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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. Looking at these markets

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Speaker 1: as Nathan's just reporting, you know, hitting new Intra day

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Speaker 1: lows down one point six, the dallaf warnered fifty points.

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Speaker 1: Let's bring in a professional and get a professional opinion

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Speaker 1: on what these markets are telling us. Here Mace McClean

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Speaker 1: see I O president and Managing director at Frost Investment

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Speaker 1: Adviers Advisors. Uh proud graduate from the Ohio State University. Mace,

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Speaker 1: thanks so much for joining us. I don't know why

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Speaker 1: you guys always say the but I'll go with it. Um,

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Speaker 1: what do you make of these markets over the last

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Speaker 1: few days? Is this a little bear market rally kind

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Speaker 1: of had its say, I would say, Jerome powege getting

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Speaker 1: is best is shwis is that you know the financial

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Speaker 1: conditions tightening with the sell off in the market. All right,

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Speaker 1: So how pronounced I mean, I guess the question is

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Speaker 1: they're gonna be out in Jackson Hole, and yes, Tom

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Speaker 1: Keenan and surveillance team will be out in Jackson Hole

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Speaker 1: as well. The surveillance golf stream is gassing up as

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Speaker 1: we speak. Um, do you expect to get anything out

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Speaker 1: of Jackson Hole this week or should we just wait

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Speaker 1: for September? Well, I think this is you know, um

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Speaker 1: terman Pal's chance to try to talk down the expectations

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Speaker 1: of a pivot. As I said, the expectations that they

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Speaker 1: would pivot and the rally in the market is really

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Speaker 1: working against him, trying to tighten to nancural conditions. And

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Speaker 1: so I think we're going to get a steady drum

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Speaker 1: beat from uh the FED speakers that we will be

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Speaker 1: um not seeing a pivot at anytime soon, but instead

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Speaker 1: will be continuing to course towards rate increases. It doesn't

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Speaker 1: matter who's been driving the rally. Are we worried about

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Speaker 1: the retail menia coming back some sort repeat or are

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Speaker 1: we okay with the fact that perhaps this rally has

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Speaker 1: been on low volume. What's your take? Of course, it

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Speaker 1: has been low volume in the summer trading, but we

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Speaker 1: are continue to see that rotation reflet, which also reflects

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Speaker 1: the rotation and consumer habits which we're you know, switching

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Speaker 1: to services and out of products as we come out

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Speaker 1: of the pandemic. So we're continuing to see that rotation.

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Speaker 1: Um and uh, you know we have not seen I

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Speaker 1: don't think solid leadership yet for the rally and the

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Speaker 1: next leg up May Sorry are you You're based in

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Speaker 1: San Antonio? Right? I am abundant Dallas today where it's flooding. Great. Well,

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Speaker 1: I just assume anybody who this is my assumption to

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Speaker 1: anybody who's from the state of Texas, they have a

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Speaker 1: call on energy. So in oil, I'm looking at w

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Speaker 1: T A crude oil here, we're down three, We're well

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Speaker 1: below ninety barrel. Has oil has energy? Has that play

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Speaker 1: played out? We don't think so. If we think that

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Speaker 1: we're continuing to explore and invest in new energy fines

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Speaker 1: at a rate that's slower than the rate we need

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Speaker 1: to replace energy stores we're using, there's any sort of

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Speaker 1: green energy transition is going to take multiple years. We're

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Speaker 1: still going to need the crude and the natural gas,

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Speaker 1: and right now we're under investing in that effort. So

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Speaker 1: if we think that we're going to see energy stay

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Speaker 1: in short supply for a number of years, and that

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Speaker 1: we think that that play is has a long way

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Speaker 1: to go. So let's stick with that. That idea that

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Speaker 1: Paul was really getting out because it seemed like it

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Speaker 1: wasn't too long ago where everyone was saying the best

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Speaker 1: way to hedge your portfolio is to do one of

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Speaker 1: two things, to either buy the dollar or you buy

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Speaker 1: just a basket of commodities, basically because those were the

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Speaker 1: two things that we're going up. At its core, though,

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Speaker 1: that is a contrarian trade. The dollar and commodity should

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Speaker 1: be moving opposite to each other. You talked about the

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Speaker 1: commodities trade. I'm curious about the dollar trade. Are you

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Speaker 1: concerned about a stronger dollar? I am concerned that the

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Speaker 1: dollar may not may peek out here as we also

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Speaker 1: see other monetary authorities around the world raise rates, we

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Speaker 1: think that we may see a peek in the dollar

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Speaker 1: at least leggling out. So I wouldn't bet uh strong

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Speaker 1: that the dollar continues unabated in its current in trend

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Speaker 1: that has been on. So Mace, we we just finished

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Speaker 1: up Q two earnings here. They kind of came in

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Speaker 1: a little bit better than expected. Maybe the expectations were

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Speaker 1: pretty low going into the earning season. Here, did the

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Speaker 1: earning season change your view here? Change maybe your allocation

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Speaker 1: change maybe some sectors you might be looking at. Not really,

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Speaker 1: We've been um nibbling at tech chnology on the in

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Speaker 1: the downturns, and so we're about trying to buy high

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Speaker 1: quality stocks, the pet the market being maybe a head

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Speaker 1: of the FED pivot. Therefore we're you know, we're trading

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Speaker 1: off today because people readjust when they think where rates

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Speaker 1: are going. But the economy is weakening, and so we

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Speaker 1: think we get every day get a little bit closer

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Speaker 1: to that um that point where the Fed does stop

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Speaker 1: raising rates and did market will get a lot more support. So, uh,

