WEBVTT - Enbridge, Fed, BMW, and SBF 0:00:00.840 --> 0:00:04.000 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 --> 0:00:09.720 Every business day we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.640 and Bloomberg experts, along with essential market moving news. 0:00:14.160 --> 0:00:15.280 Find the Bloomberg. 0:00:14.920 --> 0:00:18.400 Markets Podcast on Apple Podcasts or wherever you listen to podcasts, 0:00:18.400 --> 0:00:22.080 and at Bloomberg dot com slash podcast. Greg Ebel joins us. 0:00:22.079 --> 0:00:24.680 He's the CEO of n Bridge Energy. It's in New 0:00:24.720 --> 0:00:28.120 York Stock Exchange listed company the tickers e n BE. 0:00:28.320 --> 0:00:32.839 The company reported some earnings today, So Greg, talk to 0:00:32.880 --> 0:00:34.760 us about thanks so much for joining us here. Talk 0:00:34.760 --> 0:00:37.199 to us about kind of what you guys reported with 0:00:37.320 --> 0:00:39.560 your latest earnings results and kind of what's the outlook 0:00:39.560 --> 0:00:41.240 you're telling the street these days. 0:00:41.880 --> 0:00:43.960 Yeah, for sure, Matt, Paul, great to be with you again. 0:00:44.000 --> 0:00:48.760 And yeah, a very solid quarter both operationally and financially 0:00:48.840 --> 0:00:51.400 for us, right across all of our business. You know, 0:00:51.440 --> 0:00:55.160 we saw record volumes and results on the liquid's business, 0:00:55.680 --> 0:00:59.960 our mainline pipeline system saw record volumes, our export facility 0:01:00.560 --> 0:01:06.000 record volumes, and so we beat obviously the street estimates 0:01:06.040 --> 0:01:08.160 for the quarter, which is great, and we confirmed that 0:01:08.920 --> 0:01:12.520 we would meet our goals for the full year, and 0:01:12.760 --> 0:01:14.520 we announced a little bit of tucky in m and A. 0:01:15.240 --> 0:01:19.880 You know, we bought some renewable offshore wind facilities that 0:01:19.920 --> 0:01:24.320 we'd originally participated in in Germany, and then renewable natural 0:01:24.360 --> 0:01:28.959 gas facilities in the United States, all very long term contracts, 0:01:29.000 --> 0:01:32.480 you know, ten years or more, and all very consistent 0:01:32.520 --> 0:01:35.040 with that, you know, all of the above approach that 0:01:35.120 --> 0:01:38.040 I think the public wanted, investors want, and that actually 0:01:38.120 --> 0:01:40.360 creates a lot of value for us. We're pretty excited 0:01:40.360 --> 0:01:41.160 about the road ahead. 0:01:41.880 --> 0:01:45.920 Why is I mean, the stock's up today, but why 0:01:46.080 --> 0:01:50.840 is it down thirteen percent year today? What's is it 0:01:50.880 --> 0:01:55.320 the underlying commodity that's a problem. Is it concerned about demand? 0:01:56.080 --> 0:01:57.520 What's holding the stock down? 0:01:58.240 --> 0:02:00.640 You know what we have been in, very proudly so 0:02:01.280 --> 0:02:05.200 for decades, increase the dividend year after year, very utility 0:02:05.400 --> 0:02:08.800 like in that structure. And as you know, you guys 0:02:08.800 --> 0:02:12.080 pointed off just a few minutes ago, with interest rates 0:02:12.120 --> 0:02:16.359 that have been up, that impacts dividend paying stocks like ourselves. 0:02:16.840 --> 0:02:20.720 And as you've seen in the last call it four days, 0:02:20.960 --> 0:02:24.600 what we've seen forty to fifty sixty basis points coming 0:02:24.639 --> 0:02:27.160 in on the ten year You've seen the stocks that 0:02:27.240 --> 0:02:30.560 pay dividends react. So it's not the commodity it's not 0:02:30.760 --> 0:02:33.720 energy demand we see up those we don't have commodity exposure. 0:02:33.960 --> 0:02:36.919 Really is that ten year interest rate side of things. 0:02:36.919 --> 0:02:41.480 So that's a macro factor that frankly, I can't do 0:02:41.520 --> 0:02:43.560 anything about. What we can do is make sure the 0:02:43.600 --> 0:02:47.079 company runs well, meets its earnings targets, and continues to 0:02:47.280 --> 0:02:50.440 build up both organic growth and some of these acquisitions. 