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Speaker 2: Sharees of Netflix, you know that they're dropping. They're down
Speaker 2: about eight point three percent, the most in two years.
Speaker 2: Sharer started tumbling last night, the trade continuing lower into
Speaker 2: today's trade, following a week forecast for revenue at the
Speaker 2: company and a warning that the streaming giant will stop
Speaker 2: reporting subscriber numbers in twenty twenty five. You saw that
Speaker 2: as soon as it crossed last night, You're like, that's
Speaker 2: a big deal.
Speaker 3: It's a really big deal. I mean, less data. That
Speaker 3: is not something that investors want, it's not something that
Speaker 3: analysts want. All of that really overshadowing an otherwise strong
Speaker 3: start to the year. It's best start to a year
Speaker 3: going all the way back to twenty twenty and a
Speaker 3: blockbuster gaining subscribers in the last period. But subscriber gains, Carol,
Speaker 3: the company said, will be lower in this period.
Speaker 2: All right, So let's get to the interview. He was
Speaker 2: a bear on Netflix for years until he wasn't with
Speaker 2: us as Michael Pactor, Managing Director and entertainment analyst at
Speaker 2: Wedbush Securities. He's out there in Long Beach, California. Michael,
Speaker 2: let's just go to it down more than eight percent,
Speaker 2: that's selloff justified in your view, it is.
Speaker 4: I mean, I think Tim said something that probably isn't right.
Speaker 4: As an analyst, I prefer no information. It actually allows
Speaker 4: it allows, it allows me to share my insights and
Speaker 4: investors actually value them more.
Speaker 3: Well said.
Speaker 4: And the truth is, you know, this stock was valued
Speaker 4: for twenty years on subscriber growth, and that's all people
Speaker 4: cared about. You know, if you kind of remember, and
Speaker 4: I know you guys were in great school, but the
Speaker 4: dot com boom, all we cared about was the number
Speaker 4: of email accounts or the number of users. And that's
Speaker 4: true of Netflix from nineteen ninety seven until effectively yesterday.
Speaker 4: And what the company is now doing is acknowledging that
Speaker 4: it's no longer a super high growth company, but it
Speaker 4: is remarkably profitable. And so you know, we have to
Speaker 4: transition to looking at them as a low growth company
Speaker 4: with lots and lots of profit, and I think that
Speaker 4: what investors are missing today is that the spend on
Speaker 4: content is likely going to be steady. State there's you know,
Speaker 4: if you're spending seventeen billion a year on content at
Speaker 4: two hundred and seventy million users, do you really need
Speaker 4: to spend ten percent more at three hundred million users? Like? No,
Speaker 4: they have plenty of content, So the leverage from even
Speaker 4: modest growth is going to be massive, and the cash
Speaker 4: flow number is going to get giant. So yes, I
Speaker 4: think it's worth seven twenty five. I think the sell
Speaker 4: off is overdone. But people are disappointed because they've they've
Speaker 4: been trained to value these guys based on subscriber growth.
Speaker 3: But Michael doesn't sound like you're that disappointed that you're
Speaker 3: not going to get those subscriber numbers anymore, because you're
Speaker 3: thinking that this company needs to be valued in a
Speaker 3: different way.
Speaker 4: That's exactly right. And you know, Harvard Business School wrote
Speaker 4: a case about my valuation of Netflix, and I've been
Speaker 4: saying this for ten years. It wasn't sustainable as a
Speaker 4: high growth, low profit company. It had to transition to
Speaker 4: a low growth, immensely profitable company. They started to do
Speaker 4: that in twenty twenty two, and that's when we upgraded
Speaker 4: May of twenty two. And you know I said it
Speaker 4: then and I'm saying that now. They just had to
Speaker 4: complete the transition and acknowledge this is how we should
Speaker 4: look at them. We don't look at Facebook as a
Speaker 4: high growth user company. We look at as a high
Speaker 4: growth profit company. We don't look at Google as you know,
Speaker 4: adding users. We don't care at all. We just cared
Speaker 4: that they find better ways to monetize. Netflix has done that.
Speaker 4: They found better ways to monetize. The two big things
Speaker 4: are the ad tier, which not only grows revenue through
Speaker 4: higher revenue per thousand ads I'm sorry for thousand views,
Speaker 4: but also allows them to bring in lower, lower income
Speaker 4: customers and also allows them to retain people who are
Speaker 4: churning out. And then the second is password crack down
Speaker 4: no sharing. That means I'm going to pay more when
Speaker 4: my kids move out. I'm going to buy my kids
Speaker 4: seven dollars ninety nine cent subscriptions rather than make them
Speaker 4: pay themselves at fifteen forty nine. So these two things
Speaker 4: at a lot of revenue, and that's where we should
Speaker 4: really start looking at and mean we should start thinking
Speaker 4: about Netflix, says growing revenue? Who cares how many users
Speaker 4: they have?
Speaker 2: Let me ask you something and forgive me because I'm
Speaker 2: going to go in a tangent. But Tim knows that
Speaker 2: kind of test it Apple. Do you feel the same
Speaker 2: way about Apple that maybe it's a lower growth company,
Speaker 2: but it still sells a whole heck of a lot
Speaker 2: of stuff.
Speaker 4: Yeah, I mean I don't cover Apple. My colleague Dan
Speaker 4: i'ves does, but yes, you know, you sell five hundred
Speaker 4: million or nine hundred million phones a year. Do you
Speaker 4: really care as long as all those people use every
Speaker 4: app and they're paying in the app store, like, you
Speaker 4: don't care at all. So you know, the app store
Speaker 4: revenue is the part that's really growing. In the warranty
Speaker 4: revenue and all the service income from those guys and
Speaker 4: all the accessories. So if you have nine hundred million
Speaker 4: phones out there, they have more. You can sell nine
Speaker 4: hundred million AirPods. So people start thinking about the basket size.
Speaker 4: So yes, Amazon, same thing. Do we know how many
Speaker 4: users Amazon has? We don't care. I mean I personally
Speaker 4: went from one item a month to three items a
Speaker 4: day Amazon, and we all are doing that, so we
Speaker 4: all get it. We understand that Amazon just starts to
Speaker 4: replace all physical retail and we don't care if there
Speaker 4: are more users. Same with Apple, we don't care if
Speaker 4: there are more users as long as those people buy more.