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Speaker 1: we're more interested in the dips and buying high qualities

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Speaker 1: companies like the technology and growth stocks in week markets. Alright,

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Speaker 1: buying the dips. That's what we like to hear particularly,

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Speaker 1: is equity salesperson and equity trader, buy those dips. I'll

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Speaker 1: go show you some more stock. Mace McCain ce io,

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Speaker 1: President and managing director for Frost Investment Advisors. Boy, it's

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Speaker 1: been a tough tough go for the folks in the

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Speaker 1: fixed income. Biz, let's check in with one of those,

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Speaker 1: Andre skibahead of Blue Bay US fixed income that's at RBC,

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Speaker 1: the Royal Bank account of Global Asset Management. Andre, thanks

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Speaker 1: so much for joining us here. Help put into perspective

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Speaker 1: what it's been like to be the head of US

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Speaker 1: fixed income at a big Canadian bank when it's been

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Speaker 1: just a brutal, brutal start to the year. Give us

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Speaker 1: kind of what you've seen in the marketplace. Well, good morning. Um,

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Speaker 1: it definitely felt like being on the roller coaster ride

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Speaker 1: and not a particularly enjoyable one. UH this year. Investors

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Speaker 1: have not seen these kind of returns within UH fixed

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Speaker 1: income for a long long time. So yes, it's been

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Speaker 1: brutal indeed. Alright, so obviously concern about rising interest rates? Um,

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Speaker 1: where do you think this Federal reserve is going to go?

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Speaker 1: There are those that said, hey, September seventi five base

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Speaker 1: points and then maybe even a pause. Um, how are

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Speaker 1: you guys thinking about US federal Reserve? We think that

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Speaker 1: Federal reserve will be very data dependent. Um, it's pretty

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Speaker 1: clear that the market, including the Federal Reserve, struggled to

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Speaker 1: get their handle around where inflation is heading from here,

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Speaker 1: and that is the key question that we need answers

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Speaker 1: for before we can determine how aggressive Federal Reserve needs

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Speaker 1: to high grate going forward. What is clear is that

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Speaker 1: we have to go into restrictive territory, I tighten even

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Speaker 1: more to start helping seeing inflation coming down more aggressively

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Speaker 1: from here. But how far we need to go is

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Speaker 1: really data dependent in the months ahead. So are you

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Speaker 1: expecting anything of note here from Jackson hawayoming as the

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Speaker 1: central bankers get together later this week. Well, in a way,

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Speaker 1: Jackson Hole this time could be less eventful than in

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Speaker 1: the previous years because FED is being honest in saying

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Speaker 1: that we just need to watch the data and not

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Speaker 1: everything is in their control at this point. So absolutely

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Speaker 1: we would expect them to reaffirm the commitment to fighting inflation,

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Speaker 1: to keep hiking rates, to pushing into restrictive territory. But

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Speaker 1: how far they need to go, uh, that will be

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Speaker 1: very much framed framed in the context of incoming data.

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Speaker 1: So we actually should look more to inflation print ahead

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Speaker 1: rather than what we hear jackson Hole to determine direction

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Speaker 1: of travel. So where are you guys at Blue Bay

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Speaker 1: kind of placing your bets sharpening your pencils in the

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Speaker 1: US fixed income business. So we think that when you

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Speaker 1: look at government bond yields, three where tenure is trading

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Speaker 1: right now, is roughly where we should be at this point.

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Speaker 1: So we don't have a particularly strong view that levels

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Speaker 1: should be meaningfully higher um than three for the tenure

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Speaker 1: in credit. We find that after the market being too

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Speaker 1: panicky earlier this summer and pricing in a deep procession

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Speaker 1: too quickly, the rebound that we have seen in the

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Speaker 1: recent weeks means that credit assets look okay, but they

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Speaker 1: don't look crazy exciting after the rebound that we have

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Speaker 1: just seen. So we're much more in this weight and

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Speaker 1: see mode to determine what inflation does, what pedal reserve does,

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Speaker 1: and how much of a slowdown we will experience in

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Speaker 1: the US over the months ahead. So talk to us

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Speaker 1: a little b about liquidity here. I mean, we're talking

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Speaker 1: about financial conditions looking looser and looser, but treasury liquidity

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Speaker 1: specifically has been a major issue. How worried are you

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Speaker 1: about that? It's true that liquidity has been pretty thin

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Speaker 1: uh in multiple episodes of of this market movement, and

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Speaker 1: that applies both in the treasury space, but also broadly

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Speaker 1: in credit. UM, we think right now, given that we're

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Speaker 1: in the second half of August, liquidity is never that great.

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Speaker 1: But we look forward to market environment after Labor Day

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Speaker 1: two assess the genuine level of underlying liquidity. So I

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Speaker 1: thinks definitely are fluctuating from liquidity perspective, but neither are

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Speaker 1: they horrible on a consistent basis. So sometimes we fear

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Speaker 1: about liquidity too much, UM, But we will see how

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Speaker 1: this evolves after labor Day. All right, Andre, good stuff.

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Speaker 1: We appreciate you taking the time to talk fix and

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Speaker 1: come with us. One of the stock stories that got

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Speaker 1: my attention today was Adidas for Audi Das as the

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Speaker 1: Europeans say, it announced the surprise departure of its chief

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Speaker 1: executive officer. And this can't be a good time when

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Speaker 1: they're dealing with what's going on in China, which is

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Speaker 1: a huge supplier and end the market for them. But

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Speaker 1: I want to get the latest on what's going on

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Speaker 1: with Adidas and just the retail space. So who do

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Speaker 1: we turn to? Put him? Goyle, senior analysts for e

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Speaker 1: commerce at leisure and off price retail. Uh, that's a

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Speaker 1: mouthful for Bloomberg Intelligence. She's been coming retail for ever.

