1 00:00:15,040 --> 00:00:22,680 Speaker 1: It's amazing if you believe, definitely, and I think a 2 00:00:22,720 --> 00:00:28,280 Speaker 1: lot of fake. All Right, everyone, welcome to the Predictions 3 00:00:28,400 --> 00:00:31,600 Speaker 1: episode of Odd Lots. We're gonna be talking about what 4 00:00:31,720 --> 00:00:35,000 Speaker 1: the big stories are going to be in and what 5 00:00:35,040 --> 00:00:38,879 Speaker 1: we think is going to happen. I'm Joe Wisenthal, Managing 6 00:00:38,960 --> 00:00:42,120 Speaker 1: editor at Bloomberg Markets, and I'm Tracy Halloway, Executive editor 7 00:00:42,159 --> 00:00:45,040 Speaker 1: at Bloomberg Market. So once again we've assembled an ace 8 00:00:45,080 --> 00:00:49,680 Speaker 1: team of Bloomberg News reporters and editors. Last week we 9 00:00:49,880 --> 00:00:53,600 Speaker 1: discussed what their favorite stories were for the year. As 10 00:00:53,680 --> 00:00:58,280 Speaker 1: sort of a connoisseur of armageddon scenarios, I I sort 11 00:00:58,320 --> 00:01:01,400 Speaker 1: of have to say that the August, the August August 12 00:01:01,480 --> 00:01:04,959 Speaker 1: so often the stock markets. My favorite story so Valiant 13 00:01:05,040 --> 00:01:09,399 Speaker 1: is sort of the bad boy of Farmer. Wait a 14 00:01:09,440 --> 00:01:11,640 Speaker 1: second replaced? I know. I was just thinking they've been 15 00:01:11,680 --> 00:01:14,399 Speaker 1: replaced lightly by cheering listening, but they were bigger and 16 00:01:14,760 --> 00:01:18,360 Speaker 1: in some ways bader. So your favorite story is essentially 17 00:01:18,360 --> 00:01:21,399 Speaker 1: the end of a story? Yeah, I think so. This 18 00:01:21,480 --> 00:01:25,160 Speaker 1: story about furious saving really did strike me is encapsulating. 19 00:01:25,640 --> 00:01:27,039 Speaker 1: This week, I think it's going to be a little 20 00:01:27,040 --> 00:01:28,840 Speaker 1: more challenging because we're going to put them on the 21 00:01:28,880 --> 00:01:30,920 Speaker 1: spot and ask them what they think is going to 22 00:01:30,959 --> 00:01:35,440 Speaker 1: happen in in prediction is harder than looking back, and 23 00:01:35,440 --> 00:01:38,600 Speaker 1: then presumably at the end of we're going to ridicule 24 00:01:38,640 --> 00:01:41,679 Speaker 1: them mercilessly forgetting everything wrong. We're get it right. But yeah, 25 00:01:41,720 --> 00:01:44,760 Speaker 1: we're definitely getting meat here exactly on this date again 26 00:01:45,360 --> 00:01:48,240 Speaker 1: one year from now, to look back at the predictions 27 00:01:48,840 --> 00:01:52,320 Speaker 1: and we'll see how they did. Let's have everyone introduced themselves. 28 00:01:52,800 --> 00:01:55,240 Speaker 1: I'm Chris A. G. The managing editor for Stocks at 29 00:01:55,240 --> 00:01:58,560 Speaker 1: Bloomberg News. And Matthew Bosa I cover the Federal Reserve 30 00:01:59,320 --> 00:02:02,440 Speaker 1: it happened, I covered deals for Bloomboog News. I'm Mattlivian. 31 00:02:02,600 --> 00:02:06,440 Speaker 1: I'm a columnist for Bloomberg View. Alright, so everybody wants 32 00:02:06,480 --> 00:02:08,920 Speaker 1: to hear from the stocks guy about what's going to 33 00:02:09,000 --> 00:02:12,000 Speaker 1: happen Chris and a G. You said last week that 34 00:02:12,040 --> 00:02:16,200 Speaker 1: your favorite story for was the flash crash of August 35 00:02:17,080 --> 00:02:22,000 Speaker 1: markets crater. What's what's your big prediction? So um, at 36 00:02:22,000 --> 00:02:25,359 Speaker 1: the risk of of embarrassing, I mean, there's no doubt 37 00:02:25,360 --> 00:02:28,440 Speaker 1: in my mind that the most the most variant view 38 00:02:28,480 --> 00:02:30,320 Speaker 1: you could have right now coming into two thousand and 39 00:02:30,320 --> 00:02:32,120 Speaker 1: sixteen is that stocks are going to go up. So 40 00:02:32,280 --> 00:02:34,640 Speaker 1: what I did was trying to fashion some kind of thesis, 41 00:02:34,680 --> 00:02:37,760 Speaker 1: sort of back reverse engineer, so that I could say 42 00:02:37,760 --> 00:02:40,120 Speaker 1: that that was my opinion. I mean, I have no 43 00:02:40,160 --> 00:02:42,200 Speaker 1: idea what's going to happen. But one thing that occurred 44 00:02:42,240 --> 00:02:44,639 Speaker 1: to me over the weekend. Two things struck me. One 45 00:02:45,320 --> 00:02:48,079 Speaker 1: was that everyone on Twitter was saying how much they 46 00:02:48,080 --> 00:02:50,519 Speaker 1: loved the Big Short, and and my I was back 47 00:02:50,560 --> 00:02:52,160 Speaker 1: with my family in Boston and a few people up 48 00:02:52,200 --> 00:02:53,840 Speaker 1: there were talking about it when to Little Party and 49 00:02:53,880 --> 00:02:57,720 Speaker 1: they talked about rereading it. And then I watched the 50 00:02:58,120 --> 00:03:01,600 Speaker 1: Democratic debate with my mom and they were just going 51 00:03:01,639 --> 00:03:03,640 Speaker 1: after Wall Street in a huge way. My mother, my 52 00:03:03,639 --> 00:03:05,240 Speaker 1: mother at one point turned to me and said, they 53 00:03:05,280 --> 00:03:07,799 Speaker 1: hate you, and I was like me and then work 54 00:03:07,840 --> 00:03:10,720 Speaker 1: for Bloomberg, and she just meant sort of white males. 