1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox. 2 00:00:08,760 --> 00:00:11,520 Speaker 1: Along with my co host Lisa Bramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg p m L 6 00:00:20,840 --> 00:00:32,560 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. Tomorrow, 7 00:00:33,200 --> 00:00:36,480 Speaker 1: Jenny Ellen, the Federal Reserve Chair, is going to be 8 00:00:36,479 --> 00:00:40,200 Speaker 1: beginning her testimony in front of Congress. Uh, and this 9 00:00:40,360 --> 00:00:43,800 Speaker 1: is going to be somewhat more important than it has 10 00:00:43,840 --> 00:00:46,120 Speaker 1: potentially in the past. I want to bring in Matt Malee, 11 00:00:46,320 --> 00:00:51,479 Speaker 1: managing director and equity strategist at Miller ta Back and Company. Uh. Matt, 12 00:00:51,920 --> 00:00:53,440 Speaker 1: you know, I want to talk a little bit about 13 00:00:53,560 --> 00:00:56,240 Speaker 1: something that you pointed out in a recent recent note 14 00:00:56,280 --> 00:00:59,840 Speaker 1: where you said that aside from just balance sheet considerations 15 00:01:00,160 --> 00:01:03,760 Speaker 1: and when the Fed may raise rates next, one of 16 00:01:03,760 --> 00:01:07,119 Speaker 1: the most important things that Chair Yelling could talk about 17 00:01:07,319 --> 00:01:09,280 Speaker 1: is asset prices. Can you give us a little bit 18 00:01:09,280 --> 00:01:11,679 Speaker 1: of color around that. Well, you know, she came out 19 00:01:12,880 --> 00:01:15,679 Speaker 1: and you know, said talked about stretch valuations, and that 20 00:01:15,800 --> 00:01:18,800 Speaker 1: took people a little bit back. I'm saying, well, jeez, 21 00:01:18,880 --> 00:01:21,399 Speaker 1: if she's worried about it, should we be worried about it? 22 00:01:21,480 --> 00:01:24,800 Speaker 1: And uh and and usually when when things are misinterpreted 23 00:01:24,840 --> 00:01:27,880 Speaker 1: by by the public or by the uh financial press 24 00:01:27,920 --> 00:01:31,320 Speaker 1: with them or the markets. Uh, they quickly marched somebody 25 00:01:31,319 --> 00:01:32,520 Speaker 1: out from the FED to say, oh, no, no no, no, 26 00:01:32,600 --> 00:01:34,760 Speaker 1: she didn't mean to say that. Well, she said the 27 00:01:34,800 --> 00:01:37,440 Speaker 1: exact opposite happened. She had some more people came up 28 00:01:37,480 --> 00:01:40,160 Speaker 1: from the FED, including vice the vice chair saying that, 29 00:01:40,600 --> 00:01:42,560 Speaker 1: you know, kind of reiterating what she was saying. So 30 00:01:42,920 --> 00:01:44,840 Speaker 1: the reason why I worry about that a little bit 31 00:01:44,880 --> 00:01:46,920 Speaker 1: is that, you know, people have felt that the FED 32 00:01:47,000 --> 00:01:49,120 Speaker 1: has had their backs for quite some time now, and 33 00:01:49,160 --> 00:01:51,560 Speaker 1: I'm not saying that that you know, it is suddenly 34 00:01:51,600 --> 00:01:53,120 Speaker 1: going to be you know, they're they're looking to the 35 00:01:53,160 --> 00:01:55,320 Speaker 1: stock market to go down in this to give it way. 36 00:01:55,640 --> 00:01:57,440 Speaker 1: But people have a lot of leverages we see in 37 00:01:57,480 --> 00:02:01,600 Speaker 1: the margin debt numbers, and if uh, people start to say, Jesus, 38 00:02:01,600 --> 00:02:03,560 Speaker 1: the said doesn't have our back to the same degree, 39 00:02:03,600 --> 00:02:05,360 Speaker 1: maybe I've got to unwind some of that leverage. So 40 00:02:06,400 --> 00:02:09,920 Speaker 1: it brings into a back up for one second. So 41 00:02:10,000 --> 00:02:12,399 Speaker 1: you're saying, if the FED doesn't have our back. Why 42 00:02:12,440 --> 00:02:15,760 Speaker 1: does that relate to them saying, yeah, well things look 43 00:02:15,760 --> 00:02:18,640 Speaker 1: a little stretched, because you know, in fairness, things do 44 00:02:18,720 --> 00:02:23,520 Speaker 1: look a little stretched. Yes, but it's it's it's for 45 00:02:23,520 --> 00:02:26,239 Speaker 1: for some of these leverage players and and momentum players. 46 00:02:26,280 --> 00:02:28,600 Speaker 1: And we all know it was interesting Barons this weekend 47 00:02:28,639 --> 00:02:30,840 Speaker 1: had this uh you know, the cover story was about, 48 00:02:31,000 --> 00:02:32,600 Speaker 1: you know, the machine trading and a lot of that 49 00:02:32,680 --> 00:02:35,639 Speaker 1: is very much momentum based. And if that momentum is 50 00:02:35,639 --> 00:02:37,560 Speaker 1: going to slow down a little bit, uh, it might 51 00:02:37,720 --> 00:02:39,880 Speaker 1: cause the market roll over. No, that's not the worst 52 00:02:39,880 --> 00:02:42,359 Speaker 1: thing in the world. I mean, you know, it's funny 53 00:02:42,360 --> 00:02:45,320 Speaker 1: when we talk about seven to ten percent pullbacks um 54 00:02:45,480 --> 00:02:46,880 Speaker 1: and they was like, well, jeez, I don't know will 55 00:02:46,880 --> 00:02:49,320 Speaker 1: be that bad. Well, jeez, we've had one of those 56 00:02:49,360 --> 00:02:52,200 Speaker 1: every single year since. So it wouldn't be the worst 57 00:02:52,240 --> 00:02:55,320 Speaker 1: thing in the world at all. But if if Janet 58 00:02:55,400 --> 00:02:57,840 Speaker 1: Yellen starts talking about some of these continues to talk 59 00:02:57,840 --> 00:02:59,480 Speaker 1: about some of these things, I should say, it could 60 00:02:59,480 --> 00:03:01,400 Speaker 1: cause people pull pull on their horns a little bit. 61 00:03:01,560 --> 00:03:03,160 Speaker 1: And to be honest with you, I think that would 62 00:03:03,160 --> 00:03:04,960 Speaker 1: be number one to be normal, but it'll also be 63 00:03:04,960 --> 00:03:06,959 Speaker 1: healthy for the market. Do you think people will buy 64 00:03:06,960 --> 00:03:11,120 Speaker 1: that dip. Matt, Well, the big question is going to be, uh, 65 00:03:11,120 --> 00:03:13,880 Speaker 1: I think odd, right, I mean, just isn't it odd that? How? 66 00:03:14,000 --> 00:03:18,040 Speaker 1: You know, stocks are always an opportunity, whether if they 67 00:03:18,120 --> 00:03:20,760 Speaker 1: fall there you know, it's by the dip, if they 68 00:03:20,800 --> 00:03:23,800 Speaker 1: go up, it's a momentum trade. It doesn't seem to 69 00:03:23,800 --> 00:03:26,000 Speaker 1: be any point along the way where people say, you know, 70 00:03:26,040 --> 00:03:28,760 Speaker 1: this is just too expensive and uh, I don't I 71 00:03:28,760 --> 00:03:31,040 Speaker 1: don't want any part of it. Well, that's why I 72 00:03:31,080 --> 00:03:34,200 Speaker 1: think what we're seeing right now because not only from 73 00:03:34,280 --> 00:03:38,160 Speaker 1: what the FED chair yelling and and the vice chair 74 00:03:38,240 --> 00:03:41,520 Speaker 1: and the pred sorry San Francisco FED presidents have been 75 00:03:41,520 --> 00:03:44,560 Speaker 1: saying about asset levels, but also the coordinated effort uh 76 00:03:44,720 --> 00:03:49,440 Speaker 1: talking about you know, shrinking the balance seat raising the rates. 