WEBVTT - Rates, ESG, Europe, And CVS (Podcast) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.520 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.040 at Bloomberg dot com slash podcast. I have a new 0:00:22.079 --> 0:00:25.560 problem though, what these gas stations limit the amount of 0:00:25.600 --> 0:00:27.479 gas I can get to a hundred dollars? You know 0:00:27.480 --> 0:00:34.400 when I get to two eight, three slows down and 0:00:34.400 --> 0:00:36.240 I'm not done filling it up. No, of course not. 0:00:36.320 --> 0:00:41.640 You've got a shot of that idea. That's horrible. People were, Yeah, 0:00:41.640 --> 0:00:43.639 well it's horrible. Yes, So you're a big good truck guy, 0:00:43.640 --> 0:00:45.240 all right, pre a misrab. I'm not sure if she 0:00:45.360 --> 0:00:48.200 dressed pick up trucks, but she does cover the interest 0:00:48.280 --> 0:00:50.400 rate world for US managing director and global head of 0:00:50.440 --> 0:00:53.440 rate Strategy for TV Securities. Pretty I'm looking at the 0:00:53.479 --> 0:00:56.080 bond market. Boy, that ten year treasuries off one and 0:00:56.120 --> 0:00:59.200 three thirty seconds, pushing that yield up to three point 0:00:59.240 --> 0:01:03.240 three two percent? Is this still kind of fallout from 0:01:04.000 --> 0:01:07.920 Jackson Home? What's going on. I think there's a couple 0:01:07.920 --> 0:01:09.800 of things going on. I mean, they were just back 0:01:09.840 --> 0:01:12.560 after the long weekend. I don't think liquidity is the 0:01:12.600 --> 0:01:15.240 best um. I mean, I think it should get better. 0:01:15.280 --> 0:01:17.720 We're in September. But I think there's some component of 0:01:18.160 --> 0:01:21.280 we're getting exaggerated price moves. There is a lot of 0:01:21.319 --> 0:01:24.959 corporate supply today and I think that's adding to duration pressure. 0:01:25.520 --> 0:01:28.000 And then as as you said, there's the you know, 0:01:28.040 --> 0:01:29.880 fallout from Jackson Hole, the fact that we have a 0:01:29.880 --> 0:01:33.119 FED meeting in two weeks. The jobs report was strong, 0:01:33.160 --> 0:01:35.399 and we had I M Services which is also strong, 0:01:35.480 --> 0:01:38.160 So the U s economy seems to be holding in there. 0:01:38.640 --> 0:01:40.480 We think the pressure on the FED is still there 0:01:40.800 --> 0:01:43.320 to keep moving those rates higher, and I think all 0:01:43.319 --> 0:01:45.840 of that is a perfect storm to make rates go up. 0:01:45.959 --> 0:01:49.000 QUT is also continuing. I do think it's a little overdone. 0:01:49.120 --> 0:01:52.240 I think we're very well priced now for the FED 0:01:52.320 --> 0:01:54.680 taking rates up to four percent, keeping it there for 0:01:54.720 --> 0:01:57.280 a while, and then if you do start to see 0:01:57.280 --> 0:01:59.840 slowing and growth, we think the FED does act. So 0:02:00.520 --> 0:02:02.800 I think the market may become a little too optimistic 0:02:02.840 --> 0:02:06.160 in terms of the ability of the economy to take 0:02:06.240 --> 0:02:08.520 these rate hikes, which I think will have an impact 0:02:08.520 --> 0:02:10.480 on road just with the lag. We're not seeing that 0:02:10.560 --> 0:02:14.160 in the data just yet. What happens historically? What happens 0:02:14.200 --> 0:02:18.160 historically when you go to UM you know a certain 0:02:18.240 --> 0:02:20.760 level on the FED funds rate. I don't care what 0:02:20.800 --> 0:02:22.959 it is, but let's take four percent or five percent 0:02:23.040 --> 0:02:25.240 or six percent. What happens to ten years. Do they 0:02:25.240 --> 0:02:29.000 eventually catch