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Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim Fox.

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Speaker 1: Along with my co host Lisa Bramowitz. Each day we

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Speaker 1: bring you the most important, noteworthy, and useful interviews for

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Speaker 1: you and your money, whether you're at the grocery store

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Speaker 1: or the trading floor. Find the Bloomberg p m L

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Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. There

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Speaker 1: have been a lot of gloom and doom stories written

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Speaker 1: about US leveraged loans issue and has reached a record

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Speaker 1: pace so far this year. The total outstanding debt has

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Speaker 1: surpassed its sister assid class of US junk bonds. And oh,

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Speaker 1: some people are getting worried about we covenants and other issues.

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Speaker 1: Joining us now to tell us how concerned we really

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Speaker 1: ought to be is Christopher Remington. He is a portfolio

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Speaker 1: manager at Eaton Vance focusing on leveraged loans, which are

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Speaker 1: also called bank loans, and he joins us now. Christopher,

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Speaker 1: thank you so much for being with us. Do you

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Speaker 1: think that the gloom and doom that we've heard, this

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Speaker 1: sort of rising risks in the weaker standards? Do you

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Speaker 1: think that that's an accurate portrayal of the asset class

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Speaker 1: not really, Lisa, thanks for having us on UM. Certainly

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Speaker 1: there's been a going storyline in the market that there's

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Speaker 1: been sort of hog wild credit risk taking place, and

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Speaker 1: certainly there's been an uptakeing M and A as you've

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Speaker 1: alluded to earlier on your show. That's normal at this

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Speaker 1: point in the cycle. Certainly, plenty of things to watch, UM,

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Speaker 1: but we think that overall the sort of risk character

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Speaker 1: in the market is pretty typical of what it is

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Speaker 1: at this stage in the cycle. You pointed out the

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Speaker 1: market is growing the so called bonanza and issuance, and

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Speaker 1: you start to back out refinancings, which is just a

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Speaker 1: recycling of existing paper or um um refinancing refinancings basically

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Speaker 1: um the net number is much lower. The market has

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Speaker 1: grown by about ten percent looking back over the past year,

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Speaker 1: and that's following what had been at darth of issuance

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Speaker 1: for a couple of years before that. So the markets

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Speaker 1: catching up. There has been a good amount of issuance

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Speaker 1: this year, but that's really just a reflection of the

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Speaker 1: M and A machine and nuts on the back of

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Speaker 1: what's been a pretty sound US economy, fair enough sounded

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Speaker 1: US economy for now the last time we saw a

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Speaker 1: boom and m and A that was funded by the

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Speaker 1: leverage finance market reminds me frankly of two thousand six seven.

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Speaker 1: It wasn't so pretty after that. And some people are

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Speaker 1: concerned that a lot of companies are raising money in

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Speaker 1: the loan market and not raising money in the bond market,

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Speaker 1: and therefore there is no real advantage to being first

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Speaker 1: lean to basically having get to sort of first recoveries

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Speaker 1: in a bankruptcy and liquidation. What do you make of

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Speaker 1: all of that, though, I wouldn't suggest there's any causality

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Speaker 1: between the fact that there was a lot of issuance

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Speaker 1: in the bank loan market and the great recession that

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Speaker 1: ultimately followed. They did follow in time order, but one

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Speaker 1: had little to do with the other. UM in the

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Speaker 1: in the sort of broader context of bonds versus as loans,

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Speaker 1: I think, you know, the attractiveness of loans today. UM

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Speaker 1: is certainly one that can be made in absolute sense,

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Speaker 1: but really it's all about relativity. If you're the investor,

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Speaker 1: you have a multiple sort of pieces to the puzzle

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Speaker 1: you're trying to balance in a portfolio. You look over

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Speaker 1: on the equity side of your portfolio, and you have

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Speaker 1: stocked creating at all time ever highs. I think stocks

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Speaker 1: have lost I'm pretty sure something like half their value

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Speaker 1: twice in the last fifteen years. That does happen in

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Speaker 1: a recession. Over in bonds, you have a headwind of

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Speaker 1: rising interest rates, and with the FED on the move,

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Speaker 1: they're relatively few places to position in fixed income land

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Speaker 1: where you actually get a benefit from FED raising interest rates,

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Speaker 1: and this is definitely one of those neighborhoods. So folks

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Speaker 1: who are coming in to the asset class I think

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Speaker 1: are doing it from the standpoint of pretty good reasons.