0:02:50.639 --> 0:02:52.480 Greg talk to us about again. You mentioned some of 0:02:52.520 --> 0:02:55.720 these acquisitions and the investments you make in renewables. Realistically, 0:02:55.800 --> 0:02:58.120 do you have a good handle on the types of 0:02:58.120 --> 0:03:01.240 returns you can get on renewables. Feels like maybe some 0:03:01.320 --> 0:03:03.960 of the shine is off that side of the energy business. 0:03:04.960 --> 0:03:07.480 Well, it's a good point. I think investors are starting 0:03:07.520 --> 0:03:10.480 to figure out that they are. You know, renewables are 0:03:10.520 --> 0:03:13.560 all not built the same, right, So those that have 0:03:13.680 --> 0:03:17.720 long term contracts in other words, you know, ten fifteen 0:03:17.800 --> 0:03:23.120 year contracts with great counterparties, So larger utilities or big industrials, 0:03:23.480 --> 0:03:25.800 those are the ones you want to participate in because 0:03:26.080 --> 0:03:28.880 you know they've got a guarantee price set on that power. 0:03:29.200 --> 0:03:33.000 They've got a great investment, great customer that's taking that 0:03:33.160 --> 0:03:35.840 power and you're going to get paid. Those that are 0:03:35.920 --> 0:03:38.480 kind of going in a merchant world and haven't got 0:03:38.480 --> 0:03:43.200 these things contracted or in jurisdictions where it's extremely difficult 0:03:43.240 --> 0:03:46.240 to build things, which is a lot of jurisdictions these days. 0:03:46.400 --> 0:03:51.720 I think you're seeing those entities being you know, a 0:03:51.760 --> 0:03:54.520 lot tougher to get the returns that the ones I 0:03:54.600 --> 0:03:57.440 previously talked about, which is why our renewable business, which 0:03:57.440 --> 0:04:00.400 we've actually been in for twenty years, is all about 0:04:00.400 --> 0:04:03.840 that contracted business. So our European stuff, you know, our 0:04:03.880 --> 0:04:07.960 customers are folks like EDF Electricity de France or the 0:04:08.480 --> 0:04:11.920 government in Germany, and then here in the US, most 0:04:11.920 --> 0:04:15.080 of our customers would be utility like players. And even 0:04:15.120 --> 0:04:18.719 on the renewable natural gas tuck in that we had today, 0:04:18.760 --> 0:04:21.360 we have ten year contracts with the likes of BP 0:04:21.480 --> 0:04:23.960 and Shell. So I think and I think this is 0:04:24.000 --> 0:04:26.440 great for companies like Enbridge who have done it on 0:04:26.440 --> 0:04:29.360 a low risk basis that you're going to see differentiation. 0:04:29.600 --> 0:04:33.120 Those that have actually structured their businesses to create good returns, 0:04:33.320 --> 0:04:36.279 double digit returns are going to be rewarded, while those 0:04:36.320 --> 0:04:38.760 that have gone more merchanty. I think that's going to 0:04:38.800 --> 0:04:39.760 be a tough slug for them. 0:04:41.040 --> 0:04:45.400 Where do you see demand going for energy? I mean, 0:04:46.000 --> 0:04:50.680 as we see the jobs numbers miss and as we 0:04:50.760 --> 0:04:54.279 expect either a soft landing or a recession, I imagine 0:04:54.279 --> 0:04:56.000 demand slows down. Is that the case? 0:04:57.279 --> 0:05:01.200 Yeah? You know, typically energy is a about two thirds 0:05:01.240 --> 0:05:04.680 of GDP, and another words, energy growth grows about two 0:05:04.680 --> 0:05:07.560 thirds of GDP. So if you thought GDP was going 0:05:07.600 --> 0:05:11.279 to be three percent, you get energy at two. That's one. Two. 0:05:13.040 --> 0:05:15.360 People don't shut off their lights and they don't turn 0:05:15.400 --> 0:05:18.400 off the gas in their house, even when you've you're 0:05:18.440 --> 0:05:20.720 in a recession. Where you see it is on some 0:05:20.760 --> 0:05:23.440 of the industrial love but most of our stuff is 0:05:24.720 --> 0:05:29.280 for ultimately residential players. So I don't see that has 0:05:29.279 --> 0:05:32.400 a big impact. But remember we're building assets for ten 0:05:32.520 --> 0:05:37.000 twenty years. So