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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Tom Keene along
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Speaker 2: all of you across America and around the world, and
Speaker 2: particularly all of you listening in Indian now to without question,
Speaker 2: our Bloomberg Conversation of the day on the historic moment
Speaker 2: for the Indian people. Rugg Rojin is at Boot School.
Speaker 2: He's O School. His financial book on the Crisis of
Speaker 2: seven eight won every award fault Lines. He is one
Speaker 2: of our great financial professors and of course a former
Speaker 2: head of a Central Bank of India. Far more importantly
Speaker 2: is always Rogin out front. He has a book he
Speaker 2: is delivering Breaking the Mold on his India. It will
Speaker 2: be a definitive two hundred and seventy pages. Look for
Speaker 2: that from Princeton University Press. Shortly, Ragu, thank you so
Speaker 2: much for sending me the PDA for the book. I'm
Speaker 2: going to cut to the Chase Professor the final sentence
Speaker 2: of your book. They cannot have any more excuses. What
Speaker 2: are the excuses Modi has now and what does he
Speaker 2: need to move India to a new prosperity.
Speaker 3: Well, we have an election. The results have been coming
Speaker 3: out and I think it's a splendid result because it
Speaker 3: tells the government it needs to change course. The old
Speaker 3: course was unviable and we can talk about that. Of course,
Speaker 3: markets seem to be disappointed. We can talk about that
Speaker 3: also why markets are reacting negatively. But I think what
Speaker 3: is happening today is really, in the long run, really
Speaker 3: good for India because it forces India to choose a
Speaker 3: different course from the one it has been on, a
Speaker 3: course which has led to much wider unemployment and distress
Speaker 3: than needed in the country.
Speaker 2: Is this an election result that you see will bring
Speaker 2: the technocratic and elite South together with a more emotional
Speaker 2: and historic North. Does it bring the polarity of India
Speaker 2: together or do we have a more separate India in
Speaker 2: twenty twenty six.
Speaker 3: No, it's it's actually a win for democracy, and that's
Speaker 3: good for India because what democracy does is it allows
Speaker 3: the different paths to essentially express themselves and to negotiate.
Speaker 3: The problem earlier was India was trending towards a more
Speaker 3: autocratic country, a country with one leader who was who
Speaker 3: are a larger than like image, and that unfortunately meant
Speaker 3: that the JP leadership wasn't listening, wasn't listening to the
Speaker 3: economic news on the ground that people were actually suffering hardship,
Speaker 3: wasn't listening to the broader sense that you know, the
Speaker 3: weaponization of various instruments of the government to put you know,
Speaker 3: opposition party leaders in jail was simply not jelling and
Speaker 3: it would have taken India down a course which was
Speaker 3: ruinous in the longer run, maybe in the short run
Speaker 3: benefiti of the big, big business groups. And that's why
Speaker 3: the market is reacting adversely.
Speaker 2: But I think this is good Rock and Rogen with
Speaker 2: us with Musco Chicago. We welcome all of you on
Speaker 2: YouTube worldwide and particularly in South Asia. My colleague Damien Sassar,
Speaker 2: Professor Rogin, Professor Rajen.
Speaker 1: You have mentioned the concept of an authoritarian democracy and
Speaker 1: how India is moving into that sort of bucket. Talk
Speaker 1: to us a little bit about what this election means
Speaker 1: for India and what it means for Numerendro Modi and
Speaker 1: some of his policies on labor and whatnot.
Speaker 3: So I think the key number to look at in
Speaker 3: this election is the bgp's own seats in Parliament. They
Speaker 3: almost surely will fall short of a majority, which means
Speaker 3: that they have to actually take the support of other
Speaker 3: parties convince them to stay on board, which means they
Speaker 3: have to be much more sensitive to a broad based
Speaker 3: set of policies. Now, the PGP has done some very
Speaker 3: good things during its stint in power. For example, it
Speaker 3: has improved the investment in infrastructure and you can see
Speaker 3: Rhodes airports highways becoming much better in India. That's good. However,
Speaker 3: what it has not articulated is a sensible policy for
Speaker 3: broad based employment, and that almost surely requires policies on
Speaker 3: human capital, how to skill up the workforce, how to
Speaker 3: bring you know, industry together with universities and so on
Speaker 3: to get people jobs. So the frustration with a BJP
Speaker 3: has been mass unemployment, which is, you know, in an
Speaker 3: authority regime. They simply don't even acknowledge the fact that
Speaker 3: unemployment has been growing and is especially amongst the youth.
