1 00:00:06,080 --> 00:00:09,000 Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox. 2 00:00:09,039 --> 00:00:11,799 Speaker 1: Along with my co host Lisa Abramowitz. Each day we 3 00:00:11,920 --> 00:00:15,400 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,480 --> 00:00:18,120 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:18,239 --> 00:00:21,000 Speaker 1: or the trading floor. Find the Bloomberg p m L 6 00:00:21,120 --> 00:00:34,560 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. Late yesterday, 7 00:00:34,640 --> 00:00:38,760 Speaker 1: the White House said that broad tariffs on steel and 8 00:00:38,800 --> 00:00:42,960 Speaker 1: ten percent on aluminum that are already in effect against China, Russia, 9 00:00:43,040 --> 00:00:45,320 Speaker 1: Japan and others would not go into force for the 10 00:00:45,360 --> 00:00:49,599 Speaker 1: European Union as previously planned. Instead, the European Union has 11 00:00:49,640 --> 00:00:52,800 Speaker 1: another month to continue negotiating with the United States about 12 00:00:52,920 --> 00:00:56,640 Speaker 1: the new pact. In order to avoid the tariffs Canada Mexico, 13 00:00:56,720 --> 00:01:01,040 Speaker 1: they were given an extension until June of first talks 14 00:01:01,040 --> 00:01:04,759 Speaker 1: continuing to rewrite the North American Free Trade Agreement. Here 15 00:01:04,800 --> 00:01:07,319 Speaker 1: to tell us more about trade and China is Stephen 16 00:01:07,360 --> 00:01:10,080 Speaker 1: Rocchi is a senior fellow and lecture at Yale University, 17 00:01:10,160 --> 00:01:14,839 Speaker 1: also a Bloomberg View columnist. Uh Stephen Roach, give us 18 00:01:14,840 --> 00:01:18,720 Speaker 1: your perspective on the trip that Stephen Manuch In, the 19 00:01:18,800 --> 00:01:22,160 Speaker 1: Treasury Secretary is taken to China and whether they will 20 00:01:22,200 --> 00:01:26,200 Speaker 1: actually accomplish any resolution to the trade dispute between China 21 00:01:26,200 --> 00:01:29,640 Speaker 1: and the United States. Well, I worry that this is 22 00:01:29,680 --> 00:01:33,679 Speaker 1: a waste of taxpayer money to send these guys over 23 00:01:33,720 --> 00:01:38,280 Speaker 1: to Beijing. There's no real strategy that they have to 24 00:01:39,959 --> 00:01:46,480 Speaker 1: UH negotiate a meaningful concession with the Chinese, and they 25 00:01:46,600 --> 00:01:50,920 Speaker 1: go over with a with an approach that really has 26 00:01:51,240 --> 00:01:54,440 Speaker 1: nothing in the way of macro coherence, doesn't understand the 27 00:01:54,560 --> 00:01:59,800 Speaker 1: role that deficits play in um UH is a symptom 28 00:01:59,840 --> 00:02:02,960 Speaker 1: of America's own macro economic imbalances. So I'm not too 29 00:02:03,000 --> 00:02:06,880 Speaker 1: optimistic this trip is going to accomplish anything. Pim Stephen, 30 00:02:06,960 --> 00:02:10,080 Speaker 1: you wrote a column for Bloomberg where you were saying, 31 00:02:10,240 --> 00:02:14,840 Speaker 1: the US needs China more than China needs the US. 32 00:02:15,160 --> 00:02:18,920 Speaker 1: Does Beijing know this? You know this is this is 33 00:02:18,960 --> 00:02:24,680 Speaker 1: not you know um astrophysics. They know that they provide 34 00:02:24,800 --> 00:02:28,400 Speaker 1: American consumers with a lot of low cost goods that 35 00:02:28,480 --> 00:02:31,800 Speaker 1: they need to make to make ends meet. They know 36 00:02:31,919 --> 00:02:34,480 Speaker 1: they buy a lot of treasuries, and they know that 37 00:02:34,600 --> 00:02:37,600 Speaker 1: China is now the third largest and most rapidly growing 38 00:02:38,280 --> 00:02:41,040 Speaker 1: market for U S exports. None of these are big 39 00:02:41,440 --> 00:02:45,960 Speaker 1: state secrets. China understands all of that. These are these 40 00:02:45,960 --> 00:02:47,880 Speaker 1: are issues, of course, that we haven't spent a whole 41 00:02:47,880 --> 00:02:51,520 Speaker 1: lot of time absorbing at the policy level in Washington. Well, 42 00:02:51,560 --> 00:02:54,200 Speaker 1: the reason why I ask is because Beijing came out 43 00:02:54,240 --> 00:02:57,200 Speaker 1: and said, yeah, we're happy to negotiate with the United States. 44 00:02:57,720 --> 00:03:01,280 Speaker 1: We're just not willing to discuss a mandatory when hundred 45 00:03:01,240 --> 00:03:03,959 Speaker 1: billion dollar cut in America's three hundred seventy billion dollar 46 00:03:03,960 --> 00:03:07,080 Speaker 1: annual trade deficit with China, or curbs on Beijing's three 47 00:03:07,160 --> 00:03:10,919 Speaker 1: hundred billion dollar plan to bankroll the country's industrial upgrade 48 00:03:11,200 --> 00:03:14,200 Speaker 1: into advanced technologies, which are the two main issues that 49 00:03:14,240 --> 00:03:17,240 Speaker 1: the US wants to talk about. What do you make 50 00:03:17,240 --> 00:03:21,639 Speaker 1: of that? Well, Um, first of all, you know, the 51 00:03:21,639 --> 00:03:24,280 Speaker 1: the idea that you know, we can make America great 52 00:03:24,320 --> 00:03:27,320 Speaker 1: again by cutting a bilateral deficit with China anybody else 53 00:03:27,440 --> 00:03:31,040 Speaker 1: is totally ludicrous. I mean, if we don't rebuild our 54 00:03:31,160 --> 00:03:33,399 Speaker 1: national savings, and of course we're going the other way 55 00:03:33,400 --> 00:03:37,840 Speaker 1: with these big Trump administrastration budget deficits, we can slash 56 00:03:37,920 --> 00:03:40,360 Speaker 1: a hundred billion, two hundreds even three hundred billion off 57 00:03:40,400 --> 00:03:43,920 Speaker 1: the Chinese bilateral deficit will just go to someone else. 58 00:03:43,960 --> 00:03:46,640 Speaker 1: And that someone else is a higher cost producer that 59 00:03:46,680 --> 00:03:50,160 Speaker 1: will end up taxing American workers. And in terms of 60 00:03:50,480 --> 00:03:54,760 Speaker 1: asking China to capitulate on its industrial policy, I mean, 61 00:03:54,800 --> 00:03:57,760 Speaker 1: are we prepared to do that with our own industrial policy? 