WEBVTT - 'Bond King' Talks Selloff, Property Peril & CEO Pay

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<v Speaker 1>Good morning. It's Thursday, the fifth of October here in London.

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<v Speaker 1>This is the Bloomberg Daybacurate podcast that I'm Caroline Hepkit and.

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<v Speaker 2>I'm Stephen Carroll. Coming up today. Barkley's analysts say it

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<v Speaker 2>will take a stock crash to rescue the bond market.

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<v Speaker 1>Rishi Sunak tears off a project championed by five of

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<v Speaker 1>his predecessors in a bid to reset his party's agenda.

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<v Speaker 2>Plus, as the downturn and the property market is hurting

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<v Speaker 2>owners and landlords, the imminent danger may be elsewhere. We

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<v Speaker 2>look at the struggles facing the firms who get things built.

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<v Speaker 1>Let's start with a roundoff of our top stories. Global

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<v Speaker 1>bonds are doomed to keep falling unless we see a

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<v Speaker 1>sustained slump in equities. That according to analysts from Berkley's.

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<v Speaker 1>The Global Chairman of Research at the Bank, aj Rajah Dax,

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<v Speaker 1>says that in the short term, the only scenario where

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<v Speaker 1>bonds rally materially is where risk assets fall sharply in

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<v Speaker 1>the coming weeks. Yields hit levels not seen since two

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<v Speaker 1>thousand and seven yesterday, but then rallied on weaker US

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<v Speaker 1>jobs data. Invesco's Stephanie Larasilier says that traders are watching

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<v Speaker 1>the current moves.

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<v Speaker 3>Closely, investors starting to take no heels that we haven't

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<v Speaker 3>seen over a decade.

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<v Speaker 4>I mean, every part of the curve.

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<v Speaker 3>Is at a decade plus ties, and we're talking about

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<v Speaker 3>a uni market where you know, in the past, when

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<v Speaker 3>we have seen these yields, they've usually meant that there

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<v Speaker 3>was some underlying fundamental questionable, you know, credit issues, and

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<v Speaker 3>that doesn't exist right now.

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<v Speaker 1>Stephanie Lowersilier's comments come as trade has remained on high

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<v Speaker 1>alert for a resurgence in volatility, especially if US non

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<v Speaker 1>farm payrolls data on Friday come in stronger than expected.

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<v Speaker 2>Bill Gross, the co founder of PIMCO and a man

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<v Speaker 2>once dubbed the bond King, has also been weighing in

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<v Speaker 2>on the recent market gyrations. He says stocks are clearly

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<v Speaker 2>overvalued and the bond yields will need to fall significantly

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<v Speaker 2>to justify current valuations. Speaking to Bloomberg, Gross also took

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<v Speaker 2>aim at retail investment is, saying they've also helped to

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<v Speaker 2>spook the market, acting as quote little bond vigilantes.

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<v Speaker 5>They've been spooked over the last week or so by

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<v Speaker 5>declines of two, three four percent in their etups, and

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<v Speaker 5>so I think.

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<v Speaker 6>They're joining the crowd in terms of selling.

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<v Speaker 5>And you know, we're seeing a little bit of an

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<v Speaker 5>oversol market here headed to five percent.

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<v Speaker 2>If I want to hear that full interview with Bill Gross,

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<v Speaker 2>you can get it on the Bloomberg Talks podcast all

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<v Speaker 2>of our key conversations in one place. Redemptions by individual

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<v Speaker 2>investors have helped to deepen their out over the past week,

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<v Speaker 2>as exchange traded funds were forced to sell holdings worth

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<v Speaker 2>hundreds of millions of dollars.

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<v Speaker 1>Now to the UK. After days of criticism for not

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<v Speaker 1>making a decision on high speed Rail two, the Prime

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<v Speaker 1>Minister has confirmed that he's scrapping the northern leg of

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<v Speaker 1>the one hundred billion pound infrastructure project. Soon made the

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<v Speaker 1>announcement in his Leader's speech out the Conservative Party confidence

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<v Speaker 1>and sought to frame the move in a positive light.

