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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Apple CarPlay and Android Auto with the Bloomberg

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Speaker 1: Business App. Listen on demand wherever you get your podcasts,

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Speaker 1: or watch us live on YouTube.

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Speaker 2: The market moving event of the morning is University of

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Speaker 2: Michigan Sentiment. It is one of my favorite indicators. It's

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Speaker 2: definitely my desert island indicator. This is the preliminary read

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Speaker 2: for June, and you're looking at the index sixty five

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Speaker 2: point six. That's a seven month low, current conditions, low

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Speaker 2: expectations falling one, your inflation expectations rising to three point three.

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Speaker 2: Joanneshu is the University of Michigan Surveys of Consumers Director

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Speaker 2: and she joins us. Now, Joanne, what led this decline?

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Speaker 3: I think we need to look back one more month

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Speaker 3: to really understand what's going on. Between April and May,

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Speaker 3: consumer sentiment dropp about ten ten percent, and between May

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Speaker 3: and June it's essentially flat. Yes, it's a little lower

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Speaker 3: between June than May, but really it's within this margin

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Speaker 3: of era and we should interpret that as no change.

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Speaker 3: But what happened this month was that compared to last month,

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Speaker 3: consumers were getting rared that labor markets were starting to weekend.

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Speaker 3: They were worried that interest rates were not moving in

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Speaker 3: the right direction, and that the inflation slowed down wasn't

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Speaker 3: really happening high and fast enough. And that's exactly how

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Speaker 3: consumers continue to feel right now. Those concerns remain in place,

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Speaker 3: and consumers don't really see a material change in the

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Speaker 3: economy between last month and this month.

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Speaker 4: Joe, and it seems like again, inflation. We hear it

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Speaker 4: in you know, some of the political polling that we see,

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Speaker 4: and we see it in you know, some of the

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Speaker 4: other I think surveys that we see. It's still a big,

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Speaker 4: big issue for consumers. Even if the rate of inflation

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Speaker 4: is slowing, those higher pricing levels are really problematic, aren't they.

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Speaker 3: That's absolutely right. The share of consumers that are telling

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Speaker 3: us that high prices are eroding their living standards remains

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Speaker 3: quite high, and in fact, it did go up between

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Speaker 3: May and June. However, consumers have noticed that inflation has slowed,

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Speaker 3: and that bears out in the inflation expectations that that

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Speaker 3: have come down quite dramatically over the last two years

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Speaker 3: and even in the last last six months or so. However, consumers,

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Speaker 3: you know, aren't really sure that inflation is going to

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Speaker 3: continue decelerating at at a pace that they would like.

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Speaker 3: And you know, there are aspects of inflation that continue

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Speaker 3: to be really troublesome, in particular the cost of housing

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Speaker 3: and insurance. These are things that are going to continue

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Speaker 3: to weigh on consumers even if gas prices come down,

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Speaker 3: our food prices come gas prices come down, and food

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Speaker 3: inflation comes down.

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Speaker 2: Now, of course it has happened though before the FED

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Speaker 2: meeting this week, when we sort of got more insight

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Speaker 2: into the dot plot and sort of whatever cuts we

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Speaker 2: may get, would consumers feel materially different maybe on your

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Speaker 2: second read based off of that or No.

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Speaker 3: It's possible that they may feel different at the end

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Speaker 3: of the month, but I wouldn't necessarily interpret any change

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Speaker 3: between now and the final reading as attributable to uh,

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Speaker 3: the FED policy announcements and the FOMC meeting consequences. You know,

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Speaker 3: consumers aren't really paying attention to that. What they will

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Speaker 3: pay attention to is, you know, if if they're starting

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Speaker 3: to feel some relief as they are working through their budgets,

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Speaker 3: and if they are starting to see any sort of

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Speaker 3: positive developments or continued strength and labor markets. The big

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Speaker 3: deterioration in labor market expectations that began in May, you know,

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Speaker 3: was on the heels of some weakening jobs reports, and

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Speaker 3: and so we'll we'll see what consumers experiences are like

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Speaker 3: through the rest of the month.

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Speaker 4: Very good, Joanne, Thank you so much for joining us.

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Speaker 4: Juan Shoe, She's a Surveys of Consumers director at the

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Speaker 4: University of Michigan. Not just good football players, but good

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Speaker 4: economists as well. So that's we like at the u

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Speaker 4: University of Michigan.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on applecar Play and Android

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Speaker 1: Just Say Alexa playing Bloomberg eleven thirty.

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Speaker 2: Joining us now, Harold Krent. He is a professor of

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Speaker 2: law at Chicago Kank College of Law, the author of

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Speaker 2: the book Presidential Powers. Harold, we appreciate you jumping on

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Speaker 2: with us. So the news, of course is a bumstock

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Speaker 2: ban is tossed out by the Supreme Court walk us

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Speaker 2: through what you know, what you've seen, and your reaction.

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Speaker 5: Yeah, I mean, I think your discussion of it was

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Speaker 5: right on point. There was a nineteen thirty four statute

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Speaker 5: called the National Firearms Act, which bans machine guns, and

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Speaker 5: so the question is whether this altered semi automatic shotgun

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Speaker 5: a machine gun. It does in many ways because it

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Speaker 5: fires automatically. However, it looks different and it's trigger mechanism

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Speaker 5: is slightly different in terms of how many times you

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Speaker 5: have to press it before you can shoot a large

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Speaker 5: number of shots. So it functions identically to a machine gun,

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Speaker 5: though it works slightly differently. And so the Bureau of Alcohol, Firearms,

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Speaker 5: and Tobacco is the agency in charge of regulating guns

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Speaker 5: in our federal system, and it has changed its mind

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Speaker 5: about whether a bump stock is equivalent to a machine

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Speaker 5: gun or not. Originally it's said that it was distinct

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Speaker 5: from a machine gun, and so it did not outlaw

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Speaker 5: use of the bump stock under the National Firearms Act.

