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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside

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Speaker 1: my co host Matt Miller. Every business day, we bring

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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along

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Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast

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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and

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Speaker 1: at Bloomberg dot com slash podcast. All right, let's get

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Speaker 1: the latest on this Trump indictment, the arraignment yesterday in

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Speaker 1: Lower Manhattan. We're gonna roundtable listening today. Lisa Kamuso Miller,

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Speaker 1: former Republican National Committee communications director and partner with Reset

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Speaker 1: Public Affairs, joins us by phone, as does Bloomberg Washing

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Speaker 1: correspond at Emily Wilkins, to discuss the indictment. Lisa, let's

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Speaker 1: start with you here. What's the feeling in Republican circles

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Speaker 1: about what took place in Lower Manhattan yesterday? Oh? Well,

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Speaker 1: it's really hard to tell. I mean, this is so

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Speaker 1: unprecedented and just so different from anything we've ever seen

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Speaker 1: in the history of this country. I think, you know,

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Speaker 1: there is a different point of view from a lot

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Speaker 1: of different parts of the party, but ultimately the thought

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Speaker 1: is that wherever happened yesterday in front of the world

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Speaker 1: did nothing to bolster any support for Donald Trump from

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Speaker 1: the Republicans that he lost in twenty sixteen. So he

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Speaker 1: has a very core base of about thirty percent of

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Speaker 1: the electorate on the Republican side that are still with him,

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Speaker 1: regardless of how insane all of this really is. But

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Speaker 1: there is just so much more to look at and

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Speaker 1: unpack as this unfolds. But really, yesterday, I mean, the

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Speaker 1: fact that he wants to run for office in twenty

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Speaker 1: four but can go to mar Lago and yell from

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Speaker 1: the microphone about how the fabric of the country is

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Speaker 1: eroded and this is all fake and false is just

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Speaker 1: to me. It's just totally in contrast with what the

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Speaker 1: party at once, at one time stood for. But it

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Speaker 1: seems like everybody in the party has gotten behind him,

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Speaker 1: at least to call this this indictment political move right.

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Speaker 1: I mean, we heard from Mitt Romney, who is no

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Speaker 1: traditional fan of Donald Trump, he voted twice to impeach

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Speaker 1: the former president, that this is overreached by Alvin Bragg

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Speaker 1: and that this will damage the US judicial system. I

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Speaker 1: guess you know, from from the Democrats point of view,

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Speaker 1: Mitt Romney is as close to a voice of reason

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Speaker 1: as a Republican Party has and he's calling out Bragg

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Speaker 1: saying this is not right. Yeah, that's a real change

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Speaker 1: in tone from him, and that was really surprising. But

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Speaker 1: I suspect that part of it, too, is not necessarily political.

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Speaker 1: But I think maybe what Romney is thinking behind the

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Speaker 1: scenes is that it does. It's not necessarily about what

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Speaker 1: Bragg has done, because I cannot believe that someone like um,

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Speaker 1: like Dia Bragg would do anything but bring the strongest

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Speaker 1: possible case in an instance like this. The difference here, though,

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Speaker 1: is your republic Huh. At one point I was now

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Speaker 1: I'm a little bit cot. I was confused. Well, I'm

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Speaker 1: a never Trumper and there's no surprise about that, but

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Speaker 1: I am still part of the Republican Party and I

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Speaker 1: represent the side that's also more just confused by all

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Speaker 1: of this. We're confused by this. But but this trend

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Speaker 1: is not We're not going backwards here. That's the difference

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Speaker 1: is that we're not going back to where we once were.

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Speaker 1: We have to go through this, so we have to

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Speaker 1: figure out as a party, as a country, how it

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Speaker 1: is we're going to manage And because Trump is not

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Speaker 1: going away, So it's more of a how do we

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Speaker 1: figure out what it is that he's done to unlock

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Speaker 1: this core of voters in the Republican side. So back

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Speaker 1: to my point about Trump though, or excuse me about Romney. Romney,

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Speaker 1: to me, if he is trying to unlock and talk

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Speaker 1: about this in a way that he calls this political,

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Speaker 1: he is most likely thinking that not only is the

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Speaker 1: damage going to come from Trump, and the damage is

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Speaker 1: going to be done in a way that will cause

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Speaker 1: harm to the judicial system, it'll also cause a problem

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Speaker 1: for any future case that will come because everything Trump

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Speaker 1: is trying to do is this credit right, These all

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Speaker 1: of these allegations about payments have been confusing to people.

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Speaker 1: No one fundamentally understands why it matters. The truth is

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Speaker 1: that he but everyone sort of agrees that it happened

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Speaker 1: right in terms of the actual payments. Let me bring

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Speaker 1: in Emily Wilkins from Bloomberg Government, Emily the senior statesman

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Speaker 1: from Utah, and I mean, Mitt Romney is the one

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Speaker 1: of the more statesman like people in the entire you know, uh, Senate,

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Speaker 1: I think everyone would agree, he said, quote the prosecutors

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Speaker 1: overreach that's a dangerous precedent for criminalizing political opponents and

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Speaker 1: damages the public's faith in our justice system. Are there

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Speaker 1: any statesman, you know, are then there any like legit,

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Speaker 1: respectable senators Emily who have come out on the other

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Speaker 1: side of this, I mean for Democrats absolutely, you certainly

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Speaker 1: see them, you know, say that that, you know, encouraging

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Speaker 1: what da brag has done here, uh, kind of going

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Speaker 1: after Trump saying like, look, you know, if a potential

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Speaker 1: crime was being committed, that they have the right to

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Speaker 1: look into it. At the same point, I do think

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Speaker 1: there is a sense in DC and on Capitol Hill

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Speaker 1: that this is not the strongest case against Trump. I mean, remember,

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Speaker 1: there are multiple cases that are looking into the former

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Speaker 1: president right There's the one in Georgia that deals with

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Speaker 1: the twenty twenty election and interference. There's the one in

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Speaker 1: DC right now with the Special Special Council that's looking

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Speaker 1: into the classified documents. And there's a sense that some

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Speaker 1: of those are actually bigger concerns than any sort of

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Speaker 1: mismanagement in bookkeeping or hush money payments. And so I

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Speaker 1: think there's kind of and I will be interested to

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Speaker 1: see how Mitt Romney responds when some of those cases

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Speaker 1: are brought forward because if you look at the Republican

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Speaker 1: Party right now on Capitol Hill, they are really done

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Speaker 1: with the twenty twenty election. They're done with calls that

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Speaker 1: it's fraudulent. They want to get past that and move

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Speaker 1: past that. If you see another one of these indictments,

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Speaker 1: they're going to have to confront it again. And I

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Speaker 1: think for a number of them, you aren't going to

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Speaker 1: see maybe as much support for Trump or as much

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Speaker 1: blowback against uh. You know, whoever the DA is who

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Speaker 1: brings the case forward. I mean this particular instance, it's

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Speaker 1: really easy for Republicans, you know, when you ask them

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Speaker 1: about Trump, when you ask them about the indictment, they

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Speaker 1: will immediately change the channel to district District Attorney Alvin Bragg.

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Speaker 1: You saw Kevin McCarthy yesterday, you know, really did not

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Speaker 1: comment about Trump much at all. But when after Alvin

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Speaker 1: Bragg saying he's attempting to interfere with our democratic process,

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Speaker 1: that Congress will hold him accountable. This is really a

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Speaker 1: talking point that everyone's so far been able to get behind. Lisa,

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Speaker 1: you're the former communications director for the Republican National Committee.

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Speaker 1: Has where has the Republican Party go gone in your

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Speaker 1: in your opinion, I mean, is it gone to the

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Speaker 1: Trump's party Trump wing? And is that permanent? I mean,

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Speaker 1: where where did your Republican Party go? That's the million

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Speaker 1: dollar question. Uh. You know the funny thing about all

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Speaker 1: of this, and it's really not very funny that the

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Speaker 1: one thing that now Publicans behind the scenes are trying

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Speaker 1: to figure out is how how do they access how

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Speaker 1: do they unlock the lockbox that Trump has figured out

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Speaker 1: how to hold onto in that thirty percent, that sort

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Speaker 1: of core voter pool that is with him. The difficulty, though,

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Speaker 1: and Emily's point is absolutely right Capitol Hill is not

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Speaker 1: They are not wanting to talk anymore about twenty twenty

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Speaker 1: the leadership. There's a vacuum, right And the only thing

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Speaker 1: that continues to draw attention and continues to hold onto

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Speaker 1: those voters that are really hard the hardest to get

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Speaker 1: to is Trump. So I think that more than ever before,

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Speaker 1: Republicans are brightened to step up and stand up to him,

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Speaker 1: and so they're happier to talk about Alvin Bragg And

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Speaker 1: I mean, he's a He's become a household name over

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Speaker 1: the course of the last couple of months and years,

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Speaker 1: the party itself, though, is going to have to figure

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Speaker 1: out how to carve their own message out and talk

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Speaker 1: to the elector at that portion of the electorate that

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Speaker 1: stepped away from Trump in sixteen or excuse me that

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Speaker 1: we're with Trump in sixteen but stepped away from him

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Speaker 1: in twenty twenty. Those are the voters. Those are like

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Speaker 1: middle class voters that are They're desperate for support, They're

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Speaker 1: desperate for help, they want to access the economy in

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Speaker 1: a way. It's different. So all right, Lisa, thank you

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Speaker 1: so much for joining us. Lisa's Camuso Miller partner, I

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Speaker 1: Reset Public Affairs, and Emily Wilkins from a Bloomberg News

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Speaker 1: joining us talking to us about this Trump in Diamond.