62 00:03:57,840 --> 00:04:00,280 Speaker 1: Or did did Japan do it? Or as Germany on it. 63 00:04:00,920 --> 00:04:05,840 Speaker 1: It's a ludicrous to accuse China of of of going 64 00:04:05,920 --> 00:04:10,160 Speaker 1: after supporting innovations based initiatives when we all do it. 65 00:04:11,080 --> 00:04:13,960 Speaker 1: Stephen Roach, give us your thoughts on the dispute over 66 00:04:14,040 --> 00:04:19,839 Speaker 1: intellectual property rights with China. Intellectual property is the core 67 00:04:19,960 --> 00:04:25,840 Speaker 1: of any modern innovations based society. But I've looked him 68 00:04:25,839 --> 00:04:30,000 Speaker 1: at the accusations that have been leveled at China in 69 00:04:30,120 --> 00:04:35,320 Speaker 1: the two page document produced by the US Trade rep 70 00:04:36,080 --> 00:04:39,760 Speaker 1: on March it's not a It's not a good case 71 00:04:39,800 --> 00:04:44,760 Speaker 1: at all. Um. They make three main points that China 72 00:04:45,480 --> 00:04:51,919 Speaker 1: UH steals technology through joint ventures. Um, that's ludicrous. I 73 00:04:52,000 --> 00:04:54,120 Speaker 1: was in a joint venture, and you know when you 74 00:04:54,120 --> 00:04:56,479 Speaker 1: you're in a joint venture, you join with your partner 75 00:04:56,480 --> 00:05:01,320 Speaker 1: and you build and share operating system and innovation. There's 76 00:05:01,360 --> 00:05:04,919 Speaker 1: nothing forced about it. Then they go after China for 77 00:05:05,880 --> 00:05:11,799 Speaker 1: UH being a predator in these going out outward bound UM. 78 00:05:12,200 --> 00:05:15,520 Speaker 1: Foreign direct investment initiatives like made in China. We've just 79 00:05:15,600 --> 00:05:19,039 Speaker 1: talked about that. I think that is ludicrous. There is 80 00:05:19,080 --> 00:05:26,239 Speaker 1: a case to be made for UH China using cyber 81 00:05:26,520 --> 00:05:34,000 Speaker 1: espionage to um uh go after US innovation UH, and 82 00:05:34,040 --> 00:05:36,880 Speaker 1: that that certainly was a compelling case that the President 83 00:05:37,040 --> 00:05:41,120 Speaker 1: Obama presented to a Shijun Ping at the Sunny Land 84 00:05:41,200 --> 00:05:45,120 Speaker 1: Summit in two thousand and fifteen. But now I think 85 00:05:45,400 --> 00:05:49,360 Speaker 1: a fair amount of that UH type of activity is subsided. 86 00:05:49,880 --> 00:05:51,440 Speaker 1: So there is a case, but you know, is it 87 00:05:51,520 --> 00:05:53,640 Speaker 1: a credible case? This is a strong case, is a 88 00:05:53,720 --> 00:05:56,680 Speaker 1: compelling case, I don't think so. See, you know, I 89 00:05:56,680 --> 00:05:58,960 Speaker 1: want to push back a little bit because every economist 90 00:05:58,960 --> 00:06:03,120 Speaker 1: that we've talked to agrees that that the trade negotiations 91 00:06:03,120 --> 00:06:05,800 Speaker 1: between the U S and China haven't been leveled for 92 00:06:05,839 --> 00:06:09,080 Speaker 1: a long time, or that the trade just agreements in general. 93 00:06:09,160 --> 00:06:12,120 Speaker 1: Given the fact that China really is a closed economy 94 00:06:12,200 --> 00:06:16,159 Speaker 1: and they do have bands on US companies coming in 95 00:06:16,279 --> 00:06:18,200 Speaker 1: too much, you know, are owning too much of their 96 00:06:18,240 --> 00:06:21,600 Speaker 1: presence in China, what areas do you see room for 97 00:06:21,640 --> 00:06:24,560 Speaker 1: improvement to level the playing field here? Do you think 98 00:06:24,600 --> 00:06:28,200 Speaker 1: things are just fine? Well, you know, there's so much 99 00:06:28,360 --> 00:06:32,240 Speaker 1: generalization going on right now. You know, everyone feels this way, 100 00:06:32,279 --> 00:06:36,880 Speaker 1: everyone feels it's unequal um. This probably, you know, is 101 00:06:37,240 --> 00:06:41,799 Speaker 1: exactly the way um we dealt with the communist threat 102 00:06:41,800 --> 00:06:45,800 Speaker 1: in the nineteen fifties under the inquisitions led by Senator 103 00:06:45,880 --> 00:06:56,039 Speaker 1: Joseph McCarthy. It becomes something that is unpatriotic to openly debate. UH. 104 00:06:56,400 --> 00:07:01,400 Speaker 1: China has certainly been tough in competing for market share 105 00:07:01,440 --> 00:07:03,599 Speaker 1: around the world. There are things that they don't do 106 00:07:04,160 --> 00:07:06,560 Speaker 1: that are not fair, that are inequable, that we may 107 00:07:06,600 --> 00:07:09,440 Speaker 1: not like, and they need to be held accountable for that. 108 00:07:09,560 --> 00:07:12,880 Speaker 1: But but to condemn them for literally everything they're trying 109 00:07:12,880 --> 00:07:18,120 Speaker 1: to do to grow a large, developing economy is ludicrous. 110 00:07:18,560 --> 00:07:21,160 Speaker 1: The areas that I think we should focus on our 111 00:07:21,840 --> 00:07:24,760 Speaker 1: market access, making certain that our companies have just as 112 00:07:24,840 --> 00:07:29,040 Speaker 1: much access to their markets as they do to ours. 113 00:07:29,560 --> 00:07:34,080 Speaker 1: And I've been long in favor of pushing ahead negotiations 114 00:07:34,080 --> 00:07:37,679 Speaker 1: on a bilateral investment treaty between the U. S and China. 