77 00:03:49,680 --> 00:03:51,600 Speaker 1: And we're starting to see that creep out into the 78 00:03:51,600 --> 00:03:53,600 Speaker 1: e c B, the B the Bank of England, the 79 00:03:53,640 --> 00:03:55,840 Speaker 1: Bank of Canada, and even a little chatter about the 80 00:03:55,840 --> 00:03:57,600 Speaker 1: B O J. So when you get this kind of 81 00:03:57,600 --> 00:03:59,840 Speaker 1: coordinated effort that seems to be coming out of this 82 00:04:00,000 --> 00:04:03,360 Speaker 1: central the global central banks, uh, some of those stretched valuations, 83 00:04:03,360 --> 00:04:05,240 Speaker 1: I think people will have to change their thinking. This 84 00:04:05,320 --> 00:04:09,560 Speaker 1: is not an insignificant change. In instance, and as we 85 00:04:09,640 --> 00:04:13,360 Speaker 1: heard today from uh, you know, Jamie Diamond talking about how, 86 00:04:13,800 --> 00:04:15,880 Speaker 1: you know, we we think we could see a pickup 87 00:04:15,880 --> 00:04:19,080 Speaker 1: of votility because we really don't know. We don't know 88 00:04:19,160 --> 00:04:20,920 Speaker 1: what will happen when when they start pulling back on 89 00:04:20,960 --> 00:04:23,760 Speaker 1: this keew weik. Yeah, you know what Jamie Diamond was 90 00:04:23,800 --> 00:04:27,120 Speaker 1: talking about was that the market may not be adequately 91 00:04:27,160 --> 00:04:31,560 Speaker 1: prepared right as yeah, as potentially the Federal Reserve starts 92 00:04:31,560 --> 00:04:34,600 Speaker 1: in winding its balance sheet and the ECB starts tapering 93 00:04:34,720 --> 00:04:36,880 Speaker 1: its bond purchases. What do they what do they want though? 94 00:04:36,960 --> 00:04:39,360 Speaker 1: Do they do they want like a postcard in the mail? 95 00:04:39,400 --> 00:04:43,680 Speaker 1: Do they want a little you know? Basically that's my point, 96 00:04:44,440 --> 00:04:47,120 Speaker 1: more other than you know, getting in a biplane and 97 00:04:47,200 --> 00:04:49,520 Speaker 1: flying along the beach with this, you know, a sign. 98 00:04:49,680 --> 00:04:52,200 Speaker 1: I mean, what else do you need to tell people? 99 00:04:52,279 --> 00:04:54,479 Speaker 1: They don't know? Clearly they're not telling that. It's not 100 00:04:54,520 --> 00:04:56,560 Speaker 1: like they have some super secret sauce. I mean, they're 101 00:04:56,600 --> 00:04:58,600 Speaker 1: waiting to see what's going on in the economy as well. 102 00:04:58,640 --> 00:05:01,360 Speaker 1: I think that people I mean not to speak for you, Matt, 103 00:05:01,400 --> 00:05:03,520 Speaker 1: but it seems like people are looking for what is 104 00:05:03,600 --> 00:05:06,279 Speaker 1: really the guiding factor for the Fed because they have 105 00:05:06,440 --> 00:05:10,200 Speaker 1: said it's you know, inflation, but that's not really the case. 106 00:05:10,279 --> 00:05:12,839 Speaker 1: They have said employment, but that's not really the case 107 00:05:12,839 --> 00:05:15,280 Speaker 1: because the employment rate plunge. There. Then you know, people 108 00:05:15,279 --> 00:05:18,040 Speaker 1: are saying, well, financial stability, but you know, is that 109 00:05:18,080 --> 00:05:19,839 Speaker 1: really the case because they don't want to discrapt the 110 00:05:19,880 --> 00:05:22,240 Speaker 1: markets or is it uh, you know, making sure that 111 00:05:22,279 --> 00:05:25,080 Speaker 1: there's not another bubble. I mean, so it's just because 112 00:05:25,080 --> 00:05:27,200 Speaker 1: they keep moving the goal post both back, you don't 113 00:05:27,240 --> 00:05:30,600 Speaker 1: know what what's gonna come next. Well, the other thing 114 00:05:30,600 --> 00:05:32,359 Speaker 1: too is you have to work. I mean, and again 115 00:05:32,360 --> 00:05:34,080 Speaker 1: this is I'm not saying because they're not saying this 116 00:05:34,160 --> 00:05:36,640 Speaker 1: the boy at some point, I mean back in the 117 00:05:36,680 --> 00:05:37,960 Speaker 1: in the day. This is kind of going back to 118 00:05:38,000 --> 00:05:40,560 Speaker 1: the very beginning I reread after the crisis, when Ben 119 00:05:40,560 --> 00:05:42,640 Speaker 1: Bernanki came out and said, hey, listen, we can do 120 00:05:42,720 --> 00:05:46,240 Speaker 1: all this monetary policy and provide all this liquidity, but 121 00:05:46,279 --> 00:05:48,200 Speaker 1: it's only a kind of a stock cat measure or 122 00:05:48,240 --> 00:05:50,440 Speaker 1: a bridge to, you know, to where we can get 123 00:05:50,520 --> 00:05:52,560 Speaker 1: we need some help on the fiscal side. Well, we 124 00:05:52,800 --> 00:05:54,440 Speaker 1: look like we're finally going to get some help on 125 00:05:54,440 --> 00:05:55,919 Speaker 1: the fiscal side at the beginning of the year, and 126 00:05:55,920 --> 00:05:57,680 Speaker 1: now we're not going to get it. And it's almost 127 00:05:57,680 --> 00:05:59,360 Speaker 1: I wonder if if the FED is throwing their hands 128 00:05:59,440 --> 00:06:01,560 Speaker 1: up and said, hey, we can't. We can't be the 129 00:06:02,360 --> 00:06:04,640 Speaker 1: parents that you know, you know, you're the thirty year 130 00:06:04,640 --> 00:06:06,599 Speaker 1: old who is still living off the You need to 131 00:06:06,600 --> 00:06:09,400 Speaker 1: get out there and do your thing. And uh, you know, 132 00:06:09,440 --> 00:06:12,080 Speaker 1: it's about time that Washington stepped to the plate. And 133 00:06:12,480 --> 00:06:15,440 Speaker 1: we see more and more examples that they're not. So 134 00:06:16,120 --> 00:06:18,400 Speaker 1: maybe they're finally saying, hey, you can't rely on us anymore. 