1
00:00:00,800 --> 00:00:04,040
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside

2
00:00:04,040 --> 00:00:06,920
Speaker 1: my co host Matt Miller. Every business day, we bring

3
00:00:06,960 --> 00:00:11,520
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along

4
00:00:11,520 --> 00:00:15,600
Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast

5
00:00:15,600 --> 00:00:18,439
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and

6
00:00:18,480 --> 00:00:22,200
Speaker 1: at Bloomberg dot com slash podcast. Alison Williams joins us.

7
00:00:22,200 --> 00:00:25,320
Speaker 1: She's a senior banks analyst at Bloomberg Intelligence and Bloomberg

8
00:00:25,320 --> 00:00:27,800
Speaker 1: Opinion Calms. Paul Davies also joining us here for a

9
00:00:27,800 --> 00:00:32,000
Speaker 1: little roundtable here. Paul, what's the feeling here about bringing

10
00:00:32,080 --> 00:00:37,080
Speaker 1: back mister Emodi to UBS. I guess the market likes it.

11
00:00:37,080 --> 00:00:38,360
Speaker 1: It's kind of seen as a good thing. What do

12
00:00:38,360 --> 00:00:40,800
Speaker 1: you think, Yeah, no, I think it's it seems it's

13
00:00:40,800 --> 00:00:42,839
Speaker 1: definitely a good thing. I mean, you know, UBS now

14
00:00:42,880 --> 00:00:46,040
Speaker 1: presents a very different leadership challenge than it did. You

15
00:00:46,080 --> 00:00:48,400
Speaker 1: know three weeks ago. Three weeks ago, it was still

16
00:00:49,000 --> 00:00:52,120
Speaker 1: a very well run, self contained wealth manager with some

17
00:00:52,200 --> 00:00:55,160
Speaker 1: good sort of growth prospects, you know, churning out good

18
00:00:55,360 --> 00:00:59,000
Speaker 1: profits and buying backstock, and lots of people quite liked it.

19
00:00:59,320 --> 00:01:02,960
Speaker 1: Then it was you know, sort of shoehorned into this

20
00:01:03,040 --> 00:01:06,400
Speaker 1: incredibly large and complicated takeover deal to sort of rescue

21
00:01:06,400 --> 00:01:10,880
Speaker 1: its long time you know, crosstown rival credit Swiss, and

22
00:01:11,120 --> 00:01:15,039
Speaker 1: there is a very difficult you know, cultural and financial

23
00:01:15,120 --> 00:01:19,880
Speaker 1: integration to do. And there's also Swiss taxpayer money, you know,

24
00:01:19,959 --> 00:01:22,880
Speaker 1: on the line here if things don't go well. So

25
00:01:23,280 --> 00:01:26,760
Speaker 1: I think for shareholders, for the Swiss government, for the

26
00:01:26,760 --> 00:01:29,720
Speaker 1: Swiss people who don't necessarily like this deal either. You know,

27
00:01:29,800 --> 00:01:32,880
Speaker 1: they need somebody with the experience and the background of

28
00:01:32,920 --> 00:01:35,560
Speaker 1: Sergio or Matty and someone who has his kind of

29
00:01:35,760 --> 00:01:38,600
Speaker 1: you know, statesmanlike presence as well, and they need someone

30
00:01:38,600 --> 00:01:42,560
Speaker 1: who has his kind of citizenship as well. It's a

31
00:01:42,640 --> 00:01:45,000
Speaker 1: kind of a dirty little secret. Nobody likes to talk

32
00:01:45,040 --> 00:01:49,320
Speaker 1: about this, but I remember when Joseph Ackermanz, who is Swiss,

33
00:01:49,800 --> 00:01:52,200
Speaker 1: was put in charge of Deutsche Bank, which is German,

34
00:01:52,320 --> 00:01:54,360
Speaker 1: and guess what, it did not go down well with

35
00:01:54,400 --> 00:01:56,160
Speaker 1: the German I know, I know, I'm not saying that

36
00:01:56,200 --> 00:02:01,160
Speaker 1: there's xenophobic, but the Swiss do not like when foreigners

37
00:02:01,160 --> 00:02:04,840
Speaker 1: come in and run their big institutions. That that's an

38
00:02:04,840 --> 00:02:08,000
Speaker 1: issue with a lot of countries, right, Paul, how much

39
00:02:08,040 --> 00:02:11,519
Speaker 1: of this is about ermodi not being Dutch, Ralph Hammers.

40
00:02:11,560 --> 00:02:15,760
Speaker 1: I mean, eighty percent of the people in that country

41
00:02:15,840 --> 00:02:20,160
Speaker 1: in a recent poll were against this force takeover. Is

42
00:02:20,200 --> 00:02:22,040
Speaker 1: this a little bit of a throwing them a bone?

43
00:02:22,200 --> 00:02:24,880
Speaker 1: You know, here's a Swiss guy. Don't worry, the old

44
00:02:24,960 --> 00:02:26,960
Speaker 1: dude that you know and love is coming back, and

45
00:02:27,000 --> 00:02:29,640
Speaker 1: he's from our own country. So how much is that?

46
00:02:29,760 --> 00:02:31,560
Speaker 1: How much of that is playing into this? I mean,

47
00:02:31,600 --> 00:02:35,000
Speaker 1: I think, you know, the swissness sort of helps in

48
00:02:35,040 --> 00:02:37,640
Speaker 1: the sense of, you know, you've got to win the

49
00:02:37,680 --> 00:02:40,600
Speaker 1: trust of the people of Switzerland and like I say,

50
00:02:40,680 --> 00:02:45,200
Speaker 1: the politicians and regulators whose own careers and reputations are

51
00:02:45,200 --> 00:02:47,680
Speaker 1: on the line as well after this, after this kind

52
00:02:47,680 --> 00:02:50,760
Speaker 1: of shotgun marriage. So I mean, it definitely helps. And

53
00:02:50,800 --> 00:02:53,120
Speaker 1: there is you know, everybody kind of you know, says

54
00:02:53,160 --> 00:02:55,240
Speaker 1: there's this unwritten rule that at least one of the

55
00:02:55,240 --> 00:02:58,720
Speaker 1: two top top jobs sorry chairman or CEO, needs to

56
00:02:58,720 --> 00:03:00,760
Speaker 1: be held by a Swiss person, right, you know, it

57
00:03:00,800 --> 00:03:03,880
Speaker 1: hasn't always been true, um, and I don't think Switzerland

58
00:03:04,000 --> 00:03:07,000
Speaker 1: is you know, quite as um, you know, blinkered in

59
00:03:07,040 --> 00:03:09,600
Speaker 1: that way as as as you might as some people

60
00:03:09,680 --> 00:03:11,880
Speaker 1: might think. But I mean it's it is a conservative

61
00:03:11,880 --> 00:03:14,880
Speaker 1: country and right now they need a leader who can

62
00:03:14,919 --> 00:03:18,800
Speaker 1: sell this deal to the Swiss people exactly. So, Alison,

63
00:03:18,840 --> 00:03:21,080
Speaker 1: from your perspective as a research channels looking at the

64
00:03:21,080 --> 00:03:24,680
Speaker 1: fundamentals to financials here, what are mister Emodi's kind of

65
00:03:24,680 --> 00:03:27,720
Speaker 1: top two or three tasks do you believe to ensure

66
00:03:27,760 --> 00:03:31,280
Speaker 1: that this is a success? Wow? Top two or three?

67
00:03:31,520 --> 00:03:36,880
Speaker 1: So um so, First, you know, they have to right

68
00:03:36,920 --> 00:03:41,080
Speaker 1: size the units in terms of um, you know, deciding

69
00:03:41,480 --> 00:03:43,400
Speaker 1: what they're what they're going to keep and what they're

70
00:03:43,400 --> 00:03:46,480
Speaker 1: going to leave behind. I think you know, in particular

71
00:03:47,640 --> 00:03:50,040
Speaker 1: hell guide Chard do you have the investment bank, but

72
00:03:50,080 --> 00:03:54,600
Speaker 1: hopefully there are people with expertise evaluating those assets and

73
00:03:54,640 --> 00:03:57,480
Speaker 1: client risks and you know, making sure that there's no

74
00:03:57,600 --> 00:04:01,360
Speaker 1: doubling down on risks they don't want. Um you know,

75
00:04:02,120 --> 00:04:05,280
Speaker 1: I think that that the second so so first is

76
00:04:05,360 --> 00:04:09,520
Speaker 1: sort of making those decisions which we've seen broad strokes,

77
00:04:09,560 --> 00:04:12,360
Speaker 1: but I think Urmanti has to sort of confirm those

78
00:04:12,440 --> 00:04:19,280
Speaker 1: and implement that. Second, I would say is culture and

79
00:04:19,320 --> 00:04:21,960
Speaker 1: so maybe this is actually the this is even more

80
00:04:22,000 --> 00:04:26,120
Speaker 1: important than picking the businesses, right, So think about the

81
00:04:26,160 --> 00:04:30,799
Speaker 1: culture of ubs in terms of especially under the range

82
00:04:30,839 --> 00:04:36,560
Speaker 1: of Armani pulling back of risk and really strong controls

83
00:04:36,560 --> 00:04:38,520
Speaker 1: of the business. One of the charts we like to

84
00:04:38,560 --> 00:04:41,000
Speaker 1: show is, you know, if you look at overall trading

85
00:04:41,000 --> 00:04:45,720
Speaker 1: and revenue for the global trading and investment banking business, uh,

86
00:04:45,880 --> 00:04:48,360
Speaker 1: you know, UBS is at the lower end of variability

87
00:04:48,360 --> 00:04:50,680
Speaker 1: on that scale, and Credit SUITEZES is at the high end.

88
00:04:50,720 --> 00:04:54,800
Speaker 1: And so taking on those businesses and instill in culture,

89
00:04:54,839 --> 00:04:59,200
Speaker 1: I think it's probably the most important task and the

90
00:04:59,240 --> 00:05:04,080
Speaker 1: most difficult tasks. And then you know, finally, um, the

91
00:05:04,160 --> 00:05:09,239
Speaker 1: restructuring cost cutting program is going to be significant. Managing

92
00:05:09,400 --> 00:05:13,839
Speaker 1: the risk, especially within the Command Swiss unit where they

93
00:05:13,880 --> 00:05:17,560
Speaker 1: have a significant share, a share that I think would

94
00:05:17,560 --> 00:05:20,560
Speaker 1: have prevented it a deal if not for the troubles

95
00:05:20,600 --> 00:05:23,320
Speaker 1: that the government was trying to avoid. Um. You know,

96
00:05:23,360 --> 00:05:26,760
Speaker 1: that's a key challenge. And so Armadi obviously brings the

97
00:05:27,040 --> 00:05:31,440
Speaker 1: Swiss expertise. As you said, he's also undergone a significant

98
00:05:31,520 --> 00:05:35,520
Speaker 1: de risking and restructuring program under his reign in prior years. Hey, Paul,

99
00:05:35,880 --> 00:05:38,680
Speaker 1: you know I've seen reporting that the this deal, this

100
00:05:38,720 --> 00:05:44,520
Speaker 1: combination is extremely unpopular with the Swiss people. Why is that?

101
00:05:46,279 --> 00:05:48,120
Speaker 1: I mean, I think there's there's a couple of things.

102
00:05:48,160 --> 00:05:50,719
Speaker 1: I mean, there was some of the some of the

103
00:05:50,760 --> 00:05:56,479
Speaker 1: surveys I saw were about the credibility of the regulator

104
00:05:56,520 --> 00:06:00,080
Speaker 1: FINNMA and the government. Do they have credibility? Well, I

105
00:06:00,080 --> 00:06:03,920
Speaker 1: don't know that the overseeing Credit Swiss, which has like

106
00:06:04,000 --> 00:06:07,240
Speaker 1: a global scandal every six months. I mean, there are

107
00:06:07,279 --> 00:06:10,200
Speaker 1: plenty of people who thinks that, who think that Finnmer,

108
00:06:10,640 --> 00:06:14,160
Speaker 1: the financial regulator, could have and should have intervened in

109
00:06:14,520 --> 00:06:17,159
Speaker 1: stronger ways, you know, much sooner. I think there's you

110
00:06:17,160 --> 00:06:19,359
Speaker 1: know that you could even find people at Credit Suis

111
00:06:19,520 --> 00:06:21,640
Speaker 1: who who would have hoped that the regulator might have

112
00:06:21,680 --> 00:06:26,320
Speaker 1: rescued them from themselves much quicker. Um. But but then

113
00:06:26,360 --> 00:06:27,800
Speaker 1: the other, I mean, the other key thing about the

114
00:06:27,880 --> 00:06:30,960
Speaker 1: unpopularity of this deal is just you know, the dominant

115
00:06:31,200 --> 00:06:34,040
Speaker 1: bank at home that it will create. And again that's

116
00:06:34,040 --> 00:06:36,640
Speaker 1: a kind of I think that's another reason why the

117
00:06:36,760 --> 00:06:40,599
Speaker 1: presentation of this and the effort that you know, Sergio

118
00:06:40,720 --> 00:06:43,359
Speaker 1: Mutty will have to make to win over people and

119
00:06:43,400 --> 00:06:46,720
Speaker 1: win over win back trust is going to be so important.

120
00:06:46,839 --> 00:06:50,200
Speaker 1: You know, they waived competition rules to let this deal happen.

121
00:06:50,640 --> 00:06:52,960
Speaker 1: Colin Keller her the chairman, you know, when they were

122
00:06:53,000 --> 00:06:55,040
Speaker 1: announcing this deal the other week said you know, we

123
00:06:55,040 --> 00:06:56,839
Speaker 1: were going to do everything we can to kind of

124
00:06:56,839 --> 00:07:00,080
Speaker 1: hold onto this enlarged Swiss Bank. You know, we've not

125
00:07:00,200 --> 00:07:02,960
Speaker 1: heard the last of this at all. So I think,

126
00:07:03,000 --> 00:07:07,760
Speaker 1: you know, there's a real public public relations charm offensive,

127
00:07:07,800 --> 00:07:09,760
Speaker 1: whatever you want to call it, effort to be made

128
00:07:10,200 --> 00:07:13,120
Speaker 1: to try and keep this together, you know, on the

129
00:07:13,160 --> 00:07:16,360
Speaker 1: part of UBS. I mean, they had to do something right.

130
00:07:16,480 --> 00:07:20,320
Speaker 1: Credit Swiss had they were spying on their employees, remember

131
00:07:20,360 --> 00:07:26,240
Speaker 1: that they had bet big on Green Silly. They were

132
00:07:26,240 --> 00:07:29,200
Speaker 1: willing to give as much credit to Archagos as he

133
00:07:29,320 --> 00:07:31,880
Speaker 1: wanted exactly, you know, I mean the reality is, I mean,

134
00:07:31,880 --> 00:07:34,880
Speaker 1: this has been going on for now, getting tax issues.

135
00:07:35,400 --> 00:07:38,720
Speaker 1: I mean, is there anything they didn't do wrong? What

136
00:07:38,760 --> 00:07:41,160
Speaker 1: would the Swiss people have preferred? You know, I mean

137
00:07:41,600 --> 00:07:44,840
Speaker 1: I don't know, Alison, what just from the investment banking perspective,

138
00:07:45,400 --> 00:07:48,640
Speaker 1: do you put one and one together and get two plus?

139
00:07:48,960 --> 00:07:50,600
Speaker 1: How do you think they're going to play the investment

140
00:07:50,640 --> 00:07:55,040
Speaker 1: banking business? So unfortunately, we think it's actually the opposite.

