think consumers are going to pay more directly for the 178 00:10:21,760 --> 00:10:25,280 Speaker 1: sports they consume through digital outlets, as opposed to necessarily 179 00:10:25,320 --> 00:10:28,680 Speaker 1: buying big cable bundles that include sports among everything else. 180 00:10:28,679 --> 00:10:31,240 Speaker 1: So I think the interest in sports is continuing to grow. 181 00:10:31,320 --> 00:10:33,840 Speaker 1: I think the way sports is being delivered is changing, 182 00:10:33,840 --> 00:10:36,240 Speaker 1: and it's starting to change pretty rapidly. Is there a 183 00:10:36,320 --> 00:10:40,880 Speaker 1: particular sport or league that is new that would allow 184 00:10:41,240 --> 00:10:44,560 Speaker 1: new entrants at lower price points. I'm thinking For example, 185 00:10:44,640 --> 00:10:47,640 Speaker 1: there's drone racing league. I mean, if you want to 186 00:10:47,720 --> 00:10:50,560 Speaker 1: race your drone, there's a team I guess, and you 187 00:10:50,559 --> 00:10:54,640 Speaker 1: can participate. Or even watching other people play video games 188 00:10:54,679 --> 00:10:58,199 Speaker 1: and get it well, it's hot, right absolutely. I let 189 00:10:58,200 --> 00:11:01,400 Speaker 1: me think about the the video. Watching people play video 190 00:11:01,520 --> 00:11:05,840 Speaker 1: games in an arena draws more fans then the Marlins. 191 00:11:05,920 --> 00:11:09,280 Speaker 1: Drew Less sports, which is what you're referring to, has 192 00:11:09,320 --> 00:11:12,400 Speaker 1: become a huge phenomenon in terms of the fandom. In 193 00:11:12,480 --> 00:11:15,120 Speaker 1: terms of streaming, there's a platform called Twitch that Amazon 194 00:11:15,200 --> 00:11:18,920 Speaker 1: owns enormous usage, and so I think what digital platforms 195 00:11:18,920 --> 00:11:21,400 Speaker 1: do is they allow the emergence of new sports and properties, 196 00:11:21,400 --> 00:11:24,240 Speaker 1: whether it is drowne racing, whether it's e sports. There's 197 00:11:24,280 --> 00:11:27,120 Speaker 1: a company called flow Sports that provides coverage of of 198 00:11:27,200 --> 00:11:29,560 Speaker 1: some of the you know, lesser of covered sports on 199 00:11:29,559 --> 00:11:32,520 Speaker 1: TV like wrestling, and and and track and field, and 200 00:11:32,559 --> 00:11:35,080 Speaker 1: so that offers new opportunities for these sports to reach 201 00:11:35,080 --> 00:11:38,280 Speaker 1: an audience. So how about the traditional sports do you 202 00:11:38,960 --> 00:11:41,240 Speaker 1: has your experience shown that the value of some of 203 00:11:41,280 --> 00:11:45,239 Speaker 1: these Major League Baseball teams or football teams has deteriorated 204 00:11:45,240 --> 00:11:48,720 Speaker 1: as these other sports come up. I think the value 205 00:11:48,760 --> 00:11:52,040 Speaker 1: of these teams. The Major League teams continues to rise, 206 00:11:52,160 --> 00:11:55,080 Speaker 1: in part because they're still benefiting from the large rights 207 00:11:55,120 --> 00:11:57,560 Speaker 1: fees deals that are still in place from television, and 208 00:11:57,640 --> 00:12:00,400 Speaker 1: also because of the scarcity value. The question will be 209 00:12:00,440 --> 00:12:03,720 Speaker 1: over time, do those media whites fees continue to be large, 210 00:12:03,760 --> 00:12:06,280 Speaker 1: even if they're from different sources, or does that start 211 00:12:06,320 --> 00:12:08,120 Speaker 1: to level off? But right now, again, there are so 212 00:12:08,200 --> 00:12:10,840 Speaker 1: few teams available in such demand for them that the 213 00:12:10,880 --> 00:12:13,920 Speaker 1: pricing continues to rise. Thank you so much for joining us. 214 00:12:13,920 --> 00:12:16,040 Speaker 1: A truly fascinating area and one that I know that 215 00:12:16,080 --> 00:12:18,480 Speaker 1: my husband will be asking me a lot about tonight. 