WEBVTT - SEC, Mortgage Rates, Space, and CRE (Podcast) 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:05.240 my co host Matt Miller. 0:00:05.640 --> 0:00:09.720 Every business day we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.600 and Bloomberg experts, along with essential market moven news. 0:00:14.160 --> 0:00:17.279 Find the Bloomberg Markets podcast called Apple Podcasts or wherever 0:00:17.360 --> 0:00:20.520 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:20.680 --> 0:00:22.919 It's Nathan Deana Bloomberg Intelligence. 0:00:22.960 --> 0:00:25.320 Look Look, look, look, look see there in the I 0:00:25.400 --> 0:00:28.400 see him lower the right hand corner, I see him. Indeed, 0:00:28.520 --> 0:00:30.960 are streaming live on YouTube dot com. By the way, 0:00:31.040 --> 0:00:33.280 so if you type in Bloomberg Radio on the search 0:00:33.400 --> 0:00:35.440 on YouTube dot com, you can see us. You see 0:00:35.880 --> 0:00:38.200 me my bright green shirt there, and you'll see Nathan 0:00:38.240 --> 0:00:39.479 Dean in a moment, Nathan. 0:00:39.520 --> 0:00:40.920 We got headlines. 0:00:40.479 --> 0:00:43.400 Across the terminal that the SEC is going to finally 0:00:43.400 --> 0:00:48.400 impose these new hedge fund and private equity rules fee 0:00:48.479 --> 0:00:53.199 disclosure treatment of certain investors, and the hedge fund industry 0:00:53.240 --> 0:00:54.800 has threatened to sue over this proposal. 0:00:54.840 --> 0:00:55.280 What do we know? 0:00:56.160 --> 0:00:58.880 So, essentially, this is a proposal that would require the 0:00:59.040 --> 0:01:02.320 hedge funds and private equity funds private funds to disclose 0:01:02.360 --> 0:01:07.520 a lot of information including compensation, fees, performance and so 0:01:07.600 --> 0:01:10.720 forth like that expenses, and this is a standardization or 0:01:10.760 --> 0:01:15.160 a standardized disclosure so that an investor can essentially compare 0:01:15.200 --> 0:01:19.760 and contrast the performance of one fund versus another. In 0:01:19.800 --> 0:01:23.000 addition to this, it would also prohibit certain conflicts of interests. 0:01:23.120 --> 0:01:25.679 One of the more interesting aspects of the proposal is 0:01:25.800 --> 0:01:28.920 if you're going to cash out an investor and you're 0:01:28.920 --> 0:01:31.320 going to give a certain rebate or allow that investor 0:01:31.319 --> 0:01:33.920 to cash out at a certain percentage, you have to 0:01:33.920 --> 0:01:37.399 make that available to all different types of investors. Now, 0:01:37.440 --> 0:01:40.000 like you said before, the Managed Funded Association and the 0:01:40.040 --> 0:01:43.880 trade associations hate this rule. It's going to be significant 0:01:43.920 --> 0:01:46.920 costs in terms of compliance headaches. The big funds should 0:01:46.959 --> 0:01:49.520 be okay, but this is really also going to increase 0:01:49.560 --> 0:01:53.440 competition amongst the smaller funds. We certainly anticipate the funds 0:01:53.480 --> 0:01:56.680 will sue. They've said that they could sue within the 0:01:56.720 --> 0:01:59.920 first two weeks. In fact, the Managed Funds of Associations 0:02:00.040 --> 0:02:03.280 comment letter before it was finalized said that they were 0:02:03.320 --> 0:02:06.480 attacking the cost benefit analysis of the rule. For those 0:02:06.520 --> 0:02:08.960 of us in Washington, that's essentially a keyword. We're going 0:02:09.040 --> 0:02:11.680 to sue you. Now, the SEC did make some changes. 0:02:11.760 --> 0:02:14.160 They actually took out some language that made it a 0:02:14.160 --> 0:02:17.480 little bit easier for people to sue funds, but I 0:02:17.480 --> 0:02:19.359 certainly don't think that's going to keep the MFA and 0:02:19.400 --> 0:02:22.520 the other types of fund industries from taking this to 0:02:22.560 --> 0:02:23.000 the courts. 