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Speaker 1: You're listening to the Team Cancer Line program, Bloomberg Markets

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Speaker 1: Weekdays and ten Amias Daring on Bloomberg dot Com, the

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Speaker 1: I Heart Radio app and the Bloomberg Business App. We're

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Speaker 1: listening on demand wherever you get your podcast. We welcome

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Speaker 1: now our Bloomberg TV viewers and radio listeners. The New

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Speaker 1: York International Also show begins on Friday to help us

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Speaker 1: prepare for its Jeremy pappin This On America's chairperson and

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Speaker 1: Bloomberg's Matt Miller join us now, Matt, why don't you

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Speaker 1: kick things off? All right? Thanks? You know what I

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Speaker 1: would love to start with the IRA, Jeremy, And this

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Speaker 1: is the Inflation and Reduction Act that we all struggled

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Speaker 1: for so many months to understand. It's key because if

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Speaker 1: you get it right, consumers automatically get a seventy five

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Speaker 1: hundred dollars tax credit for buying your electric vehicles. But

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Speaker 1: if you get it wrong, they get Bob kiss and

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Speaker 1: you need the lower prices or given centis incentives. So

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Speaker 1: what have you got that I can get seventy five

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Speaker 1: hundred dollars off from Uncle sam on? And what are

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Speaker 1: you planning on putting out that's gonna be IRA compliant?

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Speaker 1: Good the good morning. Well today you've got a Nissan

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Speaker 1: Leaf that fully qualifies for the seventy five hundred dollar

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Speaker 1: tax incentive, and and you've got a Nissan Aria that

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Speaker 1: fully qualifies for the commercial leaves under the forty five

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Speaker 1: provision of the the IRA. So we've got two great

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Speaker 1: offerings in the market today, and we think the IRA

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Speaker 1: IS it's tremendous opportunity. The rules are clear now, the

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Speaker 1: framework is established for several years, and the company is

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Speaker 1: developing plants to be fully compliant with IRA. We will

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Speaker 1: be uh producing a number of EVS from our Campton

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Speaker 1: plant in Mississippi by the end of twenty twenty five

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Speaker 1: and and those and those vehicles would be fully compliant

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Speaker 1: with IRA. So I think we we welcome the IRA,

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Speaker 1: the clarity and the and the and and what it

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Speaker 1: means in terms of developing the EV demand and business

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Speaker 1: in the in the USA. In terms of EVS, I mean,

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Speaker 1: you did have the lead at one point. A lot

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Speaker 1: of people forget that Nissan was a pioneer right with

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Speaker 1: the Leaf and you still got that coming out. What

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Speaker 1: are the higher end vehicles that you can produce here?

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Speaker 1: You know, I've driven the QX sixty from Infinity, I've

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Speaker 1: driven the QX aighty, fantastic vehicles, but they don't have

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Speaker 1: the battery powered um uh sort of forward thinking power

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Speaker 1: plant that that customers are going to need in ten years. Yeah.

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Speaker 1: Look today again, it's it's Leaved that you mentioned. Is

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Speaker 1: Aria area is packed with technology. It's a it's a

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Speaker 1: it's an evy, so you get all the driving pleasure

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Speaker 1: out of it. We've enhanced the E force, which is

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Speaker 1: motion control, which provides you a sense of safety that

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Speaker 1: you know is unprecedented. The connected services in the car

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Speaker 1: is amazing. We've added a poor Pilot two point zero,

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Speaker 1: which is some you know, safety feature, and the autonomous

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Speaker 1: driving capability. So there's a lot of technology in an

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Speaker 1: area today and that's that starts at forty three thousand dollars,

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Speaker 1: so that's very competitive in the marketplace as well. Um

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Speaker 1: and and the future. You know, Nissan is going to

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Speaker 1: be launching about twenty seven new cars in the in

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Speaker 1: the next seven years, nineteen of which will be full

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Speaker 1: battery electric vehicles and most of which will come to

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Speaker 1: the US. We'll have an EV in every market that

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Speaker 1: is significant to the US customer. Jeremy, if I have

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Speaker 1: range anxiety and I want to stick with a traditional

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Speaker 1: combustion engine, what can you offer me? Are we moving

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Speaker 1: away from that too quickly? Now? I think you know

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Speaker 1: today the area is a three hundred miles EV already,

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Speaker 1: and you know it's a it's a it's a very

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Speaker 1: good range for the for the for the daily use

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Speaker 1: and the most commonly used routes in the US. I

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Speaker 1: understand the question and the charging experience. That's why the

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Speaker 1: charging experience is so important, and that's why the efforts

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Speaker 1: that are being put in place by private and public

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Speaker 1: you know, funding to deploy charging infrastructure is so important

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Speaker 1: because that's going to be critical to the to the

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Speaker 1: to the ev experience of the of the customer. So

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Speaker 1: I think it's it's a matter of of of the

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Speaker 1: charging the charging network development. We at Nissan already have

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Speaker 1: a very well established charging network throughout dealer network and

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Speaker 1: thinking about technology of the future of the company is

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Speaker 1: investing into all solid state battery, which will you know,

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Speaker 1: double the power density, lower the charging time, definitely increase

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Speaker 1: further the range. And so that's the future of breaks

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Speaker 1: rain technology. The confidence in terms of the technology we're

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Speaker 1: bringing and the breakthroughs means you know, in twenty thirty,

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Speaker 1: we think ourselves of evs will largely exceed forty percent

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Speaker 1: of ourselves. So there will be an answer for all. Okay,

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Speaker 1: let's let's switch gears a little bit. I know you

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Speaker 1: can't switch gears an electric vehicle, but nevertheless, we'll do it. Um,

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Speaker 1: let's talk a little bit about where we are with

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Speaker 1: the daaler network. Jeremy, a year ago, if I'd gone

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Speaker 1: to the dealer network, The biggest concern would have been

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Speaker 1: the available of availability of inventory, the availability of newcasts

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Speaker 1: to buy. I wonder whether now the biggest concern that

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Speaker 1: the dealer network has is the certain manificant rise in

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Speaker 1: rates interest rates that we've seen over the last year,

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Speaker 1: the fact the ECB everybody is raising rates right now,

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Speaker 1: and I'm wondering what impact you see that having. It's

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Speaker 1: a very good question. I think you're right that availability

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Speaker 1: was an issue. It's less of an issue today, but

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Speaker 1: still delier inventories are very tight at Nissan, so the

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Speaker 1: market is clearly pulling. And today what we see in

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Speaker 1: terms of the market demand is that it's it's exceeding

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Speaker 1: the production that we have. And where we're seeing a

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Speaker 1: change in terms of the interest rates having is people

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Speaker 1: are shopping for entry segments. They're showing interest in the

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Speaker 1: entry segments that perhaps was less there a year ago.

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Speaker 1: For Nissan, it's good news because we've got a Versa,

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Speaker 1: we've got a center, we've got a Kicks. All of

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Speaker 1: those are very strong value for many offerings in entry segments.

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Speaker 1: We have a very well established pres since great products.

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Speaker 1: So the customer shopping shopping a Nissan that is shopping

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Speaker 1: for a price point given where interest rates are as

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Speaker 1: an answer in our product lineup today, you're just the

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Speaker 1: product lineup today. Um, A lot of it is impressive

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Speaker 1: to me. I love the z that's one that you

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Speaker 1: can't make enough of, I'm sure. But Americans in general

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Speaker 1: like bigger things like the q X eight, like the Armada,

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Speaker 1: like the Titan, and that's scheduled um for ending production.

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Speaker 1: What are you gonna do about the big truck big

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Speaker 1: suv segment beyond say twenty twenty five. The Titan, the Armada,

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Speaker 1: the q x X eight that you've mentioned, they're all

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Speaker 1: very good business for us today. The large SUVs are

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Speaker 1: clearly an area where we are meeting customer demand and

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Speaker 1: determined to remain very relevant in the in the marketplace.

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Speaker 1: So these are these are good. These are good the

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Speaker 1: good segments for us in the works. Again, you can

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Speaker 1: find that you can find all of those vehicles as now.

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Speaker 1: But what about in twenty twenty six, I mean, aren't

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Speaker 1: you going to end production of the Titan? Then the

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Speaker 1: Titan again, is it's fully available today We're working on

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Speaker 1: remaining very relevant in the marketplace, working on the solutions

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Speaker 1: around the trucks, that are to world's electrification as well. So, um,

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Speaker 1: the Titan as we know is, you know, is is

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Speaker 1: meeting the customer and and and and we're working on

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Speaker 1: what can come next. Guys, we'll wrap it up there.

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Speaker 1: Really looking forward to the show, Jeremy. I'm sure Matt

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Speaker 1: will be popping down to take a look at what's

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Speaker 1: on offer. Jeremy, happened of Nissan And of course Bloomberg's

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Speaker 1: one and only Matt Miller. You're listening to the tape

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Speaker 1: cans are live program Bloomberg Markets weekdays at ten am

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Speaker 1: Eastern on Bloomberg Radio, the t Bloomberg dot Com, and

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Speaker 1: the Bloomberg Business App. You can also listen live on

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Speaker 1: Amazon Alexa from our flagship New York station. Just say

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Speaker 1: Alexa play Bloomberg eleven thirty. You want to focus on

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Speaker 1: Europe right now? Tomas and Nets, senior equity analyst. He

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Speaker 1: covers the European banks for bloomerket Intelligence. He's based in London. Toomas,

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Speaker 1: thanks so much for joining us here, framaut for us,

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Speaker 1: what you think the risk could be for European banks?

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Speaker 1: You know, we had Silicon Valley Bank here in the

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Speaker 1: US and that kind of spook people got people focusing

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Speaker 1: on the health of the banks. What's the concern about

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Speaker 1: European banks and real estate? Hi, guys, thank you so

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Speaker 1: much for having me. Yes. Well, first of all, Yes,

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Speaker 1: as you mentioned, everybody is right now looking at commercial

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Speaker 1: real estate. This is the asset which everybody's focusing. After

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Speaker 1: SVB and crazy with drama. Everybody is trying to understand

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Speaker 1: what is the impact of high elevated interest rates on

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Speaker 1: highly leveraged the markets and commercial realistates take all the

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Speaker 1: boxes unfortunately, and when we look at the European banks,

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Speaker 1: we are then in fact that there's nearly one point

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Speaker 1: four trillion of euros of cre loans on the balance

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Speaker 1: street at the moment. It is spread across European markets, UK, France,

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Speaker 1: Germany has the highest volumes. In terms of the exposure

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Speaker 1: as the persentage of total loans, Nordic banks actually are

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Speaker 1: screening the worst. They have more than ten percent of

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Speaker 1: the total loans versus around six to seven for European banks.