55 00:03:10,760 --> 00:03:14,560 Speaker 1: I think, um, but it's just it's one thing that 56 00:03:14,600 --> 00:03:16,640 Speaker 1: could could happen as a result of these to the 57 00:03:16,639 --> 00:03:18,720 Speaker 1: big election year obviously and whatever. The sort of a 58 00:03:18,720 --> 00:03:22,120 Speaker 1: cultural event around the Big Short kind of is that 59 00:03:22,280 --> 00:03:25,720 Speaker 1: sentiment towards Wall Street and the stock market is probably 60 00:03:25,760 --> 00:03:27,880 Speaker 1: not going to improve a great deal in two thousand 61 00:03:27,880 --> 00:03:30,399 Speaker 1: and sixteen. I think that, you know, there's a lot 62 00:03:30,400 --> 00:03:33,440 Speaker 1: of a lot of opportunity for grand standing against banks 63 00:03:33,440 --> 00:03:36,640 Speaker 1: and just sort of commerce in general. They'll probably be 64 00:03:36,720 --> 00:03:40,080 Speaker 1: unable to resist. And in my opinion, that's the best 65 00:03:40,120 --> 00:03:42,360 Speaker 1: thing that could happen to the stock market. This has 66 00:03:42,400 --> 00:03:45,160 Speaker 1: been true since two thousand and eight, that, um, the 67 00:03:45,200 --> 00:03:47,360 Speaker 1: easiest thing in the world has been turned around, bash 68 00:03:47,400 --> 00:03:51,280 Speaker 1: American commerce and markets and banks and things like that, 69 00:03:51,400 --> 00:03:53,960 Speaker 1: and as and what's happened since then, it's markets have 70 00:03:54,000 --> 00:03:57,920 Speaker 1: staged one of the biggest rallies in their history. And 71 00:03:58,000 --> 00:04:00,240 Speaker 1: I think, you know, anyone staring at it every day 72 00:04:00,320 --> 00:04:02,080 Speaker 1: the way I do, the way you guys, is aware 73 00:04:02,120 --> 00:04:04,240 Speaker 1: that that's part of the reason stocks have been able 74 00:04:04,240 --> 00:04:06,880 Speaker 1: to go up is because this incredible wall of worry 75 00:04:06,920 --> 00:04:11,160 Speaker 1: exists politically against them. It's almost seen as immoral that 76 00:04:11,240 --> 00:04:14,040 Speaker 1: the market do well. And as a result of that, UM, 77 00:04:14,080 --> 00:04:15,640 Speaker 1: I think it has done. It's been able to sort 78 00:04:15,640 --> 00:04:19,279 Speaker 1: of convince lots of people periodically people everyone's basically a nonbeliever, 79 00:04:19,839 --> 00:04:21,040 Speaker 1: and I think that there's going to be a lot 80 00:04:21,080 --> 00:04:23,320 Speaker 1: of opportunity for nonbelief this year. There already is. There's 81 00:04:23,320 --> 00:04:25,560 Speaker 1: a lot of pessimism coming into it, and it just 82 00:04:25,680 --> 00:04:27,920 Speaker 1: seems like what happens a lot of the time when 83 00:04:27,920 --> 00:04:30,200 Speaker 1: that's the case is that the market goes up. I 84 00:04:30,360 --> 00:04:33,000 Speaker 1: couldn't agree more. It definitely feels like after the crash, 85 00:04:33,040 --> 00:04:36,800 Speaker 1: there was this huge reservoir of hate and skepticism and 86 00:04:36,800 --> 00:04:39,200 Speaker 1: pessimism that built up, and I don't think it's even 87 00:04:39,240 --> 00:04:42,359 Speaker 1: close to having drained. And I think, you know, there 88 00:04:42,400 --> 00:04:45,360 Speaker 1: are pockets of euphoria, like people were excited about Silicon 89 00:04:45,480 --> 00:04:47,640 Speaker 1: Valley and startups, and for a while in Texas they're 90 00:04:47,640 --> 00:04:50,520 Speaker 1: really excited about oil. I just don't think we're anywhere 91 00:04:50,600 --> 00:04:54,440 Speaker 1: close to seeing the acceptance of the recovery in the 92 00:04:54,520 --> 00:04:58,200 Speaker 1: bull market and any widespread level that you would expect 93 00:04:58,279 --> 00:05:00,280 Speaker 1: to see you before it ends. But if isn't the 94 00:05:00,360 --> 00:05:02,839 Speaker 1: really easy counter argument to all of that just to 95 00:05:02,880 --> 00:05:05,640 Speaker 1: say that the recovery and the stock market rally was 96 00:05:05,920 --> 00:05:10,040 Speaker 1: artificial and caused by the FEDS extraordinary measures. Certainly, I mean, 97 00:05:10,040 --> 00:05:13,040 Speaker 1: there's there's absolutely convincing arguments on both sides of this thing. 98 00:05:13,080 --> 00:05:15,360 Speaker 1: And as I say, I mean, who knows what's going 99 00:05:15,360 --> 00:05:18,159 Speaker 1: to happen, obviously, but it just started this this one 100 00:05:18,240 --> 00:05:20,160 Speaker 1: thing that isn't totally obvious to everym This thing that 101 00:05:20,240 --> 00:05:22,040 Speaker 1: sort of sits in the background of the stock markets 102 00:05:22,120 --> 00:05:24,320 Speaker 1: rally over the last five years, which is just incredibly 103 00:05:24,360 --> 00:05:27,480 Speaker 1: negative sentent never repaired itself. If you look at like 104 00:05:27,720 --> 00:05:29,800 Speaker 1: some of the worst sentiment readings in the history of 105 00:05:29,800 --> 00:05:32,040 Speaker 1: the market were around the late August of this year, 106 00:05:32,080 --> 00:05:35,359 Speaker 1: and if you were building a trading case on a 107 00:05:35,360 --> 00:05:37,680 Speaker 1: contrarian case on that, you would have done well. You 108 00:05:37,720 --> 00:05:39,680 Speaker 1: would have done well frequently in this market over the 109 00:05:39,760 --> 00:05:41,839 Speaker 1: last five years if you bought when sentiment when just 110 00:05:41,839 --> 00:05:44,440 Speaker 1: sort of you know, sort of mental sentiment guts to 111 00:05:44,520 --> 00:05:48,320 Speaker 1: its lowest levels. All right, let's move on. Obviously, one 112 00:05:48,360 --> 00:05:53,599 Speaker 1: of the big stories often was the Federal reserve raid hike, 113 00:05:54,080 --> 00:05:57,279 Speaker 1: but nobody really knows what's going to happen with the future. 