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Speaker 2: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside

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Speaker 2: my co host Matt Miller.

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Speaker 1: Every business day we bring you interviews from CEOs, market pros,

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Speaker 1: and Bloomberg experts, along with essential market movin news.

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Speaker 2: I'm the Bloomberg Markets Podcast called Apple Podcasts or wherever

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Speaker 2: you listen to podcasts, and at Bloomberg dot com slash podcast.

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Speaker 2: All right, private credit. You know, we love this topic.

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Speaker 2: It's a big growing mark.

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Speaker 3: One and a half around one and a half trillion.

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Speaker 2: Oh my goodness, and you know it's just been growing.

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Speaker 2: I've been calling out that having seen a bunch of

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Speaker 2: credit blobs back in my day. There's going to be something.

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Speaker 2: There's no regulation of this market. Something's going to go wrong.

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Speaker 2: And I keep saying it, but it keeps growing. And

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Speaker 2: I'll tell you what. Pretty much everything we know about

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Speaker 2: the credit private credit business, we learned from Randy Schumer.

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Speaker 2: He's a coet of Senior Lending, a Churchill Asset Management

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Speaker 2: here in New York.

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Speaker 4: Randy, you said ninety yep, I have work to do,

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Speaker 4: yes exactly.

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Speaker 2: I'm just I don't want to put all the blame

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Speaker 2: on you, but talk to us about the growth of

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Speaker 2: this business. Is private credit business has been such a

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Speaker 2: big growth story on Wall Street really since the end

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Speaker 2: of the Great Financial Crisis? How concerned are you about

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Speaker 2: the development of this market? Should investors and should regulators

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Speaker 2: be concerned?

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Speaker 4: And Jess is now part of the private credit policse Yes,

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Speaker 4: she is. Well, the timing of this is great. Thanks

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Speaker 4: for having me on because what's happening is that And

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Speaker 4: I talked to someone on a podcast that we're doing

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Speaker 4: recently that's coming out I think this week about that

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Speaker 4: exact question. Why are people so concerned and why is

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Speaker 4: this viewed as a bubble as opposed to natural growth

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Speaker 4: of moving loans from the public banking sector into the

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Speaker 4: non regulated, which is what the regulators wanted. And he said,

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Speaker 4: because it's new, it feels new. It's not public. These

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Speaker 4: loans are not traded. These are middle market companies. And

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Speaker 4: part of that is just getting educated in the asset claus.

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Speaker 4: You guys have been doing a great job in doing

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Speaker 4: that and helping me get the word out. I think

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Speaker 4: Mark Rowan Apaula pointed out the fact that it's really

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Speaker 4: investor education, and the more education there is, the better

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Speaker 4: that we look. But the fact of the matter is

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Speaker 4: that this is actually a natural evolution away from traded

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Speaker 4: assets where the banks were considered to be not healthy

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Speaker 4: holders of these loans, and so the private credit market

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Speaker 4: has responded to the immense amount of appetite because of

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Speaker 4: so much of market volatility, these loans are untraded and

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Speaker 4: I liquid loans, as opposed to being a negative, are

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Speaker 4: viewed as being positive to a lot of investors, institutional

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Speaker 4: investors who are looking to allocate to non traded, non volatile,

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Speaker 4: less correlated assets. So the reason that the asset class

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Speaker 4: has grown so much is because the investors are looking

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Speaker 4: for alternatives to the sixty forty correlation, you know, the

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Speaker 4: allocation model.

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Speaker 5: That we talked about.

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Speaker 4: And at the end of the day, these are middle

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Speaker 4: market loans. These are low risk, relatively low levered, fully

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Speaker 4: secured with financial covenants, and so think of private credit

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Speaker 4: as middle market lending for grownups. Okay, it's very stable

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Speaker 4: lending that is being now packaged in multiple funds, very

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Speaker 4: diverse investor base across many, many, now thousands of investors

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Speaker 4: who are investing in this asset class, who have experience

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Speaker 4: in other complicated asset classes such as real estate and

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Speaker 4: private credit and public equities and fixed income, and so

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Speaker 4: it's actually meeting a demand and the demand is growing

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Speaker 4: as more investors realize what an opportunity and benefit it is.

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Speaker 3: What is your investment approach for private credit, specifically for

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Speaker 3: your clients, what do you advise them to do and

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Speaker 3: how to have that exposure.

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Speaker 5: Yeah.

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Speaker 4: So we're also very fortunate to be owned by a

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Speaker 4: very large entity called TIAA, which is their holding company,

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Speaker 4: right or Neuvene, which is a trillion dollar asset manager,

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Speaker 4: and they have hundreds of billions of dollars in fixed

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Speaker 4: income and public equities and real estate and municipal bonds,

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Speaker 4: and what their investors are looking at the same thing

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Speaker 4: as our investors at Churchill looking for is the stability

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Speaker 4: of returns. And so in a normal environment, a senior

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Speaker 4: credit we've talked about this will will get you kind

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Speaker 4: of a seven percent on leveraged yield in the current environment,

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Speaker 4: which is why it's very attractive right now because rates

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Speaker 4: are up, they're earning a twelve percent on levered yield,

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Speaker 4: and so when they look at the returns of twelve

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Speaker 4: percent versus what they're getting in other markets, we're representing

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Speaker 4: a lower risk profile and so that's adding to the

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Speaker 4: appetite that these investors are looking for now. In our case,

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Speaker 4: we can offer them senior debt opportunities, we can offer

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Speaker 4: them junior capital, we can offer them private equity. So

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Speaker 4: we have a number of asset classes that we're also

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Speaker 4: offering our private equity sponsors in terms of their financing options.

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Speaker 4: So we're taking the same financing choices that we're giving

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Speaker 4: our clients on the financing side to the investors on

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Speaker 4: the investing side. And that's what makes the sort of

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Speaker 4: nice balance which I think as it investors and frankly,

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Speaker 4: the media and regulators get to understand the asset class.

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Speaker 4: You know, this is not fast money. This is money

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Speaker 4: that investors are focusing long term assets with us long

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Speaker 4: term liabilities because these loans don't disappear tomorrow, they're not traded,

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Speaker 4: and that kind of stability is really at a premium

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Speaker 4: right now.

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Speaker 2: Who is a typical investor in one of your funds,

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Speaker 2: So yeah, we.

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Speaker 4: Don't really have typical investors. We have them from a

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Speaker 4: broad array of types of investors. So we have pension plans,

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Speaker 4: we have wealth wealth funds, we have sovereign wealth funds,

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Speaker 4: we have insurance companies, and essentially, as more and more investors,

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Speaker 4: particularly sophisticated investors, are looking at their options in this

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Speaker 4: higher for longer world, they're thinking, you know, I need

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Speaker 4: a premium yield because I can get five percent on

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Speaker 4: treasuries right now, but I also want stability and those

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Speaker 4: are the things that are attracting now even further down

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Speaker 4: the food chain in terms of family offices and retail.

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Speaker 4: And I think as the asset class grows, and we're

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Speaker 4: calling it kind of the new paradigms, the as investors

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Speaker 4: look at the benefits that private credit is offering and

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Speaker 4: they're seeing some very sophisticated players in this market. They're

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Speaker 4: they're saying, how can we party paid in this asset class.

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Speaker 3: Do you see any red flags that are bubbling up

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Speaker 3: in private credit any corners?