Speaker 2: I love what you're saying. It's interesting, but it's like
Speaker 2: a total rethink about how we value these companies, or
Speaker 2: certainly how we report on these companies. Do we get
Speaker 2: to that point? Is the analyst investment community going to
Speaker 2: go there at some point?
Speaker 4: Well, they're there on every one of the you know,
Speaker 4: the big top ten companies except for Netflix and probably
Speaker 4: for Tesla and probably for Nvidia, every other company Microsoft, Like,
Speaker 4: nobody thinks Microsoft is growing users. They just think Microsoft
Speaker 4: is growing the way they monetize users. Nobody thinks Amazon
Speaker 4: is growing users, or Apple or Google. So no, I
Speaker 4: think that every large tech company, every quarter trillion dollar
Speaker 4: company or bigger, we should start thinking about them as
Speaker 4: achieving steady state users but figuring out how to grow
Speaker 4: basket size. And that's where Netflix.
Speaker 1: Is right now.
Speaker 3: Okay, Michael, I want to talk about these different levers
Speaker 3: that that Netflix has to use to increase revenue. I
Speaker 3: want to talk prices here. I mean, how much room
Speaker 3: does Netflix have especially in markets where it's really fully penetrated,
Speaker 3: like the United States, to actually raise prices.
Speaker 4: Well, I think that you're going to see streaming competition
Speaker 4: kind of drop by the wayside. You know, let's see
Speaker 4: what the new owners of Paramount choose to do. Sony's
Speaker 4: not going to be able to suffer through through big
Speaker 4: losses on Paramount Plus, so I don't know yet. Disney
Speaker 4: is not going to take losses forever. They'll flail for
Speaker 4: a bit. But as Disney pulls ESPN onto a standalone
Speaker 4: streaming service, they're going to realize that's a huge mistake.
Speaker 4: Peacock is unsustainable. So truthfully, I'd say people will probably
Speaker 4: pay about twenty bucks a month. Where the average user
Speaker 4: on Netflix consumes sixty five hours a month of content
Speaker 4: that's worth twenty bucks. I mean, that just doesn't turn
Speaker 4: out to be very expensive thirty cents an hour, so
Speaker 4: I think twenty they can get to. I think on
Speaker 4: the ad tier they could probably get to something like
Speaker 4: six ads per hour at forty bucks per thousand, and
Speaker 4: that means you're talking about twenty dollars or so per
Speaker 4: month just in ad revenue. So I could see the
Speaker 4: average revenue going up and this passwords sharing crackdown also
Speaker 4: is going to take that number above twenty. So I
Speaker 4: think twenty dollars per user is at least in the
Speaker 4: US and Canada is pretty realistic. Cut that in half
Speaker 4: probably for Europe, and then cut it in half again
Speaker 4: for rest of the world. You know, so again twenty
Speaker 4: bucks here, ten bucks Europe, five bucks rest a world.
Speaker 4: But I think they're going to get there. I really do.
Speaker 2: In terms of addam, you obviously like it. You as
Speaker 2: we mentioned, your twelve month price target of seven to
Speaker 2: twenty five thirty percent upside roughly from where we are.
Speaker 2: What are the problems? What are the risks? Though? With
Speaker 2: the Netflix story, I mean, nothing's ever perfect, except of
Speaker 2: course my co host right other thise.
Speaker 4: They're arrogance is probably their biggest their biggest adversary. They
Speaker 4: don't seem to think that they need the analyst community.
Speaker 4: So probably half the people who cover the stock could
Speaker 4: not explain to you what I just explained. They don't
Speaker 4: have analyst days, you know. They sent out something for
Speaker 4: the upfront meetings and they told my team we can
Speaker 4: send one person. We said, can we send me and
Speaker 4: my co analysts? And they said nope, only one, they're jerks.
Speaker 4: They don't seem to have any interest in hearing journal
Speaker 4: views about anything they're doing, so their game strategy is
Speaker 4: just idiotic. And again a very large shareholder Netflix told
Speaker 4: them they should talk to me about games. I was
Speaker 4: copied on the email introduction and theyed, they just don't care,
Speaker 4: so they think they know everything. You can watch their
Speaker 4: earnings call. Look at Greg Peters and Ted Sarandos. They
Speaker 4: are the two smartest people ever born. Like watch the
Speaker 4: having the earnings interview. You can tell they are. They're
Speaker 4: the smartest people ever born. So they don't need to
Speaker 4: hear from other people. That's their biggest, biggest probley.
Speaker 3: Yeah, in some context too. I mean you have been
Speaker 3: covering gaming for years too, so perhaps that's why you
Speaker 3: know some people recommend that you should talk to those
Speaker 3: folks about games. I'm wondering if that changes just in
Speaker 3: the last thirty seconds that we have with you, Michael,
Speaker 3: Does that change at all now that increasingly you argue
Speaker 3: they're viewed as a value stock, will they start to
Speaker 3: open up a little more.
Speaker 4: I don't think so. I think your first point that
Speaker 4: they're becoming more opaque, this has been their formula for success.
Speaker 4: They have consistent we lowered the number of data points
Speaker 4: that they provide to investors for the last fifteen years.
Speaker 4: This is their DNA, So no, I don't think so, all.
Speaker 2: Right, So appreciate your time today, Michael, have a great week.
Speaker 2: And Michael Pacter, Managing director and entertainment analyst at Webush Securities,
Speaker 2: joining us from Long Beach, California'm looking at shares of
Speaker 2: Netflix tim Dad about nine percent here, so pretty much
Speaker 2: hovering near their lows of the session, down the most
Speaker 2: in about two years, so certainly one of the laggards
Speaker 2: we're seeing.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 2: We're focusing a lot on the equity trade today, but
Speaker 2: really what we've talked so much about throughout the week,
Speaker 2: and the reason that we've seen some volatility creep in
Speaker 2: once again on the side of US stocks and certainly
Speaker 2: putting pressure we're seeing that in the week overall, is
Speaker 2: that what we've seen Tim overall this week when it
Speaker 2: comes to US rates.
Speaker 3: Yeah, Yeah, US rates have shot higher Carol in fact,
Speaker 3: yields on the tenure this week, moving to levels not
Speaker 3: seen this year all the way going back to November
Speaker 3: of twenty twenty two. So certainly has to do a
Speaker 3: little bit with the way that people are thinking about
Speaker 3: the path of the Federal Reserve.