114 00:05:57,560 --> 00:06:02,000 Speaker 1: Mad Bosler is rejoined us. Matt is our authoto reserve reporter. 115 00:06:02,160 --> 00:06:05,039 Speaker 1: What's your what's your big prediction for? It doesn't have 116 00:06:05,120 --> 00:06:06,560 Speaker 1: to be a FED thing. If you don't want well, 117 00:06:06,600 --> 00:06:09,720 Speaker 1: it is a FED I think. I think the interesting 118 00:06:09,800 --> 00:06:14,320 Speaker 1: thing for FED reporters on the beat in ten, especially 119 00:06:14,400 --> 00:06:17,800 Speaker 1: in the first few weeks and months of seen, is 120 00:06:17,839 --> 00:06:21,040 Speaker 1: going to be a rethink of the Federal reserves role 121 00:06:21,120 --> 00:06:24,760 Speaker 1: in the money markets. Because you know, over the last 122 00:06:24,839 --> 00:06:26,839 Speaker 1: year or two years, you know, they've been doing a 123 00:06:26,880 --> 00:06:28,880 Speaker 1: lot of testing all these new tools to be able 124 00:06:28,920 --> 00:06:31,960 Speaker 1: to raise rates and money markets flooded with cash um 125 00:06:32,000 --> 00:06:34,360 Speaker 1: and especially in the repo market, they have this big 126 00:06:34,400 --> 00:06:37,800 Speaker 1: new reverse repo facility that members of the Federal Open 127 00:06:37,839 --> 00:06:41,600 Speaker 1: Market Committee have seemingly been very reluctant to employ too much, 128 00:06:42,360 --> 00:06:44,279 Speaker 1: and they've you know, said things in the minutes of 129 00:06:44,320 --> 00:06:46,240 Speaker 1: their meetings to the effect of this is going to 130 00:06:46,320 --> 00:06:49,479 Speaker 1: be a very temporary facility. Are you know, intervention in 131 00:06:49,520 --> 00:06:52,039 Speaker 1: repo markets is not going to last very long, and 132 00:06:52,080 --> 00:06:54,200 Speaker 1: we're going to sort of wind it down shortly after 133 00:06:54,320 --> 00:06:56,960 Speaker 1: lift off. But then you like sort of look at 134 00:06:57,000 --> 00:06:59,760 Speaker 1: the numbers and it you know, some analysts, as you know, 135 00:07:00,000 --> 00:07:02,159 Speaker 1: AC are saying that this thing could get to a 136 00:07:02,200 --> 00:07:04,719 Speaker 1: trillion dollars a day, where the FED is borrowing a 137 00:07:04,760 --> 00:07:08,160 Speaker 1: trillion dollars a day in the repo market. So I remember, 138 00:07:08,200 --> 00:07:10,960 Speaker 1: the repo market used to be like when people talked 139 00:07:10,960 --> 00:07:14,840 Speaker 1: about shadow banks. Essentially, the repo market was the shadow 140 00:07:14,880 --> 00:07:17,720 Speaker 1: banking system. It was where banks and money market funds 141 00:07:17,760 --> 00:07:21,600 Speaker 1: kind of fund each other by loaning out money against collateral, 142 00:07:22,040 --> 00:07:23,960 Speaker 1: and the idea that the FETE is going to come 143 00:07:23,960 --> 00:07:27,000 Speaker 1: in and basically crowd out all those old players and 144 00:07:27,040 --> 00:07:31,040 Speaker 1: become the ultimate shadow banker is an interesting theme. I 145 00:07:31,080 --> 00:07:34,280 Speaker 1: gotta play the role of the person listening to the 146 00:07:34,360 --> 00:07:37,400 Speaker 1: podcast who like maybe hasn't been up on this stuff. 147 00:07:37,400 --> 00:07:40,120 Speaker 1: But you know, there's like a Reddit page called explain 148 00:07:40,200 --> 00:07:41,760 Speaker 1: it to Me, Like I'm a five year old or 149 00:07:41,800 --> 00:07:44,560 Speaker 1: something like that. So for those who haven't been in 150 00:07:44,600 --> 00:07:46,800 Speaker 1: the weeds on this stuff, and when you talk about 151 00:07:46,800 --> 00:07:48,640 Speaker 1: the fed's role in the money market and the reverse 152 00:07:48,680 --> 00:07:51,680 Speaker 1: repo facility and stuff like that, what's the explain it 153 00:07:51,720 --> 00:07:54,320 Speaker 1: to me, like I'm a five year old version and 154 00:07:54,560 --> 00:07:56,880 Speaker 1: you gotta get to your prediction. Okay, So picking up 155 00:07:56,880 --> 00:08:00,160 Speaker 1: where Tracy left off, right, shadow banks like these these 156 00:08:00,200 --> 00:08:03,440 Speaker 1: money market funds that have just had this big cash 157 00:08:03,480 --> 00:08:06,520 Speaker 1: pile that's been growing and growing for several years, and 158 00:08:06,600 --> 00:08:08,760 Speaker 1: before the crisis, they were lending a lot of that 159 00:08:08,840 --> 00:08:11,000 Speaker 1: to banks which were then taking it and doing all 160 00:08:11,040 --> 00:08:14,760 Speaker 1: sorts of you