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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside

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Speaker 1: my co host Matt Miller. Every business day, we bring

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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along

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Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast

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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and

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Speaker 1: at Bloomberg dot com slash podcast. Let's talk. Get some

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Speaker 1: news that's going to take place at downtown Manhattan today

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Speaker 1: really fifteen former President Trump apparently reportedly is going to

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Speaker 1: be indicted. Little team coverage here for bloom We're gonna

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Speaker 1: round table to seeing Bloomberg's pretty Gupta. She is downtown

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Speaker 1: right now as we speak, at Center Street, so we'll

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Speaker 1: get the latest there and plus Boston Bloomberg Washington correspond

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Speaker 1: and Joe Matthew joins us from DC. So Critty, let's

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Speaker 1: start with you here. What is the scene downtown? Again?

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Speaker 1: The President expected to be arraigned or indicted and arraigned.

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Speaker 1: Two fifteen pm, I believe is the time. What are

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Speaker 1: you seeing downtown? Yeah, so two pm you are going

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Speaker 1: to see a President Trump around two pm. Get a

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Speaker 1: range and basically what that means is he's going to

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Speaker 1: come in to the District Attorney's office, which is where

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Speaker 1: we are right outside, and he's reason going to have

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Speaker 1: his charges told to him. Look, it's reported that his

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Speaker 1: team doesn't yet know what the charges actually are. There

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Speaker 1: suspicions the rage anywhere from twenty four to thirty different

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Speaker 1: counts in charges, so really waiting to see what that

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Speaker 1: actually means. He's going to go in. There are no

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Speaker 1: cameras allowed for the arranged actual arrangement, but photographs can

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Speaker 1: be taken beforehand. He's going to go in, He's going

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Speaker 1: to submit his plea. The Trump's defense team has said

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Speaker 1: that he's going to plead not guilty, and then it's

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Speaker 1: going to be a quick, quick exit from there. He's

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Speaker 1: going to get fingerprinted, he might have a mug shot potentially,

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Speaker 1: we don't actually know because of security reasons, he might not,

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Speaker 1: and then he's gonna head very quickly back to Marlago

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Speaker 1: to make his comments out of the state about eight

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Speaker 1: fifteen pm tonight, So a very quick turnaround. But let

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Speaker 1: me just draw you a picture or paint you a

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Speaker 1: picture if I can. We have this kind of layers

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Speaker 1: of people, who's starting with a District Attorney's office have

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Speaker 1: kind of barricades, a massive police presence, a massive press presence,

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Speaker 1: and then separated from that in the park a right

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Speaker 1: next door, right across the street from the District Attorney's

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Speaker 1: office are protesters. And you're seeing protesters from both sides,

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Speaker 1: but largely more pro Trumps than anti Trump. So he's

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Speaker 1: got to get back to give his speech from Mara Lago,

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Speaker 1: and I guess Alvin Bragg is going to give a

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Speaker 1: statement afterwards as well. What do you think we're going

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Speaker 1: to hear from these two guys. Well, so Alvin Bragg specifically,

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Speaker 1: we're going to hear more about perhaps some of the

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Speaker 1: allegations that are being made against him. Remember, he has

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Speaker 1: been at the end of more attacking Congress as well,

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Speaker 1: not just a Trump's defense team as well the Trump

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Speaker 1: defense teams specifically if that have attacked his character is

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Speaker 1: at attack of legitimacy, is the case. But there are

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Speaker 1: members of Congress who are saying, why is Alvin Bragg

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Speaker 1: taking this on now when this case was presented to

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Speaker 1: him a year ago, So there is a lot of

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Speaker 1: questions about that, how he's actually funding this as the

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Speaker 1: use of federal funds to protecute the form of plesident

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Speaker 1: is really justified. It's likely he may comments on that,

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Speaker 1: but at the end of the day, it might be

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Speaker 1: a very simple question, do we actually start to hear

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Speaker 1: what the charges actually are. That's what we're expecting at

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Speaker 1: least at three thirty pm. The mar Laudo comments, by

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Speaker 1: the way, at eight fifteen PM, could go in any direction.

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Speaker 1: I'll leave it to Joe to speculate on that one. Yeah, Joe,

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Speaker 1: let's let's bring you in. Here's what's the feeling in

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Speaker 1: DC as to these events today at two o'clock downtown Manhattan,

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Speaker 1: and then what we might hear from the former president

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Speaker 1: this evening. What's the feeling in DC right now? Look,

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Speaker 1: everyone's looking to New York, and you've even got Marjorie

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Speaker 1: Taylor Green there now. Is apparently not a big fan

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Speaker 1: of your town. I don't know if you've seen some

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Speaker 1: of the tweets, she says. On my way to my

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Speaker 1: hotel in New York City, I've seen many people so

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Speaker 1: drugged up they can't even stand up. They just fall

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Speaker 1: over on the sidewalks from using drugs at mayor Adams

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Speaker 1: Free drug use centers. I'm wondering if she's ever walked

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Speaker 1: around the district of Columbia. But wait, where are the

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Speaker 1: free drug use centers? I didn't know about this, just

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Speaker 1: reply to her on Twitter. Actually, well, she's got she's

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Speaker 1: got an event that starts very soon here ten thirty,

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Speaker 1: about fifteen minutes, the rally for Trump with the New

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Speaker 1: York Young Republican Club will begin across the street. She's

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Speaker 1: also suggesting that she will be attacked with a sort

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Speaker 1: of audio attack, as the counter protesters are bringing whistles

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Speaker 1: and pots and pans to try to drown her out.

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Speaker 1: The former President's going to be there early though, eleven

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Speaker 1: am is what is being reported now, to surrender leading

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Speaker 1: up to the indictment at two fifteen, at which time

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Speaker 1: the indictment will be unsealed and will actually have the charges.

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Speaker 1: As far as tonight goes, there actually were questions about

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Speaker 1: whether he would have to navigate a gag order, but

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Speaker 1: it looks like that will not be the case. He's

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Speaker 1: going to return to Marrow Lago and will deliver what

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Speaker 1: I suspect will be a fairly carefully written speech. Whether

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Speaker 1: he sticks to the script is the big question here.

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Speaker 1: But the idea is, you know, to have this sort

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Speaker 1: of administration in waiting the shadow administration. He's back there.

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Speaker 1: He's going to be in a suit and tie, not

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Speaker 1: looking like a criminal in a jumpsuit, acting and a

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Speaker 1: peer presidential. The big question we have is who's going

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Speaker 1: to show up. He's invited a lot of lawmakers to

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Speaker 1: go there, and it's a real moment here to choose

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Speaker 1: whether you want to be seen tonight at Marlago as

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Speaker 1: a loyal supporter of Donald Trump or you have other plans.

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Speaker 1: By the way, it does seem like it would be,

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Speaker 1: I mean, beyond ridiculous to take a mug shot of

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Speaker 1: the former president, right. I guess fingerprints maybe aren't on record,

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Speaker 1: but did they really have to do that? Kind of

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Speaker 1: looks like it's not going to happen. I was really

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Speaker 1: taken by that reporting because supposedly Donald Trump was hoping

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Speaker 1: to use that, you know, as a campaign poster or

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Speaker 1: as a fundraiser. He was mugging in the mirror to

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Speaker 1: try to strike the perfect posture here and expression. I

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Speaker 1: always go back to that Frank Sinatra mug shot. I'm

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Speaker 1: just guessing he was looking at that. But it looks

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Speaker 1: like there will not be a mug shot. He will

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Speaker 1: be fingerprinted digitally so he will not have ink on

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Speaker 1: his hands, and the Secret Service will be right there

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Speaker 1: with him. The question is what happens between eleven and

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Speaker 1: two fifteen. There's apparently going to be a move following

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Speaker 1: the surrender to the internally connected courthouse. He will not

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Speaker 1: likely go outside, but that could be the closest thing

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Speaker 1: we see to a perp walk based on reporting. Whether

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Speaker 1: they get pictures of it is another question. Some reporters

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Speaker 1: will be allowed in for some still photos during the arraignment,

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Speaker 1: they'll be ushered right back outside. There will not be

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Speaker 1: any video, so you know, we might get a glimpse

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Speaker 1: of this moment in history, but that's about it. Joe,

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Speaker 1: What kind of response do you think we'll get from

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Speaker 1: perhaps individual members of Congress on both sides of the

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Speaker 1: aisle once the indictment is unsealed and we get a

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Speaker 1: little bit more clarity, because it seems like his allies

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Speaker 1: are remaining pretty staunch here. Yeah, it's suspect that it'll

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Speaker 1: be pretty predictable, to be honest with you. You know,

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Speaker 1: we've we've heard Democrats, at least on the progressive side

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Speaker 1: of the party celebrating lots of exclamation points. This is

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Speaker 1: about time justice finally being served, and then you've got

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Speaker 1: Republicans calling this a witch hunt. It's the Center that

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Speaker 1: has been awfully quiet, and the White House has been

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Speaker 1: awfully quiet too. There's been a concerted decision there to

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Speaker 1: not talk about this, to not get bogged down in it,

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Speaker 1: and President, just like everybody else, is going to be

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Speaker 1: watching this unfold today. Critty, let me ask you about

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Speaker 1: what it's like down there right now. I'm sure that

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Speaker 1: there are so many thousands of reporters that you can

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Speaker 1: barely breathe. But are there any protesters or supporters? I mean,

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Speaker 1: yesterday they were like a couple literally two right are

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Speaker 1: there were there bus loads of people that are showing

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Speaker 1: up now or is it still just all press. It

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Speaker 1: is definitely showing up in full force with protesters, and

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Speaker 1: you're seeing this again for both pro Trump and anti Trump.

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Speaker 1: I did have I wouldn't say two scuffles earlier that

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Speaker 1: we're broken up by the police. It looks like it's

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Speaker 1: mostly peaceful. You are starting to see more and more

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Speaker 1: people pile in to the parts that are pro Trump.

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Speaker 1: I remember, you're also seeing some lawmakers come onto the

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Speaker 1: scene as well. We had George Santos a spotting George

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Speaker 1: Santos earlier about an hour ago, and it is reported

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Speaker 1: that Representative Marjorie Tayler Green, who is a representative of

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Speaker 1: the fourteenth District of Georgia and a Republicans has says

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Speaker 1: she's point to be right here to protest the arraignment

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Speaker 1: of the former president. So we are on Wash for

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Speaker 1: more protesters, more politicians who are here too. As Joe said,

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Speaker 1: say are you or are you not with President Trump?

