1 00:00:00,760 --> 00:00:04,040 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 2 00:00:04,040 --> 00:00:06,920 Speaker 1: my co host Matt Miller. Every business day, we bring 3 00:00:06,960 --> 00:00:11,520 Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along 4 00:00:11,520 --> 00:00:15,560 Speaker 1: with essential market moving news on the Bloomberg Markets Podcast 5 00:00:15,600 --> 00:00:18,439 Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:22,239 Speaker 1: at Bloomberg dot com Slash podcast. Let's get back to 7 00:00:22,360 --> 00:00:27,000 Speaker 1: the inflation print we had today. It's high, but it's 8 00:00:27,000 --> 00:00:28,920 Speaker 1: coming down, but maybe not coming down as fast as 9 00:00:28,960 --> 00:00:31,880 Speaker 1: people would like. Alice Andrews joins us. She's US Interest 10 00:00:31,960 --> 00:00:36,320 Speaker 1: Rates and FX reporter with Bloomberg News. Alice, what was 11 00:00:36,360 --> 00:00:40,560 Speaker 1: your takeaway from the print we had today on CPI. Yeah, 12 00:00:40,640 --> 00:00:43,080 Speaker 1: I really thought that the market reaction, especially on the 13 00:00:43,120 --> 00:00:46,199 Speaker 1: treasury side, was just really wrong footed this morning. I 14 00:00:46,280 --> 00:00:48,920 Speaker 1: was very uncomfortable with the bull flattening that we saw 15 00:00:49,080 --> 00:00:52,800 Speaker 1: after the CPI number. I think that the market really 16 00:00:52,840 --> 00:00:56,000 Speaker 1: focused on that lower headline number and that drop in 17 00:00:56,080 --> 00:00:59,360 Speaker 1: year over year and inflation. But I think that the 18 00:01:00,000 --> 00:01:02,200 Speaker 1: thing that the market was really missing was that big 19 00:01:02,280 --> 00:01:05,640 Speaker 1: shelter component. And I really think that the whole thing 20 00:01:05,720 --> 00:01:07,840 Speaker 1: was about shelter. I mean, I think that either way 21 00:01:07,880 --> 00:01:11,080 Speaker 1: you slice or dice it, if you take shelter out 22 00:01:11,120 --> 00:01:13,640 Speaker 1: of your analysis or put it back in. I think 23 00:01:13,680 --> 00:01:17,600 Speaker 1: that inflation is still rising. So for example, if I mean, 24 00:01:18,240 --> 00:01:20,440 Speaker 1: if you look at it, inflation is coming down whether 25 00:01:20,480 --> 00:01:24,440 Speaker 1: you're looking at the headline, core or supercore. But the 26 00:01:24,480 --> 00:01:26,520 Speaker 1: fact of the matter is is that the FED really 27 00:01:26,560 --> 00:01:31,560 Speaker 1: targets the super core that excludes the shelter component of CPI. 28 00:01:31,680 --> 00:01:33,600 Speaker 1: And if you take a look at it, it's running 29 00:01:33,600 --> 00:01:36,480 Speaker 1: at five point seven percent year over year, and that 30 00:01:36,640 --> 00:01:41,080 Speaker 1: surpasses core CPI at five point six percent, And to me, 31 00:01:41,400 --> 00:01:44,080 Speaker 1: that's just an indicator that inflation is going to stay 32 00:01:44,080 --> 00:01:48,240 Speaker 1: pretty sticky. Yeah, And I mean, so the core was 33 00:01:48,320 --> 00:01:51,240 Speaker 1: higher than the headline, and you're saying the supercore is 34 00:01:51,280 --> 00:01:54,000 Speaker 1: even higher than the core. That's right. And we're hearing 35 00:01:54,080 --> 00:01:58,200 Speaker 1: more and more people Alice voice concerns about the stickiness 36 00:01:58,280 --> 00:02:00,840 Speaker 1: of inflation at these levels black Rock. I heard Wailey 37 00:02:00,880 --> 00:02:03,320 Speaker 1: this morning on Bloomberg Radio talking about that. But the 38 00:02:03,440 --> 00:02:06,240 Speaker 1: ECB is also concerned about the stickiness. The Bank of 39 00:02:06,240 --> 00:02:10,320 Speaker 1: England is also concerned about the stickiness. So is inflation 40 00:02:10,360 --> 00:02:15,839 Speaker 1: at these levels, you know, five percent here to stay? Oh? 41 00:02:15,880 --> 00:02:19,960 Speaker 1: I think it could stay there. Easily, if not go higher. 42 00:02:20,000 --> 00:02:22,840 Speaker 1: I mean the indicators that things that I really like 43 00:02:22,919 --> 00:02:26,359 Speaker 1: to look at is something like housing and cars. So 44 00:02:26,440 --> 00:02:29,720 Speaker 1: what I'm seeing in the housing market is that you know, 45 00:02:29,720 --> 00:02:31,720 Speaker 1: we have a spring market, right, so that's supposed to 46 00:02:31,760 --> 00:02:35,760 Speaker 1: bring a lot of supply, but it's not. And the 47 00:02:35,760 --> 00:02:38,959 Speaker 1: fact of the matter is low supply people still out 48 00:02:38,960 --> 00:02:42,760 Speaker 1: there wanting to buy houses. It just artificially keeps housing 49 00:02:42,800 --> 00:02:45,520 Speaker 1: prices strong because there's still so much competition to get 50 00:02:45,560 --> 00:02:47,960 Speaker 1: the few houses that are coming on the market. The 51 00:02:48,040 --> 00:02:52,360 Speaker 1: other thing is that rents, because housing market is staying high, 52 00:02:52,400 --> 00:02:54,160 Speaker 1: I think that rents are going to stay high. And 53 00:02:54,200 --> 00:02:57,359 Speaker 1: that's the big, you know, component that wants to take 54 00:02:57,400 --> 00:03:00,320 Speaker 1: out or put back in of their of their analysis 55 00:03:00,440 --> 00:03:03,560 Speaker 1: of inflation. And I think, again, anyway you slice it 56 00:03:03,639 --> 00:03:07,040 Speaker 1: or dice it, with or without shelter, inflation is staying high. 57 00:03:07,120 --> 00:03:10,239 Speaker 1: The other thing that I've been looking at is transportation, 58 00:03:10,280 --> 00:03:16,520 Speaker 1: and actually this month, transportation contributed positively to CPI. And 59 00:03:16,639 --> 00:03:19,560 Speaker 1: the thing is is that autos I think are going 60 00:03:19,600 --> 00:03:23,720 Speaker 1: to actually stay high as well. I've noticed that I've 61 00:03:23,720 --> 00:03:27,800 Speaker 1: noticed a big bag I've noticed resilience in used car 62 00:03:27,840 --> 00:03:31,320 Speaker 1: prices and carback said that yesterday. Yeah, and you haven't 63 00:03:31,360 --> 00:03:36,520 Speaker 1: seen you know, Tesla's price cuts. Notwithstanding you haven't seen 64 00:03:37,640 --> 00:03:42,080 Speaker 1: new car prices come down at all, they continue to rise. 65 00:03:42,720 --> 00:03:46,080 Speaker 1: So that's that's gonna be a problem as well. And 66 00:03:46,240 --> 00:03:49,360 Speaker 1: what is really happening is that incentives are picking up. 67 00:03:49,480 --> 00:03:51,400 Speaker 1: I don't know if you're noticing this, but you know, 68 00:03:51,440 --> 00:03:54,200 Speaker 1: watching TV. I actually saw an ad last night on 69 00:03:54,240 --> 00:03:56,120 Speaker 1: TV and I thought, oh, yeah, no, I haven't seen 70 00:03:56,160 --> 00:03:58,560 Speaker 1: that in a while. But in doing a little bit analysis, 71 00:03:58,920 --> 00:04:02,960 Speaker 1: incentives have and about five percent, we're starting to see 72 00:04:03,080 --> 00:04:07,480 Speaker 1: zero percent financing, three percent financing, and huge double digit 73 00:04:07,560 --> 00:04:10,720 Speaker 1: cash back, double digit cash back. Think about that. Those 74 00:04:10,760 --> 00:04:13,240 Speaker 1: are on like more expensive cars, but still that's just 75 00:04:13,400 --> 00:04:16,880 Speaker 1: that's a lot. And so I think that because the 76 00:04:16,880 --> 00:04:21,640 Speaker 1: consumer is so savvy, right prices start to come down, 77 00:04:22,240 --> 00:04:25,880 Speaker 1: people that are working with cash on hand, boom, they're 78 00:04:25,880 --> 00:04:28,840 Speaker 1: going in and buying like you know, kind of pouncing 79 00:04:28,880 --> 00:04:31,000 Speaker 1: like they're doing on housing. It something comes on the 80 00:04:31,040 --> 00:04:34,160 Speaker 1: market on the right block that you like, Boom, you're 81 00:04:34,200 --> 00:04:39,680 Speaker 1: going to buy it. Car prices showing some incentives, cash back, boom, 82 00:04:39,760 --> 00:04:43,360 Speaker 1: consumers are pouncing. They're very you know, price sensitive and savvy. 83 00:04:43,440 --> 00:04:47,400 Speaker 1: So I think that new car prices can stay firm 84 00:04:47,480 --> 00:04:50,600 Speaker 1: with these incentives. But the thing is is that cars 85 00:04:50,720 --> 00:04:54,320 Speaker 1: new cars are still really expensive, so that shifts a 86 00:04:54,440 --> 00:04:58,000 Speaker 1: subsector into the used car market, which I think can 87 00:04:58,080 --> 00:05:01,520 Speaker 1: stay strong. Yep. Absolutely kind of heard that from CarMax yesterday. 88 00:05:01,560 --> 00:05:05,000 Speaker 1: I'm wondering, Alice, why does a FEDS like to strip 89 00:05:05,000 --> 00:05:10,000 Speaker 1: out for this super core data point. Yeah, but doesn't everybody? 90 00:05:10,320 --> 00:05:12,880 Speaker 1: It affects everybody, doesn't it everybody's got to pay rent 91 00:05:12,960 --> 00:05:16,279 Speaker 1: or mortgage. Yeah, but I think that you know, it's 92 00:05:16,360 --> 00:05:20,440 Speaker 1: just an indicator that the FED is targeting. They had 93 00:05:20,480 --> 00:05:24,600 Speaker 1: talked a lot about, you know, housing prices remaining elevated 94 00:05:24,720 --> 00:05:28,360 Speaker 1: and rents remaining elevated, and how they think that rents 95 00:05:28,360 --> 00:05:30,960 Speaker 1: are going to reset lower once these liss come up. 96 00:05:31,560 --> 00:05:35,880 Speaker 1: I just don't really get that logic, because if you're 97 00:05:36,520 --> 00:05:41,440 Speaker 1: a landlord and you know that housing prices are high 98 00:05:41,520 --> 00:05:44,680 Speaker 1: and you missed an opportunity to raise rents in the 99 00:05:44,800 --> 00:05:48,320 Speaker 1: last year, I don't understand why you would think that 100 00:05:49,040 --> 00:05:51,920 Speaker 1: lises are going to reset lower. I don't think that 101 00:05:51,920 --> 00:05:53,960 Speaker 1: that's really going to happen. In terms of the wrong 102 00:05:53,960 --> 00:05:57,840 Speaker 1: footed move in the markets, especially in rates, Alice, we 103 00:05:58,160 --> 00:06:00,480 Speaker 1: saw a drop. I mean, I mean, looking ten year, 104 00:06:00,520 --> 00:06:02,240 Speaker 1: we saw a drop in ten year yields. Now it's 105 00:06:02,279 --> 00:06:05,320 Speaker 1: coming back to unchanged around three forty three forty one. 106 00:06:07,279 --> 00:06:10,040 Speaker 1: How do you see this reaction and what does that 107 00:06:10,080 --> 00:06:14,239 Speaker 1: mean the market expects from the Fed? Well, right after 108 00:06:14,279 --> 00:06:17,440 Speaker 1: the data of the market priced in four percent that's 109 00:06:17,480 --> 00:06:21,080 Speaker 1: funds rate in January. I mean that's a full point 110 00:06:21,160 --> 00:06:23,080 Speaker 1: below where we're at right now. I thought that that 111 00:06:23,200 --> 00:06:26,120 Speaker 1: was just crazy. And I think that you know what 112 00:06:26,200 --> 00:06:28,320 Speaker 1: happens on these big numbers, right you know, you get 113 00:06:28,360 --> 00:06:32,080 Speaker 1: a lot of emotional trading and position trading. And I 114 00:06:32,120 --> 00:06:34,160 Speaker 1: think that what you're seeing right now is a market 115 00:06:34,160 --> 00:06:36,720 Speaker 1: coming back a little bit to life. We're pairing some 116 00:06:36,839 --> 00:06:40,000 Speaker 1: of that steepening that we saw and we're backing off 117 00:06:40,000 --> 00:06:44,839 Speaker 1: of that rally. Rates are rising a little bit. I 118 00:06:44,960 --> 00:06:46,359 Speaker 1: think that this is the right move, And you know, 119 00:06:46,400 --> 00:06:48,279 Speaker 1: do you have to kind of remember sometimes it takes 120 00:06:48,279 --> 00:06:51,440 Speaker 1: a day or two for you know, big numbers to 121 00:06:51,480 --> 00:06:56,039 Speaker 1: get digested by the markets. And also participation isn't exactly 122 00:06:56,080 --> 00:06:59,360 Speaker 1: that high. The other thing I wanted to mention us, 123 00:07:00,600 --> 00:07:02,520 Speaker 1: we're gonna have to we'll get that next time because 124 00:07:02,520 --> 00:07:05,200 Speaker 1: we gotta short on time. We'll get the We're gonna 125 00:07:05,200 --> 00:07:07,320 Speaker 1: get you at Gang. Yeah, we want you back for sure. 126 00:07:07,320 --> 00:07:09,440 Speaker 1: Talking about Rachel, you know, she's a former floor clark 127 00:07:09,440 --> 00:07:11,640 Speaker 1: at bear Stern says she knows all that trading stuff. 