115 00:07:37,760 --> 00:07:41,280 Speaker 1: This is stalled out, UH, And for the the Trump 116 00:07:41,280 --> 00:07:45,920 Speaker 1: administration that prides itself as being a great dealmakers, why 117 00:07:45,920 --> 00:07:48,480 Speaker 1: not do a deal on this is the obvious thing 118 00:07:48,520 --> 00:07:50,680 Speaker 1: to do. Thank you so much for being with us 119 00:07:50,680 --> 00:07:54,000 Speaker 1: and for your insights. Stephen Roach, Senior Fellow and lecture 120 00:07:54,160 --> 00:08:12,880 Speaker 1: at Yale University, also a Bloomberg View columnist. Well, since 121 00:08:13,080 --> 00:08:18,440 Speaker 1: the kickoff of earning season basically April, we've seen energy 122 00:08:18,520 --> 00:08:23,800 Speaker 1: companies perform the absolute best among SMP five hundred corporations. 123 00:08:23,800 --> 00:08:26,920 Speaker 1: Here to talk about the future outlook is Liab Denning, 124 00:08:27,040 --> 00:08:30,960 Speaker 1: energy Mining and commodities columnist for Bloomberg gad Fly. So 125 00:08:31,440 --> 00:08:34,720 Speaker 1: we have seen an outperformance in oil companies, and I'm 126 00:08:34,720 --> 00:08:37,319 Speaker 1: just wondering, do you think that there is a lot 127 00:08:37,360 --> 00:08:43,080 Speaker 1: of room for it to continue? I think so. Um Uh, 128 00:08:43,520 --> 00:08:47,719 Speaker 1: it's it's partly an oil price uh phenomenon. Obviously, all 129 00:08:47,760 --> 00:08:50,600 Speaker 1: prices are up and that does a lot of good. 130 00:08:50,640 --> 00:08:53,000 Speaker 1: But the thing we shouldn't forget is what these companies 131 00:08:53,000 --> 00:08:56,000 Speaker 1: have been doing to UM to actually make themselves just 132 00:08:56,080 --> 00:08:59,960 Speaker 1: better companies. We've seen this from the majors in terms 133 00:09:00,240 --> 00:09:04,280 Speaker 1: of scaling back on very bloated investment budgets, trying to 134 00:09:04,320 --> 00:09:07,800 Speaker 1: get more efficient in terms of which projects they do 135 00:09:07,960 --> 00:09:10,600 Speaker 1: and how they build them. But we've also seen it 136 00:09:10,640 --> 00:09:13,040 Speaker 1: with the independent guys. You know, there is a lot 137 00:09:13,040 --> 00:09:17,760 Speaker 1: more talk now of UM smaller exploration and production companies 138 00:09:17,800 --> 00:09:21,640 Speaker 1: actually trying to live within their means generate returns rather 139 00:09:21,679 --> 00:09:24,920 Speaker 1: than just grow as fast as they possibly can. We'll 140 00:09:24,960 --> 00:09:27,920 Speaker 1: see whether that lasts if all prices go higher, but 141 00:09:28,360 --> 00:09:30,440 Speaker 1: for now they seem to be making the right noises. 142 00:09:30,880 --> 00:09:35,400 Speaker 1: The US production of oil eleven million barrels a day, Yeah, 143 00:09:35,480 --> 00:09:37,520 Speaker 1: this is I mean, this is a big this historic, 144 00:09:38,280 --> 00:09:41,160 Speaker 1: it is historic. Yeah, I mean it's it's the probably 145 00:09:41,240 --> 00:09:43,120 Speaker 1: the biggest thing that's happened in the old market in 146 00:09:43,120 --> 00:09:45,880 Speaker 1: the last decade. Okay, And any chance that we're going 147 00:09:45,920 --> 00:09:48,360 Speaker 1: to see even increased production, because what we've heard in 148 00:09:48,400 --> 00:09:50,800 Speaker 1: the past is oh maybe they'll get to eleven million, 149 00:09:51,360 --> 00:09:53,360 Speaker 1: we could be headed a lot higher. The issue is 150 00:09:53,440 --> 00:09:55,280 Speaker 1: just getting the oil out from where it is, let's 151 00:09:55,320 --> 00:09:59,199 Speaker 1: say West Texas, nor pipelines nor roots. Yeah, and we're 152 00:09:59,320 --> 00:10:03,440 Speaker 1: the logistical bottlenecks in West Texas will be eased within 153 00:10:03,480 --> 00:10:06,920 Speaker 1: about eighteen months, I would say, um. As to how 154 00:10:07,000 --> 00:10:09,280 Speaker 1: high it goes, um, I mean, there are all sorts 155 00:10:09,320 --> 00:10:11,839 Speaker 1: of estimates out there. It certainly doesn't seem to be 156 00:10:12,520 --> 00:10:15,480 Speaker 1: slowing down anytime soon. And I think the key thing 157 00:10:15,480 --> 00:10:19,320 Speaker 1: to watch out for is with prices where they are 158 00:10:19,480 --> 00:10:22,599 Speaker 1: that kind of sixties seventy range. A lot of producers 159 00:10:23,240 --> 00:10:26,760 Speaker 1: are well able to keep growing production, to keep hedging 160 00:10:26,760 --> 00:10:29,640 Speaker 1: their production. The thing to watch out for is this 161 00:10:29,640 --> 00:10:33,320 Speaker 1: this kind of geopolitical premium that is creeping back into 162 00:10:33,360 --> 00:10:35,880 Speaker 1: the market, which for the guys in West Texas is 163 00:10:36,360 --> 00:10:38,839 Speaker 1: just a windfall because you know, none of that stuff 164 00:10:38,840 --> 00:10:41,680 Speaker 1: actually affects any of their production. It all happens very 165 00:10:41,720 --> 00:10:45,600 Speaker 1: far away. And the more supply shocks you see elsewhere 166 00:10:45,440 --> 00:10:48,480 Speaker 1: that the more room that creates for US barrels. You 167 00:10:48,480 --> 00:10:49,760 Speaker 1: know that that I want to pick up on that 168 00:10:49,800 --> 00:10:51,960 Speaker 1: point because I think it's a really interesting one. Just 169 00:10:52,080 --> 00:10:56,080 Speaker 1: how much of a geopolitical risk premium are we actually 170 00:10:56,160 --> 00:10:58,920 Speaker 1: seeing baked into the market right now? Okay, so now 171 00:10:58,960 --> 00:11:00,880 Speaker 1: you're asking me how long a piece of string is? 172 00:11:02,480 --> 00:11:06,600 Speaker 1: So how long is a piece of string special? Okay, Sorry, 173 00:11:06,640 --> 00:11:08,640 Speaker 1: I forgot to bring my piece of string to the studio, 174 00:11:09,920 --> 00:11:16,839 Speaker 1: so it's impossible to say how much exactly. Okay. What 175 00:11:16,880 --> 00:11:21,120 Speaker 1: I would say is that this has become much more 176 00:11:21,160 --> 00:11:23,560 Speaker 1: of a narrative over the past six months or so 177 00:11:23,880 --> 00:11:26,720 Speaker 1: than it was for the proceeding three or four years. 