Speaker 2: Yeah, exactly. So it's kind of like TikTok, TikTok, everybody,
Speaker 2: because that is the sound of the Federal Reserve basically
Speaker 2: resetting the clock when it comes to what they want
Speaker 2: to do with interest rate cuts, putting them off longer
Speaker 2: as we know. Chicago Fed Bank President Austin Goolsby among
Speaker 2: the latest too way in today saying the US Central
Speaker 2: Bank team needs some more time.
Speaker 3: Writing about all of this. In a week two when
Speaker 3: we heard from Fed Chair J Powell, who confirmed we
Speaker 3: are indeed, yes, higher for longer on rates. Is Bloomberg
Speaker 3: News Federal Reserve and Economics reporter Katerina Sariva in our
Speaker 3: Houston bureau. Katerina, a great piece that really ties together
Speaker 3: kind of everything that we heard this week with Powell,
Speaker 3: the moves on rates, we know, the drill, the FED
Speaker 3: data dependent and yet Fed Chair J. Powell is cementing
Speaker 3: the message this week that led to the reset of
Speaker 3: the clock cutting rates. As you write, why do you
Speaker 3: think there was a significant shift this week when we
Speaker 3: heard from a lot of FED speakers in recent weeks
Speaker 3: that yes, that data has indeed come in a little
Speaker 3: hotter than we like.
Speaker 5: Yeah, well, I think, you know, as they say, it
Speaker 5: ain't over to the fat ladies things. I think in
Speaker 5: this case, you know, people are really looking for that
Speaker 5: guidance from the top, and I think especially getting it
Speaker 5: from the chair is a clear indication that this is
Speaker 5: kind of you know, we're now seeing a shift and
Speaker 5: it's kind of has broad support. You know, we've, as
Speaker 5: you mentioned, heard it from various FED officials, but now
Speaker 5: also from the chair, and you know, importantly we also
Speaker 5: heard it from the Vice chair earlier this week, and
Speaker 5: you've heard similar sentiments from John Williams, the president of
Speaker 5: the New York FED. So that's kind of your FOMC
Speaker 5: troika as they like to call it. So you know,
Speaker 5: the leadership is saying it, the others are saying it.
Speaker 5: So so now we can be sure that this is
Speaker 5: kind of the path forward.
Speaker 2: It's like in a household, you know, depending upon parents,
Speaker 2: like one is sometimes more strict. So it's like, you know,
Speaker 2: well mom said this or dad said this, Like it
Speaker 2: just holds a different way.
Speaker 3: We know that.
Speaker 2: I'm not saying one sex or the other. Whowell this
Speaker 2: kiss Jay Powell is just I don't know, he's both,
Speaker 2: I guess right. But having said that, it was significant
Speaker 2: to have him kind of finally get on board with
Speaker 2: this idea that, yeah, maybe we are going to stay
Speaker 2: higher for longer. Having said that, I do feel like
Speaker 2: there's still a little bit of a drum beat among
Speaker 2: Fed officials Keterina that was still going to get a
Speaker 2: rate cut this year, and I feel like market folks
Speaker 2: that we talked to say, yeah, probably after the elections
Speaker 2: is kind of what we're thinking. Has a rate cut
Speaker 2: by the Fed and FED official has been ruled out completely?
Speaker 5: No, I don't think so at all. I think they
Speaker 5: very much would like to cut rates this year. And
Speaker 5: they're also concerned about, you know, what will start to
Speaker 5: happen on the labor market side of things if they
Speaker 5: keep rates you know, too high or high for a
Speaker 5: long time, so they're being very cautious. I think they
Speaker 5: would like to cut rates. I think you see you know,
Speaker 5: this reaction we're seeing in markets is maybe kind of
Speaker 5: a bit more extreme than where FED officials are, right.
Speaker 5: I think you're seeing now just two odds of two
Speaker 5: rate cuts this year. People push it, keeping pushing it
Speaker 5: out farther and farther. Some banks now saying that, you know,
Speaker 5: we might not get any rate cuts at all. But
Speaker 5: I think for the Fed, you know, the latest forecast
Speaker 5: we have from them is for three cuts that you know,
Speaker 5: we we'll have to see in June whether that holds up,
Speaker 5: but I think they want.
Speaker 2: To see a cut. A couple of things that struck
Speaker 2: me in your story, and this one in particular, because
Speaker 2: we're starting to hear from people saying, and we have
Speaker 2: actually for a while no rate cuts this year, and
Speaker 2: maybe we get a rate increase. You write in the story,
Speaker 2: FED officials are increasingly voicing concern high borrowing costs may
Speaker 2: not be doing enough work to rain and demand, increasing
Speaker 2: anxiety among investors in analys that the Central Bank may
Speaker 2: need to actually raise interest rates further. It's interesting how
Speaker 2: the narrative has changed. I feel, like Katerine, in such
Speaker 2: a short period of time, you know what guidance at
Speaker 2: all or commentary have we gotten really that we can
Speaker 2: kind of hang our hat on when it comes to
Speaker 2: FED officials about a rate increase.
Speaker 5: So first of all, it's not that many Fed officials
Speaker 5: that have kind of opened the door to this, but
Speaker 5: a few of them have maintained throughout this whole process,
Speaker 5: you know, from when they started holding rates in July,
Speaker 5: that another rate increase is not off the table. I mean,
Speaker 5: you've even heard Powell say this. So I think they
Speaker 5: want to keep options open. They've seen what can happen
Speaker 5: when they tie themselves down too much to one to
Speaker 5: one policy course, and it's not good. So they want
Speaker 5: to keep options open. But it's still a very kind of,
Speaker 5: you know, fringe idea, if you want to call it that.
Speaker 5: It's kind of the last option for them. So I
Speaker 5: think it's still pretty out there in terms of the
Speaker 5: chances for that, but they're keeping the door open.
Speaker 3: So okay, keeping the door open. It's fringe. It's sort
Speaker 3: of an out there option the way that you describe
Speaker 3: the idea of potentially raising rates this year. Further, I wonder, though,
Speaker 3: what data you might have to see for you to
Speaker 3: start saying that that idea is no longer fringe, or
Speaker 3: we hear from more FED officials that Okay, we might
Speaker 3: need to open the door a little wider on this.