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Speaker 4: Yeah, Well, the thing that is most I think concerning

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Speaker 4: to anybody who has experience in the asset class is

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Speaker 4: high interest rates. Because the thing that when you look

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Speaker 4: at your portfolio with rates now at five and a

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Speaker 4: half percent from a benchmark perspective versus zero a year

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Speaker 4: and a half ago, the interest coverage is shrinking across portfolios,

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Speaker 4: and so everyone looks at that as a risk, and

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Speaker 4: it's a real risk, and so you have to build

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Speaker 4: a portfolio that is ready to accept those higher rates.

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Speaker 4: And the way we do it is we look at

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Speaker 4: very defensive sectors that have high free cash flows that

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Speaker 4: are owned by private equity firms who can grow these

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Speaker 4: businesses to keep pace not only with where GDP is,

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Speaker 4: but also where some of the higher growth sectors in

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Speaker 4: areas like healthcare and business services are going. So give

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Speaker 4: an example, the average growth in both revenues and IBATA

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Speaker 4: in our portfolio right now is about twelve and a

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Speaker 4: half percent. So when you look at the GDP which

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Speaker 4: is bouncing around two three four percent something like that.

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Speaker 4: You're looking at businesses that we think will grow through

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Speaker 4: whatever cycle is coming. It looks like probably a soft

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Speaker 4: or no landing is going to be expected, but our

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Speaker 4: businesses are really faster growing than that. But they also

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Speaker 4: tend to be businesses that are market leaders that will

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Speaker 4: be able to sustain any kind of downturn even if

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Speaker 4: we do have it.

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Speaker 2: What's the deal flow you're seeing from your private equity sponsors.

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Speaker 2: What's it been like today in this higher interest rate environment.

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Speaker 4: We just got the October numbers. We are the most

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Speaker 4: as of the end of October, the most active direct

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Speaker 4: lender in the market right now in the United States.

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Speaker 4: The reason that that's happening is that our private equity

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Speaker 4: sponsors continue to have dry powder that they are raising

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Speaker 4: in their own funds. They wanted to put it to work.

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Speaker 4: They've identified areas of interest, as I mentioned, in these

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Speaker 4: defensive sectors that in this current economy are doing well,

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Speaker 4: and they realize that next year is probably going to

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Speaker 4: be a better year than people think, probably not going

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Speaker 4: to have a recession, and so they're trying to vote

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Speaker 4: with their feet and they're looking for scaled players like

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Speaker 4: Churchill that can write large checks where we have relationships

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Speaker 4: and I think I mentioned this last time. We're an

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Speaker 4: investor in their funds and so we were sort of

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Speaker 4: first in line to be asked to join these deals.

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Speaker 4: We still tend to be pretty picky. We probably do

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Speaker 4: about five percent of the deals that come in the door.

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Speaker 4: So we're looking for it only the best of the best,

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Speaker 4: knowing that we don't know what's coming next year. I mean,

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Speaker 4: think about where we were two or three years ago

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Speaker 4: with COVID and in traits and the good thing. And

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Speaker 4: this goes back to this issue a bubble. These middle

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Speaker 4: market companies have been tested. They've been tested through low rates,

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Speaker 4: they've been tested through high rates, they've been tested through

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Speaker 4: low inflation, they've been tested through high inflation. And so

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Speaker 4: I think the benefit that needs to be explained more.

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Speaker 4: And this is part of this education is why these

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Speaker 4: companies actually do well, in some cases even better than

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Speaker 4: some of the larger companies, because they tend to be

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Speaker 4: in structures that are more conservative, and also with lending

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Speaker 4: partners sisters ourselves that are basically built for the long run.

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Speaker 4: We're going to work through whatever problem these companies have

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Speaker 4: to get to a final resolution. That's a positive one.

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Speaker 3: Since your clients have money to use that's sitting on

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Speaker 3: the sidelines. What do you think this tells us about

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Speaker 3: the direction of the economy. They're willing to take more risk.

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Speaker 4: Yeah, well I think that amazingly. It looks like the

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Speaker 4: FED is engineered some kind of soft lending. Will see

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Speaker 4: what happens. It feels like their language continues to be hawkish.

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Speaker 4: They want to keep people on their toes. But if

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Speaker 4: that's the case, and I do believe that it is,

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Speaker 4: that next year will be a solid, solid year, that

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Speaker 4: could be a good thing. Now in general, I do

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Speaker 4: believe that inflation will be higher and rates will still

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Speaker 4: be higher. But this is kind of the normal that

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Speaker 4: we forgot about that hasn't been with us for fifteen years, right,

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Speaker 4: You've had zero interest rates for a large part of

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Speaker 4: that time. This zero gravity environment we got used to

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Speaker 4: all of a sudden. You know, we're like the Apollo

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Speaker 4: astronauts that they get you back or anybody from in

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Speaker 4: these long space missions, and they can't walk because they're

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Speaker 4: not used to the way to gravity. That's kind of

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Speaker 4: how we're feeling right now. I think the world is

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Speaker 4: not used to having a five percent FED funds rate,

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Speaker 4: but in fact that's the average over the last sixty years.

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Speaker 4: So I think we're returning to that, which is good

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Speaker 4: because when you have zero interest rates, it sort of

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Speaker 4: inspires some problematic behavior. But I think this new normal

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Speaker 4: is actually very positive for private credit and for investors

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Speaker 4: in general.

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Speaker 2: Randy, thanks so much for joining us. Really appreciate you

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Speaker 2: coming in the studio again. Randy Schummer. He's co head

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Speaker 2: of senior Lending and his senior managing director at Churchill

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Speaker 2: Asset Management, one of the leading private credit providers in

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Speaker 2: the marketplace. And again, it's a business. I'm just looking

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Speaker 2: at the some Bloomberg reporting here private credit market has

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Speaker 2: roughly tripled in size since two thousand and fifteen.

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Speaker 5: You're listening to the Team Ken's live program Bloomberg Markets

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Speaker 5: weekdays at ten am eastering on Bloomberg dot com, the

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Speaker 5: iHeartRadio app and the Bloomberg Business App, or listen on

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Speaker 5: demand wherever you get your podcasts.

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Speaker 2: Twenty twenty three was not a great year, kids for

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Speaker 2: the IPO market. It was just kind of muted at best.

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Speaker 6: Here.

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Speaker 2: I guess there was a little bit more hope for

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Speaker 2: twenty twenty four. We had some news today Shine the

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Speaker 2: China found an online fashion company that won over one

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Speaker 2: hundreds of millions of shoppers around the world. Has confidentially

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Speaker 2: How confidentially can it be if it's followed to go

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Speaker 2: product in the US and welcome be one of the

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Speaker 2: biggest IPOs in years. Brian Lynch joins is she's head

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Speaker 2: of market insight at Equities in So, Brian, just give

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Speaker 2: us a little summation. How was twenty twenty three in

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Speaker 2: terms of IPO activity?

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Speaker 7: Thanks for having me. Twenty twenty three was certainly an

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Speaker 7: extremely quiet year for IPOs. So far, we've seen about

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Speaker 7: twenty three billion in IPO proceeds, higher than last year,

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Speaker 7: but drastically and lower the the three hundred billion we

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Speaker 7: had seen up to this point in twenty twenty one.