216 00:12:18,600 --> 00:12:21,480 Speaker 1: As I can see you're getting into drone racing. Drone racing, 217 00:12:21,600 --> 00:12:24,960 Speaker 1: and so what would be the like technical you can 218 00:12:25,000 --> 00:12:27,560 Speaker 1: sit and use you know, you can you can watch, 219 00:12:27,640 --> 00:12:29,720 Speaker 1: you can sit all right, Chris Russo, thank you so 220 00:12:29,800 --> 00:12:31,800 Speaker 1: much for joining us. Chris Russo as head of sports 221 00:12:31,800 --> 00:12:34,920 Speaker 1: practice at Julihan Loki, which is based in New York, 222 00:12:34,960 --> 00:12:38,480 Speaker 1: talking to us about mergers and acquisition opportunities within both 223 00:12:38,520 --> 00:12:42,680 Speaker 1: sports teams and sports businesses. Know him. No, I don't 224 00:12:42,679 --> 00:12:48,040 Speaker 1: think drone racing. You maybe like shuffle board. What's the board? 225 00:12:49,400 --> 00:12:59,400 Speaker 1: We get you a ship to play that on anyway, 226 00:13:00,440 --> 00:13:01,920 Speaker 1: we want to take a moment to let you know 227 00:13:01,960 --> 00:13:04,920 Speaker 1: about something new from Bloomberg. Starting right now, you can 228 00:13:05,000 --> 00:13:07,880 Speaker 1: use our io s app or our new Google Chrome 229 00:13:07,920 --> 00:13:11,520 Speaker 1: extension to scan any news story on any website, instantly 230 00:13:11,559 --> 00:13:14,400 Speaker 1: revealing relevant news and market data from Bloomberg and other 231 00:13:14,400 --> 00:13:17,040 Speaker 1: sources related to the companies and people you're reading about. 232 00:13:17,280 --> 00:13:19,240 Speaker 1: So no matter where you're reading the news, you can 233 00:13:19,280 --> 00:13:21,800 Speaker 1: bring the power of Bloomberg's news and data with you. 234 00:13:22,000 --> 00:13:25,080 Speaker 1: It's pretty amazing. Download our Io s app or search 235 00:13:25,120 --> 00:13:27,320 Speaker 1: for the Bloomberg extension on the Chrome Store to try 236 00:13:27,320 --> 00:13:30,440 Speaker 1: it out. Learn more at Bloomberg dot com slash lens. 237 00:13:40,000 --> 00:13:43,240 Speaker 1: It has been a painful year for anybody looking to 238 00:13:43,320 --> 00:13:48,640 Speaker 1: invest really conservatively, given the fact that gold and silver 239 00:13:48,800 --> 00:13:52,679 Speaker 1: and some of the safe haven trades have not delivered 240 00:13:52,720 --> 00:13:55,840 Speaker 1: the results that many were hoping. Michael Cogo is President 241 00:13:55,920 --> 00:13:59,800 Speaker 1: portfolio manager of the Permanent Portfolio family of funds, which 242 00:13:59,800 --> 00:14:03,560 Speaker 1: over sees about three billion dollars, and he joins us now. Michael, 243 00:14:04,040 --> 00:14:07,280 Speaker 1: I was looking at your Permanent portfolio. It's a two 244 00:14:07,280 --> 00:14:10,200 Speaker 1: point eight billion dollar fund, uh and I was looking 245 00:14:10,200 --> 00:14:14,600 Speaker 1: at some of the top investments with gold, silver treasuries. 246 00:14:15,120 --> 00:14:17,679 Speaker 1: These have not been assets that have been as reliable 247 00:14:17,720 --> 00:14:20,640 Speaker 1: this year. Do you still think that they are a 248 00:14:20,640 --> 00:14:22,960 Speaker 1: worthwhile Betton? Do you think that we are going to 249 00:14:23,040 --> 00:14:27,120 Speaker 1: move to a more risk off environment anytime soon? Good morning, Lisa, 250 00:14:27,160 --> 00:14:29,520 Speaker 1: Thanks for having me. Um. You know, yeah, I think 251 00:14:29,520 --> 00:14:32,480 Speaker 1: there's always room for diversified investing, and that's what we 252 00:14:32,600 --> 00:14:35,920 Speaker 1: do in our permanent portfolio. So I wouldn't say gold 253 00:14:35,960 --> 00:14:38,840 Speaker 1: and silver have had awful years. They you know, they're 254 00:14:38,880 --> 00:14:43,160 Speaker 1: doing okay there. But but realistically, right now, given the 255 00:14:43,720 --> 00:14:47,400 Speaker 1: interest rate curve, given corporate earnings, given the likelihood of 256 00:14:47,440 --> 00:14:52,280 Speaker 1: additional growth, UM kind of a bent towards policy, tax regulation, 257 00:14:52,520 --> 00:14:54,640 Speaker 1: at least that's what we're all expecting at some point 258 00:14:54,640 --> 00:14:58,560 Speaker 1: in time. Um, there is a little resistance two stocks 259 00:14:58,600 --> 00:15:01,360 Speaker 1: continuing to drift up and and so that's what happened. 