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Speaker 2: The market moving event of the morning is University of
Speaker 2: Michigan Sentiment. It is one of my favorite indicators. It's
Speaker 2: definitely my desert island indicator. This is the preliminary read
Speaker 2: for June, and you're looking at the index sixty five
Speaker 2: point six. That's a seven month low, current conditions, low
Speaker 2: expectations falling one, your inflation expectations rising to three point three.
Speaker 2: Joanneshu is the University of Michigan Surveys of Consumers Director
Speaker 2: and she joins us. Now, Joanne, what led this decline?
Speaker 3: I think we need to look back one more month
Speaker 3: to really understand what's going on. Between April and May,
Speaker 3: consumer sentiment dropp about ten ten percent, and between May
Speaker 3: and June it's essentially flat. Yes, it's a little lower
Speaker 3: between June than May, but really it's within this margin
Speaker 3: of era and we should interpret that as no change.
Speaker 3: But what happened this month was that compared to last month,
Speaker 3: consumers were getting rared that labor markets were starting to weekend.
Speaker 3: They were worried that interest rates were not moving in
Speaker 3: the right direction, and that the inflation slowed down wasn't
Speaker 3: really happening high and fast enough. And that's exactly how
Speaker 3: consumers continue to feel right now. Those concerns remain in place,
Speaker 3: and consumers don't really see a material change in the
Speaker 3: economy between last month and this month.
Speaker 4: Joe, and it seems like again, inflation. We hear it
Speaker 4: in you know, some of the political polling that we see,
Speaker 4: and we see it in you know, some of the
Speaker 4: other I think surveys that we see. It's still a big,
Speaker 4: big issue for consumers. Even if the rate of inflation
Speaker 4: is slowing, those higher pricing levels are really problematic, aren't they.
Speaker 3: That's absolutely right. The share of consumers that are telling
Speaker 3: us that high prices are eroding their living standards remains
Speaker 3: quite high, and in fact, it did go up between
Speaker 3: May and June. However, consumers have noticed that inflation has slowed,
Speaker 3: and that bears out in the inflation expectations that that
Speaker 3: have come down quite dramatically over the last two years
Speaker 3: and even in the last last six months or so. However, consumers,
Speaker 3: you know, aren't really sure that inflation is going to
Speaker 3: continue decelerating at at a pace that they would like.
Speaker 3: And you know, there are aspects of inflation that continue
Speaker 3: to be really troublesome, in particular the cost of housing
Speaker 3: and insurance. These are things that are going to continue
Speaker 3: to weigh on consumers even if gas prices come down,
Speaker 3: our food prices come gas prices come down, and food
Speaker 3: inflation comes down.
Speaker 2: Now, of course it has happened though before the FED
Speaker 2: meeting this week, when we sort of got more insight
Speaker 2: into the dot plot and sort of whatever cuts we
Speaker 2: may get, would consumers feel materially different maybe on your
Speaker 2: second read based off of that or No.
Speaker 3: It's possible that they may feel different at the end
Speaker 3: of the month, but I wouldn't necessarily interpret any change
Speaker 3: between now and the final reading as attributable to uh,
Speaker 3: the FED policy announcements and the FOMC meeting consequences. You know,
Speaker 3: consumers aren't really paying attention to that. What they will
Speaker 3: pay attention to is, you know, if if they're starting
Speaker 3: to feel some relief as they are working through their budgets,
Speaker 3: and if they are starting to see any sort of
Speaker 3: positive developments or continued strength and labor markets. The big
Speaker 3: deterioration in labor market expectations that began in May, you know,
Speaker 3: was on the heels of some weakening jobs reports, and
Speaker 3: and so we'll we'll see what consumers experiences are like
Speaker 3: through the rest of the month.
Speaker 4: Very good, Joanne, Thank you so much for joining us.
Speaker 4: Juan Shoe, She's a Surveys of Consumers director at the
Speaker 4: University of Michigan. Not just good football players, but good
Speaker 4: economists as well. So that's we like at the u
Speaker 4: University of Michigan.
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Speaker 2: Joining us now, Harold Krent. He is a professor of
Speaker 2: law at Chicago Kank College of Law, the author of
Speaker 2: the book Presidential Powers. Harold, we appreciate you jumping on
Speaker 2: with us. So the news, of course is a bumstock
Speaker 2: ban is tossed out by the Supreme Court walk us
Speaker 2: through what you know, what you've seen, and your reaction.