Speaker 3: So what this election has done is essentially given them
Speaker 3: a cold shower of reality that people are not happy
Speaker 3: with your policies and that will force, you know, if
Speaker 3: the BJP does come back to power after negotiating with allies,
Speaker 3: it will force policies which are broader, more inclusive, and
Speaker 3: more sensitive to the needs of the people. That's a
Speaker 3: good thing.
Speaker 2: This morning an extended interview with Rock and Roger of
Speaker 2: the Buschool Chicago for those joining in America. A shock
Speaker 2: a result or beginning of results, I should say, in
Speaker 2: a Delhi election assumed to be dominant for mister Mody
Speaker 2: and it was decidedly less so my colleague Damian Sassar.
Speaker 1: Professor Roger, and I want to take you back to
Speaker 1: your former role as director of research at the IMF.
Speaker 1: You're familiar with workers' remittances, the role they play in India,
Speaker 1: I mean the role they play globally. Eight hundred and
Speaker 1: sixty million of remittances in twenty twenty three, India is
Speaker 1: fifteen percent of that. Talk to us about what this
Speaker 1: election means for the diaspora outside of India about the
Speaker 1: flows of capital into India. Is it's going to change
Speaker 1: things at all?
Speaker 3: Well, I think it's It can actually be good news
Speaker 3: both from the perspective. Remittance is will continue regardless of
Speaker 3: who's in part. This is more you know, a lot
Speaker 3: of money coming from the Middle East, some from the
Speaker 3: United States and Europe for people to their families, and
Speaker 3: that will continue that there's no reason why that would
Speaker 3: be disrupted. What is interesting, however, is foreign direct investment
Speaker 3: has been slowing into India over the last couple of years.
Speaker 3: Some people argue that one of the reasons it has
Speaker 3: been slowing is that, you know, people are worried about
Speaker 3: arbitrary government policy, to the extent that a more democratic
Speaker 3: dispensation at the center creates more stability about government policies,
Speaker 3: especially it limits the weaponization of the tax authorities, of
Speaker 3: the investigative authorities. Business actually will feel more comfortable, I hope,
Speaker 3: and I think it is quite possible that private investment,
Speaker 3: which has also be on the down as well as
Speaker 3: foreign direct investment, could pick up slowly as it sees
Speaker 3: policies emerge which are more comforting.
Speaker 2: Professor, within your new book, breaking the Mold, And I
Speaker 2: guess the answer is for every central bank. The raging
Speaker 2: vogue now is to pull climate change into some form
Speaker 2: of monetary policy mandate from whatever the nation is. Climate
Speaker 2: change is reality in India New Deli today, I believe
Speaker 2: the high of one hundred and eleven, one hundred and fourteen?
Speaker 2: Fair nit, who's counting, Professor? What does India do and
Speaker 2: what does Modi do to immediately break the mold on
Speaker 2: a climate change out of control?
Speaker 3: Well, this is precisely what the book is about. Can
Speaker 3: India afford to become another China? Does the world have
Speaker 3: room for another China? Becoming a manufacturing giant? And that
Speaker 3: was the direction the more the government was trying to
Speaker 3: go in offering massive subsidies to capital intensive manufacturing and
Speaker 3: it you know the reality is that China's already there.
Speaker 3: There is very little place for another manufacturing giant, especially
Speaker 3: given the protectionism that's right in the world. But India
Speaker 3: has a card up its leave. It actually is doing
Speaker 3: far better in services exports, which is much greener, much
Speaker 3: more sustainable and You're seeing a huge growth in skilled
Speaker 3: services exported to the rest of them, whether it's telemedicine, consulting,
Speaker 3: chip design, lots of new areas opening up. India accounts
Speaker 3: of five percent of global trade there. That's good.
Speaker 2: How do you unify a nation with over twenty languages?
Speaker 2: We in the United States are in a panic. I mean,
Speaker 2: there's two languages in Chicago, the Cubs in a white Sox.
Speaker 2: That's a different story. But ragu, how do you unify
Speaker 2: towards a new India around twenty disparate languages?
Speaker 3: Tom, It's more than that. It's twenty official languages, which
Speaker 3: means they have enough people speaking it, but there are
Speaker 3: six hundred additional dialects and languages. It's a vast complicated country.
Speaker 3: And the only way it's unified is through democracy, because
Speaker 3: democracy allows each each community a voice. You talked about
Speaker 3: twenty twenty six in in India, that's when the parliamentary
Speaker 3: seats get reapportioned. When there will be a move to
Speaker 3: have new seats in parliament for the more populous areas.
Speaker 3: That has to be done by consensus, and what I'm
Speaker 3: so glad about is that it will be done by consensus.
