1 00:00:00,800 --> 00:00:04,040 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 2 00:00:04,040 --> 00:00:06,920 Speaker 1: my co host Matt Miller. Every business day we bring 3 00:00:06,960 --> 00:00:11,520 Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along 4 00:00:11,520 --> 00:00:15,600 Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast 5 00:00:15,600 --> 00:00:18,439 Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:22,599 Speaker 1: at Bloomberg dot com slash podcast. We my coin based 7 00:00:22,600 --> 00:00:25,480 Speaker 1: down twenty two today, so we need to talk a 8 00:00:25,520 --> 00:00:27,040 Speaker 1: little bit about crypto. We're gonna do that in just 9 00:00:27,080 --> 00:00:29,720 Speaker 1: a moment. Bloomberg Markets brought to you by Commonwealth, supporting 10 00:00:29,720 --> 00:00:32,800 Speaker 1: more than two thousand independent financial advisors with the solutions 11 00:00:32,840 --> 00:00:35,920 Speaker 1: they need to grow a thriving business. Commonwealth go where 12 00:00:35,960 --> 00:00:39,479 Speaker 1: you grow. Visit Commonwealth dot com to learn more. Johanna, 13 00:00:39,479 --> 00:00:42,920 Speaker 1: a singer, joins us here in our Bloomberg Interactive Brokers studio. 14 00:00:42,960 --> 00:00:46,000 Speaker 1: She's cross asset reporter from Bloomberg News based in Singapore 15 00:00:46,520 --> 00:00:48,279 Speaker 1: but in New York. This week's we said we need 16 00:00:48,280 --> 00:00:50,959 Speaker 1: to get Joanna in the studio. When there's a ton 17 00:00:51,040 --> 00:00:53,760 Speaker 1: going on, the perfect time for Johanna to come here. 18 00:00:53,800 --> 00:00:58,200 Speaker 1: I mean, want the hell is going on. Sorry for 19 00:00:58,280 --> 00:00:59,840 Speaker 1: saying hell, but you can't talk about hell if you 20 00:00:59,840 --> 00:01:03,400 Speaker 1: can't say hell, right, Um, we have not only the 21 00:01:03,480 --> 00:01:07,600 Speaker 1: drop in Bitcoin, which to me it's not abnormal to 22 00:01:07,680 --> 00:01:10,800 Speaker 1: see this kind of I've been watching it for eleven 23 00:01:10,880 --> 00:01:14,319 Speaker 1: years now and this happens, but um, the move in 24 00:01:14,440 --> 00:01:18,960 Speaker 1: Tara is shocking to me. I mean, still day two, 25 00:01:19,160 --> 00:01:23,600 Speaker 1: I'm stunned that this supposed stable coin can fall to 26 00:01:23,680 --> 00:01:31,360 Speaker 1: this morning twenties on the dollar. It's like x ute no, no, 27 00:01:31,400 --> 00:01:34,880 Speaker 1: the ticker on the Bloomberg terminal. Right, Um, got it? Okay, 28 00:01:35,040 --> 00:01:38,480 Speaker 1: you got it? All right? Okay, So what happened? What? 29 00:01:38,480 --> 00:01:42,960 Speaker 1: What are? What is? There's there's this uh algorithm based 30 00:01:43,360 --> 00:01:47,240 Speaker 1: stable coin. It's supposed to automatically make changes to stick 31 00:01:47,319 --> 00:01:51,400 Speaker 1: exactly to one dollar. It works in combination with another 32 00:01:52,120 --> 00:01:56,480 Speaker 1: um uh coin called Luna, which then I guess buys 33 00:01:56,560 --> 00:02:00,360 Speaker 1: bitcoin and avalanche and other stuff. There's this dude, a 34 00:02:00,560 --> 00:02:03,320 Speaker 1: total bro and I don't like to use that word pejoratively, 35 00:02:03,560 --> 00:02:06,800 Speaker 1: but I will right now. Who is the backer of it? 36 00:02:07,200 --> 00:02:10,839 Speaker 1: He says he might have a solution what's going on? Well, 37 00:02:11,160 --> 00:02:13,800 Speaker 1: this is the thing with these algorithmic stable coins is 38 00:02:13,840 --> 00:02:18,040 Speaker 1: that they work until they don't. And there has been 39 00:02:18,080 --> 00:02:22,480 Speaker 1: this history of these things not doing well, and you know, 40 00:02:22,560 --> 00:02:25,200 Speaker 1: there are a few that have lasted a while, but 41 00:02:25,320 --> 00:02:29,000 Speaker 1: they can blow up in spectacular fashion. And you know, 42 00:02:29,080 --> 00:02:32,240 Speaker 1: people have talked about this where if you have volatile 43 00:02:32,280 --> 00:02:35,560 Speaker 1: assets that you wrap together, sometimes they can be volatile, 44 00:02:35,639 --> 00:02:38,880 Speaker 1: they won't necessarily maintain that desired peg to the dollar. 45 00:02:39,600 --> 00:02:44,040 Speaker 1: So it's really just been quite dramatic. And there are 46 00:02:44,040 --> 00:02:47,600 Speaker 1: a lot of people who put faith in ust doing 47 00:02:47,639 --> 00:02:50,880 Speaker 1: well in having these yields if you stake to it, 48 00:02:50,960 --> 00:02:55,600 Speaker 1: that or more people were counting on that stuff, and 49 00:02:55,639 --> 00:02:58,120 Speaker 1: now it doesn't look like that's happening. And the thing is, 50 00:02:58,280 --> 00:03:04,400 Speaker 1: how do you restore confidence once it's been lost? This 51 00:03:04,480 --> 00:03:06,800 Speaker 1: question about both of you, what's the breakdown? And do 52 00:03:06,800 --> 00:03:09,480 Speaker 1: you think an investor base for a lot of these 53 00:03:09,520 --> 00:03:13,560 Speaker 1: crypto assets, whether it's Big Corner or anything else, institutional 54 00:03:13,639 --> 00:03:18,160 Speaker 1: versus retail. Oh jeez, I don't know numbers per se, 55 00:03:18,440 --> 00:03:21,840 Speaker 1: but institutions have been getting into them. But there are 56 00:03:21,880 --> 00:03:25,360 Speaker 1: a lot of people who are regular investors who just 57 00:03:25,400 --> 00:03:28,040 Speaker 1: looked at it and said, hey, twenty yield sounds awesome. 