178 00:11:26,760 --> 00:11:31,880 Speaker 1: In some ways, the crash that happened which was you know, 179 00:11:32,040 --> 00:11:34,960 Speaker 1: in large part driven by the shale boom, sort of 180 00:11:35,000 --> 00:11:38,599 Speaker 1: inoculated the market against geopolitical shocks, or at least it 181 00:11:38,640 --> 00:11:42,000 Speaker 1: seemed like it no one really seemed to care about, uh, 182 00:11:42,200 --> 00:11:45,680 Speaker 1: you know, the latest intrigues in Saudi Arabia or you 183 00:11:45,720 --> 00:11:48,480 Speaker 1: know what was happening in the Middle East. People are 184 00:11:48,600 --> 00:11:52,120 Speaker 1: caring more about it now, partly because inventories have come down, 185 00:11:52,920 --> 00:11:56,080 Speaker 1: because demand has been pretty strong, partly in response to 186 00:11:56,120 --> 00:11:59,559 Speaker 1: lower prices, and because obviously Opec, Russia and some other 187 00:11:59,600 --> 00:12:02,160 Speaker 1: countries have been holding supply off the market. And if 188 00:12:02,160 --> 00:12:04,440 Speaker 1: you bring inventories down, then people start to worry a 189 00:12:04,440 --> 00:12:08,480 Speaker 1: bit more about supply shocks, etcetera, etcetera. It creates a 190 00:12:08,520 --> 00:12:12,400 Speaker 1: certain danger in the market. Um. Right now, we're in 191 00:12:12,400 --> 00:12:16,079 Speaker 1: a position where there is a lot of speculative money 192 00:12:16,280 --> 00:12:21,480 Speaker 1: that is very long crude or prices. UM demand, while 193 00:12:21,640 --> 00:12:25,720 Speaker 1: strong globally, is showing signs of responding to higher prices. 194 00:12:25,840 --> 00:12:29,520 Speaker 1: The US demand data for February just came out yesterday, 195 00:12:29,559 --> 00:12:31,839 Speaker 1: and one of the things that struck me about it 196 00:12:31,920 --> 00:12:34,640 Speaker 1: was that oil demand was up about half a million 197 00:12:34,679 --> 00:12:37,360 Speaker 1: barrels a day, but none of that was actually what 198 00:12:37,440 --> 00:12:40,520 Speaker 1: we tend to think of as oil demand actual refined 199 00:12:40,520 --> 00:12:42,920 Speaker 1: products like gasoline and that sort of thing. It was 200 00:12:42,960 --> 00:12:46,680 Speaker 1: all natural gas liquids. Gasoline demand was actually down. And 201 00:12:46,720 --> 00:12:49,240 Speaker 1: if you look back at what's happened to gasoline demand 202 00:12:49,360 --> 00:12:52,480 Speaker 1: since late s which is when prices began to rise 203 00:12:52,520 --> 00:12:56,560 Speaker 1: at the pump, that's kind of flattened out. Again. Are 204 00:12:56,600 --> 00:12:58,600 Speaker 1: you loading up the car to take that summer trip 205 00:12:58,640 --> 00:13:01,000 Speaker 1: because it's going to question more two dollars eighty one? 206 00:13:01,040 --> 00:13:05,800 Speaker 1: Since is the triple a average gasoline price per gallon? Yeah, 207 00:13:05,840 --> 00:13:07,440 Speaker 1: And if you look in a lot of cities it's 208 00:13:07,480 --> 00:13:12,400 Speaker 1: it's already bus People are gonna be paying more this summer. Absolutely, 209 00:13:12,440 --> 00:13:14,640 Speaker 1: and I think that does begin to feed into demand. 210 00:13:14,679 --> 00:13:17,440 Speaker 1: And that's the risky get with these quote unquote geo 211 00:13:17,440 --> 00:13:20,080 Speaker 1: political premiums. Thanks very much for being with us as always, 212 00:13:20,120 --> 00:13:23,760 Speaker 1: Liam Denning Energy Mining and Commodities columns for Bloomberg gad Play. 213 00:13:24,240 --> 00:13:42,679 Speaker 1: Read all about it at Bloomberg dot com. How bad 214 00:13:42,840 --> 00:13:45,960 Speaker 1: will it be? That is the question with Apple, which 215 00:13:46,000 --> 00:13:48,840 Speaker 1: is set to report earnings after the bell today. Uh. 216 00:13:48,880 --> 00:13:53,439 Speaker 1: And people are worried that they are seeing slowing demand 217 00:13:53,640 --> 00:13:57,960 Speaker 1: for smartphones, which have provided them with seemingly unlimited amount 218 00:13:57,960 --> 00:14:01,280 Speaker 1: of cash filling their coffers. Joying us now, Stephen Milanovitch. 219 00:14:01,520 --> 00:14:04,240 Speaker 1: He is managing director and technology analystic e b S, 220 00:14:04,360 --> 00:14:07,280 Speaker 1: joining us from EBS headquarters in New York. Stephen, thank 221 00:14:07,320 --> 00:14:10,480 Speaker 1: you so much for joining us. So what are you 222 00:14:10,520 --> 00:14:13,560 Speaker 1: expecting and how much bad news is being already baked 223 00:14:13,600 --> 00:14:16,880 Speaker 1: into shares of Apple? Well, you have to assume a 224 00:14:16,880 --> 00:14:19,600 Speaker 1: fair amount is baked in, just because practically every Apple 225 00:14:19,680 --> 00:14:25,040 Speaker 1: supplier has projected June quarter disappointment indirectly blaming Apple. On 226 00:14:25,080 --> 00:14:26,840 Speaker 1: the other hand, the stock is held up quite well, 227 00:14:26,880 --> 00:14:28,440 Speaker 1: so this quarter might be a bit of a tug 228 00:14:28,440 --> 00:14:31,920 Speaker 1: of war between on one hand, disappointing iPhone units and 229 00:14:32,080 --> 00:14:35,440 Speaker 1: on the other hand significant buy back and positives like 230 00:14:35,520 --> 00:14:39,040 Speaker 1: services growth. So there's there's some built in, but there's 231 00:14:39,040 --> 00:14:42,160 Speaker 1: still some room for disappointments. Give us your revenue estimates 232 00:14:42,160 --> 00:14:44,760 Speaker 1: for what you think Apple is going to do. So 233 00:14:44,880 --> 00:14:46,840 Speaker 1: we think the company is going to do a little 234 00:14:46,840 --> 00:14:49,960 Speaker 1: over sixty one billion in the March quarter, and remember 235 00:14:50,040 --> 00:14:53,080 Speaker 1: that they rarely have ever missed their guidance for a quarter. 