Speaker 3: Because democracy has re established itself in India and they
Speaker 3: will have to negotiate how that reapportionment helps. So India
Speaker 3: is more politically stable as a result of this election,
Speaker 3: is also going to be a greater friend for the
Speaker 3: democracies of the world.
Speaker 2: Yeah, Damien, I know one of your focuses is on
Speaker 2: India Russia, and of course it goes back to Neyhror's
Speaker 2: visit in nineteen fifty five to Russia and all the
Speaker 2: responses through the sixties of James John Kenneth Galbray think
Speaker 2: Kennedy trying to reaffirm an American presence from a distance.
Speaker 1: That's absolutely right. And Professor Rajan, I'd really like to
Speaker 1: hear your opinion on the relationship between India and Russia. Obviously,
Speaker 1: they've been a big consumer of Russian barrels of Russian oil,
Speaker 1: and if you look at the tenure and the correlation
Speaker 1: between the Indian tenure and Brent crude, it is pretty strong.
Speaker 1: It has been since two thousand, So talk to us
Speaker 1: a little bit about that relationship India and Russia.
Speaker 3: Well, India sort of tilted towards Russia when the US
Speaker 3: tilted away from India. India and the United States were
Speaker 3: quite friendly in the sixties, but then you know, as
Speaker 3: the Bangladesh situation developed, the US tilted away from India,
Speaker 3: and that's when Russia moved towards India. There was a
Speaker 3: strong friendship through the sixties, seventies and eighties. India buys
Speaker 3: a lot of military hardware from Russia, so it has
Speaker 3: been attended that has changed. India increasingly is buying from
Speaker 3: the West, you know, from France, from the United States,
Speaker 3: and that relationship is strengthening. So this is a work
Speaker 3: in process. India understands increasingly Russia is going to be
Speaker 3: dependent on China, which is unfortunately. At this point the
Speaker 3: relationship between India and China is one antagonist.
Speaker 2: Soago, I've got time for one more question. I have
Speaker 2: to interrupt and be rude. If you are called upon
Speaker 2: by mister Mody, will you serve the Indian people within
Speaker 2: his new government.
Speaker 3: Well, I think that's an unlikely prospect. You know, my
Speaker 3: sort of inclination is whenever there's a government I can
Speaker 3: agree with, I'm happy to work with them. I've always
Speaker 3: been open with advice. Let's see what happens.
Speaker 2: Rogert, thank you so much. We're really anticipating breaking the
Speaker 2: mole two hundred and seventy pages from Princeton University pres
Speaker 2: look for that from Professor Rogin the Bout School, Chicago.
Speaker 2: It is legendary at the University of Virginia. The largest
Speaker 2: birthday party ever in the history of the University of
Speaker 2: Virginia was on the lawn for Kate Moore. It was
Speaker 2: only eight nine, ten years ago. Joining us now this morning,
Speaker 2: Kate Moore from black Rock and our global allocation team.
Speaker 2: Kate Moore, Happy birthday to you.
Speaker 4: Oh thanks Tom. I must say it's great to be
Speaker 4: twenty nine again.
Speaker 2: We're we're all work as SaaS. The only one getting
Speaker 2: away to the Kate Moore's Damien Sassa is cottenshiseled and
Speaker 2: doing thirty six holes on the golf course. Kate Moore,
Speaker 2: I want you to measure the level of xuberance right now.
Speaker 2: I see a lot of fancy technical studies that say
Speaker 2: we're just not as exuberant is nineteen ninety nine. Do
Speaker 2: you buy it?
Speaker 1: Yeah?
Speaker 4: I don't see a huge amount of exuberance. Actually, let's
Speaker 4: just talk about exuberance. Over the course of twenty twenty four, right,
Speaker 4: we had gotten to a pretty excited place by the
Speaker 4: end of March. Obviously, stocks were putting up big gains.
Speaker 4: At people who had been skeptics around the resilience of
Speaker 4: you as economy had to throw in that towel. It
Speaker 4: seemed like everyone was afraid of being underweight or under risked.
Speaker 4: And I think a lot of that has faded. You know,
Speaker 4: we had a tougher April, and now we've had a
Speaker 4: lot of cross currents as companies have reported earnings, you know,
Speaker 4: some good news and some just okay news, and lots
Speaker 4: of unexpected sort of changes in the macro environment and
Speaker 4: in the policy rate expectations. So I would say we're
Speaker 4: just in a kind of a lukewarm but not negative,
Speaker 4: but a lukewarm state at the moment.