Speaker 5: Yeah. I mean, I think the inflation data is going
Speaker 5: to be you know, really hotly watched from now on,
Speaker 5: and I mean it has been already, but I think
Speaker 5: if we continue to see prints that are disappointing, that
Speaker 5: are just kind of flatlining or even going up from
Speaker 5: where we are right now, that's going to really increase
Speaker 5: concern of that. And then I think other demand activity,
Speaker 5: right if you see that using that we saw in
Speaker 5: the first few months of this year in financial market,
Speaker 5: so if you see uh, you know, the stock market
Speaker 5: going up again, maybe treasury yields falling a bit from
Speaker 5: from these higher levels now, uh, you know, that could
Speaker 5: cause concern. And then some of this consumer data, right,
Speaker 5: like the labor market strength, if that just continues unadult traded,
Speaker 5: if you see consumer spending and retail sales data that
Speaker 5: continue to come in really strong as it has the
Speaker 5: past month or so, you know, all of that will
Speaker 5: kind of add to this picture of the economy isn't
Speaker 5: slowing as we would like, and it's going to take
Speaker 5: more action from US, US being the Fed, not me,
Speaker 5: but it's you know that it would take more action
Speaker 5: from the FED to to really slow things down.
Speaker 3: Well, Katerina, we had Matt Bosler on our program yesterday
Speaker 3: and he pointed out in a great piece in Bloomberg
Speaker 3: Business Week about how increasingly we're starting to see a
Speaker 3: larger and larger portion of inflation data made up of
Speaker 3: rents going up, not necessarily across the country, but in
Speaker 3: certain hotspots around the United States. Given that the Fed's
Speaker 3: tools that it has, our Lunt instruments, how does it
Speaker 3: get that part in control when all it can do
Speaker 3: is you know, focus on this dual mandate.
Speaker 5: Yeah, I mean, it's a really interesting question, and this
Speaker 5: is something that Chicago FED President Austin Goldsby has been
Speaker 5: talking about. How if you look at the kind of
Speaker 5: different big components of inflation, goods, services, and housing, the
Speaker 5: one that really hasn't slowed down much is housing inflation.
Speaker 5: And so that's concerning. But as Matt pointed out in
Speaker 5: his peace, that does have some kind of geographic differences,
Speaker 5: right You're seeing flowdowns in the south and in the West,
Speaker 5: but not in the Northeast. So I mean, I think
Speaker 5: for them, for the FED, what that means is just
Speaker 5: keeping rates higher for longer or potentially raising rates to
Speaker 5: try to slow it down. I mean, it is a
Speaker 5: very blunt instrument, and I think that's why at the
Speaker 5: beginning of this tightening cycle, people were really concerned that
Speaker 5: we were going to have to see a recession because
Speaker 5: demand was just so strong, and in things like the
Speaker 5: housing market, where you have so many other forces at play.
Speaker 5: Right we have a huge supply issue in this country,
Speaker 5: So it's really kind of tough to move that needle
Speaker 5: when you just have the reality of not enough housing
Speaker 5: for the number of people we have in this country.
Speaker 5: So I think if we don't see more progress on
Speaker 5: that front, it is going to kind of bring back
Speaker 5: some of those questions about, you know, are we really
Speaker 5: just going to have to break things a little bit
Speaker 5: or cause more pain to fully bring down inflation.
Speaker 2: Well, and Katerine, as you guys point out or you
Speaker 2: point out in your story, I mean the idea that
Speaker 2: that you know, the things that folks are worried about
Speaker 2: is that it takes so little to kind of stimulate
Speaker 2: the economy. Right now, I think we're all shocked, you know,
Speaker 2: as growth estimates can be being kicked higher here in
Speaker 2: the United states from the eye about global growth, and
Speaker 2: you know, we keep having folks on especially in the
Speaker 2: investment universe, are saying like the US is doing well
Speaker 2: compared to a lot of other markets, especially developed markets
Speaker 2: around the world, when you look at their economic outlook,
Speaker 2: so you know, better growth doesn't take lot, you know,
Speaker 2: much to stimulate. You've got to be worried about sparking
Speaker 2: inflation again. And that's kind of where the FED is,
Speaker 2: and I'm assuming at this point they're going to want
Speaker 2: to see two to three to four you know trend
Speaker 2: you know, trending lower when it comes to inflation before
Speaker 2: they're ready to really do something when cut rates. So
Speaker 2: that's already you're talking three or four months at least
Speaker 2: from now.
Speaker 5: Yeah, I think that's right, and I think that's what
Speaker 5: we really aim to show in the piece, that the
Speaker 5: clock has been fully reset. Now we've had three months
Speaker 5: at least with the CPI of disappointing reads. We're likely
Speaker 5: to get another kind of flat maybe upprint in the
Speaker 5: PCE next week, so it really now the clocks reset.
Speaker 5: We need another probably three months or so of just
Speaker 5: yeah data that is where inflation is cooling and not
Speaker 5: just staying steady or rising.
Speaker 3: So, Katerina, let's go back in time a little bit
Speaker 3: to November December of this year when we saw what
Speaker 3: was referred to, I guess until yesterday or earlier this
Speaker 3: week as the first Powell pivot. Do you think that's
Speaker 3: something that maybe the FED chair regrets or perhaps could
Speaker 3: wishes he wouldn't have done.
Speaker 2: Yeah, I mean, I don't know.
Speaker 5: It's I think it's so difficult to, you know, in
Speaker 5: hindsight go back and say that because the data were
Speaker 5: looking good, and I mean, to be fair to him,
Speaker 5: what he said at that point is that, you know,
Speaker 5: the next policy move is likely a cut, which I
Speaker 5: think still seems to be the case. And really he
Speaker 5: was working with what he had at that point, right,
Speaker 5: So it's tough.
Speaker 2: It's tough. It's going to be interesting May first that
Speaker 2: next FMC meeting, so certainly a focal point for us. Katerina,
Speaker 2: thank you so much. Katerina Sarrive, a Bloomberg News Federal
Speaker 2: Reserve and Economics reporter.
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Speaker 2: We do want to get to some of the news
Speaker 2: that we've been following this week. Just yesterday at Columbia
Speaker 2: University here in New York calling on the NYPD to
Speaker 2: intervene on pro Palestinian protests, resulting in the arrest of
Speaker 2: more than one hundred people. This was according to the
Speaker 2: FT and also at New York City Mayor Eric Adams.
Speaker 3: Yeah, it's all coming at a time, Carol, when institutions
Speaker 3: across the US and around the world are dealing with
Speaker 3: a heightened political climate amid protests over Israel's war in Gaza,
Speaker 3: and this challenge just one of the many challenges that
Speaker 3: leaders of academic institutions are dealing with. Others include the
Speaker 3: cost of education, how AI and other technologies will change
Speaker 3: the way teachers teach and students learn, and of course,
Speaker 3: how to prepare students for a rapidly changing world.