know, like term very safe exactly, maturity 161 00:08:14,760 --> 00:08:17,160 Speaker 1: transformation and whatnot, and that is, you know, sort of 162 00:08:17,400 --> 00:08:20,840 Speaker 1: one of the things that people blame the financial crisis on. 163 00:08:21,080 --> 00:08:25,640 Speaker 1: And so now the FED has essentially become the borrower 164 00:08:26,040 --> 00:08:28,480 Speaker 1: in these markets, you know, of that cash, all that 165 00:08:28,560 --> 00:08:32,760 Speaker 1: cash that money market funds have, and so they're saying like, Okay, 166 00:08:32,760 --> 00:08:34,240 Speaker 1: we're not going to be doing a lot of this, 167 00:08:34,760 --> 00:08:36,640 Speaker 1: But then some analysts are saying, yeah, you're gonna be 168 00:08:36,640 --> 00:08:39,320 Speaker 1: doing a lot of this, And where the rubber hits 169 00:08:39,320 --> 00:08:41,840 Speaker 1: the road is you kind of have to do this 170 00:08:41,920 --> 00:08:44,760 Speaker 1: if you're going to keep your balance sheet large. And 171 00:08:44,840 --> 00:08:47,200 Speaker 1: for a while, you know, even a few months ago, 172 00:08:47,280 --> 00:08:49,920 Speaker 1: everybody thought, Okay, the FED is going to start winding 173 00:08:49,960 --> 00:08:53,000 Speaker 1: down its balance sheets sometime in ten, maybe even the 174 00:08:53,000 --> 00:08:56,400 Speaker 1: first half of but a lot of the comments we've 175 00:08:56,400 --> 00:08:58,680 Speaker 1: gotten from FED officials in the last few months suggest 176 00:08:58,760 --> 00:09:01,520 Speaker 1: that actually they're going to keep the balance sheet at 177 00:09:01,559 --> 00:09:06,640 Speaker 1: a constant size until sometime in seventeen, maybe well into seventeen. 178 00:09:07,040 --> 00:09:09,640 Speaker 1: So there's really going to be no opportunity for them 179 00:09:09,720 --> 00:09:13,400 Speaker 1: to sort of scale back their intervention in repo markets 180 00:09:13,480 --> 00:09:15,920 Speaker 1: anytime soon, and in the meantime, we could see a 181 00:09:15,920 --> 00:09:18,120 Speaker 1: lot of big changes to the money where the prediction 182 00:09:18,240 --> 00:09:20,400 Speaker 1: is so that the thing that we're going to come 183 00:09:20,440 --> 00:09:22,600 Speaker 1: back here a year ago and saying was med Bosler 184 00:09:22,720 --> 00:09:25,240 Speaker 1: right or wrong? Is okay, the FED is going to 185 00:09:25,280 --> 00:09:27,520 Speaker 1: be borrowing, you know, at least a trillion dollars a 186 00:09:27,600 --> 00:09:33,440 Speaker 1: day in the repo market. By you're so harsh, Jo, No, 187 00:09:33,520 --> 00:09:35,600 Speaker 1: I mean it's like the Predictions episode. We can't just 188 00:09:35,800 --> 00:09:38,319 Speaker 1: have someone here sit here and say smart things. We 189 00:09:38,440 --> 00:09:40,520 Speaker 1: gotta have something that we could go back. We have 190 00:09:40,640 --> 00:09:42,840 Speaker 1: to say them, have them say non smart things. No, 191 00:09:42,920 --> 00:09:44,520 Speaker 1: they just have to say something that could either be 192 00:09:44,559 --> 00:09:47,800 Speaker 1: shown right or wrong. All right, Um, let's turn to 193 00:09:48,240 --> 00:09:51,040 Speaker 1: Mr Ed Hammond. I'm sure hundreds of M and A 194 00:09:51,080 --> 00:09:53,440 Speaker 1: bankers are dying to know what you think is going 195 00:09:53,480 --> 00:09:55,840 Speaker 1: to happen in that market next year. So the many 196 00:09:55,840 --> 00:09:57,600 Speaker 1: bankers will think that next year will be better than 197 00:09:57,679 --> 00:09:59,920 Speaker 1: this year. With seventeen, we better than the sixteen, it's 198 00:10:00,040 --> 00:10:02,040 Speaker 1: one and so on. But they are always looking up, 199 00:10:02,080 --> 00:10:03,560 Speaker 1: and I guess we're trying to be a bit more 200 00:10:03,559 --> 00:10:06,600 Speaker 1: realistic on this show. Um, so what are my predictions? 201 00:10:06,600 --> 00:10:08,360 Speaker 1: I don't know. I always embarrass myself with these things, 202 00:10:08,400 --> 00:10:11,800 Speaker 1: but maybe that's the point. Um. One general one would 203 00:10:11,800 --> 00:10:13,920 Speaker 1: be that we're going to see a lot more oil 204 00:10:13,960 --> 00:10:16,600 Speaker 1: and gas M and A. I think this year it's 205 00:10:16,600 --> 00:10:18,680 Speaker 1: been a bit surprising that there hasn't been more. Obviously 206 00:10:18,760 --> 00:10:21,080 Speaker 1: there have been some quite big ones attempted, Haliberton, Baker 207 00:10:21,160 --> 00:10:23,600 Speaker 1: Hughes being obvious one of the if you look at 208 00:10:23,600 --> 00:10:25,160 Speaker 1: the spread on that today, it now looks like it's 209 00:10:25,160 --> 00:10:27,320 Speaker 1: probably gonna fall over. But I think a lot of 210 00:10:27,360 --> 00:10:30,040 Speaker 1: the smaller, you know, sort of five to twenty billion 211 00:10:30,080 --> 00:10:33,960 Speaker 1: dollar oil companies, I think we'll see them trade this year. 212 00:10:34,000 --> 00:10:37,160 Speaker 1: There's there's a sort of a realization coming that they 213 00:10:37,200 --> 00:10:39,760 Speaker 1: have diminished. They're not as important as they once were. 214 00:10:39,800 --> 00:10:41,640 