1 00:00:00,800 --> 00:00:04,040 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 2 00:00:04,040 --> 00:00:06,920 Speaker 1: my co host Matt Miller. Every business day we bring 3 00:00:06,960 --> 00:00:11,520 Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along 4 00:00:11,520 --> 00:00:15,560 Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast 5 00:00:15,600 --> 00:00:18,400 Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:21,680 Speaker 1: at Bloomberg dot com slash podcast. We're gonna get right 7 00:00:21,720 --> 00:00:24,439 Speaker 1: into that energy story in a big way. We're gonna 8 00:00:24,480 --> 00:00:27,680 Speaker 1: roundtable this thing with a couple of smart folks. Fernando Valley, 9 00:00:27,800 --> 00:00:30,200 Speaker 1: he's the senior an also Bloomberg Intelligence. He's been covering 10 00:00:30,240 --> 00:00:33,680 Speaker 1: the oil industry for decades. He's our global view guy. 11 00:00:33,720 --> 00:00:37,560 Speaker 1: Mike mcglowe's senior macro strategists with Bloomberg Intelligence. Our commodities 12 00:00:37,600 --> 00:00:40,920 Speaker 1: guru joins us viafone. Fernando's here in our Bloomberg Interactive 13 00:00:40,960 --> 00:00:44,240 Speaker 1: Brokers studio. So since he's here, he's getting the gold star. 14 00:00:44,280 --> 00:00:47,239 Speaker 1: You get to go first, Fernando. Opec. They surprised me. 15 00:00:47,680 --> 00:00:50,280 Speaker 1: I woke up this morning. I wasn't expecting a production cut. 16 00:00:50,520 --> 00:00:52,360 Speaker 1: What's what's going on with our friends at Opec? Plus 17 00:00:52,600 --> 00:00:55,880 Speaker 1: same here? It moved up the timeline. We were expecting 18 00:00:55,920 --> 00:00:58,560 Speaker 1: that they would do it around the June meeting, which 19 00:00:58,600 --> 00:01:01,000 Speaker 1: is the presential meeting, the larger one, and they moved 20 00:01:01,040 --> 00:01:06,360 Speaker 1: it up to Wednesday. The rumor mill says that muhammadan Salman, 21 00:01:07,040 --> 00:01:10,480 Speaker 1: the Crown Princess of Saudi Arabia, was upset that the 22 00:01:10,520 --> 00:01:14,360 Speaker 1: Biden administration did not do strategic petroleumers of purchases to 23 00:01:14,360 --> 00:01:18,040 Speaker 1: help stabilize the prices, and so they decided to act quicker. 24 00:01:18,160 --> 00:01:20,559 Speaker 1: Why didn't and then that's a little outside here, why 25 00:01:20,760 --> 00:01:23,320 Speaker 1: haven't we built back the spr when there are a 26 00:01:23,360 --> 00:01:25,920 Speaker 1: couple of reasons. First, they had tried to time the 27 00:01:26,000 --> 00:01:28,920 Speaker 1: market to perfection and they didn't. And then even when 28 00:01:29,000 --> 00:01:32,080 Speaker 1: prices dropped below the oil price set, they did not 29 00:01:32,160 --> 00:01:35,399 Speaker 1: make those acquisitions because it was a pre sale of 30 00:01:35,520 --> 00:01:38,680 Speaker 1: the expected sales over the next ten years. They just 31 00:01:38,720 --> 00:01:41,160 Speaker 1: moved it up so they don't technically have to refill. 32 00:01:41,840 --> 00:01:44,080 Speaker 1: But it does seem like they missed a golden chance 33 00:01:44,120 --> 00:01:48,080 Speaker 1: to kind of time the market and create some support 34 00:01:48,120 --> 00:01:51,720 Speaker 1: for the local industry as opposed to foreign industries. Get it, Yeah, No, 35 00:01:51,840 --> 00:01:55,800 Speaker 1: it's it's pretty shocking that they weren't able to do that, 36 00:01:56,720 --> 00:01:59,400 Speaker 1: especially since the price fell at one point below the 37 00:01:59,520 --> 00:02:02,000 Speaker 1: level that they had set right to buy barrels. And 38 00:02:02,600 --> 00:02:06,160 Speaker 1: at the same time President Biden warned there would be 39 00:02:06,200 --> 00:02:10,080 Speaker 1: consequences for a cut that the Kingdom put into place 40 00:02:10,160 --> 00:02:12,840 Speaker 1: last October, right a two million barrel a day cut, 41 00:02:12,919 --> 00:02:18,640 Speaker 1: and those consequences never, as far as we know, came about. Yeah, 42 00:02:18,639 --> 00:02:22,280 Speaker 1: they haven't materialized to tishing. And I think one of 43 00:02:22,040 --> 00:02:26,040 Speaker 1: the problem is if they did make those acquisitions, they 44 00:02:26,040 --> 00:02:28,359 Speaker 1: would have moved the price up a little bit above it. 45 00:02:29,040 --> 00:02:31,919 Speaker 1: The WTI came to sixty six dollars versus a sixty 46 00:02:32,000 --> 00:02:34,320 Speaker 1: eight price, so if they were to purchase that kind 47 00:02:34,320 --> 00:02:36,040 Speaker 1: of level, you would have pushed it back up way 48 00:02:36,040 --> 00:02:40,240 Speaker 1: above seventy dollars. So it was a limited window. But 49 00:02:40,320 --> 00:02:42,680 Speaker 1: I think there was no real commitment, and apparently the 50 00:02:42,720 --> 00:02:45,160 Speaker 1: Department of Energy doesn't have a strategy to make those 51 00:02:45,160 --> 00:02:48,200 Speaker 1: purchases as are. This is what I'm gonna do. I'm 52 00:02:48,200 --> 00:02:50,880 Speaker 1: gonna send Mike McLoone to the pits and just say 53 00:02:51,000 --> 00:02:53,800 Speaker 1: start buying hand over fill. He's been right on his 54 00:02:55,000 --> 00:02:58,160 Speaker 1: his oil podcasts. How does this OPEC movement here change 55 00:02:58,200 --> 00:03:01,880 Speaker 1: your call, which has been these prices going down. I 56 00:03:01,919 --> 00:03:04,239 Speaker 1: think what Fernando said really is scary. The fact that 57 00:03:04,280 --> 00:03:07,799 Speaker 1: if they're going to try to raise prices as we 58 00:03:07,919 --> 00:03:12,040 Speaker 1: tilt towards global recession, as you just saw the ism, manufacturing, employment, 59 00:03:12,080 --> 00:03:14,360 Speaker 1: new orders all came out weaker than expected and below 60 00:03:14,440 --> 00:03:17,359 Speaker 1: fifty as a federal reserves tighten, as o're entering a 61 00:03:17,440 --> 00:03:20,280 Speaker 1: bankering crisis, just just adds to my fear that we're 62 00:03:20,360 --> 00:03:23,680 Speaker 1: entering to the greatest global macroeconomic reset of our lifetime. 63 00:03:23,800 --> 00:03:25,880 Speaker 1: So let's look at w TR right now. It's eighty 64 00:03:25,880 --> 00:03:29,639 Speaker 1: dollars a barrel. It's still down nineteen percent on a 65 00:03:29,680 --> 00:03:33,000 Speaker 1: one year basis, goals up two percent. But the key 66 00:03:33,040 --> 00:03:34,760 Speaker 1: thing is bouncing the upper end of the range. But 67 00:03:34,840 --> 00:03:37,720 Speaker 1: before this happened today, net positions had all been stopped 68 00:03:37,720 --> 00:03:39,960 Speaker 1: out because they're all bullish above a hundred. They got 69 00:03:40,000 --> 00:03:41,920 Speaker 1: stopped on the sixty four. The low this year was 70 00:03:41,960 --> 00:03:44,920 Speaker 1: sixty four. And I think the rational thing for people 71 00:03:44,960 --> 00:03:47,000 Speaker 1: to do now is Okay, this is a bear market. 72 00:03:47,040 --> 00:03:49,760 Speaker 1: We're bouncing and to start selling again to questions how 73 00:03:49,800 --> 00:03:53,960 Speaker 1: that high pick kicks in, because it's there's the macro's 74 00:03:54,000 --> 00:03:56,880 Speaker 1: overwhelming and the key thing, remember Ellen, was this at opec. 75 00:03:57,000 --> 00:03:59,320 Speaker 1: OPEC is always when you have surprise cuts. It's always 76 00:03:59,320 --> 00:04:01,920 Speaker 1: almost always consistent with bear markets. I want to hear 77 00:04:02,000 --> 00:04:07,160 Speaker 1: more about your big concern there because our lifetime where 78 00:04:07,200 --> 00:04:08,960 Speaker 1: were you old? So you're saying this is going to 79 00:04:09,040 --> 00:04:13,520 Speaker 1: be the greatest, the greatest when you say global macroeconomic 80 00:04:13,640 --> 00:04:17,160 Speaker 1: research resets of our lifetime. So I've been writing about 81 00:04:17,200 --> 00:04:19,240 Speaker 1: it for about a year. I've been tightening and printing 82 00:04:19,279 --> 00:04:20,920 Speaker 1: it more on headlines lately, but I had to get 83 00:04:20,960 --> 00:04:24,520 Speaker 1: into a gradually. It's just the classic examples of biggest 84 00:04:24,520 --> 00:04:27,000 Speaker 1: booms in history and the back of liquidity, and then 85 00:04:27,000 --> 00:04:29,000 Speaker 1: the bus come as you take that liquidity away. Now 86 00:04:29,040 --> 00:04:31,440 Speaker 1: you just look at money supply, you look at bank deposits. 87 00:04:31,440 --> 00:04:34,479 Speaker 1: Things are negative things never before just plunging in. The 88 00:04:34,520 --> 00:04:37,400 Speaker 1: FED is still tightening based on backward looking measures of 89 00:04:37,480 --> 00:04:40,200 Speaker 1: inflation that were spiked by them in the first place. 90 00:04:40,240 --> 00:04:42,040 Speaker 1: Because they didn't they waited too long and they cut 91 00:04:42,080 --> 00:04:43,760 Speaker 1: too much. And I'm not blaming them, but it's just 92 00:04:43,839 --> 00:04:48,000 Speaker 1: a classic pendulum singing swing heading the other way. In 93 00:04:48,080 --> 00:04:50,480 Speaker 1: crude olt natural gas was one of the best indicators. 94 00:04:50,800 --> 00:04:54,000 Speaker 1: It's the number one measure of heat, electricity and fertilizing 95 00:04:54,040 --> 00:04:56,640 Speaker 1: this country. It's down eighty percent at two dollars, the 96 00:04:56,680 --> 00:04:59,960 Speaker 1: equivalent price in WTI is closer to forty forty five 97 00:05:00,240 --> 00:05:02,560 Speaker 1: the cost of production in the US. I think that's 98 00:05:02,600 --> 00:05:04,800 Speaker 1: where it's going. And just in the numbers, we saw 99 00:05:04,839 --> 00:05:08,279 Speaker 1: Printon just a few minutes ago. Manufacturing in this country 100 00:05:08,279 --> 00:05:11,200 Speaker 1: and a global basis is negative and central banks are 101 00:05:11,240 --> 00:05:16,000 Speaker 1: still tightening. That's a classic recessionary trajectory. And if you 102 00:05:16,080 --> 00:05:18,440 Speaker 1: see what Anna wants is are chief economists. She said 103 00:05:18,480 --> 00:05:20,880 Speaker 1: her calls for a recession in Q three and now 104 00:05:20,920 --> 00:05:25,120 Speaker 1: she's pushing it closer. Basis point One of the reasons 105 00:05:25,160 --> 00:05:27,800 Speaker 1: that you would be bullish oils because a limited spare 106 00:05:27,839 --> 00:05:30,600 Speaker 1: capacity at OPEC and when you cut what have you 107 00:05:30,640 --> 00:05:33,640 Speaker 1: just made spare capacity, So you're really trying to put 108 00:05:33,680 --> 00:05:35,600 Speaker 1: in a floor to the price as opposed to make 109 00:05:35,600 --> 00:05:38,799 Speaker 1: its spike. And so this is a tug of wars, 110 00:05:38,839 --> 00:05:41,120 Speaker 1: Mike was saying, between interest rates and the FED trying 111 00:05:41,160 --> 00:05:44,240 Speaker 1: to contain the overheating of the economy, and then other 112 00:05:44,279 --> 00:05:48,440 Speaker 1: sides like OPEC trying to steer more inflation in higher prices, 113 00:05:48,480 --> 00:05:51,000 Speaker 1: and so far demand seems to be winning, or like 114 00:05:51,120 --> 00:05:54,120 Speaker 1: lower demand. I should say, yeah. But by the way, Mike, 115 00:05:54,200 --> 00:05:55,640 Speaker 1: if you want to sell that book, I'm going to 116 00:05:55,720 --> 00:05:59,160 Speaker 1: say change global macroeconomic reset. You got to say something 117 00:05:59,160 --> 00:06:01,360 Speaker 1: that people understand, because I still don't know exactly what 118 00:06:01,400 --> 00:06:05,080 Speaker 1: that is. If you say, you know, the greatest financial 119 00:06:05,120 --> 00:06:08,960 Speaker 1: crisis of our lifetime, that book I'm buying good well. 120 00:06:09,000 --> 00:06:11,359 Speaker 1: I expect to be you know, I expect to be 121 00:06:11,440 --> 00:06:14,039 Speaker 1: writing the history Sunday and leaving it right now. You 122 00:06:14,080 --> 00:06:15,800 Speaker 1: never really realize when you're middle of it. When you 123 00:06:15,880 --> 00:06:17,919 Speaker 1: point out these facts, and if you study the history 124 00:06:17,920 --> 00:06:22,679 Speaker 1: of booms and busts and supplying and contraction and coming 125 00:06:22,720 --> 00:06:24,800 Speaker 1: on with liquidity, it's we're in one of the most 126 00:06:24,800 --> 00:06:27,800 Speaker 1: severe cases of liquidity contraction ever. Now. The key point 127 00:06:27,880 --> 00:06:30,640 Speaker 1: is we have a banking crisis, that's clear, and what 128 00:06:30,880 --> 00:06:34,560 Speaker 1: cause that banking crisis is still Actually it's accelerating. The 129 00:06:34,600 --> 00:06:37,279 Speaker 1: FED raised rates just what a week ago the ECB 130 00:06:37,440 --> 00:06:40,279 Speaker 1: did the Bank of England. That's what's making it worse. 