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Speaker 2: In from PIMCO Pacific Investment Management Company, is Tony Crescenzi
Speaker 2: here on short term paper?
Speaker 3: Where's the tip between good morning? Where's the tip between?
Speaker 4: Like?
Speaker 3: Where is long duration? It's not out ten years to
Speaker 3: guys like you, is it seven years? Or dare I say?
Speaker 3: Is a five year note a long duration piece?
Speaker 5: Well, I like to call on and in my books
Speaker 5: I've written that the five year is a long bond
Speaker 5: of the short end, So you could say because it's
Speaker 5: to move the most when the Federal reserve is moving.
Speaker 5: In fact, the five year point on the treasury curve
Speaker 5: is the top performing point on the Yeld curve when
Speaker 5: the Yel curve is steepening steepening, meaning of course, short
Speaker 5: term rates are falling faster than long term rates, so
Speaker 5: we'd expect that to continue. We've seen, in fact, a
Speaker 5: big rally in the short end relative to the long
Speaker 5: end big steepening, but it could have a long way
Speaker 5: to go, because federal reserve is like, we keep moving,
Speaker 5: So I'd say it's beyond five years. We in fact
Speaker 5: call the pivot point on the eel curve, the differentiation
Speaker 5: between short and long term race a seven years. It's
Speaker 5: at the seven year point that whatever the Fed does
Speaker 5: stops impacting markets in the way that it's the seven
Speaker 5: year point in the.
Speaker 3: Okay, I've got I just I do it.
Speaker 2: It's just impressed Cressenzi and the only one that hasn't
Speaker 2: read twelve hundred pages of steigem CHERSNZ And the basic
Speaker 2: idea is the five year inflation and just a yield.
Speaker 2: I got a four standard deviation round trip from a
Speaker 2: positive two standard deviations to now exactly a negative two
Speaker 2: standard deviations. Is it finally where we get out of
Speaker 2: range with a lower real yield.
Speaker 5: There's a chance for yields to plunge in the months
Speaker 5: ahead because the employment numbers likely to get substantially the
Speaker 5: weaker beginning in the fall due to the expiration of
Speaker 5: key immigration programs, for one, secondly because of the drop
Speaker 5: in immigration flows, and third because of the federal workers. Remember,
Speaker 5: many will let go three million federal workers, five million contractors.
Speaker 5: All of that impact probably will be seen in the fall.
Speaker 5: Add on top of that uncertainty related to tariffs, geopolitics,
Speaker 5: even other facts. Is one final point. There's something called
Speaker 5: the birth death model, the edited bias adjustment. The government
Speaker 5: makes an assumption for how many new jobs are created
Speaker 5: based on the numbers of businesses that it thinks were
Speaker 5: created that it doesn't know about yet because it new,
Speaker 5: and it adds in near over one hundred thousand jobs
Speaker 5: per month to that. But what is finding in the
Speaker 5: reconciliation of those data nine months afterward that it overcounted
Speaker 5: by twenty five thirty thousand per month. I can point
Speaker 5: to many other things that suggest the payale numbers will
Speaker 5: fall substantially below where they've been recently, and on a
Speaker 5: payroll Friday somewhere out there in the months ahead, the
Speaker 5: bottom market, specifically the short term interest rates and out
Speaker 5: to five years could rally substantially.
Speaker 6: So why isn't it FED cutting.
Speaker 5: Because we all know Mary Daily has just spoke from
Speaker 5: the San Francisco FED about the idea of wanting some
Speaker 5: validation We don't know. This is an assumption. Often people
Speaker 5: write off the US economy and it always shows resilience.
Speaker 5: It just wants to be short. And the biggest thing,
Speaker 5: though Paul, is inflation expectations. We met with Janet Yelling
Speaker 5: at our recent secular forum where we devise a five
Speaker 5: year out look. She's part of our global advisory board.
Speaker 5: She wrote papers back in twenty fifteen and twenty seventeen,
Speaker 5: some of my favorite papers with forty footnotes, where she
Speaker 5: concluded it was called inflation dynamics. She concluded the cause
Speaker 5: of inflation, the main cause is how people feel about it,
Speaker 5: and how people feel about inflation has been affected by teriffs.
Speaker 5: And she wants then still daily noos wan be shor
Speaker 5: it's done.
Speaker 3: We love to have tony perscents again.
Speaker 2: Yellen codified the phrase slack in the economy. We perceived
Speaker 2: that then as an American economy. Can we do that now?