Speaker 1: There maybe a sort of third of the size that 215 00:10:41,679 --> 00:10:44,120 Speaker 1: they were this time a year ago, and a lot 216 00:10:44,120 --> 00:10:45,800 Speaker 1: of them are just under pressure, you know, whether it's 217 00:10:45,880 --> 00:10:47,679 Speaker 1: it's the activists that's beginning to show up in a 218 00:10:47,720 --> 00:10:50,559 Speaker 1: stock or whether it's kind of some sort of self 219 00:10:50,559 --> 00:10:53,920 Speaker 1: realization that they actually need to do something and probably 220 00:10:54,000 --> 00:10:56,640 Speaker 1: merging with a rival or selling themselves to a major 221 00:10:57,360 --> 00:10:59,120 Speaker 1: is a very good way out of that. So I 222 00:10:59,160 --> 00:11:01,680 Speaker 1: think oil and gas is somewhere we'll see a lot FIG. Also, 223 00:11:02,160 --> 00:11:05,600 Speaker 1: what would happen in FIG? So that's financial institutions. Yeah, 224 00:11:05,760 --> 00:11:08,160 Speaker 1: So I think we're probably still some way off from 225 00:11:08,200 --> 00:11:10,640 Speaker 1: seeing any big bank M and A. But I think 226 00:11:10,640 --> 00:11:13,600 Speaker 1: the insurers will continue to consolidate. We've seen a few 227 00:11:13,600 --> 00:11:15,400 Speaker 1: deals in the second half of this year, notably the 228 00:11:15,440 --> 00:11:18,320 Speaker 1: health insurers sort of get together, and I think we'll 229 00:11:18,320 --> 00:11:20,760 Speaker 1: see that spread to other parts of the insurance market. 230 00:11:21,360 --> 00:11:24,600 Speaker 1: And and you know, look, I suppose the confidence is 231 00:11:24,600 --> 00:11:27,240 Speaker 1: there to do those deals. It's just through our regulatory 232 00:11:27,240 --> 00:11:28,920 Speaker 1: issues that people haven't got their head around yet. But 233 00:11:28,920 --> 00:11:31,920 Speaker 1: I think next year we'll see more of that. Conversely, 234 00:11:31,960 --> 00:11:34,199 Speaker 1: I think healthcare has to slow down. It can't continue 235 00:11:34,240 --> 00:11:36,760 Speaker 1: at the pace it's going. UM and some industries, Cable 236 00:11:36,800 --> 00:11:39,600 Speaker 1: being the obvious example, have kind of reached endgames, certainly 237 00:11:39,600 --> 00:11:41,480 Speaker 1: in terms of big consolidation, so that will come off. 238 00:11:41,520 --> 00:11:44,240 Speaker 1: I think. In one other prediction, I know last week 239 00:11:44,280 --> 00:11:46,200 Speaker 1: on here I beat up about Valiant and Bill Ackman, 240 00:11:46,480 --> 00:11:48,360 Speaker 1: but just a specific prediction on that, I think we 241 00:11:48,360 --> 00:11:50,960 Speaker 1: can be sure that Valiant will do another stupid deal 242 00:11:51,480 --> 00:11:54,680 Speaker 1: within the next year, and that the sort of Bill Ackman, 243 00:11:54,760 --> 00:11:58,199 Speaker 1: Mike Pierson, Laurel and Hardy show will have one more 244 00:11:58,240 --> 00:12:01,600 Speaker 1: episode at least M like that one. How much does 245 00:12:01,800 --> 00:12:07,840 Speaker 1: UM there's the there's the FED tightening cycle effect. One's 246 00:12:07,880 --> 00:12:10,640 Speaker 1: forecast for M and A next year. I think at 247 00:12:10,679 --> 00:12:13,600 Speaker 1: this point not a huge amount. It's so well factored 248 00:12:13,640 --> 00:12:16,040 Speaker 1: in it's something that you know, everyone has been expecting 249 00:12:16,080 --> 00:12:18,600 Speaker 1: and expecting and expecting. So I don't think there's gonna 250 00:12:18,640 --> 00:12:21,800 Speaker 1: be any great surprise to think the thing that tends 251 00:12:21,880 --> 00:12:24,120 Speaker 1: to have the most sort of material negative impact on 252 00:12:24,240 --> 00:12:26,559 Speaker 1: M and A is surprised, right, So anything that is 253 00:12:26,559 --> 00:12:30,080 Speaker 1: really unpredictable one for seeing that happens. Then you see 254 00:12:30,080 --> 00:12:32,959 Speaker 1: sort of deals drop off, for at least investors being 255 00:12:33,000 --> 00:12:35,079 Speaker 1: much less willing to reward companies for doing deals. But 256 00:12:35,120 --> 00:12:38,200 Speaker 1: at the moment, I think everything is expected. Rates go up, 257 00:12:38,200 --> 00:12:39,880 Speaker 1: but it's still going to be very, very cheap to borrow. 258 00:12:40,000 --> 00:12:42,680 Speaker 1: The cliche is that bankers, or when people say, is 259 00:12:42,679 --> 00:12:44,960 Speaker 1: that bankers, you know, have these waves where they encourage 260 00:12:44,960 --> 00:12:47,920 Speaker 1: companies to get soolidated, and then after they've all consolidated 261 00:12:47,960 --> 00:12:50,360 Speaker 1: and they encourage spinoff something like that so they can 262 00:12:50,360 --> 00:12:53,520 Speaker 1: get fees going in and out both directions. Is that 263 00:12:53,679 --> 00:12:56,760 Speaker 1: something that you see likely to accelerate? Do you mean 264 00:12:56,880 --> 00:13:03,480 Speaker 1: sort of general historic banker? I think it'll continue. I 265 00:13:03,480 --> 00:13:05,040 Speaker 1: don't know if it has much room to grow, but 266 00:13:05,080 --> 00:13:08,240 Speaker 1: I think it will definitely continue. I think we're not 267 00:13:08,280 --> 00:13:10,280 Speaker 1: necessarily at the point that we're bank because sort of 268 00:13:10,320 --> 00:13:14,040 Speaker 1: lobbying their clients to split and sell. But I think 269 00:13:14,080 --> 00:13:15,880 Speaker 1: we are at this point where, you know, activism pressure 270 00:13:15,920 --> 00:13:18,080 Speaker 1: is growing. Obviously, the funds on the management way up 271 00:13:18,120 --> 00:13:19,560 Speaker 1: from where they were a year ago. So we will 272 00:13:19,559 --> 00:13:22,360 Speaker 1: see many more activist campaigns next year, and the banks will, 273 00:13:22,400 --> 00:13:25,200 Speaker 1: as they always do, will position themselves between the kind 274 00:13:25,200 --> 00:13:27,800 Speaker 1: of the demands and the pressure on the companies and 275 00:13:27,960 --> 00:13:32,000 Speaker 1: ensure that the raw stuff. Think greed has peaked. I 276 00:13:32,000 --> 00:13:36,840 Speaker 1: think greed has peaked. I do actually think that what 277 00:13:36,920 --> 00:13:38,959 Speaker 1: we'll see in the next few years is like the 278 00:13:39,320 --> 00:13:42,199 Speaker 1: cultural shakeout from the financial crisis is still going on 279 00:13:42,720 --> 00:13:47,280 Speaker 1: and has has um has surprised me in its in 280 00:13:47,320 --> 00:13:50,880 Speaker 1: its intensity. Like I it's somewhat facetious to say greed 281 00:13:50,920 --> 00:13:52,559 Speaker 1: has peaked, but I think, like, you know, well's being 282 00:13:52,600 --> 00:13:55,120 Speaker 1: really is changing in terms of will bankers keep you know, 283 00:13:55,160 --> 00:13:57,400 Speaker 1: lobbying to do deals like of course they will. And 284 00:13:57,440 --> 00:14:00,280 Speaker 1: you see like the Dad Point deal is like at 285 00:14:00,280 --> 00:14:02,560 Speaker 1: the same time the merger in the splitting right two 286 00:14:02,640 --> 00:14:05,520 Speaker 1: giant companies and the plan is emerge and then immediately 287 00:14:05,559 --> 00:14:07,719 Speaker 1: break up in the three separate companies. Yeah, it's you know, 288 00:14:07,800 --> 00:14:09,280 Speaker 1: the M and A cycle kind of like goes on 289 00:14:09,360 --> 00:14:11,600 Speaker 1: and gets bigger and bigger deals, and you reach a 290 00:14:11,600 --> 00:14:14,719 Speaker 1: point where you just can't do a bigger deal, so 291 00:14:14,760 --> 00:14:16,800 Speaker 1: you have the like fusion and efficient at the same 292 00:14:16,840 --> 00:14:20,680 Speaker 1: time deal and then like you know, you've solved that problem. 293 00:14:20,760 --> 00:14:24,040 Speaker 1: Do you have a big prediction for next year? Well, 294 00:14:24,080 --> 00:14:27,280 Speaker 1: people still be worried about bond market liquidity. Oh yeah, 295 00:14:27,360 --> 00:14:29,080 Speaker 1: of course. The thing is like we need to have 296 00:14:29,160 --> 00:14:33,400 Speaker 1: the next crisis before people will stop talking about the world. 297 00:14:33,440 --> 00:14:35,760 Speaker 1: Where I think we're still so scarred by the by 298 00:14:35,840 --> 00:14:38,920 Speaker 1: the last crisis that the idea of of of of 299 00:14:39,040 --> 00:14:41,480 Speaker 1: not worrying about like a big bogeyman is just not 300 00:14:42,080 --> 00:14:44,240 Speaker 1: It's gonna be a long time. But you you're skeptical 301 00:14:44,440 --> 00:14:46,560 Speaker 1: on this bond market liquidity that it's actually going to 302 00:14:46,640 --> 00:14:48,200 Speaker 1: be a big deal, right, Like I When you're write 303 00:14:48,200 --> 00:14:51,040 Speaker 1: about it, you sort of have a bemused tone that 304 00:14:51,200 --> 00:14:54,160 Speaker 1: suggests to me that you don't. It doesn't confirm you 305 00:14:54,200 --> 00:14:56,360 Speaker 1: too much. I think it's an interesting story, Like I 306 00:14:56,400 --> 00:14:59,600 Speaker 1: think that, um, there are very interesting dynamics in terms 307 00:14:59,600 --> 00:15:02,640 Speaker 1: of like arket structure and how we trade financial instruments. 308 00:15:02,680 --> 00:15:06,320 Speaker 1: They're very interesting dynamics. Again in Wall Street culture, right 309 00:15:06,360 --> 00:15:08,640 Speaker 1: like banks used to be these big warehouses of risk, 310 00:15:09,080 --> 00:15:12,560 Speaker 1: and now they're not, and that has um caused sort 311 00:15:12,600 --> 00:15:15,320 Speaker 1: of both financial and cultural anxieties, like those are like 312 00:15:15,400 --> 00:15:18,200 Speaker 1: real things, and and that that changes I think meaningful 313 00:15:18,560 --> 00:15:22,000 Speaker 1: in terms of will it be the catastrophe run risk 314 00:15:22,160 --> 00:15:25,520 Speaker 1: that causes the next recession? That seems really unlikely to me? 315 00:15:25,640 --> 00:15:27,200 Speaker 1: But do you think it will be a bigger story 316 00:15:27,240 --> 00:15:36,000 Speaker 1: in than it was? No, okay, here's will go back? Um, 317 00:15:36,040 --> 00:15:38,320 Speaker 1: I think who knows? But like I think that, like 318 00:15:38,520 --> 00:15:40,480 Speaker 1: you know, we keep having little tests of it, and 319 00:15:40,520 --> 00:15:43,280 Speaker 1: those tests, you know, it seemed okay. So I think 320 00:15:43,880 --> 00:15:45,840 Speaker 