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<v Speaker 7>I say to those who backed the project in the

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<v Speaker 7>first place, the facts have changed, and the right thing

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<v Speaker 7>to do when the fact change is to have the

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<v Speaker 7>courage to change direction.

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<v Speaker 1>Richie Sonac says that he'll spend the thirty six billion

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<v Speaker 1>pounds saved on hundreds of other transport schemes instead, but

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<v Speaker 1>decisions to cut the project short go against the past

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<v Speaker 1>five Prime ministers, all of whom backed the plan. David

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<v Speaker 1>Cameron reacted to the news, calling it the loss of

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<v Speaker 1>a once in a generation opportunity.

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<v Speaker 2>Barclays is laying off roughly fifty senior deal makers as

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<v Speaker 2>part of its annual staff cut. The move is said

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<v Speaker 2>to be part of a planned to trim headcount by

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<v Speaker 2>about three hundred people across the Corporate and Investment Bank divisions.

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<v Speaker 2>That amounts to about three percent of the total headcount

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<v Speaker 2>in the unit, which also includes Barkley's trading operations.

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<v Speaker 1>The London Stock Exchange CEO Julia Hoggett says the City

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<v Speaker 1>of London is being hamstrung by low salary. The finance

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<v Speaker 1>executive says that luring top recruits with market changing talent

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<v Speaker 1>needs pay to match.

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<v Speaker 8>That person who would be game changing in terms of

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<v Speaker 8>unlocking that value for the UK company you're unlocking that

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<v Speaker 8>market would have to be paid more than the CEO

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<v Speaker 8>and wouldn't be able to have any performance related to

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<v Speaker 8>pay on top of what they started at and is

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<v Speaker 8>probably still taking a pay cup from what they be

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<v Speaker 8>paid to work for a Nation company, or a US

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<v Speaker 8>company or even sometimes a European company.

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<v Speaker 1>LC CEO Julia Hoggart speaking there to the Inner City podcast.

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<v Speaker 1>Median pay for footy one hundred CEOs increased by sixteen

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<v Speaker 1>percent to three point nine million pounds last year, and

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<v Speaker 1>you can listen to that whole interview wherever you listen

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<v Speaker 1>to your podcasts.

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<v Speaker 2>Your opinion, and diplomats have reached an initial agreement over

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<v Speaker 2>an overhaul of rules on migration. Officials agreed that in

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<v Speaker 2>a crisis situation, member states may request the relocation of

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<v Speaker 2>asylum seekers to other EU countries, as well as financial

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<v Speaker 2>contributions to support migrants. And migration have become an increasingly

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<v Speaker 2>urgent problem for European Union leaders meeting in Grenada and

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<v Speaker 2>Spain this week, with some countries taking unilateral measures to

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<v Speaker 2>Titan controls.

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<v Speaker 1>And finally, the twenty thirty Football World Cup will take

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<v Speaker 1>place across six countries and three continents. Spain, Portugal and

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<v Speaker 1>Morocco will stage most of the tournament, but it will

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<v Speaker 1>start in South America to celebrate one hundred years of

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<v Speaker 1>the competition, with Uruguay, Argentina and Paraguay hosting a match each.

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<v Speaker 1>The FIFA President Johnny Infantino says that the choice of

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<v Speaker 1>Uruguay is significant.

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<v Speaker 9>The first of these three matches will of course be

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<v Speaker 9>played at the stadium where it all began, in Montevideo's

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<v Speaker 9>medical Estadio Centennario, precisely to celebrate the centenary edition of

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<v Speaker 9>the FIFA World Cup.

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<v Speaker 1>Infantino went on to say that the organization is quote

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<v Speaker 1>bringing everyone together by awarding the competition to so many nations.

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<v Speaker 2>Welcome back back, sitting beside me after your trip to

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<v Speaker 2>Manchester this week, So much happened, of course, culminating in

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<v Speaker 2>the speech by Rishie Sineak yesterday.

