1 00:00:00,240 --> 00:00:02,960 Speaker 1: This is Bloomberg Wall Street Week. I mean may not 2 00:00:03,040 --> 00:00:05,280 Speaker 1: have an overall recession, We're having a rolling recession to 3 00:00:05,360 --> 00:00:07,040 Speaker 1: kind of roll looks pretty strongly it is when it 4 00:00:07,080 --> 00:00:09,840 Speaker 1: comes to jobs. The financial stories that shape our world. 5 00:00:09,960 --> 00:00:13,640 Speaker 1: Three major regional bank failures send shockwaves through the banking system. 6 00:00:13,680 --> 00:00:15,480 Speaker 1: We're all trying to figure out what to make of 7 00:00:15,600 --> 00:00:19,320 Speaker 1: generative AI through the eyes of the most influential voices. 8 00:00:19,440 --> 00:00:22,400 Speaker 1: Welcome down, Doctor Paul Krugman, Ryan moynihan, a Bank of America, 9 00:00:22,560 --> 00:00:25,279 Speaker 1: Zebra Lair of the Paulson Institute, well then Hubbard of 10 00:00:25,280 --> 00:00:26,280 Speaker 1: the Columbia Business School. 11 00:00:26,280 --> 00:00:30,160 Speaker 2: Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 12 00:00:30,480 --> 00:00:34,479 Speaker 1: Moving forward? Or are we on wars in Ukraine and Israel, 13 00:00:34,600 --> 00:00:38,599 Speaker 1: on climate, on college campuses, and on our fight with inflation? 14 00:00:39,159 --> 00:00:42,880 Speaker 1: This is Bloomberg Wall Street Week. I'm David Weston this week, 15 00:00:43,000 --> 00:00:45,840 Speaker 1: Rick Reader of Blackrock on where we're headed in twenty 16 00:00:45,960 --> 00:00:46,520 Speaker 1: twenty four. 17 00:00:47,200 --> 00:00:50,960 Speaker 3: I really think the US economy doesn't go into recession 18 00:00:51,159 --> 00:00:55,320 Speaker 3: except for pandemic financial crisis unless there's some big exage 19 00:00:55,320 --> 00:00:55,640 Speaker 3: in as. 20 00:00:55,560 --> 00:00:59,160 Speaker 1: Sean former IBM had Sam Palmersano on efforts to keep 21 00:00:59,240 --> 00:01:01,080 Speaker 1: tech innovation on the rails. 22 00:01:01,800 --> 00:01:04,560 Speaker 4: The issue with AI is going to be responsible use. 23 00:01:05,200 --> 00:01:08,120 Speaker 1: And Glenn August of Okill Advisors on what comes next 24 00:01:08,440 --> 00:01:09,600 Speaker 1: in distressed investing. 25 00:01:10,160 --> 00:01:12,920 Speaker 5: The extraordinary thing that we're facing is a. 26 00:01:13,120 --> 00:01:16,560 Speaker 6: Trillion plus dollars of debt that's coming due over the 27 00:01:16,560 --> 00:01:29,280 Speaker 6: nextly four years. 28 00:01:30,840 --> 00:01:33,240 Speaker 1: It was hard for Global Wall Street to tell this 29 00:01:33,280 --> 00:01:35,720 Speaker 1: week whether we were really making progress on issues that 30 00:01:35,760 --> 00:01:38,360 Speaker 1: have lingered through the years and on some of more 31 00:01:38,440 --> 00:01:41,880 Speaker 1: recent vintage climate certainly has been an agenda at least 32 00:01:41,880 --> 00:01:44,240 Speaker 1: to talk about for a long time. This week, the 33 00:01:44,240 --> 00:01:46,840 Speaker 1: COP twenty eighth summit wrapped up in the UAE, with 34 00:01:47,040 --> 00:01:49,760 Speaker 1: the man who led it declaring victory that we'll have 35 00:01:49,800 --> 00:01:52,280 Speaker 1: to wait to see whether actions live up to all 36 00:01:52,320 --> 00:01:56,240 Speaker 1: those words. The war in Ukraine continues, with President Olenski 37 00:01:56,400 --> 00:01:59,160 Speaker 1: bringing his message to Washington that he needs more help, 38 00:01:59,320 --> 00:02:02,560 Speaker 1: though once again there was more encouraging talk than there 39 00:02:02,680 --> 00:02:07,560 Speaker 1: was action from Congress. It was a very powerful leading presidents. 40 00:02:07,720 --> 00:02:10,760 Speaker 1: It's being made so clear how we needs to tell. 41 00:02:11,880 --> 00:02:14,120 Speaker 1: But if he gets then no, he can win this war. 42 00:02:14,720 --> 00:02:17,120 Speaker 1: We passed the two month mark in Israel's war with 43 00:02:17,160 --> 00:02:21,120 Speaker 1: Amast and pressure mounted to curtail Israeli operations in Gaza, 44 00:02:21,639 --> 00:02:24,280 Speaker 1: while college presidents back in the United States face the 45 00:02:24,400 --> 00:02:28,120 Speaker 1: spillover on their campuses of issues triggered by the Middle East, 46 00:02:28,520 --> 00:02:31,799 Speaker 1: leading to the University of Pennsylvania losing its president. There 47 00:02:31,880 --> 00:02:36,720 Speaker 1: is a real justification for the penn president stepping down, 48 00:02:37,320 --> 00:02:39,480 Speaker 1: and I believe the other two should come under the 49 00:02:39,520 --> 00:02:42,880 Speaker 1: exact same scrupin. The US economy kept humming along with 50 00:02:42,960 --> 00:02:45,960 Speaker 1: inflation continuing to slow, but that two percent target is 51 00:02:45,960 --> 00:02:46,840 Speaker 1: still evasive. 52 00:02:47,040 --> 00:02:50,359 Speaker 6: We are seeing inflation slowing and it's consistent with what 53 00:02:50,520 --> 00:02:51,480 Speaker 6: the FAED it expects. 54 00:02:51,639 --> 00:02:53,720 Speaker 3: The last mile of the inflation journey is often the 55 00:02:53,760 --> 00:02:54,440 Speaker 3: most difficult. 56 00:02:54,480 --> 00:02:57,239 Speaker 1: And then on Wednesday, the Federal Reserve once again stood 57 00:02:57,280 --> 00:03:00,400 Speaker 1: pat on rates but made it clear it pretty much 58 00:03:00,520 --> 00:03:03,120 Speaker 1: is done with rate hikes and is at least starting 59 00:03:03,240 --> 00:03:06,239 Speaker 1: to talk about some cuts. My question of when will 60 00:03:06,240 --> 00:03:07,760 Speaker 1: it become appropriate to. 61 00:03:08,160 --> 00:03:10,760 Speaker 7: Begin dialing back the amount of policy restraint in place 62 00:03:10,840 --> 00:03:15,200 Speaker 7: that begins to come into view and is clearly a 63 00:03:15,240 --> 00:03:17,640 Speaker 7: discush topic of discussion now in the world and also 64 00:03:17,840 --> 00:03:20,959 Speaker 7: a discussion for US at our meeting today. 65 00:03:22,600 --> 00:03:24,360 Speaker 1: And it was that news out of the FED that 66 00:03:24,440 --> 00:03:26,160 Speaker 1: drove the markets for the week, with the S and 67 00:03:26,200 --> 00:03:28,560 Speaker 1: P five hundred jumping even as the FED share was 68 00:03:28,600 --> 00:03:31,680 Speaker 1: speaking and adding ultimately two point five percent for the 69 00:03:31,680 --> 00:03:34,600 Speaker 1: week overall to end up at forty seven nineteen. That 70 00:03:34,680 --> 00:03:37,360 Speaker 1: is way above the median number for our Bloomberg ls. 71 00:03:37,480 --> 00:03:39,400 Speaker 1: They projected that for the end of this year, and 72 00:03:39,520 --> 00:03:41,360 Speaker 1: is more than two hundred points above where they think 73 00:03:41,360 --> 00:03:44,120 Speaker 1: we'll end up next year. The NASDAK closed on Friday 74 00:03:44,160 --> 00:03:47,000 Speaker 1: at an all time high after adding two point eighty 75 00:03:47,040 --> 00:03:49,920 Speaker 1: five percent, while the yield on the tenure dropped nearly 76 00:03:49,960 --> 00:03:52,440 Speaker 1: thirty two basis points to end the week under four 77 00:03:52,440 --> 00:03:54,920 Speaker 1: percent at three point nine to one. To take us 78 00:03:54,920 --> 00:03:58,520 Speaker 1: through what we've just seen, we welcome now back Barbara 79 00:03:58,560 --> 00:04:02,600 Speaker 1: reinhardtch she's Voya Investment Management CIO and multi Asset Strategy 80 00:04:02,800 --> 00:04:04,720 Speaker 1: and Solutions. So Barbara, thanks for being back with this 81 00:04:04,800 --> 00:04:05,240 Speaker 1: is great to ahead. 82 00:04:05,240 --> 00:04:05,560 Speaker 5: Thank you. 83 00:04:05,800 --> 00:04:07,360 Speaker 1: So what did we see? I don't know if the 84 00:04:07,400 --> 00:04:10,320 Speaker 1: chi fitcher expected that kind of reaction, he sure got it. 85 00:04:10,440 --> 00:04:12,320 Speaker 1: Did the markets overreact? Well? 86 00:04:12,360 --> 00:04:14,160 Speaker 8: I think you always have to put it into context. 87 00:04:14,160 --> 00:04:16,839 Speaker 8: So for just about the past seven weeks, the markets 88 00:04:16,839 --> 00:04:19,920 Speaker 8: have been starting to price in much better inflation data. 89 00:04:20,200 --> 00:04:22,480 Speaker 8: Just remember at the end of the third quarter in 90 00:04:22,520 --> 00:04:26,360 Speaker 8: September bond markets were getting very nervous. Yields were climbing 91 00:04:26,360 --> 00:04:28,839 Speaker 8: close to five percent, and there was some concern that 92 00:04:28,880 --> 00:04:32,000 Speaker 8: the Fed was still going to be increasing interest rates. 