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Speaker 1: And in terms of the risk, of course, there is

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Speaker 1: a risk of refinancing, there is a risk of higher rates,

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Speaker 1: there is a risk of not repaying the debt on time,

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Speaker 1: so which for the banks. Means we can create some

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Speaker 1: imperment charges. Maybe there will be a right of even

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Speaker 1: ever happening, but it's not going to happen over one quarter.

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Speaker 1: If there's any stresses in the market, it's gonna take

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Speaker 1: several quarters to play. But investors definitely want to understand

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Speaker 1: who is most exposed, whose portfolio is most vulnerable, and

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Speaker 1: how they will produce portfolio incoming quarters. What do we

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Speaker 1: hear from regulators, what do we hear from the ECB?

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Speaker 1: I mean, the concern here Tamash as you know, is

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Speaker 1: that you know, the FED drop the ball or didn't

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Speaker 1: do anything with the ball. So is it gonna be

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Speaker 1: a different story in Europe? You know, that's very interesting

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Speaker 1: because it SB has been looking into cre market already

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Speaker 1: for a couple of years. I think in two thousand

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Speaker 1: and eighteen they started to collect data from the banks

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Speaker 1: on their explorer to the to the market. Sadly this

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Speaker 1: data is not available for public maybe it will be

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Speaker 1: right now, and it SB has had flagged already. Commercial

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Speaker 1: real estate market is one of the vulnerabilities even before

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Speaker 1: SB and courage with drama right, So definitely it is

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Speaker 1: on the rather for the regulators. They may be looking

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Speaker 1: into introducing some macropodential measures to ease the pressure for

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Speaker 1: the banks, to ease the pressure to to to stop

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Speaker 1: the financing maybe or make financing a little bit more safe.

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Speaker 1: So definitely sb IT has will have to look into

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Speaker 1: this more more carefully. And it's all about what's going

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Speaker 1: to happen the interest racing coming months, right, whether they're

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Speaker 1: gonna be raising or not, and what is the policy

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Speaker 1: over there? And Toomas, I mean unlike here in the

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Speaker 1: US or we have a lot of regional banks that

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Speaker 1: you know, maybe not may not be to take the risk.

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Speaker 1: Here in Europe, the real estate loans are from big,

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Speaker 1: big banks. So does that limit kind of the risk

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Speaker 1: a little bit or do they are you still concerned? Yes,

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Speaker 1: as you mentioned it right right, No, for the biggest

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Speaker 1: banks H S, B, C, BNP and the laws like that,

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Speaker 1: it is around six to seven eight persons. For Nordics

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Speaker 1: banks a little bit more, it's more than ten persons,

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Speaker 1: so they are definitely more exposed. But also we are

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Speaker 1: having we're having four Germans specialized banks which are just

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Speaker 1: doing commercial realized state financing. They are quite small, not

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Speaker 1: all of them are publicly publicly treaded so definitely there

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Speaker 1: would be kind of the Canary mind, you know, there

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Speaker 1: would be there, there would be bad way, Okay, what's

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Speaker 1: happening with the market these banks, these banks are which

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Speaker 1: are very much specializing only in creft financing. What's happening

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Speaker 1: with those loans in the incoming quarter, in the reporting period.

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Speaker 1: That would definitely be a providing as youthful information. What

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Speaker 1: we can expect with other banks, all right, and we

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Speaker 1: can also expect is to get some good news or

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Speaker 1: good intelligence, good data. Bloomer Intelligence is holding an investor

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Speaker 1: event on April twentieth talking about real estate, the Real

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Speaker 1: Estate Summit twenty twenty three. Tell us about this uh

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Speaker 1: conference you guys are having. Is it? Is it in London? Yes,

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Speaker 1: it's based in London. It is organized by my colleagues

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Speaker 1: from the real estate team. So definitely were gathering all

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Speaker 1: the specialists in the market. It is it is second

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Speaker 1: time we are organizing the even so a lots of

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Speaker 1: market participants special will be there talking about actually what

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Speaker 1: we are discussing at the moment, right, So definitely it's

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Speaker 1: gonna be on agenda so very much, you know, inviting

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Speaker 1: everyone who is interested in participating to learn more from

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Speaker 1: the market experts from Bloomberg Intelligence team as well from analysts,

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Speaker 1: from real estate specialists, to get the better understanding of

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Speaker 1: what's happening with the office prices in UK, you know,

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Speaker 1: in France and Germany, across all the capital cities. What

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Speaker 1: are the expectations and how how this situation can play out?

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Speaker 1: All right, really interesting, so that so all our friends

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Speaker 1: in London they can check that out. Got to Bloomberg

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Speaker 1: dot com. They'll have some got the conferences sectionary. He'll

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Speaker 1: see some opportunities there to sign up for that. It's

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Speaker 1: in conjunction with the European Public Real Estate Association, So

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Speaker 1: Bloomberg Intelligence April twentieth in New York, Bloomberg Intelligence and EPRA.

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Speaker 1: It's the real Estate Finance Summit twenty twenty three. So

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Speaker 1: if you're in London, check that out, get the latest

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Speaker 1: on the real estate business and perhaps you know the

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Speaker 1: impact of the risks it means for some of the

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Speaker 1: European banks, and clearly that is a global issue. US

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Speaker 1: banks are being questioned and it's gonna be a real

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Speaker 1: focus for when the bank's report earnings in the next

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Speaker 1: couple of weeks. Is a lot of folks are going

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Speaker 1: to be spending a lot of time focusing on the

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Speaker 1: real estate exposure and maybe how they are reserved against that,

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Speaker 1: and what some of the risks will be for real estate.

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Speaker 1: So when the bank's report, it will be about deposits

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Speaker 1: and in some of their loan portfolio. You're listening to

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Speaker 1: the team cancer a live program Bloomberg Markets weekdays at

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Speaker 1: ten am eastering on Bloomberg dot com, the I Heart

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Speaker 1: Radio app and the Bloomberg Business app, or listening on

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Speaker 1: demand wherever you get your podcast. We've got another guest

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Speaker 1: in studio. It's just like back into the days before

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Speaker 1: the pandemic and people would actually come into work, come

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Speaker 1: into the office, come into the studio, and do this

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Speaker 1: stuff live. We're gonna talk regional banks here. There's a

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Speaker 1: lot to talk about. Obviously, we had the concern over

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Speaker 1: the last several weeks of some of these smaller regional

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Speaker 1: banks failing. That's obviously front and center. That spooked a

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Speaker 1: lot of people about the overall banking industry. Now we've

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Speaker 1: got an additional headwind, which is kind of real estate

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Speaker 1: loans and how that may be an issue for some

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Speaker 1: of the banks. So let's bring in Herman Channy covers

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Speaker 1: the regional banks for Bloomberg Intelligence. He doesn't phone it in,

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Speaker 1: he doesn't mail it, and he comes into the office,

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Speaker 1: and we appreciate that he's in the studio here. Herman

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Speaker 1: talked to us about when you talk to introditional investor

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Speaker 1: clients these days, where are they in kind of the

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Speaker 1: fear factor for the industry. Have we passed that initial

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Speaker 1: panic that we had a few weeks ago and a

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Speaker 1: little bit more rational out there? Maybe? Yeah, I think

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Speaker 1: the panic has receded for the industry. You're right, but

431
00:23:57,640 --> 00:24:00,440
Speaker 1: there are certain banks that are still in the cares

432
00:24:00,440 --> 00:24:03,200
Speaker 1: of the market. We can point to Western Alliance today.

433
00:24:04,040 --> 00:24:06,760
Speaker 1: But in terms of the industry itself, at least from

434
00:24:06,800 --> 00:24:08,720
Speaker 1: the FED data that we look at, it does seem

435
00:24:08,800 --> 00:24:12,680
Speaker 1: like the emergency bar rings from banks from the discount

436
00:24:12,720 --> 00:24:16,000
Speaker 1: window and also the new bank term funding program, those

437
00:24:16,280 --> 00:24:18,240
Speaker 1: have the client which I think is a positive sign

438
00:24:18,280 --> 00:24:21,639
Speaker 1: that banks can manage their liquidity issues without needing to

439
00:24:21,760 --> 00:24:24,640
Speaker 1: tap these emergency measures. All right, you mentioned Western Alliance

440
00:24:24,760 --> 00:24:27,560
Speaker 1: stocks down fifteen percent today. What's the story there? Yeah,

441
00:24:27,600 --> 00:24:32,000
Speaker 1: So Western Alliance came out with an updates yesterday after

442
00:24:32,119 --> 00:24:35,880
Speaker 1: the market close and offered a bunch of interesting metrics

443
00:24:36,560 --> 00:24:39,879
Speaker 1: in terms of the uninsured deposits. Sixty eight percent of

444
00:24:39,960 --> 00:24:43,720
Speaker 1: their deposits are now insured versus fifty five percent a

445
00:24:43,800 --> 00:24:46,680
Speaker 1: couple weeks back, so that's a positive sign. They also

446
00:24:46,800 --> 00:24:50,439
Speaker 1: mentioned that they didn't tap the discount window at quarter end,

447
00:24:50,520 --> 00:24:53,320
Speaker 1: so that seems like a positive sign. But interesting enough,

448
00:24:53,359 --> 00:24:57,400
Speaker 1: they didn't give any disclosures on the amount of deposits

449
00:24:57,440 --> 00:25:01,200
Speaker 1: on their balance sheet at quarter end, so the markets

450
00:25:01,240 --> 00:25:03,399
Speaker 1: a bit spooked in terms of why they did disclose

451
00:25:03,480 --> 00:25:07,960
Speaker 1: these numbers when they were pretty open about disclosing other numbers.