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Speaker 5: But after the Las Vegas tragedy, as you suggested, it

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Speaker 5: was indeed the agency under the Trump administration which had

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Speaker 5: a fresh look and on the qualities and characteristics of

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Speaker 5: this bump stock and said, you know, because it functions

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Speaker 5: so similarly to a machine gun, we are going to

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Speaker 5: classify it as a machine gun and therefore consider it

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Speaker 5: banned under the Act. And the six ' three conservative

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Speaker 5: majority basically was not persuaded and red machine gun in

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Speaker 5: that sort of narrow context, gave no deference to the

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Speaker 5: agency whatsoever, and concluded therefore that a bump stock was

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Speaker 5: not a machine gun and therefore the agency had overset

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Speaker 5: its bounds in trying to ban it.

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Speaker 4: So, Professor, I know we're just minutes into this, but

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Speaker 4: I mean, what are the practical ramifications of this decision today?

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Speaker 5: Well, if we want to ban bump stocks, it has

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Speaker 5: to be from Congress. Congress is only then. I don't

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Speaker 5: think that there would be an issue under the Second Amendment.

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Speaker 5: Obviously somebody could raise it, but I think, you know,

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Speaker 5: grenades and machine guns are not the kind of usual

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Speaker 5: weapons that were around at the founding, and so therefore

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Speaker 5: presumably they can be banned by Congress, but they can't

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Speaker 5: be through an act of an administration. It has to

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Speaker 5: be from our elected representatives themselves.

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Speaker 2: Do we learn anything about how the court voted and

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Speaker 2: what the opinion looks like in relation to the other

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Speaker 2: gun case that is on the docket for.

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Speaker 5: Them, I don't think so. I don't think there any

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Speaker 5: kind of seeds or any kind of clues about what's

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Speaker 5: going to happen in Raheemi, which you know, I agree

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Speaker 5: is far more controversial case. But this is sort of

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Speaker 5: a you know, if you look at this case from

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Speaker 5: on high, it's sort of remarkable, right, I mean, a

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Speaker 5: bumpstock converts a shotgun into something that is automatically firing

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Speaker 5: and has the same characteristics as a machine gun. And

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Speaker 5: if we can ban machine guns because we don't think

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Speaker 5: that's needed for you know, hunting or any other kind

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Speaker 5: of lawful use of a weapon, then I don't understand.

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Speaker 5: It sort of defies belief that six of our justices

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Speaker 5: rejected an agency decision under the Trump administration that have

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Speaker 5: classifies these bump stocks as converting a shotgun into a

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Speaker 5: machine gun.

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Speaker 4: So, Professor, how rare or unusual are six to three

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Speaker 4: decisions like this in terms of party lines being so

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Speaker 4: you know, rigidly followed. How do you think about that?

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Speaker 4: Just in the history of the Supreme Court?

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Speaker 5: Yeah, And I don't have great statistics going back in

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Speaker 5: terms of the set sort of you know, conservative liberal

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Speaker 5: fissures within the Supreme Court. But we've certainly seen periods

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Speaker 5: of time where the voting structures are comparable to this,

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Speaker 5: where there is a block on one side and a

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Speaker 5: block on the other, and only in the cases are

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Speaker 5: more interesting, of course, when their decides come together or

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Speaker 5: they have sort of innovative decisions that bridge the gap

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Speaker 5: and you can get a majority of liberal conservative together.

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Speaker 5: So it does reflect the fact that there's polarization. There's

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Speaker 5: question about it, and the six ' three is you know,

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Speaker 5: obviously was true on the Dodds case and the abortion

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Speaker 5: case and many others, and we'll continue to see that.

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Speaker 5: There was another case deciding today that had to do

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Speaker 5: with the rights of immigrants to get a second hearing

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Speaker 5: at an asylum and it was not a major case

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Speaker 5: on the asylum law because they had to do with how

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Speaker 5: defective the notice was for a defective notice for a hearing,

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Speaker 5: whether or not they should be allowed if it's defective

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Speaker 5: to have another notice for a hearing before they're reported.

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Speaker 5: But once again sixth to be split. So it's not

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Speaker 5: surprising and I think we're going to see more of

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Speaker 5: these and with the next twenty or so opinions that

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Speaker 5: are to come.

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Speaker 2: When you take a look at the rest of the

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Speaker 2: docket for the Supreme Court, what are you focused on

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Speaker 2: most in terms of how what it will tell you

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Speaker 2: either about the court makeup or the ramifications.

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Speaker 5: Well, to me, and since I do focus on the

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Speaker 5: administrative law of how set that this court is to

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Speaker 5: dismantle our traditional notion of what administrative agencies are and

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Speaker 5: how administrations can regulate the environment and regulate the business sector.

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Speaker 5: Those there are at least three extremely important cases that

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Speaker 5: are pending, and they have the seeds in them of

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Speaker 5: radically reshaping how our government works, because if you take

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Speaker 5: away the powers of these governing administrative agencies, there'll be

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Speaker 5: a lot less regulation. And a lot less regulation can mean, obviously,

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Speaker 5: in most people, more pollution, more practices by businesses that

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Speaker 5: hurt individuals, and that's what is really gaining my focus.

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Speaker 4: So, Professor here, presumably does the Supreme Court do they

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Speaker 4: care how the public views them? Or are they really

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Speaker 4: just pure independent, they're there for life type of thing.

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Speaker 5: You know, it's a great question. I think that Careen

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Speaker 5: once one way, I mean Chief Justice Roberts in particular

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Speaker 5: has been known for trying to shore the institutional respect

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Speaker 5: of the Court. But a lot of the members of

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Speaker 5: the Court, and obviously it's if you want to name names.

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Speaker 5: I mean, it's no secret that Alido in particular is

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Speaker 5: that the view that I have power. I don't know

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Speaker 5: how long I'm going to have this power. This is

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Speaker 5: a unique moment in history where we can really contribute

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Speaker 5: to the rearranging the way the government works. And he'll

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Speaker 5: do that and it doesn't care at all about what

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Speaker 5: people think of him. So I think there is a

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Speaker 5: split amongst the and I think Justice Barrett is probably

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Speaker 5: with Chief Justice Roberts so that they do care about

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Speaker 5: the institutional legitimacy of the court. But there are some

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Speaker 5: members of the Court who just want to take the

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Speaker 5: moment in the sun and use the power to the

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Speaker 5: best way they can to shape America in their image.