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Speaker 1: And in fact, as we're speaking right now, we are

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Speaker 1: seeing some more police presidence and actually a motorcade. It

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Speaker 1: doesn't look like this is necessarily President or former President

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Speaker 1: Trump's motorcade just yet, but again a very high profile

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Speaker 1: presence coming from Washing NDC. And just quick cretty the

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Speaker 1: police presidence is it? Is it NYPD primarily and then

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Speaker 1: I guess some secret service when when the president arrives

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Speaker 1: former president define it is definitely NYPD mostly, But you

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Speaker 1: are seeing to Joe's point about kind of that intersection,

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Speaker 1: the internal intersection between the court and the District Attorney's office,

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Speaker 1: it is completely walked off and that's where you are

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Speaker 1: seeing some secret service details, so very mostly dominated by

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Speaker 1: the New York Police Department, but there is again that

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Speaker 1: presence from the White House as well. All right, great stuff, guys,

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Speaker 1: really appreciate getting the inspectives there. Bloomberg's pretty Gupta. She

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Speaker 1: is downtown live at Center Street with the Manhattan District

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Speaker 1: Attorney's Office, and then down Washington, DC. Bloomberg's Watchington corresponded,

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Speaker 1: Joe Matthew, giving us the perspective from this from Washington,

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Speaker 1: d C. From the Capitol on this historic day. I mean,

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Speaker 1: that's it is in historic day. Well, it'll be I'm

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Speaker 1: sort some compelling images and we'll see what the indictment

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Speaker 1: reads when we get that later this afternoon, and then

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Speaker 1: we'll get the reactions from presumably members of Congress and

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Speaker 1: then the former president himself at eight pm tonight from

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Speaker 1: Marlago down in Palm Beach, Florida. That's so we'll have

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Speaker 1: continued reporting on that throughout the day. You're listening to

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Speaker 1: the Team Cancer Line program Bloomberg Markets weekdays at ten

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Speaker 1: am eastering on Bloomberg dot Com, the I Heart Radio app,

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Speaker 1: and the Bloomberg Business App. We're listening on demand wherever

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Speaker 1: you get your podcast. I know it's a big deal

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Speaker 1: because there's been so much pain in terms of of

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Speaker 1: you know, losses and both money and jobs. So much

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Speaker 1: hurt there domestically, there's such rage, outrage, and then we

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Speaker 1: have UBS tomorrow. But I just don't know what difference

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Speaker 1: the credit sweets agm makes. I was talking to Oliver

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Speaker 1: Crook about this earlier. He's in Zurich, and he says, well,

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Speaker 1: for one thing, they've got to have the team in

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Speaker 1: place to hand off right bank to UBS. But who

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Speaker 1: can we ask who will who has the best overview?

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Speaker 1: I think I got somebody. I think I got somebody.

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Speaker 1: Alison Williams, Bloomberg Intelligence. She does this stuff for a living.

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Speaker 1: So Alison, let's start there where Matt was kind of

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Speaker 1: talking about this meeting here. I mean, what's going on

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Speaker 1: over in Zurch We've got UBS buying Credit Swiss. But

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Speaker 1: I guess Credit Swiss had to have their annual general

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Speaker 1: meeting today. But it just seems kind of odd timing,

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Speaker 1: doesn't I mean, it does sound odd timing. And again

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Speaker 1: to Matt's point two, I agree, it's it seems almost

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Speaker 1: sort of pointless, right. But we're in a really unusual

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Speaker 1: situation where, um, you know, the government came in and

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Speaker 1: you know, now we're having this meeting where these shareholders

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Speaker 1: are basically not having a say in terms of this

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Speaker 1: coming deal. So I think it's just perhaps, um, you know,

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Speaker 1: a lot of the statements coming out of it are

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Speaker 1: our people, you know, having their say verbally even though

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Speaker 1: they're not able to sort of exercise the rights that

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Speaker 1: a typical shareholder would have. So I mean, I guess

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Speaker 1: as we got a little bit of hindsight here, Alison.

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Speaker 1: For UBS, I mean again, is this a deal with

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Speaker 1: hindsight that they wanted to have? It seems like a

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Speaker 1: great opportunity. I think so Stock You're right in the

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Speaker 1: stock won a big time, but they seem to be

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Speaker 1: so wedded to their their their plan of kind of

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Speaker 1: slimming down the bank focusing on wealth management. How do

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Speaker 1: you think the bankers are feeling about it these days?

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Speaker 1: So I think for UBS, again, you know it to

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Speaker 1: the extent that they have the financial protections based in

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Speaker 1: they do get you know, a fair amount of what

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Speaker 1: they want right, which is, you know, of course there

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Speaker 1: is the cultural issues and the like in terms of

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Speaker 1: bringing these bankers in, but they want more us than

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Speaker 1: the investment bank. They want that m and a business

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Speaker 1: so to the extent that they can hire and keep

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Speaker 1: those bankers and clients, that's a good thing. They want.

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Speaker 1: Latin America and Southeast Asia, those are big ads and

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Speaker 1: their wealth business and the asset management. Again there's some

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Speaker 1: complementary stuff. And the investment bank had pretty much been

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Speaker 1: gutted from a trading standpoint as it was so. And

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Speaker 1: then finally, of course, I mean the position that they

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Speaker 1: now have in Switzerland, which you know, I don't think

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Speaker 1: would have been allowed if it weren't for the government

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Speaker 1: orchestrating it because it is such a sizeable, concentrated position.

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Speaker 1: The question remains, and I think people go back to

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Speaker 1: sort of the playbook of the crisis. You know, what

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Speaker 1: else are they inheriting. One of the things is, you know,

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Speaker 1: sort of legal liabilities that obviously turned out to be

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Speaker 1: hugely costly around the deals at the global financial crisis.

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Speaker 1: But I think this is a little bit different. If

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Speaker 1: you think about the depth and breadth of mortgage and

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Speaker 1: the harm globally and you know, mom and pop consumers there,

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Speaker 1: there's not I don't think the same stakes and I

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Speaker 1: think but I do think that ubs bargain to get

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Speaker 1: what they could and build some protections in and so

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Speaker 1: at the end of the day that that will be

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Speaker 1: you know what what says financially if it was a

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Speaker 1: good deal. I think strategically they are getting sort of

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Speaker 1: what they want and able to you know, sort of

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Speaker 1: run down what they don't want. All right, let's get

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Speaker 1: to you know, the godfather of big banks, Jamie Diamond,

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Speaker 1: puts out his annual letter. Everybody reads it, and he

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Speaker 1: doesn't even really hold back too much when criticizing regular

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Speaker 1: leaders for the failure of SVB, says kind of, you know,

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Speaker 1: you put these banks in this position and then you

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Speaker 1: shut them down after they use these tools to to

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Speaker 1: to fail. Um. What do you think about Jamie Diamond's

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Speaker 1: missive here? So I think, you know, Jamie Diamond is

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Speaker 1: always very vocal and you know, certainly he has given

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Speaker 1: their their position and their size and the regulation they

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Speaker 1: face because of those aspects. Um, you know there he's

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Speaker 1: always very vocal about regulation broadly. UM, And I think

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Speaker 1: that you know he is he is making the point

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Speaker 1: and he doesn't by the way he does say you know,

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Speaker 1: this doesn't excuse management, but I think he is you know,

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Speaker 1: broadening out the picture in terms of the position that uh,

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Speaker 1: you know, the bags are in in turn and and

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Speaker 1: you know, if you look at it, it's a little wonky.

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Speaker 1: But like you know, it comes down to the capital

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Speaker 1: weights and the way the capital regulations are. And he

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Speaker 1: has consistently consistently talked about, you know the fact that

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Speaker 1: he thinks that a lot of the capital rules it's

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Speaker 1: it's too complex because there's too overlapping, and that there

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Speaker 1: are unintended consequences, and so I think he's using his

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Speaker 1: form to point some of those out. All right, Alison,

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Speaker 1: one of the I think brewing headwinds, if you will,

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Speaker 1: for banks of all shapes and sizes, is commercial real estate.

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Speaker 1: I'm hearing more and more about that. I suspect that

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Speaker 1: we're gonna hear more about it when the banks start

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Speaker 1: reporting earnings in a couple of weeks. I know you

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Speaker 1: and your team have done some research on this. How

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Speaker 1: big of a risk is commercial real estate to the

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Speaker 1: banking system. So I think the important thing about commercial

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Speaker 1: real estate is that you know, it's not sort of

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Speaker 1: a broad brush. There are there are several different holders,

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Speaker 1: there are several different properties. And the focus I think

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Speaker 1: has come, you know, the regional because the regional banks

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Speaker 1: had these issues with securities not being marked market, and

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Speaker 1: then people are thinking about how loans are not marked

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Speaker 1: to market and could there be weakness, And the regional

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Speaker 1: banks are the biggest holders of this debt. So in

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Speaker 1: some of the bigger global companies that I cover, it's

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Speaker 1: not as critical or the exposures are not as big,

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Speaker 1: but it is bigger for the regionals. And the one

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Speaker 1: area that we're watching along with everybody else. I don't

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Speaker 1: think we're unique in this is the office market because

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Speaker 1: of the weaker cash flows, rising vacancy, and again this

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Speaker 1: is sort of another unprecedented time where we have returned

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Speaker 1: to office. We still don't know how that's going to

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Speaker 1: shake out. So we think this is an area of

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Speaker 1: focus for the largest banks. It's a smaller exposure, but

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Speaker 1: this is going to be a long term time to

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Speaker 1: play out. It's not going to be like how SVB

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Speaker 1: sort of unwound in a couple of days, especially for

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Speaker 1: the larger banks. But I think what investors will focus

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Speaker 1: on is for the smaller banks. You know, could there

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Speaker 1: be certain ones that are overexposed and at risk? Alison,

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Speaker 1: you're running our banks coverage for Bloomberg Intelligence globally? How

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Speaker 1: many humans do you still have on your team? A lot?

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Speaker 1: Because I was thinking you might want to replace some

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Speaker 1: of them at least with chat GPT. Well you know

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Speaker 1: chat GBT, as you know, I think people are trying

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Speaker 1: to find ways to leverage it. I would say that, Um,

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Speaker 1: I just realized we have a Bloomberg GPT. Did you

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Speaker 1: know that? You know? Yeah, I think we can do

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Speaker 1: Bloomberg intelligence management can be I'm only joking around because

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Speaker 1: Jamie Diamond mentioned that they have a tony you you are,

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Speaker 1: I know you are, but but I guess I would

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Speaker 1: just point to like, that's that's sort of how when

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Speaker 1: you separate the week from the chaff? Right? Is it?

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Speaker 1: You know? Is the analysis digging in and giving you

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Speaker 1: what you need to know and looking past sort of

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Speaker 1: the headlines or you know something that you could sub

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Speaker 1: diving beneath the surface if you will. All right, so

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Speaker 1: what's when you earnings coming up? About thirty seconds left

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Speaker 1: house and earnings coming up in a couple of weeks.

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Speaker 1: What's the number one thing we should be focusing on, well,

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Speaker 1: aside from commercial real estate, what's happening was deposits number

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Speaker 1: one thing deposits, What are the flows at for each

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Speaker 1: bank and for the system as a whole, and is

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Speaker 1: that just disclosed by the bank. That's not some data

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Speaker 1: you get somewhere from the government. We do get data

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Speaker 1: weekly from the government. It does come with a lag,

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Speaker 1: and so that's why the last couple of weeks you've

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Speaker 1: seen you have seen those outflows of those really relate.

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Speaker 1: We're hoping that this week well, or we're expecting this

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Speaker 1: week that we'll see some stabilization. The issue with that

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Speaker 1: data though, is you know, there's a couple of different categories.

