WEBVTT - Digital Assets in Focus, M&A Opportunity 0:00:00.840 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.080 --> 0:00:05.240 my co host Matt Miller. 0:00:05.640 --> 0:00:09.600 Every business day we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.600 and Bloomberg experts, along with essential market moving news. 0:00:14.160 --> 0:00:17.279 Find the Bloomberg Markets Podcast on Apple Podcasts or wherever 0:00:17.360 --> 0:00:20.520 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:21.239 --> 0:00:25.680 So what's the state of the mysterious world of crypto 0:00:26.000 --> 0:00:28.840 now that you can jump in with an ETF? Sandy 0:00:28.880 --> 0:00:32.559 call is head of Digital asset in Investor Advisory Services 0:00:32.560 --> 0:00:36.400 at Franklin Templeton. Our next guest. You know, Gary Gensler 0:00:36.520 --> 0:00:39.479 kind of made it clear of the regulatory approval of 0:00:39.520 --> 0:00:45.440 bitcoin ETFs. That's no sort of implicit endorsement by the regulators, 0:00:45.560 --> 0:00:49.320 I imagine though that hasn't dampened any of the enthusiasm, 0:00:49.360 --> 0:00:49.640 has it? 0:00:50.760 --> 0:00:54.400 No, definitely has not. A record launch for an ETF 0:00:54.880 --> 0:00:58.560 over three billion and that new inflows into the products 0:00:58.560 --> 0:01:00.120 over the last just week. 0:01:01.200 --> 0:01:03.200 And how do you view some of those inflows? Though, 0:01:03.200 --> 0:01:07.440 I'm looking at Bloomberg Data, black Rock and Fidelity dominating 0:01:07.480 --> 0:01:09.479 in terms of flows, both north of a billion. I'm 0:01:09.480 --> 0:01:12.880 looking at least according to the terminal Franklin Templeton closure 0:01:12.920 --> 0:01:15.080 to fifty million. So how does that play out? 0:01:15.520 --> 0:01:17.920 Yeah, I think that it depends who your audience is. 0:01:18.040 --> 0:01:20.679 Out of the gate right now, you're seeing a lot 0:01:20.720 --> 0:01:25.360 of the direct self directed investors coming in and accessing 0:01:25.400 --> 0:01:29.760 this for their own personal portfolios. Moving these new products 0:01:29.800 --> 0:01:33.200 on to the wealth advisory platforms is going to take 0:01:33.200 --> 0:01:36.200 a few months as they do their due diligence see 0:01:36.240 --> 0:01:39.039 how the new product works, and so there will be 0:01:39.120 --> 0:01:43.120 a slower buildup of assets in the discretionarily managed and 0:01:43.200 --> 0:01:46.360 in the professionally managed accounts. And I think you will 0:01:46.400 --> 0:01:49.000 see this continue to grow throughout the coming year, so 0:01:49.360 --> 0:01:51.080 kind of an out of the gate with the self 0:01:51.080 --> 0:01:53.680 directed and then over time you will start to see 0:01:53.720 --> 0:01:57.400 more of the advised assets having an allocation to Bitcoin 0:01:58.000 --> 0:02:00.000 in many of these portfolios. 0:02:00.040 --> 0:02:01.920 What are your fees? Is there a fee war? 0:02:02.680 --> 0:02:05.120 Well, our fees right now are zero, So I don't 0:02:05.160 --> 0:02:06.120 think you can beat that. 0:02:07.280 --> 0:02:09.800 You actually could, but I won't go into that. 0:02:11.760 --> 0:02:14.800 Well, we believe that, you know, we want these early 0:02:14.880 --> 0:02:18.640 investors who come alongside us in our new etf offering 0:02:18.680 --> 0:02:21.880 to really get the one hundred percent full benefit of 0:02:22.000 --> 0:02:24.080 movements in bitcoin. We think we're coming up to an 0:02:24.120 --> 0:02:27.919 important period fundamentally in the bitcoin market, with the upcoming 0:02:28.000 --> 0:02:32.840 having event where the supply is going to tighten systematically. 