Speaker 1: Happy birthday, Kate, and I agree with you. Things are
Speaker 1: far more asymmetric. I mean they're not as asymmetric, the
Speaker 1: far more two sided. Given the movie we've seen since.
Speaker 2: April, you're saying there's an asymmetry between thirty nine and
Speaker 2: twenty nine.
Speaker 1: No asymmetry there whatsoever. So miss Moore King dollars flexing
Speaker 1: its muscles yet again, right, I mean, let's be real here.
Speaker 1: I mean, this is not a US exceptionalism move. This
Speaker 1: is a risk off move. Every single currency in G
Speaker 1: ten and EM with the exception of the pound, is
Speaker 1: now down versus the dollar to date. Talk to us
Speaker 1: about king dollar in the current environment.
Speaker 4: Yeah, we've had a modest overweight to the dollar throughout
Speaker 4: the course of this year. Not a huge bet, but
Speaker 4: just kind of an expectation that US economy was going
Speaker 4: to be stronger than some of our big trading partners
Speaker 4: and therefore kind of justified. But I have to say,
Speaker 4: I think there is a little bit of a risk
Speaker 4: off element to it, as you suggest, and there is
Speaker 4: also an understanding that the US economy is very resilient
Speaker 4: and quite a lot of them both consumer although that's
Speaker 4: you know people that did debate that, but the consumer
Speaker 4: data and the corporate data is still really strong. So
Speaker 4: you know, I'm not a great currency forecaster, but I
Speaker 4: wouldn't bet against the dollar at least in the next
Speaker 4: few months.
Speaker 2: Just in folks, I really want to bring this to
Speaker 2: your attention. After Damien talks to Kate More of Blackrock,
Speaker 2: we're thrilled to go to Delhi and we'll speak to
Speaker 2: Derek Wallbank of Bloomberg News on the stunning election. Damien.
Speaker 1: Well, let's stay here, Kate. Let's stay with the US.
Speaker 1: Let's stay with US equities, right. I mean, we've had
Speaker 1: some pretty big moves in Telco and it year to date.
Speaker 1: Do we lean into that. I mean, if we had
Speaker 1: this risk off move off, things sort of settling in here,
Speaker 1: I mean, is it you know, is this a buying opportunity?
Speaker 4: Yeah, Damien. One of the things I will say is
Speaker 4: I love that the leadership this year is really being
Speaker 4: driven by fundamentals. I mean, I know there are skeptics
Speaker 4: out there saying these this run can't continue. We know
Speaker 4: the companies that are performing the best are those that
Speaker 4: are putting up earnings during their earnings reporting, have affirmed
Speaker 4: guidance and oftentimes raised guidance and set higher expectations. These
Speaker 4: are companies on a really solid path, in some cases,
Speaker 4: on a secular path, separate from the business cycle. We're
Speaker 4: not in a position where people are just kind of
Speaker 4: hyping up or speculating on what may happen in the future.
Speaker 4: This technology is here today. These companies are delivering revenues
Speaker 4: and they're printing cash. So because of that, I would
Speaker 4: not fade the leadership of these big cap tech anytime soon.
Speaker 1: Yeah, But Kate, I mean value and quality are both
Speaker 1: down as a strategy here to date, right, I mean,
Speaker 1: I think it's been the low vol factor. I mean,
Speaker 1: I'm not going to get into all that because everybody
Speaker 1: calculates these industries a different way. But equity, I mean,
Speaker 1: that's a four percent year today, and I mean it
Speaker 1: seems to be there, seem to be you know, some
Speaker 1: technicals that work here now.
Speaker 4: Yeah, there are a lot of technicals. And actually we
Speaker 4: pay very close attention to positioning and sentiment to try
Speaker 4: and time our entry and exit into different positions. And
Speaker 4: we've been using options pretty aggressively. Given the ball market,
Speaker 4: you know, we've been given a lot of opportunities to
Speaker 4: buy very cheap fall and to sell all when you
Speaker 4: know it was a good opportunity quickly, Kate, we're.
Speaker 2: Out of time. But what's the sentiment did you see
Speaker 2: among fancy people like at hedge funds on big tech?
Speaker 2: Is there a big tech bet or have they pulled away?
Speaker 4: I think they're constructive for the most part. Of course,
Speaker 4: it's going to depend on this segment. We haven't seen
Speaker 4: huge shorting of the big names. In fact, no one
Speaker 4: wants to really stand in front of that train. Whether
Speaker 4: you're a mutual fund investor, a retail investor, or a
Speaker 4: hedge fund investor. I said, as long as these companies
Speaker 4: continue to have the fundamentals, Tom, I think it's going
Speaker 4: to be an important part of your portfolio for the
Speaker 4: balance of twenty twenty four.
