1 00:00:00,840 --> 00:00:04,000 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 2 00:00:04,040 --> 00:00:05,280 Speaker 1: my co host Matt Miller. 3 00:00:05,640 --> 00:00:09,600 Speaker 2: Every business day, we bring you interviews from CEOs, market pros, 4 00:00:09,720 --> 00:00:13,600 Speaker 2: and Bloomberg experts, along with essential market moving news. 5 00:00:14,160 --> 00:00:17,279 Speaker 1: Find the Bloomberg Markets Podcast on Apple Podcasts or wherever 6 00:00:17,360 --> 00:00:20,520 Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast. 7 00:00:21,120 --> 00:00:23,119 Speaker 1: If I were to come back and do another career 8 00:00:23,200 --> 00:00:26,439 Speaker 1: on Wall Street, I would think about private credit. I'm 9 00:00:26,440 --> 00:00:30,080 Speaker 1: telling you, man, the money going there and it's just 10 00:00:30,240 --> 00:00:32,360 Speaker 1: extraordinary and some of them, and there's so many smart 11 00:00:32,360 --> 00:00:35,240 Speaker 1: people out there doing private credit. And I was credit 12 00:00:35,280 --> 00:00:37,360 Speaker 1: trained by the Chase Manhattan Bank, so I know credit 13 00:00:37,440 --> 00:00:40,000 Speaker 1: as well as anybody. Our next guest knows it pretty 14 00:00:40,040 --> 00:00:42,080 Speaker 1: well too. Right to check in with Raj Donda. He's 15 00:00:42,120 --> 00:00:44,479 Speaker 1: a partner and global head of wealth management at Aris 16 00:00:44,600 --> 00:00:45,600 Speaker 1: Wealth Management. 17 00:00:45,920 --> 00:00:48,720 Speaker 3: Rag thanks so much for joining us here here at Bloomberg. 18 00:00:49,080 --> 00:00:51,920 Speaker 1: Talk to us about private credit at Aris, because I 19 00:00:52,000 --> 00:00:55,040 Speaker 1: knew you guys just lost launched a pretty big fund. 20 00:00:55,360 --> 00:00:59,160 Speaker 4: Yeah, I'm happy to And I think what's unique about 21 00:00:59,200 --> 00:01:01,400 Speaker 4: Aris is we've been doing this as longer, longer than 22 00:01:01,400 --> 00:01:04,600 Speaker 4: anyone else. The firm was founded as a private credit 23 00:01:04,600 --> 00:01:08,560 Speaker 4: shop in nineteen ninety seven, and that track record and 24 00:01:08,600 --> 00:01:12,920 Speaker 4: the breath of the team has really helped us capitalize 25 00:01:12,959 --> 00:01:16,200 Speaker 4: on the exponential growth in private credit that you mentioned. 26 00:01:17,240 --> 00:01:20,600 Speaker 4: When you see the volatility in the public markets, the 27 00:01:20,680 --> 00:01:25,960 Speaker 4: highly correlated assets, it really drives people, particularly who want 28 00:01:26,000 --> 00:01:28,720 Speaker 4: to be defensive today. 29 00:01:28,080 --> 00:01:30,319 Speaker 5: To the asset class within private credit. 30 00:01:30,360 --> 00:01:33,000 Speaker 4: Direct lending is a particular sweet spot of the firm, 31 00:01:33,040 --> 00:01:36,840 Speaker 4: and based on your background to Chase, you can appreciate 32 00:01:36,920 --> 00:01:43,399 Speaker 4: that origination is a key driver and a differentiator. We 33 00:01:43,560 --> 00:01:46,960 Speaker 4: lend to three four thousand companies and have a lot 34 00:01:46,959 --> 00:01:52,240 Speaker 4: of insight into the real economy that positions us well 35 00:01:52,280 --> 00:01:56,000 Speaker 4: really across the firm, but in particular helps us build 36 00:01:56,080 --> 00:02:00,840 Speaker 4: very diverse portfolios within the direct lending and private credit business. 37 00:02:01,680 --> 00:02:05,040 Speaker 6: About your clients are these more high net worth individuals. 38 00:02:05,240 --> 00:02:07,760 Speaker 4: So Areas manages about three hundred and sixty billion of 39 00:02:07,880 --> 00:02:14,600 Speaker 4: client assets, both institutional clients and high net worth individuals. 40 00:02:15,520 --> 00:02:22,720 Speaker 4: The firm delivers both traded and non traded opportunities to participate, 41 00:02:22,760 --> 00:02:28,240 Speaker 4: particularly for high net worth individuals, and the growth is 42 00:02:28,240 --> 00:02:32,359 Speaker 4: certainly coming both as the largest institutions globally want to 43 00:02:32,400 --> 00:02:34,760 Speaker 4: have a higher allocation to private credit. Maybe they were, 44 00:02:35,560 --> 00:02:37,760 Speaker 4: you know, an eight or ten percent allocation. They want 45 00:02:37,800 --> 00:02:41,000 Speaker 4: to take that to a fifteen or twenty. It's the 46 00:02:41,200 --> 00:02:44,440 Speaker 4: high net worth individual where they really didn't have access 47 00:02:44,480 --> 00:02:46,160 Speaker 4: and so maybe they had a four or five percent 48 00:02:46,200 --> 00:02:50,720 Speaker 4: allocation to the private markets. That allocation could double triple 49 00:02:51,000 --> 00:02:53,239 Speaker 4: in the next five years, and that's where we see 50 00:02:53,240 --> 00:02:53,880 Speaker 4: a lot of growth. 51 00:02:54,040 --> 00:02:57,200 Speaker 1: You know, I probably just became more fully aware of 52 00:02:57,280 --> 00:02:59,560 Speaker 1: the growth of private credit, maybe just in the last 53 00:02:59,560 --> 00:03:02,799 Speaker 1: four or five years. And they're the pitch that made 54 00:03:02,800 --> 00:03:04,920 Speaker 1: sense to me was you're not gett any yield out 55 00:03:04,960 --> 00:03:06,799 Speaker 1: there in the marketplace. You come to private credit, I'll 56 00:03:06,800 --> 00:03:09,120 Speaker 1: get you yield. Well, now I can park myself in 57 00:03:09,400 --> 00:03:11,519 Speaker 1: two and a half year treasury. I mean, to your treasury, 58 00:03:11,520 --> 00:03:13,840 Speaker 1: you get four and a half percent. So does private 59 00:03:13,880 --> 00:03:18,600 Speaker 1: credits still have that pitch that we have superior yield? 60 00:03:19,160 --> 00:03:23,480 Speaker 4: So private credit adds something even beyond that. It offers 61 00:03:23,880 --> 00:03:26,839 Speaker 4: a steady stream of income and that's crucial. But it's 62 00:03:26,880 --> 00:03:29,800 Speaker 4: floating rate. Ninety to ninety five percent of the assets 63 00:03:30,120 --> 00:03:32,800 Speaker 4: the loans are floating rate. So in the last year 64 00:03:32,840 --> 00:03:36,320 Speaker 4: and a half with this with ten consecutive rate increases 65 00:03:36,320 --> 00:03:38,000 Speaker 4: and a five hundred base point move in the risk 66 00:03:38,040 --> 00:03:41,480 Speaker 4: free rate. The base rate is higher, and private credit 67 00:03:41,480 --> 00:03:47,400 Speaker 4: has benefited from that. You also see banks lending less, 68 00:03:47,720 --> 00:03:52,840 Speaker 4: and so firms like areas can have real pricing power 69 00:03:52,840 --> 00:03:57,400 Speaker 4: in the markets and it allows us to earn higher spreads. 70 00:03:57,280 --> 00:03:59,080 Speaker 3: And higher fees for our clients. 71 00:03:59,640 --> 00:04:05,080 Speaker 4: So we think, if you know, private equity started the 72 00:04:05,120 --> 00:04:09,320 Speaker 4: growth in alternatives twenty thirty years ago, and private real 73 00:04:09,440 --> 00:04:13,280 Speaker 4: estate played a key role in uncorrelated income maybe in 74 00:04:13,320 --> 00:04:16,479 Speaker 4: the last five or six years, the exponential growth for 75 00:04:16,600 --> 00:04:19,400 Speaker 4: private credit going forward is right in front of us 76 00:04:19,440 --> 00:04:23,640 Speaker 4: because it's floating rate, it's uncorrelated. These are double digit 77 00:04:23,839 --> 00:04:26,719 Speaker 4: returns now you're able to earn and you're senior in 78 00:04:26,720 --> 00:04:31,400 Speaker 4: the capital structure. It's a defensive play, but particularly with 79 00:04:31,440 --> 00:04:33,840 Speaker 4: an aging population, really valuable, and to. 80 00:04:33,760 --> 00:04:36,640 Speaker 6: Paul's point when he was talking about yields, obviously investors 81 00:04:36,680 --> 00:04:38,159 Speaker 6: being able to get a very. 82 00:04:37,960 --> 00:04:38,880 Speaker 7: Different portion of that. 83 00:04:39,040 --> 00:04:40,920 Speaker 6: When you think about what it was like coming out 84 00:04:40,920 --> 00:04:43,039 Speaker 6: of the housing crisis, and especially compared to the last 85 00:04:43,040 --> 00:04:45,599 Speaker 6: decade or so in not having say four or five 86 00:04:45,600 --> 00:04:48,040 Speaker 6: percent or even higher type yield there, what's your view 87 00:04:48,080 --> 00:04:50,479 Speaker 6: as far as we do have that fed meeting next week, 88 00:04:50,760 --> 00:04:53,120 Speaker 6: even if they do potentially pause or signal that are 89 00:04:53,160 --> 00:04:56,359 Speaker 6: you expecting if yields continue to stay elevated, if the 90 00:04:56,400 --> 00:04:59,040 Speaker 6: FED just kind of coast there before cutting rates, does 91 00:04:59,080 --> 00:05:02,880 Speaker 6: that still bring in investors because yields would potentially still 92 00:05:02,880 --> 00:05:05,320 Speaker 6: be a little bit elevated until potentially whenever we would 93 00:05:05,360 --> 00:05:06,599 Speaker 6: see cuts at some point. 94 00:05:07,440 --> 00:05:10,960 Speaker 4: So the hallmark of the private markets, in private credit 95 00:05:11,000 --> 00:05:14,960 Speaker 4: in particular, is that it's flexible, long duration capital. And 96 00:05:15,000 --> 00:05:19,039 Speaker 4: so when the FED is uh, you know, meeting to 97 00:05:19,160 --> 00:05:23,040 Speaker 4: meeting making decisions about rate policy, it's on our minds 98 00:05:23,080 --> 00:05:25,239 Speaker 4: and and the firm is very aware of the macro, 99 00:05:25,760 --> 00:05:28,760 Speaker 4: but we focus on the micro and we focus on 100 00:05:28,839 --> 00:05:33,760 Speaker 4: credit quality. And so yes, of course the FED meeting 101 00:05:33,800 --> 00:05:37,280 Speaker 4: will will bring another set of questions around has the 102 00:05:37,360 --> 00:05:40,120 Speaker 4: terminal rate? Have we achieved a terminal rate? Have we 103 00:05:40,279 --> 00:05:43,680 Speaker 4: have we settled at at at at a level that 104 00:05:43,720 --> 00:05:45,720 Speaker 4: allows more buyers and sellers. 105 00:05:45,320 --> 00:05:47,680 Speaker 3: In the public or private markets. We'd like to see that. 106 00:05:48,320 --> 00:05:49,080 Speaker 5: But even if. 107 00:05:49,000 --> 00:05:53,120 Speaker 4: There's still concern around when and where the FED lands, 108 00:05:53,839 --> 00:05:57,880 Speaker 4: it remains an opportunity to source. 109 00:05:59,040 --> 00:06:00,000 Speaker 3: Attractive opportunity. 110 00:06:00,520 --> 00:06:04,720 Speaker 4: You know, the companies stay private much longer than they 111 00:06:04,720 --> 00:06:08,159 Speaker 4: ever used to, and so the companies that we work 112 00:06:08,240 --> 00:06:12,560 Speaker 4: with middle markets companies, we also finance assets, whether they're 113 00:06:12,600 --> 00:06:16,440 Speaker 4: infrastructure or real estate, and so the breadth of the 114 00:06:17,480 --> 00:06:21,839 Speaker 4: of the private credit market has really given us so 115 00:06:21,920 --> 00:06:24,400 Speaker 4: many places to be that we keep an eye on 116 00:06:24,440 --> 00:06:28,640 Speaker 4: the FED meetings, but our real focus is originating attractive 117 00:06:28,680 --> 00:06:32,160 Speaker 4: opportunities that today banks are less likely to do. 118 00:06:32,520 --> 00:06:33,800 Speaker 3: Talk to us about credit quality. 119 00:06:33,800 --> 00:06:38,680 Speaker 1: Here borrowers have seen their variable rate borrowings just skyrocket 120 00:06:38,680 --> 00:06:42,039 Speaker 1: with the again the five hundred paces point increasing rates 121 00:06:42,040 --> 00:06:44,320 Speaker 1: that you mentioned. What are you guys seeing in your 122 00:06:44,320 --> 00:06:48,120 Speaker 1: portfolio in terms of credit quality, So we we look 123 00:06:49,160 --> 00:06:52,160 Speaker 1: closely at it, of course, off over across a broad 124 00:06:52,200 --> 00:06:56,400 Speaker 1: number of names. In fact, in our corporate portfolio after 125 00:06:56,440 --> 00:06:59,680 Speaker 1: the first quarter we reported eight percent EBIT DOUG growth 126 00:07:00,120 --> 00:07:03,520 Speaker 1: amongst the portfolio companies just a year ago that. 127 00:07:03,680 --> 00:07:04,159 Speaker 3: We lend to. 128 00:07:04,279 --> 00:07:10,520 Speaker 4: So the cash flow is there. But I think ultimately 129 00:07:10,600 --> 00:07:15,440 Speaker 4: these rate hikes are a mechanism to de lever the economy, 130 00:07:15,640 --> 00:07:19,280 Speaker 4: and it's doing just that. So the rate is higher, 131 00:07:19,680 --> 00:07:22,440 Speaker 4: the debt services higher, so the quantum of debt comes down, 132 00:07:23,240 --> 00:07:29,000 Speaker 4: and we're very happy to be lending to companies and 133 00:07:29,080 --> 00:07:32,520 Speaker 4: against assets that will take on less debt but pay 134 00:07:32,560 --> 00:07:36,840 Speaker 4: a higher rate. So it's really a better position than 135 00:07:36,840 --> 00:07:38,960 Speaker 4: it would have been prior to the move in rates. 136 00:07:39,000 --> 00:07:42,000 Speaker 4: And you know, there will be some stresses that come 137 00:07:42,040 --> 00:07:44,760 Speaker 4: out of the sharp move in rates, and we take 138 00:07:44,760 --> 00:07:50,880 Speaker 4: a very granular, bottoms up look at the credit quality. 139 00:07:51,920 --> 00:07:53,960 Speaker 5: Areas has you. 140 00:07:53,880 --> 00:07:56,480 Speaker 4: Know, across this direct lending platform since two thousand and 141 00:07:56,480 --> 00:08:01,840 Speaker 4: four delivered at twelve percent IRR with really negligible default 142 00:08:02,160 --> 00:08:02,760 Speaker 4: and losses. 143 00:08:02,840 --> 00:08:04,720 Speaker 5: So we're pretty proud of that. 144 00:08:05,760 --> 00:08:08,280 Speaker 6: We really have about twenty seconds left, but we're the 145 00:08:08,280 --> 00:08:10,320 Speaker 6: hottest areas within private credit right now. 146 00:08:11,680 --> 00:08:14,840 Speaker 4: Well, so I mentioned that within private credit, direct lending 147 00:08:14,920 --> 00:08:19,280 Speaker 4: is an area that we're as active as anyone and 148 00:08:19,600 --> 00:08:23,360 Speaker 4: as long a tenure as anyone. I also think in 149 00:08:23,440 --> 00:08:28,000 Speaker 4: alternative credit, we're seeing significant demand from institutional and high 150 00:08:28,000 --> 00:08:32,200 Speaker 4: net worth clients. They want to have exposure to some 151 00:08:32,240 --> 00:08:36,640 Speaker 4: of the assets that they can use to finance attractive opportunities. 152 00:08:37,480 --> 00:08:40,360 Speaker 4: So direct lending, alternative credit, those are key areas that 153 00:08:40,679 --> 00:08:41,720 Speaker 4: we see a lot of interest in. 154 00:08:42,040 --> 00:08:44,120 Speaker 3: Roger, thanks so much for joining us. Really appreciate it. 155 00:08:44,280 --> 00:08:46,840 Speaker 1: Roger Donde, he's a partner in global head of wealth 156 00:08:46,880 --> 00:08:49,960 Speaker 1: management at Areas Wealth Management, talking a lot about private credit, 157 00:08:50,040 --> 00:08:52,000 Speaker 1: and as Roger mentioned, they've been in that business a 158 00:08:52,040 --> 00:08:54,160 Speaker 1: long time and it just again I've been on Wall 159 00:08:54,160 --> 00:08:55,920 Speaker 1: Street for thirty years and to see the growth of 160 00:08:55,920 --> 00:08:59,040 Speaker 1: this business for me just appreciating it over the last 161 00:08:59,040 --> 00:09:00,400 Speaker 1: you know, five plus. 162 00:09:00,040 --> 00:09:01,319 Speaker 3: Years, it's just been extraordinary. 