131 00:06:40,400 --> 00:06:44,400 Speaker 1: And you know, the key thing that's the trigger is 132 00:06:44,400 --> 00:06:46,440 Speaker 1: the stock market probably needs to go down. And good 133 00:06:46,440 --> 00:06:48,600 Speaker 1: indications for that is what's happening with copper, and they 134 00:06:48,600 --> 00:06:51,360 Speaker 1: trade tick for tick and if the stock market can 135 00:06:51,360 --> 00:06:53,400 Speaker 1: stay up, everything's fine. But I think the biggest risk 136 00:06:53,400 --> 00:06:55,760 Speaker 1: because it's more like to do what take the hint 137 00:06:55,880 --> 00:06:58,760 Speaker 1: of the what people say the smarter bond market, I 138 00:06:58,800 --> 00:07:01,599 Speaker 1: mean the two year note yield that and Fed funds 139 00:07:01,600 --> 00:07:05,360 Speaker 1: at five percent? Is not that that's a recession indication, Fernando. 140 00:07:05,600 --> 00:07:07,720 Speaker 1: We don't have a huge risk to the upside, do we? 141 00:07:07,880 --> 00:07:12,280 Speaker 1: Because what if Chinese people get in their cars in droves, 142 00:07:12,320 --> 00:07:14,800 Speaker 1: in hundreds of millions and drive around. What if Europe 143 00:07:14,840 --> 00:07:17,520 Speaker 1: doesn't have a recession and they continue to drive everywhere 144 00:07:17,560 --> 00:07:20,640 Speaker 1: and fill up their tanks. The OPAT plus companies are 145 00:07:20,680 --> 00:07:22,920 Speaker 1: going to be able to come to market with, you know, 146 00:07:23,080 --> 00:07:26,960 Speaker 1: cheat these production cuts as they have historically, right, they 147 00:07:26,960 --> 00:07:30,040 Speaker 1: can to a certain extent if everyone goes through the 148 00:07:30,080 --> 00:07:31,760 Speaker 1: door at the same time, and then we're probably short 149 00:07:31,800 --> 00:07:34,240 Speaker 1: because we haven't invested in the industry. And that's the 150 00:07:34,240 --> 00:07:36,800 Speaker 1: case we see in the long term why oil should 151 00:07:36,840 --> 00:07:39,600 Speaker 1: be higher. But we agree with Mike. In the short term, 152 00:07:39,640 --> 00:07:43,560 Speaker 1: the pressures on themand are just too strong that especially 153 00:07:43,600 --> 00:07:46,840 Speaker 1: with the Chinese consumer being over levered, the European consumer 154 00:07:46,880 --> 00:07:50,760 Speaker 1: being way too exposed to high energy prices, the US 155 00:07:50,800 --> 00:07:55,040 Speaker 1: consumer between high leverage and higher energy prices also struggling. 156 00:07:55,440 --> 00:07:57,720 Speaker 1: We see those pressures being too much in the short term, 157 00:07:57,920 --> 00:08:01,640 Speaker 1: and then eventually that leads even more underinvestment in oil 158 00:08:01,680 --> 00:08:03,680 Speaker 1: and gas, and that's when we see a supercycle for 159 00:08:03,720 --> 00:08:06,680 Speaker 1: commodities really taking off. Wow, good stuff. We got these 160 00:08:06,680 --> 00:08:09,200 Speaker 1: two guys on. Those are some superlidis. I know I'm 161 00:08:09,240 --> 00:08:12,400 Speaker 1: going big time here. I told you. Fernando Valley, senior 162 00:08:12,400 --> 00:08:17,240 Speaker 1: annalso Bloomberg Intelligence covering the energy space for Bloomberg Intelligence. 163 00:08:17,280 --> 00:08:20,040 Speaker 1: And Mike mcloan is Scot's down in South Miami Beach, 164 00:08:20,240 --> 00:08:24,520 Speaker 1: senior macro strategist for Bloomberg Intelligence. He's our commodities go 165 00:08:24,640 --> 00:08:27,040 Speaker 1: to person. So we'll have to get those two folks 166 00:08:27,080 --> 00:08:29,400 Speaker 1: on together. We have big moves in oil like we 167 00:08:29,480 --> 00:08:31,520 Speaker 1: do today given the OPEC plus did even talk about 168 00:08:31,520 --> 00:08:33,240 Speaker 1: good going over twenty eight thousand? I know we don't 169 00:08:33,240 --> 00:08:36,120 Speaker 1: even get to that, but interesting stuff waking up this 170 00:08:36,160 --> 00:08:38,640 Speaker 1: morning in the global energy space. We'll have more coming up. 171 00:08:39,240 --> 00:08:46,400 Speaker 1: This is Bloomberg. You're listening to the Team Cancer Live program, 172 00:08:46,440 --> 00:08:50,400 Speaker 1: Bloomberg Markets weekdays at ten AMI staring on Bloomberg dot Com, 173 00:08:50,480 --> 00:08:53,080 Speaker 1: the I Heard Radio app and the Bloomberg Business appe. 174 00:08:53,200 --> 00:08:58,720 Speaker 1: We're listening on demand wherever you get your podcast. Tomorrow 175 00:08:59,360 --> 00:09:02,360 Speaker 1: we'll be a when history will be made, when former 176 00:09:02,400 --> 00:09:06,560 Speaker 1: President Donald Trump will be indicted in Lower Manhattan. We 177 00:09:06,559 --> 00:09:08,560 Speaker 1: want to get the latest on that. We go right 178 00:09:08,600 --> 00:09:11,400 Speaker 1: to ground zero, if you will. Bloomberg's Curtty Gupta joins 179 00:09:11,480 --> 00:09:14,720 Speaker 1: us from downtown Manhattan to discuss the latest on the 180 00:09:14,760 --> 00:09:17,360 Speaker 1: ground there and also joined by Nick Ackerman. He is 181 00:09:17,559 --> 00:09:19,719 Speaker 1: self employed the law office of Nick Ackerman. He was 182 00:09:19,760 --> 00:09:24,080 Speaker 1: former assistant Special Watergate prosecutor. He joins us on the phone, Cretty, 183 00:09:24,160 --> 00:09:27,000 Speaker 1: let's start with you. You're down in Manhattan. Just tell 184 00:09:27,080 --> 00:09:30,079 Speaker 1: us where you are and what you're observing down there 185 00:09:30,120 --> 00:09:34,320 Speaker 1: as we wait President Trump's indictment schedule for tomorrow. Yeah, 186 00:09:34,320 --> 00:09:37,200 Speaker 1: a lot of anticipation in the air. It's interesting. So 187 00:09:37,200 --> 00:09:40,080 Speaker 1: we're standing rights here outside of the New York District 188 00:09:40,120 --> 00:09:42,959 Speaker 1: Attorney's office. So within the next forty eight hours, this 189 00:09:43,040 --> 00:09:46,000 Speaker 1: is the spot where President Trump or former President Trump 190 00:09:46,040 --> 00:09:49,960 Speaker 1: is expected to be arraigned at about two pm tomorrow afternoon. 191 00:09:49,960 --> 00:09:51,680 Speaker 1: But look, it's going to be a really quick visit. 192 00:09:51,720 --> 00:09:54,599 Speaker 1: He's gonna fly out from his Marlago esteate, or is 193 00:09:54,600 --> 00:09:57,760 Speaker 1: at least expected to today. I want to say, in 194 00:09:57,800 --> 00:10:00,319 Speaker 1: a couple of hours stay at Trump's how we're a 195 00:10:00,320 --> 00:10:02,480 Speaker 1: few blocks north from here, which I hear is packed 196 00:10:02,600 --> 00:10:05,240 Speaker 1: right now, only to get arranged, like I said, right 197 00:10:05,240 --> 00:10:08,520 Speaker 1: out here outside the District Attorney's office in downtown Manhattan 198 00:10:08,720 --> 00:10:11,160 Speaker 1: at two pm tomorrow, only to return again to his 199 00:10:11,240 --> 00:10:14,760 Speaker 1: moral lago state at eight fifteenth pm tomorrow. So right 200 00:10:14,760 --> 00:10:17,640 Speaker 1: now you're really seeing a lot of media presents, a 201 00:10:17,679 --> 00:10:20,800 Speaker 1: lot of police presidents, actually a couple of protesters as well. 202 00:10:20,800 --> 00:10:23,520 Speaker 1: You can really see the anticipation here isn't just for 203 00:10:23,960 --> 00:10:26,720 Speaker 1: seeing President Trump go through this historic move, but also 204 00:10:26,720 --> 00:10:29,640 Speaker 1: what the fallout might be, protests, rallies. The police are 205 00:10:29,640 --> 00:10:31,480 Speaker 1: prepared for it. Allow, So he's going to go straight back. 206 00:10:31,520 --> 00:10:34,240 Speaker 1: I guess he assumes he'll be released on his own recognizance, right, 207 00:10:34,240 --> 00:10:36,520 Speaker 1: because usually if you're indicted, don't you don't they have 208 00:10:36,559 --> 00:10:39,959 Speaker 1: to hold you? Or I don't know, Hey, Nick, let's 209 00:10:40,000 --> 00:10:42,000 Speaker 1: let's bring you in Nick. How does this typically works? 210 00:10:42,040 --> 00:10:47,080 Speaker 1: What's the legal process tomorrow for former President Trump? Well, 211 00:10:47,080 --> 00:10:49,640 Speaker 1: the process of the arrangement is he will go in 212 00:10:49,760 --> 00:10:53,320 Speaker 1: before the judge. The judge will ask him if he 213 00:10:53,360 --> 00:10:56,360 Speaker 1: wants to read the charges, and he can either wave 214 00:10:56,440 --> 00:11:01,440 Speaker 1: the reading or not. And at that point, the judge 215 00:11:01,480 --> 00:11:05,000 Speaker 1: will ask whether how he pleads guilty or not guilty. 216 00:11:06,000 --> 00:11:10,360 Speaker 1: Most all defendants plead not guilty at an arraignment, and 217 00:11:10,400 --> 00:11:14,200 Speaker 1: then the judge sets bail. In this case, it's it's 218 00:11:14,240 --> 00:11:16,840 Speaker 1: almost a certainty that he's going to be released on 219 00:11:16,960 --> 00:11:23,199 Speaker 1: his own recognisance. Sometimes, if there's a situation that justifies 220 00:11:23,240 --> 00:11:27,120 Speaker 1: bail because the person doesn't have roots to the community 221 00:11:27,200 --> 00:11:31,160 Speaker 1: and as a flight risk, they would put up a 222 00:11:31,200 --> 00:11:33,640 Speaker 1: certain amount for bail. But I don't think in this case. 223 00:11:33,720 --> 00:11:36,160 Speaker 1: I think it's it's pretty much a dead certainty that 224 00:11:36,200 --> 00:11:39,439 Speaker 1: he's going to be released on his own recognissance. Nick, 225 00:11:39,480 --> 00:11:41,199 Speaker 1: what do you think about based upon what we know, 226 00:11:41,280 --> 00:11:43,240 Speaker 1: which which is limited at this point, but based upon 227 00:11:43,280 --> 00:11:46,480 Speaker 1: your experience as an assistant US attorney for the Southern 228 00:11:46,559 --> 00:11:48,760 Speaker 1: District of New York from nineteen seventy six to nineteen 229 00:11:48,800 --> 00:11:51,600 Speaker 1: eighty three, as I mentioned, a former assistant special Watergate 230 00:11:51,600 --> 00:11:54,440 Speaker 1: prosecutor from seventy three to seventy five. Based upon your 231 00:11:54,440 --> 00:11:57,199 Speaker 1: experience and based upon what we know, what do you 232 00:11:57,240 --> 00:12:00,040 Speaker 1: think of this case here that the district attorneys of 233 00:12:00,160 --> 00:12:03,360 Speaker 1: the screen, well, we don't know what the case is, 234 00:12:03,400 --> 00:12:05,920 Speaker 1: we don't know what the charges are. The only thing 235 00:12:05,960 --> 00:12:09,880 Speaker 1: we really know is that they have been looking, you know, publicly. 236 00:12:09,920 --> 00:12:11,719 Speaker 1: That we know is that one of the things they 237 00:12:11,760 --> 00:12:16,040 Speaker 1: clearly have been looking at is this Pecker, David Pecker, 238 00:12:16,120 --> 00:12:20,080 Speaker 1: who is the head of the National Inquirer, and Donald 239 00:12:20,080 --> 00:12:24,480 Speaker 1: Trump agreed that the National Inquirer would keep their eyes 240 00:12:24,480 --> 00:12:29,040 Speaker 1: out for any kind of stories that might hurt Trump's 241 00:12:29,120 --> 00:12:34,319 Speaker 1: chances for election in twoy sixteen, and as a result, 242 00:12:34,440 --> 00:12:38,120 Speaker 1: they wound up paying off Karen McDougall, who is a 243 00:12:38,160 --> 00:12:43,920 Speaker 1: former Playboy playmate, and they paid off Stormy Daniels. But 244 00:12:44,280 --> 00:12:47,400 Speaker 1: part of what's going on here fits into the overall 245 00:12:47,640 --> 00:12:51,959 Speaker 1: theme of falsification of records of the Trump organization, for 246 00:12:52,040 --> 00:12:55,800 Speaker 1: which the Trump Organization has already been convicted of a 247 00:12:55,880 --> 00:13:00,920 Speaker 1: criminal violation in Manhattan State Court. And so the real 248 00:13:01,040 --> 00:13:08,880 Speaker 1: question is will there be other violations of falsification of records, 249 00:13:09,040 --> 00:13:15,800 Speaker 1: of insurance fraud, bank fraud, falsification of annual statements for 250 00:13:15,840 --> 00:13:20,199 Speaker 1: the Trump organization. Will that play a role in this indictment. 