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Speaker 1: They're searching for yield. Yield is hard to find today,

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Speaker 1: but they're also searching for the absence of duration. Um. Certainly,

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Speaker 1: their risks in our market credit risk, liquidity risk, but

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Speaker 1: it's not bond risk, and so investors are trying to

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Speaker 1: balance those things, and I think for good reason, Christopher,

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Speaker 1: have you witnessed money managers pushing back on deals that

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Speaker 1: are too aggressively priced? Well, I can tell you I

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Speaker 1: work here at an asset manager that is indeed doing that.

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Speaker 1: So there's been plenty of issuance, as you've started out

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Speaker 1: the segment talking about, but there's also been plenty of

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Speaker 1: deals to turn down UM. Our turndown rate here at

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Speaker 1: Eaton Advance has averaged about seventy year to date, so

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Speaker 1: I would characterize UM those largely coming on the back

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Speaker 1: of smaller deals UM and also deals that have weaker

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Speaker 1: structures UM. So I'd say the overall sort of temperature

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Speaker 1: of the market is good economy generally good about average

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Speaker 1: credit risk profile, but with weaker documentation, weaker structures, and

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Speaker 1: that's where we're really digging in and drawing the line. So,

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Speaker 1: what are some recent popular deals that you've drawn the

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Speaker 1: line on? For example, was the Thompson Reuters deal one

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Speaker 1: that you're buying into or staying away from? Well, that

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Speaker 1: stuff only one of the big ones to date. UM.

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Speaker 1: We're active in the name at the moment, so I

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Speaker 1: can't speak in great detail about it, but I will

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Speaker 1: tell you that that is a deal that would absolutely

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Speaker 1: hit on those topics that I just mentioned. Good company, UH,

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Speaker 1: somewhat weak structure, and if we are participating, it will

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Speaker 1: definitely be on the more conservatively positioned UH in our portfolio.

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Speaker 1: Definitely some things to watch there because of those structural issues.

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Speaker 1: Probably going to play out just fine, but we think

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Speaker 1: there's likely an opportunity to buy it cheaper sometime down

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Speaker 1: the road. Thanks very much for being with us. Christopher Remington,

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Speaker 1: Director of Income Product and Portfolio Strategy, also institutional portfolio

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Speaker 1: manager for floating rate loans at Eaton Fans. The topic

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Speaker 1: is Brexit. Earlier today, UK Prime Minister Theresa May said

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Speaker 1: that the European Union must treat the United Kingdom with

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Speaker 1: respect in Brexit negotiations. In a statement in which she

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Speaker 1: read at Downing Street, she said that EU leaders to

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Speaker 1: reject her plan, but no alternative at this late stage

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Speaker 1: of negotiations was not acceptable. Let's find out if it

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Speaker 1: really is unacceptable. Ian wish Art is our European government

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Speaker 1: reporter for Bloomberg News joining us from Brussels. All right, Ian,

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Speaker 1: is it really unacceptable? I thought everything in these negotiations

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Speaker 1: seemingly is acceptable. Accept an agreement exactly. It's either all

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Speaker 1: acceptable or all unacceptable. It depends on your perspective. Really, um,

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Speaker 1: the EU has made its position clear and it's pretty

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Speaker 1: much stuck to its position for a year. The UK

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Speaker 1: says it doesn't like it, and a year on is

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Speaker 1: still saying it doesn't like it. Where do you go

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Speaker 1: from there, Well, nobody really knows. Everybody still thinks that

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Speaker 1: at some point and time is running out, but at

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Speaker 1: some point they'll get a deal, but nobody quite knows

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Speaker 1: how that will come about, because, as I say, both

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Speaker 1: sides are completely talking um in different ways from different positions,

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Speaker 1: and nobody seems ready to conceive even one letter to

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Speaker 1: the other side. So, um, who knows what's going to happen.