163 00:09:01,360 --> 00:09:04,240 Speaker 1: So a great it's where a lot of capital is 164 00:09:04,280 --> 00:09:06,440 Speaker 1: going to private credit, so we like to pay attention 165 00:09:06,520 --> 00:09:06,680 Speaker 1: to that. 166 00:09:08,760 --> 00:09:12,160 Speaker 8: You're listening to the teenth Ken's Are Live program Bloomberg 167 00:09:12,200 --> 00:09:15,560 Speaker 8: Markets weekdays at ten am Eastern on Bloomberg dot com, 168 00:09:15,679 --> 00:09:18,800 Speaker 8: the iHeartRadio app, and the Bloomberg Business App, or listen 169 00:09:18,880 --> 00:09:20,920 Speaker 8: on demand wherever you get your podcast. 170 00:09:23,559 --> 00:09:26,640 Speaker 1: I was down the last few days down in Orlando 171 00:09:26,760 --> 00:09:29,920 Speaker 1: at the bny Mellon Insight conference and bring all their 172 00:09:30,600 --> 00:09:32,559 Speaker 1: ras together, and I'll tell you what I say that 173 00:09:32,679 --> 00:09:34,560 Speaker 1: to Maria Property, which was it was a great property 174 00:09:34,600 --> 00:09:36,760 Speaker 1: down there in Orlando. I was talking to some of 175 00:09:36,760 --> 00:09:40,000 Speaker 1: the people at the hotel packed hotel pre pandemic levels. 176 00:09:41,200 --> 00:09:44,240 Speaker 1: I was talking to the event people at BNY Mellon. 177 00:09:44,760 --> 00:09:47,320 Speaker 1: This was the biggest attendancy that they've had. So it 178 00:09:47,520 --> 00:09:49,640 Speaker 1: seems like people are I'm not sure where it is, 179 00:09:49,679 --> 00:09:50,880 Speaker 1: but it feels. 180 00:09:50,520 --> 00:09:52,520 Speaker 3: Like it's backed. So let's go to plane was packed. 181 00:09:52,600 --> 00:09:53,400 Speaker 3: Plane was packed. 182 00:09:53,480 --> 00:09:55,720 Speaker 1: I mean I just saw George Ferguson from Bloomberg Intelligence 183 00:09:55,720 --> 00:09:58,320 Speaker 1: go buy, so I gave him some primary research there 184 00:09:58,360 --> 00:09:59,920 Speaker 1: that the plane back was packed. 185 00:10:00,040 --> 00:10:02,600 Speaker 3: Brian Egger joints us here in New York. 186 00:10:02,600 --> 00:10:02,760 Speaker 6: Here. 187 00:10:02,800 --> 00:10:05,640 Speaker 1: He's a senior gaming and lodging analysts with Bloomberg Intelligence. 188 00:10:05,679 --> 00:10:07,680 Speaker 1: He's been doing this stuff for a long time. So 189 00:10:07,720 --> 00:10:10,640 Speaker 1: Brian talk to us about kind of the global lodging business. 190 00:10:10,640 --> 00:10:13,080 Speaker 1: Where are we kind of visa v twenty nineteen. 191 00:10:13,440 --> 00:10:16,320 Speaker 9: So for global lodging, I mean for most geographies, we 192 00:10:16,360 --> 00:10:20,480 Speaker 9: were really back above where we were in twenty nineteen 193 00:10:20,480 --> 00:10:22,560 Speaker 9: in terms of revenue available room. That was true for 194 00:10:22,600 --> 00:10:25,680 Speaker 9: the first quarter. What's notable is that that's in RevPAR 195 00:10:26,040 --> 00:10:30,240 Speaker 9: just forever for those for those in the know and 196 00:10:30,440 --> 00:10:33,280 Speaker 9: you know. So basically, we see luxury hotels catching up 197 00:10:33,280 --> 00:10:36,240 Speaker 9: with kind of the limited service that led the group 198 00:10:36,480 --> 00:10:39,880 Speaker 9: out of the pandemic. And at the same time, Asia 199 00:10:39,920 --> 00:10:42,280 Speaker 9: is kind of catching up with other regions too as 200 00:10:42,840 --> 00:10:44,280 Speaker 9: cross border travel resumes. 201 00:10:44,720 --> 00:10:46,520 Speaker 6: So what does that tell us if we're seeing that 202 00:10:46,960 --> 00:10:49,240 Speaker 6: improvement there in the luxury space as far as how 203 00:10:49,280 --> 00:10:50,840 Speaker 6: that relates to the economy. 204 00:10:51,880 --> 00:10:54,960 Speaker 9: I mean from a consumer usure discretion or spending perspective, 205 00:10:55,000 --> 00:10:57,680 Speaker 9: the economy for now is quite strong. Not only do 206 00:10:57,720 --> 00:11:01,280 Speaker 9: we see that in terms of luxury hotel bookings and demand, 207 00:11:01,280 --> 00:11:03,120 Speaker 9: but even in the cruise line sector, which I follow. 208 00:11:03,240 --> 00:11:06,880 Speaker 9: Related to this, we've seen very very strong bookings, particularly 209 00:11:06,920 --> 00:11:09,559 Speaker 9: for North American consumers. So you know, there's always a 210 00:11:09,640 --> 00:11:11,800 Speaker 9: risk of a second half slow down or recession. We're 211 00:11:11,800 --> 00:11:14,480 Speaker 9: wary of that, but generally speaking, at least through like 212 00:11:14,559 --> 00:11:18,839 Speaker 9: the first quarter, first half, the leisure discretionary consumer spending 213 00:11:18,880 --> 00:11:19,559 Speaker 9: has remained. 214 00:11:19,320 --> 00:11:22,760 Speaker 1: Quite robust, all right, So for the hotels, and I 215 00:11:22,800 --> 00:11:24,120 Speaker 1: guess it kind of goes to the you know, the 216 00:11:24,120 --> 00:11:26,920 Speaker 1: airlines as well, which we talk about with George ferguson 217 00:11:28,440 --> 00:11:30,920 Speaker 1: leisure versus business. Where are we kind of in that 218 00:11:31,280 --> 00:11:33,760 Speaker 1: mix for the hotels us to be pre pandemic. 219 00:11:33,840 --> 00:11:36,920 Speaker 9: Yeah, first time period, I would say that individual leisure 220 00:11:36,960 --> 00:11:40,600 Speaker 9: travel was really ahead of called individual business travel. That 221 00:11:40,640 --> 00:11:43,640 Speaker 9: took a little longer, but now that's so called transiit 222 00:11:43,760 --> 00:11:46,679 Speaker 9: or individual business travel or customer is also coming back. 223 00:11:47,000 --> 00:11:48,960 Speaker 9: And I think also big change too is we seem 224 00:11:49,000 --> 00:11:51,080 Speaker 9: to be a point where group bookings, this is group 225 00:11:51,120 --> 00:11:54,760 Speaker 9: business demand in places like Las Vegas, one of your favorites, 226 00:11:54,840 --> 00:11:58,959 Speaker 9: YEP is really back at pretty much a pre pandemic clip, 227 00:11:59,080 --> 00:12:01,400 Speaker 9: So you know, there's like always risks of a slow down, 228 00:12:01,440 --> 00:12:05,480 Speaker 9: but you know groups and group gatherings are are back 229 00:12:05,520 --> 00:12:05,960 Speaker 9: in the fray. 230 00:12:06,720 --> 00:12:08,760 Speaker 6: What's your take when it comes to you, because you 231 00:12:08,800 --> 00:12:11,760 Speaker 6: were talking about the cruise liners in particular, so we 232 00:12:11,760 --> 00:12:15,480 Speaker 6: always think about those names like Carnival Royal, Norwegian. I 233 00:12:15,520 --> 00:12:18,480 Speaker 6: don't qualanyed chat about have you been on the. 234 00:12:20,559 --> 00:12:21,079 Speaker 3: Business though? 235 00:12:22,720 --> 00:12:25,640 Speaker 6: Are we seeing their sales getting closer to that twenty 236 00:12:25,760 --> 00:12:28,280 Speaker 6: nineteen peak as far as seeing a rebound there in 237 00:12:28,320 --> 00:12:30,280 Speaker 6: that sort of space and segment with the consumer. 238 00:12:30,520 --> 00:12:32,000 Speaker 9: Yes, So I think at least if you look at 239 00:12:32,000 --> 00:12:35,520 Speaker 9: the consensus viewpoint, the street, if you will, expects twenty 240 00:12:35,640 --> 00:12:38,480 Speaker 9: twenty three sales for Carnival Royal in the region to 241 00:12:38,480 --> 00:12:41,480 Speaker 9: be about twelve percent higher than they were in twenty nineteen. 242 00:12:41,840 --> 00:12:46,120 Speaker 9: Now the margins are still wagging that pre pandemic benchmark somewhat, 243 00:12:46,520 --> 00:12:49,280 Speaker 9: but we're certainly getting back there. And the big catass, 244 00:12:49,320 --> 00:12:52,120 Speaker 9: of course, was that the fleet was based. The fleets 245 00:12:52,160 --> 00:12:57,960 Speaker 9: were basically shuttered for the duration of the pandemic, but 246 00:12:58,120 --> 00:13:00,840 Speaker 9: started to ring in state service last year and now 247 00:13:00,840 --> 00:13:02,120 Speaker 9: they are back in full capacity. 248 00:13:02,640 --> 00:13:05,880 Speaker 3: Talk to us about labor. I was thinking about this yesterday. 249 00:13:05,920 --> 00:13:08,320 Speaker 1: I'm sitting there doing my show in this huge convention 250 00:13:08,480 --> 00:13:12,120 Speaker 1: hall and there's you know, thousands of people there milling about, 251 00:13:12,160 --> 00:13:15,559 Speaker 1: and there were also a ton of Marriott employees who 252 00:13:15,559 --> 00:13:18,480 Speaker 1: were cleaning the you know, setting up for the meals, 253 00:13:18,480 --> 00:13:20,640 Speaker 1: cleaning the tables, doing I mean, just a. 254 00:13:20,640 --> 00:13:23,000 Speaker 3: Swarm of them, which was good to see. 255 00:13:23,760 --> 00:13:26,320 Speaker 1: Is that indicative that the hotels are doing a little 256 00:13:26,320 --> 00:13:27,600 Speaker 1: bit better with the labor situation? 257 00:13:27,640 --> 00:13:30,120 Speaker 9: Yeah, I think, you know, it comes up certainly anecdotally 258 00:13:30,160 --> 00:13:36,080 Speaker 9: across the travelature space that hotels that labor markets remained tight. 259 00:13:36,200 --> 00:13:39,760 Speaker 9: Certainly there's been some wage pressure, cost pressures that the 260 00:13:39,760 --> 00:13:42,480 Speaker 9: companies are mindful of the effects of inflation, labor and otherwise. 261 00:13:43,120 --> 00:13:45,320 Speaker 9: At the same time, of course, pricing has been quite 262 00:13:45,320 --> 00:13:48,360 Speaker 9: strong too, so we see some ability to affect cost 263 00:13:48,440 --> 00:13:51,960 Speaker 9: increases with pricing gains and your rev par increases in 264 00:13:52,000 --> 00:13:54,400 Speaker 9: the watching sector as well as yields in the crew sector. 265 00:13:54,720 --> 00:13:58,240 Speaker 6: Whatever we think about some of these travel and leisure 266 00:13:58,320 --> 00:14:01,760 Speaker 6: related type stocks, especially with China's reopening last fall, that 267 00:14:01,840 --> 00:14:04,920 Speaker 6: really gave a boost and supported those stocks. Is that 268 00:14:05,120 --> 00:14:07,640 Speaker 6: rally sort of fizzling out now or do you think 269 00:14:07,679 --> 00:14:10,400 Speaker 6: we have another leg higher one stocks maybe pull back 270 00:14:10,400 --> 00:14:12,400 Speaker 6: a little bit from here in that particular segment of 271 00:14:12,480 --> 00:14:12,760 Speaker 6: the market. 272 00:14:12,840 --> 00:14:14,120 Speaker 9: I mean, Wet'll say what you mentioned China. 273 00:14:14,160 --> 00:14:15,559 Speaker 5: What's notable about China. 274 00:14:15,360 --> 00:14:18,680 Speaker 9: Is that certainly the unwinding of the of the zero 275 00:14:18,800 --> 00:14:22,680 Speaker 9: COVID regime, they will definitely helped travel. To date, what 276 00:14:22,720 --> 00:14:25,640 Speaker 9: we have seen is that domestic in country uh stays 277 00:14:25,640 --> 00:14:29,200 Speaker 9: in hotels there and related revenue have been a bit stronger, 278 00:14:29,280 --> 00:14:32,440 Speaker 9: let's say, than inbound tourism and tourism that relies on 279 00:14:33,320 --> 00:14:35,800 Speaker 9: people coming into the country. But that being said, you know, 280 00:14:35,840 --> 00:14:37,240 Speaker 9: we're definitely moving in the right direction. 281 00:14:38,280 --> 00:14:42,920 Speaker 3: All right, my favorite, let's switch over to gaming Kotai strip. 282 00:14:43,960 --> 00:14:47,760 Speaker 3: That's kind of like, yes, it is awesome over there. 283 00:14:48,640 --> 00:14:51,640 Speaker 1: Do I assume that that Chinese anybody wants to go 284 00:14:51,720 --> 00:14:53,920 Speaker 1: to the Macaw can go or are they still so? 285 00:14:53,960 --> 00:14:57,560 Speaker 9: The travel restrictions have been being unwound and have been lifted, 286 00:14:57,560 --> 00:14:59,680 Speaker 9: and that makes a big difference. Now bear in mind 287 00:14:59,680 --> 00:15:03,360 Speaker 9: and Macau all that VIP the junket business that you 288 00:15:03,520 --> 00:15:06,440 Speaker 9: like to pay pize Paul that you know the credit, 289 00:15:06,480 --> 00:15:09,840 Speaker 9: there's been a basically a band since December of twenty 290 00:15:09,880 --> 00:15:13,600 Speaker 9: twenty one on junket credit extension. However, the mass market 291 00:15:13,760 --> 00:15:17,360 Speaker 9: and VIP direct quadering has definitely come back, and you know, 292 00:15:17,400 --> 00:15:21,600 Speaker 9: it's very much been constrained by travel restrictions and visa requirements, 293 00:15:21,600 --> 00:15:23,960 Speaker 9: but as that loosens up, we are seeing the mass 294 00:15:23,960 --> 00:15:27,480 Speaker 9: market there are definitely coming back with you know, certainly 295 00:15:27,560 --> 00:15:30,760 Speaker 9: levels approaching pre bendemic levels, not there yet but getting there. 296 00:15:30,880 --> 00:15:34,240 Speaker 6: Thinking about those casino operators like Win Results for instance, 297 00:15:34,640 --> 00:15:37,360 Speaker 6: Win Resorts in Las Vegas stands, those actually were down 298 00:15:37,400 --> 00:15:39,200 Speaker 6: a little bit pre market and a little bit under 299 00:15:39,200 --> 00:15:41,680 Speaker 6: pressure because Jefferies did downgrade some of those from hole 300 00:15:41,760 --> 00:15:43,960 Speaker 6: to buy. Thinking that some of the bounce back that 301 00:15:43,960 --> 00:15:46,400 Speaker 6: we saw when we were just talking about Macaw and 302 00:15:46,440 --> 00:15:48,920 Speaker 6: the recovery there kind of maybe that's a little bit 303 00:15:48,920 --> 00:15:51,360 Speaker 6: fizzled out there. But what particular when we're thinking about 304 00:15:51,360 --> 00:15:53,520 Speaker 6: more on the gaming front and particular names that you 305 00:15:53,600 --> 00:15:57,560 Speaker 6: think could support and be maybe moving higher from this point, Oh, I. 306 00:15:57,600 --> 00:15:59,360 Speaker 9: Mean to speak about it very generally. You know, the 307 00:15:59,600 --> 00:16:03,280 Speaker 9: the UI gaming consumer has been pretty strong Vegas. I 308 00:16:03,280 --> 00:16:05,320 Speaker 9: think it's currently been back and it's the same thing. 309 00:16:05,400 --> 00:16:07,560 Speaker 9: It's true of regional markets. You know, there was a 310 00:16:07,640 --> 00:16:11,920 Speaker 9: period where regional and drive to markets were leading Vegas. 311 00:16:11,960 --> 00:16:15,640 Speaker 9: Now Vegas is demonstrably back and doing quite well. I mean, 312 00:16:15,680 --> 00:16:19,120 Speaker 9: there may be a point where some perceive that much 313 00:16:19,120 --> 00:16:21,000 Speaker 9: of that good news has been baked in, but you know, 314 00:16:21,160 --> 00:16:23,800 Speaker 9: with that for others to determine. But overall, I mean, 315 00:16:23,800 --> 00:16:27,640 Speaker 9: we're at a favorable point barring some significant slow down 316 00:16:27,680 --> 00:16:29,800 Speaker 9: related to a weaker comedy, which is always possible. 317 00:16:29,960 --> 00:16:33,560 Speaker 8: You're listening to the tape cansur live program Bloomberg Markets 318 00:16:33,600 --> 00:16:37,000 Speaker 8: weekdays at ten am Eastern on Bloomberg Radio, the tune 319 00:16:37,040 --> 00:16:40,000 Speaker 8: in app, Bloomberg dot Com, and the Bloomberg Business App. 320 00:16:40,040 --> 00:16:42,840 Speaker 8: You can also listen live on Amazon Alexa from our 321 00:16:42,880 --> 00:16:47,240 Speaker 8: flagship New York station Just Say Alexa playing Bloomberg eleven thirty. 