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Speaker 1: Welcome to the Bloombergs Surveillance Podcast. I'm Tom Keene along

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Speaker 1: with Jonathan Ferrill and Lisa A. Brownwitz Jailey. We bring

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Speaker 1: you insight from the best and economics, finance, investment and

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Speaker 1: international relations. Find Bloomberg Surveillance and Apple Podcast SoundCloud, Bloomberg

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Speaker 1: dot Com and of course on the Bloomberg terminal. So,

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Speaker 1: fifty basis points is the hike for the Bank of

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Speaker 1: England standing by John and Rochester g ten Effect strategist

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Speaker 1: over Namura Jordan. Your reaction to this decision by the

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Speaker 1: Bay a week, Well, John, it's the simple case that

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Speaker 1: this wasn't a big surprise from the bank. Think we

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Speaker 1: were expecting around fifty basis points. That's what we got

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Speaker 1: today conversations with clients as well. Fifty basis points from

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Speaker 1: the bank again is probably the last fifty basis points,

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Speaker 1: the first and the last since they became independence. Probably

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Speaker 1: As for us, the view is that the situation in

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Speaker 1: the energy market will decimate the incomes of UK workers,

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Speaker 1: the consumer confidences going to continue to fall, consumts going

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Speaker 1: to continue slow, and the Bank of Englian is going

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Speaker 1: to potentially revive down their inflation forecast. So the last

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Speaker 1: rate hike of this cycle is probably going to be November,

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Speaker 1: is the view from us, and that means it's very

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Speaker 1: unclear to me why today the banking and doing fifty

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Speaker 1: is a reason to buy the pattern that if they

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Speaker 1: did seventy five, you would have seen selling head higher.

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Speaker 1: But John, the problem for markets is we're just not

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Speaker 1: used to trading seventies styles stamulation. Tom was mentioning they're

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Speaker 1: the thirteen percent inflation really decimating people's ability to spend.

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Speaker 1: The Bank of England will reflecting this. They've already put

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Speaker 1: in their forecast. Today we saw they think the price

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Speaker 1: cap goes three thousand, five hundred in October. That's about right.

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Speaker 1: It's going up again in January to three thousand, eight

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Speaker 1: hundred pounds per year before the average household. This is

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Speaker 1: a massive amount of money coming out the system just

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Speaker 1: spent on energy during I think very much different than

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Speaker 1: the Fed, where we have all the different Fed presidents,

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Speaker 1: including Kansas City, where we'll visit a jective, Paul. We

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Speaker 1: perceived the Bank of England as the city and maybe

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Speaker 1: London as well. What does thirteen percent inflation Due to

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Speaker 1: the Bank of England's relationship with the go to the

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Speaker 1: Premier League this weekend, to Liverpool, to Leicester to Newcastle.

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Speaker 1: What does the BOE relationship with the inflation the North

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Speaker 1: will face. Indeed, you mentioned Tommy, haven't mentioned past Harrods,

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Speaker 1: So one day me and John will have to take

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Speaker 1: to our hometown north of Birmingham and certain Coldfield it

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Speaker 1: will be felt a look in the north. Were seeing

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Speaker 1: lots of strikes being held around the UK. I was

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Speaker 1: listening to one of the NHS union representatives just earlier

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Speaker 1: this weekend. The pay rises they're being offered after inflation

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Speaker 1: adjusted roughly ten percent real pay cut is essentially like

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Speaker 1: asking workers to do a whole month of the year

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Speaker 1: working for free or losing all of their statutory holidays,

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Speaker 1: so that the impact would be we're gonna have more

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Speaker 1: labor market strikes. This will potentially see wages going so

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Speaker 1: it puts the banking in that really strange place that

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Speaker 1: they're raising rates. The consumer is being squeezed. That does

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Speaker 1: lower their inflation forecast perhaps ahead, but if we do

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Speaker 1: get a wage price spiral, this is very nineteen seventies like,

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Speaker 1: so they're gonna be keeping an eye on that and

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Speaker 1: the way the banking looks at it in the north.

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Speaker 1: They used to Bank of England agents summary. We've only

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Speaker 1: just got it now, so I'll need to look for

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Speaker 1: those details that came out at the same time as

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Speaker 1: this meeting. But they do get a holistic picture of

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Speaker 1: the rest of the country through the agents and they

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Speaker 1: will be seeing this this story that I've just laid

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Speaker 1: out playing out around the country. Jordan, I want to

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Speaker 1: take a little deeper into your idea that November will

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Speaker 1: be the last rate hike, will be the end the

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Speaker 1: rate hiking cycle of the Bank of England, raising questions

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Speaker 1: about the front loading of monetary policy and monetary tightening

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Speaker 1: that has been a big discussion. We have the Bank

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Speaker 1: of England warning of a long recession. At what point

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Speaker 1: does that pause in rate hikes lead to rate cuts?

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Speaker 1: In your view, it could happen quite quickly. The Bank

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Speaker 1: of Thing was one of the first major center banks

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Speaker 1: to rates rates. They started December last year whilst everyone

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Speaker 1: was still talking about transitory in on the crop. So

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Speaker 1: when the banking kick things off in December last year

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Speaker 1: gives them sort of the ability to end their rate

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Speaker 1: hiking cycle earlier than most and also introduce the idea

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Speaker 1: of cuts, so we're looking for May cuts from the

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Speaker 1: Bank of England. That's sort of timing and why so

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Speaker 1: inflation will still be higher than two percent. I actually

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Speaker 1: think the risk reward is inflation doesn't fall down to

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Speaker 1: two percent as quickly as the markets pricing, but the

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Speaker 1: center banks will react to the situation in credit markets.

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Speaker 1: If you look at the crossover spread, to look at

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Speaker 1: the ECB systemic risk, whatever you want to look at,

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Speaker 1: the credit stress in the market is roughly around the

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Speaker 1: same levels as the worst moments in the coronavirus panic

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Speaker 1: of March. I suspect the energy prices ten times higher

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Speaker 1: than they were on average in Germany will knock out

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Speaker 1: the business models of many manufacturers. We're gonna see credit

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Speaker 1: stress leads to hire defaults, lead to unemployment rising, and

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Speaker 1: that's why in Q form Q one the story will

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Speaker 1: change for central banks. Even though we'll have high inflation,

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Speaker 1: there could be a dobbish moment. Joldan's South Sterling still

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Speaker 1: the trade for you. Indeed, I think we've had a

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Speaker 1: big move high up to level not very fun for

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Speaker 1: me holding a short from about that period, but the

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Speaker 1: trend is lower in Starling. It has the same problems

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Speaker 1: as Europe when it comes to this energy crisis. It's

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Speaker 1: bank central bank has just done fifty basis points. Look

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Speaker 1: back to the ECB meeting they did fifty basis points.