128 00:07:11,680 --> 00:07:16,760 Speaker 1: Alice Andre's US interest rate reporter for Bloomberg News. You're 129 00:07:16,800 --> 00:07:20,920 Speaker 1: listening to the team ken'ser Line program Bloomberg Markets weekdays 130 00:07:20,920 --> 00:07:23,640 Speaker 1: at ten amis daring on Bloomberg dot Com, the I 131 00:07:23,800 --> 00:07:26,640 Speaker 1: Heart Radio app, and the Bloomberg Business App. We're listening 132 00:07:26,680 --> 00:07:31,720 Speaker 1: on demand wherever you get your podcast. Story that caught 133 00:07:31,760 --> 00:07:36,000 Speaker 1: my attention yesterday, Carnivals chief financial This is the cruise business. 134 00:07:36,000 --> 00:07:39,800 Speaker 1: Carnivals chief financial officer David Bernstein isn't worried about rising 135 00:07:39,840 --> 00:07:43,320 Speaker 1: interest rates, unlike other finance executives, as the cruise line 136 00:07:43,320 --> 00:07:45,880 Speaker 1: operator looks to pay down debt rather than finance. And 137 00:07:45,920 --> 00:07:47,360 Speaker 1: I was when I was reading that, I was saying, boy, 138 00:07:47,600 --> 00:07:50,400 Speaker 1: their creditors are happy. Credit analysts must be happy that 139 00:07:50,400 --> 00:07:52,560 Speaker 1: they're paying down debt. So I figured, let's check in 140 00:07:52,560 --> 00:07:55,240 Speaker 1: with Jody Lori. She covers. She's a credit analyst for 141 00:07:55,280 --> 00:07:58,640 Speaker 1: Bloomberg Intelligence covers this industry. Jody joins us here via 142 00:07:58,720 --> 00:08:03,320 Speaker 1: zoom on her vacation day. Oh, we really appreciate Jody 143 00:08:03,400 --> 00:08:05,640 Speaker 1: making some time there. Jody talked to us about Carnival 144 00:08:05,640 --> 00:08:08,360 Speaker 1: Cruise Lines. Here. This is a company that's focused. I mean, 145 00:08:08,400 --> 00:08:10,600 Speaker 1: a lot of these cruise operators right at the biding 146 00:08:10,600 --> 00:08:14,760 Speaker 1: again pandemic mandate, rushed into the market, raised cash, sensing 147 00:08:14,760 --> 00:08:17,000 Speaker 1: that this could be really bad for their business, and 148 00:08:17,040 --> 00:08:19,720 Speaker 1: they were. Some of them had to pay like eleven 149 00:08:20,040 --> 00:08:22,840 Speaker 1: twelve zack percent, right, I mean, some of them sold 150 00:08:22,880 --> 00:08:26,160 Speaker 1: debt for way too much interest and the sign of 151 00:08:26,240 --> 00:08:31,560 Speaker 1: the time. So what's Carnival doing now? Sure, so Carnival 152 00:08:31,640 --> 00:08:34,440 Speaker 1: is certainly one of the more interesting companies under our 153 00:08:34,480 --> 00:08:37,280 Speaker 1: coverage these days. I mean, let's let's take a little 154 00:08:37,320 --> 00:08:39,760 Speaker 1: look back, right, So, the company added about twenty four 155 00:08:39,760 --> 00:08:42,800 Speaker 1: billion or more to its balance sheet during the pandemic. 156 00:08:43,280 --> 00:08:45,360 Speaker 1: It's about twenty four billion above where it was at 157 00:08:45,360 --> 00:08:48,080 Speaker 1: the end of twenty nineteen. So you're talking about thirty 158 00:08:48,080 --> 00:08:51,160 Speaker 1: five billion dollars sitting on the balance sheet that they 159 00:08:51,160 --> 00:08:53,920 Speaker 1: have to deal with. Management is targeting it's going to 160 00:08:54,000 --> 00:08:55,719 Speaker 1: get down to about thirty three thirty three and a 161 00:08:55,760 --> 00:08:57,959 Speaker 1: half by the end of the year, which is music 162 00:08:58,000 --> 00:09:00,640 Speaker 1: to our years, of course, But how they're going to do. 163 00:09:00,679 --> 00:09:03,720 Speaker 1: That is always key. They're just getting to the precipice 164 00:09:03,800 --> 00:09:08,120 Speaker 1: of generating free cash flow, and with that, obviously they're 165 00:09:08,120 --> 00:09:10,560 Speaker 1: going to put it towards paying down debt. But I 166 00:09:10,559 --> 00:09:12,679 Speaker 1: think there's a lot of finessing that needs to go on, 167 00:09:12,720 --> 00:09:15,560 Speaker 1: and there's a lot that's dependent on the ability for 168 00:09:15,600 --> 00:09:19,120 Speaker 1: them to get customers on their ships. I look at 169 00:09:19,160 --> 00:09:21,840 Speaker 1: by the way DDIS, Paul, Okay, if you if you 170 00:09:21,880 --> 00:09:24,120 Speaker 1: put in Carnival Cruise Lines, which I think is CCL 171 00:09:24,200 --> 00:09:26,600 Speaker 1: equity and look at DDIS, you can see the debt 172 00:09:26,640 --> 00:09:28,840 Speaker 1: distribution when these things are coming due, and you can 173 00:09:28,880 --> 00:09:33,320 Speaker 1: see the average coupon is seven percent. So is that 174 00:09:33,480 --> 00:09:38,240 Speaker 1: high with a weighted average of five years? How does 175 00:09:38,320 --> 00:09:42,400 Speaker 1: their debt profile look to you? It's definitely a horse 176 00:09:42,400 --> 00:09:44,640 Speaker 1: of a different color or a ship of a different 177 00:09:44,640 --> 00:09:46,840 Speaker 1: color these days than it was at the beginning of 178 00:09:46,840 --> 00:09:50,760 Speaker 1: the pandemic. They were investment grade rated previously, and so 179 00:09:50,800 --> 00:09:54,080 Speaker 1: they commanded very good rates at that point. Now you 180 00:09:54,080 --> 00:09:56,400 Speaker 1: think about this company a year ago, they tapped the 181 00:09:56,440 --> 00:09:58,319 Speaker 1: debt markets and they actually got a lot of plaque 182 00:09:58,440 --> 00:10:04,079 Speaker 1: or issuing double di issues, right, So similar coupon to 183 00:10:04,160 --> 00:10:07,360 Speaker 1: what they issued in June of twenty twenty, during the 184 00:10:07,400 --> 00:10:10,839 Speaker 1: depths of the pandemic. And so I think management is 185 00:10:10,880 --> 00:10:14,560 Speaker 1: being very cautious about how and when they tapped the 186 00:10:14,559 --> 00:10:18,760 Speaker 1: debt markets and why because even this past fall when 187 00:10:18,800 --> 00:10:21,560 Speaker 1: they did issue debt, they issued about two billion dollars. 188 00:10:21,840 --> 00:10:23,920 Speaker 1: They've got a little creative in how they did it. 189 00:10:23,960 --> 00:10:26,480 Speaker 1: They created a new subsidiary where they put some of 190 00:10:26,480 --> 00:10:28,800 Speaker 1: their vessels, and they made it a little bit more 191 00:10:28,840 --> 00:10:32,720 Speaker 1: attractive to keep rates lower. That complicated their balance sheet. 192 00:10:32,760 --> 00:10:35,839 Speaker 1: So if you're an average bond holder, you don't really 193 00:10:35,920 --> 00:10:39,760 Speaker 1: understand which vessels are backing your bonds. You know, you're 194 00:10:39,760 --> 00:10:44,719 Speaker 1: an insecured holder, so you're really just general company ability 195 00:10:44,760 --> 00:10:49,359 Speaker 1: to pay. But the complicating factor of it is, Okay, 196 00:10:49,520 --> 00:10:52,520 Speaker 1: in a theoretical bankruptcy, where would I be in line 197 00:10:52,960 --> 00:10:56,000 Speaker 1: to receive any sort of money. Yeah, especially if it's 198 00:10:56,040 --> 00:10:59,920 Speaker 1: in Panama. Yeah, I see, like twenty billion of their 199 00:11:00,080 --> 00:11:02,880 Speaker 1: dead is at a Panama. Yeah, the Hamas and Caymans 200 00:11:02,880 --> 00:11:07,160 Speaker 1: are usually generally the place that they go to for 201 00:11:07,200 --> 00:11:11,800 Speaker 1: the issuing subsidiaries. But yeah, I mean, if you're saying, okay, 202 00:11:12,120 --> 00:11:14,760 Speaker 1: I have these bonds, and even even if it's not 203 00:11:14,880 --> 00:11:16,679 Speaker 1: you know, bankruptcy. If you're a high yield company, you 204 00:11:16,720 --> 00:11:18,800 Speaker 1: always have to think about liquidation, right if you're a 205 00:11:18,840 --> 00:11:21,200 Speaker 1: credit autai as you say, okay, what would this be 206 00:11:21,320 --> 00:11:24,960 Speaker 1: in a theoretical liquidation standpoint, because it's high yield, and 207 00:11:25,040 --> 00:11:29,200 Speaker 1: so that will dictate how the bonds trade. Now that said, 208 00:11:29,640 --> 00:11:32,200 Speaker 1: you have higher risk, higher rewards. So there are some 209 00:11:32,360 --> 00:11:35,040 Speaker 1: investors who say, oh, then it's worthwhile to sort of 210 00:11:35,120 --> 00:11:37,280 Speaker 1: nibble at those There's other investors who say, you know what, 211 00:11:37,600 --> 00:11:41,200 Speaker 1: there's still a lot of factors at play that could 212 00:11:41,240 --> 00:11:45,080 Speaker 1: dictate how these bonds behave and and the you know, 213 00:11:45,120 --> 00:11:47,520 Speaker 1: the forecast of this company. I think there's still very 214 00:11:47,600 --> 00:11:49,640 Speaker 1: much in a turnaround phase, and I think there's still 215 00:11:49,640 --> 00:11:52,160 Speaker 1: a little bit on the earlier side, although we're starting 216 00:11:52,160 --> 00:11:54,959 Speaker 1: to get to the point that we're seeing the light 217 00:11:55,000 --> 00:11:57,360 Speaker 1: at the end of the tunnel. So Jody, just give 218 00:11:57,440 --> 00:11:59,600 Speaker 1: us a sensure. I'm just looking at the stocks of 219 00:12:00,320 --> 00:12:02,840 Speaker 1: Carnival and it's peers and they're all down between twenty 220 00:12:02,880 --> 00:12:05,199 Speaker 1: and forty percent, So the market's really skittish there. I'm 221 00:12:05,200 --> 00:12:09,239 Speaker 1: sort of there's similar concerns in the credit markets as well. 222 00:12:09,280 --> 00:12:11,720 Speaker 1: I kind of thought once this pandemic you know, they 223 00:12:11,760 --> 00:12:14,120 Speaker 1: started lifting on the mass mandates and all that stuff, 224 00:12:14,480 --> 00:12:17,640 Speaker 1: that this industry would just explode with demand and occupancies 225 00:12:17,679 --> 00:12:21,439 Speaker 1: would be like sky high for years in pent up demand. 