58 00:03:28,200 --> 00:03:30,600 Speaker 1: I'm gonna put a lot of money in there. And 59 00:03:30,639 --> 00:03:33,400 Speaker 1: I have been hearing just anecdotally about people who have 60 00:03:33,480 --> 00:03:38,000 Speaker 1: lost some decent amount of their savings on stuff like this. Yeah, well, 61 00:03:38,040 --> 00:03:41,800 Speaker 1: I know a ton of people who have to be fair, 62 00:03:42,200 --> 00:03:44,720 Speaker 1: UM made a made a lot of money over the 63 00:03:44,760 --> 00:03:47,520 Speaker 1: last few years, UM that have gotten into this. People 64 00:03:47,560 --> 00:03:52,080 Speaker 1: like my trainer. You know, I have a cameraman who 65 00:03:52,080 --> 00:03:57,200 Speaker 1: have made hundreds. Well no, I don't. Actually I hired 66 00:03:57,200 --> 00:03:59,240 Speaker 1: the guy and then we started hanging out for beers 67 00:03:59,320 --> 00:04:02,680 Speaker 1: and we don't really training. Now we're just buddies, different 68 00:04:02,760 --> 00:04:04,960 Speaker 1: kind of training. But but so you're paying him to 69 00:04:04,960 --> 00:04:09,920 Speaker 1: be your buddy. But these these guys have made a 70 00:04:09,920 --> 00:04:12,560 Speaker 1: lot of a lot of money in crypto, but they're 71 00:04:12,600 --> 00:04:16,320 Speaker 1: into all of these schemes right, anything where they can 72 00:04:16,360 --> 00:04:20,760 Speaker 1: make a sick return or leverage, you know, get leveraged up. 73 00:04:20,800 --> 00:04:23,440 Speaker 1: And also stable coins are a huge part of the 74 00:04:23,480 --> 00:04:26,120 Speaker 1: way they trade. The interesting thing to me, Joanna is 75 00:04:26,160 --> 00:04:29,760 Speaker 1: that while this story is so shocking, we haven't seen 76 00:04:29,839 --> 00:04:33,200 Speaker 1: much of a ripple effect across um the crypto universe. 77 00:04:34,120 --> 00:04:37,239 Speaker 1: We haven't too much. Although some of the other stable 78 00:04:37,279 --> 00:04:41,599 Speaker 1: coins are down just a tad um like Tether. I 79 00:04:41,600 --> 00:04:44,480 Speaker 1: mean it's it's very minimal, but Tether is off you know, 80 00:04:44,920 --> 00:04:48,240 Speaker 1: point one cent or something. But yeah, you're right, that 81 00:04:48,400 --> 00:04:52,000 Speaker 1: the other stable coins, but Tether and usd coin, for instance, 82 00:04:52,160 --> 00:04:56,200 Speaker 1: do claim to be backed by dollars and other assets, 83 00:04:56,240 --> 00:04:59,560 Speaker 1: so it's um, you know, you could say they're kind 84 00:04:59,600 --> 00:05:02,400 Speaker 1: of a frint thing from some of these other algorithmic 85 00:05:02,480 --> 00:05:05,880 Speaker 1: stable coins. But definitely Terra is the one that's getting 86 00:05:05,880 --> 00:05:07,680 Speaker 1: all the attention and seems to be a lot of 87 00:05:07,720 --> 00:05:12,960 Speaker 1: the focus. Of course, the whole crypto complex is down 88 00:05:13,000 --> 00:05:17,920 Speaker 1: significantly in recent days anyway, so that's not helping things either. 89 00:05:18,279 --> 00:05:20,640 Speaker 1: And again I started off with coin basis now off 90 00:05:20,680 --> 00:05:25,400 Speaker 1: twenty three percent today, off seventy eight percent year to date, 91 00:05:25,480 --> 00:05:27,599 Speaker 1: r at a fifty two week low, still a market 92 00:05:27,600 --> 00:05:30,080 Speaker 1: cap of twelve and a half billion. But I'd look, 93 00:05:30,160 --> 00:05:34,880 Speaker 1: the coin base is kind of the everyday person's opportunity 94 00:05:34,880 --> 00:05:38,440 Speaker 1: to get exposure to crypto, and so this kind of 95 00:05:38,440 --> 00:05:42,479 Speaker 1: feels like it's meaningful. It's still could be. So look, 96 00:05:42,680 --> 00:05:46,480 Speaker 1: coin base is still going to be the major exchange 97 00:05:46,520 --> 00:05:49,039 Speaker 1: that Americans used, or one of the major exchanges that 98 00:05:49,080 --> 00:05:53,160 Speaker 1: Americans used to trade crypto. The key here takeaway in 99 00:05:53,200 --> 00:05:57,040 Speaker 1: my opinion for retail or for any investor is don't 100 00:05:57,120 --> 00:06:00,440 Speaker 1: hold your crypto on the exchange. When you get a 101 00:06:00,440 --> 00:06:04,520 Speaker 1: wallet you can use coin bases wallet, which they make 102 00:06:04,560 --> 00:06:07,880 Speaker 1: it easier for you to access, but they hold the 103 00:06:07,880 --> 00:06:10,680 Speaker 1: private key, or you can hold it on an off 104 00:06:10,720 --> 00:06:13,520 Speaker 1: exchange wallet where you have to remember the private key. 105 00:06:13,560 --> 00:06:17,680 Speaker 1: That's the one that I forgot um with my blockchain wallet. 106 00:06:17,720 --> 00:06:20,640 Speaker 1: But the problem is coin based said if they go bankrupt, 107 00:06:21,240 --> 00:06:26,080 Speaker 1: all of your crypto that they hold could be lost. Yeah, 108 00:06:26,160 --> 00:06:29,520 Speaker 1: that is a scary prospect. But you know, it doesn't 109 00:06:29,520 --> 00:06:33,039 Speaker 1: sound like they're anywhere near that point yet, but they are. 110 00:06:33,600 --> 00:06:36,839 Speaker 1: The price is just so dependent on where bitcoin is. 111 00:06:37,080 --> 00:06:39,760 Speaker 1: Coin bases price peaked around at the same time Bitcoin did, 112 00:06:39,880 --> 00:06:41,640 Speaker 1: so you know you've noticed that what I have in 113 00:06:41,680 --> 00:06:46,520 Speaker 1: my hand, cold hard cash. That's how players roll. Johanna 114 00:06:46,520 --> 00:06:48,560 Speaker 1: austing Er, thank you so much for joining us live 115 00:06:48,600 --> 00:06:51,080 Speaker 1: here in the Bloomberg and actor Brooker's studio. Join Austinger, 116 00:06:51,080 --> 00:06:53,640 Speaker 1: a cross asset reporter for Bloomberg News. Bring us the 117 00:06:53,720 --> 00:07:00,599 Speaker 1: latest on the vault crypto space. We've got in trades. 118 00:07:00,640 --> 00:07:04,520 Speaker 1: We had a hot inflation number today. Uh, just kind 119 00:07:04,560 --> 00:07:06,640 Speaker 1: of markets are trying to figure out which way to 120 00:07:06,680 --> 00:07:08,640 Speaker 1: play this year. We do have green on the screen here, 121 00:07:08,680 --> 00:07:10,920 Speaker 1: but again a lot of uncertainty out there. That's kind 122 00:07:10,960 --> 00:07:13,000 Speaker 1: of what we're seeing in the volatility. Doug Baker, He's 123 00:07:13,000 --> 00:07:16,680 Speaker 1: a portfolio management had of preferred securities at Nuvene. They've 124 00:07:16,680 --> 00:07:19,720 Speaker 1: got a couple of shekels under management. Doug, What are 125 00:07:19,760 --> 00:07:22,920 Speaker 1: you and your team? How are you thinking about putting 126 00:07:22,920 --> 00:07:26,280 Speaker 1: money to work these days? Given the inflation print we 127 00:07:26,320 --> 00:07:28,920 Speaker 1: saw this morning, given