Speaker 2: We have one of those leaders with us today. There's
Speaker 2: a lot on everybody's mind. Francisco Veloso is dean of
Speaker 2: INCIAD Business School, which is one of the top bizes
Speaker 2: schools in the world, located in France, one of my
Speaker 2: favorite cities, and Dimitri Cassanid's is Bloomberg new senior editor,
Speaker 2: both of them joining us here in our Bloomberg Interactive Growths.
Speaker 1: You can go just go.
Speaker 3: Spent a couple of years in.
Speaker 2: It might be a little late.
Speaker 6: No.
Speaker 2: Having said that, great to have both of you here
Speaker 2: with us. Francisco, thank you so much for being with us.
Speaker 2: We love kind of the business school reporting and coverage.
Speaker 2: It's such an important part of our world. We do
Speaker 2: have to start though, with kind of the general macro
Speaker 2: environment and politics on campus. You've certainly had to deal
Speaker 2: with it as a leader. What is kind of the
Speaker 2: role of heads of educational institutions in your view when
Speaker 2: it comes to protection of academic freedom, diversity of thought,
Speaker 2: freedom of speech. You know, a wise individual said to
Speaker 2: me one of our producers. The freedom to make mistakes,
Speaker 2: especially as students, happens in a safe environment dmic environment.
Speaker 2: That's where we learn and are enlightened. Help me make
Speaker 2: sense of the challenges you guys are dacing are facing
Speaker 2: in this geopolitical environment.
Speaker 7: Good afternoon, and thank you for the invitation to be
Speaker 7: here to contribute to these important conversations. You know, a
Speaker 7: lot going on in business schools. As you were saying,
Speaker 7: I think the key element is exactly what you mentioned
Speaker 7: about creating a safe, secure and supported environment for the community.
Speaker 7: And this has certainly been our focus at INSIODS and
Speaker 7: we have one of the most diverse student bodies that
Speaker 7: you can have. I mean, as we usually say at
Speaker 7: INSAIOD in your classroom, everybody is a minority, and that's
Speaker 7: really what it is. I mean, no nationality or ethnicity
Speaker 7: has more than ten to fifteen percent of the population.
Speaker 7: And that has been that We've worked very hard with
Speaker 7: our student body to create that environment for dialogue, for understanding,
Speaker 7: and our students are telling us that that is what's happening.
Speaker 1: You know.
Speaker 7: I have been personally meeting with the students from different
Speaker 7: you know, sensitivities, different nationalities and asking them what's happening
Speaker 7: on campus and in our campus we're having a very
Speaker 7: positive and productive dialogue. That does not mean that there
Speaker 7: are no sometimes frictions and tensions, but not in a
Speaker 7: way that has led to difficulties. On the contrary, the
Speaker 7: community feels very supported and safe and that's where we
Speaker 7: are Heydan.
Speaker 3: I want to take a step back and just explain
Speaker 3: how in siat is different, because I think a lot
Speaker 3: of people who are listening perhaps are in the US
Speaker 3: and they're used to what happens in a two year
Speaker 3: MBA program here in the United States, but that's not
Speaker 3: what you get at in Siat.
Speaker 2: No.
Speaker 7: So in Siad has been the pioneer school with a
Speaker 7: one year MBA and so we've started that many years ago.
Speaker 7: And we're also a very global school. So we started
Speaker 7: in France in Fontainebleau, in the Chateau the Funtain Blow
Speaker 7: that's our heritage. But twenty years ago we opened a
Speaker 7: campus in Singapore, our Asia campus, and ten years ago
Speaker 7: we opened the campus in Abu Dabi and we have
Speaker 7: now a hub here in San Francisco. And so our
Speaker 7: school is extremely global. I mean a third of our
Speaker 7: activities at the moment are out of Singapore. And this
Speaker 7: is part of our ethos because the way we position
Speaker 7: ourselves is the business school for the world, and that
Speaker 7: is about the environment that we create at all levels
Speaker 7: and certainly as a student, as I was just mentioning,
Speaker 7: when you embark on our transformative journey, it's super intense
Speaker 7: in how you engage, but it's also super intense in
Speaker 7: this human dimentioned because of this very diverse space that
Speaker 7: you find and the fact that we do create this
Speaker 7: environment means that there is a lot of openness from
Speaker 7: the students to learn from the others because one of
Speaker 7: the things that they marvel from the beginning is that
Speaker 7: they enter that space and see, how can I possibly
Speaker 7: find something in common with such a diverse group, And
Speaker 7: after a day they find out that they have many
Speaker 7: more things in common than they thought. And this is
Speaker 7: an amazing discovery experience. Of course, on the top of
Speaker 7: the you know, amazing quality of our faculty, the high
Speaker 7: level delivery that we that that we do, and this
Speaker 7: is part of that learning experience that they that.
Speaker 2: They have well, And I'm wonder and Demita, I want
Speaker 2: to bring you into this because I do think about
Speaker 2: or in a world where technology can bring people closer,
Speaker 2: students closer from all over the globe. And there's some
Speaker 2: interesting reporting that you guys have all done, our Bloomberg
Speaker 2: News has done about kind of the role of AI
Speaker 2: in all of this.
Speaker 8: Yeah, I mean, I think AI is really transforming so much.
Speaker 8: And it's interesting because we went from this place of
Speaker 8: being terrified when we were first being exposed to some
Speaker 8: of the more you know, kind of out there applications
Speaker 8: of it over the last two years, but you know
Speaker 8: in the ways that it'll be used to enable more
Speaker 8: flexibility and more students from far flung places to really
Speaker 8: engage in something to something as recently as what we
Speaker 8: reported on this week, which is the ways in which
Speaker 8: maybe something like AI will be brought to bear in
Speaker 8: how academic paper and research at business schools will be
Speaker 8: measured for purposes of accreditation to see whether or not
Speaker 8: to analyze whether or not the story we wrote about
Speaker 8: was a program that some folks at school in Philadelphia
Speaker 8: developed and it is a way to see, well, are
Speaker 8: you upholding and really you know, supporting sustainability measures as
Speaker 8: set out by the UN So it's really interesting the
Speaker 8: ways in which this particular innovations has a role to play.