Speaker 2: Twenty nine. Candles Kate more Heavy Birthday, Thank thank you
Speaker 2: so much for joining us. Folks. We have Julie Norman
Speaker 2: on just because of time in this vamp that we
Speaker 2: just did in Stanley Cup hockey. I'm not going to
Speaker 2: harass her about Baltimore Orioles best team in baseball, but seriously,
Speaker 2: this is the courage of Julie Norman of the University
Speaker 2: of College London. She is, without question, one of the
Speaker 2: experts in the world on a difficult word, terrorism and
Speaker 2: she has taken on the challenge of a book on
Speaker 2: the political history of Gaza. Professor Norman honor to have
Speaker 2: you with us this morning. What is the political future
Speaker 2: of Gaza?
Speaker 5: Oh gosh, Tom, I think that's the question that is
Speaker 5: on everyone's mind right now, and it's certainly the one
Speaker 5: that I think Biden is really trying to push Netnahu
Speaker 5: on these days. You know, Biden put out this ceasefire
Speaker 5: plan ostensibly approved by Israel, but part of that was
Speaker 5: to get the ceasefire, and part of it was just
Speaker 5: to get Netanyahu's starting to articulate what a day after
Speaker 5: might look like in Gaza.
Speaker 2: Well, okay, but importantly everybody's running for election and posturing
Speaker 2: for their domestic politics. Is the American relationship with Israel changed?
Speaker 2: Whatever the future is oft in Yahoo or Prime Minister
Speaker 2: Sasa or whatever it is, is the future changed in
Speaker 2: American Israeli relations?
Speaker 5: You know, I think there's two ways to answer that.
Speaker 5: One is governmental relations with Israel. And I would say,
Speaker 5: at that level, whether it's president, whether it's Congress, we
Speaker 5: still see very strong support for Israel pretty much across
Speaker 5: the board. Obviously some exceptions within Democratic Party representatives. I
Speaker 5: think where we're seeing the shift those with public opinion,
Speaker 5: obviously with young voters, young citizens in particular, and really
Speaker 5: you know, on the more progressive wing, with the Democratic
Speaker 5: Party more broadly now split essentially fifty to fifty on
Speaker 5: leaning more sympathetic towards Palestinians and more sympathetic towards Israel.
Speaker 5: So I do think that trend is going to continue,
Speaker 5: and it's one that lawmakers will have to grapple with
Speaker 5: is you know, incoming years a bit more than they
Speaker 5: have in the past.
Speaker 1: Doctor Norman, I'm curious to hear your thoughts of what's
Speaker 1: going on south the border. We had an election in Mexico,
Speaker 1: Claudie Shinbaum, Jewish former mayor for the city for Mexico City,
Speaker 1: at thirty percentage point. When is president, does that change
Speaker 1: Mexico's relationship with Israel at all?
Speaker 5: Yeah, it'll be interesting to see. You know, obviously very
Speaker 5: notable that she is not only the first woman, but
Speaker 5: the first Jewish person to hold that office. But she
Speaker 5: has made statements before that you know, she doesn't agree
Speaker 5: with Zionism. I think she does identify in fact as
Speaker 5: like an anti Zionist. So she seems to be, at
Speaker 5: least up until this point, upholding what Mexico stance has
Speaker 5: been as being very pro Palestine, you know, showing their
Speaker 5: showing their dissatisfaction with Israeli policies. But again, she's been
Speaker 5: towing the line of her predecessor up until this point,
Speaker 5: and I think we're not really sure what many of
Speaker 5: her policies are going to be in general simply because
Speaker 5: she's been simply a kind of walking the party line,
Speaker 5: and once she's in office, we might see some changes.
Speaker 1: I'm getting that same feeling, doctor, I mean, just the
Speaker 1: uncertainty surrounding what her appointment means as president. But you know,
Speaker 1: let's shift gears. Let's talk about Ukraine. Let's talk about
Speaker 1: the I'MA funding that they received last week. I mean,
Speaker 1: that's good news, but there's another sort of summ and
Speaker 1: other fundraiser books with Biden talk to us about US
Speaker 1: Ukrainian relations. I mean, what do we expect there?
Speaker 5: Yeah, So, you know, I think it's a tough spot
Speaker 5: for Biden right now. Obviously he got through the big
Speaker 5: aid package, you know, two months ago. That was a
Speaker 5: very long time coming. I think that's going to be
Speaker 5: the last big infusion of military aid at least that
Speaker 5: we see going to the going to Ukraine anytime soon.