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Speaker 1: One category is the top twenty five banks, So you're

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Speaker 1: not going to see in there if some of the

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Speaker 1: large regionals are seating share to sort of the top

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Speaker 1: six banks. And I think it is going to be

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Speaker 1: banked by bank, not just what's happening was deposits, by

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Speaker 1: the way, but what's happening with the rate that people

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Speaker 1: are paying on deposits, because that's another side effect that

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Speaker 1: we're expecting that that will be going up. All right,

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Speaker 1: all right, Alison, thank you so much for joining us.

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Speaker 1: Really appreciate getting your perspective. There a lot of ground

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Speaker 1: we covered, Alison Williams. She's a senior Banks analyst. She

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Speaker 1: is a human. She is not a bot or a GPT.

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Speaker 1: She's been doing this for a while, and she's a

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Speaker 1: Bloomberg intelligence. You're listening to the tape. Ken's a our

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Speaker 1: live program Bloomberg Markets weekdays at ten am Eastern on

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Speaker 1: Bloomberg Radio, tune in app, Bloomberg dot Com, and the

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Speaker 1: Bloomberg Business App. You can also listen live on Amazon

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Speaker 1: Alexa from our flagship New York station. Just say Alexa,

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Speaker 1: play Bloomberg eleven thirty. Well, yesterday's news in the global

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Speaker 1: energy space was actually Sunday afternoon. Our time was OPEC

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Speaker 1: plus cutting production by one million barrels, and we had

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Speaker 1: a nice pop five six percent in global crude yesterday,

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Speaker 1: up another half percent here today, Brent crude up sitting

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Speaker 1: here at eighty five bucks. Talk about global energy, the

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Speaker 1: fossil fuel stuff as well as the sustainable energy as well.

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Speaker 1: And we could do that with Jonathan Maxwell. He's a

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Speaker 1: CEO and co founder of Sustainable Development Capital. He's based

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Speaker 1: in London, Piccadilly, but he's here in our Bloomberg in

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Speaker 1: an actor broker studio in New York City. We appreciate

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Speaker 1: it your offices aren't Piccadilly, So isn't that like having

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Speaker 1: an office in Times Square? It is whipped just around

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Speaker 1: the corner I talpped away, so we can even mind

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Speaker 1: just off Piccadilly. They have some of the best clothing

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Speaker 1: ancestry stores in London, right, I mean that's Hill Ditching

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Speaker 1: Keys where I get my shirts. There you go Turnabowl

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Speaker 1: and Asser is right up there. They're a number of

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Speaker 1: such companies. So you know what, Jonathan, I'm glad that

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Speaker 1: you're here today because I saw something in the Jamie

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Speaker 1: Diamond letter that I thought you might find interesting. Now,

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Speaker 1: no one's had time to read the whole thing yet

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Speaker 1: because it's forty three pages and it just came out

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Speaker 1: a couple of hours ago, but I did notice he

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Speaker 1: encourages the government to use eminent domain when it comes

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Speaker 1: to both sustainable energy and fossil fuel policy. I'm not

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Speaker 1: sure exactly how he means it yet, but what do

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Speaker 1: you think of an enlarged government role in you know,

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Speaker 1: the industry that you work in. We've spent years subsidizing

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Speaker 1: energy markets. America has a huge three hundred and sixty

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Speaker 1: nine billion dollar program, the Inflation Reduction Act, But it's

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Speaker 1: designed to onshore production of energy, particularly clean energy, as

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Speaker 1: a core part of it, and to support energy security.

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Speaker 1: So those are two critical features. America actually is now

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Speaker 1: energy independent, I've right, it's a huge deal, but energy

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Speaker 1: independent because of shale an oil. So we now have

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Speaker 1: the opportunity in the America to really promote clean energy

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Speaker 1: domestic production. And it actually puts America in an amazing

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Speaker 1: position internationally. I'm saying that coming from Europe because Europe

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Speaker 1: is not in an amazing position internationally. Europe is in

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Speaker 1: a very bad position internationally. It's a net energy import

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Speaker 1: prices in Europe for natural gas. People don't often talk

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Speaker 1: about this, so it's some six to ten times higher

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Speaker 1: depending on when we talk about it every day here

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Speaker 1: and this is a huge issue. So what do you

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Speaker 1: do as Europe as you're facing an import issue? And

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Speaker 1: of course the NEXTUS now after the Russia Ukrane crisis,

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Speaker 1: is that we've now shifted our supply from Russia to America. Well,

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Speaker 1: but we have so energy independence in terms of fossil fuels, right,

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Speaker 1: we have enough oil and gas here in the US

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Speaker 1: for ourselves. The problem that we have is with the

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Speaker 1: sustainable part. So in California, for example. Sometimes you're not

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Speaker 1: allowed to charge your electric cars because the grids are

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Speaker 1: too weak and frail to support it. And now we're

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Speaker 1: asking people to increase their adaption of evs. I was

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Speaker 1: driving in this morning. I'm test driving this BMWi x Oh.

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Speaker 1: That's the electric suv, which is a mind blowing piece

429
00:23:10,720 --> 00:23:13,760
Speaker 1: of kit. I mean, it is an incredible vehicle. But

430
00:23:13,840 --> 00:23:16,800
Speaker 1: as I was passing like six or seven gas stations,

431
00:23:16,880 --> 00:23:19,800
Speaker 1: I noticed there's nowhere for me to charge it. Well,

432
00:23:20,080 --> 00:23:21,840
Speaker 1: I will come back to that. We're actually a big

433
00:23:21,840 --> 00:23:25,359
Speaker 1: investor in fast charging infrastructure for electric vehicles to solve

434
00:23:25,440 --> 00:23:27,080
Speaker 1: that problem. We're doing it in the UK and we'll

435
00:23:27,080 --> 00:23:29,680
Speaker 1: bring it to the US. But here's the issue, right,

436
00:23:29,960 --> 00:23:35,320
Speaker 1: You're absolutely right. Energy supply and particularly intermittent renewable power

437
00:23:35,640 --> 00:23:37,880
Speaker 1: is a challenge to adopt onto the grid. I'll tell

438
00:23:37,880 --> 00:23:42,320
Speaker 1: you a bigger challenge, and this is my gripe. Do

439
00:23:42,320 --> 00:23:46,040
Speaker 1: you know how much primary energy in the United States

440
00:23:46,160 --> 00:23:50,160
Speaker 1: actually ends up getting to the user if you look

441
00:23:50,160 --> 00:23:52,680
Speaker 1: at the actual amount of energy you mean, in terms

442
00:23:52,680 --> 00:23:56,880
Speaker 1: of energy that's wasted, right, not only going through pipelines

443
00:23:56,920 --> 00:24:01,240
Speaker 1: and in ships, but also through generation, expisition, distribution, and extraction.

444
00:24:01,280 --> 00:24:04,240
Speaker 1: I imagine it's very little that we actually put to use.

445
00:24:04,560 --> 00:24:08,880
Speaker 1: You know, the Lawrence Livermore National Laboratory produces numbers every year.

446
00:24:08,920 --> 00:24:11,680
Speaker 1: They have since the last global energy crisis, really in

447
00:24:11,720 --> 00:24:17,879
Speaker 1: the seventies. It's seventy percent of primary energy is lost.

448
00:24:18,000 --> 00:24:20,359
Speaker 1: That means only thirty percent gets to the end. Wait,

449
00:24:20,560 --> 00:24:23,520
Speaker 1: where's it goal? Right, I'll unpack it. So, first of all,

450
00:24:23,520 --> 00:24:24,920
Speaker 1: you take a oil and gas out of the ground,

451
00:24:25,280 --> 00:24:27,840
Speaker 1: you lose about nine to thirteen percent on extraction and

452
00:24:27,880 --> 00:24:30,960
Speaker 1: conversion into pipelines. Most of up eighty two percent of

453
00:24:30,960 --> 00:24:32,600
Speaker 1: the world's energy is all gas and coal, so we

454
00:24:32,640 --> 00:24:35,600
Speaker 1: have to be realistic. Then it goes into an energy machine,

455
00:24:35,680 --> 00:24:38,600
Speaker 1: let's call it a natural gas turbine. Firmodynamic states who

456
00:24:38,640 --> 00:24:41,320
Speaker 1: put a molecule in one end, only half can turn

457
00:24:41,359 --> 00:24:45,080
Speaker 1: into electricity. What happens to the other physics? Right, it's physics.

458
00:24:45,080 --> 00:24:47,760
Speaker 1: So the other half. If you're generating miles away from

459
00:24:47,800 --> 00:24:49,840
Speaker 1: the point of vieuse, which is generally how we do it,

460
00:24:50,240 --> 00:24:53,639
Speaker 1: that energies to get dumped. So straight before the power

461
00:24:53,680 --> 00:24:56,120
Speaker 1: gets out of a power station, you've lost about fifty

462
00:24:56,160 --> 00:24:59,280
Speaker 1: to sixty percent of the energy to start with, depending

463
00:24:59,280 --> 00:25:02,159
Speaker 1: on the efficiency. You then lose another roughly ten percent

464
00:25:02,200 --> 00:25:03,840
Speaker 1: getting to the point of view. So that's how you

465
00:25:03,920 --> 00:25:06,680
Speaker 1: get to seventy percent of energy loss before it gets there.

466
00:25:07,200 --> 00:25:10,320
Speaker 1: There is a solution to this, right, and renewables is

467
00:25:10,400 --> 00:25:13,320
Speaker 1: part of that. But it's a tool in a bigger

468
00:25:13,359 --> 00:25:15,639
Speaker 1: strategic issue of the US and Europe are going to

469
00:25:15,720 --> 00:25:18,479
Speaker 1: have to face, which is the decentralized energy. If we

470
00:25:18,560 --> 00:25:24,600
Speaker 1: just simply rely on these decades old centralized grid connect networks,

471
00:25:24,760 --> 00:25:27,080
Speaker 1: we are going to have the same problem in ten

472
00:25:27,119 --> 00:25:29,919
Speaker 1: twenty thirty years time. What we can do has been

473
00:25:30,000 --> 00:25:33,080
Speaker 1: much more efficient, cut out many of those extraction, conversion,

474
00:25:33,080 --> 00:25:38,639
Speaker 1: generation losses, transmission, transmission and distribution losses, decentralized energy, and

475
00:25:38,680 --> 00:25:40,639
Speaker 1: may make sure that we don't waste most of it

476
00:25:40,680 --> 00:25:43,840
Speaker 1: before it gets to the user. Before I take a breath.

477
00:25:44,000 --> 00:25:45,680
Speaker 1: One last thing, do you know how much energy is

478
00:25:45,720 --> 00:25:48,080
Speaker 1: lost even when it gets to the point of views? No?

479
00:25:48,480 --> 00:25:51,880
Speaker 1: Another ten twenty percent plus right the wrong I pump

480
00:25:51,880 --> 00:25:54,280
Speaker 1: it into my guest tank. I got the little cap there,

481
00:25:54,320 --> 00:26:00,639
Speaker 1: so yeah, but you still the internal combined Merry engine

482
00:26:00,640 --> 00:26:02,520
Speaker 1: to use. There's a lot of bleed off there right.