322 00:16:49,600 --> 00:16:52,120 Speaker 3: So we talked to TFS. We always like to check 323 00:16:52,160 --> 00:16:53,040 Speaker 3: out of a Manda Rebello. 324 00:16:53,120 --> 00:16:58,160 Speaker 1: She's head of Extractor Sales US on shore at DWS Group. Amanda, 325 00:16:58,240 --> 00:17:01,160 Speaker 1: good to see you here live here in Bloomberg HQ. 326 00:17:02,040 --> 00:17:05,040 Speaker 1: Talk to us about what's the ETF that you guys 327 00:17:05,080 --> 00:17:07,560 Speaker 1: are working on now that you guys are most positive 328 00:17:07,600 --> 00:17:09,639 Speaker 1: on right now because it just seems like from you 329 00:17:09,680 --> 00:17:12,080 Speaker 1: guys and from so many others are just coming at you, 330 00:17:12,480 --> 00:17:13,560 Speaker 1: you know, a million at a time. 331 00:17:13,800 --> 00:17:16,480 Speaker 7: Well, Paul, thanks for inviting me. Great to see you. 332 00:17:16,520 --> 00:17:19,560 Speaker 7: As always, we are speaking. 333 00:17:19,200 --> 00:17:21,320 Speaker 10: A lot about dividends, so we've actually just put out 334 00:17:21,359 --> 00:17:23,880 Speaker 10: a new note this morning about dividends. I think that 335 00:17:23,960 --> 00:17:27,560 Speaker 10: even with the suspending of the debt ceiling until January 336 00:17:27,560 --> 00:17:31,000 Speaker 10: twenty twenty five, there's still so much uncertainty in the market, 337 00:17:31,040 --> 00:17:33,480 Speaker 10: and we feel that if you're on the fence just 338 00:17:33,520 --> 00:17:37,560 Speaker 10: by dividend stocks, but high quality ones, and so we're 339 00:17:37,640 --> 00:17:40,480 Speaker 10: very busy talking to our clients about h DEEF in particular, 340 00:17:40,560 --> 00:17:45,159 Speaker 10: which is our International High Dividend Yield Equity ETF, and 341 00:17:45,200 --> 00:17:47,679 Speaker 10: also linked to that as well HDOOR, which is the 342 00:17:47,840 --> 00:17:51,800 Speaker 10: AQUI universe, so also incorporating em as well. Given up 343 00:17:51,800 --> 00:17:54,600 Speaker 10: where cash is yielding at the moment, you know, none 344 00:17:54,640 --> 00:17:57,399 Speaker 10: of us are really paid to sit on cash. We 345 00:17:57,440 --> 00:17:59,080 Speaker 10: need to think about where to invest in. So we 346 00:17:59,119 --> 00:18:03,720 Speaker 10: think that looking at high quality, sustainable dividend pays is 347 00:18:03,760 --> 00:18:07,520 Speaker 10: really the way to go. European equities, International Equities EQUI 348 00:18:07,640 --> 00:18:11,760 Speaker 10: Universe is always going to be yielding more than us equities. 349 00:18:11,800 --> 00:18:13,520 Speaker 10: So if you look at the S and P five hundred, 350 00:18:13,560 --> 00:18:15,720 Speaker 10: for example, typically yielding about one point five to one 351 00:18:15,760 --> 00:18:20,080 Speaker 10: point seven percent, eurostocks fifty is usually yielding something between 352 00:18:20,119 --> 00:18:22,679 Speaker 10: three point five to four point five percent, and then 353 00:18:22,720 --> 00:18:25,120 Speaker 10: if you take a dif focused strategy on that kind 354 00:18:25,119 --> 00:18:28,240 Speaker 10: of universe, then you're able to get something like four 355 00:18:28,240 --> 00:18:30,760 Speaker 10: point eight to even five point three if you start 356 00:18:30,800 --> 00:18:33,160 Speaker 10: looking at the em contingent as well. 357 00:18:33,320 --> 00:18:35,640 Speaker 6: Talk to us about where you're seeing the flows at 358 00:18:35,640 --> 00:18:38,560 Speaker 6: this point, I mean you bring up dividend payers. Is 359 00:18:38,600 --> 00:18:39,560 Speaker 6: that we're we're seeing it. 360 00:18:39,920 --> 00:18:42,080 Speaker 10: Yeah, that's definitely been one of the strongest errors for 361 00:18:42,960 --> 00:18:45,560 Speaker 10: investor demand, which has been demonstrated with inflows. 362 00:18:45,800 --> 00:18:46,879 Speaker 7: We're really grateful for that. 363 00:18:47,280 --> 00:18:49,800 Speaker 10: We do also see some clients still wanting to take 364 00:18:49,840 --> 00:18:54,280 Speaker 10: some positions as well in China too, so we've seen yeah, interesting, right, 365 00:18:54,400 --> 00:18:58,919 Speaker 10: So I think that there's those investors who still have 366 00:18:58,920 --> 00:19:01,360 Speaker 10: a long term view on China. They still think about, 367 00:19:02,480 --> 00:19:05,880 Speaker 10: you know, the long term goals of the party. And 368 00:19:06,119 --> 00:19:09,760 Speaker 10: I think, just to be very honest, I think a 369 00:19:09,760 --> 00:19:11,720 Speaker 10: lot of people just thinking and you take money away 370 00:19:11,760 --> 00:19:14,119 Speaker 10: from US equities even though there's been this kind of 371 00:19:14,119 --> 00:19:18,640 Speaker 10: fomo kind of sentiment at the moment with US equities, 372 00:19:18,640 --> 00:19:20,840 Speaker 10: and we still see a rally even though there's uncertainty, 373 00:19:21,480 --> 00:19:23,280 Speaker 10: just thinking that that's maybe the next place to be 374 00:19:23,960 --> 00:19:26,040 Speaker 10: going at the end of the day, second largest economy 375 00:19:26,040 --> 00:19:27,680 Speaker 10: in the world. We still see some clients who think 376 00:19:27,680 --> 00:19:30,679 Speaker 10: it's underweight, not just in the EM universe, but also 377 00:19:30,760 --> 00:19:34,120 Speaker 10: in the in the global equities AQUI universe too. 378 00:19:34,320 --> 00:19:37,359 Speaker 6: So what is it about US equities in particular that 379 00:19:37,359 --> 00:19:39,280 Speaker 6: we're seeing, even though we're seeing when we're looking at 380 00:19:39,280 --> 00:19:42,040 Speaker 6: the border stock market right and flirting with a potential 381 00:19:42,080 --> 00:19:44,000 Speaker 6: Beard toritory with the S and P five hundred, what 382 00:19:44,040 --> 00:19:46,200 Speaker 6: is it that investors are still skeptical about when we're 383 00:19:46,200 --> 00:19:48,040 Speaker 6: thinking about the flows in the US equities. 384 00:19:48,200 --> 00:19:49,960 Speaker 10: Yeah, I think that there's still a lot of kind 385 00:19:49,960 --> 00:19:52,639 Speaker 10: of what if. So, you know, really the focus for 386 00:19:52,720 --> 00:19:55,879 Speaker 10: us at DWS when we look at US equities with 387 00:19:55,920 --> 00:19:58,920 Speaker 10: this extension is thinking about kind of the broader fiscal 388 00:19:58,960 --> 00:20:02,040 Speaker 10: health of the US and so also we've got the 389 00:20:02,080 --> 00:20:06,119 Speaker 10: election as well coming up to I think these kind 390 00:20:06,200 --> 00:20:08,840 Speaker 10: of events that will throw the catch amongst the pigeons. 391 00:20:09,320 --> 00:20:10,399 Speaker 7: When we think about the death. 392 00:20:13,680 --> 00:20:16,480 Speaker 6: I always go back to that, let's go back it's unpacked. 393 00:20:18,520 --> 00:20:21,400 Speaker 3: The throwing the catch amongst the pigeons, throwing the cat 394 00:20:21,480 --> 00:20:22,800 Speaker 3: amongst the period. 395 00:20:22,960 --> 00:20:23,960 Speaker 7: So imagine. 396 00:20:26,200 --> 00:20:30,280 Speaker 6: I can't wait to awesome. 397 00:20:31,480 --> 00:20:34,520 Speaker 1: All right, So if I do want international equities and 398 00:20:34,520 --> 00:20:37,639 Speaker 1: I'm thinking dividend strategy, you guys have any h D 399 00:20:37,760 --> 00:20:38,119 Speaker 1: E F. 400 00:20:38,200 --> 00:20:39,520 Speaker 3: Is that the one I want to the one? 401 00:20:39,600 --> 00:20:39,840 Speaker 7: Yes? 402 00:20:39,880 --> 00:20:42,560 Speaker 10: And if you're braver, why not h D A W 403 00:20:42,560 --> 00:20:44,360 Speaker 10: which also includes em equities? 404 00:20:44,560 --> 00:20:47,320 Speaker 1: Okay, so you guys have Okay, so you have ETFs 405 00:20:47,400 --> 00:20:50,919 Speaker 1: for there, so that tracks you know, I guess European 406 00:20:50,960 --> 00:20:52,440 Speaker 1: high dividend exactly. 407 00:20:52,760 --> 00:20:55,560 Speaker 3: Yeah, all right, interesting, all right? How about value? 408 00:20:56,359 --> 00:20:59,000 Speaker 1: Some folks are saying, you know, we've had the big 409 00:20:59,080 --> 00:21:01,920 Speaker 1: sevens X stacks kind of just run up here in 410 00:21:01,960 --> 00:21:04,360 Speaker 1: the US market accounting for all of more than all 411 00:21:04,400 --> 00:21:07,040 Speaker 1: of the performance for the SPX, that maybe some of 412 00:21:07,040 --> 00:21:08,720 Speaker 1: the small and mid cap stocks, that there's a lot 413 00:21:08,720 --> 00:21:11,520 Speaker 1: of value out there. How do you guys think about that? 414 00:21:11,880 --> 00:21:12,879 Speaker 7: We're on the same page. 415 00:21:12,880 --> 00:21:16,159 Speaker 10: So growth, you know, had a really strong decade and 416 00:21:16,200 --> 00:21:19,240 Speaker 10: then we saw this pivot already starting last year, but 417 00:21:19,280 --> 00:21:21,479 Speaker 10: we think it continues at least into Q four this 418 00:21:21,560 --> 00:21:25,240 Speaker 10: year across European equities, because we think European equities are 419 00:21:25,280 --> 00:21:28,800 Speaker 10: quite undervalue, just given that there also a warmer winter 420 00:21:29,040 --> 00:21:33,960 Speaker 10: than any of us expected. The oil price spikes, especially 421 00:21:34,000 --> 00:21:37,960 Speaker 10: the link with Russian energy, didn't hurt companies quite as 422 00:21:38,040 --> 00:21:40,200 Speaker 10: much as we expected. And then on the US side 423 00:21:40,200 --> 00:21:42,359 Speaker 10: as well, we also think value is making sense too. 424 00:21:42,640 --> 00:21:45,000 Speaker 10: So also we've been speaking to our clients a lot 425 00:21:45,040 --> 00:21:50,359 Speaker 10: about SMPV, which is our ESG SMP five hundred value ETF. 426 00:21:50,400 --> 00:21:53,760 Speaker 10: And then additionally we've been speaking about Quark QAARP, which 427 00:21:53,800 --> 00:21:57,000 Speaker 10: is quality at a reasonable price, basically quality and value combined. 428 00:21:57,440 --> 00:21:59,439 Speaker 6: We only have about a minute left. Actually we're go 429 00:21:59,480 --> 00:22:02,160 Speaker 6: one longer we can go. 430 00:22:02,359 --> 00:22:03,120 Speaker 7: Let's keep it going. 431 00:22:03,520 --> 00:22:06,320 Speaker 6: It in aristocrats, Yes, what stands out to. 432 00:22:06,280 --> 00:22:09,960 Speaker 10: You, What I like about divviden aristocrats is that you 433 00:22:10,000 --> 00:22:13,520 Speaker 10: can take like a much more concentrated portfolio. So we've 434 00:22:13,520 --> 00:22:19,000 Speaker 10: got the fifteen hundred universe with SMPD and then we're 435 00:22:19,000 --> 00:22:22,120 Speaker 10: actually taking eighty two stocks and then not all financials. 436 00:22:22,400 --> 00:22:24,879 Speaker 10: So I think what's important to always think about with 437 00:22:25,000 --> 00:22:29,840 Speaker 10: divpairs is sector kind of relativity, so you end up 438 00:22:29,880 --> 00:22:33,560 Speaker 10: not having sector biases that come just because you know, 439 00:22:33,680 --> 00:22:37,159 Speaker 10: financials are always paying dividends, utilities are always paying dividends 440 00:22:37,840 --> 00:22:40,160 Speaker 10: ETFs at the end of the day, are always about diversification, 441 00:22:40,320 --> 00:22:43,239 Speaker 10: So you want to have stop diversification as well as 442 00:22:43,240 --> 00:22:44,280 Speaker 10: sector diversification. 443 00:22:44,960 --> 00:22:48,960 Speaker 1: All right, if I want some I guess if I 444 00:22:48,960 --> 00:22:51,879 Speaker 1: want to go ESG. Now I'm not sure ESG is 445 00:22:51,880 --> 00:22:54,119 Speaker 1: still a thing. It feels like it's losing momentum here 446 00:22:54,160 --> 00:22:56,919 Speaker 1: in the US. I've been told by great authority that 447 00:22:56,960 --> 00:23:00,640 Speaker 1: it is still a huge thing in Europe for European investors. 448 00:23:01,040 --> 00:23:02,840 Speaker 1: What do you guys have if I want to get 449 00:23:03,480 --> 00:23:07,880 Speaker 1: ESG kind of analysis will win into my. 450 00:23:06,960 --> 00:23:10,080 Speaker 10: Investments, So I would say SMPE. So it's just ESG, 451 00:23:10,280 --> 00:23:13,159 Speaker 10: SMP five hundred. And the way that we look at 452 00:23:13,200 --> 00:23:16,600 Speaker 10: that is the stocks in the five hundred universe SMP 453 00:23:16,720 --> 00:23:20,360 Speaker 10: they have great data in their organization and they basically 454 00:23:20,400 --> 00:23:22,320 Speaker 10: pick the winners in each sector. So you can still 455 00:23:22,359 --> 00:23:25,479 Speaker 10: have sector neutrality, but you're picking the top fifty percent 456 00:23:25,760 --> 00:23:29,400 Speaker 10: of each of the sectors. And that's a really strong 457 00:23:29,440 --> 00:23:32,040 Speaker 10: fun because actually a lot of the criticism about ESG 458 00:23:32,520 --> 00:23:34,639 Speaker 10: is are you giving up returns? In actual fact, this 459 00:23:34,720 --> 00:23:38,720 Speaker 10: one outperformed, like you know, the competitor just book standard 460 00:23:38,800 --> 00:23:43,280 Speaker 10: SMP five hundred ETFs. But then also you saw reduction 461 00:23:43,320 --> 00:23:47,320 Speaker 10: in volatility as well. I think the outperformance year to 462 00:23:47,400 --> 00:23:50,680 Speaker 10: date has been about twenty seven basis points, and then 463 00:23:51,080 --> 00:23:54,320 Speaker 10: the reduction in volatility was around fifty basis points, so 464 00:23:54,520 --> 00:23:58,000 Speaker 10: slightly increased sharp ratio two. And governance is interesting at 465 00:23:58,000 --> 00:24:01,000 Speaker 10: the moment right because we will see some police defaulting, 466 00:24:01,520 --> 00:24:04,800 Speaker 10: you know, for the remainder of the cycle. Governance schools 467 00:24:04,800 --> 00:24:08,360 Speaker 10: help us to sometimes identify who are potentially most liable 468 00:24:08,400 --> 00:24:09,280 Speaker 10: to be exposed to that. 469 00:24:09,840 --> 00:24:12,639 Speaker 6: When we talk about dividend pairs, especially these US multinational 470 00:24:12,720 --> 00:24:16,520 Speaker 6: companies saying as staples sector, like these food conglomerate giants 471 00:24:16,560 --> 00:24:19,399 Speaker 6: when we think about Campbell, Soup and some general mills. 472 00:24:19,440 --> 00:24:22,640 Speaker 6: They're starting to see some pullback there in the consumer 473 00:24:22,680 --> 00:24:24,560 Speaker 6: as far as the price pressures there. But I'm wondering, 474 00:24:24,680 --> 00:24:26,440 Speaker 6: especially when it comes to companies that derive a big 475 00:24:26,480 --> 00:24:29,040 Speaker 6: portion of the revenue overseas, with staples it's about a 476 00:24:29,119 --> 00:24:31,679 Speaker 6: quarter of that. Do you think that essentially, if the 477 00:24:31,760 --> 00:24:34,560 Speaker 6: dollar continues, maybe we see a bigger pullback there with 478 00:24:34,560 --> 00:24:37,160 Speaker 6: the FED easing that could potentially support some of those 479 00:24:37,440 --> 00:24:38,240 Speaker 6: quarters of the market. 480 00:24:38,440 --> 00:24:38,640 Speaker 7: Yeah. 481 00:24:38,720 --> 00:24:42,760 Speaker 10: So cws's forecast for euro dollar for the next twelve 482 00:24:42,800 --> 00:24:46,560 Speaker 10: months is at approximately one point one two percent. We 483 00:24:46,680 --> 00:24:49,680 Speaker 10: think that there's still kind of some value adds within 484 00:24:50,359 --> 00:24:55,480 Speaker 10: all sectors for like US providers to then export to Europe. 