Speaker 8: I think Francisco Plut probably has a lot more to
Speaker 8: say about that, because I know he's focused a lot
Speaker 8: specifically on technology and innovation. But before I throw it
Speaker 8: to him, the other interesting point that I don't know
Speaker 8: if you mentioned, but Singapore is a big campus of
Speaker 8: THEIRS and it's you know, it's almost as big and
Speaker 8: significant in size as what's happening in Fontainbleau. So that's
Speaker 8: a big direction for what's happening in B school educationals.
Speaker 8: Just to emphasis underscoore that, Well.
Speaker 2: It's interesting and I'm glad you brought that because it's
Speaker 2: like that balance right between physical plant but also what
Speaker 2: technology could do. So come on in on that.
Speaker 7: I think that this is quite critical, as you said,
Speaker 7: And it's interesting the point that Dinna just made, because
Speaker 7: we did a recent survey with our alumni. We have
Speaker 7: you know, basically seventy thousand alums, and we asked them
Speaker 7: what do you think about AI, you know, Jena I
Speaker 7: in particular, how is that you know factoring in? And
Speaker 7: one thing that's very interesting is that, you know, over
Speaker 7: half of the respondents said that they're actually more excited
Speaker 7: than concerns and so this is about, you know, how
Speaker 7: is this something that you see as an opportunity or not?
Speaker 3: And about another forty.
Speaker 7: Percent said that, you know, they have some concerns, but
Speaker 7: mostly positive and only a very small small minority thought
Speaker 7: about this that being something that they're overly concerned. So
Speaker 7: in fact, I think people that feel empowered in their
Speaker 7: learning trajectory, in their in their in their professional trajectory.
Speaker 7: I think are seeing this as an interesting opportunity. That's
Speaker 7: one one aspect that I thought would be highlighted. Certainly
Speaker 7: we're seeing that from our alumni us.
Speaker 2: To hear the positive because we do right, we do
Speaker 2: get a lot of the horrors potentially exactly.
Speaker 7: And that's what I was That's why I was mentioning
Speaker 7: because I think it is important to say that you
Speaker 7: know that you know in this survey the majority felt
Speaker 7: actually very positive about the opportunities.
Speaker 8: It's interesting. I had a professor from another an institution
Speaker 8: from Columbia in a discussion recently and the point was
Speaker 8: really more, you know, to really get at the fear,
Speaker 8: you need to don't think about this as something that's
Speaker 8: going to come in and replace a job, a position.
Speaker 8: It's task based and as a task based tool that
Speaker 8: can transform things. It actually might make your job. It
Speaker 8: might eliminate your job, but it also might make your job.
Speaker 4: So your job.
Speaker 7: What we what we do with the classroom, if you're
Speaker 7: not looking at you know, I mean business schools really
Speaker 7: have a very important role to play in this discussion
Speaker 7: on different dimensions So first is of course, to help
Speaker 7: us all understand what's going on. I mean, this is
Speaker 7: a transformative technology that's affecting every sector, every business. We
Speaker 7: need to understand what's going on, what's working, not working,
Speaker 7: how are people using this technology in a productive way.
Speaker 7: And that's what a school like INSID can do, you know,
Speaker 7: through the cutting edge research. We have faculty that have
Speaker 7: been already looking at these even before Jenny I got
Speaker 7: to the stage that it has now globally, and this
Speaker 7: is something that we're bringing to the classroom and also
Speaker 7: bringing to our executive education. We have a very successful
Speaker 7: problem on transforming your business with AI, which is an
Speaker 7: example of bringing that to the executive population on a
Speaker 7: more immediate basis, but bringing that to the classroom, you
Speaker 7: know from the research, which is quite important so that
Speaker 7: people understand. The second one is make students feel comfortable
Speaker 7: about using these tools in the classroom as there is
Speaker 7: going through that learning journey. You know, take the example
Speaker 7: that Dinna mentioned just now. You know, in all that mentions,
Speaker 7: the university and the business schools has to be a
Speaker 7: safe environment to experiment to learn. If we're not bringing
Speaker 7: that to the way that we do things with the students,
Speaker 7: then we're not fulfilling our role as as a leading business.
Speaker 2: There's a place to make mistakes education and right kind
Speaker 2: of thing through things exactly.
Speaker 7: And the and the third thing that I think it's
Speaker 7: quite interesting is actually to think about how you can
Speaker 7: create new tools, new approach to education itself through these
Speaker 7: new tools, which is of course something very important because
Speaker 7: you know, inad we see ourselves as at the cutting
Speaker 7: edge of business education, so we also it also means
Speaker 7: we have to think about how do we use that
Speaker 7: to create different tools, different approaches in education itself.
Speaker 3: So can you talk a little bit about employment after
Speaker 3: INCID because no question, that is the reason why people
Speaker 3: go to business school. It's to get jobs that earn
Speaker 3: more money after going to school and then also potentially
Speaker 3: to pivot and switch careers in addition to lifelong networking.
Speaker 3: But what are the what are the companies the types
Speaker 3: of companies that are recruiting at the business school right now?
Speaker 3: Because I think a lot of people here in the
Speaker 3: US would say, okay, well, it's consulting companies are huge
Speaker 3: for schools in New York. Finance, of course is huge
Speaker 3: for schools in New York. Increasingly, tech in recent years obviously, But.
Speaker 7: But how does that look at INCAT In some dimensions
Speaker 7: it is not that different, right, I mean, consulting is
Speaker 7: a very important part of the outlook for the students
Speaker 7: that join that join us financed as well, but not
Speaker 7: to the same extent as as the schools in London
Speaker 7: or New York. That's not not to be not to
Speaker 7: be surprised. And tech is increasingly is increasingly important. The
Speaker 7: two aspects that that is also quite important for us
Speaker 7: is an increasing presence of entrepreneurship and the role of entrepreneurship.
Speaker 7: You know, Pitchbook last last September did a very interesting
Speaker 7: ranking of you know, what were the schools globally that
Speaker 7: we're generating more startups over the long run and and
Speaker 7: basically in SIAT came out for globally or m b A,
Speaker 7: which was very interesting. Then the other part that's quite
Speaker 7: substantive on the case of INCIAT is perhaps less on
Speaker 7: the industry we have a variety of industry, but more
Speaker 7: on the geography. The placement of our students is really global.