Speaker 5: Yeah, I mean, I think your discussion of it was
Speaker 5: right on point. There was a nineteen thirty four statute
Speaker 5: called the National Firearms Act, which bans machine guns, and
Speaker 5: so the question is whether this altered semi automatic shotgun
Speaker 5: a machine gun. It does in many ways because it
Speaker 5: fires automatically. However, it looks different and it's trigger mechanism
Speaker 5: is slightly different in terms of how many times you
Speaker 5: have to press it before you can shoot a large
Speaker 5: number of shots. So it functions identically to a machine gun,
Speaker 5: though it works slightly differently. And so the Bureau of Alcohol, Firearms,
Speaker 5: and Tobacco is the agency in charge of regulating guns
Speaker 5: in our federal system, and it has changed its mind
Speaker 5: about whether a bump stock is equivalent to a machine
Speaker 5: gun or not. Originally it's said that it was distinct
Speaker 5: from a machine gun, and so it did not outlaw
Speaker 5: use of the bump stock under the National Firearms Act.
Speaker 5: But after the Las Vegas tragedy, as you suggested, it
Speaker 5: was indeed the agency under the Trump administration which had
Speaker 5: a fresh look and on the qualities and characteristics of
Speaker 5: this bump stock and said, you know, because it functions
Speaker 5: so similarly to a machine gun, we are going to
Speaker 5: classify it as a machine gun and therefore consider it
Speaker 5: banned under the Act. And the six ' three conservative
Speaker 5: majority basically was not persuaded and red machine gun in
Speaker 5: that sort of narrow context, gave no deference to the
Speaker 5: agency whatsoever, and concluded therefore that a bump stock was
Speaker 5: not a machine gun and therefore the agency had overset
Speaker 5: its bounds in trying to ban it.
Speaker 4: So, Professor, I know we're just minutes into this, but
Speaker 4: I mean, what are the practical ramifications of this decision today?
Speaker 5: Well, if we want to ban bump stocks, it has
Speaker 5: to be from Congress. Congress is only then. I don't
Speaker 5: think that there would be an issue under the Second Amendment.
Speaker 5: Obviously somebody could raise it, but I think, you know,
Speaker 5: grenades and machine guns are not the kind of usual
Speaker 5: weapons that were around at the founding, and so therefore
Speaker 5: presumably they can be banned by Congress, but they can't
Speaker 5: be through an act of an administration. It has to
Speaker 5: be from our elected representatives themselves.
Speaker 2: Do we learn anything about how the court voted and
Speaker 2: what the opinion looks like in relation to the other
Speaker 2: gun case that is on the docket for.
Speaker 5: Them, I don't think so. I don't think there any
Speaker 5: kind of seeds or any kind of clues about what's
Speaker 5: going to happen in Raheemi, which you know, I agree
Speaker 5: is far more controversial case. But this is sort of
Speaker 5: a you know, if you look at this case from
Speaker 5: on high, it's sort of remarkable, right, I mean, a
Speaker 5: bumpstock converts a shotgun into something that is automatically firing
Speaker 5: and has the same characteristics as a machine gun. And
Speaker 5: if we can ban machine guns because we don't think
Speaker 5: that's needed for you know, hunting or any other kind
Speaker 5: of lawful use of a weapon, then I don't understand.
Speaker 5: It sort of defies belief that six of our justices
Speaker 5: rejected an agency decision under the Trump administration that have
Speaker 5: classifies these bump stocks as converting a shotgun into a
Speaker 5: machine gun.
Speaker 4: So, Professor, how rare or unusual are six to three
Speaker 4: decisions like this in terms of party lines being so
Speaker 4: you know, rigidly followed. How do you think about that?
Speaker 4: Just in the history of the Supreme Court?
Speaker 5: Yeah, And I don't have great statistics going back in
Speaker 5: terms of the set sort of you know, conservative liberal
Speaker 5: fissures within the Supreme Court. But we've certainly seen periods
Speaker 5: of time where the voting structures are comparable to this,
Speaker 5: where there is a block on one side and a
Speaker 5: block on the other, and only in the cases are
Speaker 5: more interesting, of course, when their decides come together or
Speaker 5: they have sort of innovative decisions that bridge the gap
Speaker 5: and you can get a majority of liberal conservative together.
Speaker 5: So it does reflect the fact that there's polarization. There's
Speaker 5: question about it, and the six ' three is you know,
Speaker 5: obviously was true on the Dodds case and the abortion
Speaker 5: case and many others, and we'll continue to see that.