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Speaker 1: I think all the smart money is on an agreement

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Speaker 1: being done eventually, but at the moment, both sides of

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Speaker 1: doubling down, both sides of digging in. The Prime Minister

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Speaker 1: woke up to newspaper headlines saying she'd been humiliated by

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Speaker 1: AU leaders at the summit in Salzburg in Austria overnight.

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Speaker 1: So where do we go from here? I think it's

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Speaker 1: going to get very messy. Indeed, in I've got to say,

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Speaker 1: it hasn't exactly been smooth sailing before this, right, I mean,

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Speaker 1: it's been a mess all along, and this seems to

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Speaker 1: be a sort of escalation of that. I'm just wondering

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Speaker 1: does this increase the chances of a hard Brexit, and

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Speaker 1: if so, to what degree? I mean, right now, the

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Speaker 1: pound is plunging versus the dollar by the most since. Yeah,

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Speaker 1: I mean, this is the scariest, if you like, the

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Speaker 1: scariest point we've had so far in the break to

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Speaker 1: the negotiations, because it's less than two months really before

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Speaker 1: the deadline, the real hard dearsline where they need to

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Speaker 1: get a deal, and two sides of as far apart

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Speaker 1: as ever, um, you asked dip them out behind the scenes,

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Speaker 1: and they all still stay on both sides that getting

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Speaker 1: a deal is more likely than than not. Um, So

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Speaker 1: I think we have to assume that that is the case,

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Speaker 1: that behind the scenes, round the negotiating table, there is movement,

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Speaker 1: discussions are being had, but politically it's very difficult to

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Speaker 1: see where where the compromise is made. The speech that

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Speaker 1: threason May made an hour or so ago meant that

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Speaker 1: she really dug in. She really said this proposal that

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Speaker 1: the EU has put forward would see the breakup of

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Speaker 1: the United Kingdom and she can never let that happen.

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Speaker 1: Now the EU is saying that's the only proposal we're

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Speaker 1: prepared to offer. So where do you go from here?

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Speaker 1: I mean, it's it's not easy to see where any

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Speaker 1: optimism comes from. So it's also very obvious that are

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Speaker 1: hard Brexit, that no deal, that a really messy divorce

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Speaker 1: is also entirely possible. Ian worship. Is there any conversation

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Speaker 1: about the negotiating style and tactics, I mean number one,

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Speaker 1: negotiating in public, Number two drawing these seemingly firm arguments,

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Speaker 1: but then not having any wiggle room to actually have

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Speaker 1: a negotiation, and then to talk about Northern Ireland when

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Speaker 1: Teresa May's government depends on the support of Northern Ireland

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Speaker 1: members of Parliament. Correct, exactly, everywhere you look, there's there's

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Speaker 1: pitfalls and obstacles and and dead ends. Um, it's quite

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Speaker 1: clear that both sides over the past eighteen months two

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Speaker 1: years have made mistakes, most of them as mistakes have

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Speaker 1: been made by the UK side. Most of the things

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Speaker 1: that the UK said it would never would never accept,

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Speaker 1: they have accepted. So the EU clearly has the upper

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Speaker 1: hand and has had throughout the entire process. Now we're

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Speaker 1: coming right to the crunch, and as you say, it's

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Speaker 1: all about now the Irish border, it's all about Northern Ireland.

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Speaker 1: What the EU says it wants to do to protect

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Speaker 1: its own integrity as they call it, to the Single Market,

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Speaker 1: which means protecting the flow of goods and customers controls

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Speaker 1: into its own single markets depends on getting something arranged

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Speaker 1: for Northern Ireland. What it says it once the UK

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Speaker 1: into reason May is saying she can never accept he's

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Speaker 1: a red line, but something has got to give in

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Speaker 1: just twenty seconds here when you go to the pub

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Speaker 1: or when you walk around and just the average person

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Speaker 1: on the streets of London, how concerned are they about this?

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Speaker 1: How much are they following that details? They're not following

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Speaker 1: the details at all. Really what they want to know

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Speaker 1: what they want to is there going to be a

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Speaker 1: deal or isn't there going to be a deal? Is

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Speaker 1: breg A going to happen or isn't Brexit going to happen?