virtually every report that you would see 0:05:37.040 --> 0:05:40.039 globally in the United States, we will be using more 0:05:40.240 --> 0:05:43.719 energy ten years from now than we use today, and 0:05:44.279 --> 0:05:48.120 particularly so in developing countries. You're going to see them 0:05:48.200 --> 0:05:50.960 continue to move up the economic food chain and that 0:05:51.080 --> 0:05:54.279 always requires more energy. So some of our assets on 0:05:54.320 --> 0:05:57.200 the export side of things, whether it's our liquefied natural 0:05:57.200 --> 0:05:59.960 gas export facilities we're building on the West coast of Canada, 0:06:00.680 --> 0:06:03.400 or our oil export facility on the Gulf Coast of 0:06:03.440 --> 0:06:06.080 the United States, which is the largest in the US. 0:06:06.800 --> 0:06:10.560 You continue to see very good response there even through recession. 0:06:10.680 --> 0:06:13.040 So yeah, I think the demand comes down a bit, 0:06:13.080 --> 0:06:14.240 but it continues to grow. 0:06:14.960 --> 0:06:18.839 So I saw you announced intentions of buy some utilities, 0:06:18.920 --> 0:06:21.120 I guess in Ohio, North Carolina, in Utah. I mean 0:06:21.120 --> 0:06:23.640 it's a big number, fourteen billion. What's the strategy and 0:06:23.720 --> 0:06:25.360 get in the utility business. 0:06:26.080 --> 0:06:28.800 So we're you know, it's interesting, maybe a little bit 0:06:28.839 --> 0:06:32.080 of contrarian, but I think we're right on this. We've 0:06:32.080 --> 0:06:34.599 been in the utility business for a long time. We've 0:06:34.600 --> 0:06:37.440 got the largest gas utility in Canada. This will make 0:06:37.520 --> 0:06:41.600 us the largest gas utility in North America by volume, 0:06:41.680 --> 0:06:46.320 serving some seven million customers in jurisdictions that are really 0:06:46.400 --> 0:06:50.680 gas friendly. So they actually have banned the banned legislation 0:06:50.720 --> 0:06:54.120 if you will. They will not allow communities to ban 0:06:54.320 --> 0:06:57.200 natural guests. They know how important it is for industrial growth. 0:06:57.240 --> 0:06:59.480 I think of what's going on in Ohio so much 0:06:59.520 --> 0:07:04.240 from a steam automotive refining perspective, gas is critical and 0:07:04.279 --> 0:07:08.560 then growth areas like North Carolina and Utah very favorable environment. 0:07:08.680 --> 0:07:10.920 So we saw that and it fits right into our 0:07:11.000 --> 0:07:16.440 given in paying low risk environment and gas continues to grow. 0:07:16.480 --> 0:07:19.680 In fact, you contend des utilities, you will see their 0:07:19.800 --> 0:07:23.440 rate base or if you will, their customer setup and 0:07:23.480 --> 0:07:26.239 the assets that they use grow by a compound annual 0:07:26.280 --> 0:07:29.720 growth rate of eight percent through the end of the decade. 0:07:29.840 --> 0:07:33.160 So that was our strategy. You know, we had a 0:07:33.200 --> 0:07:36.080 selling a seller that was large and electric player that 0:07:36.160 --> 0:07:38.400 had to move out of that business for other reasons 0:07:39.160 --> 0:07:42.880 related to you know, its electricity business. That created an opportunity. 0:07:43.160 --> 0:07:45.920 We were able to buy that as historic lows one 0:07:46.000 --> 0:07:50.800 point three times that base of the business, and so 0:07:50.880 --> 0:07:53.160 we were a big enough player we could buy all three. 0:07:53.200 --> 0:07:55.880 And that's really exciting for us as we move and 0:07:56.200 --> 0:07:59.520 close those in twenty twenty four and have them fully 0:07:59.520 --> 0:08:02.840 in the barn and ready to produce in twenty twenty five. 0:08:03.200 --> 0:08:05.040 So I'm looking on the Bloomberg terminal, Greg and I 0:08:05.040 --> 0:08:06.800 see a dividend yield for you guys of you know, 0:08:06.880 --> 0:08:09.520 seven point six percent. I mean that is just huge. 0:08:09.760 --> 0:08:12.320 What is what's a dividend policy, you you kind of 0:08:12.360 --> 0:08:13.880 communicate to your shareholders. 