Speaker 5: There was another case deciding today that had to do
Speaker 5: with the rights of immigrants to get a second hearing
Speaker 5: at an asylum and it was not a major case
Speaker 5: on the asylum law because they had to do with how
Speaker 5: defective the notice was for a defective notice for a hearing,
Speaker 5: whether or not they should be allowed if it's defective
Speaker 5: to have another notice for a hearing before they're reported.
Speaker 5: But once again sixth to be split. So it's not
Speaker 5: surprising and I think we're going to see more of
Speaker 5: these and with the next twenty or so opinions that
Speaker 5: are to come.
Speaker 2: When you take a look at the rest of the
Speaker 2: docket for the Supreme Court, what are you focused on
Speaker 2: most in terms of how what it will tell you
Speaker 2: either about the court makeup or the ramifications.
Speaker 5: Well, to me, and since I do focus on the
Speaker 5: administrative law of how set that this court is to
Speaker 5: dismantle our traditional notion of what administrative agencies are and
Speaker 5: how administrations can regulate the environment and regulate the business sector.
Speaker 5: Those there are at least three extremely important cases that
Speaker 5: are pending, and they have the seeds in them of
Speaker 5: radically reshaping how our government works, because if you take
Speaker 5: away the powers of these governing administrative agencies, there'll be
Speaker 5: a lot less regulation. And a lot less regulation can mean, obviously,
Speaker 5: in most people, more pollution, more practices by businesses that
Speaker 5: hurt individuals, and that's what is really gaining my focus.
Speaker 4: So, Professor here, presumably does the Supreme Court do they
Speaker 4: care how the public views them? Or are they really
Speaker 4: just pure independent, they're there for life type of thing.
Speaker 5: You know, it's a great question. I think that Careen
Speaker 5: once one way, I mean Chief Justice Roberts in particular
Speaker 5: has been known for trying to shore the institutional respect
Speaker 5: of the Court. But a lot of the members of
Speaker 5: the Court, and obviously it's if you want to name names.
Speaker 5: I mean, it's no secret that Alido in particular is
Speaker 5: that the view that I have power. I don't know
Speaker 5: how long I'm going to have this power. This is
Speaker 5: a unique moment in history where we can really contribute
Speaker 5: to the rearranging the way the government works. And he'll
Speaker 5: do that and it doesn't care at all about what
Speaker 5: people think of him. So I think there is a
Speaker 5: split amongst the and I think Justice Barrett is probably
Speaker 5: with Chief Justice Roberts so that they do care about
Speaker 5: the institutional legitimacy of the court. But there are some
Speaker 5: members of the Court who just want to take the
Speaker 5: moment in the sun and use the power to the
Speaker 5: best way they can to shape America in their image.
Speaker 3: Right.
Speaker 2: Well, we really appreciate your incident analysis here for us.
Speaker 2: Harold Krentt, he's professor of law at Chicago Kent College
Speaker 2: of Law and author of the book Presidential Powers. Again,
Speaker 2: that breaking news that in a six 't three vote
Speaker 2: along ideological lines, the Supreme Court voted a criminal prohibition
Speaker 2: put in place by the Trump administration to ban bump
Speaker 2: stocks is thrown out. That bam tossed out by the
Speaker 2: Supreme Court.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
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Speaker 4: Let's get to Tesla back in the news again. It
Speaker 4: looks like our good friend Elon Musk is going to
Speaker 4: get that pay reward that he believes and now his
Speaker 4: shareholders believe that he deserves. David Waltz joins us Detroit
Speaker 4: Bureau chief for Bloomberg News. David talk to us about
Speaker 4: what this pay package is from Tesla for Elon Muskin
Speaker 4: and kind of what does it mean for the company.
Speaker 6: So that this was a big package negotiated in bombing
Speaker 6: stock stock options going back I think twenty eighteen. And
Speaker 6: the controversy is that shareholders said that this is a
Speaker 6: rubber stand board put in place by Elon. They didn't
Speaker 6: really have a great view into what they were getting.
Speaker 6: So spurred a bunch of lawsuits, and Delaware Chancery Court
Speaker 6: ruled in the shareholder's favor it's expected to be under appeal,
Speaker 6: but shareholders approved it, and so that really complicates things
Speaker 6: as we get into the appeal that shareholders who feel
Speaker 6: aggrieved are going to go into court saying that they
Speaker 6: didn't know what they were getting and it's not a
Speaker 6: good deal, even though the majority of shareholders who hold
Speaker 6: the stock now approved the deal. The other thing that
Speaker 6: they passed is that Tesla will change its domicile to Texas,
Speaker 6: where the headquarters already is more business friendly laws there.