236 00:14:53,400 --> 00:14:55,280 Speaker 1: The real issue, though, is what's the guidance going to 237 00:14:55,320 --> 00:14:58,080 Speaker 1: be for June and for June were just over fifty 238 00:14:58,080 --> 00:15:01,400 Speaker 1: billion dollars. We're looking for, or about forty one million 239 00:15:01,600 --> 00:15:04,080 Speaker 1: units for the iPhone. I think the concern is that 240 00:15:04,160 --> 00:15:06,040 Speaker 1: some of the lower numbers on the streets suggest it 241 00:15:06,040 --> 00:15:08,480 Speaker 1: could be as low as thirty five millions, So that's 242 00:15:08,480 --> 00:15:10,400 Speaker 1: going to be a number of people are looking closely at. 243 00:15:10,920 --> 00:15:14,280 Speaker 1: I'm trying to understand whether we can interpret all of 244 00:15:14,320 --> 00:15:18,560 Speaker 1: this hype about declining smartphone sales as a failure of 245 00:15:18,600 --> 00:15:21,440 Speaker 1: the iPhone ten or is this just a natural part 246 00:15:21,440 --> 00:15:24,080 Speaker 1: of the cycle. I tend to think of it more 247 00:15:24,080 --> 00:15:26,000 Speaker 1: as a market issue. Now. There is a narrative that 248 00:15:26,040 --> 00:15:29,480 Speaker 1: the ten has been disappointing, that the company's overpriced it um. 249 00:15:29,840 --> 00:15:31,840 Speaker 1: I'm not sure that's the case, in the sense that 250 00:15:31,880 --> 00:15:34,760 Speaker 1: we find that users are moving up the Apple price curve, 251 00:15:34,800 --> 00:15:37,320 Speaker 1: that is, the percentage of buyers by a phone s 252 00:15:37,480 --> 00:15:40,320 Speaker 1: over seven hundred dollars. We think has doubled the cycle, 253 00:15:40,760 --> 00:15:42,240 Speaker 1: and if you don't like the ten, there's plenty of 254 00:15:42,280 --> 00:15:44,320 Speaker 1: other options for you. I'm a bit more concerned that 255 00:15:44,360 --> 00:15:47,960 Speaker 1: the markets mature, that geographies like China, which we thought 256 00:15:48,160 --> 00:15:51,520 Speaker 1: would really bounce back for Apple, are coming back very gradually, 257 00:15:51,800 --> 00:15:54,080 Speaker 1: and as we continue to see an elongation of the 258 00:15:54,160 --> 00:15:56,520 Speaker 1: upgrade cycle. So I think it's as much a market 259 00:15:56,520 --> 00:15:58,960 Speaker 1: issue as it is an Apple problem. Can you speak 260 00:15:58,960 --> 00:16:01,840 Speaker 1: a little bit more about China, because there are some 261 00:16:02,080 --> 00:16:06,000 Speaker 1: estimates that between seventy between sixty and seventy million Chinese 262 00:16:06,000 --> 00:16:09,400 Speaker 1: consumers are due to upgrade their phones over the next 263 00:16:09,400 --> 00:16:12,960 Speaker 1: twelve to eighteen months. That's right. You know, Apple sold 264 00:16:13,000 --> 00:16:16,200 Speaker 1: about seventy million phones in fiscal fifteen as China Mobile 265 00:16:16,280 --> 00:16:18,080 Speaker 1: came on and you had a big screen phone, it's 266 00:16:18,120 --> 00:16:21,440 Speaker 1: a huge year. We're nowhere close to that. Um, Hong 267 00:16:21,520 --> 00:16:24,400 Speaker 1: Kong has pretty much gone. So we're talking about mainland China, 268 00:16:24,720 --> 00:16:27,320 Speaker 1: which is around forty million units a year. We and 269 00:16:27,360 --> 00:16:29,440 Speaker 1: others thought that there'd be a lot of people waiting 270 00:16:29,480 --> 00:16:32,640 Speaker 1: to upgrade, and therefore we'd see you some sort of 271 00:16:32,680 --> 00:16:35,440 Speaker 1: double digit growth this year. We're beginning to think that's 272 00:16:35,520 --> 00:16:38,160 Speaker 1: less likely. We think that the number of people who 273 00:16:38,200 --> 00:16:40,920 Speaker 1: can afford an iPhone in China is fairly flat, that 274 00:16:41,320 --> 00:16:43,760 Speaker 1: Apple is pretty much splitting the hind of the market 275 00:16:43,760 --> 00:16:47,120 Speaker 1: with Huawei, and that you are seeing elongation of upgrade 276 00:16:47,160 --> 00:16:50,240 Speaker 1: cycles even in China. So um, we still expect to 277 00:16:50,280 --> 00:16:52,200 Speaker 1: see some revenue growth for Apple in China with a 278 00:16:52,240 --> 00:16:54,480 Speaker 1: higher a sp but we've kind of gotten off the 279 00:16:54,520 --> 00:16:56,240 Speaker 1: idea that we're going to see a huge bounce back. 280 00:16:56,600 --> 00:16:59,280 Speaker 1: So this is such a fascinating issue to me, and 281 00:16:59,320 --> 00:17:02,960 Speaker 1: just of confirmed with Sony's earnings overnight where they reported 282 00:17:03,000 --> 00:17:07,640 Speaker 1: a massive decline and production of of cameras for smartphones, 283 00:17:07,720 --> 00:17:12,159 Speaker 1: and I'm just wondering what can Apple do to diversify 284 00:17:12,320 --> 00:17:16,160 Speaker 1: their business that there is less focus on the smartphone 285 00:17:16,240 --> 00:17:20,439 Speaker 1: supercycle and its potential death. Well, first of all, I 286 00:17:20,440 --> 00:17:23,119 Speaker 1: think the smartphone is not a terrible position for Apple 287 00:17:23,119 --> 00:17:25,440 Speaker 1: because their installed base has been growing, so it's a 288 00:17:25,560 --> 00:17:27,560 Speaker 1: question of when, not if people are going to buy 289 00:17:27,560 --> 00:17:31,119 Speaker 1: another iPhone. But to diversify, you've seen them certainly boost 290 00:17:31,119 --> 00:17:35,679 Speaker 1: their services business, so services is moving towards profitability. We 291 00:17:35,720 --> 00:17:39,120 Speaker 1: expect it's going to grow over this evening, so that's 292 00:17:39,200 --> 00:17:42,320 Speaker 1: very helpful. They also have a seven billion dollar wearables business, 293 00:17:42,480 --> 00:17:45,640 Speaker 1: you know, with the watch, the HomePod, the arabuds, so 294 00:17:45,720 --> 00:17:48,080 Speaker 1: they're you know, starting to diversify a little bit there. 