0:02:23.680 --> 0:02:26.960 So again, just give us the history here, and Nathan, 0:02:27.360 --> 0:02:29.520 is this a solution in search of a problem or 0:02:29.639 --> 0:02:32.760 is there really concern out there about disclosure from the 0:02:32.800 --> 0:02:33.360 hedge funds. 0:02:33.800 --> 0:02:36.080 So I think what this is that they took a 0:02:36.360 --> 0:02:42.519 consumer level initiative, which is disclosures to consumers, and thinking, 0:02:42.639 --> 0:02:46.880 you know, just not sophisticated investors, but just disclosures to 0:02:47.000 --> 0:02:49.680 individual consumers, and then they applied that to the private 0:02:49.680 --> 0:02:52.480 fund industry. Now, the SEC will say, look, there's eighteen 0:02:52.600 --> 0:02:55.200 you know, trillion dollars in assets under management in these funds. 0:02:55.440 --> 0:02:58.079 Investors need to know what's happening here. But the funds 0:02:58.080 --> 0:03:00.799 come back and say, look, we're dealing with sophistic get investors. 0:03:00.800 --> 0:03:03.360 We already give them these types of disclosures anyway. So 0:03:03.680 --> 0:03:06.000 I'm not exactly sure that the you know, this was 0:03:06.120 --> 0:03:08.680 really like, I think the most important rule that the 0:03:08.720 --> 0:03:11.400 SEC should have been working on, but obviously it's one 0:03:11.400 --> 0:03:14.600 of the biggest and more dramatic impacts to the fun industry. 0:03:15.080 --> 0:03:17.040 This is something the SEC has wanted to do for 0:03:17.080 --> 0:03:19.760 a while now, and you know, we will see when 0:03:19.800 --> 0:03:21.600 we get the final language, when these funds have to 0:03:21.600 --> 0:03:23.840 start complying with it. I should also note that if 0:03:23.880 --> 0:03:26.400 you are a non US fund, as long as you 0:03:26.440 --> 0:03:28.359 take in US money or US clients, you're gonna have 0:03:28.360 --> 0:03:29.320 to adhere to this as well. 0:03:29.919 --> 0:03:32.880 I mean, if they already give them these disclosures, I 0:03:32.880 --> 0:03:37.880 can't imagine why compliance costs would climb, right, If you 0:03:38.000 --> 0:03:44.920 already are transparent about your fees and expenses, then you 0:03:44.960 --> 0:03:48.240 should just be able to publish that. It seems like 0:03:48.280 --> 0:03:51.520 they might be fighting back more Nathan, against rules that 0:03:51.560 --> 0:03:54.640 would prohibit them from allowing favored investors to cash out 0:03:54.680 --> 0:03:55.800 more easily than others. 0:03:56.280 --> 0:03:56.520 Yeah. 0:03:56.560 --> 0:03:59.040 Absolutely. I mean for the big funds, the compliance costs 0:03:59.040 --> 0:04:01.080 looks they already do this, But for a lot of 0:04:01.120 --> 0:04:03.120 smaller funds out there, they don't have this type of 0:04:03.200 --> 0:04:06.080 legal compliance expertise. They're certainly going to have to ramp 0:04:06.160 --> 0:04:07.920 up there. But like you said before, I mean this 0:04:08.200 --> 0:04:10.920 the biggest issue here is the comparison angle. You know, 0:04:11.080 --> 0:04:13.640 if there is some type of secret deal that's going 0:04:13.680 --> 0:04:15.640 on out there, well that deal now needs to be 0:04:15.680 --> 0:04:18.520 made public. And if you're going to compare against one 0:04:18.520 --> 0:04:21.200 fund versus the other, and some of these comparisons also 0:04:21.279 --> 0:04:23.960 have to go down to the portfolio levels, so not 0:04:24.080 --> 0:04:27.400 just the entity level. You know, if you're looking to 0:04:27.480 --> 0:04:29.599 invest in a hedge fund or a private equity fund, 0:04:29.640 --> 0:04:32.520 anytime soon, you're going to get a lot more information 0:04:32.680 --> 0:04:35.640 on how to make those decisions, and competition is going 0:04:35.640 --> 0:04:38.280 to increase as a result. You know, we've seen some 0:04:38.320 --> 0:04:40.919 economic evidence. I'm not sure if I actually buy into this, 0:04:41.040 --> 0:04:43.880 but we've seen some economic evidence cited by the SEC 0:04:44.040 --> 0:04:45.960 that fees will go down as a result of this. 0:04:46.720 --> 0:04:49.040 But you know that will have to be played out 0:04:49.080 --> 0:04:49.880 over the next few years. 