93 00:04:32,240 --> 00:04:33,080 Speaker 1: But I think with the. 94 00:04:33,040 --> 00:04:35,680 Speaker 8: Slowing that you've seen in the economy and the slowing 95 00:04:35,680 --> 00:04:38,080 Speaker 8: that you've seen in the employment data, and the good 96 00:04:38,160 --> 00:04:42,400 Speaker 8: progress on inflation, the Fed was really able to bring 97 00:04:42,440 --> 00:04:44,839 Speaker 8: the message home to the markets this year. It may 98 00:04:44,880 --> 00:04:47,240 Speaker 8: indeed be a bit ahead of what the Fed had wanted. 99 00:04:47,320 --> 00:04:50,760 Speaker 8: You saw John Williams today from the New York Fed saying, everyone, 100 00:04:50,839 --> 00:04:53,360 Speaker 8: just a moment, holds your horses. But we do think 101 00:04:53,360 --> 00:04:55,880 Speaker 8: that the progress is made. Inflation is real, and we 102 00:04:55,920 --> 00:04:57,560 Speaker 8: do see the economy slowing. 103 00:04:57,440 --> 00:04:59,520 Speaker 1: Well looking into next year because it's time not start 104 00:04:59,520 --> 00:05:03,000 Speaker 1: thing next year. Have they steered that difficult course between 105 00:05:03,040 --> 00:05:05,720 Speaker 1: recession on the one hand and continued inflation on the 106 00:05:05,760 --> 00:05:07,960 Speaker 1: other Have they managed that? Do you think? We think 107 00:05:08,000 --> 00:05:09,039 Speaker 1: so a voya. 108 00:05:09,160 --> 00:05:13,760 Speaker 8: We have a number of inflation probability indicators and models 109 00:05:13,800 --> 00:05:16,120 Speaker 8: that we'd like to look at, and we're forecasting less 110 00:05:16,160 --> 00:05:18,880 Speaker 8: than a thirty percent chance of a recession in twenty 111 00:05:18,920 --> 00:05:22,680 Speaker 8: twenty four. In fact, if the data continues on this road, 112 00:05:22,680 --> 00:05:25,359 Speaker 8: that it's on. We think it's probably even likely that 113 00:05:25,360 --> 00:05:27,960 Speaker 8: you wouldn't see a recession much before twenty twenty five. 114 00:05:28,400 --> 00:05:30,240 Speaker 1: Wow, So what does that say to the investor going 115 00:05:30,279 --> 00:05:33,080 Speaker 1: into twenty twenty four? I mean, what is different now 116 00:05:33,120 --> 00:05:34,400 Speaker 1: than it was six months ago? 117 00:05:34,440 --> 00:05:36,920 Speaker 8: For example, Well, let's put some things in context, David. 118 00:05:37,120 --> 00:05:39,680 Speaker 8: Over the past two years, the S and P five 119 00:05:39,760 --> 00:05:42,560 Speaker 8: hundred has made very little headway. While stocks are up 120 00:05:42,600 --> 00:05:45,920 Speaker 8: almost twenty percent this year, they were down almost twenty 121 00:05:45,960 --> 00:05:49,360 Speaker 8: percent last year. So since December of twenty twenty one, 122 00:05:49,480 --> 00:05:52,160 Speaker 8: you've basically been flat on the equity market, which is 123 00:05:52,240 --> 00:05:55,359 Speaker 8: very unusual. We do see earnings able to climb about 124 00:05:55,400 --> 00:05:58,680 Speaker 8: ten percent over the course of twenty twenty four, and 125 00:05:58,760 --> 00:06:03,080 Speaker 8: if bond yields continue you to fall modestly. You know, 126 00:06:03,120 --> 00:06:04,640 Speaker 8: if you can get rates down to about three and 127 00:06:04,680 --> 00:06:06,120 Speaker 8: a half percent, you might be able to get a 128 00:06:06,160 --> 00:06:09,160 Speaker 8: little bit of multiple expansion that should give you ten 129 00:06:09,200 --> 00:06:11,320 Speaker 8: to twelve percent in equities over the course of twenty 130 00:06:11,320 --> 00:06:14,479 Speaker 8: twenty four. I would say it will not be smooth, 131 00:06:14,560 --> 00:06:16,960 Speaker 8: and there will be bumps along the way, but there's 132 00:06:17,040 --> 00:06:18,360 Speaker 8: reasons to be optimistic. 133 00:06:18,960 --> 00:06:21,400 Speaker 1: Well, that's the case for equities. If I'm trying to 134 00:06:21,400 --> 00:06:24,240 Speaker 1: decide that sixty forty split between equities and bonds going 135 00:06:24,240 --> 00:06:26,680 Speaker 1: into twenty twenty four, which do you think you tilt 136 00:06:26,720 --> 00:06:28,960 Speaker 1: more towards the bonds, because bonds are looking more attractive 137 00:06:29,000 --> 00:06:30,719 Speaker 1: than they did, certainly in recent years. 138 00:06:31,200 --> 00:06:33,480 Speaker 8: Over the very short term, I would say this, over 139 00:06:33,600 --> 00:06:36,839 Speaker 8: the past seven weeks, most people have really started to 140 00:06:36,839 --> 00:06:39,560 Speaker 8: pile into the equity market. Most of our sentiment indicators 141 00:06:39,640 --> 00:06:42,440 Speaker 8: that we look at in terms of short term temperature 142 00:06:42,480 --> 00:06:44,960 Speaker 8: of the markets are looking quite extended at this point. 143 00:06:45,400 --> 00:06:48,359 Speaker 8: You're susceptible to any type of garden variety pullback at 144 00:06:48,400 --> 00:06:50,440 Speaker 8: this point, just like we had in the summer there 145 00:06:50,480 --> 00:06:53,640 Speaker 8: was a ten percent peach atrough decline. But I would 146 00:06:53,680 --> 00:06:57,000 Speaker 8: say the reason that bonds have really yields at this point, 147 00:06:57,000 --> 00:06:59,360 Speaker 8: you're about one point seven percent on a real ten 148 00:06:59,440 --> 00:07:02,559 Speaker 8: year treasure. That is great news to acid allo cators 149 00:07:02,560 --> 00:07:05,520 Speaker 8: and investors alike. It means that you're getting a return 150 00:07:05,640 --> 00:07:08,520 Speaker 8: on bonds in excessive inflation. It's the first time I 151 00:07:08,520 --> 00:07:12,320 Speaker 8: could tell you we've had positive real yields sustainably since 152 00:07:12,360 --> 00:07:15,360 Speaker 8: the global financial crisis. So it's a great time for 153 00:07:15,440 --> 00:07:17,960 Speaker 8: investors to be looking at the actual value and the 154 00:07:17,960 --> 00:07:20,560 Speaker 8: material value that's in the fixed income markets right now. 155 00:07:20,600 --> 00:07:23,120 Speaker 1: Let's say we have a rising tide which are lifting 156 00:07:23,280 --> 00:07:25,120 Speaker 1: most of the boats, and I think it's fair to say, 157 00:07:25,280 --> 00:07:26,800 Speaker 1: as you look at twenty twenty four, where do you 158 00:07:26,800 --> 00:07:28,640 Speaker 1: think some boats might get more of a lift and 159 00:07:28,800 --> 00:07:29,440 Speaker 1: some less. 160 00:07:30,160 --> 00:07:32,400 Speaker 8: Well, it's interesting, David, So when you think about the 161 00:07:32,440 --> 00:07:35,280 Speaker 8: Federal Reserve cutting interest rates, you immediately go to some 162 00:07:35,400 --> 00:07:38,040 Speaker 8: really heavy cyclical parts of the market that should do 163 00:07:38,200 --> 00:07:40,800 Speaker 8: very well. The US small capst but on a tear 164 00:07:40,920 --> 00:07:43,560 Speaker 8: since the Federal Reserve started to say that they were 165 00:07:43,600 --> 00:07:46,240 Speaker 8: going to be potentially not raising interest rates and even 166 00:07:46,320 --> 00:07:48,920 Speaker 8: nudging them down. But there are some other parts of 167 00:07:48,920 --> 00:07:50,960 Speaker 8: the market that should have been doing better but they're not. 168 00:07:51,360 --> 00:07:53,880 Speaker 8: So something like the emerging markets, you would expect them 169 00:07:53,880 --> 00:07:56,200 Speaker 8: to do very well when the Fed is taking their 170 00:07:56,200 --> 00:07:58,520 Speaker 8: boot off the neck of the markets. They have lagged 171 00:07:58,560 --> 00:08:02,080 Speaker 8: behind significantly, in part because while they're leveraged to the 172 00:08:02,120 --> 00:08:06,240 Speaker 8: global interest rates cycle, their underlying fundamentals are not particularly 173 00:08:06,280 --> 00:08:08,280 Speaker 8: strong at this time. So I think you had to 174 00:08:08,280 --> 00:08:10,960 Speaker 8: be careful when you're talking about the rising tides lifting 175 00:08:11,040 --> 00:08:14,760 Speaker 8: all the votes. We would definitely stay allocated more towards 176 00:08:14,760 --> 00:08:17,360 Speaker 8: the US than the rest of the world. Europe is 177 00:08:17,400 --> 00:08:20,360 Speaker 8: still in recession. I'm concerned that the yen may not 178 00:08:20,560 --> 00:08:23,000 Speaker 8: rally as much as everyone expects this year, and I 179 00:08:23,000 --> 00:08:25,880 Speaker 8: think the emerging markets are still in trouble. So for us, 180 00:08:25,880 --> 00:08:28,480 Speaker 8: we're keeping our US home country bias very much alive 181 00:08:28,520 --> 00:08:29,800 Speaker 8: and well for twenty twenty four. 182 00:08:29,920 --> 00:08:32,200 Speaker 1: Within that US home country bias, one of the biases 183 00:08:32,240 --> 00:08:34,600 Speaker 1: we've all had is the FED. It seems like every 184 00:08:34,600 --> 00:08:36,040 Speaker 1: single day all we care about is the FED. Is 185 00:08:36,040 --> 00:08:37,480 Speaker 1: that going to continue in twenty five four? Are we 186 00:08:37,480 --> 00:08:39,040 Speaker 1: ever going to get pass the point where all we 187 00:08:39,080 --> 00:08:40,760 Speaker 1: care about is what the FED thinks it's doing or 188 00:08:40,800 --> 00:08:41,520 Speaker 1: we think it's doing. 