1 00:00:02,520 --> 00:00:13,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 2 00:00:13,840 --> 00:00:17,920 Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern 3 00:00:18,200 --> 00:00:22,000 Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business App. 4 00:00:22,360 --> 00:00:25,680 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:25,760 --> 00:00:27,960 Speaker 1: us live on YouTube right now. 6 00:00:28,440 --> 00:00:35,360 Speaker 2: In from PIMCO Pacific Investment Management Company, is Tony Crescenzi 7 00:00:35,440 --> 00:00:37,240 Speaker 2: here on short term paper? 8 00:00:37,600 --> 00:00:41,199 Speaker 3: Where's the tip between good morning? Where's the tip between? 9 00:00:41,680 --> 00:00:41,760 Speaker 4: Like? 10 00:00:41,840 --> 00:00:45,280 Speaker 3: Where is long duration? It's not out ten years to 11 00:00:45,400 --> 00:00:48,840 Speaker 3: guys like you, is it seven years? Or dare I say? 12 00:00:49,400 --> 00:00:52,440 Speaker 3: Is a five year note a long duration piece? 13 00:00:53,000 --> 00:00:54,680 Speaker 5: Well, I like to call on and in my books 14 00:00:54,720 --> 00:00:57,120 Speaker 5: I've written that the five year is a long bond 15 00:00:57,240 --> 00:00:59,840 Speaker 5: of the short end, So you could say because it's 16 00:01:00,200 --> 00:01:02,240 Speaker 5: to move the most when the Federal reserve is moving. 17 00:01:02,640 --> 00:01:05,480 Speaker 5: In fact, the five year point on the treasury curve 18 00:01:05,680 --> 00:01:08,680 Speaker 5: is the top performing point on the Yeld curve when 19 00:01:08,680 --> 00:01:11,360 Speaker 5: the Yel curve is steepening steepening, meaning of course, short 20 00:01:11,440 --> 00:01:14,200 Speaker 5: term rates are falling faster than long term rates, so 21 00:01:14,200 --> 00:01:16,840 Speaker 5: we'd expect that to continue. We've seen, in fact, a 22 00:01:16,880 --> 00:01:19,240 Speaker 5: big rally in the short end relative to the long 23 00:01:19,319 --> 00:01:22,040 Speaker 5: end big steepening, but it could have a long way 24 00:01:22,040 --> 00:01:23,920 Speaker 5: to go, because federal reserve is like, we keep moving, 25 00:01:23,920 --> 00:01:26,200 Speaker 5: So I'd say it's beyond five years. We in fact 26 00:01:26,240 --> 00:01:28,960 Speaker 5: call the pivot point on the eel curve, the differentiation 27 00:01:29,080 --> 00:01:31,959 Speaker 5: between short and long term race a seven years. It's 28 00:01:32,000 --> 00:01:34,240 Speaker 5: at the seven year point that whatever the Fed does 29 00:01:34,319 --> 00:01:38,360 Speaker 5: stops impacting markets in the way that it's the seven 30 00:01:38,400 --> 00:01:39,119 Speaker 5: year point in the. 31 00:01:39,360 --> 00:01:40,800 Speaker 3: Okay, I've got I just I do it. 32 00:01:40,800 --> 00:01:44,800 Speaker 2: It's just impressed Cressenzi and the only one that hasn't 33 00:01:44,880 --> 00:01:49,040 Speaker 2: read twelve hundred pages of steigem CHERSNZ And the basic 34 00:01:49,120 --> 00:01:52,000 Speaker 2: idea is the five year inflation and just a yield. 35 00:01:52,360 --> 00:01:55,640 Speaker 2: I got a four standard deviation round trip from a 36 00:01:55,720 --> 00:02:00,200 Speaker 2: positive two standard deviations to now exactly a negative two 37 00:02:00,440 --> 00:02:03,440 Speaker 2: standard deviations. Is it finally where we get out of 38 00:02:03,600 --> 00:02:06,520 Speaker 2: range with a lower real yield. 39 00:02:07,080 --> 00:02:10,600 Speaker 5: There's a chance for yields to plunge in the months 40 00:02:10,600 --> 00:02:14,160 Speaker 5: ahead because the employment numbers likely to get substantially the 41 00:02:14,160 --> 00:02:17,200 Speaker 5: weaker beginning in the fall due to the expiration of 42 00:02:17,320 --> 00:02:21,600 Speaker 5: key immigration programs, for one, secondly because of the drop 43 00:02:21,600 --> 00:02:25,120 Speaker 5: in immigration flows, and third because of the federal workers. Remember, 44 00:02:25,160 --> 00:02:28,560 Speaker 5: many will let go three million federal workers, five million contractors. 45 00:02:29,440 --> 00:02:31,720 Speaker 5: All of that impact probably will be seen in the fall. 46 00:02:31,960 --> 00:02:36,040 Speaker 5: Add on top of that uncertainty related to tariffs, geopolitics, 47 00:02:36,360 --> 00:02:38,600 Speaker 5: even other facts. Is one final point. There's something called 48 00:02:38,600 --> 00:02:42,360 Speaker 5: the birth death model, the edited bias adjustment. The government 49 00:02:42,400 --> 00:02:44,560 Speaker 5: makes an assumption for how many new jobs are created 50 00:02:44,600 --> 00:02:47,400 Speaker 5: based on the numbers of businesses that it thinks were 51 00:02:47,480 --> 00:02:49,480 Speaker 5: created that it doesn't know about yet because it new, 52 00:02:49,919 --> 00:02:52,200 Speaker 5: and it adds in near over one hundred thousand jobs 53 00:02:52,240 --> 00:02:54,280 Speaker 5: per month to that. But what is finding in the 54 00:02:54,320 --> 00:02:58,160 Speaker 5: reconciliation of those data nine months afterward that it overcounted 55 00:02:58,240 --> 00:03:00,800 Speaker 5: by twenty five thirty thousand per month. I can point 56 00:03:00,800 --> 00:03:03,320 Speaker 5: to many other things that suggest the payale numbers will 57 00:03:03,400 --> 00:03:06,400 Speaker 5: fall substantially below where they've been recently, and on a 58 00:03:06,480 --> 00:03:09,640 Speaker 5: payroll Friday somewhere out there in the months ahead, the 59 00:03:09,720 --> 00:03:12,799 Speaker 5: bottom market, specifically the short term interest rates and out 60 00:03:12,800 --> 00:03:15,120 Speaker 5: to five years could rally substantially. 61 00:03:15,360 --> 00:03:17,079 Speaker 6: So why isn't it FED cutting. 62 00:03:17,560 --> 00:03:20,760 Speaker 5: Because we all know Mary Daily has just spoke from 63 00:03:20,800 --> 00:03:23,400 Speaker 5: the San Francisco FED about the idea of wanting some 64 00:03:23,520 --> 00:03:27,560 Speaker 5: validation We don't know. This is an assumption. Often people 65 00:03:27,560 --> 00:03:30,560 Speaker 5: write off the US economy and it always shows resilience. 66 00:03:31,520 --> 00:03:33,200 Speaker 5: It just wants to be short. And the biggest thing, 67 00:03:33,240 --> 00:03:37,760 Speaker 5: though Paul, is inflation expectations. We met with Janet Yelling 68 00:03:37,800 --> 00:03:40,040 Speaker 5: at our recent secular forum where we devise a five 69 00:03:40,080 --> 00:03:42,080 Speaker 5: year out look. She's part of our global advisory board. 70 00:03:42,400 --> 00:03:44,800 Speaker 5: She wrote papers back in twenty fifteen and twenty seventeen, 71 00:03:44,840 --> 00:03:47,520 Speaker 5: some of my favorite papers with forty footnotes, where she 72 00:03:47,600 --> 00:03:51,400 Speaker 5: concluded it was called inflation dynamics. She concluded the cause 73 00:03:51,440 --> 00:03:54,480 Speaker 5: of inflation, the main cause is how people feel about it, 74 00:03:54,920 --> 00:03:57,360 Speaker 5: and how people feel about inflation has been affected by teriffs. 75 00:03:57,400 --> 00:03:59,200 Speaker 5: And she wants then still daily noos wan be shor 76 00:03:59,240 --> 00:03:59,560 Speaker 5: it's done. 77 00:04:00,240 --> 00:04:01,960 Speaker 3: We love to have tony perscents again. 