0:02:32.880 --> 0:02:36.000 This happens through an algorithm, and it's coming right at 0:02:36.040 --> 0:02:38.840 a point where these new ETFs are creating demand in 0:02:38.880 --> 0:02:41.320 the marketplace, and we think it's going to be an 0:02:41.320 --> 0:02:44.600 exciting period for bitcoin. So we want our investors to 0:02:44.639 --> 0:02:47.600 get the full benefit of any price movements that might result, 0:02:47.639 --> 0:02:49.680 and we're not taking any fee. We believe in the 0:02:49.800 --> 0:02:54.000 long term nature of this opportunity and we're willing to 0:02:54.800 --> 0:02:56.920 be in it for the long haul, so we're going 0:02:56.960 --> 0:02:59.440 to wait and take our fees later down the road 0:03:00.080 --> 0:03:01.840 as the product becomes more established. 0:03:01.880 --> 0:03:04.680 I have a host of like wacky questions. You guys 0:03:04.720 --> 0:03:08.560 have ESG offerings. I would imagine, right, okay, so how 0:03:08.600 --> 0:03:12.000 does this conflict with that? Because in order to generate 0:03:12.360 --> 0:03:16.359 this stuff you have to run computers which take gazillions 0:03:16.400 --> 0:03:21.240 of tons of electricity or gigawatts or whatever. That's sort 0:03:21.280 --> 0:03:25.560 of indirect conflict I would imagine with the environmental goals 0:03:25.600 --> 0:03:26.720 of the company. 0:03:27.800 --> 0:03:31.800 You know, intuitively, it would seem to be but what's 0:03:31.840 --> 0:03:35.880 been kind of very exciting about this is that a 0:03:35.920 --> 0:03:39.760 lot of clean energy launches have been held off because 0:03:39.800 --> 0:03:42.360 there has not been a clear use case for them. 0:03:42.680 --> 0:03:45.080 And what we're seeing is a lot of these bitcoin 0:03:45.240 --> 0:03:49.080 miners that have relocated from Russia or from China are 0:03:49.120 --> 0:03:53.360 relocating into areas and they are using clean energy incentives 0:03:53.400 --> 0:03:56.119 that are being offered by the government to build their 0:03:56.120 --> 0:03:59.800 mining facilities. So actually it turns out that bitcoin mining 0:03:59.880 --> 0:04:03.600 is starting to be a use case for introducing clean 0:04:03.720 --> 0:04:07.480 energy technology. And of course not all bitcoin miners are 0:04:07.560 --> 0:04:10.480 at that point, but we're seeing a very positive trend 0:04:10.560 --> 0:04:14.800 in this movement towards cleaner, cleaner users of energy for 0:04:14.960 --> 0:04:17.600 bitcoin mining, which we think is a great thing to see. 0:04:17.880 --> 0:04:20.240 And Sandy you mentioned kind of taking the long term view. 0:04:20.560 --> 0:04:26.320 Eric Balchunis are Bloomberg Intelligence analysts coined it the Cooinentucky Derby. 0:04:26.040 --> 0:04:26.880 Which I'm a big fan of. 0:04:26.920 --> 0:04:28.080 I enjoy betting on horses. 0:04:28.160 --> 0:04:28.400 JT. 0:04:28.480 --> 0:04:30.359 I don't know about you, now, A little pun for you. 0:04:30.720 --> 0:04:34.120 Well, I'll go back to my wacky questions. But it's 0:04:34.160 --> 0:04:36.760 just like I go to the barber shop. That's topic 0:04:36.880 --> 0:04:40.800 dujoure of people who can't afford to lose money and 0:04:40.839 --> 0:04:42.640 who don't know what they're talking about. I don't even 0:04:42.640 --> 0:04:45.680 know this what a bitcoin is. I can't explain it. 0:04:46.040 --> 0:04:49.640 Well, Ceady, I'm guessing I'm just wondering Coinentucky Derby, use 0:04:49.680 --> 0:04:52.080 your punt, whatever pun you want. There are nine new 0:04:52.400 --> 0:04:58.520 spot bitcoin ETFs. How does the race for money impact 0:04:58.680 --> 0:05:01.640 kind of success and whether or not people are going 0:05:01.680 --> 0:05:02.400 to be pulling out of it? 0:05:03.400 --> 0:05:06.160 Yeah, so I look at it this way. There's two 0:05:06.200 --> 0:05:09.560 sets of offerings that are coming to market through these nine. 0:05:09.880 --> 0:05:13.600 I think it's even eleven. One set is coming from 0:05:13.800 --> 0:05:16.200 firms that have been digital natives and have kind of 0:05:16.240 --> 0:05:20.359 grown up in the crypto space. One set is coming 0:05:20.360 --> 0:05:24.440 from traditional asset management firms. I think Franklin Templeton is 0:05:24.480 --> 0:05:27.400 a little unique in that we're actually both right. We 0:05:27.520 --> 0:05:31.760 have been active and operating in the digital crypto native 0:05:31.800 --> 0:05:37.280 space since twenty seventeen. We operating across five different public blockchains. 