189 00:08:41,920 --> 00:08:44,360 Speaker 8: David, that's a great question, and we all have had 190 00:08:44,400 --> 00:08:47,400 Speaker 8: the FED on the brain since really twenty twenty one. 191 00:08:48,080 --> 00:08:49,520 Speaker 8: I think the real issue that we're going to have 192 00:08:49,520 --> 00:08:51,559 Speaker 8: to face in twenty twenty four that's going to change 193 00:08:51,600 --> 00:08:54,480 Speaker 8: the market's view is going to be the US presidential election. 194 00:08:55,400 --> 00:08:57,920 Speaker 8: Over the past couple of elections that we've had, say 195 00:08:58,000 --> 00:09:02,760 Speaker 8: twenty twenty, twenty sixteen, two thousand and four to two 196 00:09:02,800 --> 00:09:05,360 Speaker 8: thousand as well, it's kind of been this pattern that 197 00:09:05,400 --> 00:09:08,000 Speaker 8: follows the market tends to make some decent gains into 198 00:09:08,000 --> 00:09:10,280 Speaker 8: the beginning of the year, really the first half, and 199 00:09:10,320 --> 00:09:14,000 Speaker 8: then right around the June primaries, the market starts to say, hmm, 200 00:09:14,040 --> 00:09:16,120 Speaker 8: there's some things that could be uncertain about this election. 201 00:09:16,559 --> 00:09:19,080 Speaker 8: Could it be another Supreme Court decided election. Is it 202 00:09:19,120 --> 00:09:22,160 Speaker 8: too difficult to determine who the winner is going to be? 203 00:09:22,720 --> 00:09:24,720 Speaker 8: And the market tends to get a little bit nervous. 204 00:09:24,760 --> 00:09:28,160 Speaker 8: The equity market generally has a week third quarter, and 205 00:09:28,200 --> 00:09:31,960 Speaker 8: then right around October there starts to be enough information 206 00:09:32,040 --> 00:09:33,880 Speaker 8: that the market starts to sniff out who the winner 207 00:09:33,920 --> 00:09:36,640 Speaker 8: is going to be, and then equities generally march higher 208 00:09:36,640 --> 00:09:38,520 Speaker 8: into the end of the year, and we would see 209 00:09:38,559 --> 00:09:40,520 Speaker 8: that as likely replaying this year. 210 00:09:40,800 --> 00:09:44,280 Speaker 1: That June timing could be tricky because everybody, even the Fed, 211 00:09:44,360 --> 00:09:46,480 Speaker 1: agrees we're going to be slowing down the economy through 212 00:09:46,520 --> 00:09:48,200 Speaker 1: the first half of the year. You could have a 213 00:09:48,240 --> 00:09:50,760 Speaker 1: slowing economy. I'm not necessarily going into negative, but a 214 00:09:50,800 --> 00:09:52,840 Speaker 1: lot more modesty is now. At the same time, you 215 00:09:52,880 --> 00:09:55,000 Speaker 1: have that market uncertainty in the middle of the year. 216 00:09:55,160 --> 00:09:57,960 Speaker 1: What you're saying, I think is it could be tricky. 217 00:09:57,280 --> 00:10:00,360 Speaker 8: It could be very choppy. For sure, we think that 218 00:10:00,400 --> 00:10:02,680 Speaker 8: you're going to make decent gains in twenty twenty four, 219 00:10:02,760 --> 00:10:06,200 Speaker 8: in part because your starting point is relatively good. It 220 00:10:06,200 --> 00:10:08,040 Speaker 8: could be a bumpy twenty twenty four for sure. 221 00:10:08,320 --> 00:10:11,120 Speaker 1: It's fascinating. Okay, any hedges, you would recommend. 222 00:10:11,320 --> 00:10:12,120 Speaker 8: None at this moment. 223 00:10:12,160 --> 00:10:14,920 Speaker 1: But thank you, Thanks so much. Gra Always great to 224 00:10:14,920 --> 00:10:19,480 Speaker 1: have you with us. Barbro Reinhardt of Voyem coming up. 225 00:10:19,559 --> 00:10:22,440 Speaker 1: Rick Reader of Blackrock joins us to explain his latest venture, 226 00:10:22,960 --> 00:10:26,600 Speaker 1: Rick's second fixed income ETF from the leader in the field. 227 00:10:54,840 --> 00:10:59,000 Speaker 2: This is Bloomberg Wall Street Week with David Weston from 228 00:10:59,160 --> 00:10:59,960 Speaker 2: Bloomberg Radio. 229 00:11:06,679 --> 00:11:09,800 Speaker 1: This is Wall Street. I'm David Weston. Exchange traded funds 230 00:11:09,840 --> 00:11:13,599 Speaker 1: have grown dramatically, hitting a record ten trillion dollars in 231 00:11:13,679 --> 00:11:16,720 Speaker 1: assets this year. Blackreck is the leading provider of ETFs, 232 00:11:16,800 --> 00:11:19,560 Speaker 1: and we welcome back now Rick Reader. He's Blackrock Chief 233 00:11:19,600 --> 00:11:22,400 Speaker 1: Investment Officer of Global Fixed Income and head of the 234 00:11:22,480 --> 00:11:25,080 Speaker 1: Global Allocation Team. Rick, welcome back to Wall Street Week. 235 00:11:25,080 --> 00:11:26,679 Speaker 1: Good to have you, thanks sir having me so this 236 00:11:26,800 --> 00:11:30,199 Speaker 1: week you announced a second ETF. You announced one back 237 00:11:30,240 --> 00:11:33,640 Speaker 1: in May that was flexible income. As I recall, now 238 00:11:33,720 --> 00:11:36,040 Speaker 1: this is total return. Why'd you do it? 239 00:11:36,760 --> 00:11:36,800 Speaker 7: So? 240 00:11:36,840 --> 00:11:37,440 Speaker 5: A couple of hanks? 241 00:11:37,480 --> 00:11:39,640 Speaker 3: As you said, I mean there's been an explosion of 242 00:11:39,720 --> 00:11:42,000 Speaker 3: demand for ETF. So it's a pretty incredible how the 243 00:11:42,040 --> 00:11:45,160 Speaker 3: industry is developed and how clients are looking more for 244 00:11:46,080 --> 00:11:49,439 Speaker 3: things that are liquid, transparent, use them for tax strategies, 245 00:11:49,480 --> 00:11:52,880 Speaker 3: build models, and the models allow you to be dynamic 246 00:11:53,000 --> 00:11:56,240 Speaker 3: around putting ETFs in, and so there's a whole new 247 00:11:56,400 --> 00:12:00,199 Speaker 3: cohort of investors and existing clients. It's like, gosh, the 248 00:12:00,280 --> 00:12:03,360 Speaker 3: ETF rapper is a really effective one. So we are 249 00:12:03,440 --> 00:12:04,960 Speaker 3: taking a lot of our strategies. So the one we're 250 00:12:05,000 --> 00:12:08,400 Speaker 3: launching now is our total return strategy, very close to 251 00:12:09,000 --> 00:12:12,640 Speaker 3: what is the mutual fund, but it gives people who 252 00:12:12,679 --> 00:12:13,000 Speaker 3: want to. 253 00:12:13,080 --> 00:12:15,240 Speaker 1: Use that rapper, it gives them the ability to do it. 254 00:12:15,320 --> 00:12:17,800 Speaker 3: And you know, we launch this income fund that is 255 00:12:18,160 --> 00:12:21,800 Speaker 3: roughly similar to a fund we run called SiO Strategic 256 00:12:21,840 --> 00:12:25,360 Speaker 3: Income Opportunities. But boy, it's gotten the receptivity to it, 257 00:12:25,480 --> 00:12:27,880 Speaker 3: the rate at which it's grown. Some of it is 258 00:12:28,000 --> 00:12:30,920 Speaker 3: because it's an income producing seven percent yield an environment 259 00:12:31,040 --> 00:12:34,320 Speaker 3: like this with a low volatility to it. Similar people 260 00:12:34,320 --> 00:12:35,680 Speaker 3: are coming in the high yield, but this is actually 261 00:12:35,720 --> 00:12:38,720 Speaker 3: lower volatile. So it's gotten a tremendous amount of attention 262 00:12:39,280 --> 00:12:41,920 Speaker 3: people putting money in, and so we're launching this one, 263 00:12:41,960 --> 00:12:44,839 Speaker 3: which is more of total return. Like when people do 264 00:12:44,960 --> 00:12:48,720 Speaker 3: sixty forty, this would be the forty and so an 265 00:12:48,800 --> 00:12:52,120 Speaker 3: AG index like, but we use a lot of strategies 266 00:12:52,120 --> 00:12:54,640 Speaker 3: to generate more return than the index. So that's why 267 00:12:54,679 --> 00:12:56,439 Speaker 3: it's gotten a lot of attention. And I think you'll 268 00:12:56,440 --> 00:12:59,000 Speaker 3: see a lot of people say, particularly now with rates 269 00:12:59,000 --> 00:13:01,839 Speaker 3: heaven backed up, gosh, equities have had a good go, 270 00:13:02,559 --> 00:13:05,120 Speaker 3: I'm gonna look for some fixed income and total return 271 00:13:05,280 --> 00:13:07,600 Speaker 3: is a nice match to your equity portfolio. 