226 00:12:21,520 --> 00:12:25,839 Speaker 1: That really hasn't happened, or has it. It's starting to happen. 227 00:12:25,920 --> 00:12:29,559 Speaker 1: We actually wrote a note that specifically spoke to occupancy 228 00:12:29,640 --> 00:12:33,480 Speaker 1: rates as well as to cash flow. So one thing 229 00:12:33,559 --> 00:12:36,080 Speaker 1: that they have is advanced bookings, which is basically the 230 00:12:36,120 --> 00:12:39,000 Speaker 1: cash they take in when people book their cruises. They 231 00:12:39,000 --> 00:12:41,360 Speaker 1: can't book that as revenue until the person actually goes 232 00:12:41,400 --> 00:12:43,760 Speaker 1: on a cruise, but they can take it in as cash, 233 00:12:43,800 --> 00:12:46,600 Speaker 1: so that actually helps their business. It's an alternative form 234 00:12:46,600 --> 00:12:51,120 Speaker 1: of cash compared to say raising debt. The piece when 235 00:12:51,160 --> 00:12:54,120 Speaker 1: you think about it from an occupancy standpoint that's difficult 236 00:12:54,160 --> 00:12:56,320 Speaker 1: for these companies is the cruise lines were unique and 237 00:12:56,320 --> 00:12:59,160 Speaker 1: that they got a moratorium, meaning they were unable to 238 00:12:59,200 --> 00:13:01,920 Speaker 1: actually cruise. They were unable to operate. You compare that 239 00:13:01,960 --> 00:13:03,520 Speaker 1: to the theme parks, which I know you and I 240 00:13:03,520 --> 00:13:06,680 Speaker 1: have talked about it before. Um and and the theme 241 00:13:06,720 --> 00:13:09,200 Speaker 1: parks they were able to sort of get creative and 242 00:13:09,360 --> 00:13:12,560 Speaker 1: how they operated. So you take someone like Cedar Fair, 243 00:13:12,679 --> 00:13:15,360 Speaker 1: they were able to have a wine and cheese festival 244 00:13:15,600 --> 00:13:19,400 Speaker 1: at Nottsbury Farm, you know, and and and six Flags. 245 00:13:19,400 --> 00:13:22,120 Speaker 1: We actually my family actually went to Great Adventure and 246 00:13:22,120 --> 00:13:25,199 Speaker 1: did the Safari tour in our own car. And you 247 00:13:25,240 --> 00:13:26,560 Speaker 1: don't have to get out of the car, nor do 248 00:13:26,600 --> 00:13:28,120 Speaker 1: you want to get out of the car, you know, Okay, 249 00:13:28,240 --> 00:13:30,680 Speaker 1: And it is a little fun to have drafts like it, Yeah, 250 00:13:30,840 --> 00:13:36,200 Speaker 1: absolutely out of draft actually in the yes, the baboons 251 00:13:36,320 --> 00:13:37,960 Speaker 1: used to do that. I think they've been a little 252 00:13:38,000 --> 00:13:41,200 Speaker 1: bit better about how they let you interact with them. 253 00:13:41,480 --> 00:13:43,680 Speaker 1: But I was there one time as a kid where 254 00:13:43,679 --> 00:13:48,680 Speaker 1: they did rip off our antenna from the Now I 255 00:13:48,760 --> 00:13:52,520 Speaker 1: have something on my list that this weekend that sounds awesome. 256 00:13:52,840 --> 00:13:54,959 Speaker 1: Yeah so, but but your point is that the very 257 00:13:54,960 --> 00:13:57,920 Speaker 1: good time. Your point is that the cruise lines were 258 00:13:58,080 --> 00:14:03,959 Speaker 1: sincerely disadvantaged these every other industries, right exactly. So getting 259 00:14:03,960 --> 00:14:05,840 Speaker 1: back to the cruise lines, you compare that to the 260 00:14:05,840 --> 00:14:08,880 Speaker 1: theme parks, and the cruise lines were literally unable to cruise. 261 00:14:09,080 --> 00:14:12,280 Speaker 1: They had these massive vessels that were either sitting dormant 262 00:14:12,400 --> 00:14:14,400 Speaker 1: or they had to staff it up so that they 263 00:14:14,400 --> 00:14:16,400 Speaker 1: had a minimal amount of staff to just keep the 264 00:14:16,960 --> 00:14:20,760 Speaker 1: basically keep the ships from getting stale. They also postponed 265 00:14:20,840 --> 00:14:23,640 Speaker 1: some of their capex right, so that just the maintenance 266 00:14:23,680 --> 00:14:26,200 Speaker 1: caffex that's required, and it just takes a lot of 267 00:14:26,240 --> 00:14:29,320 Speaker 1: time to ramp up from zero. So even though these 268 00:14:29,360 --> 00:14:32,400 Speaker 1: companies are seeing tremendous demand, I mean I'm hearing anecdotally 269 00:14:32,440 --> 00:14:34,600 Speaker 1: because people hear that I you know, I'm a cruise analysts, 270 00:14:34,600 --> 00:14:37,280 Speaker 1: they'd go, oh, actually, I just went on my first cruise. 271 00:14:37,840 --> 00:14:40,840 Speaker 1: And you're definitely hearing that more and more, which is 272 00:14:40,920 --> 00:14:43,800 Speaker 1: music to the cruise company's ears, because the challenge that 273 00:14:43,840 --> 00:14:47,560 Speaker 1: they're dealing with isn't so much the diehard cruiser fans 274 00:14:47,600 --> 00:14:52,880 Speaker 1: like my parents, but the people who have never stepped 275 00:14:52,880 --> 00:14:54,880 Speaker 1: foot on a cruise ship before, the people who are 276 00:14:54,960 --> 00:14:59,840 Speaker 1: skittish around cruises or it's just not within their generational appeal. 277 00:15:00,280 --> 00:15:02,880 Speaker 1: And so that's where the cruise companies are trying to 278 00:15:02,960 --> 00:15:05,120 Speaker 1: jump over. The hurdle is saying, Okay, let's get these 279 00:15:05,160 --> 00:15:07,480 Speaker 1: new to cruise people on the ships and then grow 280 00:15:07,720 --> 00:15:11,880 Speaker 1: our our pool of potential customers. Then they'll they'll see benefits. 281 00:15:12,160 --> 00:15:14,240 Speaker 1: They'll see it as beneficial. That's it. I mean, there 282 00:15:15,320 --> 00:15:17,440 Speaker 1: is only so much they can cruise. There's only so 283 00:15:17,440 --> 00:15:19,600 Speaker 1: many days in the year. There's only so many rooms 284 00:15:19,600 --> 00:15:21,880 Speaker 1: in a ship, and it takes a lot of time 285 00:15:22,000 --> 00:15:25,440 Speaker 1: to get them from zero to one hundred percent operational. 286 00:15:25,720 --> 00:15:29,400 Speaker 1: Are they these companies still investing in ships. I mean, 287 00:15:29,400 --> 00:15:32,040 Speaker 1: that's to me is the sign of optimus. If you're 288 00:15:32,080 --> 00:15:35,280 Speaker 1: bullish on you know, your future, five to ten years, 289 00:15:35,320 --> 00:15:37,520 Speaker 1: you'll build a billion dollars ship or whatever they cost. 290 00:15:37,520 --> 00:15:41,920 Speaker 1: These days. Yes, I mean the companies are still very 291 00:15:41,960 --> 00:15:44,840 Speaker 1: much investing in ships. Carnival has a little bit of 292 00:15:44,840 --> 00:15:46,920 Speaker 1: a gap in terms of when they're planning to take 293 00:15:47,360 --> 00:15:49,280 Speaker 1: delivery of ships, which I think they're a little bit 294 00:15:49,280 --> 00:15:53,600 Speaker 1: relieved by. It's less so indicative of what they've been 295 00:15:53,640 --> 00:15:57,760 Speaker 1: planning more so of the hold up in the shipbuilders side. 296 00:15:57,920 --> 00:16:02,480 Speaker 1: So obviously the shipbuilders, just like every other industry, dealt 297 00:16:02,520 --> 00:16:05,480 Speaker 1: with the pandemic where they had shutdowns, they were unable 298 00:16:05,520 --> 00:16:08,400 Speaker 1: to get parts. You know, everything you're hearing about the autos, 299 00:16:08,440 --> 00:16:10,680 Speaker 1: similar sort of things we're going on with the shipbuilding. 300 00:16:11,000 --> 00:16:13,320 Speaker 1: So a lot of the cruise ships had ships that 301 00:16:13,360 --> 00:16:16,360 Speaker 1: were scheduled to be delivered that they got postponed, which 302 00:16:16,440 --> 00:16:19,640 Speaker 1: was actually fortuitous for the cruise ships because it gave 303 00:16:19,680 --> 00:16:21,960 Speaker 1: them a little bit more time to deal with the 304 00:16:22,000 --> 00:16:23,840 Speaker 1: fact that they had all these ships that were just 305 00:16:24,000 --> 00:16:26,800 Speaker 1: not being operating. Yep, all right, Jody, thank you so 306 00:16:26,880 --> 00:16:29,120 Speaker 1: much for joining us. Really appreciate getting your thoughts here 307 00:16:29,160 --> 00:16:32,400 Speaker 1: on Carnival and on the cruise industry as it ramps 308 00:16:32,480 --> 00:16:35,160 Speaker 1: back up a post pandemic. Jody Lorie, she's a credit 309 00:16:35,160 --> 00:16:38,800 Speaker 1: analyst for Bloomberg Intelligence. She's on her day off, but 310 00:16:38,880 --> 00:16:41,160 Speaker 1: she took time out to give us the update on 311 00:16:41,200 --> 00:16:44,120 Speaker 1: the cruise business. We appreciate that. Two gold stars for Jody. 312 00:16:44,440 --> 00:16:46,960 Speaker 1: You're listening to the tape. Ken's a our live program 313 00:16:47,000 --> 00:16:50,960 Speaker 1: Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio, 314 00:16:51,080 --> 00:16:54,440 Speaker 1: the tuning app, Bloomberg dot Com, and the Bloomberg Business App. 315 00:16:54,560 --> 00:16:57,320 Speaker 1: You can also listen live on Amazon Alexa from our 316 00:16:57,360 --> 00:17:02,440 Speaker 1: flagship New York station, Jo Say Alexa playing Bloomberg eleven thirty. 317 00:17:03,520 --> 00:17:06,160 Speaker 1: I want to bring the all star to the microphone 318 00:17:06,200 --> 00:17:09,639 Speaker 1: over here. Karen Uberhart, she's in Bloomberg Intelligence. She covers 319 00:17:09,640 --> 00:17:13,000 Speaker 1: the industrial space. I mean talk about these are real companies. 320 00:17:13,000 --> 00:17:17,680 Speaker 1: Met These are like dear Caterpillar, Emerson Electric. I mean, 321 00:17:18,000 --> 00:17:23,440 Speaker 1: you're going hardcore industrial America. This is General Electric. Back 322 00:17:23,480 --> 00:17:25,360 Speaker 1: in the day. I guess you could say, I mean 323 00:17:25,359 --> 00:17:28,640 Speaker 1: back in the day, General Electric is still bigger than Emerson, right, 324 00:17:28,680 --> 00:17:32,040 Speaker 1: I mean big. Emerson's just a forty seven billion dollar company. 325 00:17:32,080 --> 00:17:34,680 Speaker 1: It will put up a I'm sure ge right now 326 00:17:35,560 --> 00:17:39,280 Speaker 1: one hundred and two billion, so it's still bigger. It's 327 00:17:39,280 --> 00:17:41,960 Speaker 1: not the world's biggest maker of earth moving equipment. No, 328 00:17:42,080 --> 00:17:44,359 Speaker 1: this is they have all right. Karen Buberhart, Senior Industrial 329 00:17:44,400 --> 00:17:46,520 Speaker 1: Annals Bloomberg Intelligen just joins us here in our Bloomberg 330 00:17:46,560 --> 00:17:49,520 Speaker 1: Interactive Brokers studio because Emerson Electrics out there with a 331 00:17:49,640 --> 00:17:52,520 Speaker 1: deal to buy National Instruments. Karen, thanks so much for 332 00:17:52,560 --> 00:17:56,520 Speaker 1: joining us here in studio. What is Emerson Electric buying? 