Speaker 2: Were there forty footnotes? If we have two stark Americas
Speaker 2: of haves.
Speaker 5: And have nots, we can because all we have to
Speaker 5: look at is how fast can the economy grow? How
Speaker 5: fast is it growing? And that that suggests a growth recession,
Speaker 5: not an outright recession, which is defined as a contraction
Speaker 5: in GDP, which was seen in the first quarter of
Speaker 5: the year. But what if the economy grows at one percent?
Speaker 5: Sort of pin cup projection in that zone and consensus
Speaker 5: for the next year, the Fed says it can grow
Speaker 5: according to the Summary of Economic Projections, about one point
Speaker 5: seven because that's the combination of the people and how
Speaker 5: productive the areto point three percent increase in people one
Speaker 5: and a half percent increase in productivity. If we grow
Speaker 5: at one percent, a company will say, hmm, I can
Speaker 5: I can handle about an increase of about two in
Speaker 5: a demand of goods and services. It's only one Should
Speaker 5: I slow hiring and spending. That depends on the sentiment
Speaker 5: that exists at that time. They could either say yes,
Speaker 5: I'm going to cut back, I'm really nervous, or it's
Speaker 5: short term, don't worry about and keep the game going.
Speaker 2: That's three cent right here for America across the nation.
Speaker 2: An extraordinary busy, eclectic news flow here at Bloomberg Surveillance.
Speaker 2: We welcome all of you, particularly ninety nine one FM
Speaker 2: in Washington. A briefing by the Pentagon, by the Secretary
Speaker 2: of Defense, by the Chairman of the Joint Chiefs of Staff,
Speaker 2: with really striking video of the military actions of the
Speaker 2: last number of days. We're going to look at private
Speaker 2: credit for global Wall Street, for Manhattan Wall Street. Randy
Speaker 2: Schummer will be with us in a bit. We continue
Speaker 2: now with Tony Crescenzi of Pimco.
Speaker 3: As well, Paul Tony.
Speaker 4: How much credit risk should investors be taking these days?
Speaker 4: Because I can sit into your treasury, I'm not getting
Speaker 4: four percent, but I'm still getting three and three quarters percent.
Speaker 6: That's not a bad living.
Speaker 5: How much credit or well in investment portfolios managed by
Speaker 5: Pimco and other large managers, a bond investor can achieve
Speaker 5: a yield up between five and seven percent for a
Speaker 5: double A minus average credit quality, which means a ninety
Speaker 5: nine point nine eight percent chance of getting your money
Speaker 5: back according to long Term Moody's data. But that five
Speaker 5: to seven percent number, which we would call the nirvana
Speaker 5: for bond investing, need have credit mingled in that. But
Speaker 5: what is credit? You could say that agency mortgage backed securities,
Speaker 5: the mortgages that are backed by Fanny May and Freddie
Speaker 5: Mack implicitly back by the United States, is a form
Speaker 5: of credit. It has a yield spread to treasuries of
Speaker 5: one hundred and fifty basis points one fifty. That's a
Speaker 5: big yield advantage. And so we are at PIMCO overweight
Speaker 5: mortgage backed security. So it's just a matter of how
Speaker 5: you obtain that credit allocation. In fact, the credit beta
Speaker 5: as they call it. We'd be more careful about high yield,
Speaker 5: for example, where we'd be significantly below where we would
Speaker 5: let's say one more extreme covaluation. It's a great performer,
Speaker 5: but we know the convexity of it, which is to say,
Speaker 5: in bad times you're not going to fare well. And
Speaker 5: if you can achieve five to seven percent, which is
Speaker 5: very attractive relative to history, inflation and volatility taken up, don't.
Speaker 2: Do Does he understand that if you say convexity the
Speaker 2: surveillance trapped door, Yes, is it risk?
Speaker 5: It's another way of saying of like a boomerang, be careful.
Speaker 5: It could really swing the other way.
Speaker 3: So short term paper like Jerome Schneider's just killing it
Speaker 3: this year, isn't he?
Speaker 5: The money market king is faring well. We've got a
Speaker 5: big yield advantage in that space.
Speaker 1: The thing to.
Speaker 5: Worry about most is investors, you know, have a households
Speaker 5: have a major task here. They've been so successful in
Speaker 5: locking and low mortgage rates. They should move with the
Speaker 5: same urgency from shorter instruments into into somewhat longer duration
Speaker 5: five years or so five to ten years and locking
Speaker 5: these high yields.
