1 00:00:00,840 --> 00:00:04,000 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 2 00:00:04,040 --> 00:00:05,280 Speaker 1: my co host Matt Miller. 3 00:00:05,640 --> 00:00:09,720 Speaker 2: Every business day, we bring you interviews from CEOs, market pros, 4 00:00:09,720 --> 00:00:13,600 Speaker 2: and Bloomberg experts, along with essential market moving news. 5 00:00:14,160 --> 00:00:17,279 Speaker 1: Find the Bloomberg Markets podcast called Apple Podcasts or wherever 6 00:00:17,400 --> 00:00:20,520 Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast. 7 00:00:20,800 --> 00:00:23,640 Speaker 1: All right, so let's start with you on a rog Microsoft. 8 00:00:23,960 --> 00:00:24,360 Speaker 3: I don't know. 9 00:00:24,440 --> 00:00:26,160 Speaker 1: I thought it was a good quarter. I'm you know, 10 00:00:26,280 --> 00:00:28,280 Speaker 1: if there's dips, you know, five or a PM, I'd 11 00:00:28,280 --> 00:00:30,600 Speaker 1: be buying the dips here. What did you take away 12 00:00:30,600 --> 00:00:33,520 Speaker 1: from Microsoft? Stocks had a rip this year. 13 00:00:34,280 --> 00:00:36,040 Speaker 4: I think that's what it is. It's had to rip, 14 00:00:36,080 --> 00:00:38,960 Speaker 4: and people are just digesting the news. I think it 15 00:00:39,000 --> 00:00:41,040 Speaker 4: was a good quota, as you said, But people, I 16 00:00:41,040 --> 00:00:44,640 Speaker 4: think had unrealistic expectations that the AI Will Cloades, is 17 00:00:44,680 --> 00:00:47,159 Speaker 4: going to blad out the cloud number, which I think 18 00:00:47,200 --> 00:00:49,479 Speaker 4: will happen over the next twelve to twenty four months, 19 00:00:49,680 --> 00:00:51,920 Speaker 4: but it's not immediate. It's just going to take some time. 20 00:00:52,680 --> 00:00:54,360 Speaker 5: Well, in terms of things that are going to take 21 00:00:54,400 --> 00:00:56,120 Speaker 5: some time, I feel like that also applies to the 22 00:00:56,160 --> 00:01:00,800 Speaker 5: AI play with Alphabet Google. What are you thinking, Mendep 23 00:01:00,840 --> 00:01:03,680 Speaker 5: when it comes to whether that AI chatter is going 24 00:01:03,720 --> 00:01:06,000 Speaker 5: to translate into actual money for Alphabet. 25 00:01:06,440 --> 00:01:09,480 Speaker 6: Well, so the good thing for Alphabet was yesterday the 26 00:01:09,560 --> 00:01:13,840 Speaker 6: expectations were somewhat muted around search and YouTube, and what 27 00:01:13,920 --> 00:01:16,840 Speaker 6: they showed was this business is as resilient as it 28 00:01:16,880 --> 00:01:21,280 Speaker 6: can be, even in an environment where at pricing is 29 00:01:21,319 --> 00:01:26,000 Speaker 6: still facing some headwinds. But I think what Alphabet showed 30 00:01:26,120 --> 00:01:29,080 Speaker 6: yesterday is one they are able to keep the engagement, 31 00:01:29,520 --> 00:01:34,000 Speaker 6: so concerns around chat GPT eating their lunch were overblown. 32 00:01:34,120 --> 00:01:36,479 Speaker 6: And then on the cloud side, it was a pretty 33 00:01:36,520 --> 00:01:40,120 Speaker 6: strong number. Twenty eight percent growth, thirty two billion dollar 34 00:01:40,240 --> 00:01:43,319 Speaker 6: run rate for cloud. That's pretty impressive. And now cloud 35 00:01:43,400 --> 00:01:45,959 Speaker 6: business is not a drag on profitability as it was 36 00:01:46,080 --> 00:01:50,280 Speaker 6: last year. So I think Netnet, I mean they're kind 37 00:01:50,280 --> 00:01:53,240 Speaker 6: of optimizing the cost side of the equation. Ruth Pett 38 00:01:53,320 --> 00:01:58,280 Speaker 6: actually was elevated into the president role. And look, I 39 00:01:58,320 --> 00:02:01,280 Speaker 6: think once you start to see a bound cyclical rebound 40 00:02:01,360 --> 00:02:04,440 Speaker 6: in AD spending, you will see double digit EPs growth 41 00:02:04,440 --> 00:02:07,240 Speaker 6: in this name and they can compound for the next four. 42 00:02:07,160 --> 00:02:07,600 Speaker 7: Or five years. 43 00:02:07,640 --> 00:02:09,880 Speaker 1: All right, So let me ask us either both of 44 00:02:09,880 --> 00:02:12,280 Speaker 1: you guys, I want to hear from Matt Miller tells 45 00:02:12,320 --> 00:02:17,280 Speaker 1: me chat GPT bing is like awesome and that Google 46 00:02:17,720 --> 00:02:20,359 Speaker 1: doesn't have a chance. What do you guys think about that? 47 00:02:20,560 --> 00:02:23,760 Speaker 6: Well, last night they showed the search revenue grew a 48 00:02:23,880 --> 00:02:25,080 Speaker 6: robust five percent. 49 00:02:25,520 --> 00:02:29,040 Speaker 1: So okay, when I was covering Google, if they put 50 00:02:29,040 --> 00:02:31,400 Speaker 1: a five percent print up, we take them out to 51 00:02:31,440 --> 00:02:33,720 Speaker 1: the woodshed. Now you're telling me it's robust. 52 00:02:34,160 --> 00:02:38,880 Speaker 6: And YouTube premium that was the real standout. So YouTube 53 00:02:38,960 --> 00:02:42,840 Speaker 6: ad revenue grew four point five percent, Premium, which is 54 00:02:42,880 --> 00:02:46,600 Speaker 6: incorporated in their other segment, grew twenty four percent. Compare 55 00:02:46,639 --> 00:02:49,360 Speaker 6: that to a Netflix and Spotify. I mean they are 56 00:02:49,400 --> 00:02:52,520 Speaker 6: having all sorts of issues which earned raising prices. In 57 00:02:52,560 --> 00:02:55,720 Speaker 6: the case of YouTube, this is like YouTube premium is 58 00:02:55,760 --> 00:02:58,919 Speaker 6: almost an eight to ten billion dollar revenue business growing 59 00:02:59,000 --> 00:03:02,000 Speaker 6: high teens. So they are taking share of when it 60 00:03:02,000 --> 00:03:05,160 Speaker 6: comes to streaming, and it's a higher margin business than 61 00:03:05,240 --> 00:03:08,120 Speaker 6: Netflix because this is all usually generated content. 62 00:03:08,880 --> 00:03:14,440 Speaker 1: Full disclosure, Bloomberg Markets is on YouTube, all right, So, honor, 63 00:03:14,680 --> 00:03:19,120 Speaker 1: what does Microsoft say about chat GPT bing? Is it 64 00:03:19,160 --> 00:03:19,440 Speaker 1: a thing? 65 00:03:20,240 --> 00:03:23,760 Speaker 4: So for Microsoft, search revenue declining and going to be 66 00:03:23,800 --> 00:03:27,799 Speaker 4: weak next quarter? And LinkedIn, which is based on advertising 67 00:03:28,000 --> 00:03:30,040 Speaker 4: declining and going to be weak next quarter. 68 00:03:30,120 --> 00:03:36,800 Speaker 1: So Google really and Snap had some weak numbers too. 69 00:03:36,920 --> 00:03:40,880 Speaker 6: So social media ad pricing continues to be weak. We'll 70 00:03:40,920 --> 00:03:43,320 Speaker 6: find out from Meta if that is the case, or 71 00:03:43,480 --> 00:03:46,640 Speaker 6: Snap is uh, you know, a standout in terms of 72 00:03:46,720 --> 00:03:50,840 Speaker 6: the weakness. But I think Search we know has the 73 00:03:50,960 --> 00:03:54,040 Speaker 6: highest ry when it comes to ad spend, and in 74 00:03:54,120 --> 00:03:57,080 Speaker 6: the case of Google, clearly the ad pricing was much 75 00:03:57,080 --> 00:03:58,120 Speaker 6: stronger than others. 76 00:03:58,240 --> 00:04:00,280 Speaker 5: So is there a potential read through of the ad 77 00:04:00,360 --> 00:04:03,480 Speaker 5: Snap numbers on advertising to Meta or is Meta such 78 00:04:03,520 --> 00:04:04,920 Speaker 5: a BMT that you can't reach. 79 00:04:05,280 --> 00:04:08,240 Speaker 6: I'm in the camp that Meta's ad pricing numbers will 80 00:04:08,280 --> 00:04:11,240 Speaker 6: also be bad. Meta is doing well in terms of 81 00:04:11,360 --> 00:04:14,320 Speaker 6: cost cutting and they obviously are the scale player when 82 00:04:14,360 --> 00:04:17,599 Speaker 6: it comes to social media, but this will still be 83 00:04:17,839 --> 00:04:21,120 Speaker 6: a weak ad pricing environment for Meta as well. I 84 00:04:21,120 --> 00:04:23,840 Speaker 6: think Reels maybe a bright spot, given they have talked 85 00:04:23,880 --> 00:04:26,719 Speaker 6: so much about you know, competing with TikTok and threads. 86 00:04:26,920 --> 00:04:29,000 Speaker 6: I mean, we'll find out more about it. I think 87 00:04:29,000 --> 00:04:31,919 Speaker 6: they're going to pair back on their reality labs ambitions. 88 00:04:31,960 --> 00:04:34,159 Speaker 6: The whole Meta Worse thing that was a big drag 89 00:04:34,240 --> 00:04:38,799 Speaker 6: last year, but it's still when you compare Meta Story. 