260 00:15:01,360 --> 00:15:05,240 Speaker 1: And so while we would advocate a healthy UH investment 261 00:15:05,240 --> 00:15:08,760 Speaker 1: in stocks as well because that is a growth asset class, 262 00:15:09,000 --> 00:15:12,200 Speaker 1: we also diversify ourselves among a bunch of other asset 263 00:15:12,240 --> 00:15:14,960 Speaker 1: classes just in the event that the economy turns to 264 00:15:15,000 --> 00:15:18,720 Speaker 1: account for multiple scenarios to profit but also protect against 265 00:15:18,800 --> 00:15:21,360 Speaker 1: downside risk. So I think there's always a good time 266 00:15:21,400 --> 00:15:24,520 Speaker 1: to be diversified and to hedge your bets even in 267 00:15:25,120 --> 00:15:28,000 Speaker 1: a positive stock market environment. All right, Michael, I wonder 268 00:15:28,000 --> 00:15:30,040 Speaker 1: if you could tell us what is the most unloved 269 00:15:30,080 --> 00:15:33,640 Speaker 1: investment category that you've been presented with over the last quarter. 270 00:15:35,400 --> 00:15:40,480 Speaker 1: I would say probably energy, UM, materials, and UH and 271 00:15:40,960 --> 00:15:45,080 Speaker 1: maybe financials from an equity market standpoint. Um, you know, 272 00:15:45,160 --> 00:15:48,680 Speaker 1: because some of those trades had had a good bump 273 00:15:48,760 --> 00:15:54,280 Speaker 1: post election on expectations UM of those types of industries outperforming. 274 00:15:54,720 --> 00:15:57,560 Speaker 1: Yet while the economy is still growing, the economy so 275 00:15:57,640 --> 00:15:59,800 Speaker 1: far this year sort of continues to look a lot 276 00:15:59,840 --> 00:16:02,120 Speaker 1: like the last couple of years. And so we don't 277 00:16:02,160 --> 00:16:03,680 Speaker 1: know where we're gonna end up in Q two. But 278 00:16:03,840 --> 00:16:06,880 Speaker 1: Q one wasn't great, um, and so you're still looking 279 00:16:06,920 --> 00:16:09,760 Speaker 1: at this sort of one to two percent kind of 280 00:16:09,800 --> 00:16:14,280 Speaker 1: annualized GDP growth. I think everybody expects this catalyst through 281 00:16:14,320 --> 00:16:18,080 Speaker 1: policy and tax and less regulation, and but but to 282 00:16:18,200 --> 00:16:21,080 Speaker 1: date nothing has been passed, and so you've had incremental 283 00:16:21,160 --> 00:16:23,480 Speaker 1: gains in that area, and as a result, you haven't 284 00:16:23,520 --> 00:16:27,120 Speaker 1: had the the economic momentum to get us to high 285 00:16:27,160 --> 00:16:29,960 Speaker 1: two to three percent GDP. So, as a result, the 286 00:16:29,960 --> 00:16:33,720 Speaker 1: stocks that would benefit in that environment, the energies, the 287 00:16:33,720 --> 00:16:37,120 Speaker 1: the you know, the transports, the financials, the industrials. It's 288 00:16:37,120 --> 00:16:39,200 Speaker 1: been a lot more of a mixed picture in those 289 00:16:39,240 --> 00:16:42,560 Speaker 1: types of industries, and people have reverted to the you know, 290 00:16:42,600 --> 00:16:45,720 Speaker 1: the high profile you know, Fang plus five type stocks 291 00:16:45,800 --> 00:16:49,600 Speaker 1: and and other types of growth names, and that's where 292 00:16:49,600 --> 00:16:51,840 Speaker 1: a lot of liquidity has gone as well. Michael, I'd 293 00:16:51,840 --> 00:16:53,720 Speaker 1: love to get your take on some comments