483
00:26:03,040 --> 00:26:06,280
Speaker 1: In transport transports, about thirty percent of energy use. Seventy

484
00:26:06,320 --> 00:26:10,080
Speaker 1: percent of it's in buildings industry, and it's on that's

485
00:26:10,119 --> 00:26:13,120
Speaker 1: where we're just facing enormous losses. So here's the thing. Yes,

486
00:26:13,200 --> 00:26:15,720
Speaker 1: we can build renewable power. It will take us ten

487
00:26:15,880 --> 00:26:18,520
Speaker 1: twenty thirty years to start to By the way, on

488
00:26:18,520 --> 00:26:21,600
Speaker 1: that note, if the Inflation and Reduction Act is successful,

489
00:26:22,080 --> 00:26:25,720
Speaker 1: sixty percent of electricity in the America will be green

490
00:26:25,800 --> 00:26:29,040
Speaker 1: by twenty thirty. Do you know how much energy in

491
00:26:29,080 --> 00:26:33,119
Speaker 1: America comes from electricity? How much energy comes from electric

492
00:26:33,240 --> 00:26:38,960
Speaker 1: twenty comes from where Well, we're talking about heat, gas, transport, fuels.

493
00:26:39,040 --> 00:26:41,159
Speaker 1: So there was just this massive job to do on

494
00:26:41,240 --> 00:26:44,240
Speaker 1: the energy transition. My business case is to say, yes,

495
00:26:44,400 --> 00:26:48,120
Speaker 1: let's build renewable power. Let's make energy as clean as

496
00:26:48,119 --> 00:26:50,439
Speaker 1: possible on the supply side, but let's look at the

497
00:26:50,480 --> 00:26:54,040
Speaker 1: demand side. Let's think about attacking that seventy percent last

498
00:26:54,080 --> 00:26:55,879
Speaker 1: before it gets to the point of views. Then we

499
00:26:55,880 --> 00:26:57,720
Speaker 1: only got a minute left. Let me hear about the

500
00:26:57,800 --> 00:27:00,520
Speaker 1: first charging networks that you're building. So how soon will

501
00:27:00,560 --> 00:27:02,919
Speaker 1: they get here? So we started building them in the

502
00:27:03,000 --> 00:27:05,680
Speaker 1: UK over the last ten to one or two years.

503
00:27:06,040 --> 00:27:08,240
Speaker 1: It's fast charging networks. So if you want to charge

504
00:27:08,240 --> 00:27:10,960
Speaker 1: your car in five to ten, fifteen, twenty minutes. You

505
00:27:11,000 --> 00:27:12,920
Speaker 1: can park your car and you can get it completely

506
00:27:13,200 --> 00:27:16,200
Speaker 1: duced up quickly. We've got a rollout of these sites

507
00:27:16,200 --> 00:27:19,399
Speaker 1: across the UK. BP Pulse is a big client of ours.

508
00:27:19,400 --> 00:27:22,800
Speaker 1: We've just announced the breaking ground on the largest one

509
00:27:22,840 --> 00:27:27,040
Speaker 1: in the UK. It's over maybe two hundred charging points

510
00:27:27,040 --> 00:27:29,640
Speaker 1: at the n EC in Birmingham in the UK, and

511
00:27:29,680 --> 00:27:31,880
Speaker 1: we will be bringing this to the United States soon.

512
00:27:32,080 --> 00:27:35,119
Speaker 1: How fast is a fast charger for you? We can

513
00:27:35,440 --> 00:27:38,680
Speaker 1: get to full eighty percent to full charge in anything

514
00:27:38,720 --> 00:27:42,200
Speaker 1: between fifteen and twenty minutes. That sounds pretty good. It's great,

515
00:27:42,680 --> 00:27:45,040
Speaker 1: I can tell you it's it's difficult, and I don't know.

516
00:27:45,080 --> 00:27:48,080
Speaker 1: I've talked. I've talked to all of the last three

517
00:27:48,080 --> 00:27:51,200
Speaker 1: CEOs of BP about this. Why aren't they already at

518
00:27:51,240 --> 00:27:54,640
Speaker 1: the gas stations? Why doesn't Shell already have these at

519
00:27:54,680 --> 00:27:58,240
Speaker 1: every gas station. It's been a decade since Tesla started

520
00:27:58,560 --> 00:28:01,080
Speaker 1: rolling out these vehicles. I think they're dragging their feet.

521
00:28:01,080 --> 00:28:02,879
Speaker 1: They're dragging the feed all right. Jonathan Maxwell, thank you

522
00:28:02,920 --> 00:28:05,600
Speaker 1: so much for joining us. Great discussion. Jonathan Maxwell as

523
00:28:05,640 --> 00:28:09,720
Speaker 1: a CEO and co founder Sustainable Development Capital. Next time,

524
00:28:09,760 --> 00:28:12,320
Speaker 1: Matt and I are are in London Piccadilly. We're stopping by.

525
00:28:12,320 --> 00:28:14,080
Speaker 1: We're gonna say hi, you're gonna buy us some beverage

526
00:28:14,080 --> 00:28:16,320
Speaker 1: of our choice by us the shirt, a turn bowl

527
00:28:16,359 --> 00:28:19,560
Speaker 1: and asser. Oh nice, that's cool. That's even better, a

528
00:28:19,800 --> 00:28:23,760
Speaker 1: considerably more expensive than a PIMS cop. Okay, very good,

529
00:28:23,880 --> 00:28:26,199
Speaker 1: all right, we're gonna have more coming up markets on

530
00:28:26,280 --> 00:28:29,840
Speaker 1: the red here sp off about three tenths of one percent.

531
00:28:31,560 --> 00:28:35,440
Speaker 1: You're listening to the Team Cancer Line program, Bloomberg Markets

532
00:28:35,480 --> 00:28:38,560
Speaker 1: weekdays at ten am, easting on Bloomberg dot com, the

533
00:28:38,640 --> 00:28:41,360
Speaker 1: I Heart Radio app, and the Bloomberg Business app. We're

534
00:28:41,400 --> 00:28:46,360
Speaker 1: listening on demand wherever you get your podcast. Let's talk

535
00:28:46,400 --> 00:28:49,720
Speaker 1: a little M and A here, specifically some tech MNA.

536
00:28:50,200 --> 00:28:52,560
Speaker 1: How did the collapse of Silicon Valley Bank impact the

537
00:28:52,560 --> 00:28:54,440
Speaker 1: tech m and A market out there in Silicon Valley.

538
00:28:54,440 --> 00:28:56,240
Speaker 1: It's checking with Ted Smith. He's a co founder and

539
00:28:56,280 --> 00:29:01,400
Speaker 1: president of Union Square Advisors. So, Ted, we had some turmoil,

540
00:29:02,840 --> 00:29:06,240
Speaker 1: you know, some real unease in the banking space over

541
00:29:06,240 --> 00:29:08,400
Speaker 1: the last several weeks, with a failure of Silicon Valley

542
00:29:08,400 --> 00:29:11,360
Speaker 1: Bank and a couple of other regional banks. How did

543
00:29:11,360 --> 00:29:14,240
Speaker 1: that impact kind of tech m and A the view

544
00:29:14,280 --> 00:29:18,440
Speaker 1: towards tech m and A what did you observe? Well,

545
00:29:18,480 --> 00:29:19,920
Speaker 1: first of all, guys, thanks for having me back on

546
00:29:19,960 --> 00:29:22,040
Speaker 1: I really appreciate it. I think you're right. A lot

547
00:29:22,040 --> 00:29:26,680
Speaker 1: of uncertainty around the SEB collapse and related effects, and

548
00:29:26,720 --> 00:29:30,400
Speaker 1: so everybody picked up the mantle of being cautious and

549
00:29:30,520 --> 00:29:34,640
Speaker 1: reassessing their situation. Obviously, there's a whole host of companies

550
00:29:35,240 --> 00:29:39,840
Speaker 1: that were depositors to and lenders, you know, lend these

551
00:29:40,120 --> 00:29:43,239
Speaker 1: to SVB, and they all had to scramble to try

552
00:29:43,280 --> 00:29:44,800
Speaker 1: to figure out sort of what the next step was.

553
00:29:44,840 --> 00:29:47,959
Speaker 1: So that put a lot of things on hold. Processes

554
00:29:48,000 --> 00:29:50,280
Speaker 1: that were in flight, processes that were about ready to

555
00:29:50,280 --> 00:29:52,600
Speaker 1: get kicked off in some cases with which I'm familiar,

556
00:29:52,600 --> 00:29:55,840
Speaker 1: processes that were almost ready to finish. That the pause

557
00:29:55,880 --> 00:29:58,400
Speaker 1: button got pushed while everybody kind of figured out whether

558
00:29:58,440 --> 00:30:00,920
Speaker 1: they were standing on firm ground or quick. I think

559
00:30:00,920 --> 00:30:03,640
Speaker 1: we're largely through that, or at least the first wave

560
00:30:03,640 --> 00:30:05,280
Speaker 1: of that. Most people kind of have a plan for

561
00:30:05,360 --> 00:30:10,560
Speaker 1: going forward. We're seeing renewed activity. Those processes that I

562
00:30:10,600 --> 00:30:12,120
Speaker 1: mentioned that we're in flight seemed to be back in

563
00:30:12,160 --> 00:30:13,720
Speaker 1: flight for the most part, and the ones that I

564
00:30:13,760 --> 00:30:16,520
Speaker 1: know of that we're almost done, actually completed, So I

565
00:30:16,520 --> 00:30:22,160
Speaker 1: think I think folks quickly moved past the initial shock

566
00:30:22,920 --> 00:30:26,240
Speaker 1: and uncertainty and kind of have Plan B in place

567
00:30:26,280 --> 00:30:29,920
Speaker 1: at this point. I wonder what happens to the banks

568
00:30:29,960 --> 00:30:32,080
Speaker 1: that are going to now have to compete though with

569
00:30:32,240 --> 00:30:39,440
Speaker 1: money market funds and you know, short term treasury ETFs

570
00:30:39,520 --> 00:30:42,080
Speaker 1: and the like. I mean, are they going to have

571
00:30:42,120 --> 00:30:47,120
Speaker 1: to start offering four percent five percent on savings accounts?