what we've seen from this Federal 128 00:07:28,960 --> 00:07:31,080 Speaker 1: Reserve over the past couple of months, how are you 129 00:07:31,080 --> 00:07:34,760 Speaker 1: guys approaching the market? Yeah? Absolutely, um so, so thanks 130 00:07:34,760 --> 00:07:37,360 Speaker 1: for having me on um. You know, our views are 131 00:07:37,360 --> 00:07:39,480 Speaker 1: a little bit more sing going as as far as 132 00:07:39,560 --> 00:07:41,480 Speaker 1: as rates are concerned. We we do feel a lot 133 00:07:41,520 --> 00:07:44,440 Speaker 1: as priced into the curve today and and really our 134 00:07:44,480 --> 00:07:46,760 Speaker 1: our outlook as far as the Fed is concerned by 135 00:07:46,840 --> 00:07:49,360 Speaker 1: year end is is a slightly slightly more constructive than 136 00:07:49,400 --> 00:07:52,040 Speaker 1: the market. So we we do feel that the Fed 137 00:07:52,080 --> 00:07:53,720 Speaker 1: will will get to about two and a half percent 138 00:07:53,760 --> 00:07:56,640 Speaker 1: by year end. UM the ten years probably gonna be 139 00:07:56,720 --> 00:07:59,760 Speaker 1: slightly north of three percent by that time, but we 140 00:08:00,000 --> 00:08:03,120 Speaker 1: you feel that what's important important takeaway here is that 141 00:08:03,240 --> 00:08:05,680 Speaker 1: a lot is priced into the curve, and when we 142 00:08:05,760 --> 00:08:08,520 Speaker 1: do look at at rates and where they are today, 143 00:08:09,160 --> 00:08:12,160 Speaker 1: I think some people are are are looking a little 144 00:08:12,200 --> 00:08:14,640 Speaker 1: too bearish lye and and feel that there's a lot 145 00:08:14,680 --> 00:08:18,040 Speaker 1: more move to come. We're we're we're really positioned from 146 00:08:18,080 --> 00:08:21,480 Speaker 1: the perspective that, um, we need to look at what's 147 00:08:21,520 --> 00:08:24,600 Speaker 1: priced in and and trade accordingly. Now we want to 148 00:08:24,600 --> 00:08:27,480 Speaker 1: remain relatively conservative when it comes to interest rate risk 149 00:08:27,560 --> 00:08:31,360 Speaker 1: or duration risk, and you'll see that reflected across our strategies. 150 00:08:32,800 --> 00:08:37,360 Speaker 1: What about investors who want to return here? Absolutely, is 151 00:08:37,360 --> 00:08:39,840 Speaker 1: it a good time to get in? We think so. 152 00:08:40,040 --> 00:08:42,480 Speaker 1: We think credit spreads are actually very attractive in fixed 153 00:08:42,480 --> 00:08:45,120 Speaker 1: income space, whether you're talking about investment grade bonds, high 154 00:08:45,120 --> 00:08:47,719 Speaker 1: heel bonds, and in my space and preferred securities, the 155 00:08:47,840 --> 00:08:50,760 Speaker 1: credit spreads are actually very attractive UM. And when you 156 00:08:50,760 --> 00:08:54,360 Speaker 1: look at the underlying fundamentals, they're they're pretty strong. Corporate 157 00:08:54,360 --> 00:08:57,560 Speaker 1: America really from a liquidity and a leverage perspective isn't 158 00:08:57,600 --> 00:09:00,080 Speaker 1: isn't too extended. And actually the consumers and really a 159 00:09:00,120 --> 00:09:03,760 Speaker 1: good spot too. UM. They had elevated savings rates during 160 00:09:03,800 --> 00:09:07,120 Speaker 1: COVID and are really coming into this environment UM fairly 161 00:09:07,120 --> 00:09:10,200 Speaker 1: well protected to with with some ability to absorb the 162 00:09:10,240 --> 00:09:12,640 Speaker 1: impact of inflation like we saw today, still kind of 163 00:09:12,679 --> 00:09:16,199 Speaker 1: coming in higher than than what most people are expecting, Doug, 164 00:09:16,280 --> 00:09:17,839 Speaker 1: we don't talk a lot on this show. I don't 165 00:09:17,880 --> 00:09:21,400 Speaker 1: think about preferred stocks in general and the preferred market. 166 00:09:21,840 --> 00:09:24,199 Speaker 1: Give us your kind of thirty second elevator pitch for 167 00:09:24,320 --> 00:09:26,840 Speaker 1: preferred How are you guys thinking about that part of 168 00:09:26,880 --> 00:09:30,120 Speaker 1: the market. Yeah, absolutely so. I think it's important that 169 00:09:30,160 --> 00:09:31,760 Speaker 1: one of the first takeaways is that this is a 170 00:09:31,840 --> 00:09:35,760 Speaker 1: high quality investment solution. Most of our issuers are banks 171 00:09:35,760 --> 00:09:39,679 Speaker 1: and insurance companies, and those two categories combined account for 172 00:09:39,679 --> 00:09:42,280 Speaker 1: about eight percent of our issuer base. So at the 173 00:09:42,360 --> 00:09:44,960 Speaker 1: end of the day, these are highly rated, typically and 174 00:09:45,040 --> 00:09:50,479 Speaker 1: highly regulated issuers, and interestingly enough, both of those sectors 175 00:09:50,800 --> 00:09:54,080 Speaker 1: arguably benefit the most from a rising rate environment. So 176 00:09:54,080 --> 00:09:56,400 Speaker 1: so the outlook for the fundamentals in our space are 177 00:09:56,520 --> 00:09:59,560 Speaker 1: pretty strong. Now, a lot of our preferred securities are 178 00:09:59,559 --> 00:10:02,760 Speaker 1: either long dated or perpetual nature, so so the thought 179 00:10:02,880 --> 00:10:04,920 Speaker 1: is by most folks that this must be a long 180 00:10:05,200 --> 00:10:09,480 Speaker 1: duration or high interest rate sensitivity solution, and so some 181 00:10:09,520 --> 00:10:11,840 Speaker 1: people could be a little scared by that, but actually, 182 00:10:12,320 --> 00:10:15,920 Speaker 1: you know, through active management and security selection, you can 183 00:10:15,920 --> 00:10:21,359 Speaker 1: actually put a portfolio together with a very reasonable duration exposure. 