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<v Speaker 1>Yeah, listen, it was great to be in Manchester. It

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<v Speaker 1>was difficult to get back, of course, because there was

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<v Speaker 1>strike action and so that was one of the things

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<v Speaker 1>that were sort of overhanging the last day of this

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<v Speaker 1>full day conference up in Manchester. It's a huge jamboree.

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<v Speaker 1>It's all the MPs, it's the Prime Minister and Chancellor

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<v Speaker 1>giving major speeches, and it's all the party activists there.

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<v Speaker 1>It's sort of meant to rally the grassroots of the

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<v Speaker 1>Conservative Party and so there was a lot of anticipation

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<v Speaker 1>around what the Prime Minister was going to say and

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<v Speaker 1>there was a lot of speculation about high speed rail too.

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<v Speaker 1>This is a huge infrastructure project that was meant to

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<v Speaker 1>end with fast, super fast bullets trains coming into Manchester Station.

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<v Speaker 1>Speculation that was going to be scrapped, and indeed that

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<v Speaker 1>is exactly what the Prime Minister did in that speech.

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<v Speaker 1>He canceled it. He did talk about reinvesting all of

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<v Speaker 1>the money in one hundreds of other projects road and

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<v Speaker 1>rail in the North of England and the Midlands. But

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<v Speaker 1>there was really a furroy after that. And so I

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<v Speaker 1>spent the afternoon after the Prime Minister's speech going to

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<v Speaker 1>the press conference held by the Greater Manchester Mayor Andy Burnham.

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<v Speaker 1>He was surrounded by.

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<v Speaker 2>Who you'd spoken to earlier in the week of about.

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<v Speaker 1>Absolutely I had spotted him roving around the conference hall,

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<v Speaker 1>you know, speaking to people. He's obviously a labor politician,

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<v Speaker 1>but you know was was welcoming the Conservative conference to

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<v Speaker 1>his city and yes, so I caught up with him

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<v Speaker 1>then in a one on one conversation. The palpable frustration

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<v Speaker 1>and really anger because Burnham was surrounded by a number

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<v Speaker 1>of business people and also the chair of the Greater

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<v Speaker 1>Manchester Business Board, lou Cardwell, who's herself an entrepreneur. So

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<v Speaker 1>I spoke to both of them and there was real

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<v Speaker 1>sort of anger. It doesn't help build business confidence. What

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<v Speaker 1>Andy Burnham was saying he didn't understand how the Conservative

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<v Speaker 1>Party could call itself the party of business or bring

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<v Speaker 1>growth to the regions that they didn't. The particular point

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<v Speaker 1>they made again and again was that Richie Sunac was

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<v Speaker 1>in the city to make the decision affecting the city

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<v Speaker 1>and did not consult business people and all himself in

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<v Speaker 1>the city when he was their There was a real

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<v Speaker 1>sort of anger about that Prime ministerial government decision and

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<v Speaker 1>seems to be potentially building to push back.

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<v Speaker 9>Yeah.

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<v Speaker 2>Look, it's something that we're going to be hearing plenty

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<v Speaker 2>more about as well, and the ramifications without decision being

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<v Speaker 2>made and whether or not party members from the Conservative

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<v Speaker 2>Party and indeed voters will buy the alternative plan that

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<v Speaker 2>Richie put forward in his speech yesterday. First, we're going

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<v Speaker 2>to turn to the markets and bring you more of

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<v Speaker 2>our interview with the Pimcoke co founder Bill Gross. After

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<v Speaker 2>that historic sell off that we've seen on bond markets,

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<v Speaker 2>driving yields to their highest levels since two thousand and seven,

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<v Speaker 2>the man known as the bond King, says the market's

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<v Speaker 2>looking a little over sold. Bill Gross has been speaking

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<v Speaker 2>to Bloomberg's Katie Greefeld and remain bustic.