251 00:13:20,320 --> 00:13:23,680 Speaker 1: We just don't know at this point, and it's a 252 00:13:23,880 --> 00:13:26,520 Speaker 1: pure guesswork as to what this indictment is going to 253 00:13:26,600 --> 00:13:31,079 Speaker 1: look like. It could also involve actions that Donald Trump 254 00:13:31,120 --> 00:13:33,400 Speaker 1: has taken in the last week by putting up that 255 00:13:33,559 --> 00:13:36,600 Speaker 1: picture of him with a baseball bat and the district 256 00:13:36,600 --> 00:13:40,760 Speaker 1: attorney that could wind up involving other charges. There could 257 00:13:40,800 --> 00:13:45,320 Speaker 1: also be witness tampering relating to Michael Cohen. All of 258 00:13:45,360 --> 00:13:48,080 Speaker 1: this is speculation at this point, right, Well, we're going 259 00:13:48,160 --> 00:13:50,880 Speaker 1: to find out tomorrow. It does remind me that Trump 260 00:13:51,440 --> 00:13:55,920 Speaker 1: essentially threatened death and destruction if he were indicted. Cratty, 261 00:13:56,000 --> 00:13:58,480 Speaker 1: You're standing there at the DA's office, and you mentioned 262 00:13:58,480 --> 00:14:00,079 Speaker 1: that there are a lot of people around trump O. 263 00:14:00,720 --> 00:14:04,560 Speaker 1: Are there security concerns? Are we worried that there will 264 00:14:04,600 --> 00:14:08,960 Speaker 1: be you know, busloads of angry protesters coming in from 265 00:14:09,000 --> 00:14:12,360 Speaker 1: out of state. Well, it definitely is the worry, And 266 00:14:12,440 --> 00:14:14,600 Speaker 1: I mean I can say that pretty confidently with the 267 00:14:14,640 --> 00:14:17,160 Speaker 1: amount of police presidence here. It's not just about protection 268 00:14:17,360 --> 00:14:19,680 Speaker 1: for President Trump as well. But you can see the barricade. 269 00:14:19,680 --> 00:14:22,360 Speaker 1: You're even seeing media not necessarily about to be parked 270 00:14:22,480 --> 00:14:24,720 Speaker 1: close side to where their cameras are parked, for example. 271 00:14:24,760 --> 00:14:27,840 Speaker 1: So this is definitely the preparation for that worst ye scenario. 272 00:14:28,040 --> 00:14:29,600 Speaker 1: But I think we also have to keep in mind 273 00:14:29,680 --> 00:14:33,160 Speaker 1: that even President Trump's defense team over the weekend had 274 00:14:33,200 --> 00:14:35,520 Speaker 1: come out on another network and said, look, we are 275 00:14:35,560 --> 00:14:38,360 Speaker 1: trying to avoid showmanship or trying to avoid the theater. 276 00:14:38,680 --> 00:14:40,840 Speaker 1: And Nick can perhaps comment on this, but I thought 277 00:14:40,840 --> 00:14:43,520 Speaker 1: it was really interesting the way that they're talking about 278 00:14:43,560 --> 00:14:46,320 Speaker 1: approaching this case. They're not looking to dismiss it. They're 279 00:14:46,320 --> 00:14:49,520 Speaker 1: not looking to remove the presiding judge, who, by the way, 280 00:14:49,560 --> 00:14:54,320 Speaker 1: has a history of presiding against the former president President Trump, 281 00:14:54,360 --> 00:14:56,240 Speaker 1: even going as far to saying, one merchant, who of 282 00:14:56,280 --> 00:14:58,920 Speaker 1: course is the judge presiding, he hates me. And those 283 00:14:58,960 --> 00:15:01,480 Speaker 1: are some comments, a very wrong comments made on social media. 284 00:15:01,640 --> 00:15:04,800 Speaker 1: Yet the defense team isn't actually looking to remove them 285 00:15:04,800 --> 00:15:07,280 Speaker 1: from the case. And that's all to show that this 286 00:15:07,360 --> 00:15:11,600 Speaker 1: is being done cooperatively, collaboratively and through the due process 287 00:15:11,640 --> 00:15:14,080 Speaker 1: of law. Hey, Nick, just want to get a sense 288 00:15:14,080 --> 00:15:16,160 Speaker 1: from you given up, there's a lot we don't know. 289 00:15:16,280 --> 00:15:19,800 Speaker 1: But and assuming the former president, you know, does not 290 00:15:19,960 --> 00:15:22,840 Speaker 1: plead some point at this case, what's the timing of 291 00:15:22,840 --> 00:15:24,760 Speaker 1: a case like this, how would it progress and when 292 00:15:24,760 --> 00:15:26,400 Speaker 1: would we actually get to a trial if there was 293 00:15:26,400 --> 00:15:29,560 Speaker 1: a trial, Well, I hate to say it, but after tomorrow, 294 00:15:29,600 --> 00:15:33,440 Speaker 1: it's probably going to be thoroughly boring. Um, what what's 295 00:15:33,480 --> 00:15:36,400 Speaker 1: going to happen is just like at all other criminal cases. 296 00:15:37,560 --> 00:15:42,040 Speaker 1: The defense is going to file motions. Um, they're probably 297 00:15:42,040 --> 00:15:44,960 Speaker 1: the emotions are dismissed. It could be emotion for change 298 00:15:45,000 --> 00:15:49,720 Speaker 1: of venue. There could be emotion for more details on 299 00:15:49,760 --> 00:15:53,680 Speaker 1: the complaint in the indictment. But my senses, this is 300 00:15:53,720 --> 00:15:58,520 Speaker 1: going to be a very detailed indictment, unlike most indictments. 301 00:15:59,080 --> 00:16:03,280 Speaker 1: But there'll be the pre trial motion practice. The district 302 00:16:03,320 --> 00:16:07,040 Speaker 1: attorney will have the opportunity to respond. This doesn't take 303 00:16:07,600 --> 00:16:09,840 Speaker 1: place in a matter of days. It's going to be 304 00:16:09,880 --> 00:16:12,680 Speaker 1: a matter of months as this goes back and forth. 305 00:16:13,400 --> 00:16:16,800 Speaker 1: The judge then has to decide the motions. They'll be 306 00:16:16,960 --> 00:16:21,640 Speaker 1: discovery where the DA's office has to provide the defense 307 00:16:21,760 --> 00:16:25,040 Speaker 1: with documents that are in its possession that relate to 308 00:16:25,080 --> 00:16:28,800 Speaker 1: the case. So this is this could very well take 309 00:16:29,000 --> 00:16:31,880 Speaker 1: up to a year before it finally gets to trial. 310 00:16:32,040 --> 00:16:35,440 Speaker 1: This is not going to happen overnight, all right, Really 311 00:16:35,440 --> 00:16:38,520 Speaker 1: appreciate getting your insight there. Nick Ackerman, he's a former 312 00:16:38,640 --> 00:16:42,360 Speaker 1: assistant special Watergate prosecutor and then he went on to 313 00:16:42,440 --> 00:16:45,000 Speaker 1: be the Assistant US Attorney for the Southern District of 314 00:16:45,040 --> 00:16:47,480 Speaker 1: New York from nineteen seventy six to eighty three. And 315 00:16:47,520 --> 00:16:49,440 Speaker 1: he now has his own law office of Nick Ackerman, 316 00:16:49,480 --> 00:16:51,280 Speaker 1: getting his thoughts there, and of course could Gupta on 317 00:16:51,320 --> 00:16:55,760 Speaker 1: the ground downtown Manhattan for Bloomberg News on site at 318 00:16:55,800 --> 00:16:58,640 Speaker 1: the DA's office in Lower Manhattan. If you're listening to 319 00:16:58,680 --> 00:17:02,040 Speaker 1: the tape, Kens are a line program Bloomberg Markets weekdays 320 00:17:02,080 --> 00:17:05,280 Speaker 1: at ten am Eastern on Bloomberg Radio, the Tuna app, 321 00:17:05,359 --> 00:17:08,239 Speaker 1: Bloomberg dot Com, and the Bloomberg Business App. You can 322 00:17:08,280 --> 00:17:11,520 Speaker 1: also listen live on Amazon Alexa from our flagship New 323 00:17:11,600 --> 00:17:16,240 Speaker 1: York station. Just say Alexa play Bloomberg eleven thirty. I 324 00:17:16,280 --> 00:17:19,480 Speaker 1: want to get to the banks here. It is grim 325 00:17:19,520 --> 00:17:22,520 Speaker 1: news coming out of Switzerland. UBS buying credit Swiss. I 326 00:17:22,560 --> 00:17:26,000 Speaker 1: guess that's the good news kind of. But there's a 327 00:17:26,000 --> 00:17:27,760 Speaker 1: lot of redundancies there. They're going to cut a lot 328 00:17:27,760 --> 00:17:30,639 Speaker 1: of people, and that's why we go to Alison Williams, 329 00:17:30,640 --> 00:17:34,399 Speaker 1: Senior Global Banks Analysts. So, Alison, you saw some of 330 00:17:34,440 --> 00:17:37,240 Speaker 1: the numbers here, tens of thousands of people likely to 331 00:17:37,320 --> 00:17:39,440 Speaker 1: be let go. Here is this kind of part and 332 00:17:39,520 --> 00:17:43,159 Speaker 1: parcel when you put two investment banks together, well, it is. 333 00:17:43,440 --> 00:17:48,640 Speaker 1: It is generally with investment banks, especially areas where there 334 00:17:48,680 --> 00:17:52,320 Speaker 1: might be direct overlaps such as such as research as 335 00:17:52,320 --> 00:17:57,119 Speaker 1: you know, and it does seem like, you know, some 336 00:17:57,320 --> 00:17:58,919 Speaker 1: of the reports I've seen that a lot of the 337 00:17:58,920 --> 00:18:02,960 Speaker 1: cuts could be centered in Switzerland would also seem to 338 00:18:03,000 --> 00:18:06,760 Speaker 1: make sense just because, um, there's probably a lot of 339 00:18:06,760 --> 00:18:13,399 Speaker 1: overlap in terms of systems and management administration. And again 340 00:18:14,080 --> 00:18:16,880 Speaker 1: it's it's it's tough to tell, and we've said since 341 00:18:16,880 --> 00:18:19,040 Speaker 1: the beginning of this deal, it's tough to tell sort 342 00:18:19,080 --> 00:18:24,120 Speaker 1: of what the what the revenue attrition is going to 343 00:18:24,160 --> 00:18:27,640 Speaker 1: be from. You know, people that use both banks right 344 00:18:27,680 --> 00:18:31,560 Speaker 1: and that now um maybe move some of their exposure 345 00:18:31,600 --> 00:18:37,840 Speaker 1: to someone else that also will reverberate with employees. So um, 346 00:18:38,359 --> 00:18:41,919 Speaker 1: So there are a lot of synergies, so to speak, 347 00:18:42,920 --> 00:18:45,440 Speaker 1: but I wonder if they're as bad as as we anticipate. 348 00:18:45,440 --> 00:18:47,679 Speaker 1: I mean, the market has been there for Credit Suite 349 00:18:47,760 --> 00:18:51,360 Speaker 1: and ubs. There was enough share for both players before. 350 00:18:52,040 --> 00:18:53,800 Speaker 1: And while I get that, you know in terms of 351 00:18:53,840 --> 00:18:57,879 Speaker 1: back office or you know, wealthy clients that used both 352 00:18:57,960 --> 00:19:02,720 Speaker 1: to hedge their bets in a sense, um, that's an overlap, 353 00:19:02,880 --> 00:19:05,720 Speaker 1: But it seems like there still is enough room for 354 00:19:05,800 --> 00:19:09,040 Speaker 1: this big business, isn't there? Yeah, I mean it does. 355 00:19:09,280 --> 00:19:13,480 Speaker 1: I mean to me, it does seem a really big number. 356 00:19:13,600 --> 00:19:15,800 Speaker 1: Like I scratched my head a little bit about where 357 00:19:15,840 --> 00:19:17,720 Speaker 1: some of those will come, right, because a lot of 358 00:19:17,760 --> 00:19:22,639 Speaker 1: the like asset management UM, you know, there's very complimentary products. 359 00:19:23,640 --> 00:19:25,679 Speaker 1: And as I said, so there's some overlap in the 360 00:19:25,720 --> 00:19:29,639 Speaker 1: investment bank, but that investment bank has already been so 361 00:19:29,760 --> 00:19:33,720 Speaker 1: dramatically downsized. I'm not sure you know what's left to 362 00:19:33,760 --> 00:19:36,720 Speaker 1: cut except for a couple of small areas that I mentioned. 363 00:19:37,280 --> 00:19:40,720 Speaker 1: You know, a lot of the uh, you know, one 364 00:19:40,720 --> 00:19:44,080 Speaker 1: of the compelling things that UBS ces is the ability 365 00:19:44,119 --> 00:19:47,440 Speaker 1: to add the US presence and the technology presence that 366 00:19:47,520 --> 00:19:50,200 Speaker 1: it doesn't have a credit suitee UM, and same thing 367 00:19:50,200 --> 00:19:52,919 Speaker 1: in asset management, there's some complimentary things. And then in 368 00:19:53,040 --> 00:19:58,160 Speaker 1: terms of the wealth management business you know, both globally 369 00:19:58,200 --> 00:20:02,879 Speaker 1: and the Swiss in particular to the extent that you 370 00:20:03,000 --> 00:20:07,200 Speaker 1: have a number of advisors with a number of client UM. Yes, 371 00:20:07,320 --> 00:20:09,520 Speaker 1: as I said, there might be some overlap and some 372 00:20:09,600 --> 00:20:14,359 Speaker 1: reduction of exposures, but the headline number is really significant. 