Speaker 5: And as the war goes on, I think Biden's getting
Speaker 5: to a point of just as is the what is
Speaker 5: the endgame here? What is all this going towards? And
Speaker 5: I think those conversations are starting to happen more.
Speaker 2: Professor Norman, do your claimed expertise and I'm not saying
Speaker 2: this to be Snyder snarky. I think it's a serious question.
Speaker 2: Is Hamas defeated or trending for defeated? How do you
Speaker 2: gauge that? How do you measure that?
Speaker 5: Yeah, so this has obviously been one of Israel's main objectives,
Speaker 5: and the US right now is assessing that Hamas has
Speaker 5: been sufficiently depleted in the sense that they couldn't carry
Speaker 5: out a massive military attack, they couldn't govern effectively, that
Speaker 5: sort of thing. At this point, I would just say,
Speaker 5: though Hamas is so many different actors all at once.
Speaker 5: They're a military operation, they are a political party, they're
Speaker 5: a social movement, and there's a lot of just everyday
Speaker 5: people who identify as Hamas supporters. So I don't think
Speaker 5: the movement itself is close to being wiped out. And honestly,
Speaker 5: I feel like many that after the guys of war,
Speaker 5: they will probably be able to recruit quite effectively, or
Speaker 5: a group very similar to them will likely be able
Speaker 5: to recruit very effectively.
Speaker 1: And doctor Norman talks to us a little, just a
Speaker 1: bit just about I mean, look, I can't believe I'm
Speaker 1: saying this.
Speaker 2: Russia.
Speaker 1: Russian relationships with the West with the US specifically, I mean,
Speaker 1: talk to us a little bit about, you know, what
Speaker 1: comes next for the country, what comes next for its
Speaker 1: relationships with the former Soviet states. I mean, I'm thinking Armenia,
Speaker 1: I'm thinking Azerbaijan, I'm thinking you know, I'm thinking quite frankly,
Speaker 1: you know, Luzbekistan and a lot of the sort of
Speaker 1: step out of China. You talk to us a little
Speaker 1: bit about what's going on there.
Speaker 5: Yeah, sure, so, I would say, you know, obviously, I
Speaker 5: don't think things will change with the US, at least
Speaker 5: within these next six months, at least during the Biden
Speaker 5: presidency and with the Ukraine War, But with much of
Speaker 5: the rest of the world, including former Soviet estates, including
Speaker 5: much of the global South, you know, they have viewed
Speaker 5: this war very differently than the US. They have continued,
Speaker 5: you know, trading with Russia, taking advantage of cheaper prices
Speaker 5: and really trying to kind of straddle both lines. So globally,
Speaker 5: I feel like Russia is actually still doing fine with
Speaker 5: man with many states, and they will probably continue on
Speaker 5: that trajectory as as anti Western sentiment increases.
Speaker 2: Unfortunately, professor, we've got forty five seconds left since you
Speaker 2: bleed Baltimore Orioles Orange with the new ownership. Should the
Speaker 2: Orioles be aggressive at the trade deadline?
Speaker 5: Oh, I mean I would just say I put all
Speaker 5: my trust in David Rubinstein, like whatever he thinks is best,
Speaker 5: I will like trust. He's brought a lot of graphics
Speaker 5: to Baltimore and we're all just super excited.
Speaker 2: Nailed it. Professor Normany just knows how to get back
Speaker 2: on the show. Julie Norman, thank you so much and
Speaker 2: really anticipated as our most serious history about the political
Speaker 2: history of GAZAOK for that. We'll have a substantial set
Speaker 2: of economic data at ten o'clock and our economic indicators
Speaker 2: always brought to you by Commonwealth, supporting more than two
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Speaker 2: real commitment to what we're doing here as well joining
Speaker 2: us for a peaceful conversation that the Damien the day is.
Speaker 1: The interview of the day.
Speaker 2: Oh, I don't know about the interview of the day,
Speaker 2: but let's get back to sanity and what the markets
Speaker 2: are doing. Lindsay Roster with US multisector Investing Goldman Sechs
Speaker 2: Asset Management. Which category of multisector is your most vibrant
Speaker 2: study right now?
Speaker 6: The most vibrant study would be structured product. What's interesting
Speaker 6: about it is it isn't a market that you can
Speaker 6: just buy it all. This is a market that you
Speaker 6: absolutely have to be an active manager in billin colos
Speaker 6: and even in commercial mortgage pack security.
Speaker 2: For the mere mortals out there, identify what structured product is.
Speaker 2: It sounds like I'm buying skyscrapers that are bankrupt? What
Speaker 2: structured product?