Speaker 6: And so if Tesla wins its appeal, or even if
Speaker 6: they lose it, Elon and the board could just create
Speaker 6: another similar pay package for him in tex Is under
Speaker 6: Texas law, and then it would probably start this cycle
Speaker 6: all over again, but it would be in a different
Speaker 6: court that could be more friendly to the company and
Speaker 6: to Elon Musk. So you know this, this is far
Speaker 6: from over, this whole fight over the pay package. What
Speaker 6: it does mean for a near term right now is
Speaker 6: the shareholders are endorsing Elon Musk and they're saying, we
Speaker 6: you know, this is the guy we want to stick with.
Speaker 6: Wind loser draw on the legal actions.
Speaker 2: So are we done talking about it now? Like I mean,
Speaker 2: are we done?
Speaker 6: Well, what else does it mean for Tesla? You know
Speaker 6: the bigger issues I think for this company?
Speaker 2: Well sure, but now I know the bigger issues. But
Speaker 2: before we move on, like in terms of the pay
Speaker 2: package drama, that book has closed.
Speaker 6: No, it's far from closed because the Delaware so Tesla
Speaker 6: appealed the judge's ruining. So there's going to be another
Speaker 6: round of litigation on this thing, and who knows how
Speaker 6: far it could go. Now that's what I mean. Let's
Speaker 6: suppose the shareholders win and Elon doesn't get his pay
Speaker 6: package because the court overturns it. What would probably happen
Speaker 6: is the Tesla board would come up with another similar package,
Speaker 6: so it would be an all new one, maybe of
Speaker 6: similar value structure. However you want to do it for
Speaker 6: Elon Musk, but they would do it now that the
Speaker 6: company is domiciled in Texas. They'd do it under Texas law.
Speaker 6: The fact that they changed their domicile the Texas doesn't
Speaker 6: matter for this lawsuit because the pay package was done
Speaker 6: when Texas was a Delaware or Tesla was a Delaware corporation,
Speaker 6: and so the pay package, what the board did, and
Speaker 6: the litigation involved is all done under Delaware law Testya's
Speaker 6: leaving Delaware. Elon's taken a couple of his companies, including X,
Speaker 6: out of Delaware, and he's all, he doesn't like being regulated,
Speaker 6: he doesn't like the laws there, so he's left. He's
Speaker 6: even going to send them a cake with a parting
Speaker 6: shot that he's leaving Delaware. But so if you, you know,
Speaker 6: even if you you have this next round of litigation,
Speaker 6: even if the shareholders win, they could just come up
Speaker 6: with another package that rewards him and you could have
Speaker 6: this fight all over again. So many more chapters to
Speaker 6: go in the pay package dispute. Who care? Yeah?
Speaker 2: So okay, you were trying to then talk about the
Speaker 2: broader industry and I made you go into the lawsuit again.
Speaker 2: So how do they tie together?
Speaker 6: Well, what the shareholders are basically saying is despite the
Speaker 6: fact that that Tesla as a growth company has kind
Speaker 6: of stalled out, they still believe Elon Musk is the
Speaker 6: guy to take them there. And the challenge that he
Speaker 6: faces now to deliver on Tesla still being a tech company,
Speaker 6: still being a growth company, is you do either have
Speaker 6: to recharge so to speak. They're electric vehicle sales and
Speaker 6: they've stalled out for a number of reasons, particularly in
Speaker 6: the US. One is the cars are old and kind
Speaker 6: of stale. They all have the same look to them
Speaker 6: and they haven't freshened it up. The Modelsques looked the
Speaker 6: same for twelve years now, and everything else is sort
Speaker 6: of a derivative of that stylistically. And then there's just
Speaker 6: a lot more competition. You have four General motors BMW,
Speaker 6: Mercedes very aggressive in the US, and you have the
Speaker 6: Chinese ev makers in China in Europe very aggressive as well.
Speaker 6: So he's got a lot more competition than he had
Speaker 6: a few years ago on all these markets, so it's
Speaker 6: tougher to get growth, which is why he's moving to this.
Speaker 6: We're an autonomous vehicle AI company and we'll see what
Speaker 6: happens in August when they show us that. But that's
Speaker 6: going to be a tough one. I mean, you've got
Speaker 6: crews and you've got Weimo out there for years now
Speaker 6: trying to show that they can develop robotexti's and it's
Speaker 6: it's really tough to make that work. But that's what's
Speaker 6: going to con and shareholders that it's a tech company.
Speaker 4: All right, David, thank you so much. We appreciate that.