373 00:20:15,320 --> 00:20:19,200 Speaker 1: Little bit it is a little bit interesting to think, 374 00:20:19,200 --> 00:20:22,239 Speaker 1: like where those cuts are going to write. I mean, 375 00:20:22,280 --> 00:20:25,879 Speaker 1: this is this is this is all according to the 376 00:20:26,000 --> 00:20:30,360 Speaker 1: Zontag Situngue, which is a Swiss newspaper citing an unidentified 377 00:20:30,400 --> 00:20:34,800 Speaker 1: senior manager at ubs. They're saying thirty six thousand jobs 378 00:20:35,000 --> 00:20:38,719 Speaker 1: will roll, so eleven thousand inside Switzerland, twenty five thousand 379 00:20:38,720 --> 00:20:42,280 Speaker 1: outside Switzerland. And this is not at all a beloved 380 00:20:42,359 --> 00:20:46,639 Speaker 1: deal domestically, So you can imagine that a local newspaper. Um, 381 00:20:46,800 --> 00:20:50,320 Speaker 1: you know, if it bleeds, it leads, they might want 382 00:20:50,320 --> 00:20:52,640 Speaker 1: to play it up a little bit just for sales. 383 00:20:52,800 --> 00:20:56,560 Speaker 1: I don't know, yeah, and who knows how they're coming 384 00:20:56,640 --> 00:21:02,360 Speaker 1: because the cuts, the cost cutting that they've talked about, um, 385 00:21:02,400 --> 00:21:06,160 Speaker 1: you know, it's something like fifteen to twenty percent of 386 00:21:06,200 --> 00:21:10,800 Speaker 1: the cost base. You know. Also could it be outsourcing again, 387 00:21:10,840 --> 00:21:14,920 Speaker 1: like it's very hard to get to these really sizeable numbers. 388 00:21:14,960 --> 00:21:18,600 Speaker 1: One one could imagine someone saying, oh, well, if it's 389 00:21:18,640 --> 00:21:20,439 Speaker 1: this much percent of clasts, what does that mean for 390 00:21:20,440 --> 00:21:23,520 Speaker 1: a headcount? But I think you know, again, it's it's 391 00:21:23,520 --> 00:21:29,120 Speaker 1: a very different um, you know, business and some others. Right, 392 00:21:29,160 --> 00:21:31,719 Speaker 1: So it's not like a typical we're going to have 393 00:21:31,840 --> 00:21:35,120 Speaker 1: we know, two branches now we're only going to have one. Um, 394 00:21:35,800 --> 00:21:39,359 Speaker 1: you know, how many headcounts? How many heads you really cut? 395 00:21:39,400 --> 00:21:42,479 Speaker 1: If those branches are focused on serving Mualti clients and 396 00:21:42,520 --> 00:21:46,240 Speaker 1: you're bringing those people together. They're we've sort of identified 397 00:21:46,280 --> 00:21:48,320 Speaker 1: for you where we see the areas we're cuts, but 398 00:21:48,359 --> 00:21:51,840 Speaker 1: it's still hard to get to that. So Elson's big numbers. 399 00:21:52,320 --> 00:21:54,680 Speaker 1: I can't think of a reason. I mean, if I'm 400 00:21:54,720 --> 00:21:57,840 Speaker 1: an UBS shareholder here, I have to be really patient, 401 00:21:57,880 --> 00:22:00,280 Speaker 1: don't I'm because i don't know really what I've bought. 402 00:22:00,400 --> 00:22:03,199 Speaker 1: I'm not really sure what I'm going to end up with. 403 00:22:03,440 --> 00:22:05,640 Speaker 1: I mean, you really have to believe in UBS management 404 00:22:05,680 --> 00:22:07,399 Speaker 1: to stick around for what it could be a multi 405 00:22:07,480 --> 00:22:11,480 Speaker 1: year in integration, you do. And perhaps that's one of 406 00:22:11,520 --> 00:22:14,719 Speaker 1: the reasons why they felt they needed to bring Ermadi back, 407 00:22:16,119 --> 00:22:19,359 Speaker 1: you know, some of the fits and starts, um. You know, 408 00:22:19,359 --> 00:22:22,119 Speaker 1: obviously Hammers was not there for that long, but some 409 00:22:22,200 --> 00:22:24,680 Speaker 1: of the things that he had done, you know, in 410 00:22:24,800 --> 00:22:28,560 Speaker 1: terms of buying the Digital Wealth Manager in the US, 411 00:22:28,600 --> 00:22:31,280 Speaker 1: a deal that was later canceled, um, like we did 412 00:22:31,359 --> 00:22:39,240 Speaker 1: evaluation or other reasons. Archigos actually happened under Hammer's watch, 413 00:22:39,240 --> 00:22:42,119 Speaker 1: although you could certainly connect the dots to say that 414 00:22:42,160 --> 00:22:45,520 Speaker 1: the risk culture was there before he got there. But 415 00:22:45,640 --> 00:22:49,639 Speaker 1: URMANDI what he brings is, you know, he came in 416 00:22:49,720 --> 00:22:52,760 Speaker 1: after if you can remember the rogue trader scandal or 417 00:22:53,280 --> 00:22:56,760 Speaker 1: unauthorized incident as they like to call it, which we 418 00:22:56,840 --> 00:22:59,920 Speaker 1: know means they lost money because generally a rogue trader 419 00:23:00,200 --> 00:23:03,119 Speaker 1: make money. We don't hear about that. But you know 420 00:23:03,200 --> 00:23:06,080 Speaker 1: he came in after that, he put in a plan. 421 00:23:06,480 --> 00:23:09,440 Speaker 1: His plan was successful. He said he was going to 422 00:23:09,480 --> 00:23:12,639 Speaker 1: shrink the investment bank and he did, and he did it, 423 00:23:12,680 --> 00:23:14,000 Speaker 1: by the way, at a time when it was not 424 00:23:14,080 --> 00:23:16,280 Speaker 1: that popular, Like they were the first bank to say, 425 00:23:16,320 --> 00:23:17,560 Speaker 1: you know what, we don't have to be this big 426 00:23:17,680 --> 00:23:20,520 Speaker 1: fix income. We don't have to be everything to everybody. 427 00:23:20,520 --> 00:23:22,359 Speaker 1: We're going to focus where we want. We're going to 428 00:23:22,440 --> 00:23:26,120 Speaker 1: focus on profitability and then manage through like a ten 429 00:23:26,200 --> 00:23:31,000 Speaker 1: year period of like regulation, litigation, the things coming. So 430 00:23:31,040 --> 00:23:33,840 Speaker 1: I think, yeah, to your point, it's a long period, 431 00:23:33,880 --> 00:23:36,280 Speaker 1: but maybe that he gives some confidence. All right, Alison, 432 00:23:36,320 --> 00:23:38,679 Speaker 1: thank you so much for joining us yet again. Alison Williams, 433 00:23:38,680 --> 00:23:42,000 Speaker 1: Senior banks analyst for Bloomberg Intelligence, breaking down what is 434 00:23:42,040 --> 00:23:46,479 Speaker 1: the beginnings of a long merger process ubs acquiring credit Swiss. 435 00:23:47,119 --> 00:23:49,680 Speaker 1: You're listening to the Take Kids Are a live program 436 00:23:49,720 --> 00:23:53,680 Speaker 1: Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio, 437 00:23:53,800 --> 00:23:56,560 Speaker 1: the tune in app, Bloomberg dot Com, and the Bloomberg 438 00:23:56,600 --> 00:23:59,680 Speaker 1: Business App. You can also listen live on Amazon Alexa 439 00:23:59,720 --> 00:24:03,040 Speaker 1: from our flagship New York station, Just say Alexa play 440 00:24:03,160 --> 00:24:07,760 Speaker 1: Bloomberg eleven thirty. Yeah, woke this warning to a big 441 00:24:07,760 --> 00:24:11,000 Speaker 1: production cut command out. Plus looking at in the markets here, 442 00:24:11,119 --> 00:24:13,920 Speaker 1: WTI crude oil up about five point eight percent, about 443 00:24:13,920 --> 00:24:16,000 Speaker 1: just about eighty dollars per bower. What does that mean 444 00:24:16,040 --> 00:24:19,040 Speaker 1: for global investors? Will Robert Teeter joins us here in 445 00:24:19,040 --> 00:24:22,240 Speaker 1: our Bloomberg Director Broker studio. He's head of investment policy 446 00:24:22,320 --> 00:24:26,000 Speaker 1: and strategy for Silver Crests Asset Management. Robert, thanks for 447 00:24:26,119 --> 00:24:29,119 Speaker 1: so much for coming to the studio here. Again, what 448 00:24:29,200 --> 00:24:31,159 Speaker 1: do you make of this move from OPEC in the 449 00:24:31,400 --> 00:24:34,800 Speaker 1: in the impact on global energy? Yeah, it's a really 450 00:24:35,680 --> 00:24:38,399 Speaker 1: interesting development in terms of a couple of different impacts. 451 00:24:38,400 --> 00:24:39,800 Speaker 1: I think the first thing that I would say is 452 00:24:39,840 --> 00:24:42,560 Speaker 1: that it does certainly send us a pretty important signal 453 00:24:42,600 --> 00:24:45,680 Speaker 1: that perhaps demand in the global economy hasn't been quite 454 00:24:45,680 --> 00:24:47,520 Speaker 1: as strong as we've all been expecting. I think that's 455 00:24:47,520 --> 00:24:49,560 Speaker 1: one of the things that OPEC's been responding to here 456 00:24:49,640 --> 00:24:52,119 Speaker 1: is trying to get prices up through restricting the supply 457 00:24:52,200 --> 00:24:54,200 Speaker 1: side rather than relying on demand. And I think that's 458 00:24:54,200 --> 00:24:56,679 Speaker 1: a pretty important signal in terms of demand outlook for 459 00:24:56,680 --> 00:25:01,720 Speaker 1: global economics. I mean, you have, i've key drivers that 460 00:25:01,760 --> 00:25:06,359 Speaker 1: you think we should be watching, bank stress, inflation, the economy, earnings, 461 00:25:06,359 --> 00:25:09,600 Speaker 1: and the fixed income market. This I think goes to 462 00:25:09,760 --> 00:25:14,800 Speaker 1: inflation and to the economy in a sense. It seems 463 00:25:14,840 --> 00:25:18,360 Speaker 1: like it could drive inflation higher and slow the economy down. 464 00:25:18,480 --> 00:25:20,320 Speaker 1: Is that Am I reading it the right way? I'm 465 00:25:20,320 --> 00:25:23,280 Speaker 1: reading it that way as well. Certainly, mechanically speaking, higher 466 00:25:23,359 --> 00:25:26,280 Speaker 1: oil prices will be inflationary. They will represent that classic 467 00:25:26,359 --> 00:25:29,040 Speaker 1: tax on the consumer and take spending away from other 468 00:25:29,320 --> 00:25:31,280 Speaker 1: other parts of the economy. I do think perhaps it 469 00:25:31,320 --> 00:25:34,119 Speaker 1: plays into the rate hike cycle as well, though in 470 00:25:34,160 --> 00:25:36,159 Speaker 1: terms of reading that signal that perhaps demand is a 471 00:25:36,200 --> 00:25:40,359 Speaker 1: bit slower than we've been anticipating. So on the bank 472 00:25:40,480 --> 00:25:44,080 Speaker 1: stress issue, is that something that's in our rearview mirror now. 473 00:25:44,320 --> 00:25:46,280 Speaker 1: I mean, it was kind of acute there three or 474 00:25:46,320 --> 00:25:49,600 Speaker 1: four weeks ago. Haven't heard too much since, but some 475 00:25:49,640 --> 00:25:52,120 Speaker 1: of the drivers probably are still there. I think they are. 476 00:25:52,200 --> 00:25:55,440 Speaker 1: I think in terms of depositors, it's in the rearview mirror. Certainly, 477 00:25:55,480 --> 00:25:58,159 Speaker 1: the comments from FED officials have been very focused on 478 00:25:58,240 --> 00:26:00,439 Speaker 1: protecting deposits. I think they've been very er that that 479 00:26:00,520 --> 00:26:03,280 Speaker 1: issue is over and done with. When you think about 480 00:26:03,560 --> 00:26:06,199 Speaker 1: earnings in the economy, I think the earnings drag on 481 00:26:06,280 --> 00:26:08,240 Speaker 1: banks might be real, and I think when you think 482 00:26:08,240 --> 00:26:12,160 Speaker 1: about the drag on economic activity from a slowdown in lending, 483 00:26:12,240 --> 00:26:14,440 Speaker 1: that's going to be real as well. Although the fact 484 00:26:14,480 --> 00:26:16,880 Speaker 1: that the crisis was sort of mostly over and done 485 00:26:16,880 --> 00:26:19,760 Speaker 1: with relatively quickly bodes well for the outlook. But nonetheless, 486 00:26:19,760 --> 00:26:21,439 Speaker 1: I think there will be follow through drag on the 487 00:26:21,440 --> 00:26:24,920 Speaker 1: economy from a slowdown in lending, whether that's regulatory mandated 488 00:26:25,040 --> 00:26:27,400 Speaker 1: or just more caution on balance sheets. So what does 489 00:26:27,400 --> 00:26:30,679 Speaker 1: that mean? What are your expectations for earnings? Are we 490 00:26:30,800 --> 00:26:33,840 Speaker 1: entering a recession and does that mean earnings come down? What? 491 00:26:34,040 --> 00:26:37,159 Speaker 1: In percentage terms? I don't see a recession yet, So 492 00:26:37,240 --> 00:26:39,480 Speaker 1: my view has been that we're running around two percent 493 00:26:39,520 --> 00:26:41,919 Speaker 1: on the economy right now. I'd expect somewhere like another 494 00:26:42,160 --> 00:26:44,480 Speaker 1: one percent drag from some of these issues in banking. 