485 00:24:55,480 --> 00:24:58,280 Speaker 10: So that's okay. I'm not too much of an expert. 486 00:24:58,280 --> 00:25:00,560 Speaker 10: We can ask Dave Biangko, but I think sentiment on 487 00:25:00,600 --> 00:25:03,560 Speaker 10: our site is that, you know, there's a lot of 488 00:25:03,680 --> 00:25:07,359 Speaker 10: very strong European consumer staples names already, like Nesley and 489 00:25:07,400 --> 00:25:11,959 Speaker 10: so forth, so perhaps less reliance on US names for 490 00:25:12,000 --> 00:25:12,479 Speaker 10: this sector. 491 00:25:12,640 --> 00:25:14,560 Speaker 3: All right, Amanda, thank you so much for stopping by. 492 00:25:14,560 --> 00:25:15,560 Speaker 3: I really appreciate it. 493 00:25:15,640 --> 00:25:18,520 Speaker 1: Amanda Rabello, she is our go to for ETF. She's 494 00:25:18,560 --> 00:25:22,040 Speaker 1: head of Xtracker Sales US on shore at DWS Group. 495 00:25:23,359 --> 00:25:26,760 Speaker 8: You're listening to the team Ken's are Live program Bloomberg 496 00:25:26,800 --> 00:25:30,199 Speaker 8: Markets weekdays at ten am Eastern on Bloomberg dot Com, 497 00:25:30,240 --> 00:25:33,400 Speaker 8: the iHeartRadio app and the Bloomberg Business App, or listen 498 00:25:33,480 --> 00:25:35,600 Speaker 8: on demand wherever you get your podcasts. 499 00:25:37,359 --> 00:25:38,040 Speaker 3: Switch gears. 500 00:25:38,160 --> 00:25:40,119 Speaker 6: Just let's talk, yes, hech and when you want to 501 00:25:40,160 --> 00:25:41,640 Speaker 6: talk tech, I'm excited. 502 00:25:41,680 --> 00:25:42,199 Speaker 3: Where do you go? 503 00:25:42,400 --> 00:25:44,160 Speaker 1: I go out to Silicon Valley and I can talk 504 00:25:44,200 --> 00:25:48,200 Speaker 1: to this person out there who knows everything about everything 505 00:25:48,320 --> 00:25:51,520 Speaker 1: in the valley. Emily Chank joins us. 506 00:25:53,200 --> 00:25:54,080 Speaker 7: You all are too kind. 507 00:25:55,119 --> 00:25:57,280 Speaker 1: I mean, it's just so much is going on out there. 508 00:25:57,320 --> 00:26:00,280 Speaker 1: And Emily, You've got a new show premiering ten night 509 00:26:00,600 --> 00:26:02,800 Speaker 1: called The Circuit tell Us about that. 510 00:26:03,040 --> 00:26:06,080 Speaker 11: Yes, indeed, Well, you know, as you know, Paul, I've 511 00:26:06,119 --> 00:26:09,879 Speaker 11: been anchoring Bloomberg Technology for twelve years, every day in 512 00:26:09,960 --> 00:26:13,720 Speaker 11: the chair covering Silicon Valley. Hence how you introduced me. 513 00:26:14,000 --> 00:26:16,479 Speaker 11: And I just had this desire to go deeper and longer. 514 00:26:16,520 --> 00:26:19,560 Speaker 11: You know, tech is complicated and the people making these 515 00:26:19,560 --> 00:26:22,840 Speaker 11: decisions are changing the lives of billions and billions of people. 516 00:26:22,960 --> 00:26:24,879 Speaker 7: So I wanted to get out in the field. 517 00:26:24,960 --> 00:26:27,800 Speaker 11: I wanted to do more long form, have extended conversations, 518 00:26:27,840 --> 00:26:30,040 Speaker 11: meet people where they are, so we are you know, 519 00:26:30,080 --> 00:26:32,720 Speaker 11: for example, at Brian Cheskey's home in San Francisco, we 520 00:26:32,800 --> 00:26:35,480 Speaker 11: go to meet a whistleblower in Santa Fe. We go 521 00:26:35,600 --> 00:26:38,159 Speaker 11: to interview Natalie Bortman at a women's soccer game in 522 00:26:38,320 --> 00:26:42,280 Speaker 11: La Like, how cool is that? And tonight we actually 523 00:26:42,320 --> 00:26:45,480 Speaker 11: have the co founders of Twitter, Av Williams, who opens 524 00:26:45,560 --> 00:26:47,080 Speaker 11: up about Elon Musk for the first time. 525 00:26:47,280 --> 00:26:49,480 Speaker 1: Yes, and you just published on Bloomberg just hit the 526 00:26:49,480 --> 00:26:53,440 Speaker 1: Bloomberg termin I'm seeing there sir, he feels I mean, 527 00:26:53,480 --> 00:26:54,440 Speaker 1: he's got some remorse here. 528 00:26:54,440 --> 00:26:55,520 Speaker 3: He's sad about this. 529 00:26:55,720 --> 00:26:58,560 Speaker 11: He uses the word sad, yeah, you know, and he 530 00:26:58,720 --> 00:27:01,680 Speaker 11: says he's surprised even himself when he felt that way 531 00:27:01,720 --> 00:27:05,639 Speaker 11: when the deal went through. And you know, if anyone 532 00:27:05,640 --> 00:27:08,160 Speaker 11: has followed Twitter's history, there's been so much drama over 533 00:27:08,200 --> 00:27:10,280 Speaker 11: the years, so many changing of the guards. And he 534 00:27:10,400 --> 00:27:12,440 Speaker 11: was pushed out, and Jack came in, and Jack was 535 00:27:12,440 --> 00:27:14,600 Speaker 11: pushed out, and Di Costelo came in, and then Jack 536 00:27:14,640 --> 00:27:19,400 Speaker 11: came back and now Elon and so you know, there 537 00:27:19,480 --> 00:27:22,200 Speaker 11: is a lot of blood on the floor, so to speak. 538 00:27:22,480 --> 00:27:24,960 Speaker 7: And this new chapter I think isn't. 539 00:27:24,720 --> 00:27:27,040 Speaker 11: What perhaps Jack Dorsey thought it would be when he 540 00:27:27,080 --> 00:27:30,880 Speaker 11: brought in Elon Musk. And if Williams puts it this way, look, 541 00:27:30,920 --> 00:27:33,520 Speaker 11: I thought it would be interesting. I was excited to 542 00:27:33,600 --> 00:27:37,600 Speaker 11: watch and see what happens. But even though he's brilliant, 543 00:27:37,960 --> 00:27:40,120 Speaker 11: you can't be brilliant on everything. And I don't think 544 00:27:40,160 --> 00:27:41,520 Speaker 11: he's gotten this quite right. 545 00:27:43,240 --> 00:27:45,520 Speaker 6: Right. How frequently will we be able to see these 546 00:27:45,560 --> 00:27:46,840 Speaker 6: interviews every. 547 00:27:46,640 --> 00:27:48,120 Speaker 7: Week on Bloomberg Television. 548 00:27:48,160 --> 00:27:50,040 Speaker 11: You can watch it at ten o'clock, but also you 549 00:27:50,080 --> 00:27:52,240 Speaker 11: can download the Bloomberg Gap on your smart TV, which 550 00:27:52,240 --> 00:27:53,359 Speaker 11: I just did a week ago. 551 00:27:53,680 --> 00:27:55,040 Speaker 7: It's right next to HBO. 552 00:27:55,920 --> 00:27:59,480 Speaker 11: New episodes drop every Thursday, eight pm Eastern on the app, 553 00:27:59,520 --> 00:28:01,280 Speaker 11: and you can also streaming on Bloomberg dot com and 554 00:28:01,760 --> 00:28:05,080 Speaker 11: the Companion podcast where you can hear extended conversations. You're amazing. 555 00:28:05,200 --> 00:28:08,680 Speaker 11: Radio colleagues have helped me to opinion podcasts, and I'm 556 00:28:08,720 --> 00:28:09,520 Speaker 11: so grateful. 557 00:28:09,160 --> 00:28:10,919 Speaker 3: That's what the kids are doing. Today's podcasting. 558 00:28:11,119 --> 00:28:13,199 Speaker 1: All right, So what's the feeling, Emily. You've been out 559 00:28:13,240 --> 00:28:14,679 Speaker 1: in the valley for such a long time, you know, 560 00:28:14,760 --> 00:28:16,600 Speaker 1: all the players. What's the feeling out there? 561 00:28:16,680 --> 00:28:19,840 Speaker 3: Now? These days we had, you know, some banking prices 562 00:28:19,880 --> 00:28:23,399 Speaker 3: to keep being right right in their backyard. What's the 563 00:28:23,440 --> 00:28:24,040 Speaker 3: feeling out there? 564 00:28:24,720 --> 00:28:27,080 Speaker 7: You know, everyone's a little down. 565 00:28:27,359 --> 00:28:29,480 Speaker 11: I mean, we've had hundreds of thousands of people laid 566 00:28:29,480 --> 00:28:33,520 Speaker 11: off in tech at this point. However, the overwhelming message 567 00:28:33,560 --> 00:28:36,359 Speaker 11: that I got is that the party's not over. 568 00:28:36,720 --> 00:28:38,080 Speaker 7: You know, the lights have turned on. 569 00:28:38,280 --> 00:28:40,520 Speaker 11: People are still figuring things out, but the dance floor 570 00:28:40,600 --> 00:28:42,920 Speaker 11: is open for business, and people are still optimistic that 571 00:28:43,080 --> 00:28:47,280 Speaker 11: innovation is going to happen no matter what. For example, AI, 572 00:28:47,400 --> 00:28:50,280 Speaker 11: everyone's really excited about that. I go to meet legendary 573 00:28:50,360 --> 00:28:53,400 Speaker 11: venture capitalist Bill Gurley in Austin, Texas, and he. 574 00:28:53,320 --> 00:28:55,240 Speaker 7: Says, this is bad. This is going to last for 575 00:28:55,240 --> 00:28:55,720 Speaker 7: a few years. 576 00:28:55,760 --> 00:28:58,520 Speaker 11: But I actually love investing in this environment when there's 577 00:28:58,560 --> 00:29:01,479 Speaker 11: not this massive hype cycle happening and it's quiet and 578 00:29:01,520 --> 00:29:04,640 Speaker 11: people leave because they think there's no opportunity to be had. 579 00:29:04,680 --> 00:29:06,840 Speaker 11: But this is when you can actually put a bet 580 00:29:06,880 --> 00:29:08,600 Speaker 11: down early and it'll. 581 00:29:08,320 --> 00:29:09,920 Speaker 7: Play out over years. 582 00:29:10,000 --> 00:29:13,320 Speaker 11: So you know a new era is taking shape. I 583 00:29:13,360 --> 00:29:16,240 Speaker 11: would say it's an era of austerity. We're gonna have 584 00:29:16,320 --> 00:29:20,480 Speaker 11: less free sushi and smoothies. And I remember my first 585 00:29:20,520 --> 00:29:22,800 Speaker 11: visit to the Google cafeteria where there were just rows 586 00:29:22,800 --> 00:29:26,040 Speaker 11: and rows of all different kinds of food. Things are changing, 587 00:29:26,080 --> 00:29:29,320 Speaker 11: Belts are tightening, but that doesn't mean that innovation is 588 00:29:29,360 --> 00:29:29,840 Speaker 11: gonna die. 589 00:29:30,160 --> 00:29:32,440 Speaker 6: When you're speaking to some of these big names, when 590 00:29:32,480 --> 00:29:34,920 Speaker 6: it comes to these executive type players, what is they're 591 00:29:34,960 --> 00:29:37,520 Speaker 6: thinking as far as worthy economy is headed. 592 00:29:38,120 --> 00:29:42,920 Speaker 11: I think they're worried for sure. The thing is, nobody 593 00:29:42,960 --> 00:29:44,920 Speaker 11: knows how long the downturn is gonna last. And I 594 00:29:45,000 --> 00:29:47,600 Speaker 11: say downturn. I just booked a uber CEO dar Kajrashahi 595 00:29:48,480 --> 00:29:50,680 Speaker 11: today as well, and he said the downturn that hasn't 596 00:29:50,720 --> 00:29:52,640 Speaker 11: happened yet, So I know we're you know, we're still 597 00:29:52,640 --> 00:29:56,400 Speaker 11: warning about it. Layoffs are happening, but an actual downturn 598 00:29:56,440 --> 00:29:58,760 Speaker 11: hasn't happened yet. So if and when that does happen, 599 00:29:59,360 --> 00:30:02,440 Speaker 11: the expectation is that it'll last a little while. But 600 00:30:02,800 --> 00:30:06,440 Speaker 11: folks are doubling down, you know, trimming the fat, if 601 00:30:06,480 --> 00:30:10,840 Speaker 11: you will, making cuts, re establishing their priorities to move 602 00:30:10,880 --> 00:30:13,120 Speaker 11: forward in a new leaner era. 603 00:30:13,560 --> 00:30:17,040 Speaker 1: What do you think, just from the technology industry perspective, 604 00:30:17,360 --> 00:30:19,760 Speaker 1: what do you think is the future of San Francisco. 605 00:30:19,880 --> 00:30:23,239 Speaker 1: Like for twenty years when I had friends from Europe saying, Hey, 606 00:30:23,240 --> 00:30:24,840 Speaker 1: I'm coming over there with my family for a couple 607 00:30:24,880 --> 00:30:26,480 Speaker 1: of weeks and we're doing New York and we're gonna 608 00:30:26,520 --> 00:30:28,840 Speaker 1: do maybe Florida. I said, you have to carve out 609 00:30:28,840 --> 00:30:30,800 Speaker 1: four or five days for San Francisco. 610 00:30:30,880 --> 00:30:32,560 Speaker 3: A day or two in town a day or two, 611 00:30:32,560 --> 00:30:33,520 Speaker 3: and nap a day or two. 612 00:30:33,840 --> 00:30:36,120 Speaker 1: You know, in Silicon Valley for example, some of those 613 00:30:36,120 --> 00:30:38,960 Speaker 1: beautiful towns like pap Palo Alto. What is the future 614 00:30:39,000 --> 00:30:42,040 Speaker 1: of What are your companies that you cover there? What 615 00:30:42,080 --> 00:30:43,280 Speaker 1: did they think about San Francis? 616 00:30:43,360 --> 00:30:45,000 Speaker 7: Well, you know, I love San Francisco too. 617 00:30:45,040 --> 00:30:47,520 Speaker 11: That is my home, and it hasn't recovered as quickly 618 00:30:47,600 --> 00:30:49,160 Speaker 11: as the rest of the country is the rest of 619 00:30:49,520 --> 00:30:50,000 Speaker 11: the world. 620 00:30:50,160 --> 00:30:51,760 Speaker 7: The other day, I was walking down the street. 621 00:30:51,840 --> 00:30:54,320 Speaker 11: I saw a raccoon on the sidewalk at eleven AM 622 00:30:54,720 --> 00:30:55,960 Speaker 11: and the raccoon. 623 00:30:55,600 --> 00:31:00,200 Speaker 7: Was like, this is my sidewalk. I belong here. 624 00:31:00,840 --> 00:31:03,040 Speaker 11: And so I think San Francisco's just recovering more slow 625 00:31:03,080 --> 00:31:04,440 Speaker 11: than you have. A lot of these companies that are 626 00:31:04,440 --> 00:31:07,200 Speaker 11: really struggling to get workers back to the office right still. 627 00:31:07,640 --> 00:31:09,960 Speaker 11: I think that's gonna change over time. The CEOs I'm 628 00:31:10,000 --> 00:31:12,960 Speaker 11: talking to, for example, Dara Kasrashai, the CEO of Uber, 629 00:31:13,160 --> 00:31:15,240 Speaker 11: they're asking people to come back three days a week. 630 00:31:15,640 --> 00:31:18,880 Speaker 11: Employees don't love it, but eventually they're gonna do it, 631 00:31:19,440 --> 00:31:21,760 Speaker 11: and I think it's just going to take more time. 632 00:31:22,120 --> 00:31:25,520 Speaker 11: Everyone's worried about talent, and especially in Silicon Valley, where 633 00:31:25,560 --> 00:31:28,600 Speaker 11: you know, top engineers are so sought after. But at 634 00:31:28,600 --> 00:31:30,920 Speaker 11: a certain point the balance of power is going to 635 00:31:30,960 --> 00:31:33,200 Speaker 11: shift back to employers, and I think we're starting to 636 00:31:33,240 --> 00:31:34,440 Speaker 11: see that with the economy. 637 00:31:34,680 --> 00:31:37,200 Speaker 6: You brought up cost cutting. Obviously that's been so big, 638 00:31:37,320 --> 00:31:40,120 Speaker 6: especially in the tech and growth space. When you're speaking 639 00:31:40,160 --> 00:31:42,240 Speaker 6: with executives, do they feel like most of that pain 640 00:31:42,280 --> 00:31:44,760 Speaker 6: has passed or should we expect more cost cutting to 641 00:31:44,760 --> 00:31:46,280 Speaker 6: come in particular segments of tech. 642 00:31:46,320 --> 00:31:48,040 Speaker 11: I think there will be more cost cutting, you know. 643 00:31:48,120 --> 00:31:51,080 Speaker 11: I think valuations are coming down. They're still coming down. 644 00:31:51,400 --> 00:31:53,880 Speaker 11: Some companies that have raised haven't had to do their 645 00:31:53,920 --> 00:31:56,120 Speaker 11: downround yet because they have had money in the bank. 646 00:31:56,160 --> 00:31:58,120 Speaker 11: And when they have to raise money again, that's when 647 00:31:58,440 --> 00:32:01,360 Speaker 11: you know, it's all reality is gonna hit and they're 648 00:32:01,400 --> 00:32:03,080 Speaker 11: going to say, oh my gosh, we have to cut 649 00:32:03,400 --> 00:32:06,680 Speaker 11: some things. And I think people are just reevaluating, and 650 00:32:07,120 --> 00:32:09,280 Speaker 11: you know everyone's doing it differently. You know, Metas on 651 00:32:09,320 --> 00:32:12,320 Speaker 11: its third layoff right, which is tough. And what's hard 652 00:32:12,360 --> 00:32:15,280 Speaker 11: there is, you know, you start to lose the trust 653 00:32:15,280 --> 00:32:18,520 Speaker 11: of employees when they can't be sure if they have 654 00:32:18,560 --> 00:32:21,560 Speaker 11: a job right and morale is low, nobody knows what 655 00:32:21,560 --> 00:32:24,320 Speaker 11: they're supposed to be working on. And so I think 656 00:32:24,360 --> 00:32:27,720 Speaker 11: it's it's not just what companies do, but how they 657 00:32:27,760 --> 00:32:30,760 Speaker 11: do it that is going to define how strong they 658 00:32:30,760 --> 00:32:31,600 Speaker 11: are in the future. 