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Speaker 3: Right.

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Speaker 2: Well, we really appreciate your incident analysis here for us.

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Speaker 2: Harold Krentt, he's professor of law at Chicago Kent College

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Speaker 2: of Law and author of the book Presidential Powers. Again,

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Speaker 2: that breaking news that in a six 't three vote

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Speaker 2: along ideological lines, the Supreme Court voted a criminal prohibition

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Speaker 2: put in place by the Trump administration to ban bump

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Speaker 2: stocks is thrown out. That bam tossed out by the

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Speaker 2: Supreme Court.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple Car playing Android

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Speaker 4: Let's get to Tesla back in the news again. It

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Speaker 4: looks like our good friend Elon Musk is going to

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Speaker 4: get that pay reward that he believes and now his

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Speaker 4: shareholders believe that he deserves. David Waltz joins us Detroit

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Speaker 4: Bureau chief for Bloomberg News. David talk to us about

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Speaker 4: what this pay package is from Tesla for Elon Muskin

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Speaker 4: and kind of what does it mean for the company.

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Speaker 6: So that this was a big package negotiated in bombing

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Speaker 6: stock stock options going back I think twenty eighteen. And

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Speaker 6: the controversy is that shareholders said that this is a

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Speaker 6: rubber stand board put in place by Elon. They didn't

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Speaker 6: really have a great view into what they were getting.

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Speaker 6: So spurred a bunch of lawsuits, and Delaware Chancery Court

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Speaker 6: ruled in the shareholder's favor it's expected to be under appeal,

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Speaker 6: but shareholders approved it, and so that really complicates things

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Speaker 6: as we get into the appeal that shareholders who feel

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Speaker 6: aggrieved are going to go into court saying that they

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Speaker 6: didn't know what they were getting and it's not a

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Speaker 6: good deal, even though the majority of shareholders who hold

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Speaker 6: the stock now approved the deal. The other thing that

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Speaker 6: they passed is that Tesla will change its domicile to Texas,

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Speaker 6: where the headquarters already is more business friendly laws there.

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Speaker 6: And so if Tesla wins its appeal, or even if

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Speaker 6: they lose it, Elon and the board could just create

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Speaker 6: another similar pay package for him in tex Is under

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Speaker 6: Texas law, and then it would probably start this cycle

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Speaker 6: all over again, but it would be in a different

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Speaker 6: court that could be more friendly to the company and

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Speaker 6: to Elon Musk. So you know this, this is far

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Speaker 6: from over, this whole fight over the pay package. What

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Speaker 6: it does mean for a near term right now is

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Speaker 6: the shareholders are endorsing Elon Musk and they're saying, we

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Speaker 6: you know, this is the guy we want to stick with.

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Speaker 6: Wind loser draw on the legal actions.

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Speaker 2: So are we done talking about it now? Like I mean,

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Speaker 2: are we done?

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Speaker 6: Well, what else does it mean for Tesla? You know

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Speaker 6: the bigger issues I think for this company?

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Speaker 2: Well sure, but now I know the bigger issues. But

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Speaker 2: before we move on, like in terms of the pay

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Speaker 2: package drama, that book has closed.

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Speaker 6: No, it's far from closed because the Delaware so Tesla

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Speaker 6: appealed the judge's ruining. So there's going to be another

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Speaker 6: round of litigation on this thing, and who knows how

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Speaker 6: far it could go. Now that's what I mean. Let's

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Speaker 6: suppose the shareholders win and Elon doesn't get his pay

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Speaker 6: package because the court overturns it. What would probably happen

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Speaker 6: is the Tesla board would come up with another similar package,

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Speaker 6: so it would be an all new one, maybe of

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Speaker 6: similar value structure. However you want to do it for

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Speaker 6: Elon Musk, but they would do it now that the

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Speaker 6: company is domiciled in Texas. They'd do it under Texas law.

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Speaker 6: The fact that they changed their domicile the Texas doesn't

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Speaker 6: matter for this lawsuit because the pay package was done

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Speaker 6: when Texas was a Delaware or Tesla was a Delaware corporation,

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Speaker 6: and so the pay package, what the board did, and

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Speaker 6: the litigation involved is all done under Delaware law Testya's

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Speaker 6: leaving Delaware. Elon's taken a couple of his companies, including X,

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Speaker 6: out of Delaware, and he's all, he doesn't like being regulated,

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Speaker 6: he doesn't like the laws there, so he's left. He's

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Speaker 6: even going to send them a cake with a parting

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Speaker 6: shot that he's leaving Delaware. But so if you, you know,

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Speaker 6: even if you you have this next round of litigation,

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Speaker 6: even if the shareholders win, they could just come up

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Speaker 6: with another package that rewards him and you could have

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Speaker 6: this fight all over again. So many more chapters to

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Speaker 6: go in the pay package dispute. Who care? Yeah?

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Speaker 2: So okay, you were trying to then talk about the

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Speaker 2: broader industry and I made you go into the lawsuit again.

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Speaker 2: So how do they tie together?

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Speaker 6: Well, what the shareholders are basically saying is despite the

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Speaker 6: fact that that Tesla as a growth company has kind

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Speaker 6: of stalled out, they still believe Elon Musk is the

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Speaker 6: guy to take them there. And the challenge that he

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Speaker 6: faces now to deliver on Tesla still being a tech company,

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Speaker 6: still being a growth company, is you do either have

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Speaker 6: to recharge so to speak. They're electric vehicle sales and

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Speaker 6: they've stalled out for a number of reasons, particularly in

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Speaker 6: the US. One is the cars are old and kind

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Speaker 6: of stale. They all have the same look to them

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Speaker 6: and they haven't freshened it up. The Modelsques looked the

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Speaker 6: same for twelve years now, and everything else is sort

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Speaker 6: of a derivative of that stylistically. And then there's just

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Speaker 6: a lot more competition. You have four General motors BMW,

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Speaker 6: Mercedes very aggressive in the US, and you have the

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Speaker 6: Chinese ev makers in China in Europe very aggressive as well.