90 00:04:39,160 --> 00:04:42,520 Speaker 6: It's a combination of four of their most prominent apps, 91 00:04:42,560 --> 00:04:45,279 Speaker 6: and the Blue app, which is about forty billion rund 92 00:04:45,360 --> 00:04:48,880 Speaker 6: rate in our view, is still declining and that is 93 00:04:49,000 --> 00:04:51,120 Speaker 6: a tough way to fill. When it comes to the 94 00:04:51,120 --> 00:04:51,760 Speaker 6: top line. 95 00:04:51,960 --> 00:04:53,880 Speaker 1: Meta stock up one hundred and forty eight percent year 96 00:04:53,920 --> 00:04:56,040 Speaker 1: to date. Wow up another one and a half percent today. 97 00:04:56,080 --> 00:04:58,359 Speaker 1: Go figure? All right on rob you talk, I know 98 00:04:58,400 --> 00:05:01,200 Speaker 1: you and Mandeep and the tech team have put together 99 00:05:01,360 --> 00:05:02,839 Speaker 1: this seminal report on AI. 100 00:05:03,240 --> 00:05:03,920 Speaker 8: How do I find it? 101 00:05:03,960 --> 00:05:05,000 Speaker 1: On the Bloomberg terminal? 102 00:05:05,279 --> 00:05:08,280 Speaker 6: You can go to iet Internet dashboard and. 103 00:05:08,200 --> 00:05:10,600 Speaker 1: That's where it is. Okay, So that is a seminar report. 104 00:05:10,640 --> 00:05:12,239 Speaker 1: If you want to know what AI is and whether 105 00:05:12,279 --> 00:05:15,200 Speaker 1: it's a scam or a croc or whether it's real 106 00:05:16,000 --> 00:05:19,720 Speaker 1: like Dani's from Webrosecurities says, you can go there and 107 00:05:19,800 --> 00:05:22,839 Speaker 1: check it out. So BI space, I n ET you 108 00:05:22,920 --> 00:05:25,919 Speaker 1: find that report there anorak. When you talk to institutional investors, 109 00:05:26,279 --> 00:05:29,680 Speaker 1: how are they playing? First of all, how do they 110 00:05:29,760 --> 00:05:33,280 Speaker 1: view AI? Is it a seminal event in tech? And 111 00:05:33,320 --> 00:05:34,479 Speaker 1: if so, how do they play it? 112 00:05:34,839 --> 00:05:38,360 Speaker 4: I mean from our side, in the software side, it 113 00:05:38,400 --> 00:05:41,120 Speaker 4: is the cloud providers that can really benefit from this 114 00:05:41,200 --> 00:05:44,400 Speaker 4: because you have to build those applications in the fastest 115 00:05:44,480 --> 00:05:47,360 Speaker 4: processing environment, and that can only be on the cloud. 116 00:05:47,680 --> 00:05:50,320 Speaker 4: Right now, Microsoft has an advantage because of its open 117 00:05:50,360 --> 00:05:53,200 Speaker 4: EI relationship. We think Amazon will catch up over the 118 00:05:53,200 --> 00:05:55,719 Speaker 4: next six to twelve months. We think Google's already there 119 00:05:55,760 --> 00:05:58,760 Speaker 4: with their products. These three companies will benefit more than 120 00:05:58,760 --> 00:05:59,960 Speaker 4: anybody else on the software. 121 00:06:00,800 --> 00:06:03,120 Speaker 5: Well, I know that you know this, but I love 122 00:06:03,320 --> 00:06:05,240 Speaker 5: the funny quotes from Earning's calls. I'm just going to 123 00:06:05,320 --> 00:06:08,080 Speaker 5: repeat it for our audience, the AWS CEO said yesterday, 124 00:06:08,160 --> 00:06:10,599 Speaker 5: kind of taking a shot at Microsoft. It's interesting that 125 00:06:10,680 --> 00:06:13,640 Speaker 5: somebody who's not running their own models, like Microsoft, which 126 00:06:13,640 --> 00:06:16,320 Speaker 5: outsource to open AI, would argue that they've got such 127 00:06:16,400 --> 00:06:19,120 Speaker 5: deep expertise in this area. What do you make of 128 00:06:19,160 --> 00:06:20,000 Speaker 5: a comment like that. 129 00:06:20,520 --> 00:06:23,800 Speaker 4: See, but for the first time, Amazon's feeling the heat. 130 00:06:24,080 --> 00:06:26,200 Speaker 4: They haven't felt that in like what last ten, twelve, 131 00:06:26,240 --> 00:06:26,919 Speaker 4: fifteen years. 132 00:06:26,920 --> 00:06:27,920 Speaker 5: They now have a petition. 133 00:06:28,000 --> 00:06:31,280 Speaker 4: They have a massive competition now with Microsoft because they 134 00:06:31,320 --> 00:06:34,600 Speaker 4: are coming up with products on a monthly basis. The 135 00:06:34,640 --> 00:06:36,960 Speaker 4: pace at which they are coming up with add ons 136 00:06:37,000 --> 00:06:39,760 Speaker 4: to their code products such as off is get Love. 137 00:06:40,839 --> 00:06:43,640 Speaker 4: I mean, it's just it's just remarkable how that's happening. So, 138 00:06:44,320 --> 00:06:46,160 Speaker 4: I mean they have to be feeling pressure at this point. 139 00:06:46,200 --> 00:06:47,520 Speaker 4: I think there's a little bit of that. I think 140 00:06:47,560 --> 00:06:49,760 Speaker 4: Amazon Web Service is going to be weak next quarter 141 00:06:49,920 --> 00:06:52,960 Speaker 4: next week when they report, and let's see what he says. 142 00:06:52,960 --> 00:06:57,400 Speaker 1: Then all right, men, deep the ride sharing biz. What 143 00:06:57,440 --> 00:06:59,120 Speaker 1: are we going to hear from the Ubers and the 144 00:06:59,720 --> 00:07:02,719 Speaker 1: lift of the world. And again I am agnostic between 145 00:07:02,760 --> 00:07:05,039 Speaker 1: the two. Whatever's got the lowest price, That's how I go. 146 00:07:05,320 --> 00:07:08,080 Speaker 6: I mean, so far, the story is Uber is taking 147 00:07:08,120 --> 00:07:13,000 Speaker 6: market share. Lift has lowered prices to reclaim that share. 148 00:07:13,200 --> 00:07:16,160 Speaker 6: But we know this is a scale business and there 149 00:07:16,240 --> 00:07:19,760 Speaker 6: is a big focus on profitability this year. So clearly 150 00:07:19,880 --> 00:07:23,119 Speaker 6: Uber is in a much better situation. The delivery side, 151 00:07:23,400 --> 00:07:26,600 Speaker 6: I think will continue to be a drag on their 152 00:07:26,640 --> 00:07:29,800 Speaker 6: overall free cash flow and the CFO transition. I think 153 00:07:29,840 --> 00:07:32,760 Speaker 6: that was the other big news with Uber, so something 154 00:07:32,840 --> 00:07:34,760 Speaker 6: that I think investors want to know more about. 155 00:07:34,920 --> 00:07:37,920 Speaker 5: Will those third party partnerships be a tailwind for them 156 00:07:37,960 --> 00:07:41,040 Speaker 5: heading into earnings for it with Domino's. 157 00:07:40,640 --> 00:07:45,120 Speaker 6: Yeah, yeah, I think, Look, if everyone realizes that they 158 00:07:45,160 --> 00:07:48,080 Speaker 6: have the traffic when it comes to you know, people 159 00:07:48,600 --> 00:07:52,440 Speaker 6: looking for a meal or ride Uber is the go 160 00:07:52,520 --> 00:07:55,760 Speaker 6: to place. It's a verb, and so every big chain 161 00:07:56,080 --> 00:07:59,000 Speaker 6: right now is looking to partner with them just to 162 00:07:59,600 --> 00:08:03,080 Speaker 6: be on the platform. Dominos is still doing their own delivery, 163 00:08:03,360 --> 00:08:06,560 Speaker 6: so they're not bank and so that is what was interesting. 164 00:08:06,600 --> 00:08:10,760 Speaker 6: They're just using them as a customer acquisition channel for 165 00:08:10,880 --> 00:08:12,480 Speaker 6: people who are ordering online. 166 00:08:12,600 --> 00:08:13,520 Speaker 8: I just don't get it. 167 00:08:13,640 --> 00:08:16,960 Speaker 1: Over the last five years, Uber's compound and a return, 168 00:08:17,120 --> 00:08:20,480 Speaker 1: it's been about flat okay, lift compoundent and your return 169 00:08:20,520 --> 00:08:24,480 Speaker 1: over the last five years negative thirty percent is all 170 00:08:24,520 --> 00:08:27,239 Speaker 1: because of Uber Eats, which I don't do, by the way. 171 00:08:27,520 --> 00:08:29,280 Speaker 1: I think there's the charges they put on for like 172 00:08:29,320 --> 00:08:31,000 Speaker 1: a twenty dollars PiZZ is ridiculous. 173 00:08:31,240 --> 00:08:34,520 Speaker 6: But it's a tough business. I mean, three sided marketplace. 174 00:08:34,960 --> 00:08:38,079 Speaker 6: It's a low gross margin business. You just can't change 175 00:08:38,080 --> 00:08:41,000 Speaker 6: the margin profile of the business. And on top of it, 176 00:08:41,000 --> 00:08:43,880 Speaker 6: it's so hard to maintain a supply. I mean, the 177 00:08:43,880 --> 00:08:45,400 Speaker 6: supply is constantly turning. 178 00:08:46,040 --> 00:08:48,080 Speaker 5: And in New York you've got Curb as well, which 179 00:08:48,120 --> 00:08:50,400 Speaker 5: is the cheapest by far. It's the taxi hailing app. 180 00:08:50,520 --> 00:08:52,920 Speaker 5: So I know that's a very niche market. 