0:05:37.279 --> 0:05:41.359 We do our own node verification, We really understand and 0:05:41.440 --> 0:05:44.320 are a part of the ecosystem, create our own research 0:05:44.360 --> 0:05:49.040 on individual coins, including bitcoin, and put together portfolios of 0:05:49.120 --> 0:05:52.479 multi cooin portfolios through separately managed accounts that we can 0:05:52.520 --> 0:05:55.919 work with investors to access. So we've been in this 0:05:55.960 --> 0:05:58.159 space for a long time and really understand it. Yet 0:05:58.160 --> 0:06:01.599 we are also a seventy five year old asset manager 0:06:01.600 --> 0:06:04.520 who is trusted and who has been there for clients 0:06:04.520 --> 0:06:07.360 through many market regimes. So I think it's the coming 0:06:07.440 --> 0:06:11.720 together of the crypt natives and the traditional financial services, 0:06:12.120 --> 0:06:15.360 really epitomized by Franklin Templeton, that I think is creating 0:06:15.440 --> 0:06:18.960 the excitement about what's going to happen. And I don't 0:06:19.080 --> 0:06:20.960 know if it's going to be a derby and some 0:06:21.080 --> 0:06:23.080 aren't going to finish the race. I just think it's 0:06:23.120 --> 0:06:24.960 going to be a long race. Right. It's a new 0:06:25.000 --> 0:06:27.920 asset class. Some of your questions are showing people have 0:06:28.000 --> 0:06:31.320 yet to kind of start to understand it. But once 0:06:31.360 --> 0:06:33.920 they do, I think it's hard not to get excited. 0:06:33.960 --> 0:06:35.680 I saw that in my own career when I had 0:06:35.680 --> 0:06:38.680 my AHA moment. It's like my eyes opened and I 0:06:38.760 --> 0:06:41.159 really saw this new opportunity and potential. 0:06:41.440 --> 0:06:43.840 Sandy, this may be a dumb question. Bitcoin trades twenty 0:06:43.880 --> 0:06:47.760 four to seven. If the token crashes on Saturday and Sunday, 0:06:48.040 --> 0:06:50.960 do I wake up Monday morning with a huge loss 0:06:51.160 --> 0:06:51.960 on my TF? 0:06:52.160 --> 0:06:53.880 Well, the good news for you is if the token 0:06:53.960 --> 0:06:57.440 crashes on a Saturday or Sunday. We've got portfolio managers 0:06:57.440 --> 0:07:00.599 and traders trading it on a Saturday and Sunday and 0:07:00.680 --> 0:07:03.680 working to keep the spread between the Bitcoin index and 0:07:03.760 --> 0:07:07.800 what's happening in the ETF in line. So we operate 0:07:07.839 --> 0:07:09.840 twenty four to seven in these markets just like the 0:07:09.960 --> 0:07:13.200 markets operate. So it would be like any market. You know, 0:07:13.240 --> 0:07:15.120 if there's a move over the weekend, you'll see that 0:07:15.200 --> 0:07:19.320 move reflected. But the fact that the ETF is closed 0:07:19.400 --> 0:07:22.200 and the market is open isn't going to be a 0:07:22.240 --> 0:07:24.680 problem in this case because we're running a twenty four 0:07:24.680 --> 0:07:26.200 to seven trading desk around this. 0:07:26.840 --> 0:07:30.760 You you mentioned the next big step that includes derivatives 0:07:31.200 --> 0:07:32.280 with respect to bitcoin. 0:07:33.160 --> 0:07:35.840 That's a lot of people are looking already at derivatives. 