78 00:04:03,040 --> 00:04:09,360 Speaker 2: Yellen codified the phrase slack in the economy. We perceived 79 00:04:09,400 --> 00:04:13,040 Speaker 2: that then as an American economy. Can we do that now? 80 00:04:13,080 --> 00:04:17,400 Speaker 2: Were there forty footnotes? If we have two stark Americas 81 00:04:17,800 --> 00:04:18,640 Speaker 2: of haves. 82 00:04:18,360 --> 00:04:22,400 Speaker 5: And have nots, we can because all we have to 83 00:04:22,440 --> 00:04:25,800 Speaker 5: look at is how fast can the economy grow? How 84 00:04:25,800 --> 00:04:29,599 Speaker 5: fast is it growing? And that that suggests a growth recession, 85 00:04:29,680 --> 00:04:32,120 Speaker 5: not an outright recession, which is defined as a contraction 86 00:04:32,200 --> 00:04:34,920 Speaker 5: in GDP, which was seen in the first quarter of 87 00:04:34,920 --> 00:04:37,040 Speaker 5: the year. But what if the economy grows at one percent? 88 00:04:37,200 --> 00:04:40,200 Speaker 5: Sort of pin cup projection in that zone and consensus 89 00:04:40,200 --> 00:04:42,800 Speaker 5: for the next year, the Fed says it can grow 90 00:04:42,880 --> 00:04:45,400 Speaker 5: according to the Summary of Economic Projections, about one point 91 00:04:45,480 --> 00:04:49,480 Speaker 5: seven because that's the combination of the people and how 92 00:04:49,520 --> 00:04:52,680 Speaker 5: productive the areto point three percent increase in people one 93 00:04:52,680 --> 00:04:54,720 Speaker 5: and a half percent increase in productivity. If we grow 94 00:04:54,720 --> 00:04:57,600 Speaker 5: at one percent, a company will say, hmm, I can 95 00:04:57,800 --> 00:05:00,599 Speaker 5: I can handle about an increase of about two in 96 00:05:01,040 --> 00:05:04,320 Speaker 5: a demand of goods and services. It's only one Should 97 00:05:04,320 --> 00:05:08,160 Speaker 5: I slow hiring and spending. That depends on the sentiment 98 00:05:08,240 --> 00:05:10,320 Speaker 5: that exists at that time. They could either say yes, 99 00:05:10,360 --> 00:05:12,680 Speaker 5: I'm going to cut back, I'm really nervous, or it's 100 00:05:12,680 --> 00:05:15,239 Speaker 5: short term, don't worry about and keep the game going. 101 00:05:15,440 --> 00:05:18,600 Speaker 2: That's three cent right here for America across the nation. 102 00:05:19,240 --> 00:05:24,080 Speaker 2: An extraordinary busy, eclectic news flow here at Bloomberg Surveillance. 103 00:05:24,080 --> 00:05:26,440 Speaker 2: We welcome all of you, particularly ninety nine one FM 104 00:05:26,480 --> 00:05:29,880 Speaker 2: in Washington. A briefing by the Pentagon, by the Secretary 105 00:05:29,880 --> 00:05:33,080 Speaker 2: of Defense, by the Chairman of the Joint Chiefs of Staff, 106 00:05:33,240 --> 00:05:37,680 Speaker 2: with really striking video of the military actions of the 107 00:05:37,760 --> 00:05:40,120 Speaker 2: last number of days. We're going to look at private 108 00:05:40,200 --> 00:05:43,679 Speaker 2: credit for global Wall Street, for Manhattan Wall Street. Randy 109 00:05:43,680 --> 00:05:46,480 Speaker 2: Schummer will be with us in a bit. We continue 110 00:05:46,520 --> 00:05:49,800 Speaker 2: now with Tony Crescenzi of Pimco. 111 00:05:49,520 --> 00:05:50,640 Speaker 3: As well, Paul Tony. 112 00:05:50,640 --> 00:05:53,880 Speaker 4: How much credit risk should investors be taking these days? 113 00:05:53,920 --> 00:05:56,119 Speaker 4: Because I can sit into your treasury, I'm not getting 114 00:05:56,160 --> 00:05:58,880 Speaker 4: four percent, but I'm still getting three and three quarters percent. 115 00:05:58,960 --> 00:05:59,640 Speaker 6: That's not a bad living. 116 00:05:59,680 --> 00:06:04,320 Speaker 5: How much credit or well in investment portfolios managed by 117 00:06:04,320 --> 00:06:07,360 Speaker 5: Pimco and other large managers, a bond investor can achieve 118 00:06:07,360 --> 00:06:10,240 Speaker 5: a yield up between five and seven percent for a 119 00:06:10,360 --> 00:06:13,680 Speaker 5: double A minus average credit quality, which means a ninety 120 00:06:13,720 --> 00:06:15,880 Speaker 5: nine point nine eight percent chance of getting your money 121 00:06:15,920 --> 00:06:19,240 Speaker 5: back according to long Term Moody's data. But that five 122 00:06:19,279 --> 00:06:22,359 Speaker 5: to seven percent number, which we would call the nirvana 123 00:06:22,440 --> 00:06:26,400 Speaker 5: for bond investing, need have credit mingled in that. But 124 00:06:26,440 --> 00:06:30,200 Speaker 5: what is credit? You could say that agency mortgage backed securities, 125 00:06:30,279 --> 00:06:32,360 Speaker 5: the mortgages that are backed by Fanny May and Freddie 126 00:06:32,360 --> 00:06:35,400 Speaker 5: Mack implicitly back by the United States, is a form 127 00:06:35,440 --> 00:06:38,159 Speaker 5: of credit. It has a yield spread to treasuries of 128 00:06:38,200 --> 00:06:41,880 Speaker 5: one hundred and fifty basis points one fifty. That's a 129 00:06:41,960 --> 00:06:45,400 Speaker 5: big yield advantage. And so we are at PIMCO overweight 130 00:06:45,839 --> 00:06:47,800 Speaker 5: mortgage backed security. So it's just a matter of how 131 00:06:47,839 --> 00:06:51,919 Speaker 5: you obtain that credit allocation. In fact, the credit beta 132 00:06:51,960 --> 00:06:54,719 Speaker 5: as they call it. We'd be more careful about high yield, 133 00:06:54,760 --> 00:06:58,840 Speaker 5: for example, where we'd be significantly below where we would 134 00:06:58,960 --> 00:07:02,479 Speaker 5: let's say one more extreme covaluation. It's a great performer, 135 00:07:02,560 --> 00:07:05,360 Speaker 5: but we know the convexity of it, which is to say, 136 00:07:06,040 --> 00:07:08,200 Speaker 5: in bad times you're not going to fare well. And 137 00:07:08,240 --> 00:07:09,880 Speaker 5: if you can achieve five to seven percent, which is 138 00:07:09,920 --> 00:07:15,320 Speaker 5: very attractive relative to history, inflation and volatility taken up, don't. 139 00:07:15,640 --> 00:07:18,040 Speaker 2: Do Does he understand that if you say convexity the 140 00:07:18,080 --> 00:07:20,760 Speaker 2: surveillance trapped door, Yes, is it risk? 141 00:07:21,040 --> 00:07:24,040 Speaker 5: It's another way of saying of like a boomerang, be careful. 142 00:07:24,240 --> 00:07:25,920 Speaker 5: It could really swing the other way. 143 00:07:26,720 --> 00:07:30,000 Speaker 3: So short term paper like Jerome Schneider's just killing it 144 00:07:30,040 --> 00:07:30,800 Speaker 3: this year, isn't he? 145 00:07:30,880 --> 00:07:34,600 Speaker 5: The money market king is faring well. We've got a 146 00:07:34,600 --> 00:07:36,320 Speaker 5: big yield advantage in that space. 147 00:07:37,000 --> 00:07:37,680 Speaker 1: The thing to. 148 00:07:37,880 --> 00:07:41,600 Speaker 5: Worry about most is investors, you know, have a households 149 00:07:41,600 --> 00:07:45,440 Speaker 5: have a major task here. They've been so successful in 150 00:07:45,480 --> 00:07:48,840 Speaker 5: locking and low mortgage rates. They should move with the 151 00:07:48,840 --> 00:07:53,119 Speaker 5: same urgency from shorter instruments into into somewhat longer duration 152 00:07:53,320 --> 00:07:56,320 Speaker 5: five years or so five to ten years and locking 153 00:07:56,400 --> 00:07:57,200 Speaker 5: these high yields. 