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Speaker 1: What did the euro do nothing? Just because central banks

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Speaker 1: are doing these bigger rate hikes, not enough to defend

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Speaker 1: their currency against what's a big terms of trade shock

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Speaker 1: that the pounds should essentially be trading towards one fifteen

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Speaker 1: down to one ten just based on terms of trade alone.

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Speaker 1: The price of the UK's exports have fallen, was the

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Speaker 1: price of UK's imports of skyrocketed. The UK needs a

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Speaker 1: weaker currency to help is exchange rate ugly. Jordan, just quickly,

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Speaker 1: can you imagine if the Fed forecast the recession like

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Speaker 1: this one, the starts in four q and runs through

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Speaker 1: the whole of next year. Could you see them emtive forecasting?

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Speaker 1: Could you forecasting at the mirror? So I just I

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Speaker 1: can see it happening, but they'll be a bit slower

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Speaker 1: than us to get that. Let's get right to at

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Speaker 1: our conversation of the day on the United Kingdom with

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Speaker 1: David blanche Flower, professor of Economics of Dharmouth College. He

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Speaker 1: darkened the door at the Bank of England a number

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Speaker 1: of years ago. We're thrilled he could join us today. Danny,

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Speaker 1: you've gone through the details and you make it very

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Speaker 1: clear that A ninety seven in a path to the

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Speaker 1: Eisenhower deflation. The inflation panic is overwrought. This is a

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Speaker 1: bank signaling a deflation or a substantial disinflation out to

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Speaker 1: two thousand twenty four. What should be policy if we

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Speaker 1: model a future disinflation? Well, obviously this the story is

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Speaker 1: the forecast of a recession six quarters of negative growth

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Speaker 1: they're forecasting. But if you go to that, I think

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Speaker 1: it's the chart one point four and what you see

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Speaker 1: there is that there's a significant risk in four of deflation.

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Speaker 1: And that's the famous chart the Bank of England produces

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Speaker 1: shows you eight hundred years of inflation, and the one

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Speaker 1: thing that stands out from it is the big risk

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Speaker 1: when you have high inflation is that you generate deflation.

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Speaker 1: And so that's obviously the worry. I mean, the truth

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Speaker 1: is Johnny's right there forecasting inflation pretty soon this year,

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Speaker 1: but by this thing plummets, and I think the likelihood

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Speaker 1: is actually that this forecast is overly optimistic. I think

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Speaker 1: the chances are the unemployment rate is going to rise

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Speaker 1: by much more. Output is probably I mean it may

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Speaker 1: not last for six quarters, but output probably is going

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Speaker 1: to be weaker. Um and we're probably going to see

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Speaker 1: the bank having to the u turn pretty fast. I mean,

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Speaker 1: this is the devastating, terrible forecast. And sorry, last point.

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Speaker 1: I remember in two thousand, an age in August, so

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Speaker 1: you know a number of reports ago and the big

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Speaker 1: deal then was the UK was in recession and they

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Speaker 1: didn't use the word recession. The word recession is all

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Speaker 1: over this report. So this is this is devastating. But

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Speaker 1: I think the argument the balance of risks is balance.

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Speaker 1: Lisa just talked about it. Risks are actually very strongly

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Speaker 1: to the downside to this. So so why they actually

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Speaker 1: raised rates sort of unclear when you read the thing. Well, Danny,

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Speaker 1: let's talk about how original this moment truly is. And

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Speaker 1: can you imagine a federal reserve forecasting of recession in

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Speaker 1: the way that the Bank having it has done today?

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Speaker 1: And why do you think that's the case. Well, I

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Speaker 1: think I think that in some ways they are under

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Speaker 1: huge political pressure to try and deal with the interest rate,

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Speaker 1: with the inflation rates story, I mean, trust came out

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Speaker 1: this morning and said the bank should have raised rates

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Speaker 1: earlier and we're going to re look at the remits.

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Speaker 1: So I think the politics of it are pretty interesting.

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Speaker 1: I mean, the fact that the word was meant, the

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Speaker 1: word recession is in this report. It's I don't know

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Speaker 1: if any other monetary policy report that has that word.

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Speaker 1: As I said, go back to the August two thousand,

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Speaker 1: they didn't even use the word recession when they were

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Speaker 1: in recession. So so obviously some of the questions, you know,

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Speaker 1: how how quickly does recession come and how quickly does

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Speaker 1: the bad data come? But we've got bad p m

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Speaker 1: s this morning, sales of UK cars down. I mean,

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Speaker 1: this baby could get bad pretty quickly. And I think,

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Speaker 1: as you say, the likelihood of the FED doing this

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Speaker 1: is is really pretty different. But I think this is

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Speaker 1: pretty unique for the NPC. I've not seen anything like

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Speaker 1: this in all my time with them watching. When you're

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Speaker 1: talking about the balance of risks and how it's incredibly

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Speaker 1: skewed to the downside, how do them respond to Jordan

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Speaker 1: Rochester's point about a wage spiral that you're actually starting

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Speaker 1: to see in a very real way, and how this

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Speaker 1: bank gets ahead of that to curtail that, even if

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Speaker 1: it requires some sort of recession or significant downside in

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Speaker 1: the near term. Well, we've been talking about non existent

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Speaker 1: wage spiral since two thousand and eight, which we haven't seen.

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Speaker 1: I mean, we've seen some some attempt to try and

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Speaker 1: keep up nominal wage growth, um that we've seen big

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Speaker 1: falls in real wages. I think the idea of a

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Speaker 1: wage price fire in the United States and in the

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Speaker 1: UK is for the birds. I mean, we're seeing settlements

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Speaker 1: around four percent, We're seeing public sector workers saying, you know,

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Speaker 1: we we need to try and maintain our living standards.

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Speaker 1: The chance that any of this is driven by workers

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Speaker 1: there demanding and getting higher wage increases, I see absolutely

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Speaker 1: none of that. None of it in the United States,

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Speaker 1: none of it in Europe, none of it in the UK.

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Speaker 1: We're talking about inflation and workers asking for four percent

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Speaker 1: pay raises. This is not none of this is driven

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Speaker 1: by by wages. So I think that whole argument is

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Speaker 1: just nonsense. Danny. A lot of people are saying that

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Speaker 1: right now this is the Bank of England front loading

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Speaker 1: rate hikes, that they're going to start cutting rates or

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Speaker 1: at least pausing the rate hikes later. This year than

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Speaker 1: cutting next year, And that seems to be this belief

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Speaker 1: with the Fed as well, that yes, there are some

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Speaker 1: pretty significant rate hikes, but it is a front loading

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Speaker 1: to try to get ahead of the inflationary push. Why

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Speaker 1: do you think that's a bad idea to see what

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Speaker 1: you can do now and then wait and then see

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Speaker 1: how it, however, trickles out. Lisa, that's I mean, it's

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Speaker 1: a great point, but I mean I always had the

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Speaker 1: view that you say, and what we need to do

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Speaker 1: is get rates up to dry and cut them later

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Speaker 1: from the recession that you've caused. So obviously that seems

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Speaker 1: like a problem. I mean, the bigger issue in some

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Speaker 1: sense least is that, yes, you've now got rates up.