452
00:25:08,320 --> 00:25:10,600
Speaker 1: So that's that's a number that gets disclosed by these

453
00:25:10,760 --> 00:25:13,680
Speaker 1: companies in their quarterly filings typically, right, so they would

454
00:25:13,720 --> 00:25:16,520
Speaker 1: disclose this when they report their earnings, which is in

455
00:25:16,560 --> 00:25:19,800
Speaker 1: a couple of weeks. But they pre reported a bunch

456
00:25:19,840 --> 00:25:23,199
Speaker 1: of other metrics, but not probably the most important metrics

457
00:25:23,280 --> 00:25:26,159
Speaker 1: that investors are focused on now. So that's that's what's

458
00:25:26,160 --> 00:25:28,720
Speaker 1: spooking the market. Investors are looking for a lot of

459
00:25:29,160 --> 00:25:31,600
Speaker 1: data from the FED. Right, what do we see in

460
00:25:31,800 --> 00:25:34,159
Speaker 1: terms of borrowing at the discount window and in this

461
00:25:34,280 --> 00:25:39,880
Speaker 1: new facility. Yeah, so the discount window peaked two weeks ago.

462
00:25:40,440 --> 00:25:45,560
Speaker 1: The disclosure went when the direct aftermath of spob um,

463
00:25:45,640 --> 00:25:52,000
Speaker 1: those discount window borrowings have declined sequentially each week thereafter,

464
00:25:52,680 --> 00:25:56,520
Speaker 1: and the new bank term program is a bit more

465
00:25:57,160 --> 00:26:00,480
Speaker 1: generous in the way the borrowings work with the FED.

466
00:26:00,600 --> 00:26:04,080
Speaker 1: So you're you're seeing those numbers go up, but the overall,

467
00:26:04,119 --> 00:26:07,040
Speaker 1: if you combine those to the overall borrowings from the

468
00:26:07,119 --> 00:26:09,960
Speaker 1: FED are coming down, which is a good sign. What

469
00:26:10,080 --> 00:26:13,879
Speaker 1: are we seeing then, in terms of lending from these banks?

470
00:26:14,080 --> 00:26:21,320
Speaker 1: You know, even if rates come down or frankly, whether

471
00:26:21,359 --> 00:26:23,640
Speaker 1: they go up, it doesn't matter if banks aren't giving

472
00:26:23,680 --> 00:26:28,080
Speaker 1: out loans right right, we can make the inference that

473
00:26:28,280 --> 00:26:33,760
Speaker 1: if banks are seeing deposits go out the door, that

474
00:26:33,960 --> 00:26:38,119
Speaker 1: there's probably less interest for banks to really ratchet up

475
00:26:38,160 --> 00:26:41,840
Speaker 1: their their appetite to lend. I think that's really the

476
00:26:42,320 --> 00:26:47,080
Speaker 1: issue for the overall economy that banks could probably have

477
00:26:47,280 --> 00:26:51,639
Speaker 1: less willingness to to to increase their their lending because

478
00:26:51,760 --> 00:26:54,360
Speaker 1: there there's not a lot of funding available to them

479
00:26:54,520 --> 00:26:58,280
Speaker 1: at advantageous prices. So you're seeing funding costs rise, so

480
00:26:58,560 --> 00:27:04,480
Speaker 1: that that inherently means that loan rates and borrowing rates

481
00:27:04,520 --> 00:27:08,200
Speaker 1: will have to increase as well, and that could affect

482
00:27:08,359 --> 00:27:11,119
Speaker 1: both the demand for loans and the supply of loans.

483
00:27:11,840 --> 00:27:14,440
Speaker 1: So let's switch gears a little bit on the regional banks.

484
00:27:14,520 --> 00:27:19,080
Speaker 1: Another potential headwind for the banks is real estate. And

485
00:27:19,400 --> 00:27:23,359
Speaker 1: we were just talking to Thomas Nutzel Bloomber Intelligence. He's

486
00:27:23,400 --> 00:27:25,680
Speaker 1: summarizing the risk for the European banks. How about for

487
00:27:25,760 --> 00:27:28,760
Speaker 1: the regional banks here in the United States? Is there

488
00:27:28,760 --> 00:27:31,080
Speaker 1: a concern? If so, what does the concern kind of

489
00:27:31,200 --> 00:27:36,080
Speaker 1: circle around real estate? Right? So, commercial real estate is

490
00:27:36,800 --> 00:27:39,639
Speaker 1: something that's become more and more of an issue. It

491
00:27:40,160 --> 00:27:45,520
Speaker 1: was starting to percolate during the pandemic period when folks

492
00:27:45,600 --> 00:27:48,639
Speaker 1: weren't going into the office and there was not a

493
00:27:48,720 --> 00:27:52,119
Speaker 1: lot of travel, so hotel loans were another issue. It

494
00:27:52,200 --> 00:27:54,720
Speaker 1: seems like now the focus is more on office than

495
00:27:54,800 --> 00:27:59,280
Speaker 1: anything else because you're seeing these loans reach their maturity

496
00:27:59,400 --> 00:28:01,960
Speaker 1: this year, next year, and the year after, and the

497
00:28:02,080 --> 00:28:05,359
Speaker 1: cash flows of these office loans have really been challenged

498
00:28:05,560 --> 00:28:09,920
Speaker 1: by less occupancy, less folks coming into the office, so

499
00:28:11,280 --> 00:28:15,680
Speaker 1: the real estate has and square footage has really come down.

500
00:28:15,720 --> 00:28:18,240
Speaker 1: The needs for those real estate square footage has come down,

501
00:28:18,960 --> 00:28:21,760
Speaker 1: So all that means that there's less cash flow more

502
00:28:22,000 --> 00:28:24,920
Speaker 1: in higher vacancies, meaning there's it's going to be a

503
00:28:25,040 --> 00:28:30,280
Speaker 1: challenge for the folks that own these properties to refinance

504
00:28:30,400 --> 00:28:33,040
Speaker 1: given that rates are higher and your cash flows are lower,

505
00:28:33,160 --> 00:28:35,359
Speaker 1: so that something has to give. They either have to

506
00:28:35,440 --> 00:28:41,400
Speaker 1: inject more equity into these loans or they may have

507
00:28:41,600 --> 00:28:44,280
Speaker 1: to give the key back to the borrowers. So those

508
00:28:44,320 --> 00:28:47,520
Speaker 1: are things where we're focused on and tracking, but it's

509
00:28:47,560 --> 00:28:49,480
Speaker 1: going to be a longer term story that will play

510
00:28:49,520 --> 00:28:52,800
Speaker 1: out over the next few years. So Herman, let's say

511
00:28:52,920 --> 00:28:54,800
Speaker 1: a big client calls you up at the end of quarter.

512
00:28:54,880 --> 00:28:56,800
Speaker 1: He says, listen, I gotta put a lot of money

513
00:28:56,880 --> 00:29:00,800
Speaker 1: here into action. Which regional banks do I buy? You know, pick,

514
00:29:01,000 --> 00:29:02,840
Speaker 1: pick your top three? What do you what do I

515
00:29:02,960 --> 00:29:06,160
Speaker 1: want right now? Sure, you want a bank that has

516
00:29:06,400 --> 00:29:10,080
Speaker 1: demonstrated the ability to manage interest rate risking. No, I

517
00:29:10,080 --> 00:29:12,480
Speaker 1: mean I want the names of the banks. I'll give

518
00:29:12,520 --> 00:29:14,960
Speaker 1: them to you now. So you look at the banks

519
00:29:15,000 --> 00:29:17,600
Speaker 1: that have the track record. You can look at banks

520
00:29:17,680 --> 00:29:24,240
Speaker 1: like PNC mnc US bank that have strong management teams,

521
00:29:25,160 --> 00:29:29,120
Speaker 1: have managed risks pretty definitely over multiple periods, and they've

522
00:29:29,160 --> 00:29:32,000
Speaker 1: been around the block, and they understand credit risk, they

523
00:29:32,080 --> 00:29:34,920
Speaker 1: understand interest rate risks. So those are the ones that

524
00:29:35,400 --> 00:29:38,520
Speaker 1: have been affected by this downturn in banks, then, so

525
00:29:38,800 --> 00:29:42,120
Speaker 1: prices seem earlier reasons to repeat it slowly for those

526
00:29:42,480 --> 00:29:47,360
Speaker 1: uh driving along, get out your pencil. PNC, US Bank,

527
00:29:47,560 --> 00:29:51,360
Speaker 1: M and T and US Bank now full disclosure. Herman

528
00:29:51,440 --> 00:29:53,800
Speaker 1: used to work at M ANDT in investor Relationshi is

529
00:29:53,920 --> 00:29:57,200
Speaker 1: that's right? That's right. You own the shares. I do

530
00:29:57,400 --> 00:30:00,880
Speaker 1: own some residual shares from some Oh thank god you

531
00:30:00,920 --> 00:30:03,440
Speaker 1: got that out there. What if? What if you so

532
00:30:03,480 --> 00:30:06,280
Speaker 1: you moved to Buffalo? I did. I moved from New

533
00:30:06,360 --> 00:30:08,120
Speaker 1: York City to Buffalo for the role. Have you ever

534
00:30:08,280 --> 00:30:13,840
Speaker 1: jumped on a table? I have broken it. That's what

535
00:30:13,920 --> 00:30:16,640
Speaker 1: the Buffalo Bills do. Dude, Okay, you not see that?

536
00:30:17,640 --> 00:30:21,400
Speaker 1: It's yeah, it's a It's something that Bills mafia fans

537
00:30:21,480 --> 00:30:25,800
Speaker 1: do so but I haven't unfortunately, haven't had the opportunity

538
00:30:25,800 --> 00:30:27,480
Speaker 1: to do that. But would love to go back and

539
00:30:28,040 --> 00:30:32,959
Speaker 1: see a Bills game and partake in all those. I mean,

540
00:30:33,040 --> 00:30:35,960
Speaker 1: they are die hard fans up there, and that's interesting.

541
00:30:36,000 --> 00:30:38,400
Speaker 1: That's a good bank, quality bank. I usually use that

542
00:30:38,440 --> 00:30:40,880
Speaker 1: as one of my kind of benchmarks for regional banks.