154 00:07:57,360 --> 00:07:59,360 Speaker 3: To thank you, Tony, Thank you, sir. 155 00:08:06,600 --> 00:08:10,200 Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live 156 00:08:10,240 --> 00:08:13,440 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 157 00:08:13,480 --> 00:08:17,160 Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or 158 00:08:17,320 --> 00:08:18,960 Speaker 1: watch us live on YouTube. 159 00:08:19,520 --> 00:08:22,640 Speaker 2: Stephanie Mouth joins us down from Wolf Research, but far 160 00:08:22,720 --> 00:08:25,520 Speaker 2: more stuff. They've got to ask the thing that mayor 161 00:08:26,160 --> 00:08:30,600 Speaker 2: that mayor not Mayor Daily that Chicago, Mary Daily of 162 00:08:30,680 --> 00:08:33,640 Speaker 2: San Francisco said, which is I think important? 163 00:08:33,960 --> 00:08:34,920 Speaker 3: And this is something in. 164 00:08:34,880 --> 00:08:38,160 Speaker 2: The financial media that I think is lost. They don't 165 00:08:38,200 --> 00:08:43,920 Speaker 2: really follow the bond market and all the predictive statistics 166 00:08:44,480 --> 00:08:46,680 Speaker 2: that we have available today, do they. 167 00:08:48,080 --> 00:08:48,280 Speaker 3: No? 168 00:08:48,320 --> 00:08:51,040 Speaker 7: And I mean the main focus for them is going 169 00:08:51,120 --> 00:08:53,640 Speaker 7: to be on the data as they come up data 170 00:08:53,800 --> 00:08:57,280 Speaker 7: and as as Mary Daily said, if they were purely 171 00:08:57,320 --> 00:08:59,840 Speaker 7: looking at the inflation data as it was reported, which 172 00:08:59,880 --> 00:09:02,560 Speaker 7: is somewhere backward looking, they would think the inflation picture 173 00:09:02,600 --> 00:09:03,080 Speaker 7: is quite good. 174 00:09:03,080 --> 00:09:04,040 Speaker 3: Can we get two. 175 00:09:04,000 --> 00:09:07,920 Speaker 2: Negative statistics of GDP, the King keep James Perturba and 176 00:09:07,920 --> 00:09:11,040 Speaker 2: the NBER on a path to recession. 177 00:09:11,640 --> 00:09:13,960 Speaker 7: No. I mean well, first of all, the first quarter 178 00:09:14,520 --> 00:09:16,960 Speaker 7: certainly revised down on consumption, so that's not great. But 179 00:09:17,000 --> 00:09:18,760 Speaker 7: the second quarter is looking to be a number that 180 00:09:18,800 --> 00:09:20,520 Speaker 7: could be nearly four percent because we're gonna have a 181 00:09:20,559 --> 00:09:24,120 Speaker 7: bounce back in trade. So a lot of the volatility 182 00:09:24,160 --> 00:09:26,880 Speaker 7: that drove Q one to be so weak was driven 183 00:09:26,960 --> 00:09:28,920 Speaker 7: by front loading of tariffs that's going to go and 184 00:09:28,960 --> 00:09:32,880 Speaker 7: reverse in the second quarter. The measures of real final 185 00:09:32,920 --> 00:09:35,520 Speaker 7: demand were something like two percent for the for the 186 00:09:35,559 --> 00:09:37,800 Speaker 7: first quarter, so it was just fine. So we expect 187 00:09:37,800 --> 00:09:40,160 Speaker 7: it to be kind of a decent year for growth, 188 00:09:40,240 --> 00:09:42,440 Speaker 7: certainly slower than where we've been, something in the one 189 00:09:42,480 --> 00:09:44,920 Speaker 7: and a half percent range, but nothing that's going to 190 00:09:45,120 --> 00:09:46,000 Speaker 7: flag our session to the. 191 00:09:46,080 --> 00:09:50,240 Speaker 3: To the like me takes the two quarter moving Hell, 192 00:09:50,679 --> 00:09:51,440 Speaker 3: you look at you. 193 00:09:51,880 --> 00:09:55,439 Speaker 4: How about the labor market, Stephanie, I'm looking at the 194 00:09:55,480 --> 00:09:59,599 Speaker 4: continuous continuing claims came in in higher than expected the 195 00:09:59,679 --> 00:10:01,440 Speaker 4: heights twenty twenty one. 196 00:10:01,679 --> 00:10:04,480 Speaker 3: Should we start worrying a little bit about the labor 197 00:10:04,559 --> 00:10:05,120 Speaker 3: market here? 198 00:10:05,679 --> 00:10:08,080 Speaker 7: I think what we're seeing is the job finding prospects 199 00:10:08,120 --> 00:10:11,760 Speaker 7: have slowed down pretty substantially. But the important thing is 200 00:10:11,760 --> 00:10:13,880 Speaker 7: we're not really seeing layoffs pick up. So it is 201 00:10:13,920 --> 00:10:17,240 Speaker 7: the sign of a cooling labor market, which was largely 202 00:10:17,280 --> 00:10:19,760 Speaker 7: consensus kind of heading into this year. I think that 203 00:10:19,800 --> 00:10:22,120 Speaker 7: should be the sort of messages that the labor markets. 204 00:10:21,880 --> 00:10:22,400 Speaker 3: Should hold up. 205 00:10:22,400 --> 00:10:24,120 Speaker 7: But it is certainly a lot cooler than where it's been. 206 00:10:24,360 --> 00:10:26,720 Speaker 7: The thing to focus on from here on out is 207 00:10:26,760 --> 00:10:30,280 Speaker 7: to what extent immigration ends up putting significant downward pressure 208 00:10:30,400 --> 00:10:34,400 Speaker 7: on job gains. So our forecast we just put out 209 00:10:34,440 --> 00:10:38,160 Speaker 7: for for next Thursday the Perils for reports on Thursday 210 00:10:38,360 --> 00:10:41,240 Speaker 7: next week, it's for one hundred and thirty thousand, which 211 00:10:41,280 --> 00:10:44,000 Speaker 7: is a decent number. Granted we do think it will 212 00:10:44,040 --> 00:10:46,280 Speaker 7: ultimately get revised down below that, but at least on 213 00:10:46,320 --> 00:10:47,480 Speaker 7: first print it should be decent. 214 00:10:47,559 --> 00:10:51,160 Speaker 4: So how do we think about that immigration issue, the 215 00:10:51,200 --> 00:10:55,520 Speaker 4: southern borders effect that we've been closed. How does that 216 00:10:55,559 --> 00:10:59,760 Speaker 4: flow into I don't know, the farm and farming industry, 217 00:10:59,640 --> 00:11:03,160 Speaker 4: the construction housing business, which I know employs a lot 218 00:11:03,160 --> 00:11:04,360 Speaker 4: of immigrants. How does that work. 219 00:11:04,480 --> 00:11:06,000 Speaker 7: Yeah, that's going to be a challenge. And I think 220 00:11:06,040 --> 00:11:08,280 Speaker 7: it's not even just about the order being closed. The 221 00:11:08,280 --> 00:11:11,160 Speaker 7: flows of immigration have slowed down quite a bit since 222 00:11:11,200 --> 00:11:13,600 Speaker 7: the the beginning of the Trump administration, and even at 223 00:11:13,640 --> 00:11:15,679 Speaker 7: the end of the Biden administration they did start to 224 00:11:15,720 --> 00:11:18,360 Speaker 7: slow down the flows of immigration. What's going to be 225 00:11:18,360 --> 00:11:21,600 Speaker 7: important from here on out is the visa expiration. So 226 00:11:21,720 --> 00:11:24,680 Speaker 7: there is about one and a half million to three 227 00:11:24,720 --> 00:11:27,760 Speaker 7: million people whose visas are going to expire. Because these 228 00:11:27,800 --> 00:11:30,880 Speaker 7: are discretionary visas, the administration has the ability to end 229 00:11:30,920 --> 00:11:33,439 Speaker 7: them over the next eighteen months. And this is going 230 00:11:33,480 --> 00:11:37,840 Speaker 7: to be the real impact to the industries that you cite, farming, construction, leisure, 231 00:11:37,880 --> 00:11:40,400 Speaker 7: and hospitality. In some areas, this is where it could 232 00:11:40,400 --> 00:11:43,000 Speaker 7: start to become a real tightening and the companies might 233 00:11:43,040 --> 00:11:44,160 Speaker 7: have trouble finding labor. Again. 