Speaker 3: To thank you, Tony, Thank you, sir.
Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live
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Speaker 2: Stephanie Mouth joins us down from Wolf Research, but far
Speaker 2: more stuff. They've got to ask the thing that mayor
Speaker 2: that mayor not Mayor Daily that Chicago, Mary Daily of
Speaker 2: San Francisco said, which is I think important?
Speaker 3: And this is something in.
Speaker 2: The financial media that I think is lost. They don't
Speaker 2: really follow the bond market and all the predictive statistics
Speaker 2: that we have available today, do they.
Speaker 3: No?
Speaker 7: And I mean the main focus for them is going
Speaker 7: to be on the data as they come up data
Speaker 7: and as as Mary Daily said, if they were purely
Speaker 7: looking at the inflation data as it was reported, which
Speaker 7: is somewhere backward looking, they would think the inflation picture
Speaker 7: is quite good.
Speaker 3: Can we get two.
Speaker 2: Negative statistics of GDP, the King keep James Perturba and
Speaker 2: the NBER on a path to recession.
Speaker 7: No. I mean well, first of all, the first quarter
Speaker 7: certainly revised down on consumption, so that's not great. But
Speaker 7: the second quarter is looking to be a number that
Speaker 7: could be nearly four percent because we're gonna have a
Speaker 7: bounce back in trade. So a lot of the volatility
Speaker 7: that drove Q one to be so weak was driven
Speaker 7: by front loading of tariffs that's going to go and
Speaker 7: reverse in the second quarter. The measures of real final
Speaker 7: demand were something like two percent for the for the
Speaker 7: first quarter, so it was just fine. So we expect
Speaker 7: it to be kind of a decent year for growth,
Speaker 7: certainly slower than where we've been, something in the one
Speaker 7: and a half percent range, but nothing that's going to
Speaker 7: flag our session to the.
Speaker 3: To the like me takes the two quarter moving Hell,
Speaker 3: you look at you.
Speaker 4: How about the labor market, Stephanie, I'm looking at the
Speaker 4: continuous continuing claims came in in higher than expected the
Speaker 4: heights twenty twenty one.
Speaker 3: Should we start worrying a little bit about the labor
Speaker 3: market here?
Speaker 7: I think what we're seeing is the job finding prospects
Speaker 7: have slowed down pretty substantially. But the important thing is
Speaker 7: we're not really seeing layoffs pick up. So it is
Speaker 7: the sign of a cooling labor market, which was largely
Speaker 7: consensus kind of heading into this year. I think that
Speaker 7: should be the sort of messages that the labor markets.
Speaker 3: Should hold up.
Speaker 7: But it is certainly a lot cooler than where it's been.
Speaker 7: The thing to focus on from here on out is
Speaker 7: to what extent immigration ends up putting significant downward pressure
Speaker 7: on job gains. So our forecast we just put out
Speaker 7: for for next Thursday the Perils for reports on Thursday
Speaker 7: next week, it's for one hundred and thirty thousand, which
Speaker 7: is a decent number. Granted we do think it will
Speaker 7: ultimately get revised down below that, but at least on
Speaker 7: first print it should be decent.
Speaker 4: So how do we think about that immigration issue, the
Speaker 4: southern borders effect that we've been closed. How does that
Speaker 4: flow into I don't know, the farm and farming industry,
Speaker 4: the construction housing business, which I know employs a lot
Speaker 4: of immigrants. How does that work.
Speaker 7: Yeah, that's going to be a challenge. And I think
Speaker 7: it's not even just about the order being closed. The
Speaker 7: flows of immigration have slowed down quite a bit since
Speaker 7: the the beginning of the Trump administration, and even at
Speaker 7: the end of the Biden administration they did start to
Speaker 7: slow down the flows of immigration. What's going to be
Speaker 7: important from here on out is the visa expiration. So
Speaker 7: there is about one and a half million to three
Speaker 7: million people whose visas are going to expire. Because these
Speaker 7: are discretionary visas, the administration has the ability to end
Speaker 7: them over the next eighteen months. And this is going
Speaker 7: to be the real impact to the industries that you cite, farming, construction, leisure,
Speaker 7: and hospitality. In some areas, this is where it could
Speaker 7: start to become a real tightening and the companies might
Speaker 7: have trouble finding labor. Again.
Speaker 2: Really, let's crystallize this to the jobs report on July third.