0:08:14.280 --> 0:08:17.320 Sure, so we pay out, and we've been paying a 0:08:17.320 --> 0:08:21.680 dividend for forever, and it's an important part of our equation. 0:08:21.800 --> 0:08:25.760 I think our compound annual title total shareholder return is 0:08:25.800 --> 0:08:29.640 about eleven percent since two thousand and then you go 0:08:29.720 --> 0:08:31.480 back to the sixties and you'd find it about a 0:08:31.520 --> 0:08:34.760 similar number. And the philosophy there is, as we build 0:08:34.800 --> 0:08:37.960 these low risk projects and we bring them in, we 0:08:38.000 --> 0:08:40.920 can pay out sixty to seventy percent of that cash 0:08:40.960 --> 0:08:45.880 flow to investors through dividends. And so the higher yield 0:08:46.000 --> 0:08:48.559 right now is really driven by as we talked about 0:08:48.559 --> 0:08:52.120 the ten year, the ten year yield having an impact 0:08:52.160 --> 0:08:54.520 on that people will put their money in US treasuries 0:08:54.840 --> 0:08:57.400 versus some dividend paying stock. So I would expect that 0:08:57.520 --> 0:09:00.360 to come down. I use the stock to go as 0:09:00.480 --> 0:09:03.280 you see some softening on the yield side of things. 0:09:03.280 --> 0:09:06.400 But that's sixty to seventy percent pay out, very comfortable 0:09:06.400 --> 0:09:09.319 for us, very much in line with our cash flow 0:09:09.400 --> 0:09:12.200 and allows us to retain enough cash to continue to 0:09:12.280 --> 0:09:13.240 invest in the business. 0:09:13.480 --> 0:09:15.000 All right, Greg, thanks so much for taking some time, 0:09:15.040 --> 0:09:17.079 and you guys are busy today with your earnings Gregor Ebel. 0:09:17.280 --> 0:09:21.080 He is the CEO of n Bridge Energy e NB 0:09:21.280 --> 0:09:23.280 is the ticker and look over the last five years, 0:09:23.280 --> 0:09:27.199 compound and annual return about eight point five percent better 0:09:27.320 --> 0:09:31.959 than its benchmark index. So some solid returns there and 0:09:31.960 --> 0:09:33.640 this stocks up slightly here Today. 0:09:34.320 --> 0:09:37.720 You're listening to the team Ken's are Live program Bloomberg 0:09:37.760 --> 0:09:41.120 Markets weekdays at ten am Eastern on Bloomberg dot com, 0:09:41.240 --> 0:09:44.360 the iHeartRadio app and the Bloomberg Business app, or listen 0:09:44.440 --> 0:09:46.559 on demand wherever you get your podcasts. 0:09:48.280 --> 0:09:50.559 Jay Hatfield joins us, one of those smart folks we 0:09:50.679 --> 0:09:53.520 like to chat with, CEO, founder and portfolio manager at 0:09:53.559 --> 0:09:57.240 Infrastructure Capital Advisors, and Jay, this has been a good 0:09:57.240 --> 0:09:59.280 week for risk assets here. I mean, I mean we've 0:09:59.320 --> 0:10:01.560 got yields pull and fifty basis points on the tenure. 0:10:01.559 --> 0:10:03.960 We got the stocks up five days in a row. 0:10:04.080 --> 0:10:06.120 What'd you make of the job sprint today? What are 0:10:06.120 --> 0:10:08.240 you making of this market right here that we've seen recently? 0:10:09.360 --> 0:10:13.520 Thanks Paul Matt for having me on again. We put 0:10:13.559 --> 0:10:16.160 out a note on Tuesday because things were looking a 0:10:16.200 --> 0:10:18.319 little bit bleak last week. I'd have to say, because 0:10:18.320 --> 0:10:22.480 you'd have great earnings reports and terrible price reaction in 0:10:22.520 --> 0:10:25.360 the market as a whole, But we did some work 0:10:25.480 --> 0:10:30.200 on near term catalysts on bonds and we saw everything 0:10:30.240 --> 0:10:33.880 really lining up for rally. So so far we've been correct. 