234 00:11:44,200 --> 00:11:47,400 Speaker 2: Really, let's crystallize this to the jobs report on July third. 235 00:11:47,400 --> 00:11:49,640 Speaker 2: It's the first time I've looked at the numbers. Folks 236 00:11:49,720 --> 00:11:52,880 Speaker 2: definitely were off the course. Living this last time around 237 00:11:52,960 --> 00:11:55,720 Speaker 2: was one hundred and thirty nine thousand, well under one fifty, 238 00:11:55,760 --> 00:11:58,959 Speaker 2: well under two hundred. The statistic now is one hundred 239 00:11:59,000 --> 00:12:03,640 Speaker 2: and sixteen thousand. That one hundred and sixteen thousand isn't 240 00:12:03,679 --> 00:12:04,880 Speaker 2: the same as one hundred. 241 00:12:04,640 --> 00:12:08,120 Speaker 3: And sixteen thousand and five or ten years ago, is it? No, 242 00:12:08,320 --> 00:12:09,720 Speaker 3: it's not what's ad delta. 243 00:12:10,200 --> 00:12:13,640 Speaker 7: So the way I think about it is the job 244 00:12:13,800 --> 00:12:16,400 Speaker 7: number versus sort of the break even rate. The break 245 00:12:16,400 --> 00:12:18,560 Speaker 7: even rate meaning kind of a steady state that would 246 00:12:18,600 --> 00:12:20,920 Speaker 7: be sort of neither tightening nor easing up on the 247 00:12:20,960 --> 00:12:24,200 Speaker 7: labor market. Today, that's around seventy five thousand based on 248 00:12:24,240 --> 00:12:27,680 Speaker 7: our estimates, but two years ago that was double that. 249 00:12:28,880 --> 00:12:30,960 Speaker 7: So that's why we were able to sustain really high 250 00:12:31,080 --> 00:12:35,480 Speaker 7: job gains without really seeing, you know, a significant tightening 251 00:12:35,520 --> 00:12:38,000 Speaker 7: in the labor market because we had all this flow 252 00:12:38,040 --> 00:12:40,920 Speaker 7: of immigration that is largely cut off, and that seventy 253 00:12:40,920 --> 00:12:43,319 Speaker 7: five might even be slightly lower than that realistically. 254 00:12:43,679 --> 00:12:47,560 Speaker 4: So is there an unemployment rate number that gets the 255 00:12:47,600 --> 00:12:48,160 Speaker 4: Fed's attention? 256 00:12:48,240 --> 00:12:48,640 Speaker 3: Do you think? 257 00:12:49,320 --> 00:12:51,400 Speaker 7: Yeah? I think I think in two directions. Right, So, 258 00:12:51,720 --> 00:12:53,760 Speaker 7: the FED zone forecast or that it could be four 259 00:12:53,760 --> 00:12:55,040 Speaker 7: and a half percent by the end of this year, 260 00:12:55,080 --> 00:12:57,040 Speaker 7: and they kind of expected to stay there through next year. 261 00:12:57,400 --> 00:12:58,920 Speaker 7: So if you get to four and a half percent 262 00:12:59,160 --> 00:13:01,920 Speaker 7: by you know, the fall certainly would be grounds to 263 00:13:01,960 --> 00:13:04,640 Speaker 7: be cutting. But there's a chance that this whole immigration 264 00:13:04,760 --> 00:13:07,800 Speaker 7: dialogue that we're having does the has the opposite effect 265 00:13:07,840 --> 00:13:10,079 Speaker 7: on the unemployment rate because it is tightening the labor 266 00:13:10,120 --> 00:13:12,880 Speaker 7: market in those blue collar industries and could actually put 267 00:13:12,920 --> 00:13:16,040 Speaker 7: some downward pressure keeping it from rising substantially. That would 268 00:13:16,080 --> 00:13:17,960 Speaker 7: be the environment where the Fed doesn't cut this year. 269 00:13:18,160 --> 00:13:20,760 Speaker 4: Interesting because right now the unemployment. 270 00:13:21,240 --> 00:13:22,720 Speaker 3: I'm getting a lot of mystery here. 271 00:13:22,840 --> 00:13:25,480 Speaker 4: Well that's I mean, on the one hand, Tom, on 272 00:13:25,520 --> 00:13:27,680 Speaker 4: the other, I mean, unemployment rate is forecast to be 273 00:13:27,760 --> 00:13:31,640 Speaker 4: just four point three percent, uh coming up. I mean again, 274 00:13:32,000 --> 00:13:33,920 Speaker 4: it feels to me, and I think that most people 275 00:13:34,000 --> 00:13:35,439 Speaker 4: like kind of full employment. 276 00:13:35,840 --> 00:13:38,240 Speaker 7: Yeah, so I think I think that to take it 277 00:13:38,280 --> 00:13:40,640 Speaker 7: to like remove some of the mystery. I think what 278 00:13:40,679 --> 00:13:43,000 Speaker 7: we're looking at is an environment where the economy is 279 00:13:43,040 --> 00:13:44,679 Speaker 7: slowed down. We're at a one and a half is 280 00:13:44,760 --> 00:13:48,640 Speaker 7: percent GDP growth, which is fine, not great. The unemployment 281 00:13:48,679 --> 00:13:52,439 Speaker 7: rate kind of bounces between four to two and four five, 282 00:13:52,880 --> 00:13:54,920 Speaker 7: and we kind of see an environment that's okay, and 283 00:13:54,920 --> 00:13:57,480 Speaker 7: then we actually begin to accelerate next year. The immigration 284 00:13:57,559 --> 00:13:59,760 Speaker 7: thing is going to mean that we see slower job 285 00:14:00,240 --> 00:14:01,760 Speaker 7: but we don't necessarily need to be scared of That 286 00:14:02,559 --> 00:14:03,520 Speaker 7: is the nehru. 287 00:14:03,640 --> 00:14:06,679 Speaker 2: I mean, we've got literally, folks, we've got a function 288 00:14:06,880 --> 00:14:10,880 Speaker 2: on the Bloomberg TAYL which is the tailor rule, which is, 289 00:14:11,120 --> 00:14:12,120 Speaker 2: you know, somewhat out. 290 00:14:12,000 --> 00:14:13,559 Speaker 3: Of vogue to say the least. 291 00:14:13,559 --> 00:14:18,560 Speaker 2: Can you do a fancy Stephanie roth Nehru into tailor rule, 292 00:14:18,679 --> 00:14:23,200 Speaker 2: Oaken law calculation or is all that academic mumbo jumbo 293 00:14:23,960 --> 00:14:25,640 Speaker 2: just as useless right now? Yeah? 294 00:14:25,680 --> 00:14:27,640 Speaker 7: I mean, well, for a long period of time it 295 00:14:27,680 --> 00:14:29,760 Speaker 7: was particular uses. I think now it's going to become 296 00:14:29,840 --> 00:14:33,000 Speaker 7: more relevant. But what we're looking at is an environment 297 00:14:33,040 --> 00:14:38,360 Speaker 7: where the sort of non inflationary unemployment rate is probably 298 00:14:38,440 --> 00:14:42,120 Speaker 7: in this, you know, for two to four five percent range, 299 00:14:42,440 --> 00:14:44,000 Speaker 7: and I think at that point, you know, you're not 300 00:14:44,080 --> 00:14:46,640 Speaker 7: really seeing that that have to reap either way. If 301 00:14:46,640 --> 00:14:49,160 Speaker 7: it moves below for certainly inflationary moves above four and 302 00:14:49,200 --> 00:14:51,640 Speaker 7: a half, then that's weakening in the economy. 303 00:14:51,720 --> 00:14:56,200 Speaker 3: Thirty seconds week dollar. If we get a legitimate week. 304 00:14:56,080 --> 00:14:59,320 Speaker 2: Dollar, does that provide stimulus through exports? 305 00:15:00,200 --> 00:15:02,600 Speaker 7: Yeah, And it also crites some inflationary pressures in an 306 00:15:02,680 --> 00:15:05,480 Speaker 7: environment where we don't really want to see inflationary pressures. 307 00:15:05,760 --> 00:15:07,800 Speaker 7: So base cases you start to see inflation pick up 308 00:15:07,800 --> 00:15:10,320 Speaker 7: over the summer. There's because we've had the past couple 309 00:15:10,360 --> 00:15:12,760 Speaker 7: of months of low inflation, the markets has sort of 310 00:15:12,800 --> 00:15:15,160 Speaker 7: assumed that tariffs don't matter, and we're going to see inflation. 