572
00:30:47,160 --> 00:30:51,480
Speaker 1: Can they do that? It's a good question, and I

573
00:30:51,520 --> 00:30:53,160
Speaker 1: think the answer is they are going to have to

574
00:30:53,160 --> 00:30:55,680
Speaker 1: compete at some level. Obviously there's a broader level of

575
00:30:55,680 --> 00:30:59,680
Speaker 1: services these banks can provide, and so as a result,

576
00:30:59,720 --> 00:31:01,720
Speaker 1: they may not have to compete sort of basis point

577
00:31:01,720 --> 00:31:03,600
Speaker 1: for basis point, but we do see them needing to

578
00:31:03,640 --> 00:31:06,480
Speaker 1: be competitive in the market. We also think that, you know,

579
00:31:07,240 --> 00:31:10,560
Speaker 1: from away from the savings accounts themselves, that back on

580
00:31:10,600 --> 00:31:13,640
Speaker 1: the lending side, the whole private credit asset class, which

581
00:31:13,640 --> 00:31:16,440
Speaker 1: has grown to the north of two trillion dollars, is

582
00:31:16,600 --> 00:31:19,280
Speaker 1: absolutely ready to push forward and be more a part

583
00:31:19,320 --> 00:31:22,920
Speaker 1: on the lending side rather than just the regional banks

584
00:31:22,920 --> 00:31:25,040
Speaker 1: and the large banks, particularly in tech, and so we

585
00:31:25,080 --> 00:31:28,520
Speaker 1: see that activity picking up as well. So when I

586
00:31:28,560 --> 00:31:31,560
Speaker 1: think about M and A TED, I think about you know,

587
00:31:32,440 --> 00:31:35,960
Speaker 1: I guess confidence, confidence on the part of a management team,

588
00:31:36,000 --> 00:31:38,200
Speaker 1: confidence on the part of a board of directors. You

589
00:31:38,240 --> 00:31:41,840
Speaker 1: really have to have confidence in the macro environment, the

590
00:31:42,360 --> 00:31:44,800
Speaker 1: micro part of your business to go out there and

591
00:31:44,840 --> 00:31:48,959
Speaker 1: spend big money and acquire companies. Is that out there now?

592
00:31:49,000 --> 00:31:52,760
Speaker 1: It seems like there's anything but confidence out there. I think.

593
00:31:53,000 --> 00:31:55,400
Speaker 1: I think it's very situationally dependent, of course, and you're

594
00:31:55,400 --> 00:31:58,360
Speaker 1: absolutely right, and in fact you're right twice, because you

595
00:31:58,400 --> 00:32:00,400
Speaker 1: have to have confidence in your own business, and you

596
00:32:00,440 --> 00:32:02,960
Speaker 1: have to have confidence that you know enough about the

597
00:32:02,960 --> 00:32:05,600
Speaker 1: business that you may be acquiring that you can double

598
00:32:05,640 --> 00:32:09,000
Speaker 1: down on that. And certainly in some cases there are

599
00:32:09,040 --> 00:32:12,320
Speaker 1: we've talked to boards, talk to management teams who are saying, look,

600
00:32:12,360 --> 00:32:15,120
Speaker 1: we're recasting our own view of the market as we

601
00:32:15,160 --> 00:32:17,240
Speaker 1: go forward. Although I would say a lot of that

602
00:32:17,480 --> 00:32:19,560
Speaker 1: started happening in twenty twenty two. This was not a

603
00:32:19,560 --> 00:32:22,360
Speaker 1: twenty twenty three event. Yes, the SBB situation was a

604
00:32:22,760 --> 00:32:24,840
Speaker 1: bit of a shock to the system, but in many

605
00:32:24,880 --> 00:32:28,080
Speaker 1: cases that didn't really change the plans that it has

606
00:32:28,360 --> 00:32:31,920
Speaker 1: been put in place from the larger potential acquirers. It

607
00:32:32,040 --> 00:32:34,480
Speaker 1: was a bit of a It was a side note.

608
00:32:34,520 --> 00:32:36,560
Speaker 1: It was an important side note in Silicon Valley, but

609
00:32:36,560 --> 00:32:39,480
Speaker 1: it was, and so most of the large acquirers and

610
00:32:39,520 --> 00:32:42,880
Speaker 1: certainly the private equity buyers that have confidence to do

611
00:32:42,920 --> 00:32:46,680
Speaker 1: deals still have that confidence. I think the secondary piece

612
00:32:46,720 --> 00:32:48,520
Speaker 1: that I mentioned where you have to have confidence in

613
00:32:48,520 --> 00:32:51,320
Speaker 1: the target and do they have the right approach to

614
00:32:51,360 --> 00:32:54,360
Speaker 1: their business? Are they ready to be acquired and contribute

615
00:32:54,400 --> 00:32:57,240
Speaker 1: to the new combined organization. That's where all the scrutiny

616
00:32:57,320 --> 00:32:59,640
Speaker 1: is going right now, and that may mean that bills

617
00:32:59,640 --> 00:33:02,120
Speaker 1: take long going to get done. Are there lessons learned

618
00:33:02,120 --> 00:33:08,160
Speaker 1: ted you think in terms of, you know, diversifying your

619
00:33:09,520 --> 00:33:14,080
Speaker 1: cash you know, or or has the moral hazard proved that?

620
00:33:14,320 --> 00:33:16,440
Speaker 1: You know, if the FED in the FDIC we're going

621
00:33:16,480 --> 00:33:18,800
Speaker 1: to back up uninsured depositors last time, they're going to

622
00:33:18,880 --> 00:33:22,680
Speaker 1: do it next time too. Yeah. I don't know that

623
00:33:22,720 --> 00:33:25,000
Speaker 1: we can all count on that ladder point, although it

624
00:33:25,040 --> 00:33:27,600
Speaker 1: certainly feels that way that the FED is prepared to

625
00:33:27,880 --> 00:33:30,360
Speaker 1: step in and do what they need to do rather

626
00:33:30,400 --> 00:33:33,320
Speaker 1: than create an awful tail spin, which is what I

627
00:33:33,360 --> 00:33:35,600
Speaker 1: think would have happened had they not done that. I

628
00:33:35,640 --> 00:33:38,920
Speaker 1: do think diversification is more on the minds of every CFO,

629
00:33:39,040 --> 00:33:41,840
Speaker 1: every CEO, every board member now than it ever has been.

630
00:33:42,120 --> 00:33:44,040
Speaker 1: So I think we will see more of that spreading

631
00:33:44,040 --> 00:33:46,920
Speaker 1: deposits around a little bit. But I also think it's

632
00:33:47,040 --> 00:33:49,200
Speaker 1: it's it's going to be, as we've seen over the

633
00:33:49,280 --> 00:33:50,640
Speaker 1: last two or three weeks, it's going to be a

634
00:33:50,640 --> 00:33:53,440
Speaker 1: flight in some cases to the larger banks who are

635
00:33:53,440 --> 00:33:57,200
Speaker 1: deemed obviously much safer in this environment, and to other

636
00:33:57,280 --> 00:34:00,680
Speaker 1: regionals that are deemed to be managing their risk on

637
00:34:00,720 --> 00:34:03,320
Speaker 1: a more conservative basis. So money is going to move around,

638
00:34:03,400 --> 00:34:06,280
Speaker 1: it is going to get more diversified. Um But I

639
00:34:06,320 --> 00:34:09,080
Speaker 1: also do think to your point that we've learned that

640
00:34:09,120 --> 00:34:11,040
Speaker 1: the FED is going to step in into a nasty

641
00:34:11,080 --> 00:34:14,520
Speaker 1: situation and not let even these original banks fail. So ted,

642
00:34:14,560 --> 00:34:16,080
Speaker 1: when you go ahead and talk to your your private

643
00:34:16,080 --> 00:34:19,160
Speaker 1: equity clients, uh, their cost a capital just got a

644
00:34:19,200 --> 00:34:22,880
Speaker 1: lot more expensive on the debt side, um Man. That

645
00:34:23,000 --> 00:34:25,600
Speaker 1: changes the DCF model a little bit. How are what

646
00:34:25,640 --> 00:34:30,719
Speaker 1: are you hearing? Yeah? Well, first of all, absolutely right,

647
00:34:31,040 --> 00:34:33,480
Speaker 1: but they have an enormous amount of equity capital that

648
00:34:33,520 --> 00:34:35,919
Speaker 1: they need to put to work. And what we're hearing

649
00:34:35,920 --> 00:34:38,040
Speaker 1: in some cases is, look, let's just write the equity

650
00:34:38,120 --> 00:34:40,600
Speaker 1: check and we'll worry about the debt down the road. Now,

651
00:34:40,640 --> 00:34:42,880
Speaker 1: not every every fund is large enough to do that,

652
00:34:43,600 --> 00:34:45,400
Speaker 1: except you know, some of the some of the largest,

653
00:34:45,400 --> 00:34:47,279
Speaker 1: but they will do that in certain cases, and I

654
00:34:47,320 --> 00:34:49,080
Speaker 1: think some of the midsize funds will do it as well,

655
00:34:49,080 --> 00:34:52,680
Speaker 1: obviously for smaller deals. Um. But the reality of it

656
00:34:52,760 --> 00:34:56,200
Speaker 1: is here is they can adjust their models, given you know,

657
00:34:56,400 --> 00:34:59,840
Speaker 1: buyout level returns to reduce the amount of debt exposure,

658
00:34:59,840 --> 00:35:02,399
Speaker 1: and certain cases amp up the equity check a little

659
00:35:02,400 --> 00:35:05,080
Speaker 1: bit more and still get terrific returns if they might,

660
00:35:05,320 --> 00:35:07,239
Speaker 1: if they make the right bets. And because there is

661
00:35:07,280 --> 00:35:09,840
Speaker 1: so much of this private equity capital on the sidelines

662
00:35:09,920 --> 00:35:12,440
Speaker 1: right now waiting to be deployed, and a group of

663
00:35:12,600 --> 00:35:16,520
Speaker 1: LPs standing behind those funds expecting that capital to deployed,

664
00:35:16,560 --> 00:35:18,560
Speaker 1: they didn't put it, you know, in a safe deposit

665
00:35:18,600 --> 00:35:20,759
Speaker 1: box and say, you know, wait for another sunny day.

666
00:35:20,840 --> 00:35:23,440
Speaker 1: They expect these folks to invest, whether it's raining or

667
00:35:24,280 --> 00:35:27,440
Speaker 1: sunshiny out. And so we think that capital will get deployed.

668
00:35:27,600 --> 00:35:29,600
Speaker 1: We just may see the debt equity mix change a

669
00:35:29,600 --> 00:35:31,719
Speaker 1: little bit, or we may see people wait until the

670
00:35:31,840 --> 00:35:34,400
Speaker 1: Fed loose you know, loosens a little bit, and we

671
00:35:34,400 --> 00:35:36,239
Speaker 1: see interest rates come down a little bit before they

672
00:35:36,239 --> 00:35:38,600
Speaker 1: fully spenanced some of these people. I have to ask,

673
00:35:38,680 --> 00:35:40,440
Speaker 1: you know, because I've been going to super return for

674
00:35:40,480 --> 00:35:44,960
Speaker 1: the last few years, and every year there's more and

675
00:35:45,080 --> 00:35:48,520
Speaker 1: more dry powder. I mean it's it was one trillion,

676
00:35:48,600 --> 00:35:50,960
Speaker 1: then it was two trillion, then it was two point

677
00:35:51,000 --> 00:35:54,359
Speaker 1: seven trillion. I mean, how much cash is there and

678
00:35:54,520 --> 00:35:57,840
Speaker 1: when is it going to get spent? Yeah, it's a

679
00:35:57,880 --> 00:35:59,879
Speaker 1: really good question. I don't know what the total number

680
00:35:59,920 --> 00:36:02,440
Speaker 1: is now, it's obviously well into the multiple trillions. As

681
00:36:02,480 --> 00:36:05,680
Speaker 1: you point out, I think the log jam eventually breaks,

682
00:36:05,680 --> 00:36:07,120
Speaker 1: and we think it breaks in the back half of

683
00:36:07,120 --> 00:36:09,640
Speaker 1: this year. Every private equity firm we're talking about, he's

684
00:36:09,680 --> 00:36:12,640
Speaker 1: gearing up for a very busy back half of twenty

685
00:36:12,680 --> 00:36:15,560
Speaker 1: twenty three and on into twenty twenty four. Obviously, it's

686
00:36:15,600 --> 00:36:17,200
Speaker 1: not all going to get to spend in one quarter,

687
00:36:17,400 --> 00:36:19,920
Speaker 1: two quarters, even in the year. But we really do

688
00:36:19,960 --> 00:36:22,439
Speaker 1: think it loosens up as we go into the back

689
00:36:22,440 --> 00:36:25,400
Speaker 1: half of this year, because everybody seems to be poised

690
00:36:25,360 --> 00:36:27,759
Speaker 1: to see a very active second half of the year.