141
00:07:55,040 --> 00:07:58,360
Speaker 1: You put one and one together and the combined edity

142
00:07:58,440 --> 00:08:01,760
Speaker 1: is probably going to come in below. You know, sort

143
00:08:01,760 --> 00:08:04,240
Speaker 1: of what would be ProForma estimates at least for the

144
00:08:04,280 --> 00:08:08,680
Speaker 1: near term. For for two key reasons. One is, you know,

145
00:08:08,720 --> 00:08:10,960
Speaker 1: as I mentioned, they're going to want to mitigate combined

146
00:08:11,040 --> 00:08:14,640
Speaker 1: risk to clients in terms of UM exposures to clients

147
00:08:14,720 --> 00:08:18,040
Speaker 1: and what they're providing them. They're not going to double

148
00:08:18,120 --> 00:08:20,440
Speaker 1: down from the client side. They're also not going to

149
00:08:20,480 --> 00:08:23,240
Speaker 1: want to double down as well clients like two UM,

150
00:08:23,640 --> 00:08:26,320
Speaker 1: you know, sort of diversify the people that they're working

151
00:08:26,320 --> 00:08:30,520
Speaker 1: with in their exposures. And then secondly, you know, when

152
00:08:30,520 --> 00:08:33,400
Speaker 1: you look at UM, you know, in particular the fixed

153
00:08:33,400 --> 00:08:36,040
Speaker 1: income trading business of credit swees, a lot of this

154
00:08:37,120 --> 00:08:40,160
Speaker 1: are types of businesses that UBS has shied away from

155
00:08:40,200 --> 00:08:43,319
Speaker 1: and moved away from a long time ago. UBS is

156
00:08:43,360 --> 00:08:47,760
Speaker 1: fixed income trading unit is very currencies rates focused. UM

157
00:08:47,840 --> 00:08:50,800
Speaker 1: so really focused on flow based businesses if you will,

158
00:08:50,840 --> 00:08:53,600
Speaker 1: that don't use the balance sheet as much. UM. Credit

159
00:08:53,640 --> 00:08:56,559
Speaker 1: sweet was the opposite. We know that they've already been

160
00:08:56,600 --> 00:09:00,640
Speaker 1: moving away and reducing that and we think that well

161
00:09:00,679 --> 00:09:02,960
Speaker 1: UBS has said they're going to do it, and we

162
00:09:03,000 --> 00:09:05,360
Speaker 1: expect that that happens on an accelerated time from that

163
00:09:05,400 --> 00:09:08,600
Speaker 1: they cut those assets more. All right, guys, great having

164
00:09:08,640 --> 00:09:11,160
Speaker 1: you both together on this. It's a big, big day

165
00:09:11,320 --> 00:09:15,480
Speaker 1: for UBS as it tries to navigate its acquisition of

166
00:09:15,559 --> 00:09:18,080
Speaker 1: Credit Swiss really over. It's going to be a multi

167
00:09:18,160 --> 00:09:20,199
Speaker 1: year issue, is kind of how it appears at this point.

168
00:09:20,240 --> 00:09:23,480
Speaker 1: We had Paul Davies, Bloomberg Opinion columnists joining us from London,

169
00:09:23,720 --> 00:09:26,720
Speaker 1: and Alison William's, senior Global Banks annalyst fro Bloomberg Intelligence,

170
00:09:26,920 --> 00:09:29,760
Speaker 1: joining us from the phone from Princeton, New Jersey, kind

171
00:09:29,800 --> 00:09:32,280
Speaker 1: of rounding it all out. Yeah, I just think it's

172
00:09:33,480 --> 00:09:35,640
Speaker 1: not the end. We're gonna hear more. I think your

173
00:09:35,679 --> 00:09:39,440
Speaker 1: story exactly right. There's probably a lot of issues that

174
00:09:39,559 --> 00:09:41,880
Speaker 1: UBS is gonna find over the coming weeks, months, and

175
00:09:42,040 --> 00:09:47,240
Speaker 1: maybe years. This is Bloomberg. You're listening to the Team

176
00:09:47,600 --> 00:09:51,440
Speaker 1: Cancer Live program, Bloomberg Markets weekdays at ten am, easting

177
00:09:51,600 --> 00:09:54,280
Speaker 1: on Bloomberg dot Com, the I Heard Radio app, and

178
00:09:54,360 --> 00:09:57,280
Speaker 1: the Bloomberg Business App. We're listening on demand wherever you

179
00:09:57,320 --> 00:10:03,200
Speaker 1: get your podcast. David Bonson, cio of the Bonson Group.

180
00:10:03,200 --> 00:10:05,720
Speaker 1: Before that, you spend a bunch of time at Morgan

181
00:10:05,800 --> 00:10:09,480
Speaker 1: Stanley and then at UBS running money here so under

182
00:10:09,480 --> 00:10:14,679
Speaker 1: Sergio Armudi exactly now. Interesting, mister Monti's back. David, thanks

183
00:10:14,720 --> 00:10:17,920
Speaker 1: so much for joining us. Here. What are you telling

184
00:10:17,920 --> 00:10:21,400
Speaker 1: your clients these days? You know it just January was great,

185
00:10:21,120 --> 00:10:24,440
Speaker 1: February not so much, March just kind of hanging out here.

186
00:10:24,440 --> 00:10:26,640
Speaker 1: And now we've started quarter two. What are you telling

187
00:10:26,640 --> 00:10:31,200
Speaker 1: your clients? Well, essentially, I'm telling them exactly what markets

188
00:10:31,240 --> 00:10:32,679
Speaker 1: are telling us, which is that there's a lot of

189
00:10:32,760 --> 00:10:36,080
Speaker 1: uncertainty in the equity market and that volatility is likely

190
00:10:36,240 --> 00:10:40,439
Speaker 1: to continue. I'm struck by Bullard's comment about the equity

191
00:10:40,520 --> 00:10:44,600
Speaker 1: volatility can mean certain things at different times for financial conditions,

192
00:10:44,640 --> 00:10:47,600
Speaker 1: and it's just not really their job to look at it,

193
00:10:47,640 --> 00:10:49,640
Speaker 1: because I very much agree with them. It is not

194
00:10:49,679 --> 00:10:52,960
Speaker 1: their job to look at that. Financial conditions are going

195
00:10:53,000 --> 00:10:56,200
Speaker 1: to move for any number of different reasons, and their

196
00:10:56,320 --> 00:11:00,439
Speaker 1: job is to not to be taking their signals that way. Rather,

197
00:11:01,640 --> 00:11:05,120
Speaker 1: it is quite evident that the disinflation is upon us.

198
00:11:05,440 --> 00:11:11,360
Speaker 1: They have overtightened, and they seem hell bent on exacerbating

199
00:11:11,400 --> 00:11:14,400
Speaker 1: the mistakes they make on both ends, staying too low

200
00:11:14,480 --> 00:11:16,880
Speaker 1: too long and then staying too tight too long. Well

201
00:11:16,880 --> 00:11:18,760
Speaker 1: don't they. I mean, it seems what they really want

202
00:11:18,760 --> 00:11:21,880
Speaker 1: to do is avoid the fate of Arthur Burns. They

203
00:11:22,040 --> 00:11:26,600
Speaker 1: don't want to uh, you know, shoot before they see

204
00:11:26,640 --> 00:11:32,760
Speaker 1: the whites of the eyes of I guess disinflation, right, Well,

205
00:11:32,800 --> 00:11:35,400
Speaker 1: I would love to believe that they cared about that.

206
00:11:35,480 --> 00:11:38,520
Speaker 1: I don't. I definitely understand rhetorically the pal has talked

207
00:11:38,640 --> 00:11:41,840
Speaker 1: much more that way, more volkerlike than Burns like. But

208
00:11:42,160 --> 00:11:44,800
Speaker 1: Arthur Burns never had the luxury of dealing with M

209
00:11:44,880 --> 00:11:49,160
Speaker 1: two dropping three percent in one quarter and the CPI

210
00:11:49,320 --> 00:11:54,800
Speaker 1: lag essentially representing over half the shelter lag, rather in

211
00:11:54,920 --> 00:11:57,840
Speaker 1: CPI representing over half of what we see in CPI.

212
00:11:59,120 --> 00:12:01,520
Speaker 1: Burns was not coming off of a shutdown of the

213
00:12:01,559 --> 00:12:05,200
Speaker 1: economy that then led to a supply side really a

214
00:12:05,280 --> 00:12:08,920
Speaker 1: debacle in the production of goods and services, labor shortages,

215
00:12:09,040 --> 00:12:11,880
Speaker 1: other things like that. And so there were a lot

216
00:12:11,920 --> 00:12:14,440
Speaker 1: of differences in the inflation of the seventies and the

217
00:12:14,440 --> 00:12:17,680
Speaker 1: inflation we've had in the last eighteen months. But what

218
00:12:17,720 --> 00:12:20,200
Speaker 1: do you what do you think then, David? It's been

219
00:12:20,240 --> 00:12:23,120
Speaker 1: suggested to us by I think daniel D. Martineau Booth

220
00:12:23,480 --> 00:12:26,079
Speaker 1: that part of what Powell wants to do is just

221
00:12:26,280 --> 00:12:29,720
Speaker 1: break the FED put for now and forever. What do

222
00:12:29,760 --> 00:12:34,200
Speaker 1: you think his endgame is? Yeah? And I love Danielle

223
00:12:34,200 --> 00:12:36,280
Speaker 1: and I think that Danielle's an assessment of what Pale

224
00:12:36,320 --> 00:12:38,440
Speaker 1: did back in eighteen and nineteen was some of the

225
00:12:38,480 --> 00:12:41,439
Speaker 1: best out there, But I don't agree with her that

226
00:12:41,440 --> 00:12:44,800
Speaker 1: that is the case. I don't think any said chair

227
00:12:45,200 --> 00:12:47,520
Speaker 1: can break the FED put. I think that it is

228
00:12:47,559 --> 00:12:50,520
Speaker 1: not merely a matter that Wall Street or Main Street

229
00:12:50,559 --> 00:12:53,199
Speaker 1: has gotten dependent on it, both of which is true,

230
00:12:53,800 --> 00:12:56,679
Speaker 1: but the US economy has gotten dependent on it. The

231
00:12:56,800 --> 00:13:02,920
Speaker 1: pension funds, the unfunded liabilities of pensioners all around the

232
00:13:02,960 --> 00:13:06,880
Speaker 1: country to totally break the put. If we really thought

233
00:13:06,920 --> 00:13:09,720
Speaker 1: that was happening, credit spreads would be five hundred basis

234
00:13:09,760 --> 00:13:12,360
Speaker 1: points wider than they are. We had a year last

235
00:13:12,400 --> 00:13:15,720
Speaker 1: year where everyone was talking about recession and yet duration

236
00:13:16,080 --> 00:13:19,640
Speaker 1: underperformed credit. I mean it was It's surreal that we're

237
00:13:19,679 --> 00:13:22,319
Speaker 1: having a banking moment right now and there isn't a

238
00:13:22,400 --> 00:13:25,920
Speaker 1: single lick of credit impairment. It's entirely interest great risk.

239
00:13:26,440 --> 00:13:29,280
Speaker 1: So I don't think that the FED put is going anywhere.

240
00:13:29,320 --> 00:13:32,040
Speaker 1: But again, even if Daniel's right, we wouldn't know it

241
00:13:32,440 --> 00:13:35,320
Speaker 1: until they really get tested. I mean, the SMPS down

242
00:13:35,400 --> 00:13:39,400
Speaker 1: twenty the NAVSDAC was from last year. The NAVSDAC had

243
00:13:39,440 --> 00:13:43,720
Speaker 1: already gone up fifty before it came down thirty. Credit

244
00:13:43,800 --> 00:13:48,120
Speaker 1: spreads are still really really tame. Nothing has broken yet.

245
00:13:48,320 --> 00:13:51,760
Speaker 1: Now we have the banking system, you know, I certainly

246
00:13:51,800 --> 00:13:54,640
Speaker 1: think the FED can control housing price, inflation of the

247
00:13:54,679 --> 00:13:57,560
Speaker 1: interest rate, and that bubble was out of control. So

248
00:13:57,600 --> 00:13:59,920
Speaker 1: that's one element where I believe they can control inflation.

249
00:14:00,040 --> 00:14:02,079
Speaker 1: And I just don't believe they have any control with

250
00:14:02,160 --> 00:14:05,520
Speaker 1: the sad funds rate over normal goods and services. All right, Dave,

251
00:14:05,600 --> 00:14:08,400
Speaker 1: let's get to brass tax here. Where do we go

252
00:14:08,440 --> 00:14:10,080
Speaker 1: with our money? A lot of folks are telling me

253
00:14:10,200 --> 00:14:13,120
Speaker 1: to go to quality. I'm not really sure what that means,

254
00:14:13,160 --> 00:14:14,920
Speaker 1: but it feels like I should be buying companies that

255
00:14:15,000 --> 00:14:19,560
Speaker 1: sell toothpaste and I mean cash shampoo and have high dividends.

256
00:14:19,640 --> 00:14:23,560
Speaker 1: I mean, how do you think about quality in today's market?

257
00:14:23,600 --> 00:14:26,040
Speaker 1: What does that mean to you? Yeah, so I can

258
00:14:26,040 --> 00:14:29,080
Speaker 1: only assume that you're seeing me up accidentally. I certainly

259
00:14:29,120 --> 00:14:31,640
Speaker 1: am talking to my book here, but the differences. I'm

260
00:14:31,640 --> 00:14:34,720
Speaker 1: not making a tactical call for quality. It's all we do,

261
00:14:34,800 --> 00:14:36,920
Speaker 1: it's all we ever believe in. We never want to

262
00:14:36,960 --> 00:14:40,600
Speaker 1: be buying high priced, high multiple What do you mean, David,

263
00:14:40,600 --> 00:14:43,840
Speaker 1: when you say quality? We mean balance sheet strength and

264
00:14:43,920 --> 00:14:46,600
Speaker 1: free cash flow, and that's all anyone should mean. I mean,

265
00:14:46,640 --> 00:14:49,000
Speaker 1: I would add to that, although I think it's sort

266
00:14:49,000 --> 00:14:52,840
Speaker 1: of implied a business model that is sensible and defensible

267
00:14:52,920 --> 00:14:56,000
Speaker 1: and so forth. But out of that business model that

268
00:14:56,160 --> 00:14:59,000
Speaker 1: is not quite so cyclical and not quite so speculative.

269
00:14:59,400 --> 00:15:02,680
Speaker 1: Quality is a financial condition. It refers to balance sheet strength,

270
00:15:02,760 --> 00:15:07,360
Speaker 1: lower debt ratios, and more predictable and growing free cash flow.

271
00:15:07,400 --> 00:15:10,280
Speaker 1: And how do we know if a company has dependable

272
00:15:10,720 --> 00:15:13,240
Speaker 1: dividend growth? It's from the free cash flow growth. You

273
00:15:13,280 --> 00:15:16,400
Speaker 1: can't pay a dividend from money that doesn't exist. And so,

274
00:15:16,440 --> 00:15:19,920
Speaker 1: as dividend growth managers, a little over two and a

275
00:15:19,960 --> 00:15:22,280
Speaker 1: half a billion of the over four billion that I

276
00:15:22,360 --> 00:15:25,480
Speaker 1: manage is in dividend growth equity and it is doing

277
00:15:25,640 --> 00:15:28,840
Speaker 1: extremely well right now, and we believe it's the right

278
00:15:28,840 --> 00:15:31,480
Speaker 1: place to be going forward. But again, we believe that

279
00:15:31,520 --> 00:15:34,040
Speaker 1: even when Fang is rallying. But hey, while you're talking

280
00:15:34,080 --> 00:15:37,360
Speaker 1: your book, you want to give us some names. Yeah,

281
00:15:37,400 --> 00:15:39,800
Speaker 1: by the way, I think the name I Blackstone and Apollo.