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Speaker 7: So it's been a quiet year. And the fall cohort

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Speaker 7: of IPOs that we did see so Clavio, Instacart, Arm Birkenstock,

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Speaker 7: really did not pave the way for others to follow.

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Speaker 7: It looks like Birkenstock as of today is the only

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Speaker 7: one training above their open price. So it's been a

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Speaker 7: tough year for IPOs. Yet there is a lot of

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Speaker 7: demand f I pos and there are thousands of unicorn

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Speaker 7: companies sitting on the sidelines, you know, figuring out their

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Speaker 7: next move.

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Speaker 3: What does this mean for twenty twenty four.

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Speaker 7: Then yeah, I do think we'll see the market pick

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Speaker 7: up in twenty twenty four, you know, both from a

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Speaker 7: macro perspective, as you know you talked about a bit earlier,

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Speaker 7: we are seeing better macro indicators. We have job growth,

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Speaker 7: we have strong GDP, Inflation is cooling. You know, there's

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Speaker 7: an end in sight when it comes to rate hikes

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Speaker 7: or you know, even rate cuts, So that puts us

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Speaker 7: in a better position. And ultimately a lot of these

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Speaker 7: companies are feeling a lot of pressure from both early

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Speaker 7: investors and shareholders to achieve liquidity. You know, look at

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Speaker 7: Read at a company that was rumored today to be

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Speaker 7: considering an IPO in twenty twenty four. This is a

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Speaker 7: company that was found in two thousand and five, so

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Speaker 7: they've been private for eighteen years. There's a lot of

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Speaker 7: pend up demand for liquidity, and wild platforms like equity

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Speaker 7: Zen can enable some of that liquidity while they're private.

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Speaker 7: It really takes a public market exit for vast number

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Speaker 7: of investors to have access and you know that wide

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Speaker 7: scal liquidity for early shareholders.

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Speaker 2: Is Kim kardashing going to save the IPO market? I

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Speaker 2: hear she's got a company called Skims, which I'm sure

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Speaker 2: John Tucker.

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Speaker 6: Is aware of, but oh he do that's wearing at

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Speaker 6: this skirf.

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Speaker 2: Yeah, talk to us about like, I don't know, what

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Speaker 2: do you know about Skims?

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Speaker 7: Sure? So Skims kind of bucks the trend of some

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Speaker 7: of these other companies. They were just founded in twenty nineteen,

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Speaker 7: so a relatively young company valued out of four billion

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Speaker 7: dollar valuation over the summer, but they're rapidly growing. They

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Speaker 7: obviously have a strong brand name, you know, the connection

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Speaker 7: with Kim Kardashian certainly helps. And you know, from what

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Speaker 7: I've heard, they have a strong product as well. So

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Speaker 7: if they did IPO next year, they would certainly be

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Speaker 7: different than a lot of these ten fifteen, almost twenty

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Speaker 7: year old companies that we expect to hit the markets.

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Speaker 3: What industry groups are doing better at going public at

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Speaker 3: this point versus others that are struggling. Is it more

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Speaker 3: company specific or is it more industry specific?

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Speaker 7: I think it is company specific to some extent. You know,

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Speaker 7: there are certain things that any company is going to

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Speaker 7: need to exhibit to have a successful IPO. They need

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Speaker 7: to be showing profitability, they need to be in growth,

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Speaker 7: and they need to have a strong brand that investors

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Speaker 7: know and recognize. That being said, a lot of these

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Speaker 7: companies this fall showed some of those elements and still

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Speaker 7: weren't successful. The industries that we're seeing the most investor

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Speaker 7: interest in in the private markets are AI and machine learning,

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Speaker 7: so not surprising, information technology so pure tech companies, and fintech.

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Speaker 7: So those are the areas we're seeing interest in the

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Speaker 7: private markets. When you look at AI and machine learning,

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Speaker 7: a lot of these companies are younger companies who are

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Speaker 7: less likely to be close to an IPO. So I

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Speaker 7: think some of these pure tech companies that have really

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Speaker 7: attractive multiples could be the ones, you know that have

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Speaker 7: a more successful debut.

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Speaker 2: You know, Brian, I wonder what the what are the

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Speaker 2: bankers saying as to why they didn't get more done

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Speaker 2: in twenty twenty three. Like back in my day, as

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Speaker 2: long as this market wasn't crashing, I could push out

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Speaker 2: a lot of stuff out the door, particularly from companies

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Speaker 2: that are really looking for some liquidity. What are they

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Speaker 2: saying here, what kind of market do they need? I mean,

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Speaker 2: the S Andp's up sixteen seventeen eighteen percent, even equal

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Speaker 2: weighted it's up four or five percent, So it's not

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Speaker 2: like the market's down.

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Speaker 7: I think you're right. The macro indicators show that we

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Speaker 7: are in a pretty good place for companies to exit.

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Speaker 7: I think that there's just a lot of trepidation in

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Speaker 7: the market given that we haven't seen a blockbuster IPO

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Speaker 7: be successful, you know, this year or last year really,

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Speaker 7: so it's I think it's more of an investors are nervous.

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Speaker 7: They're looking for someone to lead the packing kind of

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Speaker 7: tell everyone, Okay, this is going to work out fine,

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Speaker 7: and we've yet to really see that. I do think

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Speaker 7: once we see one or two really successful IPOs, the

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Speaker 7: doors will open more because you know, the macro factors

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Speaker 7: are there and it should be a decent market to exit.

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Speaker 7: That being said, I think another factor that impacts a

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Speaker 7: lot of these companies is that if they raise capital

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Speaker 7: in twenty twenty one, it's very unlikely that that valuation

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Speaker 7: is still where the market is unless they into it.

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Speaker 7: So they're just going to have to accept that the

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Speaker 7: IPO at a lower evaluation, you know, if they're trying to.

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Speaker 2: Exit, well, Shine could be maybe one of these companies

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Speaker 2: because it's I think according to the Wall Street Journal

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Speaker 2: reporting Shine, which is it's a Chinese company, so that

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Speaker 2: could be an issue for some people. But it's now

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Speaker 2: based in Singapore, was valued around sixty six billion dollars

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Speaker 2: in a fundraising round in May, and is likely to

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Speaker 2: aim for an even higher valuation in an initial public offering,

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Speaker 2: So I guess. And it's got Gold and Sachs and

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Speaker 2: JP Morgan and Morgan Stanley. So I mean, it seems

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Speaker 2: like all the elements are there for Shine. Do we

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Speaker 2: have any sense of timing Shine would be early twenty

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Speaker 2: four later twenty four.

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Speaker 7: Indications look like this would be an early twenty four IPO.

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Speaker 7: But this is also a company that has had its

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Speaker 7: valuation decrease. They raised capital in twenty twenty two at

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Speaker 7: one hundred billion dollar valuation, earlier this year raised again

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Speaker 7: at a sixty six billion dollar valuation, and as you said,

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Speaker 7: looking at an eighty or ninety billion dollar valuation. So

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Speaker 7: they haven't bucked that trend of companies that have had to,

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Speaker 7: you know, accept that their twenty twenty one twenty twenty

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Speaker 7: two valuation may not be where the market is anymore.