184 00:10:21,640 --> 00:10:24,760 Speaker 1: For example, our our mutual fund at at the end 185 00:10:24,760 --> 00:10:26,880 Speaker 1: of the month of March this year was running a 186 00:10:26,960 --> 00:10:29,920 Speaker 1: duration of just over three years. So so I think 187 00:10:29,920 --> 00:10:35,119 Speaker 1: that there are possibilities and UM very attractive ones to 188 00:10:35,160 --> 00:10:38,400 Speaker 1: take advantage of the preferred market and and to do 189 00:10:38,520 --> 00:10:42,800 Speaker 1: so while also managing your your interest rate risk to 190 00:10:42,920 --> 00:10:46,920 Speaker 1: a fairly reasonable level. What do you think about UM 191 00:10:47,600 --> 00:10:50,480 Speaker 1: Europe or other regions than the US. I mean, you 192 00:10:50,480 --> 00:10:53,320 Speaker 1: say preferred, I think about Volkswagen. You say preferred, I 193 00:10:53,320 --> 00:10:56,319 Speaker 1: think about Porsche. Right, these are just they have famous 194 00:10:56,320 --> 00:10:58,640 Speaker 1: preferred stocks. I don't know if you like them particularly. 195 00:10:58,640 --> 00:11:03,120 Speaker 1: Why do they have famous preferreds? That's that's the doctor trades. Yeah, 196 00:11:03,360 --> 00:11:07,000 Speaker 1: vow three at g y okay, yeah so, but but 197 00:11:07,280 --> 00:11:09,800 Speaker 1: it just makes me I mean obviously not banks, although 198 00:11:09,880 --> 00:11:13,800 Speaker 1: they have massive financial arms. UM. What do you think 199 00:11:13,840 --> 00:11:18,480 Speaker 1: about the UH outside of the US? UM right now? 200 00:11:18,679 --> 00:11:22,000 Speaker 1: Sure so, so outside the US banks are still very 201 00:11:22,120 --> 00:11:25,520 Speaker 1: large issuers of preferred It's it's a slightly different categories 202 00:11:25,640 --> 00:11:28,840 Speaker 1: something that we've referred to as contingent capital securities. But 203 00:11:29,080 --> 00:11:32,520 Speaker 1: definitely here in the US, it seems there's a misperception 204 00:11:32,520 --> 00:11:35,800 Speaker 1: about how strong these Western European banks aren't. It shocks 205 00:11:35,840 --> 00:11:38,480 Speaker 1: most people when we put data in front of them, 206 00:11:38,520 --> 00:11:42,200 Speaker 1: and we demonstrate that on average, UH, these banks are 207 00:11:42,280 --> 00:11:45,720 Speaker 1: better capitalized and even our US banks and so so 208 00:11:45,920 --> 00:11:49,040 Speaker 1: we do think that there are tremendous opportunities, especially in 209 00:11:49,080 --> 00:11:51,960 Speaker 1: Western Europe. Now are there a handful of names obviously 210 00:11:52,000 --> 00:11:55,160 Speaker 1: we'd like to avoid and maybe some particular regions indeed, 211 00:11:55,640 --> 00:11:59,000 Speaker 1: but we've we've gone through the Western European bank space 212 00:11:59,120 --> 00:12:02,280 Speaker 1: to pull out things like, hey, how much Russian Ukraine 213 00:12:02,320 --> 00:12:05,079 Speaker 1: exposure is there? What if this was all written down, 214 00:12:05,600 --> 00:12:08,160 Speaker 1: what would that mean for for that segment of our market? 215 00:12:08,600 --> 00:12:11,360 Speaker 1: And and to be honest, with the amount of capital 216 00:12:11,480 --> 00:12:15,720 Speaker 1: that's in the bank system today in Europe, um, they 217 00:12:15,720 --> 00:12:20,000 Speaker 1: should be well positioned to absorb any any sort of 218 00:12:20,080 --> 00:12:22,920 Speaker 1: hit or write down UH and and even the knock 219 00:12:22,920 --> 00:12:25,400 Speaker 1: on effects that we expect to hit the European economy, 220 00:12:25,679 --> 00:12:29,320 Speaker 1: those banks should be well positioned. A reminder for everyone 221 00:12:29,679 --> 00:12:34,600 Speaker 1: US banks, European banks, they're stress tested regularly to to 222 00:12:34,760 --> 00:12:38,839 Speaker 1: determine whether they can survive dire economic conditions worse than 223 00:12:38,880 --> 00:12:40,559 Speaker 1: what we saw in two thousand and eight, two thousand 224 00:12:40,640 --> 00:12:43,880 Speaker 1: and nine. So when people are you know, starting to 225 00:12:43,960 --> 00:12:48,199 Speaker 1: raise the specter of of of a recession, that doesn't 226 00:12:48,200 --> 00:12:50,480 Speaker 1: really bother us too much. In in in in the 227 00:12:50,520 --> 00:12:53,319 Speaker 1: scheme of things, good stuff. Doug Baker bringing it today, 228 00:12:53,520 --> 00:12:56,920 Speaker 1: Doug Baker Portfolio Management had to preferred securities at noeu Ven. 229 00:13:00,679 --> 00:13:03,840 Speaker 1: Let's get over to Michael Dean right now, Bloomberg Intelligence 230 00:13:03,880 --> 00:13:07,959 Speaker 1: autos analysts out of London. He covers Volkswagen has been 231 00:13:08,000 --> 00:13:11,679 Speaker 1: doing a bang up job of it for years. In fact, Um, Michael, 232 00:13:11,720 --> 00:13:14,760 Speaker 1: A lot of the calls that you made UM are 233 00:13:14,920 --> 00:13:18,560 Speaker 1: are now coming true. At the main one of them 234 00:13:18,559 --> 00:13:20,920 Speaker 1: being that UM, folks Wong is finally gonna I p 235 00:13:21,080 --> 00:13:24,079 Speaker 1: O Porsche. Before we get into the Scout announcement, which 236 00:13:24,080 --> 00:13:28,240 Speaker 1: I'm pumped about, UM, talk to us about the Porsche 237 00:13:28,280 --> 00:13:32,640 Speaker 1: I p O and how how important this is, How 238 00:13:32,640 --> 00:13:35,880 Speaker 1: big is this going to be for a company that has, like, 239 00:13:35,960 --> 00:13:40,160 Speaker 1: you know, ten other brands, Hi, good morning. So yes, 240 00:13:40,559 --> 00:13:42,439 Speaker 1: if you look at some you know what's happening to 241 00:13:42,520 --> 00:13:45,559 Speaker 1: Tesla in terms of the market capitalization. If you look 242 00:13:45,600 --> 00:13:49,000 Speaker 1: at Ferrari, you look at the very strong valuations that 243 00:13:49,000 --> 00:13:51,679 Speaker 1: that luxury brand has, and then you look at Volkswagen, 244 00:13:51,720 --> 00:13:55,120 Speaker 1: which is trading on near crisis multiples. It's very important 245 00:13:55,120 --> 00:13:58,000 Speaker 1: for them to do something and by I poing Porsche, 246 00:13:58,120 --> 00:14:01,920 Speaker 1: they can actually extract some value for shareholders and hopefully, 247 00:14:02,040 --> 00:14:04,199 Speaker 1: you know, Porsche will be valued at a similar sort 248 00:14:04,240 --> 00:14:08,800 Speaker 1: of level to to Ferrari Volkwagon. By the way, Volkswagen 249 00:14:08,840 --> 00:14:12,440 Speaker 1: trades for about eighty eight billion euros in total right, 250 00:14:12,480 --> 00:14:15,760 Speaker 1: which is like a tenth of Tesla. How much is 251 00:14:15,800 --> 00:14:18,480 Speaker 1: Porscha going to be worth post ipl so we think 252 00:14:18,520 --> 00:14:20,600 Speaker 1: it could be worth up to eighty billion euros, so 253 00:14:20,720 --> 00:14:24,360 Speaker 1: so almost the market cap of its parent company in total. 