495 00:26:44,560 --> 00:26:47,359 Speaker 1: So I'm in the camp of slightly positive economic growth 496 00:26:47,840 --> 00:26:50,359 Speaker 1: and I'm in the camp that consensus earnings are about 497 00:26:50,440 --> 00:26:52,560 Speaker 1: right for flat, although I do think there will be 498 00:26:52,600 --> 00:26:54,880 Speaker 1: some reshuffling of the deck beneath that, and we'll get 499 00:26:54,880 --> 00:26:56,360 Speaker 1: a lot more color on that as we get into 500 00:26:56,359 --> 00:26:58,240 Speaker 1: earning season and see where some of those misses and 501 00:26:58,280 --> 00:27:01,600 Speaker 1: beats are coming from. It all that backdrop, what do 502 00:27:01,640 --> 00:27:04,600 Speaker 1: you expect our federal Reserve to do? There's you know, 503 00:27:04,680 --> 00:27:06,200 Speaker 1: a lot of folks out there to saying, hey, another 504 00:27:06,240 --> 00:27:09,280 Speaker 1: twenty five bases point hike, maybe two, But there's also 505 00:27:09,440 --> 00:27:12,200 Speaker 1: a reasonable crowd out there saying this economy is slowing 506 00:27:12,280 --> 00:27:14,920 Speaker 1: down everywhere you look. We had the ism data again today, 507 00:27:16,640 --> 00:27:18,520 Speaker 1: this should be it. Maybe you can cut. I mean, 508 00:27:18,680 --> 00:27:21,120 Speaker 1: what camp do you fall into. I'm in the camp 509 00:27:21,160 --> 00:27:23,800 Speaker 1: of it. They'll either be a pause or twenty five 510 00:27:23,880 --> 00:27:25,359 Speaker 1: and that will be the end of it. And I 511 00:27:25,359 --> 00:27:27,320 Speaker 1: think if it is twenty five, it's unlikely to be 512 00:27:27,359 --> 00:27:29,800 Speaker 1: more following. The one thing that I think will perhaps 513 00:27:29,880 --> 00:27:32,240 Speaker 1: change over coming weeks will be that the rate cuts 514 00:27:32,240 --> 00:27:34,080 Speaker 1: that have been priced in for later in the year, 515 00:27:34,520 --> 00:27:36,080 Speaker 1: I think those will be going away. I read the 516 00:27:36,080 --> 00:27:38,080 Speaker 1: signals from the FED as the bank crisis is not 517 00:27:38,160 --> 00:27:40,120 Speaker 1: a major issue. They don't need to cut in response 518 00:27:40,160 --> 00:27:42,280 Speaker 1: to that. Economy is okay. They don't need to cut 519 00:27:42,359 --> 00:27:44,280 Speaker 1: in response to that, and that they'll be resolute in 520 00:27:44,359 --> 00:27:46,720 Speaker 1: keeping rates where they are our twenty five bases points 521 00:27:46,760 --> 00:27:50,159 Speaker 1: higher until inflation gets down to target. So let me 522 00:27:50,160 --> 00:27:55,119 Speaker 1: get to the fifth driver. Then we've covered the banking stresses. 523 00:27:55,200 --> 00:27:58,160 Speaker 1: We've covered inflation in the economy as well as earnings. 524 00:27:58,160 --> 00:28:00,800 Speaker 1: The fixed income market has been aptly nut. So I 525 00:28:00,840 --> 00:28:04,199 Speaker 1: mean I grafted the VIX, which is supposed to measure 526 00:28:04,200 --> 00:28:08,040 Speaker 1: in some sense at least equity market volatility, against the 527 00:28:08,080 --> 00:28:11,360 Speaker 1: move index, which measures bond market volatility, and the move 528 00:28:11,400 --> 00:28:14,120 Speaker 1: index is just off the charts. I mean, looking at that, 529 00:28:14,200 --> 00:28:17,120 Speaker 1: you would expect equities to be doing absolutely nothing, which 530 00:28:17,200 --> 00:28:20,240 Speaker 1: is fair, a fair assessment, but the bond market just 531 00:28:20,280 --> 00:28:25,920 Speaker 1: to be, I mean, going crazy. How does this affect 532 00:28:25,960 --> 00:28:29,200 Speaker 1: your investment strategies? Yeah, so it's interesting. I read the 533 00:28:29,480 --> 00:28:31,560 Speaker 1: volatility in a similar way, and I think I take 534 00:28:31,560 --> 00:28:33,879 Speaker 1: it as to an indication that we're right around this 535 00:28:33,920 --> 00:28:36,200 Speaker 1: inflection point. So we're near the end of the FED 536 00:28:36,280 --> 00:28:38,320 Speaker 1: rate hike cycle. We're sort of on the edge of 537 00:28:38,320 --> 00:28:40,680 Speaker 1: a recession, but not quite there, and so each incremental 538 00:28:40,800 --> 00:28:43,560 Speaker 1: data point is going to trigger a pretty massive response 539 00:28:43,560 --> 00:28:45,520 Speaker 1: in the fixed income markets. But I think if I 540 00:28:45,640 --> 00:28:47,400 Speaker 1: zoom out from that a little bit and look away 541 00:28:47,440 --> 00:28:49,560 Speaker 1: from day to day trading and think about this upcoming 542 00:28:49,600 --> 00:28:52,120 Speaker 1: weeks and months, to me, we're likely to be range 543 00:28:52,120 --> 00:28:54,720 Speaker 1: bound on treasuries. The range of you know, plus or 544 00:28:54,720 --> 00:28:57,000 Speaker 1: minus thirty basis points are still from here, which is 545 00:28:57,040 --> 00:28:59,960 Speaker 1: still some volatility. But I think dependent upon what signal 546 00:29:00,000 --> 00:29:02,000 Speaker 1: as we get in terms of inflation, what signals we 547 00:29:02,080 --> 00:29:03,880 Speaker 1: get on the FED. You see some of the data 548 00:29:03,920 --> 00:29:06,920 Speaker 1: today in ism pointing to a slightly weaker economy. So 549 00:29:06,960 --> 00:29:08,800 Speaker 1: I think all of these things balance out and keep 550 00:29:08,880 --> 00:29:11,000 Speaker 1: us range bounding treasuries, even though there's been a lot 551 00:29:11,040 --> 00:29:14,200 Speaker 1: of volatility lately. Robert, when you talk to folks in 552 00:29:14,240 --> 00:29:16,640 Speaker 1: the marketplace, do you get a sense a lot of 553 00:29:16,640 --> 00:29:19,440 Speaker 1: people missed that first quarter move? I mean, we'd s 554 00:29:19,480 --> 00:29:21,440 Speaker 1: and p up just about seven percent in the first 555 00:29:21,520 --> 00:29:24,120 Speaker 1: quarter and coming off with just a brutal twenty twenty 556 00:29:24,120 --> 00:29:26,640 Speaker 1: two when you lost money is inequities, you lost money 557 00:29:26,720 --> 00:29:29,959 Speaker 1: in bonds. Do you get a sense that people missed it. 558 00:29:30,760 --> 00:29:32,560 Speaker 1: I think some people have missed it. I think it's 559 00:29:32,560 --> 00:29:34,840 Speaker 1: been very easy to be barished at any point in 560 00:29:34,880 --> 00:29:37,160 Speaker 1: time over the last couple of years, there's certainly lots 561 00:29:37,160 --> 00:29:39,680 Speaker 1: of things going on that we can point to as negative. 562 00:29:39,880 --> 00:29:41,760 Speaker 1: But one of the things that I've been impressed by, 563 00:29:41,760 --> 00:29:44,080 Speaker 1: and you see it when you listen to company earnings calls, 564 00:29:44,200 --> 00:29:47,080 Speaker 1: is just the dynamic response of companies and ways to 565 00:29:47,160 --> 00:29:49,400 Speaker 1: find to manage around whatever the problems of the day 566 00:29:49,480 --> 00:29:52,040 Speaker 1: might be, whether that's a OPEC oil cut or surprise 567 00:29:52,040 --> 00:29:54,080 Speaker 1: inflation or the issues we had with COVID, and so 568 00:29:54,160 --> 00:29:56,120 Speaker 1: companies are finding ways to make money, and so I 569 00:29:56,160 --> 00:29:58,400 Speaker 1: think it's important to sort of stick with that story 570 00:29:58,480 --> 00:30:00,400 Speaker 1: through the long haul, even though there there are lots 571 00:30:00,440 --> 00:30:02,360 Speaker 1: of reasons to be barished today as there were a 572 00:30:02,440 --> 00:30:05,480 Speaker 1: year ago. Where which companies? Where where are you looking 573 00:30:05,480 --> 00:30:07,880 Speaker 1: to find those? Yeah? So I think we've seen some 574 00:30:07,960 --> 00:30:11,120 Speaker 1: durability and earnings in the consumer discretionary space. I think 575 00:30:11,120 --> 00:30:13,720 Speaker 1: we're still looking to see some positive earnings out of 576 00:30:13,720 --> 00:30:16,320 Speaker 1: the industrial side, and we've and we've seen tech companies 577 00:30:16,520 --> 00:30:18,960 Speaker 1: respond in a pretty interesting way to the situations that 578 00:30:19,000 --> 00:30:21,720 Speaker 1: they're involved in. So whether that means earnings, beats or missus, 579 00:30:21,760 --> 00:30:23,480 Speaker 1: I think they're doing a lot of things to restructure 580 00:30:23,480 --> 00:30:25,880 Speaker 1: their businesses and create earnings. So those three sectors are 581 00:30:25,880 --> 00:30:28,600 Speaker 1: ones that I think have the potential for durable gains 582 00:30:28,600 --> 00:30:31,840 Speaker 1: and earnings going forward. We had our commodities analyst on 583 00:30:32,000 --> 00:30:34,200 Speaker 1: earlier and what was the term he used, Matt like, 584 00:30:34,280 --> 00:30:37,320 Speaker 1: I mean, he's got like Mike McLoone said, this will 585 00:30:37,400 --> 00:30:43,160 Speaker 1: be the greatest global macroeconomic reset in history. Oh no, 586 00:30:43,280 --> 00:30:45,600 Speaker 1: in our life, in our lifetime, but that's close enough 587 00:30:45,640 --> 00:30:48,400 Speaker 1: to history because we're pretty old. Yeah, exactly so, I mean, 588 00:30:48,440 --> 00:30:49,760 Speaker 1: I mean he was just kind of looking at it 589 00:30:49,800 --> 00:30:54,719 Speaker 1: from interest rates and commodity prices and you know this 590 00:30:54,840 --> 00:30:57,840 Speaker 1: and not and you know, weaning off of the stimulus 591 00:30:57,880 --> 00:31:00,479 Speaker 1: from the pandemic. He thinks we're set up for how 592 00:31:00,480 --> 00:31:03,440 Speaker 1: long the duration is, but certainly a violent move downward 593 00:31:03,480 --> 00:31:06,480 Speaker 1: in this economy that's the hardest of hard landing. I 594 00:31:06,480 --> 00:31:08,840 Speaker 1: guess it was kind of a Thomas Wood statement. I 595 00:31:08,880 --> 00:31:10,640 Speaker 1: think it was, you know, the kind of thing we 596 00:31:10,640 --> 00:31:12,600 Speaker 1: were hearing a lot after the Great Financial Crisis but 597 00:31:12,680 --> 00:31:15,720 Speaker 1: didn't really come to pass. At some point, though, the 598 00:31:15,800 --> 00:31:18,400 Speaker 1: chickens have to come home to roost, right. I think 599 00:31:18,400 --> 00:31:20,680 Speaker 1: that's right, And I actually think the financial crisis is 600 00:31:20,680 --> 00:31:22,760 Speaker 1: a good analogy in a way. We've had a massive 601 00:31:22,840 --> 00:31:25,400 Speaker 1: cycle over the past few years related to the pandemic 602 00:31:25,520 --> 00:31:27,520 Speaker 1: and we're sort of back to where we started, although 603 00:31:27,520 --> 00:31:29,600 Speaker 1: I do think there will be some drags and some lags. 604 00:31:29,600 --> 00:31:31,600 Speaker 1: And so if we look at, you know, long term 605 00:31:31,640 --> 00:31:34,760 Speaker 1: numbers on economic growth coming into the pandemic era, we 606 00:31:34,760 --> 00:31:36,840 Speaker 1: were around two percent. We're maybe there now, but a 607 00:31:36,880 --> 00:31:39,240 Speaker 1: bit lower going forward because of all those drags. But 608 00:31:39,320 --> 00:31:40,800 Speaker 1: I do think it's a reset. It's sort of a 609 00:31:41,040 --> 00:31:43,360 Speaker 1: back to where we were before. Not a lot of 610 00:31:43,440 --> 00:31:47,160 Speaker 1: dynamic activity on the economy, just slow growth. That doesn't 611 00:31:47,160 --> 00:31:49,640 Speaker 1: seem like a bad thing. I mean, it doesn't seem 612 00:31:49,640 --> 00:31:52,040 Speaker 1: as bad as McLoone put it, right, But they're not 613 00:31:52,040 --> 00:31:54,840 Speaker 1: going to sell any books Robert, Yeah, Boks, Mike needs 614 00:31:54,840 --> 00:31:57,080 Speaker 1: to write a book, and Robert needs to just make 615 00:31:57,120 --> 00:31:59,560 Speaker 1: money for his clients, right, exactly, Easy peasy, all right. 616 00:31:59,720 --> 00:32:03,280 Speaker 1: So Robert Energy is having its day in the sun today. 