295 00:17:48,200 --> 00:17:50,359 Speaker 1: And as the watch, you know, really doesn't excuse me 296 00:17:50,400 --> 00:17:52,240 Speaker 1: as the iPhone doesn't really grow much in the future, 297 00:17:52,440 --> 00:17:54,920 Speaker 1: getting a couple points of corporate grows from wearables is 298 00:17:54,920 --> 00:17:57,040 Speaker 1: going to be noticeable. I don't think you're going to 299 00:17:57,119 --> 00:17:59,520 Speaker 1: see tremendous new hardware from the company for the next 300 00:17:59,600 --> 00:18:02,840 Speaker 1: day two years, but eventually you could see augmented glasses, 301 00:18:03,040 --> 00:18:06,159 Speaker 1: augmented reality glasses, for example. That will help diversify revenue 302 00:18:06,200 --> 00:18:09,960 Speaker 1: a bit as well augmenting the investors pocketbook. How about 303 00:18:09,960 --> 00:18:14,280 Speaker 1: returning money to shareholders, Well, we expect a pretty big number. Tonight, 304 00:18:14,320 --> 00:18:17,560 Speaker 1: they have about a billion of excess cash. We expect 305 00:18:17,640 --> 00:18:20,199 Speaker 1: a good bump to the dividend and discussion of you know, 306 00:18:20,280 --> 00:18:23,240 Speaker 1: up to a hundred billion dollar incremental buy back um. 307 00:18:23,320 --> 00:18:25,600 Speaker 1: The question is over what period would that happen. I 308 00:18:25,760 --> 00:18:27,480 Speaker 1: would say three to five years. I think it's going 309 00:18:27,520 --> 00:18:29,399 Speaker 1: to be a little bit more on the gradual side. 310 00:18:29,720 --> 00:18:31,760 Speaker 1: Some people have a concern that maybe they'll keep more 311 00:18:31,840 --> 00:18:34,800 Speaker 1: dry powder for M and A possibly, but I don't 312 00:18:34,800 --> 00:18:36,679 Speaker 1: expect the company is going to be that acquisitive, at 313 00:18:36,720 --> 00:18:38,639 Speaker 1: least in the new yer term. So I think they 314 00:18:38,680 --> 00:18:41,320 Speaker 1: feel the stock here is is very undervalued, particularly due 315 00:18:41,359 --> 00:18:43,840 Speaker 1: to the services business, so I expect they'll be relatively 316 00:18:43,880 --> 00:18:46,840 Speaker 1: aggressive on a buyback. Does anyone care about apples for 317 00:18:47,000 --> 00:18:54,920 Speaker 1: a into that newspaper service and other types of subscription offerings, entertainment. Well, 318 00:18:54,960 --> 00:18:57,680 Speaker 1: it helps the services side. You know. It's funny the 319 00:18:57,680 --> 00:18:59,960 Speaker 1: the company has said that the vast majority of ifall, 320 00:19:00,160 --> 00:19:03,560 Speaker 1: customers pay nothing for Apple services. So if they get 321 00:19:03,600 --> 00:19:06,359 Speaker 1: people starting to use services, our work fines that they 322 00:19:06,400 --> 00:19:10,440 Speaker 1: actually increase their number of transactions at rate annually. So 323 00:19:10,760 --> 00:19:13,879 Speaker 1: it is through new kinds of video and the newspaper 324 00:19:13,920 --> 00:19:15,800 Speaker 1: and so forth that they are hoping to get people 325 00:19:15,840 --> 00:19:18,800 Speaker 1: into that services ecosystem, and history suggests that once they 326 00:19:18,800 --> 00:19:21,879 Speaker 1: get in, they get pretty active. Stephen Milanovitch, thank you 327 00:19:21,920 --> 00:19:24,920 Speaker 1: so much for being with as. Steven Milanovich is Managing 328 00:19:24,920 --> 00:19:28,359 Speaker 1: director and technology Analysts at you b AS, coming to 329 00:19:28,480 --> 00:19:45,680 Speaker 1: us from eb S headquarters. It is time to dig 330 00:19:45,680 --> 00:19:48,600 Speaker 1: a little deeper into fixed income. Focus on fixed income 331 00:19:48,640 --> 00:19:51,200 Speaker 1: brought to you by PIMCO for investors who demand more 332 00:19:51,240 --> 00:19:54,040 Speaker 1: than the markets deliver. All investments contain risk and may 333 00:19:54,080 --> 00:19:58,320 Speaker 1: lose value. Consults your investment professional before investing. A lot 334 00:19:58,359 --> 00:20:00,800 Speaker 1: of people in the fixed income markets are focused on 335 00:20:00,840 --> 00:20:03,480 Speaker 1: the Federal Reserve, which is starting a two day meeting 336 00:20:03,720 --> 00:20:07,439 Speaker 1: that ends tomorrow, but also a lot of focuses on 337 00:20:07,680 --> 00:20:10,840 Speaker 1: the US Treasure Department that is going to announce its 338 00:20:10,920 --> 00:20:15,920 Speaker 1: quarterly refunding plans at eight thirty tomorrow morning in New York. 339 00:20:16,440 --> 00:20:20,600 Speaker 1: Ira I red Jersey, chief US industrate strategist for Bloomberg Intelligence, 340 00:20:20,640 --> 00:20:23,680 Speaker 1: joins us. Now, I want to start with the refunding 341 00:20:23,760 --> 00:20:27,120 Speaker 1: announcement because frankly, a lot of people think that the 342 00:20:27,240 --> 00:20:29,919 Speaker 1: increase in the amount of debt that the US Treasure 343 00:20:29,960 --> 00:20:34,040 Speaker 1: Department is is issuing, uh, is part of the reason 344 00:20:34,080 --> 00:20:36,280 Speaker 1: why we've seen yields actually rise. Steve minus In, the 345 00:20:36,280 --> 00:20:39,760 Speaker 1: Treasury Secretary, of course, totally dismissing