Speaker 7: I mean, for example, over the last few last few years,
Speaker 7: and this is in particular the number of you know,
Speaker 7: the Gulf countries overtook London as the most significant placement
Speaker 7: area for our graduates because the population that we get
Speaker 7: is extremely internationally, extremely mobile, so they look for opportunities
Speaker 7: in a global scale. And this is one of the
Speaker 7: things that is super interesting about our populations, how our
Speaker 7: students really look and say, Okay, maybe it's Singapore, maybe
Speaker 7: it's Malaysia, maybe it's the UEE, or maybe it's London
Speaker 7: or Paris, and it's in that dimensioned that I feel
Speaker 7: there is a very visible difference from some of the
Speaker 7: you know, perhaps US based business schools significance.
Speaker 2: I feel like a lot of the reporting is a
Speaker 2: lot more on the Mid East and the money and
Speaker 2: the innovation and spending that they are doing right now.
Speaker 8: So for instance, I mean here in the US, one
Speaker 8: of the sort of tensions and pressure points in the
Speaker 8: past year or two, though on the jobs front has
Speaker 8: been contraction to some degree. I mean, those are still
Speaker 8: definitely the leading industries, but there's still a lot of
Speaker 8: fear and a lot of concern about what we see
Speaker 8: happening with the consulting jobs, with the finance jobs, certainly
Speaker 8: with the tech jobs. The layoffs have been continuing. It
Speaker 8: wasn't just the story for twenty twenty three. It was
Speaker 8: also for twenty twenty four to what extent has that
Speaker 8: affected your students coming out? And you know, we did
Speaker 8: a story less Spring and it was affecting our schools
Speaker 8: and graduates at the highest levels of the ranking, like
Speaker 8: Harvard grads all the way on down, who were graduating
Speaker 8: without jobs and feeling very nervous.
Speaker 2: And we just have about forty five seconds.
Speaker 7: Yes, and it is also having some impact because of
Speaker 7: course there's less opportunities on these and so which means
Speaker 7: that our students are finding also other opportunities as well
Speaker 7: because we're seeing just less jobs available in those industries.
Speaker 7: So they're doing these two dimensions. One is the geographical element,
Speaker 7: so perhaps they're interested in consulting, and they say, okay,
Speaker 7: if you want consulting, you may have a good opportunity
Speaker 7: in the Middle East, but not in London, for example,
Speaker 7: or in New York. The other part is to look
Speaker 7: at other industries and for example, a big push that
Speaker 7: we've had over the last few years to for example,
Speaker 7: to look at sustainability and to look at the energy transition.
Speaker 7: You know, we're also very much supporting our graduates to
Speaker 7: explore these other aspects of the role that business schools
Speaker 7: can have to explore these new opportunities in terms of,
Speaker 7: for example, energy, transition, sustainability and all of these elements
Speaker 7: that are picking up around the globe, and where we
Speaker 7: feel that we are training our graduates to lead on
Speaker 7: that and very much interested to be and to continue
Speaker 7: to be at.
Speaker 2: The forefront of this interesting time. To be leading a
Speaker 2: top business school, it's got to be fun. Dean Francisco Valo,
Speaker 2: So the NCID Business School joining us here in studio
Speaker 2: along with our own Dimitry Cancanini, senior editor at Bloomberg News,
Speaker 2: thanks to book. This is Bloomberg, Marc.
Speaker 4: A journal.
Speaker 6: Now about you let me drive, no no, no, no, Honry
Speaker 6: please Grave, I want to drive, which a good question.
Speaker 1: This is the drive to the globe. Well on Bloomberg Radio.
Speaker 2: All right, everybody, just about eighteen minutes left in today's
Speaker 2: trading session, getting ready to wrap up the Friday trade.
Speaker 2: Also the week overall, a week where we know it's
Speaker 2: a trend line, not great one for the S and
Speaker 2: P five hundred. We would be down three weeks in
Speaker 2: a row. Haven't seen this in some time, but it's okay.
Speaker 2: If you're trying to be a bear in this market,
Speaker 2: but if you've got some bullish overtones in your portfolio,
Speaker 2: that makes it a little bit more tricky.
Speaker 1: Yeah.
Speaker 3: Worth also noting that the yield on the tenure hit
Speaker 3: its highest since November over the FED reset. This idea
Speaker 3: that the Fed's resetting the clock and on cuts and
Speaker 3: reevaluating the trajectory of price growth. And we've got a
Speaker 3: great guest to help us, you know, get an idea
Speaker 3: of really what's going on and makes sense of rates
Speaker 3: plused equities as well. Janet Rilling is senior portfolio manager
Speaker 3: and head of the plus fixed income team at all
Speaker 3: Spring Global Investments. She joins us from a Wisconsin Janet,
Speaker 3: how are you.
Speaker 6: I'm good.
Speaker 9: Good afternoon.
Speaker 3: Yeah, good afternoon to you as well. I do want
Speaker 3: to start with what happened with yields this week, because
Speaker 3: we certainly saw a reset from the Federal Reserve and
Speaker 3: I think that expectation is certainly playing out when it
Speaker 3: comes to the rates market.
Speaker 6: Yeah.
Speaker 9: So this is really the data dependency playing out, right.
Speaker 9: The fedist told us they're going to be data dependent,
Speaker 9: and when we see the data change, they're going to change.
Speaker 9: So what have we seen happen. We've seen stronger growth
Speaker 9: than expectations, a more robust job market, but most importantly
Speaker 9: elevated inflation, and that's what's caused them to make a
Speaker 9: change in their view. They've been communicating a more hawkish tone.
Speaker 9: How well, earlier this week indicated a shift in that view,
Speaker 9: and that certainly has resonated in the fixed income markets.
Speaker 2: All right, speaking of shifts and tones, we're just watching
Speaker 2: shares of Nvidia right now extending. They're dropped to ten
Speaker 2: percent right now as we speak, So their racing about
Speaker 2: two hundred and twelve billion dollars in market care have
Speaker 2: value when it comes to end video. So again, this
Speaker 2: has been one of the standout performers, best performing name
Speaker 2: in the S and P five one hundred last year.
Speaker 2: It was another top performer already this year. I mean
Speaker 2: the stock perspective everybody, it's up about fifty three percent
Speaker 2: this year. But we are definitely seeing a very different
Speaker 2: tone in today's trade.
Speaker 3: Video goes down, also, stocks.
Speaker 2: Go up, stocks go down. But it's interesting. I'm just
Speaker 2: going to pull up real quickly on the Bloomberg A
Speaker 2: GP chart and in terms of the trend line, like
Speaker 2: you've seen a little bit of a roll over here,
Speaker 2: certainly if you go back to when it peaked kind
Speaker 2: of back in late March. So you've definitely seen a
Speaker 2: move down and definitely a move down lower in today
Speaker 2: again extending the drop to ten percent. So we talked
Speaker 2: about corrections.