1: I think it'll it'll fade as the tests go on 321 00:15:45,920 --> 00:15:49,960 Speaker 1: and they don't break the market. Well, we have lots 322 00:15:49,960 --> 00:15:52,400 Speaker 1: of predictions to think about. I think we should. I 323 00:15:52,440 --> 00:15:55,280 Speaker 1: think you and I know I was trying to escape it. No, 324 00:15:55,480 --> 00:15:59,440 Speaker 1: it's only fair, No, alright, Well, I predict everything in 325 00:15:59,480 --> 00:16:02,760 Speaker 1: my portfolio is going to do really well. Tracy owns 326 00:16:02,760 --> 00:16:06,080 Speaker 1: like a lot of physical silver, not by choice, so 327 00:16:06,160 --> 00:16:11,320 Speaker 1: that's good for the precious metal. And piggyback on Chris 328 00:16:11,440 --> 00:16:15,480 Speaker 1: n Age's prediction about how this deep wall of worry 329 00:16:15,520 --> 00:16:17,680 Speaker 1: that still exists will mean it's another good year for 330 00:16:17,680 --> 00:16:20,480 Speaker 1: the stock market. I was thinking like, in this whole 331 00:16:20,600 --> 00:16:23,440 Speaker 1: narrative that we've had since the crisis, the one thing 332 00:16:23,520 --> 00:16:26,840 Speaker 1: that perma Bears skeptics have always said, it's like, oh, 333 00:16:26,880 --> 00:16:28,560 Speaker 1: there's no way the FED will be able to do 334 00:16:28,600 --> 00:16:31,880 Speaker 1: a tightening cycle without causing like a huge economic or 335 00:16:31,920 --> 00:16:35,720 Speaker 1: market collapse. And the perma bears have been so humiliated 336 00:16:35,760 --> 00:16:38,240 Speaker 1: throughout the years that this has got to be the 337 00:16:38,280 --> 00:16:40,880 Speaker 1: last chapter because if this could happen, then they truly 338 00:16:40,920 --> 00:16:43,600 Speaker 1: will have to be banished. They'll all have to unplug 339 00:16:43,640 --> 00:16:45,720 Speaker 1: their computers, throw them into salt water and never be 340 00:16:45,760 --> 00:16:48,400 Speaker 1: heard from again. Delete their Twitter, delete their Twitter cout. 341 00:16:48,440 --> 00:16:50,400 Speaker 1: So I think this is the final chapter and their 342 00:16:50,480 --> 00:16:57,320 Speaker 1: humiliation and without market armageddon, but capitulation is usually the 343 00:16:57,520 --> 00:16:59,840 Speaker 1: ultimate journey, and then and then after and then we'll 344 00:16:59,840 --> 00:17:02,280 Speaker 1: get a turning point, like we haven't had the final 345 00:17:03,040 --> 00:17:06,840 Speaker 1: nail in the common steak and the heart event for them, 346 00:17:06,880 --> 00:17:08,560 Speaker 1: and so I think that this is the year for that. 347 00:17:08,680 --> 00:17:11,480 Speaker 1: So your prediction is that people will stop talking because 348 00:17:11,480 --> 00:17:16,399 Speaker 1: they've been proven y, I don't think that will come 349 00:17:16,480 --> 00:17:27,560 Speaker 1: from You've literally just negated our next year's predictions episode. Oh, Tracy, 350 00:17:27,680 --> 00:17:30,920 Speaker 1: look who showed up to join us? It's Dan Moss, Dan, 351 00:17:31,280 --> 00:17:34,959 Speaker 1: who are you. I'm the executive editor for Global Economics, 352 00:17:35,040 --> 00:17:38,520 Speaker 1: And what is your prediction. It's a little bit contrarian, 353 00:17:38,880 --> 00:17:41,359 Speaker 1: but what the heck we like contrary in here. My 354 00:17:41,440 --> 00:17:48,160 Speaker 1: prediction is that Brazil stabilizes and possibly bounces sentiment towards 355 00:17:48,240 --> 00:17:52,240 Speaker 1: that country, which is an enormous economy, is so beaten down. 356 00:17:52,320 --> 00:17:56,959 Speaker 1: And then there's been this relentless march of negative headlines 357 00:17:57,600 --> 00:18:03,520 Speaker 1: all through relating to whether the president gets impeached, relating 358 00:18:03,560 --> 00:18:08,160 Speaker 1: to contraction in the economy, relating to the budget deficit, 359 00:18:08,280 --> 00:18:11,960 Speaker 1: relating to the beating that stocks and the real that's 360 00:18:12,000 --> 00:18:17,640 Speaker 1: their currency have taken. But perhaps things are oversold. There's 361 00:18:17,640 --> 00:18:20,560 Speaker 1: been a lot of attention recently on the resignation of 362 00:18:20,600 --> 00:18:25,639 Speaker 1: Finance Minister Wha. Kim Levy and his replacement with Planning 363 00:18:25,680 --> 00:18:30,600 Speaker 1: Minister Nelson Barbosa. Now, Levy had this kind of market 364 00:18:30,640 --> 00:18:34,320 Speaker 1: halo over him. He came right from investment banking a 365 00:18:34,400 --> 00:18:37,680 Speaker 1: year ago, and he was seen as the market friendly 366 00:18:37,800 --> 00:18:42,320 Speaker 1: force of Dilma's government. However, he had all sorts of 367 00:18:42,359 --> 00:18:48,280 Speaker 1: troubles getting his fiscal targets to stick. His relationships in 368 00:18:48,440 --> 00:18:54,040 Speaker 1: Congress weren't terrific. Barbosa, on the other hand, is seen 369 00:18:54,080 --> 00:18:59,040 Speaker 1: as closer to Dilma, closer to the party, And you've 370 00:18:59,040 --> 00:19:04,200 Speaker 1: got to ask yourself what's better what's worse? Here? A 371 00:19:04,359 --> 00:19:09,320 Speaker 1: Levy with a great resume but perhaps ineffective and Bob 372 00:19:09,320 --> 00:19:14,040 Speaker 1: Bobosa who doesn't quite have that market lineage, but my 373 00:19:14,240 --> 00:19:18,400 Speaker 1: end up being politically more affected. Is this call Brazil 374 00:19:18,600 --> 00:19:21,960 Speaker 1: specific or can you are you almost on the verge 375 00:19:21,960 --> 00:19:24,720 Speaker 1: of calling a bottom in emerging markets across the board? 