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Speaker 1: And even those of us who speak to the people

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Speaker 1: who know can't really stay for short what the outcome

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Speaker 1: will be. And that's the scary thing about the Brexit

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Speaker 1: process at the moment. I wish thank you so much

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Speaker 1: for joining us in wish or does the European government

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Speaker 1: reporter for Blueberg News a big question and angst in

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Speaker 1: markets these days? At what point will the rising benchmark

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Speaker 1: rates in the United States damp in interest and risk

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Speaker 1: your assets. And here to answer the question is Tony Sheer,

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Speaker 1: director of Research and co portfolio manager at SMED Capital Management,

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Speaker 1: with the two point three billion dollars of assets under management.

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Speaker 1: So I'm just wondering, Tony. We've been hearing about this

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Speaker 1: that at once, at some point people are going to

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Speaker 1: go back into government debt and avoid the risk kier

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Speaker 1: assets that they've basically been forced into during financial oppression.

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Speaker 1: We're not seeing that yet. When will it occur? It's

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Speaker 1: a great question. It's been years as cheap money has

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Speaker 1: been flowing around, whether it's private equity money or whether

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Speaker 1: it's just the as you say, riskier assets that have

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Speaker 1: gotten away with not having to show real earnings or

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Speaker 1: free cash flow, and that has gone on for quite

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Speaker 1: a long time. As yields go up, you'll have something

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Speaker 1: to compete with that, right And so, you know, we

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Speaker 1: don't know when, but we do think that the economy

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Speaker 1: is going to be far more resilient and the next

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Speaker 1: several years than even the consensus right now would tell you.

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Speaker 1: You listen to Jamie Diamond talked about the five percent

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Speaker 1: on the tenure a couple of years out from now,

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Speaker 1: and if that's driven by economic growth, we do we

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Speaker 1: think you think that there's gonna be five percent treasury

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Speaker 1: yields in a couple of years. It's historically not not

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Speaker 1: asking a lot, actually, right, I mean we just are

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Speaker 1: in a tenure look back where that looks like a

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Speaker 1: really big number right now, but you go back into

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Speaker 1: a longer term time frame, it's really not asking a lot.

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Speaker 1: And so no, we don't think. So we're at a

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Speaker 1: four point something percent four point two I think with

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Speaker 1: the last print on GDP right now, with unemployment lower

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Speaker 1: lower than that, how long is that going to persist

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Speaker 1: without yields eventually starting to reflect some upside on the

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Speaker 1: longer term treasury bond? Tony, I gotta ask you about

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Speaker 1: one group of stocks that has been leading the market higher,

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Speaker 1: and that's technology. I want to know about this idea

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Speaker 1: of financial euphoria and why you believe where if you

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Speaker 1: believe that holding technology and growth stocks could permanently damage

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Speaker 1: investors long term success. From a letter from Smeat Capital Anyway,

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Speaker 1: great question. The short answer is yes, absolutely, All manias

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Speaker 1: and euphorias don't end well. You know, the Internet changed

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Speaker 1: our lives coming out of nine until eighteen years later

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Speaker 1: to today. It changed your life. But when most of

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Speaker 1: the capitalization went towards those ideas, right, you know, you

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Speaker 1: lost your shirt in the subs went three years. Whereas

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Speaker 1: the under capitalization that was going on in value stocks

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Speaker 1: and ever forgotten about, you know, the old economy type stocks.

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Speaker 1: You didn't just do relatively well, you did nominally well

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Speaker 1: in the next couple of years. Right, you could, you

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Speaker 1: could just absolutely beat the mother you'd rather let's say,

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Speaker 1: and I'm not picking on one stock for any reason,

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Speaker 1: but I mean, you'd rather go with the McDonald's and

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Speaker 1: a Coca Cola then you would Facebook or Amazon dot Com?