0:07:35.880 --> 0:07:39.320 I think that, you know, building the education and understanding 0:07:39.320 --> 0:07:42.280 of the opportunity is more important as the next step 0:07:42.320 --> 0:07:46.080 than really thinking about the next product evolution. I think 0:07:46.120 --> 0:07:49.160 a lot of people have yet to really internalize. We've 0:07:49.200 --> 0:07:52.080 been in a period where we're used to platforms being 0:07:52.200 --> 0:07:55.640 the way of the economy. Network effects are built around 0:07:55.640 --> 0:08:01.200 platforms like Amazon or Uber or airbn be and now 0:08:01.240 --> 0:08:05.600 what we're seeing in the crypto domain is that we're 0:08:05.640 --> 0:08:10.360 seeing protocol based networks right where anyone peer to peer 0:08:10.480 --> 0:08:13.720 can access it. Just like when you type HTTP into 0:08:13.760 --> 0:08:16.960 your browser, that's a protocol. Everyone in the world can 0:08:17.080 --> 0:08:20.680 use that to access the Internet. And these networks that 0:08:20.720 --> 0:08:23.760 are being built like Bitcoin, are protocols that anyone in 0:08:23.800 --> 0:08:27.360 the world can use and everyone can participate in. So 0:08:27.400 --> 0:08:30.480 it's different than a company owning the platform. This is 0:08:30.640 --> 0:08:34.719 all of us collectively owning these new networks, and this 0:08:34.800 --> 0:08:38.240 is a new way to access that ownership. So it's 0:08:38.280 --> 0:08:41.720 an education process and I think that that's where the 0:08:41.760 --> 0:08:45.480 focus should be to really help investors understand why this 0:08:45.600 --> 0:08:48.320 can be an important opportunity for their portfolio. 0:08:48.640 --> 0:08:51.720 Sandy, I got to ask about the Franklin Templeton x profile. 0:08:51.800 --> 0:08:53.840 You've got laser eyes on Ben Franklin. 0:08:54.120 --> 0:08:56.240 I would say, there's not in the marketing department. I 0:08:56.320 --> 0:08:57.000 just make it clear. 0:08:57.120 --> 0:09:00.680 I just want to like some of them's weird third 0:09:00.800 --> 0:09:02.880 tweets that I've seen, even in tweet saying the lawyers 0:09:02.880 --> 0:09:05.880 won't let us respond to comments, but we hear you 0:09:05.920 --> 0:09:09.120 posting about the sixty to forty plus bitcoin. What what 0:09:09.240 --> 0:09:11.320 is the marketing plant like, what's going on. 0:09:11.600 --> 0:09:14.200 Well, this is really you know, as I said, we 0:09:14.280 --> 0:09:17.559 really are part of the crypto made and ecosystem as 0:09:17.600 --> 0:09:21.560 well as being a traditional asset manager, and our analysts, 0:09:21.640 --> 0:09:24.800 interns employees that are in the digital asset unit really 0:09:25.040 --> 0:09:28.400 understand what matters to people in that community, and the 0:09:28.480 --> 0:09:30.800 laser eyes was an important signal to them that we 0:09:30.920 --> 0:09:33.400 stand with them in believing in the future of bitcoin. 0:09:33.840 --> 0:09:36.720 All right, Sandy, thanks for something. I appreciate it. Sandy 0:09:36.720 --> 0:09:39.880 Call had a digital asset in investor advisory Services at 0:09:39.960 --> 0:09:44.880 Franklin Temple. Did I sound too skeptical? It's too harsh. 0:09:44.600 --> 0:09:45.360 Talking to the youth. 0:09:46.600 --> 0:09:50.439 You're listening to the team Kens Live program Bloomberg Markets 0:09:50.480 --> 0:09:53.559 weekdays at ten am Eastern on Bloomberg dot Com, the 0:09:53.679 --> 0:09:56.800 iHeartRadio app and the Bloomberg Business App, or listen on 0:09:56.880 --> 0:09:58.840 demand wherever you get your podcasts. 0:10:00.559 --> 0:10:04.320 Well, let's make a deal. What's the outlook for M 0:10:04.320 --> 0:10:07.200 and A in twenty twenty four, Bailey Our next guest 0:10:07.559 --> 0:10:11.000 Mitch Berlin. He's vice chair of America's Strategy and Transactions 0:10:11.040 --> 0:10:14.040 with Ernst and Young, and I gotta say I think 0:10:14.080 --> 0:10:16.920 he wins the prize for the coolest looking office on 0:10:17.040 --> 0:10:19.480 zoom today. Are you looking at question? What are all 0:10:19.480 --> 0:10:21.120 the ribbons in the background. 