up UM treasury yields or do they always 0:02:29.000 --> 0:02:32.840 hold below the Fed fund rate? They tend to hold 0:02:32.880 --> 0:02:36.360 below because typically, you know, the FED is not able 0:02:36.400 --> 0:02:40.000 to get this soft landing or be able to to 0:02:40.200 --> 0:02:42.880 keep rates at that level. So the two year or 0:02:42.880 --> 0:02:45.720 the very front end can get up to that terminal rate, 0:02:46.200 --> 0:02:49.160 but then the long end tends to lag because within 0:02:49.400 --> 0:02:51.920 a year or two of the FED reaching that terminal rate, 0:02:51.919 --> 0:02:54.120 they tend to have to start to cut rates. So 0:02:54.160 --> 0:02:55.960 that's why the long end doesn't catch up. Now, the 0:02:56.040 --> 0:02:58.799 one big difference this time is QUT. The FED is 0:02:58.840 --> 0:03:01.560 also letting the balance sheet run off, and that's resulting 0:03:01.560 --> 0:03:04.240 in more durations apply to the market. I think that 0:03:04.520 --> 0:03:07.040 this time around is putting a little more pressure in 0:03:07.080 --> 0:03:09.280 the long end. But I think if the FED starts 0:03:09.320 --> 0:03:12.120 to cut rates, they're also going to stop QUT. So 0:03:12.440 --> 0:03:15.320 you know, right now it seems to be that your 0:03:15.360 --> 0:03:17.480 call for next year. Do you think we go into 0:03:17.520 --> 0:03:21.120 a recession that's too deep, unemployment rises too high, American 0:03:21.120 --> 0:03:24.600 families have trouble um keeping jobs, putting food on the table. 0:03:24.600 --> 0:03:26.560 On the FED has to cut rates and stop QUT 0:03:28.520 --> 0:03:30.840 pretty much. Yes, you said it well, I mean we 0:03:30.919 --> 0:03:34.440 are looking, unfortunately for the economy to slow down, and 0:03:34.480 --> 0:03:37.800 it's hard for me to justify the FEDS four point 0:03:37.920 --> 0:03:40.200 one on the unemployment rate. I mean, if it starts 0:03:40.240 --> 0:03:43.800 to rise. Typically the the unemployment rate doesn't rise that gradually. 0:03:44.160 --> 0:03:47.040 It tends to rise, it tends to accelerate once it rises. 0:03:47.080 --> 0:03:50.160 So yeah, we're thinking closer to five in the second 0:03:50.160 --> 0:03:52.680 half of next day on the unemployment rate, forcing the 0:03:52.680 --> 0:03:55.080 fight to start to cut rates when I think they'll 0:03:55.120 --> 0:03:57.480 they'll be late in starting to cut ride because they're 0:03:57.520 --> 0:04:00.560 fighting the inflation problem. But once they start, I do 0:04:00.640 --> 0:04:03.080 think they're at least getting to neutral and they'd have 0:04:03.120 --> 0:04:05.280 to stop QT at that point as well. It's hard 0:04:05.320 --> 0:04:08.800 for them to justify cutting rates and still undertaking QT, 0:04:09.400 --> 0:04:11.440 but I think that's not something they're going to admit 0:04:11.480 --> 0:04:13.760 to right now, They're going to let the data determine it. 0:04:14.120 --> 0:04:16.840 Right now. It's inflation is public enemy number one, and 0:04:16.920 --> 0:04:19.039 that's why I think the focus is whether they go 0:04:19.120 --> 0:04:22.400 seventy five or fifty at the September meeting. So the 0:04:22.640 --> 0:04:25.800 TV Securities, do you guys have an official recession call 0:04:26.200 --> 0:04:30.160 or do you think this FED can soft landed? So 0:04:30.200 --> 0:04:33.200 we have a slowdown in growth called you know, you're 0:04:33.360 --> 0:04:36.640 zero percent growth. When you're growing at zero doesn't take 0:04:36.680 --> 0:04:40.280 a lot to slip into recession. So it's a shallow 0:04:40.520 --> 0:04:42.720 slow down in