181 00:08:52,600 --> 00:08:54,480 Speaker 1: But walk around the corner and get a slice. I 182 00:08:54,520 --> 00:08:56,120 Speaker 1: mean what's the big deal? On a rock ran and 183 00:08:56,120 --> 00:08:59,359 Speaker 1: man Deep Singh senior tech analysts, they lead our technology 184 00:08:59,400 --> 00:09:01,520 Speaker 1: research covered how many analysts do you guys have around 185 00:09:01,520 --> 00:09:04,680 Speaker 1: the world and all that stuff, like twenty in the 186 00:09:04,720 --> 00:09:06,720 Speaker 1: tech team and the tech team we got twenty people 187 00:09:06,760 --> 00:09:10,439 Speaker 1: doing nothing but the tech space based in the US, 188 00:09:10,480 --> 00:09:13,439 Speaker 1: based in London, based in Hong Kong and other parts 189 00:09:13,440 --> 00:09:16,120 Speaker 1: of Asia. So we got the tech space covered. Check 190 00:09:16,160 --> 00:09:18,480 Speaker 1: it out. Man Deep Singh on a rock run a 191 00:09:18,520 --> 00:09:20,440 Speaker 1: senior analysts. We're kind of running that business for us, 192 00:09:20,440 --> 00:09:21,440 Speaker 1: and we appreciate that. 193 00:09:22,600 --> 00:09:25,960 Speaker 3: You're listening to the team. Ken's are live program Bloomberg 194 00:09:26,080 --> 00:09:29,440 Speaker 3: Markets weekdays at ten am Eastern on Bloomberg dot com, 195 00:09:29,520 --> 00:09:32,640 Speaker 3: the iHeartRadio app and the Bloomberg Business app, or listen 196 00:09:32,720 --> 00:09:34,840 Speaker 3: on demand wherever you get your podcasts. 197 00:09:36,480 --> 00:09:39,480 Speaker 1: All right, I n go, it gets you the Bloomberg 198 00:09:39,520 --> 00:09:42,680 Speaker 1: Index browser. I look at the Bloomberg US agg total 199 00:09:42,720 --> 00:09:46,080 Speaker 1: return value UNHEEDGED. It's up two percent this year, so 200 00:09:46,120 --> 00:09:47,520 Speaker 1: the bond people are doing a little bit better than 201 00:09:47,520 --> 00:09:49,880 Speaker 1: the last year, which was the disaster. And I look 202 00:09:49,880 --> 00:09:52,840 Speaker 1: at the Bloomberg US Corporate high Yield total return that's 203 00:09:52,920 --> 00:09:55,720 Speaker 1: up six point five percent, so again some nice returns 204 00:09:55,720 --> 00:09:58,800 Speaker 1: into fixed income businesses this year after a dismal twenty 205 00:09:58,920 --> 00:10:00,880 Speaker 1: twenty two. Had you play it well? One of the 206 00:10:00,920 --> 00:10:04,320 Speaker 1: ways is through you can do some ETFs kids. Johanna 207 00:10:04,320 --> 00:10:07,800 Speaker 1: Gayegos joins us. She's a co founder of bond Blocks 208 00:10:08,679 --> 00:10:11,240 Speaker 1: that is an ETF biz that focuses on the fix 209 00:10:11,320 --> 00:10:13,640 Speaker 1: income business. Joanna joins us here in our Bloomberg Interactive 210 00:10:13,640 --> 00:10:17,720 Speaker 1: Broker studio. So, Joanna, where are you seeing kind of 211 00:10:17,760 --> 00:10:21,000 Speaker 1: opportunities in fixed income this year after again a very 212 00:10:21,000 --> 00:10:23,600 Speaker 1: tough twenty twenty two for that that sector. 213 00:10:23,800 --> 00:10:25,880 Speaker 9: Yeah, I think in context of twenty twenty two and 214 00:10:25,920 --> 00:10:28,719 Speaker 9: the returns here today you just mentioned, like those are 215 00:10:28,960 --> 00:10:32,880 Speaker 9: returns of broad indexes in fixed income AG and obviously 216 00:10:32,960 --> 00:10:36,320 Speaker 9: high yields and investment grade, and what we're trying, I 217 00:10:36,400 --> 00:10:39,120 Speaker 9: really want investors to do and encourage them to do. 218 00:10:39,679 --> 00:10:41,480 Speaker 9: And I think what bond Blocks is all about is 219 00:10:41,640 --> 00:10:45,040 Speaker 9: look across the full spectrum of fixed income opportunities to 220 00:10:45,040 --> 00:10:48,240 Speaker 9: cross asset classes, and in particular look a little further 221 00:10:48,600 --> 00:10:51,320 Speaker 9: down the credit spectrum all the way up into high yield. 222 00:10:51,840 --> 00:10:55,600 Speaker 9: And that's because there's a lot of difference across the 223 00:10:55,679 --> 00:11:00,680 Speaker 9: credit space in sectors and in ratings categories, and right 224 00:11:00,720 --> 00:11:03,640 Speaker 9: now with yields the way they have progressed and they're 225 00:11:03,640 --> 00:11:05,440 Speaker 9: going to continue to progress for the rest of twenty 226 00:11:05,520 --> 00:11:09,439 Speaker 9: twenty three, and the resilience we've seen in these corporations 227 00:11:09,480 --> 00:11:13,400 Speaker 9: balance sheets. You know, you're being compensated very well for 228 00:11:13,480 --> 00:11:15,520 Speaker 9: taking on this risk. You have a lot of income 229 00:11:15,559 --> 00:11:19,800 Speaker 9: to cushion any potential downturns, and you know you you 230 00:11:19,880 --> 00:11:23,240 Speaker 9: should consider going even you know, as far down, you know, 231 00:11:23,280 --> 00:11:26,920 Speaker 9: the high starting with triple starting with triple reinvestment grade 232 00:11:27,280 --> 00:11:28,920 Speaker 9: down to triple C and high yield. 233 00:11:29,200 --> 00:11:30,559 Speaker 7: You really need to take a look. 234 00:11:30,400 --> 00:11:32,560 Speaker 9: At those spaces because I think there's a lot of 235 00:11:32,600 --> 00:11:35,880 Speaker 9: strength there and you know, you know, so far through 236 00:11:35,920 --> 00:11:38,840 Speaker 9: all of this twenty twenty three, I don't think investors 237 00:11:38,840 --> 00:11:39,800 Speaker 9: are paying too much attention. 238 00:11:39,840 --> 00:11:43,640 Speaker 5: Thenization And how are you thinking about longer duration and 239 00:11:43,800 --> 00:11:46,880 Speaker 5: the calculation in terms of how much positioning to do 240 00:11:46,920 --> 00:11:47,880 Speaker 5: around longer duration? 241 00:11:48,160 --> 00:11:51,080 Speaker 9: Yeah, so I think the important thing for longer durations, 242 00:11:51,120 --> 00:11:54,640 Speaker 9: if you're taking very long duration, you're thinking that something 243 00:11:54,720 --> 00:11:57,560 Speaker 9: is going to turn with the economy, and that you 244 00:11:57,559 --> 00:11:59,800 Speaker 9: know you're positioning yourself for that event. 245 00:12:00,440 --> 00:12:03,280 Speaker 7: The way we see duration is that it's a. 246 00:12:03,240 --> 00:12:07,520 Speaker 9: Really important, precise tool that you should be managing, and 247 00:12:07,520 --> 00:12:09,560 Speaker 9: you should be careful of how it is existing in 248 00:12:09,559 --> 00:12:12,000 Speaker 9: your portfolio because it represents all the interest rate risk 249 00:12:12,040 --> 00:12:14,240 Speaker 9: in your portfolio. So the way we think about it 250 00:12:14,280 --> 00:12:17,200 Speaker 9: is across a whole spectrum of duration. So we would 251 00:12:17,240 --> 00:12:20,280 Speaker 9: recommend that people along this. 252 00:12:20,360 --> 00:12:23,720 Speaker 7: Path start adjusting their duration as we get more and 253 00:12:23,760 --> 00:12:24,400 Speaker 7: more information. 254 00:12:24,480 --> 00:12:26,319 Speaker 9: I mean, what people have been doing in our duration 255 00:12:26,440 --> 00:12:29,400 Speaker 9: products to date is they've been you know, buying the 256 00:12:29,440 --> 00:12:32,800 Speaker 9: short side of the curve and you know, reducing their 257 00:12:32,880 --> 00:12:35,480 Speaker 9: duration as much as possible. I think they've really been 258 00:12:35,520 --> 00:12:38,000 Speaker 9: doing that as a cash alternative, though not really taking 259 00:12:38,000 --> 00:12:40,720 Speaker 9: an investment view. And so you know, here we are. 260 00:12:40,760 --> 00:12:44,079 Speaker 9: Our view is that it's unlikely that there's going to 261 00:12:44,120 --> 00:12:46,440 Speaker 9: be a recession in twenty twenty three, but we have 262 00:12:46,480 --> 00:12:48,559 Speaker 9: the tools that allow you to express that view. 263 00:12:49,040 --> 00:12:51,320 Speaker 1: So where are you seeing your clients or where you're 264 00:12:51,320 --> 00:12:54,120 Speaker 1: seeing the funds flows across your products? 265 00:12:54,160 --> 00:12:54,440 Speaker 3: Right now? 266 00:12:54,440 --> 00:12:56,080 Speaker 1: Where are people because I mean you could go to 267 00:12:56,200 --> 00:12:58,720 Speaker 1: a piece of two your paper and get four point 268 00:12:58,840 --> 00:13:00,719 Speaker 1: nine percent just sitting in a two your treasury. Where 269 00:13:00,760 --> 00:13:02,200 Speaker 1: are you seeing kind of some of the fun flows. 270 00:13:02,320 --> 00:13:04,120 Speaker 9: Yeah, so we're still we're seeing a lot of flows 271 00:13:04,120 --> 00:13:04,800 Speaker 9: in the shorter. 272 00:13:04,679 --> 00:13:07,640 Speaker 7: End because people are still positioning themselves with those risk 273 00:13:07,720 --> 00:13:08,600 Speaker 7: free yields. 