0:10:20.720 --> 0:10:22.160 They're actually dog show ribbons. 0:10:22.200 --> 0:10:26.160 Oh don't shool, I mean you're interested, right, we've just changed. 0:10:26.080 --> 0:10:28.760 We've just changed the topic. So you're gonna get. 0:10:29.160 --> 0:10:31.679 More accomplished than I am. So you know what kind 0:10:31.679 --> 0:10:32.000 of dogs? 0:10:34.000 --> 0:10:34.760 What are the dogs? 0:10:35.280 --> 0:10:36.600 Portuguese water dogs? 0:10:36.800 --> 0:10:39.959 Oh beautiful, Yeah, those are the ones that are like hypoallergenic. 0:10:40.080 --> 0:10:44.360 They don't show right at his office anyway. Okay, so 0:10:44.400 --> 0:10:48.319 we'll get back on topic. Is this an environment right 0:10:48.360 --> 0:10:52.960 now in twenty twenty four that's conducive to deal making 0:10:53.040 --> 0:10:54.240 and kind of what's driving it? 0:10:54.679 --> 0:10:55.200 It will be? 0:10:55.320 --> 0:10:58.160 So twenty twenty three was a reset to the pre 0:10:58.240 --> 0:11:01.360 pandemic deal volume. So if you look at major deals, 0:11:01.360 --> 0:11:03.600 those are those deals that are above one hundred million. 0:11:04.120 --> 0:11:08.640 There are approximately twelve hundred and fifty in twenty nineteen 0:11:08.640 --> 0:11:11.040 and twelve hundred and fifty in twenty twenty three. So 0:11:11.080 --> 0:11:13.199 we were trying to understand what does M and A 0:11:13.360 --> 0:11:16.040 look like going from there now that we've reset to 0:11:16.080 --> 0:11:19.760 pre pandemic levels. And so we looked at the last 0:11:19.800 --> 0:11:22.319 thirty five years of M and A and we correlated 0:11:22.360 --> 0:11:29.319 that to information such as GDP growth, inflation, corporate profits, 0:11:29.800 --> 0:11:33.119 the bond spreads and such, and we did see a correlation. 0:11:33.280 --> 0:11:36.240 And so if the predictions for those same metrics hold 0:11:36.280 --> 0:11:39.160 true going forward for twenty twenty four, we should see 0:11:39.160 --> 0:11:41.319 about a twelve to thirteen increase in M and A 0:11:41.640 --> 0:11:43.400 over the twenty twenty three numbers. 0:11:43.720 --> 0:11:46.680 Does the feeling I spend most of my day job 0:11:46.720 --> 0:11:49.920 Mitch covering the IPO market, and the main sense is 0:11:49.960 --> 0:11:52.400 that something's got to give? Is that kind of your sense? 0:11:52.440 --> 0:11:54.719 We have a need for deals, We have cash on 0:11:54.800 --> 0:11:58.000 the sidelines, We have companies who are kind of nearing 0:11:58.040 --> 0:12:00.000 the end of their maturity in one sense or another. 0:12:00.600 --> 0:12:01.560 That's exactly right. 0:12:01.640 --> 0:12:03.960 I think that we're at a point now where people 0:12:03.960 --> 0:12:06.200 have been sitting on the sidelines for two years. There 0:12:06.200 --> 0:12:08.720 are a lot of private companies or portfolios or private 0:12:08.760 --> 0:12:12.359 equity that are coming to maturity on their debt to refinance, 0:12:12.400 --> 0:12:14.160 we put them in a very different position from an 0:12:14.280 --> 0:12:16.679 ROI than they are today. So they have to do 0:12:16.720 --> 0:12:20.040 the math and figure out should we monetize now or 0:12:20.320 --> 0:12:22.760 do we take the risk of refinancing hoping that we 0:12:22.760 --> 0:12:25.280 can get a lower rate soon enough that it doesn't 0:12:25.320 --> 0:12:27.199 impact our ROI calculations. 