691
00:36:28,000 --> 00:36:30,080
Speaker 1: All right, Ted, thanks so much for joining us, Ted Smith,

692
00:36:30,080 --> 00:36:33,520
Speaker 1: He's a co founder and president of Union Square Advisors

693
00:36:33,520 --> 00:36:36,560
Speaker 1: based here in Midtown Manhattan. He's been all over the

694
00:36:36,600 --> 00:36:38,279
Speaker 1: street doing m ANDA, So we're talking a little m

695
00:36:38,280 --> 00:36:40,800
Speaker 1: and A tech m and A in particular, it's been quiet,

696
00:36:40,880 --> 00:36:43,120
Speaker 1: like we've seen across the M and A space in general,

697
00:36:43,600 --> 00:36:46,680
Speaker 1: as a buyers and sellers adjust to a new market,

698
00:36:46,719 --> 00:36:49,879
Speaker 1: a new higher cost of capital, and some uncertainty out

699
00:36:49,880 --> 00:36:52,960
Speaker 1: there in terms of the geopolitical environment as well. You're

700
00:36:53,000 --> 00:36:56,400
Speaker 1: listening to the tape cancer our live program Bloomberg Markets

701
00:36:56,480 --> 00:36:59,839
Speaker 1: weekdays at ten am Eastern on Bloomberg Radio to tune

702
00:36:59,840 --> 00:37:02,799
Speaker 1: in a Bloomberg dot Com and the Bloomberg Business alf.

703
00:37:02,880 --> 00:37:05,680
Speaker 1: You can also listen live on Amazon Alexa from our

704
00:37:05,719 --> 00:37:10,120
Speaker 1: flagship New York station. Just say Alexa, play Bloomberg eleven thirty.

705
00:37:11,680 --> 00:37:13,800
Speaker 1: Let's stock bonds here. I mean, you think about twenty

706
00:37:13,840 --> 00:37:16,800
Speaker 1: twenty two, there was just no place to hide. Stocks

707
00:37:16,840 --> 00:37:20,360
Speaker 1: down twenty percent, bonds down, you know, mid teens. You know,

708
00:37:20,400 --> 00:37:23,560
Speaker 1: that's a performance we hadn't really ever seen. I'm looking

709
00:37:23,560 --> 00:37:26,399
Speaker 1: at the US aggregate index so far this year done

710
00:37:26,440 --> 00:37:29,719
Speaker 1: a lot better, up three point four percent, So that's

711
00:37:29,760 --> 00:37:31,879
Speaker 1: helping a little bit offset some of the losses from

712
00:37:31,920 --> 00:37:34,160
Speaker 1: last year. Let's check in with the professional does this

713
00:37:34,280 --> 00:37:37,920
Speaker 1: every day, Natalie Trevithick, head of investment grade credit strategy

714
00:37:37,920 --> 00:37:41,360
Speaker 1: at paid ind Regal. So, Natalie, after that bruising twenty

715
00:37:41,400 --> 00:37:44,759
Speaker 1: twenty two, how did you guys approach the beginning here

716
00:37:44,760 --> 00:37:49,680
Speaker 1: of twenty twenty three? We approached it as optimistic. I

717
00:37:49,680 --> 00:37:51,719
Speaker 1: would say we thought we were all cowed up. We

718
00:37:51,719 --> 00:37:53,880
Speaker 1: weren't quite fulls, but we were expecting to get the

719
00:37:54,080 --> 00:37:55,960
Speaker 1: que ponds, which would be the milk from the cow.

720
00:37:56,040 --> 00:37:59,680
Speaker 1: So we're looking at probably mid single digit returns and

721
00:38:00,040 --> 00:38:02,279
Speaker 1: you want actually turned out way better than expected. As

722
00:38:02,320 --> 00:38:04,400
Speaker 1: you mentioned, you know, corporate bonds are up three and

723
00:38:04,400 --> 00:38:07,000
Speaker 1: a half percent, and after that March, you know, when

724
00:38:07,320 --> 00:38:09,960
Speaker 1: we went through that banking crisis, March was up two

725
00:38:09,960 --> 00:38:12,319
Speaker 1: point eight percent in corporate bonds. So so far, it's

726
00:38:12,320 --> 00:38:14,680
Speaker 1: been a good year for us. So where in the

727
00:38:14,719 --> 00:38:18,400
Speaker 1: investment grade space are you guys, you know, kind of

728
00:38:18,440 --> 00:38:21,040
Speaker 1: traffick again in the shorter end, the longer end, where

729
00:38:21,080 --> 00:38:24,799
Speaker 1: you guys kind of playing, we're trafficking in all of it.

730
00:38:24,880 --> 00:38:26,799
Speaker 1: I'd say we've been more active in the five and

731
00:38:26,840 --> 00:38:28,560
Speaker 1: ten year part of the curve, and there's been a

732
00:38:28,560 --> 00:38:31,719
Speaker 1: lot of the man for long duration credit, but the

733
00:38:31,719 --> 00:38:35,799
Speaker 1: friend end has become dislocated, so there's definitely opportunities there. Well.

734
00:38:35,840 --> 00:38:37,799
Speaker 1: Banks of God and beaten up, so have some of

735
00:38:37,840 --> 00:38:41,359
Speaker 1: the more defensive non financials. Healthcare bonds are doing well.

736
00:38:41,360 --> 00:38:44,840
Speaker 1: We're looking at some of the other consumer cyclicals, Audios

737
00:38:44,840 --> 00:38:47,600
Speaker 1: of God and Cheaper, so we're definitely seeing pockets of

738
00:38:47,640 --> 00:38:51,560
Speaker 1: opportunity within the credit markets. Are you concerned about a

739
00:38:51,600 --> 00:38:57,719
Speaker 1: credit crunch Natalie upcoming? We are a little bit concerned

740
00:38:57,719 --> 00:39:01,120
Speaker 1: because well, more regulations for banks to actually be positive

741
00:39:01,160 --> 00:39:04,560
Speaker 1: for bondholders, if not equity holders. It also means that

742
00:39:04,560 --> 00:39:07,000
Speaker 1: that could cool down the economy quicker than expected, and

743
00:39:07,080 --> 00:39:10,520
Speaker 1: the potential recession maybe more severe, which would be bad

744
00:39:10,600 --> 00:39:13,920
Speaker 1: for banks. So all in all, we think spreads may

745
00:39:14,080 --> 00:39:16,600
Speaker 1: trend a little bit wider from here in the aggregate,

746
00:39:16,800 --> 00:39:19,560
Speaker 1: particularly within the banking sector, and funding costs may go

747
00:39:19,680 --> 00:39:22,279
Speaker 1: up for them, But we'd say away from financials, most

748
00:39:22,280 --> 00:39:24,760
Speaker 1: of them are well positioned with pretty strong balance sheets

749
00:39:24,760 --> 00:39:29,160
Speaker 1: to weather recession. Yeah. I saw. I mean the world

750
00:39:29,239 --> 00:39:34,040
Speaker 1: watched as holders of credit Swiss at ones gotten crushed,

751
00:39:35,040 --> 00:39:40,240
Speaker 1: but there were different covenants for the Swiss at ones

752
00:39:40,280 --> 00:39:43,759
Speaker 1: than there are for others and everyone you know was

753
00:39:43,840 --> 00:39:48,719
Speaker 1: punished on price. So is there the possibility that you know,

754
00:39:49,120 --> 00:39:51,680
Speaker 1: many babies were thrown out with the bathwater in that case,

755
00:39:53,160 --> 00:39:55,719
Speaker 1: You're definitely right about that. There is different laws and

756
00:39:55,800 --> 00:39:59,160
Speaker 1: Swiss that call those at ones to be knocked out fully,

757
00:39:59,200 --> 00:40:00,760
Speaker 1: but there's also going to be a lot of lawsuits.

758
00:40:00,800 --> 00:40:03,120
Speaker 1: It will take years to see if there's any recovery there.

759
00:40:03,520 --> 00:40:05,839
Speaker 1: There is risk in other bonds and that they could

760
00:40:05,840 --> 00:40:08,000
Speaker 1: still be you not written down completely in this case,

761
00:40:08,000 --> 00:40:11,160
Speaker 1: while equities survive, but they still have that potential to

762
00:40:11,200 --> 00:40:13,520
Speaker 1: be written down in a severe banking environment. So we

763
00:40:13,520 --> 00:40:16,239
Speaker 1: think some of that punishment is warranted. But there's a

764
00:40:16,239 --> 00:40:18,560
Speaker 1: lot of places within the banking sector which are still

765
00:40:18,560 --> 00:40:22,560
Speaker 1: safe for bondholders. So how are you guys thinking about

766
00:40:22,560 --> 00:40:26,520
Speaker 1: credit quality these days now? Because we really haven't had

767
00:40:26,640 --> 00:40:29,279
Speaker 1: too much of an issue even during the lockdowns were

768
00:40:29,320 --> 00:40:33,520
Speaker 1: so much liquidity pumped into the marketplace. How are you

769
00:40:33,560 --> 00:40:38,879
Speaker 1: thinking about credit quality in what may be a recessionary environment. Yeah,

770
00:40:38,920 --> 00:40:41,880
Speaker 1: we think credit quality isn't going to go down terribly.

771
00:40:41,920 --> 00:40:45,000
Speaker 1: We did see a downgrade from Nissan from investment grade

772
00:40:45,040 --> 00:40:47,759
Speaker 1: to high yield, but we think most companies can weather

773
00:40:47,840 --> 00:40:51,800
Speaker 1: the storm. We're seeing just outside demand for non financial issuance,

774
00:40:51,840 --> 00:40:53,880
Speaker 1: So there's still a lot of capital sitting on the

775
00:40:53,920 --> 00:40:56,520
Speaker 1: sideline waiting to buy these corporate bonds that yields greater

776
00:40:56,600 --> 00:41:00,160
Speaker 1: than five percent. We think companies have already extended their

777
00:41:00,160 --> 00:41:04,080
Speaker 1: maturity walls pretty successfully, so we don't expect huge amounts

778
00:41:04,120 --> 00:41:06,960
Speaker 1: of incremental issuance. But we think supply and demand are

779
00:41:07,200 --> 00:41:10,040
Speaker 1: pretty well balanced at this point. There's more trouble I

780
00:41:10,120 --> 00:41:13,360
Speaker 1: think within the financial sector, and their cost of funding

781
00:41:13,400 --> 00:41:17,160
Speaker 1: could go up. Our new issuers coming to market here,

782
00:41:17,200 --> 00:41:20,280
Speaker 1: I mean, I'm I've been I'm if I'm a CFO.