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Speaker 1: You know we're talking to globally around two or something

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Speaker 1: less in the Euro Area. The problem actually is, I

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Speaker 1: think back to two thousand and eight you could we

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Speaker 1: could cut from five five percent of a half or zero.

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Speaker 1: The room for the central Bank to cut is limited. Um,

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Speaker 1: it's going to fall on fiscal authorities. Look in the

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Speaker 1: UK there's there's basically no Prime minister, there's no chancel

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Speaker 1: of the exchequer. People are talking about the plans that

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Speaker 1: they might have but that but the pressure is going

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Speaker 1: to come on a new chancellor and a new Prime

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Speaker 1: minister pretty down quickly, and the markets are going to

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Speaker 1: speak and they're going to say whether they whether they

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Speaker 1: think this is appropriate or not. I mean, we don't

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Speaker 1: even know who the channel that would be in September

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Speaker 1: when these bad data come in. So I agree with you,

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Speaker 1: but it looks to me that you front load, you flunk,

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Speaker 1: your front load interest rate rises for the recession that

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Speaker 1: you worsened by doing it. So I think there was

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Speaker 1: a significant argument today to actually sit pat and wait,

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Speaker 1: because it's unclear that these rate rises are going to

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Speaker 1: do anything to bring inflation down being caused by global

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Speaker 1: oil prices. What it? What it? How is these interest

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Speaker 1: rates actually gonna do anything other than tank the economy?

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Speaker 1: How do they actually bring prices down? And Baby is

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Speaker 1: already admitted that basically it can't. So I think there

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Speaker 1: was a strong argument to sit weight and watch. But

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Speaker 1: the political argument was a very strong one because the

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Speaker 1: Trust was threatening the remit of the banks and it

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Speaker 1: should have raised rates earlier. Well, I'm not surprised you

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Speaker 1: said that at the end there, Danny, that's for sure.

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Speaker 1: Danny plans fright. Danny always good to catch up. But

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Speaker 1: we've gotten here is earnings, but nobody cares because when

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Speaker 1: you do a transaction of this import and symbolism to

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Speaker 1: Wall Street and frankly a recovering world from the pandemic.

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Speaker 1: It is good to talk to Jim's alter he's co

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Speaker 1: president Apollo Asset Management, and yeah, and earnings, but I'm

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Speaker 1: gonna go beyond earnings, Jim to your new transaction acquiring

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Speaker 1: the leasing efforts of the largest fleet of seven forties

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Speaker 1: sevens in the world. This is a cargo business, mostly

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Speaker 1: of Atlas Air. How do you dive into such a

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Speaker 1: troubled industry? Is covid Asia moving cargo? And say the

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Speaker 1: opportunity is now well, good morning, thanks for having me on.

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Speaker 1: You know that's a that's a classic Apollo transaction. We

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Speaker 1: know the industry well, we've been around it for decades.

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Speaker 1: We've successfully navigated it. No pun intended in terms of

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Speaker 1: variety of other investments in the space um and it's

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Speaker 1: a classic opportunity for us to use our great industry skills,

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Speaker 1: are our great capital formation skills, uh and do something

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Speaker 1: we think has got a lot of fundamental value where

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Speaker 1: purchase price manners. So uh, you know, a lot to

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Speaker 1: talk about a pile today. That's one transaction, um, But

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Speaker 1: very very happy with what we've done in the in

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Speaker 1: that situation, let's talk about the inflow is thirty six billion,

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Speaker 1: I think thirteen billion after quarter end in a first

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Speaker 1: close your next flagship p fun Just kinda through some

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Speaker 1: of these numbers, Jimmys. You look at the opportunities in

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Speaker 1: front of you. Where aren't they? What can you do

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Speaker 1: that the banks can't do that you're excited about. Well, listen,

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Speaker 1: as you said, Johnan, it's a very foggy environment out there,

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Speaker 1: a lot a lot of dispersion on views on where

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Speaker 1: rates and other things are going. And that's when we

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Speaker 1: do well. You know, record record f R re Ford

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Speaker 1: for the quarter, record s R E. You know, capital formation, deployment,

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Speaker 1: origination strong um. You know, for us, it was a

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Speaker 1: great quarter in terms of you know, investor dialogue. As

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Speaker 1: you said, thirty six billion in the quarter. We closed

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Speaker 1: thirteen billion on on our new flagship funten um. And

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Speaker 1: for us, you know, we we are this is the

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Speaker 1: kind of markets that we thrive. When others are a

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Speaker 1: bit paralyzed or markets are closed, we bring our our

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Speaker 1: flexible capital or permanent capital or ingenuity uh to transactions.

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Speaker 1: And you know, I know you mentioned the the Atlas era,

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Speaker 1: but for us New Fortress Energy was a great transaction

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Speaker 1: Air France, you know in No Fortress Energy. Basically they

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Speaker 1: we've been to this company for a couple of years.

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Speaker 1: We've been a financing partner. They put their liquid lergy

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Speaker 1: products vehicles into a in j V. We provided the equity,

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Speaker 1: but the bank market was shut. Typically most folks would

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Speaker 1: have to put their pencil down. We we really marshaled

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Speaker 1: our resources and raised the billion four financing to have

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Speaker 1: a successful transaction. So for us, these are the markets

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Speaker 1: we thrive, uh, you know, firms doing extraordinary and hitting

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Speaker 1: on all cylinders. Jim, you said that the markets are closed,

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Speaker 1: and they were for the most part until last month

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Speaker 1: where they reopened with a vengeance and you saw everybody

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Speaker 1: fled back to the market, money pile into even the

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Speaker 1: most speculative debt people basically sounding the all clear sign.

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Speaker 1: What do you make of that and how do you

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Speaker 1: sort of adjust your view? And perhaps in May when

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Speaker 1: you said that recession was one third to two thirds

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Speaker 1: of your base case and you were talking about not

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Speaker 1: taking that durational liquidity risk. Yeah, I think you've got

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Speaker 1: to differentiate between a rally and credit and the markets

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Speaker 1: being open. The reality is, it's been well publicized that, uh,

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Speaker 1: you know, a lot of financing commitments have been hung

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Speaker 1: if you will, nowhere near what they were in oh A,

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Speaker 1: probably eighty billion plus on minus versus the four But

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Speaker 1: new financing commitments are very challenging to secure today. We're

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Speaker 1: a leader in private credit. We extend credit, we borrow

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Speaker 1: in those markets as well. But the reality is the markets,

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Speaker 1: the I G markets open, but the lower quality high

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Speaker 1: your markets still very few transactions are getting done. Very

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Speaker 1: few new commitments are being made on buyouts. So it's

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Speaker 1: it's not as clear as you said. Again, please don't

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Speaker 1: differentiate a railly and credit versus really an open, thriving

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Speaker 1: financing market. And Jim, can I ask you what you

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Speaker 1: think of that rallying credit though a hundred and forty

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Speaker 1: basis points of spread tight and they on high yield

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Speaker 1: in the last month alone, we've got just lining up

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Speaker 1: calling that wishful thinking. What do you call it? Well,

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Speaker 1: it's interesting we we we typically when when when spreads

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Speaker 1: go to six hundred, we usually have to buy signal

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Speaker 1: for us. Historically, they were there for just a couple

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Speaker 1: of a short period of time. As you said, they

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Speaker 1: rally dramatically. It feels like the rally. You know, I

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Speaker 1: would say they're on the richer side of fair value

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Speaker 1: than they are the attractive side of fair value. But

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Speaker 1: I think it's interesting to contrast that to the private

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Speaker 1: markets right now. You can you know, a year ago

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Speaker 1: high old indexes were in the mid four's, maybe touching five.