0:12:27.600 --> 0:12:31.920 Okay, so who's coming together in twenty twenty four. You 0:12:31.960 --> 0:12:34.200 don't have to name names, but like, well that would 0:12:34.240 --> 0:12:37.439 be nice, but industries, I. 0:12:37.360 --> 0:12:37.840 Can name that. 0:12:37.960 --> 0:12:40.000 The industry sectors, the sectors that we're going to see 0:12:40.000 --> 0:12:42.960 the most activity are the ones where the deal multiples 0:12:43.000 --> 0:12:45.640 have gone down. Because in a time where you have 0:12:45.720 --> 0:12:49.240 a very high cost of capital and high multiples, it's 0:12:49.320 --> 0:12:51.360 unlikely that you're going to see a significant amount of 0:12:51.440 --> 0:12:53.560 M and A activity. But if you look at the 0:12:53.679 --> 0:12:56.640 sectors where the deal multiples have gone down, that includes 0:12:56.679 --> 0:13:00.000 life sciences and technology, those deal multiples have gone down 0:13:00.040 --> 0:13:02.680 down about eight points each. And if you look at energy, 0:13:02.720 --> 0:13:05.080 those deal multiples have gone down about four points here 0:13:05.120 --> 0:13:05.560 over year. 0:13:05.840 --> 0:13:07.480 Those are the areas where I thought energy it. 0:13:07.520 --> 0:13:09.959 Was pretty much exhausted, like in twenty twenty three with 0:13:10.040 --> 0:13:10.760 all those deals. 0:13:11.080 --> 0:13:14.480 Well there's still and it may not be the major players, 0:13:14.480 --> 0:13:17.559 but there's still players out there, and they're cost of 0:13:17.880 --> 0:13:20.280 the constant capitals high, but the multiples are going down, 0:13:20.320 --> 0:13:21.880 so they can be attractive targets. 0:13:22.360 --> 0:13:24.120 When you're talking life sciences, we saw a number of 0:13:24.160 --> 0:13:27.640 deals coming out of JP Morgan a few weeks ago 0:13:28.440 --> 0:13:31.679 is that biotech. Are we seeing smaller Bolton deals? Are 0:13:31.720 --> 0:13:33.560 we going to see potentially a return of. 0:13:33.840 --> 0:13:34.520 Major M and A. 0:13:34.880 --> 0:13:35.720 You're going to see both. 0:13:35.760 --> 0:13:37.760 I think the when you look at major M and A, 0:13:37.880 --> 0:13:41.440 there's still patent cliffs looming and they'll need to buy 0:13:41.559 --> 0:13:44.760 an R and D pipeline to continue to turn the 0:13:44.760 --> 0:13:46.280 profits that they want to turn. So I think you'll 0:13:46.280 --> 0:13:48.000 see it on both on both sides and some of 0:13:48.000 --> 0:13:49.720 the smaller biotech deals as well. 0:13:49.920 --> 0:13:52.199 What's up with the FTC and some of this antitrust though? 0:13:52.240 --> 0:13:55.240 Is that something that's it feels like every deal has 0:13:55.400 --> 0:13:57.079 some kind of a tie up. I don't. 0:13:57.640 --> 0:13:59.439 Yeah, stuper with that, Yeah, I know. 0:13:59.480 --> 0:14:01.840 It's a good quest. So the new guidelines came out. 0:14:01.880 --> 0:14:03.720 It's been thirteen years or so since they've come up 0:14:03.760 --> 0:14:07.280 with since they've revised the guidelines. The clients that we're 0:14:07.320 --> 0:14:10.599 speaking to understand that it's going to make things a 0:14:10.640 --> 0:14:12.640 little bit more difficult and take longer, but they're not 0:14:12.720 --> 0:14:15.240 shying away from deal making because of many choices. They 0:14:15.240 --> 0:14:17.400 really in many cases, they really don't have a choice, 0:14:17.679 --> 0:14:20.280 and so more will come under the radar because the 0:14:20.320 --> 0:14:22.440 threshold of what they consider to be a movement in 0:14:22.480 --> 0:14:25.160 the consolidation index has tightened, so more will come under 0:14:25.160 --> 0:14:27.960 the radar. They're going to require more information, so the 0:14:28.080 --> 0:14:30.720 timeline to get a deal done is going to take longer, 0:14:31.040 --> 0:14:33.360 so more is going to come under their scrutiny. But 0:14:33.440 --> 0:14:36.080 we are working with clients every day to come up 0:14:36.120 --> 0:14:39.640 with multiple scenarios that they can look at around reshifting 0:14:39.640 --> 0:14:43.280 the portfolio of the combined entity into something that would 0:14:43.320 --> 0:14:46.840 be more appealing to the FTC and DJ Okay. 0:14:46.600 --> 0:14:48.240 You want to weigh in on spirit, I mean, what 0:14:48.320 --> 0:14:52.080 happened there, it's maybe you take not specifically, maybe a 