that yesterday at the 346 00:20:39,960 --> 00:20:44,080 Speaker 1: Malkin conference. What's your perspective, what's your expectation for how 347 00:20:44,160 --> 00:20:46,840 Speaker 1: much the Treasure Department is going to increase is debt 348 00:20:46,880 --> 00:20:49,240 Speaker 1: sales in the next quarter. Yes. So what's interesting is 349 00:20:49,240 --> 00:20:52,800 Speaker 1: that the Treasury departments already said, um, how much they 350 00:20:52,880 --> 00:20:54,399 Speaker 1: think that they're going to have to borrow over the 351 00:20:55,080 --> 00:20:57,720 Speaker 1: course of the next two months and then the following 352 00:20:57,840 --> 00:21:00,320 Speaker 1: three months. So um, they think this quarter or so 353 00:21:00,400 --> 00:21:02,840 Speaker 1: the quarter that actually started a month ago, Uh, they 354 00:21:02,840 --> 00:21:07,640 Speaker 1: think they're gonna borrow seventy billion dollars of new marketable debt, 355 00:21:07,720 --> 00:21:11,320 Speaker 1: which is not particularly high. The second quarter, of course, 356 00:21:11,359 --> 00:21:13,679 Speaker 1: you just had taxes that were paid, so you you 357 00:21:13,720 --> 00:21:16,560 Speaker 1: actually have uh. The month that just ended in April 358 00:21:16,840 --> 00:21:19,439 Speaker 1: tends to be a surplus month, but then and the 359 00:21:19,480 --> 00:21:22,080 Speaker 1: next couple of months tend to be pretty flat. There's 360 00:21:22,119 --> 00:21:26,120 Speaker 1: not big budget deficits that really um uh, that really 361 00:21:26,119 --> 00:21:28,600 Speaker 1: have to be funded over the next few months. So 362 00:21:29,000 --> 00:21:31,960 Speaker 1: will Treasury Department do something with saying that they're going 363 00:21:32,000 --> 00:21:34,680 Speaker 1: to issue more debt? Yes, they have to because later 364 00:21:34,720 --> 00:21:37,160 Speaker 1: this year they're going to have to issue a lot 365 00:21:37,200 --> 00:21:40,119 Speaker 1: more um, but it's going to be incremental again, so 366 00:21:40,160 --> 00:21:42,400 Speaker 1: it will be another billion or two of a lot 367 00:21:42,440 --> 00:21:45,679 Speaker 1: of different instruments of what I'm really looking for, quite frankly, 368 00:21:45,760 --> 00:21:48,480 Speaker 1: or tips. So um. They didn't do anything with with 369 00:21:48,600 --> 00:21:52,480 Speaker 1: the Treasury Inflation Protected Security Program last time, and they 370 00:21:52,560 --> 00:21:55,600 Speaker 1: asked their advisory committee, Hey, what should we do with this? 371 00:21:55,720 --> 00:21:58,119 Speaker 1: And there was a whole you know, forty page power 372 00:21:58,160 --> 00:22:02,240 Speaker 1: point presentation that that that committee made to the Treasury Department. 373 00:22:02,280 --> 00:22:04,359 Speaker 1: So the Treasury has been mulling that over over the 374 00:22:04,440 --> 00:22:06,679 Speaker 1: last few months. That's really interesting. And we did, of 375 00:22:06,720 --> 00:22:09,679 Speaker 1: course get the first quarter results as far as how 376 00:22:09,760 --> 00:22:12,000 Speaker 1: much debt the U. S. Treasury sold four d eight 377 00:22:12,240 --> 00:22:16,240 Speaker 1: billion dollars a record and exceeding the estimates that the 378 00:22:16,280 --> 00:22:19,879 Speaker 1: Treasury Department previously came out with. How much credibility do 379 00:22:20,600 --> 00:22:24,080 Speaker 1: these estimates have if they have exceeded them in the past. Yeah, 380 00:22:24,119 --> 00:22:27,480 Speaker 1: there's always been. There's always big, big variants in it, 381 00:22:27,560 --> 00:22:30,040 Speaker 1: and and part of that is they might pivot and 382 00:22:30,119 --> 00:22:32,440 Speaker 1: decide to do something a little bit different in UH 383 00:22:32,480 --> 00:22:34,760 Speaker 1: in between. So so that the one thing about that 384 00:22:34,800 --> 00:22:38,679 Speaker 1: four eight billion is they basically pre funded some of 385 00:22:38,720 --> 00:22:40,879 Speaker 1: the borrowing that they would have to do this quarter. 386 00:22:41,040 --> 00:22:44,160 Speaker 1: So um. So, the previous estimate for this quarter, for example, 387 00:22:44,160 --> 00:22:47,119 Speaker 1: was about a hundred and seventy five billion dollars of 388 00:22:47,160 --> 00:22:50,280 Speaker 1: issuance during the second quarter of eighteen. Now it's only 389 00:22:50,320 --> 00:22:53,320 Speaker 1: seventy five because the last quarter they issued an extra 390 00:22:53,440 --> 00:22:57,760 Speaker 1: hundred billion dollars that was unexpected. So so these estimates 391 00:22:57,800 --> 00:23:00,359 Speaker 1: are are just that their estimates, they always missed them 392 00:23:00,359 --> 00:23:03,320 Speaker 1: by a little um But you know, at the same time, 393 00:23:03,359 --> 00:23:06,520 Speaker 1: they're they're kind of useful guides as to the magnitude 394 00:23:06,520 --> 00:23:10,560 Speaker 1: of increase that they're expecting or the magnitude of of 395 00:23:09,720 --> 00:23:13,240 Speaker 1: UH pay down that they're expecting in in the different markets. 396 00:23:13,280 --> 00:23:16,000 Speaker 1: So when you're trying to forecast exactly how much they're 397 00:23:16,000 --> 00:23:18,200 Speaker 1: going to issue for T bills all the way through 398 00:23:18,240 --> 00:23:20,840 Speaker 1: thirty year bonds. Um. You need to you need to 399 00:23:20,880 --> 00:23:23,560 Speaker 1: know that, UM, and and so it is helpful information. 