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<v Speaker 5>I think pe rachel's are coming down. Katie explained it

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<v Speaker 5>in terms of an equity risk premium being close to

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<v Speaker 5>you know, basically the bond market and meaning that there's

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<v Speaker 5>little risk in terms of stocks relative to treasure bills

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<v Speaker 5>or short term treasure notes. I would put it this way,

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<v Speaker 5>give me thirty seconds for an example, that APE ratio

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<v Speaker 5>at twenty, turn it up signed down as an EP

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<v Speaker 5>ratio at five. So an earnings ratio at five, a

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<v Speaker 5>PE ratio of twenty was a year and a half ago,

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<v Speaker 5>and since then, real yield says Katie pointed out, I've

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<v Speaker 5>gone up by.

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<v Speaker 6>You know, a good three hundred and fifty basis points.

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<v Speaker 5>If and I'm not saying this is going to happen,

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<v Speaker 5>but if the earnings yield ratio, the EP ratio went

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<v Speaker 5>up from five to eight and a half percent, then

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<v Speaker 5>PE ratios would be down around twelve or thirteen.

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<v Speaker 6>And that's it's a little old school.

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<v Speaker 5>It's Gordon discount dividend discount model type of thing. But

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<v Speaker 5>it does indicate the direction in terms of pe ratios

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<v Speaker 5>that they might move if we see a situation really

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<v Speaker 5>real yields still at the two point four zero.

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<v Speaker 10>Percent, and let's break down what we've seen in terms

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<v Speaker 10>of nominal yields. As you mentioned, real yields very high

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<v Speaker 10>and they've been in the driver's seat really if you

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<v Speaker 10>think about this rise in the ten year yield, talk

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<v Speaker 10>to us though about break evens. Do you think that

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<v Speaker 10>inflation expectations should be higher here given what we're seeing

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<v Speaker 10>in the energy market.

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<v Speaker 6>Yeah, I think it should.

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<v Speaker 5>And you know, the break even rate for the ten

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<v Speaker 5>uere amazingly is rather stable between two and two point

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<v Speaker 5>three percent today, I think around two point three four percent,

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<v Speaker 5>and so that's the expectation for inflation. I would say

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<v Speaker 5>it's more like three. Getting down to two is going

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<v Speaker 5>to be very difficult going forward. And so you know

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<v Speaker 5>that to me means that nominal treasuries take the tenure

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<v Speaker 5>again at four point seventy five or four point eight,

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<v Speaker 5>that nominal treasuries are basically based upon an expectation for

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<v Speaker 5>a three percent PAD funds rate over a long term basis.

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<v Speaker 5>There is an equity risk premium that you talked about

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<v Speaker 5>there is a term premium for bonds as well of

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<v Speaker 5>about one to one on a quarter percent, because that's

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<v Speaker 5>the risk of owning a tenure versus a treasury bill.

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<v Speaker 5>And so if FED funds settle around three to three

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<v Speaker 5>and a half percent, you know, a five percent tenure

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<v Speaker 5>treasury is decent value, it's not great value.

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<v Speaker 4>What is great value?

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<v Speaker 6>Though?

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<v Speaker 10>When you think about five percent on a ten year treasury,

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<v Speaker 10>we haven't seen that for fifteen years plus.

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<v Speaker 4>If that's not great, what is great?

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<v Speaker 5>Well, it's great er, there's no doubt about that. But

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<v Speaker 5>five percent again, would would be a normal bond term

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<v Speaker 5>premium of about one or a quarter percent hunder three

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<v Speaker 5>percent inflationary expectations.

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<v Speaker 6>So that's okay.

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<v Speaker 5>And I know corporate spreads have winded out a little

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<v Speaker 5>bit and that makes them attractive. But what what I

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<v Speaker 5>think has happened, Katie in the past several weeks and

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<v Speaker 5>the market is beginning to recognize treasury supply, you know,

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<v Speaker 5>based upon a two trillion dollar deficit. They're beginning to recognize,

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<v Speaker 5>you know, basically the selling of bonds by the.

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<v Speaker 6>Fed in terms of the QT.