659 00:32:31,960 --> 00:32:36,240 Speaker 1: So if I have a great new idea and I 660 00:32:36,280 --> 00:32:38,920 Speaker 1: go to sand Hill Road, which is the you know 661 00:32:38,920 --> 00:32:41,320 Speaker 1: where you get all the venture capital smart money in 662 00:32:41,360 --> 00:32:42,160 Speaker 1: Silicon Valley? 663 00:32:43,160 --> 00:32:44,760 Speaker 3: Can I get? Would I be able to track? 664 00:32:44,840 --> 00:32:48,440 Speaker 1: Some investors are still appetite for financing and risk and 665 00:32:48,440 --> 00:32:49,880 Speaker 1: new ideas and new technologies. 666 00:32:50,000 --> 00:32:53,040 Speaker 11: There are still venture capital firms open for business on 667 00:32:53,200 --> 00:32:55,400 Speaker 11: sand Hill Road. That said, you know, there are all 668 00:32:55,400 --> 00:32:57,760 Speaker 11: these new accelerators in the. 669 00:32:57,720 --> 00:32:59,000 Speaker 7: Bay Area and around the world. 670 00:32:59,040 --> 00:33:02,360 Speaker 11: There's a lot of different ways to get money, and 671 00:33:03,240 --> 00:33:05,520 Speaker 11: they're still investing. In fact, there's a lot of capital 672 00:33:05,560 --> 00:33:07,680 Speaker 11: built up that people raised in the good times that 673 00:33:07,680 --> 00:33:10,160 Speaker 11: they need to deploy. And in fact, investors are having 674 00:33:10,200 --> 00:33:12,640 Speaker 11: a tough time figuring out where to put that money. 675 00:33:13,000 --> 00:33:15,840 Speaker 11: So there is money to be had for great ideas, 676 00:33:15,880 --> 00:33:18,520 Speaker 11: and of course you know, you have to find that 677 00:33:18,640 --> 00:33:21,080 Speaker 11: one investor that's willing to bet on you. 678 00:33:21,360 --> 00:33:24,280 Speaker 7: But the cycle is going to continue. If history is any. 679 00:33:24,080 --> 00:33:27,520 Speaker 11: Indication, the cycle of Silicon Valley will go on. 680 00:33:28,280 --> 00:33:30,959 Speaker 6: Speaking of those cost cutting efforts, we were talking about 681 00:33:31,000 --> 00:33:34,960 Speaker 6: meta Facebook when it first started its tranches of big 682 00:33:35,040 --> 00:33:37,040 Speaker 6: job cuts back in November. If you look at its 683 00:33:37,040 --> 00:33:40,520 Speaker 6: stocks since then, up over one hundred and eighty percent. Obviously, 684 00:33:40,520 --> 00:33:42,800 Speaker 6: these costcuts so painful when you think of people who 685 00:33:42,800 --> 00:33:44,840 Speaker 6: are losing their jobs. But when you think from the 686 00:33:44,880 --> 00:33:48,000 Speaker 6: investor perspective, even beyond that salesforce, some other companies that 687 00:33:48,040 --> 00:33:49,960 Speaker 6: have had to go through this this year also seeing 688 00:33:50,000 --> 00:33:52,240 Speaker 6: their stocks rewarded. Do you think we'll continue to see 689 00:33:52,240 --> 00:33:53,560 Speaker 6: that on the investors side. 690 00:33:53,640 --> 00:33:58,120 Speaker 11: I think time will tell, because we're all wondering what 691 00:33:58,320 --> 00:34:00,880 Speaker 11: where Mark Zuckerberg is really right doubled? Is he going 692 00:34:00,960 --> 00:34:04,440 Speaker 11: to keep pursuing this metaverse idea. Is it going to 693 00:34:04,520 --> 00:34:06,680 Speaker 11: be you know, more of a focus on Instagram and WhatsApp? 694 00:34:06,680 --> 00:34:09,800 Speaker 11: What's gonna happen with the blue app? I think there's 695 00:34:09,960 --> 00:34:12,000 Speaker 11: a lot when you look at the stock price, there's 696 00:34:12,000 --> 00:34:13,399 Speaker 11: a lot that you don't see, you know. I talk 697 00:34:13,480 --> 00:34:16,400 Speaker 11: to a lot of Meta employees and former Meta employees 698 00:34:16,520 --> 00:34:19,239 Speaker 11: who say, this isn't the year of efficiency, this is 699 00:34:19,239 --> 00:34:20,279 Speaker 11: the year of inefficiency. 700 00:34:20,320 --> 00:34:21,840 Speaker 7: We don't know what we're supposed to be doing. 701 00:34:22,840 --> 00:34:25,520 Speaker 11: I'm actually sitting around all day trying to wait, waiting 702 00:34:25,520 --> 00:34:27,799 Speaker 11: to see if I get cut, if my colleagues are 703 00:34:27,800 --> 00:34:30,120 Speaker 11: getting cut. And that's a really difficult position. And so 704 00:34:30,239 --> 00:34:32,759 Speaker 11: I it's almost a tale of two cities. You know, 705 00:34:32,800 --> 00:34:34,920 Speaker 11: investors might like what they see on the P and L, 706 00:34:35,600 --> 00:34:39,640 Speaker 11: but over time we'll see if Mark Zuckerberg can really 707 00:34:39,960 --> 00:34:41,480 Speaker 11: get people to follow him again. 708 00:34:41,600 --> 00:34:44,000 Speaker 3: Yep, yep, all right, talk to us again about the circuit. 709 00:34:44,040 --> 00:34:45,400 Speaker 3: This premiere's premiere. 710 00:34:45,160 --> 00:34:48,360 Speaker 11: Tonight, Yes, eight eight pm on the Bloomberg App. I 711 00:34:48,440 --> 00:34:51,080 Speaker 11: know this is confusing, but you know, on your smart 712 00:34:51,080 --> 00:34:54,520 Speaker 11: tv download the Bloomberg app. It looks beautiful and also 713 00:34:54,600 --> 00:34:57,239 Speaker 11: ten pm Eastern on Bloomberg Television and also be on 714 00:34:57,239 --> 00:34:59,960 Speaker 11: Bloomberg dot com. It's on demand, It'll be on YouTube tomorrow. 715 00:35:00,120 --> 00:35:02,040 Speaker 11: You know, there's a lot of different ways. 716 00:35:02,000 --> 00:35:02,600 Speaker 7: You can watch it. 717 00:35:02,640 --> 00:35:04,160 Speaker 11: And we you know, we're going out to talk to 718 00:35:04,200 --> 00:35:05,680 Speaker 11: a variety of different kinds of people. 719 00:35:05,800 --> 00:35:07,160 Speaker 3: I think it's a perfect excited well. 720 00:35:07,160 --> 00:35:08,759 Speaker 1: It's always a great time in Silicon Valy because there's 721 00:35:08,760 --> 00:35:11,319 Speaker 1: always so much change. But now it's not just the 722 00:35:11,360 --> 00:35:13,400 Speaker 1: same old story, which is everything's great. 723 00:35:13,800 --> 00:35:13,960 Speaker 6: Right. 724 00:35:13,960 --> 00:35:15,680 Speaker 1: You got to put some perspective out there for it, 725 00:35:15,719 --> 00:35:16,960 Speaker 1: and I think that's probably what a lot of your 726 00:35:17,000 --> 00:35:19,160 Speaker 1: viewers are going to be looking for. It says perspective 727 00:35:19,200 --> 00:35:21,520 Speaker 1: on it in an industry that, you know how some headwinds. 728 00:35:21,560 --> 00:35:22,440 Speaker 7: Times are changing. 729 00:35:22,480 --> 00:35:24,360 Speaker 11: No more free kombucha and lattes. 730 00:35:24,719 --> 00:35:26,400 Speaker 7: Okay, but don't go home. 731 00:35:26,440 --> 00:35:26,799 Speaker 3: Very good. 732 00:35:26,800 --> 00:35:29,399 Speaker 1: I'mly chrying. Thank you so much for joining us here 733 00:35:29,520 --> 00:35:30,720 Speaker 1: right here in New York, and again. 734 00:35:30,600 --> 00:35:33,000 Speaker 6: So excited I got to me her in person. I 735 00:35:33,120 --> 00:35:35,040 Speaker 6: was zero to you in honor. 736 00:35:35,320 --> 00:35:38,359 Speaker 1: All over Silicon Valley of the Circuit premieres tonight, as 737 00:35:38,360 --> 00:35:40,560 Speaker 1: em we said, on a variety of platforms. 738 00:35:40,640 --> 00:35:43,759 Speaker 8: You're listening to the tape Cat's are live program Bloomberg 739 00:35:43,840 --> 00:35:47,719 Speaker 8: Markets weekdays at ten am Eastern on Bloomberg Radio, tune 740 00:35:47,760 --> 00:35:50,680 Speaker 8: in app, Bloomberg dot com, and the Bloomberg Business App. 741 00:35:50,719 --> 00:35:53,560 Speaker 8: You can also listen live on Amazon Alexa from our 742 00:35:53,560 --> 00:35:58,719 Speaker 8: flagship New York station, Just say Alexa play Bloomberg eleven thirty. 743 00:36:00,040 --> 00:36:02,400 Speaker 1: Also, we need to hear at the Bloomberg invest conference 744 00:36:02,440 --> 00:36:06,360 Speaker 1: at the Bloomberg HQ in Midtown Manhattan. Just this is 745 00:36:06,360 --> 00:36:08,720 Speaker 1: great because you just look at the really smart people 746 00:36:09,040 --> 00:36:11,960 Speaker 1: kind of just everywhere, back and forth, and everyone's always saying, hey, 747 00:36:12,040 --> 00:36:14,040 Speaker 1: let's grab this person. See what they got to say 748 00:36:14,360 --> 00:36:17,960 Speaker 1: that With Joe Mazzola, we grabbed him Managing director of 749 00:36:18,040 --> 00:36:21,000 Speaker 1: Trader Education at Charles Schwab. So, Joe, whenever we have 750 00:36:21,200 --> 00:36:23,320 Speaker 1: you or one of your colleagues from Charles Schwab on it, 751 00:36:23,640 --> 00:36:26,440 Speaker 1: all I think is you guys, see everything you have 752 00:36:26,520 --> 00:36:28,839 Speaker 1: a good jillion customers out there all over the world, 753 00:36:29,080 --> 00:36:31,600 Speaker 1: with a good jillion dollars in assets under management? 754 00:36:32,360 --> 00:36:33,000 Speaker 3: What are you telling? 755 00:36:33,120 --> 00:36:34,840 Speaker 1: What's what's kind of the message going at to Schwab 756 00:36:34,880 --> 00:36:37,719 Speaker 1: clients these days about the market? It seems like, boy, 757 00:36:37,719 --> 00:36:39,680 Speaker 1: if you don't know an Apple or Amazon, you're kind 758 00:36:39,719 --> 00:36:41,200 Speaker 1: of grasping straws here. 759 00:36:41,360 --> 00:36:43,200 Speaker 12: So interesting you bring that up. You know, we do 760 00:36:43,840 --> 00:36:48,040 Speaker 12: attitudinal and behavioral studies, So attitudinal study we do a 761 00:36:48,680 --> 00:36:51,839 Speaker 12: quarterly survey with with our traders, kind of asking him 762 00:36:51,840 --> 00:36:54,560 Speaker 12: what they see in the market right now, a little 763 00:36:54,600 --> 00:36:56,120 Speaker 12: bit more bearish than they were in Q one. 764 00:36:56,440 --> 00:36:56,560 Speaker 9: Uh. 765 00:36:57,280 --> 00:36:57,640 Speaker 8: A lot of it. 766 00:36:57,760 --> 00:36:58,960 Speaker 12: A lot of it I think has to do with 767 00:36:59,080 --> 00:37:01,160 Speaker 12: the rally we've seen in tech. They're starting to pair 768 00:37:01,280 --> 00:37:04,360 Speaker 12: some of those positions in terms of some of the 769 00:37:04,480 --> 00:37:07,640 Speaker 12: behavioral studies. You know, we've seen them pairing positions in 770 00:37:08,120 --> 00:37:11,200 Speaker 12: Vidia in a MD and are they missing you know, 771 00:37:11,320 --> 00:37:14,640 Speaker 12: some of the rally that's you know, that'll that'll be seen, 772 00:37:14,840 --> 00:37:17,040 Speaker 12: you know, well, we'll see how that plays out. But 773 00:37:17,480 --> 00:37:19,120 Speaker 12: with a lot of the tech names in Vidia, a 774 00:37:19,239 --> 00:37:21,279 Speaker 12: m D, Microsoft, they are starting to pair back some 775 00:37:21,440 --> 00:37:23,800 Speaker 12: of those and maybe adding a little bit more to 776 00:37:23,920 --> 00:37:26,239 Speaker 12: what they would consider some value at this point. Be 777 00:37:26,320 --> 00:37:28,320 Speaker 12: at Bank of America, they're looking at Ford some of 778 00:37:28,360 --> 00:37:30,760 Speaker 12: the stocks that maybe have underperformed. 779 00:37:30,080 --> 00:37:30,560 Speaker 5: In Q one. 780 00:37:30,880 --> 00:37:33,560 Speaker 6: Would that be more specific toward retail investors? 781 00:37:33,840 --> 00:37:35,080 Speaker 12: Yeah, absolutely interesting. 782 00:37:35,120 --> 00:37:36,960 Speaker 6: And so what does that tell us then if you 783 00:37:37,120 --> 00:37:39,600 Speaker 6: see that happening in retail versus what we're trying to 784 00:37:39,719 --> 00:37:41,719 Speaker 6: counteract with what's happening, to say with hedge funds and 785 00:37:41,800 --> 00:37:43,200 Speaker 6: more institutional investors. 786 00:37:43,480 --> 00:37:44,840 Speaker 12: Well, here's what I would say. I think a lot 787 00:37:44,880 --> 00:37:46,400 Speaker 12: of it has to do with kind of the education 788 00:37:46,520 --> 00:37:48,520 Speaker 12: that our retail investors have, and and I want to 789 00:37:48,520 --> 00:37:50,280 Speaker 12: promote that a little bit because I think it's important. 790 00:37:51,280 --> 00:37:53,640 Speaker 12: What we do is we talk to them about different 791 00:37:53,640 --> 00:37:56,560 Speaker 12: ways of you know, risk allocations. I'm here for an 792 00:37:56,560 --> 00:37:58,600 Speaker 12: options panel, so we talked about options quite a bit, 793 00:37:59,080 --> 00:38:02,080 Speaker 12: and you know, we look at ways for we provide 794 00:38:02,120 --> 00:38:05,400 Speaker 12: ways for our clients to educate themselves. We have videos, 795 00:38:05,440 --> 00:38:07,280 Speaker 12: we have course work, we have all that stuff available 796 00:38:07,320 --> 00:38:08,920 Speaker 12: to them, and a lot of them take advantage of it. 797 00:38:09,000 --> 00:38:11,400 Speaker 12: They really do. So when they see moves in the 798 00:38:11,480 --> 00:38:14,200 Speaker 12: market like this are kind of you know, counterintuitive to 799 00:38:14,200 --> 00:38:16,520 Speaker 12: a certain extent. When you've got basically five stocks that 800 00:38:16,520 --> 00:38:17,960 Speaker 12: are making up twenty five percent of the S and 801 00:38:18,000 --> 00:38:20,320 Speaker 12: P five hundred market cap. They look at that and 802 00:38:20,400 --> 00:38:23,400 Speaker 12: they say, hmm, you know, there's a potential maybe for 803 00:38:23,520 --> 00:38:25,120 Speaker 12: us to kind of roll out of some of those names, 804 00:38:25,360 --> 00:38:28,600 Speaker 12: look for some value on the other side, maybe some 805 00:38:28,680 --> 00:38:31,000 Speaker 12: stocks that hadn't done as well. I think a lot 806 00:38:31,040 --> 00:38:32,640 Speaker 12: of it just has to do with the risk management 807 00:38:32,680 --> 00:38:33,320 Speaker 12: that we teach. 808 00:38:33,560 --> 00:38:37,080 Speaker 1: So options, futures and options. That's something that I don't know. 809 00:38:37,080 --> 00:38:39,200 Speaker 1: I've been in the Wall street for thirty years. I'm 810 00:38:39,200 --> 00:38:41,920 Speaker 1: still not comfortable that whole concept of futures and options. 811 00:38:42,160 --> 00:38:45,800 Speaker 1: So how do you guys educate the clients at Schwab 812 00:38:45,920 --> 00:38:47,160 Speaker 1: about that part of the market. 