growth that we do pencil in, and 0:04:43.000 --> 0:04:45.120 that's why we've penciled in rate cuts in the end 0:04:45.120 --> 0:04:48.640 of QT next year. All right, I'm gonna talk corporate 0:04:48.640 --> 0:04:51.600 real estate. So TV Security, you guys are one Vanderbilt, 0:04:51.640 --> 0:04:54.880 Is that right? It is? Yes, it's a new building 0:04:54.960 --> 0:04:59.440 right next to Grand Central exactly. That's awesome. I mean, 0:05:00.440 --> 0:05:02.000 I mean, I'm not sure you even go there if 0:05:02.000 --> 0:05:04.280 you work from home, but it looked when they're putting 0:05:04.279 --> 0:05:05.800 it up, I was like, holy cow, this is gonna 0:05:05.839 --> 0:05:08.839 be awesome. Now it's a great building. I've been in 0:05:08.880 --> 0:05:12.080 the office since, you know, for over a year, and 0:05:12.560 --> 0:05:15.200 it's filling up now. That. I think we're we have 0:05:15.320 --> 0:05:18.039 a few few flaws, and there's the summit. If you 0:05:18.040 --> 0:05:21.160 haven't been to the summit, it's great. Glass Bottom. I'm 0:05:21.160 --> 0:05:24.200 not a huge fan of heights, but it's very impressive 0:05:24.560 --> 0:05:26.800 when you look down on the glass bottom floor and 0:05:26.839 --> 0:05:29.360 see all of New York. So that's a good building. 0:05:29.480 --> 0:05:32.000 I want to do that. Let's do that. Yeah, down, 0:05:32.040 --> 0:05:36.200 we need the invite though, yes, we need the any day, 0:05:36.520 --> 0:05:40.840 all right, pretty so, just real, real quickly here coming 0:05:40.880 --> 0:05:42.640 up in a couple of weeks from this photo reserve. 0:05:43.200 --> 0:05:45.920 What would be a mistake where everybody goes, oh boy, 0:05:46.000 --> 0:05:50.600 here we go. You know, you can think of two 0:05:50.600 --> 0:05:53.719 sided mistakes. I think one mistake would be if they 0:05:53.760 --> 0:05:56.080 suggest that they might be getting close to being done 0:05:56.760 --> 0:06:00.360 because just because oil prices are lower and inflation seems 0:06:00.360 --> 0:06:02.840 to have beat That would be one mistake. The other 0:06:02.880 --> 0:06:05.440 mistake would be to say, oh, no, we're going until 0:06:05.480 --> 0:06:09.600 two on your over your inflation. I think that's a 0:06:09.680 --> 0:06:12.560 mistake I'm really nervous about because it just inflation is 0:06:12.600 --> 0:06:15.520 a very lagging indicator, and if they ignore growth, they're 0:06:15.560 --> 0:06:17.960 absolutely going to overdo it because inflation is going to 0:06:18.040 --> 0:06:20.719 take a while to come down to respond to slowing growth. 0:06:21.040 --> 0:06:23.720 So there are two sided risks. After jacksonal I'm more 0:06:23.760 --> 0:06:27.120 concerned about the overdoing because we need to really win 0:06:27.200 --> 0:06:31.119 that inflation battle, even if it means a slowing growth. Alright, 0:06:31.240 --> 0:06:33.479 this fat man. If they waited too long to raise 0:06:33.600 --> 0:06:35.400 rates and now they're going to raise rates too late 0:06:35.440 --> 0:06:37.560 and too long, and then maybe they'll even cut them 0:06:37.640 --> 0:06:40.800 too soon. We have to see Premisser. She'll have insight 0:06:40.920 --> 0:06:43.120 for us along the way. As always. Managing director and 0:06:43.160 --> 0:06:45.679 global head of Rate Strategy for TV Security is also 0:06:45.720 --> 0:06:48.960 an ambassador for one Vanderbilt Avenue. Got to check that 0:06:49.040 --> 0:06:55.600 building up. Alright. One of the fastest growing areas in 0:06:55.600 --> 0:07:00.560 investing is E s G environmental social governance. Sure enough, 0:07:00.560 --> 