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Speaker 1: You can issue a be part of a senior club

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Speaker 1: in private credit right now with spreads you know a

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Speaker 1: lot of so for plus six fifty, which is basically

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Speaker 1: almost touching nine and a half ten percent high quality,

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Speaker 1: first lean position, top of the capital structure, thirty forty LTV.

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Speaker 1: So that's an interesting market, and we're open. We've been

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Speaker 1: active h at Apollo and at mid cap. The the

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Speaker 1: generic on the run high your market not particularly interesting,

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Speaker 1: and I suspect you're right, um, you know, at least

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Speaker 1: I mentioned I was of the view that you know,

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Speaker 1: a recession was in the cards in twenty three. We

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Speaker 1: still believe it will be. I don't think it's going

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Speaker 1: to be a deep historical recession. Um, As we all

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Speaker 1: know the numbers right now, you're having you know, negative

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Speaker 1: GDP numbers with four thousand uh a new employment per month.

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Speaker 1: So it's not your follows recession by any means. It's

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Speaker 1: a different kind of environment um. But you know, from

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Speaker 1: our perspective, if you have the ability to navigate, it

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Speaker 1: is quite interesting. As many are on pause, Jim, I

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Speaker 1: got twenty seconds to squeeze this in. This is the

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Speaker 1: question where the person behind your camera starts wiping a handset.

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Speaker 1: Don't answer it. You were considering how being needle Musk

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Speaker 1: finance that Twitter bit, given how it's falling apart, Has

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Speaker 1: that left a bit of taste in your mouth around

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Speaker 1: doing business with him potentially in the future. Just yes

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Speaker 1: or no your thoughts on it. We're we're a big

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Speaker 1: player in the bubble financing markets. We we financed lots

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Speaker 1: of folks, were very thoughtful about what we do uh

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Speaker 1: and we got a long term craft record to prove

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Speaker 1: that out. We begin our jobs coverage now we do

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Speaker 1: it with our great Michael McKee, And then we moved

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Speaker 1: to Thomas Porcelli. Tom Porcelli's chief you US economists at

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Speaker 1: RBC Capital Markets, and first came to my attention with

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Speaker 1: absolutely brilliant study of the wage dynamics of the United

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Speaker 1: States of America. Tom Porcelli, good morning. I want to

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Speaker 1: talk to you about what we just heard from Professor

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Speaker 1: Blanche Flower Dartmouth, where he said, basically, a linkage of

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Speaker 1: these tumultuous times indue wage growth is unfounded. Give us

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Speaker 1: your update on America's wage growth in this nine percent

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Speaker 1: inflation we're facing. I completely agree with his assessment. I

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Speaker 1: think the people that are comparing today to the seventies

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Speaker 1: slash eight ease, I think that they're doing us a disservice.

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Speaker 1: I think that this probably has much more in common

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Speaker 1: with the forties than it does the seventies. UM. I

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Speaker 1: don't think that this is some wage price spiral that

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Speaker 1: that the FED is is trying to or can impact.

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Speaker 1: UM And I think that those that effort will will

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Speaker 1: bear very little fruit. UM. I think the FED is

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Speaker 1: hiking pretty aggressively into an economy that's very clearly slowing down. UM.

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Speaker 1: I don't I don't know how that ends well. UM

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Speaker 1: And I think, you know, if if their thought process

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Speaker 1: is what we've got to really tamp down on on

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Speaker 1: wage pressures, I don't know more you want to tamp

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Speaker 1: down on those I mean in negative terms, excuse me,

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Speaker 1: in real terms, they're deeply in negative territory. I mean,

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Speaker 1: I I always like sort of marvel at the idea

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Speaker 1: that I think very few people appreciate that disposable personal

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Speaker 1: income nominally UM in nominal terms from the beginning of

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Speaker 1: the year to today is really up only modestly nominal.

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Speaker 1: But in real terms you're deeply in negative. So that

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Speaker 1: that whole I d I think is UM is sort

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Speaker 1: of foolish. And and I would say one last thing

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Speaker 1: time and then I'll stop, you know this idea And

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Speaker 1: and uh, Mike was talking about Mike McKee was talking

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Speaker 1: about this a moment ago UM, and you know he's right.

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Speaker 1: The FED keeps on sort of, you know, hanging their

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Speaker 1: hat on the idea that there's you know, people can

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Speaker 1: find a job really quick and etcetera. And make no

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Speaker 1: mistake in certain industries that is still true. But UM,

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Speaker 1: job openings or not the thing we're supposed to be

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Speaker 1: hanging our hat on. It's a massive lagging indicator. They

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Speaker 1: fall in earnest in the midst of a recession. UM.

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Speaker 1: In other words, they're free option for companies um. And

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Speaker 1: we're already seeing them slow now in a in a

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Speaker 1: more meaningful way. So you know, this idea and by

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Speaker 1: the way, sorry, one last thing on that. UM. This

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Speaker 1: this idea too, that there's you know, two job openings

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Speaker 1: for every person unemployed. That that is not correct. You

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Speaker 1: have to look at people also that are not in

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Speaker 1: the labor force that want a job, right, a completely

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Speaker 1: separate metric. Um. And when you add that to the

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Speaker 1: number of unemployed, what you actually see is that the

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Speaker 1: ratio is actually one for one. And actually, just to

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Speaker 1: be clear, it was one for one are to the

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Speaker 1: most recent job openings number. Now it's less than that.

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Speaker 1: So I have no sympathy for for that view in

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Speaker 1: any way. So Tom, translate that picture into what we're

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Speaker 1: expecting tomorrow with the jobs report that we get out

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Speaker 1: there in the anecdotal data that we're getting from a

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Speaker 1: number of companies that they are starting to cut back workers. Yeah, Lisa,

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Speaker 1: I think that's exactly right. I mean, you know again, uh,

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Speaker 1: you know, I know you guys were talking about jobless claims.