543
00:30:40,920 --> 00:30:44,640
Speaker 1: And then P and C H Pittsburgh National Corporation or

544
00:30:44,800 --> 00:30:47,000
Speaker 1: used to be P and D Pittsburgh National Bank. I

545
00:30:47,120 --> 00:30:49,400
Speaker 1: think so some good stuff there, US Bank as well.

546
00:30:49,600 --> 00:30:52,400
Speaker 1: All right, regional banks some issues, but they seem to

547
00:30:52,480 --> 00:30:56,040
Speaker 1: have weathered at least the initial wave of concern that

548
00:30:56,160 --> 00:30:58,160
Speaker 1: we saw several weeks ago, and now people are gonna

549
00:30:58,160 --> 00:31:00,480
Speaker 1: be focusing on the banks when they report their quarterly

550
00:31:00,520 --> 00:31:03,320
Speaker 1: earnings coming up, Herman Chan, thank you so much for

551
00:31:03,440 --> 00:31:05,640
Speaker 1: joining us yet again. As we wind our way through

552
00:31:05,680 --> 00:31:08,360
Speaker 1: this regional banks story, Herman Chann, he covers the regional

553
00:31:08,360 --> 00:31:10,280
Speaker 1: banks from Bloomberg Intelligence. He joins us here in a

554
00:31:10,360 --> 00:31:13,920
Speaker 1: Bloomberg Interactive broker studio as he is wanted to do.

555
00:31:15,200 --> 00:31:18,600
Speaker 1: You're listening to the team cancer a live program Bloomberg

556
00:31:18,720 --> 00:31:22,160
Speaker 1: Markets weekdays at ten am Eastern, Bloomberg dot Com, the

557
00:31:22,280 --> 00:31:25,000
Speaker 1: I Heart Radio app, and the Bloomberg Business App. We're

558
00:31:25,040 --> 00:31:29,959
Speaker 1: listening on demand wherever you get your podcast. Let's get

559
00:31:30,080 --> 00:31:33,000
Speaker 1: right to our next guest, Dan Ives, Managing Director Senior

560
00:31:33,040 --> 00:31:34,840
Speaker 1: Echo to analyst. He covers all the tech stuff for

561
00:31:35,040 --> 00:31:38,360
Speaker 1: web Bush Securities. Dan, thanks so much for joining us again.

562
00:31:38,360 --> 00:31:40,480
Speaker 1: We appreciate getting some of your time here. I want

563
00:31:40,520 --> 00:31:42,479
Speaker 1: to start with there's a million ways we can go here.

564
00:31:42,480 --> 00:31:44,680
Speaker 1: But I want to start with Tesla. It seemed like

565
00:31:44,800 --> 00:31:46,600
Speaker 1: they had a good delivery number. I know there was

566
00:31:46,600 --> 00:31:48,600
Speaker 1: a number of the people were looking at, but the

567
00:31:48,680 --> 00:31:51,000
Speaker 1: stock markets not buying it over the past couple of days.

568
00:31:51,000 --> 00:31:53,680
Speaker 1: What do you make of it? Yeah, I mean, look,

569
00:31:53,760 --> 00:31:56,560
Speaker 1: this was obviously a lot of hype that we've seen

570
00:31:56,560 --> 00:31:58,640
Speaker 1: in terms of what the stocks done this year post

571
00:31:58,680 --> 00:32:01,440
Speaker 1: of price cuts. I view it as a strong number.

572
00:32:01,560 --> 00:32:03,800
Speaker 1: I just think some of the bulls were hoping from

573
00:32:03,840 --> 00:32:06,320
Speaker 1: more in terms of a bigger beat. And now this

574
00:32:06,560 --> 00:32:09,160
Speaker 1: is sort of the drum roll into earnings April nineteenth

575
00:32:09,200 --> 00:32:11,840
Speaker 1: to see what margins are doing. I think they're able

576
00:32:11,880 --> 00:32:13,880
Speaker 1: to hold a line. I think this knee jerk is

577
00:32:13,960 --> 00:32:16,840
Speaker 1: just sort of a sort of selling the news. We're

578
00:32:16,920 --> 00:32:19,640
Speaker 1: buyers here on weakness. Yeah, it should be noted that

579
00:32:20,160 --> 00:32:24,160
Speaker 1: the number was better than the street's estimate, so they

580
00:32:24,280 --> 00:32:28,040
Speaker 1: beat Not only did they post record deliveries in the quarter,

581
00:32:28,200 --> 00:32:32,240
Speaker 1: but they beat what the average estimate of analysts had suggested.

582
00:32:32,280 --> 00:32:37,760
Speaker 1: They would post our analysts just you know, sandbagging them.

583
00:32:37,840 --> 00:32:41,760
Speaker 1: Here's what's the story. Look, I think it's always hard

584
00:32:41,840 --> 00:32:44,800
Speaker 1: to peg the number because of the price cuts. Because

585
00:32:44,800 --> 00:32:48,080
Speaker 1: obviously since the price cuts that they did earlier this quarter.

586
00:32:48,200 --> 00:32:51,480
Speaker 1: That's been a huge catalyst, specifically in China. So the

587
00:32:51,680 --> 00:32:54,200
Speaker 1: numbers moved around a lot. And look, I think the

588
00:32:54,320 --> 00:32:56,720
Speaker 1: big thing here is they are on a trajectory for

589
00:32:56,800 --> 00:32:59,800
Speaker 1: one point eight million for the year in terms of units,

590
00:32:59,840 --> 00:33:03,360
Speaker 1: and you look in the neighborhood of autos, it's still

591
00:33:03,440 --> 00:33:06,240
Speaker 1: Tessa's world. Everyone else's paying rent. And I think that's

592
00:33:06,280 --> 00:33:09,600
Speaker 1: what continues to stick out here despite this sella. Are

593
00:33:09,640 --> 00:33:12,840
Speaker 1: the prices, you know, I mean the prices were too

594
00:33:12,960 --> 00:33:16,040
Speaker 1: high obviously, that's why they cut them. But now that

595
00:33:16,240 --> 00:33:19,320
Speaker 1: rates continue to climb, is it just unaffordable for too

596
00:33:19,360 --> 00:33:23,120
Speaker 1: many people to cover that monthly nut? Yeah, Matt, I

597
00:33:23,240 --> 00:33:27,160
Speaker 1: think here it's really they're trying to find the level

598
00:33:27,640 --> 00:33:30,959
Speaker 1: where they could cut prices stimulate demand, but also mean

599
00:33:31,080 --> 00:33:35,040
Speaker 1: team margins. It's a tight rope, especially in China. There's

600
00:33:35,280 --> 00:33:38,040
Speaker 1: essentially i'll call Mini to monitor a price war breaking

601
00:33:38,120 --> 00:33:41,000
Speaker 1: out at a time where the macro is still cloudy.

602
00:33:41,080 --> 00:33:43,600
Speaker 1: And I think that's even though we're still in the

603
00:33:43,680 --> 00:33:47,479
Speaker 1: second ending of the ev arms race GM others board,

604
00:33:47,920 --> 00:33:50,240
Speaker 1: you know, for TESTA right now, this is it's a

605
00:33:50,280 --> 00:33:52,920
Speaker 1: critical three to six months to put an iron fence

606
00:33:52,960 --> 00:33:57,440
Speaker 1: around their installed these. So, Dan, with the price cuts,

607
00:33:57,640 --> 00:34:00,760
Speaker 1: what does that do to the test a margin story,

608
00:34:00,800 --> 00:34:05,400
Speaker 1: the profitability story. Well, they are uniquely positioned because of

609
00:34:05,480 --> 00:34:08,600
Speaker 1: their scale globally that they're able to cut prices and

610
00:34:08,719 --> 00:34:12,719
Speaker 1: some still have margins, you know, significantly above the industry,

611
00:34:13,640 --> 00:34:16,200
Speaker 1: and I think that's going to be the narrative when

612
00:34:16,200 --> 00:34:18,800
Speaker 1: they are port earnings in a few weeks. But the

613
00:34:18,920 --> 00:34:21,320
Speaker 1: big question is will they have to cut more to

614
00:34:21,480 --> 00:34:24,759
Speaker 1: stimulate demand? I think, look, it's mere term pain for

615
00:34:24,880 --> 00:34:27,480
Speaker 1: long term gain because if they don't and just sit

616
00:34:27,560 --> 00:34:30,400
Speaker 1: there and keep prices where they are, especially going back

617
00:34:30,400 --> 00:34:32,279
Speaker 1: a few months ago, that would have been the wrong move.

618
00:34:32,600 --> 00:34:35,560
Speaker 1: I think it's the right strategic polker move. The stocks

619
00:34:35,600 --> 00:34:38,120
Speaker 1: obviously had a you know, a huge run from the

620
00:34:38,239 --> 00:34:41,200
Speaker 1: bottom and now it's really what I've used for the

621
00:34:41,400 --> 00:34:44,400
Speaker 1: next step in the growth story with China front and center,

622
00:34:44,760 --> 00:34:47,320
Speaker 1: as just eed, arms race placed out globally, both in

623
00:34:47,440 --> 00:34:49,080
Speaker 1: China as well as in the US and the three

624
00:34:49,160 --> 00:34:52,440
Speaker 1: WIN three area code with GM and FOURD aggressively going

625
00:34:52,480 --> 00:34:57,319
Speaker 1: after evs. So again, how do you think as your

626
00:34:57,440 --> 00:35:00,600
Speaker 1: view of EV demand changed at all? Dan, I know

627
00:35:00,680 --> 00:35:03,800
Speaker 1: there's some concerns out there when you see price cuts,

628
00:35:03,800 --> 00:35:06,000
Speaker 1: that kind of calls into question what the ultimate demand

629
00:35:06,239 --> 00:35:09,800
Speaker 1: is out there. Well, I think when you think a

630
00:35:09,840 --> 00:35:12,480
Speaker 1: step back in the US, less than three percent of

631
00:35:12,560 --> 00:35:15,640
Speaker 1: automobiles or evs, we weave that goes to ten percent