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Speaker 1: Uh as absolutely? Okay? The you know, I we wrote

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Speaker 1: a piece here recently about that mania, and we went

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Speaker 1: back to two thousand eleven, just as a case in point,

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Speaker 1: when no one was really thinking about fang stocks. That

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Speaker 1: was a point in time where we were looking at

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Speaker 1: another recession, in that case, a double dip recession. And

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Speaker 1: what you were thinking about then was g l D. Right, gold,

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Speaker 1: the gold dt F had more money sucked into it,

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Speaker 1: and the sp wise, the broad market et F at

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Speaker 1: seventy eight billion dollars. Okay, you fast forward to today,

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Speaker 1: the g l D has twenty nine billion in it

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Speaker 1: and the spy has two ninety bill in in it.

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Speaker 1: You should have been taking risk back then, but you

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Speaker 1: were buying bonds and gold was up for that year.

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Speaker 1: The market that SMP had an inter year down draft

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Speaker 1: of nineteen and a half percent, and people were scared, right,

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Speaker 1: But you should have been taking risk then. Fast forward

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Speaker 1: to today, no one is thinking or caring about that stuff.

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Speaker 1: They're only thinking about the things. So you've got, in

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Speaker 1: our view, massive, massive over capitalization in in a very

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Speaker 1: narrow set of stocks, and that's been exacerbated by the

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Speaker 1: amount of money that's gone into passive. There is the

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Speaker 1: agnostic money that owns this stuff that they don't know

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Speaker 1: really what they own or how poorly exposed they are.

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Speaker 1: So let's talk about your portfolio. How have you adjusted

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Speaker 1: it most recently in terms of stocks, bonds, and within stocks,

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Speaker 1: the types of stocks. Great questions. So I mean for us,

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Speaker 1: what this offers, what this capital and misallocation offers us

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Speaker 1: is some cheap stocks that have been left for dead

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Speaker 1: and really forgotten about in comparison to the over excitement

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Speaker 1: and fang. So we've been adding to our position in

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Speaker 1: Walgreens Boots Alliance for instance. Uh, you know, we've been

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Speaker 1: adding to Target Kroger. We've been adding to some of

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Speaker 1: the cheaper stocks that no one cares about a newer

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Speaker 1: name for us, to Discovery Communications. And if you aren't Netflix, okay,

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Speaker 1: you get discounted in old media land. Almost across the board,

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Speaker 1: Discoveries incredibly cheap. We think it offers. They just did

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Speaker 1: a deal with Hulu. They did is gonna now offer

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Speaker 1: their content on the Hulu website or that's right, And

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Speaker 1: that's exactly what they said they were going to do

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Speaker 1: when they did the deal with Scripts Networks when they

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Speaker 1: when they combined, right, they're gonna bring the discovery channels

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Speaker 1: excuse me to uh to the same over the top

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Speaker 1: platforms as Script Networks has had. So real quick. What

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Speaker 1: about bonds versus stocks? Well, I mean yields we think

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Speaker 1: are going to be rising here. So you don't like bonds, No,

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Speaker 1: we don't like bonds. Okay, you don't like any bonds?

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Speaker 1: And how long if you not like bonds, well, you're

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Speaker 1: like approximately a decade were an equity we're an equity manager.

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Speaker 1: But no, we do think that we're going to be

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Speaker 1: in a in a well we think also in we

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Speaker 1: haven't talked about inflation. We think inflation but also economic

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Speaker 1: growth is gonna drive rates higher, so you don't want

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Speaker 1: to be, you know, owning bonds. High quality, value oriented

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Speaker 1: equities we think are going to be a place that

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Speaker 1: you can win, not just relatively but nominally as well.

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Speaker 1: Well done, Thanks very much for coming in and sharing

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Speaker 1: your thoughts with us. Tony Sheer is director of Research

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Speaker 1: co portfolio manager for Smeeed Capital Management, helping to manage

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Speaker 1: more than two point two billion dollars. They're based in Seattle,

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Speaker 1: talking about adding to positions in Walgreen's Boots Alliance, Target, Kroger,

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Speaker 1: and Discovery Networks. David Neilman is a serial airline entrepreneur,

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Speaker 1: founder of Jet Blue Airways, also a founder of Morris Airways,

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Speaker 1: also founder of west Jet Airways. Also he is going