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Speaker 7: But to your point, it's a company that has achieved

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Speaker 7: twenty three billion dollars in revenue, had its most profitable

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Speaker 7: half in the first half of this year. You know,

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Speaker 7: it was growing rapidly with new distribution centers in the US, Canada,

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Speaker 7: and Europe. They're opening new manufacturing centers in Brazil and India.

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Speaker 7: So a lot of growth going on there, but also

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Speaker 7: some concerns about their relationship with China, you know, IP infringement,

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Speaker 7: labor practices and some other things. So certainly not a

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Speaker 7: straight forward story on this one.

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Speaker 3: We only have about a minute left. But what other

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Speaker 3: companies should we keep on our radar that could potentially

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Speaker 3: go public next year?

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Speaker 7: Yeah, Reddit's one that we mentioned. They are in comations

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Speaker 7: to potentially file next year. They're private for a very

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Speaker 7: long time, and really they have solidified themselves as one

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Speaker 7: of the leading social media platforms in the US. They

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Speaker 7: made you know, a lot of splashy news in the

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Speaker 7: error of the meme stocks their subreddits. Wall Street Back

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Speaker 7: was really you know, the catalyst for a lot of

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Speaker 7: the retail momentum in the stock market. So I think

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Speaker 7: they are an important one to watch and see. Geek

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Speaker 7: is another one that has confidentially not sorry, not confidentially,

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Speaker 7: had filed to go public, hasn't yet, but has grown significantly,

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Speaker 7: and we know they're considering an IPO, so we have

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Speaker 7: eyes on that one as well.

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Speaker 2: All right, well, hopefully twenty four will be be a

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Speaker 2: better IPO market than we have more opportunities to talk

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Speaker 2: to Brian. Brian Lynch is head of market insight at Equities.

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Speaker 5: In you're listening to the tape cans are live program

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Speaker 5: Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio,

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Speaker 5: the tune in app, Bloomberg dot Com, and the Bloomberg

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00:20:54,280 --> 00:20:57,360
Speaker 5: Business App. You can also listen live on Amazon Alexa

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Speaker 5: from our flagship New York station Just say hello, what's playing?

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Speaker 5: Bloomberg eleven thirty.

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Speaker 2: Just met Paul Sweeny live here on Bloomberg Interactive Broker.

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Speaker 2: This is a treat, folks. Neil Hennessy joins us chief

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Speaker 2: market strategist The Hennessy Advisors. He started this back in

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Speaker 2: nineteen eighty nine. I'm not gonna call him old, I'm

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Speaker 2: gonna say he's a seasoned investor. It but we share something.

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Speaker 2: We share something. We both started our careers at Pain whatever,

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Speaker 2: which is a great brokerage, firm, investment bank, great retail presence.

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Speaker 2: Back in the day, it was acquired by I don't

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Speaker 2: know where this now is, but now it's basically the

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Speaker 2: guts of ubs here in the US, but the House

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Speaker 2: of Pain Neil, thanks so much for joining us here.

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Speaker 2: You see a market like this SPX up seventeen to

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Speaker 2: eighteen percent, but it's you take out the Magnificent seven

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Speaker 2: and what do we got here? So how do you

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Speaker 2: look at markets like this that doesn't feel like a

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Speaker 2: healthy market.

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Speaker 8: Well, the market really hasn't gone any place. I mean,

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Speaker 8: as of yesterday, you look at the Nasdaq was up

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Speaker 8: thirty seven percent, but you take out they always say

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Speaker 8: eight stocks, we'll get to the magnificence seven here in second.

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Speaker 8: But essentially you take those out, the market's up seven percent,

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Speaker 8: so it's really gotten no place. That downs up to

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Speaker 8: and a half or three percent.

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Speaker 6: So those eight.

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Speaker 8: Companies have controlled the market. But interesting enough, then you

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Speaker 8: get to three weeks ago, I guess we came up

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Speaker 8: with the new slogan magnificent seven.

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Speaker 6: Then Netflix went.

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Speaker 8: Out, but that made me think to go back to

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Speaker 8: nineteen sixty when the movie was made, The Magnificence Short.

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Speaker 8: So I'll give you something to think about here is

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Speaker 8: in that movie, the ending, they hired seven gunslingers to

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Speaker 8: help protect the town and there are only three left.

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Speaker 8: So you tell me which three of the seven are

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Speaker 8: going to be left?

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Speaker 2: So what do you do with a market that has

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Speaker 2: that lack of breath? I know you guys at Hennessey

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Speaker 2: are value investors, So how do you approach this market?

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Speaker 2: How has it changed maybe over the last several years?

438
00:22:52,840 --> 00:22:57,800
Speaker 8: As you know, you know value, what is a place

439
00:22:57,840 --> 00:22:59,800
Speaker 8: that you want to be if you want to play again?

440
00:23:00,560 --> 00:23:05,200
Speaker 8: So look at the SMPT five hundred you're talking about.

441
00:23:05,480 --> 00:23:09,199
Speaker 8: Apple is seven over seven percent of that thirteen percent

442
00:23:09,240 --> 00:23:12,159
Speaker 8: of the Nasdaq. And if you think logically, would you

443
00:23:12,320 --> 00:23:15,240
Speaker 8: put thirteen percent of your money in one stock?

444
00:23:16,600 --> 00:23:17,159
Speaker 6: Probably not?

445
00:23:17,800 --> 00:23:20,920
Speaker 8: Okay, So but that's what people have been doing at

446
00:23:20,920 --> 00:23:23,000
Speaker 8: some point in time, just like the late nineties when

447
00:23:23,040 --> 00:23:25,720
Speaker 8: all the value managers were getting fired because if you

448
00:23:25,760 --> 00:23:27,760
Speaker 8: weren't twenty three years old and you didn't have a

449
00:23:27,840 --> 00:23:31,639
Speaker 8: dot com on your forehead, you were fired. But essentially,

450
00:23:32,040 --> 00:23:35,000
Speaker 8: you know, I love the mid cap arena, like the

451
00:23:35,000 --> 00:23:38,119
Speaker 8: Hennessy MidCap thirty. And the reason I like that is

452
00:23:38,200 --> 00:23:43,199
Speaker 8: mid cap stocks have really outperformed everything over time, and

453
00:23:43,520 --> 00:23:49,160
Speaker 8: they're large enough to withstand an economic tsunami. They're big

454
00:23:49,280 --> 00:23:52,000
Speaker 8: enough to make an acquisition that would be a creative

455
00:23:52,080 --> 00:23:55,560
Speaker 8: to them from a smaller company. But they're also big

456
00:23:55,680 --> 00:23:58,399
Speaker 8: enough to be acquired by a larger company and be

457
00:23:58,440 --> 00:23:58,960
Speaker 8: a creative.

458
00:23:59,000 --> 00:23:59,240
Speaker 6: There.

459
00:24:00,000 --> 00:24:03,399
Speaker 8: You see a lot of value in that mid cap

460
00:24:03,640 --> 00:24:04,640
Speaker 8: arena right now.

461
00:24:05,000 --> 00:24:08,720
Speaker 3: What stocks or industries in midcaps do you like?