Speaker 3: Well, likely we'll see it move fall or closed below
Speaker 3: carrold it's fifty day moving average for the first time
Speaker 3: going all the way back to November.
Speaker 2: Yeah, so this is why we care about what's going on.
Speaker 2: These are names that have been really propelling some of
Speaker 2: the momentum in the markets all right back to though
Speaker 2: it's also been propelling and changing the momentum. And is
Speaker 2: that move up in rates Going back to Jenner Rilling,
Speaker 2: who's over at all Spring Global Investments, she's head of
Speaker 2: a plus fixed income team. So I am curious, Janet,
Speaker 2: we've talked about the changing narrative from the Federal Reserve
Speaker 2: and the changing narrative around US Treasury rates and what
Speaker 2: we've seen along the Treasury curve. When is it that
Speaker 2: you guys pull the levers for your investors saying you know,
Speaker 2: now it's time to kind of change our strategy on
Speaker 2: the fixed income side.
Speaker 8: Of things.
Speaker 2: Is now the time or did you do it already?
Speaker 2: I don't know a month ago. I'm just curious.
Speaker 9: Yeah, we're certainly a team that's active in rates positioning.
Speaker 9: Last year we had a long duration position on given
Speaker 9: our expectations that we were at the terminal rate by
Speaker 9: the Fed. We did neutralize that coming into this year,
Speaker 9: So that puts us in a good position to be
Speaker 9: opportunistic with the changes and rates. Earlier this week we
Speaker 9: saw the two year briefly go above five percent, and
Speaker 9: I would say that was a point we thought it
Speaker 9: was worth nibbling a little bit. So we are watching
Speaker 9: closely and watching for an opportunity to add a duration.
Speaker 9: If there's continued upward pressure here.
Speaker 3: On rates, what would what would prompt you to add
Speaker 3: to the portfolio right now? What would prompt you to buy?
Speaker 3: What do you need to see on the rates curve?
Speaker 9: Yeah, well, part of it is just outright levels. If
Speaker 9: we start getting above five percent on the two year,
Speaker 9: that's looking pretty attractive to us. While the Fed has
Speaker 9: turned a bit more hawkish, we are not expecting them
Speaker 9: to raise rates, particularly in the next several quarters. So
Speaker 9: a two year above five percent seems like good value
Speaker 9: to us where we can start collecting that yield and
Speaker 9: there's not the pressure of it going up much further.
Speaker 2: But when you say about adding duration, how far out
Speaker 2: in the curve are you willing to go and does
Speaker 2: it make sense? I'm just thinking for investor especially, you know,
Speaker 2: I don't guess if they are thinking about you know,
Speaker 2: almost five percent on the ten year if we go
Speaker 2: back there. I mean, how many are saying, you know,
Speaker 2: this isn't a bad shift in my money and a
Speaker 2: way to kind of lock in an expected return if
Speaker 2: you will, with maybe less risk that we might see
Speaker 2: the equity side of things or some other investments.
Speaker 9: We are more constructive on the front end. So a
Speaker 9: place we are overweight is the five year. More in
Speaker 9: the ten year space we're more neutral, and as we
Speaker 9: go out further in the thirty year, we do have
Speaker 9: an underweight position because we think the range of outcomes
Speaker 9: there is much wider. You have issues with if inflation
Speaker 9: does accelerate further, but the long end will be hit
Speaker 9: a bit further. And certainly there are some technical pressures
Speaker 9: related to funding for the government for the ongoing deficits
Speaker 9: that we are running.
Speaker 2: What do you think we could top out are where
Speaker 2: could we go above on the ten year.
Speaker 9: Well, certainly earlier ear late last year we hit five percent,
Speaker 9: so certainly we could retest that five percent area, but
Speaker 9: our base case puts it probably a bit below five percent.
Speaker 9: I mean currently today we're at four sixty one. I
Speaker 9: think we hit about a four sixty four earlier in
Speaker 9: the week. I mean, there's certainly room for it to
Speaker 9: move up some from here, but given our outlook, we
Speaker 9: would think that five percent would be a good place
Speaker 9: to start, adding.
Speaker 3: Sorry, five percent on the two year of.
Speaker 2: The ten ten on the ten years.
Speaker 3: I mean, do you that's interesting because we've spoken to
Speaker 3: a lot of folks who said, you know, within this cycle,
Speaker 3: we think we're not going to hit the hit five again.
Speaker 3: We think that the peak happened back in October.
Speaker 2: What say you, but you think it'll be below five percent,
Speaker 2: You'll think it's more like.
Speaker 9: Yeah, our base cases below. My point was, if we
Speaker 9: do retouch five percent, that could be a buying opportunity.
Speaker 2: Okay, beyond the US Treasury curve. Where else in fixed
Speaker 2: in come do you find the best opportunities right now
Speaker 2: in this environment?
Speaker 9: Yeah, we think it's a good time to be diversified
Speaker 9: in your exposures. So we run a corplus strategy where
Speaker 9: we can use a lot of the global fixed income sectors.
Speaker 9: So we do have an allocation to investment grade corporate credit.
Speaker 9: It's more of a neutral allocation, but we think it's
Speaker 9: a good place to be, particularly the triple be part
Speaker 9: of the investment grade credit space. You get a bit
Speaker 9: higher yields there, and with the strength we've seen in
Speaker 9: the US economy, we think that those companies will be
Speaker 9: stable and able to continue to service their debt well.
Speaker 9: In terms of high yield here, we're at the lower
Speaker 9: end of our range in terms of our allocation. We've
Speaker 9: kept some dry powder in the event that we get
Speaker 9: more of a risk off trade, and certainly this week,
Speaker 9: with what we've seen in the treasury market, we have
Speaker 9: seen high yield spreads widen, so that opportunity could be
Speaker 9: coming in the next couple of weeks. The fundamentals are
Speaker 9: quite good in the high yield market, but of course
Speaker 9: valuations reflect a lot of that.
Speaker 3: Right now, Hey, Janet, we're gonna have to leave it there.
Speaker 3: Thank you so much for joining us this afternoon. That's
Speaker 3: Janet Reelings, Senior portfolio manager, and head of the plus
Speaker 3: fixed Income team over at all Spring Global Investment.
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