Speaker 4: As always David Welsch, Detroit bureau chief for Bloomberg News,
Speaker 4: giving us the latest update on our good friend Elon
Speaker 4: Musk and Tesla working towards getting that pay package passed
Speaker 4: form fifty six billion dollars. That gets your attention.
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Speaker 2: Alex still alongside Paul Sweeney. This is Bloomberg Intelligence Radio.
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Speaker 2: two thousand companies and one hundred and thirty industries worldwide.
Speaker 2: I just want to point out here that the CAC
Speaker 2: forty is down another three percent today, so we are
Speaker 2: picking up some steam as we're about a one hour
Speaker 2: away from the close of European trading, so keep your
Speaker 2: eye on that on very high volume as well. In
Speaker 2: the botto market, you're seeing a continued bid into the
Speaker 2: bar market. Is it the FED is it safe haven.
Speaker 2: There are lots of different theories out there as well,
Speaker 2: but over the whole week so far, the tenure is
Speaker 2: down twenty two basis points. That's a pretty solid move,
Speaker 2: So we want to get more on that with Pria
Speaker 2: Israe Fixed and Come portfolio manager JP Morgan Asset Management.
Speaker 2: She joins us. Now, Pria, I think Barclays came out
Speaker 2: and said, like, look, it's gone too far, like like
Speaker 2: we want to store it here a little bit. This
Speaker 2: buying move has gone too far. What do you think?
Speaker 7: I don't agree.
Speaker 8: I mean, I think there's been a perfect storm the
Speaker 8: last couple of weeks. Growth is slowing, inflation is finally decelerating.
Speaker 8: I think we can put that first quarter high inflation
Speaker 8: prints behind us. We realize that was an outlier, not
Speaker 8: the start of a reacceleration. So you have growth and
Speaker 8: inflation both slowing. You know, I think the market is
Speaker 8: really pricing for growth to slow down to a little
Speaker 8: below potential, but we don't know, you know, the jury
Speaker 8: is out there. Plus we have this political risk which
Speaker 8: is out there, and we're heading into an illiquid summer.
Speaker 8: I mean next week itself, we have a holiday in
Speaker 8: the middle of the week. I think people are getting
Speaker 8: nervous about the carry trade online and that's what we've
Speaker 8: seen a little bit this week.
Speaker 7: So I'm not sure it's done.
Speaker 8: I would not be selling into this, but you know,
Speaker 8: particularly when it comes to treasuries, I actually think people
Speaker 8: who've been positioned for a soft landing, which we have been,
Speaker 8: we've been owning high quality spread product, risky assets. I
Speaker 8: think actually owning some treasuries is a good hedge because
Speaker 8: there is really only one safe haven asset in a
Speaker 8: world wide inflation is declining, and that's still treasuries, and
Speaker 8: we're not pricing.
Speaker 7: In that much.
Speaker 8: We're still above, you know, north of four percent on
Speaker 8: the tenure. So I actually think you're supposed to own
Speaker 8: those hedges. You're supposed to have liquid assets alongside any
Speaker 8: of those soft landing traits that you have on.
Speaker 4: What is a high quality spread product.
Speaker 8: So I'm glad you asked that because it is across
Speaker 8: the you know, whether it's investment rate, credit, high yield.
Speaker 8: I think they're parts of high yield that I would
Speaker 8: say are high quality securitize credit.
Speaker 7: So within the ABS C MBS sector.
Speaker 8: So I think you dig in, you look at what
Speaker 8: the companies or structures. You know, what is that money
Speaker 8: being used for if there's good cash flow. We looked
Speaker 8: at some of these single family rental you know there
Speaker 8: it's a business model where you're earning cash flow based
Speaker 8: on people paying rent, which we know that rent.
Speaker 7: You know, rents are are high.
Speaker 8: So I think making sure you know the business model
Speaker 8: there's free cash flow, there's no releveraging of the company
Speaker 8: or the structure. I think owning that in a diversified way,
Speaker 8: so we own you know, IG credit, so investment grate credit,
Speaker 8: high yield credit, securitize credit.
Speaker 7: I think that's what we would call.
Speaker 8: You know, most of them in the index, many of
Speaker 8: them not in the aggregate index.
Speaker 7: So these would be bonds where.
Speaker 8: You're earning that spread for the fact that you're taking
Speaker 8: on some credit risks, some less liquidity risk, that's what
Speaker 8: you're giving up, but you're picking up that spread because
Speaker 8: corporate fundamentals are still very, very strong, and so that's
Speaker 8: what we're That's why we still like high quality spread
Speaker 8: product because this is not like other times when there's
Speaker 8: been a lot of leveraging up or companies are not
Speaker 8: doing the right thing with their money. I think as
Speaker 8: long as you dig in, you realize what you're buying.