Speaker 2: It's the first time I've looked at the numbers. Folks
Speaker 2: definitely were off the course. Living this last time around
Speaker 2: was one hundred and thirty nine thousand, well under one fifty,
Speaker 2: well under two hundred. The statistic now is one hundred
Speaker 2: and sixteen thousand. That one hundred and sixteen thousand isn't
Speaker 2: the same as one hundred.
Speaker 3: And sixteen thousand and five or ten years ago, is it? No,
Speaker 3: it's not what's ad delta.
Speaker 7: So the way I think about it is the job
Speaker 7: number versus sort of the break even rate. The break
Speaker 7: even rate meaning kind of a steady state that would
Speaker 7: be sort of neither tightening nor easing up on the
Speaker 7: labor market. Today, that's around seventy five thousand based on
Speaker 7: our estimates, but two years ago that was double that.
Speaker 7: So that's why we were able to sustain really high
Speaker 7: job gains without really seeing, you know, a significant tightening
Speaker 7: in the labor market because we had all this flow
Speaker 7: of immigration that is largely cut off, and that seventy
Speaker 7: five might even be slightly lower than that realistically.
Speaker 4: So is there an unemployment rate number that gets the
Speaker 4: Fed's attention?
Speaker 3: Do you think?
Speaker 7: Yeah? I think I think in two directions. Right, So,
Speaker 7: the FED zone forecast or that it could be four
Speaker 7: and a half percent by the end of this year,
Speaker 7: and they kind of expected to stay there through next year.
Speaker 7: So if you get to four and a half percent
Speaker 7: by you know, the fall certainly would be grounds to
Speaker 7: be cutting. But there's a chance that this whole immigration
Speaker 7: dialogue that we're having does the has the opposite effect
Speaker 7: on the unemployment rate because it is tightening the labor
Speaker 7: market in those blue collar industries and could actually put
Speaker 7: some downward pressure keeping it from rising substantially. That would
Speaker 7: be the environment where the Fed doesn't cut this year.
Speaker 4: Interesting because right now the unemployment.
Speaker 3: I'm getting a lot of mystery here.
Speaker 4: Well that's I mean, on the one hand, Tom, on
Speaker 4: the other, I mean, unemployment rate is forecast to be
Speaker 4: just four point three percent, uh coming up. I mean again,
Speaker 4: it feels to me, and I think that most people
Speaker 4: like kind of full employment.
Speaker 7: Yeah, so I think I think that to take it
Speaker 7: to like remove some of the mystery. I think what
Speaker 7: we're looking at is an environment where the economy is
Speaker 7: slowed down. We're at a one and a half is
Speaker 7: percent GDP growth, which is fine, not great. The unemployment
Speaker 7: rate kind of bounces between four to two and four five,
Speaker 7: and we kind of see an environment that's okay, and
Speaker 7: then we actually begin to accelerate next year. The immigration
Speaker 7: thing is going to mean that we see slower job
Speaker 7: but we don't necessarily need to be scared of That
Speaker 7: is the nehru.
Speaker 2: I mean, we've got literally, folks, we've got a function
Speaker 2: on the Bloomberg TAYL which is the tailor rule, which is,
Speaker 2: you know, somewhat out.
Speaker 3: Of vogue to say the least.
Speaker 2: Can you do a fancy Stephanie roth Nehru into tailor rule,
Speaker 2: Oaken law calculation or is all that academic mumbo jumbo
Speaker 2: just as useless right now? Yeah?
Speaker 7: I mean, well, for a long period of time it
Speaker 7: was particular uses. I think now it's going to become
Speaker 7: more relevant. But what we're looking at is an environment
Speaker 7: where the sort of non inflationary unemployment rate is probably
Speaker 7: in this, you know, for two to four five percent range,
Speaker 7: and I think at that point, you know, you're not
Speaker 7: really seeing that that have to reap either way. If
Speaker 7: it moves below for certainly inflationary moves above four and
Speaker 7: a half, then that's weakening in the economy.
Speaker 3: Thirty seconds week dollar. If we get a legitimate week.
Speaker 2: Dollar, does that provide stimulus through exports?
Speaker 7: Yeah, And it also crites some inflationary pressures in an
Speaker 7: environment where we don't really want to see inflationary pressures.
Speaker 7: So base cases you start to see inflation pick up
Speaker 7: over the summer. There's because we've had the past couple
Speaker 7: of months of low inflation, the markets has sort of
Speaker 7: assumed that tariffs don't matter, and we're going to see inflation.