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Speaker 1: She was actually one of the very first hires at

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Speaker 1: Bloomberg Intelligence back in two thousand nine, so she's been

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Speaker 1: a rock here for Bloomberg's intelligence research operation. So putam,

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Speaker 1: what do you say about Adida is here? Uh, Cosper

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Speaker 1: Worsted stepping down? What's that mean? And what do you

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Speaker 1: what do you take away from Yeah? Thankful? Um. I

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Speaker 1: think you know it was actually by surprise. If contract

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Speaker 1: doesn't end until so going out next year is we

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Speaker 1: think likely a result of the weaker results that they've

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Speaker 1: seen recently, some notably the execution in China. They had

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Speaker 1: replaced their Chinese had earlier this year. And I think

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Speaker 1: this just you know, follows onto that there results in

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Speaker 1: the first quarter were very weak and guided that was

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Speaker 1: largely China. We lost you there for a second. But

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Speaker 1: let's go back to the China story, because I think

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Speaker 1: that's so important. We're talking about a slowdown in the

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Speaker 1: Chinese economy. We're also talking about potentially UM getting a

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Speaker 1: lot more support in China. How does it translate to

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Speaker 1: some of the issues that we're seeing when it comes

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Speaker 1: to American exposure to China specifically. Yeah, I think I

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Speaker 1: think for Adida specifically UM China. The issues are largely there,

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Speaker 1: not even on the supplying anymore. And when you think

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Speaker 1: about any company today that's investing in growth in China,

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Speaker 1: whether it's Adidas or whether it's a Lemon or Nike,

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Speaker 1: the struggles are all the same, so it's not relevant

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Speaker 1: to just one company at home. Adidas has done very well. Actually,

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Speaker 1: um They've seen the business grown nicely. They've stayed in

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Speaker 1: the number two spot with Nike being the lead, and

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Speaker 1: at that position, we think they were on pace to

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Speaker 1: maintain per years. Where do we stand with inventories here?

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Speaker 1: It sounds like you're at the Jersey shore. I would

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Speaker 1: guess on the beach, but I want to see where

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Speaker 1: do we standing with the inventories here? A lot of

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Speaker 1: retailer's been talking about, you know, maybe they overbought and

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Speaker 1: had a ton of inventory in the in the system

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Speaker 1: and ano they're having to mark down prices to move inventory.

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Speaker 1: Are we seeing that in the athletes are space with

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Speaker 1: the Audi, Das and the Nikes of the world. Yeah,

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Speaker 1: there's definitely more inventory in the retail marketplace across the board.

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Speaker 1: It's true also in Adidas and at Nike, but the

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Speaker 1: inventory situation is a little different. Where in North America

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Speaker 1: they have the demand to support the elevated inventory his

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Speaker 1: local inventory. In China they're having to mark down more,

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Speaker 1: and somewhat in Europe as well. So I think it's

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Speaker 1: a tale of two halfs really when you think about it,

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Speaker 1: where there are pockets of areas in the business that

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Speaker 1: are doing exceptionally well, but then there's a big part

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Speaker 1: of the business, the growth part of the business, that's

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Speaker 1: struggling and if we don't see signs of a recovery

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Speaker 1: anytime soon. Put one of the big stories in the

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Speaker 1: retail spaces, of course, been this build up of inventories.

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Speaker 1: But what to me is so interesting is how quickly

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Speaker 1: the market narrative on that inventory story has changed. Because

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Speaker 1: I want to say, about a year ago or so,

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Speaker 1: when we're talking about supply chain issues, a lot of

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Speaker 1: these major retailers were shoring up their supply chains and

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Speaker 1: having an inventory build up was a good thing. Now

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Speaker 1: it seems to be such a massive negative. Do we

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Speaker 1: ever see a market dynamic where we go back to

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Speaker 1: the fact that an inventory build up is a good thing,

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Speaker 1: given that the supply chain issues happen completely healed? Uh,

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Speaker 1: you know, a lot of inventory is never a good

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Speaker 1: thing in retail. You want to have the right supply

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Speaker 1: with the right demand. What happened over the pandemic was

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Speaker 1: I would say one time in nature. It was really

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Speaker 1: a result of the pandemic. Or factories were shut down,

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Speaker 1: there were transportation delayed, the report blockages. That's all now

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Speaker 1: mitigated to a large extent. And do we ever go

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Speaker 1: back to that situation. Hopefully not, But I think we're

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Speaker 1: just going back into the normal retail cycle where retailers

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Speaker 1: ordered too much and they mismatched demand and you have

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Speaker 1: to mark things down. That's how retails operated for hundreds

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Speaker 1: of years, and we're just back in that place again.

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Speaker 1: Put them I've read something recently that says people are

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Speaker 1: actually going back to the stores and the growth you're

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Speaker 1: seeing and the bricks and order is pretty darn near

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Speaker 1: where you're seeing on the e commerce side. Is this

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Speaker 1: just a what are you seeing out there in terms

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Speaker 1: of that kind of data? Well, you have to be

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Speaker 1: careful when you look at the growth, right, Paul, because

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Speaker 1: you're looking at two different growth comparisons. One for the

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Speaker 1: online side, the growth looks more muted because you're off

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Speaker 1: of very tough comparisons from a year with prior, whereas

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Speaker 1: the reverse is true for the breaking mortar side. Now,

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Speaker 1: I'd say the leveling field is pretty balanced. You're going

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Speaker 1: to have people returning to stores. There's always going to

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Speaker 1: be room for stores because people do need that last

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Speaker 1: minute thing and they do enjoy shopping this certain extent. Still,

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Speaker 1: though it's going to be more bounced, we see e

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Speaker 1: commerce penetration rising. To keep in mind that it was,

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Speaker 1: you know, below twenty percent just a few years ago,

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Speaker 1: So there is still a step up in e commerce.