333 00:17:56,560 --> 00:17:59,840 Speaker 1: What is National Instruments? It's one of the larger test 334 00:18:00,040 --> 00:18:02,399 Speaker 1: and measurement companies, you know, like when you're in the 335 00:18:02,480 --> 00:18:05,440 Speaker 1: R and D lab and you know, developing product etc. 336 00:18:06,040 --> 00:18:08,680 Speaker 1: That is a platform that Emerson wants to develop. It's 337 00:18:08,680 --> 00:18:12,640 Speaker 1: a higher growth platform. It fits with their automation focus 338 00:18:12,760 --> 00:18:15,359 Speaker 1: now and they'd been looking. They did say they'd have 339 00:18:15,440 --> 00:18:18,560 Speaker 1: to do a meaningful deal to get a footprint rather 340 00:18:18,600 --> 00:18:22,000 Speaker 1: than their own, and they did it rather quickly. So 341 00:18:22,040 --> 00:18:24,320 Speaker 1: what does Emerson's core business I mean, what do I 342 00:18:24,359 --> 00:18:29,040 Speaker 1: go to Emerson for factory automation process, you know, plant 343 00:18:29,080 --> 00:18:32,960 Speaker 1: automation like chemical plants, etc. Software They're getting involved. They 344 00:18:33,000 --> 00:18:35,600 Speaker 1: took one of the biggest bets on software with buying 345 00:18:36,080 --> 00:18:39,280 Speaker 1: Aspen Technologies to get them into industrial software. This is 346 00:18:39,280 --> 00:18:41,320 Speaker 1: a new CEO about two and a half years. He's 347 00:18:41,320 --> 00:18:44,760 Speaker 1: really trying to make the make the company into less cyclical, 348 00:18:44,920 --> 00:18:47,720 Speaker 1: higher growth. Lots of companies are doing, but he's moving quickly. 349 00:18:47,880 --> 00:18:50,240 Speaker 1: I saw Fordive was the biggest gainer in the S 350 00:18:50,320 --> 00:18:55,359 Speaker 1: ANDP for not buying. And sometimes you know, you just 351 00:18:55,400 --> 00:18:57,880 Speaker 1: feel good when you don't spend a ton of money. Well, 352 00:18:58,080 --> 00:18:59,960 Speaker 1: you thought you were going to get I get the 353 00:19:00,040 --> 00:19:02,119 Speaker 1: That's a shareholder reaction, but does it lead them in 354 00:19:02,119 --> 00:19:04,800 Speaker 1: a disadvantaged position for not getting it? That was a 355 00:19:04,840 --> 00:19:08,200 Speaker 1: financial stretch for Fortive. You know, it is a twenty 356 00:19:08,200 --> 00:19:10,600 Speaker 1: three billion dollar company. They would have had to issue 357 00:19:10,640 --> 00:19:13,639 Speaker 1: stock or some nearer stock to get it done. Leverage 358 00:19:13,640 --> 00:19:15,560 Speaker 1: would have been very high. People were nervous about that. 359 00:19:16,200 --> 00:19:18,879 Speaker 1: It did lead Emerson to pay sixty bucks, which is 360 00:19:18,920 --> 00:19:21,359 Speaker 1: more than you know, some of us would have liked. 361 00:19:21,640 --> 00:19:25,119 Speaker 1: The numbers still can work, but you know it was 362 00:19:25,200 --> 00:19:27,960 Speaker 1: higher than So it's interesting here. So Emerson Electric paying 363 00:19:28,400 --> 00:19:31,399 Speaker 1: eight point two billion dollars sixty dollars to share. The 364 00:19:31,440 --> 00:19:35,400 Speaker 1: stock was at like fifty three before trading today, so 365 00:19:35,600 --> 00:19:38,920 Speaker 1: a premium. Emerson's people know this. People must have known 366 00:19:38,920 --> 00:19:41,280 Speaker 1: this is going on. Well, you know, it's funny. The 367 00:19:41,320 --> 00:19:43,719 Speaker 1: CEO drew a line in the sand and said, if 368 00:19:43,760 --> 00:19:47,600 Speaker 1: it's a sixty dollars bid, it's not ours. And so 369 00:19:47,720 --> 00:19:51,600 Speaker 1: I was in the possive writing, this is a competitive bid. 370 00:19:51,760 --> 00:19:55,080 Speaker 1: Maybe it's gonna be sixty bucks. And it is sixty bucks. 371 00:19:55,200 --> 00:19:58,639 Speaker 1: You can still make the numbers work. The synergies are 372 00:19:58,680 --> 00:20:00,680 Speaker 1: talking about one hundred and sixty f million and five 373 00:20:00,760 --> 00:20:02,280 Speaker 1: years out. That's a stretch to get it all the 374 00:20:02,280 --> 00:20:04,920 Speaker 1: way five years. But Emerson is a very good operating company. 375 00:20:04,960 --> 00:20:06,880 Speaker 1: They're going to do better than the numbers they say 376 00:20:06,920 --> 00:20:09,119 Speaker 1: on synergies and it is a creed of even at 377 00:20:09,119 --> 00:20:11,439 Speaker 1: sixty bucks. I'm just saying for NATTY shareholders, right the 378 00:20:11,480 --> 00:20:16,320 Speaker 1: ticker for National Instruments NATI, those shares were trading at 379 00:20:16,400 --> 00:20:19,920 Speaker 1: thirty five, thirty six thirty seven dollars at the end 380 00:20:19,960 --> 00:20:22,640 Speaker 1: of twenty two, beginning of twenty three, and then I'm 381 00:20:22,640 --> 00:20:25,720 Speaker 1: guessing just by looking at the chart that shareholders became 382 00:20:25,760 --> 00:20:29,200 Speaker 1: aware that they had something others wanted to buy, because 383 00:20:29,240 --> 00:20:34,920 Speaker 1: the stock just shoots up in the beginning of January 384 00:20:35,040 --> 00:20:38,400 Speaker 1: twenty three. Well, that's when they announced a hostile bid. 385 00:20:38,480 --> 00:20:40,520 Speaker 1: They couldn't Emerson was trying to get a deal done. 386 00:20:40,560 --> 00:20:42,320 Speaker 1: They went into forty eight, they couldn't get it done. 387 00:20:42,320 --> 00:20:44,200 Speaker 1: They went into fifty three, they couldn't get it done. 388 00:20:44,400 --> 00:20:46,520 Speaker 1: There was a lot of communication going back and forth. 389 00:20:46,840 --> 00:20:49,560 Speaker 1: So Emerson broke the news, we're trying to buy this thing, 390 00:20:49,640 --> 00:20:52,920 Speaker 1: and they published all the letters and communications to get 391 00:20:52,960 --> 00:20:55,959 Speaker 1: them off. You get them moving, right. So then they 392 00:20:55,960 --> 00:20:59,560 Speaker 1: went into a strategic planning situation and got other bidders 393 00:21:00,000 --> 00:21:01,840 Speaker 1: and this is where it fell out and Emerson had 394 00:21:01,880 --> 00:21:05,640 Speaker 1: to fight to sixty to get it from Fordive is 395 00:21:05,920 --> 00:21:08,720 Speaker 1: or how is Emerson paying for this cash? They're selling 396 00:21:08,760 --> 00:21:11,879 Speaker 1: their climate business, and that is part of that's probably 397 00:21:11,920 --> 00:21:14,320 Speaker 1: what they want. They're going to have nine point nine 398 00:21:14,359 --> 00:21:17,919 Speaker 1: point five billion dollars in cash from selling their refrigeration 399 00:21:18,119 --> 00:21:21,760 Speaker 1: and climate you know, air conditioning components. That gets them 400 00:21:21,800 --> 00:21:25,600 Speaker 1: out of a residential oriented cyclical business, gives them money 401 00:21:25,640 --> 00:21:28,600 Speaker 1: to put into a higher growth that these businesses they 402 00:21:28,640 --> 00:21:30,920 Speaker 1: say will grow ford to selling the name from that's 403 00:21:30,920 --> 00:21:32,399 Speaker 1: where I know the name. I see it at my 404 00:21:32,480 --> 00:21:34,720 Speaker 1: house in the basement all the time. They're a market 405 00:21:34,800 --> 00:21:36,639 Speaker 1: leader in that business, but they wanted out of that 406 00:21:36,720 --> 00:21:40,240 Speaker 1: to spend money on these higher growth, higher margin businesses. 407 00:21:40,520 --> 00:21:45,320 Speaker 1: All right, So if everybody's talking about a recession, your companies, 408 00:21:45,440 --> 00:21:49,120 Speaker 1: long lead times make big stuff. How are you thinking 409 00:21:49,119 --> 00:21:52,000 Speaker 1: about or how are your companies telling you that they're 410 00:21:52,000 --> 00:21:56,320 Speaker 1: preparing for a recession? You know, Um, the backlogs are 411 00:21:56,359 --> 00:21:59,000 Speaker 1: at record levels. It doesn't mean some of that can't dissipate, 412 00:21:59,080 --> 00:22:01,439 Speaker 1: but there's there's a lot of pent up demand. A 413 00:22:01,480 --> 00:22:04,679 Speaker 1: company like Emerson's pretty long lead time, So maybe some 414 00:22:04,760 --> 00:22:06,800 Speaker 1: of their large projects might get pushed out a little bit. 415 00:22:06,840 --> 00:22:08,639 Speaker 1: But I don't think they're going to see you know, 416 00:22:08,680 --> 00:22:11,760 Speaker 1: like residential construction goes down thirty percent. They're not going 417 00:22:11,800 --> 00:22:14,440 Speaker 1: to see that kind of exposure. But they all are 418 00:22:14,520 --> 00:22:19,600 Speaker 1: still you know, supply constrained. Um, their costs are still 419 00:22:20,000 --> 00:22:23,400 Speaker 1: they still have getting that supply chain stuff is still 420 00:22:23,400 --> 00:22:25,800 Speaker 1: an issue for still going on. Yeah, and in this 421 00:22:25,880 --> 00:22:29,600 Speaker 1: in this case, automation is a growth business. Companies are 422 00:22:29,680 --> 00:22:33,359 Speaker 1: investing a lot in you know, EV and semiconductors, et cetera. 423 00:22:33,440 --> 00:22:35,480 Speaker 1: There's a lot of money going into the automation business. 424 00:22:35,800 --> 00:22:38,280 Speaker 1: That's where there, there they are, and where they're going 425 00:22:38,280 --> 00:22:40,160 Speaker 1: in a bigger way, drawing on the same track as AI, 426 00:22:40,280 --> 00:22:43,840 Speaker 1: really right, I mean automation and software is happening at 427 00:22:43,840 --> 00:22:45,639 Speaker 1: the same time as we're seeing these big leaps forward 428 00:22:45,680 --> 00:22:49,720 Speaker 1: and manufacturing. What about consolidation we were talking about, you 429 00:22:49,720 --> 00:22:51,560 Speaker 1: know the string of M and A we've seen this week, 430 00:22:51,960 --> 00:22:56,280 Speaker 1: obviously not in industrials but mostly in UH in materials commodities. 431 00:22:56,440 --> 00:22:59,560 Speaker 1: Now we see this deal. Is there a consolidation way happening? 