274 00:13:08,640 --> 00:13:11,559 Speaker 9: I mean, again, I encouraging our investors to look further 275 00:13:11,679 --> 00:13:14,440 Speaker 9: out on either duration spectrum or the credit on the 276 00:13:14,840 --> 00:13:18,960 Speaker 9: credit spectrum. But we've also started to see couple trades 277 00:13:19,040 --> 00:13:21,440 Speaker 9: across the treasury curve and the belly of the curve 278 00:13:22,160 --> 00:13:25,800 Speaker 9: five seven and a few long trades. So there's a 279 00:13:25,920 --> 00:13:28,840 Speaker 9: there's there's some there's some notion. There's still you know, 280 00:13:28,920 --> 00:13:33,120 Speaker 9: overall in ETFs, Treasury ETFs, government ETFs are still you 281 00:13:33,120 --> 00:13:36,480 Speaker 9: know close except for July, we're sixty percent of flows 282 00:13:36,520 --> 00:13:39,640 Speaker 9: in ETF in ETF fixing and flow, so people aren't 283 00:13:39,679 --> 00:13:41,160 Speaker 9: really stepping into that risk yet. 284 00:13:41,360 --> 00:13:44,080 Speaker 1: What's what what's in your high yield ETF products? What 285 00:13:44,160 --> 00:13:46,680 Speaker 1: are what's typically in that ETF. 286 00:13:46,880 --> 00:13:49,520 Speaker 9: Yeah, So what's different again back to comparing us to 287 00:13:49,559 --> 00:13:52,600 Speaker 9: a broad based index, whether it's investment grade or high 288 00:13:52,640 --> 00:13:55,080 Speaker 9: yield or even the AG, is that we've cut up 289 00:13:55,320 --> 00:13:58,960 Speaker 9: the exposures in high yield in particular into ratings categories 290 00:13:58,960 --> 00:14:01,839 Speaker 9: and also sector category. And what you know is really 291 00:14:01,880 --> 00:14:04,040 Speaker 9: fascinating is like you can really play some of. 292 00:14:04,000 --> 00:14:06,800 Speaker 7: These views that you guys talk about every day, like. 293 00:14:07,200 --> 00:14:10,240 Speaker 9: If you want, you know, the most balance sheet strength 294 00:14:10,360 --> 00:14:14,240 Speaker 9: that or with the lowest default risk right now, that 295 00:14:14,280 --> 00:14:18,000 Speaker 9: would be the XBB product, right, so it's the first, 296 00:14:18,280 --> 00:14:20,200 Speaker 9: you know, the first frawway into high yield. 297 00:14:20,200 --> 00:14:22,280 Speaker 7: That's the first the highest level of. 298 00:14:22,640 --> 00:14:23,920 Speaker 9: Rating in high yield. 299 00:14:24,640 --> 00:14:26,760 Speaker 7: If you really think that. 300 00:14:28,240 --> 00:14:30,560 Speaker 9: The infant session isn't coming and you're gonna avoid it 301 00:14:30,600 --> 00:14:32,480 Speaker 9: in twenty twenty three, which is what I think, Yeah, 302 00:14:33,240 --> 00:14:36,280 Speaker 9: you should consider looking at the triple C product. It's 303 00:14:36,400 --> 00:14:41,400 Speaker 9: yielding a lot, the default rate isn't above normal averages, 304 00:14:42,000 --> 00:14:44,560 Speaker 9: and you know, if you even just it's not about 305 00:14:44,560 --> 00:14:47,200 Speaker 9: like going all in, but it's about maybe adding some 306 00:14:47,280 --> 00:14:51,160 Speaker 9: of that exposure into your portfolio just to improve your results. 307 00:14:51,440 --> 00:14:54,240 Speaker 9: Another you've talked about it in the previous session of it, 308 00:14:54,320 --> 00:14:57,240 Speaker 9: like consumer cyclicals and high yield is the best performing 309 00:14:57,320 --> 00:15:00,320 Speaker 9: sector in high yield. So it's telling you obvious that's 310 00:15:00,320 --> 00:15:01,360 Speaker 9: the strength of consumer. 311 00:15:01,720 --> 00:15:03,200 Speaker 7: But in our energy. 312 00:15:02,880 --> 00:15:06,280 Speaker 9: Sector, product is also a way to play a really 313 00:15:06,320 --> 00:15:09,960 Speaker 9: strong balance sheet and high quality because of what's developing 314 00:15:10,120 --> 00:15:13,400 Speaker 9: you know, through through through the markets. There so the 315 00:15:13,480 --> 00:15:16,880 Speaker 9: dispersion amongst the sectors and just the seven sectors. 316 00:15:16,560 --> 00:15:19,080 Speaker 7: That we have is over five hundred basis points. 317 00:15:19,160 --> 00:15:21,320 Speaker 9: The best performing is close to nine percent, which is 318 00:15:21,320 --> 00:15:26,280 Speaker 9: consumer cyclicals. The worst performing is technology and telecom, and 319 00:15:26,320 --> 00:15:29,360 Speaker 9: it's it's it's. 320 00:15:30,040 --> 00:15:32,280 Speaker 7: Just about three or four percent, So five. 321 00:15:32,200 --> 00:15:35,360 Speaker 9: Hundred basis point difference. There's a lot of opportunity that 322 00:15:35,560 --> 00:15:38,200 Speaker 9: you know, people should be considering as we still see 323 00:15:38,200 --> 00:15:41,160 Speaker 9: this resilience and you know, we're getting closer and closer 324 00:15:41,160 --> 00:15:42,160 Speaker 9: than a twenty twenty three. 325 00:15:42,360 --> 00:15:46,080 Speaker 5: Yeah, this consumer resilience ticker is so interesting. I have 326 00:15:46,120 --> 00:15:47,920 Speaker 5: it up on my terminal right now. It looks like 327 00:15:47,960 --> 00:15:49,960 Speaker 5: you are having a great year in that space. What 328 00:15:50,000 --> 00:15:52,320 Speaker 5: are what are kind of the specifics that go into that, 329 00:15:52,360 --> 00:15:55,320 Speaker 5: because I'm I'm fascinated and kind of the continued strength 330 00:15:55,360 --> 00:15:57,920 Speaker 5: of the consumer. So I'm curious about the calculation. 331 00:15:58,040 --> 00:16:00,360 Speaker 9: Yeah, it's the same type of categorization you see in 332 00:16:00,400 --> 00:16:04,200 Speaker 9: equity sector products. It's it's a group of issuers in 333 00:16:04,200 --> 00:16:07,880 Speaker 9: that sector, consumer cyclicals. And so what it represents is 334 00:16:08,080 --> 00:16:10,200 Speaker 9: all of all of the debt in our high yield 335 00:16:10,240 --> 00:16:14,320 Speaker 9: products are representing those firms ability to cover their interest, 336 00:16:15,200 --> 00:16:18,000 Speaker 9: their their their balance sheets, their revenues, and how well 337 00:16:18,040 --> 00:16:20,560 Speaker 9: they're paying their debt. And so you know, as the 338 00:16:20,600 --> 00:16:24,800 Speaker 9: default rates are again maintain for like historical. 339 00:16:24,400 --> 00:16:26,760 Speaker 7: Averages this year, spreads are actually. 340 00:16:26,480 --> 00:16:31,040 Speaker 9: Tightening across the category, and high yield not widening. So 341 00:16:31,120 --> 00:16:33,760 Speaker 9: there's a lot to like consider that. You know, whatever 342 00:16:33,800 --> 00:16:36,000 Speaker 9: category it is. If you're an energy producer, if you're 343 00:16:36,000 --> 00:16:39,240 Speaker 9: an energy company, that's what's in our energy sector. So 344 00:16:39,240 --> 00:16:42,320 Speaker 9: you're benefiting from the You're benefiting from the characteristics of 345 00:16:42,360 --> 00:16:47,360 Speaker 9: those sectors, plus the characteristics of individual issuers and the 346 00:16:47,400 --> 00:16:50,240 Speaker 9: resilience and the health of the fundamentals that are there. 347 00:16:50,640 --> 00:16:51,040 Speaker 8: All right. 348 00:16:51,080 --> 00:16:53,080 Speaker 1: We always love talking to Joanna and Joanna Go Diego's 349 00:16:53,080 --> 00:16:55,880 Speaker 1: co founder of bond Blocks. They do the ETF thing, 350 00:16:55,920 --> 00:16:59,200 Speaker 1: but they do the ETF thing with that fixing comes focused, 351 00:16:59,240 --> 00:17:01,360 Speaker 1: so we don't talk about that maybe as much as 352 00:17:01,360 --> 00:17:03,720 Speaker 1: you sure, So it's great checking in with Joanna occasionally. 353 00:17:03,920 --> 00:17:07,040 Speaker 3: You're listening to the tape Cat's are live program Bloomberg 354 00:17:07,080 --> 00:17:10,679 Speaker 3: Markets weekdays at ten am Eastern on Bloomberg Radio, the 355 00:17:10,760 --> 00:17:13,960 Speaker 3: tune in app, Bloomberg dot Com, and the Bloomberg Business App. 356 00:17:14,000 --> 00:17:16,840 Speaker 3: You can also listen live on Amazon Alexa from our 357 00:17:16,840 --> 00:17:21,920 Speaker 3: flagship New York station, Just say Alexa play Bloomberg eleven thirty. 358 00:17:22,760 --> 00:17:25,560 Speaker 1: Let's Go right to our next guest, Alex Chaloff. That 359 00:17:25,840 --> 00:17:29,520 Speaker 1: is a jailer for Cheliff Showoff, Sholoff, shooff. Okay, I'm 360 00:17:29,560 --> 00:17:29,720 Speaker 1: on that. 361 00:17:29,760 --> 00:17:31,920 Speaker 8: Put your shawl on, you take your shawl off. 362 00:17:32,080 --> 00:17:33,080 Speaker 1: There we go boom. 363 00:17:33,119 --> 00:17:35,080 Speaker 5: I like a smart guy, because where did he get 364 00:17:35,119 --> 00:17:37,800 Speaker 5: his mba usc best university in the world. 