0:04:50.640 --> 0:04:52.960 Yeah, exactly, all right, Nathan, Hey, thanks so much for 0:04:53.040 --> 0:04:55.599 joining us. Nathan Dean, He's a senior US policy analyst 0:04:55.760 --> 0:04:58.760 with Bloomberg Intelligence. Absolutely spot on this news. 0:04:58.760 --> 0:04:58.960 Here. 0:05:00.120 --> 0:05:03.520 You're listening to the team Ken's are Live program Bloomberg 0:05:03.560 --> 0:05:06.960 Markets weekdays at ten am Eastern on Bloomberg dot com, 0:05:07.000 --> 0:05:10.200 the iHeartRadio app, and the Bloomberg Business app, or listening 0:05:10.240 --> 0:05:12.360 on demand wherever you get your podcasts. 0:05:15.800 --> 0:05:20.680 Eric Adelberg, mortgage backed security strategist for Bloomberg Intelligence, joins 0:05:20.720 --> 0:05:23.320 us Erica. We had some new home sales data come 0:05:23.360 --> 0:05:26.400 out today. What's what's your sense of what we saw 0:05:26.480 --> 0:05:27.200 builders are building? 0:05:27.240 --> 0:05:30.000 It looks like, yeah, you know, it actually surprised me, 0:05:30.200 --> 0:05:33.280 we saw I mean, to be fair, this is actually 0:05:33.279 --> 0:05:37.680 reflecting mortgage prices probably that were maybe prior to the 0:05:37.760 --> 0:05:42.000 latest jump up. Yep, but we're still seeing the share 0:05:42.240 --> 0:05:45.160 of new homes increasing. They're about sixteen percent of total 0:05:45.240 --> 0:05:48.359 sales now. And what the things that surprised me today? 0:05:48.400 --> 0:05:50.640 So sixteen sorry a round sixteen percent of total sales? 0:05:50.680 --> 0:05:52.599 Is that higher than average? Lower than average? 0:05:52.600 --> 0:05:52.919 Were we? 0:05:53.200 --> 0:05:55.080 Yeah? It was down to like six percent like a 0:05:55.080 --> 0:05:56.080 couple of years ago. 0:05:56.240 --> 0:05:58.520 Right, and so the long term average new homes built 0:05:58.600 --> 0:06:02.119 maybe ten percent of the stuff being bought and sold. Yeah, okay, 0:06:02.160 --> 0:06:05.120 so now it's higher. Yeah, because Matt's not going to 0:06:05.160 --> 0:06:08.240 sell his west Chester retreat because he'd have to. 0:06:08.279 --> 0:06:10.200 Goes I locked in at three and a quarter percent? 0:06:10.279 --> 0:06:10.720 Are right? 0:06:10.920 --> 0:06:12.920 So that's the problem, right, or that's the issue. 0:06:13.000 --> 0:06:15.000 Well, the other things that surprised me were the fact 0:06:15.040 --> 0:06:18.000 that the home prices actually, and these are a bit 0:06:18.040 --> 0:06:20.560 of more of a jumpy series than existing home prices. 0:06:20.760 --> 0:06:24.440 But existing home prices and new home prices in the 0:06:24.520 --> 0:06:27.680 last month's report were more like median prices, call it, 0:06:28.240 --> 0:06:31.000 were more or less equal. Usually new homes traded about 0:06:31.040 --> 0:06:34.760 twenty five to thirty percent higher than existing homes, and 0:06:34.800 --> 0:06:38.320 then this month that completely reversed. So the median price 0:06:38.400 --> 0:06:40.440 for the new homes is now like four thirty six 0:06:40.520 --> 0:06:43.440 and for the existing homes now back to four h six. 0:06:44.080 --> 0:06:47.400 The existing home price fell a little bit, as you'd 0:06:47.400 --> 0:06:50.440 expect season late, but new home prices actually jumped a 0:06:50.480 --> 0:06:53.240 bunch from four to fifteen last month to four to 0:06:53.279 --> 0:06:56.560 thirty six this month, So that's interesting. So it's not 0:06:56.640 --> 0:06:57.960 just that they're cutting prices. 