Speaker 8: There's a lot of opportunity within fixed income here.
Speaker 2: So it's just to be clear, it's it's credit risk,
Speaker 2: but it's calculated credit risk. But duration risk is a
Speaker 2: no no.
Speaker 8: Now I think it's now it's getting to levels where
Speaker 8: duration risk is attractive to I know, we might be
Speaker 8: disappointed with the FED. The FED sort of moved to
Speaker 8: one cut this year. I think the Fed has a
Speaker 8: little bit of PTSD from what happened earlier this year
Speaker 8: where they signal rate cuts by June and then we
Speaker 8: get three months of very strong inflation numbers, and so
Speaker 8: I think the FED is very much data dependent.
Speaker 7: But I think owning some duration, owning some five.
Speaker 8: Year treasuries or ten year treasuries is attractive because you know,
Speaker 8: I mean, we can debate whether the first cut is
Speaker 8: in September or December. But let's look at total amount
Speaker 8: of cuts the market is pricing in the end point
Speaker 8: after all these cuts to be three seventy five. The
Speaker 8: Fed's own estimate for long run DOT is two seventy five.
Speaker 7: There's one hundred basis points spread.
Speaker 8: I think in a soft landing, the Fed's cutting to
Speaker 8: three percent, so there's room for rates to decline in
Speaker 8: that five to ten year part of the curve in
Speaker 8: a hard landing. So if things slow down more, the
Speaker 8: FED has told us they're going to be aggressive. They're
Speaker 8: going to cut much more more than that neutral rate.
Speaker 8: So I think owning duration risk can I've been nervous
Speaker 8: around duration risk while inflation was high. I think we
Speaker 8: take a lot of comfort with some of the inflation numbers.
Speaker 8: We're getting the totality of the data. We just slowing down,
Speaker 8: you know, inflation expectations being anchored the inflation data itself
Speaker 8: telling you it's really shelter and auto insurance. So if
Speaker 8: the inflation fear can be put a little bit in
Speaker 8: the rear view mirror, I think owning some duration risk here,
Speaker 8: particularly as we're going into an illiquid environment where some
Speaker 8: of the growth data is showing signs of cracking, I
Speaker 8: think you should own some duration risk as well.
Speaker 7: Some fives intense April.
Speaker 4: Let's say I'm a analyst at JPMorgan Asset Management and
Speaker 4: cover you know, the cable, the high yield, the telecommunications
Speaker 4: sector in the highyield space. If I commit to your
Speaker 4: office and say I love this industry. I think you
Speaker 4: should be buying some of these cable and telecom bonds.
Speaker 4: Do you care about calls like that or do you
Speaker 4: just buy credit metrics, ratings metrics, that kind of thing.
Speaker 4: How are you in terms of giving some way to
Speaker 4: certain industries.
Speaker 8: Yeah, so, I think in general we like to overweight industries,
Speaker 8: you know, utilities which have the whole electrification or anything
Speaker 8: linked to AI. So I think we think of industries
Speaker 8: that are sort of growth industries, industries of the future,
Speaker 8: versus those that are not. So I think we'll do
Speaker 8: that work. But then you have to look at valuation
Speaker 8: at some point if a company is still going to
Speaker 8: be around. I mean there are cable companies will tell
Speaker 8: you which may not seem like they're the companies of
Speaker 8: the future, but they have solid cash flow, they have
Speaker 8: plans to reduce some of that leverage, and we own
Speaker 8: some of those in our funds.
Speaker 7: And then we look at valuation. Where are those.
Speaker 8: Spreads and if they're you know, there might be double B,
Speaker 8: single B. There are certainly some cable companies in that range.
Speaker 8: It can offer value. I think what you'd want to
Speaker 8: think about is diversifying those forms of return particularly we're
Speaker 8: going into an election time period where there will be
Speaker 8: wider dispersion, So I actually think I would listen carefully,
Speaker 8: ask the questions, understand what the company's plans are for
Speaker 8: the debt that they're raising, where are levels? And I
Speaker 8: think there's value even in a sector which you might
Speaker 8: say have structural challenges, before we let you go.
Speaker 2: I just want to end on Europe because, as I
Speaker 2: was mentioning, the CAC forty is down three percent. You
Speaker 2: are seeing a bin to the bond market over in Europe.
Speaker 2: But it's been a really tough week for France and
Speaker 2: the spread is really blowing out between France and German tenure.
Speaker 2: Is there a trade here for you?