365 00:17:37,960 --> 00:17:40,080 Speaker 1: We go right on, right on, man, I like it. 366 00:17:40,119 --> 00:17:41,840 Speaker 5: I like it, Alex she We've got a duke guy 367 00:17:41,840 --> 00:17:42,359 Speaker 5: in the room. 368 00:17:42,440 --> 00:17:45,320 Speaker 1: CIO of Bernstein Private Wealth. That's a good name on 369 00:17:45,400 --> 00:17:48,240 Speaker 1: this street, Bernstein, Alex. We got a fed day today. 370 00:17:48,240 --> 00:17:50,480 Speaker 1: We make a big deal of it here at Bloomberg. 371 00:17:51,200 --> 00:17:52,600 Speaker 1: What are you looking for here? What are you telling 372 00:17:52,640 --> 00:17:55,080 Speaker 1: your clients here? As it relates to our Frederick Reserve 373 00:17:55,119 --> 00:17:56,480 Speaker 1: and it's impact on the market. 374 00:17:56,520 --> 00:18:00,959 Speaker 8: No surprises this afternoon they raised twenty five Palll is 375 00:18:01,000 --> 00:18:04,639 Speaker 8: extremely hawkish in his comments. Market doesn't like it, but 376 00:18:04,680 --> 00:18:07,280 Speaker 8: that's reality. And then we move on. It's all about 377 00:18:07,320 --> 00:18:08,480 Speaker 8: September twenty. 378 00:18:08,960 --> 00:18:12,560 Speaker 5: And as you know, J. Powell has to be hawkish 379 00:18:12,560 --> 00:18:14,639 Speaker 5: and he's going to be. But sometimes you get a 380 00:18:14,680 --> 00:18:17,359 Speaker 5: tiny slip up in his comments and he reveals a 381 00:18:17,359 --> 00:18:19,359 Speaker 5: little dubbishness. Are you anticipating that? 382 00:18:19,880 --> 00:18:22,280 Speaker 8: I think the last few meetings he has, we haven't 383 00:18:22,280 --> 00:18:26,640 Speaker 8: seen the slip up or intentional or otherwise. Our view 384 00:18:26,720 --> 00:18:29,440 Speaker 8: is that he is very deliberate in his language. It's 385 00:18:29,520 --> 00:18:32,600 Speaker 8: like a free lunch. There's no cost to him being hawkish. 386 00:18:32,600 --> 00:18:34,639 Speaker 8: It doesn't cost, it doesn't grow the balance sheet, it 387 00:18:34,640 --> 00:18:37,720 Speaker 8: doesn't change the economy. He can do it. And if 388 00:18:37,800 --> 00:18:40,920 Speaker 8: all the harm is is that he moves rist acids down, 389 00:18:41,320 --> 00:18:44,800 Speaker 8: that's okay. So I think he's he'll be very disciplined, 390 00:18:45,040 --> 00:18:46,680 Speaker 8: very intentional in his language. 391 00:18:46,760 --> 00:18:49,479 Speaker 1: Well, I mean, the risk I see out there is 392 00:18:49,600 --> 00:18:52,439 Speaker 1: he's going to push this economy through recession. Who wants that. 393 00:18:52,480 --> 00:18:55,000 Speaker 1: I've taken recession off the table personally, but he could 394 00:18:55,000 --> 00:18:57,560 Speaker 1: push it right into Recessionho wants that he could. But 395 00:18:57,760 --> 00:19:02,080 Speaker 1: our house view is that off landing is highly likely. 396 00:19:02,640 --> 00:19:05,679 Speaker 1: It's largely on the back or almost entirely on the 397 00:19:05,720 --> 00:19:08,440 Speaker 1: back today of the strength and the labor market which 398 00:19:08,520 --> 00:19:11,159 Speaker 1: will flow through to the consumer. You know, you have 399 00:19:11,200 --> 00:19:13,520 Speaker 1: an unemployment rate which for all intents and purposes is 400 00:19:13,520 --> 00:19:16,320 Speaker 1: effectively zero. Anyone that wants a job can find a job. 401 00:19:16,680 --> 00:19:19,960 Speaker 1: You've got twenty five to fifty four year olds eighty. 402 00:19:19,720 --> 00:19:23,560 Speaker 8: One percent employed. That's a thirty year high. You've got 403 00:19:23,600 --> 00:19:27,080 Speaker 8: wage growth finally tipping back to positive. So our view 404 00:19:27,119 --> 00:19:29,760 Speaker 8: is that the strength and labor is strong enough to 405 00:19:29,840 --> 00:19:33,080 Speaker 8: push us through. And look, if this is it, if 406 00:19:33,080 --> 00:19:36,520 Speaker 8: this is a hike some hawkish dialogue and then a pause, 407 00:19:36,640 --> 00:19:39,320 Speaker 8: or we get the same thing in September, we're through. 408 00:19:39,880 --> 00:19:41,800 Speaker 8: So we are very close to the end of this, 409 00:19:41,880 --> 00:19:43,600 Speaker 8: so we're optimistic about it. 410 00:19:43,720 --> 00:19:45,359 Speaker 5: What's your timeline on a soft landing. 411 00:19:46,480 --> 00:19:49,320 Speaker 8: It's going to be over, they'll tell you when it's over. Okay, right, 412 00:19:49,359 --> 00:19:50,719 Speaker 8: It's going to be one of these things where in 413 00:19:50,760 --> 00:19:52,880 Speaker 8: a year they'll say, oh, guess what, we were zero 414 00:19:52,880 --> 00:19:56,479 Speaker 8: point one or maybe even had one quarter of negative GDP, 415 00:19:56,720 --> 00:19:59,080 Speaker 8: but that's it. But it'll be a two thousand and 416 00:19:59,520 --> 00:20:01,920 Speaker 8: end of twenty event where they talk about twenty three 417 00:20:01,960 --> 00:20:03,040 Speaker 8: and Q one twenty four. 418 00:20:03,240 --> 00:20:06,119 Speaker 5: Do you think there's a potential then of us getting 419 00:20:06,160 --> 00:20:09,119 Speaker 5: to that soft landing but the consumer still feeling like 420 00:20:09,200 --> 00:20:11,640 Speaker 5: inflation is just as bad as it has been. 421 00:20:12,080 --> 00:20:14,520 Speaker 8: I think that's a reality. The good news is that 422 00:20:14,640 --> 00:20:17,520 Speaker 8: household balance sheets continue to be strong, and you get 423 00:20:17,520 --> 00:20:20,359 Speaker 8: some wage growth that continues to grow on itself. I 424 00:20:20,359 --> 00:20:23,600 Speaker 8: think the compounding effect will make things easier. You've already 425 00:20:23,600 --> 00:20:27,240 Speaker 8: seen some pullback in some of the blowout areas of inflation. 426 00:20:27,480 --> 00:20:30,520 Speaker 8: Used cars has come to airline prices have come down, 427 00:20:30,640 --> 00:20:34,080 Speaker 8: so they've been isolated, but they're starting to happen. So 428 00:20:34,119 --> 00:20:36,760 Speaker 8: our view is that inflation isn't going away. It's not 429 00:20:36,800 --> 00:20:38,760 Speaker 8: going to zero overnight, and it's not as if we'll 430 00:20:38,800 --> 00:20:40,720 Speaker 8: be in a deflationary period. So you're not going to 431 00:20:40,800 --> 00:20:43,440 Speaker 8: go fly Los Angeles to New York for one hundred 432 00:20:43,440 --> 00:20:46,359 Speaker 8: and ninety nine bucks anymore. That's just the reality. But 433 00:20:46,960 --> 00:20:49,280 Speaker 8: as far as year over year changes, those will be 434 00:20:49,320 --> 00:20:50,320 Speaker 8: certainly less extreme. 435 00:20:50,359 --> 00:20:50,680 Speaker 7: All right. 436 00:20:50,720 --> 00:20:52,520 Speaker 1: So given that kind of backtrop, what are you telling 437 00:20:52,560 --> 00:20:56,280 Speaker 1: your Burnsteain private wealth management clients to do here? How 438 00:20:56,359 --> 00:20:58,200 Speaker 1: much risk are you putting on the table for them? 439 00:20:58,320 --> 00:21:01,080 Speaker 8: There's two main themes that we're focused on. One is 440 00:21:01,119 --> 00:21:03,400 Speaker 8: extend duration. Don't be afraid of the bond. 441 00:21:03,280 --> 00:21:03,879 Speaker 1: More duration. 442 00:21:04,080 --> 00:21:07,320 Speaker 8: You got iteration, Okay, it's cash, you've been nice, I'm 443 00:21:07,320 --> 00:21:13,120 Speaker 8: get two year cash. In short term. We had a thing. Okay, 444 00:21:13,160 --> 00:21:15,400 Speaker 8: it was okay, okay, but now we've got to move on. 445 00:21:15,640 --> 00:21:18,399 Speaker 8: It's not you, it's me. So we're breaking up with 446 00:21:18,480 --> 00:21:21,199 Speaker 8: cash and money markets and looking at extending duration. I 447 00:21:21,200 --> 00:21:23,000 Speaker 8: think you're going to clip the coupon while you wait 448 00:21:23,040 --> 00:21:24,919 Speaker 8: for the FED to be done. If we get an 449 00:21:24,960 --> 00:21:27,720 Speaker 8: equity market sell off, and everyone who thinks soft landing 450 00:21:27,760 --> 00:21:30,800 Speaker 8: is wrong, guess what. Bonds are way more protective than 451 00:21:30,840 --> 00:21:35,160 Speaker 8: something in money markets in short and next year our view, 452 00:21:35,240 --> 00:21:38,320 Speaker 8: when they start cutting, you'll pick up price appreciation. So 453 00:21:39,040 --> 00:21:41,159 Speaker 8: we might be early, but I'm okay. I'd rather be 454 00:21:41,200 --> 00:21:43,560 Speaker 8: early than wait here, and I think we're just on time, 455 00:21:43,640 --> 00:21:46,040 Speaker 8: by the way. That's theme one. Theme two is private 456 00:21:46,080 --> 00:21:49,000 Speaker 8: markets take advantage of the dislocation that's occurred in the 457 00:21:49,000 --> 00:21:51,840 Speaker 8: private markets and start to put money to work. That's 458 00:21:51,880 --> 00:21:54,600 Speaker 8: probably a three year theme, but it's happening right now. 459 00:21:54,640 --> 00:21:56,440 Speaker 8: Some really interesting opportunities in privates. 