632
00:35:16,200 --> 00:35:18,920
Speaker 1: in the next three years, So the demand story is

633
00:35:19,000 --> 00:35:22,120
Speaker 1: going to be there. I think the issue really comes

634
00:35:22,160 --> 00:35:24,960
Speaker 1: down to prices. Now the tax credit has come through,

635
00:35:25,280 --> 00:35:28,480
Speaker 1: which is a positive, but that's really going to be

636
00:35:28,560 --> 00:35:32,120
Speaker 1: the question in terms of competition. And I don't view

637
00:35:32,160 --> 00:35:34,480
Speaker 1: it as a zero some game. I view this as

638
00:35:34,560 --> 00:35:37,040
Speaker 1: just a mass of what I'll call green tidal wave

639
00:35:37,400 --> 00:35:39,920
Speaker 1: that's going to benefit not just Tesla, the likes of

640
00:35:40,080 --> 00:35:43,600
Speaker 1: GM for short plays like Goose and others, and in China,

641
00:35:43,960 --> 00:35:46,680
Speaker 1: I think Neo is probably the one or with DYD

642
00:35:46,840 --> 00:35:50,719
Speaker 1: that sticks out the domestic plays dan if If EV

643
00:35:51,000 --> 00:35:55,960
Speaker 1: demand is that strong, if sales are as robust as

644
00:35:56,000 --> 00:35:59,719
Speaker 1: you expect them to be, how on earth are we

645
00:36:00,080 --> 00:36:02,920
Speaker 1: to power all of those vehicles? I mean, we can

646
00:36:03,640 --> 00:36:07,440
Speaker 1: already not power the small amount of evs that sit

647
00:36:07,520 --> 00:36:12,000
Speaker 1: in California today. What will we do if the inventory

648
00:36:12,080 --> 00:36:16,320
Speaker 1: doubles or triples? You just now then, because that's the

649
00:36:16,440 --> 00:36:19,160
Speaker 1: big issue in the Beltway because it's the carrot and

650
00:36:19,200 --> 00:36:21,080
Speaker 1: the stink. You want to move to green, you want

651
00:36:21,080 --> 00:36:24,719
Speaker 1: to move to evs need the utilities, need charging statitions.

652
00:36:25,280 --> 00:36:27,240
Speaker 1: Just to give numbers, we have one hundred ten thousand

653
00:36:27,320 --> 00:36:30,400
Speaker 1: charging statitions in the United States. We need five hundred

654
00:36:30,440 --> 00:36:34,359
Speaker 1: thousand to get to twenty percent EV penetration. There's going

655
00:36:34,400 --> 00:36:36,800
Speaker 1: to need to be a lot of government funding around

656
00:36:36,840 --> 00:36:40,240
Speaker 1: this from a grid perspective and charging stations to ultimately

657
00:36:40,280 --> 00:36:42,680
Speaker 1: build this out, especially when you have the biggest US

658
00:36:42,800 --> 00:36:47,239
Speaker 1: automakers going fully ev GM over the next decade. Why

659
00:36:47,280 --> 00:36:49,960
Speaker 1: do you think we don't see EV charging stations at

660
00:36:50,000 --> 00:36:53,680
Speaker 1: every gas station? I mean, why don't the big raw

661
00:36:53,760 --> 00:36:58,160
Speaker 1: duct Shell or BP or you know, Sonoco seventy six.

662
00:36:58,200 --> 00:37:01,080
Speaker 1: Why don't they get on board. They've had years and

663
00:37:01,360 --> 00:37:04,080
Speaker 1: years to do it, so it can't be a time issue.

664
00:37:04,520 --> 00:37:08,319
Speaker 1: Are they fighting against it? Well, look, I think part

665
00:37:08,400 --> 00:37:10,960
Speaker 1: of it is just the economic decision in terms of

666
00:37:11,040 --> 00:37:13,600
Speaker 1: especially real estate. For every gas station you know that

667
00:37:13,719 --> 00:37:16,759
Speaker 1: that are obviously owned by individuals, do they want to

668
00:37:16,800 --> 00:37:20,279
Speaker 1: give that up? Doesn't make sense mathematically given what it

669
00:37:20,440 --> 00:37:23,360
Speaker 1: looks like today in terms of EV as a penetration story,

670
00:37:23,719 --> 00:37:26,040
Speaker 1: you clearly see more of that in China, more of

671
00:37:26,120 --> 00:37:28,880
Speaker 1: that in Europe, and a lot of this hack contender.

672
00:37:29,400 --> 00:37:32,680
Speaker 1: I mean, that's really the biggest you're fighting the tide here,

673
00:37:33,080 --> 00:37:36,239
Speaker 1: but so far it's sort of a game of you know,

674
00:37:36,800 --> 00:37:39,160
Speaker 1: roll call high stakes poker that they're playing. In so

675
00:37:39,320 --> 00:37:42,239
Speaker 1: far for them, it's been the right decision because it's

676
00:37:42,320 --> 00:37:45,879
Speaker 1: Tessa and the Supercharger network that is essentially built out

677
00:37:45,960 --> 00:37:49,480
Speaker 1: within the US EV demand. Right. All right, Dan, let's

678
00:37:49,560 --> 00:37:51,800
Speaker 1: switch gears because we can always switch gears with you

679
00:37:51,920 --> 00:37:56,880
Speaker 1: and you pivot fine. Apple Bloombard BusinessWeek is the great story.

680
00:37:56,960 --> 00:38:00,000
Speaker 1: Dan Mark German is out saying Apple looks beyond China

681
00:38:00,239 --> 00:38:05,280
Speaker 1: in Bidjory make Cook's supply chains. In reality, can Apple

682
00:38:05,360 --> 00:38:08,399
Speaker 1: diversify away from China in terms of its supply chain

683
00:38:08,440 --> 00:38:11,680
Speaker 1: and if so, how long will that take? Well, German,

684
00:38:11,960 --> 00:38:14,160
Speaker 1: you know there's Apple as well as anyone out there,

685
00:38:14,360 --> 00:38:17,560
Speaker 1: look realistically, and it's part of why Cook was in

686
00:38:17,680 --> 00:38:20,200
Speaker 1: China last week. I mean, that is the hearts and

687
00:38:20,320 --> 00:38:22,520
Speaker 1: lungs of Apple, and they could talk to Game. But

688
00:38:23,480 --> 00:38:26,120
Speaker 1: if they aggressively went after it in the next two

689
00:38:26,239 --> 00:38:29,400
Speaker 1: years max, they can move five to seven percent production

690
00:38:29,440 --> 00:38:32,279
Speaker 1: app of China now of course India, Vietnam and some

691
00:38:32,400 --> 00:38:35,239
Speaker 1: other areas. But you know that is right now the

692
00:38:35,360 --> 00:38:37,759
Speaker 1: tight rope for Apple because that is one of the

693
00:38:37,920 --> 00:38:42,479
Speaker 1: key ingredients and their success in the geopolitical essentially cold

694
00:38:42,520 --> 00:38:46,960
Speaker 1: tech board that's playing out. But Coopertina can percent politician,

695
00:38:47,440 --> 00:38:49,759
Speaker 1: you know, in terms of what Cook's being able to do,

696
00:38:49,880 --> 00:38:54,200
Speaker 1: and that's how they've been able to navigate this. So

697
00:38:54,440 --> 00:38:57,640
Speaker 1: thinking about it here, I mean, if I'm an Apple,

698
00:38:57,880 --> 00:38:59,839
Speaker 1: I'm you know, if I'm Apple, I'm happy. I gotta

699
00:39:00,040 --> 00:39:03,279
Speaker 1: great story, great tailin But boy, my China risk is

700
00:39:03,320 --> 00:39:06,359
Speaker 1: almost as large as it's ever been really, and it's

701
00:39:06,440 --> 00:39:09,600
Speaker 1: not going away, is it. It's not going away? And

702
00:39:09,880 --> 00:39:13,160
Speaker 1: but look if they if they decide to build production

703
00:39:13,239 --> 00:39:15,640
Speaker 1: in New Jersey, those are going to be awesome thirty

704
00:39:15,680 --> 00:39:19,239
Speaker 1: five hundred hour iPhones. And that's the problem is that

705
00:39:19,480 --> 00:39:22,879
Speaker 1: to keep prices where they are key production. To look

706
00:39:22,960 --> 00:39:25,800
Speaker 1: at this balance China is a hard and one. It

707
00:39:25,920 --> 00:39:28,480
Speaker 1: is a geopolitical risk, and it's also why they have

708
00:39:28,560 --> 00:39:31,920
Speaker 1: to navigate that. But also at peak iPhone, they're the

709
00:39:32,000 --> 00:39:35,600
Speaker 1: second biggest employer within China. Beijing loves have an Apple

710
00:39:35,680 --> 00:39:39,200
Speaker 1: and on the trophy Kese Dan what do you like

711
00:39:39,440 --> 00:39:42,880
Speaker 1: that you know, Tom Keane talks about this bifurcation, the

712
00:39:43,040 --> 00:39:46,320
Speaker 1: rich getting richer. It's the big profitable tech companies that

713
00:39:46,920 --> 00:39:49,160
Speaker 1: have done so well in the first quarter, as you know,

714
00:39:50,440 --> 00:39:52,920
Speaker 1: what are we missing in terms of the smaller companies,

715
00:39:53,000 --> 00:39:55,960
Speaker 1: those that we haven't heard of, the you know, up

716
00:39:56,000 --> 00:39:59,719
Speaker 1: and coming We would have once called them maybe unicorns

717
00:39:59,800 --> 00:40:02,200
Speaker 1: or are possibly a little beyond that. But what do

718
00:40:02,280 --> 00:40:05,839
Speaker 1: you see out there that you like that's not Apple? Yeah,

719
00:40:05,920 --> 00:40:08,719
Speaker 1: I think it's Keen summarized so well. The strong will

720
00:40:08,800 --> 00:40:11,560
Speaker 1: get stronger, and we've seen that in the first quart