813 00:38:47,239 --> 00:38:50,479 Speaker 12: Yeah, I mean we tend to look at premium selling 814 00:38:50,520 --> 00:38:55,120 Speaker 12: type strategies. We keep them away from naked calls, don't. 815 00:38:55,160 --> 00:38:57,200 Speaker 12: We don't like unlimited risk, right, Everything we do is 816 00:38:57,280 --> 00:39:00,040 Speaker 12: risk to find. We talk a lot about spreads. The 817 00:39:00,040 --> 00:39:01,560 Speaker 12: things I'm going to talk about today on the panel 818 00:39:01,800 --> 00:39:04,279 Speaker 12: is this idea of when you do have some of 819 00:39:04,400 --> 00:39:08,440 Speaker 12: these high performing tech names you know that are trading, 820 00:39:08,760 --> 00:39:11,279 Speaker 12: you know, multiple levels where they haven't traded before, and 821 00:39:11,680 --> 00:39:14,200 Speaker 12: get you get certain times in the market where what 822 00:39:14,280 --> 00:39:17,520 Speaker 12: we call call skew is bid so much that people 823 00:39:17,520 --> 00:39:19,920 Speaker 12: are kind of reaching for these calls, right, they're basically 824 00:39:20,040 --> 00:39:22,400 Speaker 12: paying up normally than what they would normally pay for 825 00:39:22,600 --> 00:39:24,520 Speaker 12: these relative to kind of what they would pay for 826 00:39:24,600 --> 00:39:27,200 Speaker 12: the protection. You get some you get some times like 827 00:39:27,280 --> 00:39:29,200 Speaker 12: that where it gives you an opportunity as an investor, 828 00:39:29,200 --> 00:39:31,080 Speaker 12: as a trader, take advantage of that. So we would 829 00:39:31,080 --> 00:39:33,320 Speaker 12: talk about maybe selling call spreads into something like that, 830 00:39:33,800 --> 00:39:36,200 Speaker 12: or if you're long the stock, maybe buying put spreads 831 00:39:36,320 --> 00:39:38,200 Speaker 12: or buying collars as a way to kind of hedge 832 00:39:38,200 --> 00:39:40,239 Speaker 12: some of that downside, especially if you've had those big 833 00:39:40,280 --> 00:39:41,200 Speaker 12: moves in some of those names. 834 00:39:41,400 --> 00:39:43,319 Speaker 6: What are you seeing on the options front heading into 835 00:39:43,400 --> 00:39:44,440 Speaker 6: the FED meeting. 836 00:39:44,320 --> 00:39:48,759 Speaker 12: With the positioning Well, so, interestingly enough, heading into the 837 00:39:49,960 --> 00:39:53,359 Speaker 12: debt ceiling debate, we saw a lot of protection buying 838 00:39:53,600 --> 00:39:55,160 Speaker 12: from the institutional side, right, And was. 839 00:39:55,120 --> 00:39:56,720 Speaker 6: That because it was cheaper to buy protection? 840 00:39:57,320 --> 00:39:58,759 Speaker 12: Yeah, but they bid it up pretty good, and they 841 00:39:58,800 --> 00:39:59,800 Speaker 12: bid it up. So one of the things that we 842 00:40:00,080 --> 00:40:02,080 Speaker 12: got a skew. Right, we looked at the put versus 843 00:40:02,160 --> 00:40:04,480 Speaker 12: a call, we saw the skew levels to levels we 844 00:40:04,520 --> 00:40:05,920 Speaker 12: haven't seen it in about two years. So there was 845 00:40:05,960 --> 00:40:07,520 Speaker 12: a lot of a lot of buying of the protection 846 00:40:07,760 --> 00:40:09,400 Speaker 12: and then as soon as you know, they wait at 847 00:40:09,440 --> 00:40:11,160 Speaker 12: the eleventh hours as they always do, and as soon 848 00:40:11,200 --> 00:40:13,200 Speaker 12: as the announcement came out, a lot of that, a 849 00:40:13,239 --> 00:40:15,440 Speaker 12: lot of that premium came out of the markets, and 850 00:40:15,560 --> 00:40:17,439 Speaker 12: that's why we're seeing, you know, a sub fourteen dix 851 00:40:17,480 --> 00:40:20,880 Speaker 12: at this point. I think heading into the June announcement, 852 00:40:20,960 --> 00:40:23,520 Speaker 12: we haven't started to see as much of the protection buying. 853 00:40:23,600 --> 00:40:25,560 Speaker 12: At this point, we might see that a little bit more. 854 00:40:25,600 --> 00:40:28,360 Speaker 12: I think I would keep an eye on the July announcement. 855 00:40:28,360 --> 00:40:30,640 Speaker 12: I think that there's a little bit more volatility involved there. 856 00:40:30,800 --> 00:40:32,879 Speaker 6: So if people missed out on some of the rally 857 00:40:32,920 --> 00:40:34,879 Speaker 6: that we've seen this year, are they trying to still 858 00:40:35,040 --> 00:40:37,680 Speaker 6: maybe shield some of their defensive positioning, but then try 859 00:40:37,719 --> 00:40:39,480 Speaker 6: to write out any sort of upside that they could 860 00:40:39,520 --> 00:40:42,040 Speaker 6: have potentially leading into these different meetings, whether it's next 861 00:40:42,120 --> 00:40:43,399 Speaker 6: week or the FED meeting in July. 862 00:40:43,560 --> 00:40:44,759 Speaker 12: Well, I'll tell you, I think a lot of that 863 00:40:44,800 --> 00:40:47,080 Speaker 12: has happened in the last week or so. I mean, 864 00:40:47,239 --> 00:40:49,560 Speaker 12: just look at kind of the internals, kind of underneath 865 00:40:49,560 --> 00:40:51,680 Speaker 12: the surface. I thought yesterday was a fascinating day. I 866 00:40:51,760 --> 00:40:55,000 Speaker 12: really did. You had, you know, the SMP was down 867 00:40:55,440 --> 00:40:58,600 Speaker 12: down minimal, but you had the advanced decline line that 868 00:40:58,719 --> 00:41:01,040 Speaker 12: was up. So basically what you saw this big rotation 869 00:41:01,200 --> 00:41:03,640 Speaker 12: out of some of those big megacaf texts into some 870 00:41:03,800 --> 00:41:06,000 Speaker 12: of these value stocks that people are starting to scoop 871 00:41:06,080 --> 00:41:07,319 Speaker 12: up a little bit. I mean, look at the look 872 00:41:07,320 --> 00:41:09,440 Speaker 12: at the rustle's done the last last couple days. It's 873 00:41:09,440 --> 00:41:11,279 Speaker 12: pushed up into a couple of months high. 874 00:41:11,320 --> 00:41:13,200 Speaker 6: So it's up about seven percent this month. 875 00:41:13,080 --> 00:41:14,360 Speaker 12: Absolutely big mosting. 876 00:41:14,440 --> 00:41:17,239 Speaker 1: Okay, all right, so ess and I can't go an 877 00:41:17,320 --> 00:41:21,080 Speaker 1: hour on the show without somebody or something saying talking 878 00:41:21,080 --> 00:41:22,800 Speaker 1: to us about AI. And when we just we have 879 00:41:22,960 --> 00:41:25,399 Speaker 1: to be all over. I have I wouldn't know AI 880 00:41:25,480 --> 00:41:28,560 Speaker 1: if I tripped over. But apparently everybody feels like the 881 00:41:28,640 --> 00:41:30,840 Speaker 1: play is in Vidia. So when you get like a 882 00:41:30,960 --> 00:41:33,160 Speaker 1: crazy vinitiy is a great company. It's been a great 883 00:41:33,160 --> 00:41:35,239 Speaker 1: company for a long time, but it's now been bit 884 00:41:35,360 --> 00:41:37,279 Speaker 1: up in trading evaluations, and I don't think even the 885 00:41:37,320 --> 00:41:40,160 Speaker 1: Invidia bulls can can really stomach what do you see 886 00:41:40,640 --> 00:41:43,200 Speaker 1: across your trading platform, whether it's people trying to hedge 887 00:41:43,239 --> 00:41:45,279 Speaker 1: some of that, or maybe just people trying to maybe 888 00:41:45,320 --> 00:41:47,800 Speaker 1: take a little bit more risk and buy some options 889 00:41:47,840 --> 00:41:49,040 Speaker 1: to try to take advantage of what are you seeing 890 00:41:49,040 --> 00:41:49,719 Speaker 1: around a name like that. 891 00:41:49,960 --> 00:41:51,919 Speaker 12: That's that's one of the names that we're talking about, 892 00:41:51,960 --> 00:41:55,560 Speaker 12: that inflated call skew right where you're really starting to see, uh, 893 00:41:55,719 --> 00:41:58,160 Speaker 12: some people reach for some of some of those call premiums. 894 00:41:59,280 --> 00:42:01,120 Speaker 12: I look at that is, you know, if let's say 895 00:42:01,120 --> 00:42:02,759 Speaker 12: I was long the stock, I would take advantage of that, 896 00:42:02,880 --> 00:42:06,000 Speaker 12: maybe sell some calls into that position. I think, you know, 897 00:42:06,160 --> 00:42:07,960 Speaker 12: if you're long the stock, that gives you the opportunity 898 00:42:07,960 --> 00:42:10,520 Speaker 12: to kind of reduce some of that downside. Or the 899 00:42:10,560 --> 00:42:12,239 Speaker 12: other way you could look at this is would be 900 00:42:12,320 --> 00:42:14,560 Speaker 12: something with like a collar, right, and you know we're 901 00:42:14,600 --> 00:42:16,560 Speaker 12: going to talk about this on the panel, this idea 902 00:42:16,600 --> 00:42:19,120 Speaker 12: of a put spread collar as opposed to just a 903 00:42:19,200 --> 00:42:21,759 Speaker 12: traditional collar, because what the put spread collar does, since 904 00:42:21,800 --> 00:42:24,279 Speaker 12: it's actually a cheaper way than actually buying the put 905 00:42:24,320 --> 00:42:26,680 Speaker 12: out right by itself, you know, kind of reduces that debit. 906 00:42:26,920 --> 00:42:28,560 Speaker 12: It allows you to sell a call that's a little 907 00:42:28,600 --> 00:42:30,560 Speaker 12: bit higher up and gives you opportunity to get a 908 00:42:30,560 --> 00:42:32,799 Speaker 12: little bit more upside on the stock. If you think 909 00:42:32,800 --> 00:42:34,120 Speaker 12: that's going to continue to rally. 910 00:42:34,440 --> 00:42:38,440 Speaker 6: Talk to us about the Vicks below fourteen. Yes, what's happening. 911 00:42:39,120 --> 00:42:42,560 Speaker 12: So, I mean it's from from my perspective. I think 912 00:42:42,600 --> 00:42:45,480 Speaker 12: if you look at the implied ball relative to the 913 00:42:45,560 --> 00:42:47,040 Speaker 12: realized ball, it makes sense. 914 00:42:47,480 --> 00:42:47,600 Speaker 3: Right. 915 00:42:48,280 --> 00:42:50,399 Speaker 12: Think back to twenty two. What happened In twenty two 916 00:42:50,560 --> 00:42:53,839 Speaker 12: everybody bought protection and what happened The market grinded down 917 00:42:53,960 --> 00:42:56,000 Speaker 12: slowly and they lost money on the hedge, so they 918 00:42:56,040 --> 00:42:57,719 Speaker 12: lost money on the on the stock, and they lost 919 00:42:57,760 --> 00:42:59,120 Speaker 12: money in the head. They didn't want to do that 920 00:42:59,200 --> 00:43:02,040 Speaker 12: this year. What's happening is, even though it does seem 921 00:43:02,160 --> 00:43:05,480 Speaker 12: like it's cheap, I mean what three year levels in 922 00:43:05,600 --> 00:43:08,680 Speaker 12: terms of how much it's pulled back, you're still looking 923 00:43:08,760 --> 00:43:12,240 Speaker 12: at a market where the imply volatility exceeds the realized 924 00:43:12,400 --> 00:43:17,160 Speaker 12: volatility until that changes. I think that's probably the pattern. Plus, 925 00:43:17,280 --> 00:43:19,320 Speaker 12: remember we're heading into the summertime, guys. I mean the 926 00:43:19,400 --> 00:43:22,320 Speaker 12: summertime is usually kind of the duldrums internity of volatility. 927 00:43:22,520 --> 00:43:24,600 Speaker 6: When everyone talks about the hallmarks that you need to 928 00:43:24,640 --> 00:43:27,239 Speaker 6: see with capitulation, obviously the VIX gets thrown in there. 929 00:43:27,280 --> 00:43:28,800 Speaker 6: I mean the highest at certain points, whether it was 930 00:43:28,840 --> 00:43:31,440 Speaker 6: the last year briefly earlier back in March, we saw 931 00:43:31,480 --> 00:43:34,040 Speaker 6: it briefly in your day above thirty. But do we 932 00:43:34,120 --> 00:43:36,600 Speaker 6: actually have to see the VIC spike higher in order 933 00:43:36,640 --> 00:43:38,680 Speaker 6: to kind of have that capitulation type moment or do 934 00:43:38,760 --> 00:43:40,759 Speaker 6: you think things are a little bit different. I mean, 935 00:43:40,800 --> 00:43:42,480 Speaker 6: I don't want to say this time around because everyone says, 936 00:43:42,520 --> 00:43:42,920 Speaker 6: don't say that. 937 00:43:43,000 --> 00:43:46,319 Speaker 12: Sure, Sure, My personal opinion is that I think if 938 00:43:46,360 --> 00:43:48,880 Speaker 12: the VIX can get back above eighteen, you'll start to 939 00:43:48,880 --> 00:43:50,760 Speaker 12: see some more people get a little bit more interested 940 00:43:50,920 --> 00:43:55,560 Speaker 12: in hedging. It's kind of an inverse relationship. Sometimes you 941 00:43:55,560 --> 00:43:57,200 Speaker 12: would think that at these levels, right, you see the 942 00:43:57,239 --> 00:43:58,880 Speaker 12: hedgers coming because it's a cheaper way to do it. 943 00:43:59,160 --> 00:44:01,160 Speaker 12: But I think they're way for maybe that signal, that 944 00:44:01,280 --> 00:44:03,759 Speaker 12: signal that hey, we finally got above this eighteen level, 945 00:44:03,920 --> 00:44:05,680 Speaker 12: which we've had a hard time getting above from a 946 00:44:05,800 --> 00:44:08,600 Speaker 12: resistance standpoint. You get above that level, that shows us 947 00:44:08,680 --> 00:44:11,319 Speaker 12: there's some volatility back in the market, and that gives 948 00:44:11,360 --> 00:44:13,640 Speaker 12: you the opportunity to kind of trade that volatility. 949 00:44:14,200 --> 00:44:15,880 Speaker 1: Joe, you're based out in the West coast. I am, 950 00:44:16,080 --> 00:44:17,680 Speaker 1: so you come all the way east. You get off 951 00:44:17,719 --> 00:44:20,880 Speaker 1: the plane. I brought it, You brought this. I mean, 952 00:44:20,920 --> 00:44:22,000 Speaker 1: you guys are kind of used to this. 953 00:44:22,080 --> 00:44:22,719 Speaker 3: Every once in a while. 954 00:44:22,760 --> 00:44:24,000 Speaker 12: We get it every three years, Paul. 955 00:44:24,160 --> 00:44:25,759 Speaker 3: Yeah, and this is new to us. 956 00:44:25,880 --> 00:44:29,359 Speaker 6: This, this is brand new dealing with something I haven't seen. 957 00:44:29,400 --> 00:44:30,560 Speaker 6: We don't see this in Texas either. 958 00:44:30,800 --> 00:44:33,520 Speaker 12: No, and remember we pay up for this stuff too, right, 959 00:44:33,680 --> 00:44:36,120 Speaker 12: So yeah, talk about implied volatility? 960 00:44:36,160 --> 00:44:38,200 Speaker 1: Oky, real quick, third thirty seconds you're on this, Penelty. 961 00:44:38,280 --> 00:44:39,640 Speaker 1: What are you guys focusing on on this panel? 962 00:44:39,719 --> 00:44:41,759 Speaker 12: Yeah, basically we're going to look at how retail and 963 00:44:41,800 --> 00:44:45,200 Speaker 12: then institutional investors use options as a way to enhance 964 00:44:45,280 --> 00:44:47,239 Speaker 12: income and then also kind of hedge portfolios. 965 00:44:47,360 --> 00:44:50,080 Speaker 6: Alex and Manova on my team is actually moderating that panel, 966 00:44:50,120 --> 00:44:51,160 Speaker 6: so everyone should tune into that. 967 00:44:51,239 --> 00:44:52,719 Speaker 1: Yeah, check out that out and again, you know, we'll 968 00:44:52,800 --> 00:44:54,920 Speaker 1: just plug that again because I mean, there's a lot 969 00:44:55,000 --> 00:44:57,520 Speaker 1: of smart people here in Eternal. Customers can watch and 970 00:44:57,600 --> 00:45:01,160 Speaker 1: listen live to our Bloomberg invest efforts on Live Go. 971 00:45:01,760 --> 00:45:04,080 Speaker 1: You can also check out highlights from the Bloomberg invest 972 00:45:04,120 --> 00:45:08,640 Speaker 1: conference on your Bloomberg Talks podcast feed, available anywhere you 973 00:45:08,760 --> 00:45:09,680 Speaker 1: get your podcasts. 974 00:45:10,000 --> 00:45:13,080 Speaker 8: You're listening to the tape. Cat's are live program Bloomberg 975 00:45:13,200 --> 00:45:16,759 Speaker 8: Markets weekdays at ten am Eastern on Bloomberg Radio, the 976 00:45:16,840 --> 00:45:20,040 Speaker 8: tune in app Bloomberg dot Com and the Bloomberg Business app. 977 00:45:20,120 --> 00:45:22,880 Speaker 8: You can also listen live on Amazon Alexa from our 978 00:45:22,960 --> 00:45:27,320 Speaker 8: flagship New York station. Just say Alexa play Bloomberg eleven thirty. 979 00:45:29,200 --> 00:45:31,440 Speaker 1: We got some just awesome people kind of walking through 980 00:45:31,520 --> 00:45:34,640 Speaker 1: here for the Bloomberg invest conference, and we grabbed another one. Yes, 981 00:45:34,920 --> 00:45:38,680 Speaker 1: Mike Rogers, retired four star admiral for the US Navy. 982 00:45:38,760 --> 00:45:40,480 Speaker 1: Also a proud Auburn. 