272 00:13:07,800 --> 00:13:10,079 Speaker 1: If I'm putting together the portfolio and let's assume I 273 00:13:10,120 --> 00:13:13,240 Speaker 1: want some ETFs in it, how do I choose your 274 00:13:13,360 --> 00:13:15,559 Speaker 1: ETFs as supposed some others? I mean, how does this 275 00:13:15,640 --> 00:13:18,240 Speaker 1: fit into my portfolio? What does it balance against? So? 276 00:13:18,440 --> 00:13:20,120 Speaker 3: I mean it said one thing about fixed income, and 277 00:13:20,760 --> 00:13:23,599 Speaker 3: I run a lot of equity portfolios and fixed income portfolios. 278 00:13:23,880 --> 00:13:26,760 Speaker 3: The one thing about fixed income is there sixty eight 279 00:13:26,960 --> 00:13:30,680 Speaker 3: thousand fixed income securities versus you know the SMP five hundred, 280 00:13:31,240 --> 00:13:34,040 Speaker 3: there are sixty eight thousand, and your ability to create 281 00:13:34,160 --> 00:13:37,480 Speaker 3: additional return. They're using your research, your analytics, your quant 282 00:13:38,120 --> 00:13:41,800 Speaker 3: fixed income market, to most investors is a pretty opaque market. 283 00:13:41,920 --> 00:13:43,520 Speaker 3: It's just hard to figure out should I buy a 284 00:13:43,559 --> 00:13:48,240 Speaker 3: double a colo, a trip la commercial mortgage backed security. 285 00:13:48,760 --> 00:13:51,120 Speaker 3: So the benefit of and one of the secrets to 286 00:13:51,200 --> 00:13:53,800 Speaker 3: fixed income for so many years, is if you can 287 00:13:53,920 --> 00:13:57,160 Speaker 3: run more income than the index, but then manage your 288 00:13:57,240 --> 00:13:59,640 Speaker 3: volatility because a lot of parts of the index are inefficient, 289 00:14:00,080 --> 00:14:03,079 Speaker 3: too rich, and so you cut out the bad stuff 290 00:14:03,480 --> 00:14:05,000 Speaker 3: and then you build a lot of income and you 291 00:14:05,080 --> 00:14:08,800 Speaker 3: can outperform. And most managers ourselves included post managers and 292 00:14:08,880 --> 00:14:12,440 Speaker 3: fixing them outperform, outperform indicies. You know what we think 293 00:14:12,559 --> 00:14:16,520 Speaker 3: we're pretty good at is we use so much analytics, 294 00:14:16,679 --> 00:14:21,880 Speaker 3: risk management, increasingly artificial intelligence, looking at data signals. You know, 295 00:14:21,880 --> 00:14:27,520 Speaker 3: our research allows us to look at collateral under a mortgage, residential, commercial, mortgage. 296 00:14:27,560 --> 00:14:30,320 Speaker 3: So you know, the ability to tap into our resources 297 00:14:30,400 --> 00:14:32,640 Speaker 3: to try and create you know, real return when income 298 00:14:32,760 --> 00:14:36,400 Speaker 3: is now so beneficial is something that I think, you know, 299 00:14:36,480 --> 00:14:38,160 Speaker 3: why why I think people will. 300 00:14:38,040 --> 00:14:41,240 Speaker 1: Invest in it if I'm looking at various alternatives. How 301 00:14:41,360 --> 00:14:43,440 Speaker 1: much of this is betting on Rick Reader and his 302 00:14:43,640 --> 00:14:47,000 Speaker 1: team being able to manage that complicated world of bonds 303 00:14:47,040 --> 00:14:49,040 Speaker 1: that you just describe. Yeah, so it's a great question. 304 00:14:49,200 --> 00:14:51,720 Speaker 3: I've never asked that in a couple of different So 305 00:14:51,760 --> 00:14:53,920 Speaker 3: we launched the first one, which is this income fund, 306 00:14:54,560 --> 00:14:58,240 Speaker 3: and that is very much and aggressive. We'll look at 307 00:14:58,360 --> 00:15:02,040 Speaker 3: things like European invests, European high yield, to merging markets, 308 00:15:02,360 --> 00:15:04,160 Speaker 3: and so it is very much in aggresive because they're 309 00:15:04,160 --> 00:15:06,040 Speaker 3: trying to keep our income high, you know, seven percent 310 00:15:06,120 --> 00:15:09,640 Speaker 3: income when an index is five ish. So that is 311 00:15:09,880 --> 00:15:12,800 Speaker 3: very much tapping into because we're taking risk to get 312 00:15:12,880 --> 00:15:16,560 Speaker 3: that to get that yield. Total return is still you know, 313 00:15:16,640 --> 00:15:19,120 Speaker 3: we're trying to we're trying to beat the index, but 314 00:15:19,280 --> 00:15:21,920 Speaker 3: we're more tethered to the index. I mean, it should 315 00:15:21,920 --> 00:15:24,760 Speaker 3: be much more sincere to the aggregate index. So people 316 00:15:24,800 --> 00:15:28,600 Speaker 3: should count on it doing interest rate wise, credit wise 317 00:15:28,640 --> 00:15:30,320 Speaker 3: relative to the index. When people put it in their 318 00:15:30,360 --> 00:15:33,280 Speaker 3: portfolio against equities, they should look at it relative to that. 319 00:15:33,880 --> 00:15:36,320 Speaker 3: We've had a really good track record knock wood of 320 00:15:36,680 --> 00:15:40,600 Speaker 3: beating the index and so, you know, but the differentiation 321 00:15:40,760 --> 00:15:43,440 Speaker 3: and total return, we are going to be more index oriented. 322 00:15:43,720 --> 00:15:45,800 Speaker 3: We're just going to try and create an extra hundred 323 00:15:45,880 --> 00:15:48,480 Speaker 3: basis points or so over that index over time versus 324 00:15:48,600 --> 00:15:50,760 Speaker 3: my income one. We're just going to try and create 325 00:15:50,800 --> 00:15:52,520 Speaker 3: a lot of income for you persistently. 326 00:15:52,760 --> 00:15:55,680 Speaker 1: We had a very eventful twenty twenty three. Let's look 327 00:15:55,680 --> 00:15:57,400 Speaker 1: forward to twenty twenty four, and I guess one thing 328 00:15:57,440 --> 00:15:59,840 Speaker 1: setting it up is actually what Jay Powell said here 329 00:16:00,120 --> 00:16:02,200 Speaker 1: just this week at the end of twenty twenty three 330 00:16:02,400 --> 00:16:05,360 Speaker 1: about the possibility of rate cuts. Boy, he really embraced it. 331 00:16:05,440 --> 00:16:07,480 Speaker 1: If anything, it was pretty incredible, David. 332 00:16:07,880 --> 00:16:10,880 Speaker 3: You know, it was very different than we were literally 333 00:16:10,880 --> 00:16:13,200 Speaker 3: a couple of weeks ago, certainly in the last meeting, 334 00:16:13,760 --> 00:16:15,440 Speaker 3: and that was you know, that was pretty aggressive. I 335 00:16:15,480 --> 00:16:18,160 Speaker 3: think it is the right direction to travel. You know, 336 00:16:18,240 --> 00:16:20,960 Speaker 3: you do look at inflation. I mean six month CPI 337 00:16:21,120 --> 00:16:23,920 Speaker 3: core PC are all trending down aggressively. I mean, we 338 00:16:24,000 --> 00:16:27,120 Speaker 3: look at numbers over six month moving averages. Service inflation 339 00:16:27,200 --> 00:16:29,680 Speaker 3: is still a bit sticky, but the averages are coming 340 00:16:29,760 --> 00:16:31,920 Speaker 3: down well into the twos. Core PC we think by 341 00:16:32,000 --> 00:16:34,080 Speaker 3: January is in the two So I think it was 342 00:16:34,120 --> 00:16:36,360 Speaker 3: the right thing to move it. What was surprising is 343 00:16:36,440 --> 00:16:38,880 Speaker 3: how fast I thought there would be a more of 344 00:16:38,960 --> 00:16:41,840 Speaker 3: a transition to it. Listen to long term funds rate 345 00:16:41,960 --> 00:16:44,320 Speaker 3: is two and a half percent. The Fed projections what 346 00:16:44,400 --> 00:16:47,640 Speaker 3: they put in that data yesterday they had real GDP 347 00:16:47,760 --> 00:16:49,640 Speaker 3: of one and a half and they have core PC 348 00:16:49,800 --> 00:16:52,320 Speaker 3: at two and a half. That's pretty normal. I mean 349 00:16:52,360 --> 00:16:54,880 Speaker 3: that is, if you said, over time one and a 350 00:16:54,920 --> 00:16:57,760 Speaker 3: half growth, two and a half inflation, maybe get two 351 00:16:57,800 --> 00:16:59,640 Speaker 3: inflation down to two at some point, but it's not 352 00:16:59,680 --> 00:17:02,600 Speaker 3: that far are We've got a funds rate that's. 353 00:17:02,480 --> 00:17:03,920 Speaker 1: Five and three ace percent. 