282
00:15:39,840 --> 00:15:42,440
Speaker 1: If you're a couple of asset managers, they get lumped

283
00:15:42,440 --> 00:15:44,600
Speaker 1: in with financials. And we know the banks of at

284
00:15:44,600 --> 00:15:47,880
Speaker 1: a hard time. But these are just unbelievable dividend growers

285
00:15:47,920 --> 00:15:50,560
Speaker 1: that simply don't have a bank business model at all.

286
00:15:50,640 --> 00:15:54,400
Speaker 1: They don't take balance sheet risk. They're using investor money

287
00:15:54,440 --> 00:15:57,080
Speaker 1: from which they get really good fees, really good promotes,

288
00:15:57,640 --> 00:16:00,240
Speaker 1: and they are mostly a non traditional asset class is

289
00:16:00,280 --> 00:16:04,600
Speaker 1: private equity, hedge funds, real estate, credit and their asset

290
00:16:04,680 --> 00:16:08,520
Speaker 1: gathering machines. And so Blackstone and Apollo are two robust

291
00:16:08,640 --> 00:16:12,280
Speaker 1: dividend growing names. Blackstone we've owned for a decade and

292
00:16:12,640 --> 00:16:16,040
Speaker 1: believe that they will continue growing the dividend in high

293
00:16:16,080 --> 00:16:18,680
Speaker 1: single digits per year. You're going to get about a

294
00:16:18,800 --> 00:16:21,960
Speaker 1: five percent dividend annualized, and you're going to get we

295
00:16:22,000 --> 00:16:26,720
Speaker 1: think that much or more in price grows. How about energy,

296
00:16:27,120 --> 00:16:30,440
Speaker 1: I'm thinking, David, I might have missed that whole train there,

297
00:16:30,480 --> 00:16:35,160
Speaker 1: that whole boat. What happened with energies or anything left there? Yeah,

298
00:16:35,160 --> 00:16:37,200
Speaker 1: there certainly is, although we are a little bit more

299
00:16:37,240 --> 00:16:39,880
Speaker 1: bullish than now a midstream than upstream. But you know,

300
00:16:39,960 --> 00:16:41,640
Speaker 1: when you say missed the boat, if you mean the

301
00:16:42,400 --> 00:16:46,160
Speaker 1: forty five percent move and in the sixty percent move

302
00:16:46,280 --> 00:16:49,240
Speaker 1: last year, but you know what, it's trading at nine

303
00:16:49,280 --> 00:16:52,160
Speaker 1: point two times earnings. Okay, it's trading at half of

304
00:16:52,200 --> 00:16:56,920
Speaker 1: its annualized evaluation. Meanwhile, Tech, which was pummelo last year,

305
00:16:57,040 --> 00:16:59,920
Speaker 1: is still trading at twenty four times versus in eighteen

306
00:17:00,120 --> 00:17:04,080
Speaker 1: times historical. So I would still argue that energy is

307
00:17:04,160 --> 00:17:08,520
Speaker 1: undervalued relative and tech is overvalued relative. But a better

308
00:17:08,560 --> 00:17:11,960
Speaker 1: place to be from a quality standpoint is midstream. Really

309
00:17:12,160 --> 00:17:15,840
Speaker 1: robust free cash flow growth, heavy dividend coverage, and they

310
00:17:15,920 --> 00:17:22,000
Speaker 1: really delevered. What is midstream is that refineries. No refineries

311
00:17:22,000 --> 00:17:24,840
Speaker 1: would be more downstream, and midstream would be the pipelines

312
00:17:24,920 --> 00:17:29,200
Speaker 1: and storage transportation. It's a very environmentally friendly play as well.

313
00:17:29,240 --> 00:17:32,520
Speaker 1: You don't want oil and gas being transported by truck

314
00:17:32,600 --> 00:17:35,560
Speaker 1: and by rail, and so we like the pipeline space.

315
00:17:35,600 --> 00:17:38,520
Speaker 1: And then of course the LNG exports story is a

316
00:17:38,560 --> 00:17:41,960
Speaker 1: midstream story too, and we think there's huge growth potential there.

317
00:17:42,680 --> 00:17:44,639
Speaker 1: If I wanted to build a new pipeline today, I

318
00:17:44,640 --> 00:17:46,760
Speaker 1: couldn't get it done, could not in this administration. Why

319
00:17:46,760 --> 00:17:50,000
Speaker 1: did we all hate that big pipeline down from Canada.

320
00:17:50,119 --> 00:17:52,760
Speaker 1: I don't know, something the ELK migration or something, so,

321
00:17:53,040 --> 00:17:55,000
Speaker 1: but I mean, I mean, that's also kind of a

322
00:17:55,040 --> 00:17:57,840
Speaker 1: bullish part of the midstream called they're not going to

323
00:17:57,880 --> 00:18:01,439
Speaker 1: be adding more pipelines. Yeah. I do hope that that

324
00:18:01,480 --> 00:18:05,040
Speaker 1: will change. I believe it is without getting overly political

325
00:18:05,080 --> 00:18:08,040
Speaker 1: and incredibly foolish decision by the current administration. But the

326
00:18:08,080 --> 00:18:10,960
Speaker 1: fact that matter is you're right. It boosts up the

327
00:18:11,040 --> 00:18:15,600
Speaker 1: value of incumbent assets when you artificially constrain new supply.

328
00:18:15,920 --> 00:18:17,600
Speaker 1: All right, we'll have to see how that place out.

329
00:18:17,640 --> 00:18:20,280
Speaker 1: David Bonson always a pleasure to chat with, get some

330
00:18:20,400 --> 00:18:23,680
Speaker 1: good ideas. David Bonson, CIO of the Bonson Group. He's

331
00:18:23,800 --> 00:18:26,919
Speaker 1: been managing private wealth money for a long Time's got

332
00:18:26,960 --> 00:18:28,800
Speaker 1: a lot of perspective. He's out there in the West Coast,

333
00:18:28,800 --> 00:18:31,720
Speaker 1: to which we late out there in Newport Beach, California.

334
00:18:31,960 --> 00:18:33,720
Speaker 1: That's got to be tough going to tennis every day.

335
00:18:33,960 --> 00:18:37,080
Speaker 1: You're listening to the tape kens Are Live program Bloomberg

336
00:18:37,160 --> 00:18:40,680
Speaker 1: Markets weekdays at ten am Eastern on Bloomberg Radio, the

337
00:18:40,800 --> 00:18:44,000
Speaker 1: tune in app, Bloomberg dot Com, and the Bloomberg Business App.

338
00:18:44,080 --> 00:18:46,879
Speaker 1: You can also listen live on Amazon Alexa from our

339
00:18:46,920 --> 00:18:52,040
Speaker 1: flagship New York station, Just Say Alexa, play Bloomberg eleven thirty.

340
00:18:53,119 --> 00:18:55,680
Speaker 1: The news coming out of China, I guess most recently

341
00:18:56,119 --> 00:19:00,000
Speaker 1: is company specific. Ali Baba one of the leading conglomerate telecom,

342
00:19:00,400 --> 00:19:03,560
Speaker 1: cloud companies, e commerce companies. One of the real success

343
00:19:03,560 --> 00:19:06,639
Speaker 1: stories of China is going to be breaking itself up

344
00:19:06,640 --> 00:19:08,760
Speaker 1: into six smaller pieces. And I don't want to necessarily

345
00:19:08,760 --> 00:19:10,400
Speaker 1: talk about that per se, but what does it mean

346
00:19:10,800 --> 00:19:13,040
Speaker 1: for the economy, for the tech sector, for just the

347
00:19:13,080 --> 00:19:17,600
Speaker 1: government's involvement in the economy of China. And to do

348
00:19:17,640 --> 00:19:22,080
Speaker 1: that we check in with Bloomberg Economics chief economists Tom Orlick. Tom,

349
00:19:22,160 --> 00:19:25,840
Speaker 1: you lived and worked in China and Beijing for many,

350
00:19:25,880 --> 00:19:29,040
Speaker 1: many years. You've got a fantastic perspective here. You see

351
00:19:29,040 --> 00:19:34,040
Speaker 1: the Ali Baba news And is this entirely in response

352
00:19:34,119 --> 00:19:36,879
Speaker 1: or primarily in response to the government saying you guys

353
00:19:36,880 --> 00:19:38,200
Speaker 1: got too big? I mean, we want to see you

354
00:19:38,240 --> 00:19:43,440
Speaker 1: get smaller. So I think what Ali Baba has done here, Paul,

355
00:19:43,800 --> 00:19:49,280
Speaker 1: is potentially rather ingenious. They've got a plan which could

356
00:19:49,320 --> 00:19:54,120
Speaker 1: satisfy their two key constituencies. On the one hand, you've

357
00:19:54,119 --> 00:19:58,560
Speaker 1: got investors who are frustrated that they see Ali Baba,

358
00:19:58,960 --> 00:20:02,119
Speaker 1: the big company, not being valued as it should be

359
00:20:02,720 --> 00:20:06,280
Speaker 1: and see potential for much higher valuations if some of

360
00:20:06,320 --> 00:20:10,960
Speaker 1: the fast growing components of the business, from e commerce

361
00:20:11,080 --> 00:20:15,679
Speaker 1: to cloud to logistics, can be split off. And on

362
00:20:15,720 --> 00:20:19,719
Speaker 1: the other hand, you've got Beijing Jijinping, who were worried

363
00:20:19,720 --> 00:20:24,200
Speaker 1: about the power of tech monopolies, worried perhaps that very

364
00:20:24,240 --> 00:20:27,880
Speaker 1: powerful entrepreneurs could one day pose a challenge to Communist

365
00:20:27,960 --> 00:20:31,359
Speaker 1: party rule. And so this plan to split the company

366
00:20:31,440 --> 00:20:38,800
Speaker 1: up into six different smaller companies potentially satisfies both groups.

367
00:20:38,840 --> 00:20:42,840
Speaker 1: All right, So you hit on something there that I

368
00:20:42,920 --> 00:20:46,440
Speaker 1: was wondering about. Since these Ali Baba headlines came out, really,

369
00:20:46,480 --> 00:20:52,880
Speaker 1: since the photos of Jack Mass surfaced reportedly back in China,

370
00:20:53,040 --> 00:20:56,119
Speaker 1: how much does Ali Baba really get to decide for itself?

371
00:20:56,400 --> 00:20:59,120
Speaker 1: I mean, when we say Ali Baba made a genius decision,

372
00:20:59,560 --> 00:21:02,320
Speaker 1: isn't it? Aren't they just kind of told what to do?

373
00:21:04,280 --> 00:21:06,360
Speaker 1: You know? I mean, that is a really good question.

374
00:21:06,800 --> 00:21:09,199
Speaker 1: And I do not have a crystal ball into the

375
00:21:09,359 --> 00:21:15,560
Speaker 1: Ali Baba boardroom. Certainly, China's Common Prosperity Agenda, which has

376
00:21:15,640 --> 00:21:21,720
Speaker 1: included a sweeping crackdown on the big tech company's Ali Baba,

377
00:21:21,880 --> 00:21:25,959
Speaker 1: ten Cent, ma Chuan and others, will have exerted a

378
00:21:26,000 --> 00:21:31,080
Speaker 1: bunch of pressure on company leadership at the same time,

379
00:21:32,040 --> 00:21:35,000
Speaker 1: are the regulators kind of in the weeds of this

380
00:21:35,200 --> 00:21:39,080
Speaker 1: kind of calling the shots on what happens. I don't

381
00:21:39,119 --> 00:21:42,760
Speaker 1: know the answer to that, but my suspicion is that

382
00:21:42,880 --> 00:21:46,760
Speaker 1: China's government aren't that silly. They know what they want,

383
00:21:47,160 --> 00:21:50,560
Speaker 1: They want to clamp down on monopolistic power, but they

384
00:21:50,720 --> 00:21:54,720
Speaker 1: also know the limits of their own understanding, and they

385
00:21:54,760 --> 00:21:58,879
Speaker 1: know that at its heart, Ali Baba is a very competitive,

386
00:21:58,960 --> 00:22:02,440
Speaker 1: very dynamic, aentual, the world beating company, and they don't

387
00:22:02,440 --> 00:22:04,240
Speaker 1: want to stop that. They don't want to they don't

388
00:22:04,240 --> 00:22:07,560
Speaker 1: want to kill it. But the direction comes from the government,

389
00:22:07,600 --> 00:22:10,399
Speaker 1: but the decisions come from the corporate board. Let me

390
00:22:10,480 --> 00:22:14,160
Speaker 1: ask you a question that I started thinking about when

391
00:22:16,080 --> 00:22:19,240
Speaker 1: I guess fifteen years ago when Yukos goot Um find

392
00:22:19,400 --> 00:22:22,919
Speaker 1: like twenty billion from Russia and then um, you know,

393
00:22:23,040 --> 00:22:27,560
Speaker 1: their their boss ended up in a Siberian gulag China.

394
00:22:27,800 --> 00:22:31,880
Speaker 1: I wonder the same thing about do they do they

395
00:22:32,040 --> 00:22:36,800
Speaker 1: risk driving away international investors who are scared about the

396
00:22:36,880 --> 00:22:41,000
Speaker 1: lack of a you know, real justice system, the lack

397
00:22:41,040 --> 00:22:43,719
Speaker 1: of the rule of law, when they start disappearing leaders

398
00:22:44,080 --> 00:22:46,640
Speaker 1: and investment bankers, do they do they care about that?

399
00:22:48,520 --> 00:22:52,640
Speaker 1: So I mean, firstly, whilst there are obviously some commonalities

400
00:22:52,680 --> 00:22:57,600
Speaker 1: between Russia and China, um, I think that what happens

401
00:22:57,720 --> 00:23:04,200
Speaker 1: to the Russian entrepreneurs following Putin assuming power and what's

402
00:23:04,200 --> 00:23:07,320
Speaker 1: happened to Chinese entrepreneurs over the last couple of years

403
00:23:07,680 --> 00:23:12,280
Speaker 1: are really two different things. Right, China's entrepreneurs have been

404
00:23:12,320 --> 00:23:16,679
Speaker 1: hit with fines. Rushes entrepreneurs, Well, if they've just been

405
00:23:16,760 --> 00:23:18,959
Speaker 1: hit with fines, they'd be doing a lot better than

406
00:23:19,000 --> 00:23:24,119
Speaker 1: they are actually doing now. But Jack Mah disappeared for

407
00:23:24,160 --> 00:23:26,600
Speaker 1: a couple of years, right. There was an investment banker

408
00:23:26,760 --> 00:23:28,879
Speaker 1: about a month ago who hasn't been heard from since.