311 00:15:15,280 --> 00:15:17,960 Speaker 7: Just because we saw low inflation recently doesn't mean over 312 00:15:17,960 --> 00:15:19,000 Speaker 7: the summer it's not going to pick up. 313 00:15:19,040 --> 00:15:19,600 Speaker 3: SEFERI row. 314 00:15:19,600 --> 00:15:22,080 Speaker 2: Thank you so much for the world research this morning. 315 00:15:22,160 --> 00:15:25,400 Speaker 2: Just a great brief off that key economic data. 316 00:15:25,760 --> 00:15:29,640 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 317 00:15:29,680 --> 00:15:32,720 Speaker 1: starting at seven am Eastern on Apple Corplay and Android 318 00:15:32,720 --> 00:15:35,760 Speaker 1: Auto with the Bloomberg Business app. You can also listen 319 00:15:35,840 --> 00:15:39,080 Speaker 1: live on Amazon Alexa from our flagship New York station 320 00:15:39,640 --> 00:15:42,560 Speaker 1: Just say Alexa, Play Bloomberg eleven thirty. 321 00:15:42,400 --> 00:15:46,400 Speaker 2: Anticipated for Global, Wall Street and a Manhattan Raffendy Swimmer 322 00:15:46,560 --> 00:15:49,040 Speaker 2: joins us here from Churchill Paul. 323 00:15:49,400 --> 00:15:53,640 Speaker 4: Randy Schwimmer is the vice chairman investor Solutionscripts Churchill Asset 324 00:15:53,680 --> 00:15:58,280 Speaker 4: Management Joints. Is here in our studio here, Randy, if 325 00:15:58,280 --> 00:16:01,560 Speaker 4: I've got if I'm a private equity, private credit, can 326 00:16:01,640 --> 00:16:03,440 Speaker 4: I get out of any of my deals? I need 327 00:16:03,480 --> 00:16:06,320 Speaker 4: some liquidity, dude, It's been years since I've been able. 328 00:16:06,480 --> 00:16:09,400 Speaker 4: The IPO market seems kind of lame. I'm not seeing 329 00:16:09,400 --> 00:16:10,680 Speaker 4: a ton of m and ah. 330 00:16:10,680 --> 00:16:11,680 Speaker 3: How do I get liquidity? 331 00:16:11,840 --> 00:16:12,080 Speaker 6: Yeah? 332 00:16:12,120 --> 00:16:14,320 Speaker 8: So see, you know, I always come armed and prepared 333 00:16:14,360 --> 00:16:17,240 Speaker 8: for because this is the center for a private market's 334 00:16:17,280 --> 00:16:21,160 Speaker 8: excellence here at Bloomberg Surveillance with you too. So we 335 00:16:21,400 --> 00:16:24,040 Speaker 8: just came out yesterday with a survey of almost sixty 336 00:16:24,080 --> 00:16:27,800 Speaker 8: four yeah, one hundred and sixty four private equity leaders. 337 00:16:27,960 --> 00:16:30,440 Speaker 8: And what they're saying, which is now consistent with what 338 00:16:30,480 --> 00:16:35,920 Speaker 8: we're seeing, more optimism about deal flowkay opening up before 339 00:16:36,000 --> 00:16:39,360 Speaker 8: the second half starts of this year. About twenty five 340 00:16:39,400 --> 00:16:42,640 Speaker 8: percent said more deal flow than another twenty five percent, 341 00:16:42,680 --> 00:16:45,000 Speaker 8: so total about fifty saying it's coming before the first 342 00:16:45,000 --> 00:16:47,600 Speaker 8: half of the next year. Why is that happening? Because 343 00:16:47,640 --> 00:16:52,760 Speaker 8: the deals that they're looking at have isolated tariff risk already. 344 00:16:52,960 --> 00:16:57,440 Speaker 8: So for example, hot topic right now, pest control businesses. 345 00:16:57,520 --> 00:16:59,920 Speaker 8: Why is that hot topic? Because you know who does 346 00:17:00,200 --> 00:17:05,399 Speaker 8: care about fed cuts, ants and termites? They are indifferent, 347 00:17:05,560 --> 00:17:08,520 Speaker 8: all right? Why don't they care? Because it's more of 348 00:17:08,560 --> 00:17:11,480 Speaker 8: a seasonal thing. And by the way, you are experiencing 349 00:17:11,560 --> 00:17:13,680 Speaker 8: lots of flies in the kitchen during this hot weather, 350 00:17:13,800 --> 00:17:18,440 Speaker 8: right So, pest control firms are opportunities because very little equipment, 351 00:17:19,000 --> 00:17:22,480 Speaker 8: not a lot of labor, and repeatable revenue sources of 352 00:17:22,560 --> 00:17:25,399 Speaker 8: occurring how many times have you fired your pest control 353 00:17:25,840 --> 00:17:28,040 Speaker 8: at very few once they're in and these are small 354 00:17:28,080 --> 00:17:30,000 Speaker 8: business so privately, it's like, you know what, we're going 355 00:17:30,040 --> 00:17:32,480 Speaker 8: to consolidate these mom and pops and create bigger platforms 356 00:17:32,480 --> 00:17:37,959 Speaker 8: than sell them. And those businesses, because they're they're strong 357 00:17:38,160 --> 00:17:41,960 Speaker 8: through various cycles, right, all of a sudden have greater value. 358 00:17:42,040 --> 00:17:44,480 Speaker 8: So now what we're seeing in our shop is a 359 00:17:44,520 --> 00:17:49,040 Speaker 8: tickup of deal flow, which means more realization. So stay tuned, Paul, 360 00:17:49,080 --> 00:17:49,520 Speaker 8: it's coming. 361 00:17:49,720 --> 00:17:52,720 Speaker 2: The headlines is private credit is trying to find a 362 00:17:52,760 --> 00:17:56,160 Speaker 2: new valuation and maybe private equity too. You mentioned there's 363 00:17:56,200 --> 00:17:59,360 Speaker 2: three trillion dollars looking to exit out there in some 364 00:17:59,400 --> 00:18:02,880 Speaker 2: way somehow out Yeah, go through the process right now 365 00:18:03,560 --> 00:18:06,320 Speaker 2: about somebody an endowment or whoever. 366 00:18:06,640 --> 00:18:09,800 Speaker 3: Has to clear they have to sell private credit. 367 00:18:10,080 --> 00:18:14,280 Speaker 2: How does that occur on a less heated Thursday in June. 368 00:18:14,400 --> 00:18:14,600 Speaker 3: Yeah. 369 00:18:14,600 --> 00:18:16,480 Speaker 8: So what they're doing now is they're coming to us 370 00:18:16,480 --> 00:18:19,000 Speaker 8: and they're saying, Randy, you know, you guys have really 371 00:18:19,040 --> 00:18:23,200 Speaker 8: successful platform. There's certain strategies we really like about your business. 372 00:18:23,560 --> 00:18:25,880 Speaker 8: We have these other businesses that we want to get 373 00:18:25,880 --> 00:18:28,720 Speaker 8: out of. Okay, can you help us to move our 374 00:18:28,760 --> 00:18:31,520 Speaker 8: portfolio from strategies that we thought we're going to work out, 375 00:18:31,560 --> 00:18:34,240 Speaker 8: but over the last several years has not been as 376 00:18:34,480 --> 00:18:37,280 Speaker 8: resilient as we thought, or the returns haven't been there. 377 00:18:37,520 --> 00:18:40,200 Speaker 8: So we sit down on a consulting basis with these 378 00:18:40,240 --> 00:18:42,840 Speaker 8: firms and we say, we can help you get into 379 00:18:43,080 --> 00:18:48,400 Speaker 8: a let's call it, a more resilient area with better returns. 380 00:18:47,960 --> 00:18:51,840 Speaker 3: And lower risk. Everyone wants to know how much hair. 381 00:18:51,840 --> 00:18:55,320 Speaker 8: Depends on the well, it depends on the risk asset 382 00:18:55,760 --> 00:18:58,360 Speaker 8: class that they are currently in, right, So if they're 383 00:18:58,359 --> 00:19:00,600 Speaker 8: in a distress class and they're not getting the volume, 384 00:19:00,760 --> 00:19:02,840 Speaker 8: which by the way, historically has been the case. Because 385 00:19:03,280 --> 00:19:06,560 Speaker 8: where's the recession. Everybody's saying, Hey, every thing about private 386 00:19:06,560 --> 00:19:08,400 Speaker 8: credit is you know, you've done really well, but there 387 00:19:08,400 --> 00:19:11,159 Speaker 8: hasn't been a real recession, which is true. You know, 388 00:19:11,200 --> 00:19:13,560 Speaker 8: there's been little crises. As one of my friends at 389 00:19:13,600 --> 00:19:18,159 Speaker 8: Moody says, there have been quizzes, not tests. Okay, but 390 00:19:18,240 --> 00:19:20,000 Speaker 8: you know what, some of the asset classes have failed 391 00:19:20,040 --> 00:19:20,560 Speaker 8: the quizzes. 