Speaker 7: Just because we saw low inflation recently doesn't mean over
Speaker 7: the summer it's not going to pick up.
Speaker 3: SEFERI row.
Speaker 2: Thank you so much for the world research this morning.
Speaker 2: Just a great brief off that key economic data.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 2: Anticipated for Global, Wall Street and a Manhattan Raffendy Swimmer
Speaker 2: joins us here from Churchill Paul.
Speaker 4: Randy Schwimmer is the vice chairman investor Solutionscripts Churchill Asset
Speaker 4: Management Joints. Is here in our studio here, Randy, if
Speaker 4: I've got if I'm a private equity, private credit, can
Speaker 4: I get out of any of my deals? I need
Speaker 4: some liquidity, dude, It's been years since I've been able.
Speaker 4: The IPO market seems kind of lame. I'm not seeing
Speaker 4: a ton of m and ah.
Speaker 3: How do I get liquidity?
Speaker 6: Yeah?
Speaker 8: So see, you know, I always come armed and prepared
Speaker 8: for because this is the center for a private market's
Speaker 8: excellence here at Bloomberg Surveillance with you too. So we
Speaker 8: just came out yesterday with a survey of almost sixty
Speaker 8: four yeah, one hundred and sixty four private equity leaders.
Speaker 8: And what they're saying, which is now consistent with what
Speaker 8: we're seeing, more optimism about deal flowkay opening up before
Speaker 8: the second half starts of this year. About twenty five
Speaker 8: percent said more deal flow than another twenty five percent,
Speaker 8: so total about fifty saying it's coming before the first
Speaker 8: half of the next year. Why is that happening? Because
Speaker 8: the deals that they're looking at have isolated tariff risk already.
Speaker 8: So for example, hot topic right now, pest control businesses.
Speaker 8: Why is that hot topic? Because you know who does
Speaker 8: care about fed cuts, ants and termites? They are indifferent,
Speaker 8: all right? Why don't they care? Because it's more of
Speaker 8: a seasonal thing. And by the way, you are experiencing
Speaker 8: lots of flies in the kitchen during this hot weather,
Speaker 8: right So, pest control firms are opportunities because very little equipment,
Speaker 8: not a lot of labor, and repeatable revenue sources of
Speaker 8: occurring how many times have you fired your pest control
Speaker 8: at very few once they're in and these are small
Speaker 8: business so privately, it's like, you know what, we're going
Speaker 8: to consolidate these mom and pops and create bigger platforms
Speaker 8: than sell them. And those businesses, because they're they're strong
Speaker 8: through various cycles, right, all of a sudden have greater value.
Speaker 8: So now what we're seeing in our shop is a
Speaker 8: tickup of deal flow, which means more realization. So stay tuned, Paul,
Speaker 8: it's coming.
Speaker 2: The headlines is private credit is trying to find a
Speaker 2: new valuation and maybe private equity too. You mentioned there's
Speaker 2: three trillion dollars looking to exit out there in some
Speaker 2: way somehow out Yeah, go through the process right now
Speaker 2: about somebody an endowment or whoever.
Speaker 3: Has to clear they have to sell private credit.
Speaker 2: How does that occur on a less heated Thursday in June.
Speaker 3: Yeah.
Speaker 8: So what they're doing now is they're coming to us
Speaker 8: and they're saying, Randy, you know, you guys have really
Speaker 8: successful platform. There's certain strategies we really like about your business.
Speaker 8: We have these other businesses that we want to get
Speaker 8: out of. Okay, can you help us to move our
Speaker 8: portfolio from strategies that we thought we're going to work out,
Speaker 8: but over the last several years has not been as
Speaker 8: resilient as we thought, or the returns haven't been there.
Speaker 8: So we sit down on a consulting basis with these
Speaker 8: firms and we say, we can help you get into
Speaker 8: a let's call it, a more resilient area with better returns.
Speaker 3: And lower risk. Everyone wants to know how much hair.
Speaker 8: Depends on the well, it depends on the risk asset
Speaker 8: class that they are currently in, right, So if they're
Speaker 8: in a distress class and they're not getting the volume,
Speaker 8: which by the way, historically has been the case. Because
Speaker 8: where's the recession. Everybody's saying, Hey, every thing about private
Speaker 8: credit is you know, you've done really well, but there
Speaker 8: hasn't been a real recession, which is true. You know,
Speaker 8: there's been little crises. As one of my friends at
Speaker 8: Moody says, there have been quizzes, not tests. Okay, but
Speaker 8: you know what, some of the asset classes have failed
Speaker 8: the quizzes.