462
00:24:09,359 --> 00:24:14,000
Speaker 8: Well, you know, you know energies energies there, But I

463
00:24:14,040 --> 00:24:18,000
Speaker 8: mean if you look at names that people don't associate

464
00:24:18,080 --> 00:24:20,399
Speaker 8: too much when you get the radio, TV or something

465
00:24:20,480 --> 00:24:25,640
Speaker 8: like that, is Comfort Systems, big deal, but most likely

466
00:24:25,840 --> 00:24:28,440
Speaker 8: they did part of this building because they're industrial and

467
00:24:29,560 --> 00:24:33,800
Speaker 8: building and putting in the ventilation, hating air things of

468
00:24:33,840 --> 00:24:34,320
Speaker 8: that sort.

469
00:24:34,640 --> 00:24:34,840
Speaker 5: You know.

470
00:24:34,880 --> 00:24:37,600
Speaker 8: They earn eight dollars a share and pay a dollar dividend,

471
00:24:37,920 --> 00:24:40,119
Speaker 8: so logic would tell you there's plenty of room to

472
00:24:40,200 --> 00:24:41,399
Speaker 8: raise the dividend.

473
00:24:42,280 --> 00:24:44,679
Speaker 2: You can set up seventy to date, so yeah, you

474
00:24:44,720 --> 00:24:47,480
Speaker 2: call for seven billion dollar market cap company fix is

475
00:24:47,520 --> 00:24:48,640
Speaker 2: a ticker, Yeah.

476
00:24:48,480 --> 00:24:50,919
Speaker 6: And then you can look at Sprouts farmers market.

477
00:24:51,119 --> 00:24:53,040
Speaker 2: Wait, wait, this is a public company.

478
00:24:53,080 --> 00:24:53,920
Speaker 6: Hold on, huh.

479
00:24:53,920 --> 00:24:55,159
Speaker 2: I'm going to go ahead and.

480
00:24:55,119 --> 00:24:57,959
Speaker 6: I'm just going Sprouts up on the terminal. Okay.

481
00:24:58,640 --> 00:25:01,040
Speaker 8: You know it's farmers market, and truly when you walk

482
00:25:01,080 --> 00:25:03,480
Speaker 8: into the store, you feel like you're in a farmer's market.

483
00:25:03,480 --> 00:25:04,640
Speaker 6: There's produce all over.

484
00:25:04,760 --> 00:25:08,479
Speaker 8: And then if you think about inflation, food prices that

485
00:25:08,520 --> 00:25:11,199
Speaker 8: have gone up, and you go, well, geez, do I

486
00:25:11,280 --> 00:25:13,760
Speaker 8: really want to get into a specialty market like that

487
00:25:14,040 --> 00:25:17,080
Speaker 8: or Whole Foods? Well, there's a big difference between Sprouts

488
00:25:17,160 --> 00:25:21,320
Speaker 8: and say Whole Foods or and that's simple that you know,

489
00:25:21,400 --> 00:25:23,199
Speaker 8: you look at the produce and you look at the

490
00:25:23,280 --> 00:25:25,320
Speaker 8: vegetables and stuff, and you just add a little bit

491
00:25:25,320 --> 00:25:27,200
Speaker 8: of positive and you can make a very cheap meal

492
00:25:27,400 --> 00:25:31,840
Speaker 8: for a family. And that's that's their their niche. They

493
00:25:31,840 --> 00:25:34,280
Speaker 8: have about three hundred stores, mainly on the West coast.

494
00:25:34,280 --> 00:25:36,960
Speaker 8: But you know, here's this company that makes three dollars

495
00:25:37,000 --> 00:25:40,320
Speaker 8: a share and doesn't pay a dividend. So you know,

496
00:25:40,359 --> 00:25:45,160
Speaker 8: there's so much value out there you just keep keep

497
00:25:45,200 --> 00:25:47,439
Speaker 8: looking for it and then buy and hold it.

498
00:25:47,520 --> 00:25:50,399
Speaker 2: S FM is the ticker there. It's got about a

499
00:25:50,640 --> 00:25:52,840
Speaker 2: four point three billion market cap, up thirty percent year

500
00:25:52,880 --> 00:25:56,160
Speaker 2: to dat. How do you guys at Hennessy define value?

501
00:25:56,280 --> 00:25:58,119
Speaker 2: I mean, is there a pe threshold? How do you

502
00:25:58,200 --> 00:26:00,760
Speaker 2: scream to find sprouts for farmer's market is I know

503
00:26:00,800 --> 00:26:02,600
Speaker 2: analyst didn't come to you and say, hey, I just

504
00:26:02,600 --> 00:26:04,280
Speaker 2: went into this great farmers market. I think we should

505
00:26:04,280 --> 00:26:06,160
Speaker 2: buy it. So I'm guessing you guys screen here.

506
00:26:06,640 --> 00:26:08,680
Speaker 6: Well, you're right.

507
00:26:08,760 --> 00:26:13,320
Speaker 8: Everybody has to a certain Every money manager has a formula. Yep, okay,

508
00:26:13,400 --> 00:26:15,399
Speaker 8: And we have a formula and what we do is

509
00:26:15,600 --> 00:26:19,520
Speaker 8: once a year we rework the formula. So essentially it's

510
00:26:19,880 --> 00:26:22,520
Speaker 8: looking for companies between one and ten billion dollars in

511
00:26:22,600 --> 00:26:28,000
Speaker 8: market cap. We're looking for increase in earnings. The main

512
00:26:28,080 --> 00:26:30,960
Speaker 8: point being a price is sales ratio of one point

513
00:26:31,080 --> 00:26:33,000
Speaker 8: five or less. So we're not going to pay more

514
00:26:33,080 --> 00:26:36,199
Speaker 8: than a dollar fifty for a dollar in sales. And

515
00:26:36,240 --> 00:26:40,440
Speaker 8: that's where the value is. Because earnings, just like anybody,

516
00:26:40,680 --> 00:26:43,920
Speaker 8: you can manipulate earnings by taking a ride off or

517
00:26:43,960 --> 00:26:47,520
Speaker 8: adding this, or taking a game, and earnings don't pay

518
00:26:47,600 --> 00:26:50,679
Speaker 8: your bills. Cash flow pays your bills. And so when

519
00:26:50,760 --> 00:26:53,040
Speaker 8: you start to look at a truer number, unless you're

520
00:26:53,040 --> 00:26:57,040
Speaker 8: going to do an Enron, it's sales, right, and so

521
00:26:57,160 --> 00:26:59,199
Speaker 8: we won't like I say, pay it more than a

522
00:26:59,240 --> 00:27:01,600
Speaker 8: dollar fifty for dollar and sales. Now you take those

523
00:27:02,480 --> 00:27:07,639
Speaker 8: magnificent magnificent easy for me to say, the seven or

524
00:27:07,720 --> 00:27:10,680
Speaker 8: eight stocks, and you're looking at a price of sales

525
00:27:10,800 --> 00:27:14,840
Speaker 8: of you know, somewhere in the nine ten. So you

526
00:27:14,840 --> 00:27:17,960
Speaker 8: know we're they're buying. You know, there are eight times

527
00:27:18,000 --> 00:27:19,479
Speaker 8: what our threshold.

528
00:27:19,000 --> 00:27:20,919
Speaker 3: Is at least, what are you selling?