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Speaker 6: So he's got a lot more competition than he had

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Speaker 6: a few years ago on all these markets, so it's

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Speaker 6: tougher to get growth, which is why he's moving to this.

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Speaker 6: We're an autonomous vehicle AI company and we'll see what

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Speaker 6: happens in August when they show us that. But that's

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Speaker 6: going to be a tough one. I mean, you've got

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Speaker 6: crews and you've got Weimo out there for years now

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Speaker 6: trying to show that they can develop robotexti's and it's

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Speaker 6: it's really tough to make that work. But that's what's

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Speaker 6: going to con and shareholders that it's a tech company.

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Speaker 4: All right, David, thank you so much. We appreciate that.

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Speaker 4: As always David Welsch, Detroit bureau chief for Bloomberg News,

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Speaker 4: giving us the latest update on our good friend Elon

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Speaker 4: Musk and Tesla working towards getting that pay package passed

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Speaker 4: form fifty six billion dollars. That gets your attention.

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Speaker 2: We bring you all the top news and business and

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Speaker 2: I just want to point out here that the CAC

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Speaker 2: forty is down another three percent today, so we are

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Speaker 2: picking up some steam as we're about a one hour

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Speaker 2: away from the close of European trading, so keep your

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Speaker 2: eye on that on very high volume as well. In

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Speaker 2: the botto market, you're seeing a continued bid into the

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Speaker 2: bar market. Is it the FED is it safe haven.

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Speaker 2: There are lots of different theories out there as well,

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Speaker 2: but over the whole week so far, the tenure is

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Speaker 2: down twenty two basis points. That's a pretty solid move,

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Speaker 2: So we want to get more on that with Pria

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Speaker 2: Israe Fixed and Come portfolio manager JP Morgan Asset Management.

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Speaker 2: She joins us. Now, Pria, I think Barclays came out

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Speaker 2: and said, like, look, it's gone too far, like like

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Speaker 2: we want to store it here a little bit. This

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Speaker 2: buying move has gone too far. What do you think?

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Speaker 7: I don't agree.

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Speaker 8: I mean, I think there's been a perfect storm the

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Speaker 8: last couple of weeks. Growth is slowing, inflation is finally decelerating.

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Speaker 8: I think we can put that first quarter high inflation

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Speaker 8: prints behind us. We realize that was an outlier, not

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Speaker 8: the start of a reacceleration. So you have growth and

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Speaker 8: inflation both slowing. You know, I think the market is

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Speaker 8: really pricing for growth to slow down to a little

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Speaker 8: below potential, but we don't know, you know, the jury

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Speaker 8: is out there. Plus we have this political risk which

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Speaker 8: is out there, and we're heading into an illiquid summer.

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Speaker 8: I mean next week itself, we have a holiday in

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Speaker 8: the middle of the week. I think people are getting

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Speaker 8: nervous about the carry trade online and that's what we've

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Speaker 8: seen a little bit this week.

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Speaker 7: So I'm not sure it's done.

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Speaker 8: I would not be selling into this, but you know,

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Speaker 8: particularly when it comes to treasuries, I actually think people

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Speaker 8: who've been positioned for a soft landing, which we have been,

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Speaker 8: we've been owning high quality spread product, risky assets. I

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Speaker 8: think actually owning some treasuries is a good hedge because

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Speaker 8: there is really only one safe haven asset in a

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Speaker 8: world wide inflation is declining, and that's still treasuries, and

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Speaker 8: we're not pricing.

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Speaker 7: In that much.

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Speaker 8: We're still above, you know, north of four percent on

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Speaker 8: the tenure. So I actually think you're supposed to own

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Speaker 8: those hedges. You're supposed to have liquid assets alongside any

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Speaker 8: of those soft landing traits that you have on.

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Speaker 4: What is a high quality spread product.

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Speaker 8: So I'm glad you asked that because it is across

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Speaker 8: the you know, whether it's investment rate, credit, high yield.

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Speaker 8: I think they're parts of high yield that I would

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Speaker 8: say are high quality securitize credit.

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Speaker 7: So within the ABS C MBS sector.

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Speaker 8: So I think you dig in, you look at what

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Speaker 8: the companies or structures. You know, what is that money

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Speaker 8: being used for if there's good cash flow. We looked

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Speaker 8: at some of these single family rental you know there

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Speaker 8: it's a business model where you're earning cash flow based

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Speaker 8: on people paying rent, which we know that rent.

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Speaker 7: You know, rents are are high.

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Speaker 8: So I think making sure you know the business model

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Speaker 8: there's free cash flow, there's no releveraging of the company

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Speaker 8: or the structure. I think owning that in a diversified way,

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Speaker 8: so we own you know, IG credit, so investment grate credit,

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Speaker 8: high yield credit, securitize credit.

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Speaker 7: I think that's what we would call.

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Speaker 8: You know, most of them in the index, many of

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Speaker 8: them not in the aggregate index.

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Speaker 7: So these would be bonds where.

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Speaker 8: You're earning that spread for the fact that you're taking

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Speaker 8: on some credit risks, some less liquidity risk, that's what

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Speaker 8: you're giving up, but you're picking up that spread because

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Speaker 8: corporate fundamentals are still very, very strong, and so that's

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Speaker 8: what we're That's why we still like high quality spread

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Speaker 8: product because this is not like other times when there's

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Speaker 8: been a lot of leveraging up or companies are not

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Speaker 8: doing the right thing with their money. I think as

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Speaker 8: long as you dig in, you realize what you're buying.

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Speaker 8: There's a lot of opportunity within fixed income here.

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Speaker 2: So it's just to be clear, it's it's credit risk,

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Speaker 2: but it's calculated credit risk. But duration risk is a

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Speaker 2: no no.