Speaker 3: Right, if you fail a quiz.
Speaker 8: You're still failing. So I do think that what we're
Speaker 8: seeing now from our survey and what we're seeing in
Speaker 8: our pipeline, so April was kind of a low month,
Speaker 8: you know, given tariffs and everything else. May was a
Speaker 8: bit of a comeback. June we have seen fifty percent
Speaker 8: higher deal flow than we saw June of last year.
Speaker 8: So I think this three trillion dollars time that you
Speaker 8: mentioned globally of corporates waiting to acxit is that that
Speaker 8: ice cube is starting to melt. We're seeing it in
Speaker 8: our pipeline, We're seeing it in global m and A data.
Speaker 8: The folks at London Stock Exchange keep track of this.
Speaker 8: M and A for twenty twenty five through the middle
Speaker 8: of June is up, you know, over twenty two and
Speaker 8: twenty three. So I do think that it's coming back.
Speaker 4: Where are the banks here? As you in your private
Speaker 4: credit folks look at deals, where are the banks these days?
Speaker 4: Because you guys walk on middle market.
Speaker 3: And where are the banks?
Speaker 8: Yeah, so great segue. So kudos to Carmen Arroya and
Speaker 8: Ellen Schneider, your reporters who came out yesterday. I guess
Speaker 8: it was Tuesday headline JP Morgan Traders shut out of
Speaker 8: private credit market. Okay, what's going on there is they're
Speaker 8: going out with their list. You know, I worked there,
Speaker 8: you worked there right. You know, remember they go out lists, Hey,
Speaker 8: we'd like to buy these loans, and then here's a
Speaker 8: bunch of loans, okay, or we want to sell those loans.
Speaker 8: Here's here's the list. And what your reporters basically said,
Speaker 8: which is really true, is that you know, nobody wants
Speaker 8: to sell these loans. If I have a three hundred,
Speaker 8: I have three hundred loans through the companies in my
Speaker 8: senior portfolio, and they're doing well, why would I want
Speaker 8: to sell them? So while JP is obviously a giant
Speaker 8: in terms of secondary trading and loans and bonds and
Speaker 8: everything else, in the private markets, it's more challenging because
Speaker 8: these things are I liquid And one of the people
Speaker 8: that they quote says, it's like making an Ostrich fly.
Speaker 8: It doesn't happen.
Speaker 2: Do you care just one final question quickly, do you
Speaker 2: care about mark to market?
Speaker 8: There is no such things, right, So, what we care
Speaker 8: about our third party valuations? So we have three distinct
Speaker 8: outside firms who come in every quarter and value all
Speaker 8: of eachlums, each item. Right now, we have a run
Speaker 8: on team that weighs in sure, But you know, if
Speaker 8: you have three outside firms saying here's what the loan
Speaker 8: is that's that's mark to market.
Speaker 2: Okay, Randy too short of visit Randy Schummer, Thank you
Speaker 2: so much. Let's do this again much bunch longer. Get
Speaker 2: you at the top of the hour.
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Speaker 1: Bloomberg terminal.
Speaker 3: A lot of people we'll talk about fancy degrees.
Speaker 2: I think a PP and E at Williams, any of another,
Speaker 2: you know, microeconomics at the University of Chicago, Biomedical science
Speaker 2: at Texas, A and M bience medical arguably the most
Speaker 2: prestigious BioMed degree in the country. There's a few other
Speaker 2: institutions getting it right. Angie Guildea survived that. Angie, what
Speaker 2: was it like surviving the biomedical combine at College Station.
Speaker 9: It was hard. I'll tell you. There were a lot
Speaker 9: of really smart aggies out there. So I'm glad to
Speaker 9: have graduated and gotten a prestigious degree from the types
Speaker 9: of A and M.
Speaker 3: Absolutely iconic degree. I have to have you.
Speaker 2: Alisa Matteo mentions the shell BP none event. Do you
Speaker 2: people at KPMG, do you look for a big oil
Speaker 2: upstream roll up?
Speaker 9: You know what we've been seeing in the market, and
Speaker 9: we've seen this over the last couple of years, is consolidate.
Speaker 9: You saw Exxon Bay Pioneer. You saw Chevron make a
Speaker 9: bid for Ana Dharker, which the Oxy ended up purchasing
Speaker 9: and then hes. So certainly, I think consolidation in the
Speaker 9: market is something that will continue. Who buys who is
Speaker 9: something that's still left to be.