460 00:21:56,480 --> 00:21:57,800 Speaker 1: So how do you get how do you do that? 461 00:21:57,880 --> 00:21:59,280 Speaker 1: How do you play the private markets? 462 00:21:59,359 --> 00:22:02,080 Speaker 8: I think you're paid, especially in real estate. I think 463 00:22:02,119 --> 00:22:04,040 Speaker 8: you want to say this is interesting, but this is 464 00:22:04,040 --> 00:22:07,680 Speaker 8: probably a Q one twenty four start date, So continue 465 00:22:07,720 --> 00:22:10,360 Speaker 8: to watch, maybe for a selective deal here or there. 466 00:22:10,400 --> 00:22:13,360 Speaker 8: It's interesting, but on a wholesale fashion, I wait till 467 00:22:13,359 --> 00:22:16,679 Speaker 8: next year. Private debt very interesting today. There's a lot 468 00:22:16,760 --> 00:22:18,800 Speaker 8: of different ways that you can access that market with 469 00:22:18,840 --> 00:22:23,240 Speaker 8: fresh capital, both for original originations, new originations as well 470 00:22:23,240 --> 00:22:26,800 Speaker 8: as secondary purchases. That's a big juicy part of the market. 471 00:22:27,119 --> 00:22:29,119 Speaker 8: And then I think in private equity it's just start 472 00:22:29,160 --> 00:22:32,080 Speaker 8: to dip your toe and engage in other people's mistakes 473 00:22:32,119 --> 00:22:34,199 Speaker 8: over the next two to three years. So whether you 474 00:22:34,240 --> 00:22:36,760 Speaker 8: do that through primaries they're taking advantage of a reset 475 00:22:36,800 --> 00:22:39,359 Speaker 8: and evaluation market, whether you do that through secondaries that 476 00:22:39,400 --> 00:22:42,280 Speaker 8: are buying other people's mistakes and taking advantage of some 477 00:22:42,440 --> 00:22:45,280 Speaker 8: real motivation to sell. Like, there's a number of different 478 00:22:45,280 --> 00:22:45,959 Speaker 8: ways you can play it. 479 00:22:46,040 --> 00:22:48,080 Speaker 5: Are you still seeing a lot of dry powder out there? 480 00:22:48,680 --> 00:22:50,920 Speaker 8: Huge? Huge? I mean, the only thing that I would 481 00:22:50,960 --> 00:22:53,560 Speaker 8: say is you're starting to see institutional LPs that took 482 00:22:53,600 --> 00:22:57,200 Speaker 8: off twenty twenty three because their portfolios were upside down 483 00:22:57,240 --> 00:23:00,160 Speaker 8: with liquid versus illiquid. They've signaled to the market, we're 484 00:23:00,160 --> 00:23:02,479 Speaker 8: probably going to take twenty four off as well. So 485 00:23:02,720 --> 00:23:05,240 Speaker 8: big institutions walking away from the market, you still have 486 00:23:05,320 --> 00:23:08,199 Speaker 8: sovereign wealth guys they've they're not stopping at all and 487 00:23:08,240 --> 00:23:11,080 Speaker 8: in fact not turning that dial up. But then the 488 00:23:11,160 --> 00:23:13,960 Speaker 8: ultra high net worth, you know, the Bernstein client is 489 00:23:14,000 --> 00:23:17,240 Speaker 8: looking at allocating to private markets, in a greater degree 490 00:23:17,400 --> 00:23:19,440 Speaker 8: to a greater degree than they have in the past. 491 00:23:19,760 --> 00:23:21,320 Speaker 8: So I think you'll have that balance. It'll be a 492 00:23:21,320 --> 00:23:23,879 Speaker 8: different it'll be a mix shift of who's the owner, 493 00:23:24,320 --> 00:23:26,080 Speaker 8: but yes, lots of dry powder. 494 00:23:26,480 --> 00:23:29,360 Speaker 1: How about the hedge fund allocation? What are you guys 495 00:23:29,400 --> 00:23:31,679 Speaker 1: suggesting for your clients in terms of hedge funds? 496 00:23:31,920 --> 00:23:34,560 Speaker 8: It really depends on what you're trying to accomplish. I 497 00:23:34,560 --> 00:23:37,920 Speaker 8: think hedge funds as a blanket category people have had 498 00:23:37,920 --> 00:23:40,760 Speaker 8: to revisit, and for good reason. Returns there were disappointing 499 00:23:40,840 --> 00:23:45,000 Speaker 8: in twenty fifteen, sixteen twenty and eighteen nineteen. Some of 500 00:23:45,040 --> 00:23:48,360 Speaker 8: them weren't protective during COVID. But for someone that has 501 00:23:48,400 --> 00:23:50,600 Speaker 8: a big equity exposure where they don't want to give 502 00:23:50,640 --> 00:23:52,959 Speaker 8: that up, but they want something to neutralize it, that's 503 00:23:53,000 --> 00:23:54,160 Speaker 8: where hedge funds play a role. 504 00:23:54,800 --> 00:23:57,359 Speaker 5: And I have to ask my favorite question here at 505 00:23:57,359 --> 00:24:01,239 Speaker 5: Bloomberg the AI play. Are you getting any questions about it? 506 00:24:01,320 --> 00:24:03,439 Speaker 5: Are you hearing a lot more skepticism because of the 507 00:24:03,440 --> 00:24:04,680 Speaker 5: wealth level of your clients. 508 00:24:05,000 --> 00:24:07,000 Speaker 8: I think our clients are, so the answer is yes, 509 00:24:07,040 --> 00:24:11,400 Speaker 8: people are asking about AI. Bernstein has done tremendous research 510 00:24:11,440 --> 00:24:14,760 Speaker 8: on the topic and have published on it and a 511 00:24:14,840 --> 00:24:18,239 Speaker 8: number of different venues. But the questions our clients are 512 00:24:18,280 --> 00:24:21,040 Speaker 8: asking more about the productivity. The change in the labor 513 00:24:21,080 --> 00:24:24,560 Speaker 8: market will just destroy jobs in the next ten years. 514 00:24:24,760 --> 00:24:27,960 Speaker 8: Will my grandchild graduating college in twenty twenty five, are 515 00:24:28,000 --> 00:24:30,439 Speaker 8: they gonna have a job. That's where people are focused on, 516 00:24:30,800 --> 00:24:32,960 Speaker 8: And our view is these things take a long time 517 00:24:33,040 --> 00:24:35,840 Speaker 8: to play out. Will likely have some productivity gains that 518 00:24:35,920 --> 00:24:39,080 Speaker 8: will be additive to the overall economy, but there's some 519 00:24:39,160 --> 00:24:41,960 Speaker 8: things that just can't be replaced. So I tell them 520 00:24:42,000 --> 00:24:45,080 Speaker 8: what I tell my own kids, my teenagers. Find something 521 00:24:45,119 --> 00:24:47,520 Speaker 8: to do that a robot can't do, and if you 522 00:24:47,520 --> 00:24:48,920 Speaker 8: focus on that, you're going to be okay. 523 00:24:49,000 --> 00:24:51,400 Speaker 1: Thin'd be okay. What are some of the things you're 524 00:24:51,400 --> 00:24:54,720 Speaker 1: suggesting your clients stay away from at this point. 525 00:24:55,280 --> 00:24:57,800 Speaker 8: I think, you know, commodities are tricky, You've just got 526 00:24:57,840 --> 00:24:59,399 Speaker 8: to be careful there. I don't know if that's a 527 00:24:59,440 --> 00:25:02,320 Speaker 8: stay away from. I think that's an area. I think 528 00:25:02,359 --> 00:25:05,159 Speaker 8: the shorter term, as I said, we're breaking up with 529 00:25:05,240 --> 00:25:08,439 Speaker 8: short term fixed income, So I don't think there's, you know, 530 00:25:08,480 --> 00:25:11,000 Speaker 8: some bomb that's going to go off in the treasury market, 531 00:25:11,040 --> 00:25:14,400 Speaker 8: and the zero to two's but you know that you're 532 00:25:14,400 --> 00:25:16,280 Speaker 8: gonna give up. You're gonna wake up in three years 533 00:25:16,280 --> 00:25:20,600 Speaker 8: and regret having owned anything in short duration through this cycle. 534 00:25:21,560 --> 00:25:23,760 Speaker 8: Other than that, it's it's this is look, this has 535 00:25:23,800 --> 00:25:26,760 Speaker 8: been a wild market. It's like the rally. That's like 536 00:25:26,800 --> 00:25:30,679 Speaker 8: a non rally, and so it doesn't feel maybe to 537 00:25:30,760 --> 00:25:33,439 Speaker 8: everyone that it is a rally. But you know, we 538 00:25:33,520 --> 00:25:35,639 Speaker 8: called the bottom in October. We wrote a note to 539 00:25:36,000 --> 00:25:38,119 Speaker 8: our clients in October of last year to say, the 540 00:25:38,119 --> 00:25:42,560 Speaker 8: next bowl market has begun, and it has. 541 00:25:42,680 --> 00:25:44,680 Speaker 1: Do you think the market's a little too far over 542 00:25:44,680 --> 00:25:47,560 Speaker 1: at skis here? With again, the market's moved up, you know, 543 00:25:47,600 --> 00:25:48,960 Speaker 1: thirty percent off of that low. 544 00:25:49,200 --> 00:25:51,960 Speaker 8: I think you're spot on, especially with what's going to 545 00:25:52,000 --> 00:25:54,359 Speaker 8: happen with earnings. You know, you had a negative earnings 546 00:25:55,359 --> 00:25:58,919 Speaker 8: in fourth quarter, a negative earnings in first quarter. Our expectation. 