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Speaker 8: Now I think it's now it's getting to levels where

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Speaker 8: duration risk is attractive to I know, we might be

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Speaker 8: disappointed with the FED. The FED sort of moved to

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Speaker 8: one cut this year. I think the Fed has a

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Speaker 8: little bit of PTSD from what happened earlier this year

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Speaker 8: where they signal rate cuts by June and then we

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Speaker 8: get three months of very strong inflation numbers, and so

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Speaker 8: I think the FED is very much data dependent.

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Speaker 7: But I think owning some duration, owning some five.

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Speaker 8: Year treasuries or ten year treasuries is attractive because you know,

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Speaker 8: I mean, we can debate whether the first cut is

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Speaker 8: in September or December. But let's look at total amount

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Speaker 8: of cuts the market is pricing in the end point

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Speaker 8: after all these cuts to be three seventy five. The

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Speaker 8: Fed's own estimate for long run DOT is two seventy five.

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Speaker 7: There's one hundred basis points spread.

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Speaker 8: I think in a soft landing, the Fed's cutting to

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Speaker 8: three percent, so there's room for rates to decline in

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Speaker 8: that five to ten year part of the curve in

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Speaker 8: a hard landing. So if things slow down more, the

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Speaker 8: FED has told us they're going to be aggressive. They're

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Speaker 8: going to cut much more more than that neutral rate.

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Speaker 8: So I think owning duration risk can I've been nervous

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Speaker 8: around duration risk while inflation was high. I think we

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Speaker 8: take a lot of comfort with some of the inflation numbers.

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Speaker 8: We're getting the totality of the data. We just slowing down,

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Speaker 8: you know, inflation expectations being anchored the inflation data itself

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Speaker 8: telling you it's really shelter and auto insurance. So if

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Speaker 8: the inflation fear can be put a little bit in

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Speaker 8: the rear view mirror, I think owning some duration risk here,

437
00:23:25,720 --> 00:23:29,439
Speaker 8: particularly as we're going into an illiquid environment where some

438
00:23:29,480 --> 00:23:32,480
Speaker 8: of the growth data is showing signs of cracking, I

439
00:23:33,320 --> 00:23:35,040
Speaker 8: think you should own some duration risk as well.

440
00:23:35,080 --> 00:23:36,720
Speaker 7: Some fives intense April.

441
00:23:36,760 --> 00:23:40,520
Speaker 4: Let's say I'm a analyst at JPMorgan Asset Management and

442
00:23:40,560 --> 00:23:43,600
Speaker 4: cover you know, the cable, the high yield, the telecommunications

443
00:23:43,640 --> 00:23:46,080
Speaker 4: sector in the highyield space. If I commit to your

444
00:23:46,080 --> 00:23:48,359
Speaker 4: office and say I love this industry. I think you

445
00:23:48,400 --> 00:23:51,159
Speaker 4: should be buying some of these cable and telecom bonds.

446
00:23:51,880 --> 00:23:53,639
Speaker 4: Do you care about calls like that or do you

447
00:23:53,760 --> 00:23:57,640
Speaker 4: just buy credit metrics, ratings metrics, that kind of thing.

448
00:23:57,640 --> 00:24:00,199
Speaker 4: How are you in terms of giving some way to

449
00:24:00,440 --> 00:24:01,280
Speaker 4: certain industries.

450
00:24:02,359 --> 00:24:06,720
Speaker 8: Yeah, so, I think in general we like to overweight industries,

451
00:24:07,040 --> 00:24:11,520
Speaker 8: you know, utilities which have the whole electrification or anything

452
00:24:11,560 --> 00:24:14,320
Speaker 8: linked to AI. So I think we think of industries

453
00:24:14,359 --> 00:24:17,800
Speaker 8: that are sort of growth industries, industries of the future,

454
00:24:18,400 --> 00:24:20,399
Speaker 8: versus those that are not. So I think we'll do

455
00:24:20,520 --> 00:24:23,280
Speaker 8: that work. But then you have to look at valuation

456
00:24:23,480 --> 00:24:26,720
Speaker 8: at some point if a company is still going to

457
00:24:26,720 --> 00:24:28,840
Speaker 8: be around. I mean there are cable companies will tell

458
00:24:28,880 --> 00:24:31,439
Speaker 8: you which may not seem like they're the companies of

459
00:24:31,440 --> 00:24:34,520
Speaker 8: the future, but they have solid cash flow, they have

460
00:24:35,119 --> 00:24:37,560
Speaker 8: plans to reduce some of that leverage, and we own

461
00:24:37,640 --> 00:24:38,880
Speaker 8: some of those in our funds.

462
00:24:39,040 --> 00:24:41,520
Speaker 7: And then we look at valuation. Where are those.

463
00:24:41,320 --> 00:24:44,080
Speaker 8: Spreads and if they're you know, there might be double B,

464
00:24:44,240 --> 00:24:47,480
Speaker 8: single B. There are certainly some cable companies in that range.

465
00:24:48,240 --> 00:24:51,159
Speaker 8: It can offer value. I think what you'd want to

466
00:24:51,160 --> 00:24:55,280
Speaker 8: think about is diversifying those forms of return particularly we're

467
00:24:55,320 --> 00:24:57,480
Speaker 8: going into an election time period where there will be

468
00:24:57,840 --> 00:25:01,320
Speaker 8: wider dispersion, So I actually think I would listen carefully,

469
00:25:01,520 --> 00:25:05,359
Speaker 8: ask the questions, understand what the company's plans are for

470
00:25:05,440 --> 00:25:08,119
Speaker 8: the debt that they're raising, where are levels? And I

471
00:25:08,160 --> 00:25:10,920
Speaker 8: think there's value even in a sector which you might

472
00:25:10,960 --> 00:25:13,959
Speaker 8: say have structural challenges, before we let you go.

473
00:25:14,040 --> 00:25:15,439
Speaker 2: I just want to end on Europe because, as I

474
00:25:15,440 --> 00:25:17,639
Speaker 2: was mentioning, the CAC forty is down three percent. You

475
00:25:17,680 --> 00:25:20,240
Speaker 2: are seeing a bin to the bond market over in Europe.

476
00:25:20,280 --> 00:25:23,240
Speaker 2: But it's been a really tough week for France and

477
00:25:23,280 --> 00:25:26,520
Speaker 2: the spread is really blowing out between France and German tenure.