0:06:58.200 --> 0:07:01.640 Erica, what is the your mortgage rate you look at, 0:07:01.680 --> 0:07:05.800 because obviously it varies depending on a borrower's credit quality 0:07:06.120 --> 0:07:10.360 and you know, the asset, et cetera. But I can see, 0:07:10.560 --> 0:07:13.760 you know, in official Bloomberg stories, a much lower rate 0:07:13.920 --> 0:07:16.880 sited than I see on the bank rate thirty year 0:07:16.920 --> 0:07:21.840 mortgage right, So we're saying seven point three percent right 0:07:21.880 --> 0:07:24.680 now and sounding an alarm. Meanwhile, the bank rate is 0:07:24.720 --> 0:07:27.520 over seven point six. Yeah, what's the rate that you 0:07:27.520 --> 0:07:28.400 look at, and why. 0:07:28.680 --> 0:07:30.240 I do like to look at bank rate because it's 0:07:30.240 --> 0:07:34.000 available daily Mortgage news daily also. But the big difference 0:07:34.000 --> 0:07:36.840 when you're looking at mortgage rates is looking at what 0:07:36.880 --> 0:07:40.160 they call effective rates, what you're paying if you hadn't 0:07:40.200 --> 0:07:44.440 paid points, versus what the contract rate rates, which is 0:07:44.480 --> 0:07:47.040 where a lot of people actually take out the mortgage 0:07:47.080 --> 0:07:50.720 because they are paying points. So once you adjust for 0:07:51.080 --> 0:07:54.440 the points and look at a no point adjusted rate, 0:07:54.440 --> 0:07:57.679 it's always closer to the bank rate number. So even 0:07:57.760 --> 0:08:01.560 even on the NBA thirty year fixing an index that 0:08:01.600 --> 0:08:04.280 they released today, we have an index in Bloomberg that 0:08:04.320 --> 0:08:08.120 they also release called MB thirty er effective rate and 0:08:08.200 --> 0:08:11.720 similarly we back out and no point freddimack rate and 0:08:11.760 --> 0:08:14.280 those are all above seven and a half percent. Now, 0:08:14.400 --> 0:08:17.720 so yeah, mortgage borers might be able to get a 0:08:17.720 --> 0:08:21.320 lower rate, but that's because they or somebody else is 0:08:21.360 --> 0:08:24.280 paying points. Now, one of the reasons new home sales 0:08:24.320 --> 0:08:26.640 has been doing as well as it has is because 0:08:26.720 --> 0:08:29.120 the builders have come up with this great strategy where 0:08:29.120 --> 0:08:32.360 they're actually buying down the mortgage rate for a lot 0:08:32.400 --> 0:08:36.760 of their buyers. So until recently, some buyers were able 0:08:36.800 --> 0:08:40.120 to get mortgage rates closer to five percent. It's a 0:08:40.120 --> 0:08:42.000 good deal for the home builder. They don't have to 0:08:42.040 --> 0:08:44.440 reduce their prices, and you know, make other people who 0:08:44.440 --> 0:08:47.920 want prices on homes that higher prices mad. But at 0:08:47.920 --> 0:08:50.000 the same time it makes it more affordable for new 0:08:50.000 --> 0:08:50.720 home buyers. 0:08:51.200 --> 0:08:52.000 So the builders. 0:08:52.320 --> 0:08:56.000 It's not like the builders are extending lines of credit 0:08:56.040 --> 0:08:58.920 to buyers. They're not giving mortgages to buyers. They're just 0:08:59.080 --> 0:09:01.320 turning to the bank and saying, we'll buy points for them. 0:09:01.440 --> 0:09:03.559 I mean, in some cases they have a relationship with 0:09:03.600 --> 0:09:07.720 a lender. In a few cases they actually can probably 0:09:07.800 --> 0:09:09.920 offer them mortgage. Have their own financing arms, they have 0:09:09.920 --> 0:09:10.960 their own financing arms. 0:09:11.240 --> 0:09:14.520 It's been a tough month for fixed income, really tough 0:09:14.559 --> 0:09:16.840 month for mortgage of backed securities, off two point six percent. 0:09:17.280 --> 0:09:19.560 What's it like out there in the NBS market these. 0:09:19.520 --> 0:09:23.880 Days, It's it's probably pretty tough for some investors. It's 0:09:23.880 --> 0:09:26.560 an interesting time for strategists. But one of the things 0:09:26.600 --> 0:09:29.319 I'm looking at this morning is actually just how different 0:09:29.480 --> 0:09:32.400 the current coupon, which is kind of where things are 0:09:32.400 --> 0:09:37.120 being issued, is versus the mortgage index. And while the 0:09:37.120 --> 0:09:41.439 mortgage index has underperformed because it's very long duration now, 0:09:41.480 --> 0:09:44.160 because people are just sitting on their mortgages forever. 