254 00:14:24,480 --> 00:14:27,280 Speaker 1: So this is huge for the company. Why is Volkswagen 255 00:14:27,360 --> 00:14:29,640 Speaker 1: trade at such a discount? Dude? Imagine this means you 256 00:14:29,680 --> 00:14:37,120 Speaker 1: get Bentley, Lamborghini, UH Party, CRT, Scolder, Volkswagen. I don't 257 00:14:37,120 --> 00:14:40,280 Speaker 1: know what I'm missing, all for free Audi, all for 258 00:14:40,600 --> 00:14:44,040 Speaker 1: Let me ask the expert, Michael Dean. Why is that? Well, 259 00:14:44,080 --> 00:14:46,680 Speaker 1: you just look at any European auto company or any 260 00:14:46,800 --> 00:14:50,400 Speaker 1: legacy auto company. They're trading on crisis multiples, which means 261 00:14:50,720 --> 00:14:53,840 Speaker 1: that it's effectively the market saying that their their ice business, 262 00:14:53,880 --> 00:14:57,520 Speaker 1: their internal combustion engine business um will take them down 263 00:14:57,640 --> 00:15:00,280 Speaker 1: or or the company won't exist in the future, even 264 00:15:00,280 --> 00:15:03,280 Speaker 1: though they're spending huge amounts and they're going to convert 265 00:15:03,440 --> 00:15:07,080 Speaker 1: very quickly to too battery electric vehicles, so it's a 266 00:15:07,200 --> 00:15:09,960 Speaker 1: very tough market valuation for them at the moment. Well, 267 00:15:10,200 --> 00:15:11,800 Speaker 1: let me talk to you about Herbert DS because I'm 268 00:15:11,800 --> 00:15:15,520 Speaker 1: gonna interview in this afternoon. I've been following this guy 269 00:15:15,560 --> 00:15:19,120 Speaker 1: since he came from BMW. He produced one of my 270 00:15:19,120 --> 00:15:22,720 Speaker 1: favorite motorcycles there, the r N and t UM among 271 00:15:22,760 --> 00:15:27,240 Speaker 1: other things. But now at Volkswagen he has led up. 272 00:15:27,960 --> 00:15:32,000 Speaker 1: Can I say ball to the wall, charge towards electrification, 273 00:15:32,120 --> 00:15:36,000 Speaker 1: towards the future? Um is he? Do you think doing 274 00:15:36,160 --> 00:15:39,320 Speaker 1: doing all the right things now? I think so? I 275 00:15:39,360 --> 00:15:42,520 Speaker 1: mean partly, Um, you know they're big charge into battery 276 00:15:42,520 --> 00:15:46,360 Speaker 1: electric so I think you know, Volkswagen can overtake Tesla 277 00:15:46,360 --> 00:15:48,560 Speaker 1: in terms of volumes for battery electric vehicles in two 278 00:15:48,600 --> 00:15:51,960 Speaker 1: thousand twenty four, but indirectly because of what happened with 279 00:15:52,080 --> 00:15:56,400 Speaker 1: diesel gates, Volkswagen was kind of forced into battery electric vehicles. 280 00:15:56,440 --> 00:15:59,200 Speaker 1: But Deese has sort of taken the helm and he's 281 00:15:59,280 --> 00:16:02,240 Speaker 1: really pushed and you know, they're they're way forward in 282 00:16:02,360 --> 00:16:05,480 Speaker 1: terms of their transition compared to other legacy bronze. He 283 00:16:05,520 --> 00:16:08,000 Speaker 1: has no blood on his hands from diesel Gate. By 284 00:16:08,000 --> 00:16:10,720 Speaker 1: the way. It's personally a sad, a very sad story 285 00:16:10,760 --> 00:16:13,720 Speaker 1: for me because I love a diesel power train. I don't. 286 00:16:14,200 --> 00:16:18,080 Speaker 1: I just adore I still have a diesel. You haven't, 287 00:16:18,520 --> 00:16:20,800 Speaker 1: Isn't it great? My first car that I ever bought 288 00:16:20,800 --> 00:16:24,240 Speaker 1: with my own money was Audi a four two point 289 00:16:24,280 --> 00:16:26,680 Speaker 1: five t D I. I loved it. My new favorite 290 00:16:26,680 --> 00:16:31,760 Speaker 1: power train is GM's Babydramax, a little in line six diesel. 291 00:16:31,800 --> 00:16:34,840 Speaker 1: I think they're fantastic propulsion systems and given where pump 292 00:16:34,840 --> 00:16:37,520 Speaker 1: prices are, I mean the economical as well, So I'm 293 00:16:37,600 --> 00:16:39,360 Speaker 1: very happy to have a diesel at the moment. All Right, 294 00:16:39,440 --> 00:16:42,240 Speaker 1: Michael talked to us just about the car industry in general. Like, 295 00:16:42,680 --> 00:16:44,680 Speaker 1: one of the questions I have is just, you know, 296 00:16:44,720 --> 00:16:47,120 Speaker 1: in the United States, kind of the average production with 297 00:16:47,160 --> 00:16:50,520 Speaker 1: sixteen seventeen million cars a year, I'm told we're not 298 00:16:50,560 --> 00:16:52,640 Speaker 1: going to see that again. How do you think about 299 00:16:52,640 --> 00:16:56,480 Speaker 1: production and inventory levels at the dealers? Matt's gotta wait 300 00:16:56,520 --> 00:17:00,800 Speaker 1: like eighteen months for his truck. Is that the new normal? Yeah? 301 00:17:00,800 --> 00:17:03,280 Speaker 1: It's so interesting at the moment. So, you know, initially 302 00:17:03,440 --> 00:17:07,680 Speaker 1: we had these production shortfalls because the semiconductor constraints. Now 303 00:17:07,720 --> 00:17:10,199 Speaker 1: we've had other supply issues on the back of the 304 00:17:10,320 --> 00:17:13,360 Speaker 1: Ukraine War. So so yeah, we look at the first 305 00:17:13,440 --> 00:17:16,800 Speaker 1: quarter results this year, many automakers their production was down, 306 00:17:17,440 --> 00:17:20,760 Speaker 1: but their margins are up. So they finally realized that 307 00:17:20,800 --> 00:17:23,000 Speaker 1: they don't have to go for volume, and actually it's 308 00:17:23,000 --> 00:17:26,399 Speaker 1: probably a good thing for profitability for the industry. That's 309 00:17:26,640 --> 00:17:30,760 Speaker 1: they're producing fewer cars, they're producing higher marching cars, and 310 00:17:30,760 --> 00:17:33,680 Speaker 1: they're producing less of you know, the smaller saloons, which 311 00:17:33,680 --> 00:17:37,159 Speaker 1: aren't very popular anymore. By the way, I can't wait, um, Michael, 312 00:17:37,200 --> 00:17:40,280 Speaker 1: until you come over here to the US and get 313 00:17:40,280 --> 00:17:43,000 Speaker 1: to ride in my truck. Hopefully I have it by then. 314 00:17:43,400 --> 00:17:45,760 Speaker 1: But let me tell you something about this truck I ordered. 