392 00:19:20,720 --> 00:19:21,920 Speaker 3: Right, if you fail a quiz. 393 00:19:21,680 --> 00:19:24,320 Speaker 8: You're still failing. So I do think that what we're 394 00:19:24,359 --> 00:19:26,919 Speaker 8: seeing now from our survey and what we're seeing in 395 00:19:26,960 --> 00:19:30,639 Speaker 8: our pipeline, so April was kind of a low month, 396 00:19:30,960 --> 00:19:33,320 Speaker 8: you know, given tariffs and everything else. May was a 397 00:19:33,320 --> 00:19:36,520 Speaker 8: bit of a comeback. June we have seen fifty percent 398 00:19:36,680 --> 00:19:39,560 Speaker 8: higher deal flow than we saw June of last year. 399 00:19:39,800 --> 00:19:42,159 Speaker 8: So I think this three trillion dollars time that you 400 00:19:42,240 --> 00:19:46,280 Speaker 8: mentioned globally of corporates waiting to acxit is that that 401 00:19:46,520 --> 00:19:49,119 Speaker 8: ice cube is starting to melt. We're seeing it in 402 00:19:49,160 --> 00:19:51,680 Speaker 8: our pipeline, We're seeing it in global m and A data. 403 00:19:52,720 --> 00:19:55,880 Speaker 8: The folks at London Stock Exchange keep track of this. 404 00:19:56,160 --> 00:19:58,560 Speaker 8: M and A for twenty twenty five through the middle 405 00:19:58,560 --> 00:20:01,800 Speaker 8: of June is up, you know, over twenty two and 406 00:20:01,920 --> 00:20:04,800 Speaker 8: twenty three. So I do think that it's coming back. 407 00:20:05,560 --> 00:20:07,679 Speaker 4: Where are the banks here? As you in your private 408 00:20:07,680 --> 00:20:12,120 Speaker 4: credit folks look at deals, where are the banks these days? 409 00:20:12,200 --> 00:20:14,560 Speaker 4: Because you guys walk on middle market. 410 00:20:14,560 --> 00:20:15,520 Speaker 3: And where are the banks? 411 00:20:15,600 --> 00:20:19,560 Speaker 8: Yeah, so great segue. So kudos to Carmen Arroya and 412 00:20:19,640 --> 00:20:22,960 Speaker 8: Ellen Schneider, your reporters who came out yesterday. I guess 413 00:20:22,960 --> 00:20:27,560 Speaker 8: it was Tuesday headline JP Morgan Traders shut out of 414 00:20:27,680 --> 00:20:31,520 Speaker 8: private credit market. Okay, what's going on there is they're 415 00:20:31,560 --> 00:20:33,200 Speaker 8: going out with their list. You know, I worked there, 416 00:20:33,720 --> 00:20:36,400 Speaker 8: you worked there right. You know, remember they go out lists, Hey, 417 00:20:36,440 --> 00:20:37,960 Speaker 8: we'd like to buy these loans, and then here's a 418 00:20:37,960 --> 00:20:41,240 Speaker 8: bunch of loans, okay, or we want to sell those loans. 419 00:20:40,720 --> 00:20:43,800 Speaker 8: Here's here's the list. And what your reporters basically said, 420 00:20:43,840 --> 00:20:46,520 Speaker 8: which is really true, is that you know, nobody wants 421 00:20:46,560 --> 00:20:48,560 Speaker 8: to sell these loans. If I have a three hundred, 422 00:20:48,680 --> 00:20:50,919 Speaker 8: I have three hundred loans through the companies in my 423 00:20:51,000 --> 00:20:52,960 Speaker 8: senior portfolio, and they're doing well, why would I want 424 00:20:52,960 --> 00:20:56,320 Speaker 8: to sell them? So while JP is obviously a giant 425 00:20:56,320 --> 00:20:58,600 Speaker 8: in terms of secondary trading and loans and bonds and 426 00:20:58,600 --> 00:21:01,440 Speaker 8: everything else, in the private markets, it's more challenging because 427 00:21:01,480 --> 00:21:03,879 Speaker 8: these things are I liquid And one of the people 428 00:21:03,880 --> 00:21:06,680 Speaker 8: that they quote says, it's like making an Ostrich fly. 429 00:21:07,000 --> 00:21:07,879 Speaker 8: It doesn't happen. 430 00:21:08,119 --> 00:21:10,919 Speaker 2: Do you care just one final question quickly, do you 431 00:21:11,040 --> 00:21:13,159 Speaker 2: care about mark to market? 432 00:21:14,359 --> 00:21:17,080 Speaker 8: There is no such things, right, So, what we care 433 00:21:17,119 --> 00:21:20,360 Speaker 8: about our third party valuations? So we have three distinct 434 00:21:20,400 --> 00:21:23,400 Speaker 8: outside firms who come in every quarter and value all 435 00:21:23,520 --> 00:21:26,400 Speaker 8: of eachlums, each item. Right now, we have a run 436 00:21:26,440 --> 00:21:28,800 Speaker 8: on team that weighs in sure, But you know, if 437 00:21:28,840 --> 00:21:31,080 Speaker 8: you have three outside firms saying here's what the loan 438 00:21:31,200 --> 00:21:32,760 Speaker 8: is that's that's mark to market. 439 00:21:32,800 --> 00:21:35,359 Speaker 2: Okay, Randy too short of visit Randy Schummer, Thank you 440 00:21:35,400 --> 00:21:38,480 Speaker 2: so much. Let's do this again much bunch longer. Get 441 00:21:38,520 --> 00:21:39,480 Speaker 2: you at the top of the hour. 442 00:21:45,560 --> 00:21:49,439 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 443 00:21:49,480 --> 00:21:52,479 Speaker 1: starting at seven am Eastern on Apple Coarclay, and Android 444 00:21:52,520 --> 00:21:55,560 Speaker 1: Auto with the Bloomberg Business app. You can also watch 445 00:21:55,600 --> 00:21:58,560 Speaker 1: us live every weekday on YouTube and always on the 446 00:21:58,560 --> 00:21:59,480 Speaker 1: Bloomberg terminal. 447 00:21:59,520 --> 00:22:01,640 Speaker 3: A lot of people we'll talk about fancy degrees. 448 00:22:01,680 --> 00:22:04,760 Speaker 2: I think a PP and E at Williams, any of another, 449 00:22:04,920 --> 00:22:09,800 Speaker 2: you know, microeconomics at the University of Chicago, Biomedical science 450 00:22:10,000 --> 00:22:13,320 Speaker 2: at Texas, A and M bience medical arguably the most 451 00:22:13,359 --> 00:22:17,160 Speaker 2: prestigious BioMed degree in the country. There's a few other 452 00:22:17,240 --> 00:22:22,359 Speaker 2: institutions getting it right. Angie Guildea survived that. Angie, what 453 00:22:22,520 --> 00:22:28,080 Speaker 2: was it like surviving the biomedical combine at College Station. 454 00:22:29,480 --> 00:22:31,600 Speaker 9: It was hard. I'll tell you. There were a lot 455 00:22:31,640 --> 00:22:35,320 Speaker 9: of really smart aggies out there. So I'm glad to 456 00:22:35,480 --> 00:22:39,680 Speaker 9: have graduated and gotten a prestigious degree from the types 457 00:22:39,720 --> 00:22:40,159 Speaker 9: of A and M. 458 00:22:40,359 --> 00:22:43,080 Speaker 3: Absolutely iconic degree. I have to have you. 459 00:22:43,080 --> 00:22:47,399 Speaker 2: Alisa Matteo mentions the shell BP none event. Do you 460 00:22:47,520 --> 00:22:51,080 Speaker 2: people at KPMG, do you look for a big oil 461 00:22:51,320 --> 00:22:52,600 Speaker 2: upstream roll up? 462 00:22:54,040 --> 00:22:56,560 Speaker 9: You know what we've been seeing in the market, and 463 00:22:56,600 --> 00:22:59,920 Speaker 9: we've seen this over the last couple of years, is consolidate. 