0:14:52.120 --> 0:14:52.760 broader view. 0:14:53.120 --> 0:14:55.080 Well, my guess is that the way that they shift 0:14:55.080 --> 0:14:57.800 to the portfolio of the routes may have not been 0:14:58.560 --> 0:15:01.480 exactly what the FTC is looking for. But it sounds 0:15:01.480 --> 0:15:03.200 like they're going back to the drawing board from the 0:15:03.680 --> 0:15:05.480 From what we're reading in the paper, it sounds like 0:15:05.560 --> 0:15:08.920 they're they're going to go back for another try at it. 0:15:09.040 --> 0:15:11.440 So I imagine they're going to have to reshift their portfolio 0:15:11.440 --> 0:15:12.800 into something that's more appealing. 0:15:13.120 --> 0:15:16.800 Well, looking at I robot that's coming from Europe, are 0:15:16.800 --> 0:15:19.960 they more stringent typically, like what's to read from one 0:15:20.000 --> 0:15:22.280 of the biggest technology companies not being able to buy 0:15:22.360 --> 0:15:24.960 the maker of a robotic vacuum. 0:15:25.240 --> 0:15:27.480 Yeah, so I can't speak on behalf of the FDC. 0:15:27.600 --> 0:15:30.320 By are the European regulators on that one? I think 0:15:30.320 --> 0:15:34.040 the concern was around having a market dominance and being 0:15:34.040 --> 0:15:37.640 able to shut other players out because you know, the 0:15:37.680 --> 0:15:40.160 buyer of that has such a significant marketplace that they 0:15:40.200 --> 0:15:43.960 can control who's competing with their own products. 0:15:44.000 --> 0:15:46.120 And I think that there's some sensitivity around that. 0:15:46.560 --> 0:15:49.800 Okay, So twenty twenty four overall, you think is going 0:15:49.880 --> 0:15:51.720 to be a pretty hot year for M and A, 0:15:51.840 --> 0:15:52.520 Can we say that? 0:15:52.800 --> 0:15:53.200 We do? 0:15:53.240 --> 0:15:55.600 We think again, you know, twelve to thirty percent increase, 0:15:55.600 --> 0:15:57.800 which would be nice because the last over the last 0:15:58.080 --> 0:16:00.120 two years, M and A has gone down thirty to 0:16:00.160 --> 0:16:02.520 forty percent depending on what sector you're looking at. 0:16:02.920 --> 0:16:05.440 And M and A is not just for the big guys. 0:16:05.920 --> 0:16:10.080 You can have much smaller, even businesses you've never heard of, 0:16:10.160 --> 0:16:12.680 right right, and we would And I mean, how does 0:16:12.680 --> 0:16:15.600 that work? How is that different in terms of funding 0:16:15.720 --> 0:16:17.960 or whatever than the big deals. 0:16:18.400 --> 0:16:20.200 Well, the smaller deals are easy to get fund and 0:16:20.240 --> 0:16:22.640 sometimes you can fund them off balance sheet, but you 0:16:22.720 --> 0:16:24.680 probably will see a pickup in some of those smaller 0:16:24.760 --> 0:16:28.400 deals because quite frankly, they're also coming up with maturities 0:16:28.400 --> 0:16:30.480 on their debt that they're trying to figure out how 0:16:30.520 --> 0:16:33.960 to refinance. And often again it's the constant capital is 0:16:34.040 --> 0:16:36.880 too expensive for them. Now they struck these deals five 0:16:36.960 --> 0:16:39.280 years ago, when you know the cost of capital is 0:16:39.320 --> 0:16:41.560 almost free, and now they're paying five six percent. 0:16:41.600 --> 0:16:43.800 That's a very different economic scenario for them. 0:16:44.000 --> 0:16:47.240 Is that is that one of the bigger drivers behind 0:16:47.320 --> 0:16:49.800 these some of these deals that you know, we got 0:16:50.000 --> 0:16:54.440 a big debt coming up, but whatever, and this is 0:16:54.480 --> 0:16:57.240 the way we can fund that. 0:16:57.440 --> 0:16:58.320 It will be for sure. 0:16:58.360 --> 0:16:59.960 They need to exit, they need to get they need 0:16:59.960 --> 0:17:04.639 to refinance that debt, and to to increase that interest 0:17:04.760 --> 0:17:07.320 rate by four or five percent is significant. 