400 00:23:24,000 --> 00:23:27,040 Speaker 1: I read Jersey. Is the market raising interest rates and 401 00:23:27,119 --> 00:23:30,680 Speaker 1: therefore the Federal Reserve won't have to you know that. 402 00:23:30,680 --> 00:23:33,600 Speaker 1: That's a good question him. My view is no, Uh, 403 00:23:33,640 --> 00:23:35,600 Speaker 1: you know, the interest rates are somewhat higher, you know, 404 00:23:35,680 --> 00:23:37,959 Speaker 1: certainly you know three percent? Is this the you know 405 00:23:38,040 --> 00:23:40,400 Speaker 1: number that I know a lot of people, um, look 406 00:23:40,400 --> 00:23:42,440 Speaker 1: at I think in the rates market, you know, pretty 407 00:23:42,480 --> 00:23:44,639 Speaker 1: much everyone yawned and said, oh, three percent. It's not 408 00:23:44,680 --> 00:23:47,720 Speaker 1: important because three point six is an important technical level 409 00:23:47,760 --> 00:23:50,760 Speaker 1: and three percent just another number. UM. But I do 410 00:23:50,840 --> 00:23:52,560 Speaker 1: think that that Wait a minute, Wait a minute. You've 411 00:23:52,560 --> 00:23:55,159 Speaker 1: got people who are looking at three point oh six 412 00:23:55,359 --> 00:23:59,320 Speaker 1: and they're having, you know, over lunch discussions about that, 413 00:23:59,600 --> 00:24:02,960 Speaker 1: and yet around number like three percent is not interesting. 414 00:24:03,000 --> 00:24:06,359 Speaker 1: I mean, come on, really for real? Yeah, I'm not 415 00:24:06,440 --> 00:24:10,639 Speaker 1: getting um. The But but to go back to your 416 00:24:10,720 --> 00:24:12,680 Speaker 1: question about whether or not you know the Fed doesn't 417 00:24:12,720 --> 00:24:14,879 Speaker 1: have to hike because the markets doing it for them. 418 00:24:14,920 --> 00:24:16,359 Speaker 1: I think one of the reasons why we're here one 419 00:24:16,400 --> 00:24:18,440 Speaker 1: of the reasons why two year notes are two and 420 00:24:18,440 --> 00:24:20,479 Speaker 1: a half percent, and the reason why you know ten 421 00:24:20,560 --> 00:24:24,439 Speaker 1: year notes are hovering right around three is because is 422 00:24:24,440 --> 00:24:26,679 Speaker 1: because the Federal Reserve is expected to hike. If the 423 00:24:26,720 --> 00:24:29,520 Speaker 1: Federal Reserve we're not expected to hike a few more 424 00:24:29,520 --> 00:24:32,280 Speaker 1: times this year and three times next year, then you'd 425 00:24:32,280 --> 00:24:35,040 Speaker 1: wind up with certainly front end yields. So two year 426 00:24:35,119 --> 00:24:37,600 Speaker 1: notes and five year notes would probably be at somewhat 427 00:24:37,600 --> 00:24:40,400 Speaker 1: lower yields than they are today. Um, you know ten 428 00:24:40,480 --> 00:24:43,880 Speaker 1: year notes, and that scenario might actually move move move 429 00:24:43,960 --> 00:24:47,080 Speaker 1: somewhat higher and make potentially new yield ties for this cycle. 430 00:24:47,480 --> 00:24:50,320 Speaker 1: So let's say the Treasure Department does announce some kind 431 00:24:50,320 --> 00:24:52,720 Speaker 1: of new TIPS issue in what will that tell you 432 00:24:52,760 --> 00:24:56,920 Speaker 1: with respect to the US is expectations regarding inflation. Yeah, 433 00:24:57,000 --> 00:24:59,119 Speaker 1: not a lot for inflation. Now that the b issue 434 00:24:59,119 --> 00:25:01,399 Speaker 1: with the TIPS program is that there is that it 435 00:25:01,440 --> 00:25:05,040 Speaker 1: tends to have very spotty liquidity. So because they don't 436 00:25:05,040 --> 00:25:08,119 Speaker 1: issue them as regularly as they issue other instruments, there 437 00:25:08,119 --> 00:25:11,400 Speaker 1: there is not as much of them outstanding. Um, they 438 00:25:11,440 --> 00:25:14,000 Speaker 1: only have one or two new issues every year and 439 00:25:14,040 --> 00:25:17,320 Speaker 1: then they reopen those issues. So I you know, big 440 00:25:17,359 --> 00:25:19,040 Speaker 1: part of the discussion is how do they make that 441 00:25:19,080 --> 00:25:22,000 Speaker 1: program more liquid, how do they get investors more interested, 442 00:25:22,320 --> 00:25:24,400 Speaker 1: how do they make it a program that can be 443 00:25:24,880 --> 00:25:27,400 Speaker 1: a kind of sustainable funding source and at the same 444 00:25:27,440 --> 00:25:31,840 Speaker 1: time be useful from an information purpose for policymakers like 445 00:25:31,920 --> 00:25:34,439 Speaker 1: the Federal Reserve as to as to where the market 446 00:25:34,440 --> 00:25:37,080 Speaker 1: things inflation is going to be. So those are those 447 00:25:37,080 --> 00:25:39,680 Speaker 1: are all the potential things that they that the Treasury 448 00:25:39,680 --> 00:25:42,480 Speaker 1: Department might try to address. And maybe that's a matter 449 00:25:42,520 --> 00:25:44,639 Speaker 1: of maybe getting rid of one of the issues, maybe 450 00:25:44,760 --> 00:25:47,359 Speaker 1: getting rid of, for example, the thirty year and only 451 00:25:47,400 --> 00:25:49,600 Speaker 1: having five and ten year and then having more frequent 452 00:25:49,640 --> 00:25:51,840 Speaker 1: auctions of them so you get a little bit more 453 00:25:51,880 --> 00:25:54,840 Speaker 1: liquidity and better price discovery. Thank you very much. I 454 00:25:54,920 --> 00:25:58,480 Speaker 1: read Jersey as our interest rate strategies for Bloomberg Intelligence. 455 00:26:00,280 --> 00:26:02,800 Speaker 1: Thanks for listening to the Bloomberg P and L podcast. 456 00:26:03,160 --> 00:26:07,040 Speaker 1: You can subscribe and listen to interviews at Apple Podcasts, SoundCloud, 457 00:26:07,160 --> 00:26:10,640 Speaker 1: or whatever podcast platform you prefer. I'm pim Fox. I'm 458 00:26:10,680 --> 00:26:14,200 Speaker 1: on Twitter at pim Fox, I'm on Twitter at Lisa 459 00:26:14,240 --> 00:26:17,200 Speaker 1: Abramo wits one. Before the podcast, you can always catch 460 00:26:17,280 --> 00:26:19,000 Speaker 1: us worldwide on Bloomberg Radio.