Speaker 6: Hopefully not skyscrapers that are bankrupt, although there was actually
Speaker 6: a you could say a default in office based in
Speaker 6: New York recently. But really, what structured product is is
Speaker 6: a bucket of assets and there is a structured overlaid
Speaker 6: that allows you to have trunching, so splitting off the
Speaker 6: stuff exactly, and different levels of it have different protection
Speaker 6: levels or what they call fancy jargon credit enhancement. So
Speaker 6: if you're the highest part of the capital structure, you're
Speaker 6: going to have the most credit enhancement that comes typically
Speaker 6: with less threads. Hey I'm a Philly's girl, but I'll
Speaker 6: let you go with the analogy.
Speaker 2: That's kind the white sox the lowest true. How would
Speaker 2: you respond to the argument.
Speaker 1: I mean, we all know about the one point seven
Speaker 1: trillion dollar private credit market, and we know about you know,
Speaker 1: the marketing that goes around that that these are. You know,
Speaker 1: they have tighter covenants, they're safer that you talk to
Speaker 1: us about the recoveries on first been loans, I'm hearing
Speaker 1: that recoveries on a lot of that debt are not
Speaker 1: going to be as high as what you might otherwise
Speaker 1: find in the public markets.
Speaker 6: Yeah, so it it is really going to be collateral specific.
Speaker 6: But it goes back to again where I started with
Speaker 6: active management. You want to make manager who is really
Speaker 6: thinking about what they're investing in, and so you can
Speaker 6: look at broad numbers like what are recovery rates? Are
Speaker 6: they going to be lower? I would say, find your manager.
Speaker 6: Find your manager who's going to do the right job.
Speaker 6: And again, the big thing that's different between public credit
Speaker 6: and private credit is that private credit is less liquid
Speaker 6: and what I mean by that your ability to get
Speaker 6: your money every single day less. So in the public
Speaker 6: markets we have daily liquidity. With that you get a premium.
Speaker 6: By the way, though, in the private market too compensate
Speaker 6: you for.
Speaker 1: That, Lindsay, I want to channel one of your former
Speaker 1: colleagues a chapter the name of Sam Finkelstein now at
Speaker 1: Citadel I believe, a senior PM at Citdeley joined Griffin
Speaker 1: Dunn down in Miami, a former emerging market.
Speaker 2: Fly A manager.
Speaker 1: Talk to us about the role of emerging markets in
Speaker 1: a multi asset diversified portfolio.
Speaker 6: Yes, so you want to be able to look across
Speaker 6: the globe into all asset classes for opportunity. As you're
Speaker 6: both aware, it is a great opportunity set right now.
Speaker 6: From a yield perspective, we've got yields that we haven't seen.
Speaker 6: There's income and fixed income. We've heard that story. But
Speaker 6: you really want to go out there and find the
Speaker 6: right place to get risk adjusted returns because spreads are
Speaker 6: really tight. Emerging markets have been definitely an outperformer year
Speaker 6: to date. What's really driven that is that the double
Speaker 6: B and single B market has been open for financing,
Speaker 6: which is new. But we think about emerging markets as
Speaker 6: a piece of the puzzle, and there is a lot
Speaker 6: of high risk, a lot of election risk. I mean,
Speaker 6: certainly we've got election risk in the US. We don't
Speaker 6: have to get into that, but their election risk in
Speaker 6: emerging markets as well. We are finding more opportunity actually
Speaker 6: in the US right now when our portfolios are tilted
Speaker 6: more to the US in a multisector fruit.
Speaker 1: So, Linda, I'd love to ask you about the US elections,
Speaker 1: but we only have you for a limited amount of
Speaker 1: time and I need to channel Clive Asna's here your
Speaker 1: g sam factor in disease. We talk about Carrie, we
Speaker 1: talk about value quality. What factors do you believe as
Speaker 1: an investor you should be leaning into in the current environment.
Speaker 6: Yeah, it would be idiosyncratic factors. You want to do
Speaker 6: the right work here. If you think shout.
Speaker 2: Out there from what Gold say? Now you know it's
Speaker 2: idiot idiosyncratic carriage. An idiosyncratic factor is the kids are
Speaker 2: out of school and it's killing my bank account. Go
Speaker 2: what do you got tom?
Speaker 6: It means you got to do the homework right. You
Speaker 6: got to figure out is this a company that's going
Speaker 6: to pay you back? And that's really the point with bonds?
Speaker 6: Are you going to get there?
Speaker 2: But I'm kidding, but Damien as a really important question, folks.