Speaker 7: You know? Not yet.
Speaker 8: I still think there's a washout that's happening. I mean
Speaker 8: the periphery, whether it was France so Italy. We're very
Speaker 8: consensus long carry trades. But at some point I have
Speaker 8: to think we're not talking about France leaving the Eurozone,
Speaker 8: so at some point we'd want to dip in. I
Speaker 8: think closer to the election, I will say I hesitate
Speaker 8: trading political risk. It's impossible to really trade it by
Speaker 8: very binary risks, but at some point I think if
Speaker 8: those spreads widen out another twenty thirty basis points, I
Speaker 8: think we can start to leg into it. I wouldn't
Speaker 8: bet the farm on it, because again, you know political risk,
Speaker 8: and we saw this for so many years in the
Speaker 8: European crisis.
Speaker 7: It's difficult and things can a little.
Speaker 8: Bit spill out of control as people de risk. But
Speaker 8: I think the fundamentals are still strong. Let's see, even
Speaker 8: if you get the worst case scenario from a market standpoint,
Speaker 8: will they deliver and will they talk about as much
Speaker 8: spending that is being talked about. I think there's a
Speaker 8: campaign season and then what actually gets done. So I
Speaker 8: think we look at details, we look at.
Speaker 7: Poles and at some point, but I think we were
Speaker 7: still in the early innings.
Speaker 2: Afterwhid and pretty it's fair enough and that's what we
Speaker 2: saw over in Italy with Georgia Maloney. It wasn't as
Speaker 2: bad as everyone was worried about. Pria Israel fixed and
Speaker 2: come Portfolio Manager, JP Morgan, Asset Management.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 4: Well for the month of June, Folks, Bloomberg Radio is
Speaker 4: committed to bringing you segments and guests focus on the
Speaker 4: topic of equality.
Speaker 6: Earlier in the.
Speaker 4: Week, guest host just met and I spoke with Yin Maguire,
Speaker 4: President and CEO of the National Minority Supplier Development Council.
Speaker 4: We first asked her to talk to us about where
Speaker 4: we are in this country in terms of implementing diversity.
Speaker 9: There is a surge in litigation as a part of
Speaker 9: very ideological, well funded, and well coordinated effort among a
Speaker 9: small group of organizations that are completely out of a
Speaker 9: step with the vast majority of Americans. We have a
Speaker 9: thought leadership partner called Public Private Strategies Institute. They commissioned
Speaker 9: Mourning Console study that a few months ago, and the
Speaker 9: study found that majority of corporate senior executives across all
Speaker 9: political affiliations that support the diversity initiative. They believe that
Speaker 9: diversity initiatives played a critical role in the success of
Speaker 9: their companies. For example, seventy five percent of them self
Speaker 9: described as conservatives. Seventy seven percent described themselves as a
Speaker 9: moderates and eighty nine percent our liberals, and all of
Speaker 9: them recognizing the positive contribution of diversity initiatives to their
Speaker 9: business performance. And so these lawsuits really are part of
Speaker 9: larger strategies to constrain the ability of business leaders to
Speaker 9: make decisions for the benefits of their companies. And you know,
Speaker 9: I came to this country with the one suitcase and
Speaker 9: one thousand dollars to pursue my American dream, and because
Speaker 9: I believe America supposed to be a place that one
Speaker 9: has a freedom to achieve, has a freedom to earn,
Speaker 9: and has freedom to make decisions, and has freedom to prosper.
Speaker 9: And so we're seeing an organized movement to stifle that freedom.
Speaker 4: Do you think this is mostly political driven or is
Speaker 4: it shareholder saying I'm just not sure you've proven to
Speaker 4: me that it's in the best interest of me as
Speaker 4: a shareholder to pursue diversity.
Speaker 9: I think it's a political driven and it's an ideological movement.
Speaker 9: We have, you know, NMSCC made up hundreds of thousands
Speaker 9: of corporations, and so we have a daily dialogue with
Speaker 9: corporate executives and they believe in the value of diversities.
Speaker 9: Sometime people don't like the words the E and I,
Speaker 9: so then let's find the new words, you know.
Speaker 8: But the.
Speaker 9: Outcome of the diversity initiative is yielding positive business results.
Speaker 9: It's a good just good for the business.
Speaker 10: When you're talking about the American dream and then also
Speaker 10: corporate America, some of the strides that have been made,
Speaker 10: but still some pitfalls there. Where did those pitfalls stand?
Speaker 10: Because you were talking about the litigations, Where are those
Speaker 10: issues and why are there those litigations, what are they
Speaker 10: involved in?