135 00:06:18,600 --> 00:06:20,200 Speaker 1: You need to step to the place. So we'll see 136 00:06:20,200 --> 00:06:23,120 Speaker 1: what happened with the millennial market. Another thing that that 137 00:06:23,200 --> 00:06:26,080 Speaker 1: might have a pretty significant effect on markets is bank earnings, 138 00:06:26,080 --> 00:06:28,960 Speaker 1: which begin on Friday. And I'm wondering, you know, we 139 00:06:29,080 --> 00:06:31,920 Speaker 1: have seen an expectation that fixed income trading revenues are 140 00:06:31,920 --> 00:06:34,479 Speaker 1: gonna be down six in the second quarter for the 141 00:06:34,560 --> 00:06:38,640 Speaker 1: five biggest US banks, trading in general down about uh 142 00:06:38,920 --> 00:06:42,560 Speaker 1: Is there anything in particular within the bank earnings that 143 00:06:42,600 --> 00:06:47,680 Speaker 1: are going to potentially have a material effect on market movements. Well, 144 00:06:48,000 --> 00:06:49,560 Speaker 1: the thing that's going to be interesting is that is 145 00:06:49,880 --> 00:06:52,480 Speaker 1: that obviously after these uh uh numbers, that of the 146 00:06:52,680 --> 00:06:56,159 Speaker 1: c car numbers that give a lot of people allowed confidence. 147 00:06:58,000 --> 00:07:00,800 Speaker 1: I'm sorry, And and they've rallied nicely off of that, 148 00:07:00,920 --> 00:07:02,760 Speaker 1: and and and be honest that they're getting a little 149 00:07:02,760 --> 00:07:05,520 Speaker 1: over bought on a technical basis. It's interesting. If you'd 150 00:07:05,520 --> 00:07:07,120 Speaker 1: asked me this question a couple of weeks ago, I 151 00:07:07,160 --> 00:07:08,880 Speaker 1: would have said, geez, this is this is gonna be 152 00:07:08,880 --> 00:07:11,640 Speaker 1: a big problem because you worry about guidance because she's 153 00:07:11,680 --> 00:07:13,240 Speaker 1: look at the way interest rates are, and look how 154 00:07:13,240 --> 00:07:15,440 Speaker 1: flat the yield curve is. Well, in the last two 155 00:07:15,440 --> 00:07:17,800 Speaker 1: weeks that has actually improved a little bit. It's only 156 00:07:17,880 --> 00:07:20,400 Speaker 1: a two week move, but it will be interesting to 157 00:07:20,440 --> 00:07:23,600 Speaker 1: see if if that gives them enough enough of impetus 158 00:07:23,640 --> 00:07:25,520 Speaker 1: to to to give a little bit better guidance than 159 00:07:25,560 --> 00:07:27,400 Speaker 1: I've been thinking, because, to be honest with you, I 160 00:07:27,400 --> 00:07:28,640 Speaker 1: was getting a little worried that it was going to 161 00:07:28,680 --> 00:07:31,600 Speaker 1: be one of those sell the news situations where we 162 00:07:31,640 --> 00:07:33,760 Speaker 1: have all this good news, everybody's bullish on the group. 163 00:07:33,800 --> 00:07:36,360 Speaker 1: Everybody said we should be uh, you know, overweight in 164 00:07:36,560 --> 00:07:38,520 Speaker 1: the financial stocks. So I thought we were getting a 165 00:07:38,520 --> 00:07:41,480 Speaker 1: little too frothy there. And and maybe this change in 166 00:07:41,520 --> 00:07:43,720 Speaker 1: the yield curve, the spread and from the two years 167 00:07:43,720 --> 00:07:46,760 Speaker 1: in the tenure uh has widened out nicely, but it's 168 00:07:46,800 --> 00:07:49,760 Speaker 1: still quite low. So my concern is that we're we're 169 00:07:49,800 --> 00:07:51,920 Speaker 1: not going to get quite the same kind of uh 170 00:07:52,160 --> 00:07:54,880 Speaker 1: boost that we got out of the stress test results. 171 00:07:54,880 --> 00:07:56,840 Speaker 1: But uh uh, it's not as bad as I was 172 00:07:56,960 --> 00:07:59,760 Speaker 1: was thinking, you know, just two or three weeks ago. One. 173 00:08:00,000 --> 00:08:02,520 Speaker 1: Thank you very much, Matt Maylee. He is Managing director 174 00:08:02,520 --> 00:08:16,920 Speaker 1: equity strategist at Miller tay Back. Lack of daisical. So 175 00:08:16,960 --> 00:08:19,040 Speaker 1: we've had languid, We've had list lists, and we've had 176 00:08:19,120 --> 00:08:22,000 Speaker 1: lack of daisical. I'm on toucher hooks waiting for the 177 00:08:22,120 --> 00:08:25,520 Speaker 1: next synonym. I don't have one for you. I'm sorry, 178 00:08:25,520 --> 00:08:28,920 Speaker 1: but let's just go right on to the long awaited 179 00:08:29,000 --> 00:08:34,360 Speaker 1: repeal replaced? How about repair? When it comes to healthcare. Republicans, 180 00:08:34,360 --> 00:08:37,160 Speaker 1: of course, returned to Washington this week and they wanted 181 00:08:37,200 --> 00:08:40,080 Speaker 1: to produce a revised version of the Senate healthcare bill, 182 00:08:40,640 --> 00:08:44,040 Speaker 1: but none of the expected changes so far appear to 183 00:08:44,800 --> 00:08:49,480 Speaker 1: win sufficient support from at least the ten GOP senators 184 00:08:49,480 --> 00:08:52,559 Speaker 1: who have publicly opposed the bill. Here to tell us 185 00:08:52,559 --> 00:08:56,160 Speaker 1: more about what is happening, if anything, is Max Neeson. 186 00:08:56,240 --> 00:09:00,040 Speaker 1: He is our Bloomberg Gadfly columnist. He knows everything and 187 00:09:00,080 --> 00:09:04,080 Speaker 1: others to know about the healthcare on the pharmaceutical industry. Max, 188 00:09:04,920 --> 00:09:09,360 Speaker 1: go ahead, I want to launch your comments here with 189 00:09:09,400 --> 00:09:12,000 Speaker 1: all good wishes go for What what is going on 190 00:09:12,160 --> 00:09:16,439 Speaker 1: here with this healthcare bill? So? Um, you know we 191 00:09:16,520 --> 00:09:18,840 Speaker 1: have the centers back they're working on a new bill, 192 00:09:19,640 --> 00:09:22,520 Speaker 1: UH that that's set to be released I believe on Thursday. 193 00:09:22,920 --> 00:09:26,840 Speaker 1: We do not yet know what's going to be in it. Um. 194 00:09:26,920 --> 00:09:28,760 Speaker 1: It seems to be one of those situations that we've 195 00:09:28,800 --> 00:09:31,520 Speaker 1: gotten pretty used to where they're kind of last minute 196 00:09:31,520 --> 00:09:35,840 Speaker 1: tweaks and negotiations, horse trading all of that. Um. So 197 00:09:35,880 --> 00:09:38,440 Speaker 1: what's going on right now is you know, the eternal 198 00:09:39,120 --> 00:09:42,559 Speaker 1: uh kind of tug of war between moderates and conservatives 199 00:09:42,559 --> 00:09:46,360 Speaker 1: on the bill. Moderates UH ted Cruz and likely one. 200 00:09:47,480 --> 00:09:50,439 Speaker 1: Basically a proposal added that would allow insurers to sell 201 00:09:50,920 --> 00:09:55,199 Speaker 1: much skinnier, much less generous insurance plans as long as 202 00:09:55,200 --> 00:09:58,760 Speaker 1: those insurers also offered a c A compliant plans. The 203 00:09:58,840 --> 00:10:00,959 Speaker 1: issue with that is that it makes insurance a lot 204 00:10:00,960 --> 00:10:05,160 Speaker 1: more expensive when it's a compliant, like a lot more expensive. 