617 00:32:03,440 --> 00:32:05,680 Speaker 1: You know, had a after I had had two or 618 00:32:05,720 --> 00:32:08,920 Speaker 1: three great years, and then Nis you're given it a 619 00:32:08,920 --> 00:32:11,160 Speaker 1: back smarting because he thinks he missed I think I 620 00:32:11,200 --> 00:32:13,239 Speaker 1: missed that trade a little bit. So, but what do 621 00:32:13,240 --> 00:32:15,200 Speaker 1: we do with energy from here? I mean, I know 622 00:32:15,240 --> 00:32:17,600 Speaker 1: today's having a good day, but it hasn't been having 623 00:32:17,640 --> 00:32:20,720 Speaker 1: a good twenty twenty three. In my view, I would 624 00:32:20,720 --> 00:32:23,000 Speaker 1: say the outlook is okay. And the reason I say 625 00:32:23,040 --> 00:32:25,280 Speaker 1: okay is I think the backdrop on economic growth is 626 00:32:25,320 --> 00:32:27,520 Speaker 1: relatively slow. So that same signal that I think we 627 00:32:27,640 --> 00:32:30,120 Speaker 1: got from OPEC today of not seeing a lot of 628 00:32:30,160 --> 00:32:33,160 Speaker 1: demand side activity as far as energy, I think that 629 00:32:33,200 --> 00:32:35,480 Speaker 1: backdrop is with us going forward. So while the price 630 00:32:35,480 --> 00:32:38,200 Speaker 1: action might be favorable today and going forward, I think 631 00:32:38,200 --> 00:32:40,360 Speaker 1: that's probably just an okay outlook rather than a great 632 00:32:40,360 --> 00:32:43,880 Speaker 1: outlook for energy. So the the idea that OPEC is 633 00:32:43,920 --> 00:32:47,080 Speaker 1: going to cut this surprise announcement that we got yesterday 634 00:32:47,200 --> 00:32:50,280 Speaker 1: didn't rock your boat too much. Not a lot. I mean, 635 00:32:50,320 --> 00:32:52,239 Speaker 1: I think the follow through on pricing will again be 636 00:32:52,360 --> 00:32:54,720 Speaker 1: inflationary and a drag on the consumer. But I think 637 00:32:54,720 --> 00:32:57,000 Speaker 1: it's more important to look at the demand side signal 638 00:32:57,000 --> 00:32:59,440 Speaker 1: that it seems to be sending. That's a poor demand 639 00:32:59,440 --> 00:33:03,640 Speaker 1: side signal. I know. Just thirty seconds Robert Tech it's 640 00:33:03,640 --> 00:33:06,520 Speaker 1: having a good year after big really really lagging last big, 641 00:33:06,760 --> 00:33:09,480 Speaker 1: big profitable Tech has done well. Yeah, yeah it has. 642 00:33:09,480 --> 00:33:11,120 Speaker 1: And I think a lot of the rotation we've seen 643 00:33:11,200 --> 00:33:13,640 Speaker 1: recently has been on the back of balance sheet strength. 644 00:33:14,040 --> 00:33:16,479 Speaker 1: In my view, with inflation continuing to improve, you'll get 645 00:33:16,560 --> 00:33:19,320 Speaker 1: rate stabilizing and some valuation boost on that front as well. 646 00:33:19,320 --> 00:33:21,720 Speaker 1: So I think the outlook for technology is reasonably favorable 647 00:33:21,720 --> 00:33:23,800 Speaker 1: here as long as they're cutting costs. That seems to 648 00:33:23,840 --> 00:33:26,480 Speaker 1: be a theme for a lot of industries, a lot 649 00:33:26,480 --> 00:33:28,760 Speaker 1: of companies. Robert Teeter, head of investment policy in a 650 00:33:28,800 --> 00:33:32,160 Speaker 1: strategy group for Silver Crest Asset Management. We appreciate getting 651 00:33:32,360 --> 00:33:34,480 Speaker 1: his time. Appreciate him coming into the Bloomberg and Actor 652 00:33:34,560 --> 00:33:39,840 Speaker 1: Broker studio. You're listening to the Team Cancer Line program 653 00:33:39,920 --> 00:33:43,920 Speaker 1: Bloomberg Markets weekdays at ten am Eastern on Bloomberg dot Com, 654 00:33:43,960 --> 00:33:46,840 Speaker 1: the Irhart Radio app, and the Bloomberg Business App. We're 655 00:33:46,880 --> 00:33:53,040 Speaker 1: listening on demand wherever you get your podcast. I'm gonna guess, actually, 656 00:33:53,040 --> 00:33:57,240 Speaker 1: I'll bet that our next guest is not the WWE fan. 657 00:33:57,320 --> 00:33:59,240 Speaker 1: What do you think? I don't think he is either. 658 00:33:59,280 --> 00:34:02,200 Speaker 1: All right, let's him in here. Jerry Smith. He's a 659 00:34:02,240 --> 00:34:05,120 Speaker 1: reporter Bloomberg News. I think he knows more about ww 660 00:34:05,280 --> 00:34:07,880 Speaker 1: than both of us combined. Yes, particularly in the last 661 00:34:07,880 --> 00:34:09,799 Speaker 1: twenty twenty four hours. Because he's a reporter. This is 662 00:34:09,840 --> 00:34:13,399 Speaker 1: his beat, all that media entertainment stuff, and he joins 663 00:34:13,480 --> 00:34:16,040 Speaker 1: us live in a Bloomberg Interactive Broker studio, which is 664 00:34:16,040 --> 00:34:19,480 Speaker 1: a strong performance from somebody who's a Wake Forest Demon deacon. 665 00:34:20,000 --> 00:34:22,760 Speaker 1: So we appreciate him coming into the studio. So, Jerry, 666 00:34:22,800 --> 00:34:25,480 Speaker 1: what's it he's ripping on you? Dude? What's a talent 667 00:34:25,520 --> 00:34:31,160 Speaker 1: agency doing buying? You know, mister McMahon's WWE. So Endeavor 668 00:34:31,239 --> 00:34:34,440 Speaker 1: is a lot more than a talent agency. They own UFC, 669 00:34:35,040 --> 00:34:37,800 Speaker 1: so they are already into They're into with this okay, 670 00:34:37,800 --> 00:34:40,279 Speaker 1: combat sports, and I think that's why a lot of 671 00:34:40,280 --> 00:34:43,120 Speaker 1: people saw them as the front runner when WWE said 672 00:34:43,120 --> 00:34:46,600 Speaker 1: that they were exploring a potential sale. As you can 673 00:34:46,640 --> 00:34:50,480 Speaker 1: just see the obvious synergies, the crossover a fan bases 674 00:34:50,520 --> 00:34:53,880 Speaker 1: between people who are fans of combat sports like UFC 675 00:34:54,440 --> 00:34:59,600 Speaker 1: and WWE. So, first off, just some semantics here. I 676 00:34:59,640 --> 00:35:02,880 Speaker 1: see the red sticky headline that crossed the Bloomberg terminal 677 00:35:02,960 --> 00:35:07,880 Speaker 1: says Endeavor and WWE to combine in a deal valued 678 00:35:07,880 --> 00:35:11,120 Speaker 1: it more than twenty one billion dollars? Is endeavor? Has 679 00:35:11,120 --> 00:35:13,960 Speaker 1: it been reduced to just UFC? Are they really combining 680 00:35:14,000 --> 00:35:17,640 Speaker 1: as a merger of equals? Or is Endeavor buying WWE? 681 00:35:17,880 --> 00:35:20,880 Speaker 1: So Endeavor is gonna have fifty one percent of the 682 00:35:20,920 --> 00:35:23,680 Speaker 1: new company, and WWE is gonna have forty nine percent 683 00:35:23,760 --> 00:35:26,680 Speaker 1: of this new company. Um, and that it's going to 684 00:35:26,719 --> 00:35:29,400 Speaker 1: trade under the stock ticker t KO, which is a 685 00:35:29,480 --> 00:35:33,360 Speaker 1: fun a fun stock tick, technical knockout for those unfamiliar. Correct. 686 00:35:34,040 --> 00:35:37,200 Speaker 1: So so it's a purchase essentially, it's not a combination. 687 00:35:37,280 --> 00:35:40,359 Speaker 1: That's PR likes to spin it that way all the time. Um, 688 00:35:40,440 --> 00:35:41,960 Speaker 1: I just need to sort it out because what do 689 00:35:41,960 --> 00:35:45,840 Speaker 1: you call a flak? He hates that term, hate that, 690 00:35:45,920 --> 00:35:49,120 Speaker 1: but it's for a good reason. Um. I just when 691 00:35:49,120 --> 00:35:51,319 Speaker 1: I saw the headline, I thought, oh, maybe Endeavor has 692 00:35:51,400 --> 00:35:55,400 Speaker 1: just uh you know, focused most of its business on UFC, 693 00:35:55,680 --> 00:35:57,560 Speaker 1: and I didn't know that it dwindled down to that. 694 00:35:57,560 --> 00:36:00,879 Speaker 1: But Endeavor does a lot more than just bat sports. Right. 695 00:36:01,560 --> 00:36:03,759 Speaker 1: This is William Morris Endeavor, right right, I mean this 696 00:36:03,840 --> 00:36:07,440 Speaker 1: is a massive talent agency. A lot of the biggest 697 00:36:07,480 --> 00:36:10,880 Speaker 1: celebrities in Hollywood are represented by um talent agents. I 698 00:36:10,880 --> 00:36:14,719 Speaker 1: mean obviously, um Ari Emmanuel runs Endeavor and kind of 699 00:36:14,719 --> 00:36:19,759 Speaker 1: made famous by that show Gold was said to be 700 00:36:19,800 --> 00:36:22,920 Speaker 1: based on on Ari Emmanuel. So they do that, you know, 701 00:36:22,960 --> 00:36:26,160 Speaker 1: they broker major sports rights, A lot of sports leagues 702 00:36:26,760 --> 00:36:29,640 Speaker 1: will UM, you know, higher endeavor to help them with 703 00:36:29,680 --> 00:36:32,319 Speaker 1: their sports rights deals. So they do a lot more 704 00:36:32,360 --> 00:36:35,680 Speaker 1: than just UFC. But as far as buying WWE, I 705 00:36:35,680 --> 00:36:37,759 Speaker 1: think that's where a lot of people saw the synergies 706 00:36:37,760 --> 00:36:41,920 Speaker 1: in this. So Vince McMahon, who was the control shareholder 707 00:36:41,920 --> 00:36:45,600 Speaker 1: of WWE via his control stock, had ten votes per share. 708 00:36:45,800 --> 00:36:47,400 Speaker 1: Did he have to body slam his daughter out of 709 00:36:47,440 --> 00:36:50,480 Speaker 1: there to get control? Right? I mean, this is a 710 00:36:50,520 --> 00:36:53,960 Speaker 1: remarkable turn of events for Vince McMahon. I mean considering 711 00:36:54,000 --> 00:36:56,600 Speaker 1: just months ago he um, you know, he's been under 712 00:36:56,640 --> 00:37:00,399 Speaker 1: investigation for um, you know, hush um alleged high money 713 00:37:00,400 --> 00:37:04,600 Speaker 1: payments with UM, you know, involving his leadership of the company. 714 00:37:04,680 --> 00:37:07,920 Speaker 1: And now he turns around and UM has this massive 715 00:37:07,960 --> 00:37:11,359 Speaker 1: deal with Endeavor, so um, you know it's you never 716 00:37:11,440 --> 00:37:15,640 Speaker 1: count out UM. Vince McMahon scorn stars though, right, But 717 00:37:15,800 --> 00:37:17,920 Speaker 1: is he gonna so now his super voting stock is 718 00:37:17,960 --> 00:37:20,960 Speaker 1: can be converted into just common stock, right, So he's 719 00:37:21,000 --> 00:37:23,560 Speaker 1: not gonna have any outsized control here. He's in fact 720 00:37:23,920 --> 00:37:27,239 Speaker 1: just gonna be a minority shaholder. Right. Yeah, he is 721 00:37:27,280 --> 00:37:29,680 Speaker 1: somebody who and if you can actually see this in 722 00:37:30,000 --> 00:37:34,400 Speaker 1: WWE's sec filings where they see him so important to 723 00:37:34,920 --> 00:37:38,120 Speaker 1: WWE that if he was out of the picture, Um, 724 00:37:38,160 --> 00:37:41,080 Speaker 1: you know, the creativity of the company would suffer and 725 00:37:41,080 --> 00:37:44,239 Speaker 1: that would be material impact the company because he is 726 00:37:44,719 --> 00:37:47,200 Speaker 1: for years. I mean, he is the guy who has 727 00:37:47,480 --> 00:37:50,680 Speaker 1: um really orchestrated, um all of this behind the scenes. 728 00:37:50,760 --> 00:37:53,239 Speaker 1: So he's very involved. So do we know what his 729 00:37:53,320 --> 00:37:56,200 Speaker 1: role will be in his new couh he's still gonna 730 00:37:56,200 --> 00:38:00,000 Speaker 1: be leading WWE. Um Nick con is gonna be uh 731 00:38:00,080 --> 00:38:04,640 Speaker 1: technically leading WWE, but he's still there and it's um yeah, 732 00:38:04,680 --> 00:38:06,840 Speaker 1: I mean it's going to be really interesting. He was 733 00:38:06,920 --> 00:38:10,000 Speaker 1: on CNBC earlier. I thought it was a perfect fit. 734 00:38:10,280 --> 00:38:14,760 Speaker 1: He said that, um, WW had many suitors for the company. 735 00:38:14,920 --> 00:38:16,360 Speaker 1: Is that true? Where there are a lot of people 736 00:38:16,360 --> 00:38:21,239 Speaker 1: after WWE? That's what That's what he said. Um, you 737 00:38:21,280 --> 00:38:23,759 Speaker 1: know it's I think one thing to think about is 738 00:38:23,800 --> 00:38:27,799 Speaker 1: this is live sports is extremely valuable right now if 739 00:38:27,840 --> 00:38:30,120 Speaker 1: you think about what's happening in the industry with cord cutting. 