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Speaker 1: But there is a place for stories too, you know.

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Speaker 1: Putuma just came back from two weeks of vacation and

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Speaker 1: I'm kind of counting down the months and when I

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Speaker 1: can take another and I realized, you know, look, I've

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Speaker 1: taken all my days off for the year. And I said, well,

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Speaker 1: we only actually have four months of the year left,

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Speaker 1: which means that maybe it's not too early start talking

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Speaker 1: about the holiday season. Do you think it's too early

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Speaker 1: talking about the holiday season and what should we be

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Speaker 1: expecting in just a few months down the road on

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Speaker 1: the retail space, I always think it's too early. When

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Speaker 1: we started talking about one of those Halloween and stores.

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Speaker 1: I see Halloween and stores when I go in right now,

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Speaker 1: and Sammy not even over the January. I'm like, all right,

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Speaker 1: when's Christmas? No? But I think you know clearly two

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Speaker 1: ages all about the holidays, right, and I think it's

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Speaker 1: all going to be dependent on inventory and the help

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Speaker 1: of the consumer. We are at a point where the

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Speaker 1: consumer has been spending, but largely the spund has shifted

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Speaker 1: towards travel and experiences because that's where they had pent

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Speaker 1: up demand. And on the other hand, inflation is curving

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Speaker 1: spend of consumer staples of food and just um, really

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Speaker 1: shifting towards those areas out of discretionary apparel sending. We

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Speaker 1: saw that at Walmart, we saw that at Target. We've

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Speaker 1: seen that across the board, even other retailers. They're citing

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Speaker 1: that there is pressure on the low income consumer. That's

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Speaker 1: the first sign of a recession. If you look back

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Speaker 1: to prior recessions, the first consumer de fault is the

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Speaker 1: low income consumer. And we're now seeing signs of slop.

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Speaker 1: I don't know when we get into a recession, but

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Speaker 1: early signs are there as we speak today. All Right,

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Speaker 1: put them good stuff, we appreciate it. Put them goyal

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Speaker 1: senior analysts covering all things retail for Bloomberg Intelligence. You know,

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Speaker 1: my inbox this week end with the research from Wall

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Speaker 1: Street was kind of cautious on the market. A lot

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Speaker 1: of Wall Street folks are saying, all right, pause, hit

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Speaker 1: the brakes here. We still got a fed raising rates.

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Speaker 1: This rally in the market may need to take a pause. Uh.

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Speaker 1: I remember the days when Wall Street analysts just said

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Speaker 1: bye bye bye. Chanellie Basket, wall Street reporter for Bloomberg News,

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Speaker 1: joins us here in our Bloomberg internactive broker's studio. So

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Speaker 1: it feels like the streets a little bit more bearish,

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Speaker 1: a little bit more cautious on this rally we've seen.

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Speaker 1: Cautious is definitely the word that I would use, and

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Speaker 1: I would think back to what had happened last week.

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Speaker 1: We had talked to Greg Fleming, the CEO of Rockefeller,

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Speaker 1: and he said that's where his clients are. I'd even

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Speaker 1: look at more data. For example, you have liz Ane

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Speaker 1: Saunders really pointing out here, that's uh. Los Ane Saunders

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Speaker 1: of Schwab pointing out that hedge funds are not really

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Speaker 1: letting go of short bets and that their net futures

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Speaker 1: positioning for the SMP five hundred are near the lowest

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Speaker 1: level since June. Money. That's an interesting thing to point out.

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Speaker 1: And what else is happening when you look at options

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Speaker 1: market SEEFTC data also shows sizeable and that short positioning

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Speaker 1: in so for future. So that is the library replacement.

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Speaker 1: So that is increasingly hawkish. I don't like that library

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Speaker 1: replacement at all. The other day man loans on work

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Speaker 1: for thirty five years live word, plus I have just

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Speaker 1: the right guests for you to talk all day about.

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Speaker 1: I don't think that's a I don't think that's a

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Speaker 1: contrarian take though. I feel like it's pretty consensus. We want.

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Speaker 1: This is like market plumbing. We'll get into the cooler funners.

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Speaker 1: Radio audience is like, what's that? I like the geeky stuff,

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Speaker 1: but listen. All of this is just to say that

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Speaker 1: there are more expectations about a hawk is freed and

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Speaker 1: conversely uh pressure on the stock market in light of that,

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Speaker 1: plus more catalysts that are going into the fall. You

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Speaker 1: look at a note that Guggenheim said out last week

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Speaker 1: to clients as well, and the idea that docks have

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Speaker 1: really been struggling with their two day moving average could

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Speaker 1: mean deeper losses ahead for equities. And the point that

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Speaker 1: I've been making all year is that for the marginal buyers,

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Speaker 1: let's use hedge funds as one of the bigger examples here.