0:12:33.200 --> 0:12:36.960
<v Speaker 5>They're beginning to recognize higher for longer as well, and

0:12:37.000 --> 0:12:39.439
<v Speaker 5>so those two factors have been important in terms of

0:12:39.480 --> 0:12:42.680
<v Speaker 5>the current rise. What I've seen in the last week

0:12:43.679 --> 0:12:46.440
<v Speaker 5>is that the bond vigilantes, to the extent that they

0:12:46.440 --> 0:12:51.360
<v Speaker 5>are now individuals owning you know, billions and billions, hundreds

0:12:51.360 --> 0:12:55.800
<v Speaker 5>of billions of bond ETFs, they've been spooked over the

0:12:55.920 --> 0:12:59.719
<v Speaker 5>last week or so by declines of two, three, four

0:12:59.760 --> 0:13:04.079
<v Speaker 5>percent in their ETFs, and so I think they're joining

0:13:04.120 --> 0:13:06.880
<v Speaker 5>the crowd in terms of selling. And you know, we're

0:13:06.920 --> 0:13:09.160
<v Speaker 5>seeing a little bit of an over soul market here

0:13:09.280 --> 0:13:10.640
<v Speaker 5>headed to five percent.

0:13:10.640 --> 0:13:11.560
<v Speaker 6>Certainly over sold.

0:13:11.559 --> 0:13:14.880
<v Speaker 11>But I do worry bills about some of these external events.

0:13:14.960 --> 0:13:17.560
<v Speaker 11>Of course, yesterday there was a lot of hoopla around

0:13:17.840 --> 0:13:20.920
<v Speaker 11>basically the Speaker of the House losing his position here

0:13:20.960 --> 0:13:24.600
<v Speaker 11>and whether this was symptomatic of just the dysfunction in Washington.

0:13:25.000 --> 0:13:27.559
<v Speaker 11>You mentioned the federal debt. We know debt servicing costs

0:13:27.600 --> 0:13:30.000
<v Speaker 11>have gone up from sub two percent here for the

0:13:30.040 --> 0:13:32.280
<v Speaker 11>government too, I think now somewhere in the four to

0:13:32.400 --> 0:13:35.040
<v Speaker 11>five percent range here on average. How much of that

0:13:35.160 --> 0:13:38.480
<v Speaker 11>ends up becoming a factor in investment decisions or can

0:13:38.520 --> 0:13:39.600
<v Speaker 11>you ignore it?

0:13:39.840 --> 0:13:40.000
<v Speaker 7>Well?

0:13:40.200 --> 0:13:42.240
<v Speaker 6>I don't think you can ignore it. You know, We're

0:13:42.240 --> 0:13:45.400
<v Speaker 6>going to see the point again thirty days.

0:13:45.160 --> 0:13:47.840
<v Speaker 5>From now, in which they have to vote and we'll

0:13:47.840 --> 0:13:53.200
<v Speaker 5>have a new speaker, I assume. But to me it indicates,

0:13:53.640 --> 0:13:57.000
<v Speaker 5>you know, disruption in terms of the process, additional disruption

0:13:57.520 --> 0:14:01.800
<v Speaker 5>based upon what we've seen because Henry Republicans ten concerned

0:14:01.840 --> 0:14:05.079
<v Speaker 5>are Republicans basically are running the show and the house,

0:14:05.120 --> 0:14:08.920
<v Speaker 5>and so that will increase volatility in terms of all

0:14:09.080 --> 0:14:11.240
<v Speaker 5>markets and curly as a negative.

0:14:12.760 --> 0:14:16.360
<v Speaker 2>So that was the Pimco co founder Bill Gross there

0:14:16.600 --> 0:14:19.880
<v Speaker 2>speaking to Bloomberg's Katie Greifeld and remain bustic.