740 00:38:30,120 --> 00:38:34,000 Speaker 1: Anybody who can draw even just a few million viewers 741 00:38:34,160 --> 00:38:37,200 Speaker 1: because WrestleMania was this weekend, right yeah, WrestleMania. I mean 742 00:38:37,239 --> 00:38:39,359 Speaker 1: the viewership for that is huge. They're very big on 743 00:38:39,400 --> 00:38:43,160 Speaker 1: social media as well. They're very savvy about WWE's social 744 00:38:43,160 --> 00:38:48,200 Speaker 1: media presence. They've been trying to expand internationally. So yeah, 745 00:38:48,200 --> 00:38:50,400 Speaker 1: I mean this is um, you know, whether they had 746 00:38:50,480 --> 00:38:53,680 Speaker 1: multiple suitors or not, I'm is a good question, but 747 00:38:53,760 --> 00:38:56,879 Speaker 1: it's certainly valuable. And I think they paired this where 748 00:38:56,880 --> 00:39:01,400 Speaker 1: they were also renewing these deals with USA and Fox, 749 00:39:01,440 --> 00:39:04,560 Speaker 1: which are they're two big broadcasters, so you know, we'll 750 00:39:04,600 --> 00:39:07,000 Speaker 1: see what happens with those deals. So what do we 751 00:39:07,160 --> 00:39:10,520 Speaker 1: what is Endeavor saying today about how they want to 752 00:39:10,520 --> 00:39:13,440 Speaker 1: create value here? We're you know, because they're paying a 753 00:39:13,480 --> 00:39:17,440 Speaker 1: pretty big number here, and but the w w E 754 00:39:17,480 --> 00:39:19,560 Speaker 1: stock is down, so maybe they're getting you know, a 755 00:39:19,600 --> 00:39:23,040 Speaker 1: good deal a relative to expectations. But where do they 756 00:39:23,040 --> 00:39:25,799 Speaker 1: see the upside here? Yeah? I mean Ari Manuel said, 757 00:39:26,040 --> 00:39:28,719 Speaker 1: you know, they're looking at doing some sort of streaming product, um, 758 00:39:29,360 --> 00:39:32,120 Speaker 1: but I think there's also just cough save means and 759 00:39:32,160 --> 00:39:35,800 Speaker 1: synergies involved, So you know, I think it's going to 760 00:39:35,880 --> 00:39:40,960 Speaker 1: be um. You know, you're talking about two big properties 761 00:39:41,000 --> 00:39:44,520 Speaker 1: in terms of live sports, combat sports, and I think 762 00:39:44,520 --> 00:39:47,160 Speaker 1: they're not saying too much about the strategy just yet, 763 00:39:47,160 --> 00:39:49,759 Speaker 1: but I think that that's you can see opportunities there 764 00:39:50,080 --> 00:39:53,160 Speaker 1: of combining these companies and putting that together. One of 765 00:39:53,200 --> 00:39:58,080 Speaker 1: the interesting things we've seen, besides Vince McMahon's mustache is 766 00:39:59,280 --> 00:40:02,400 Speaker 1: the value for the curling up. I've got a little 767 00:40:02,880 --> 00:40:06,000 Speaker 1: I've got a little thing going on here, only on radio, okay, 768 00:40:06,040 --> 00:40:09,880 Speaker 1: not on TV. UM is that the WWE thinks maybe 769 00:40:09,880 --> 00:40:13,480 Speaker 1: betting would be a good idea. How can you organize 770 00:40:13,520 --> 00:40:17,440 Speaker 1: betting on what's essentially a fixed match? I assume these 771 00:40:17,440 --> 00:40:21,960 Speaker 1: things are all fixed, right, They're scripted? Is the term, right? Jerry? Well? 772 00:40:22,120 --> 00:40:24,160 Speaker 1: I think they, um, you know, there's been reporting out 773 00:40:24,160 --> 00:40:29,560 Speaker 1: there that they had explored potential betting on WWE UM 774 00:40:29,880 --> 00:40:33,040 Speaker 1: and they could see the opportunity there. Um, you know, 775 00:40:33,120 --> 00:40:36,799 Speaker 1: similar to you can bet on UM award shows and 776 00:40:36,840 --> 00:40:39,320 Speaker 1: it's you know which the outcome of those are already 777 00:40:39,440 --> 00:40:43,400 Speaker 1: known to a small number of people. So I think, yeah, 778 00:40:43,400 --> 00:40:46,120 Speaker 1: you can bet on the Oscars for example, Yeah, okay, 779 00:40:46,600 --> 00:40:49,759 Speaker 1: or the Grammy's right fee. Only two award shows I 780 00:40:49,760 --> 00:40:51,840 Speaker 1: can think of, but I'm sure there are others. Golden Globes. 781 00:40:52,040 --> 00:40:53,960 Speaker 1: All you can bet on the Golden Globes. Okay, good 782 00:40:54,000 --> 00:40:57,040 Speaker 1: to know. So, Jerry, is this is an all stock deal? 783 00:40:57,719 --> 00:40:59,600 Speaker 1: Do we know or is they some cashion near Do 784 00:40:59,640 --> 00:41:02,719 Speaker 1: we know? Um that I have the check on that. 785 00:41:02,840 --> 00:41:04,799 Speaker 1: So I'm just wondering, like, who's going to really really 786 00:41:04,800 --> 00:41:08,360 Speaker 1: control this thing? But I'm guessing Ari and the Endeavor 787 00:41:08,400 --> 00:41:10,759 Speaker 1: folks will be doing it, and so this is a 788 00:41:10,760 --> 00:41:12,920 Speaker 1: big deal. Do we know when this closes? I think 789 00:41:12,920 --> 00:41:16,280 Speaker 1: they've said, um, later this year. Okay, all right, good stuff. 790 00:41:16,320 --> 00:41:18,839 Speaker 1: That was fun. All right, wrestling. I'm just I know 791 00:41:18,840 --> 00:41:20,719 Speaker 1: it's huge and people are into it. So the third 792 00:41:20,760 --> 00:41:23,120 Speaker 1: time we've talked about it in the last two hours, 793 00:41:23,160 --> 00:41:25,440 Speaker 1: I know, so we I feel like we've talked more 794 00:41:25,440 --> 00:41:28,879 Speaker 1: about the WWE today than we have about oil well 795 00:41:28,920 --> 00:41:32,520 Speaker 1: and the former president being indicted right now. Yeah, well 796 00:41:32,560 --> 00:41:34,960 Speaker 1: that's tomorrow's news. So all right, Jerry Smith, thanks much 797 00:41:34,960 --> 00:41:38,960 Speaker 1: for joining us. Jerry Smith is a media entertainment reporter 798 00:41:39,000 --> 00:41:43,680 Speaker 1: for Bloomberg News and that includes wrestling and ultimate fighting stuff. 799 00:41:43,680 --> 00:41:47,880 Speaker 1: And Jerry, are you a fan? I've dabbled, Yeah, you've dabbled. 800 00:41:47,920 --> 00:41:50,480 Speaker 1: I would have lost that bet. All right, Jerry Smith 801 00:41:50,920 --> 00:41:54,800 Speaker 1: breaking it down for us here, Endeavor buying WWE snapped 802 00:41:54,800 --> 00:41:58,040 Speaker 1: into a slim gym. There you go, this is Bloomberg. 803 00:41:58,400 --> 00:42:01,520 Speaker 1: You're listening to the take to our live program Bloomberg 804 00:42:01,600 --> 00:42:05,080 Speaker 1: Markets weekdays at ten am Eastern on Bloomberg Radio, the 805 00:42:05,239 --> 00:42:08,399 Speaker 1: tune in app, Bloomberg dot Com, and the Bloomberg Business App. 806 00:42:08,520 --> 00:42:11,319 Speaker 1: You can also listen live on Amazon Alexa from our 807 00:42:11,320 --> 00:42:16,600 Speaker 1: flagship New York station, jes Say Alexa play Bloomberg eleven thirty. 808 00:42:17,000 --> 00:42:20,640 Speaker 1: The bank rate thirty year fixed mortgage six point eight 809 00:42:20,800 --> 00:42:24,279 Speaker 1: one percent down from the peak, just a couple of 810 00:42:24,400 --> 00:42:27,560 Speaker 1: USCO still sharply higher than what a lot of people got, 811 00:42:27,880 --> 00:42:31,200 Speaker 1: just as recently as a year ago. I count myself lucky. Yes, 812 00:42:31,280 --> 00:42:34,120 Speaker 1: you know, sometimes I'm so angry about the high taxes 813 00:42:34,160 --> 00:42:36,399 Speaker 1: I pay living up in Westchester. But then I think, 814 00:42:36,800 --> 00:42:38,640 Speaker 1: at least I got three percent of the mortgage, because 815 00:42:38,640 --> 00:42:40,279 Speaker 1: that kind of makes up for it. That does, That does. 816 00:42:40,360 --> 00:42:43,080 Speaker 1: Let's talk to somebody who follows this real estate stuff 817 00:42:43,560 --> 00:42:47,000 Speaker 1: on a daily basis. Jeff Langbaum. He is the senior 818 00:42:47,160 --> 00:42:50,839 Speaker 1: reets analyst for Bloomberg Intelligence. Hey, Jeff, I mean, there's 819 00:42:50,880 --> 00:42:53,000 Speaker 1: a couple of ways we want to go here. People 820 00:42:53,040 --> 00:42:55,200 Speaker 1: are concerned that the banks are going to run into 821 00:42:55,200 --> 00:42:58,120 Speaker 1: some problems because interest rates are going up and a 822 00:42:58,160 --> 00:43:01,799 Speaker 1: lot of these offices, these office complex out there, a 823 00:43:01,800 --> 00:43:03,880 Speaker 1: lot of real estate owners. I got a refinance here 824 00:43:03,880 --> 00:43:05,759 Speaker 1: and it's gonna be a lot more expensive. How do 825 00:43:05,800 --> 00:43:09,840 Speaker 1: you look at that? How do you quantify that risk? Well? So, um, 826 00:43:10,040 --> 00:43:13,719 Speaker 1: basically we're likely, like you mentioned, Paul Offices are in 827 00:43:13,760 --> 00:43:17,920 Speaker 1: a perfect storm here. The you know, it's it's been 828 00:43:17,960 --> 00:43:21,160 Speaker 1: a story for a while that um that you know, 829 00:43:21,239 --> 00:43:24,360 Speaker 1: cash flow into building level is falling as there's a 830 00:43:24,440 --> 00:43:27,239 Speaker 1: risk of you know, tenants pulling back on space and 831 00:43:27,560 --> 00:43:30,640 Speaker 1: higher rates mean lower asset values. And at the same 832 00:43:30,680 --> 00:43:32,600 Speaker 1: time all that's going on now, all of a sudden 833 00:43:32,880 --> 00:43:35,080 Speaker 1: you kind of wonder when who's going to be willing 834 00:43:35,120 --> 00:43:38,120 Speaker 1: to lend on these properties? When new death new when 835 00:43:38,160 --> 00:43:41,279 Speaker 1: debt maturities come due over the next couple, next couple 836 00:43:41,320 --> 00:43:44,279 Speaker 1: of years, um, and the landlords are you know, going 837 00:43:44,360 --> 00:43:49,440 Speaker 1: to have to fight to find access to capital. So um, 838 00:43:49,560 --> 00:43:53,120 Speaker 1: this is a real concern in the sector. And I 839 00:43:53,200 --> 00:43:56,080 Speaker 1: noticed today we saw a story on the Bloomberg Terminal 840 00:43:56,080 --> 00:44:01,600 Speaker 1: that Blackstones be Read, the famous Blackstone Read saw four 841 00:44:01,640 --> 00:44:04,319 Speaker 1: and a half billion dollars of withdrawal requests in March. 842 00:44:04,440 --> 00:44:06,479 Speaker 1: This is a third month in a row that they've 843 00:44:06,480 --> 00:44:10,240 Speaker 1: been in that you know, four to five billion dollar area. 844 00:44:10,280 --> 00:44:13,279 Speaker 1: Of course, they have shut down the gates. There's a 845 00:44:13,760 --> 00:44:16,560 Speaker 1: I think a limit to what investors can take out 846 00:44:16,880 --> 00:44:20,719 Speaker 1: in any given quarter five percent, so they haven't been 847 00:44:20,760 --> 00:44:23,600 Speaker 1: able to withdraw that. But what does this mean for 848 00:44:24,160 --> 00:44:27,520 Speaker 1: the industry. Well, I think what going on with the 849 00:44:28,080 --> 00:44:31,520 Speaker 1: Blackstone Read is there's a disconnect right now between what 850 00:44:31,600 --> 00:44:35,720 Speaker 1: public READ prices are showing to be the perceived value 851 00:44:35,719 --> 00:44:40,120 Speaker 1: of commercial real estate versus where nonlisted shares like b 852 00:44:40,239 --> 00:44:44,440 Speaker 1: READ and private real estate values are trading. And investors 853 00:44:44,440 --> 00:44:46,319 Speaker 1: in b READ are looking at that and saying, well, 854 00:44:46,360 --> 00:44:49,080 Speaker 1: if public reach shares are way down, this is going 855 00:44:49,120 --> 00:44:50,759 Speaker 1: down too, let me try and get my money out. 856 00:44:51,360 --> 00:44:53,839 Speaker 1: And so there's there's just a disconnect there, and I 857 00:44:53,880 --> 00:44:55,960 Speaker 1: think one of the things that it's going to have 858 00:44:56,080 --> 00:44:59,200 Speaker 1: to happen is private real estate values are going to 859 00:44:59,239 --> 00:45:01,600 Speaker 1: have to come down some and then we'll have to 860 00:45:01,600 --> 00:45:05,120 Speaker 1: figure out whether public reap shares came down too much 861 00:45:05,640 --> 00:45:08,439 Speaker 1: or whether private values are going to have to chase 862 00:45:08,480 --> 00:45:12,480 Speaker 1: them lower. All right, So how bad is it out there, Jeff? 863 00:45:12,960 --> 00:45:15,960 Speaker 1: In the office world? I mean, you know, vacancies here 864 00:45:15,960 --> 00:45:18,680 Speaker 1: in New York City still remain extraordinarily high, and no, 865 00:45:18,840 --> 00:45:21,240 Speaker 1: I'm not gonna say vacancies, but people coming back to work. 866 00:45:21,680 --> 00:45:24,239 Speaker 1: It just seems like this is a huge problem that 867 00:45:24,400 --> 00:45:27,480 Speaker 1: I'm not sure when it gets people realizing Yeah, when 868 00:45:27,560 --> 00:45:30,000 Speaker 1: when when will this be realized? When will the office 869 00:45:30,000 --> 00:45:32,040 Speaker 1: owners really feel the pain when they come around they 870 00:45:32,040 --> 00:45:34,480 Speaker 1: say their tenants don't want, don't need as much space. 871 00:45:35,080 --> 00:45:38,000 Speaker 1: They're feeling it now. I mean, vacancy is high, not 872 00:45:38,080 --> 00:45:39,840 Speaker 1: just you know, the amount of people in the buildings, 873 00:45:39,880 --> 00:45:42,720 Speaker 1: but the amount of UM least space in the buildings. 