983 00:45:40,320 --> 00:45:42,359 Speaker 5: Tiger or Eagle baby. 984 00:45:43,719 --> 00:45:45,960 Speaker 3: All right, Admiral, thanks so much for joining us here. 985 00:45:46,280 --> 00:45:47,440 Speaker 3: I want to talk about Ukraine. 986 00:45:48,640 --> 00:45:52,680 Speaker 1: Is there any credible military officer that could have gone 987 00:45:52,840 --> 00:45:55,920 Speaker 1: up to mister Putin, you know, a year ago, and said, oh, 988 00:45:55,960 --> 00:45:57,840 Speaker 1: we can do this easy. We're just gonna waltz right 989 00:45:57,880 --> 00:46:00,279 Speaker 1: into KEIV, just give us a week. Is there any 990 00:46:00,680 --> 00:46:02,840 Speaker 1: credible officer that could have done that in good conscience? 991 00:46:03,520 --> 00:46:05,560 Speaker 5: Well, look, I'm not on the inside of the Russian 992 00:46:05,640 --> 00:46:08,040 Speaker 5: military closer than we are now. 993 00:46:08,480 --> 00:46:12,040 Speaker 13: Clearly, both his military and Putin himself. I think Miskale 994 00:46:12,280 --> 00:46:15,560 Speaker 13: miscalculated in two important dimensions. Number One, they overestimated their 995 00:46:15,560 --> 00:46:21,200 Speaker 13: own capabilities, but perhaps most importantly, they grossly underestimated Ukraine's capacity, 996 00:46:21,360 --> 00:46:24,000 Speaker 13: but also their will. Yeah, I think their view was 997 00:46:24,360 --> 00:46:27,080 Speaker 13: will penetrate the border. We'll move in very visible presence. 998 00:46:27,200 --> 00:46:29,800 Speaker 13: We will awe them, shock them, Hey, they will just wilt. 999 00:46:30,000 --> 00:46:32,880 Speaker 13: That clearly has not happened. And we're sixteen months now 1000 00:46:33,280 --> 00:46:35,960 Speaker 13: into a conflict that most people thought was two days. 1001 00:46:35,840 --> 00:46:37,200 Speaker 5: Or going to be two weeks or less. 1002 00:46:37,760 --> 00:46:41,120 Speaker 6: Talk to about this latest counter offensive in Ukraine, obviously 1003 00:46:41,200 --> 00:46:43,000 Speaker 6: to ows the Russian military. 1004 00:46:43,640 --> 00:46:47,439 Speaker 13: So you have seen Ukraine assimilate or acquire a set 1005 00:46:47,520 --> 00:46:50,560 Speaker 13: of new weapons, new capabilities. They've spent several months training 1006 00:46:50,640 --> 00:46:53,960 Speaker 13: on those, integrating them into the Ukrainian military. Now we'll 1007 00:46:54,000 --> 00:46:56,160 Speaker 13: see how they apply them, if you will, in an 1008 00:46:56,239 --> 00:46:57,920 Speaker 13: offensive on the battlefield. 1009 00:46:57,960 --> 00:47:01,560 Speaker 5: It's likely to start the very immediate near term. 1010 00:47:01,640 --> 00:47:04,200 Speaker 13: That the situation with the dam perhaps has complicated some 1011 00:47:04,320 --> 00:47:07,319 Speaker 13: things from the planning perspective and certainly from a humanitarian 1012 00:47:08,000 --> 00:47:10,239 Speaker 13: most importantly from humanitarian perspective. 1013 00:47:10,320 --> 00:47:14,399 Speaker 5: But we'll see. The challenge to me is I could 1014 00:47:14,480 --> 00:47:15,440 Speaker 5: well be wrong, but. 1015 00:47:15,560 --> 00:47:18,399 Speaker 13: My sense sixteen months into this conflict is that neither 1016 00:47:18,640 --> 00:47:22,640 Speaker 13: side has enough military capacity to deliver a knock up blow. 1017 00:47:22,680 --> 00:47:25,520 Speaker 13: Defining a knock up blow is either, in the case 1018 00:47:25,560 --> 00:47:28,800 Speaker 13: of Ukraine, driving the Russians totally out of Ukrainian territory 1019 00:47:28,840 --> 00:47:31,920 Speaker 13: to include Crimea, which is the Ukrainian stated political objective 1020 00:47:31,920 --> 00:47:34,960 Speaker 13: here or on the case of the Russians being able 1021 00:47:35,040 --> 00:47:38,040 Speaker 13: to not only sustain their current holdings, but quite frankly, 1022 00:47:38,480 --> 00:47:39,960 Speaker 13: you can see they've kind of given up on the 1023 00:47:40,200 --> 00:47:44,880 Speaker 13: offensive from a significant perspective. They're into incremental gains of 1024 00:47:44,960 --> 00:47:47,719 Speaker 13: where they are very different dynamic than sixteen months ago. 1025 00:47:47,800 --> 00:47:49,800 Speaker 13: But the sad thing is because neither side seems to 1026 00:47:49,840 --> 00:47:54,279 Speaker 13: have the ability to generate overwhelming advantage, that means to 1027 00:47:54,400 --> 00:47:57,680 Speaker 13: me is a high likelihood this conflict continues for some 1028 00:47:57,960 --> 00:48:00,640 Speaker 13: significant period of time. I define that is, hey, I 1029 00:48:00,680 --> 00:48:02,239 Speaker 13: don't think this is going to end by the end 1030 00:48:02,280 --> 00:48:04,640 Speaker 13: of the years, is, of example, six months. 1031 00:48:04,480 --> 00:48:06,480 Speaker 6: From it, So the timetable much longer than we could 1032 00:48:06,520 --> 00:48:08,520 Speaker 6: just catch I suspected. 1033 00:48:08,600 --> 00:48:10,879 Speaker 5: Now I hope I'm wrong. I always remind people. 1034 00:48:10,880 --> 00:48:13,279 Speaker 13: Look, if you study history, conflicts, generally in under three 1035 00:48:13,360 --> 00:48:17,520 Speaker 13: scenarios or some combinations these three, one side manages to 1036 00:48:17,600 --> 00:48:21,400 Speaker 13: achieve a significant kind of battlefield advantage, and either the 1037 00:48:21,480 --> 00:48:23,480 Speaker 13: one that's on the wrong end of that says, hey, 1038 00:48:23,520 --> 00:48:25,640 Speaker 13: we need to stop this because they're kicking our butt 1039 00:48:25,680 --> 00:48:29,279 Speaker 13: on the battlefield. The second is political pressure on the 1040 00:48:29,320 --> 00:48:32,200 Speaker 13: primary belligerents Russia or Ukraine gets to the point where 1041 00:48:32,480 --> 00:48:35,640 Speaker 13: they feel, look politically, our population, the domestic pressures, we 1042 00:48:35,800 --> 00:48:38,800 Speaker 13: need to stop this. Neither of these nations, Russia or 1043 00:48:38,920 --> 00:48:44,280 Speaker 13: Ukraine is currently under any domestic pressure internally, any meaningful 1044 00:48:44,320 --> 00:48:47,120 Speaker 13: pressure to stop this. And the third scenario, if you 1045 00:48:47,160 --> 00:48:51,000 Speaker 13: look at history, some outside party historically it might have 1046 00:48:51,120 --> 00:48:53,759 Speaker 13: been the United Nations, It might have been a nation 1047 00:48:53,960 --> 00:48:58,120 Speaker 13: that is supplying the primary con combatants Russia Ukraine with 1048 00:48:58,360 --> 00:49:00,680 Speaker 13: arms or capabilities. In this scenario, that would be China 1049 00:49:00,719 --> 00:49:04,879 Speaker 13: for Russia, US EU, NATO for Ukraine. None of those 1050 00:49:04,920 --> 00:49:07,800 Speaker 13: outside parties right now are applying pressure really on the 1051 00:49:07,880 --> 00:49:10,240 Speaker 13: combatants to stop this. So it leads me to believe 1052 00:49:10,600 --> 00:49:12,960 Speaker 13: unless one of those three dynamics change, and it doesn't 1053 00:49:12,960 --> 00:49:14,400 Speaker 13: look like they're going to change in the air interim, 1054 00:49:14,880 --> 00:49:18,200 Speaker 13: we're likely to see this protracted kind of conflicts. 1055 00:49:18,239 --> 00:49:22,520 Speaker 1: Sadly, how decisive, if at all, will be the introduction 1056 00:49:22,760 --> 00:49:26,520 Speaker 1: of fix wing aircraft that you know American F sixteens 1057 00:49:26,800 --> 00:49:27,719 Speaker 1: to the Ukrainians. 1058 00:49:28,120 --> 00:49:32,040 Speaker 5: Right, Look, will it provide additional capacity and capability? Yes? 1059 00:49:32,760 --> 00:49:34,759 Speaker 13: Is it in and of itself likely to lead to 1060 00:49:34,840 --> 00:49:39,160 Speaker 13: something that is so destabilizing it it helps lead Ukraine's 1061 00:49:39,160 --> 00:49:39,600 Speaker 13: ability to. 1062 00:49:39,640 --> 00:49:41,840 Speaker 5: Drive the Russians out. I doubt it. 1063 00:49:42,640 --> 00:49:45,359 Speaker 13: I think we're in the situation where there's no one 1064 00:49:45,400 --> 00:49:50,200 Speaker 13: particular weapons system or technology that if the Ukraine, if 1065 00:49:50,320 --> 00:49:52,000 Speaker 13: Ukraine had it, it would end the conflict. 1066 00:49:52,239 --> 00:49:53,439 Speaker 5: I just don't see it that way. 1067 00:49:53,560 --> 00:49:56,960 Speaker 13: It's their ability to bring together multiple kind of capacities. 1068 00:49:56,960 --> 00:49:58,800 Speaker 13: Remember among the things they've been asking for that the 1069 00:49:58,920 --> 00:50:00,920 Speaker 13: US has said, Hey, look, we're little concerned about this, 1070 00:50:01,040 --> 00:50:03,359 Speaker 13: that could be destabilizing. They have talked for a long 1071 00:50:03,400 --> 00:50:05,400 Speaker 13: time now about get US weapons that allow us to 1072 00:50:05,520 --> 00:50:11,560 Speaker 13: project to actually to deliver firepower, destructive capability deeper into Russia. 1073 00:50:11,640 --> 00:50:14,000 Speaker 5: Hey, look, if we want to drive them out of Ukraine, we. 1074 00:50:14,080 --> 00:50:16,200 Speaker 13: Need to go after the infrastructure that they're using in 1075 00:50:16,320 --> 00:50:18,920 Speaker 13: Russia itself to support them. And we also potentially need 1076 00:50:18,960 --> 00:50:20,759 Speaker 13: to look at how might we break the will of 1077 00:50:20,800 --> 00:50:23,440 Speaker 13: the Russian public here, much like you see the Russians 1078 00:50:23,480 --> 00:50:26,880 Speaker 13: doing with the airstrikes, cruise missiles, et cetera, into Kievan 1079 00:50:27,000 --> 00:50:29,240 Speaker 13: other cities within Ukraine. 1080 00:50:29,440 --> 00:50:31,640 Speaker 6: Vladimir putin what are you watching for? When it comes 1081 00:50:31,680 --> 00:50:34,360 Speaker 6: to the risks of what he could potentially do. Obviously 1082 00:50:34,440 --> 00:50:35,600 Speaker 6: a lot of unknownes there. 1083 00:50:36,440 --> 00:50:41,320 Speaker 13: Look, he can always opt to escalate. Escalate either in intensity, 1084 00:50:41,600 --> 00:50:45,040 Speaker 13: apply a lot more resources. He could choose to escalate 1085 00:50:45,120 --> 00:50:48,560 Speaker 13: in terms of expanding this geographically. Hey, this conflict if 1086 00:50:48,600 --> 00:50:53,000 Speaker 13: you will, and moves beyond just Ukraine. He could potentially 1087 00:50:53,040 --> 00:50:55,880 Speaker 13: expand this into other domains, think about cyber think about space. 1088 00:50:56,680 --> 00:50:58,040 Speaker 5: I think where we are right now. 1089 00:50:58,200 --> 00:51:01,080 Speaker 13: I think Putin has come to the conclusion expanding this 1090 00:51:01,200 --> 00:51:04,080 Speaker 13: significantly is probably not in their best interest. So they've 1091 00:51:04,160 --> 00:51:06,480 Speaker 13: tended to be a little bit more measured outside of 1092 00:51:06,560 --> 00:51:09,120 Speaker 13: the specifics of the ground kind of conflict that we're 1093 00:51:09,200 --> 00:51:12,000 Speaker 13: seeing and the strikes and other things. I in no 1094 00:51:12,040 --> 00:51:13,440 Speaker 13: way I am trying to minimize that. And for the 1095 00:51:13,480 --> 00:51:16,879 Speaker 13: men and women in Ukraine, Wow, this is imagine living 1096 00:51:16,960 --> 00:51:18,400 Speaker 13: in a society where. 1097 00:51:18,239 --> 00:51:20,279 Speaker 5: You've got missile strikes every night. 1098 00:51:20,360 --> 00:51:22,000 Speaker 13: Now you're starting to see a couple during the day 1099 00:51:22,320 --> 00:51:26,839 Speaker 13: where infrastructure like dams, power generation, you know, are being destroyed, 1100 00:51:27,200 --> 00:51:30,600 Speaker 13: where your transportation infrastructure is a target, and where there's 1101 00:51:30,760 --> 00:51:35,680 Speaker 13: just random missile strikes, random weapons being fired into key 1102 00:51:35,719 --> 00:51:38,239 Speaker 13: even other places where you just don't know what's going 1103 00:51:38,320 --> 00:51:42,680 Speaker 13: to happen in a typical day. That is not Boy, 1104 00:51:42,719 --> 00:51:44,759 Speaker 13: that's a painful experience. I wouldn't want anybody to do. 1105 00:51:45,040 --> 00:51:49,399 Speaker 1: Is there any reasonable scenario strategy that the Ukrainians could 1106 00:51:49,480 --> 00:51:52,920 Speaker 1: undertake where they could in fact achieve all the military 1107 00:51:53,000 --> 00:51:57,080 Speaker 1: games push Russia out of all that? I mean, is 1108 00:51:57,120 --> 00:51:58,719 Speaker 1: there any reasonable way they could do that? 1109 00:52:00,040 --> 00:52:02,279 Speaker 13: Look, I think that that's a tough challenge, given the 1110 00:52:02,360 --> 00:52:05,160 Speaker 13: current level of resources they have, given the fact that 1111 00:52:05,280 --> 00:52:08,200 Speaker 13: quite frankly, remember that there's also pressure on them in 1112 00:52:08,320 --> 00:52:10,800 Speaker 13: some ways, with nations saying look, we want to support you, 1113 00:52:11,360 --> 00:52:13,920 Speaker 13: but we don't want this to escalate, don't want this 1114 00:52:14,040 --> 00:52:14,840 Speaker 13: to become broader. 1115 00:52:15,960 --> 00:52:18,239 Speaker 5: Because of that, Ukraine is in some ways trying to 1116 00:52:18,280 --> 00:52:20,000 Speaker 5: walk a fine line here. It clearly wants to. 1117 00:52:20,040 --> 00:52:23,040 Speaker 13: Achieve its stated objective of driving the Russian forces out 1118 00:52:23,080 --> 00:52:25,279 Speaker 13: of Ukraine and territory. On the other hand, it is 1119 00:52:25,400 --> 00:52:29,200 Speaker 13: mindful that its primary backers are also telling it we 1120 00:52:29,280 --> 00:52:30,959 Speaker 13: got to do this in a way that doesn't create 1121 00:52:31,000 --> 00:52:32,880 Speaker 13: a worse situation that broadens it. 1122 00:52:33,080 --> 00:52:36,440 Speaker 5: That's not an insignificant challenge. If you're in Keiev, I suspect. 1123 00:52:36,360 --> 00:52:39,960 Speaker 6: We only have about forty second we know here we go. 1124 00:52:40,120 --> 00:52:42,279 Speaker 6: What is the next immediate thing that you're keeping your 1125 00:52:42,320 --> 00:52:43,880 Speaker 6: eye on when it comes to all of is unfolding. 1126 00:52:45,360 --> 00:52:48,760 Speaker 13: Number one, to these new weapons that Ukraine is receiving. 1127 00:52:48,880 --> 00:52:50,440 Speaker 13: Think about some of the tanks, think about some of 1128 00:52:50,480 --> 00:52:54,040 Speaker 13: the armored vehicles, think about aircraft. Does that change the dynamic? 1129 00:52:54,160 --> 00:52:54,520 Speaker 5: Number one? 1130 00:52:54,600 --> 00:52:58,680 Speaker 13: Number two, do you see any weakening in the political 1131 00:52:58,760 --> 00:53:01,160 Speaker 13: cohesion in the West commitment to Hey, we're going to 1132 00:53:01,239 --> 00:53:04,560 Speaker 13: keep these sanctions on? Number three, the current sanctions clearly 1133 00:53:04,600 --> 00:53:07,160 Speaker 13: haven't achieved the desired effect. Not saying they don't have impact, 1134 00:53:07,239 --> 00:53:09,200 Speaker 13: but that the desired intent was, Hey, look, this is 1135 00:53:09,239 --> 00:53:11,160 Speaker 13: going to create enough pain that Putin's gonna side he 1136 00:53:11,200 --> 00:53:13,840 Speaker 13: wants to leave. Do we see additional sanctions coming on? 1137 00:53:13,920 --> 00:53:15,480 Speaker 13: And the last thing that I would be looking for, 1138 00:53:16,440 --> 00:53:21,560 Speaker 13: are there any indications of increased internal pressure for Putin. 