315 00:17:45,840 --> 00:17:51,080 Speaker 1: It just launched in February. It's a g M. Chevy 316 00:17:51,119 --> 00:17:54,240 Speaker 1: Silverado z R two. They priced at sixty seven, sorry, 317 00:17:54,240 --> 00:17:58,760 Speaker 1: sixty six in February. Then at the end of the month, 318 00:17:58,800 --> 00:18:00,600 Speaker 1: at the beginning of March, they probably is to raise 319 00:18:00,640 --> 00:18:04,320 Speaker 1: the price to six. Then at the end of March 320 00:18:04,359 --> 00:18:07,360 Speaker 1: they raised the price again to sixty nine to five. 321 00:18:07,440 --> 00:18:10,360 Speaker 1: So they've raised the price, um, more than three thousand 322 00:18:10,400 --> 00:18:15,240 Speaker 1: dollars in the space of like two months. Is that normal? Yes, 323 00:18:15,480 --> 00:18:17,960 Speaker 1: I've got another example. I was looking to buy the 324 00:18:18,000 --> 00:18:20,720 Speaker 1: BMW I X so that's sort of X five equivalent 325 00:18:21,320 --> 00:18:24,359 Speaker 1: battery electric vehicle. When I first looked it was eighty 326 00:18:24,440 --> 00:18:26,439 Speaker 1: five thou pounds. It's gone up to a hundred and 327 00:18:26,480 --> 00:18:33,040 Speaker 1: five thousand pounds. So the inflation is real. Yes, it's everywhere, 328 00:18:33,240 --> 00:18:35,280 Speaker 1: and they can get these prices. People are willing to 329 00:18:35,320 --> 00:18:37,359 Speaker 1: pay it. Yeah. And you've got to remember the most 330 00:18:37,440 --> 00:18:40,920 Speaker 1: vehicles of finance now, so um, it's whether you extend 331 00:18:40,960 --> 00:18:42,960 Speaker 1: the finance over another year, so you make the monthly 332 00:18:43,000 --> 00:18:45,400 Speaker 1: payment the same, so that it's not really hitting consumers 333 00:18:45,400 --> 00:18:49,560 Speaker 1: pockets at the moment. So are the days over? Michael? 334 00:18:49,600 --> 00:18:52,040 Speaker 1: And we we pull into a lot and it's just 335 00:18:52,320 --> 00:18:54,920 Speaker 1: dozens and dozens and maybe hundreds of cars on a 336 00:18:54,920 --> 00:18:57,680 Speaker 1: dealer's lot, and we get the have a little bit 337 00:18:57,680 --> 00:19:00,760 Speaker 1: of a negotiation over the race you're gonna pay. Are 338 00:19:00,760 --> 00:19:03,000 Speaker 1: those days over for consumers? Yeah? I think so. I 339 00:19:03,000 --> 00:19:04,840 Speaker 1: mean in Europe that was never the model, you always 340 00:19:04,960 --> 00:19:08,720 Speaker 1: ordered the vehicle, and and in the US it's probably 341 00:19:08,720 --> 00:19:11,040 Speaker 1: better for the manufacturers if it goes that way, because 342 00:19:11,280 --> 00:19:14,119 Speaker 1: you know, you probably have more options, and options are 343 00:19:14,160 --> 00:19:16,840 Speaker 1: very profitable as you know for cars, So so for 344 00:19:16,920 --> 00:19:20,040 Speaker 1: long run, profitability. Um, yeah, I think it's better for 345 00:19:20,080 --> 00:19:21,560 Speaker 1: the car makers, and that's the way it's going to 346 00:19:21,640 --> 00:19:23,359 Speaker 1: go in the US as well. All Right, I'm keeping 347 00:19:23,400 --> 00:19:27,040 Speaker 1: my two thousand fourteen BMW five thirty five I in 348 00:19:27,160 --> 00:19:31,639 Speaker 1: Duke Blue with manual transmission. Dude. It's a great engine, 349 00:19:31,720 --> 00:19:35,040 Speaker 1: it's a great transmission, and I don't see anything wrong 350 00:19:35,080 --> 00:19:38,760 Speaker 1: with keeping that. Um, I gotta uh, just a minute 351 00:19:38,840 --> 00:19:42,680 Speaker 1: left here, Michael, What do I ask Herbert D's today? 352 00:19:42,720 --> 00:19:45,720 Speaker 1: What should what should my most important question for the 353 00:19:45,800 --> 00:19:49,080 Speaker 1: CEO of Folkswagon be this afternoon? I just confirmed that 354 00:19:49,119 --> 00:19:52,680 Speaker 1: they're going to ibi Porsche in the fourth quarter. Um, 355 00:19:52,720 --> 00:19:55,439 Speaker 1: that would be the key item of my agenda. But 356 00:19:55,480 --> 00:19:58,200 Speaker 1: also just about battery electric vehicles. So he's talking about 357 00:19:58,680 --> 00:20:01,520 Speaker 1: the cost of batteries or the equivalent cost of of 358 00:20:01,600 --> 00:20:04,639 Speaker 1: a BEV compared to Anne being pushed back maybe a 359 00:20:04,720 --> 00:20:07,560 Speaker 1: year or two. So when will cost be comparable? Originally 360 00:20:07,600 --> 00:20:10,080 Speaker 1: we thought it was gonna be two tho. We forgot talk. 361 00:20:11,320 --> 00:20:13,719 Speaker 1: We forgot to and probably to you, it didn't you 362 00:20:13,720 --> 00:20:17,240 Speaker 1: weren't you weren't um you know, slobbering over a scout 363 00:20:17,320 --> 00:20:20,280 Speaker 1: as a young teen, Michael, because I never had the 364 00:20:20,320 --> 00:20:22,800 Speaker 1: scout you've never had it, but it's so cool for 365 00:20:22,840 --> 00:20:26,240 Speaker 1: the US. I mean, does Volkswagen as a brand really 366 00:20:26,240 --> 00:20:30,160 Speaker 1: have a chance in America? Well, they suddenly do on 367 00:20:30,160 --> 00:20:32,439 Speaker 1: on the Beth side of things, um, and they've got 368 00:20:32,480 --> 00:20:34,520 Speaker 1: good market show at the moment, so they're catching up 369 00:20:34,560 --> 00:20:37,639 Speaker 1: with Tesla. There's suddenly in with a chance on the 370 00:20:37,720 --> 00:20:40,280 Speaker 1: new power trains. Yeah, the battery electric vehicles they had, 371 00:20:40,320 --> 00:20:43,360 Speaker 1: the I D four is quite cool. The microbus, everybody's 372 00:20:43,400 --> 00:20:45,400 Speaker 1: waiting for that. Greg Jarrett's waiting for that to come back, 373 00:20:45,760 --> 00:20:48,040 Speaker 1: and then the and then the new Scout will be 374 00:20:48,080 --> 00:20:52,520 Speaker 1: like a Rivian competitor. Michael Dean, Bloomberg Intelligence analyst, uh, 375 00:20:52,640 --> 00:20:54,879 Speaker 1: covering autos for US at Alan and great to have 376 00:20:54,960 --> 00:20:57,440 Speaker 1: you on the program. Thanks so much for joining us, 377 00:20:57,600 --> 00:21:00,680 Speaker 1: and do tune in later this afternoon. I'm Inberg Television 378 00:21:00,680 --> 00:21:03,639 Speaker 1: and Radio from my interview with the CEO of Folkswagen 379 00:21:03,680 --> 00:21:12,480 Speaker 1: Herberts Professional here doing this stuff for living Christian Ladeau, 380 00:21:12,720 --> 00:21:16,360 Speaker 1: director of investment research at cap Trust. UM Richard, I'm 381 00:21:16,359 --> 00:21:19,159 Speaker 1: just kind of reading some notes here about half of 382 00:21:19,200 --> 00:21:21,800 Speaker 1: the broad US market, we'll call that the Russell three thousand, 383 00:21:22,000 --> 00:21:26,240 Speaker 1: About half are down over from the fifty two week highs. 