547 00:25:58,960 --> 00:26:00,920 Speaker 8: I think we're right on the market of a negative 548 00:26:01,320 --> 00:26:04,000 Speaker 8: eight percent earning. So this is the real you know, 549 00:26:04,080 --> 00:26:06,359 Speaker 8: nuclear winter in the earning cycle for the S and P. 550 00:26:07,280 --> 00:26:09,160 Speaker 8: And if you look at where the SMP levels are, 551 00:26:09,359 --> 00:26:11,639 Speaker 8: you know where we were before this morning five percent 552 00:26:11,680 --> 00:26:14,760 Speaker 8: away from an all time high. That there's a disconnect there. 553 00:26:14,800 --> 00:26:18,320 Speaker 8: So yeah, we're you know, people talk about the magnificent seven. Yep, 554 00:26:18,440 --> 00:26:21,080 Speaker 8: we talk about the forgotten four ninety three. And that's 555 00:26:21,119 --> 00:26:24,240 Speaker 8: where the interesting opportunity could be. In the next chapter, where. 556 00:26:24,040 --> 00:26:27,920 Speaker 5: Are you seeing the most opportunity within the smaller caps 557 00:26:27,960 --> 00:26:29,320 Speaker 5: that's being ignored right now? 558 00:26:29,800 --> 00:26:33,200 Speaker 8: Small caps are really interesting. I mean, the growth part 559 00:26:33,240 --> 00:26:35,600 Speaker 8: of that market has exploded, having a terrific year. The 560 00:26:36,080 --> 00:26:38,639 Speaker 8: more value, which is really bank small cap value on 561 00:26:38,680 --> 00:26:41,320 Speaker 8: a look through basis are basically financials, and we know 562 00:26:41,400 --> 00:26:44,560 Speaker 8: what's happened there over the spring and the stress around 563 00:26:44,600 --> 00:26:48,560 Speaker 8: bank failures. So I think small cap as an overall 564 00:26:48,640 --> 00:26:51,480 Speaker 8: allocation still makes sense. It should be a smaller part 565 00:26:51,520 --> 00:26:54,800 Speaker 8: of the portfolio, but I'd rather play that as an 566 00:26:54,840 --> 00:26:57,120 Speaker 8: asset class than try to find a name or two. 567 00:26:57,680 --> 00:26:59,440 Speaker 8: You can be active, and we are in the small 568 00:26:59,480 --> 00:27:01,720 Speaker 8: cap space, but I don't think you want to be 569 00:27:01,800 --> 00:27:03,879 Speaker 8: concentrated in any way, shape or form. 570 00:27:03,920 --> 00:27:08,080 Speaker 1: Just thirty seconds left energy kind of people. I don't 571 00:27:08,080 --> 00:27:09,240 Speaker 1: think you can really agree on what to do with 572 00:27:09,240 --> 00:27:11,320 Speaker 1: the energy trade. Are you guys still long energy? Because 573 00:27:11,320 --> 00:27:12,840 Speaker 1: it had an't good run over the last several years. 574 00:27:13,000 --> 00:27:16,080 Speaker 8: We've been selective in LPG and frankly had the right name. 575 00:27:16,200 --> 00:27:19,119 Speaker 8: So feel really good about our exposure. But you know, 576 00:27:19,320 --> 00:27:22,280 Speaker 8: long term, a lot of questions around the energy platform 577 00:27:22,280 --> 00:27:25,160 Speaker 8: and the infrastructure, the cost of debt. It's heavily levered 578 00:27:25,400 --> 00:27:29,920 Speaker 8: as a space, so just be cautious, all right. 579 00:27:30,200 --> 00:27:32,520 Speaker 1: Alex Shallaff, thanks so much for joining us. Alex Shalloff, 580 00:27:32,520 --> 00:27:37,160 Speaker 1: he's a CIO of Bernstein Wealth, our private wealth. 581 00:27:38,640 --> 00:27:42,040 Speaker 3: You're listening to the team. Ken's are live program Bloomberg 582 00:27:42,080 --> 00:27:45,439 Speaker 3: Markets weekdays at ten am Eastern on Bloomberg dot com, 583 00:27:45,560 --> 00:27:48,680 Speaker 3: the iHeartRadio app and the Bloomberg Business app, or listen 584 00:27:48,760 --> 00:27:50,880 Speaker 3: on demand wherever you get your podcasts. 585 00:27:52,640 --> 00:27:54,560 Speaker 1: Bank news continues to hit the tape. We had some 586 00:27:54,640 --> 00:27:57,400 Speaker 1: earnings out, we had some buyback information out. Let's bring 587 00:27:57,400 --> 00:27:59,840 Speaker 1: in Alison Williams. She's a senior analyst for Bloomberg to 588 00:27:59,840 --> 00:28:03,240 Speaker 1: tel Intelligence covering all the global banks and al so, 589 00:28:03,320 --> 00:28:07,120 Speaker 1: let's start with Deutsche Bank. They had some earnings today. 590 00:28:07,359 --> 00:28:09,840 Speaker 1: What's the takeaway for the German lender. 591 00:28:11,200 --> 00:28:14,639 Speaker 10: I think the takeaway was that core trends are pretty good, 592 00:28:15,000 --> 00:28:17,320 Speaker 10: similar to what we saw at the US banks. That 593 00:28:17,560 --> 00:28:21,159 Speaker 10: net interest income is holding up better than expected. So 594 00:28:21,280 --> 00:28:25,600 Speaker 10: obviously we're different rate regimes, but that is the key 595 00:28:25,680 --> 00:28:29,359 Speaker 10: positive and especially true for Deutsche Bank. You know, trading, 596 00:28:29,400 --> 00:28:33,440 Speaker 10: which is the biggest part of their business, fell ten percent, 597 00:28:33,600 --> 00:28:35,760 Speaker 10: so that doesn't sound heroic, but it's better than the 598 00:28:35,760 --> 00:28:39,120 Speaker 10: fifteen to twenty percent view that they've had in June, 599 00:28:39,160 --> 00:28:42,440 Speaker 10: and they have an outlook that that should be improving 600 00:28:42,520 --> 00:28:46,480 Speaker 10: in the second half. But their corporate bank and private bank, 601 00:28:46,520 --> 00:28:51,640 Speaker 10: which are there more stable recurring revenue businesses, also doing better, 602 00:28:51,920 --> 00:28:55,320 Speaker 10: increasing their share of the overall top line. So investors 603 00:28:55,440 --> 00:28:59,920 Speaker 10: like that core cost cutting coming in line. They're delivering 604 00:29:00,040 --> 00:29:04,440 Speaker 10: on their efficiencies. Investors like that. What investors don't like, 605 00:29:05,000 --> 00:29:08,120 Speaker 10: I would presume was a negative for me at least, 606 00:29:08,400 --> 00:29:11,840 Speaker 10: is the fact that their non recurring costs coming in higher. 607 00:29:12,000 --> 00:29:14,560 Speaker 10: So we're structuring legal costs that we've heard a lot 608 00:29:14,560 --> 00:29:18,440 Speaker 10: about and severance, so this is something that we've seen 609 00:29:18,960 --> 00:29:21,600 Speaker 10: at most of the US banks. City and Morgan Stanley 610 00:29:21,640 --> 00:29:25,920 Speaker 10: had relatively bigger charges, but we know that there's job cuts. 611 00:29:25,440 --> 00:29:31,560 Speaker 10: The severance costs come today but should help the second 612 00:29:31,560 --> 00:29:34,200 Speaker 10: half profit. And then finally buybacks, which they had actually 613 00:29:34,240 --> 00:29:37,240 Speaker 10: announced last night, so it's a smaller it's a four 614 00:29:37,280 --> 00:29:40,960 Speaker 10: hundred and fifty million buy back. It's about two percent 615 00:29:40,960 --> 00:29:43,400 Speaker 10: of their market cap. That that's no way in comparison 616 00:29:43,440 --> 00:29:45,200 Speaker 10: to you look at Wells Fargo, who also had an 617 00:29:45,200 --> 00:29:48,880 Speaker 10: announcement last night thirty billion program eighteen percent of the 618 00:29:48,960 --> 00:29:51,680 Speaker 10: market cap, although that will be over some period of time. 619 00:29:52,200 --> 00:29:56,080 Speaker 5: I want to transition stateside and talk about PacWest, which 620 00:29:56,760 --> 00:29:59,040 Speaker 5: was up by thirty percent earlier today now up by 621 00:29:59,040 --> 00:30:01,520 Speaker 5: twenty seven percent on that news that it'll be sold 622 00:30:01,560 --> 00:30:04,760 Speaker 5: off to Bank of California. Talk us through that deal 623 00:30:04,840 --> 00:30:07,520 Speaker 5: and why the market is responding so positively to both 624 00:30:07,560 --> 00:30:08,880 Speaker 5: of those names. 625 00:30:09,160 --> 00:30:12,320 Speaker 10: I mean, I think, you know, to some extent, just 626 00:30:12,400 --> 00:30:16,600 Speaker 10: getting some resolution to some of the issues that we 627 00:30:16,680 --> 00:30:19,680 Speaker 10: saw in March. And PacWest was, you know, certainly one 628 00:30:19,720 --> 00:30:23,240 Speaker 10: of the banks that investors have been watching, and I 629 00:30:23,280 --> 00:30:27,080 Speaker 10: would say that you know, the fact that that deal 630 00:30:27,160 --> 00:30:30,280 Speaker 10: will get done, and the fact that across the industry broadly, 631 00:30:30,880 --> 00:30:35,080 Speaker 10: we're seeing deposits stablise, the cost of deposit pricing going 632 00:30:35,160 --> 00:30:39,040 Speaker 10: up in the quarter, but generally the outlook more favorable 633 00:30:39,360 --> 00:30:41,360 Speaker 10: is giving a lift to all the banks. 