409
00:23:29,160 --> 00:23:32,800
Speaker 1: They throw reporters in some place that they don't tell

410
00:23:32,920 --> 00:23:35,000
Speaker 1: us about and we don't hear from them. I mean,

411
00:23:35,200 --> 00:23:38,440
Speaker 1: these people just get taken off the streets and they're gone. Yeah,

412
00:23:38,520 --> 00:23:41,919
Speaker 1: And I think to your point, this is clearly something

413
00:23:41,960 --> 00:23:47,199
Speaker 1: which is very concerning for international investors. So markets have

414
00:23:47,400 --> 00:23:51,240
Speaker 1: cheered this plan for an Ali Baba restructuring. There's been

415
00:23:51,280 --> 00:23:53,760
Speaker 1: I think a sixteen percent pop in the Ali Baba

416
00:23:53,800 --> 00:23:56,640
Speaker 1: share price in the last day. But if you look

417
00:23:56,680 --> 00:23:59,040
Speaker 1: at what's happened to Ali Baba's share price and the

418
00:23:59,080 --> 00:24:01,400
Speaker 1: share price of ten Cent and the other big tech

419
00:24:01,480 --> 00:24:04,560
Speaker 1: companies over the last two or three years, it's fallen

420
00:24:04,600 --> 00:24:07,639
Speaker 1: a lot, right, It's fallen a lot, and a big

421
00:24:07,680 --> 00:24:12,600
Speaker 1: reason for that is precisely because investors and I worried, well,

422
00:24:12,720 --> 00:24:14,600
Speaker 1: am I investing in a company which can make his

423
00:24:14,680 --> 00:24:17,920
Speaker 1: own decisions? Or am I investing in a company which

424
00:24:18,040 --> 00:24:19,920
Speaker 1: is always going to be at the mercy of the

425
00:24:20,040 --> 00:24:25,160
Speaker 1: kind of capricious policy choices of the Communist Party. You're

426
00:24:25,320 --> 00:24:28,639
Speaker 1: you're you're the chief economist at Bloomberg Economics. So this

427
00:24:28,720 --> 00:24:31,720
Speaker 1: is a completely unfair question. Do we have any idea

428
00:24:32,160 --> 00:24:35,200
Speaker 1: where jackma is what he's doing because his mat was

429
00:24:35,200 --> 00:24:38,520
Speaker 1: saying he's been hasn't been seenially for a couple of years. Um,

430
00:24:38,840 --> 00:24:43,119
Speaker 1: you know that is completely unfair question. So, um so

431
00:24:43,160 --> 00:24:45,640
Speaker 1: I'm not going to speculate on it, but I will

432
00:24:45,680 --> 00:24:51,760
Speaker 1: tell you that entrepreneurs in China have a more difficult

433
00:24:51,840 --> 00:24:56,840
Speaker 1: job in general than entrepreneurs in the West, and entrepreneurs

434
00:24:56,880 --> 00:24:59,280
Speaker 1: in China for the last couple of years have had

435
00:24:59,320 --> 00:25:03,440
Speaker 1: an even more or difficult job than normal. So if

436
00:25:03,440 --> 00:25:08,160
Speaker 1: they're keeping a low profile and messaging alignments with communist

437
00:25:08,200 --> 00:25:12,160
Speaker 1: policy priorities, that's really not a huge surprise. All right, Tom,

438
00:25:12,520 --> 00:25:15,119
Speaker 1: I will I'll apologize for both of us, Tom for

439
00:25:15,200 --> 00:25:17,879
Speaker 1: putting in an uncomfortable position on a number. You're one

440
00:25:17,880 --> 00:25:20,600
Speaker 1: of the smartest economists out there, and we're so happy

441
00:25:20,640 --> 00:25:23,119
Speaker 1: to have you with us that we don't want to

442
00:25:24,000 --> 00:25:26,119
Speaker 1: I want to get you fired for saying the wrong thing.

443
00:25:26,240 --> 00:25:27,960
Speaker 1: Throw you under the bus. All right, Tom, thanks so

444
00:25:28,000 --> 00:25:29,480
Speaker 1: much for joining us. Tom or like he's a chief

445
00:25:29,480 --> 00:25:34,119
Speaker 1: economist for Bloomberg Economics. You're listening to the team Cancer

446
00:25:34,080 --> 00:25:37,640
Speaker 1: a live program Bloomberg Markets weekdays at ten. AMI's Daring

447
00:25:37,800 --> 00:25:40,480
Speaker 1: on Bloomberg dot Com, the I Heart Radio app, and

448
00:25:40,520 --> 00:25:43,479
Speaker 1: the Bloomberg Business app. We're listening on demand wherever you

449
00:25:43,480 --> 00:25:49,520
Speaker 1: get your podcast. Barry Roodholts, founder Riholts Wealth Management, he's

450
00:25:49,520 --> 00:25:52,440
Speaker 1: gonna help us guide us through the next segment or two,

451
00:25:52,440 --> 00:25:53,960
Speaker 1: and we'll let him get it. I got so many

452
00:25:54,040 --> 00:25:56,000
Speaker 1: questions that I gotta ask Barry. I know, but let's

453
00:25:56,000 --> 00:25:57,880
Speaker 1: get to wear next guests. Let's get the Anaka Tree

454
00:25:57,960 --> 00:26:02,160
Speaker 1: on Chief Economists International four, then long Shot Kemp and Anica.

455
00:26:02,200 --> 00:26:04,840
Speaker 1: We've got a US Federal Reserve here that most market

456
00:26:04,880 --> 00:26:07,720
Speaker 1: participants here feel like. All right, maybe one more twenty

457
00:26:07,720 --> 00:26:10,119
Speaker 1: five basis point rate increase, and maybe that's kind of

458
00:26:10,119 --> 00:26:13,600
Speaker 1: going to be it, but boy, Christine Leguard a couple

459
00:26:13,600 --> 00:26:15,600
Speaker 1: of weeks ago, it is pretty adamant that along with

460
00:26:15,680 --> 00:26:18,880
Speaker 1: that fifty basis point increase, there's likely more to come.

461
00:26:18,960 --> 00:26:21,439
Speaker 1: What's the feeling in Europe about how the European Central

462
00:26:21,440 --> 00:26:23,280
Speaker 1: Banking and the Bank of Eglim for that matter, is

463
00:26:23,280 --> 00:26:27,320
Speaker 1: going to proceed over the next several months in quarters? Hi,

464
00:26:27,440 --> 00:26:30,640
Speaker 1: good morning. Well, there's certainly a difference, and I think

465
00:26:30,640 --> 00:26:34,399
Speaker 1: it's classic Europe being a lagger versus the US, and

466
00:26:34,480 --> 00:26:37,119
Speaker 1: we see it again. So obviously, you know, all central

467
00:26:37,160 --> 00:26:40,879
Speaker 1: banks started off with this transitory dialogue. The US as

468
00:26:40,920 --> 00:26:43,240
Speaker 1: the first to kind of realize, well, let's move away

469
00:26:43,240 --> 00:26:46,240
Speaker 1: from that and let's actually start taking action, and the

470
00:26:46,240 --> 00:26:50,280
Speaker 1: ECB followed suit, but took longer and acted later. And

471
00:26:50,320 --> 00:26:53,680
Speaker 1: therefore it's no surprise that they have to be persistently

472
00:26:53,800 --> 00:26:57,919
Speaker 1: more hawkish than the SAID in order to solve the

473
00:26:57,920 --> 00:27:01,400
Speaker 1: inflationary problem. So what does that mean, Anica? I mean,

474
00:27:01,440 --> 00:27:05,440
Speaker 1: first of all, everyone's been watching the euro gain strength

475
00:27:05,480 --> 00:27:08,080
Speaker 1: against the dollar, right, is that is that part of this?

476
00:27:09,560 --> 00:27:12,119
Speaker 1: I think so absolutely? And I mean, let's just be

477
00:27:12,200 --> 00:27:14,919
Speaker 1: very tangible. You know, the market is talking about the

478
00:27:14,960 --> 00:27:17,240
Speaker 1: twenty five basis points for the FED and a fifty

479
00:27:17,280 --> 00:27:20,280
Speaker 1: basis points for the for the ECB, and it's simply

480
00:27:20,320 --> 00:27:26,040
Speaker 1: this mechanism working through. Sorry, we got it. Barry has

481
00:27:26,040 --> 00:27:28,120
Speaker 1: a question, but we get to have as Mike turned on,

482
00:27:28,240 --> 00:27:31,040
Speaker 1: there we go, there we go. Hey, Anica. So here

483
00:27:31,080 --> 00:27:35,760
Speaker 1: in the States, it looks like goods based inflation peaked

484
00:27:35,840 --> 00:27:39,040
Speaker 1: sometime last year around June, but we still have very

485
00:27:39,119 --> 00:27:45,560
Speaker 1: persistent services based inflation, primarily wages, a shortage of workers,

486
00:27:45,600 --> 00:27:49,200
Speaker 1: and apartment rentals where there's just not enough housing. How

487
00:27:49,240 --> 00:27:54,480
Speaker 1: does that goods versus services dynamic look in Europe? Yeah,

488
00:27:54,520 --> 00:27:56,920
Speaker 1: so we're seeing exactly the same phenomena, and it's also

489
00:27:57,000 --> 00:27:58,720
Speaker 1: visible in the p M. I's right. If you look

490
00:27:58,760 --> 00:28:02,919
Speaker 1: at the plies services, it's still it's still very strong,

491
00:28:02,920 --> 00:28:06,359
Speaker 1: whereas pmies and manufacturing obviously getting much much weaker. And

492
00:28:06,840 --> 00:28:08,880
Speaker 1: in Europe it's exactly the same as what you see

493
00:28:08,920 --> 00:28:11,119
Speaker 1: in the US. And obviously it's no surprise that the

494
00:28:11,240 --> 00:28:15,600
Speaker 1: reopening it's still playing its hand in the fact that

495
00:28:15,640 --> 00:28:19,439
Speaker 1: the services side is strong, and like the US, the

496
00:28:19,520 --> 00:28:24,119
Speaker 1: labor market is extremely strong, extremely tight, and don't forget

497
00:28:24,119 --> 00:28:25,840
Speaker 1: what we have more in Europe than you have in

498
00:28:25,840 --> 00:28:28,959
Speaker 1: the US for these labor unions, which also tend to

499
00:28:29,000 --> 00:28:33,919
Speaker 1: increase the stickiness around the wage inflation Arnica. We know

500
00:28:34,119 --> 00:28:36,640
Speaker 1: in Europe there's so many of those big European industrial

501
00:28:36,680 --> 00:28:40,160
Speaker 1: companies that do a lot of business with China. Give

502
00:28:40,240 --> 00:28:43,400
Speaker 1: us a sense of how the China reopening is factoring

503
00:28:43,400 --> 00:28:47,840
Speaker 1: into your economic outlook. Yeah, so, I mean we're all

504
00:28:47,960 --> 00:28:50,440
Speaker 1: very excited about, you know, one of the world's largest

505
00:28:50,480 --> 00:28:54,720
Speaker 1: demand drivers finally being able to participate into the economy

506
00:28:54,760 --> 00:28:57,800
Speaker 1: and actually, you know, help global growth. I think the

507
00:28:57,840 --> 00:29:00,880
Speaker 1: issue is obviously, like we saw in the other opening stories,

508
00:29:01,400 --> 00:29:03,720
Speaker 1: it tends to be more services driven. It tends to

509
00:29:03,720 --> 00:29:06,080
Speaker 1: be it's probably likely to be more domestic driven at

510
00:29:06,120 --> 00:29:09,240
Speaker 1: least in the beginning, and obviously all sorts of protectionist

511
00:29:09,320 --> 00:29:12,680
Speaker 1: political policies going on over there means it's less straightforward

512
00:29:12,720 --> 00:29:15,719
Speaker 1: then Hey, China is back in the game. So I

513
00:29:15,720 --> 00:29:17,880
Speaker 1: don't think on one hand, it's on one hand, we

514
00:29:17,880 --> 00:29:20,160
Speaker 1: were all sort of excited about, Hey, the reopening in

515
00:29:20,240 --> 00:29:23,640
Speaker 1: China is finally happening and actually faster than we expected.

516
00:29:24,200 --> 00:29:27,320
Speaker 1: On the other hand, there are these factors to sort

517
00:29:27,360 --> 00:29:30,160
Speaker 1: of work through. So it's not that straightforward, right. We

518
00:29:30,480 --> 00:29:33,920
Speaker 1: look at the past three decades, clearly China was an

519
00:29:33,920 --> 00:29:38,880
Speaker 1: exporter of deflation. Now, after spending all this time locked down,

520
00:29:39,920 --> 00:29:42,960
Speaker 1: how big of an inflation exporter might they be over

521
00:29:43,000 --> 00:29:46,920
Speaker 1: the next year. Yeah. I mean, I think what you're

522
00:29:46,920 --> 00:29:49,480
Speaker 1: seeing in general and it's a little bit more fundamental

523
00:29:49,560 --> 00:29:52,360
Speaker 1: in terms of what's two parts. I think one is

524
00:29:52,400 --> 00:29:55,000
Speaker 1: more fundamental, fundamental and longer term, which is like a

525
00:29:55,120 --> 00:29:59,080
Speaker 1: rewiring of global supply chains. And obviously, you know a

526
00:29:59,120 --> 00:30:01,560
Speaker 1: lot of companies in Europe. Everybody talks about Europe, but

527
00:30:01,600 --> 00:30:04,520
Speaker 1: actually are these European companies or are they just companies

528
00:30:04,520 --> 00:30:06,600
Speaker 1: that happen to be listed in Europe? And a lot

529
00:30:06,640 --> 00:30:09,040
Speaker 1: of the industrial ones are in that camp, right, And

530
00:30:09,080 --> 00:30:12,760
Speaker 1: that's why people sometimes look at European equities, especially now

531
00:30:13,320 --> 00:30:16,040
Speaker 1: versus the US, and say, Wow, what's an opportunity to

532
00:30:16,080 --> 00:30:19,160
Speaker 1: buy these great industrial businesses cheap because that happened to

533
00:30:19,160 --> 00:30:21,800
Speaker 1: be listed in Europe. There's that part of it. But

534
00:30:21,880 --> 00:30:24,680
Speaker 1: I think what you're seeing is a lot of international

535
00:30:24,720 --> 00:30:28,840
Speaker 1: industrial companies listed in Europe are forced to kind of

536
00:30:28,920 --> 00:30:34,680
Speaker 1: reassure look for alternatives supply sources outside of China, for example,

537
00:30:35,160 --> 00:30:40,200
Speaker 1: which is actually naturally quite inflationary because obviously they were

538
00:30:40,240 --> 00:30:44,560
Speaker 1: enjoying a much lower cost by using China as a

539
00:30:44,640 --> 00:30:47,120
Speaker 1: key part in the supply chain. All right, I want

540
00:30:47,120 --> 00:30:49,400
Speaker 1: to get to the banks conversation. So I'm just gonna

541
00:30:49,800 --> 00:30:52,440
Speaker 1: don't I don't have any kind of We're just gonna

542
00:30:52,440 --> 00:30:56,520
Speaker 1: go straight there, because Anaka, I noticed you've been watching

543
00:30:56,720 --> 00:31:01,000
Speaker 1: I think you've been watching the hearings. What is this

544
00:31:01,160 --> 00:31:06,440
Speaker 1: bailout of SVB and signature bank depositors? And that's really

545
00:31:06,520 --> 00:31:08,880
Speaker 1: what it is, right, a depositor bailout. What does that

546
00:31:08,960 --> 00:31:16,200
Speaker 1: mean for you know? Moral hazard? Yeah, it's a major one. Right,

547
00:31:16,240 --> 00:31:18,000
Speaker 1: So I think there's two points that we have to

548
00:31:18,040 --> 00:31:20,200
Speaker 1: talk about here. I think one point is the fact

549
00:31:20,280 --> 00:31:26,000
Speaker 1: that it's schizophrenic behavior. So on one hand, central banks say, okay, guys,

550
00:31:26,120 --> 00:31:28,840
Speaker 1: stop talking about the FED puts, stop saying. You know,

551
00:31:28,880 --> 00:31:32,200
Speaker 1: we're always going to put a flaw under everything. We're

552
00:31:32,200 --> 00:31:34,920
Speaker 1: going to tackle inflation. Don't count on us anymore. We're

553
00:31:34,920 --> 00:31:39,120
Speaker 1: restricting money supplied, blah blah blah. However, if a bank fails,

554
00:31:39,760 --> 00:31:42,000
Speaker 1: suddenly our hands appear again, and we're putting a flaw

555
00:31:42,080 --> 00:31:45,680
Speaker 1: under the marketplace. And that's exactly what guaranteeing all deposits

556
00:31:45,880 --> 00:31:48,760
Speaker 1: is signaling to the markets. So it's a bit schizophrenic.