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Speaker 1: What and what number starts to scare you. I don't

432
00:22:25,880 --> 00:22:28,760
Speaker 1: know why you're not scared now, I mean it's you know,

433
00:22:29,080 --> 00:22:30,960
Speaker 1: you don't have to wait for some magical to eighty

434
00:22:31,040 --> 00:22:33,520
Speaker 1: or three hundred. I mean you're up from one hundred

435
00:22:33,560 --> 00:22:36,199
Speaker 1: and sixty six thousand, right, that was the low that

436
00:22:36,240 --> 00:22:38,960
Speaker 1: we hit in mid March, and so from that point

437
00:22:38,960 --> 00:22:41,840
Speaker 1: to today we're now up fifty percent. Now, I know,

438
00:22:41,960 --> 00:22:44,840
Speaker 1: the standard retort on that is, hey, you know, but

439
00:22:44,960 --> 00:22:47,199
Speaker 1: we're coming off a really low levels. Okay, you were

440
00:22:47,240 --> 00:22:49,359
Speaker 1: coming off a really low levels in oh one two,

441
00:22:49,560 --> 00:22:52,560
Speaker 1: I mean they're historically low then. Um, but hey, we

442
00:22:52,600 --> 00:22:56,280
Speaker 1: managed to actually lose jobs in the unemployment one uprising,

443
00:22:56,320 --> 00:22:58,960
Speaker 1: so that the level thing is not compelling. It's the move, right,

444
00:22:59,000 --> 00:23:01,760
Speaker 1: it's the delta, um, and the delta is incredibly compelling.

445
00:23:01,760 --> 00:23:04,320
Speaker 1: You're up fifty from the low. And sorry, just to

446
00:23:04,359 --> 00:23:06,360
Speaker 1: me be clear on that. So if you look back

447
00:23:06,400 --> 00:23:08,480
Speaker 1: to every other every recession we went back to the

448
00:23:08,480 --> 00:23:11,600
Speaker 1: recession that started in nine nine, if you look at

449
00:23:11,640 --> 00:23:15,520
Speaker 1: every recession from the low into that recession, um, you're

450
00:23:15,600 --> 00:23:19,400
Speaker 1: up about Um here we are up fifty. And yes,

451
00:23:19,440 --> 00:23:21,080
Speaker 1: I know there's some seasonal thing. I get all of that,

452
00:23:21,160 --> 00:23:25,320
Speaker 1: but even if you adjust for that, you're still up wildly.

453
00:23:25,440 --> 00:23:28,119
Speaker 1: I mean, this is it's not a good outcome. A

454
00:23:28,160 --> 00:23:30,480
Speaker 1: lot of people would argue that you're coming from a

455
00:23:30,520 --> 00:23:32,800
Speaker 1: point where everybody had been taken out of the workforce

456
00:23:32,800 --> 00:23:35,280
Speaker 1: and then brought back in in this sort of artificial

457
00:23:35,320 --> 00:23:37,359
Speaker 1: breach as a result of the pandemic and the global

458
00:23:37,400 --> 00:23:40,840
Speaker 1: economy shutting down as we look forward, is your argument

459
00:23:40,880 --> 00:23:42,879
Speaker 1: that the FED should look through this and stand pat

460
00:23:42,960 --> 00:23:45,480
Speaker 1: not raise rates that much or at all, and sort

461
00:23:45,480 --> 00:23:47,720
Speaker 1: of wait to see what happens, even in the face

462
00:23:48,200 --> 00:23:51,720
Speaker 1: of nine point one percent headline CP I I have

463
00:23:51,760 --> 00:23:54,879
Speaker 1: a lot of sympathy for lifting rates. I think you know,

464
00:23:54,920 --> 00:23:57,160
Speaker 1: look and you you will have heard me say this before.

465
00:23:57,160 --> 00:23:59,240
Speaker 1: I mean, I think the FED was very very late

466
00:23:59,280 --> 00:24:01,520
Speaker 1: to this. I me, I would argue that today we

467
00:24:01,520 --> 00:24:03,400
Speaker 1: should be a hundred basis points higher because the FED

468
00:24:03,480 --> 00:24:06,639
Speaker 1: was much more aggressive, you know, sort of late last year. Um.

469
00:24:06,760 --> 00:24:08,960
Speaker 1: But so I do have a lot of sympathy for that.

470
00:24:09,119 --> 00:24:11,240
Speaker 1: I just think that we have to be careful. Um

471
00:24:11,440 --> 00:24:14,479
Speaker 1: And and ask aloud, do you think that these interst

472
00:24:14,520 --> 00:24:17,480
Speaker 1: rate hikes are actually going to scale back on inflation?

473
00:24:17,760 --> 00:24:20,399
Speaker 1: I think inflation is going to slow organically. I know

474
00:24:20,480 --> 00:24:22,719
Speaker 1: that's a it's a that's a tough pill to swallow

475
00:24:22,760 --> 00:24:24,520
Speaker 1: for the FED, and I know they can't stand oddly

476
00:24:24,600 --> 00:24:26,680
Speaker 1: buy up and wait for that to happen, so they

477
00:24:26,680 --> 00:24:29,040
Speaker 1: have to keep on raising rates. I just think we

478
00:24:29,080 --> 00:24:31,600
Speaker 1: have to be careful about the level of rates that

479
00:24:31,640 --> 00:24:33,800
Speaker 1: we get to. UM. I don't know that we have

480
00:24:33,880 --> 00:24:36,640
Speaker 1: to get wildly into restrictive territory. I mean, look, let's

481
00:24:36,640 --> 00:24:39,280
Speaker 1: be clear. You know, prior to things starting to term

482
00:24:39,320 --> 00:24:42,240
Speaker 1: pretty squishy over the last few months, and the backdrop

483
00:24:42,280 --> 00:24:45,320
Speaker 1: did not need UM any accommodation. I mean, we should

484
00:24:45,359 --> 00:24:47,680
Speaker 1: have been at neutral a while ago. But I think

485
00:24:47,680 --> 00:24:49,440
Speaker 1: now where in so many ways, I feel like we're

486
00:24:49,440 --> 00:24:52,920
Speaker 1: fighting yesterday's war on inflation. And moreover, I would add

487
00:24:53,200 --> 00:24:55,600
Speaker 1: there's certain components of inflation that have been doing some

488
00:24:55,600 --> 00:24:57,760
Speaker 1: pretty heavy lifting that the FED has zero ability to

489
00:24:57,800 --> 00:25:00,719
Speaker 1: control UM. Whether that's food or energy, things that are

490
00:25:00,720 --> 00:25:03,080
Speaker 1: obviously now receding to some extent. But I think about

491
00:25:03,119 --> 00:25:05,840
Speaker 1: some of the inflation components over the last month or two,

492
00:25:06,280 --> 00:25:11,080
Speaker 1: like UH auto insurance or or our car repair. I

493
00:25:11,119 --> 00:25:13,000
Speaker 1: know that might sound like small, these small little things