354 00:17:04,800 --> 00:17:07,200 Speaker 3: That real rate is really high. The Fed has to 355 00:17:07,280 --> 00:17:09,640 Speaker 3: get rates down, has to start to move them down. 356 00:17:10,160 --> 00:17:11,880 Speaker 3: I thought they would take a bit of time because 357 00:17:11,880 --> 00:17:15,399 Speaker 3: of financial conditions, managing financial conditions. I thought they'd take 358 00:17:15,440 --> 00:17:17,560 Speaker 3: a bit more time. But I think the direction travel 359 00:17:17,680 --> 00:17:19,119 Speaker 3: is right, and I think they are moving in a 360 00:17:19,160 --> 00:17:20,679 Speaker 3: direction that is that is the right thing. 361 00:17:20,800 --> 00:17:23,160 Speaker 1: By the way, that real rate actually climbs its inflation 362 00:17:23,359 --> 00:17:25,639 Speaker 1: goes down, right, So to some extent they have to 363 00:17:25,680 --> 00:17:28,520 Speaker 1: come down to just keep the same level of restrictiveness. 364 00:17:28,680 --> 00:17:30,359 Speaker 3: So much your power set, And he said at the 365 00:17:30,440 --> 00:17:32,439 Speaker 3: last meeting too, they asked, so you focus on nominal 366 00:17:32,520 --> 00:17:34,800 Speaker 3: or real rates? And he said it again, he focus 367 00:17:34,880 --> 00:17:36,639 Speaker 3: on the real rate of interest. If they focus on 368 00:17:36,680 --> 00:17:40,240 Speaker 3: the real rate of interest, definitionally inflations two and a half, 369 00:17:40,960 --> 00:17:42,720 Speaker 3: you know, you think about over time, the real rate 370 00:17:42,760 --> 00:17:47,479 Speaker 3: of interest is closer to zero to one running three percent. 371 00:17:47,680 --> 00:17:50,200 Speaker 1: Real rates too high. He's got to at least get. 372 00:17:50,119 --> 00:17:52,320 Speaker 3: It down one hundred base points, and I think he's 373 00:17:52,359 --> 00:17:54,800 Speaker 3: got to get it down two hundred basis points because 374 00:17:54,880 --> 00:17:57,600 Speaker 3: growth is slowing, and he talked about you're starting to 375 00:17:57,640 --> 00:18:00,280 Speaker 3: see more balance in the labor force. Virtually every cater 376 00:18:00,440 --> 00:18:03,879 Speaker 3: is showing still solid, but more balanced alongside of inflation 377 00:18:04,040 --> 00:18:07,880 Speaker 3: coming down. So the real rate definitionally per the way 378 00:18:07,920 --> 00:18:11,040 Speaker 3: they've described, their focus has to come down. And I 379 00:18:11,080 --> 00:18:13,159 Speaker 3: think they're going to get started quite frankly, you know, 380 00:18:13,200 --> 00:18:14,520 Speaker 3: I think they're gonna ge started in may be. 381 00:18:14,560 --> 00:18:17,040 Speaker 1: Could they start a little bit earlier if possible? What 382 00:18:17,119 --> 00:18:19,040 Speaker 1: does that tell me as an investor? I mean, bonds 383 00:18:19,080 --> 00:18:21,119 Speaker 1: of had a tough time as those rates went up. 384 00:18:21,520 --> 00:18:23,760 Speaker 1: The bonds really took it on the chin, so to speak. 385 00:18:24,000 --> 00:18:25,600 Speaker 1: But what does that say for twenty twenty four in 386 00:18:25,720 --> 00:18:26,359 Speaker 1: terms of bonds? 387 00:18:26,760 --> 00:18:28,080 Speaker 3: So I'd say one thing, I don't know. I brought 388 00:18:28,119 --> 00:18:29,400 Speaker 3: a chart. I don't know if you have that chart 389 00:18:29,440 --> 00:18:32,280 Speaker 3: that shows that there was we just went through the 390 00:18:32,400 --> 00:18:36,480 Speaker 3: most extraordinary draw down on the bond market. So for 391 00:18:36,600 --> 00:18:40,000 Speaker 3: three years you had this extraordinary draw down that was 392 00:18:40,080 --> 00:18:43,040 Speaker 3: literally a twenty percent return down. I mean we were 393 00:18:43,119 --> 00:18:45,719 Speaker 3: to the point where long bonds were trading. There's one 394 00:18:45,720 --> 00:18:47,040 Speaker 3: of the long line trades at forty seven and a 395 00:18:47,080 --> 00:18:49,639 Speaker 3: half cents on the dollar. Nobody thinks triple A treasury 396 00:18:49,640 --> 00:18:51,600 Speaker 3: should trade forty seven and a half cents on the dollar. 397 00:18:51,640 --> 00:18:54,400 Speaker 3: But they were issued in twenty post COVID, and now 398 00:18:54,520 --> 00:18:56,280 Speaker 3: they've they've come under this incredible pressure. 399 00:18:56,400 --> 00:18:59,440 Speaker 1: So now I did this presentation today. 400 00:18:59,240 --> 00:19:01,080 Speaker 3: Where I called it, you know, the only way to 401 00:19:01,119 --> 00:19:03,600 Speaker 3: make a big splash is you need the diving board 402 00:19:03,640 --> 00:19:05,320 Speaker 3: to be really high. How does the diving board get 403 00:19:05,359 --> 00:19:08,440 Speaker 3: really high. It's when losses happen before it, and you 404 00:19:08,640 --> 00:19:11,920 Speaker 3: just build the levels. In terms of your upside potential return, 405 00:19:12,400 --> 00:19:15,200 Speaker 3: I think next year, if you believe, which I believe 406 00:19:15,280 --> 00:19:17,480 Speaker 3: in the FED has pressage that we are going to 407 00:19:17,480 --> 00:19:19,800 Speaker 3: start to bring their rate down, you can create a 408 00:19:19,880 --> 00:19:21,920 Speaker 3: lot of income and portfolios, and I think the total 409 00:19:22,000 --> 00:19:24,600 Speaker 3: return performance is going to be really good. Can we 410 00:19:24,760 --> 00:19:27,040 Speaker 3: build portfolios today there are still six and a half 411 00:19:27,160 --> 00:19:30,680 Speaker 3: percent And by the way, for we're building, we're buying. 412 00:19:30,880 --> 00:19:33,920 Speaker 3: We're buying assets in Europe. Now two and three year 413 00:19:34,040 --> 00:19:37,080 Speaker 3: investment created European assets. As a dollar investor, you're getting 414 00:19:37,080 --> 00:19:39,480 Speaker 3: at six and a quarter. They were financing at negative 415 00:19:39,520 --> 00:19:42,560 Speaker 3: interest rates back in twenty twenty one negative. Now we're 416 00:19:42,560 --> 00:19:44,800 Speaker 3: at six and a quarter. Listen, I think the return 417 00:19:44,880 --> 00:19:46,840 Speaker 3: I mean, I think you can clip six percent six 418 00:19:46,920 --> 00:19:49,359 Speaker 3: and a half percent yield that can turn into double 419 00:19:49,440 --> 00:19:51,800 Speaker 3: digit return. You could get a ten if they bring 420 00:19:51,880 --> 00:19:52,520 Speaker 3: the raid down. 421 00:19:53,040 --> 00:19:54,800 Speaker 1: It could such a treat tab in Wall Street. Thank 422 00:19:54,840 --> 00:19:59,520 Speaker 1: you so much. That's Rick Reader of Black Rock coming up, 423 00:19:59,600 --> 00:20:01,840 Speaker 1: waiting for the the other shoe to drop. We talk 424 00:20:01,920 --> 00:20:05,000 Speaker 1: with Glenn August of Oak Hill Advisors on the opportunities 425 00:20:05,040 --> 00:20:07,040 Speaker 1: for distressed investing in the new year. 426 00:20:07,760 --> 00:20:11,000 Speaker 6: We think there's going to be an extraordinary opportunity to 427 00:20:11,080 --> 00:20:14,720 Speaker 6: provide customized capital solutions to help these companies refinance. 428 00:20:15,920 --> 00:20:18,280 Speaker 1: That's coming up next on Wall Street Week on Bloomberg. 429 00:20:19,680 --> 00:20:23,880 Speaker 2: This is Bloomberg Wall Street Week with David Weston from 430 00:20:24,040 --> 00:20:24,960 Speaker 2: Bloomberg Radio. 431 00:20:31,359 --> 00:20:34,040 Speaker 1: This is Wall Street Week. I'm David Weston. Twenty twenty 432 00:20:34,080 --> 00:20:37,359 Speaker 1: three saw record rate hikes directed at curbing inflation, but 433 00:20:37,560 --> 00:20:40,720 Speaker 1: inevitably putting pressure on debtors as the cost of borrowing 434 00:20:40,760 --> 00:20:43,760 Speaker 1: money or refinancing what they already have borrowed goes up. 435 00:20:44,160 --> 00:20:46,280 Speaker 1: To give us a read on how bad the stress 436 00:20:46,359 --> 00:20:49,280 Speaker 1: could get and what opportunities may be presented to investors. 437 00:20:49,440 --> 00:20:52,200 Speaker 1: Welcome now, Glenn August, He's founder and CEO of Oak 438 00:20:52,280 --> 00:20:54,480 Speaker 1: Hill Advisors. Glenn, welcome to Wall Street Week. Great to 439 00:20:54,520 --> 00:20:56,160 Speaker 1: have you here, Thank you for having me. So let's 440 00:20:56,160 --> 00:20:58,880 Speaker 1: start on distress because you have a new i think 441 00:20:58,960 --> 00:21:02,399 Speaker 1: third fund, something over two billion dollars. Why did you 442 00:21:02,480 --> 00:21:04,639 Speaker 1: decide this was a particularly good time to have some 443 00:21:04,760 --> 00:21:06,920 Speaker 1: dry powder to maybe jump into the distress area. 444 00:21:07,240 --> 00:21:10,480 Speaker 6: Well, look, I've been doing distress now for over thirty 445 00:21:10,560 --> 00:21:15,239 Speaker 6: five years, and distressed is an opportunistic strategy, and there 446 00:21:15,280 --> 00:21:18,280 Speaker 6: are moments whe are distressed is super exciting, there's. 447 00:21:18,160 --> 00:21:19,399 Speaker 5: Moments where's less exciting. 