205 00:10:05,320 --> 00:10:07,280 Speaker 1: Just can you just give an example because I know 206 00:10:07,440 --> 00:10:10,960 Speaker 1: some of the details here because the having to understand that, 207 00:10:11,000 --> 00:10:16,000 Speaker 1: you know, the cost of the premium outweighs the deductible 208 00:10:16,400 --> 00:10:19,080 Speaker 1: on in many cases that is rather ordinary, but this 209 00:10:19,200 --> 00:10:22,920 Speaker 1: is even more exceptional. Yeah, I mean, you know, it's 210 00:10:22,920 --> 00:10:26,319 Speaker 1: hard to tell unless insurers are actually putting out premiums 211 00:10:26,320 --> 00:10:30,080 Speaker 1: in in kind of this alternative universe. But um, you know, 212 00:10:30,160 --> 00:10:34,640 Speaker 1: this proposal seems sort of designed to to send them skyrocketing. 213 00:10:34,960 --> 00:10:38,520 Speaker 1: Anyone who's not sick is going to pick the cheaper 214 00:10:38,600 --> 00:10:45,880 Speaker 1: or not a month, right, Yeah, okay, but that comes 215 00:10:45,880 --> 00:10:48,040 Speaker 1: out to a premium that is going to actually be 216 00:10:48,760 --> 00:10:52,120 Speaker 1: costing you more than the deductible I and and also 217 00:10:52,200 --> 00:10:55,920 Speaker 1: deductibles are gonna rise to because that's another another part 218 00:10:55,920 --> 00:10:58,679 Speaker 1: of the plans. So not only do you have these 219 00:10:58,840 --> 00:11:04,280 Speaker 1: these escalaiming premium, also deductibles, and especially for low income people, 220 00:11:04,640 --> 00:11:07,440 Speaker 1: if you have a deductible that's you know, several thousand dollars, 221 00:11:07,440 --> 00:11:10,640 Speaker 1: that's a substantial portion portion of your income, you can't 222 00:11:10,640 --> 00:11:13,720 Speaker 1: really quite call that healthcare coverage. So that's another difficulty 223 00:11:13,760 --> 00:11:16,800 Speaker 1: to the bill. So, Max, you know, the tenor of 224 00:11:16,960 --> 00:11:20,760 Speaker 1: your discussion and your comments is somewhat negative. But that's 225 00:11:20,800 --> 00:11:25,240 Speaker 1: surprising because you recently wrote probably the most positive piece 226 00:11:25,280 --> 00:11:27,960 Speaker 1: you've ever written about how there's actually some silver lining 227 00:11:28,280 --> 00:11:30,280 Speaker 1: and some of the back and forth that's going on, 228 00:11:30,360 --> 00:11:33,120 Speaker 1: Can you uh give us a little sense of what 229 00:11:33,280 --> 00:11:37,640 Speaker 1: this sort of gridlock among Republicans could mean for the 230 00:11:37,720 --> 00:11:40,480 Speaker 1: bill and why this could be potentially a positive for 231 00:11:40,520 --> 00:11:43,200 Speaker 1: at least the people in the health care industry. Absolutely, so, 232 00:11:43,240 --> 00:11:45,480 Speaker 1: it's I'll preface this by saying that, you know, we've 233 00:11:45,480 --> 00:11:48,079 Speaker 1: been here before. The House bill looked dead with a 234 00:11:48,160 --> 00:11:51,360 Speaker 1: similar kind of in past, and that ended up getting done. 235 00:11:51,800 --> 00:11:54,000 Speaker 1: But we've heard over the past couple of days and 236 00:11:54,200 --> 00:11:56,880 Speaker 1: even last week for Mitch McConnell, is the idea of 237 00:11:56,960 --> 00:12:00,800 Speaker 1: being floated of bipartisan fix of some kind. And and 238 00:12:00,840 --> 00:12:03,359 Speaker 1: I want to emphasize that this is a remote possibility, 239 00:12:03,640 --> 00:12:05,960 Speaker 1: um that just hasn't been you know what's happened lately 240 00:12:05,960 --> 00:12:10,040 Speaker 1: in Congress. But I think the potential positive here is 241 00:12:10,080 --> 00:12:13,760 Speaker 1: that from everything we we know, it wouldn't take all 242 00:12:13,840 --> 00:12:18,200 Speaker 1: that much to stabilize the individual insurance market. It would 243 00:12:18,240 --> 00:12:20,720 Speaker 1: take some pretty minor tweaks, a bit of extra spending, 244 00:12:21,040 --> 00:12:24,320 Speaker 1: but but nothing you know, as as disruptive or kind 245 00:12:24,360 --> 00:12:27,719 Speaker 1: of impactful as what we're seeing in this bill. Um, 246 00:12:27,760 --> 00:12:31,400 Speaker 1: Some things like a permanent reinsurance market, promising to to 247 00:12:31,559 --> 00:12:34,439 Speaker 1: fund cost sharing subsidies, just things that make it a 248 00:12:34,480 --> 00:12:37,679 Speaker 1: little easier for people to stay on insurance and for 249 00:12:37,760 --> 00:12:39,720 Speaker 1: insurance to stay in the market, but go a really 250 00:12:39,760 --> 00:12:43,440 Speaker 1: long way. So if that is a possibility, and it 251 00:12:43,520 --> 00:12:46,120 Speaker 1: seems a little closer now that that probably could be 252 00:12:46,120 --> 00:12:48,320 Speaker 1: good for the market. Do you find max, though, that 253 00:12:48,480 --> 00:12:52,040 Speaker 1: these kinds of discussions on on sort of strategy and 254 00:12:52,040 --> 00:12:55,480 Speaker 1: philosophy of the actual system that really don't matter at 255 00:12:55,520 --> 00:12:58,080 Speaker 1: this point because it's just about these ten g OP 256 00:12:58,280 --> 00:13:02,959 Speaker 1: senators and in fact, one them. Senator Susan Collins, Republican 257 00:13:03,040 --> 00:13:08,760 Speaker 1: from Maine, UH commented about the UH likely insertion of 258 00:13:08,840 --> 00:13:12,880 Speaker 1: forty five billion dollars in funding to fight the opioid epidemic. 