0:10:34.200 --> 0:10:37.840 And what we're really focused on is global growth, mostly 0:10:37.960 --> 0:10:41.200 in Europe, and nobody really ever reports on it, but 0:10:41.320 --> 0:10:43.120 you can easily get it on the terminal. That's where 0:10:43.120 --> 0:10:46.840 we get it. The European data is just awful, yep. 0:10:47.360 --> 0:10:51.440 It's their inner recession, as we had predicted. Mild so far, 0:10:51.480 --> 0:10:54.199 but it's only going to get worse. The UCB raised 0:10:54.240 --> 0:10:58.120 rates twice during the quarter, so nothing better is happening yep. 0:10:58.480 --> 0:11:03.320 And if you look even today, the unemployment is rising 0:11:03.320 --> 0:11:07.720 in Spain and Germany, they'd have the final manufacturing pmis 0:11:07.800 --> 0:11:10.880 forty three, so that's bad. But also we had a 0:11:10.920 --> 0:11:15.040 week PMI which lowered our Atlanta growth rate. And then 0:11:15.080 --> 0:11:17.959 the final point is that and we focus a lot 0:11:18.000 --> 0:11:22.120 on oil, is that it's not well discussed that gasoline 0:11:22.160 --> 0:11:26.000 prices came down ten percent in a month, so it's 0:11:26.000 --> 0:11:29.199 one hundred and twenty percent annualized. That's a little bit exaggeration, 0:11:29.320 --> 0:11:31.480 but still that's going to show up in not just 0:11:32.120 --> 0:11:35.400 headline CPI, but more importantly core. And this is what 0:11:35.480 --> 0:11:37.360 the fedinis is and this is why they have all 0:11:37.360 --> 0:11:40.839 the nonsense from the seventies because of the real problem 0:11:40.880 --> 0:11:44.560 the seventies we had twelve hundred percent increase in oil prices. 0:11:44.559 --> 0:11:47.560 It bleeds through to core. So we're going to probably 0:11:47.600 --> 0:11:50.920 have cool CPI print in a couple of weeks and 0:11:51.040 --> 0:11:54.640 PPI definitely. And so this whole narrative that we're going 0:11:54.679 --> 0:11:58.520 to like six percent bond yield should attenuate. I think 0:11:58.559 --> 0:12:01.120 said that we think the rate or really rally when 0:12:01.120 --> 0:12:03.920 the ECP starts cutting rates in the first half or 0:12:03.960 --> 0:12:05.600 even the first quarter of next year, so you. 0:12:05.559 --> 0:12:07.600 Think they're gonna cut imminently. They do have a two 0:12:07.679 --> 0:12:11.520 handle on inflation, you know, I mean maybe because they're 0:12:11.520 --> 0:12:16.079 in a recession, or maybe because inflation was transitory ish. 0:12:16.480 --> 0:12:18.640 We were talking to Cam Harvey yesterday, you know that guy. 0:12:18.679 --> 0:12:21.280 He's a professor at Duke. Yeah, excellent, and he was 0:12:21.360 --> 0:12:24.440 making the point that you have been making for a while. 0:12:24.559 --> 0:12:29.360 He said, look, it's ridiculous that this FED thinks inflation 0:12:29.600 --> 0:12:32.760 is still you know, three to four when you take 0:12:32.800 --> 0:12:35.319 out the rent equivalent, which is backwards looking in the 0:12:35.360 --> 0:12:39.320 wrong way to do it. We're under two and I 0:12:39.320 --> 0:12:43.160 immediately looked at your CPI dash R on Infrastructure Capital 0:12:43.160 --> 0:12:46.040 Advisers on your website, and you guys have one point 0:12:46.080 --> 0:12:48.320 three percent right now. So explain to us how you 0:12:48.360 --> 0:12:51.040 calculate that you use core CPI and then you take 0:12:51.080 --> 0:12:52.840 out the rent equivalent part and you put it in 0:12:52.880 --> 0:12:53.640 case Shiller. 0:12:53.440 --> 0:12:55.800 Right, correct, You can even you can basically do it 0:12:55.840 --> 0:12:57.160 in your head, so. 0:12:57.160 --> 0:12:59.560 Because not mia, you live it in your head. 0:12:59.679 --> 0:13:03.000 But it's it's kind of nutty. But the CPI still 0:13:03.040 --> 0:13:07.120 is saying shelters seven point two percent when it's really 0:13:07.160 --> 0:13:08.920 it's actually going up a little bit to be fair, 0:13:09.040 --> 0:13:12.000 but it's not likely to skyrock. But but so just 0:13:12.040 --> 0:13:14.400 assumes zero case Schuller has been close to zero, so 0:13:14.480 --> 0:13:19.000 forty percent time seven is like three percent. So basically 0:13:19.040 --> 0:13:23.520 CPI is over Headline is overstated by three percent, and 0:13:23.559 --> 0:13:27.199 then it's only thirty three percent of core, so it's overstated. 0:13:27.320 --> 0:13:29.720 Core is overstated by about two point one percent. 