0:09:44.000 --> 0:09:47.719 Matt I will be on it for years. 0:09:47.520 --> 0:09:51.040 So from a duration standpoint, it's going to trade pretty 0:09:51.080 --> 0:09:56.960 similarly to the tenure treasury, if you will. In fact, 0:09:57.200 --> 0:09:59.840 mortgage spreads for the whole index aren't widening that much. 0:10:00.000 --> 0:10:04.160 The same divergence between what you said about where mortgages 0:10:04.200 --> 0:10:06.600 are being issued right now versus what most people have 0:10:06.960 --> 0:10:10.440 is reflected in the mortgage index right now. The current 0:10:10.559 --> 0:10:13.000 coupon or where the yield egals to the coupon around 0:10:13.080 --> 0:10:16.160 par is about six percent for the first time again 0:10:16.240 --> 0:10:20.280 for many, many years. But the mortgage index coupon is 0:10:20.320 --> 0:10:23.600 below three percent. All right, So that yeah, I mean, 0:10:23.640 --> 0:10:25.880 I'm not saying it's not underforming, but yeah. 0:10:25.920 --> 0:10:29.679 All right, Erica, great stuff again, Erica Adelberg, NBS Strategists, 0:10:29.679 --> 0:10:31.680 Bloomberg Intelligence joining us here. 0:10:32.400 --> 0:10:35.520 You're listening to the tape cans are live program Bloomberg 0:10:35.600 --> 0:10:39.200 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:10:39.240 --> 0:10:41.319 tune in app, Bloomberg dot Com, and the. 0:10:41.280 --> 0:10:42.480 Bloomberg Business App. 0:10:42.520 --> 0:10:45.320 You can also listen live on Amazon Alexa from our 0:10:45.360 --> 0:10:49.760 flagship New York station just say Alexa play Bloomberg eleven thirty. 0:10:51.280 --> 0:10:54.120 So it looks like BAA slash Merrill. They're trying to 0:10:54.120 --> 0:10:57.560 make a push on across their trading business. What did 0:10:57.600 --> 0:10:58.120 you find out? 0:10:58.520 --> 0:11:02.280 So it's funny baa second largest bank by assets, but 0:11:02.440 --> 0:11:05.960 when you talk to folks cross Wall Street about trading, 0:11:06.440 --> 0:11:09.960 they're not the first name that comes up in conversation. 0:11:10.240 --> 0:11:13.720 And really that just comes down to their risk tolerance. 0:11:13.840 --> 0:11:17.440 Since the financial crisis, since they bought Merrill, since there's 0:11:17.480 --> 0:11:20.640 been so much integration, they've kind of held back. And 0:11:21.000 --> 0:11:24.800 while they're still serving clients and they are one of 0:11:24.800 --> 0:11:30.520 the largest firms that is trading with buyside investors, they're 0:11:30.559 --> 0:11:34.240 not taking as much market share as let's say JP Morgan, 0:11:35.040 --> 0:11:38.240 But that's starting to change. About three years ago they 0:11:38.320 --> 0:11:41.280 named a new head, Jim Damar. He took over for 0:11:41.480 --> 0:11:44.640 Tom Montag who was really running that trading business along 0:11:44.679 --> 0:11:48.040 with investment banking. And in the last three years they've 0:11:48.080 --> 0:11:52.280 added some talent, some key talent from those firms that 0:11:52.480 --> 0:11:57.960 take risk your bets, from Goldman Morgan Stanley, and they've 0:11:58.000 --> 0:12:01.080 also been able to get more capital. They went all 0:12:01.080 --> 0:12:04.400 the way up to CEO moynihan to their head of 0:12:04.640 --> 0:12:08.840 risk to ask for basically more room to run. And 0:12:09.040 --> 0:12:15.040 while they're still in a narrower risk tolerance than others 0:12:15.440 --> 0:12:19.240 with more capital and with these key hires, they've been 0:12:19.240 --> 0:12:22.840 able to slowly chip away and gain more market share 0:12:22.960 --> 0:12:25.160 over the last two three years. 