783
00:41:20,320 --> 00:41:23,240
Speaker 1: I'm used to issuing paper, you know, treasures near zero,

784
00:41:23,440 --> 00:41:26,799
Speaker 1: not where they are here. Yeah, we're still seeing an

785
00:41:26,800 --> 00:41:30,240
Speaker 1: active calendar. We had general motors in the market today yesterday.

786
00:41:30,320 --> 00:41:33,160
Speaker 1: Today we have a number more of one off issuers

787
00:41:33,200 --> 00:41:36,520
Speaker 1: like Mass Mutual. But they're definitely taking opportunities to come

788
00:41:36,520 --> 00:41:39,799
Speaker 1: to market because they aren't refinancing their entire balance sheets

789
00:41:39,800 --> 00:41:41,839
Speaker 1: at these higher levels. Say, if their funding costs used

790
00:41:41,840 --> 00:41:45,480
Speaker 1: to be three percent, now they you know, refinance about

791
00:41:45,480 --> 00:41:48,080
Speaker 1: say ten percent. Their total funding costs are only going

792
00:41:48,160 --> 00:41:50,360
Speaker 1: up marginally, and they want to be active in the

793
00:41:50,440 --> 00:41:53,960
Speaker 1: in the market. I just think, well, a lot of

794
00:41:53,960 --> 00:41:57,600
Speaker 1: people are are believing right now that the Fed could cut,

795
00:41:58,320 --> 00:42:01,840
Speaker 1: that rates could come down. Is that unlikely in your opinion?

796
00:42:03,800 --> 00:42:05,759
Speaker 1: You know, it's a tough called. Day by day. I

797
00:42:05,800 --> 00:42:08,200
Speaker 1: think the probability of a fat hike and may has

798
00:42:08,239 --> 00:42:10,000
Speaker 1: gone down. Whether they cut by the end of the

799
00:42:10,040 --> 00:42:13,040
Speaker 1: years yet to be seen. That's not necessarily something we're

800
00:42:13,040 --> 00:42:16,240
Speaker 1: calling for. But even if rights stay up here, bonds

801
00:42:16,239 --> 00:42:18,320
Speaker 1: are still poised to you know, clip that keep on

802
00:42:18,360 --> 00:42:20,759
Speaker 1: and generate decent returns even a spreads wide and a

803
00:42:20,760 --> 00:42:23,040
Speaker 1: little bit further from here. So we still think we're

804
00:42:23,040 --> 00:42:26,520
Speaker 1: looking at a nice return, positive returns for corporates in

805
00:42:26,560 --> 00:42:30,239
Speaker 1: two and twenty three. Now, either you guys looking at

806
00:42:30,320 --> 00:42:33,560
Speaker 1: particular sectors of the market here that you like better

807
00:42:33,680 --> 00:42:37,760
Speaker 1: than some others. Yeah, we do like the healthcare sector.

808
00:42:37,880 --> 00:42:40,160
Speaker 1: Utilities have actually come out with a lot of issuance

809
00:42:40,239 --> 00:42:42,520
Speaker 1: that quite keep levels. Those are a rated. A lot

810
00:42:42,600 --> 00:42:45,440
Speaker 1: of them are first mortgage secured bonds coming with thirty

811
00:42:45,480 --> 00:42:49,960
Speaker 1: year paper, which we find quite attractive. You know. We

812
00:42:50,040 --> 00:42:53,000
Speaker 1: like certain pockets of the consumer cyclical sector. Some of

813
00:42:53,000 --> 00:42:56,399
Speaker 1: the autos were favorable on really though it comes down

814
00:42:56,440 --> 00:43:00,000
Speaker 1: to bottom up credit selection here, so it's just about

815
00:43:00,000 --> 00:43:02,440
Speaker 1: at the individual credits. You've got to do a lot

816
00:43:02,440 --> 00:43:06,959
Speaker 1: of work in that case. Yes, absolutely, but there's also

817
00:43:06,960 --> 00:43:09,000
Speaker 1: a lot of name avoidance. There's a lot of insurers

818
00:43:09,000 --> 00:43:10,799
Speaker 1: out there we can just choose not to own in

819
00:43:10,800 --> 00:43:13,279
Speaker 1: this market, so we really are focused on the ones

820
00:43:13,280 --> 00:43:14,720
Speaker 1: which we think are going to be able to weather

821
00:43:14,760 --> 00:43:17,319
Speaker 1: recession and continue to hold in well. There's a lot

822
00:43:17,360 --> 00:43:22,480
Speaker 1: of opportunities within technology and communications as well. All Right, Natalie,

823
00:43:22,480 --> 00:43:24,560
Speaker 1: thanks very much. We really appreciate getting a couple of

824
00:43:24,560 --> 00:43:26,960
Speaker 1: minutes of your time. Natalie trevith Ak, head of investment

825
00:43:27,000 --> 00:43:31,600
Speaker 1: grade credit Strategy at Payden and Regal. You're listening to

826
00:43:31,680 --> 00:43:35,160
Speaker 1: the tape cancer our live program Bloomberg Markets weekdays at

827
00:43:35,239 --> 00:43:38,279
Speaker 1: ten am Eastern on Bloomberg Radio, the tune in app,

828
00:43:38,360 --> 00:43:41,239
Speaker 1: Bloomberg dot Com, and the Bloomberg Business App. You can

829
00:43:41,239 --> 00:43:44,520
Speaker 1: also listen live on Amazon Alexa from our flagship New

830
00:43:44,560 --> 00:43:49,920
Speaker 1: York station. Just say Alexa play Bloomberg eleven thirty. Well,

831
00:43:49,920 --> 00:43:51,719
Speaker 1: if you're a Bloomber terminal user in here looking for

832
00:43:51,760 --> 00:43:55,600
Speaker 1: some investment ideas, b I go is a good function

833
00:43:55,640 --> 00:43:58,360
Speaker 1: to know that takes you to Bloomberg Intelligence, which Bloomberg

834
00:43:58,400 --> 00:44:02,520
Speaker 1: Intelligence is Bloomberg's in house investment research department, four hundred

835
00:44:02,560 --> 00:44:05,840
Speaker 1: analysts strong all over the world, covering two thousand companies

836
00:44:05,840 --> 00:44:07,880
Speaker 1: about one hundred and thirty industries. And they got a

837
00:44:07,920 --> 00:44:09,359
Speaker 1: lot of smart analyst They come up with a lot

838
00:44:09,360 --> 00:44:11,480
Speaker 1: of good ideas. Let's get to some of them right now.

839
00:44:11,560 --> 00:44:13,320
Speaker 1: We can do that with Tim Craighead. He's a research

840
00:44:13,360 --> 00:44:17,000
Speaker 1: director and European strategists with Bloomberg Intelligence. He joins us

841
00:44:17,040 --> 00:44:20,160
Speaker 1: on the phone from London. So Tim, I know, you guys,

842
00:44:20,200 --> 00:44:23,080
Speaker 1: you've got your focus ideas that are out there for people,

843
00:44:23,320 --> 00:44:25,560
Speaker 1: and then you look at that focus ideas lists, which

844
00:44:25,560 --> 00:44:28,279
Speaker 1: are some of the most high high conviction ideas of

845
00:44:28,320 --> 00:44:31,200
Speaker 1: Bloomberg Intelligence has, and then you whittle it down even

846
00:44:31,200 --> 00:44:33,360
Speaker 1: more and you guys, guys have some focus ideas to

847
00:44:33,440 --> 00:44:36,960
Speaker 1: watch here. Talk to us about some of these names

848
00:44:37,080 --> 00:44:40,680
Speaker 1: and why you guys are highlighting them some pretty interesting

849
00:44:40,719 --> 00:44:45,480
Speaker 1: opportunities for investors. Yeah, sure, thank Paul, thanks for thanks

850
00:44:45,520 --> 00:44:48,320
Speaker 1: for having me on. Look, as you said, the focus

851
00:44:48,360 --> 00:44:53,480
Speaker 1: ideas are those are those are views that combine three things,

852
00:44:53,680 --> 00:44:58,640
Speaker 1: a high conviction point of view on fundamentals. Secondly, that

853
00:44:58,719 --> 00:45:02,279
Speaker 1: high conviction should be differentiated from the market. It's it's

854
00:45:02,360 --> 00:45:07,200
Speaker 1: anti consensus. And thirdly, they're catalysts or triggers that we

855
00:45:07,320 --> 00:45:11,879
Speaker 1: see that can change the market's mindset. And this set

856
00:45:11,920 --> 00:45:14,360
Speaker 1: of ten, which is as you said, is a subset

857
00:45:14,400 --> 00:45:16,000
Speaker 1: of the broader list, which, by the way, you can

858
00:45:16,000 --> 00:45:18,680
Speaker 1: find on bi space focus if you've got a terminal.

859
00:45:19,560 --> 00:45:24,759
Speaker 1: But this this subgroup all have catalysts that are important

860
00:45:24,840 --> 00:45:26,799
Speaker 1: coming up in the second quarter. So it is the

861
00:45:26,880 --> 00:45:31,440
Speaker 1: focus ideas to watch for two Q and there are

862
00:45:31,480 --> 00:45:35,400
Speaker 1: ten ideas. We kept it. We kept it focused US.

863
00:45:35,480 --> 00:45:39,200
Speaker 1: It spans the region. There's five US, three European, two Asian.

864
00:45:39,600 --> 00:45:42,960
Speaker 1: There's eight that are constructive, there's two that are a

865
00:45:42,960 --> 00:45:47,080
Speaker 1: bit worrisome. So it's a cool bottom up list on

866
00:45:47,200 --> 00:45:50,640
Speaker 1: analyst calls. All right, let's start with the US. Give

867
00:45:50,680 --> 00:45:53,960
Speaker 1: us a couple of names that the analysts put pushed

868
00:45:54,000 --> 00:45:57,239
Speaker 1: up to you and identified as interesting. Yeah. So I

869
00:45:57,880 --> 00:46:01,680
Speaker 1: think it all revolves in the US by a large degree,

870
00:46:01,760 --> 00:46:04,919
Speaker 1: around the consumer. And it's interesting because we have both

871
00:46:04,920 --> 00:46:10,000
Speaker 1: positive and negative ideas here. The negative idea is a

872
00:46:10,000 --> 00:46:12,920
Speaker 1: company called Casey's General Stores. If Paul, do you know

873
00:46:13,000 --> 00:46:16,480
Speaker 1: this company? I do not yeah, so I didn't either

874
00:46:16,560 --> 00:46:20,120
Speaker 1: until we started talking about this thing with our coverage.