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Speaker 1: Some of these hedge funds are down in the first

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Speaker 1: half of the year. How much powder do they have

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Speaker 1: on the sidelines to spend big in the second half

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Speaker 1: of the year. They don't. It's the answer. Yeah, I

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Speaker 1: got you. I think what's interesting And you brought this

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Speaker 1: point up on the hedge funds story as well, because

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Speaker 1: this is actually my chart of the day UM as

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Speaker 1: well as that CFTC positioning really talks about how people

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Speaker 1: have been more and more short on the SMP five hundred,

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Speaker 1: even though you've seen the rally just kind of skyrocket

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Speaker 1: were from the low. So it's interesting that hedge funds, though,

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Speaker 1: are still kind of holding onto it. And they would

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Speaker 1: argue that perhaps the rallies driven more by retail. We're

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Speaker 1: smart money saying well, no, I don't believe in it,

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Speaker 1: and it's smart money saying they don't believe in it,

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Speaker 1: or are they afraid to dip in. I was talking

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Speaker 1: to a big hedge fund manager last week and they

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Speaker 1: were saying, listen, I just don't see a pitch that

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Speaker 1: I can hit at yet, and I don't have enough

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Speaker 1: conviction here. So even some of the smartest guys in

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Speaker 1: the room are sitting there saying that you can look

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Speaker 1: at the data both ways. You can. You you don't

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Speaker 1: want to fight the rally. You lose money that way.

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Speaker 1: You don't want to get into the rally because you

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Speaker 1: could also lose money that way. And so that is

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Speaker 1: the conundrum on Wall Street today. And so what you're

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Speaker 1: setting up for is for the banking side of things.

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Speaker 1: If you look at if volatility kind of stays low here,

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Speaker 1: you can see some of the activity come back. Data underwriting,

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Speaker 1: equity and writing all the things that we've lost all

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Speaker 1: year that have made the bank's money uh m, and

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Speaker 1: a advisory work once again. And that's the stuff that

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Speaker 1: could really fuel Wall Street into the second half. If

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Speaker 1: you have deals come back, you have merger are come back.

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Speaker 1: If you have all these activists asking for split ups,

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Speaker 1: you also have deals come back. So a little bit

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Speaker 1: of calmness would be the hope for Wall Street for

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Speaker 1: the second part of this year. I guess less than

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Speaker 1: half of the year left. Um, but you know you

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Speaker 1: were talking about it, Paul Pain still on a lot

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Speaker 1: of corners on Wall Street, Credit Sweets being the poster

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Speaker 1: child of that. A lot of banks also suffering a

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Speaker 1: lot of losses. I mean Credit Swiss, my former employer.

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Speaker 1: I worked there for a while. They just have management

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Speaker 1: problems after management problem, aftter management problems in the stocks

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Speaker 1: at you know, five h was five Swiss. Frank's yeah,

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Speaker 1: just brutal um talking about hollowing out. As we put

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Speaker 1: in our Bloomberg Big Take story, the investment bank kind

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Speaker 1: of backing away from everything with the exception of advisory work,

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Speaker 1: and so they really would not be an investment bank anymore.

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Speaker 1: They would be I guess, just really a wealth advisor.

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Speaker 1: I guess wealth advisor. And that's something that UBS has

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Speaker 1: struggled with a long time. Remember the new CEO and

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Speaker 1: a lot of new executives have come from UBS, and

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Speaker 1: you're looking at a question of what that trading business

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Speaker 1: looks like in the future. Can they take on more

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Speaker 1: risk when Credit Swiss fade is facing a ratings downgrade.

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Speaker 1: That swashbuckling world of trading, that high flying world has

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Speaker 1: brought them billions of dollars in revenue, but in more

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Speaker 1: recent quarters and years a lot of losses along with it.

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Speaker 1: What's the government, the Swiss government saying about that? Can

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Speaker 1: they allow one of their two national banks to really

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Speaker 1: not be a investment bank? You don't need to get

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Speaker 1: out completely if you take Deutsche Bank as an example.

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Speaker 1: But they did was they really sold a big chunk

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Speaker 1: of their prime brokerage business. They kept a lot of

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Speaker 1: their fixed income trading business. And guess what where Credit

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Speaker 1: sweez is trading at less than a third of their

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Speaker 1: book value. Deutsche Bank is back to par Deutsche bankers

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Speaker 1: trading at their book value. So they really recovered in

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Speaker 1: a big way. So sometimes deep cuts can lead to

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Speaker 1: a better future, as shown by Deutsche Bank. But again,

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Speaker 1: what decisions are going on this new management team going

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Speaker 1: to make today that really defines the future for a

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Speaker 1: bank that started their roots in the eighteen hundreds. Yeah, so,

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Speaker 1: I mean, you know Historic Bank here and Credit Swiss

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Speaker 1: bought what was one of the U S historic banks,

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Speaker 1: First Boston Corporation, uh, and then that combined Credit Swiss

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Speaker 1: First Boston bought d L j u Lfkin and jen Red,

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Speaker 1: another high quality investment bank. But despite those acquisitions, I

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Speaker 1: mean they we were always a top five bank six

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Speaker 1: you are in equity income m n a um. But

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Speaker 1: you know they just can't get the profit side, the

431
00:24:15,440 --> 00:24:18,560
Speaker 1: cost side of the business, uh right, and so then

432
00:24:18,600 --> 00:24:21,080
Speaker 1: it results they have these big, big blow ups from

433
00:24:21,119 --> 00:24:23,480
Speaker 1: time to time and a risk culture. Uh that's showing

434
00:24:23,520 --> 00:24:26,200
Speaker 1: time and again to be problematic. So anyway, good news.