448 00:21:19,520 --> 00:21:22,520 Speaker 6: And our view is having capital ready to sees on 449 00:21:22,560 --> 00:21:24,280 Speaker 6: that opportunity always makes sense. 450 00:21:24,960 --> 00:21:26,240 Speaker 5: And as you highlighted in. 451 00:21:26,240 --> 00:21:29,040 Speaker 6: Your opening comments, rates have gone on five hundred basis points. 452 00:21:29,080 --> 00:21:31,200 Speaker 6: Obviously this week, in the last couple of weeks have 453 00:21:31,280 --> 00:21:32,920 Speaker 6: been pretty big weeks for the rates coming down. 454 00:21:33,400 --> 00:21:34,800 Speaker 5: But the extraordinary thing that. 455 00:21:34,840 --> 00:21:39,160 Speaker 6: We're facing is a trillion plus dollars of debt that's 456 00:21:39,200 --> 00:21:41,639 Speaker 6: coming due over the next three four years, and that 457 00:21:41,880 --> 00:21:43,200 Speaker 6: debt needs to get refinanced. 458 00:21:43,720 --> 00:21:45,920 Speaker 5: And as we look at the picture of that the 459 00:21:46,040 --> 00:21:47,400 Speaker 5: profile of that debt. 460 00:21:47,880 --> 00:21:49,960 Speaker 6: We think that it's not going to be able to 461 00:21:50,000 --> 00:21:53,000 Speaker 6: be refinanced in the syndicated markets, and so we think 462 00:21:53,040 --> 00:21:57,080 Speaker 6: there's going to be an extraordinary opportunity to provide customized 463 00:21:57,119 --> 00:22:01,040 Speaker 6: capital solutions to help these companies refinance. And when I 464 00:22:01,160 --> 00:22:05,640 Speaker 6: look over the different distress cycles over the last few decades, 465 00:22:06,119 --> 00:22:09,240 Speaker 6: it was a very different opportunity. There was a big recession, 466 00:22:09,240 --> 00:22:11,800 Speaker 6: there was geopolitical events, whether it's ninety one, two thousand 467 00:22:11,800 --> 00:22:15,120 Speaker 6: and one, two thousand eight global financial crisis. This time, 468 00:22:16,160 --> 00:22:18,159 Speaker 6: it feels like it's not necessarily going to be a 469 00:22:18,280 --> 00:22:21,600 Speaker 6: big recession, although it's obviously still out there as a 470 00:22:21,640 --> 00:22:23,680 Speaker 6: possibility that causes the stress cycle. 471 00:22:24,080 --> 00:22:26,360 Speaker 5: This time is just the reality there's so much debt coming. 472 00:22:26,240 --> 00:22:29,200 Speaker 1: Due, well, is it? In some sense it's glenn a 473 00:22:29,359 --> 00:22:32,879 Speaker 1: macro event of having money essentially free for a long 474 00:22:32,920 --> 00:22:35,359 Speaker 1: period of time, which is pretty extraordinary globally, not just 475 00:22:35,400 --> 00:22:37,560 Speaker 1: the United States, And you come off of that and 476 00:22:37,600 --> 00:22:40,480 Speaker 1: there are consequences that maybe the macro event as a work. Yeah. 477 00:22:40,480 --> 00:22:44,119 Speaker 6: Look, I think that the macro the inflation that we 478 00:22:44,240 --> 00:22:46,600 Speaker 6: saw over the last couple of years post COVID, clearly 479 00:22:46,720 --> 00:22:50,000 Speaker 6: put a major strain on companies, and when you raise 480 00:22:50,040 --> 00:22:53,040 Speaker 6: rates five hundred basis points, that has a big dent 481 00:22:53,200 --> 00:22:56,040 Speaker 6: in free cash flow. And a lot of companies issued 482 00:22:56,080 --> 00:22:57,840 Speaker 6: debt a couple of years ago and rates for lower 483 00:22:57,880 --> 00:23:01,760 Speaker 6: and debt comes due. We look at that profile again, 484 00:23:01,840 --> 00:23:03,920 Speaker 6: A trillion one in the US over the next three 485 00:23:04,000 --> 00:23:07,040 Speaker 6: four years. It's the highest amount of debt coming to 486 00:23:07,200 --> 00:23:09,480 Speaker 6: over the next three years in any point in the 487 00:23:09,560 --> 00:23:11,720 Speaker 6: last twenty thirty years in the leverage finance markets. And 488 00:23:11,760 --> 00:23:14,680 Speaker 6: there's another three hundred four hundred billion of debt coming 489 00:23:14,760 --> 00:23:15,320 Speaker 6: due in Europe. 490 00:23:15,359 --> 00:23:18,160 Speaker 5: And so I think there's really two ways to play distressed. 491 00:23:18,320 --> 00:23:20,760 Speaker 6: I think in this upcoming cycle, one is going to 492 00:23:20,800 --> 00:23:22,840 Speaker 6: be buying into those companies that you think will be 493 00:23:22,920 --> 00:23:25,560 Speaker 6: able to refinance the debt and buying at discounts, and 494 00:23:25,840 --> 00:23:28,840 Speaker 6: we think make double digit opportunities there. And then the second, 495 00:23:28,880 --> 00:23:31,800 Speaker 6: as I said a moment ago, is providing customized capital 496 00:23:31,880 --> 00:23:36,879 Speaker 6: solutions where you can layer in capital, get security because 497 00:23:36,880 --> 00:23:40,520 Speaker 6: a lot of the assets are not secured, get downside protection, 498 00:23:40,680 --> 00:23:42,080 Speaker 6: then have some upside opportunity. 499 00:23:42,359 --> 00:23:44,280 Speaker 1: So the rise of interest rates was a very big 500 00:23:44,400 --> 00:23:47,840 Speaker 1: story for the business world twenty Another big story actually 501 00:23:47,960 --> 00:23:51,240 Speaker 1: was the growth of private credit. Right every single day, 502 00:23:51,320 --> 00:23:53,600 Speaker 1: we seem to see something new in private credit. You're 503 00:23:53,880 --> 00:23:56,480 Speaker 1: very active in private credit, have been for a long time. 504 00:23:57,200 --> 00:23:59,680 Speaker 1: Why is it growing so fast? What is the itch 505 00:23:59,760 --> 00:24:01,080 Speaker 1: that's being scratched there? 506 00:24:01,280 --> 00:24:06,320 Speaker 6: So private credit is an extraordinary asset class. The itch 507 00:24:06,440 --> 00:24:09,920 Speaker 6: that is being scratched, to ease your phrase is the 508 00:24:10,080 --> 00:24:16,760 Speaker 6: demand by private equity sponsors and by non private equity sponsors. 509 00:24:16,680 --> 00:24:20,640 Speaker 5: To get a solution to help their capital structure. 510 00:24:20,720 --> 00:24:24,879 Speaker 6: Either to do new transactions because they're not confident in 511 00:24:24,920 --> 00:24:28,960 Speaker 6: the access to the syndicated markets, to have a bespoke 512 00:24:29,040 --> 00:24:34,080 Speaker 6: transaction that provides for asset sales or business improvement, to 513 00:24:34,280 --> 00:24:36,960 Speaker 6: have flexibility with a partner that. 514 00:24:37,000 --> 00:24:38,359 Speaker 5: You've worked with for years. 515 00:24:39,280 --> 00:24:42,320 Speaker 6: And the reality is that the syndicated markets because of 516 00:24:42,359 --> 00:24:47,280 Speaker 6: the proliferation of clos and the banks withdrawing from the 517 00:24:47,400 --> 00:24:50,280 Speaker 6: market in a pretty meaningful way post GFC, but with 518 00:24:50,520 --> 00:24:54,200 Speaker 6: increased capital requirements, it seems like it's be even further withdrawal. 519 00:24:54,560 --> 00:24:57,440 Speaker 6: In fact, you're seeing banks do private partnerships with people 520 00:24:57,560 --> 00:24:59,639 Speaker 6: like ourselves. We have a big partnership with PMO as 521 00:24:59,640 --> 00:25:02,240 Speaker 6: an exis sample, but others are doing them as well. 522 00:25:02,800 --> 00:25:06,159 Speaker 5: We think that the banks aren't providing the capital. The 523 00:25:06,320 --> 00:25:08,640 Speaker 5: clos are very structured. 524 00:25:08,240 --> 00:25:10,040 Speaker 6: Vehicles, and while they're great vehicles, and we have a 525 00:25:10,160 --> 00:25:13,520 Speaker 6: very large COLO business ourselves, only certain types of assets 526 00:25:13,600 --> 00:25:15,520 Speaker 6: fit in there. And so when we look at the 527 00:25:15,560 --> 00:25:19,240 Speaker 6: private credit market today, the opportunity to invest in the 528 00:25:19,320 --> 00:25:22,800 Speaker 6: first zero to forty percent of a capital structure zero 529 00:25:22,880 --> 00:25:26,520 Speaker 6: to forty five, maybe fifty percent sometimes in a multi 530 00:25:26,640 --> 00:25:29,880 Speaker 6: billion dollar company in industry we like, with management team, 531 00:25:29,920 --> 00:25:32,760 Speaker 6: we like, with sponsorship we like, and the opportunity to 532 00:25:32,840 --> 00:25:37,600 Speaker 6: make ten to eleven percent plus unlevered, I think is 533 00:25:37,640 --> 00:25:38,320 Speaker 6: really attractive. 