1139 00:53:21,560 --> 00:53:24,680 Speaker 5: Or indications that Putin has come to the conclusion. 1140 00:53:24,800 --> 00:53:27,520 Speaker 13: That the situation is starting to destabilize, Because remember, the 1141 00:53:27,560 --> 00:53:29,680 Speaker 13: biggest thing I think in the back of his mind 1142 00:53:29,840 --> 00:53:31,680 Speaker 13: is this idea of regime change. 1143 00:53:31,680 --> 00:53:33,880 Speaker 5: Hey, is somehow he under pressure to be removed? 1144 00:53:34,120 --> 00:53:34,440 Speaker 14: All right? 1145 00:53:34,719 --> 00:53:37,359 Speaker 1: Admiral Mike Rogers, thanks so much for joining US four 1146 00:53:37,400 --> 00:53:39,680 Speaker 1: star Admiral US Naval. We appreciate getting your insights. 1147 00:53:39,960 --> 00:53:43,040 Speaker 8: You're listening to the tape cans are live program Bloomberg 1148 00:53:43,120 --> 00:53:46,680 Speaker 8: Markets weekdays at ten am Eastern on Bloomberg Radio, the 1149 00:53:46,800 --> 00:53:49,960 Speaker 8: tune in app, Bloomberg dot Com, and the Bloomberg Business App. 1150 00:53:50,040 --> 00:53:52,839 Speaker 8: You can also listen live on Amazon Alexa from our 1151 00:53:52,880 --> 00:53:57,240 Speaker 8: flagship New York station. Just say Alexa play Bloomberg eleven thirty. 1152 00:53:58,680 --> 00:54:01,400 Speaker 1: All right, let's talk about the economy here. You know 1153 00:54:01,440 --> 00:54:03,319 Speaker 1: a lot of cross currents out there. We had job 1154 00:54:03,360 --> 00:54:04,000 Speaker 1: schemes came in a. 1155 00:54:04,000 --> 00:54:06,080 Speaker 3: Little bit higher. But we want to talk to the economy. 1156 00:54:06,200 --> 00:54:09,960 Speaker 1: Our go to voice such a go to go to voices, Annawang, 1157 00:54:10,120 --> 00:54:13,480 Speaker 1: chief FiOS Economists with Bloomberg Economists, way over educated. 1158 00:54:13,480 --> 00:54:15,400 Speaker 3: I won't even go into the whole thing, but we 1159 00:54:15,480 --> 00:54:16,560 Speaker 3: get the benefit of it here. 1160 00:54:16,680 --> 00:54:19,880 Speaker 1: So and what are the key things you're looking for 1161 00:54:20,160 --> 00:54:22,880 Speaker 1: here to cage where this economy is going to go 1162 00:54:22,880 --> 00:54:24,040 Speaker 1: over the next six to twelve months. 1163 00:54:24,040 --> 00:54:25,319 Speaker 3: Where should we be focusing our time? 1164 00:54:25,680 --> 00:54:28,320 Speaker 14: Yeah, we actually just published a piece on the Terminal 1165 00:54:28,440 --> 00:54:34,240 Speaker 14: yesterday about showing that Greenspan's two favorite economic indicators, railcar 1166 00:54:34,360 --> 00:54:40,280 Speaker 14: loadings and car boxes shipments, actually showed a significant plunge 1167 00:54:40,560 --> 00:54:45,320 Speaker 14: in in orders in demand and in fact, the railcar 1168 00:54:45,440 --> 00:54:50,040 Speaker 14: loadings plunged by sixteen percent on the three months moving average, 1169 00:54:50,160 --> 00:54:53,759 Speaker 14: and that is the lowest since two thousand and nine September. 1170 00:54:54,200 --> 00:54:57,560 Speaker 14: So I would say that these leading indicators, because seriously, 1171 00:54:57,680 --> 00:55:01,080 Speaker 14: these two are the the you know, utmost leading indicators 1172 00:55:01,200 --> 00:55:04,120 Speaker 14: out of everything that we see is flagging quite a 1173 00:55:04,400 --> 00:55:05,680 Speaker 14: serious softening ahead. 1174 00:55:06,120 --> 00:55:08,320 Speaker 6: People were taking a close side. Obviously it's Thursday we 1175 00:55:08,400 --> 00:55:10,960 Speaker 6: get the initial jobless claims readings. We did see it 1176 00:55:11,000 --> 00:55:13,160 Speaker 6: above two hundred and sixty thousand, rising to the heights 1177 00:55:13,239 --> 00:55:15,840 Speaker 6: in October of twenty twenty one. When it comes to 1178 00:55:15,920 --> 00:55:17,680 Speaker 6: some of these labor datas, is that sort of the 1179 00:55:17,760 --> 00:55:21,000 Speaker 6: last shoot to drop? Is that more obviously a lagging indicator, 1180 00:55:21,080 --> 00:55:23,319 Speaker 6: And if so, where do you rather look to get 1181 00:55:23,360 --> 00:55:25,120 Speaker 6: more of a headway as far as this is what 1182 00:55:25,160 --> 00:55:26,560 Speaker 6: the economy is telling us at this point. 1183 00:55:26,760 --> 00:55:29,200 Speaker 14: Yeah, So the labor market certainly is. 1184 00:55:29,280 --> 00:55:37,200 Speaker 7: The laggiest, the last drop with all the degrees, and 1185 00:55:37,920 --> 00:55:38,160 Speaker 7: if you. 1186 00:55:38,280 --> 00:55:41,959 Speaker 14: Plug it into a fancy econometric model, it will show 1187 00:55:42,000 --> 00:55:45,800 Speaker 14: that the lags of the feed's monetary policy is actually 1188 00:55:45,840 --> 00:55:48,600 Speaker 14: the longest for a labor market. It takes about twenty 1189 00:55:48,680 --> 00:55:49,799 Speaker 14: four months. 1190 00:55:49,520 --> 00:55:50,960 Speaker 3: For it to hit. 1191 00:55:51,080 --> 00:55:54,040 Speaker 6: So I could still see another possibly close to twelve months. 1192 00:55:54,080 --> 00:55:55,000 Speaker 7: It's just very slow. 1193 00:55:55,200 --> 00:55:58,640 Speaker 14: However, it is the most important one because if people 1194 00:55:58,760 --> 00:56:01,200 Speaker 14: don't have income, then they will reduce spending. So once 1195 00:56:01,280 --> 00:56:04,200 Speaker 14: this hit, the shoe is very like big, it really 1196 00:56:04,320 --> 00:56:07,000 Speaker 14: hits the economy. So in terms of today, I think 1197 00:56:07,040 --> 00:56:09,919 Speaker 14: there was a lot of chatter about how to take 1198 00:56:10,280 --> 00:56:13,880 Speaker 14: whether to take the jobless claims jump seriously, that we 1199 00:56:13,920 --> 00:56:17,640 Speaker 14: have been burned by the Massachusetts fraud. But I think 1200 00:56:17,680 --> 00:56:20,320 Speaker 14: there's a good reason to take this seriously because the 1201 00:56:20,480 --> 00:56:23,359 Speaker 14: jump is coming from Ohio. And I was just as 1202 00:56:23,440 --> 00:56:28,080 Speaker 14: I just mentioned, Greenspan's favorite indicator is railcar loadings, and 1203 00:56:28,200 --> 00:56:31,880 Speaker 14: Ohio is actually an intermodal node in the United States, 1204 00:56:32,239 --> 00:56:35,680 Speaker 14: and it's consistent within the Baise book. The Cleveland District 1205 00:56:35,760 --> 00:56:38,280 Speaker 14: in Ohio reported a freight recession. 1206 00:56:38,440 --> 00:56:40,840 Speaker 7: So that's there's a probable. 1207 00:56:40,520 --> 00:56:43,040 Speaker 14: Cost to to why this jobless claim jumped. 1208 00:56:43,640 --> 00:56:48,200 Speaker 1: Bloomberg Economics, what's the recession call coming out of your your. 1209 00:56:48,080 --> 00:56:50,960 Speaker 14: Folks, we are we have been at Q three recession 1210 00:56:51,040 --> 00:56:54,919 Speaker 14: this year for a year, and we haven't changed because 1211 00:56:54,920 --> 00:56:55,359 Speaker 14: you've got. 1212 00:56:55,280 --> 00:56:58,440 Speaker 6: This she's got this model thing amazing because the ECFC 1213 00:56:58,600 --> 00:57:01,000 Speaker 6: function of the terminal, it's all as you know, all 1214 00:57:01,280 --> 00:57:02,880 Speaker 6: of these things. It's always all over the place. If 1215 00:57:02,920 --> 00:57:07,000 Speaker 6: you look quarter over quarter, there's just slight contraction five 1216 00:57:07,120 --> 00:57:08,960 Speaker 6: tens of a percent for the third quarter, four tens 1217 00:57:09,000 --> 00:57:11,080 Speaker 6: of a percent for the fourth quarter. But if you 1218 00:57:11,120 --> 00:57:14,279 Speaker 6: look yearly, not there. It seems like coming into this year, 1219 00:57:14,400 --> 00:57:17,040 Speaker 6: as you know, everybody was expecting some sort of downturn. 1220 00:57:17,440 --> 00:57:19,920 Speaker 6: Is this possibly maybe we just see more of a 1221 00:57:20,040 --> 00:57:22,880 Speaker 6: slower low growth environment than sort of this recession that 1222 00:57:22,960 --> 00:57:24,320 Speaker 6: everyone is trying to predict. 1223 00:57:24,720 --> 00:57:26,960 Speaker 14: I think at this point, whether there's a recession or not, 1224 00:57:27,160 --> 00:57:31,480 Speaker 14: it's not very important for investors because it's so highly anticipated. 1225 00:57:31,920 --> 00:57:35,880 Speaker 14: It's it's really whether this will be longer this even 1226 00:57:35,960 --> 00:57:38,080 Speaker 14: if it's a slow growth, but it's not a recession, 1227 00:57:38,160 --> 00:57:40,400 Speaker 14: but if it persists for three or four years, it's 1228 00:57:40,480 --> 00:57:43,360 Speaker 14: a problem, right, And if it turns out to be 1229 00:57:43,400 --> 00:57:47,360 Speaker 14: a deep plunge, if the green span indicators it's representative 1230 00:57:47,440 --> 00:57:49,640 Speaker 14: of the wider economy, which I don't think it is. 1231 00:57:49,760 --> 00:57:52,560 Speaker 14: I mean, it's mostly focused on goods. But if it is, 1232 00:57:52,840 --> 00:57:55,200 Speaker 14: then it's going to be a deep, deep recession. And 1233 00:57:55,360 --> 00:57:59,360 Speaker 14: some market participants are indeed pricing in a deep recession, 1234 00:57:59,680 --> 00:58:03,720 Speaker 14: like the bonds, bonds, fixed income traders. If you look 1235 00:58:03,720 --> 00:58:07,920 Speaker 14: at the distribution of bets on the FED rate hikes, 1236 00:58:08,080 --> 00:58:10,720 Speaker 14: it's really bimoldal You have one camp that's seeing like 1237 00:58:10,880 --> 00:58:14,560 Speaker 14: significant and deep recession, there's another camp that sees no lending, 1238 00:58:14,760 --> 00:58:17,439 Speaker 14: and we're sort of in the middle. So so yeah, 1239 00:58:17,600 --> 00:58:20,280 Speaker 14: I think what's important is whether there's a drawn out 1240 00:58:20,360 --> 00:58:22,959 Speaker 14: low growth period because the FED had to keep rates 1241 00:58:23,040 --> 00:58:26,760 Speaker 14: higher for longer, or whether there's a really really deep plunge. 1242 00:58:27,400 --> 00:58:29,720 Speaker 3: A deep plunge when I got everybody who's got a 1243 00:58:29,800 --> 00:58:30,440 Speaker 3: job has a job. 1244 00:58:30,560 --> 00:58:33,240 Speaker 6: Consumer spending too, those numbers, what is that telling us 1245 00:58:33,320 --> 00:58:33,840 Speaker 6: at this point? 1246 00:58:34,160 --> 00:58:37,439 Speaker 14: Well, I think the consumer spending did experience a little 1247 00:58:37,480 --> 00:58:39,840 Speaker 14: bit of a renaissance in January and February. 1248 00:58:39,920 --> 00:58:42,080 Speaker 7: But let me go back to Green Spans. 1249 00:58:45,000 --> 00:58:48,680 Speaker 14: Indicator is saying that there's a significant plunge since. 1250 00:58:48,520 --> 00:58:49,640 Speaker 6: The SVB collapse. 1251 00:58:49,720 --> 00:58:52,400 Speaker 14: So I think a lot of this tightening and lags 1252 00:58:52,440 --> 00:58:55,960 Speaker 14: to monetary policy. There is a basis for that, like 1253 00:58:56,120 --> 00:58:59,480 Speaker 14: auto loans default. Right, you're we are now hearing more 1254 00:58:59,600 --> 00:59:03,480 Speaker 14: murmur ofault. These people are paying over ten percent for car, 1255 00:59:03,560 --> 00:59:05,600 Speaker 14: they're monthly payments over a thousand dollars. 1256 00:59:05,760 --> 00:59:07,720 Speaker 6: They just have their monthly credit data. 1257 00:59:07,800 --> 00:59:08,240 Speaker 8: I believe this. 1258 00:59:08,560 --> 00:59:12,160 Speaker 14: That's right, And the lacks of monetary policy is also 1259 00:59:12,320 --> 00:59:16,680 Speaker 14: pretty long for the credit channel, which is through bank tightening. 1260 00:59:17,160 --> 00:59:20,680 Speaker 14: Banks with draw on credit because the credit risk is 1261 00:59:20,760 --> 00:59:23,920 Speaker 14: getting worse as the economy goes into a slow growth period. 1262 00:59:24,200 --> 00:59:26,520 Speaker 14: So to your point, if there's no recession, but we 1263 00:59:26,640 --> 00:59:29,640 Speaker 14: have very slow growth for for or four years, default 1264 00:59:29,760 --> 00:59:33,600 Speaker 14: rates will rise and that's where the tightening, the credit 1265 00:59:33,680 --> 00:59:37,560 Speaker 14: tightening on the economy will feed on each other and 1266 00:59:38,200 --> 00:59:40,240 Speaker 14: generate more downward pressure on all. 1267 00:59:40,320 --> 00:59:41,880 Speaker 1: Right, A lot of folks will say the FED was 1268 00:59:41,920 --> 00:59:44,400 Speaker 1: late to the party and now they're late to leave 1269 00:59:45,440 --> 00:59:47,680 Speaker 1: in terms of cutting rates. Do you think that's the case? 1270 00:59:47,880 --> 00:59:50,959 Speaker 1: Have they gone too far? Is keeping rates this level 1271 00:59:51,080 --> 00:59:53,880 Speaker 1: too long a real risk problem? 1272 00:59:53,920 --> 00:59:55,960 Speaker 14: I guess my view on this has been very clear. 1273 00:59:56,000 --> 00:59:59,000 Speaker 14: I think the risk for them is under tightening. Okay, 1274 01:00:00,040 --> 01:00:02,120 Speaker 14: k For I think the data in the next two 1275 01:00:02,240 --> 01:00:05,920 Speaker 14: months might might seem to contradict my view because I 1276 01:00:06,000 --> 01:00:10,040 Speaker 14: think the CPI data could fall to three percent by 1277 01:00:10,640 --> 01:00:11,560 Speaker 14: in the June report. 1278 01:00:11,640 --> 01:00:14,000 Speaker 6: So when we get they're reading next Tuesday, right, it's. 1279 01:00:13,880 --> 01:00:17,760 Speaker 14: Gonna drop precipitously because of a negative based effect. So 1280 01:00:18,000 --> 01:00:20,720 Speaker 14: by their July meeting at the FOMC, they will have 1281 01:00:20,880 --> 01:00:23,520 Speaker 14: in their hand a June CPI report with your over 1282 01:00:23,640 --> 01:00:26,760 Speaker 14: year headline of almost three percent. So at that point 1283 01:00:26,840 --> 01:00:28,640 Speaker 14: I think a lot of people in the market will 1284 01:00:28,680 --> 01:00:31,320 Speaker 14: be like, the Fed is done and shouldn't. 1285 01:00:34,400 --> 01:00:36,680 Speaker 3: This all right? Eawan, Thank you so much for joining us. 1286 01:00:36,680 --> 01:00:39,640 Speaker 3: Appreciate getting great thoughts as always. Yep, as always. 1287 01:00:40,080 --> 01:00:43,000 Speaker 1: Uh getting her hair on site in the Bloomberg Interactive 1288 01:00:43,040 --> 01:00:45,800 Speaker 1: Brokers studio which has been out moved up to the 1289 01:00:45,840 --> 01:00:46,400 Speaker 1: sixth floor. 1290 01:00:46,600 --> 01:00:48,400 Speaker 3: By all the link Yeah, by all the foods. We 1291 01:00:48,480 --> 01:00:51,120 Speaker 3: appreciate that. The Bloomberg invest Conference. 1292 01:00:54,120 --> 01:00:57,200 Speaker 2: Thanks for listening to the Bloomberg Markets podcast. You can 1293 01:00:57,240 --> 01:01:00,960 Speaker 2: subscribe and listen to interviews at Apple Podcast or whatever 1294 01:01:01,120 --> 01:01:04,720 Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter 1295 01:01:05,040 --> 01:01:06,919 Speaker 2: at Matt Miller nineteen seventy three. 1296 01:01:07,400 --> 01:01:09,760 Speaker 3: And I'm Faul Sweeney. I'm on Twitter at pt Sweeney. 1297 01:01:09,920 --> 01:01:12,560 Speaker 1: Before the podcast, you can always catch us worldwide at 1298 01:01:12,560 --> 01:01:13,320 Speaker 1: Bloomberg Radio.