0:13:30.120 --> 0:13:34.200 So but the the so inflation isn't as bad as 0:13:34.200 --> 0:13:37.640 we think it is, is what you're saying. Still cumulatively, 0:13:37.760 --> 0:13:40.559 it sucks right for consumers, especially since. 0:13:40.360 --> 0:13:42.080 We near extremes I don't still kill it. 0:13:42.080 --> 0:13:44.559 I don't feel like wages of kept up certainly mind 0:13:44.559 --> 0:13:50.320 heaven and then growth though looked incredible backward looking right, 0:13:50.360 --> 0:13:53.120 four point nine percent in Q three, How does it 0:13:53.120 --> 0:13:55.080 look to you going forward? Because I feel like the 0:13:55.080 --> 0:13:59.920 consumer is getting hurt here, you know, and charging everything 0:14:00.320 --> 0:14:01.800 and missing payments. 0:14:02.480 --> 0:14:05.600 Well, no doubt. We have a saying that the average 0:14:05.640 --> 0:14:08.880 consumer is not an economist. So what we mean by 0:14:08.920 --> 0:14:11.439 that is they don't really care about CPI, whether it's 0:14:11.600 --> 0:14:13.600 R or whatever, because that's for twelve months, but they 0:14:13.640 --> 0:14:17.160 do care about twenty four. So prices have still skyrocketed 0:14:17.200 --> 0:14:19.000 over twenty four And if your wages didn't go up, 0:14:19.040 --> 0:14:21.760 which is true for a lot of lower income consumers 0:14:21.800 --> 0:14:24.080 and you don't own a house, you're definitely under pressure. 0:14:24.120 --> 0:14:27.160 And by the way, CPIR was much higher than core 0:14:27.240 --> 0:14:29.640 CPI for a while, correct, because I look back on 0:14:29.680 --> 0:14:32.320 the table and you guys were up at eleven twelve percent. 0:14:32.600 --> 0:14:34.520 Yeah, this is why we say that FED is incompetent, 0:14:34.520 --> 0:14:37.040 because they just weren't even looking at any data, like 0:14:37.080 --> 0:14:39.560 you can go back and say, look at PPI is 0:14:39.600 --> 0:14:42.240 actually reported. It was at eleven when they said things 0:14:42.240 --> 0:14:46.600 were transitory. So they need to redo their entire framework, 0:14:47.040 --> 0:14:50.440 and you should. Everyone should go. Look at the way 0:14:50.480 --> 0:14:54.360 the CPI shelter is calculated. It's ridiculous. They only updated 0:14:54.400 --> 0:14:58.320 it one sixth every six months, so it's just designed 0:14:58.320 --> 0:15:00.680 to be lagged. So the FED should for that, in 0:15:00.720 --> 0:15:03.840 fact that San Frisco, San Francisco Fed does correct for. 0:15:04.320 --> 0:15:05.920 I just don't understand why they don't. I mean, for 0:15:06.000 --> 0:15:09.560 all the flack and Druckmiller gives Janney Yellen. She's a 0:15:09.640 --> 0:15:13.880 super genius, right, and she's an economist PhD. 0:15:14.600 --> 0:15:15.120 Like she's not. 0:15:16.320 --> 0:15:19.880 Now she's like a government you know, political uh, kind 0:15:19.920 --> 0:15:23.640 of a hack, but she was like a serious economist. 0:15:23.920 --> 0:15:28.760 It's inexplicable. And I'm shocked that not on this program 0:15:28.800 --> 0:15:32.800 but other media outlets that everyone comes on and says, 0:15:33.360 --> 0:15:36.080 not the FED but other people that inflation's sticky, when 0:15:36.120 --> 0:15:39.840 it's just flat out not sticky. It's actually contained has 0:15:39.880 --> 0:15:42.040 been since July of last year. 0:15:42.440 --> 0:15:44.680 Have we seen then peak rates? 0:15:45.480 --> 0:15:47.840 We definitely there's not going to be another increase. And 0:15:47.920 --> 0:15:50.720 now for the first time we've been saying, I think for. 0:15:50.720 --> 0:15:52.680 The federal fund rate, right, Yeah. 0:15:52.440 --> 0:15:54.800 We've been saying for four or five months to Fed 0:15:54.880 --> 0:15:57.880 one increase rates, but they don't know it yet. Now 0:15:57.920 --> 0:15:59.720 they know it. Now they know it after this employment 0:16:00.680 --> 0:16:04.440 very cool, wages rising unemployment. So that's what they look at, 0:16:04.480 --> 0:16:07.040 even though that's a flawed leading indicator. So the Fed 0:16:07.120 --> 0:16:09.520 