534 00:25:38,480 --> 00:25:40,120 Speaker 1: Well, it's been great having you here on Wall Street. 535 00:25:40,119 --> 00:25:42,240 Speaker 1: We thank you so much. Glenn. That is Glenn August 536 00:25:42,320 --> 00:25:46,200 Speaker 1: of Oak Hill Advisors Global. Wall Street spent much of 537 00:25:46,280 --> 00:25:49,200 Speaker 1: twenty twenty three focused on tech, including ways in which 538 00:25:49,280 --> 00:25:52,560 Speaker 1: artificial intelligence could change our world. And so much of 539 00:25:52,640 --> 00:25:56,000 Speaker 1: what tech can do depends critically on the data it uses, 540 00:25:56,400 --> 00:25:58,560 Speaker 1: large amounts of it, by the way, and the quality 541 00:25:58,680 --> 00:26:02,040 Speaker 1: of that data it consumes. Sam Pomesno ran ibm as 542 00:26:02,160 --> 00:26:05,119 Speaker 1: chairman and CEO. Among other things, he now co chairs 543 00:26:05,160 --> 00:26:08,359 Speaker 1: that Data and Trust Alliance, which has just released proposed 544 00:26:08,520 --> 00:26:11,480 Speaker 1: data standards on behalf of nineteen companies, And we welcome 545 00:26:11,520 --> 00:26:14,040 Speaker 1: Sam now back to Wall Street Week, So welcome. It's 546 00:26:14,040 --> 00:26:15,960 Speaker 1: good to have you back here. So first of all, 547 00:26:16,160 --> 00:26:18,040 Speaker 1: why'd you start with data? There's a lot of concerns 548 00:26:18,080 --> 00:26:20,840 Speaker 1: about artificial intelligence and what it might do. Why did 549 00:26:20,840 --> 00:26:21,520 Speaker 1: you start with data? 550 00:26:21,680 --> 00:26:24,520 Speaker 4: It's interesting, it's a good question, Ken Schael and I'm 551 00:26:24,560 --> 00:26:26,919 Speaker 4: my partner at the Coachure and this thing got together 552 00:26:27,280 --> 00:26:29,840 Speaker 4: a couple of years ago and said, the issue with 553 00:26:29,960 --> 00:26:33,439 Speaker 4: AI is going to be responsible use and how can 554 00:26:33,520 --> 00:26:36,119 Speaker 4: you as an enterprise use it responsibly because it can 555 00:26:36,200 --> 00:26:36,960 Speaker 4: be transformational. 556 00:26:37,080 --> 00:26:38,800 Speaker 1: This is before all the excitement. 557 00:26:38,480 --> 00:26:41,680 Speaker 4: GPT four and all the things that have occurred now, right, 558 00:26:42,359 --> 00:26:45,520 Speaker 4: And so we formed this consortium of twenty now twenty 559 00:26:45,600 --> 00:26:50,800 Speaker 4: six companies since like Walmart and Nike, Fizerman, American Express, 560 00:26:50,840 --> 00:26:54,399 Speaker 4: I mean NFL, big guys at enterprise guys, right, and 561 00:26:54,520 --> 00:26:57,080 Speaker 4: got together and one of the key projects that they 562 00:26:57,119 --> 00:27:00,479 Speaker 4: thought we should focus on was data. The first one 563 00:27:00,560 --> 00:27:03,879 Speaker 4: was a bias in data and HR practices, which was 564 00:27:04,000 --> 00:27:06,720 Speaker 4: somewhat straightforward compared to let's say quality of data on 565 00:27:06,800 --> 00:27:09,520 Speaker 4: the Internet. And they came up with a whole set 566 00:27:09,560 --> 00:27:13,400 Speaker 4: of procedures that they implemented, processes, etc. And the most 567 00:27:13,480 --> 00:27:16,120 Speaker 4: recent one that their teams worked on was the quality 568 00:27:16,200 --> 00:27:19,000 Speaker 4: of the data, and then how do you responsibly use 569 00:27:19,119 --> 00:27:20,520 Speaker 4: that data so you can build trust. 570 00:27:21,160 --> 00:27:22,159 Speaker 1: There's a large enterprise. 571 00:27:22,240 --> 00:27:26,560 Speaker 4: Whether you're in consumer packaged goods or you're in finance, 572 00:27:26,640 --> 00:27:28,200 Speaker 4: or whatever happens to be, you have to have a 573 00:27:28,280 --> 00:27:32,720 Speaker 4: trusted relationship with the information that you're using to either 574 00:27:32,760 --> 00:27:36,760 Speaker 4: attract customers or transfer funds, or fraud whatever it happens 575 00:27:36,800 --> 00:27:37,000 Speaker 4: to be. 576 00:27:37,560 --> 00:27:40,840 Speaker 1: Data is an asset. It has value. So if people 577 00:27:40,960 --> 00:27:44,320 Speaker 1: did adopt this and it worked, could data sets be 578 00:27:44,440 --> 00:27:47,040 Speaker 1: more valuable than they might otherwise be if you didn't 579 00:27:47,080 --> 00:27:48,240 Speaker 1: have the metadata attached. 580 00:27:48,440 --> 00:27:51,359 Speaker 4: Now you're getting into something that's extremely complicated because the 581 00:27:51,480 --> 00:27:52,200 Speaker 4: answer is yes. 582 00:27:52,280 --> 00:27:54,080 Speaker 1: But then how do you value the asset. 583 00:27:54,480 --> 00:27:56,560 Speaker 4: We've done a lot of work on a balance sheet 584 00:27:56,800 --> 00:27:59,280 Speaker 4: because a lot of these assets are data and software 585 00:28:00,160 --> 00:28:03,080 Speaker 4: tangibles like a building or equipment or a tool or 586 00:28:03,119 --> 00:28:03,480 Speaker 4: whatever it. 587 00:28:03,520 --> 00:28:04,080 Speaker 1: Happens to be. 588 00:28:04,320 --> 00:28:07,760 Speaker 4: So in the economic modeling of these things, it's a 589 00:28:07,800 --> 00:28:11,360 Speaker 4: little more complicated. But your point is absolutely correct intellectually 590 00:28:11,480 --> 00:28:12,560 Speaker 4: that it is an asset. 591 00:28:12,640 --> 00:28:15,000 Speaker 1: It's an asset of the enterprise. It's also an asset 592 00:28:15,040 --> 00:28:15,720 Speaker 1: of the individual. 593 00:28:15,880 --> 00:28:17,440 Speaker 4: I mean I want to get into the consumer that 594 00:28:17,640 --> 00:28:20,720 Speaker 4: is your data, that is your asset, and the fact 595 00:28:20,800 --> 00:28:23,920 Speaker 4: how that data is being used, you should participate in 596 00:28:24,040 --> 00:28:26,720 Speaker 4: its use, as I'd argue, if it's an economic value, 597 00:28:26,760 --> 00:28:28,600 Speaker 4: you should share in the economic value. 598 00:28:28,920 --> 00:28:30,320 Speaker 1: Now that hasn't occurred. 599 00:28:30,080 --> 00:28:32,159 Speaker 4: Us to yet, but I do think some of the 600 00:28:32,240 --> 00:28:36,119 Speaker 4: solutions here is make it almost a commercial relationship between 601 00:28:36,160 --> 00:28:40,160 Speaker 4: the user and the service provider, so that if they 602 00:28:40,240 --> 00:28:43,320 Speaker 4: are using the data correctly and you've complied, that's fine, 603 00:28:43,400 --> 00:28:45,480 Speaker 4: and you get some economic value whatever that it could be, 604 00:28:45,520 --> 00:28:47,360 Speaker 4: free services, whatever that happens to be. 605 00:28:47,960 --> 00:28:50,320 Speaker 1: How is this working or do you anticipate it would 606 00:28:50,360 --> 00:28:53,880 Speaker 1: work across borders? Because this is a global business as 607 00:28:53,880 --> 00:28:56,520 Speaker 1: a part, particularly when you get into generaive AI, it's 608 00:28:56,560 --> 00:29:00,520 Speaker 1: global necessarily, is your vision that this would apply cross borders? 609 00:29:00,520 --> 00:29:02,760 Speaker 1: And yes, let me say even to China. 610 00:29:03,520 --> 00:29:07,760 Speaker 4: Well, if you left China out, I'd say yes. Now 611 00:29:07,840 --> 00:29:10,360 Speaker 4: we're going to get more complicated, or any any any 612 00:29:10,400 --> 00:29:15,120 Speaker 4: authority and government that uses the information for we would 613 00:29:15,200 --> 00:29:19,440 Speaker 4: do not as open democratic principles. Right, that's a complicated. 614 00:29:19,520 --> 00:29:22,000 Speaker 4: Let's just take a more straightforward world. Let's talk about 615 00:29:22,040 --> 00:29:25,040 Speaker 4: to say the West. Right, A lot of these companies, 616 00:29:25,400 --> 00:29:28,520 Speaker 4: as you know, operate around the world in all these places, 617 00:29:28,560 --> 00:29:32,000 Speaker 4: so they're going they will implement these approaches that they've 618 00:29:32,000 --> 00:29:35,000 Speaker 4: said they're going to adopt. Our hope is that we'll 619 00:29:35,040 --> 00:29:38,640 Speaker 4: get more participation from companies outside the United States that 620 00:29:38,720 --> 00:29:39,680 Speaker 4: will do the same thing. 621 00:29:40,320 --> 00:29:41,760 Speaker 5: But the where we began. 