478
00:25:27,080 --> 00:25:28,119
Speaker 2: Is there a trade here for you?

479
00:25:28,040 --> 00:25:30,800
Speaker 7: You know? Not yet.

480
00:25:31,400 --> 00:25:33,560
Speaker 8: I still think there's a washout that's happening. I mean

481
00:25:33,640 --> 00:25:36,920
Speaker 8: the periphery, whether it was France so Italy. We're very

482
00:25:36,960 --> 00:25:41,000
Speaker 8: consensus long carry trades. But at some point I have

483
00:25:41,080 --> 00:25:43,600
Speaker 8: to think we're not talking about France leaving the Eurozone,

484
00:25:43,760 --> 00:25:45,879
Speaker 8: so at some point we'd want to dip in. I

485
00:25:45,920 --> 00:25:49,000
Speaker 8: think closer to the election, I will say I hesitate

486
00:25:49,080 --> 00:25:52,719
Speaker 8: trading political risk. It's impossible to really trade it by

487
00:25:52,880 --> 00:25:55,479
Speaker 8: very binary risks, but at some point I think if

488
00:25:55,480 --> 00:25:59,000
Speaker 8: those spreads widen out another twenty thirty basis points, I

489
00:25:59,000 --> 00:26:02,240
Speaker 8: think we can start to leg into it. I wouldn't

490
00:26:02,240 --> 00:26:05,120
Speaker 8: bet the farm on it, because again, you know political risk,

491
00:26:05,160 --> 00:26:07,119
Speaker 8: and we saw this for so many years in the

492
00:26:07,119 --> 00:26:08,520
Speaker 8: European crisis.

493
00:26:08,960 --> 00:26:11,440
Speaker 7: It's difficult and things can a little.

494
00:26:11,200 --> 00:26:14,600
Speaker 8: Bit spill out of control as people de risk. But

495
00:26:14,760 --> 00:26:17,760
Speaker 8: I think the fundamentals are still strong. Let's see, even

496
00:26:17,760 --> 00:26:20,760
Speaker 8: if you get the worst case scenario from a market standpoint,

497
00:26:21,440 --> 00:26:24,240
Speaker 8: will they deliver and will they talk about as much

498
00:26:24,240 --> 00:26:26,760
Speaker 8: spending that is being talked about. I think there's a

499
00:26:26,760 --> 00:26:29,480
Speaker 8: campaign season and then what actually gets done. So I

500
00:26:29,480 --> 00:26:31,200
Speaker 8: think we look at details, we look at.

501
00:26:31,040 --> 00:26:33,920
Speaker 7: Poles and at some point, but I think we were

502
00:26:33,960 --> 00:26:35,400
Speaker 7: still in the early innings.

503
00:26:35,040 --> 00:26:36,760
Speaker 2: Afterwhid and pretty it's fair enough and that's what we

504
00:26:36,800 --> 00:26:39,239
Speaker 2: saw over in Italy with Georgia Maloney. It wasn't as

505
00:26:39,240 --> 00:26:41,520
Speaker 2: bad as everyone was worried about. Pria Israel fixed and

506
00:26:41,520 --> 00:26:44,480
Speaker 2: come Portfolio Manager, JP Morgan, Asset Management.

507
00:26:46,200 --> 00:26:50,080
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

508
00:26:50,160 --> 00:26:53,200
Speaker 1: weekdays at ten am Eastern on Apple car Play and

509
00:26:53,200 --> 00:26:56,480
Speaker 1: Android Auto with the Bloomberg Business. You can also listen

510
00:26:56,600 --> 00:26:59,680
Speaker 1: live on Amazon Alexa from our flagship New York station,

511
00:27:00,240 --> 00:27:02,760
Speaker 1: Say Alexa, playing Bloomberg eleven.

512
00:27:04,640 --> 00:27:06,960
Speaker 4: Well for the month of June, Folks, Bloomberg Radio is

513
00:27:06,960 --> 00:27:09,359
Speaker 4: committed to bringing you segments and guests focus on the

514
00:27:09,359 --> 00:27:10,320
Speaker 4: topic of equality.

515
00:27:10,560 --> 00:27:11,160
Speaker 6: Earlier in the.

516
00:27:11,080 --> 00:27:13,960
Speaker 4: Week, guest host just met and I spoke with Yin Maguire,

517
00:27:14,359 --> 00:27:18,000
Speaker 4: President and CEO of the National Minority Supplier Development Council.

518
00:27:18,400 --> 00:27:20,600
Speaker 4: We first asked her to talk to us about where

519
00:27:20,640 --> 00:27:23,560
Speaker 4: we are in this country in terms of implementing diversity.

520
00:27:24,080 --> 00:27:29,639
Speaker 9: There is a surge in litigation as a part of

521
00:27:29,960 --> 00:27:35,919
Speaker 9: very ideological, well funded, and well coordinated effort among a

522
00:27:36,000 --> 00:27:40,520
Speaker 9: small group of organizations that are completely out of a

523
00:27:40,640 --> 00:27:48,200
Speaker 9: step with the vast majority of Americans. We have a

524
00:27:48,240 --> 00:27:54,320
Speaker 9: thought leadership partner called Public Private Strategies Institute. They commissioned

525
00:27:55,680 --> 00:28:00,439
Speaker 9: Mourning Console study that a few months ago, and the

526
00:28:00,520 --> 00:28:06,840
Speaker 9: study found that majority of corporate senior executives across all

527
00:28:06,960 --> 00:28:14,159
Speaker 9: political affiliations that support the diversity initiative. They believe that

528
00:28:14,880 --> 00:28:20,520
Speaker 9: diversity initiatives played a critical role in the success of

529
00:28:20,640 --> 00:28:25,240
Speaker 9: their companies. For example, seventy five percent of them self

530
00:28:25,280 --> 00:28:32,200
Speaker 9: described as conservatives. Seventy seven percent described themselves as a

531
00:28:32,320 --> 00:28:35,280
Speaker 9: moderates and eighty nine percent our liberals, and all of