432 00:22:59,680 --> 00:23:02,159 Speaker 1: Is this a one off? It's I think it's a 433 00:23:02,200 --> 00:23:05,199 Speaker 1: strategic move. There's like four or five people in that business. Um. 434 00:23:05,400 --> 00:23:07,840 Speaker 1: You know, the other big one in the US is 435 00:23:07,880 --> 00:23:10,680 Speaker 1: Key Site. They were talked about as maybe buying them, 436 00:23:10,720 --> 00:23:13,199 Speaker 1: but I don't think they were serious contenders. And you 437 00:23:13,200 --> 00:23:15,120 Speaker 1: don't see a lot of other deals on the horizon 438 00:23:15,800 --> 00:23:18,640 Speaker 1: the companies you cover not But what's happening is they're 439 00:23:18,680 --> 00:23:21,600 Speaker 1: breaking up. I mean all the multis have are becoming 440 00:23:21,600 --> 00:23:24,000 Speaker 1: more focused and more so. But a lot of that 441 00:23:24,080 --> 00:23:27,000 Speaker 1: is happening in spinoffs. They're creating new companies um like 442 00:23:27,040 --> 00:23:30,320 Speaker 1: the HVAC companies are mostly pure plays now. They came 443 00:23:30,359 --> 00:23:33,000 Speaker 1: out of larger companies. So that's the biggest wave in 444 00:23:33,040 --> 00:23:35,959 Speaker 1: the large industrials is breaking up being more focused. And 445 00:23:36,000 --> 00:23:38,920 Speaker 1: that's exactly what Emerson did with this move selling climate, 446 00:23:39,080 --> 00:23:41,520 Speaker 1: trying to get into more It's so funny they go 447 00:23:41,560 --> 00:23:44,879 Speaker 1: through these. When I first started working at Bloomberg and Frankfurt, 448 00:23:44,920 --> 00:23:47,760 Speaker 1: I was covering Seemans at the time, and they were 449 00:23:48,320 --> 00:23:50,800 Speaker 1: breaking up, and then they got together, and then they're 450 00:23:50,840 --> 00:23:52,800 Speaker 1: breaking up. I mean, it's it's it's good to be 451 00:23:52,840 --> 00:23:56,200 Speaker 1: an investment banker covering industrial America. Absolutely a wave and 452 00:23:56,440 --> 00:23:58,920 Speaker 1: and and you know it had I'm here a long 453 00:23:58,960 --> 00:24:00,840 Speaker 1: time too, and I've seen them put them all together 454 00:24:00,920 --> 00:24:03,639 Speaker 1: to lower the cick locality, to be in different businesses, 455 00:24:03,880 --> 00:24:06,600 Speaker 1: be more diverse. Then you see them breaking up to 456 00:24:06,680 --> 00:24:10,600 Speaker 1: be more focused. My feeling is, you know, once we 457 00:24:10,640 --> 00:24:13,440 Speaker 1: get in a bad cycle and some of these focused companies, 458 00:24:13,640 --> 00:24:16,560 Speaker 1: you know, get whacked by a bad recession, maybe they're 459 00:24:16,560 --> 00:24:18,320 Speaker 1: going to want a little balance again. I mean, this 460 00:24:18,359 --> 00:24:20,240 Speaker 1: thing comes and goes and comes and goes, as you know, 461 00:24:20,400 --> 00:24:23,440 Speaker 1: over long periods of time. Twenty seconds GEED stocks up 462 00:24:23,560 --> 00:24:26,040 Speaker 1: thirty five percent the traillion twelve months. Are they done? 463 00:24:26,160 --> 00:24:29,479 Speaker 1: They fixed everything? Well, you know, there's a lot a 464 00:24:29,560 --> 00:24:31,320 Speaker 1: lot of legs in aerospace that's going to be a 465 00:24:31,359 --> 00:24:35,120 Speaker 1: great standalone business. And I think what changed is people 466 00:24:35,160 --> 00:24:37,320 Speaker 1: start to get confidence on the energy business, which has 467 00:24:37,359 --> 00:24:39,640 Speaker 1: been the dog for a while, and you know it's 468 00:24:39,680 --> 00:24:41,239 Speaker 1: been going up for a while. But then they had 469 00:24:41,280 --> 00:24:43,680 Speaker 1: an investor day and pitched the long term story for 470 00:24:44,080 --> 00:24:46,879 Speaker 1: you know, the energy business, the IRA etc. There's a 471 00:24:46,880 --> 00:24:49,000 Speaker 1: lot of money flowing into that business there and wind 472 00:24:49,000 --> 00:24:51,440 Speaker 1: power etc. So now the two pieces look like they're 473 00:24:51,480 --> 00:24:53,119 Speaker 1: going to be okay and the stock is taken off. 474 00:24:53,160 --> 00:24:56,040 Speaker 1: All right, good news finally for our friends at General Electric. 475 00:24:56,240 --> 00:24:59,960 Speaker 1: Karen Uberhard. She's industrial anallyst for Bloomberg Intelligence, the absolute 476 00:25:00,160 --> 00:25:04,120 Speaker 1: expert on all that industrial stuff coming out of Middle America. 477 00:25:04,280 --> 00:25:08,800 Speaker 1: She's the best. You're listening to the team Ken'serline program 478 00:25:08,880 --> 00:25:12,840 Speaker 1: Bloomberg Markets weekdays at ten am, easting on Bloomberg dot com, 479 00:25:12,880 --> 00:25:15,520 Speaker 1: the I Heart Radio app, and the Bloomberg Business App. 480 00:25:15,600 --> 00:25:20,240 Speaker 1: We're listening on demand wherever you get your podcast. Want 481 00:25:20,240 --> 00:25:22,200 Speaker 1: to get to right next guest Johann Gron He's a 482 00:25:22,280 --> 00:25:27,560 Speaker 1: vice president and head of ETF strategy at Alliance Investment Management. Johan, 483 00:25:27,800 --> 00:25:29,440 Speaker 1: thanks so much for joining us here. I'm just looking 484 00:25:29,440 --> 00:25:31,240 Speaker 1: through the notes here and Matt and I talk a 485 00:25:31,240 --> 00:25:33,720 Speaker 1: lot about the volatility, particularly in the treasury market, but 486 00:25:33,760 --> 00:25:36,560 Speaker 1: there's been some volatility in the equities, although it's been 487 00:25:36,640 --> 00:25:39,560 Speaker 1: kind of low recently. But you've got a product called 488 00:25:39,640 --> 00:25:45,240 Speaker 1: bufferd ETFs. What is a bufferd ETF. Oh, hey, yeah, 489 00:25:45,240 --> 00:25:47,240 Speaker 1: thanks for having me on. It's good good to talk 490 00:25:47,240 --> 00:25:51,920 Speaker 1: to you. Buffery ETFs and all their simplicity, effectively are 491 00:25:51,920 --> 00:25:55,560 Speaker 1: four investors that care about having some downside risk committigation 492 00:25:55,600 --> 00:25:59,040 Speaker 1: in their portfolios. So effectively, all of this is exposure 493 00:25:59,080 --> 00:26:02,359 Speaker 1: to the SMP five hundred, and you can participate in 494 00:26:02,400 --> 00:26:05,120 Speaker 1: the SMP five hundred up to a cap. That's the catch, 495 00:26:05,160 --> 00:26:08,800 Speaker 1: if you will. So in the case of our two products, 496 00:26:08,840 --> 00:26:10,720 Speaker 1: we have one with a ten percent buffer, we have 497 00:26:10,760 --> 00:26:13,439 Speaker 1: one with a twenty percent buffer. In the case of 498 00:26:13,480 --> 00:26:17,320 Speaker 1: the ten percent buffer, if you were to invest this month, 499 00:26:17,359 --> 00:26:21,200 Speaker 1: for example, you can gain up to about eighteen percent 500 00:26:21,240 --> 00:26:24,000 Speaker 1: if the SMP five hundred goes up in the next 501 00:26:24,000 --> 00:26:26,040 Speaker 1: twelve months, and if the SMP five hundred is down 502 00:26:26,080 --> 00:26:28,399 Speaker 1: by ten percent or less than you're flat with the 503 00:26:28,480 --> 00:26:31,320 Speaker 1: market or flat in your portfolio. So that's at a 504 00:26:31,400 --> 00:26:33,560 Speaker 1: very high level. That's kind of how they work. What 505 00:26:33,640 --> 00:26:37,080 Speaker 1: if it's down ten percent or more so, in the 506 00:26:37,080 --> 00:26:40,000 Speaker 1: case of the ten percent buffer, if it's down by eleven, 507 00:26:40,080 --> 00:26:42,600 Speaker 1: you lose one. If it's down by twelve, you lose two. 508 00:26:42,640 --> 00:26:45,880 Speaker 1: If it's down by twenty, you lose ten. So basically, 509 00:26:45,920 --> 00:26:47,879 Speaker 1: whatever the market is down, mine is that ten So 510 00:26:48,720 --> 00:26:52,359 Speaker 1: so sorry, the ten percent buffer, you can get eighteen 511 00:26:52,440 --> 00:26:55,679 Speaker 1: percent upside, but you're protected from ten percent of the 512 00:26:55,720 --> 00:27:00,119 Speaker 1: down side, that's right. And the twenty percent buffer, it's 513 00:27:00,160 --> 00:27:04,040 Speaker 1: your upside cap. The April found that we have. The 514 00:27:04,119 --> 00:27:09,000 Speaker 1: upside is almost twelve percent netal fees, I see, and 515 00:27:09,160 --> 00:27:12,639 Speaker 1: the downside would be then you get downside protection to 516 00:27:12,720 --> 00:27:15,879 Speaker 1: twenty percent, that's right. Yeah, So if the market is 517 00:27:15,880 --> 00:27:18,760 Speaker 1: down by twenty percent or less, you're still flat. So 518 00:27:18,760 --> 00:27:20,600 Speaker 1: if you put the million dollars in on day one 519 00:27:20,640 --> 00:27:23,040 Speaker 1: here on let's say April first, or even today, actually 520 00:27:23,040 --> 00:27:25,880 Speaker 1: it's trading at about the same place. It's been relatively 521 00:27:25,880 --> 00:27:30,040 Speaker 1: flat so far in April, then you have you have 522 00:27:30,160 --> 00:27:33,119 Speaker 1: that opportunity to twelve percent up and then you're still 523 00:27:33,160 --> 00:27:35,080 Speaker 1: you have twenty percent of the buffer if the market 524 00:27:35,080 --> 00:27:37,919 Speaker 1: swings down. How many ETFs are do you guys have 525 00:27:38,080 --> 00:27:41,280 Speaker 1: right now? And kind of where are you seeing the demand? 526 00:27:41,680 --> 00:27:44,639 Speaker 1: What types of products? Yeah, so a lot of a 527 00:27:44,640 --> 00:27:47,280 Speaker 1: lot of the demand we've seen our twenty percent product 528 00:27:47,440 --> 00:27:51,959 Speaker 1: and part of that stems from the volatility and the 529 00:27:52,359 --> 00:27:54,879 Speaker 1: rate tiking, if you will. In the battle market. There 530 00:27:54,880 --> 00:27:57,119 Speaker 1: are a lot of advisors and investors out there that 531 00:27:57,520 --> 00:28:01,240 Speaker 1: they'd rather take put their put theirs on the equity side, 532 00:28:01,240 --> 00:28:03,280 Speaker 1: on the equity risk premia. When you have a twenty 533 00:28:03,280 --> 00:28:06,880 Speaker 1: percent cushion's um it's rare to see or you don't 534 00:28:06,880 --> 00:28:10,560 Speaker 1: see a lot of predictions speaking to a market decline 535 00:28:10,560 --> 00:28:13,480 Speaker 1: of twenty percent or more in the next twelve months. 536 00:28:13,680 --> 00:28:15,280 Speaker 1: So that's a pretty good trade off for a lot 537 00:28:15,320 --> 00:28:17,760 Speaker 1: of a lot of advices and investors. And that's where 538 00:28:17,800 --> 00:28:21,399 Speaker 1: we see the most the most traction. Well, if you 539 00:28:21,440 --> 00:28:26,280 Speaker 1: look across the the ETF spectrum, though, um, you know, 540 00:28:26,640 --> 00:28:28,800 Speaker 1: where do you see I mean, the most demand in 541 00:28:28,840 --> 00:28:33,359 Speaker 1: the last couple of weeks has certainly been ultra short 542 00:28:33,400 --> 00:28:36,280 Speaker 1: treasury ETFs. Right, So if you look, if you look 543 00:28:36,320 --> 00:28:41,600 Speaker 1: at the ETF universe, where do you see the biggest holes. Well, 544 00:28:41,760 --> 00:28:44,239 Speaker 1: more broadly speaking, that's just a reflection of you know, 545 00:28:44,280 --> 00:28:46,720 Speaker 1: where where the places are being bets at the moment. Right, 546 00:28:46,760 --> 00:28:52,200 Speaker 1: So we still see some more slightly more aggressive behaviors, 547 00:28:52,200 --> 00:28:54,880 Speaker 1: if you will, in terms of putting money into equity ETFs. 548 00:28:55,160 --> 00:28:58,040 Speaker 1: So you see a little bit a little bit less 549 00:28:58,200 --> 00:29:01,160 Speaker 1: risk one and a little bit more risk on generally speaking, 550 00:29:01,280 --> 00:29:04,440 Speaker 1: is what we've been seeing. Now. I happen to believe 551 00:29:04,440 --> 00:29:06,920 Speaker 1: that that might be a little bit premature, but that's 552 00:29:07,080 --> 00:29:09,440 Speaker 1: the market economous conversation that I'm happy to get into 553 00:29:09,480 --> 00:29:12,200 Speaker 1: if you'd like. So all right, let's kind of go there, John, 554 00:29:12,280 --> 00:29:17,040 Speaker 1: because we had the big CPI print today PPI coming up, 555 00:29:17,040 --> 00:29:20,640 Speaker 1: and of course inflation's job one for this Federal Reserve 556 00:29:21,000 --> 00:29:23,800 Speaker 1: and for the ETF I'm sorry, the ECB as well. 557 00:29:24,520 --> 00:29:26,440 Speaker 1: What are you guys at Alliance? Would would you make 558 00:29:26,480 --> 00:29:28,239 Speaker 1: the inflation print today? And how do you think our 559 00:29:28,280 --> 00:29:32,120 Speaker 1: Federal Reserve is going to respond? I actually think it's 560 00:29:32,120 --> 00:29:35,520 Speaker 1: pretty straightforward. We still see pressure in the service sector. 