529
00:27:22,240 --> 00:27:25,480
Speaker 8: Well, we're not selling anything because when we do this formula,

530
00:27:26,040 --> 00:27:28,520
Speaker 8: at the end of the formula, we buy to thirty

531
00:27:28,600 --> 00:27:32,199
Speaker 8: companies okay that hit the list and essentially buy them

532
00:27:32,200 --> 00:27:36,120
Speaker 8: an equal dollar mounts, hold them for one year, and

533
00:27:36,160 --> 00:27:40,280
Speaker 8: then readjust the portfolio to then the thirty stocks that

534
00:27:40,400 --> 00:27:42,920
Speaker 8: hit our list and buy them an equal dollar mounts.

535
00:27:43,040 --> 00:27:44,800
Speaker 8: But the last stage of that is we're looking for

536
00:27:44,880 --> 00:27:48,640
Speaker 8: companies that have or stocks that have price appreciation over

537
00:27:48,760 --> 00:27:52,000
Speaker 8: three or six month period, and then we buy the

538
00:27:52,040 --> 00:27:57,280
Speaker 8: top thirty that have the best price appreciation after one year.

539
00:27:57,680 --> 00:27:59,640
Speaker 8: And you sort of ask, why would you do price

540
00:27:59,760 --> 00:28:02,159
Speaker 8: pre and aren't you just chasing the market.

541
00:28:02,600 --> 00:28:04,760
Speaker 6: The reality is really.

542
00:28:04,480 --> 00:28:08,840
Speaker 8: Smart managers more than me, they've been buying these companies

543
00:28:08,840 --> 00:28:10,800
Speaker 8: for a while. They've just been holding their hand little

544
00:28:10,800 --> 00:28:12,840
Speaker 8: by little by little by little, so over a three

545
00:28:13,000 --> 00:28:15,960
Speaker 8: six twelve month period it goes up. So we're not

546
00:28:16,160 --> 00:28:18,639
Speaker 8: catching it in the first inning, right, We're catching the

547
00:28:18,680 --> 00:28:21,440
Speaker 8: stocks in their third inning, fourth inning, which is where

548
00:28:21,480 --> 00:28:21,960
Speaker 8: you want to be.

549
00:28:22,480 --> 00:28:25,000
Speaker 2: Okay, sounds reasonable to me. It's a plan. You've been

550
00:28:25,000 --> 00:28:27,240
Speaker 2: doing it a long time and must be working. Neil Hennessy,

551
00:28:27,600 --> 00:28:30,560
Speaker 2: chief market strategist, Hennessy Advisors based out there.

552
00:28:31,200 --> 00:28:33,920
Speaker 9: What's the name of the town again, the Vado Marine County, Nevado,

553
00:28:34,040 --> 00:28:37,000
Speaker 9: Marin County, which is really a beautiful place to be

554
00:28:37,080 --> 00:28:39,520
Speaker 9: and I don't know why, you know, everybody doesn't set

555
00:28:39,560 --> 00:28:41,320
Speaker 9: up shop in Marin County.

556
00:28:41,400 --> 00:28:44,520
Speaker 5: You're listening to the tape. Can's our live program Bloomberg

557
00:28:44,600 --> 00:28:48,200
Speaker 5: Markets weekdays at ten am Eastern on Bloomberg Radio, the

558
00:28:48,240 --> 00:28:51,480
Speaker 5: tune in app, Bloomberg dot Com, and the Bloomberg Business App.

559
00:28:51,520 --> 00:28:54,320
Speaker 5: You can also listen live on Amazon Alexa from our

560
00:28:54,360 --> 00:28:58,760
Speaker 5: flagship New York station, Just say Alexa playing Bloomberg eleven thirty.

561
00:29:00,120 --> 00:29:02,440
Speaker 2: Let's get to Washington, DC because there is a lot

562
00:29:02,440 --> 00:29:05,360
Speaker 2: going on in Washington DC that will impact markets, impact

563
00:29:05,360 --> 00:29:07,760
Speaker 2: individual companies. So we like to get a sense of

564
00:29:07,840 --> 00:29:11,320
Speaker 2: kind of what are the investors, the professional investors, how

565
00:29:11,320 --> 00:29:14,040
Speaker 2: are they kind of discounting what's happening in Washington, DC

566
00:29:14,160 --> 00:29:16,120
Speaker 2: and some of the policy and regulatory risks. So we

567
00:29:16,360 --> 00:29:19,600
Speaker 2: always appreciate checking with Jen Flinton. She is head of

568
00:29:19,800 --> 00:29:24,040
Speaker 2: US Government Affairs at Investo, a huge money management firm. Jen,

569
00:29:24,080 --> 00:29:26,840
Speaker 2: I'm sure there's a whole bunch of issues that you

570
00:29:26,880 --> 00:29:29,880
Speaker 2: guys are following down there in DC. I'd like to

571
00:29:29,880 --> 00:29:32,560
Speaker 2: start with my government is it going to shut down

572
00:29:32,840 --> 00:29:35,120
Speaker 2: anytime soon? I need to be worried about that.

573
00:29:36,720 --> 00:29:42,160
Speaker 10: Well, not until January for certain appropriations bill. So a

574
00:29:42,160 --> 00:29:43,920
Speaker 10: couple of weeks ago they were able to pass a

575
00:29:43,960 --> 00:29:48,480
Speaker 10: continuing resolution that's that stop gap funding for the government

576
00:29:48,960 --> 00:29:51,960
Speaker 10: into January, so we're not going to have a holiday

577
00:29:52,080 --> 00:29:58,840
Speaker 10: shutdown threat. We'll have two basic tiers. It'll be January nineteen,

578
00:29:59,200 --> 00:30:03,320
Speaker 10: which you'll have have the Agriculture bill, the Energy bill,

579
00:30:03,480 --> 00:30:07,080
Speaker 10: the milk con and VA bill. Those will be dealt

580
00:30:07,080 --> 00:30:10,640
Speaker 10: with by January nineteenth theoretically, and then you'll have a

581
00:30:10,680 --> 00:30:13,880
Speaker 10: February second where you get the really hard appropriations bills

582
00:30:13,920 --> 00:30:19,120
Speaker 10: done right. So that's Defense, Labor, HHS, Homeland, think, Immigration,

583
00:30:19,560 --> 00:30:24,080
Speaker 10: Interior think, environment, and so they'll have to come together

584
00:30:24,960 --> 00:30:28,120
Speaker 10: over the holidays and then going into next year on

585
00:30:28,160 --> 00:30:29,719
Speaker 10: these bills, the House and Senate.

586
00:30:30,080 --> 00:30:32,960
Speaker 3: So how likely are we going to see another eleven

587
00:30:33,080 --> 00:30:35,920
Speaker 3: hour type of situation leading up to these deadlines?

588
00:30:36,640 --> 00:30:39,440
Speaker 10: It's pretty likely, I'm afraid. I mean, look, you have

589
00:30:39,560 --> 00:30:42,600
Speaker 10: the Senate that is marking to f y twenty three

590
00:30:42,680 --> 00:30:45,160
Speaker 10: numbers and you have the House that's marking.

591
00:30:44,840 --> 00:30:46,360
Speaker 7: To f y twenty two numbers.

592
00:30:46,800 --> 00:30:51,440
Speaker 10: That's a big difference in money, right, So they're going

593
00:30:51,480 --> 00:30:52,200
Speaker 10: to have to.

594
00:30:52,320 --> 00:30:53,920
Speaker 2: Find why are they doing it differently?