384 00:21:26,960 --> 00:21:30,040 Speaker 1: That's a bear market? Are are things worse out there 385 00:21:30,040 --> 00:21:32,159 Speaker 1: than we think they are in terms of you know, 386 00:21:32,240 --> 00:21:36,919 Speaker 1: the equity markets? Good morning guys. Yeah, there's there's a 387 00:21:36,960 --> 00:21:39,640 Speaker 1: lot of I don't want to say sketchy, but let's 388 00:21:39,640 --> 00:21:43,320 Speaker 1: say questionable business models in some of those companies. So 389 00:21:43,480 --> 00:21:46,200 Speaker 1: we've we've really had a period of froth that had 390 00:21:46,240 --> 00:21:50,439 Speaker 1: to come down, and we're seeing that in the broad 391 00:21:50,520 --> 00:21:54,679 Speaker 1: swath of industries, mostly in the tech and health care areas. 392 00:21:55,760 --> 00:21:58,680 Speaker 1: But you know, you talked about real economy stocks, those 393 00:21:58,680 --> 00:22:00,760 Speaker 1: are the ones holding up a little bit. Are certainly 394 00:22:00,800 --> 00:22:04,879 Speaker 1: the ones in inflation beneficiary areas like energy and materials. 395 00:22:06,359 --> 00:22:09,320 Speaker 1: All Right, So I don't know if you kind of 396 00:22:09,359 --> 00:22:11,280 Speaker 1: got this message early in your career like I did, 397 00:22:11,320 --> 00:22:13,280 Speaker 1: which is don't fight the Fed, But if you did, 398 00:22:14,400 --> 00:22:16,560 Speaker 1: kind of makes investing hard over the next six to 399 00:22:16,640 --> 00:22:19,120 Speaker 1: twelve eighteen months because we have a federal reserve that's 400 00:22:19,160 --> 00:22:23,400 Speaker 1: certainly in a hiking mode. Indeed it is. And yes, 401 00:22:23,480 --> 00:22:26,280 Speaker 1: my entire career has been in periods where interest rates 402 00:22:26,320 --> 00:22:30,280 Speaker 1: are going down. Uh, we don't know yet just how 403 00:22:30,359 --> 00:22:34,040 Speaker 1: far the Fed will have to go. Consensus has it 404 00:22:34,160 --> 00:22:38,760 Speaker 1: going to three and a quarter percent by UM at 405 00:22:38,840 --> 00:22:42,280 Speaker 1: least that was the last read, and that was really 406 00:22:42,280 --> 00:22:46,160 Speaker 1: predicated on inflation remaining high, and you know, it's too 407 00:22:46,240 --> 00:22:48,560 Speaker 1: too early to know. I think we have to have 408 00:22:48,680 --> 00:22:52,840 Speaker 1: that debate internally about whether this is a nineteen seventies 409 00:22:52,920 --> 00:22:56,440 Speaker 1: type of inflationary spiral or whether it's more like World 410 00:22:56,520 --> 00:22:58,520 Speaker 1: War two where the gis came home and did a 411 00:22:58,600 --> 00:23:00,880 Speaker 1: lot of spending and there wasn't a lot the goods available, 412 00:23:00,920 --> 00:23:05,720 Speaker 1: and sooner or later that got solved. We had John 413 00:23:05,760 --> 00:23:09,000 Speaker 1: Author's on yesterday. He was comparing what we're watching in 414 00:23:09,040 --> 00:23:13,840 Speaker 1: the markets right now to what we saw in which 415 00:23:14,000 --> 00:23:17,439 Speaker 1: which was a little bit uh scary, to be honest. 416 00:23:17,760 --> 00:23:20,560 Speaker 1: What do you think about valuations here? Um, What do 417 00:23:20,600 --> 00:23:23,000 Speaker 1: you think about the possibility of a bottom? What do 418 00:23:23,000 --> 00:23:25,600 Speaker 1: you think about investors kind of waiting into this and 419 00:23:25,640 --> 00:23:30,040 Speaker 1: picking things up? Yes, I see a lot of similarities 420 00:23:30,080 --> 00:23:37,120 Speaker 1: to those those pockets of speculative stocks, certainly do. UM. 421 00:23:37,200 --> 00:23:41,640 Speaker 1: The prospects of bottoming here is really company by company 422 00:23:41,640 --> 00:23:46,080 Speaker 1: and industry by industry. You have some really attractive stocks 423 00:23:46,119 --> 00:23:50,359 Speaker 1: at current prices. You can get a five six percent 424 00:23:50,440 --> 00:23:54,640 Speaker 1: dividend yield with cash flows cheap on earnings, good balance, 425 00:23:54,640 --> 00:23:57,320 Speaker 1: sheets and you're probably going to be fine with that 426 00:23:57,400 --> 00:23:59,920 Speaker 1: kind of stock, but to really get into the specul 427 00:24:00,000 --> 00:24:02,000 Speaker 1: of his stuff, you really need to see inflation come 428 00:24:02,040 --> 00:24:05,320 Speaker 1: off in the FED, taking the foot off the gas pedal. 