Speaker 4: Determined, Angie.
Speaker 6: I watched the Whoa Whoa?
Speaker 3: You know the answer because she watched Limb Man. I know,
Speaker 3: you know who buys who?
Speaker 4: Yeah, I mean I watched the first season of Land Man.
Speaker 4: I consider myself an expert now in all things oil
Speaker 4: and gas, Angie, but I noticed that that risk premium
Speaker 4: that we saw in crude oil from the Mid East,
Speaker 4: escalation in Iran, that seems to be out of the
Speaker 4: market now. So what are the underlining fundamentals of global
Speaker 4: oil these days?
Speaker 9: It's a fascinating situation that happened because if you compare
Speaker 9: what happened in the seventies with the oral embargo, with
Speaker 9: the Iraqi war in two thousand and three. I mean,
Speaker 9: we just not see the spike that historically we've seen
Speaker 9: when there's conflict in the Middle East. And I think
Speaker 9: part of that is the markets are more mature, we've
Speaker 9: got more data. But a big part of that is one,
Speaker 9: there's oversupply in the market right now, so we're washed
Speaker 9: and oil. And the second thing is the relevance that
Speaker 9: the US shale and American production has had to the market.
Speaker 9: I mean, we're the number one producing country in the world,
Speaker 9: and the reliance on the Middle East oil is not
Speaker 9: what it was twenty thirty forty years ago.
Speaker 4: You're down there in Houston, the center of the US
Speaker 4: energy business. Where are your clients. What do they want
Speaker 4: to really see crude oil in terms of price? What's
Speaker 4: kind of the ideal range.
Speaker 9: Ideally it's above seventy dollars a barrel. It's different in
Speaker 9: different assets. But the cost of drilling the shale is
Speaker 9: the inventory is depleting, so the cost are going up.
Speaker 9: There's some additional costs from drilling with the terriffs on
Speaker 9: the steel pipe and things like that. So really you've
Speaker 9: got to see above seventy dollars a barrel is really
Speaker 9: a good sweet spot. Otherwise it just gets really really
Speaker 9: tough to maintain profitability.
Speaker 2: Angie, one more question and a busy busy day here.
Speaker 2: As I talked about the roll up as well the
Speaker 2: ev electric ESG thing and all of it related to hydrocarbons.
Speaker 2: Are we in the same regime of thirty six months
Speaker 2: ago or is it a new new for the debate
Speaker 2: in America of hydrocarbons and electricity.
Speaker 9: Well, it's interesting. We just had the statistical review come
Speaker 9: out that KPMG sponsored with the Energy Institute, and we're
Speaker 9: seeing all forms of energy grow. We saw US renewables
Speaker 9: grow at a seven percent rate, which was faster than Europe.
Speaker 9: But we're seeing it play out in different parts of
Speaker 9: the world. China, for instance, added more renewables than any
Speaker 9: other country combined. They still use a big part of
Speaker 9: their wedge around gas and fossil fuels cold, but they
Speaker 9: are completely adding to the mix.
Speaker 2: Andrew too short of visit, Angie Gilde, Thank you so much,
Speaker 2: the KPMG, the United States Energy Leader.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 1: Just say Alexa, play Bloomberg eleven thirty joining us now
Speaker 1: with our newspapers.
Speaker 3: And she said, we're starting with this. I don't care
Speaker 3: what you people think, Lisa Matteo.
Speaker 6: Yes, but Brad Pitt can fit into that F one
Speaker 6: And this is interesting. It's a question from the Wall
Speaker 6: Street Journal. So it's can F one finally deliver Apple
Speaker 6: a big screen hit? So it's coming out in theaters
Speaker 6: this week, right, Brad pitts in it. When the team
Speaker 6: first started pitching the movie, there was a bidding war
Speaker 6: for it. Okay, so Apple paid some big money. They
Speaker 6: agreed to spend two hundred and fifty million dollars. Brad
Speaker 6: Pitt paid more than twenty million dollars. He's going to
Speaker 6: get a cut of the film's revenue if it becomes
Speaker 6: a big hit. Yeah, and you have big like directors.
Speaker 6: The director of Top Gun Matters, It's yes.
Speaker 4: I'm gonnapreciate it in the theater.