494
00:25:13,240 --> 00:25:15,640
Speaker 1: they added like a tenth, right, they added a tenth

495
00:25:15,720 --> 00:25:17,920
Speaker 1: or more UM to the headline, on to the month

496
00:25:17,920 --> 00:25:20,840
Speaker 1: on month gain. UM. That's an enormous number that again,

497
00:25:20,880 --> 00:25:23,080
Speaker 1: the FEED is no ability to control. People went out

498
00:25:23,080 --> 00:25:25,439
Speaker 1: and bought a bunch of used cars. They are breaking

499
00:25:25,480 --> 00:25:27,679
Speaker 1: down and they need more insurance. I mean, what does

500
00:25:27,760 --> 00:25:29,560
Speaker 1: what can the FED do about that? So I just

501
00:25:29,600 --> 00:25:31,160
Speaker 1: think the FED has to be honest about the things

502
00:25:31,160 --> 00:25:33,240
Speaker 1: that it can cannot control. Tell I want to finish

503
00:25:33,240 --> 00:25:35,960
Speaker 1: out with this. The federal seven with FED funds pakes

504
00:25:36,240 --> 00:25:39,359
Speaker 1: what does it pake for the team over Ambi's sake? Yeah,

505
00:25:39,400 --> 00:25:41,600
Speaker 1: so we we think you get to the midpoint, it

506
00:25:41,640 --> 00:25:44,239
Speaker 1: would be three three three point three sevent five. So

507
00:25:44,280 --> 00:25:47,280
Speaker 1: basically they hyked over the balance of of this year. Um,

508
00:25:47,320 --> 00:25:51,840
Speaker 1: we think that that's uh reasonable still at this point. Um,

509
00:25:52,119 --> 00:25:53,800
Speaker 1: you know, I know it's probably sort of in line

510
00:25:53,840 --> 00:25:55,399
Speaker 1: with what the market is saying. I don't know if

511
00:25:55,400 --> 00:25:57,480
Speaker 1: I like that or not. Um, but that's where we

512
00:25:57,520 --> 00:25:59,760
Speaker 1: are right now. I tell myself, somebody catch up. Thank you,

513
00:25:59,800 --> 00:26:15,000
Speaker 1: said some Plocenic Capital Markets. The signal from our antenna

514
00:26:15,560 --> 00:26:21,159
Speaker 1: reached to Louisburg, Pennsylvania. Louisburg, PA. And long ago she

515
00:26:21,280 --> 00:26:24,440
Speaker 1: used to listen to the garbage we do every it's

516
00:26:24,560 --> 00:26:31,320
Speaker 1: our fault. You you were at Scenic Bucknell in school,

517
00:26:31,320 --> 00:26:34,359
Speaker 1: and you actually were listening to Bloomberg Radio. I was

518
00:26:34,400 --> 00:26:36,439
Speaker 1: actually watching Bloomberg TV when I woke up in the

519
00:26:36,440 --> 00:26:40,400
Speaker 1: morning because I couldn't read financial media, didn't understand economics.

520
00:26:41,720 --> 00:26:45,440
Speaker 1: So you used to watch Bloomberg I did. I did,

521
00:26:45,720 --> 00:26:47,840
Speaker 1: and so I learned a thing or two. Hopefully I'm

522
00:26:47,840 --> 00:26:50,800
Speaker 1: not disappointing you now. And so it's our folcus, it's

523
00:26:50,800 --> 00:26:53,680
Speaker 1: our faulty bassak here of course, looking at all of

524
00:26:53,720 --> 00:26:58,080
Speaker 1: our banking work, it truly has a wonderful pulse on

525
00:26:58,119 --> 00:27:01,959
Speaker 1: this island of Manhattan for all of you worldwide. How

526
00:27:02,000 --> 00:27:05,359
Speaker 1: nervous is it? What's the sweat factor this first week?

527
00:27:05,600 --> 00:27:08,119
Speaker 1: I don't think people realize how deep some of the

528
00:27:08,160 --> 00:27:10,600
Speaker 1: cuts can start to get because on one hand, yes,

529
00:27:10,680 --> 00:27:12,840
Speaker 1: of course bonuses are going to be down this year,

530
00:27:12,840 --> 00:27:17,400
Speaker 1: and many many businesses, so many businesses have stalled very dramatically.

531
00:27:17,560 --> 00:27:21,359
Speaker 1: I p O S Spacks Remember Spack bankers were being

532
00:27:21,440 --> 00:27:25,080
Speaker 1: hired left and right last year. Even debt underwriting has

533
00:27:25,240 --> 00:27:29,480
Speaker 1: dramatically slowed down, and M and A has also slowed down.

534
00:27:29,600 --> 00:27:32,280
Speaker 1: So of course bonuses will be down. But the question

535
00:27:32,320 --> 00:27:35,119
Speaker 1: now becomes job cuts because you have a lot of banks,

536
00:27:35,119 --> 00:27:38,280
Speaker 1: like credit suites that are an enormous amount of pressure

537
00:27:38,760 --> 00:27:41,119
Speaker 1: and they you know, they are scooped. This morning from

538
00:27:41,119 --> 00:27:44,200
Speaker 1: Bloomberg was that they're discussing thousands of job cuts globally.

539
00:27:44,240 --> 00:27:48,600
Speaker 1: But are you equating the challenges of American Wall Street

540
00:27:49,119 --> 00:27:52,879
Speaker 1: with the huge realities of Zurk. Yes, because Credit Sweet

541
00:27:52,920 --> 00:27:54,920
Speaker 1: is a huge US bank as well, and not in

542
00:27:55,000 --> 00:27:57,439
Speaker 1: wealth went management, but yes, in investment banking they were

543
00:27:57,480 --> 00:27:59,600
Speaker 1: top ten. So I can get a seat at eleven

544
00:27:59,680 --> 00:28:02,480
Speaker 1: fine down there at the back end of Madison Avenue. Listen.