0:12:26.040 --> 0:12:30.040 So have they built up a bigger team? I know 0:12:30.160 --> 0:12:31.719 there is a speech at least I read in a 0:12:31.760 --> 0:12:33.959 Bloomberg story that there was a speech last year where 0:12:34.000 --> 0:12:37.880 Damar said, listen, if you're not willing to give it 0:12:37.920 --> 0:12:41.160 your all and you work your butt off to build 0:12:41.200 --> 0:12:43.160 this business, you might want to work somewhere else. 0:12:43.400 --> 0:12:45.720 Yeah, exactly So about a year ago is when he 0:12:45.760 --> 0:12:48.680 gave that speech, and it was after second quarter results 0:12:48.720 --> 0:12:51.880 where some of the other banks had posted pretty impressive 0:12:52.080 --> 0:12:55.800 results within fixed income. Especially this was after the war 0:12:55.800 --> 0:12:58.360 in Ukraine had broke out, and you had banks on 0:12:58.400 --> 0:13:01.160 Wall Street taking advantage of all the volatility. They were 0:13:01.200 --> 0:13:04.800 helping clients place bets tied to Russia. Bank of America 0:13:04.880 --> 0:13:07.960 did not. They had a mandate from high up that said, 0:13:08.040 --> 0:13:10.160 you guys got to hang back. You can't get involved 0:13:10.160 --> 0:13:12.560 in these types of trades. You can help clients unwind 0:13:12.600 --> 0:13:15.440 their positions, but you can't help people profit and we 0:13:15.480 --> 0:13:19.160 can't profit off of this war. So this was why 0:13:19.320 --> 0:13:21.680 Jim was getting up and saying, hey, we have progress 0:13:21.720 --> 0:13:23.920 that we still have to make. And that comment was 0:13:23.960 --> 0:13:27.000 made to his group, the entire trading team, to say, 0:13:27.400 --> 0:13:29.959 if you're not willing to put your best foot forward 0:13:30.280 --> 0:13:34.000 and to act, maybe not aggressively in the form of 0:13:34.000 --> 0:13:36.160 taking more risk, but you got to be willing to 0:13:36.520 --> 0:13:40.439 be top three, then yeah, maybe you should look elsewhere. 0:13:40.440 --> 0:13:43.080 And he's not making this statement to say here's the 0:13:43.120 --> 0:13:46.640 door and you should be going to somewhere else get 0:13:46.640 --> 0:13:48.480 out of here. He's just saying we want to have 0:13:48.520 --> 0:13:50.200 people that really want to be here and that we 0:13:50.240 --> 0:13:55.719 want to make headway. And one year later they have. 0:13:55.840 --> 0:13:58.760 They've shown that their second quarter results this year, so 0:13:58.840 --> 0:14:00.880 this is one year after the the kind of tepid 0:14:00.920 --> 0:14:03.880 results they saw year ago. They were up ten percent 0:14:03.960 --> 0:14:06.319 when all the other banks on Wall Street were down. 0:14:06.880 --> 0:14:09.680 Now that's also because you're comparing it to the record 0:14:09.800 --> 0:14:13.440 quarter again a year ago post the war in Ukraine. 0:14:14.320 --> 0:14:15.760 So it's it's. 0:14:15.600 --> 0:14:19.200 Really going to be a story that we'll keep tracking 0:14:19.360 --> 0:14:23.840 and if this group can continue to maintain the growth 0:14:23.920 --> 0:14:26.400 and the market share that they have chipped away at again, 0:14:26.920 --> 0:14:29.600 then it might be something that they are able to sustain. 0:14:29.680 --> 0:14:32.400 But that's still a question mark. It's not a foregone 0:14:32.680 --> 0:14:33.800 furgone conclusion. 0:14:34.200 --> 0:14:34.360 You know. 0:14:34.360 --> 0:14:35.960 When I was at Meryl, we were going to go 0:14:36.000 --> 0:14:38.960 pitch a company, a public company, on a follow on offering, 0:14:39.000 --> 0:14:40.760 and that one of the things was we wanted to 0:14:40.840 --> 0:14:42.840 be a top trader in stock. We want to say 0:14:42.840 --> 0:14:44.440 we were your number number one trade, which we weren't 0:14:44.480 --> 0:14:46.600 really like three, third, third or fourth. So I went down. 0:14:46.640 --> 0:14:48.400 My job was to go down and talk to the trader. 0:14:48.600 --> 0:14:50.560 It was probably my same age, young and they said, 0:14:50.600 --> 0:14:53.040 you know, if you can, we'd appreciate it if you 0:14:53.080 --> 0:14:56.040 could take a bigger profile on XYZ stock from that 0:14:56.320 --> 0:14:58.800 day forward until we pitched the IP in like two months. 