that we 294 00:16:53,840 --> 00:16:56,520 Speaker 1: heard earlier in the show from Leo Groshowski. He's the 295 00:16:56,560 --> 00:16:59,640 Speaker 1: chief investment officer B and Y Melon Wealth Management, and 296 00:16:59,680 --> 00:17:02,760 Speaker 1: he was saying that he does think that that the 297 00:17:02,800 --> 00:17:06,000 Speaker 1: market is still has value the stock market US stock 298 00:17:06,000 --> 00:17:09,600 Speaker 1: market in particular, he's going into emerging markets. He's basically 299 00:17:10,240 --> 00:17:14,720 Speaker 1: going for the risk on trade, including technology shares as 300 00:17:14,720 --> 00:17:17,480 Speaker 1: well as others. I'm wondering, do you agree with that assessment. 301 00:17:17,520 --> 00:17:19,720 Speaker 1: Do you think that that is the correct bet for 302 00:17:19,800 --> 00:17:23,600 Speaker 1: somebody generally sort of use that as a guiding principle 303 00:17:24,080 --> 00:17:27,840 Speaker 1: while making allocations right now? I sure do, and I think, 304 00:17:27,880 --> 00:17:30,920 Speaker 1: you know, we talked about our permanent portfolio being somewhat 305 00:17:31,119 --> 00:17:34,480 Speaker 1: conservative and and sort of you know, a downside risk protector, 306 00:17:34,560 --> 00:17:37,159 Speaker 1: but we also invested to make up for that to 307 00:17:37,240 --> 00:17:40,520 Speaker 1: provide growth in our portfolio. We tend to invest in growth, 308 00:17:40,600 --> 00:17:43,840 Speaker 1: high beta, high volatility type stocks to give us give 309 00:17:43,840 --> 00:17:47,280 Speaker 1: our portfolios some some growth movement. And so I think 310 00:17:47,320 --> 00:17:50,320 Speaker 1: in the stock market, I believe there's always value UM. 311 00:17:50,400 --> 00:17:52,960 Speaker 1: And I think where you you look right now, you 312 00:17:53,000 --> 00:17:55,280 Speaker 1: would look to the areas that have not kept up 313 00:17:55,280 --> 00:17:57,840 Speaker 1: with the broad market UM. And I think some of 314 00:17:57,840 --> 00:18:00,560 Speaker 1: the sectors that I mentioned would would probably get you there, 315 00:18:00,880 --> 00:18:04,600 Speaker 1: and those are the sort of risk on growth oriented names. 316 00:18:04,600 --> 00:18:06,720 Speaker 1: So I would totally be in line with that way 317 00:18:06,760 --> 00:18:10,760 Speaker 1: of thinking, and probably our own equity based investments and 318 00:18:10,800 --> 00:18:13,760 Speaker 1: where we're looking for value would would mirror that type 319 00:18:13,760 --> 00:18:15,960 Speaker 1: of thinking. Now, you've got to have a strong stomach. 320 00:18:16,000 --> 00:18:18,280 Speaker 1: That's not where the market has been so far this year, 321 00:18:18,560 --> 00:18:23,680 Speaker 1: but looking forward, UM, where the values might be going forward, UM, 322 00:18:23,760 --> 00:18:26,200 Speaker 1: I think that is the way to go. I mean, 323 00:18:26,440 --> 00:18:28,920 Speaker 1: keep in mind, the last several years, you've had very 324 00:18:28,960 --> 00:18:32,000 Speaker 1: low cost capital that's been buying stocks and bonds, and 325 00:18:32,040 --> 00:18:34,840 Speaker 1: as a result, there's definitely some sectors. And keeping mind 326 00:18:34,840 --> 00:18:37,320 Speaker 1: with low interest rates, you know, people have been searching 327 00:18:37,320 --> 00:18:40,040 Speaker 1: for yields, So there's definitely some sectors that have gotten 328 00:18:40,359 --> 00:18:43,919 Speaker 1: richly valued. The the yield equivalence in the stock market, 329 00:18:43,960 --> 00:18:47,040 Speaker 1: the consumers, UM, you know, those sorts of things that 330 00:18:47,280 --> 00:18:51,680 Speaker 1: people are still investing in, and UH, from a value standpoint, 331 00:18:51,680 --> 00:18:53,560 Speaker 1: you probably want to move away from those and into 332 00:18:53,600 --> 00:18:56,720 Speaker 1: some other things that haven't kept up that the prices 333 00:18:56,760 --> 00:18:59,639 Speaker 1: are less and have more growth potential going forward the 334 00:18:59,680 --> 00:19:02,160 Speaker 1: next for years. Well, Michael, let's say that you don't 335 00:19:02,200 --> 00:19:05,359 Speaker 1: have a strong stomach for any of this, and that 336 00:19:06,040 --> 00:19:09,120 Speaker 1: you know you perhaps think of actually taking some profits. 