532
00:28:35,320 --> 00:28:42,320
Speaker 9: them recognizing the positive contribution of diversity initiatives to their

533
00:28:42,360 --> 00:28:47,560
Speaker 9: business performance. And so these lawsuits really are part of

534
00:28:47,680 --> 00:28:52,800
Speaker 9: larger strategies to constrain the ability of business leaders to

535
00:28:52,920 --> 00:28:58,280
Speaker 9: make decisions for the benefits of their companies. And you know,

536
00:28:58,360 --> 00:29:01,520
Speaker 9: I came to this country with the one suitcase and

537
00:29:01,600 --> 00:29:04,480
Speaker 9: one thousand dollars to pursue my American dream, and because

538
00:29:04,520 --> 00:29:10,080
Speaker 9: I believe America supposed to be a place that one

539
00:29:11,000 --> 00:29:15,080
Speaker 9: has a freedom to achieve, has a freedom to earn,

540
00:29:15,200 --> 00:29:19,480
Speaker 9: and has freedom to make decisions, and has freedom to prosper.

541
00:29:20,120 --> 00:29:25,600
Speaker 9: And so we're seeing an organized movement to stifle that freedom.

542
00:29:26,800 --> 00:29:29,440
Speaker 4: Do you think this is mostly political driven or is

543
00:29:29,480 --> 00:29:32,440
Speaker 4: it shareholder saying I'm just not sure you've proven to

544
00:29:32,440 --> 00:29:34,400
Speaker 4: me that it's in the best interest of me as

545
00:29:34,400 --> 00:29:36,840
Speaker 4: a shareholder to pursue diversity.

546
00:29:37,520 --> 00:29:41,800
Speaker 9: I think it's a political driven and it's an ideological movement.

547
00:29:43,240 --> 00:29:47,360
Speaker 9: We have, you know, NMSCC made up hundreds of thousands

548
00:29:47,400 --> 00:29:52,280
Speaker 9: of corporations, and so we have a daily dialogue with

549
00:29:52,920 --> 00:29:59,240
Speaker 9: corporate executives and they believe in the value of diversities.

550
00:29:59,680 --> 00:30:02,360
Speaker 9: Sometime people don't like the words the E and I,

551
00:30:02,840 --> 00:30:05,640
Speaker 9: so then let's find the new words, you know.

552
00:30:06,200 --> 00:30:06,520
Speaker 8: But the.

553
00:30:08,120 --> 00:30:15,959
Speaker 9: Outcome of the diversity initiative is yielding positive business results.

554
00:30:15,800 --> 00:30:17,880
Speaker 9: It's a good just good for the business.

555
00:30:18,400 --> 00:30:21,520
Speaker 10: When you're talking about the American dream and then also

556
00:30:21,680 --> 00:30:24,440
Speaker 10: corporate America, some of the strides that have been made,

557
00:30:24,480 --> 00:30:28,200
Speaker 10: but still some pitfalls there. Where did those pitfalls stand?

558
00:30:28,240 --> 00:30:31,280
Speaker 10: Because you were talking about the litigations, Where are those

559
00:30:31,320 --> 00:30:33,800
Speaker 10: issues and why are there those litigations, what are they

560
00:30:33,800 --> 00:30:34,320
Speaker 10: involved in?

561
00:30:34,760 --> 00:30:39,600
Speaker 9: So the litigation, as I shared earlier, is a really ideological,

562
00:30:40,240 --> 00:30:48,640
Speaker 9: well organized effort to block the participation for underserved group

563
00:30:49,120 --> 00:30:51,000
Speaker 9: into our economic lives.

564
00:30:51,400 --> 00:30:53,720
Speaker 7: And it's not new.

565
00:30:54,640 --> 00:30:59,040
Speaker 9: So the attack on diversity and opposition to economic equity

566
00:30:59,080 --> 00:31:02,600
Speaker 9: has been there for a very long time. But if

567
00:31:02,640 --> 00:31:07,560
Speaker 9: you look at data and effects, it says otherwise. You know,

568
00:31:07,600 --> 00:31:10,440
Speaker 9: it's very different from what you're hearing in the media.

569
00:31:10,640 --> 00:31:10,920
Speaker 7: Right.

570
00:31:11,000 --> 00:31:17,480
Speaker 9: So, for example, McKenzie's and the company reported that companies

571
00:31:17,520 --> 00:31:22,920
Speaker 9: that are more culturally diverse, actually they're yield I think

572
00:31:23,040 --> 00:31:29,240
Speaker 9: thirty seven percent more profitability than average companies and diverse

573
00:31:29,320 --> 00:31:34,880
Speaker 9: suppliers who we serve, and they actually provide in the

574
00:31:35,000 --> 00:31:38,240
Speaker 9: range of, you know, a little less than nine percent

575
00:31:38,320 --> 00:31:42,920
Speaker 9: cost savings compared to average companies. They realize about three

576
00:31:42,960 --> 00:31:46,880
Speaker 9: to seven percent procurement savings. So there are tremendous economic

577
00:31:47,080 --> 00:31:51,400
Speaker 9: value for diversity initiatives in corporate America.

578
00:31:51,440 --> 00:31:53,479
Speaker 10: What about minority businesses.

579
00:31:53,640 --> 00:32:01,440
Speaker 9: So the minority businesses, they are ready to compete every day.

580
00:32:01,600 --> 00:32:05,800
Speaker 9: We work with them to certify them, to develop them,

581
00:32:06,240 --> 00:32:11,800
Speaker 9: to connect them to opportunities, relationships and a capital. And

582
00:32:12,360 --> 00:32:16,520
Speaker 9: we have businesses, you know, they started as a startup,

583
00:32:16,840 --> 00:32:19,760
Speaker 9: a small business and and they grew to be a

584
00:32:19,840 --> 00:32:24,240
Speaker 9: mid size and to large sized businesses. And we have

585
00:32:24,480 --> 00:32:28,200
Speaker 9: businesses out there. Forcus example, one of our certified mbes

586
00:32:29,040 --> 00:32:33,760
Speaker 9: actually helped design and build finance Liguardi Airport. I was

587
00:32:34,200 --> 00:32:39,000
Speaker 9: I was walking through the Loguardia Airport right, yes, under

588
00:32:39,040 --> 00:32:39,680
Speaker 9: the construction.