561 00:29:35,600 --> 00:29:38,280 Speaker 1: I mean, goods have come down for natural reasons, but 562 00:29:38,840 --> 00:29:40,960 Speaker 1: in terms of the service sector inflation and you still 563 00:29:40,960 --> 00:29:43,720 Speaker 1: have some wage inflation. And even if there are not 564 00:29:43,880 --> 00:29:46,360 Speaker 1: numbers that you might see in you know, other other 565 00:29:46,440 --> 00:29:48,880 Speaker 1: parts of the world. They're still very high. Given the 566 00:29:48,920 --> 00:29:52,400 Speaker 1: target that the FED has and the fact that FED 567 00:29:52,440 --> 00:29:55,160 Speaker 1: shairman John Paul was talking about fifty basis points just 568 00:29:55,200 --> 00:29:58,920 Speaker 1: before we had a couple of banking issues, I think 569 00:29:58,920 --> 00:30:02,480 Speaker 1: that speaks to the that there is still more quote 570 00:30:02,560 --> 00:30:04,560 Speaker 1: unquote work for the FED to do, and what that 571 00:30:04,640 --> 00:30:06,720 Speaker 1: implies is that, yes, they're going to continue with this 572 00:30:07,720 --> 00:30:10,560 Speaker 1: ray tike cycle twenty five basis points in a couple 573 00:30:10,600 --> 00:30:15,200 Speaker 1: of weeks here that I think that's pretty much baked 574 00:30:15,240 --> 00:30:17,720 Speaker 1: in right now. You have a seventy five percent chance 575 00:30:17,760 --> 00:30:21,160 Speaker 1: of that happening according to the statistics today. But I 576 00:30:21,200 --> 00:30:22,960 Speaker 1: think that's more a function of time. The closer we 577 00:30:23,040 --> 00:30:24,920 Speaker 1: get to the meeting, that those numbers are going to 578 00:30:24,960 --> 00:30:26,320 Speaker 1: go up and we're going to see the twenty five 579 00:30:26,320 --> 00:30:29,080 Speaker 1: basis point hike. So I think that's pretty much more 580 00:30:29,160 --> 00:30:31,640 Speaker 1: or less a dumb deal, pending any any strange behaviors 581 00:30:31,640 --> 00:30:33,760 Speaker 1: in the market in the next couple of weeks here, Yeah, 582 00:30:33,800 --> 00:30:35,960 Speaker 1: the markets pricing in some cuts after that. Do you 583 00:30:36,000 --> 00:30:38,960 Speaker 1: think we're going to see any this year? I don't. 584 00:30:39,160 --> 00:30:42,960 Speaker 1: I'm in the camp of no. I just have a look, 585 00:30:43,000 --> 00:30:45,160 Speaker 1: at the end of the day, the FED consists of 586 00:30:45,240 --> 00:30:47,760 Speaker 1: human beings, right, and like it or not, they they 587 00:30:47,760 --> 00:30:49,440 Speaker 1: can be as data dependent as they want. But I 588 00:30:49,440 --> 00:30:51,920 Speaker 1: don't think they're going to have enough data points to 589 00:30:52,520 --> 00:30:56,400 Speaker 1: place what I would consider a very bold pivot already 590 00:30:56,440 --> 00:30:59,200 Speaker 1: in July. I see some the consensus is that they're 591 00:30:59,200 --> 00:31:01,400 Speaker 1: going to start cutting in July already and then at 592 00:31:01,480 --> 00:31:04,680 Speaker 1: every meeting for the rest of the year after that. 593 00:31:05,240 --> 00:31:06,920 Speaker 1: I don't think that will happen. I think they will 594 00:31:06,960 --> 00:31:09,840 Speaker 1: have much more staying power than that. The decision to 595 00:31:10,560 --> 00:31:15,560 Speaker 1: pause is somewhat difficult. We might see it in May, 596 00:31:15,640 --> 00:31:18,000 Speaker 1: but I can also very easily see the rate hiking 597 00:31:18,080 --> 00:31:22,040 Speaker 1: cycle continuing another meeting or two. But it's an easier 598 00:31:22,080 --> 00:31:25,440 Speaker 1: decision to make. To make a decision after a pause 599 00:31:25,680 --> 00:31:30,200 Speaker 1: is much much more difficult, because either you have to say, well, crap, 600 00:31:30,280 --> 00:31:32,600 Speaker 1: we have more inflation that we thought. I guess the 601 00:31:32,680 --> 00:31:37,400 Speaker 1: disinflation we've been seeing it wasn't after all unintended transitory. 602 00:31:37,640 --> 00:31:40,240 Speaker 1: So they're going to be very cautious with that. That 603 00:31:40,400 --> 00:31:42,240 Speaker 1: part of it, right, So they'd rather go higher for 604 00:31:42,320 --> 00:31:45,800 Speaker 1: longer than pausing or cutting earlier. And then on the 605 00:31:45,800 --> 00:31:47,720 Speaker 1: flip side, if you if you say you're going you're 606 00:31:47,720 --> 00:31:50,800 Speaker 1: going to actually start cutting rates, then the question immediately becomes, 607 00:31:51,360 --> 00:31:53,440 Speaker 1: what is it that the FED is seeing that hasn't 608 00:31:53,480 --> 00:31:55,280 Speaker 1: been baked into the market over the past, you know, 609 00:31:55,400 --> 00:31:58,720 Speaker 1: two months so, and that it'd been a self will 610 00:31:58,760 --> 00:32:01,240 Speaker 1: create some some reelings, and I don't I don't think 611 00:32:01,240 --> 00:32:04,040 Speaker 1: that that's anything that they want to trigger. So Johanna 612 00:32:04,440 --> 00:32:06,600 Speaker 1: over the lines, talk to us about just the fun 613 00:32:06,720 --> 00:32:10,000 Speaker 1: flows in and out of ETFs. Are you seeing continued 614 00:32:10,640 --> 00:32:13,800 Speaker 1: net inflows here, because it's just been you know, in 615 00:32:13,920 --> 00:32:17,040 Speaker 1: my investing lifetime, well north of thirty years, it's just 616 00:32:17,080 --> 00:32:19,680 Speaker 1: been one of the most fascinating phenomena to watch the 617 00:32:19,720 --> 00:32:24,720 Speaker 1: growth of the ETF business. Yeah, I mean, it is fascinating, 618 00:32:24,720 --> 00:32:28,040 Speaker 1: and it's fascinating for good reasons, as I'm sure you've 619 00:32:28,040 --> 00:32:30,120 Speaker 1: covered in previous episodes, you know, in terms of why 620 00:32:30,160 --> 00:32:33,800 Speaker 1: the ETF rapper is so attractive. But even even in March, 621 00:32:34,520 --> 00:32:38,160 Speaker 1: we saw thirty billion coming into the overall ETF industry 622 00:32:38,160 --> 00:32:40,920 Speaker 1: here in the United States, and it's now back up 623 00:32:40,960 --> 00:32:43,520 Speaker 1: to like almost seven trillion six point nine to be 624 00:32:43,560 --> 00:32:46,040 Speaker 1: more precise, six point nine trillion dollars in market size 625 00:32:46,040 --> 00:32:48,800 Speaker 1: and the predictions over the next couple of decades is 626 00:32:48,800 --> 00:32:52,240 Speaker 1: that it's going to easily double triple or maybe quadruple, 627 00:32:53,000 --> 00:32:56,840 Speaker 1: so that that flow of capital, if you will, from 628 00:32:56,880 --> 00:32:59,920 Speaker 1: the mutual fund industry primarily into the ETF industry is 629 00:33:00,360 --> 00:33:03,400 Speaker 1: US that's basically tied away. That that's not going to 630 00:33:03,480 --> 00:33:06,960 Speaker 1: stop anytime soon. Yeah. I was talking to Brian Lake 631 00:33:07,000 --> 00:33:11,000 Speaker 1: from JP Morgan on on Monday and he said he 632 00:33:11,360 --> 00:33:14,880 Speaker 1: sees fifteen billion that's for the US market. If you 633 00:33:14,880 --> 00:33:18,040 Speaker 1: look at, you know, the global ETF industry, it's more 634 00:33:18,080 --> 00:33:22,920 Speaker 1: like ten trillion dollars in UH. It's a huge it's 635 00:33:22,920 --> 00:33:24,960 Speaker 1: a huge market and growing. Where do you think the 636 00:33:25,000 --> 00:33:26,840 Speaker 1: most growth is going to be. We've seen a lot 637 00:33:26,920 --> 00:33:29,320 Speaker 1: in terms of for a while we saw factors and 638 00:33:29,360 --> 00:33:33,280 Speaker 1: then now thematic I'd say probably actively managed ETFs are 639 00:33:33,320 --> 00:33:37,120 Speaker 1: the hottest thing right now. What's your take? Well, I 640 00:33:37,120 --> 00:33:39,320 Speaker 1: guess it depends on the where the question is coming from, 641 00:33:39,400 --> 00:33:41,840 Speaker 1: right But in terms of growth, it's going to continue 642 00:33:41,880 --> 00:33:43,680 Speaker 1: to be in the in the passive endses, in the 643 00:33:43,720 --> 00:33:47,360 Speaker 1: broad market exposure that is by by far the most 644 00:33:47,400 --> 00:33:51,800 Speaker 1: dominant part of the world, if you will. But in 645 00:33:51,920 --> 00:33:55,040 Speaker 1: terms of where UH etf issuers are going to see 646 00:33:55,040 --> 00:33:57,920 Speaker 1: the most exciting opportunity for growth and also on opportunities 647 00:33:57,960 --> 00:34:02,600 Speaker 1: to to h to generate some revenue is from the 648 00:34:02,640 --> 00:34:06,040 Speaker 1: active ETF actively managed ETF space and then more specifically 649 00:34:06,080 --> 00:34:09,520 Speaker 1: the space that Alian's Investment Management is in is to 650 00:34:09,600 --> 00:34:12,600 Speaker 1: define the outcome ETF space. It's a relatively new space 651 00:34:12,640 --> 00:34:16,120 Speaker 1: as well. An innovation has just barely begun in this 652 00:34:16,200 --> 00:34:19,160 Speaker 1: space and that is already over. It's been around for 653 00:34:20,200 --> 00:34:22,000 Speaker 1: almost what is an a three and a half years 654 00:34:22,080 --> 00:34:24,960 Speaker 1: maybe and as of last year it grew by ten 655 00:34:25,000 --> 00:34:28,440 Speaker 1: billion alone and that growth is just continuing as well. 656 00:34:29,200 --> 00:34:31,120 Speaker 1: All Right, Johan, thank you so much for joining us. 657 00:34:31,200 --> 00:34:33,800 Speaker 1: Johann Gron he is the vice president ahead of ETF 658 00:34:33,880 --> 00:34:37,719 Speaker 1: strategy to Alligan's Investment Management and just falling up on them. 659 00:34:37,760 --> 00:34:40,520 Speaker 1: It's just the growth of ETFs is just extraordinary. You know, 660 00:34:40,560 --> 00:34:42,680 Speaker 1: you think about we grew up when is all about 661 00:34:42,760 --> 00:34:45,359 Speaker 1: mutual funds, you know, but these ETFs have just there's 662 00:34:45,400 --> 00:34:48,680 Speaker 1: such a superior product in terms of cost for and 663 00:34:49,040 --> 00:34:52,000 Speaker 1: other attributes as well for so many investors. And the buffer, 664 00:34:52,239 --> 00:34:56,160 Speaker 1: i mean the space that Johan and Alliance Investment Management 665 00:34:56,160 --> 00:35:01,320 Speaker 1: are in buffer ETFs is just about to break out. 666 00:35:01,520 --> 00:35:04,640 Speaker 1: I mean they're doing I assume very well with their business. 