0:14:59.040 --> 0:15:02.000 Number one, every you're singing every single day trading the 0:15:02.000 --> 0:15:04.120 stock and not just a commitment of capital, you know, 0:15:04.200 --> 0:15:06.720 So that trader that desk was willing to put up 0:15:06.720 --> 0:15:08.640 to capital to make our jobs of getting the follow 0:15:08.680 --> 0:15:11.320 and offering easier, which we did get and made a 0:15:11.360 --> 0:15:14.160 big print. Looking at the comp function, No for the stock, 0:15:14.840 --> 0:15:17.040 Bab's kind of flat over the last five years, Morgan 0:15:17.080 --> 0:15:20.080 Stanley up fifteen percent, Goldman Sacks up nine percent. So 0:15:20.400 --> 0:15:23.040 if you go to Brian moynihan, now do you feel 0:15:23.040 --> 0:15:24.880 like if I'm a trader and I asked for some 0:15:24.920 --> 0:15:27.000 more capital, you think he's going to be more open 0:15:27.080 --> 0:15:27.280 to that. 0:15:27.840 --> 0:15:28.880 So there's a lot that's. 0:15:28.800 --> 0:15:32.560 Changed in the last year and capital has become more 0:15:32.600 --> 0:15:36.120 constrained across Wall Street. But the bank, if if you 0:15:36.160 --> 0:15:38.120 were to ask them, I'm sure that they would say, 0:15:38.120 --> 0:15:40.920 we have enough cash on the balance sheet. They will 0:15:41.120 --> 0:15:44.280 show you that with the numbers, and they will say 0:15:44.320 --> 0:15:47.640 that if the capital is needed and the group, whether 0:15:47.680 --> 0:15:50.440 it's the trading group or the investment banking group, comes 0:15:50.440 --> 0:15:52.960 to us and has a good pitch and they explain 0:15:53.040 --> 0:15:55.440 why they need what they need, we'll give it to them. 0:15:55.520 --> 0:15:58.280 But I think that that's probably getting harder to do. 0:15:58.360 --> 0:16:02.000 Those pitches need to be pretty clear, pretty persuasive. But 0:16:02.080 --> 0:16:05.120 what you just described is exactly what they're trying to 0:16:05.160 --> 0:16:08.760 focus on, which is making sure that the groups within 0:16:08.800 --> 0:16:11.760 this huge organization are working together. So if you have 0:16:11.800 --> 0:16:15.080 someone in investment banking that's working with a client, it's 0:16:15.120 --> 0:16:18.160 a corporate client, and then they need to hedge their 0:16:19.240 --> 0:16:23.160 risks whether it's their currency risk or their rates, They're 0:16:23.200 --> 0:16:25.360 going to want to say, hey, you should talk to 0:16:25.400 --> 0:16:27.960 our trader who can help you out. And I think 0:16:28.000 --> 0:16:30.280 that when you have such a big organization this is 0:16:30.320 --> 0:16:33.840 not specific to be of a but anywhere often communication 0:16:33.920 --> 0:16:36.200 lines can break down. So they're just trying to communicate 0:16:36.240 --> 0:16:41.320 better in order to either get clients to interact with 0:16:41.360 --> 0:16:44.000 them more or to tap new clients that they might 0:16:44.040 --> 0:16:46.640 not even know that they can be working with and 0:16:46.720 --> 0:16:47.920 that they should be working with. 0:16:48.440 --> 0:16:50.360 So who's the best and biggest trading desk on the 0:16:50.360 --> 0:16:50.800 street and. 0:16:50.760 --> 0:16:53.640 What do they do right well, right now, JP Morgan 0:16:53.760 --> 0:16:57.040 does have the most market share and that's been kind 0:16:57.080 --> 0:17:00.000 of the same for as long as I've tracked. 