874 00:45:42,760 --> 00:45:46,279 Speaker 1: It's it's high. It's above historical levels UM, and it's 875 00:45:46,320 --> 00:45:48,200 Speaker 1: going and it's probably going to get worse. But I 876 00:45:48,239 --> 00:45:51,880 Speaker 1: think what's interesting and what needs to be UM thought 877 00:45:51,880 --> 00:45:54,560 Speaker 1: about is that there really is going to have to 878 00:45:54,600 --> 00:45:57,360 Speaker 1: be some sort of bifurcation between the better quality assets 879 00:45:58,000 --> 00:46:00,680 Speaker 1: UM and the better and the better located assets and 880 00:46:00,760 --> 00:46:03,920 Speaker 1: those that are you know, probably bound for obsolescence UM. 881 00:46:04,000 --> 00:46:08,800 Speaker 1: And what you'll probably see is those better, better quality assets. 882 00:46:09,560 --> 00:46:12,040 Speaker 1: You know, even if the existing tenants move out or 883 00:46:12,120 --> 00:46:14,759 Speaker 1: pair back of their space, they'll have an easier time 884 00:46:14,920 --> 00:46:17,920 Speaker 1: filling that space because their own assets. Where tenants are 885 00:46:17,960 --> 00:46:21,680 Speaker 1: going to want to be UM, the older, more commodity 886 00:46:21,760 --> 00:46:23,959 Speaker 1: like stuff. You know, that's going to be a real 887 00:46:24,000 --> 00:46:26,720 Speaker 1: tough slog and it's going to impact the overall supplied 888 00:46:26,719 --> 00:46:30,399 Speaker 1: demand dynamics, no doubt. Um. But you know, the better 889 00:46:30,440 --> 00:46:32,960 Speaker 1: quality assets probably hold up better. It's a lot. It's 890 00:46:32,960 --> 00:46:34,920 Speaker 1: a lot like what happened in the mall space over 891 00:46:34,960 --> 00:46:38,400 Speaker 1: the last decade or so, where you know, the lower 892 00:46:38,400 --> 00:46:41,680 Speaker 1: tier malls just kind of disappeared and the better, better 893 00:46:41,760 --> 00:46:45,600 Speaker 1: quality malls. You know, did Okay? I love a good mall. Sure, 894 00:46:45,719 --> 00:46:47,799 Speaker 1: I gotta Sammy, you're coming to New Jersey. I just 895 00:46:47,920 --> 00:46:50,840 Speaker 1: was hanging out the Ridge Hill Mall in Yonkers. We 896 00:46:50,920 --> 00:46:52,880 Speaker 1: do malls in Jersey. I want to check out the 897 00:46:53,000 --> 00:46:55,080 Speaker 1: what is the American Dream Mall? Yeah? I know we 898 00:46:55,080 --> 00:46:59,480 Speaker 1: can get over there, uh, Jeff. In terms of the movements, 899 00:46:59,520 --> 00:47:02,600 Speaker 1: the flow us that you've seen, um, was there a 900 00:47:02,640 --> 00:47:07,840 Speaker 1: marked difference pre and post SVB because the collapse of 901 00:47:07,840 --> 00:47:12,040 Speaker 1: Silicon Valley Bank obviously tied to holding they're holding a 902 00:47:12,120 --> 00:47:15,640 Speaker 1: chut charity portfolio and the move in rates. But everybody 903 00:47:15,719 --> 00:47:18,000 Speaker 1: then started saying commercial real estate was the next shoot 904 00:47:18,000 --> 00:47:21,319 Speaker 1: to drop. Has that freaked out big institutional holders, It 905 00:47:21,440 --> 00:47:25,719 Speaker 1: freaked out the anybody invested in office reachs that's for sure. 906 00:47:26,040 --> 00:47:29,200 Speaker 1: And you can look at the stock price performance on 907 00:47:29,200 --> 00:47:32,080 Speaker 1: on you know, the Bloomberg Office Read index for example, 908 00:47:32,120 --> 00:47:35,000 Speaker 1: and you know it was it was down. They underperformed 909 00:47:35,080 --> 00:47:37,040 Speaker 1: last year just because of all the things that we've 910 00:47:37,040 --> 00:47:38,719 Speaker 1: been talking about. But then all of a sudden in 911 00:47:38,840 --> 00:47:42,760 Speaker 1: March when it became you know what, when refinancing became 912 00:47:42,760 --> 00:47:47,279 Speaker 1: the new risk, the new headwind. Uh, they shot down 913 00:47:47,600 --> 00:47:51,640 Speaker 1: um pretty rapidly, um completely disconnected from the rest of 914 00:47:52,640 --> 00:47:55,560 Speaker 1: the reach sectors. They found a little bounced lately. I 915 00:47:55,600 --> 00:47:57,839 Speaker 1: think probably a little short squeeze, a little you know, 916 00:47:58,000 --> 00:48:00,520 Speaker 1: risk on type type move. But you know, there's been 917 00:48:00,560 --> 00:48:03,400 Speaker 1: a real move away from those names because of the 918 00:48:03,480 --> 00:48:08,040 Speaker 1: concern that if you can't refinance, your mortgage is coming due. Um, 919 00:48:08,080 --> 00:48:11,480 Speaker 1: you know, what's the equity worth. So I think about 920 00:48:11,600 --> 00:48:13,440 Speaker 1: just the New York marketings. I think that's one of 921 00:48:13,440 --> 00:48:15,359 Speaker 1: the harder hit markets in the country, along with maybe 922 00:48:15,400 --> 00:48:18,160 Speaker 1: San Francisco and New York. I'm looking at your research 923 00:48:18,200 --> 00:48:21,440 Speaker 1: New York focused s L Green and Vornado. I mean, 924 00:48:21,480 --> 00:48:23,359 Speaker 1: what do those reads do, what are they what are 925 00:48:23,360 --> 00:48:25,440 Speaker 1: they telling me about the future of their business? I'm 926 00:48:25,840 --> 00:48:27,400 Speaker 1: you know, you just look around in New York and 927 00:48:27,440 --> 00:48:31,879 Speaker 1: it's it's tough to see a real rebound in office occupancies. Well, 928 00:48:32,320 --> 00:48:34,520 Speaker 1: they do tend to own the better quality acids, like 929 00:48:34,560 --> 00:48:39,000 Speaker 1: I was referring to before, So you know, they they 930 00:48:39,040 --> 00:48:43,919 Speaker 1: probably m end up being okay, but not without pain 931 00:48:44,000 --> 00:48:45,960 Speaker 1: in the in the near term. What they need to 932 00:48:46,000 --> 00:48:51,080 Speaker 1: do is actually show UM that they have the ability 933 00:48:51,160 --> 00:48:54,480 Speaker 1: to raise capital, that they have the ability to refinance 934 00:48:54,840 --> 00:48:58,840 Speaker 1: that's that is coming due UM and you know, UM 935 00:48:59,120 --> 00:49:01,200 Speaker 1: one way that they can do that is if they 936 00:49:01,320 --> 00:49:05,920 Speaker 1: can sell some assets or or partial ownership interest in 937 00:49:05,960 --> 00:49:09,879 Speaker 1: assets and prove that there is still demand to own 938 00:49:09,920 --> 00:49:13,479 Speaker 1: this space and demand to lend on this space. And 939 00:49:13,680 --> 00:49:15,600 Speaker 1: you know, that's something that's really going to take a 940 00:49:15,600 --> 00:49:17,480 Speaker 1: little while to shake out. It's going to probably be 941 00:49:17,560 --> 00:49:20,400 Speaker 1: the story of twenty twenty three, you know, proof that 942 00:49:20,440 --> 00:49:24,000 Speaker 1: there is both debt and equity interest in office buildings. 943 00:49:24,760 --> 00:49:27,640 Speaker 1: And it really remains to be seen. But you know, 944 00:49:28,000 --> 00:49:31,240 Speaker 1: I do think that, you know, if if my argument 945 00:49:31,239 --> 00:49:35,680 Speaker 1: about the bifurcation between quality holds true, that those guys 946 00:49:35,760 --> 00:49:38,759 Speaker 1: end up being okay. How about Hudson Yards. I mean, 947 00:49:38,800 --> 00:49:43,520 Speaker 1: that is an amazing redevelopment of Midtown West just west 948 00:49:43,560 --> 00:49:48,000 Speaker 1: of Penn station and amazing office buildings and space over there. 949 00:49:48,680 --> 00:49:51,000 Speaker 1: But that seemed to open almost like just right before 950 00:49:51,040 --> 00:49:54,960 Speaker 1: the pandemic. How is it doing it? It's actually doing okay. UM. 951 00:49:55,040 --> 00:49:57,040 Speaker 1: And you know one of the reasons it's doing okay 952 00:49:57,120 --> 00:50:00,359 Speaker 1: is because they got those leases signed and you know, 953 00:50:00,360 --> 00:50:02,480 Speaker 1: you've got long term leases and so we haven't really 954 00:50:02,480 --> 00:50:05,640 Speaker 1: had as much opportunity for that to roll off yet. UM. 955 00:50:05,719 --> 00:50:08,560 Speaker 1: And and you know, with the benefit of a long 956 00:50:08,640 --> 00:50:11,279 Speaker 1: term lease is that even if people aren't coming back 957 00:50:11,280 --> 00:50:14,800 Speaker 1: to work, the tenant is on the hook and so um. 958 00:50:14,840 --> 00:50:18,760 Speaker 1: You know it will it will be an interesting shakeout 959 00:50:18,840 --> 00:50:21,080 Speaker 1: over the next you know, couple of years to see 960 00:50:21,120 --> 00:50:24,440 Speaker 1: what works and what doesn't. Um. But again, high quality 961 00:50:24,560 --> 00:50:28,600 Speaker 1: new stuff really should be them, you know, the type 962 00:50:28,600 --> 00:50:32,879 Speaker 1: of buildings that uh that that tend to um outperform 963 00:50:33,719 --> 00:50:36,040 Speaker 1: versus the overall average. They have cool stuff to do 964 00:50:36,120 --> 00:50:40,880 Speaker 1: over there, studios there, They've got this little Spain area 965 00:50:41,120 --> 00:50:44,240 Speaker 1: which is I saw that eat there. Do do office 966 00:50:44,280 --> 00:50:49,799 Speaker 1: big successful office properties have to offer experiences or do 967 00:50:49,880 --> 00:50:52,319 Speaker 1: they have to have a daycare on site? Does there 968 00:50:52,360 --> 00:50:54,320 Speaker 1: need to be a gym? Do you see that, Jeff, 969 00:50:54,840 --> 00:50:59,120 Speaker 1: highly amenetized space will win out. I mean, you know, basically, 970 00:50:59,200 --> 00:51:03,239 Speaker 1: what landlords are trying to do and what tenants are 971 00:51:03,320 --> 00:51:05,319 Speaker 1: trying to do is figure out ways that they can 972 00:51:05,360 --> 00:51:09,120 Speaker 1: make the office buildings somewhere where their tenants and their 973 00:51:09,160 --> 00:51:12,640 Speaker 1: employees want to go. And you know, they're they're trying 974 00:51:12,640 --> 00:51:15,640 Speaker 1: to figure out what works and it will evolve over time. 975 00:51:15,719 --> 00:51:17,880 Speaker 1: But yeah, I mean, you know that that goes that 976 00:51:17,960 --> 00:51:21,160 Speaker 1: goes hand in hand with you know, highly amenitizes, you know, 977 00:51:22,080 --> 00:51:25,680 Speaker 1: landlords that can put capital into their buildings to make them, 978 00:51:25,880 --> 00:51:29,239 Speaker 1: you know, up to the most modern required standards. And 979 00:51:29,840 --> 00:51:32,400 Speaker 1: that's what's going to win out. Why can't a boss 980 00:51:32,440 --> 00:51:34,160 Speaker 1: just say come back to work. I don't know how 981 00:51:34,160 --> 00:51:35,920 Speaker 1: that does work, all right, Jeff, thanks so much for 982 00:51:36,000 --> 00:51:39,600 Speaker 1: joining our Yeah, exactly waiting for your session. Jeff Langbaum, 983 00:51:39,840 --> 00:51:42,880 Speaker 1: he's a senior read analyst for Bloomberg Intelligence breaking it 984 00:51:42,880 --> 00:51:46,600 Speaker 1: down and lots of headwinds for the real real estate space, 985 00:51:46,640 --> 00:51:48,360 Speaker 1: particularly on the commercial side. Do you think about the 986 00:51:48,400 --> 00:51:51,239 Speaker 1: pandemic and people not coming into the office and now 987 00:51:51,280 --> 00:51:54,200 Speaker 1: you've got you know, kind of refinancing risk here in 988 00:51:54,239 --> 00:51:57,040 Speaker 1: a much higher interest rate environment, which is one thing 989 00:51:57,080 --> 00:51:59,920 Speaker 1: after another impacting these companies. So it's good to have 990 00:52:00,200 --> 00:52:04,120 Speaker 1: somebody like Jeff Langbaumo covers all of the reats able 991 00:52:04,160 --> 00:52:06,120 Speaker 1: to get us a little bit smarter here. Thanks for 992 00:52:06,160 --> 00:52:09,600 Speaker 1: listening to the Bloomberg Markets podcast. You can subscribe and 993 00:52:09,719 --> 00:52:13,800 Speaker 1: listen to interviews with Apple Podcasts or whatever podcast platform 994 00:52:13,840 --> 00:52:17,160 Speaker 1: you prefer. I'm Matt Miller. I'm on Twitter at Matt 995 00:52:17,160 --> 00:52:20,200 Speaker 1: Miller nineteen seventy three. And I'm fall Sweeney. I'm on 996 00:52:20,239 --> 00:52:23,120 Speaker 1: Twitter at pt Sweeney. Before the podcast, you can always 997 00:52:23,160 --> 00:52:25,280 Speaker 1: catch us worldwide at Bloomberg Radio