875
00:46:20,239 --> 00:46:24,200
Speaker 1: It's a Midwest convenience store, and yeah, we see them

876
00:46:24,239 --> 00:46:29,400
Speaker 1: as basically being at risk of the general economic outlook

877
00:46:29,400 --> 00:46:33,360
Speaker 1: and if we see slowing consumers, training down, et cetera,

878
00:46:33,760 --> 00:46:35,880
Speaker 1: that this is a this is a risk to earnings

879
00:46:35,960 --> 00:46:40,279
Speaker 1: estimates through this year. The other three that play on

880
00:46:40,320 --> 00:46:44,200
Speaker 1: the opposite side of the consumer one is Alta Beauty,

881
00:46:44,320 --> 00:46:48,520
Speaker 1: which is beauty shops across the US. Another is Gap stores.

882
00:46:48,680 --> 00:46:53,319
Speaker 1: We all know Gap, and the third is Sketchers those

883
00:46:53,360 --> 00:46:57,239
Speaker 1: that have very companies exactly company shoes. They all have

884
00:46:57,400 --> 00:47:01,600
Speaker 1: really company specific element to it. So the Gap is

885
00:47:01,600 --> 00:47:04,799
Speaker 1: a restructuring story. They've already proved what they can do

886
00:47:04,800 --> 00:47:07,440
Speaker 1: with Banana Republic, and we think that's a blueprint for

887
00:47:07,760 --> 00:47:11,440
Speaker 1: the Gap itself. An old Navy is actually half the

888
00:47:11,480 --> 00:47:14,200
Speaker 1: business and there they had a merchandise in issue last year.

889
00:47:14,200 --> 00:47:17,239
Speaker 1: It's been corrected, there's a new CEO coming in. There's

890
00:47:17,239 --> 00:47:19,920
Speaker 1: a lot of cool stuff happening. Alta Beauty is all

891
00:47:19,960 --> 00:47:23,120
Speaker 1: about going back to the office and getting back out

892
00:47:23,200 --> 00:47:25,640
Speaker 1: post pandemic, and people want to look nice and their

893
00:47:25,680 --> 00:47:30,440
Speaker 1: sales strands, we think are still underestimated, and Sketchers is

894
00:47:30,480 --> 00:47:34,000
Speaker 1: expanding globally. They've got news distribution centers coming in Canada,

895
00:47:34,200 --> 00:47:37,279
Speaker 1: in India, they've spent money on technology that's travling a

896
00:47:37,320 --> 00:47:42,400
Speaker 1: loyalty program, and again we think there's upside estimates. So Tim,

897
00:47:42,719 --> 00:47:45,040
Speaker 1: a lot of these names, as you mentioned for the

898
00:47:45,160 --> 00:47:48,160
Speaker 1: US stock picks, are kind of centered on the consumer.

899
00:47:48,200 --> 00:47:50,560
Speaker 1: What is really that bi's call on the consumer here?

900
00:47:50,600 --> 00:47:53,200
Speaker 1: I mean, we've got pretty much full employment, but man,

901
00:47:53,239 --> 00:47:56,000
Speaker 1: there's a lot of headwinds out there for the consumers

902
00:47:56,080 --> 00:48:00,480
Speaker 1: relates to inflation and other things. Yeah, I mean, you're right,

903
00:48:00,719 --> 00:48:04,160
Speaker 1: there is a there's a I think there's generally a

904
00:48:04,239 --> 00:48:11,080
Speaker 1: worry that you've got high inflation, negative impact disposable income.

905
00:48:11,160 --> 00:48:17,479
Speaker 1: If you don't have something special about your story, you

906
00:48:17,520 --> 00:48:22,399
Speaker 1: are at risk to to discretionary income being impacted over

907
00:48:22,440 --> 00:48:25,080
Speaker 1: the course of the year. And how much better can

908
00:48:25,080 --> 00:48:28,000
Speaker 1: it get with employment being as low as it is.

909
00:48:28,520 --> 00:48:33,399
Speaker 1: And if housing comes under some stress with higher interest rates,

910
00:48:33,880 --> 00:48:38,120
Speaker 1: that has you know, another sort of different layer of

911
00:48:38,239 --> 00:48:41,759
Speaker 1: pressure on what could be consumer spending. So you know,

912
00:48:41,800 --> 00:48:45,400
Speaker 1: we look for example like these three, but there's others

913
00:48:45,440 --> 00:48:49,839
Speaker 1: where there's something that's different beyond just simply the economic call. Right,

914
00:48:49,840 --> 00:48:52,319
Speaker 1: all right, let's let's go over to Europe here for

915
00:48:52,600 --> 00:48:54,240
Speaker 1: our friends over there. What are some of the names

916
00:48:54,239 --> 00:48:57,560
Speaker 1: that kind of jump out to you guys there? So,

917
00:48:57,560 --> 00:49:00,839
Speaker 1: so a couple here. One You're gonna think I'm crazy

918
00:49:00,840 --> 00:49:03,960
Speaker 1: at first. I'm going to name him a bank Eba

919
00:49:05,000 --> 00:49:08,200
Speaker 1: Banko bill val. This is one of the big Spanish banks,

920
00:49:08,440 --> 00:49:11,279
Speaker 1: but importantly a chunk of their businesses in Mexico where

921
00:49:11,320 --> 00:49:15,160
Speaker 1: loan growth is actually quite healthy. Another chunk is in Spain.

922
00:49:16,440 --> 00:49:19,640
Speaker 1: Didn't that interest margins are improving with higher interest rates,

923
00:49:19,680 --> 00:49:23,200
Speaker 1: basic bank story, and we think all of that is good.

924
00:49:23,239 --> 00:49:25,880
Speaker 1: But everybody seems to be focused on Turkey because they

925
00:49:25,920 --> 00:49:28,879
Speaker 1: do have a Turkish business and there's geopolitical risk there, etc.

926
00:49:29,400 --> 00:49:34,320
Speaker 1: And with that, it's only now sudden percent of their business.

927
00:49:33,800 --> 00:49:36,239
Speaker 1: It's smaller and smaller. We don't think it's a worry,

928
00:49:36,239 --> 00:49:38,279
Speaker 1: and we think it market's too focused on it and

929
00:49:38,440 --> 00:49:40,960
Speaker 1: not focused enough on the good part, So that we

930
00:49:41,040 --> 00:49:46,080
Speaker 1: think is underappreciated. Tap Gemini, big global IT service company.

931
00:49:46,080 --> 00:49:50,120
Speaker 1: It's focused on big strategic transformations. It's not that parculically

932
00:49:50,160 --> 00:49:54,040
Speaker 1: exposed to troubles and technology and worries there. So we

933
00:49:54,080 --> 00:49:57,560
Speaker 1: think that's well positioned. And the other is best thoughts,

934
00:49:57,880 --> 00:50:01,319
Speaker 1: which if you're in to clean it energy, energy transition.

935
00:50:01,480 --> 00:50:05,239
Speaker 1: This is one of the leading wind turbine producers globally.

936
00:50:05,920 --> 00:50:09,239
Speaker 1: And you know, you think about the Inflation Reduction Act,

937
00:50:09,280 --> 00:50:13,360
Speaker 1: which is really a energy transition bill. And in Europe

938
00:50:13,360 --> 00:50:17,080
Speaker 1: there's this similar sort of big government initiative and push

939
00:50:17,120 --> 00:50:21,839
Speaker 1: that's all going to drive business too. We think best

940
00:50:21,960 --> 00:50:24,400
Speaker 1: us it's gotten sorry to say, a tailwind. Ye. So

941
00:50:24,920 --> 00:50:27,799
Speaker 1: all right, all right, thirty seconds, Tim Asia, what do

942
00:50:27,800 --> 00:50:31,440
Speaker 1: you guys have from there? It's all about China's reopening,

943
00:50:32,040 --> 00:50:37,400
Speaker 1: think about Hong Kong ex changes, rising, set of IPOs coming.

944
00:50:37,680 --> 00:50:40,520
Speaker 1: You and I have talked plenty about Laili Baba over time,

945
00:50:40,520 --> 00:50:45,520
Speaker 1: expliting in the sixth repatriation of tech listenings in the

946
00:50:45,600 --> 00:50:49,680
Speaker 1: US to Hong Kong and China. That's all the Hong

947
00:50:49,719 --> 00:50:53,200
Speaker 1: Kong ex changes favor. And AIA is an insurance company.

948
00:50:53,239 --> 00:50:55,440
Speaker 1: But you have mainland Chinese that are starting to travel,

949
00:50:55,480 --> 00:50:58,839
Speaker 1: they go to Hong Kong, they buy new insurance policies

950
00:50:59,239 --> 00:51:04,720
Speaker 1: as a as a offshore savings mechanism. Good for AI AIA,

951
00:51:04,880 --> 00:51:07,279
Speaker 1: interesting stuff, all right, Tim, you're based in London. You

952
00:51:07,280 --> 00:51:09,680
Speaker 1: live in London. How are things on the street of

953
00:51:09,719 --> 00:51:14,319
Speaker 1: London these days? Packed? Busy crazy? You'd never know that

954
00:51:14,360 --> 00:51:18,880
Speaker 1: there's any issue. Yeah, it feels good and it's starting

955
00:51:18,880 --> 00:51:21,359
Speaker 1: to be spring. All right, that's good stuff because it's

956
00:51:21,560 --> 00:51:23,560
Speaker 1: here in New York, it's it's we're not quite back,

957
00:51:23,600 --> 00:51:25,840
Speaker 1: you know. It's a kind of that issue about getting

958
00:51:25,840 --> 00:51:27,360
Speaker 1: people back in your office. But I understand it's a

959
00:51:27,400 --> 00:51:29,840
Speaker 1: little bit better in London. Tim Craighead joined us. We

960
00:51:29,840 --> 00:51:31,960
Speaker 1: appreciate getting a couple of minutes of his time. He

961
00:51:32,080 --> 00:51:35,840
Speaker 1: is the research director for Bloomberg Intelligence over in London,

962
00:51:36,160 --> 00:51:39,240
Speaker 1: running that business over there with our good friend Sam Fazzelli.

963
00:51:39,400 --> 00:51:41,480
Speaker 1: He's also a macro strategist, kind of given us some

964
00:51:41,600 --> 00:51:45,920
Speaker 1: good strategies, some good ideas with some catalysts. Thanks for

965
00:51:45,960 --> 00:51:49,480
Speaker 1: listening to the Bloomberg Markets podcast. You can subscribe and

966
00:51:49,520 --> 00:51:53,600
Speaker 1: listen to interviews with Apple Podcasts or whatever podcast platform

967
00:51:53,640 --> 00:51:56,960
Speaker 1: you prefer. I'm Matt Miller. I'm on Twitter at Matt

968
00:51:56,960 --> 00:52:00,520
Speaker 1: Miller nineteen seventy three on Falsewhinee. I'm on Twitter at

969
00:52:00,520 --> 00:52:03,400
Speaker 1: pt Sweeney. Before the podcast, you can always catch us

970
00:52:03,400 --> 00:52:04,880
Speaker 1: worldwide at Bloomberg Radient