464 00:23:00,960 --> 00:23:04,720 Speaker 9: You saw Exxon Bay Pioneer. You saw Chevron make a 465 00:23:04,720 --> 00:23:08,920 Speaker 9: bid for Ana Dharker, which the Oxy ended up purchasing 466 00:23:09,000 --> 00:23:13,080 Speaker 9: and then hes. So certainly, I think consolidation in the 467 00:23:13,119 --> 00:23:17,720 Speaker 9: market is something that will continue. Who buys who is 468 00:23:18,440 --> 00:23:19,800 Speaker 9: something that's still left to be. 469 00:23:19,800 --> 00:23:21,359 Speaker 4: Determined, Angie. 470 00:23:21,400 --> 00:23:22,959 Speaker 6: I watched the Whoa Whoa? 471 00:23:23,080 --> 00:23:25,439 Speaker 3: You know the answer because she watched Limb Man. I know, 472 00:23:26,000 --> 00:23:27,080 Speaker 3: you know who buys who? 473 00:23:27,200 --> 00:23:29,240 Speaker 4: Yeah, I mean I watched the first season of Land Man. 474 00:23:29,280 --> 00:23:31,800 Speaker 4: I consider myself an expert now in all things oil 475 00:23:31,840 --> 00:23:35,480 Speaker 4: and gas, Angie, but I noticed that that risk premium 476 00:23:35,480 --> 00:23:39,119 Speaker 4: that we saw in crude oil from the Mid East, 477 00:23:39,480 --> 00:23:41,840 Speaker 4: escalation in Iran, that seems to be out of the 478 00:23:41,880 --> 00:23:45,560 Speaker 4: market now. So what are the underlining fundamentals of global 479 00:23:45,560 --> 00:23:46,639 Speaker 4: oil these days? 480 00:23:46,960 --> 00:23:51,479 Speaker 9: It's a fascinating situation that happened because if you compare 481 00:23:51,600 --> 00:23:55,280 Speaker 9: what happened in the seventies with the oral embargo, with 482 00:23:55,359 --> 00:23:59,200 Speaker 9: the Iraqi war in two thousand and three. I mean, 483 00:23:59,320 --> 00:24:03,040 Speaker 9: we just not see the spike that historically we've seen 484 00:24:03,920 --> 00:24:06,520 Speaker 9: when there's conflict in the Middle East. And I think 485 00:24:06,560 --> 00:24:08,800 Speaker 9: part of that is the markets are more mature, we've 486 00:24:08,800 --> 00:24:12,240 Speaker 9: got more data. But a big part of that is one, 487 00:24:12,320 --> 00:24:16,800 Speaker 9: there's oversupply in the market right now, so we're washed 488 00:24:16,840 --> 00:24:20,680 Speaker 9: and oil. And the second thing is the relevance that 489 00:24:20,720 --> 00:24:24,639 Speaker 9: the US shale and American production has had to the market. 490 00:24:24,680 --> 00:24:28,240 Speaker 9: I mean, we're the number one producing country in the world, 491 00:24:28,320 --> 00:24:31,359 Speaker 9: and the reliance on the Middle East oil is not 492 00:24:31,480 --> 00:24:34,440 Speaker 9: what it was twenty thirty forty years ago. 493 00:24:34,880 --> 00:24:37,679 Speaker 4: You're down there in Houston, the center of the US 494 00:24:38,480 --> 00:24:41,920 Speaker 4: energy business. Where are your clients. What do they want 495 00:24:41,960 --> 00:24:45,520 Speaker 4: to really see crude oil in terms of price? What's 496 00:24:45,800 --> 00:24:46,879 Speaker 4: kind of the ideal range. 497 00:24:48,119 --> 00:24:52,159 Speaker 9: Ideally it's above seventy dollars a barrel. It's different in 498 00:24:52,200 --> 00:24:56,000 Speaker 9: different assets. But the cost of drilling the shale is 499 00:24:56,080 --> 00:24:58,960 Speaker 9: the inventory is depleting, so the cost are going up. 500 00:24:59,520 --> 00:25:03,560 Speaker 9: There's some additional costs from drilling with the terriffs on 501 00:25:04,040 --> 00:25:06,840 Speaker 9: the steel pipe and things like that. So really you've 502 00:25:06,840 --> 00:25:11,440 Speaker 9: got to see above seventy dollars a barrel is really 503 00:25:11,480 --> 00:25:14,679 Speaker 9: a good sweet spot. Otherwise it just gets really really 504 00:25:14,760 --> 00:25:17,880 Speaker 9: tough to maintain profitability. 505 00:25:18,040 --> 00:25:21,399 Speaker 2: Angie, one more question and a busy busy day here. 506 00:25:21,840 --> 00:25:24,840 Speaker 2: As I talked about the roll up as well the 507 00:25:25,040 --> 00:25:30,720 Speaker 2: ev electric ESG thing and all of it related to hydrocarbons. 508 00:25:31,240 --> 00:25:33,680 Speaker 2: Are we in the same regime of thirty six months 509 00:25:33,720 --> 00:25:36,320 Speaker 2: ago or is it a new new for the debate 510 00:25:36,440 --> 00:25:40,200 Speaker 2: in America of hydrocarbons and electricity. 511 00:25:41,280 --> 00:25:45,200 Speaker 9: Well, it's interesting. We just had the statistical review come 512 00:25:45,240 --> 00:25:49,040 Speaker 9: out that KPMG sponsored with the Energy Institute, and we're 513 00:25:49,080 --> 00:25:54,480 Speaker 9: seeing all forms of energy grow. We saw US renewables 514 00:25:54,520 --> 00:25:58,480 Speaker 9: grow at a seven percent rate, which was faster than Europe. 515 00:25:58,880 --> 00:26:01,000 Speaker 9: But we're seeing it play out in different parts of 516 00:26:01,040 --> 00:26:04,800 Speaker 9: the world. China, for instance, added more renewables than any 517 00:26:04,800 --> 00:26:07,680 Speaker 9: other country combined. They still use a big part of 518 00:26:07,720 --> 00:26:12,280 Speaker 9: their wedge around gas and fossil fuels cold, but they 519 00:26:12,320 --> 00:26:14,359 Speaker 9: are completely adding to the mix. 520 00:26:14,680 --> 00:26:17,040 Speaker 2: Andrew too short of visit, Angie Gilde, Thank you so much, 521 00:26:17,119 --> 00:26:21,200 Speaker 2: the KPMG, the United States Energy Leader. 522 00:26:21,520 --> 00:26:25,440 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 523 00:26:25,480 --> 00:26:28,520 Speaker 1: starting at seven am Eastern on Apple, Cocklay and Android 524 00:26:28,520 --> 00:26:31,560 Speaker 1: Auto with the Bloomberg Business app. You can also listen 525 00:26:31,640 --> 00:26:34,840 Speaker 1: live on Amazon Alexa from our flagship New York station. 526 00:26:35,440 --> 00:26:39,120 Speaker 1: Just say Alexa, play Bloomberg eleven thirty joining us now 527 00:26:39,160 --> 00:26:40,120 Speaker 1: with our newspapers. 528 00:26:40,160 --> 00:26:42,320 Speaker 3: And she said, we're starting with this. I don't care 529 00:26:42,400 --> 00:26:44,440 Speaker 3: what you people think, Lisa Matteo. 530 00:26:44,600 --> 00:26:47,240 Speaker 6: Yes, but Brad Pitt can fit into that F one 531 00:26:47,400 --> 00:26:49,600 Speaker 6: And this is interesting. It's a question from the Wall 532 00:26:49,600 --> 00:26:52,480 Speaker 6: Street Journal. So it's can F one finally deliver Apple 533 00:26:52,640 --> 00:26:54,919 Speaker 6: a big screen hit? So it's coming out in theaters 534 00:26:54,920 --> 00:26:57,680 Speaker 6: this week, right, Brad pitts in it. When the team 535 00:26:57,680 --> 00:26:59,600 Speaker 6: first started pitching the movie, there was a bidding war 536 00:26:59,640 --> 00:27:01,960 Speaker 6: for it. Okay, so Apple paid some big money. They 537 00:27:02,000 --> 00:27:05,040 Speaker 6: agreed to spend two hundred and fifty million dollars. Brad 538 00:27:05,080 --> 00:27:07,399 Speaker 6: Pitt paid more than twenty million dollars. He's going to 539 00:27:07,440 --> 00:27:09,399 Speaker 6: get a cut of the film's revenue if it becomes 540 00:27:09,400 --> 00:27:12,680 Speaker 6: a big hit. Yeah, and you have big like directors. 541 00:27:12,680 --> 00:27:15,440 Speaker 6: The director of Top Gun Matters, It's yes. 542 00:27:15,320 --> 00:27:17,000 Speaker 4: I'm gonnapreciate it in the theater. 