622 00:29:41,880 --> 00:29:43,520 Speaker 4: There are a couple of companies that have been involved 623 00:29:43,560 --> 00:29:46,200 Speaker 4: that were non domiciled in the US, but it's not 624 00:29:46,480 --> 00:29:48,120 Speaker 4: a larger portion of the twenty six. 625 00:29:48,280 --> 00:29:48,920 Speaker 5: It's a couple. 626 00:29:49,120 --> 00:29:52,360 Speaker 4: So we really think that by if these large take 627 00:29:52,360 --> 00:29:54,719 Speaker 4: a Walmart adopts people around the world as well, these 628 00:29:54,760 --> 00:29:56,680 Speaker 4: guys don't know what they're doing, or Nike, you know, 629 00:29:56,720 --> 00:29:59,360 Speaker 4: all these companies that operate everywhere else, that we'll get 630 00:29:59,440 --> 00:29:59,920 Speaker 4: up the adoption. 631 00:30:00,360 --> 00:30:02,480 Speaker 1: That's our hope. Sam. It's always good to have you 632 00:30:02,560 --> 00:30:04,720 Speaker 1: on Wall Street Week. Thank you so much. That's Sam Palmisano. 633 00:30:04,800 --> 00:30:07,560 Speaker 1: He is co chair of the Data and Trust Alliance. 634 00:30:09,440 --> 00:30:12,120 Speaker 1: Coming up eating a slice of humble Pie with our 635 00:30:12,200 --> 00:30:15,920 Speaker 1: holiday desserts this year. That's next on Wall Street Week 636 00:30:16,120 --> 00:30:27,560 Speaker 1: on Bloomberg. Finally, one more thought. Winston Churchill reportedly said 637 00:30:27,640 --> 00:30:30,800 Speaker 1: of his successor, Clement Attlee, he's a modest man, but 638 00:30:30,960 --> 00:30:33,800 Speaker 1: he has much to be honest about. It turns out 639 00:30:33,880 --> 00:30:36,160 Speaker 1: that as we move into the final days of twenty 640 00:30:36,200 --> 00:30:38,400 Speaker 1: twenty three, there are a fair number of us who 641 00:30:38,480 --> 00:30:41,080 Speaker 1: have much to be honest about. As we often do. 642 00:30:41,280 --> 00:30:44,200 Speaker 1: We entered the year full of confidence about all sorts 643 00:30:44,240 --> 00:30:47,080 Speaker 1: of things. My confidence that the Jets would finally be 644 00:30:47,120 --> 00:30:49,880 Speaker 1: a contender for the Super Bowl behind their superstar seventy 645 00:30:49,920 --> 00:30:53,320 Speaker 1: five million dollar quarterback Aaron Rodgers, only to lose him 646 00:30:53,360 --> 00:30:55,040 Speaker 1: to injury in the very first game. 647 00:30:55,400 --> 00:30:58,600 Speaker 8: Overall, his contract was about one hundred and twelve millions, 648 00:30:58,680 --> 00:31:00,640 Speaker 8: so even if you can't play, likes. 649 00:31:00,280 --> 00:31:03,040 Speaker 1: Going to be okay. Republicans on Capitol Hill went into 650 00:31:03,040 --> 00:31:05,160 Speaker 1: the new year confidence that they could finally score some 651 00:31:05,240 --> 00:31:08,000 Speaker 1: points with their new majority in the House of Representatives. 652 00:31:08,160 --> 00:31:11,560 Speaker 1: But then it took fifteen ballots to give Kevin McCarthy 653 00:31:11,640 --> 00:31:14,520 Speaker 1: the gavel. There are obstacles in my life. I have 654 00:31:14,800 --> 00:31:17,360 Speaker 1: fallen many times. There was a time I was going 655 00:31:17,400 --> 00:31:19,120 Speaker 1: to be Speaker and I couldn't, and you guys all 656 00:31:19,200 --> 00:31:22,360 Speaker 1: counted me out. I'm speaker. I'm the fifty fifth Speaker 657 00:31:22,400 --> 00:31:24,000 Speaker 1: of the House. And he held on to it for 658 00:31:24,120 --> 00:31:25,360 Speaker 1: only ten months. 659 00:31:25,920 --> 00:31:29,520 Speaker 3: The office of Speaker of the House of the United 660 00:31:29,560 --> 00:31:33,680 Speaker 3: States House of Representatives is hereby declared vacant. 661 00:31:34,240 --> 00:31:36,800 Speaker 1: US automakers went into twenty twenty three confident that the 662 00:31:36,880 --> 00:31:39,760 Speaker 1: demand for electric vehicles would give them momentum toward their 663 00:31:39,840 --> 00:31:44,120 Speaker 1: aggressive goals for replacing internal combustion engines in the near future. 664 00:31:44,480 --> 00:31:46,240 Speaker 1: But by the end of the year, Ford was said 665 00:31:46,320 --> 00:31:48,120 Speaker 1: to cut its production of the F one to fifty 666 00:31:48,240 --> 00:31:51,600 Speaker 1: lightning in half, and GM was redirecting some of its 667 00:31:51,680 --> 00:31:53,800 Speaker 1: EV investment toward its shareholders. 668 00:31:54,160 --> 00:31:57,680 Speaker 8: We never thought that the EV adoption would necessarily be 669 00:31:57,760 --> 00:31:58,400 Speaker 8: a straight line. 670 00:31:58,480 --> 00:32:01,040 Speaker 5: We've seen this in other markets. We're seeing it now 671 00:32:01,120 --> 00:32:01,600 Speaker 5: in the US. 672 00:32:01,680 --> 00:32:03,400 Speaker 8: But I think the thing that everybody has to remember, 673 00:32:03,640 --> 00:32:06,000 Speaker 8: if the growth is slowing, it is still growing. 674 00:32:06,320 --> 00:32:08,719 Speaker 1: On the economic front, China entered the new year by 675 00:32:08,800 --> 00:32:12,320 Speaker 1: lifting its COVID lockdown, which was widely expected to give 676 00:32:12,360 --> 00:32:15,680 Speaker 1: its economy a jumpstart. Is a big reopening to come 677 00:32:15,760 --> 00:32:17,760 Speaker 1: in China. I don't think it's happening now. 678 00:32:18,000 --> 00:32:20,040 Speaker 3: When it does happen, I think you are going to 679 00:32:20,120 --> 00:32:21,960 Speaker 3: see a very strong lifting growth. 680 00:32:21,920 --> 00:32:25,440 Speaker 1: To everyone's surprise, including Presumaly President Geez. It didn't work 681 00:32:25,480 --> 00:32:28,320 Speaker 1: out that way, and China continues to struggle with getting 682 00:32:28,360 --> 00:32:30,520 Speaker 1: its growth engine back on track. 683 00:32:31,000 --> 00:32:33,880 Speaker 7: I have been more optimistic about China in the past, 684 00:32:34,040 --> 00:32:36,760 Speaker 7: and I will say that I have recalibrated my views. 685 00:32:36,800 --> 00:32:39,160 Speaker 5: I mean, it is definitely going through a tough period. 686 00:32:39,520 --> 00:32:43,600 Speaker 1: But when it came to economic expectations, US prognosticators also 687 00:32:43,720 --> 00:32:46,920 Speaker 1: had plenty to be modest about as economists. After economists 688 00:32:46,960 --> 00:32:49,520 Speaker 1: went into the year predicting a recession that didn't come 689 00:32:49,840 --> 00:32:52,840 Speaker 1: at least yet, and markets weren't much better, predicting a 690 00:32:52,960 --> 00:32:55,560 Speaker 1: mere sixty six basis points and rate hikes from the 691 00:32:55,600 --> 00:32:58,320 Speaker 1: Fed in twenty twenty three, and we got one hundred 692 00:32:58,320 --> 00:33:01,520 Speaker 1: and fifty Over in Europe, market similarly got it wrong, 693 00:33:01,640 --> 00:33:04,080 Speaker 1: predicting one hundred and forty one basis points in higher 694 00:33:04,160 --> 00:33:06,480 Speaker 1: rates when it turned out to be two hundred and fifty. 695 00:33:07,040 --> 00:33:09,520 Speaker 1: So as we enter yet another new year full of 696 00:33:09,640 --> 00:33:12,840 Speaker 1: expectations and predictions, it may be wise to remember Winston 697 00:33:12,920 --> 00:33:16,320 Speaker 1: Churchill's suggestion that we may have much to be humble about. 698 00:33:16,960 --> 00:33:19,640 Speaker 1: But as with all rules, this one is honored in 699 00:33:19,760 --> 00:33:22,960 Speaker 1: the breach, and the breach in twenty twenty three must 700 00:33:23,000 --> 00:33:26,680 Speaker 1: surely be miss Taylor Swift. Whatever else happened this year, 701 00:33:26,920 --> 00:33:30,040 Speaker 1: whatever disappointments, the rest of US may have had, Taylor 702 00:33:30,080 --> 00:33:33,280 Speaker 1: Swift had absolutely nothing to be humble about. What she 703 00:33:33,760 --> 00:33:37,680 Speaker 1: has accomplished with her tour is unprecedented. 704 00:33:38,360 --> 00:33:42,120 Speaker 3: Never before have we ever seen an artist. 705 00:33:41,960 --> 00:33:46,360 Speaker 1: Put multiple stadium shows on sale in the same city 706 00:33:46,680 --> 00:33:49,360 Speaker 1: and blow them all out. She did so well that 707 00:33:49,560 --> 00:33:53,800 Speaker 1: Blackstone actually imitated her for their holiday video this year. 708 00:33:54,680 --> 00:33:55,160 Speaker 8: Sixty. 709 00:34:01,000 --> 00:34:02,840 Speaker 1: That does it. For this episode of Wall Street Week, 710 00:34:02,880 --> 00:34:05,720 Speaker 1: I'm David Weston. This is Bloomberg. See you next week.