376 00:19:25,240 --> 00:19:28,000 Speaker 1: I'm not quite at that point. I thought we could 377 00:19:28,000 --> 00:19:29,719 Speaker 1: go to you into it. But this is like a 378 00:19:29,720 --> 00:19:32,359 Speaker 1: pretty big call because you have to imagine that at 379 00:19:32,400 --> 00:19:36,240 Speaker 1: the end of TWI, the people who got this call right, 380 00:19:36,359 --> 00:19:38,920 Speaker 1: especially if there is a turnaround, are going to be 381 00:19:39,000 --> 00:19:41,480 Speaker 1: some of the big heroes on Wall Street. And what 382 00:19:41,520 --> 00:19:44,159 Speaker 1: I want to know specifically, since the plan is that 383 00:19:44,200 --> 00:19:46,479 Speaker 1: we're going to all be back here next year at 384 00:19:46,480 --> 00:19:50,000 Speaker 1: this time reviewing calls, what is the measure that we 385 00:19:50,000 --> 00:19:53,360 Speaker 1: should use to see whether this call turned out right? 386 00:19:53,440 --> 00:19:56,080 Speaker 1: Is it a real level? Is it a what what 387 00:19:56,160 --> 00:20:00,000 Speaker 1: should be uh Brazilian government? What should we say, Okay, 388 00:20:00,240 --> 00:20:02,480 Speaker 1: this um, this was the right call? How should we 389 00:20:02,520 --> 00:20:04,680 Speaker 1: measure that? Well? You can know whether you're right or 390 00:20:04,720 --> 00:20:08,200 Speaker 1: wrong or year. Well, look in terms of market metrics, 391 00:20:08,480 --> 00:20:11,760 Speaker 1: look at the real look at Brazilian bonds, look at 392 00:20:11,760 --> 00:20:15,000 Speaker 1: Brazilian stocks. But also by the time we're sitting here 393 00:20:15,000 --> 00:20:18,600 Speaker 1: in twelve months time, we'll know whether the president has survived. 394 00:20:19,040 --> 00:20:21,960 Speaker 1: We're hearing a lot in the Brazilian Congress about impeachment. 395 00:20:23,280 --> 00:20:25,000 Speaker 1: I think a lot of things are probably going to 396 00:20:25,080 --> 00:20:27,840 Speaker 1: become clear. We're in the Maelstrom now. I like this 397 00:20:27,880 --> 00:20:30,199 Speaker 1: call because, as you said, it is contraryan but I 398 00:20:30,280 --> 00:20:34,280 Speaker 1: also like the reasoning that while everyone else is concerned 399 00:20:34,520 --> 00:20:37,600 Speaker 1: that this very credible finance minister has gone, that there 400 00:20:37,640 --> 00:20:40,159 Speaker 1: may be a silver lining to this person who's more 401 00:20:40,200 --> 00:20:42,199 Speaker 1: of an all out of the president. There's been a 402 00:20:42,240 --> 00:20:46,320 Speaker 1: fairly intense debate over the past year. Is Brazil's problem 403 00:20:46,400 --> 00:20:50,840 Speaker 1: fundamentally one of politics or fundamentally one of economics? We 404 00:20:50,880 --> 00:20:53,560 Speaker 1: will find out. All right, that's Dan Mass You can 405 00:20:53,600 --> 00:21:02,120 Speaker 1: catch him on the Benchmark podcast. Thanks, thank you, all right, well, 406 00:21:02,200 --> 00:21:05,399 Speaker 1: thanks everyone for listening to another episode. Yeah, thanks everyone 407 00:21:05,480 --> 00:21:09,600 Speaker 1: for joining us in and I'm looking forward to a 408 00:21:09,680 --> 00:21:13,320 Speaker 1: full year of odd lots in. I'm Joseph Wisn't thought. 409 00:21:13,320 --> 00:21:15,919 Speaker 1: You can follow me on Twitter and was Stillbert and 410 00:21:15,960 --> 00:21:19,280 Speaker 1: I'm Tracy Alloway. I'm on Twitter at Tracy Alloway. Thanks 411 00:21:19,359 --> 00:21:35,959 Speaker 1: very much. Joe and I are very proud of our 412 00:21:36,040 --> 00:21:39,199 Speaker 1: new podcast, Odd Lots, but we are also very proud 413 00:21:39,359 --> 00:21:43,360 Speaker 1: of Bloomberg's other growing suite of original podcast all designed 414 00:21:43,359 --> 00:21:46,880 Speaker 1: to help you navigate the complexities of business, financial markets, 415 00:21:46,960 --> 00:21:50,640 Speaker 1: and the global economy. So in addition to our own podcast, 416 00:21:50,800 --> 00:21:54,280 Speaker 1: please don't miss Benchmark with Dan Moss, Tory Stillwell and 417 00:21:54,400 --> 00:21:58,000 Speaker 1: Aki Edo, an informative, jargon free look at the inner 418 00:21:58,000 --> 00:22:00,960 Speaker 1: workings of the global economy. Then there is a Deal 419 00:22:01,000 --> 00:22:03,520 Speaker 1: of the Week with our M and A reporter Alec Sherman, 420 00:22:03,640 --> 00:22:05,440 Speaker 1: which is a breakdown of the biggest M and A 421 00:22:05,560 --> 00:22:08,840 Speaker 1: deals and gives you an inside peek at corporate board rooms. 422 00:22:09,240 --> 00:22:13,080 Speaker 1: All three shows are available on iTunes, SoundCloud, pocket Cast 423 00:22:13,160 --> 00:22:16,760 Speaker 1: for Android, Bloomberg dot Com, and of course, the Bloomberg Terminal.