543 00:27:17,080 --> 00:27:19,040 Speaker 6: Yes, And I feel like you have to, like even 544 00:27:19,080 --> 00:27:21,359 Speaker 6: Imax because the sound and all that kind of stuff 545 00:27:21,359 --> 00:27:24,960 Speaker 6: with it. But pre release surveys are showing that F 546 00:27:25,000 --> 00:27:29,520 Speaker 6: one is struggling to generate interests of audiences beyond older men. 547 00:27:29,640 --> 00:27:31,879 Speaker 6: So they're not getting that younger group. 548 00:27:31,960 --> 00:27:35,959 Speaker 2: Okay, but the one is all the all the the 549 00:27:36,040 --> 00:27:39,000 Speaker 2: drivers are you know, honky boy toys for the girls. 550 00:27:39,000 --> 00:27:41,080 Speaker 2: So they're getting a lot of girls watching F one, 551 00:27:41,600 --> 00:27:44,639 Speaker 2: huge worldwide audience. Is that what they think here, that, 552 00:27:45,160 --> 00:27:47,920 Speaker 2: like you know, Barbie or whatever, women will show up to. 553 00:27:47,840 --> 00:27:49,480 Speaker 3: See F one? Is that in the zeitgeist? 554 00:27:49,560 --> 00:27:51,480 Speaker 6: Well they're hoping, I mean, because you think about like that, 555 00:27:51,520 --> 00:27:54,480 Speaker 6: what was that other movie, Grand Tarorismo, that other race 556 00:27:54,520 --> 00:27:57,280 Speaker 6: car movies that came out, and that was a great one. 557 00:27:57,320 --> 00:28:00,240 Speaker 6: It attracted the younger audience, It attracted the women. It 558 00:28:00,600 --> 00:28:08,200 Speaker 6: did that. It also had a younger star. And okay, no, 559 00:28:08,320 --> 00:28:15,000 Speaker 6: not at all right over my head, but we will 560 00:28:15,000 --> 00:28:17,120 Speaker 6: give the recap on Monday. I'll let you know how 561 00:28:17,119 --> 00:28:20,560 Speaker 6: it did. This is when I'm also in the Wall 562 00:28:20,600 --> 00:28:24,439 Speaker 6: Street Journal. Weighted vests. I know you've trained. I have 563 00:28:24,600 --> 00:28:26,600 Speaker 6: the waighted vest. I got it for Mother's Day. 564 00:28:28,359 --> 00:28:29,320 Speaker 2: I asked for it. 565 00:28:29,359 --> 00:28:32,600 Speaker 6: It was on special requests. But you've seen the women 566 00:28:32,720 --> 00:28:35,919 Speaker 6: right running around with these things. It was huge with 567 00:28:35,960 --> 00:28:40,240 Speaker 6: the military and now the women. It's like a fashion statement. 568 00:28:41,080 --> 00:28:42,720 Speaker 3: For Father's Day. It was a case of. 569 00:28:44,400 --> 00:28:48,040 Speaker 4: What works for you has and she does the peloton 570 00:28:48,400 --> 00:28:51,040 Speaker 4: like treadmill, so she wears it at the Again, by 571 00:28:51,080 --> 00:28:53,480 Speaker 4: the way, while she's doing this, I'm just kicking back 572 00:28:53,480 --> 00:28:54,719 Speaker 4: on the couch watching ESPN. 573 00:28:55,160 --> 00:29:00,640 Speaker 6: Oh my god, you have to because they went into 574 00:29:00,640 --> 00:29:04,320 Speaker 6: the research behind it. So, yes, it does burn more calories. 575 00:29:04,360 --> 00:29:06,360 Speaker 6: That's the whole thing why the women are doing it. 576 00:29:06,640 --> 00:29:08,640 Speaker 6: If you wear one about ten percent of your body weight, 577 00:29:08,640 --> 00:29:11,000 Speaker 6: it's going to burn an initial eight and a half calories. 578 00:29:11,320 --> 00:29:13,120 Speaker 6: And then if you get the heavy one. I have 579 00:29:13,160 --> 00:29:15,360 Speaker 6: a sixteen pound one and a twenty pound one. 580 00:29:15,840 --> 00:29:17,120 Speaker 5: Let's get two on hand. 581 00:29:19,080 --> 00:29:21,800 Speaker 6: But that's the thing. They say. If you go too 582 00:29:21,880 --> 00:29:23,680 Speaker 6: high and if you start feeling pressure in your back, 583 00:29:23,720 --> 00:29:26,400 Speaker 6: they say to go down in weight. They say, don't 584 00:29:26,840 --> 00:29:29,400 Speaker 6: do it in like jumping exercises and all that, because 585 00:29:29,440 --> 00:29:31,920 Speaker 6: you can hurt yourself. That's the morning pound just fine. 586 00:29:31,960 --> 00:29:34,120 Speaker 6: But no, you got to wear it around the house 587 00:29:34,200 --> 00:29:35,800 Speaker 6: like you gotta as you're doing your cleaning. 588 00:29:36,400 --> 00:29:40,600 Speaker 3: Yes, so you've done Brad Pitt and Girl Wellness Year. 589 00:29:40,960 --> 00:29:42,440 Speaker 3: This is a twisted newspapers. 590 00:29:42,800 --> 00:29:44,600 Speaker 8: We have time for this one's even better. 591 00:29:44,680 --> 00:29:44,880 Speaker 2: Okay. 592 00:29:46,800 --> 00:29:49,560 Speaker 6: Nike comes out with earnings today, right, but the talk 593 00:29:49,760 --> 00:29:53,960 Speaker 6: is about its latest shoe. It's a snowfer snow Yes, 594 00:29:54,160 --> 00:29:57,600 Speaker 6: it is a sneaker and a loafer. Okay, and this 595 00:29:57,640 --> 00:30:00,520 Speaker 6: is the phenomenon. You've seen men wearing the right they're 596 00:30:00,520 --> 00:30:03,200 Speaker 6: the comfortable shoes. So now Nike is starting to jump 597 00:30:03,240 --> 00:30:05,080 Speaker 6: on that. You know, Tom, you've talked about all like 598 00:30:05,160 --> 00:30:07,240 Speaker 6: the executives kind of wearing them. You see the pictures 599 00:30:07,240 --> 00:30:08,440 Speaker 6: if you're watching on YouTube. 600 00:30:08,680 --> 00:30:09,400 Speaker 1: What do you think? 601 00:30:09,560 --> 00:30:12,400 Speaker 6: I mean, they're they're kind of cute. No they're not. 602 00:30:12,600 --> 00:30:17,000 Speaker 6: They're kind of ugly. But it's the air Maax phenomenon. 603 00:30:17,760 --> 00:30:20,040 Speaker 6: And it's it comes out June twenty seven. It hasn't 604 00:30:20,040 --> 00:30:22,240 Speaker 6: even been released yet, and it's and it's going for 605 00:30:22,320 --> 00:30:25,080 Speaker 6: like five hundred dollars in resale prices. 606 00:30:25,280 --> 00:30:27,840 Speaker 3: What's a snow part? Does it feel? 607 00:30:28,240 --> 00:30:32,520 Speaker 6: Sneakers? Yes, sneaker and a loafer. Sneaker, sneaker and a loafer. 608 00:30:32,600 --> 00:30:35,160 Speaker 6: So you see the bottom is like the sneaker and 609 00:30:35,200 --> 00:30:36,440 Speaker 6: the top is like a penny loaf. 610 00:30:36,880 --> 00:30:38,520 Speaker 4: David Weston walking around the snow. 611 00:30:38,280 --> 00:30:41,280 Speaker 6: For then I know it's I'm telling you men love 612 00:30:41,320 --> 00:30:41,840 Speaker 6: these things. 613 00:30:42,200 --> 00:30:46,160 Speaker 2: Yes, all right, we're getting to Jack per Sells, the 614 00:30:46,240 --> 00:30:50,760 Speaker 2: original snowfer. Yes, remember that you'd have white and black 615 00:30:50,840 --> 00:30:53,800 Speaker 2: Jack Bert. There was a huge choice, be a Flyers 616 00:30:53,880 --> 00:30:54,680 Speaker 2: or Jack Purcelles. 617 00:30:55,800 --> 00:30:56,680 Speaker 3: That was it. 618 00:30:56,840 --> 00:30:59,920 Speaker 2: Lisa Mateo, the newspapers, Thank you. 619 00:31:00,600 --> 00:31:05,440 Speaker 1: This is the Bloomberg Surveillance Podcast, available on Apple, Spotify, 620 00:31:05,560 --> 00:31:09,840 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 621 00:31:09,960 --> 00:31:13,440 Speaker 1: seven to ten am Eastern on Bloomberg dot com, the 622 00:31:13,520 --> 00:31:17,560 Speaker 1: iHeartRadio app tune In, and the Bloomberg Business app. You 623 00:31:17,600 --> 00:31:20,960 Speaker 1: can also watch us live every weekday on YouTube and 624 00:31:21,160 --> 00:31:22,880 Speaker 1: always on the Bloomberg terminal