557
00:31:48,840 --> 00:31:52,280
Speaker 1: Schizophrenic and a bit confusing. The moral hazard points if

558
00:31:52,280 --> 00:31:54,920
Speaker 1: again a bit more of a philosophical conversation, which is

559
00:31:55,520 --> 00:31:57,920
Speaker 1: what is the role that banks play in society? We

560
00:31:57,960 --> 00:32:00,360
Speaker 1: obviously know that it's crucial because that's how the whole

561
00:32:00,360 --> 00:32:04,560
Speaker 1: credit cycle works, et cetera, amplification, economic growth, et cetera.

562
00:32:05,200 --> 00:32:07,400
Speaker 1: And is the role of a bank more of a utility,

563
00:32:07,400 --> 00:32:10,880
Speaker 1: in which case it is a kind of more hazard situation,

564
00:32:10,920 --> 00:32:13,800
Speaker 1: but it should be run differently knowing that governments are

565
00:32:13,800 --> 00:32:16,400
Speaker 1: always there to bail out for Puss. I mean, this

566
00:32:16,480 --> 00:32:18,240
Speaker 1: is what this is the point I'm getting to. Yeah,

567
00:32:18,240 --> 00:32:21,280
Speaker 1: because Paul is normally the most conservative guy in the room,

568
00:32:21,800 --> 00:32:25,320
Speaker 1: and ever since he realized that the FED, the FDIC,

569
00:32:25,480 --> 00:32:27,040
Speaker 1: and the US governor there to bail us out no

570
00:32:27,120 --> 00:32:29,560
Speaker 1: matter what happens, he's wanted to take on more risks.

571
00:32:30,480 --> 00:32:33,840
Speaker 1: So so let me push back a little bit. I'm

572
00:32:33,840 --> 00:32:37,040
Speaker 1: going to push back a little bit, and I'm literally

573
00:32:37,080 --> 00:32:41,040
Speaker 1: talking my book, which Bailout Nation came out No. Nine,

574
00:32:41,480 --> 00:32:45,040
Speaker 1: but Nation, I think we really need to make a

575
00:32:45,160 --> 00:32:50,400
Speaker 1: distinction between rescuing people from the folly of their own

576
00:32:50,440 --> 00:32:53,520
Speaker 1: behavior and making them whole, like all of the Wall

577
00:32:53,520 --> 00:32:59,440
Speaker 1: Street banks that bought subprime junk and depositors that have

578
00:32:59,520 --> 00:33:03,000
Speaker 1: half in in cash. A small business operating that's using

579
00:33:03,000 --> 00:33:08,080
Speaker 1: a local bank. I don't think there's anything reckless or

580
00:33:08,560 --> 00:33:10,760
Speaker 1: requiring a bailout when someone says, oh, I'm going to

581
00:33:10,800 --> 00:33:13,960
Speaker 1: go to this top twenty bank and run my business

582
00:33:14,000 --> 00:33:16,560
Speaker 1: out of it. The alternative is we're only going to

583
00:33:16,600 --> 00:33:18,920
Speaker 1: put our money in the four largest banks. And so

584
00:33:19,400 --> 00:33:23,680
Speaker 1: there's a difference between rescuing equity holders were made whole

585
00:33:24,920 --> 00:33:27,840
Speaker 1: or bondholders who really were made whole, and people who

586
00:33:27,880 --> 00:33:32,400
Speaker 1: are just collateral damages like depositors, to say nothing of

587
00:33:32,480 --> 00:33:36,120
Speaker 1: trying to arrest the contagion and allowing it to spiral

588
00:33:36,160 --> 00:33:39,080
Speaker 1: out of control. All right, Monica, let's go closer to

589
00:33:39,120 --> 00:33:42,600
Speaker 1: home for you credit Swiss ubs. How important is that

590
00:33:42,680 --> 00:33:46,680
Speaker 1: for European economies? You know, we sense it over here

591
00:33:46,680 --> 00:33:49,000
Speaker 1: in the States, but I'm guessing it's just much more

592
00:33:49,040 --> 00:33:52,680
Speaker 1: profound for not only just the Swiss, but European investors

593
00:33:52,680 --> 00:33:57,000
Speaker 1: in general. Well, I think that you know, credit suis

594
00:33:57,080 --> 00:34:00,000
Speaker 1: is old news, so you know, We've read for months

595
00:34:00,040 --> 00:34:02,479
Speaker 1: and months and months around all the issues of Credit Sweets,

596
00:34:02,480 --> 00:34:04,240
Speaker 1: and that's why I don't think it was as much

597
00:34:04,280 --> 00:34:07,760
Speaker 1: of a blow to sort of domestic European readers as

598
00:34:07,760 --> 00:34:10,520
Speaker 1: it might be across the continent, simply because they're so

599
00:34:10,680 --> 00:34:12,919
Speaker 1: used to the issues over there. So I think that's

600
00:34:13,000 --> 00:34:14,920
Speaker 1: not such a big thing. I think the bigger thing

601
00:34:15,080 --> 00:34:17,319
Speaker 1: is that and I think that's also the point that

602
00:34:17,360 --> 00:34:20,640
Speaker 1: you're making earlier. It's very confident now I'm talking. You

603
00:34:20,640 --> 00:34:22,760
Speaker 1: can talk about depositors, and you can talk about investors

604
00:34:22,760 --> 00:34:25,160
Speaker 1: in market participants, but let's talk about real people, because

605
00:34:25,160 --> 00:34:27,480
Speaker 1: it's all about fear and real people and they influence

606
00:34:27,719 --> 00:34:31,680
Speaker 1: the markets. Obviously. The point is, as a depositor, how

607
00:34:31,719 --> 00:34:35,120
Speaker 1: on earth are you supposed to gauge whether depositing your

608
00:34:35,160 --> 00:34:37,879
Speaker 1: money at a certain bank, also a household name bank,

609
00:34:37,960 --> 00:34:40,560
Speaker 1: by the way, is safe based on the balance sheet

610
00:34:40,560 --> 00:34:44,000
Speaker 1: situation of the bank. If even Credit Sweets, which was

611
00:34:44,040 --> 00:34:48,040
Speaker 1: so well under certain anticipated ended up surprised by having

612
00:34:48,040 --> 00:34:50,120
Speaker 1: gone through what it went through. What I'm trying to

613
00:34:50,160 --> 00:34:52,520
Speaker 1: say is if you analyze a lot of the banks,

614
00:34:52,520 --> 00:34:54,440
Speaker 1: and I mean if you're just a regular depositor and

615
00:34:54,520 --> 00:34:56,200
Speaker 1: you see even if you're a larger one, even if

616
00:34:56,239 --> 00:35:00,440
Speaker 1: you're a corporate that's depositing serious sums of at all.

617
00:35:00,920 --> 00:35:03,040
Speaker 1: If you just reads the balet sheet at stays value,

618
00:35:03,040 --> 00:35:04,920
Speaker 1: you might think, oh, that's totally fine, and then you've

619
00:35:04,960 --> 00:35:08,719
Speaker 1: got unrealized losses, et cetera. And it's just the accident

620
00:35:09,480 --> 00:35:15,520
Speaker 1: sort of victims of the accident from raising weights too fast. Yep. Interesting. Yeah,

621
00:35:15,520 --> 00:35:18,120
Speaker 1: it's a very difficult issue that most investors are trying

622
00:35:18,120 --> 00:35:20,320
Speaker 1: to get their handles handle around, and we got regulators

623
00:35:20,320 --> 00:35:23,120
Speaker 1: in Washington in DC trying to do the same. Anakatreon,

624
00:35:23,760 --> 00:35:27,480
Speaker 1: Chief Economist International van Launchot Kevin joining us. We appreciate

625
00:35:27,520 --> 00:35:30,680
Speaker 1: her time. You're listening to the tape cancer our live program,

626
00:35:30,719 --> 00:35:34,680
Speaker 1: Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio,

627
00:35:34,800 --> 00:35:37,520
Speaker 1: the tune in app, Bloomberg dot Com, and the Bloomberg

628
00:35:37,600 --> 00:35:40,680
Speaker 1: Business App. You can also listen live on Amazon Alexa

629
00:35:40,800 --> 00:35:44,080
Speaker 1: from our flagship New York station, Just say Alexa, play

630
00:35:44,160 --> 00:35:49,480
Speaker 1: Bloomberg eleven thirty, Matt Miller and Lee in the Bloomberg

631
00:35:49,480 --> 00:35:52,480
Speaker 1: Interactive Broker Studios. Barry Ridholtz, head of Ridholts Wealth Management,

632
00:35:52,800 --> 00:35:55,560
Speaker 1: He's got a podcast out there he writes books, he

633
00:35:55,640 --> 00:35:57,120
Speaker 1: does all that stuff. But we grabbed him for a

634
00:35:57,120 --> 00:35:58,920
Speaker 1: few minutes and he's gonna stick around with us. We

635
00:35:59,040 --> 00:36:01,479
Speaker 1: will talk fixing. And when you want to talk fixed

636
00:36:01,480 --> 00:36:03,719
Speaker 1: and you need to go to some serious people, and

637
00:36:03,760 --> 00:36:08,360
Speaker 1: that includes good folks at TCW. Brian Well and Cocio

638
00:36:08,440 --> 00:36:11,200
Speaker 1: and General's portfolio manager joins us at TCW with throughout

639
00:36:11,239 --> 00:36:14,240
Speaker 1: in LA. That sounds cool, but it's really not. Folks.

640
00:36:14,280 --> 00:36:16,359
Speaker 1: They got to get into the office like four or

641
00:36:16,400 --> 00:36:18,600
Speaker 1: five in the morning. It's a disaster. They say, Oh,

642
00:36:18,640 --> 00:36:20,239
Speaker 1: but we get out early, we can go play golf.

643
00:36:20,719 --> 00:36:23,640
Speaker 1: I'd never buy that argument. But Brian, thanks so much

644
00:36:23,640 --> 00:36:26,120
Speaker 1: for joining us here. I want to start by talking,

645
00:36:26,680 --> 00:36:29,680
Speaker 1: you know, volatility in the treasury market. I don't remember

646
00:36:29,719 --> 00:36:32,719
Speaker 1: seeing one hundred basis points moves in the two year

647
00:36:32,760 --> 00:36:35,279
Speaker 1: in the tread treasury and the ten ten year kind

648
00:36:35,280 --> 00:36:37,560
Speaker 1: of on a daily basis, it seems, what are you

649
00:36:37,560 --> 00:36:41,320
Speaker 1: guys doing out there? What's going on? Where's the liquidity? Yeah? Incredible.

650
00:36:41,600 --> 00:36:43,399
Speaker 1: Not only have to get up early, but it's raining today,

651
00:36:43,440 --> 00:36:48,239
Speaker 1: so everybody's playing today, Paul, unbelievable. Right, it was just

652
00:36:48,280 --> 00:36:50,799
Speaker 1: a few weeks ago, you know, we saw I think

653
00:36:50,800 --> 00:36:52,520
Speaker 1: we hit about five h seven on the two year,

654
00:36:52,600 --> 00:36:54,239
Speaker 1: then you blink your eyes and you're trading at three

655
00:36:54,320 --> 00:36:56,640
Speaker 1: eighty on the two year. We've kind of seemed to

656
00:36:56,680 --> 00:37:00,359
Speaker 1: settle into a range right around here, about around four percent. So, um,

657
00:37:00,440 --> 00:37:02,480
Speaker 1: you know, we came into this, uh you know, this

658
00:37:02,560 --> 00:37:06,520
Speaker 1: period long duration long a steepener, meaning we had a

659
00:37:06,560 --> 00:37:07,919
Speaker 1: lot of our duration in the front of the curve,

660
00:37:08,080 --> 00:37:11,760
Speaker 1: expecting things to normalize, and things have moved in that direction,

661
00:37:11,800 --> 00:37:13,839
Speaker 1: although we still got you know, quite an inverted curve

662
00:37:13,880 --> 00:37:16,759
Speaker 1: about minus fifty basis points on two's ten. So we

663
00:37:16,800 --> 00:37:18,600
Speaker 1: kind of we kind of liked being long duration here

664
00:37:18,800 --> 00:37:20,480
Speaker 1: and in the meantime, we're gonna trade this range. We're

665
00:37:20,520 --> 00:37:23,400
Speaker 1: gonna trade the volatility and hopefully can as a malpha

666
00:37:23,480 --> 00:37:25,080
Speaker 1: for our clients as we kind of move up and

667
00:37:25,080 --> 00:37:28,080
Speaker 1: down twenty five fifty basis points. So we looked at

668
00:37:28,120 --> 00:37:31,359
Speaker 1: the ten year a couple of months ago, almost as

669
00:37:31,440 --> 00:37:33,960
Speaker 1: high as the two year was the and yup of fours,

670
00:37:34,320 --> 00:37:36,760
Speaker 1: and here we are back around three and a half percent.

671
00:37:37,160 --> 00:37:39,920
Speaker 1: Are we going to see a four handle on the

672
00:37:39,960 --> 00:37:44,960
Speaker 1: tenure or anytime soon? I don't think so. I'm fat well,

673
00:37:45,160 --> 00:37:47,359
Speaker 1: I doubt it. I'd say, actually have more conviction saying

674
00:37:47,360 --> 00:37:49,440
Speaker 1: we won't see five again on the two year. I

675
00:37:49,440 --> 00:37:51,440
Speaker 1: think we've seen the on the two year. I think

676
00:37:51,440 --> 00:37:53,640
Speaker 1: we've seen the red line, you know, with regards to

677
00:37:53,760 --> 00:37:56,480
Speaker 1: what the what the financial markets can handle. We got

678
00:37:56,520 --> 00:37:58,560
Speaker 1: up toward about you know, two percent on excuse me,

679
00:37:58,640 --> 00:38:01,320
Speaker 1: five percent on twos, and you know, things started to

680
00:38:01,360 --> 00:38:03,160
Speaker 1: break and you know, we've got this kind of a

681
00:38:03,160 --> 00:38:05,440
Speaker 1: little bit of a in illusion up stability, you know,

682
00:38:05,480 --> 00:38:06,919
Speaker 1: for the last couple of days, just because we haven't

683
00:38:06,960 --> 00:38:09,239
Speaker 1: seen a regional bank going too receivership you know for

684
00:38:09,280 --> 00:38:13,200
Speaker 1: about what seventy two hours plus or minus weekends coming up,

685
00:38:13,320 --> 00:38:15,880
Speaker 1: you know, we're not buying it. What's that the weekend's

686
00:38:15,920 --> 00:38:18,720
Speaker 1: coming up, that's when we find out which bank doesn't

687
00:38:18,800 --> 00:38:21,920
Speaker 1: didn't make it till Monday. Yeah, that's right, that's right.