Speaker 6: Yes, And I feel like you have to, like even
Speaker 6: Imax because the sound and all that kind of stuff
Speaker 6: with it. But pre release surveys are showing that F
Speaker 6: one is struggling to generate interests of audiences beyond older men.
Speaker 6: So they're not getting that younger group.
Speaker 2: Okay, but the one is all the all the the
Speaker 2: drivers are you know, honky boy toys for the girls.
Speaker 2: So they're getting a lot of girls watching F one,
Speaker 2: huge worldwide audience. Is that what they think here, that,
Speaker 2: like you know, Barbie or whatever, women will show up to.
Speaker 3: See F one? Is that in the zeitgeist?
Speaker 6: Well they're hoping, I mean, because you think about like that,
Speaker 6: what was that other movie, Grand Tarorismo, that other race
Speaker 6: car movies that came out, and that was a great one.
Speaker 6: It attracted the younger audience, It attracted the women. It
Speaker 6: did that. It also had a younger star. And okay, no,
Speaker 6: not at all right over my head, but we will
Speaker 6: give the recap on Monday. I'll let you know how
Speaker 6: it did. This is when I'm also in the Wall
Speaker 6: Street Journal. Weighted vests. I know you've trained. I have
Speaker 6: the waighted vest. I got it for Mother's Day.
Speaker 2: I asked for it.
Speaker 6: It was on special requests. But you've seen the women
Speaker 6: right running around with these things. It was huge with
Speaker 6: the military and now the women. It's like a fashion statement.
Speaker 3: For Father's Day. It was a case of.
Speaker 4: What works for you has and she does the peloton
Speaker 4: like treadmill, so she wears it at the Again, by
Speaker 4: the way, while she's doing this, I'm just kicking back
Speaker 4: on the couch watching ESPN.
Speaker 6: Oh my god, you have to because they went into
Speaker 6: the research behind it. So, yes, it does burn more calories.
Speaker 6: That's the whole thing why the women are doing it.
Speaker 6: If you wear one about ten percent of your body weight,
Speaker 6: it's going to burn an initial eight and a half calories.
Speaker 6: And then if you get the heavy one. I have
Speaker 6: a sixteen pound one and a twenty pound one.
Speaker 5: Let's get two on hand.
Speaker 6: But that's the thing. They say. If you go too
Speaker 6: high and if you start feeling pressure in your back,
Speaker 6: they say to go down in weight. They say, don't
Speaker 6: do it in like jumping exercises and all that, because
Speaker 6: you can hurt yourself. That's the morning pound just fine.
Speaker 6: But no, you got to wear it around the house
Speaker 6: like you gotta as you're doing your cleaning.
Speaker 3: Yes, so you've done Brad Pitt and Girl Wellness Year.
Speaker 3: This is a twisted newspapers.
Speaker 8: We have time for this one's even better.
Speaker 2: Okay.
Speaker 6: Nike comes out with earnings today, right, but the talk
Speaker 6: is about its latest shoe. It's a snowfer snow Yes,
Speaker 6: it is a sneaker and a loafer. Okay, and this
Speaker 6: is the phenomenon. You've seen men wearing the right they're
Speaker 6: the comfortable shoes. So now Nike is starting to jump
Speaker 6: on that. You know, Tom, you've talked about all like
Speaker 6: the executives kind of wearing them. You see the pictures
Speaker 6: if you're watching on YouTube.
Speaker 1: What do you think?
Speaker 6: I mean, they're they're kind of cute. No they're not.
Speaker 6: They're kind of ugly. But it's the air Maax phenomenon.
Speaker 6: And it's it comes out June twenty seven. It hasn't
Speaker 6: even been released yet, and it's and it's going for
Speaker 6: like five hundred dollars in resale prices.
Speaker 3: What's a snow part? Does it feel?
Speaker 6: Sneakers? Yes, sneaker and a loafer. Sneaker, sneaker and a loafer.
Speaker 6: So you see the bottom is like the sneaker and
Speaker 6: the top is like a penny loaf.
Speaker 4: David Weston walking around the snow.
Speaker 6: For then I know it's I'm telling you men love
Speaker 6: these things.
Speaker 2: Yes, all right, we're getting to Jack per Sells, the
Speaker 2: original snowfer. Yes, remember that you'd have white and black
Speaker 2: Jack Bert. There was a huge choice, be a Flyers
Speaker 2: or Jack Purcelles.
Speaker 3: That was it.
Speaker 2: Lisa Mateo, the newspapers, Thank you.
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