589
00:32:39,760 --> 00:32:40,720
Speaker 10: Over the last decade, I.

590
00:32:40,760 --> 00:32:44,600
Speaker 9: Used to avoid Loguarda airport, but since the reconstruction by

591
00:32:44,800 --> 00:32:48,680
Speaker 9: our mbes, like, I actually want to fly to logard right.

592
00:32:48,720 --> 00:32:50,480
Speaker 10: I don't want everyone to know though, because it's so

593
00:32:50,520 --> 00:32:52,080
Speaker 10: easy to get there from my apartment.

594
00:32:52,440 --> 00:32:55,400
Speaker 7: Yes, it's easier, right.

595
00:32:55,840 --> 00:33:00,600
Speaker 9: We have mbes there are design and building natural gas

596
00:33:00,800 --> 00:33:05,280
Speaker 9: power plants, and so they're definitely contributing to our economy

597
00:33:05,600 --> 00:33:10,440
Speaker 9: every single day. And actually, we're releasing the twenty twenty

598
00:33:10,480 --> 00:33:15,200
Speaker 9: three Minority Business Economic Impact Study, and you're going to

599
00:33:15,240 --> 00:33:19,240
Speaker 9: see some of the reports come out. I'm very pleased

600
00:33:19,240 --> 00:33:24,760
Speaker 9: to share the NMSDC certified Minority owned businesses generated about

601
00:33:24,920 --> 00:33:29,719
Speaker 9: three hundred sixty three billion dollar in annual revenue, and

602
00:33:29,840 --> 00:33:33,840
Speaker 9: that is five hundred and fifty billion dollar economic output,

603
00:33:33,880 --> 00:33:37,480
Speaker 9: two million jobs, and one hundred and forty nine billion

604
00:33:37,520 --> 00:33:44,240
Speaker 9: dollar in wages. And if we continue that trend, that

605
00:33:44,600 --> 00:33:49,040
Speaker 9: we can actually reach a trillion dollar goal for NMSDC

606
00:33:49,240 --> 00:33:53,040
Speaker 9: certified mbs by twenty thirty and that's one point five

607
00:33:53,200 --> 00:33:57,400
Speaker 9: trillion dollar economic output and four million jobs.

608
00:33:57,560 --> 00:34:00,760
Speaker 4: So I know you and other advuracyads recently sent a

609
00:34:00,840 --> 00:34:04,680
Speaker 4: letter to Fortune five hundred companies advocating for DEI. What's

610
00:34:04,720 --> 00:34:06,719
Speaker 4: been the response to that letter? Any follow up?

611
00:34:07,400 --> 00:34:13,600
Speaker 9: Yes, I'm very proud to stand with eleven other CEOs

612
00:34:13,680 --> 00:34:21,120
Speaker 9: of a broad range of business organizations representing Black, Asian, Latino, woman, LGBTQ,

613
00:34:22,120 --> 00:34:27,360
Speaker 9: disability venter owned businesses. We represent seventy plus percent American

614
00:34:28,200 --> 00:34:32,200
Speaker 9: and we wrote open letter to Fortune five hundred company

615
00:34:32,239 --> 00:34:36,640
Speaker 9: CEOs really share with them the business cases for diversity,

616
00:34:36,880 --> 00:34:40,080
Speaker 9: and I really encouraged them to continue to invest in

617
00:34:40,120 --> 00:34:45,320
Speaker 9: the initiatives and it has been tremendously positive and in fact,

618
00:34:45,400 --> 00:34:50,000
Speaker 9: working ongoing dialogue with them, continue to share best practices

619
00:34:50,239 --> 00:34:53,800
Speaker 9: and problem solving. In fact, I was with a Fortune

620
00:34:54,480 --> 00:34:58,680
Speaker 9: five hundred company CEO and talking about you know, people

621
00:34:58,800 --> 00:35:02,320
Speaker 9: just need to stop debating on the term and the

622
00:35:02,440 --> 00:35:05,960
Speaker 9: words and with the feelings, and we just need to

623
00:35:06,200 --> 00:35:10,399
Speaker 9: understand why corporations are doing it and why they are

624
00:35:10,440 --> 00:35:15,360
Speaker 9: doing it. And corporations just need more choices of suppliers,

625
00:35:15,400 --> 00:35:20,799
Speaker 9: including inclusion of diverse suppliers so they can build rezilient

626
00:35:20,920 --> 00:35:23,879
Speaker 9: supply chain. And a corporation is going to need more

627
00:35:23,920 --> 00:35:29,560
Speaker 9: diverse talents so they can build product services to diverse

628
00:35:29,640 --> 00:35:33,880
Speaker 9: customer base. Right, so it's really a pure simple business,

629
00:35:34,160 --> 00:35:34,920
Speaker 9: good business.

630
00:35:35,040 --> 00:35:35,279
Speaker 1: Yep.

631
00:35:35,480 --> 00:35:35,799
Speaker 8: All right.

632
00:35:35,800 --> 00:35:38,840
Speaker 4: That was Ying Maguire, President and CEO of the National

633
00:35:38,880 --> 00:35:43,000
Speaker 4: Minority Supplier Development Council, talking about diversity in the workforce

634
00:35:43,000 --> 00:35:46,200
Speaker 4: in the economy and she represents these suppliers all throughout

635
00:35:46,719 --> 00:35:47,400
Speaker 4: the country.

636
00:35:47,840 --> 00:35:52,320
Speaker 1: This is the Bloomberg Intelligence Podcast, available on apples, Spotify,

637
00:35:52,560 --> 00:35:55,439
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638
00:35:55,560 --> 00:35:59,120
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639
00:35:59,239 --> 00:36:01,960
Speaker 1: Bihar right Now, dio app, tune In, and the Bloomberg

640
00:36:02,000 --> 00:36:05,160
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641
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