429 00:24:06,600 --> 00:24:10,359 Speaker 1: A T and T what you call their Christian You 430 00:24:10,480 --> 00:24:12,199 Speaker 1: picked that, you picked the poster child. And what I 431 00:24:12,240 --> 00:24:14,960 Speaker 1: just said that is the that is a kind of 432 00:24:15,000 --> 00:24:19,480 Speaker 1: company that I feel has very little downside. Here. You've 433 00:24:19,520 --> 00:24:23,440 Speaker 1: got a company that divested the media business that was 434 00:24:23,440 --> 00:24:27,080 Speaker 1: a real drag on that company, and it's saying that 435 00:24:27,160 --> 00:24:30,200 Speaker 1: it's going to stay straight and narrow from here. It's 436 00:24:30,200 --> 00:24:33,520 Speaker 1: going to start raising prices, it's going to start cutting costs, 437 00:24:34,280 --> 00:24:37,439 Speaker 1: and then it gets that evaluation boost to make it 438 00:24:37,520 --> 00:24:40,639 Speaker 1: a little bit more in line with its peers Verizon 439 00:24:40,720 --> 00:24:43,520 Speaker 1: and T Mobile, and you can get a thirty percent game. 440 00:24:43,600 --> 00:24:47,640 Speaker 1: The stog like that, is this a whole new management 441 00:24:47,640 --> 00:24:50,560 Speaker 1: team there at A T and T. Because they two 442 00:24:50,600 --> 00:24:53,520 Speaker 1: of the worst acquisitions I can remember, and I covered 443 00:24:53,520 --> 00:24:56,880 Speaker 1: the media industry for thirty years as analyst. Was direct TV, 444 00:24:57,440 --> 00:25:00,880 Speaker 1: a business that was clearly on the downside, and then 445 00:25:00,920 --> 00:25:03,320 Speaker 1: A T and T with I mean buying Time Warner 446 00:25:03,359 --> 00:25:05,560 Speaker 1: in business they didn't really know with a really tough 447 00:25:05,600 --> 00:25:09,560 Speaker 1: capital structure. Is the management has it turned over such 448 00:25:09,560 --> 00:25:12,800 Speaker 1: that you have confidence in their ability. Well, let's just 449 00:25:12,840 --> 00:25:16,880 Speaker 1: say this management team has been sufficiently chastised. I think 450 00:25:16,880 --> 00:25:19,120 Speaker 1: the market has given it a clear signal. It had 451 00:25:19,119 --> 00:25:22,760 Speaker 1: been a dog for five years, and I think it's 452 00:25:22,920 --> 00:25:24,639 Speaker 1: known now that it's not going to be able to 453 00:25:24,680 --> 00:25:27,000 Speaker 1: do that kind of transaction anymore. In the market simply 454 00:25:27,040 --> 00:25:29,800 Speaker 1: won't let it. An activist investor would jump in there 455 00:25:29,800 --> 00:25:32,520 Speaker 1: and tell him to stop. But now the management team 456 00:25:32,560 --> 00:25:37,000 Speaker 1: hasn't turned over to a great extent yet. If they 457 00:25:37,000 --> 00:25:39,119 Speaker 1: were to make missteps from here, I think you'd see that. 458 00:25:40,040 --> 00:25:42,000 Speaker 1: How about the homebuilders there? A lot of folks are 459 00:25:42,040 --> 00:25:44,119 Speaker 1: concerned about the homebuilders. I know you have Pulti Group 460 00:25:44,119 --> 00:25:46,840 Speaker 1: on there, but because rates, yeah, rates rates, I mean 461 00:25:47,200 --> 00:25:50,880 Speaker 1: prices are already high, um, and now you've got mortgage 462 00:25:50,960 --> 00:25:55,200 Speaker 1: rates rising. Does it make a difference. Oh? Absolutely. This 463 00:25:55,280 --> 00:25:58,200 Speaker 1: is in the industry that's likely to hit a recession 464 00:25:58,240 --> 00:26:02,280 Speaker 1: pretty soon. But that's a beauty of a cycle like this. 465 00:26:02,280 --> 00:26:06,359 Speaker 1: This stuck has peaked a year ago and business has 466 00:26:06,359 --> 00:26:08,639 Speaker 1: still been getting good. So in other words, investors know 467 00:26:08,760 --> 00:26:12,199 Speaker 1: this is coming, and now the question is what's going 468 00:26:12,240 --> 00:26:15,080 Speaker 1: to happen a year from now, and I think you're 469 00:26:15,119 --> 00:26:18,040 Speaker 1: going to have a pretty shallow recession. Now, that's that's 470 00:26:18,080 --> 00:26:21,639 Speaker 1: where we could debate this. But if we see rates 471 00:26:21,680 --> 00:26:24,240 Speaker 1: come down, because inflation has come down about six to 472 00:26:24,320 --> 00:26:27,080 Speaker 1: nine months from now, and you know, we still still 473 00:26:27,119 --> 00:26:30,479 Speaker 1: have a structural shortage of housing, we could see the 474 00:26:30,560 --> 00:26:35,920 Speaker 1: other side of this housing recession coming real quick, shallow recession. 475 00:26:36,400 --> 00:26:42,800 Speaker 1: That he's a gaucho, by the way, who Christians a gaucho? UCSB? Oh, 476 00:26:43,040 --> 00:26:45,960 Speaker 1: that's right? Then is there any more beautiful place? And 477 00:26:46,720 --> 00:26:49,600 Speaker 1: I was just I can't imagine going to school in 478 00:26:49,640 --> 00:26:53,000 Speaker 1: a cooler place. How was it? Tell us here on 479 00:26:53,040 --> 00:26:56,520 Speaker 1: the on the East coast? What was it like going 480 00:26:56,520 --> 00:26:59,640 Speaker 1: to college at U C. S B. It was horrible 481 00:27:00,000 --> 00:27:04,240 Speaker 1: to know how I ever got myself out of bed boy, 482 00:27:04,280 --> 00:27:06,000 Speaker 1: and it stays like this in the market that I 483 00:27:06,040 --> 00:27:08,280 Speaker 1: wish I was back there. Yeah, exactly, all right, Christian, 484 00:27:08,320 --> 00:27:10,560 Speaker 1: good good stuff. We appreciate you coming on. Christian Lado, 485 00:27:10,920 --> 00:27:13,879 Speaker 1: he's in director of investment research at cap Trust. Talking 486 00:27:13,880 --> 00:27:15,879 Speaker 1: about some of the names that are looking at it again, 487 00:27:16,320 --> 00:27:19,359 Speaker 1: you know some of the names A T and T, Broadcom, 488 00:27:19,359 --> 00:27:21,919 Speaker 1: Poulti Group, those are some of the names that they're 489 00:27:21,960 --> 00:27:23,919 Speaker 1: you know, allocating some capital too. Here and in the 490 00:27:23,920 --> 00:27:26,119 Speaker 1: markets today, a little bit of a mixed SMP and 491 00:27:26,160 --> 00:27:28,520 Speaker 1: NADAL up about four to six tenths of one percent 492 00:27:28,560 --> 00:27:31,919 Speaker 1: of the nasdac UH that's trading off about half of 493 00:27:31,960 --> 00:27:33,680 Speaker 1: one percent, So a little bit of a mixed market. 494 00:27:33,680 --> 00:27:37,040 Speaker 1: Here is the market digest UH. This CPI print that 495 00:27:37,080 --> 00:27:40,520 Speaker 1: we had this morning. Thanks for listening to the Bloomberg 496 00:27:40,560 --> 00:27:43,960 Speaker 1: Markets podcast. You can subscribe and listen to interviews with 497 00:27:44,040 --> 00:27:48,840 Speaker 1: Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. 498 00:27:49,119 --> 00:27:52,959 Speaker 1: I'm on Twitter at Matt Miller three. Put on fall 499 00:27:53,000 --> 00:27:55,880 Speaker 1: Sweeney I'm on Twitter at pt Sweeney before the podcast. 500 00:27:55,960 --> 00:28:00,720 Speaker 1: You can always catch us worldwide at Bloomberg Radio.