259 00:13:12,880 --> 00:13:16,120 Speaker 1: Correct forty billion dollars. Her quote is that's helpful, but 260 00:13:16,240 --> 00:13:20,760 Speaker 1: it's by no means sufficient. So if that's her issue, 261 00:13:20,800 --> 00:13:23,120 Speaker 1: you're gonna have to solve that before you get to 262 00:13:23,160 --> 00:13:27,360 Speaker 1: any of these other lofty philosophical resolutions. Yeah. Absolutely so. 263 00:13:27,400 --> 00:13:30,160 Speaker 1: A lot of individual senators have their issues. For a 264 00:13:30,160 --> 00:13:33,400 Speaker 1: lot of them, it's opioids. For others, in medicaid Expecsion 265 00:13:33,440 --> 00:13:36,839 Speaker 1: states it's a little bit of a ratcheting back in 266 00:13:36,840 --> 00:13:39,320 Speaker 1: in how much impact that is. But it's hard to 267 00:13:39,400 --> 00:13:42,719 Speaker 1: fulfill ten of those desires all at once. Uh that 268 00:13:42,840 --> 00:13:45,040 Speaker 1: there is a substantial pool of money with which they 269 00:13:45,080 --> 00:13:48,439 Speaker 1: can do so. Uh. The Senate bill scored is saving 270 00:13:48,559 --> 00:13:51,520 Speaker 1: a more than d billion dollars more against the deficit 271 00:13:51,600 --> 00:13:53,640 Speaker 1: than the House bill, so that can be spent. And 272 00:13:53,679 --> 00:13:56,200 Speaker 1: also the twenty years right, yeah, over over ten years, 273 00:13:56,280 --> 00:13:59,880 Speaker 1: ten years, I beg And there's also some talk ab 274 00:14:00,000 --> 00:14:03,840 Speaker 1: out ending the repeal of attacks on high income Americans. 275 00:14:04,160 --> 00:14:07,319 Speaker 1: That adds another more than two billion dollars. So the 276 00:14:07,440 --> 00:14:09,760 Speaker 1: question is can you buy it, you know, kind of 277 00:14:10,240 --> 00:14:12,959 Speaker 1: give enough funding to various pet projects. But at the 278 00:14:13,040 --> 00:14:15,080 Speaker 1: end of the day, it's really hard to fix the 279 00:14:15,120 --> 00:14:17,440 Speaker 1: kind of fundamentally here, which is, you know, more than 280 00:14:17,480 --> 00:14:20,320 Speaker 1: twenty million people scored to lose health insurance. It's it's 281 00:14:20,320 --> 00:14:22,440 Speaker 1: hard to vote for that, and uh, it's it's hard 282 00:14:22,480 --> 00:14:25,080 Speaker 1: to fix that. Well, we're gonna watch what happens. They've 283 00:14:25,120 --> 00:14:27,360 Speaker 1: got this week and they've got next week, I believe 284 00:14:27,360 --> 00:14:30,960 Speaker 1: in order to do this before the break, Well, this 285 00:14:31,040 --> 00:14:33,040 Speaker 1: is what we don't have time. But that I gotta say, 286 00:14:33,200 --> 00:14:35,080 Speaker 1: it just seems odd that you would have such an 287 00:14:35,120 --> 00:14:40,040 Speaker 1: important piece of legislation done in such a I don't know, 288 00:14:40,880 --> 00:14:44,960 Speaker 1: rush rush, thank you, rushed, okay, rushed manner. Thank you 289 00:14:45,040 --> 00:14:48,200 Speaker 1: very much. Lisa Bramwit No, thank you very much for 290 00:14:48,280 --> 00:14:51,560 Speaker 1: joining us. Max Needson is our Bloomberg gad Fly columnist. 291 00:14:51,560 --> 00:15:07,000 Speaker 1: Are expert when it comes to all things healthcare. Well, 292 00:15:07,040 --> 00:15:10,200 Speaker 1: if you have not been living in the Midwest, that 293 00:15:10,360 --> 00:15:16,440 Speaker 1: particularly in places that depend heavily on harvesting wheat and grain, uh, 294 00:15:16,720 --> 00:15:19,880 Speaker 1: you might not know, but there has been a drought 295 00:15:20,000 --> 00:15:23,920 Speaker 1: that has been decimating the US wheat crop. And here 296 00:15:23,960 --> 00:15:26,400 Speaker 1: to tell us more about it, as Sal GILBERTI. He 297 00:15:26,520 --> 00:15:29,320 Speaker 1: is the president and the founder of two Cream Trading. 298 00:15:29,800 --> 00:15:33,680 Speaker 1: Also with us, our guide to everything commodities is Mike McGlone. 299 00:15:33,680 --> 00:15:37,200 Speaker 1: Here's our commodity strategist for Bloomberg Intelligence. Mike, do you 300 00:15:37,200 --> 00:15:39,040 Speaker 1: want to maybe just set up what's been going on? 301 00:15:39,080 --> 00:15:40,920 Speaker 1: I mean, I've been following it in detail just because 302 00:15:40,960 --> 00:15:43,280 Speaker 1: I'm interested in the topic. But this is a really 303 00:15:43,960 --> 00:15:49,400 Speaker 1: uh un sung saga right now. Tell us about the 304 00:15:49,520 --> 00:15:52,000 Speaker 1: what's happening? Well, I think you nailed the main part 305 00:15:52,080 --> 00:15:53,560 Speaker 1: of it. Pain, but I look at that as more 306 00:15:53,600 --> 00:15:57,120 Speaker 1: than the shorter term granular situation. Yes, we're having a 307 00:15:57,120 --> 00:15:58,960 Speaker 1: bit of a I would say more of a normal 308 00:15:59,040 --> 00:16:01,600 Speaker 1: weather event. It's it's drought in kind of the planes 309 00:16:01,640 --> 00:16:05,160 Speaker 1: in the US, it's in Dakotas in the Minnesota. It's 310 00:16:05,200 --> 00:16:07,840 Speaker 1: really affected the wheat crop. But the bigger pictures, it's 311 00:16:07,880 --> 00:16:10,960 Speaker 1: potentially trickling down to the rest of the crops. And 312 00:16:11,040 --> 00:16:12,600 Speaker 1: the way I look at it in terms of real 313 00:16:12,640 --> 00:16:16,120 Speaker 1: the real big picture is we've had significant about four 314 00:16:16,520 --> 00:16:19,800 Speaker 1: five years of down years in the grain markets, corn 315 00:16:19,880 --> 00:16:22,120 Speaker 1: beans and wheat. In fact, last year wheat was at 316 00:16:22,120 --> 00:16:23,880 Speaker 1: a ten year low and then plantings were at a 317 00:16:23,960 --> 00:16:26,440 Speaker 1: hundred year low. So what's happening is to me is 318 00:16:26,480 --> 00:16:30,680 Speaker 1: the markets just normalizing, Weather's not so perfect, and prices 319 00:16:30,720 --> 00:16:33,240 Speaker 1: are coming back, and this might just be the beginning 320 00:16:33,400 --> 00:16:36,440 Speaker 1: with wheat leading. So sal I want to bring you 321 00:16:36,480 --> 00:16:39,600 Speaker 1: in here. Do you think that the backdrop has been 322 00:16:39,680 --> 00:16:44,040 Speaker 1: set for a surge in these commodities in the prices 323 00:16:44,160 --> 00:16:48,000 Speaker 1: or do you think that simply efficiencies and farming and 324 00:16:48,280 --> 00:16:52,760 Speaker 1: other sort of sorts of technological developments have increased production 325 00:16:52,800 --> 00:16:55,920 Speaker 1: capability to such an extent that prices are going to 326 00:16:56,040 --> 00:16:59,000 Speaker 1: remain subdued for the foreseeable future. Um, that's a great point. 