667 00:35:04,640 --> 00:35:07,799 Speaker 1: I know black Rock, which is an ETF Beheemoth has 668 00:35:07,880 --> 00:35:10,800 Speaker 1: filed plans to break into the booming buff Buffer ETF 669 00:35:10,840 --> 00:35:13,600 Speaker 1: market as well. So it's a tremendous space. Yeah, we'll 670 00:35:13,640 --> 00:35:15,960 Speaker 1: stay on top of that. You're listening to the tape 671 00:35:16,120 --> 00:35:19,479 Speaker 1: cancer our live program Bloomberg Markets weekdays at ten am 672 00:35:19,480 --> 00:35:23,280 Speaker 1: Eastern on Bloomberg Radio, the tune in app, Bloomberg dot Com, 673 00:35:23,320 --> 00:35:26,040 Speaker 1: and the Bloomberg Business alf. You can also listen live 674 00:35:26,160 --> 00:35:29,200 Speaker 1: on Amazon Alexa from our flagship New York station, Just 675 00:35:29,360 --> 00:35:35,120 Speaker 1: say Alexa play Bloomberg eleven thirty. Our Brad case Joints 676 00:35:35,120 --> 00:35:38,400 Speaker 1: his chief economist, director of Research for Middleburg Communities, talk 677 00:35:38,440 --> 00:35:41,160 Speaker 1: about a guy who's just way over educated. All right, 678 00:35:41,200 --> 00:35:44,200 Speaker 1: he keep economists there, chief economists. That's the key part 679 00:35:44,200 --> 00:35:47,480 Speaker 1: of his title todays. Yeah, all right, Burke, where would 680 00:35:47,480 --> 00:35:50,160 Speaker 1: you go? Undergrad Williams? Okay, not bad. They're the EPs. 681 00:35:50,160 --> 00:35:52,799 Speaker 1: We cleared that up, masters in something from Berkeley, then 682 00:35:52,800 --> 00:35:55,040 Speaker 1: a PhD from Yale. Then he goes out and gets 683 00:35:55,040 --> 00:35:58,399 Speaker 1: his CFA. On top of that and the CIA, which 684 00:35:58,400 --> 00:36:00,200 Speaker 1: I have no idea what that is, but while you're 685 00:36:00,200 --> 00:36:03,319 Speaker 1: working at the Federal Reserve. I would guess, yeah, absolutely, Yeah, 686 00:36:02,880 --> 00:36:06,960 Speaker 1: that's that's alternative investments. Alternative Sure, why not? So I'm 687 00:36:07,000 --> 00:36:09,799 Speaker 1: guessing he's got everything covered here. Brad talked us about 688 00:36:09,800 --> 00:36:11,600 Speaker 1: inflation out there. You guys are in the real estate 689 00:36:11,640 --> 00:36:14,640 Speaker 1: business at middle BIRG communities. What's going on with the 690 00:36:14,680 --> 00:36:17,640 Speaker 1: cost of housing? Is that really the driver here for 691 00:36:17,719 --> 00:36:20,040 Speaker 1: the inflation that is still probably a lot stickier than 692 00:36:20,080 --> 00:36:21,960 Speaker 1: people would like to see. Yeah, I mean you have 693 00:36:22,000 --> 00:36:24,360 Speaker 1: to remember that there are two very different parts of 694 00:36:24,360 --> 00:36:28,160 Speaker 1: the of the housing market. That the prices of houses 695 00:36:28,239 --> 00:36:30,360 Speaker 1: that are bought by owners who expect to live in 696 00:36:30,400 --> 00:36:34,400 Speaker 1: the houses, those are still so expensive and prices have 697 00:36:34,480 --> 00:36:38,000 Speaker 1: already started to decline, um, and so it's it's harder 698 00:36:38,040 --> 00:36:40,919 Speaker 1: to buy those properties, and people are worried that once 699 00:36:40,960 --> 00:36:44,719 Speaker 1: they buy the the price will come down. Um. But 700 00:36:44,719 --> 00:36:47,120 Speaker 1: but the but that's much more expensive than the rental 701 00:36:47,400 --> 00:36:49,680 Speaker 1: housing part of the market, which is I've actually got 702 00:36:49,680 --> 00:36:52,880 Speaker 1: a lot of a lot of attention last year because 703 00:36:52,920 --> 00:36:56,279 Speaker 1: rents had increased so dramatically all across the country. That 704 00:36:56,320 --> 00:36:59,319 Speaker 1: has gone away, but uh, you know, but that's not 705 00:36:59,400 --> 00:37:03,040 Speaker 1: yet mayasured in things like the CPI, because what they're 706 00:37:03,040 --> 00:37:06,520 Speaker 1: measuring is essentially leases that people signed last year. This 707 00:37:06,600 --> 00:37:09,960 Speaker 1: is what I wanted to ask about. And you you 708 00:37:10,040 --> 00:37:13,480 Speaker 1: worked at the Federal Reserve Board. Doesn't somebody at the 709 00:37:13,520 --> 00:37:16,839 Speaker 1: FED know somebody at the BLS who can set that straight? 710 00:37:16,880 --> 00:37:19,640 Speaker 1: Because it seems to be a measurement a metrics problem 711 00:37:19,840 --> 00:37:22,080 Speaker 1: more than it is a rent problem. It's not really 712 00:37:22,080 --> 00:37:28,719 Speaker 1: a problem. What the CPI is for is measuring it properly. Okay, 713 00:37:28,560 --> 00:37:32,560 Speaker 1: The FED, when they set interest rate policy is looking 714 00:37:32,600 --> 00:37:35,040 Speaker 1: at something a little bit different. So the FED is 715 00:37:35,040 --> 00:37:38,359 Speaker 1: worried about inflation, not about the CPI. Now for a 716 00:37:38,360 --> 00:37:40,080 Speaker 1: lot of those people, for a lot of people, those 717 00:37:40,120 --> 00:37:42,279 Speaker 1: are the same thing. But if you're a FED decision maker, 718 00:37:42,320 --> 00:37:45,239 Speaker 1: they're not. And so the people have a FED Yes 719 00:37:45,320 --> 00:37:48,319 Speaker 1: they are aware, yea, and they're paying close attention to 720 00:37:48,400 --> 00:37:50,680 Speaker 1: and they like, if I'm not mistaken. They prefer the 721 00:37:50,719 --> 00:37:57,120 Speaker 1: core PC right, yes, the personal consumption expenditures expenditures exactly 722 00:37:57,160 --> 00:37:59,239 Speaker 1: I was looking for the E. Yeah, so they look 723 00:37:59,280 --> 00:38:01,320 Speaker 1: at a different measure than we kind of main Street 724 00:38:01,400 --> 00:38:04,520 Speaker 1: follows the CPI. There's a very little difference between the 725 00:38:04,560 --> 00:38:07,560 Speaker 1: CPI and the PC deflator, all right, So put it 726 00:38:07,640 --> 00:38:10,120 Speaker 1: all together here, what's our Fed going to do? So? 727 00:38:10,160 --> 00:38:12,399 Speaker 1: I think the Fed is going to continue raising interest rates. 728 00:38:12,440 --> 00:38:14,720 Speaker 1: I expect them to raise them at the next meeting. 729 00:38:14,760 --> 00:38:17,720 Speaker 1: I don't. That may end up being the last one, okay. 730 00:38:18,520 --> 00:38:21,040 Speaker 1: But the reason that they're doing that is is that 731 00:38:21,560 --> 00:38:26,400 Speaker 1: getting inflation down is very important, and they have finished 732 00:38:26,400 --> 00:38:30,239 Speaker 1: that job. Inflation, when you measure it properly is back 733 00:38:30,320 --> 00:38:33,839 Speaker 1: down under two percent. But that's not their only job. 734 00:38:33,960 --> 00:38:37,319 Speaker 1: I explain that one because you know what, I used 735 00:38:37,400 --> 00:38:40,280 Speaker 1: my sandwich ham and cheese sandwich at the La Delhi 736 00:38:40,640 --> 00:38:44,200 Speaker 1: forever was six dollars and seventy cents. It's now nine 737 00:38:44,200 --> 00:38:48,600 Speaker 1: dollars and twenty cents. That's inflation for me. Is that 738 00:38:48,640 --> 00:38:50,799 Speaker 1: going to go down? I mean it's not. No, the 739 00:38:50,800 --> 00:38:54,000 Speaker 1: Fed doesn't. They're generally not not looking to get prices 740 00:38:54,080 --> 00:38:56,560 Speaker 1: back down to where they were sometime in the past. Okay. 741 00:38:56,719 --> 00:38:59,399 Speaker 1: They they're trying to say, we don't want the rate 742 00:38:59,440 --> 00:39:02,560 Speaker 1: of increase in prices to be much above two percent. 743 00:39:03,000 --> 00:39:05,239 Speaker 1: They don't want it to go down either, and they're 744 00:39:05,239 --> 00:39:08,120 Speaker 1: actually there are economic problems that are caused when when 745 00:39:08,120 --> 00:39:11,319 Speaker 1: prices are actually declining. So that's not something everybody waits. 746 00:39:11,360 --> 00:39:13,439 Speaker 1: Nobody wants to buy anything right because you think you'll 747 00:39:13,440 --> 00:39:15,359 Speaker 1: get a cheaper price in the future. You look at 748 00:39:15,360 --> 00:39:17,719 Speaker 1: something like the Japanese economy, which has had trouble for 749 00:39:17,800 --> 00:39:19,920 Speaker 1: more than thirty years, and a lot of that trouble 750 00:39:20,000 --> 00:39:23,320 Speaker 1: came because they were in that disinflationary situation. So the 751 00:39:23,680 --> 00:39:25,560 Speaker 1: price here's hand which is not going down back down 752 00:39:25,560 --> 00:39:27,759 Speaker 1: to five bucks. What we want is for it to 753 00:39:27,760 --> 00:39:30,319 Speaker 1: stop going up so aggressively. And that, as I say, 754 00:39:30,400 --> 00:39:32,640 Speaker 1: really has been accomplished in spite of what we saw 755 00:39:32,680 --> 00:39:35,320 Speaker 1: this morning when the CPI came out. Years hoping to 756 00:39:35,320 --> 00:39:37,880 Speaker 1: find that because all I look at my ECO screens, 757 00:39:37,880 --> 00:39:41,000 Speaker 1: I at CPI, CPI X, food and Energy and the 758 00:39:41,080 --> 00:39:43,960 Speaker 1: Supercore whatever that is, that's all got a five handle 759 00:39:44,040 --> 00:39:45,960 Speaker 1: on it. So what should I be looking at or 760 00:39:46,000 --> 00:39:48,160 Speaker 1: what is the FED looking at to say, all right, 761 00:39:48,239 --> 00:39:50,839 Speaker 1: we've kind of done our job. So so thirty five 762 00:39:50,920 --> 00:39:53,400 Speaker 1: percent of the CPI comes from the way they measure 763 00:39:53,920 --> 00:39:57,240 Speaker 1: housing costs. Okay, and that's not just rent, but rents 764 00:39:57,480 --> 00:40:00,200 Speaker 1: are the main piece of information that they're using to 765 00:40:00,320 --> 00:40:02,879 Speaker 1: do that. But as they say, to a great extent, 766 00:40:02,920 --> 00:40:05,680 Speaker 1: they're measuring the rents that were signed a year. Okay. Um. 767 00:40:05,920 --> 00:40:09,960 Speaker 1: So so what they're doing in practice is saying, all right, 768 00:40:10,040 --> 00:40:12,640 Speaker 1: what's happening to new rents, and new rents are not 769 00:40:12,800 --> 00:40:16,839 Speaker 1: showing that that strong growth that they're still measuring, um 770 00:40:17,080 --> 00:40:19,560 Speaker 1: and and so when you take into account the new rents, 771 00:40:19,800 --> 00:40:22,439 Speaker 1: then the overall CPI is down in the two percent range. Okay, 772 00:40:22,480 --> 00:40:25,520 Speaker 1: the government doesn't publish that number, that's right. What's right 773 00:40:26,480 --> 00:40:30,360 Speaker 1: because because they accomplish their main purpose by publishing the 774 00:40:30,440 --> 00:40:33,719 Speaker 1: CPI or the or the pc deflator, Okay, that is 775 00:40:33,840 --> 00:40:37,400 Speaker 1: measuring something different. I'm just saying that the FED is 776 00:40:37,760 --> 00:40:39,879 Speaker 1: their job is not to get the CPI to two percent. 777 00:40:40,160 --> 00:40:43,279 Speaker 1: Their job is to is to fight inflation. Those are 778 00:40:43,360 --> 00:40:46,080 Speaker 1: slightly different. Now, one of the things that that that 779 00:40:46,400 --> 00:40:49,440 Speaker 1: that they're that they're that they need to accomplish is 780 00:40:49,480 --> 00:40:52,360 Speaker 1: they need to make sure people don't expect inflation to 781 00:40:52,520 --> 00:40:55,720 Speaker 1: stay high. And since people are paying attention to the CPI, 782 00:40:56,400 --> 00:40:59,239 Speaker 1: that's why it's important to get the CPI down. But 783 00:40:59,719 --> 00:41:01,960 Speaker 1: that's part of the job that is not yet expectations 784 00:41:02,040 --> 00:41:03,960 Speaker 1: or the problem. Let me quickly, we only have a 785 00:41:04,000 --> 00:41:05,239 Speaker 1: minute and a half left, but I want to ask 786 00:41:05,239 --> 00:41:08,000 Speaker 1: you about housing because I think there's an affordability issue 787 00:41:08,040 --> 00:41:10,759 Speaker 1: now for a lot of people, both in terms of 788 00:41:10,800 --> 00:41:14,760 Speaker 1: price and in terms of rates. How does that get solved? 