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Speaker 1: to have a new airline, a low cost airline, and

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Speaker 1: here to tell us all about it is George ferguson

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Speaker 1: Bloomberg Intelligence, his own expert when it comes to all

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Speaker 1: things aerospace and defense. This is an interesting story, George,

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Speaker 1: that David Neilman is going to be taking those A

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Speaker 1: two twenty jets that were developed by Bombardier formerly known

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Speaker 1: as the C series, and he wants to start a

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Speaker 1: new airline called Moxie. Does the world need Moxie? Well, so,

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Speaker 1: I think principally he will be flying US routes. And

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Speaker 1: I can't only speak for the entire world, although I

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Speaker 1: try sometimes, but I think the US doesn't necessarily need

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Speaker 1: another airline. We have a lot of capacity, fairs are

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Speaker 1: under pressure, margins are falling for airlines. Um, he's going

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Speaker 1: to try to wedge Moxie in here. I think it's

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Speaker 1: going to be difficult to make a lot of money

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Speaker 1: with Maxie, all right, But this is the founder of

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Speaker 1: jet Blue, so he has some experience and jet Blue

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Speaker 1: has done pretty well, right, I mean, they've done uh,

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Speaker 1: gotten a lot of market share, and they have a

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Speaker 1: model that is being emulated by others. I'm just wondering.

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Speaker 1: I mean, I personally would kind of enjoy it if

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Speaker 1: somebody offered even lower fares out there. What's the problem. Yeah,

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Speaker 1: you know, I think everybody wants lower fares. I think

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Speaker 1: that's a that's a good thing. So again, but the

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Speaker 1: more you cut fairs and more Abiales cuts fars, the

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Speaker 1: more difficult it is to make a profit in this business.

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Speaker 1: But George, hold on a second, because actually prices have

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Speaker 1: been going up steadily. I don't know if you've noticed

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Speaker 1: at him, I don't know if you've noticed it, but

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Speaker 1: it's been going up pretty dramatically. And now you have

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Speaker 1: to pay for your overhead luggage and you have to

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Speaker 1: pay for uh the oxygen that you breathe. So, I

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Speaker 1: mean they have succeeded in increasing priss but believe it

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Speaker 1: or not, airlines are still less profitable this year than

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Speaker 1: they were in and the reason is fuel prices are

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Speaker 1: rising like and fares are rising to three so there,

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Speaker 1: so they don't have the pricing power to compensate for

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Speaker 1: that eising costs. Can you make me go into a

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Speaker 1: little bit of the thinking behind using that A to

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Speaker 1: twenty jet, that C series jet, I mean, it only

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Speaker 1: holds about a hundred and fifty travelers, and most of

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Speaker 1: the low cost carriers, as I understand, they're going with

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Speaker 1: something like the airbus. You got it. And that's why

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Speaker 1: I think it's very interesting about this too, right is

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Speaker 1: that uh So, David Neilman has worked before with UM

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Speaker 1: with air Bus, and I think there's a little bit

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Speaker 1: of some of the old the Airbus getting the band

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Speaker 1: back together. Um, and they really need to build some

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Speaker 1: demand for this A to twenty. And I think they're

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Speaker 1: hoping that Neilman can build a fleet of these because

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Speaker 1: we think that they give him a deal on the

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Speaker 1: sixty aircraft. You think, my guess, My guess is they did. Um.

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Speaker 1: I think that's a big difference. Uh. Sort of in

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Speaker 1: moving this airplane from Bombardier to air buses, you now

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Speaker 1: have deeper pockets. I think as you launch an airplane,

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Speaker 1: you have to be ready to take a little bit

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Speaker 1: of pain less profitability, a bunch of discounting, and that's

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Speaker 1: what this does. He wants to fly from tertiary airports

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Speaker 1: in America or maybe secondary tertiary, So you could argue

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Speaker 1: that you need that smaller size because he's flying from

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Speaker 1: places like Trenton, you know where windsor Locks, Connecticut in

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Speaker 1: places like that. Well, you're not gonna be able to

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Speaker 1: fill a hundred and fifty or a hundred and seventy

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Speaker 1: sea airplanes. But the rest of the little cost world