0:17:00.400 --> 0:17:02.680 It's really which is in the long time, No, it's long, 0:17:02.680 --> 0:17:04.520 but yet they have the big capital behind them. It's 0:17:04.520 --> 0:17:05.960 all about how much capital you can put up. So 0:17:06.040 --> 0:17:08.480 JPM Morgan gold and Sacks Morgan Stanley, you know, those 0:17:08.480 --> 0:17:10.760 are things. And if you're Merrill Lynch and you've got 0:17:10.800 --> 0:17:13.320 the Bank of America balance sheet, but Catherine is just 0:17:13.600 --> 0:17:17.520 reporting less less ready to put up you know, some 0:17:17.560 --> 0:17:20.159 incremental capital here, but maybe that's changing a little bit. So, 0:17:20.960 --> 0:17:22.520 but it's good stuff. I remember, it just took me 0:17:22.640 --> 0:17:24.360 like a forty five minutes to find where this kid 0:17:24.440 --> 0:17:27.200 sat on the trading floor. That's how big the Maryland's 0:17:27.200 --> 0:17:28.800 trading floor was and how many people were there. I 0:17:28.840 --> 0:17:31.760 had to find it. You know, it's crazy, but anyway, 0:17:31.760 --> 0:17:33.320 that was a good, good story. Catherine, thanks so much 0:17:33.320 --> 0:17:35.199 for the reporting here. That's story just jumped off the 0:17:35.240 --> 0:17:38.080 termino for me this morning. Katherine Dherty, Finance reporter for 0:17:38.119 --> 0:17:42.200 Bloomberg News, Bank of America, Merrill Lynch, the thundering Herd 0:17:42.240 --> 0:17:44.080 of Merrill Lynch, maybe stepping up a little bit more 0:17:44.160 --> 0:17:44.920 on the margin. 0:17:45.960 --> 0:17:49.359 You're listening to the team Ken's are Live program Bloomberg 0:17:49.400 --> 0:17:52.800 Markets weekdays at ten am Eastern on Bloomberg dot Com, 0:17:52.880 --> 0:17:56.000 the iHeartRadio app and the Bloomberg Business App, or listen 0:17:56.080 --> 0:17:58.200 on demand wherever you get your podcasts. 0:18:00.000 --> 0:18:02.240 The question I have is, why is all these countries 0:18:02.280 --> 0:18:04.199 tripping over themselves to get to the moon. Did we 0:18:04.359 --> 0:18:06.800 do that like more than fifty years ago? I don't 0:18:06.800 --> 0:18:08.520 know what the big deal is, but our next guest 0:18:08.520 --> 0:18:11.719 will help us out here. Lauren Grush, Space reporter. That's right, 0:18:11.760 --> 0:18:14.280 Bloomberg has a Space report. Why because we have twenty 0:18:14.320 --> 0:18:16.720 four hundred journalists accrown around the world. 0:18:16.760 --> 0:18:19.600 We cover everything and fifty countries. 0:18:19.640 --> 0:18:22.040 But also, I mean it's a huge and emerging. 0:18:22.160 --> 0:18:25.480 It's a business industry. I mean, look, I think. 0:18:26.320 --> 0:18:27.439 It's not just NASA anymore. 0:18:27.760 --> 0:18:30.639 Let me ask Lauren. I'm pretty sure, Lauren. First of all, hello, 0:18:30.720 --> 0:18:34.240 welcome to the program. Thanks for joining us. Didn't Elon 0:18:34.320 --> 0:18:38.120 Musk and SpaceX just raise new money at an even 0:18:38.200 --> 0:18:41.879 higher evaluation in what is for most startups of down market? 0:18:43.520 --> 0:18:46.639 They did, But they also have quite a lot on 0:18:46.680 --> 0:18:48.760 their plate in terms of what they're trying to develop. 0:18:48.800 --> 0:18:51.200 You know, they're working on Starship, which is this massive 0:18:51.280 --> 0:18:55.320 vehicle supposed to take humans and cargo into deep space 0:18:55.680 --> 0:18:57.879 and to the Moon, as you guys have been talking about. 0:18:58.359 --> 0:19:01.440 And they're also expanding when it comes to their Starlink 0:19:01.440 --> 0:19:02.240 initiative as well. 0:19:02.280 --> 0:19:04.200 So they have quite a lot to work on. 0:19:04.320 --> 0:19:07.760 And so that's ultimately why part of the reason why 0:19:07.800 --> 0:19:08.640 they did that raise. 0:19:08.800 --> 0:19:10.600 All right, Laurence, So help me out here. What's the 0:19:10.640 --> 0:19:14.040 attraction to the south pole of the Moon? We had 0:19:14.560 --> 0:19:18.040 Russia crash didn't quite do it, but India today reported 0:19:18.119 --> 0:19:21.840 a successful landing. What are they after right. 0:19:21.880 --> 0:19:23.840 So, the south pole of the Moon has been a 0:19:23.840 --> 0:19:27.240 bit of a tantalizing place for scientists over the last 0:19:27.280 --> 0:19:30.760 few years because more and more research has come out 0:19:31.160 --> 0:19:34.960 and evidence has come out that the region might have 0:19:35.240 --> 0:19:40.879