688
00:38:22,000 --> 00:38:23,600
Speaker 1: And it's not just banks too. I mean, like you

689
00:38:23,600 --> 00:38:25,719
Speaker 1: know that that's grabbed the headlines for the last couple weeks,

690
00:38:25,760 --> 00:38:28,480
Speaker 1: and that's primarily with the you know, behind this this

691
00:38:28,560 --> 00:38:31,520
Speaker 1: rate rally and this rate volatility. But you know, there's

692
00:38:31,520 --> 00:38:33,200
Speaker 1: other shoes to drop. You know, we saw we saw

693
00:38:33,360 --> 00:38:36,040
Speaker 1: LBI in the UK back in the fall. Now we've

694
00:38:36,040 --> 00:38:38,439
Speaker 1: had our little you know, our regional situation, and we've

695
00:38:38,440 --> 00:38:41,200
Speaker 1: actually had ADJIECI you know, get merged you know, ubs

696
00:38:41,239 --> 00:38:43,440
Speaker 1: and credit Swiss. But you know, just look at look

697
00:38:43,480 --> 00:38:45,400
Speaker 1: at read stocks, Look at read stocks, look at re

698
00:38:45,719 --> 00:38:48,839
Speaker 1: read bonds, both in Europe as well in the US

699
00:38:48,960 --> 00:38:52,160
Speaker 1: under a tremendous amount of pressure. Um So, like I said,

700
00:38:52,200 --> 00:38:54,279
Speaker 1: we've seen the red line, there were gonna be other

701
00:38:54,320 --> 00:38:56,839
Speaker 1: things to to you know, to go to go bang. Uh,

702
00:38:56,920 --> 00:38:58,520
Speaker 1: it's just gonna be a matter of time. You know,

703
00:38:58,560 --> 00:39:00,919
Speaker 1: it doesn't all happen, you know, and can decad of days. Brian,

704
00:39:01,000 --> 00:39:05,480
Speaker 1: do you watch the flows of money in terms of

705
00:39:05,520 --> 00:39:08,959
Speaker 1: like out of bank deposits and into broker dealer into

706
00:39:09,000 --> 00:39:12,719
Speaker 1: fixed income assets, because it seems like, yeah, there are

707
00:39:12,719 --> 00:39:15,839
Speaker 1: a lot more uninsured deposits out there than I would

708
00:39:15,880 --> 00:39:20,239
Speaker 1: have thought previously. That's institutional money plus a lot of

709
00:39:20,280 --> 00:39:23,560
Speaker 1: retail money. Um. You know, mom and pop are asking

710
00:39:23,560 --> 00:39:25,719
Speaker 1: the questions, should I take my money out of the

711
00:39:25,760 --> 00:39:28,799
Speaker 1: bank and instead put it into a you know, short

712
00:39:28,880 --> 00:39:33,200
Speaker 1: duration treasuries fund or buy an ETF or something like that. Yeah.

713
00:39:33,280 --> 00:39:34,840
Speaker 1: I think Look, I think a lot of people, not

714
00:39:34,920 --> 00:39:36,960
Speaker 1: just people, I think companies have let their guard down

715
00:39:37,000 --> 00:39:40,000
Speaker 1: you know, with regards to how much uninsured money they

716
00:39:40,120 --> 00:39:42,120
Speaker 1: kept at a lot of these smaller and regional banks.

717
00:39:42,160 --> 00:39:43,600
Speaker 1: I don't think we've seen the end of this flow.

718
00:39:44,120 --> 00:39:46,600
Speaker 1: I think, you know, people are catching their breath. I

719
00:39:46,600 --> 00:39:49,040
Speaker 1: think they now have the opportunity to move their money.

720
00:39:49,080 --> 00:39:50,719
Speaker 1: But I don't think it's over. And yeah, we see

721
00:39:50,760 --> 00:39:53,000
Speaker 1: it directly. In fact, the way we see it, you know,

722
00:39:53,120 --> 00:39:55,000
Speaker 1: in the fixed income market. We see it with regards

723
00:39:55,040 --> 00:39:57,239
Speaker 1: to short end you know bills, treasury bills, you know,

724
00:39:57,360 --> 00:39:59,719
Speaker 1: one month, two month, three months bills. They're trading in

725
00:40:00,000 --> 00:40:02,880
Speaker 1: bably rich. Why are they trading rich meaning very expensive?

726
00:40:03,520 --> 00:40:06,560
Speaker 1: Because money float out of deposited banks, they went into

727
00:40:06,600 --> 00:40:08,600
Speaker 1: money market funds, and those money market funds had to

728
00:40:08,640 --> 00:40:11,440
Speaker 1: buy something, you know, and right now, this all this volatility,

729
00:40:11,880 --> 00:40:14,600
Speaker 1: those fund managers are not sure how long that money

730
00:40:14,680 --> 00:40:16,520
Speaker 1: is going to stick around for, so they just buy

731
00:40:16,560 --> 00:40:18,880
Speaker 1: the shortest instrument. And we're seeing that right now. We

732
00:40:18,920 --> 00:40:21,239
Speaker 1: have not seen the you know, this this richness of

733
00:40:21,320 --> 00:40:23,799
Speaker 1: these high prices and short te bills alleviate at all

734
00:40:23,840 --> 00:40:26,200
Speaker 1: in the last few days. What do you make of

735
00:40:26,239 --> 00:40:31,360
Speaker 1: these regional banks offering CDs FDIC insured up to a

736
00:40:31,440 --> 00:40:34,920
Speaker 1: quarter million dollars around the five percent yield level. Is

737
00:40:34,960 --> 00:40:38,839
Speaker 1: this just to attract some depositors that seems like a

738
00:40:38,880 --> 00:40:43,879
Speaker 1: pretty decent return over the course of twelve months. It's

739
00:40:43,880 --> 00:40:45,799
Speaker 1: an excellent return, im It's what they have to do.

740
00:40:45,920 --> 00:40:48,160
Speaker 1: I mean, right now, you've got to you've got to

741
00:40:48,200 --> 00:40:50,560
Speaker 1: hold on to his money of your deposits as you can.

742
00:40:50,760 --> 00:40:52,560
Speaker 1: You know, if you're some of these small regional banks

743
00:40:52,600 --> 00:40:55,440
Speaker 1: and you're trying to basically instill confidence because banking is

744
00:40:55,440 --> 00:40:58,560
Speaker 1: a confidence game, and so they're going to have to

745
00:40:58,560 --> 00:41:00,960
Speaker 1: do and sometimes maybe even you lose a little bit money,

746
00:41:01,480 --> 00:41:04,680
Speaker 1: but there that's the most important thing, to keep that liquidity, uh,

747
00:41:04,760 --> 00:41:06,040
Speaker 1: and to be able to kind of live on, you

748
00:41:06,040 --> 00:41:08,080
Speaker 1: know through it's probably gonna be, you know, pretty eventful

749
00:41:08,080 --> 00:41:10,440
Speaker 1: a few months here, Brian. I don't know if you

750
00:41:10,480 --> 00:41:12,239
Speaker 1: look at WORP or how often you look at the

751
00:41:12,239 --> 00:41:15,040
Speaker 1: world instant Probably do I do so just thinking you can.

752
00:41:15,239 --> 00:41:16,880
Speaker 1: You can find the nerds at a party if you

753
00:41:16,960 --> 00:41:19,360
Speaker 1: yell at work and people look at you, you know

754
00:41:19,400 --> 00:41:22,799
Speaker 1: where the bond geeks are. Yeah, exactly, Um, we'll listen.

755
00:41:23,000 --> 00:41:24,640
Speaker 1: Maybe I'm not as much of a nerd because I

756
00:41:24,680 --> 00:41:30,200
Speaker 1: don't really get it. Is this really the market pricing

757
00:41:30,280 --> 00:41:33,320
Speaker 1: in cuts. I mean, is that really what this means

758
00:41:33,360 --> 00:41:36,080
Speaker 1: when I look at this screen? Um? Or is it

759
00:41:36,120 --> 00:41:40,719
Speaker 1: like hedging? Going on? What question? What did it? Because

760
00:41:40,760 --> 00:41:43,080
Speaker 1: you know, Powell has come out and said over and

761
00:41:43,120 --> 00:41:46,359
Speaker 1: over again, guys, I'm not gonna cut rates this year,

762
00:41:46,920 --> 00:41:49,479
Speaker 1: and if he does, it would be terrifying, right because

763
00:41:49,520 --> 00:41:51,520
Speaker 1: I feel like something huge would have to break. So

764
00:41:51,560 --> 00:41:54,840
Speaker 1: what does WORP really mean? So, so for for for

765
00:41:54,840 --> 00:41:57,520
Speaker 1: for my mom who might be listening, WORP is the

766
00:41:57,560 --> 00:41:59,800
Speaker 1: market's projection of the FED funds rate. So where's it

767
00:41:59,800 --> 00:42:01,879
Speaker 1: going to go over the next twelve months? And what

768
00:42:01,880 --> 00:42:04,359
Speaker 1: WORP is saying right now is that there's a coin

769
00:42:04,400 --> 00:42:07,759
Speaker 1: flip that the Fed's gonna hike next month, and then

770
00:42:08,160 --> 00:42:10,160
Speaker 1: by the end of the year, it's saying the Fed's

771
00:42:10,160 --> 00:42:12,640
Speaker 1: gonna cut about three times, so about seventy five basis points.

772
00:42:12,640 --> 00:42:15,280
Speaker 1: Because the way I would encourage everyone to think about

773
00:42:15,280 --> 00:42:16,960
Speaker 1: that is, you know, we we think about it like

774
00:42:17,000 --> 00:42:20,279
Speaker 1: to talk about it as a single number. Think about

775
00:42:20,320 --> 00:42:23,520
Speaker 1: it more is maybe maybe a fifty fifty kind of

776
00:42:23,880 --> 00:42:27,640
Speaker 1: probability of two scenarios, the first one meaning the FED hikes,

777
00:42:27,640 --> 00:42:29,480
Speaker 1: and we get to about you know, five and a

778
00:42:29,560 --> 00:42:31,279
Speaker 1: quarter on the upper part of the band of the

779
00:42:31,280 --> 00:42:33,719
Speaker 1: FED funds rate, and it stays there for the end

780
00:42:33,760 --> 00:42:35,040
Speaker 1: of the year, and that's where we end. There's a

781
00:42:35,040 --> 00:42:38,360
Speaker 1: fifty percent shot of that. However, there's a fifty percent

782
00:42:38,400 --> 00:42:40,440
Speaker 1: shot they got to cut one hundred and fifty basis points,

783
00:42:40,719 --> 00:42:44,160
Speaker 1: meaning that something even more nasty than we've seen breaks

784
00:42:44,160 --> 00:42:47,239
Speaker 1: in the financial markets. There's you know, that's kind of

785
00:42:47,280 --> 00:42:51,040
Speaker 1: systemic type of risk, and you know, financial conditions tighten

786
00:42:51,160 --> 00:42:53,920
Speaker 1: so much that the Fed has to get incredibly aggressive

787
00:42:54,120 --> 00:42:56,840
Speaker 1: really soon to kind of alleviate that pressure on the

788
00:42:57,280 --> 00:42:59,759
Speaker 1: on the economy and on the market. So it's you know,

789
00:42:59,800 --> 00:43:03,480
Speaker 1: it's it's a it's a very um extreme two scenarios.

790
00:43:03,520 --> 00:43:06,319
Speaker 1: That's the way I would encourage people think about it. Hey,

791
00:43:06,360 --> 00:43:07,920
Speaker 1: Brian thinks so much good to gets good to get

792
00:43:07,960 --> 00:43:09,719
Speaker 1: a little insight there. I know people talk about it

793
00:43:09,760 --> 00:43:13,400
Speaker 1: as if it's actually mister market saying this is likely

794
00:43:13,440 --> 00:43:16,640
Speaker 1: to happen, you know, and it doesn't. It doesn't convince me,

795
00:43:16,880 --> 00:43:19,560
Speaker 1: all right. Brian Well and co cio and general's PM

796
00:43:19,560 --> 00:43:22,400
Speaker 1: at TCW Fixed Income. Before that, he started his career

797
00:43:22,480 --> 00:43:25,319
Speaker 1: at Donaldson, Loupkin and Yield. Jarette and Your Kids can

798
00:43:25,360 --> 00:43:27,640
Speaker 1: go out and look that up. Fantastic firm until me

799
00:43:27,680 --> 00:43:30,200
Speaker 1: and my friends a credit Swiss came along and acquired them,

800
00:43:30,239 --> 00:43:32,720
Speaker 1: and then most of the talent walked out like fifteen

801
00:43:32,760 --> 00:43:35,320
Speaker 1: minutes after the closing. So that's how that works. But

802
00:43:35,480 --> 00:43:38,200
Speaker 1: the Brian landed just fine at the Trust Company of

803
00:43:38,280 --> 00:43:40,320
Speaker 1: the West Run and the Gobs of Casher, so we

804
00:43:40,360 --> 00:43:42,719
Speaker 1: appreciate getting a few minutes of this time. This is

805
00:43:42,800 --> 00:43:47,440
Speaker 1: where you're listening to the tape cancer our live program

806
00:43:47,480 --> 00:43:51,439
Speaker 1: Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio,

807
00:43:51,760 --> 00:43:54,919
Speaker 1: tune in app, Bloomberg dot Com, and the Bloomberg Business App.

808
00:43:55,040 --> 00:43:57,839
Speaker 1: You can also listen live on Amazon Alexa from our

809
00:43:57,840 --> 00:44:01,840
Speaker 1: flagship New York station. Just say, let's play Bloomberg eleven,

810
00:44:01,920 --> 00:44:07,160
Speaker 1: Dirty Mandy Seeing Senior Technology. Anels Perflummer Intelligence joins us

811
00:44:07,160 --> 00:44:08,960
Speaker 1: here in the studio and Poonam. Let's beginning with you

812
00:44:09,000 --> 00:44:11,160
Speaker 1: with we've been talking about Lulu Lemon, but love to

813
00:44:11,160 --> 00:44:13,080
Speaker 1: broaden it out a little bit more. What's your call

814
00:44:13,160 --> 00:44:16,440
Speaker 1: here on the consumer on retail? Are they just buying

815
00:44:16,480 --> 00:44:18,960
Speaker 1: stretchy pants or are they buying other stuff too? I

816
00:44:19,000 --> 00:44:21,080
Speaker 1: think shoppers are buying what they want to buy. So

817
00:44:21,120 --> 00:44:22,880
Speaker 1: it's one of those things where if you have the

818
00:44:22,960 --> 00:44:25,680
Speaker 1: right product, you're getting the shopper to come in. There's

819
00:44:25,719 --> 00:44:28,040
Speaker 1: been mixed reviews, and you know, the consumer spending and

820
00:44:28,040 --> 00:44:30,480
Speaker 1: where the consumer is slowing boot Paul, you know when

821
00:44:30,480 --> 00:44:34,920
Speaker 1: I look at it, if you're traveling and you're spending money, right,

822
00:44:34,960 --> 00:44:36,919
Speaker 1: you just have to find what you want and lu

823
00:44:37,000 --> 00:44:39,719
Speaker 1: Lemon is a place where people find what they want.

824
00:44:39,760 --> 00:44:43,520
Speaker 1: And that's why you continue to see strengths. They're despite

825
00:44:43,880 --> 00:44:47,479
Speaker 1: macro indicators that would say, you know, inflation is high rates,

826
00:44:47,480 --> 00:44:51,240
Speaker 1: they're going up, unemployment is kicking up, a little, saving

827
00:44:51,280 --> 00:44:54,520
Speaker 1: they're dropping. But the consumer are spending because the consumer

828
00:44:54,600 --> 00:44:56,799
Speaker 1: is spending where they want to spend. So we were

829
00:44:56,840 --> 00:45:02,160
Speaker 1: talking about this earlier. I noticed the retail world seems

830
00:45:02,160 --> 00:45:06,200
Speaker 1: to have lost its middle. There's there's the budget value

831
00:45:06,200 --> 00:45:10,399
Speaker 1: minded brands and the luxury brands. Am I miss reading this?

832
00:45:10,480 --> 00:45:13,880
Speaker 1: Is this just my bias perspective? Or have we hollowed

833
00:45:13,920 --> 00:45:18,919
Speaker 1: out what used to be the JC Penny's, Macy's, Lord

834
00:45:19,000 --> 00:45:23,040
Speaker 1: and tailor sort of middle end of the retail market.