789 00:41:15,440 --> 00:41:18,200 Speaker 1: So it gets all fundamentally, but just more supply. And 790 00:41:18,360 --> 00:41:20,400 Speaker 1: that's that's everywhere in the country, but it's especially in 791 00:41:20,400 --> 00:41:22,560 Speaker 1: the parts of the country where people are moving to 792 00:41:23,280 --> 00:41:27,680 Speaker 1: and so houses housing prices are just outrageous in places 793 00:41:27,719 --> 00:41:31,000 Speaker 1: like San Francisco. But people are moving out of San Francisco, 794 00:41:31,120 --> 00:41:33,279 Speaker 1: partly because of that, but partly because their jobs are 795 00:41:33,320 --> 00:41:35,880 Speaker 1: moving out. Their jobs are moving two places where it 796 00:41:36,080 --> 00:41:38,640 Speaker 1: is somewhat easier to build housing. And so you know, 797 00:41:38,800 --> 00:41:42,200 Speaker 1: my company's situation is, you know, we're in that part 798 00:41:42,239 --> 00:41:44,120 Speaker 1: of the country where the people are moving to because 799 00:41:44,160 --> 00:41:47,040 Speaker 1: the jobs are moving there. And you know, it's a 800 00:41:47,120 --> 00:41:49,759 Speaker 1: long term story there is it will take years for 801 00:41:49,880 --> 00:41:53,600 Speaker 1: us to build enough housing for everybody. But over those years, 802 00:41:53,640 --> 00:41:55,000 Speaker 1: a lot of those people will move out of the 803 00:41:55,080 --> 00:41:58,200 Speaker 1: high house parts of the country and to the places 804 00:41:58,239 --> 00:42:01,160 Speaker 1: where the jobs are moving to. Middleburg, Virginia. Is that 805 00:42:01,280 --> 00:42:03,520 Speaker 1: you guys are we are not located there. We're named 806 00:42:03,520 --> 00:42:05,600 Speaker 1: after that town. Okay, where were you guys located? And 807 00:42:05,840 --> 00:42:08,239 Speaker 1: just outside of Washington, DC in Virginia? Okay, all right, 808 00:42:08,280 --> 00:42:11,080 Speaker 1: good stuff from Middleburg Communities. Next time you're back in 809 00:42:11,080 --> 00:42:12,520 Speaker 1: New York, we'll get you back in here. You've got 810 00:42:12,560 --> 00:42:13,840 Speaker 1: a lot of good stuff to talk about. I'm just 811 00:42:13,840 --> 00:42:15,959 Speaker 1: looking at Middleburg, Virginia. Looks like a very nice little 812 00:42:16,480 --> 00:42:19,160 Speaker 1: town there. I've never been there. I was more Inston 813 00:42:19,239 --> 00:42:22,120 Speaker 1: Williams it is. I googled Williams versus Amherst to see 814 00:42:22,480 --> 00:42:24,520 Speaker 1: I thought I was going to see football scores, but 815 00:42:24,680 --> 00:42:28,080 Speaker 1: everything I got was like, Williams has more access to nature. 816 00:42:28,440 --> 00:42:33,080 Speaker 1: Apparently Williams has better food and dorm situations. But Amherst 817 00:42:33,239 --> 00:42:35,680 Speaker 1: is closed to Northampton, which has a lively arts town, 818 00:42:36,120 --> 00:42:38,000 Speaker 1: so it's not really the same kind of thing you'd 819 00:42:38,040 --> 00:42:40,840 Speaker 1: get if you googled Ohio State versus. It's a big rivalry. 820 00:42:40,880 --> 00:42:44,120 Speaker 1: It's a huge rivalry. Yeah, the biggest little game in America. 821 00:42:45,320 --> 00:42:47,480 Speaker 1: Rad Case, thanks so much for joining us chief economist 822 00:42:47,880 --> 00:42:51,680 Speaker 1: at Middleburg Communities. You're listening to the tape cans Are 823 00:42:51,760 --> 00:42:55,360 Speaker 1: Live program Bloomberg Markets weekdays at ten am Eastern on 824 00:42:55,520 --> 00:42:59,280 Speaker 1: Bloomberg Radio, Tuna app, Bloomberg dot Com, and the Bloomberg 825 00:42:59,320 --> 00:43:02,400 Speaker 1: Business App. You can also listen live on Amazon Alexa 826 00:43:02,520 --> 00:43:05,799 Speaker 1: from our flagship New York station. Just say Alexa play 827 00:43:05,920 --> 00:43:12,160 Speaker 1: Bloomberg eleven thirty to weed? Why not? Morgan Paxy, a 828 00:43:12,239 --> 00:43:16,200 Speaker 1: co founder managing partner Beside Investment Management, joins us they 829 00:43:16,239 --> 00:43:20,680 Speaker 1: have a Poseidon Dynamic, a cannabis etf the tickers ps DN. 830 00:43:20,920 --> 00:43:22,879 Speaker 1: Morgan takes so much for taking the time to join 831 00:43:23,000 --> 00:43:25,200 Speaker 1: us here. We want to get a state of the 832 00:43:25,320 --> 00:43:28,680 Speaker 1: cannabis business these especially after till Ray's disappointing revenue in 833 00:43:28,719 --> 00:43:33,480 Speaker 1: neverse came in yesterday. What's what's the weed market look like? Sure, well, 834 00:43:33,520 --> 00:43:35,480 Speaker 1: thank you for having me. It's good to be with 835 00:43:35,600 --> 00:43:40,839 Speaker 1: you all here in Rainy, Miami for the Benzinga Cannabis Conference. UM. 836 00:43:41,600 --> 00:43:44,320 Speaker 1: It's a really interesting time in our industry. UM. Companies 837 00:43:44,360 --> 00:43:47,000 Speaker 1: like Tilray, as as you know, had a pretty lousy quarter, 838 00:43:47,320 --> 00:43:50,319 Speaker 1: not their first, not their last. UM. There are several 839 00:43:50,360 --> 00:43:52,480 Speaker 1: companies in our space that really won't make it through 840 00:43:52,600 --> 00:43:56,200 Speaker 1: this period. There was too much capacity built regulations and 841 00:43:56,400 --> 00:43:59,480 Speaker 1: really keep up, and so you know, the weaker companies 842 00:43:59,480 --> 00:44:02,160 Speaker 1: are falling by the wayside and the good companies are 843 00:44:02,440 --> 00:44:04,960 Speaker 1: managing through m So that's what we're seeing right now. 844 00:44:05,400 --> 00:44:07,960 Speaker 1: We're seeing that here live at the conference. I'm at 845 00:44:08,040 --> 00:44:12,480 Speaker 1: this week great attendance mood is pretty somber because it 846 00:44:12,560 --> 00:44:14,879 Speaker 1: feels like people don't want to celebrate if they're doing 847 00:44:14,960 --> 00:44:17,880 Speaker 1: well because they see others struggling in this time. So, 848 00:44:19,160 --> 00:44:21,640 Speaker 1: you know, through a tight capital market like we're in, though, 849 00:44:21,760 --> 00:44:24,759 Speaker 1: it's it's brought a lot of focus on fundamentals and 850 00:44:24,880 --> 00:44:28,319 Speaker 1: companies are really being very stupid their cash They need 851 00:44:28,360 --> 00:44:30,360 Speaker 1: to get to an a point of cash flow positive 852 00:44:30,880 --> 00:44:34,400 Speaker 1: and really thinking about their roys, how they're deploying capital, 853 00:44:34,560 --> 00:44:37,279 Speaker 1: what they're doing on their cost side. So as the 854 00:44:37,360 --> 00:44:39,759 Speaker 1: demand continues to grow, we're seeing, you know, we're seeing 855 00:44:39,800 --> 00:44:41,600 Speaker 1: that translate to the bottom. All when I get into 856 00:44:41,640 --> 00:44:43,480 Speaker 1: a somber mood, I just look for a little sativa 857 00:44:43,920 --> 00:44:45,680 Speaker 1: that kind of boost you up a little bit, you know, 858 00:44:45,840 --> 00:44:49,360 Speaker 1: gives you a little energy boost. Why aren't we seeing 859 00:44:49,760 --> 00:44:53,319 Speaker 1: explosive sales figures from these cannabis companies. I went down 860 00:44:53,440 --> 00:44:56,760 Speaker 1: to the grand opening of the first legal weed shop 861 00:44:56,840 --> 00:44:59,040 Speaker 1: in New York a couple of months ago, and the 862 00:44:59,200 --> 00:45:03,200 Speaker 1: line was apped around the block four days. How come 863 00:45:03,280 --> 00:45:07,120 Speaker 1: that's not coming through in the numbers. Sure? Well, Remember 864 00:45:07,200 --> 00:45:09,239 Speaker 1: cannabis is still as a state by state market, and 865 00:45:09,440 --> 00:45:12,640 Speaker 1: New York is an abject failure from a legal standpoint 866 00:45:12,760 --> 00:45:16,680 Speaker 1: because the regulators have not opened up legal doors, right, 867 00:45:16,760 --> 00:45:19,920 Speaker 1: so there's very few legal retail. Even though there's retail 868 00:45:20,000 --> 00:45:23,279 Speaker 1: all over New York, most of that or of that 869 00:45:23,400 --> 00:45:26,560 Speaker 1: is completely illegal, so which is actually very scary. There 870 00:45:26,640 --> 00:45:28,319 Speaker 1: was a there was a guy actually shot and killed 871 00:45:28,360 --> 00:45:35,120 Speaker 1: in was in the Bronx. Yes, we prefer the term unregulated, Morgan. Sure, Okay, 872 00:45:35,560 --> 00:45:38,400 Speaker 1: Well that's not helping the regulated market so much. So 873 00:45:38,719 --> 00:45:40,320 Speaker 1: that's part of the problem why New York is not 874 00:45:40,400 --> 00:45:41,840 Speaker 1: doing well. But if you go to like New Jersey 875 00:45:42,000 --> 00:45:44,880 Speaker 1: or Connecticut, those are states that are doing great or Missouri. 876 00:45:45,000 --> 00:45:47,880 Speaker 1: Missouri just in the month of March at one hundred 877 00:45:47,880 --> 00:45:50,440 Speaker 1: and twenty six million dollars of legal sales. So it 878 00:45:50,560 --> 00:45:52,880 Speaker 1: really depends on where you are, all right. Just New 879 00:45:52,960 --> 00:45:54,840 Speaker 1: York's got a lot of work to do, all right, Morgan, 880 00:45:54,840 --> 00:45:56,319 Speaker 1: thanks so much for joining us. We'll get you back 881 00:45:56,360 --> 00:45:58,359 Speaker 1: on again and get the update here made the next 882 00:45:58,400 --> 00:46:01,200 Speaker 1: time you're in New York tomorrow maye. We can get 883 00:46:01,239 --> 00:46:03,000 Speaker 1: them right back on tomorrow because that wasn't enough time 884 00:46:03,040 --> 00:46:04,920 Speaker 1: and I want to hear more about the conference down there, 885 00:46:04,960 --> 00:46:07,239 Speaker 1: so I'm gonna ask Eric Mallow, our producer. We can 886 00:46:07,320 --> 00:46:09,520 Speaker 1: do that if we can, and we'll ask Morgan obviously 887 00:46:09,560 --> 00:46:11,240 Speaker 1: if yeah, if he's got time, he's down in Miami. 888 00:46:11,400 --> 00:46:14,040 Speaker 1: Morgan Paxy a co founder and managing partner Poseide the 889 00:46:14,080 --> 00:46:18,120 Speaker 1: Investment Management. Thanks for listening to the Bloomberg Markets podcast. 890 00:46:18,520 --> 00:46:21,680 Speaker 1: You can subscribe and listen to interviews with Apple Podcasts 891 00:46:21,880 --> 00:46:25,799 Speaker 1: or whatever podcast platform you prefer. I'm Matt Miller. I'm 892 00:46:25,840 --> 00:46:29,319 Speaker 1: on Twitter at Matt Miller nineteen seventy three, and I'm 893 00:46:29,320 --> 00:46:32,360 Speaker 1: fall Sweeney. I'm on Twitter at pt Sweeney. Before the podcast, 894 00:46:32,440 --> 00:46:34,919 Speaker 1: you can always catch us worldwide at Bloomberg Radio