0:14:20.680 --> 0:14:23.600
<v Speaker 1>Now we're going to Germany for our next story, where

0:14:23.640 --> 0:14:27.520
<v Speaker 1>the property downturn driven by higher interest rates is starting

0:14:27.560 --> 0:14:30.920
<v Speaker 1>to claim some big victims. A swathe of German developers

0:14:30.960 --> 0:14:35.760
<v Speaker 1>are facing insolvency. That's leaving construction projects in limbo across

0:14:35.760 --> 0:14:40.720
<v Speaker 1>the country and creditors potentially facing hefty losses are distressed

0:14:40.840 --> 0:14:44.280
<v Speaker 1>debt reported. Libby Cherry has been following this story. Libby,

0:14:44.360 --> 0:14:47.680
<v Speaker 1>great to have you on. Firstly, what's just prompted this

0:14:47.840 --> 0:14:51.320
<v Speaker 1>particular wave of businesses to file for insolvency?

0:14:53.760 --> 0:14:56.480
<v Speaker 12>Hi that so it's a bit of a perfect storm

0:14:56.520 --> 0:15:00.920
<v Speaker 12>really when it comes to these developers. So, as you said,

0:15:00.960 --> 0:15:04.440
<v Speaker 12>we've seen this very rapid rise in interest rates and

0:15:04.480 --> 0:15:08.520
<v Speaker 12>that's feeding through into higher financing costs for these developers,

0:15:08.560 --> 0:15:11.200
<v Speaker 12>the loans that they often take out in order to

0:15:11.240 --> 0:15:14.400
<v Speaker 12>fund a project to completion. And then on the other side,

0:15:14.440 --> 0:15:18.520
<v Speaker 12>you've had inflation, so that's increased the cost of building materials,

0:15:18.560 --> 0:15:22.120
<v Speaker 12>that's increased the cost of labor, and that's eating into

0:15:22.160 --> 0:15:25.200
<v Speaker 12>their margins as well. And you know, often they can

0:15:25.240 --> 0:15:27.240
<v Speaker 12>find themselves at a point where they're halfway through a

0:15:27.320 --> 0:15:30.560
<v Speaker 12>projects and they're left without the money to finish it.

0:15:30.720 --> 0:15:33.520
<v Speaker 12>And you know, at that point, you know, if your

0:15:33.600 --> 0:15:36.160
<v Speaker 12>lenders aren't willing to provide you with more money, you know,

0:15:36.240 --> 0:15:38.960
<v Speaker 12>you sometimes you face a little choice but to yeah,

0:15:39.160 --> 0:15:41.000
<v Speaker 12>to file for insolvency proceedings.

0:15:41.600 --> 0:15:44.600
<v Speaker 2>So what are the broader repercussions then for Germany cities.

0:15:46.440 --> 0:15:48.600
<v Speaker 4>Well, yeah, it's a good question.

0:15:48.800 --> 0:15:52.760
<v Speaker 12>I mean these cities, you know, they these projects, you know,

0:15:52.800 --> 0:15:54.400
<v Speaker 12>they can be in the middle of these cities, they

0:15:54.400 --> 0:15:59.280
<v Speaker 12>can become iceols. You know, often construction has been delayed

0:15:59.320 --> 0:16:02.640
<v Speaker 12>while negotiations are going on anyway, and once you enter

0:16:02.720 --> 0:16:05.840
<v Speaker 12>an insolvency process, you can find that some of the

0:16:05.920 --> 0:16:09.840
<v Speaker 12>existing contractors walk away. There's then a problem of having

0:16:09.880 --> 0:16:13.040
<v Speaker 12>to tender for you know, for new contractors to come in.

0:16:14.440 --> 0:16:16.160
<v Speaker 4>You can start having.

0:16:15.920 --> 0:16:18.760
<v Speaker 12>Some of the people that decided to buy the building

0:16:18.880 --> 0:16:21.720
<v Speaker 12>getting called feet and it becomes a.

0:16:21.640 --> 0:16:22.760
<v Speaker 4>Political issue as well.

0:16:22.800 --> 0:16:25.200
<v Speaker 12>I mean, no one wants these you know, gaping issols

0:16:25.280 --> 0:16:26.520
<v Speaker 12>in the middle of their cities.

0:16:26.560 --> 0:16:31.320
<v Speaker 4>So you do see some kind of yeah, you know, the.