435
00:24:26,280 --> 00:24:28,719
Speaker 1: They're lots of stuff on Wall Street as always as

436
00:24:28,760 --> 00:24:30,639
Speaker 1: the bankers get back from the Hampton, instincts gonna be

437
00:24:30,760 --> 00:24:33,000
Speaker 1: heating up. For Shinali Bastik. She is our Wall Street

438
00:24:33,000 --> 00:24:36,560
Speaker 1: reporter joining us live on our Bloomberg Interactive Brokers studio.

439
00:24:39,440 --> 00:24:41,359
Speaker 1: Pretty sure, I'm here, I'm just but we've got a

440
00:24:41,359 --> 00:24:43,679
Speaker 1: guest in our studio, which we don't get very often

441
00:24:43,720 --> 00:24:46,720
Speaker 1: from the falls of Washington, d C. And re Hoardern

442
00:24:47,000 --> 00:24:49,800
Speaker 1: Washington corresponding for Bloomberg Televisions. We saw her wandering around

443
00:24:49,800 --> 00:24:51,840
Speaker 1: and crazy, and I are like, let's grab her and

444
00:24:51,880 --> 00:24:54,920
Speaker 1: get her in our studio here to get the latest emory.

445
00:24:54,920 --> 00:24:57,880
Speaker 1: Thanks so much for joining us here. I don't really

446
00:24:57,920 --> 00:25:01,840
Speaker 1: know where to go other than in August. It's August,

447
00:25:02,040 --> 00:25:03,840
Speaker 1: but in d C. I know it's a lovely time

448
00:25:03,880 --> 00:25:07,800
Speaker 1: of year down in Washington. Weatherwise, But elections are coming

449
00:25:07,880 --> 00:25:10,359
Speaker 1: up here and is it me or is the narrative

450
00:25:10,400 --> 00:25:13,679
Speaker 1: begun to change from not how bad is it going

451
00:25:13,720 --> 00:25:16,560
Speaker 1: to be for the Democrats, but can they maybe pick

452
00:25:16,640 --> 00:25:20,320
Speaker 1: up some ground there. They had a pretty good summer

453
00:25:20,440 --> 00:25:24,600
Speaker 1: in the sense of getting some really high profile legislative

454
00:25:24,600 --> 00:25:26,879
Speaker 1: goals over the finish line, the most recently which the

455
00:25:26,880 --> 00:25:30,080
Speaker 1: president when this recess is over and everyone's kind of

456
00:25:30,119 --> 00:25:33,000
Speaker 1: back to the grind and Washington is going to have

457
00:25:33,040 --> 00:25:35,399
Speaker 1: this big almost party at the White House for getting

458
00:25:35,640 --> 00:25:39,400
Speaker 1: over the very very smaller version of their billback Better

459
00:25:39,520 --> 00:25:42,639
Speaker 1: but their Inflation Reduction Act, so they had that, They

460
00:25:42,680 --> 00:25:45,240
Speaker 1: had gun legislation, they had something for veterans. They were

461
00:25:45,280 --> 00:25:48,040
Speaker 1: able to get Congress to sign off on Sweden and

462
00:25:48,080 --> 00:25:51,960
Speaker 1: Finland joining NATO, like these are really important measures, and

463
00:25:51,960 --> 00:25:53,280
Speaker 1: they got it all done in the summer at the

464
00:25:53,359 --> 00:25:56,760
Speaker 1: same time as gasolene prices were trickling down and that

465
00:25:56,840 --> 00:26:00,600
Speaker 1: was the biggest issue for voters and that has really

466
00:26:00,640 --> 00:26:05,719
Speaker 1: evaporated from the news headlines being every single day. So

467
00:26:05,760 --> 00:26:08,600
Speaker 1: with that kind of gives them some breathing room going

468
00:26:08,600 --> 00:26:12,040
Speaker 1: into this election that they can campaign on these gains.

469
00:26:12,080 --> 00:26:15,600
Speaker 1: So I thought very interesting last week, Mitch McConnell, although

470
00:26:15,640 --> 00:26:18,520
Speaker 1: he's back in his home state of Kentucky, the Senate

471
00:26:18,680 --> 00:26:21,480
Speaker 1: rope leader, said, I think there's probably a greater likelihood

472
00:26:21,480 --> 00:26:24,680
Speaker 1: the House flips, which independent analysts have said, flip from

473
00:26:24,760 --> 00:26:27,280
Speaker 1: Democrat to Republic. But he says the Senate races are

474
00:26:27,320 --> 00:26:31,159
Speaker 1: just different there. Statewide candidate quality has a lot to

475
00:26:31,200 --> 00:26:34,080
Speaker 1: do with the outcome, and what he clearly is indirectly

476
00:26:34,119 --> 00:26:37,080
Speaker 1: indirectly pointing to is some of these Senate candidates that

477
00:26:37,119 --> 00:26:40,879
Speaker 1: have really been backed by the former president that don't

478
00:26:40,920 --> 00:26:44,280
Speaker 1: have that usual level experience that you would see in

479
00:26:44,320 --> 00:26:47,960
Speaker 1: some senators. Well, let's go from Washington to Tehran. We

480
00:26:48,000 --> 00:26:50,600
Speaker 1: know that there are conversations right now happening with European

481
00:26:50,680 --> 00:26:53,360
Speaker 1: leaders regarding the Iran deal. Do we see it coming back?

482
00:26:54,240 --> 00:26:56,320
Speaker 1: It's just now, I would say, the same level of

483
00:26:56,320 --> 00:26:58,760
Speaker 1: discussions it's always been. This deal has been on the table.