595
00:30:55,040 --> 00:30:59,480
Speaker 10: Yeah, So the agreement on the debt ceiling negotiations over

596
00:30:59,640 --> 00:31:03,520
Speaker 10: June was to mark to f y twenty three, which

597
00:31:03,560 --> 00:31:07,000
Speaker 10: is what the Senate's doing. But conservatives in the House

598
00:31:07,080 --> 00:31:12,480
Speaker 10: were very unhappy with that budget ceialing negotiation, so they

599
00:31:12,520 --> 00:31:15,880
Speaker 10: got appropriations to agree to mark to f y twenty two.

600
00:31:16,480 --> 00:31:18,520
Speaker 2: Interesting, all right, So they can't even agree on that,

601
00:31:19,040 --> 00:31:21,680
Speaker 2: all right. So a lot is going to fall to

602
00:31:21,760 --> 00:31:26,440
Speaker 2: this new House Speaker, Mike Johnson, Republican from Louisiana. Is

603
00:31:26,480 --> 00:31:28,440
Speaker 2: there any reason to believe that he's going to be

604
00:31:28,480 --> 00:31:32,280
Speaker 2: more successful integrating his far right part of his party

605
00:31:33,160 --> 00:31:35,040
Speaker 2: so they can actually get something done in the House.

606
00:31:36,000 --> 00:31:38,800
Speaker 10: That's an excellent question, and we're going to know a

607
00:31:38,800 --> 00:31:41,920
Speaker 10: little bit about that over the next thirty six forty

608
00:31:41,960 --> 00:31:45,000
Speaker 10: eight hours as he meets with the conference and tries

609
00:31:45,040 --> 00:31:49,200
Speaker 10: to get an agreement to move the NDAA, which is

610
00:31:49,240 --> 00:31:52,640
Speaker 10: the National Defense Authorization Act, which must be done by

611
00:31:52,640 --> 00:31:55,440
Speaker 10: the end of the year. They never let that lapse.

612
00:31:55,480 --> 00:31:58,440
Speaker 10: It's been like sixty years since that slap. So that

613
00:31:58,480 --> 00:32:01,480
Speaker 10: House to get done before they break for the holidays.

614
00:32:01,920 --> 00:32:04,640
Speaker 10: And then there's got to be some agreement around the

615
00:32:04,680 --> 00:32:07,920
Speaker 10: supplemental bill, the one hundred and six billion dollars supplemental

616
00:32:07,960 --> 00:32:13,200
Speaker 10: bill for Ukraine, in Israel and no Pacific the border.

617
00:32:13,720 --> 00:32:18,400
Speaker 10: And he is sort of juxt opposing the negotiations in

618
00:32:18,480 --> 00:32:20,440
Speaker 10: the Senate and has to figure out what his own

619
00:32:20,440 --> 00:32:21,560
Speaker 10: conference can swallow.

620
00:32:21,600 --> 00:32:23,240
Speaker 7: And those meetings are happening this week.

621
00:32:25,520 --> 00:32:29,120
Speaker 2: So what's the I mean, do we are we? If

622
00:32:29,160 --> 00:32:31,720
Speaker 2: I'm an investor and I thinking about Washington, DC and

623
00:32:31,760 --> 00:32:34,880
Speaker 2: think about policy, am I beholding to literally a handful

624
00:32:34,960 --> 00:32:38,960
Speaker 2: of representatives for just movement of my government?

625
00:32:40,080 --> 00:32:40,320
Speaker 8: Well?

626
00:32:40,760 --> 00:32:44,920
Speaker 10: Quite, frankly, it is a very tight margin. Not just

627
00:32:45,120 --> 00:32:47,479
Speaker 10: in the House you have about a four vote margin

628
00:32:48,000 --> 00:32:51,640
Speaker 10: and in the Senate one vote margin. So yes, there

629
00:32:51,880 --> 00:32:55,200
Speaker 10: has to be compromised, there has to be negotiated agreement,

630
00:32:55,560 --> 00:32:59,120
Speaker 10: and that means making a lot of people unhappy in

631
00:32:59,200 --> 00:33:03,360
Speaker 10: order to move these bills, these must pass bills, and that,

632
00:33:03,520 --> 00:33:06,640
Speaker 10: quite frankly, is the same situation that McCarthy was in

633
00:33:06,920 --> 00:33:10,440
Speaker 10: that now Speaker Johnson is in. But the same is

634
00:33:10,520 --> 00:33:15,120
Speaker 10: true for Majority Leader Schumer the Democrat, and McConnell who

635
00:33:15,120 --> 00:33:18,680
Speaker 10: are trying to walk this tightline on INDAA and on

636
00:33:18,720 --> 00:33:23,440
Speaker 10: the supplemental funding and on appropriations. So they're all still

637
00:33:23,520 --> 00:33:26,320
Speaker 10: in the same seats. It's just you know, one different

638
00:33:26,360 --> 00:33:26,960
Speaker 10: player here.

639
00:33:28,360 --> 00:33:31,120
Speaker 3: So as far as looking at how some of these

640
00:33:31,160 --> 00:33:34,400
Speaker 3: deadlines kind of overlap with the next Federal Reserve well

641
00:33:34,480 --> 00:33:37,040
Speaker 3: not the next Phedoserve meeting, that decision's on December thirteenth,

642
00:33:37,120 --> 00:33:39,600
Speaker 3: but the meeting the first meeting at the beginning of

643
00:33:39,600 --> 00:33:42,120
Speaker 3: next year. It's actually January thirtieth and thirty first, So

644
00:33:42,160 --> 00:33:44,680
Speaker 3: you have some of these shutdown deadlines coming up close

645
00:33:44,720 --> 00:33:47,960
Speaker 3: to that. How do you think this could potentially impact

646
00:33:48,040 --> 00:33:50,160
Speaker 3: anything coming up when it comes to some of that

647
00:33:50,760 --> 00:33:53,120
Speaker 3: policy decision when you have issues going on the other

648
00:33:53,160 --> 00:33:54,040
Speaker 3: side with the government.

649
00:33:54,800 --> 00:33:57,800
Speaker 10: Yeah, I mean, quite frankly, Congress doesn't look much to

650
00:33:57,920 --> 00:34:02,080
Speaker 10: the monetary policy issues of the and it's questionable, I

651
00:34:02,120 --> 00:34:05,640
Speaker 10: think how much the FED considers the you know, annual

652
00:34:05,680 --> 00:34:10,640
Speaker 10: budget appropriation process the fiscal issues as it makes its

653
00:34:10,680 --> 00:34:14,880
Speaker 10: monetary decisions. And so while it is a congruence of

654
00:34:15,000 --> 00:34:17,200
Speaker 10: issues that are all going to arise at the same time,

655
00:34:17,239 --> 00:34:20,280
Speaker 10: and I expect that will make the markets a little

656
00:34:20,560 --> 00:34:25,200
Speaker 10: you know, you know, volatile around around these important deadlines.

657
00:34:26,120 --> 00:34:29,480
Speaker 10: I do think that as we enter into twenty twenty

658
00:34:29,480 --> 00:34:32,120
Speaker 10: four with this election year, you're going to see after

659
00:34:32,160 --> 00:34:35,560
Speaker 10: these appropriations bills are settled, the shift is going to

660
00:34:35,600 --> 00:34:40,080
Speaker 10: be a hard shift into election year politics and that

661
00:34:40,200 --> 00:34:42,320
Speaker 10: really is going to be the driver going into twenty

662
00:34:42,360 --> 00:34:42,879
Speaker 10: twenty four.