634 00:30:41,920 --> 00:30:45,360 Speaker 1: Allison, you talk to us men mentioned the Wells Fargo 635 00:30:45,400 --> 00:30:48,120 Speaker 1: buyback thirty billion dollars eighteen percent of the outstanding. That 636 00:30:48,200 --> 00:30:50,880 Speaker 1: is that is size. Of course, what does that say 637 00:30:50,880 --> 00:30:54,360 Speaker 1: about the regulator's view of the big US banks? You 638 00:30:54,400 --> 00:30:58,280 Speaker 1: know now that they're allowing them to return some capital 639 00:30:58,320 --> 00:30:59,920 Speaker 1: to shareholders. 640 00:30:59,640 --> 00:31:02,440 Speaker 10: So I think Wells Fargo is a little bit of 641 00:31:02,440 --> 00:31:05,800 Speaker 10: an exception. Uh, you know, certainly the regulators are allowing 642 00:31:05,840 --> 00:31:09,440 Speaker 10: them you know today, but tomorrow we do get these 643 00:31:09,480 --> 00:31:11,520 Speaker 10: Basil three endgame rules, and so that's going to be 644 00:31:11,560 --> 00:31:17,120 Speaker 10: sort of another kink in terms of raising capital requirements 645 00:31:17,160 --> 00:31:21,280 Speaker 10: for these banks, for Wells Fargo in particular, because they 646 00:31:21,280 --> 00:31:25,360 Speaker 10: do have such sizeable excess they and again it's a 647 00:31:25,480 --> 00:31:27,680 Speaker 10: thirty billion, but it's not necessarily today, so it's over 648 00:31:27,680 --> 00:31:32,480 Speaker 10: a specific timeframe. But the Basil three endgame rooms are 649 00:31:32,560 --> 00:31:34,520 Speaker 10: are thought to be a little bit more punitive on 650 00:31:34,560 --> 00:31:36,680 Speaker 10: the trading side of things. That's a smaller business for 651 00:31:36,720 --> 00:31:37,360 Speaker 10: Wells Fargo. 652 00:31:38,440 --> 00:31:41,840 Speaker 5: And moving to back to the regionals again, are you 653 00:31:42,080 --> 00:31:44,920 Speaker 5: anticipating that the regional bank rally that we're seeing today 654 00:31:44,960 --> 00:31:47,200 Speaker 5: because of the PacWest move is not something that's going 655 00:31:47,280 --> 00:31:49,800 Speaker 5: to be a little bit short lived or are we 656 00:31:49,880 --> 00:31:53,080 Speaker 5: seeing more success to come for some of those regional names. 657 00:31:53,760 --> 00:31:55,920 Speaker 10: Well, I think, you know, going back to my comments 658 00:31:55,960 --> 00:31:59,280 Speaker 10: on you know, the deposit stabilization and just sort of 659 00:31:59,280 --> 00:32:02,240 Speaker 10: moving past the issue in March, right, So that that 660 00:32:02,400 --> 00:32:06,080 Speaker 10: was really where the dramatic underperformance came from these banks. 661 00:32:06,120 --> 00:32:09,600 Speaker 10: First was the fear, and then was just the recognition that, 662 00:32:09,680 --> 00:32:12,520 Speaker 10: you know, beyond the fear of deposit flight at a 663 00:32:12,680 --> 00:32:18,120 Speaker 10: few specific banks, there was this broad fear about the 664 00:32:18,160 --> 00:32:22,960 Speaker 10: cost of deposits rising those deposit outflows, that migration is 665 00:32:23,040 --> 00:32:26,160 Speaker 10: expected to continue, but not certainly not at the fear 666 00:32:26,200 --> 00:32:27,920 Speaker 10: full place that we saw at March. We saw that 667 00:32:27,960 --> 00:32:31,520 Speaker 10: things were much more stable in the second quarter, and 668 00:32:31,560 --> 00:32:34,760 Speaker 10: then you know, the outlook from the banks is that 669 00:32:34,760 --> 00:32:38,680 Speaker 10: that you know, will continue to look better. Of course, 670 00:32:38,800 --> 00:32:43,080 Speaker 10: part of that is predicated on rate cuts from the 671 00:32:43,120 --> 00:32:46,600 Speaker 10: FED that are built into the curve in the coming quarters, 672 00:32:46,640 --> 00:32:49,240 Speaker 10: so monetary policy will continue to. 673 00:32:49,240 --> 00:32:49,840 Speaker 8: Play a role. 674 00:32:51,240 --> 00:32:54,200 Speaker 1: Allison, talk to us about this Basil three rules that 675 00:32:54,240 --> 00:32:57,120 Speaker 1: you referenced, pretending like we know nothing about what they are, 676 00:32:57,200 --> 00:32:59,600 Speaker 1: so tell us what they are and why they're important 677 00:32:59,600 --> 00:33:00,840 Speaker 1: for the big banks. 678 00:33:01,240 --> 00:33:04,080 Speaker 10: So first, it's just the name endgame. I mean, can 679 00:33:04,120 --> 00:33:06,960 Speaker 10: we finally just get the final set of rules that 680 00:33:06,960 --> 00:33:10,000 Speaker 10: we'll be dealing with. You know, the Basil three imputent 681 00:33:10,080 --> 00:33:13,640 Speaker 10: implementation has been you know, the guidelines and the rules. 682 00:33:13,640 --> 00:33:16,040 Speaker 10: This has been going on since the financial crisis, so 683 00:33:16,680 --> 00:33:20,160 Speaker 10: well over a decade in terms of regulators aim to 684 00:33:20,200 --> 00:33:23,560 Speaker 10: make the banks safer. And so this last set of rules, 685 00:33:23,680 --> 00:33:28,720 Speaker 10: which is really the US regulators you know, view on implementation. 686 00:33:30,440 --> 00:33:32,520 Speaker 10: It'll be good to get the final set of rules. 687 00:33:32,680 --> 00:33:36,320 Speaker 10: I would say that our regulatory and policy experts n BI, 688 00:33:37,040 --> 00:33:41,120 Speaker 10: we are expecting, uh, you know, that there will be 689 00:33:41,200 --> 00:33:45,240 Speaker 10: increased requirements across the biggest banks. Regulators have sort of 690 00:33:45,920 --> 00:33:49,520 Speaker 10: broadcasts that that could add like a two percentage point 691 00:33:49,880 --> 00:33:53,760 Speaker 10: increase to their capital ratios. This will be the proposal 692 00:33:53,800 --> 00:33:58,200 Speaker 10: that we get tomorrow. It might not become finalized until 693 00:33:58,240 --> 00:33:59,760 Speaker 10: perhaps a year from now, and then there'll be a 694 00:33:59,760 --> 00:34:02,520 Speaker 10: cuple blow of yours basing period. So the banks it 695 00:34:02,720 --> 00:34:06,280 Speaker 10: certainly have enough you know, money that they're generating in 696 00:34:06,360 --> 00:34:10,239 Speaker 10: terms of internal capital to meet these guidelines over any 697 00:34:10,280 --> 00:34:15,200 Speaker 10: such time period. But obviously it's it's a negative because 698 00:34:15,239 --> 00:34:18,399 Speaker 10: it'll lower returns. That's how investors look at the profitability 699 00:34:18,400 --> 00:34:22,319 Speaker 10: of these banks. But you know the other side of 700 00:34:22,320 --> 00:34:26,279 Speaker 10: that is that they are safer and more sound, and 701 00:34:26,320 --> 00:34:28,920 Speaker 10: so perhaps that could help the multiples. 702 00:34:29,120 --> 00:34:31,880 Speaker 1: All right, Alison, Thanks as always for joining us and 703 00:34:31,920 --> 00:34:35,440 Speaker 1: giving us your analysis and expertise on the global banking space. 704 00:34:35,440 --> 00:34:39,520 Speaker 1: Alison Williams, senior Global Banks analysts for Bloomberg Intelligence, joining 705 00:34:39,600 --> 00:34:42,640 Speaker 1: us on the phone there again. Wells Fargo big stock 706 00:34:42,680 --> 00:34:45,479 Speaker 1: buy back thirty billion dollars. That's good news for Wells 707 00:34:45,520 --> 00:34:48,840 Speaker 1: Fargo shareholders. Deutsche Bank putting up some numbers as alis 708 00:34:48,840 --> 00:34:51,040 Speaker 1: and said, we're, you know, generally pretty solid in a 709 00:34:51,040 --> 00:34:54,919 Speaker 1: tough environment for a bank that's had its challenges over 710 00:34:54,960 --> 00:34:55,480 Speaker 1: the years. 711 00:34:57,600 --> 00:35:00,680 Speaker 2: Thanks for listening to the Bloomberg Markets podcast. You can 712 00:35:00,719 --> 00:35:04,480 Speaker 2: subscribe and listen to interviews of Apple Podcasts or whatever 713 00:35:04,600 --> 00:35:08,320 Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter 714 00:35:08,520 --> 00:35:10,439 Speaker 2: at Matt Miller nineteen seventy three. 715 00:35:10,880 --> 00:35:13,240 Speaker 1: And I'm Faull Sweeney. I'm on Twitter at pt Sweeney. 716 00:35:13,400 --> 00:35:16,040 Speaker 1: Before the podcast, you can always catch us worldwide at 717 00:35:16,040 --> 00:35:18,640 Speaker 1: Bloomberg Radio.