545
00:28:02,560 --> 00:28:05,800
Speaker 1: The interesting thing about this, too is every conversation we

546
00:28:05,840 --> 00:28:09,360
Speaker 1: have on background with executives is yes, that normal attriction

547
00:28:09,440 --> 00:28:11,200
Speaker 1: will probably come back at the end of the year,

548
00:28:11,240 --> 00:28:15,480
Speaker 1: that five percent, calling that usual. The question this year

549
00:28:15,840 --> 00:28:20,680
Speaker 1: is that four or five become ten. That's a possibility

550
00:28:20,840 --> 00:28:23,280
Speaker 1: if things continue to go south for the rest of

551
00:28:23,320 --> 00:28:25,800
Speaker 1: the year, and it's a reality that. Remember, there's playing

552
00:28:25,840 --> 00:28:28,840
Speaker 1: offense and there's playing defense. And if you're an investment bank,

553
00:28:29,240 --> 00:28:31,840
Speaker 1: you're playing you're gonna want to play offense, and you're

554
00:28:31,840 --> 00:28:35,600
Speaker 1: gonna want to prepare for a tough time. As I remember,

555
00:28:35,760 --> 00:28:37,760
Speaker 1: A good example of this is Morgan Stanley. Remember a

556
00:28:37,800 --> 00:28:40,880
Speaker 1: couple of years ago they started cutting jobs before things

557
00:28:40,920 --> 00:28:44,120
Speaker 1: got bad, so that they would have capital to deploy

558
00:28:44,160 --> 00:28:46,880
Speaker 1: into markets, so that they would have the ability to

559
00:28:46,960 --> 00:28:50,120
Speaker 1: hire in other areas if they needed to. People like

560
00:28:50,200 --> 00:28:52,880
Speaker 1: to get prepared. Only you were just sitting here in

561
00:28:52,920 --> 00:28:55,280
Speaker 1: our Bloomberg, in our active studio, I'm gonna say, nine

562
00:28:55,320 --> 00:28:59,160
Speaker 1: months ago, twelve months of recording about how these investment

563
00:28:59,160 --> 00:29:01,280
Speaker 1: banks couldn't hire enough people, how they couldn't pay their

564
00:29:01,320 --> 00:29:04,360
Speaker 1: junior people enough, raising their pay three or four times

565
00:29:04,360 --> 00:29:08,000
Speaker 1: in the course of a year, which I've never seen before.

566
00:29:08,640 --> 00:29:11,440
Speaker 1: Now it's exactly opposite. I mean, it just kind of

567
00:29:12,040 --> 00:29:14,200
Speaker 1: confirmed my BELI having worked on Wall Street for twenty

568
00:29:14,200 --> 00:29:16,840
Speaker 1: five years and maybe one of the worst managed businesses.

569
00:29:17,480 --> 00:29:19,120
Speaker 1: I don't know that it's worst managed. I think you

570
00:29:19,160 --> 00:29:20,520
Speaker 1: have to prepare on Wall Street for it to be

571
00:29:20,520 --> 00:29:26,200
Speaker 1: a volatile business, right are you lecturing? Mr Sweeney? Take

572
00:29:26,320 --> 00:29:29,479
Speaker 1: I need some help here, because for a whole my

573
00:29:29,480 --> 00:29:33,200
Speaker 1: whole career is just managing the bonus expectations, which Tom,

574
00:29:33,240 --> 00:29:36,320
Speaker 1: You're right, they started in when you got back from

575
00:29:36,400 --> 00:29:39,520
Speaker 1: Labor Day. Your every conversation you had around the water

576
00:29:39,560 --> 00:29:42,840
Speaker 1: cooler was about bonus bonus out of February and suggesting

577
00:29:42,880 --> 00:29:44,560
Speaker 1: this year is going to start in, Well, let's go

578
00:29:44,560 --> 00:29:47,520
Speaker 1: to what Paul was talking about, which is the junior bankers,

579
00:29:47,600 --> 00:29:49,479
Speaker 1: and we said good morning to all of them. Are

580
00:29:49,480 --> 00:29:52,520
Speaker 1: studying for cf A level four right now, no question

581
00:29:52,560 --> 00:29:56,760
Speaker 1: about it. To review mortals used to get eighty and

582
00:29:56,800 --> 00:29:58,840
Speaker 1: then they went to one hundred, and then there was

583
00:29:58,880 --> 00:30:02,720
Speaker 1: a salary war, right yes. And it's so funny. This

584
00:30:02,760 --> 00:30:05,800
Speaker 1: is kind of like an insider baseball a thing going on,

585
00:30:07,520 --> 00:30:10,600
Speaker 1: and we can get insider baseball. It's funny because last

586
00:30:10,640 --> 00:30:14,080
Speaker 1: year Liquidity, a Meme company, had started to break a

587
00:30:14,080 --> 00:30:16,640
Speaker 1: lot of that news about the junior banker salaries. They

588
00:30:16,680 --> 00:30:20,960
Speaker 1: themselves hired somebody, so there are two employees for this company.

589
00:30:21,040 --> 00:30:23,600
Speaker 1: That employee now split off on his own. You're still

590
00:30:23,640 --> 00:30:26,680
Speaker 1: seeing young people split off on their own, a lot

591
00:30:26,720 --> 00:30:30,239
Speaker 1: of realities about not only the pay not being what

592
00:30:30,320 --> 00:30:32,719
Speaker 1: they would have liked, but also the perks being taken

593
00:30:32,760 --> 00:30:35,640
Speaker 1: away post pandemic. And now when I speak to young

594
00:30:35,920 --> 00:30:38,240
Speaker 1: people on Wall Street, not only are they complaining about

595
00:30:38,240 --> 00:30:40,600
Speaker 1: the perks and the ability not to just kind of

596
00:30:40,720 --> 00:30:44,840
Speaker 1: leave and join a Meme stock company, they also are

597
00:30:44,880 --> 00:30:47,920
Speaker 1: complaining about the fact that they might need to choose

598
00:30:47,920 --> 00:30:51,520
Speaker 1: a new career because the hiring classes from you know,

599
00:30:51,720 --> 00:30:54,280
Speaker 1: analysts are not being promoted as quickly in terms, are

600
00:30:54,280 --> 00:30:58,560
Speaker 1: not being hired as often already already because Paul, what

601
00:30:58,560 --> 00:31:01,560
Speaker 1: what what Ernali does on stands the perks when you

602
00:31:01,600 --> 00:31:05,560
Speaker 1: and I started was if there were ten pizzas, you

603
00:31:05,600 --> 00:31:09,760
Speaker 1: could get a piece of pepperoni, and that exactly. The

604
00:31:09,760 --> 00:31:12,040
Speaker 1: pizzas came in around eight o'clock at night, and you're

605
00:31:12,040 --> 00:31:14,360
Speaker 1: the anchoring here. People were in the pandemic and getting

606
00:31:14,360 --> 00:31:16,880
Speaker 1: free lunch and dinner. And if they came in and

607
00:31:16,920 --> 00:31:19,680
Speaker 1: now they are not, they were getting their ubers paid for.

608
00:31:19,960 --> 00:31:23,440
Speaker 1: Now they are not. And so there's a lot of

609
00:31:23,800 --> 00:31:26,440
Speaker 1: So what's the feeling as to I mean, now we've

610
00:31:26,520 --> 00:31:28,920
Speaker 1: kind of got the markets rallying here over the last

611
00:31:29,280 --> 00:31:31,560
Speaker 1: month and a half or so. I'm wondering what the

612
00:31:31,640 --> 00:31:33,440
Speaker 1: rhetoric is going to be from some of these Wall

613
00:31:33,440 --> 00:31:36,040
Speaker 1: Street executives when they do speak, whether it's at a

614
00:31:36,120 --> 00:31:39,120
Speaker 1: conference coming up here in the fall or some earnings.