337 00:19:09,119 --> 00:19:12,679 Speaker 1: How can we never hear anybody say, gee, sell a 338 00:19:12,720 --> 00:19:15,320 Speaker 1: little bit. There's nothing wrong with taking a profit. You're 339 00:19:15,359 --> 00:19:20,040 Speaker 1: never gonna go broke taking profits. I I agree. I mean, 340 00:19:20,440 --> 00:19:24,440 Speaker 1: I think in this environment, after an eight plus year 341 00:19:24,560 --> 00:19:28,200 Speaker 1: bull market in stocks and bonds, that you know, that's 342 00:19:28,200 --> 00:19:31,240 Speaker 1: not to say that they will correct in and of themselves. 343 00:19:31,240 --> 00:19:33,320 Speaker 1: I mean, usually it takes more than just somebody saying 344 00:19:33,359 --> 00:19:36,800 Speaker 1: it's time for correction, UM. And the economic data isn't 345 00:19:36,840 --> 00:19:40,080 Speaker 1: supporting a recession or anything like that right now, and 346 00:19:40,119 --> 00:19:42,879 Speaker 1: so you've had UH stocks continue to go up for 347 00:19:42,920 --> 00:19:44,840 Speaker 1: the reasons I mentioned. Corporate earnings have been good in 348 00:19:44,840 --> 00:19:48,400 Speaker 1: the last three quarters. UM. But there's never a bad 349 00:19:48,440 --> 00:19:50,400 Speaker 1: time to take some money off the table. And I mean, 350 00:19:50,520 --> 00:19:52,760 Speaker 1: I think what we're hearing from our investor base a 351 00:19:52,800 --> 00:19:55,720 Speaker 1: lot lately has been okay, I still want to make 352 00:19:55,720 --> 00:19:57,439 Speaker 1: some money in the pocket. I think it has more 353 00:19:57,520 --> 00:19:59,920 Speaker 1: room to run, or maybe it's getting close to the 354 00:20:00,080 --> 00:20:02,320 Speaker 1: time that I pull back, But we're starting to hear 355 00:20:02,400 --> 00:20:05,640 Speaker 1: more people talk about what's coming next, taking some money 356 00:20:05,640 --> 00:20:08,600 Speaker 1: off the table, putting some some investments in even in 357 00:20:08,680 --> 00:20:12,200 Speaker 1: something like our fund that that is in stocks only, 358 00:20:12,520 --> 00:20:15,719 Speaker 1: you know, as a hedge against maybe the fact that 359 00:20:15,760 --> 00:20:18,080 Speaker 1: the stock market won't go on at this rate forever. 360 00:20:18,200 --> 00:20:20,400 Speaker 1: So I think it's never a bad time to take 361 00:20:20,440 --> 00:20:23,760 Speaker 1: money to take profits. UM. Keeping what you earned along 362 00:20:23,800 --> 00:20:26,080 Speaker 1: the way is as important as making it, and I 363 00:20:26,119 --> 00:20:30,040 Speaker 1: do think sometimes people forget that. So i'd agree with you, Michael. 364 00:20:30,040 --> 00:20:35,720 Speaker 1: What's the most contrarian bet. The most contrarian bet right now, 365 00:20:35,760 --> 00:20:40,439 Speaker 1: I would say would be probably equity investments in energy 366 00:20:40,480 --> 00:20:43,440 Speaker 1: and materials UM for a lot of the reasons I've 367 00:20:43,480 --> 00:20:47,560 Speaker 1: given UM, and probably the financials as well. Uh. I 368 00:20:48,000 --> 00:20:51,000 Speaker 1: think that in the longer term that's where a lot 369 00:20:51,000 --> 00:20:53,840 Speaker 1: of value is in the stock market. And uh, you know, 370 00:20:53,880 --> 00:20:57,880 Speaker 1: we certainly have strong investments there UM. But it's it's 371 00:20:57,920 --> 00:21:02,600 Speaker 1: been tough riding them at the moment um. But again, 372 00:21:02,760 --> 00:21:05,320 