835
00:45:23,560 --> 00:45:26,719
Speaker 1: So there's clearly a bifurcation between the low and the

836
00:45:26,800 --> 00:45:30,560
Speaker 1: high end that exist the middle was losing ground, so

837
00:45:30,600 --> 00:45:32,640
Speaker 1: they're starting to evolve. So when you talk about these

838
00:45:32,680 --> 00:45:35,319
Speaker 1: department stores, you know they've been around forever, but the

839
00:45:35,400 --> 00:45:37,759
Speaker 1: customer kind of went away from them because they were

840
00:45:37,760 --> 00:45:40,640
Speaker 1: too vague, too overathorted. And what we're seeing happening with

841
00:45:40,680 --> 00:45:44,719
Speaker 1: the middle, they're starting to become more catering to clients

842
00:45:44,760 --> 00:45:48,040
Speaker 1: that they want. So they're evolving. They're shrinking their store sides,

843
00:45:48,400 --> 00:45:51,680
Speaker 1: they are developing brands that will resonate more of a shoppers.

844
00:45:51,719 --> 00:45:55,080
Speaker 1: They're changing the experience and the stores and and that's

845
00:45:55,080 --> 00:45:57,839
Speaker 1: where the middle is shifting right now. A man deep,

846
00:45:57,880 --> 00:46:01,840
Speaker 1: let's switch from retail a little bit. Micron semiconductor company.

847
00:46:01,880 --> 00:46:04,239
Speaker 1: That's some pretty good numbers, but I think people like

848
00:46:04,320 --> 00:46:06,840
Speaker 1: the guidance a little bit. Talks just real briefly about

849
00:46:06,880 --> 00:46:09,560
Speaker 1: what you learn from Micron and what it means for

850
00:46:09,760 --> 00:46:13,880
Speaker 1: the Yeah, the glut, the glut. I don't know if

851
00:46:13,920 --> 00:46:17,200
Speaker 1: their numbers were good because they had negative thirty one

852
00:46:17,280 --> 00:46:19,680
Speaker 1: percent gross margins. So when how do you do that?

853
00:46:20,200 --> 00:46:22,839
Speaker 1: You do that when you've got a lot of inventory

854
00:46:22,840 --> 00:46:25,560
Speaker 1: that you have to write off. And look, these businesses

855
00:46:25,640 --> 00:46:28,839
Speaker 1: require a lot of capex because they're running their own

856
00:46:28,880 --> 00:46:32,279
Speaker 1: fabs and they're running at a much lower utilization right

857
00:46:32,320 --> 00:46:35,040
Speaker 1: now because the end market demand isn't there on the

858
00:46:35,120 --> 00:46:38,560
Speaker 1: PC and smartphone side. That's when you see negative gross margins.

859
00:46:38,920 --> 00:46:41,200
Speaker 1: The last time it happened wasn't two thousand and eight

860
00:46:41,200 --> 00:46:44,920
Speaker 1: oh nine, and we know that lasted about eight quarters.

861
00:46:44,960 --> 00:46:47,399
Speaker 1: So everyone right now is thinking this is a four

862
00:46:47,440 --> 00:46:50,480
Speaker 1: to five quarter decline and next year it's going to be,

863
00:46:50,640 --> 00:46:54,120
Speaker 1: you know, back to fifty percent growth. Now. Look, I

864
00:46:54,400 --> 00:46:56,960
Speaker 1: think there are certain end markets and semis that are

865
00:46:57,040 --> 00:47:00,400
Speaker 1: strong autos data centers. We know that. But in the

866
00:47:00,400 --> 00:47:03,440
Speaker 1: case of Micron, over half of their revenue comes from

867
00:47:03,480 --> 00:47:05,880
Speaker 1: PCs and smartphones, and which is why they had to

868
00:47:05,880 --> 00:47:08,799
Speaker 1: write down a lot of the inventory. Who's buying PCs? Now?

869
00:47:08,880 --> 00:47:13,560
Speaker 1: Does anybody buy PCs anymore? Well? Yeah, still so, I mean,

870
00:47:14,000 --> 00:47:17,520
Speaker 1: I guess for work right for the office laptops, but

871
00:47:17,560 --> 00:47:20,640
Speaker 1: it's still a saturated market. So when you think about,

872
00:47:20,719 --> 00:47:23,200
Speaker 1: you know, the demand drivers and how these end markets

873
00:47:23,200 --> 00:47:26,279
Speaker 1: are growing, they're not growing north of you know, low

874
00:47:26,360 --> 00:47:29,640
Speaker 1: single digit and that's where a refresh cycle really matters.

875
00:47:29,640 --> 00:47:33,080
Speaker 1: So what happened during the COVID phases we probably pulled

876
00:47:33,120 --> 00:47:35,359
Speaker 1: forward a lot of the refreshes, and right now we're

877
00:47:35,400 --> 00:47:38,319
Speaker 1: going through that lave where there is nobody who is

878
00:47:38,480 --> 00:47:41,440
Speaker 1: actually interested in refreshing their PC and we have to

879
00:47:41,440 --> 00:47:45,360
Speaker 1: wait a couple of years. Same thing with smartphones. And look,

880
00:47:45,880 --> 00:47:48,960
Speaker 1: Micron doesn't supply directly to customer. It's a B to

881
00:47:49,080 --> 00:47:52,600
Speaker 1: B business. So the companies that buy from Micron, they

882
00:47:52,719 --> 00:47:55,840
Speaker 1: probably had an over capacity to begin with because we

883
00:47:55,960 --> 00:47:59,080
Speaker 1: are coming from a shortage phase. We're talking about supply

884
00:47:59,200 --> 00:48:02,560
Speaker 1: chain shortages for the last few years, and so Micron

885
00:48:02,680 --> 00:48:05,960
Speaker 1: actually expanded their capacity over the last three years. So

886
00:48:06,120 --> 00:48:09,719
Speaker 1: now that extra capacity is hurting them. So let me

887
00:48:09,800 --> 00:48:12,960
Speaker 1: ask you the question before Matt does. When do we

888
00:48:13,040 --> 00:48:18,000
Speaker 1: start to see sufficient semiconductor production to allow new cars

889
00:48:18,040 --> 00:48:21,799
Speaker 1: to be produced at levels that will meet demand and

890
00:48:21,960 --> 00:48:26,280
Speaker 1: perhaps get rid of some of these UH dealer search

891
00:48:26,320 --> 00:48:30,080
Speaker 1: charge adms right, additional dealer markup Berry And I don't

892
00:48:30,080 --> 00:48:33,200
Speaker 1: care about the PCs, but I ordered my Challenger a

893
00:48:33,200 --> 00:48:38,120
Speaker 1: couple months ago and I'm willing for it. Right because

894
00:48:38,239 --> 00:48:41,279
Speaker 1: autos is still you know, ten to fifteen percent of

895
00:48:41,360 --> 00:48:45,160
Speaker 1: their overall revenue, whereas PCs and smartphones are much bigger.

896
00:48:45,200 --> 00:48:47,879
Speaker 1: So even though you may think it's because of you know,

897
00:48:49,320 --> 00:48:53,440
Speaker 1: bottlenecks and chip supply. But that's not how these companies

898
00:48:53,480 --> 00:48:56,200
Speaker 1: make money. If what you're supplying to the autos is

899
00:48:56,360 --> 00:48:59,480
Speaker 1: a small sp chip, whereas when it comes to PCs

900
00:48:59,520 --> 00:49:03,080
Speaker 1: and data centers, it's much bigger sps for these companies ever,

901
00:49:03,200 --> 00:49:05,879
Speaker 1: so they're just not a priority to the manufacturers that's

902
00:49:05,920 --> 00:49:09,680
Speaker 1: satisfying their bigger clients. Wow, that's see. I mean almost

903
00:49:09,680 --> 00:49:11,680
Speaker 1: the last time GM and Ford weren't like a major client.

904
00:49:11,719 --> 00:49:13,279
Speaker 1: All right, put let's go back to you because I

905
00:49:13,280 --> 00:49:15,680
Speaker 1: mean the inventory issue that we're talking about in Semis,

906
00:49:16,000 --> 00:49:18,880
Speaker 1: it's the similar type thing in your retail space of

907
00:49:18,960 --> 00:49:23,080
Speaker 1: yoga pants. Inventory to sales ratio has the industry kind

908
00:49:23,080 --> 00:49:28,120
Speaker 1: of gottenance inventory situation in shape. I think they're working

909
00:49:28,160 --> 00:49:30,360
Speaker 1: towards it, so it's definitely better than where it was

910
00:49:30,520 --> 00:49:33,560
Speaker 1: mid last year and even through the holidays, but it's

911
00:49:33,560 --> 00:49:36,080
Speaker 1: still a work in progress. There's still more inventory that

912
00:49:36,160 --> 00:49:39,120
Speaker 1: needs to be cut, and they really need to realign

913
00:49:39,200 --> 00:49:42,359
Speaker 1: their inventories with demand because if the consumer does flow

914
00:49:42,440 --> 00:49:46,080
Speaker 1: in the back half, then inventories could once again pile

915
00:49:46,160 --> 00:49:49,000
Speaker 1: up very quickly if they don't begin to put a

916
00:49:49,080 --> 00:49:51,759
Speaker 1: model in where they can chase inventory rather than half

917
00:49:51,800 --> 00:49:56,200
Speaker 1: too much. I mean many have just real quick thirty seconds.

918
00:49:56,600 --> 00:49:58,839
Speaker 1: Are we on the other side of this ups and

919
00:49:58,920 --> 00:50:00,719
Speaker 1: downs with chips? Are we? Are we not? Kind of

920
00:50:00,719 --> 00:50:03,439
Speaker 1: on an upswing. We're gonna it'll be a good business again,

921
00:50:03,680 --> 00:50:09,239
Speaker 1: probably viewing that late inventory correction phase for PCs and smartphones. Okay, well,

922
00:50:09,280 --> 00:50:11,399
Speaker 1: we haven't seen us slowdown on the autos and data

923
00:50:11,400 --> 00:50:13,600
Speaker 1: center side, so we can't even talk about a trough

924
00:50:13,640 --> 00:50:17,240
Speaker 1: because there hasn't been any deceleration. So end market exposure

925
00:50:17,320 --> 00:50:20,040
Speaker 1: really matters right now, all right, end market exposure really matters.

926
00:50:20,080 --> 00:50:22,279
Speaker 1: All right? Good stuff, And that's Matt and Barried buying

927
00:50:22,320 --> 00:50:24,239
Speaker 1: all these silly cars that they do, all right, so

928
00:50:24,280 --> 00:50:25,640
Speaker 1: we got put them, Goyle, thank you so much for

929
00:50:25,719 --> 00:50:29,560
Speaker 1: joining us. Put them covers all the motorcycle because Ducati

930
00:50:29,680 --> 00:50:32,279
Speaker 1: has more chips in the multi Strata V four than

931
00:50:32,280 --> 00:50:34,200
Speaker 1: they've ever had. Now you've got a motorcycle that can

932
00:50:34,200 --> 00:50:37,080
Speaker 1: do adaptive cruise control, that has blind spot detection. But

933
00:50:37,160 --> 00:50:39,960
Speaker 1: the problem with that is, I order one last year

934
00:50:40,120 --> 00:50:41,960
Speaker 1: in twenty twenty two, I'm not going to get until

935
00:50:42,000 --> 00:50:44,719
Speaker 1: next year ordering things left and run he is I

936
00:50:44,719 --> 00:50:47,799
Speaker 1: mean left and right recession? Exactly what recession. All right,

937
00:50:47,800 --> 00:50:50,239
Speaker 1: mendep seen covering all of the tech stuff here for

938
00:50:50,400 --> 00:50:53,600
Speaker 1: Bloomberg Intelligence. A nice round table there bringing retail and

939
00:50:53,680 --> 00:50:56,400
Speaker 1: tech together. Who else can do with the Bloomberg Intelligence

940
00:50:56,680 --> 00:51:00,759
Speaker 1: More coming up? You're listening to the table cancer our

941
00:51:00,760 --> 00:51:04,520
Speaker 1: live program Bloomberg Markets weekdays at ten am Eastern on

942
00:51:04,560 --> 00:51:07,759
Speaker 1: Bloomberg Radio, tune in app, Bloomberg dot Com, and the

943
00:51:07,800 --> 00:51:10,960
Speaker 1: Bloomberg Business App. You can also listen live on Amazon

944
00:51:11,040 --> 00:51:14,360
Speaker 1: Alexa from our flagship New York station. Just say Alexa

945
00:51:14,560 --> 00:51:19,120
Speaker 1: play Bloomberg eleven thirty. We focus on earnings. We focus

946
00:51:19,160 --> 00:51:22,480
Speaker 1: on big macro issues, like what's going on in the

947
00:51:22,480 --> 00:51:24,040
Speaker 1: banking system. But boy, at the end of the day,

948
00:51:24,080 --> 00:51:26,879
Speaker 1: it seems like these markets continue to be driven by

949
00:51:26,920 --> 00:51:29,160
Speaker 1: this federal reserve. We need to get a sense kind

950
00:51:29,160 --> 00:51:31,680
Speaker 1: of where we are. Hugh Henry, he's a founding partner

951
00:51:31,719 --> 00:51:35,720
Speaker 1: of Eclectica Asset Management. I founded that back in two

952
00:51:36,080 --> 00:51:38,279
Speaker 1: and two. Hugh, thanks so much for joining us here.

953
00:51:40,480 --> 00:51:43,000
Speaker 1: How is this FED performing here? Is this FED still

954
00:51:43,040 --> 00:51:46,200
Speaker 1: behind the curve? Are they just nowhere near the curve

955
00:51:46,320 --> 00:51:49,040
Speaker 1: or are they finally gotten back on board there? What's

956
00:51:49,040 --> 00:51:50,880
Speaker 1: your call of this FED here? As we wait some

957
00:51:50,960 --> 00:51:54,480
Speaker 1: more inflation data later this week. Oh, he is, I

958
00:51:54,520 --> 00:51:57,200
Speaker 1: feared you would gona. I don't know if it's because

959
00:51:57,200 --> 00:52:00,400
Speaker 1: it's raining and I find myself in Los Angeles and

960
00:52:00,480 --> 00:52:02,400
Speaker 1: it's raining. You go all the way to LA and

961
00:52:02,440 --> 00:52:04,759
Speaker 1: it's raining. I know, and I don't want to. I

962
00:52:04,840 --> 00:52:07,120
Speaker 1: don't I am the rain. I'm full of the state,

963
00:52:08,040 --> 00:52:12,719
Speaker 1: the Fed's notions, their potions. Whereas the game might might

964
00:52:13,080 --> 00:52:15,400
Speaker 1: I think the best retort to your question is it

965
00:52:15,480 --> 00:52:19,600
Speaker 1: a retort, but is tell me when the FED tell

966
00:52:19,640 --> 00:52:22,000
Speaker 1: me when we last gave them like five stars, Tell

967
00:52:22,040 --> 00:52:24,920
Speaker 1: me when they actually order it, when they actually they

968
00:52:25,040 --> 00:52:28,520
Speaker 1: brought something to the table which actually empowered and made

969
00:52:28,520 --> 00:52:33,760
Speaker 1: our lives better. And I don't one eighty two when

970
00:52:33,800 --> 00:52:38,319
Speaker 1: when when finally rates peaked. Now, let's let's look at

971
00:52:38,320 --> 00:52:42,360
Speaker 1: that rates peaked to FED rates peaked to twenty percent. Yeah,

972
00:52:42,400 --> 00:52:45,560
Speaker 1: and that seems an extraordinary level. But let's put a

973
00:52:45,560 --> 00:52:48,960
Speaker 1: filter on that because debt and I'm going to round

974
00:52:49,120 --> 00:52:52,239
Speaker 1: these debts to GDP ratios, you know, the quantum of

975
00:52:52,239 --> 00:52:54,880
Speaker 1: debt versus the income of the American economy. I'm going

976
00:52:54,920 --> 00:52:57,120
Speaker 1: to We're not going to do decimal points. I'm going

977
00:52:57,160 --> 00:53:00,480
Speaker 1: to tell you that in the semicies we had dle average.