721
00:40:11,680 --> 00:40:15,880
Speaker 1: especially Microsoft Redman terms. I'm from a software perspective. I

722
00:40:16,040 --> 00:40:19,800
Speaker 1: think it's really going to be it's smidcap and cybersecurity

723
00:40:19,800 --> 00:40:22,319
Speaker 1: in cloud. I mean, there's your names like I look

724
00:40:22,400 --> 00:40:25,160
Speaker 1: at names like data Dogs, Snowflake. You look at in

725
00:40:25,280 --> 00:40:29,399
Speaker 1: cybersecurity names like CrowdStrike and others. I think that's where

726
00:40:29,480 --> 00:40:33,120
Speaker 1: this first quarter. I view this as really the start

727
00:40:33,239 --> 00:40:36,800
Speaker 1: putting more gasoline in this tech rally rather than something

728
00:40:36,880 --> 00:40:40,520
Speaker 1: that I hear. All right, Dan, great stuff. Appreciate it

729
00:40:40,640 --> 00:40:43,920
Speaker 1: as always. Dan. I'ves managing director and senior equity analysts

730
00:40:43,960 --> 00:40:46,200
Speaker 1: for Webbush Securities were left checking in with Dan getting

731
00:40:46,200 --> 00:40:49,719
Speaker 1: the latest on all things at tech. You're listening to

732
00:40:49,800 --> 00:40:53,319
Speaker 1: the tape cancer our Line program Bloomberg Markets weekdays at

733
00:40:53,360 --> 00:40:56,439
Speaker 1: ten am Eastern on Bloomberg Radio, the tune in app,

734
00:40:56,480 --> 00:40:59,359
Speaker 1: Bloomberg dot Com, and the Bloomberg Business App. You can

735
00:40:59,400 --> 00:41:02,640
Speaker 1: also listen live on Amazon Alexa from our flagship New

736
00:41:02,719 --> 00:41:08,520
Speaker 1: York station just say Alexa playing Bloomberg eleven thirty. You're

737
00:41:08,600 --> 00:41:10,600
Speaker 1: here to tell us about FedEx, which, by the way,

738
00:41:10,600 --> 00:41:13,080
Speaker 1: so Chridy's always pushing the FedEx story. I think it's

739
00:41:13,200 --> 00:41:16,520
Speaker 1: very important, but a lot of people don't don't want

740
00:41:16,560 --> 00:41:19,080
Speaker 1: to hear it. Why not, I don't know, because this

741
00:41:19,160 --> 00:41:21,080
Speaker 1: is riveting stuff. I'll tell you, this is more riveting

742
00:41:21,120 --> 00:41:23,319
Speaker 1: than the Trump stuff. I gotta say. FedEx is an

743
00:41:23,520 --> 00:41:26,560
Speaker 1: enormous This is tech. You just don't realize the subtle

744
00:41:27,120 --> 00:41:32,160
Speaker 1: undercarn of online delivery. Can't imagine that's they're the logistic

745
00:41:32,360 --> 00:41:34,919
Speaker 1: arms for everybody that's not Amazon. Well, Verry, I'm curious

746
00:41:34,920 --> 00:41:37,200
Speaker 1: about you think about the FedEx story, because ultimately FedEx

747
00:41:37,280 --> 00:41:40,560
Speaker 1: is seen as a spell weather naturally except the tropical

748
00:41:40,640 --> 00:41:42,680
Speaker 1: trade eers. If volumes are going up, if people are

749
00:41:42,680 --> 00:41:45,320
Speaker 1: spending FedEx stock goes up, except it now feels like

750
00:41:45,400 --> 00:41:47,640
Speaker 1: there's a little bit of a change here because today

751
00:41:47,719 --> 00:41:49,920
Speaker 1: I'll give you the news first is that they came

752
00:41:49,960 --> 00:41:52,160
Speaker 1: out to an investor event at the New York Stock Exchange.

753
00:41:52,160 --> 00:41:55,440
Speaker 1: They're increasing their dividend by ten percent. But they're merging

754
00:41:55,520 --> 00:41:57,839
Speaker 1: two of their core businesses, their express business and their

755
00:41:57,920 --> 00:42:01,759
Speaker 1: ground business. One is there kind of internal network, one

756
00:42:02,000 --> 00:42:05,000
Speaker 1: is based purely on independent contractors basically for the consumer.

757
00:42:05,120 --> 00:42:08,440
Speaker 1: One's more expensive postage than the other. Now they're combining

758
00:42:08,520 --> 00:42:11,359
Speaker 1: them really to avoid some of the margin costs, which

759
00:42:11,480 --> 00:42:13,799
Speaker 1: was mostly coming from labor, and that's why they're trying

760
00:42:13,800 --> 00:42:15,640
Speaker 1: to kind of mesh the two. It's going to create

761
00:42:15,680 --> 00:42:18,520
Speaker 1: four billion dollars in cost efficiency. The stock is rising

762
00:42:18,560 --> 00:42:20,880
Speaker 1: off it. It's going to help their dividend appease some

763
00:42:21,000 --> 00:42:22,920
Speaker 1: of their activist investors as well. But at the core

764
00:42:23,000 --> 00:42:25,040
Speaker 1: of it, to me, it feels like a macro story

765
00:42:25,440 --> 00:42:28,919
Speaker 1: because this bell weather that is really not about weather.

766
00:42:29,000 --> 00:42:31,000
Speaker 1: Given the stock has been trading more off margins than

767
00:42:31,160 --> 00:42:36,920
Speaker 1: volume or economic activity, is now really trading off of labor. Yes,

768
00:42:37,040 --> 00:42:39,799
Speaker 1: and no, to start with, this is a thirty year

769
00:42:39,880 --> 00:42:42,719
Speaker 1: trend that's been in the making of the shift in

770
00:42:42,920 --> 00:42:49,479
Speaker 1: retail from physical stores to online or even just drop

771
00:42:49,560 --> 00:42:54,719
Speaker 1: shipping and various sorts of app or third party sellers.

772
00:42:55,080 --> 00:42:58,439
Speaker 1: You know, Instagram is a giant retailer, and FedEx gets

773
00:42:58,480 --> 00:43:01,640
Speaker 1: to benefit because all the influencers who say I love

774
00:43:01,719 --> 00:43:05,680
Speaker 1: this lipstick, Suddenly that lipstick sells out. So that's number

775
00:43:05,719 --> 00:43:09,000
Speaker 1: one and then number two. Sometimes, you know, management looks

776
00:43:09,000 --> 00:43:11,759
Speaker 1: at the logistics of what they're doing and to them

777
00:43:12,320 --> 00:43:14,799
Speaker 1: to the end client. I don't care how the hell

778
00:43:14,840 --> 00:43:17,200
Speaker 1: you ship this package. Send it by air, send it

779
00:43:17,280 --> 00:43:19,120
Speaker 1: by truck. I don't care. I just want to get

780
00:43:19,120 --> 00:43:21,120
Speaker 1: it from here to here in the least expensive way.

781
00:43:21,480 --> 00:43:24,719
Speaker 1: And whether the client is the end consumer or the

782
00:43:24,880 --> 00:43:27,799
Speaker 1: retailer themselves, hey, whatever you could do to keep our

783
00:43:27,880 --> 00:43:30,200
Speaker 1: costs down so we can move product from here to there.

784
00:43:30,880 --> 00:43:34,000
Speaker 1: If you have that as one division or two, who cares.

785
00:43:34,040 --> 00:43:36,719
Speaker 1: And in fact, I suspect you're gonna pick up my

786
00:43:36,800 --> 00:43:39,320
Speaker 1: package in a truck, take it to an airport, and

787
00:43:39,400 --> 00:43:42,640
Speaker 1: then express it to wherever it goes. Whether that's a

788
00:43:42,760 --> 00:43:46,600
Speaker 1: single division, multiple divisions, it doesn't matter to the retailer

789
00:43:46,760 --> 00:43:50,000
Speaker 1: or the consumer. All right, good stuff, and Kritty, thank

790
00:43:50,040 --> 00:43:51,640
Speaker 1: you for bringing the story to us. You've been consistent

791
00:43:51,719 --> 00:43:53,759
Speaker 1: on this for the last several weeks, and then what

792
00:43:53,920 --> 00:43:55,600
Speaker 1: we had is a good earnings. The company put out

793
00:43:55,640 --> 00:43:57,480
Speaker 1: some good earnings, and then they put out some good

794
00:43:57,560 --> 00:43:59,840
Speaker 1: cost cutting move raising a dividends. So it seems like

795
00:44:00,120 --> 00:44:02,960
Speaker 1: they're getting themselves positioned. A lot of folks are saying, hey,

796
00:44:02,960 --> 00:44:05,200
Speaker 1: maybe they're cutting costs because they sense a recession coming.

797
00:44:05,239 --> 00:44:07,400
Speaker 1: So a couple of ways to look at this. Krittigupta

798
00:44:07,480 --> 00:44:11,279
Speaker 1: covers all that good stuff. Stocks Force Markets correspondent for

799
00:44:11,520 --> 00:44:16,600
Speaker 1: Bloomberg TV Radio News. She's pretty much everywhere. You're listening

800
00:44:16,719 --> 00:44:20,480
Speaker 1: to the Team Cancer Line program, Bloomberg Markets weekdays at

801
00:44:20,520 --> 00:44:23,439
Speaker 1: ten Amias Daring on Bloomberg dot com, the I Heart

802
00:44:23,560 --> 00:44:26,160
Speaker 1: Radio app, and the Bloomberg Business app. We're listening on

803
00:44:26,280 --> 00:44:31,200
Speaker 1: demand wherever you get your podcast. We did get some

804
00:44:31,480 --> 00:44:35,320
Speaker 1: economic news today. The ism services ism came in weaker

805
00:44:35,360 --> 00:44:39,680
Speaker 1: than expected, and we got the weaker manufacturing isms earlier

806
00:44:39,760 --> 00:44:41,839
Speaker 1: in the weeks. And maybe this economy, like a lot

807
00:44:41,880 --> 00:44:44,120
Speaker 1: of people have been saying for a long time, is

808
00:44:44,200 --> 00:44:47,560
Speaker 1: in fact weakening and a recession is certainly in play.