Speaker 1: we we think we tend to think out, you know, two, 373 00:21:05,520 --> 00:21:07,719 Speaker 1: three or five years out with a lot of our 374 00:21:07,760 --> 00:21:10,280 Speaker 1: investments and uh and so you know, we do have 375 00:21:10,320 --> 00:21:12,400 Speaker 1: the strong stomach to wait, to wait the story out 376 00:21:12,440 --> 00:21:14,600 Speaker 1: and hopefully it it plays out the way we think 377 00:21:14,640 --> 00:21:18,120 Speaker 1: it will. But yeah, that's the Conturian move right now. 378 00:21:18,160 --> 00:21:20,159 Speaker 1: You know, we're we're not in a lot of the 379 00:21:20,840 --> 00:21:24,640 Speaker 1: high profile um fang type of stocks. I think they're 380 00:21:24,680 --> 00:21:28,840 Speaker 1: all great businesses from a consumer standpoint um, but a 381 00:21:28,840 --> 00:21:30,359 Speaker 1: lot of them are very pricey. I mean, we do 382 00:21:30,440 --> 00:21:34,199 Speaker 1: own Facebook, but uh yeah, we gotta I got we 383 00:21:34,200 --> 00:21:35,560 Speaker 1: gotta leave it there. But I want to thank you 384 00:21:35,640 --> 00:21:38,639 Speaker 1: very much. Michael Cogino. He is the president and portfolio 385 00:21:38,680 --> 00:21:41,720 Speaker 1: manager of the Permanent Portfolio family of funds, helping to 386 00:21:41,760 --> 00:21:58,119 Speaker 1: manage approximately three billion dollars, based in San Francisco. This 387 00:21:58,200 --> 00:22:01,400 Speaker 1: is Bloomberg Markets on him Fox along with Lisa abrama Witz, 388 00:22:01,440 --> 00:22:04,600 Speaker 1: and we've been speaking about low stock market volatility. A 389 00:22:04,600 --> 00:22:06,399 Speaker 1: lot of people are looking for any action in the 390 00:22:06,440 --> 00:22:09,560 Speaker 1: months of April or may probably didn't get it. Here 391 00:22:09,600 --> 00:22:12,280 Speaker 1: to tell us more about it is Laura Keller Financial 392 00:22:12,320 --> 00:22:16,120 Speaker 1: reporter for Bloomberg. Laura, maybe you could just describe has 393 00:22:16,200 --> 00:22:19,440 Speaker 1: been has this period of time, this May and April 394 00:22:19,440 --> 00:22:23,200 Speaker 1: time frame, has this been unduly low when it comes 395 00:22:23,200 --> 00:22:26,560 Speaker 1: to volatility? Oh? Yes, Phim, that very much has been. 396 00:22:26,640 --> 00:22:28,680 Speaker 1: When we were looking back at the VIX index, which 397 00:22:29,080 --> 00:22:31,480 Speaker 1: is really the best measure, um what most people use, 398 00:22:31,840 --> 00:22:34,560 Speaker 1: I mean, it's really near a record low, and it's 399 00:22:34,600 --> 00:22:38,280 Speaker 1: been that way close to ten points on that VIX index, 400 00:22:38,800 --> 00:22:41,120 Speaker 1: uh for the last month. So it's really just been 401 00:22:41,359 --> 00:22:44,240 Speaker 1: quite a period of just not a lot of price changes, 402 00:22:44,359 --> 00:22:46,760 Speaker 1: and therefore, you know, for a lot of these traders, 403 00:22:46,760 --> 00:22:48,840 Speaker 1: a lot of these banks and by side to not 404 00:22:48,960 --> 00:22:51,320 Speaker 1: a lot of trading, you know, Laura, I was struck 405 00:22:51,359 --> 00:22:54,520 Speaker 1: by the action yesterday. JP Morgan shares for example, down 406 00:22:54,560 --> 00:22:57,920 Speaker 1: about a little more than two percent yesterday after the 407 00:22:57,960 --> 00:23:00,640 Speaker 1: news that they and Morgan Stanley and by of America 408 00:23:00,880 --> 00:23:04,400 Speaker 1: we're going to see substantially lower trading volumes. And I'm wondering, 409 00:23:04,680 --> 00:23:07,240 Speaker 1: why is this a surprise to markets? I mean, isn't 410 00:23:07,280 --> 00:23:10,239 Speaker 1: this clearly portrayed in all the data that things are 411 00:23:10,240 --> 00:23:12,879 Speaker 1: cooling off and that people are kind of slowing down. 412 00:23:13,880 --> 00:23:15,840 Speaker 1: I don't