484
00:26:58,800 --> 00:27:00,960
Speaker 1: The Iranians didn't say yes or no. They came back

485
00:27:01,000 --> 00:27:05,600
Speaker 1: with the response. Now the Europeans are telling the Americans,

486
00:27:05,640 --> 00:27:08,120
Speaker 1: we need a response from you, and they the Americans

487
00:27:08,160 --> 00:27:10,200
Speaker 1: have said, we have had the same deal on the table.

488
00:27:10,280 --> 00:27:12,760
Speaker 1: The Iranians can say yes or no. There's been the

489
00:27:12,960 --> 00:27:16,760
Speaker 1: same issues of hurdles for the Iranians that have always

490
00:27:16,800 --> 00:27:19,000
Speaker 1: stood in the way. One of them was the i

491
00:27:19,119 --> 00:27:21,359
Speaker 1: r g C, the Islamic Revolutionary Guard. They want that

492
00:27:21,440 --> 00:27:25,280
Speaker 1: off the terror list right now. The Iranians, the reporting

493
00:27:25,320 --> 00:27:27,800
Speaker 1: that we've had for weeks is that potentially they're starting

494
00:27:27,840 --> 00:27:30,520
Speaker 1: to maybe allow that to go ahead, and they're not

495
00:27:30,560 --> 00:27:32,159
Speaker 1: going to make that the end all to be of

496
00:27:32,240 --> 00:27:34,679
Speaker 1: the deal. But the one issue they do have is

497
00:27:34,680 --> 00:27:37,680
Speaker 1: if a Republican president comes back in power, they want

498
00:27:37,720 --> 00:27:40,400
Speaker 1: to make sure that this deal is safeguarded. And that's

499
00:27:40,440 --> 00:27:43,120
Speaker 1: there's nothing the United States can do for that, right interesting,

500
00:27:43,240 --> 00:27:46,359
Speaker 1: So keep an eye on that. So as folks do

501
00:27:46,440 --> 00:27:50,359
Speaker 1: come back into Washington after the recess, what's on the

502
00:27:50,480 --> 00:27:54,240
Speaker 1: legislative calendar do you think getting re elected? Getting re elected?

503
00:27:54,320 --> 00:27:58,000
Speaker 1: That's it, right, I mean, it's yeah, it's it's a

504
00:27:58,080 --> 00:28:01,640
Speaker 1: small amount of run on. How might put it this way,

505
00:28:02,000 --> 00:28:04,280
Speaker 1: the abortion ruling from the Supreme Court. How will the

506
00:28:04,320 --> 00:28:07,680
Speaker 1: Democratic Party do you anticipate them running on that using

507
00:28:07,680 --> 00:28:09,800
Speaker 1: that as an issue. Well, they want to make sure

508
00:28:09,920 --> 00:28:14,159
Speaker 1: that they are getting the word out to all of

509
00:28:14,200 --> 00:28:17,040
Speaker 1: their constituents that this is something that one they want

510
00:28:17,080 --> 00:28:19,879
Speaker 1: to put into law and go to Congress, but also

511
00:28:19,960 --> 00:28:23,800
Speaker 1: that they don't want to see Republicans gaining power or

512
00:28:24,440 --> 00:28:29,520
Speaker 1: individual candidates that are for abortion gaining this type of power.

513
00:28:29,560 --> 00:28:31,200
Speaker 1: They will certainly run in that and you can see

514
00:28:31,200 --> 00:28:34,600
Speaker 1: them already doing that with them spending in terms of

515
00:28:35,000 --> 00:28:39,160
Speaker 1: donations and what you do see what we saw recently

516
00:28:39,160 --> 00:28:43,560
Speaker 1: in Kansas with voters they are rejecting um more draconian

517
00:28:43,600 --> 00:28:47,479
Speaker 1: measures on abortion, is that this is a live issue

518
00:28:47,840 --> 00:28:49,520
Speaker 1: for the re member election. Everyone thought it was going

519
00:28:49,560 --> 00:28:51,720
Speaker 1: to be inflation, and the Republicans are going to hammer

520
00:28:51,720 --> 00:28:55,400
Speaker 1: the administration on that. They're already doing it in in the ads.

521
00:28:55,440 --> 00:28:58,960
Speaker 1: But the Democrats will fight back on well, inflation, it's

522
00:28:59,040 --> 00:29:02,720
Speaker 1: high here, as you mentioned earlier, it's high all over

523
00:29:02,760 --> 00:29:05,520
Speaker 1: the world. We were able to get the administration's words,

524
00:29:05,520 --> 00:29:08,040
Speaker 1: will be able to get gasoline prices down going into

525
00:29:08,080 --> 00:29:10,400
Speaker 1: the winter months and the peak driving seasons of the summer.

526
00:29:10,440 --> 00:29:13,800
Speaker 1: We have it down, and they are going to want

527
00:29:13,840 --> 00:29:16,520
Speaker 1: to make sure that women, especially is hearing that to

528
00:29:16,600 --> 00:29:19,080
Speaker 1: make sure that is their number one issue, not inflation.

529
00:29:19,280 --> 00:29:22,480
Speaker 1: All right, So is this mid room election going to

530
00:29:22,480 --> 00:29:26,680
Speaker 1: be a referendum on former President Trump and his ability

531
00:29:26,720 --> 00:29:30,440
Speaker 1: to run for president i e. If his candidates that

532
00:29:30,520 --> 00:29:33,920
Speaker 1: he backs here in these mid terms farewell, he will say, hey,

533
00:29:33,960 --> 00:29:35,920
Speaker 1: maybe you know I still got it and I can

534
00:29:36,000 --> 00:29:38,880
Speaker 1: make another run. It's an interesting question because we've seen

535
00:29:38,920 --> 00:29:42,960
Speaker 1: already a number of former Trump or the former President's

536
00:29:43,000 --> 00:29:46,240
Speaker 1: candidates he's chosen already, when most recently we saw that

537
00:29:46,280 --> 00:29:50,560
Speaker 1: in Wyoming with Representative Chaining getting ousted from her seat.