978
00:53:00,520 --> 00:53:04,120
Speaker 1: We finally completed the deal leverage from the travesty, you know,

979
00:53:04,239 --> 00:53:07,160
Speaker 1: the bank crisis so many decades before in the nineteen

980
00:53:07,239 --> 00:53:09,880
Speaker 1: thirty s, which is to say, DEAD was one times

981
00:53:10,480 --> 00:53:13,800
Speaker 1: the size of the American economy. And if you fast

982
00:53:13,840 --> 00:53:19,240
Speaker 1: forward forty fifty years from that point, of course, we releveraged.

983
00:53:19,880 --> 00:53:22,920
Speaker 1: We became very boulish on ourselves, and I think, and

984
00:53:23,000 --> 00:53:25,920
Speaker 1: I fear the process, we created a lot of fictitious

985
00:53:26,000 --> 00:53:29,560
Speaker 1: wealth in the asset markets. But dead is now four

986
00:53:29,600 --> 00:53:32,640
Speaker 1: times national income. And so what I want to say

987
00:53:32,840 --> 00:53:35,359
Speaker 1: if you had twenty and you compare the twenty percent

988
00:53:35,480 --> 00:53:39,439
Speaker 1: FED funds to the dead of one times GDP, well

989
00:53:39,880 --> 00:53:42,759
Speaker 1: you know, twenty times one is twenty. And then fast

990
00:53:42,800 --> 00:53:46,279
Speaker 1: forward to today and we're at five pretty much, and

991
00:53:46,320 --> 00:53:48,759
Speaker 1: we've got four of four x of debt. So I

992
00:53:48,800 --> 00:53:50,719
Speaker 1: want to say to you that today feels a lot

993
00:53:50,800 --> 00:53:54,120
Speaker 1: like nineteen eighty two, that we're kind of at twenty

994
00:53:54,160 --> 00:53:57,520
Speaker 1: percent reds. And when you're at those levels, things break,

995
00:53:57,880 --> 00:54:00,920
Speaker 1: and you don't need me to tell you they've been breaking.

996
00:54:01,440 --> 00:54:04,120
Speaker 1: So here's the question I think a lot of people

997
00:54:04,160 --> 00:54:10,000
Speaker 1: are wrestling with, because when you look at rates objectively. Today,

998
00:54:10,040 --> 00:54:14,000
Speaker 1: when you look at them in absolute terms, they're historically low.

999
00:54:14,120 --> 00:54:17,640
Speaker 1: So is it the level of rates or how rapidly

1000
00:54:18,239 --> 00:54:24,759
Speaker 1: they rose over the past twelve months. It so the rates,

1001
00:54:25,239 --> 00:54:28,600
Speaker 1: to use the vernacular of the financial markets, it's the carry,

1002
00:54:28,840 --> 00:54:31,640
Speaker 1: you know, it's the servicing of the debt. So, yes,

1003
00:54:31,719 --> 00:54:34,960
Speaker 1: you're correct, I mean comparing five to twenty then of

1004
00:54:35,000 --> 00:54:38,560
Speaker 1: course an absolute terms, one is way below the other.

1005
00:54:39,400 --> 00:54:43,880
Speaker 1: But again, when the debt is four times greater, then

1006
00:54:44,000 --> 00:54:47,000
Speaker 1: you equalize. So don't fall into that trap. Five percent

1007
00:54:47,120 --> 00:54:53,759
Speaker 1: rates are very potently destructive to our economy today, I think,

1008
00:54:54,160 --> 00:54:56,279
Speaker 1: So I want to keep me I suggest to you

1009
00:54:57,400 --> 00:55:00,320
Speaker 1: that we almost have the worst of all wor roads,

1010
00:55:01,320 --> 00:55:05,799
Speaker 1: and let me try and explain why. Because the real economy,

1011
00:55:06,200 --> 00:55:08,799
Speaker 1: you know, for the real folk out there going to

1012
00:55:08,880 --> 00:55:11,759
Speaker 1: work and trying to make a dollar, they're under the

1013
00:55:11,880 --> 00:55:17,560
Speaker 1: heel of this very profound and sharp tightening of money

1014
00:55:17,600 --> 00:55:21,880
Speaker 1: try conditions, and then we have asset prices, and asset

1015
00:55:21,920 --> 00:55:26,160
Speaker 1: prices are really prone to inflation, and it's an inflation

1016
00:55:26,239 --> 00:55:29,920
Speaker 1: coming from kind of the system of trade that we

1017
00:55:30,000 --> 00:55:31,960
Speaker 1: have with the rest of the world that you know,

1018
00:55:31,960 --> 00:55:35,600
Speaker 1: as we know America consumes and the rest of the

1019
00:55:35,640 --> 00:55:39,239
Speaker 1: world produces almost so one is a deficit nation and

1020
00:55:39,280 --> 00:55:44,160
Speaker 1: one is a surplus nation. Now, economics, it was conceived

1021
00:55:44,200 --> 00:55:47,880
Speaker 1: that that could happen from time to time, but actually

1022
00:55:47,920 --> 00:55:51,600
Speaker 1: it's become the norm. I mean, all of my adult life,

1023
00:55:51,680 --> 00:55:54,759
Speaker 1: America has been the deficit nation. And we've had we

1024
00:55:54,800 --> 00:55:58,719
Speaker 1: call them mercantileus, but we've had trade orientated economies like

1025
00:55:58,920 --> 00:56:02,800
Speaker 1: Germany and these oil producers and of course over in Asia,

1026
00:56:03,040 --> 00:56:06,880
Speaker 1: and they create surpluses. And the great problem that the

1027
00:56:07,000 --> 00:56:11,560
Speaker 1: real folk have is that these suplus nations around the world,

1028
00:56:11,840 --> 00:56:16,640
Speaker 1: they don't want to buy physical goods or services from

1029
00:56:16,640 --> 00:56:19,920
Speaker 1: the real folk. They want to buy they want to

1030
00:56:19,920 --> 00:56:24,200
Speaker 1: buy financial asses from the wall street folk. And so

1031
00:56:24,239 --> 00:56:27,640
Speaker 1: again we've got this kind of division where one part

1032
00:56:27,719 --> 00:56:30,360
Speaker 1: of the community, very small part of the community, is

1033
00:56:30,360 --> 00:56:33,520
Speaker 1: wearing sunglasses because the future seems so bright, and the

1034
00:56:33,600 --> 00:56:36,839
Speaker 1: other part of the community has the disdain of the rain,

1035
00:56:36,960 --> 00:56:40,239
Speaker 1: the deflationary rain. But how does that work out you?

1036
00:56:40,320 --> 00:56:43,640
Speaker 1: I mean, this all sounds very kind of sky is

1037
00:56:43,680 --> 00:56:48,080
Speaker 1: falling Thomas Woods. We heard this after the Great Financial Crisis.

1038
00:56:48,200 --> 00:56:50,880
Speaker 1: It reminds me of that you know rap video that

1039
00:56:51,120 --> 00:56:57,160
Speaker 1: was what was that it was Cane's versus High right, right,

1040
00:56:57,840 --> 00:57:03,320
Speaker 1: and but that you how terrible reckoning never came to pass.

1041
00:57:03,440 --> 00:57:05,880
Speaker 1: Maybe we put it off for a decade and a half.

1042
00:57:05,920 --> 00:57:08,440
Speaker 1: But how does this all work out? Because that sounds

1043
00:57:08,440 --> 00:57:15,920
Speaker 1: like a really bad setup. No, okay, Okay, propaganda, my friend,

1044
00:57:16,080 --> 00:57:20,560
Speaker 1: you've been swallowing the propaganda from Wall Street. Let's let's

1045
00:57:20,640 --> 00:57:25,000
Speaker 1: let's unveil a few things. Okay. If you look at

1046
00:57:25,040 --> 00:57:28,320
Speaker 1: the per capita GDP expansion, what does that mean? It

1047
00:57:28,400 --> 00:57:31,920
Speaker 1: means the average income from for the average Joe in

1048
00:57:31,920 --> 00:57:35,520
Speaker 1: this country, okay, And letting you base it to one hundred,

1049
00:57:35,920 --> 00:57:39,960
Speaker 1: and you compare the plight of the average real person, okay,

1050
00:57:40,200 --> 00:57:43,440
Speaker 1: since two thousand and nine, since the last financial great

1051
00:57:43,520 --> 00:57:47,800
Speaker 1: financial crisis. Okay, And as a reference point, let's take

1052
00:57:48,120 --> 00:57:52,480
Speaker 1: nineteen thirty okay. And so let's consider two communities of

1053
00:57:52,560 --> 00:57:56,120
Speaker 1: the real four, one starting in nineteen thirteen going fifteen

1054
00:57:56,200 --> 00:57:58,960
Speaker 1: years out. One starting in two thousand and nine and

1055
00:57:59,000 --> 00:58:03,240
Speaker 1: going fifteen years is slightly less. Yeah, the folk back

1056
00:58:03,280 --> 00:58:06,040
Speaker 1: in the in the Great Depression, their income has gone

1057
00:58:06,040 --> 00:58:09,160
Speaker 1: from one hundred to one hundred and eighty. Okay. So

1058
00:58:09,200 --> 00:58:13,680
Speaker 1: there's our reference point, okay, where where is the corresponding

1059
00:58:13,800 --> 00:58:16,800
Speaker 1: expansion and income for the When we start that that

1060
00:58:16,920 --> 00:58:19,800
Speaker 1: journey at two thousand and nine, you find that the

1061
00:58:19,880 --> 00:58:24,280
Speaker 1: average per capital US GDP statistic has gone from one

1062
00:58:24,360 --> 00:58:27,920
Speaker 1: hundred to just shy of one hundred and twenty. Actually,

1063
00:58:27,920 --> 00:58:31,560
Speaker 1: for the real folk, we've been living in a depression

1064
00:58:32,000 --> 00:58:35,240
Speaker 1: where the financial press are unwilling for some reason to

1065
00:58:35,320 --> 00:58:37,800
Speaker 1: call it that. And why is it a depression? Because

1066
00:58:37,840 --> 00:58:40,480
Speaker 1: of the last the last fourteen years or so, the

1067
00:58:40,600 --> 00:58:44,040
Speaker 1: Federal Reserve and indeed financial markets on at least three

1068
00:58:44,040 --> 00:58:50,680
Speaker 1: occasions have sought to tighten monetary policy, and that that's

1069
00:58:50,240 --> 00:58:55,680
Speaker 1: proven itself to be futile damaging. That's really interesting. You

1070
00:58:56,160 --> 00:59:00,960
Speaker 1: You raise some some fascinating points, one of which is

1071
00:59:01,080 --> 00:59:05,240
Speaker 1: looking at both wealth inequality and what's been taking place

1072
00:59:06,080 --> 00:59:09,680
Speaker 1: in terms of the US deficits. What you're really saying

1073
00:59:09,960 --> 00:59:13,960
Speaker 1: is that if the United States cut less taxes on

1074
00:59:14,080 --> 00:59:18,240
Speaker 1: corporations and the wealthy, the average working stiff would have

1075
00:59:18,440 --> 00:59:22,760
Speaker 1: more cash and we'd have less deficits. Am I hearing

1076
00:59:22,760 --> 00:59:27,720
Speaker 1: you correctly? I would like to take it a step forward.

1077
00:59:27,720 --> 00:59:29,680
Speaker 1: I'd like to say that actually the US has been

1078
00:59:30,480 --> 00:59:32,480
Speaker 1: and this will kind of cause people to shark, but

1079
00:59:32,920 --> 00:59:37,520
Speaker 1: has been a benevolent hegemone that has actually been willing

1080
00:59:37,880 --> 00:59:41,360
Speaker 1: to run them. Going on in the modern financial world,

1081
00:59:41,600 --> 00:59:45,000
Speaker 1: which is that all of the suckplus savings from all

1082
00:59:45,000 --> 00:59:48,720
Speaker 1: over the world are being channeled and funneled into the

1083
00:59:48,800 --> 00:59:52,200
Speaker 1: United States economy. Why is that funny? It's funny because

1084
00:59:52,360 --> 00:59:56,040
Speaker 1: the US economy has no need for those savings. Sure,

1085
00:59:56,080 --> 00:59:59,440
Speaker 1: there's a need for investment in the US economy, but

1086
01:00:00,480 --> 01:00:05,320
Speaker 1: neat is more than met by domestic sources of savings. Okay,

1087
01:00:05,680 --> 01:00:08,520
Speaker 1: so and and and the orthodoxy of economics is the

1088
01:00:08,560 --> 01:00:11,520
Speaker 1: savings should be going to the other nations, which you know,

1089
01:00:11,560 --> 01:00:14,920
Speaker 1: which need financing, which which had lots of investment demands.

1090
01:00:15,120 --> 01:00:19,360
Speaker 1: That's not happening. And so again, what happens the surplus

1091
01:00:19,520 --> 01:00:23,560
Speaker 1: capital flows, They flow into US prices and then they

1092
01:00:23,640 --> 01:00:25,919
Speaker 1: make they make it very uncomfortable for the real foot

1093
01:00:25,960 --> 01:00:28,880
Speaker 1: because your house is just too expensive, like young professional

1094
01:00:28,960 --> 01:00:32,320
Speaker 1: kids can't live in major cities. And because that's a

1095
01:00:32,360 --> 01:00:35,439
Speaker 1: great point, I had a boss, an X boss now,

1096
01:00:36,320 --> 01:00:39,400
Speaker 1: who said he couldn't believe the audacity of the new

1097
01:00:39,480 --> 01:00:42,800
Speaker 1: hires that felt they should be able to live near

1098
01:00:42,840 --> 01:00:45,480
Speaker 1: the office, to afford to live in the city where

1099
01:00:45,480 --> 01:00:47,840
Speaker 1: they work, all right, because Hugh, I hope we get

1100
01:00:47,840 --> 01:00:49,919
Speaker 1: to have you on for for a lot longer next time,

1101
01:00:49,920 --> 01:00:51,640
Speaker 1: for like a half hour instead of just ten minutes,

1102
01:00:51,640 --> 01:00:54,040
Speaker 1: because it's really fascinating stuff, all right, Hugh Henry, founding

1103
01:00:54,080 --> 01:00:56,680
Speaker 1: Pardoner of Eclectic Asset Management. Thanks for listening to the

1104
01:00:56,720 --> 01:01:00,640
Speaker 1: Bloomberg Markets podcast. You can subscribe and into the interviews

1105
01:01:00,640 --> 01:01:04,920
Speaker 1: of Apple Podcasts or whatever podcast platform you prefer. I'm

1106
01:01:04,960 --> 01:01:08,720
Speaker 1: Matt Miller. I'm on Twitter at Matt Miller nineteen seventy three.

1107
01:01:09,160 --> 01:01:11,640
Speaker 1: And I'm fall Sweeney. I'm on Twitter at pt Sweeney.

1108
01:01:11,680 --> 01:01:14,360
Speaker 1: Before the podcast, you can always catch us worldwide at

1109
01:01:14,360 --> 01:01:15,400
Speaker 1: Bloomberg Radio