I don't know if that's quite truly, so 413 00:23:15,880 --> 00:23:18,040 Speaker 1: I think, you know, in terms of chats, maybe people 414 00:23:18,040 --> 00:23:20,399 Speaker 1: have some awareness of this. One of the analysts that 415 00:23:20,440 --> 00:23:22,879 Speaker 1: we spoke to for our story, Gerward Cassidy of RBC, 416 00:23:23,560 --> 00:23:26,399 Speaker 1: you know, he was saying, yes, you know, investors did 417 00:23:26,520 --> 00:23:30,639 Speaker 1: expect this quarter to be less fantastic, but probably only 418 00:23:30,680 --> 00:23:32,960 Speaker 1: about five percent or so down on the trading side 419 00:23:32,960 --> 00:23:35,760 Speaker 1: of things. And here JP Morgan is telling us Mary 420 00:23:35,800 --> 00:23:38,240 Speaker 1: and Lake the CFO yesterday, you know it's down about 421 00:23:38,280 --> 00:23:41,960 Speaker 1: fifteen percent, and Bank of America saying, look, it's probably 422 00:23:41,960 --> 00:23:44,320 Speaker 1: going to end up between ten and twelve percent down 423 00:23:44,359 --> 00:23:47,679 Speaker 1: for the quarter. So those are definitely more significant moves 424 00:23:47,680 --> 00:23:50,840 Speaker 1: than I think many investors had anticipated, even if you know, 425 00:23:50,920 --> 00:23:53,679 Speaker 1: they themselves understand that their own activity has been muted 426 00:23:53,720 --> 00:23:57,080 Speaker 1: this quarter, and then also know that banks need volume 427 00:23:57,119 --> 00:24:00,200 Speaker 1: in order to have good trading for the quarter. Well, 428 00:24:00,240 --> 00:24:02,280 Speaker 1: you mentioned also in your in your story, which I 429 00:24:02,320 --> 00:24:06,879 Speaker 1: recommend everyone on Bloomberg dot com, is that when you 430 00:24:07,000 --> 00:24:10,760 Speaker 1: have this kind of low market volatility, it may be 431 00:24:10,880 --> 00:24:13,080 Speaker 1: because all of the things that people thought were going 432 00:24:13,160 --> 00:24:17,320 Speaker 1: to happen didn't happen, such as a victory by the 433 00:24:17,359 --> 00:24:21,600 Speaker 1: far right in the French presidential elections. But having said that, 434 00:24:22,440 --> 00:24:25,560 Speaker 1: is no one really prepared for that, you know, out 435 00:24:25,560 --> 00:24:29,480 Speaker 1: of body, out of mind experience that comes from nowhere, 436 00:24:29,560 --> 00:24:33,400 Speaker 1: that the could crush your so far pretty stellar returns 437 00:24:33,440 --> 00:24:36,200 Speaker 1: for the year. You mean, if anything could change coming 438 00:24:36,280 --> 00:24:38,159 Speaker 1: up in the next that that no one can predict. 439 00:24:38,240 --> 00:24:40,240 Speaker 1: I mean it's almost as if no one is buying 440 00:24:40,280 --> 00:24:44,080 Speaker 1: insurance just because nothing has happened in the past. Yeah, 441 00:24:44,160 --> 00:24:46,000 Speaker 1: it's a little bit that way. When you start to 442 00:24:46,040 --> 00:24:48,720 Speaker 1: think about ideas and why aren't you putting money to work, 443 00:24:49,000 --> 00:24:50,960 Speaker 1: I think the better way to look at it is 444 00:24:51,000 --> 00:24:53,720 Speaker 1: actually more on the side of cash. Many investors that 445 00:24:53,720 --> 00:24:55,520 Speaker 1: I've talked to you have said, luck, we're going to cash. 446 00:24:55,560 --> 00:24:57,680 Speaker 1: There was a story a couple weeks back on the 447 00:24:57,680 --> 00:25:01,360 Speaker 1: Bloomberg terminal talking about different debt investors that have moved 448 00:25:01,400 --> 00:25:03,960 Speaker 1: that way as well. So once you have that happening 449 00:25:03,960 --> 00:25:06,960 Speaker 1: and people are pulling back their money, they're not actively 450 00:25:06,960 --> 00:25:09,680 Speaker 1: going out and buying things. So that's really what we're 451 00:25:09,680 --> 00:25:11,720 Speaker 1: talking about here. I don't know that it necessarily means 452 00:25:11,760 --> 00:25:13,720 Speaker 1: that you don't think that there could be something on 453 00:25:13,760 --> 00:25:16,560 Speaker 1: the horizon that maybe you're positioning for in the future. 