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Speaker 1: is going to much bigger airplanes as they try to

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Speaker 1: defray the cost of higher pilot salaries in the front

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Speaker 1: and those higher fuel expenses. Lisa Abrama it's just wants

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Speaker 1: more leg room and wants to not be charged for

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Speaker 1: the oxygen that she uses on the plane. Yeah. Also,

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Speaker 1: I mean there are there are a list of things

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Speaker 1: that I would like. I would like the free snacks

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Speaker 1: to come back, because I know that in some places

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Speaker 1: that's not acceptable. I also the whole idea of support

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Speaker 1: pets that are like huge peacocks that take up They

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Speaker 1: got rid of that, they got rid of the peak

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Speaker 1: not not not a big fan of that. And yeah, no,

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Speaker 1: I think that there are some issues. There's some issues

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Speaker 1: that need to be addressed. I think Lisa wants, ever

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Speaker 1: wants to get those wings you know that they used

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Speaker 1: to give out when you traveled on in there. I

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Speaker 1: think they still have them. All Right, George, I want

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Speaker 1: to talk to you about some news that was made

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Speaker 1: this week with the Emirates and Eddie had Uh. These

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Speaker 1: two pretend these airline rivals exactly, and there is some

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Speaker 1: talk that perhaps are going to be combining perhaps not.

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Speaker 1: They denied it, But what's the logic here? Why would

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Speaker 1: it be beneficial for them to join forces? Yeah, I

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Speaker 1: mean there's a lot of capacity that flies between UM

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Speaker 1: Europe and Asia. Right, it's a it's a big trade route.

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Speaker 1: There's a lot of people that fly those routes, UM

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Speaker 1: that that work in in Europe or work in the

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Speaker 1: even further into the US UM and so so because

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Speaker 1: of all this sort of demand for flying airlines amended

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Speaker 1: even more supply, and so you have you have a

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Speaker 1: market that the big European carriers compete for, the big

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Speaker 1: Asian carriers compete for. In the Middle Eastern carriers compete for,

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Speaker 1: and I and fairs are just horrible on these routes. Uh.

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Speaker 1: And so you know, ET hasn't had the best go

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Speaker 1: of it. Um. They're they're smaller than Emirates they went

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Speaker 1: after by horrible you mean they're low Um, Yes, okay,

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Speaker 1: because because okay, carry on, George, just remember shareholders do

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Speaker 1: deserve a decent return, all right, and some of these

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Speaker 1: are approaching levels. Aren't a decent return for Charilder. We

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Speaker 1: can debate that later on, I guess if you want.

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Speaker 1: But so ETA had hasn't had a great go of it.

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Speaker 1: Emirates has been much more successful. Look, they're kind of brothers, right,

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Speaker 1: They're both in the U a E. They're in the

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Speaker 1: towns that are a hundred kilometers hundred fifty kilometers apart UH,

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Speaker 1: and I think that probably the government to us probably

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Speaker 1: pulling both of them to get together because they Abadhabians

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Speaker 1: are probably pired of losing money on at the HOD

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Speaker 1: and they see emirates as being more successful. And so

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Speaker 1: I think the reason why this could get done in

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Speaker 1: the end is that that government will push a lot

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Speaker 1: of parties that don't want to, you know, maybe be

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Speaker 1: together together to rationalize this UH this carrier, and that

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Speaker 1: would lower some of the capacity between Europe and Southeast

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Speaker 1: Asia and help fares in that part of the world.

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Speaker 1: George Ferguson, thank you so much for joining us. Please

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Speaker 1: do lower the prices, get us some more leg room

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Speaker 1: and possibly even overhead overhead space that you don't have

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Speaker 1: to pay for. Thank you. Those are our requests. Thanks

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Speaker 1: for listening to the Bloomberg P and L podcast. You

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Speaker 1: can subscribe and listen to interviews at Apple Podcasts, SoundCloud,

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Speaker 1: or whatever podcast platform you prefer. I'm pim Fox. I'm

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Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa

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Speaker 1: abramowits one before the podcast. You can always catch us

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Speaker 1: worldwide on Bloomberg Radio.