663
00:34:43,520 --> 00:34:45,359
Speaker 2: So is that kind of the message Like if I'm

664
00:34:45,360 --> 00:34:48,879
Speaker 2: a you know, Invesco port portfolio manager, equity portfolio manager

665
00:34:48,960 --> 00:34:51,520
Speaker 2: or fixed income and I called you up and I say, Hey,

666
00:34:51,520 --> 00:34:55,000
Speaker 2: what's the biggest I don't know risk for me and

667
00:34:55,120 --> 00:34:57,560
Speaker 2: my portfolio coming out of Washington, DC?

668
00:34:57,719 --> 00:34:58,200
Speaker 6: What is it?

669
00:34:58,280 --> 00:35:00,800
Speaker 2: Do you say? It's just I guess the upcoming election.

670
00:35:00,880 --> 00:35:02,480
Speaker 2: What are some of the big what's the big issue

671
00:35:02,480 --> 00:35:02,680
Speaker 2: for you?

672
00:35:03,320 --> 00:35:03,600
Speaker 7: Yeah?

673
00:35:03,640 --> 00:35:08,560
Speaker 10: So the next what six eight, nine weeks are really

674
00:35:08,600 --> 00:35:11,279
Speaker 10: going to be the vast majority of legislation that's going

675
00:35:11,320 --> 00:35:13,560
Speaker 10: to get done. That's going to be, as I said,

676
00:35:13,600 --> 00:35:17,359
Speaker 10: the NDAA, the approbes, but also some tax extenders which

677
00:35:17,360 --> 00:35:20,200
Speaker 10: are possible by the end of the year. And then

678
00:35:20,760 --> 00:35:23,279
Speaker 10: it's going to be a lot of messaging bills you're

679
00:35:23,280 --> 00:35:25,200
Speaker 10: going to see in the House. They're going to try

680
00:35:25,239 --> 00:35:27,080
Speaker 10: to do a lot of messaging. If they can't get

681
00:35:27,120 --> 00:35:31,760
Speaker 10: something done on immigration within the context of this supplemental bill,

682
00:35:32,000 --> 00:35:34,560
Speaker 10: they're going to push. They're going to continue to push

683
00:35:34,640 --> 00:35:36,440
Speaker 10: on that border issue. It's going to be a major

684
00:35:36,520 --> 00:35:40,640
Speaker 10: message for House Republicans. And then you're going to see

685
00:35:40,640 --> 00:35:43,040
Speaker 10: a lot of executive action. You're going to see the

686
00:35:43,120 --> 00:35:46,640
Speaker 10: agencies taking it upon themselves, within their own discretion or

687
00:35:46,680 --> 00:35:50,280
Speaker 10: discretion as they define it, uh to move the agenda

688
00:35:50,360 --> 00:35:54,200
Speaker 10: of the administration things that they weren't able to get

689
00:35:54,200 --> 00:35:56,919
Speaker 10: done over the next last three years, or that they've

690
00:35:56,960 --> 00:36:00,520
Speaker 10: been working to resolve and finalize over the past three years.

691
00:36:00,800 --> 00:36:03,280
Speaker 10: And so that's really what I'm telling folks to look

692
00:36:03,320 --> 00:36:06,440
Speaker 10: at right now is watch those executive actions.

693
00:36:07,360 --> 00:36:10,040
Speaker 3: So what are the most immediate things that you're watching

694
00:36:10,480 --> 00:36:13,120
Speaker 3: in the next few weeks as far as what people

695
00:36:13,160 --> 00:36:14,680
Speaker 3: need to be focused on in Washington.

696
00:36:15,760 --> 00:36:20,880
Speaker 10: Well, first we've got to watch these negotiations on appropriations,

697
00:36:20,960 --> 00:36:24,280
Speaker 10: and we will be behind the scenes watching that very closely.

698
00:36:25,680 --> 00:36:28,920
Speaker 10: But over the next thirty six forty eight hours, it'll

699
00:36:28,920 --> 00:36:31,920
Speaker 10: be really interesting to see how these members sort of

700
00:36:31,960 --> 00:36:35,480
Speaker 10: resolve on the NDAA, that Defense Authorization Act, which is

701
00:36:35,560 --> 00:36:39,480
Speaker 10: very important. Conference technically meets on Thursday, but they could

702
00:36:39,520 --> 00:36:42,480
Speaker 10: have a decision by Friday because they've been negotiating this

703
00:36:42,640 --> 00:36:46,759
Speaker 10: behind the scenes, and there's some amendments that could be

704
00:36:46,840 --> 00:36:51,040
Speaker 10: added to that that we'll be looking for, some related

705
00:36:51,120 --> 00:36:56,279
Speaker 10: to AI, some related to crypto money laundering issues, some

706
00:36:56,440 --> 00:37:01,240
Speaker 10: relating to outbound investment in China. So we're looking for

707
00:37:01,760 --> 00:37:05,000
Speaker 10: whether those will be included in the final NDAA. But

708
00:37:05,160 --> 00:37:09,120
Speaker 10: then it will be a race to the appropriation's deadlines

709
00:37:09,440 --> 00:37:13,080
Speaker 10: and making sure that they fund the government that is

710
00:37:13,120 --> 00:37:17,879
Speaker 10: important to the rating of the US but also sort

711
00:37:17,880 --> 00:37:21,680
Speaker 10: of the faith in this Congress's ability to get things done.

712
00:37:22,560 --> 00:37:25,520
Speaker 2: Well, a lot of work to do. We'll certainly follow

713
00:37:25,600 --> 00:37:28,279
Speaker 2: up with you Jen on that. Jen Flinton, she's the

714
00:37:28,320 --> 00:37:31,000
Speaker 2: head of US Government affairs for Invesco. Trying to keep

715
00:37:31,040 --> 00:37:34,239
Speaker 2: track of all the legislation, all the policy work that's

716
00:37:34,280 --> 00:37:38,080
Speaker 2: being done in Washington, DC and how it impacts investco

717
00:37:38,320 --> 00:37:43,000
Speaker 2: porfolio managers and their investment holdings. You know the analogous

718
00:37:43,000 --> 00:37:45,640
Speaker 2: person for Bloomberg Intelligence that does that work as Nathan

719
00:37:45,680 --> 00:37:49,440
Speaker 2: Dean for Bloomberg Intelligence. It's so important for investors that

720
00:37:49,480 --> 00:37:51,480
Speaker 2: have a good feel for what's going on down in Washington,

721
00:37:51,560 --> 00:37:51,759
Speaker 2: d C.

722
00:37:53,280 --> 00:37:56,359
Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can

723
00:37:56,400 --> 00:37:59,840
Speaker 1: subscribe and listen to interviews at Apple Podcasts or what

724
00:38:00,000 --> 00:38:03,520
Speaker 1: whatever podcast platform you prefer. I'm Matt Miller. I'm on

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00:38:03,600 --> 00:38:06,120
Speaker 1: Twitter at Matt Miller nineteen seventy three.

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00:38:06,560 --> 00:38:08,960
Speaker 2: And I'm Paul Sweeney. I'm on Twitter at pt Sweeney.

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00:38:09,080 --> 00:38:11,759
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