454 00:25:16,800 --> 00:25:19,639 Speaker 1: It just seems like there's no you know, sort of 455 00:25:19,680 --> 00:25:21,879 Speaker 1: push for that right now, and people are actually pulling 456 00:25:21,960 --> 00:25:25,680 Speaker 1: back and getting more defensive therefore not trading as much. Laura, 457 00:25:26,000 --> 00:25:28,760 Speaker 1: Not all trading is the same with respect to profits 458 00:25:28,800 --> 00:25:31,320 Speaker 1: for the banks, and there's some higher profit, higher margin 459 00:25:31,440 --> 00:25:35,119 Speaker 1: areas like corporate debt trading or mortgage backed security trading. 460 00:25:35,160 --> 00:25:37,840 Speaker 1: Usually debt trading is more profitable than equity trading. Do 461 00:25:37,880 --> 00:25:41,119 Speaker 1: you have a sense of where the heaviest declines in 462 00:25:41,200 --> 00:25:45,760 Speaker 1: activity are right exactly, he says. You point out electronic 463 00:25:45,800 --> 00:25:48,919 Speaker 1: trading is really happening in the markets for equities, so 464 00:25:49,400 --> 00:25:51,320 Speaker 1: as a bank, you just don't get as much fees 465 00:25:51,359 --> 00:25:54,200 Speaker 1: on that. That is an area actually where marrying Lake said, 466 00:25:54,359 --> 00:25:58,240 Speaker 1: the bank gpmorgan was doing pretty well. So equities seem like, 467 00:25:58,440 --> 00:26:00,439 Speaker 1: you know, they might be okay as far as trading 468 00:26:00,520 --> 00:26:03,719 Speaker 1: volumes and revenues, but the debt side, which again, as 469 00:26:03,760 --> 00:26:05,840 Speaker 1: you point out, is a lot where a lot of 470 00:26:05,880 --> 00:26:08,640 Speaker 1: banks make more money more fees. You know, we can 471 00:26:08,680 --> 00:26:11,159 Speaker 1: see when we look at trades data, which is the 472 00:26:11,840 --> 00:26:14,800 Speaker 1: UM industry collective for all the different prices and all 473 00:26:14,800 --> 00:26:17,520 Speaker 1: the trades, that volumes are down. I mean they're not 474 00:26:17,600 --> 00:26:20,560 Speaker 1: down hugely, but you know five six percent, it can 475 00:26:20,600 --> 00:26:22,840 Speaker 1: be significant in a quarter, and so far that's what 476 00:26:22,880 --> 00:26:25,320 Speaker 1: we're seeing for April in May, and then when you 477 00:26:25,560 --> 00:26:28,359 Speaker 1: take that and extrapolate for the banks, that can be 478 00:26:28,400 --> 00:26:31,399 Speaker 1: a hefty bit of change for what they're not making 479 00:26:31,440 --> 00:26:35,000 Speaker 1: on fees on these trades, especially because they've had such 480 00:26:35,000 --> 00:26:37,760 Speaker 1: a good period of time of bond trading revenues over 481 00:26:37,800 --> 00:26:40,320 Speaker 1: the past year or so. So this comes sort of 482 00:26:40,359 --> 00:26:43,919 Speaker 1: a reality check whether this industry really is making a comeback. 483 00:26:43,960 --> 00:26:46,280 Speaker 1: Laura Keller, thank you so much for joining us. Laura 484 00:26:46,400 --> 00:26:49,280 Speaker 1: Kelor covers the financial industry for Bloomberg News, and she 485 00:26:49,280 --> 00:26:54,960 Speaker 1: comes to us from London. Thanks for listening to the 486 00:26:55,000 --> 00:26:58,120 Speaker 1: Bloomberg P and L podcast. You can subscribe and listen 487 00:26:58,160 --> 00:27:02,280 Speaker 1: to interviews at Apple Podcast, SoundCloud, or whatever podcast platform 488 00:27:02,359 --> 00:27:06,280 Speaker 1: you prefer. I'm pim Fox. I'm on Twitter at pim Fox. 489 00:27:06,560 --> 00:27:10,080 Speaker 1: I'm on Twitter at Lisa Abramo wits one. Before the podcast, 490 00:27:10,119 --> 00:27:12,720 Speaker 1: you can always catch us worldwide on Bloomberg Radio.