0:16:31.200 --> 0:16:35.680
<v Speaker 12>Mayor's office or some of the sort of local politicians

0:16:35.680 --> 0:16:37.360
<v Speaker 12>also you know, getting involved.

0:16:37.920 --> 0:16:40.960
<v Speaker 1>Yeah, and so then what are the lenders doing about this?

0:16:41.120 --> 0:16:42.240
<v Speaker 1>What's their attitude?

0:16:44.040 --> 0:16:48.400
<v Speaker 12>So, I mean many of the you know, a lot

0:16:48.440 --> 0:16:51.680
<v Speaker 12>of this is kind of bank financing, and there can

0:16:51.680 --> 0:16:55.080
<v Speaker 12>be situations where you know, it's it's in their interest

0:16:55.120 --> 0:16:57.680
<v Speaker 12>to fund the fund the project or completion, so they

0:16:57.760 --> 0:17:00.760
<v Speaker 12>might be willing to, you know, in certain cy situations,

0:17:00.840 --> 0:17:03.880
<v Speaker 12>you know, provide a bit more new money to kind

0:17:03.920 --> 0:17:05.720
<v Speaker 12>of get the project to completion and sell the building

0:17:05.720 --> 0:17:06.240
<v Speaker 12>and move on.

0:17:07.400 --> 0:17:10.440
<v Speaker 4>But negotiations can become more difficult.

0:17:09.960 --> 0:17:12.639
<v Speaker 12>You do see, you know, for instance, there might be

0:17:12.680 --> 0:17:15.639
<v Speaker 12>some of these smaller pension funds which have invested in

0:17:15.720 --> 0:17:19.439
<v Speaker 12>funding these developments, and for regular true reasons, they might

0:17:19.480 --> 0:17:22.440
<v Speaker 12>be limited in the amount of new money they can provide,

0:17:23.160 --> 0:17:26.400
<v Speaker 12>So yeah, it can lead to quite sort of difficult

0:17:27.119 --> 0:17:28.600
<v Speaker 12>negotiations for sure.

0:17:29.320 --> 0:17:32.199
<v Speaker 2>What's the outlook then for the sector? Maybe given that

0:17:32.480 --> 0:17:34.680
<v Speaker 2>interest rates are where they are and as we're being

0:17:34.680 --> 0:17:37.080
<v Speaker 2>told by central banks, will remain higher for longer.

0:17:38.520 --> 0:17:43.160
<v Speaker 12>Well exactly, I think obviously the sort of macro outlook

0:17:43.200 --> 0:17:45.399
<v Speaker 12>is quite is quite uncertain. But certainly some of the

0:17:45.400 --> 0:17:48.040
<v Speaker 12>people that we were speaking to that deal with these

0:17:48.080 --> 0:17:49.720
<v Speaker 12>kind of cases were saying that they do.

0:17:50.680 --> 0:17:53.359
<v Speaker 4>You know, anticipate more of these insolvencies going forward.

0:17:54.560 --> 0:17:56.439
<v Speaker 12>And you know, as you say, if you know, central

0:17:56.480 --> 0:17:58.000
<v Speaker 12>bank and just way to stay where there are, there

0:17:58.000 --> 0:18:00.960
<v Speaker 12>will be this period of adjusting. Let alone, if we

0:18:01.080 --> 0:18:03.760
<v Speaker 12>get see some kind of you know, downturn in the

0:18:03.840 --> 0:18:07.439
<v Speaker 12>economy as well, you know, I feel that, you know,

0:18:07.880 --> 0:18:09.920
<v Speaker 12>I think a lot of the responses that we've got

0:18:09.920 --> 0:18:11.720
<v Speaker 12>with sciss a business model which relied a lot on

0:18:11.840 --> 0:18:12.720
<v Speaker 12>cheap financing.

0:18:12.800 --> 0:18:14.000
<v Speaker 4>But you know, perhaps in the.

0:18:14.320 --> 0:18:17.840
<v Speaker 12>We might be able to reach a new equilibrium.

0:18:17.880 --> 0:18:20.639
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