538
00:29:51,480 --> 00:29:55,040
Speaker 1: I think it will be depending on the individuals and

539
00:29:55,240 --> 00:29:58,840
Speaker 1: what they're running for. Meaning maybe you'll see some representatives

540
00:29:58,880 --> 00:30:01,520
Speaker 1: going to the House that the foreign president backed, but

541
00:30:01,640 --> 00:30:05,080
Speaker 1: some of these senators that are running you have mement

542
00:30:05,160 --> 00:30:09,680
Speaker 1: Oz in Pennsylvania, you have Blake Masters in Arizona. At

543
00:30:09,720 --> 00:30:13,040
Speaker 1: the moment, their polls aren't faring as well, and these

544
00:30:13,080 --> 00:30:16,680
Speaker 1: are going to be really big seats that the foreign

545
00:30:16,720 --> 00:30:19,520
Speaker 1: president is going to want to see his candidates win.

546
00:30:20,120 --> 00:30:24,040
Speaker 1: What's on President Biden's agenda? Do you think UM does

547
00:30:24,080 --> 00:30:26,600
Speaker 1: even have any big trips planned, you know, back in

548
00:30:26,640 --> 00:30:28,880
Speaker 1: the fall, because it seems like, you know, the world's

549
00:30:28,960 --> 00:30:31,280
Speaker 1: kind of moved on from COVID. It seems like maybe

550
00:30:31,320 --> 00:30:33,360
Speaker 1: I can take advantage of, you know, some of these

551
00:30:33,400 --> 00:30:36,840
Speaker 1: travel opportunities to kind of so from now until the

552
00:30:36,880 --> 00:30:41,360
Speaker 1: mid terms, he will likely focus all of his energy domestically.

553
00:30:41,640 --> 00:30:43,760
Speaker 1: So already on Thursday, he's going to Maryland. This is

554
00:30:43,800 --> 00:30:45,400
Speaker 1: gonna be like the kickoff of his push for the

555
00:30:45,400 --> 00:30:49,200
Speaker 1: mid terms. Whether or not those candidates actually want the

556
00:30:49,200 --> 00:30:52,120
Speaker 1: President United States to come campaign with him is another issue.

557
00:30:52,520 --> 00:30:54,560
Speaker 1: Over the weekend, the Washington Post had a survey and

558
00:30:54,600 --> 00:30:57,720
Speaker 1: it was more than sixty candidates in these very hot

559
00:30:57,840 --> 00:31:01,200
Speaker 1: races um kind of saying they're either not asking the

560
00:31:01,240 --> 00:31:05,080
Speaker 1: President to come or they're actively avoiding it. Basically, there's

561
00:31:05,160 --> 00:31:08,320
Speaker 1: no welcome banner that they want because it's really more

562
00:31:08,360 --> 00:31:10,520
Speaker 1: of a referendum for a lot of these people. For

563
00:31:10,560 --> 00:31:14,080
Speaker 1: the Democrats, it's a referendum on the administration. But then

564
00:31:14,240 --> 00:31:15,960
Speaker 1: after the mid terms, he set to go to the

565
00:31:16,040 --> 00:31:18,600
Speaker 1: G twenty in Bali. Now they haven't announced that, but

566
00:31:18,720 --> 00:31:20,880
Speaker 1: that is likely. The President has been doing his team,

567
00:31:20,920 --> 00:31:24,360
Speaker 1: Shiji Ping's team is working together to maybe have their

568
00:31:24,400 --> 00:31:28,120
Speaker 1: first meeting. Potentially that could be in November. The President

569
00:31:28,160 --> 00:31:31,320
Speaker 1: will be in in Asia Pacific, so there's definitely going

570
00:31:31,360 --> 00:31:33,960
Speaker 1: to be travel internationally, but that will happen only after

571
00:31:34,000 --> 00:31:38,440
Speaker 1: the midterms. Everything is going to be right after Labor Day.

572
00:31:38,480 --> 00:31:42,480
Speaker 1: It is going to be every headline, every inbox. Just

573
00:31:42,560 --> 00:31:46,040
Speaker 1: prepare yourself some TV ads. I'm guessing all right. Anrie Hordern,

574
00:31:46,200 --> 00:31:49,320
Speaker 1: Washington correspondent for Bloomberg Television. We're fortunate to have her

575
00:31:49,320 --> 00:31:51,560
Speaker 1: in our Bloomberg Interact their Broker studio today, so that

576
00:31:51,800 --> 00:31:57,520
Speaker 1: is a treat. Thanks for listening to the Bloomberg Markets podcast.

577
00:31:57,920 --> 00:32:01,160
Speaker 1: You can subscribe and listen to interviews and Apple podcasts

578
00:32:01,280 --> 00:32:05,200
Speaker 1: or whatever podcast platform you prefer. I'm Matt Miller. I'm

579
00:32:05,200 --> 00:32:09,240
Speaker 1: on Twitter at Matt Miller three. Pet On fall Sweeney

580
00:32:09,240 --> 00:32:11,920
Speaker 1: I'm on Twitter at pt Sweeney. Before the podcast, you

581
00:32:11,920 --> 00:32:14,320
Speaker 1: can always catch us worldwide at Bloomberg Radio