is clearly not going to raise. ECB's not going to raise, 0:16:09.520 --> 0:16:12.280 they're going to cut. But you know, all this really 0:16:12.320 --> 0:16:14.600 is going to start to impact because we're worried about 0:16:14.680 --> 0:16:17.520 the liquidity, you know, trillion. That's the other data we 0:16:17.600 --> 0:16:21.400 look at that most people don't global monetary base or 0:16:21.440 --> 0:16:25.160 supply global liquidity really from central banks down a trillion 0:16:25.280 --> 0:16:29.360 over the last two quarters. So it's terrible. That's probably 0:16:29.400 --> 0:16:31.440 not going to turn around until next year when the 0:16:31.440 --> 0:16:34.000 ECB is forced to cut. Because you know, that's a 0:16:34.040 --> 0:16:36.080 simple way to trade the market, right, It's like if 0:16:36.120 --> 0:16:38.280 the FED intervenes during the pandemic and says we're going 0:16:38.320 --> 0:16:40.760 to increase the monetary base by a gigantic amount, you 0:16:40.800 --> 0:16:44.800 get long. If they're sucking money. It's like taking five 0:16:44.880 --> 0:16:48.240 hundred dollars off free parking. You know, if you're playing Monopoly, 0:16:48.320 --> 0:16:50.440 all of a sudden, you know, if you put it on, 0:16:50.520 --> 0:16:53.360 then all of a sudden, everything's overinflated. And everything's go go. 0:16:53.440 --> 0:16:55.120 You take it off and it's bad. So we're in 0:16:55.160 --> 0:16:58.880 the takeoff phase. But I think we overshot to five percent. 0:17:00.000 --> 0:17:01.880 We'll see if we keep rallying from here at four 0:17:01.880 --> 0:17:04.160 and a half. But next year we're confident we'll get 0:17:04.160 --> 0:17:07.640 below four. So we'll meet our five thousand target next 0:17:07.760 --> 0:17:08.639 year at least. 0:17:08.920 --> 0:17:11.480 So you don't think like the bond vigilantes will come 0:17:11.520 --> 0:17:13.520 back and say, we're not going to finance this kind 0:17:13.520 --> 0:17:14.680 of deficit spending much long. 0:17:14.760 --> 0:17:17.560 We think there's was this rate. That's a great question 0:17:17.560 --> 0:17:20.240 because we think there's way way too much focused on 0:17:20.359 --> 0:17:25.640 the US budget deficit because like I mean, I don't know. 0:17:26.320 --> 0:17:29.000 Matt is concerned about it, so you can try to 0:17:29.000 --> 0:17:29.920 relay his concerns. 0:17:30.240 --> 0:17:33.160 Well, I think it's terrible from the economic growth perspective 0:17:33.160 --> 0:17:35.320 because there's something called crowding out, So if the government 0:17:35.359 --> 0:17:36.919 spends money, it can't be invested in. 0:17:37.200 --> 0:17:39.680 Well, if they spend nine hundred billion dollars next year 0:17:40.160 --> 0:17:43.720 servicing the debt, we're not going to have enough money 0:17:43.720 --> 0:17:45.320 to spend for the next pandemic. 0:17:45.359 --> 0:17:47.800 No, it's a horrible it's a horrible, horrible thing, and 0:17:47.840 --> 0:17:50.600 it's a waste of capital. And it's terrible for economic growth, 0:17:50.680 --> 0:17:53.920 terrible for everyone. But it's not enough to drive global 0:17:53.960 --> 0:17:56.680 interest rates up one hundred basis points. That's my only point. 0:17:56.720 --> 0:17:59.400 At the margin, it's bad. Yeah, but keep in mind 0:17:59.400 --> 0:18:02.600 that our d strangely, if you look at the balance, 0:18:02.640 --> 0:18:05.680 he's actually still monetizing part of the debt because they're 0:18:05.720 --> 0:18:09.520 unwinding their short term borrowing. So it can't be true 0:18:10.400 --> 0:18:13.720 that that's the key driver of global interest rates. It's bad, 0:18:13.840 --> 0:18:17.040 it's bad for it. It's a terrible economic policy. Obviously, 0:18:17.080 --> 0:18:19.080 the budget process is horrendous. 