327 00:16:59,000 --> 00:17:01,800 Speaker 1: But I think what has atually happen is demand has 328 00:17:01,920 --> 00:17:05,320 Speaker 1: increased so steadily that we are fortunate that these technological 329 00:17:05,320 --> 00:17:08,280 Speaker 1: advantages have kept pace with the demand. And in general, 330 00:17:08,680 --> 00:17:11,359 Speaker 1: supplies do keep pace with demand in terms of grain 331 00:17:11,440 --> 00:17:15,240 Speaker 1: production and grain demand. But grain demand is continually rising, 332 00:17:15,480 --> 00:17:18,040 Speaker 1: which means if it doesn't rain somewhere, people aren't going 333 00:17:18,040 --> 00:17:20,119 Speaker 1: to stop using it. That you're not gonna let yourself 334 00:17:20,200 --> 00:17:22,040 Speaker 1: be hungry just because it doesn't rain in some far 335 00:17:22,080 --> 00:17:24,840 Speaker 1: away place. And that is the perfect setup right now. 336 00:17:24,880 --> 00:17:28,240 Speaker 1: We've had uh, wheat prices at lows. We've had corn 337 00:17:28,280 --> 00:17:30,720 Speaker 1: prices sitting at or near the cost of production now 338 00:17:30,760 --> 00:17:33,280 Speaker 1: for a good part of three or four years. And 339 00:17:33,400 --> 00:17:35,680 Speaker 1: what happens is again, no matter what the news is, 340 00:17:35,720 --> 00:17:37,359 Speaker 1: today is a great day as an example for that, 341 00:17:37,359 --> 00:17:39,320 Speaker 1: And no wonder what the stock market is doing, no 342 00:17:39,359 --> 00:17:42,399 Speaker 1: matter what technology is doing, people are going to use grains. 343 00:17:42,440 --> 00:17:45,040 Speaker 1: They don't stop using them. And so when there's a 344 00:17:45,080 --> 00:17:48,760 Speaker 1: supply disruption mostly due to weather, and weather does affect 345 00:17:48,760 --> 00:17:51,520 Speaker 1: even the new technology and new new new grains that 346 00:17:51,560 --> 00:17:53,840 Speaker 1: are out there, drought resistance things like that, you do 347 00:17:53,960 --> 00:17:57,760 Speaker 1: have an almost immediate reaction in prices, which is understandable. 348 00:17:57,800 --> 00:17:59,760 Speaker 1: And it's happening now and wheat, and it could, as 349 00:17:59,800 --> 00:18:02,600 Speaker 1: my says, be a precursor to what's to come in corn. 350 00:18:02,920 --> 00:18:04,920 Speaker 1: And not to harp on the weather, but because Mike 351 00:18:05,000 --> 00:18:07,480 Speaker 1: knows has just I love the learning about the weather. 352 00:18:07,520 --> 00:18:11,280 Speaker 1: But what's going okay, but this it's interesting. But what's 353 00:18:11,320 --> 00:18:15,440 Speaker 1: happening right now to the spring wheat crop. I think 354 00:18:15,440 --> 00:18:17,320 Speaker 1: the U s d A says something like only thirty 355 00:18:17,359 --> 00:18:20,840 Speaker 1: seven of the wheat crop is in good or excellent condition. 356 00:18:21,200 --> 00:18:23,840 Speaker 1: And that particular wheat crop, to your point, is high 357 00:18:23,880 --> 00:18:26,840 Speaker 1: in protein, and so it isn't in higher demand, It 358 00:18:26,920 --> 00:18:30,840 Speaker 1: isn't constant higher demand. That's exactly correct, and in fact, 359 00:18:30,880 --> 00:18:33,520 Speaker 1: poor protein we if it's so poort, they'll throw it 360 00:18:33,520 --> 00:18:37,439 Speaker 1: in an ethanol exactly. So what happens is grains are 361 00:18:37,440 --> 00:18:40,119 Speaker 1: going to get used one way or another, and people 362 00:18:40,160 --> 00:18:42,600 Speaker 1: need to understand that farmers will drive the price of 363 00:18:42,640 --> 00:18:45,159 Speaker 1: grains down to their cost of production because they're going 364 00:18:45,200 --> 00:18:47,399 Speaker 1: to plant as many seeds as they can to make 365 00:18:47,440 --> 00:18:50,080 Speaker 1: as much money as they can. But when it stops raining, 366 00:18:50,800 --> 00:18:53,200 Speaker 1: people don't stop using, and in fact, people are using 367 00:18:53,240 --> 00:18:56,960 Speaker 1: more over time, the the the global consumption of corn, 368 00:18:57,000 --> 00:18:59,960 Speaker 1: soybis in wheat is rising, making records hies almost every 369 00:19:00,160 --> 00:19:02,919 Speaker 1: single year. That doesn't stop even when it stops raining. 370 00:19:03,040 --> 00:19:06,000 Speaker 1: So um. Not to not to go real macro here, 371 00:19:06,080 --> 00:19:08,480 Speaker 1: but when we talk about the weather, we're also getting 372 00:19:08,480 --> 00:19:11,040 Speaker 1: a heat wave. Yes, weather hasn't been perfect, but we're 373 00:19:11,080 --> 00:19:14,440 Speaker 1: having quite a substantial heatwave in the South and in 374 00:19:14,760 --> 00:19:17,040 Speaker 1: parts of the Midwest. And I'm just wondering, you know, 375 00:19:17,200 --> 00:19:21,680 Speaker 1: on a broader level, if there is a persistent heat wave, 376 00:19:21,760 --> 00:19:23,320 Speaker 1: call it whatever you will. I don't want to get 377 00:19:23,359 --> 00:19:27,040 Speaker 1: into any political debates, but call it whatever you will. Well, 378 00:19:27,080 --> 00:19:31,920 Speaker 1: this crimp the supply of some of these commodities or 379 00:19:32,040 --> 00:19:35,720 Speaker 1: is that something that is peripheral and neither here. No, No, 380 00:19:35,800 --> 00:19:38,200 Speaker 1: it's a it's a key, key point in the bigger picture. 381 00:19:38,200 --> 00:19:40,040 Speaker 1: We all know what's happening in global warming. The good 382 00:19:40,040 --> 00:19:42,480 Speaker 1: news is the last few years it's heated up in 383 00:19:42,480 --> 00:19:44,919 Speaker 1: the grain belt, but we've had more rain. Weather it's 384 00:19:44,960 --> 00:19:47,560 Speaker 1: been but I've had more rain. It's that precipitation. If 385 00:19:47,600 --> 00:19:50,719 Speaker 1: that starts to decline a little, which is historically always 386 00:19:50,720 --> 00:19:53,120 Speaker 1: has you know, you get these cycles of a lot 387 00:19:53,160 --> 00:19:55,480 Speaker 1: of precipitation and less so, which seems to be kicking 388 00:19:55,520 --> 00:19:58,080 Speaker 1: in now. Um that will be a big difference. But 389 00:19:58,160 --> 00:20:02,560 Speaker 1: oh well, overall heat you hot and dry in the Midwest, 390 00:20:02,760 --> 00:20:05,280 Speaker 1: that generally means less production. Even though we have these 391 00:20:05,320 --> 00:20:07,919 Speaker 1: great you know, you know, advances in technology, just you 392 00:20:07,960 --> 00:20:10,520 Speaker 1: can't grow without water, and you can only arrogate so much. 393 00:20:10,720 --> 00:20:13,080 Speaker 1: And I will say that this is a critical time 394 00:20:13,080 --> 00:20:16,480 Speaker 1: period basically post July four that week after July you 395 00:20:16,480 --> 00:20:19,320 Speaker 1: can see the extended forecast, you have about four weeks 396 00:20:19,320 --> 00:20:21,440 Speaker 1: where it really needs to rain and or at least 397 00:20:21,440 --> 00:20:23,439 Speaker 1: be cool where the corn can survive. This is a 398 00:20:23,560 --> 00:20:26,480 Speaker 1: very critical time for pollination. If you look back the 399 00:20:26,560 --> 00:20:29,920 Speaker 1: last ten years, corn prices have doubled twice from their 400 00:20:29,920 --> 00:20:33,040 Speaker 1: cost of production, both times it started in July. Both 401 00:20:33,040 --> 00:20:35,480 Speaker 1: times it's because it did not rain post fourth of July. 402 00:20:35,880 --> 00:20:38,960 Speaker 1: It was very hot in the critical poll nation time 403 00:20:39,000 --> 00:20:41,719 Speaker 1: which you're at now, and so you've been sitting across 404 00:20:41,720 --> 00:20:44,159 Speaker 1: the production for nearly four years. There there could be 405 00:20:44,200 --> 00:20:46,520 Speaker 1: some very serious opportunity. I'm only going to give you 406 00:20:46,600 --> 00:20:49,120 Speaker 1: one word. Would this be a trade you'd put on now? 407 00:20:49,400 --> 00:20:53,400 Speaker 1: It would be an investment I would consider strongly. Alright, 408 00:20:53,480 --> 00:20:56,919 Speaker 1: well said, yeah, fascinating, really really fascinating. Thank you so 409 00:20:56,960 --> 00:21:00,479 Speaker 1: much for joining us. Sal Gioberti, President, chief investment officer 410 00:21:00,520 --> 00:21:03,879 Speaker 1: and co founder of two Cream Trading, LLC, which is 411 00:21:03,920 --> 00:21:08,600 Speaker 1: based in Brattleboro, Vermont. Also our sincere thanks to Mike mcgloan, 412 00:21:08,640 --> 00:21:12,400 Speaker 1: our commodity strategist here at Bloomberg Intelligence and an expert 413 00:21:12,440 --> 00:21:17,680 Speaker 1: on all things uh, whether actually grain and other commodities. 414 00:21:29,119 --> 00:21:32,200 Speaker 1: So we have been touching on a bit the fact 415 00:21:32,359 --> 00:21:35,800 Speaker 1: that bank earnings will start on Friday and that we're 416 00:21:35,840 --> 00:21:40,119 Speaker 1: expecting somewhat lower trading volumes. Laura Keller, a financial reporter 417 00:21:40,160 --> 00:21:44,760 Speaker 1: for Bloomberg News, had a wonderfully colorful take on sort 418 00:21:44,760 --> 00:21:49,080 Speaker 1: of the effects of slower trading activity at banks, including 419 00:21:49,400 --> 00:21:53,119 Speaker 1: lots of swiping on Tinder and leaving early for a 420 00:21:53,240 --> 00:21:56,200 Speaker 1: variety of events. Laura, before we get into the color 421 00:21:56,280 --> 00:21:58,480 Speaker 1: of it all, I want to just get a sense 422 00:21:58,640 --> 00:22:01,919 Speaker 1: of where the slow down is happening most. I mean, 423 00:22:01,960 --> 00:22:05,280 Speaker 1: we heard yesterday, um from Jim Bianco of Bianco Research, 424 00:22:05,400 --> 00:22:08,359 Speaker 1: that a lot of traders have trading apps on their phones. 425 00:22:08,400 --> 00:22:11,520 Speaker 1: It's not just that they're leaving and going to the beach. Sure, sure, 426 00:22:11,560 --> 00:22:14,200 Speaker 1: and definitely we know any traders listening out there. We 427 00:22:14,240 --> 00:22:15,720 Speaker 1: don't want to accuse you of not been able to 428 00:22:15,720 --> 00:22:17,560 Speaker 1: do your job when you're out in the golfers or 429 00:22:17,560 --> 00:22:20,200 Speaker 1: because of course that's always part of your job, right, Um, 430 00:22:20,240 --> 00:22:21,840 Speaker 1: But no, at least, I mean, it is not about 431 00:22:21,880 --> 00:22:24,080 Speaker 1: necessarily not being in the office. It's the reason that 432 00:22:24,080 --> 00:22:26,600 Speaker 1: people are not in the office is because there's not 433 00:22:26,680 --> 00:22:29,640 Speaker 1: much going on. So certainly it's it's a volume problem. 434 00:22:29,720 --> 00:22:31,720 Speaker 1: You know, if you look at treasuries, if you look 435 00:22:31,720 --> 00:22:33,840 Speaker 1: at equities, if you look at the corporate bond market, 436 00:22:34,160 --> 00:22:37,760 Speaker 1: there really is just all down. And that's kind of 437 00:22:37,840 --> 00:22:40,640 Speaker 1: what we're seeing. I think there are certain markets, um, 438 00:22:40,720 --> 00:22:42,399 Speaker 1: that are a little bit better off. I you know, 439 00:22:42,440 --> 00:22:44,679 Speaker 1: I'm talking some rage traders the other day, and you 440 00:22:44,680 --> 00:22:47,360 Speaker 1: know they're saying for the third quarter anyway, the last 441 00:22:47,760 --> 00:22:51,160 Speaker 1: week or so, things have picked up somewhat. So certainly 442 00:22:51,200 --> 00:22:53,800 Speaker 1: there are pockets. But we are waiting for the big 443 00:22:53,800 --> 00:22:56,400 Speaker 1: banks to kind of let us know when we hear 444 00:22:56,440 --> 00:22:58,720 Speaker 1: on all these earnings calls, you know what they are seeing. 445 00:22:58,920 --> 00:23:01,600 Speaker 1: Is it going to be something like Jeffreys that said, hey, 446 00:23:01,680 --> 00:23:04,000 Speaker 1: emerging markets was a little bit slow for us. Leverage 447 00:23:04,000 --> 00:23:07,199 Speaker 1: credit where we're big that was slow or or are 448 00:23:07,240 --> 00:23:08,600 Speaker 1: is it going to be different, because as we know, 449 00:23:08,800 --> 00:23:11,080 Speaker 1: every one of these big five banks has a bit 450 00:23:11,119 --> 00:23:14,000 Speaker 1: of a different kind of trading franchise and specialized in 451 00:23:14,000 --> 00:23:17,800 Speaker 1: different products. You know, I I had a really big 452 00:23:17,880 --> 00:23:20,600 Speaker 1: laugh this morning when I was reading Matt Levine's Money Stuff, 453 00:23:20,680 --> 00:23:25,080 Speaker 1: his daily UH compilation of stories, and he quoted a 454 00:23:25,119 --> 00:23:28,520 Speaker 1: passage from your story Uh in particular, one bond trader 455 00:23:28,560 --> 00:23:30,760 Speaker 1: says he's been slipping out early to watch his kids 456 00:23:30,760 --> 00:23:35,240 Speaker 1: play sports. And Matt framed this as this is apparently bad, 457 00:23:35,359 --> 00:23:37,600 Speaker 1: and then it talked about how people are saying, well, 458 00:23:37,640 --> 00:23:40,359 Speaker 1: you know, there's a lot of potential influences that could 459 00:23:40,359 --> 00:23:43,800 Speaker 1: shake up markets like North Korea and and or terrorist attack, 460 00:23:43,840 --> 00:23:46,400 Speaker 1: and he said, uh, you know, you can see why 461 00:23:46,440 --> 00:23:49,359 Speaker 1: this kind of cast some shade over Wall Street because 462 00:23:49,640 --> 00:23:52,320 Speaker 1: the framing here is basically, quote, boy, I hope there 463 00:23:52,359 --> 00:23:54,280 Speaker 1: is a terrorist attack so I can spend less time 464 00:23:54,320 --> 00:23:57,760 Speaker 1: with my children. Is that is that accurate? No? I 465 00:23:57,800 --> 00:24:00,560 Speaker 1: don't think that's true at all. I mean there's compete desires. 