Speaker 2: Does the factor shift and adjust and the waiting shift
Speaker 2: I want to go back to one of your observations,
Speaker 2: which was what's called the money Tower, the Michell New
Speaker 2: York tower on Broadway at fifty five and sixty. Now,
Speaker 2: you know, we get the Pinatis Blackstone. They paid a
Speaker 2: thousand of square foot or whatever. Ten years ago it
Speaker 2: was a different mood and we see all these haircuts
Speaker 2: going on. Now, come on, that's got to be an
Speaker 2: opportunity for you or Goldman Sachs advising big foreign money.
Speaker 2: When does the big foreign money show up to buying
Speaker 2: train wrecks like the money Tower. I'm broad seventeen forty Broadway.
Speaker 6: When when they can make money on the investment?
Speaker 2: Is that now?
Speaker 6: Well, it depends based on the forward. When you think
Speaker 6: about who are the tenants, what's the leasing opportunities? Just
Speaker 6: like you think about a normal corporate company, you know,
Speaker 6: what's what's the forward, What's what's their growth opportunity? Is
Speaker 6: this an exciting place to be? What's the quality of
Speaker 6: the space that you're dealing with. If we think that
Speaker 6: it makes sense and we think that the price is right,
Speaker 6: then we can advise and help. But I think the
Speaker 6: big thing right now is that there are a lot
Speaker 6: of assets trading at the wrong price. And so if
Speaker 6: you just passively buy the world right now, you're you're
Speaker 6: going to get burned. You need to have an active
Speaker 6: manager to help you.
Speaker 2: Source within the fancy talk world. Damiens Hour and Lindsey Rossner,
Speaker 2: the answer is you're waiting for price rationalization to occur.
Speaker 6: That's right back to spreads being really tight. We're waiting
Speaker 6: for the right time to get involved. That doesn't mean
Speaker 6: we have no risk on our in our portfolios.
Speaker 2: You got to keep this and you gotta keep there.
Speaker 6: There is some Carrie. I think. What's also really interesting
Speaker 6: are there real val opportunities. And I'm going to give
Speaker 6: you one that's not necessarily in my bond portfolio. But
Speaker 6: right now you can go to France and see Taylor
Speaker 6: Swift for two hundred dollars. The prices start in the
Speaker 6: US two thousand plus global market. Vote with your feet,
Speaker 6: find the opportunity Taylor Swift in Paris. You know what
Speaker 6: my sister did, and I'm not going to blame her
Speaker 6: for not taking me. We have a phenomenal relationship because
Speaker 6: you went with a bunch of friends. They had a
Speaker 6: great time.
Speaker 1: Now we're thinking about going on Argentina.
Speaker 2: So let's go say that we got Mohamedelarian.
Speaker 6: You may have seen Taylor Swift, Mohammed ray.
Speaker 2: If Riley from Saint Louis went and Lindsay's sister went.
Speaker 2: Wasn't an Was everybody in the audience American in Paris?
Speaker 6: There were there were there were many many Americans there.
Speaker 2: Yes, email it on YouTube live chat. Please did you
Speaker 2: go see Taylor in Paris and save us from one
Speaker 2: mark Lindsay.
Speaker 1: You know you mentioned some of these less liquid segments
Speaker 1: of the fixing market is offering value, and you know,
Speaker 1: when I think of those areas of the market, and
Speaker 1: obviously for you guys at g SAM, you know these markets,
Speaker 1: you know who holds the bonds, you know, but I
Speaker 1: get a little bit fearful because for me, this the
Speaker 1: whole private credit. You know, these little clubs, these little syndicates,
Speaker 1: and then you hear what's going on with Vista, and
Speaker 1: they're kind of, you know, fighting with each other because again,
Speaker 1: everybody knows who holds the bonds, and you can kind
Speaker 1: of show preference for one club at the expense of another.
Speaker 1: So talk to us about those dynamics and how that
Speaker 1: changes the playing field for you as an investor.
Speaker 6: Yeah, the dynamics are the same ones that have always
Speaker 6: been a portfolio construction. It's all about sizing and it's
Speaker 6: about understanding your liquidity profile. And while yes, private credit
Speaker 6: has grown, this concept of figuring that out and how
Speaker 6: to get out on the right spot on the efficient
Speaker 6: frontier isn't anything new.
Speaker 2: Thank you for joining thanke you for having to hold
Speaker 2: you conversations. Multisector investing barely describes. It's the nuances of
Speaker 2: piecing together where we are right now, particularly within commercial
Speaker 2: real estate. This is a Bloombergs Surveillance podcast, bringing you
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