809
00:44:47,680 --> 00:44:50,160
Speaker 1: That could certainly hear those people talking about that a

810
00:44:50,160 --> 00:44:51,880
Speaker 1: little bit more. But what does that mean for the

811
00:44:52,000 --> 00:44:54,440
Speaker 1: credit markets. Our next guest has a thought or two

812
00:44:54,520 --> 00:44:59,040
Speaker 1: on that. Roberta. Goss, Senior Managing director of Pretium Partners,

813
00:44:59,480 --> 00:45:02,680
Speaker 1: joins us. Roberta. In a credit space, what are you

814
00:45:02,760 --> 00:45:05,879
Speaker 1: seeing here versus maybe a some other you know, maybe

815
00:45:05,920 --> 00:45:09,080
Speaker 1: twenty twenty or even you know, during some more challenging times.

816
00:45:09,080 --> 00:45:10,560
Speaker 1: What are you see in a credit markets these days?

817
00:45:12,000 --> 00:45:18,080
Speaker 1: Good morning. So we have seen in corporate credit really

818
00:45:18,400 --> 00:45:24,360
Speaker 1: over the last three years ongoing continued volatility, which we

819
00:45:24,560 --> 00:45:28,880
Speaker 1: expect to see continue over the next couple of years.

820
00:45:30,160 --> 00:45:33,920
Speaker 1: By that, I mean, uh, you know, we are expecting

821
00:45:34,440 --> 00:45:39,879
Speaker 1: an earnings recession, not one that's consumer led, and one

822
00:45:40,000 --> 00:45:45,360
Speaker 1: that is impacting corporate earnings as a result of ongoing

823
00:45:45,480 --> 00:45:53,759
Speaker 1: supply chain stabilization and labor costs that are really hard

824
00:45:53,920 --> 00:45:59,920
Speaker 1: for management teams and companies to address. Still, as a result,

825
00:46:00,080 --> 00:46:06,120
Speaker 1: we're seeing margin pressure across across corporates. But it's really

826
00:46:06,160 --> 00:46:12,920
Speaker 1: a rolling set of opportunities and volatility that we expect

827
00:46:13,000 --> 00:46:17,560
Speaker 1: to be prolonged over the next couple of years. So

828
00:46:17,719 --> 00:46:20,200
Speaker 1: we're seeing I mean, the fault rates have been so

829
00:46:20,560 --> 00:46:23,320
Speaker 1: low even during the pandemic. There's so so much liquidity

830
00:46:23,360 --> 00:46:26,239
Speaker 1: pumped into the marketplace, But in your recession scenario, do

831
00:46:26,280 --> 00:46:28,200
Speaker 1: you think that is going to increase going forward? Are

832
00:46:28,200 --> 00:46:30,200
Speaker 1: we're going to see some real stress maybe in some

833
00:46:30,320 --> 00:46:35,600
Speaker 1: of these credits. Yes. So last year we reached sort

834
00:46:35,640 --> 00:46:39,239
Speaker 1: of very low levels, historic lows in default rates in

835
00:46:39,400 --> 00:46:46,480
Speaker 1: the zero point five percent level. Our expectation we've already

836
00:46:46,560 --> 00:46:50,040
Speaker 1: started to see default rates pick up the trailing numbers

837
00:46:50,120 --> 00:46:53,320
Speaker 1: in the low two percent range, which is still below

838
00:46:53,480 --> 00:46:58,720
Speaker 1: the historic average. But our expectation is that in twenty

839
00:46:58,800 --> 00:47:02,920
Speaker 1: twenty three default rates will will rise to three and

840
00:47:02,960 --> 00:47:06,440
Speaker 1: a half PERCENTUM, and then in twenty twenty four they

841
00:47:06,480 --> 00:47:09,839
Speaker 1: will increase increase again to the four and a half

842
00:47:09,920 --> 00:47:15,719
Speaker 1: percent level. At those rates, that puts us UM, you know,

843
00:47:16,160 --> 00:47:19,879
Speaker 1: not at certainly not at the levels we experienced during

844
00:47:19,920 --> 00:47:25,320
Speaker 1: the GFCUM, but close to the five year level that

845
00:47:25,440 --> 00:47:31,720
Speaker 1: we saw during the oil issues oil and gas issues

846
00:47:32,360 --> 00:47:36,960
Speaker 1: of twenty twenty or twenty sixteen, leading into uh, sort

847
00:47:37,000 --> 00:47:41,560
Speaker 1: of some elevated default late rates in twenty twenty as

848
00:47:41,600 --> 00:47:45,520
Speaker 1: a result of COVID. And does that put us into

849
00:47:45,800 --> 00:47:48,720
Speaker 1: a credit crunch situation, because we've heard some FED speakers

850
00:47:48,760 --> 00:47:53,680
Speaker 1: say that's a concern. Yes, we do think, um, that

851
00:47:53,920 --> 00:47:58,480
Speaker 1: will uh you know, I think a month ago we

852
00:47:58,600 --> 00:48:02,600
Speaker 1: would have said that this would have been a fairly short,

853
00:48:03,160 --> 00:48:07,560
Speaker 1: uh you know period of recession. I think the banking

854
00:48:07,680 --> 00:48:11,640
Speaker 1: volatility we've seen over the last several weeks, although that

855
00:48:11,840 --> 00:48:16,800
Speaker 1: is stabilized recently, we think will result in tighter credit

856
00:48:16,840 --> 00:48:21,360
Speaker 1: conditions over the next twelve to twenty four months. And

857
00:48:21,560 --> 00:48:25,600
Speaker 1: as a result of that, we think that our default

858
00:48:25,600 --> 00:48:31,000
Speaker 1: assumptions are are you know, base case right now? So

859
00:48:31,120 --> 00:48:32,960
Speaker 1: if I how about if I want to go out,

860
00:48:33,120 --> 00:48:36,319
Speaker 1: I mean, you know, I want to do a deal,

861
00:48:36,400 --> 00:48:38,640
Speaker 1: I need some acquisition capital. I got go to my

862
00:48:38,719 --> 00:48:41,759
Speaker 1: private equity partners, they pony us some equity. I go

863
00:48:41,880 --> 00:48:44,920
Speaker 1: to my big banker in New York or LA or somewhere,

864
00:48:44,960 --> 00:48:47,520
Speaker 1: and I'd look for a leverage loan. What kind of

865
00:48:47,640 --> 00:48:50,440
Speaker 1: terms am I going to have? And how's that different

866
00:48:50,480 --> 00:48:53,840
Speaker 1: from maybe a year or two ago. Yeah, So in

867
00:48:53,960 --> 00:48:59,560
Speaker 1: twenty twenty one, you know, leverage loans and credit capital

868
00:48:59,640 --> 00:49:03,239
Speaker 1: was freely available. UM. I would say that over the

869
00:49:03,320 --> 00:49:09,920
Speaker 1: last six months that's certainly tightened in uh dramatically, And

870
00:49:10,760 --> 00:49:14,920
Speaker 1: the main sort of underwriting banks, the large money center banks,

871
00:49:15,440 --> 00:49:21,600
Speaker 1: UM are not as free to underwrite large LBOs and

872
00:49:22,440 --> 00:49:27,200
Speaker 1: at very attractive levels. I'd say today, UM, if you're

873
00:49:27,239 --> 00:49:31,520
Speaker 1: a PE sponsor coming with a with a new LBOUM,

874
00:49:31,960 --> 00:49:36,680
Speaker 1: leverage levels are going to be dramatically lower than they

875
00:49:36,719 --> 00:49:41,719
Speaker 1: were in twenty twenty one. Um. And uh, you know,

876
00:49:41,880 --> 00:49:45,319
Speaker 1: pricing on leverage loans right now, if you just look

877
00:49:45,360 --> 00:49:49,560
Speaker 1: at the average yield on the leverage Loan index, that's

878
00:49:49,600 --> 00:49:54,680
Speaker 1: at nine and a half percent. So the impact of

879
00:49:54,840 --> 00:49:58,359
Speaker 1: rising rates, in particular with live or now over five

880
00:49:58,520 --> 00:50:03,920
Speaker 1: percent and spreads on loans over four percent, financing four

881
00:50:04,080 --> 00:50:10,920
Speaker 1: LBOs and private equity sponsors has gotten quite expensive. I

882
00:50:11,080 --> 00:50:14,960
Speaker 1: think that also results in you a question of how

883
00:50:15,120 --> 00:50:19,960
Speaker 1: much PE sponsors are prepared to pay as a result

884
00:50:20,040 --> 00:50:24,279
Speaker 1: of multiples on new transactions. Hi, Rebert, It thanks so

885
00:50:24,360 --> 00:50:26,360
Speaker 1: much for joining us. Appreciate get an update there on

886
00:50:26,560 --> 00:50:30,480
Speaker 1: the credit market. The leverage loan market, like most other markets,

887
00:50:30,560 --> 00:50:34,239
Speaker 1: being impacted by the rapid raise increase in interest rates

888
00:50:34,280 --> 00:50:36,799
Speaker 1: from the Federal Reserve over the past twelve to fourteen months.

889
00:50:36,840 --> 00:50:40,680
Speaker 1: Rebert of Goss, Senior Managing director at Pretium Partners Here,

890
00:50:47,200 --> 00:50:50,279
Speaker 1: thanks for listening to the Bloomberg Markets podcast. You can

891
00:50:50,320 --> 00:50:54,080
Speaker 1: subscribe and listen to interviews of Apple Podcasts or whatever

892
00:50:54,200 --> 00:50:57,800
Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on Twitter

893
00:50:58,080 --> 00:51:01,400
Speaker 1: at Matt Miller in nineteen seventy three. And I'm fall Sweeney.

894
00:51:01,400 --> 00:51:04,000
Speaker 1: I'm on Twitter at pt Sweeney. Before the podcast, you

895
00:51:04,040 --> 00:51:06,439
Speaker 1: can always catch us worldwide at Bloomberg Radio