0:17:07.640 --> 0:17:08.800 What's going on with private equity? 0:17:08.920 --> 0:17:09.400 Equity? 0:17:10.200 --> 0:17:11.880 Do we call it private equity anymore? 0:17:11.920 --> 0:17:12.080 Though? 0:17:12.240 --> 0:17:13.240 Pe? 0:17:13.400 --> 0:17:16.000 Do we still call it that because it's morphed into 0:17:16.000 --> 0:17:16.560 something else. 0:17:17.400 --> 0:17:19.000 If we change the name, we'd have to change a 0:17:19.040 --> 0:17:20.800 lot of thought leadership. So we'll continue to call it 0:17:20.840 --> 0:17:23.920 private equity. But they're they're in a in a difficult 0:17:23.960 --> 0:17:27.600 position right now because again, their deals are leveraged. There 0:17:27.600 --> 0:17:29.680 were you know, those that were struck five years ago. 0:17:29.720 --> 0:17:31.840 They were probably hoping to monetize by now. But they're 0:17:31.880 --> 0:17:34.520 coming up with the same maturity cliffs, and so they 0:17:34.560 --> 0:17:36.240 have to do the math to say, shouldn't you know, 0:17:36.960 --> 0:17:40.240 should we lower our valuations and try to sell these 0:17:40.440 --> 0:17:43.920 port codes now? Should we refinanced hope that we can 0:17:43.960 --> 0:17:47.040 get refinanced for a lower cost of capital and a 0:17:47.119 --> 0:17:49.800 year or two and keep the valuations high. You have 0:17:49.880 --> 0:17:51.440 to go, you know, you have to go port code 0:17:51.440 --> 0:17:53.480 by port cone, really do the math to see what 0:17:53.560 --> 0:17:55.760 makes sense whether you move now or hold on it. 0:17:56.119 --> 0:17:59.399 Okay, the question everybody's been waiting for, how many dogs 0:17:59.440 --> 0:18:00.240 and what are their names? Games? 0:18:00.520 --> 0:18:02.200 No, so I have five dogs. 0:18:02.240 --> 0:18:03.679 Oh my gosh they are. 0:18:05.320 --> 0:18:08.159 So we got Loot, Tiki, Greta, Berta, and Irma. 0:18:08.560 --> 0:18:10.720 Yes, all right, so if you want a dog, I 0:18:10.760 --> 0:18:12.639 can ship one over to you right away because I 0:18:12.680 --> 0:18:13.240 have too many. 0:18:13.680 --> 0:18:16.159 I will take any and all that I googled. I 0:18:16.160 --> 0:18:22.800 didn't know we have a snowshovel yet, dogging dogside. 0:18:21.080 --> 0:18:23.480 All right, I will leave it there. Mitch Berle and 0:18:23.680 --> 0:18:28.240 Vice chair of America's Strategy and Transactions with Rinstin Young. 0:18:28.240 --> 0:18:29.600 I don't think he's ever going to come back with 0:18:29.680 --> 0:18:30.120 us for that. 0:18:30.200 --> 0:18:31.720 The real question is would you rather have a dog 0:18:31.800 --> 0:18:33.000 or a shovel I'd rather have talk. 0:18:33.320 --> 0:18:35.840 How about you get a dog that you trained to 0:18:36.560 --> 0:18:38.640 shovel you out or something like that. 0:18:44.160 --> 0:18:47.320 You're listening to the tape catch are live program Bloomberg 0:18:47.359 --> 0:18:50.960 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:18:51.000 --> 0:18:54.240 tune in app, Bloomberg dot Com, and the Bloomberg Business app. 0:18:54.280 --> 0:18:57.120 You can also listen live on Amazon Alexa from our 0:18:57.119 --> 0:19:01.119 flagship New York station, Just say Alexa Bloomberg eleven. 0:19:02.000 --> 0:19:05.160 Let's take a deeper dive into these risk assets, Skyler 0:19:05.200 --> 0:19:10.080 winand is CIO at Reagan Capital. Let's stretch you off 0:19:10.520 --> 0:19:13.399 with the bubble question. Does this feel like a bubble 0:19:13.440 --> 0:19:13.600 to you? 0:19:14.960 --> 0:19:15.680 It sure does. 0:19:16.160 --> 0:19:20.200 With stocks back to all time highs, short end rates 0:19:20.280 --> 0:19:22.840 up five hundred basis points in the last two years, 0:19:23.480 --> 0:19:26.320 long end rates up two hundred and fifty basis points. 0:19:26.800 --> 0:19:30.399 You do the math on where stocks should be given 0:19:30.400 --> 0:19:34.000