466 00:24:00,600 --> 00:24:02,560 Speaker 1: I mean you have family men who definitely want to 467 00:24:02,560 --> 00:24:04,520 Speaker 1: be able to go to their kids sports practices and 468 00:24:04,600 --> 00:24:07,240 Speaker 1: would enjoy doing that on a Dailey basis, and then 469 00:24:07,320 --> 00:24:09,280 Speaker 1: you know, of course you do have traders who you know, 470 00:24:09,400 --> 00:24:13,080 Speaker 1: are here to have a career, and certainly a terrorist event, 471 00:24:13,080 --> 00:24:15,960 Speaker 1: while I don't think that's anyone's wish, um, you know, 472 00:24:16,040 --> 00:24:18,560 Speaker 1: would create some kind of small but they do tend 473 00:24:18,600 --> 00:24:20,080 Speaker 1: to do that. But I mean, no one that I'm 474 00:24:20,080 --> 00:24:22,880 Speaker 1: talking to is saying, hey, I would love to have 475 00:24:22,960 --> 00:24:25,840 Speaker 1: some kind of you know, something happening in Syria, um, 476 00:24:25,920 --> 00:24:28,159 Speaker 1: maybe another London attack. No one that I talked to 477 00:24:28,320 --> 00:24:30,720 Speaker 1: was actually hoping for something like that. Lord. Just on 478 00:24:30,760 --> 00:24:33,600 Speaker 1: a more general note, the bond trading that is going 479 00:24:33,640 --> 00:24:36,720 Speaker 1: on at these big banks. How much are they doing 480 00:24:36,760 --> 00:24:39,120 Speaker 1: now versus how much they were doing let's say ten 481 00:24:39,200 --> 00:24:43,520 Speaker 1: years ago, And is there a strategic decision that banks really, 482 00:24:43,600 --> 00:24:45,720 Speaker 1: or at least some banks, they don't want to be 483 00:24:45,760 --> 00:24:48,040 Speaker 1: in this business. It's not profitable and there's no real 484 00:24:48,080 --> 00:24:50,200 Speaker 1: reason for because they're just middlemen. They're not really putting 485 00:24:50,240 --> 00:24:51,800 Speaker 1: up their own money. They're not holding any of this 486 00:24:51,840 --> 00:24:54,200 Speaker 1: on their balance sheets, are they. Well, I think payment 487 00:24:54,320 --> 00:24:56,119 Speaker 1: is a bit of a structural change. I mean, if 488 00:24:56,160 --> 00:24:57,960 Speaker 1: you talk to traders who've been on the street for 489 00:24:58,040 --> 00:25:00,720 Speaker 1: you know, ten, fifteen years, twenty years, they do talk 490 00:25:00,760 --> 00:25:03,080 Speaker 1: about how it used to be in the old days. 491 00:25:03,160 --> 00:25:04,880 Speaker 1: You know, there was more volume, there were a lot 492 00:25:04,880 --> 00:25:08,640 Speaker 1: more people on the desk, less automation and trading. Um. 493 00:25:08,720 --> 00:25:11,760 Speaker 1: Certainly different kinds of markets have a little bit more 494 00:25:11,760 --> 00:25:14,600 Speaker 1: of that in a sense of almost more custom markets 495 00:25:14,840 --> 00:25:17,600 Speaker 1: in a way that you knew as an a holder 496 00:25:17,600 --> 00:25:21,000 Speaker 1: of inventory what you had. And then the game or 497 00:25:21,080 --> 00:25:23,760 Speaker 1: the challenge was to figure out whether you've got a 498 00:25:23,760 --> 00:25:26,720 Speaker 1: match for someone out there who's looking for something that 499 00:25:26,760 --> 00:25:29,160 Speaker 1: would fit what you've got, and maybe not even a match, 500 00:25:29,200 --> 00:25:31,919 Speaker 1: you know, not even necessarily talking about you know, appointment 501 00:25:31,920 --> 00:25:34,240 Speaker 1: type trading, PIM you have something where you have something 502 00:25:34,280 --> 00:25:36,360 Speaker 1: and I'm the guy in the middle. But also sort 503 00:25:36,400 --> 00:25:38,359 Speaker 1: of this more with a lot of traders talk about 504 00:25:38,359 --> 00:25:40,840 Speaker 1: it's fun trading, which is the prep trading, so they 505 00:25:40,920 --> 00:25:43,359 Speaker 1: also got to play their own sort of book. So 506 00:25:43,400 --> 00:25:46,320 Speaker 1: certainly things have changed. But if we bring it back 507 00:25:46,359 --> 00:25:48,800 Speaker 1: to present day, I mean, Morgan Stanley, take a look 508 00:25:48,840 --> 00:25:51,520 Speaker 1: at them. They you know, James Gorman has talked about 509 00:25:51,520 --> 00:25:54,280 Speaker 1: fixed income and changing there. I mean, they're not even 510 00:25:54,359 --> 00:25:57,040 Speaker 1: really trading commodities anymore, which is obviously a large part 511 00:25:57,040 --> 00:25:59,399 Speaker 1: of that C in f I C C fixed income 512 00:25:59,840 --> 00:26:04,520 Speaker 1: um in the the acronym there. But you know, Morgan Stanley, 513 00:26:04,960 --> 00:26:06,640 Speaker 1: what was it? Was it the fourth quarter? I can't 514 00:26:06,640 --> 00:26:08,520 Speaker 1: even remember anymore, but there was one quarter when we 515 00:26:08,560 --> 00:26:11,399 Speaker 1: had such a very you know, it's a clobberine at 516 00:26:11,440 --> 00:26:15,640 Speaker 1: Morgan Stanley, so something like that. You know they've gone 517 00:26:15,680 --> 00:26:18,000 Speaker 1: through that transition. I don't know that you can say 518 00:26:18,040 --> 00:26:19,720 Speaker 1: that for some of the other bulls. Bracket bag well 519 00:26:20,080 --> 00:26:24,080 Speaker 1: asset management does have some of its uh positive characteristics 520 00:26:24,080 --> 00:26:26,879 Speaker 1: when it's other people's money. Thank you very much, Laura Keller, 521 00:26:27,160 --> 00:26:29,639 Speaker 1: financial reporter for Bloomberg News. You can follow her on 522 00:26:29,680 --> 00:26:35,280 Speaker 1: Twitter at Laura J. Keller. Thanks for listening to the 523 00:26:35,320 --> 00:26:38,440 Speaker 1: Bloomberg P and L podcast. You can subscribe and listen 524 00:26:38,440 --> 00:26:42,600 Speaker 1: to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform 525 00:26:42,680 --> 00:26:46,560 Speaker 1: you prefer. I'm pim Fox. I'm on Twitter at pim Fox. 526 00:26:46,880 --> 00:26:50,400 Speaker 1: I'm on Twitter at Lisa Abramo. It's one before the podcast. 527 00:26:50,440 --> 00:26:53,040 Speaker 1: You can always catch us worldwide on Bloomberg Radio.