0:18:19.160 --> 0:18:22.000 And for taxes, dude, because now every time someone wants 0:18:22.000 --> 0:18:23.760 to cut taxes, they're going to say, we can't afford to. 0:18:23.760 --> 0:18:25.480 We got to do entitlements, we got to pay for 0:18:25.520 --> 0:18:27.960 the military, we got to pay nine hundred billion dollars 0:18:27.960 --> 0:18:30.440 a service debt, so Miller and the rest of the 0:18:30.480 --> 0:18:33.159 middle class is going to have to pay half half. 0:18:33.480 --> 0:18:36.280 No, it's horrendous policy. And in fact, you know, we're 0:18:36.320 --> 0:18:39.400 actually pretty bullish about China because they save forty five 0:18:39.440 --> 0:18:43.760 percent of their GDP. So savings and investment drives economic growth. 0:18:43.800 --> 0:18:45.920 That's all the only thing that does it. And that's 0:18:45.960 --> 0:18:49.040 just intuitively Obviously, if the government is reducing savings, we're 0:18:49.040 --> 0:18:50.520 going to have lower growth in the long run. So 0:18:50.520 --> 0:18:53.719 it is terrible, but just not enough to drive global 0:18:53.760 --> 0:18:56.720 rates to six seven eight percent. That's our main point. 0:18:57.040 --> 0:18:59.840 We learned something again today, Yeah, we do every time 0:19:00.000 --> 0:19:02.040 comes in here. Jay Hatfell, thanks so much for joining us. 0:19:02.440 --> 0:19:05.880 Jays the CEO and founder and portfolio manager at Infrastructure 0:19:05.920 --> 0:19:10.399 Capital Advisors. He was a banker, he was I don't know, 0:19:10.600 --> 0:19:13.320 hedge year, a hedge fund due. He's a skier up 0:19:13.359 --> 0:19:15.880 at my favorite place, Squaw Valley, which I think they've 0:19:15.880 --> 0:19:19.520 renamed it something, but still Lake Tahoe. That whole area 0:19:19.600 --> 0:19:20.359 there is just awesome. 0:19:20.400 --> 0:19:23.160 So have they that Squaw Valley was not cool squad? 0:19:23.200 --> 0:19:25.119 Oh no, it's something different now, So I don't know. 0:19:25.400 --> 0:19:28.480 You're listening to the tape cans are live program Bloomberg 0:19:28.560 --> 0:19:32.159 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:19:32.200 --> 0:19:35.400 tune in app, Bloomberg dot Com, and the Bloomberg Business App. 0:19:35.480 --> 0:19:38.280 You can also listen live on Amazon Alexa from our 0:19:38.320 --> 0:19:43.320 flagship New York station, Just say Alexa play Bloomberg eleven thirty. 0:19:44.359 --> 0:19:50.000 So Sam Bankman free found guilty. Shocker, It took the 0:19:50.240 --> 0:19:52.520 jury like fifteen minutes a cup of coffee to convict 0:19:52.520 --> 0:19:54.359 this guy did. I'm not even sure they got their pizza. 0:19:54.440 --> 0:19:57.120 Even the trial was felt like the trial was only 0:19:57.160 --> 0:19:58.800 like two weeks, but. 0:19:58.760 --> 0:20:01.240 There's so much evidence. Many people turned against him, and 0:20:01.480 --> 0:20:02.800 he was like an open and shutcase. 0:20:02.800 --> 0:20:03.120 No train. 0:20:03.200 --> 0:20:06.240 But we have somebody here who's really into this business 0:20:06.240 --> 0:20:08.680 and has really read in as the kids say, Zeke Fox. 0:20:08.880 --> 0:20:12.119 He's an investigative reporter and it's also our author of 0:20:12.160 --> 0:20:15.560 the new book on crypto entitled Number Go Up. It 0:20:15.640 --> 0:20:18.359 was released in September twenty twenty three. He writes for 0:20:18.359 --> 0:20:19.760 Bloomberg BusinessWeek. 0:20:19.400 --> 0:20:20.560 And it was used in the trial. 0:20:20.760 --> 0:20:23.280 It was used in a trial. Explain that to me, Zeke, 0:20:23.480 --> 0:20:25.639 So how was your book used in this trial? 0:20:25.680 --> 0:20:25.920 Here? 0:20:27.000 --> 0:20:31.000 Hey, this was unbelievable. So, as you point out, they 0:20:31.200 --> 0:20:34.560 had so much evidence. All the top lieutenants were testifying 0:20:34.600 --> 0:20:37.600 against Sam, but then Sam decided to take the stand 0:20:37.920 --> 0:20:40.959 and tell his version of the story. Real unusual decision 0:20:41.040 --> 0:20:46.200 for Krimmel defendant, because then the prosecutor gets to cross 0:20:46.240 --> 0:20:50.760 examine you about anything you've ever said. And this prosecutor 0:20:51.240 --> 0:20:53.679 had no mercy. I felt like she was going for 0:20:53.760 --> 0:20:56.280