Speaker 9: So the litigation, as I shared earlier, is a really ideological,
Speaker 9: well organized effort to block the participation for underserved group
Speaker 9: into our economic lives.
Speaker 7: And it's not new.
Speaker 9: So the attack on diversity and opposition to economic equity
Speaker 9: has been there for a very long time. But if
Speaker 9: you look at data and effects, it says otherwise. You know,
Speaker 9: it's very different from what you're hearing in the media.
Speaker 7: Right.
Speaker 9: So, for example, McKenzie's and the company reported that companies
Speaker 9: that are more culturally diverse, actually they're yield I think
Speaker 9: thirty seven percent more profitability than average companies and diverse
Speaker 9: suppliers who we serve, and they actually provide in the
Speaker 9: range of, you know, a little less than nine percent
Speaker 9: cost savings compared to average companies. They realize about three
Speaker 9: to seven percent procurement savings. So there are tremendous economic
Speaker 9: value for diversity initiatives in corporate America.
Speaker 10: What about minority businesses.
Speaker 9: So the minority businesses, they are ready to compete every day.
Speaker 9: We work with them to certify them, to develop them,
Speaker 9: to connect them to opportunities, relationships and a capital. And
Speaker 9: we have businesses, you know, they started as a startup,
Speaker 9: a small business and and they grew to be a
Speaker 9: mid size and to large sized businesses. And we have
Speaker 9: businesses out there. Forcus example, one of our certified mbes
Speaker 9: actually helped design and build finance Liguardi Airport. I was
Speaker 9: I was walking through the Loguardia Airport right, yes, under
Speaker 9: the construction.
Speaker 10: Over the last decade, I.
Speaker 9: Used to avoid Loguarda airport, but since the reconstruction by
Speaker 9: our mbes, like, I actually want to fly to logard right.
Speaker 10: I don't want everyone to know though, because it's so
Speaker 10: easy to get there from my apartment.
Speaker 7: Yes, it's easier, right.
Speaker 9: We have mbes there are design and building natural gas
Speaker 9: power plants, and so they're definitely contributing to our economy
Speaker 9: every single day. And actually, we're releasing the twenty twenty
Speaker 9: three Minority Business Economic Impact Study, and you're going to
Speaker 9: see some of the reports come out. I'm very pleased
Speaker 9: to share the NMSDC certified Minority owned businesses generated about
Speaker 9: three hundred sixty three billion dollar in annual revenue, and
Speaker 9: that is five hundred and fifty billion dollar economic output,
Speaker 9: two million jobs, and one hundred and forty nine billion
Speaker 9: dollar in wages. And if we continue that trend, that
Speaker 9: we can actually reach a trillion dollar goal for NMSDC
Speaker 9: certified mbs by twenty thirty and that's one point five
Speaker 9: trillion dollar economic output and four million jobs.
Speaker 4: So I know you and other advuracyads recently sent a
Speaker 4: letter to Fortune five hundred companies advocating for DEI. What's
Speaker 4: been the response to that letter? Any follow up?
Speaker 9: Yes, I'm very proud to stand with eleven other CEOs
Speaker 9: of a broad range of business organizations representing Black, Asian, Latino, woman, LGBTQ,
Speaker 9: disability venter owned businesses. We represent seventy plus percent American
Speaker 9: and we wrote open letter to Fortune five hundred company
Speaker 9: CEOs really share with them the business cases for diversity,
Speaker 9: and I really encouraged them to continue to invest in
Speaker 9: the initiatives and it has been tremendously positive and in fact,
Speaker 9: working ongoing dialogue with them, continue to share best practices
Speaker 9: and problem solving. In fact, I was with a Fortune
Speaker 9: five hundred company CEO and talking about you know, people
Speaker 9: just need to stop debating on the term and the
Speaker 9: words and with the feelings, and we just need to
Speaker 9: understand why corporations are doing it and why they are
Speaker 9: doing it. And corporations just need more choices of suppliers,
Speaker 9: including inclusion of diverse suppliers so they can build rezilient
Speaker 9: supply chain. And a corporation is going to need more
Speaker 9: diverse talents so they can build product services to diverse
Speaker 9: customer base. Right, so it's really a pure simple business,
Speaker 9: good business.
Speaker 1: Yep.
Speaker 8: All right.
Speaker 4: That was Ying Maguire, President and CEO of the National
Speaker 4: Minority Supplier Development Council, talking about diversity in the workforce
Speaker 4: in the economy and she represents these suppliers all throughout
Speaker 4: the country.
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