615
00:31:39,200 --> 00:31:41,720
Speaker 1: I mean, how dour can they be? We've kind of

616
00:31:41,720 --> 00:31:43,760
Speaker 1: got the markets rallying off of this bottom here. Yeah,

617
00:31:43,760 --> 00:31:46,600
Speaker 1: I sound like a total perma bear. However, you know

618
00:31:47,160 --> 00:31:51,920
Speaker 1: it's called the house of someone's got to do it.

619
00:31:52,360 --> 00:31:55,600
Speaker 1: And if you look at credit employees, if they cut

620
00:31:55,600 --> 00:31:58,640
Speaker 1: thousands of employees and get to what forty nine thousand,

621
00:31:59,080 --> 00:32:02,800
Speaker 1: they still have are very large banks. And so the

622
00:32:02,880 --> 00:32:05,560
Speaker 1: question is what kind of cuts are we really looking

623
00:32:05,600 --> 00:32:11,640
Speaker 1: at these executives normal attrition? They got to go way

624
00:32:11,680 --> 00:32:14,320
Speaker 1: past Yeah, I mean, actually will you could argue that.

625
00:32:14,360 --> 00:32:15,880
Speaker 1: I mean, what we've seen, it seems like over the

626
00:32:15,920 --> 00:32:19,440
Speaker 1: last decade plus is that the big US banks get stronger.

627
00:32:19,680 --> 00:32:24,440
Speaker 1: USUTA bank stutsa banks an there's I gotta get to

628
00:32:24,480 --> 00:32:26,640
Speaker 1: sing because she is so up to speed on everything

629
00:32:27,360 --> 00:32:29,680
Speaker 1: going on. We talked to Mr Zelter today at Apollo

630
00:32:30,400 --> 00:32:33,160
Speaker 1: and they have done a transaction to acquire with the

631
00:32:33,280 --> 00:32:36,480
Speaker 1: team one of the most romantic companies in the world,

632
00:32:36,720 --> 00:32:42,280
Speaker 1: Atlas Cargo. Atlas is the largest owner of the Miracle

633
00:32:42,600 --> 00:32:45,960
Speaker 1: other than the space program of my life, the Boeing seven.

634
00:32:47,280 --> 00:32:51,000
Speaker 1: Paul and I watch Cathay Pacific come in from Anchorage

635
00:32:51,040 --> 00:32:54,760
Speaker 1: to JFK, you know, on our iPhones and all that.

636
00:32:55,200 --> 00:32:59,920
Speaker 1: But that's an example Shenali about private enterprises falling into

637
00:33:00,040 --> 00:33:02,960
Speaker 1: what used to be normal big company for bringing it

638
00:33:03,120 --> 00:33:05,760
Speaker 1: up to because private credit markets, you know, if you

639
00:33:05,840 --> 00:33:08,680
Speaker 1: think about it over at Carlisle, they're a m the

640
00:33:08,760 --> 00:33:12,120
Speaker 1: assets under management and credit alone, where Apolo is the biggest,

641
00:33:12,720 --> 00:33:16,800
Speaker 1: doubled in six months. So they went from seventies some

642
00:33:16,960 --> 00:33:20,120
Speaker 1: billion to a hundred forties some billion within six months.

643
00:33:20,200 --> 00:33:23,240
Speaker 1: Why are they boxing out the big firms from transactions

644
00:33:23,320 --> 00:33:27,040
Speaker 1: like buying Atlas? It's so simple big banks these days

645
00:33:27,200 --> 00:33:30,000
Speaker 1: in credit markets, in private equity markets, they are subjected

646
00:33:30,040 --> 00:33:33,240
Speaker 1: things like Vulcar. They are subject to other capital requirements.

647
00:33:33,320 --> 00:33:36,160
Speaker 1: The FED has clamped down and so when the economic

648
00:33:36,200 --> 00:33:38,960
Speaker 1: gets into environment gets tough. By the way, they have

649
00:33:39,520 --> 00:33:41,480
Speaker 1: tons of leverage loans on their books right now in

650
00:33:41,480 --> 00:33:43,760
Speaker 1: which they're taking you know, an estimated billion to two

651
00:33:43,800 --> 00:33:46,160
Speaker 1: billion dollars with the losses. There's still losses. There a

652
00:33:46,240 --> 00:33:48,760
Speaker 1: brain drain from a given big bank. I'm gonna pick

653
00:33:49,600 --> 00:33:52,600
Speaker 1: Bank of America over to people like Apollo big time.

654
00:33:52,680 --> 00:33:54,480
Speaker 1: But I have to say, even on the buy side,

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00:33:54,520 --> 00:33:57,360
Speaker 1: there is some pressure private equity marks. In the second

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00:33:57,400 --> 00:34:00,200
Speaker 1: quarter we're down uh And so with the was a

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00:34:00,240 --> 00:34:03,440
Speaker 1: massive jargon what's a private equity mark? So when you're

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00:34:03,480 --> 00:34:06,720
Speaker 1: holding private companies there's usually magic involved where you say

659
00:34:06,760 --> 00:34:10,640
Speaker 1: it's privately held, it's not publicly traded. We don't lose

660
00:34:10,719 --> 00:34:13,319
Speaker 1: money because of that. But that's not true. And now

661
00:34:13,400 --> 00:34:15,480
Speaker 1: you're seeing that, and you see it. You know, look

662
00:34:15,520 --> 00:34:18,800
Speaker 1: at the hedge funds. Tiger Global was a huge attractor

663
00:34:18,840 --> 00:34:22,840
Speaker 1: of talent. Chase Coleman. Michael Barr walks in and she

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00:34:23,000 --> 00:34:30,680
Speaker 1: just she just knows to mention the Detroit Tigers. Tiger Okay,

665
00:34:31,560 --> 00:34:35,839
Speaker 1: they're they're losing worse than the Detroit Tigers. We gotta

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00:34:35,920 --> 00:34:37,719
Speaker 1: leave it. Thank you for the brief. Here it's a

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Speaker 1: September brief, folks in early Augustali bask This is the

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00:34:44,000 --> 00:34:48,640
Speaker 1: Bloomberg Surveillance Podcast. Thanks for listening. Join us live weekdays

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00:34:48,719 --> 00:34:52,120
Speaker 1: from seven to ten am Eastern on Bloomberg Radio and

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00:34:52,280 --> 00:34:56,080
Speaker 1: on Bloomberg Television each day from six to nine am

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00:34:56,600 --> 00:35:00,080
Speaker 1: for insight from the best and economics, finance, invest and

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00:35:00,480 --> 00:35:06,960
Speaker 1: international relations. And subscribe to the Surveillance podcast on Apple podcast, SoundCloud,

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00:35:07,160 --> 00:35:10,719
Speaker 1: Bloomberg dot com, and of course on the terminal. I'm

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00:35:10,800 --> 00:35:13,440
Speaker 1: Tom keane In. This is Bloomberg