0:07:03.400 the largest exchange traded fund investing in s G, that 0:07:03.400 --> 0:07:06.040 would be the I Shares E s G, AWARE M, 0:07:06.120 --> 0:07:07.760 S C, I U S A E t F. Yep, 0:07:07.880 --> 0:07:10.160 that's what I got it all in there increases assets 0:07:10.160 --> 0:07:14.080 by forty seven hundred times to four billion dollars since 0:07:14.080 --> 0:07:18.320 its inception in twenty thousand and sixteen. But Mr Rhonda 0:07:18.400 --> 0:07:21.280 Santas the Governor of the Great State of Florida, I 0:07:21.280 --> 0:07:23.240 don't think he's really buying into it. Let's get into 0:07:23.280 --> 0:07:25.720 this story. Matt winklerd, Editor in chief emeritus and founder 0:07:26.040 --> 0:07:28.480 of Bloomberg News joins us here in a Bloomberg Interactive 0:07:28.480 --> 0:07:30.800 Broker Studio. Matt, thanks so much for joining us. You've 0:07:30.800 --> 0:07:33.280 got a column out today looking at Florida, looking at 0:07:33.280 --> 0:07:36.840 the governor Rhonda Santis and his views on E s 0:07:36.880 --> 0:07:40.360 G investing. What did you find so, Paul and Matt, 0:07:40.400 --> 0:07:43.480 great to be with you. Rhonda Santis, governor of Florida, 0:07:43.560 --> 0:07:47.880 first term governor of Florida, highly educated, went to Yale 0:07:48.120 --> 0:07:54.520 and Harvard Law School, has an initiative that prohibits the 0:07:54.560 --> 0:07:57.200 state of Florida, which is the third largest state and 0:07:57.240 --> 0:08:01.760 which has about two hundred and ten billion of assets 0:08:01.840 --> 0:08:07.280 under management, from considering what you just mentioned as E 0:08:07.480 --> 0:08:13.440 s G criteria for investing. The trouble is with that initiative, 0:08:13.640 --> 0:08:18.000 it goes against Florida's own very own dictum that says, 0:08:18.120 --> 0:08:24.920 we must consider performance total return as the yard stick, 0:08:24.960 --> 0:08:28.280 if you like, for measuring our returns. And if you 0:08:28.360 --> 0:08:33.640 do that, E s G absolutely crushes every other benchmark 0:08:34.840 --> 0:08:37.840 over any time period during the past decades. So his 0:08:37.840 --> 0:08:42.640 own initiative is it odds with the essential requirement for 0:08:42.720 --> 0:08:46.640 the Florida Retirement System to manage on the basis of performance. 0:08:46.760 --> 0:08:50.360 But it's possible he's not as concerned about performance financial 0:08:50.360 --> 0:08:53.040 performance as he is about politics, right, because he's made 0:08:53.040 --> 0:08:56.480 a number of really provocative moves already that draw him 0:08:56.480 --> 0:08:58.600 into the national spotlight and set him up for a 0:08:58.600 --> 0:09:03.400 presidential run. Yeah. I mean it is seemingly a very 0:09:03.480 --> 0:09:09.080 political ploy on his part because he is educated enough 0:09:09.160 --> 0:09:14.160 to know that every fiduciary has an obligation to earn 0:09:14.240 --> 0:09:18.480 the highest return at the lowest volatility for shareholders and 0:09:18.520 --> 0:09:23.480 bondholders alike. And if that is your focus, then you 0:09:23.559 --> 0:09:26.880 have to consider E s G in your investing. And 0:09:26.920 --> 0:09:31.480 if you don't, your shareholders, your bondholders, your pensioners were 0:09:31.520 --> 0:09:34.480 all suffer. Does the data support that? Matt? What do 0:09:34.520 --> 0:09:35.880 you What did you see? I know you and shouldn't 0:09:35.880 --> 0:09:39.320 pay your colleague always dive into the data for your arguments. 0:09:39.360 --> 0:09:44.000 What's the data? So it's it's very conclusive. We have 0:09:44.280 --> 0:09:46.559 a decade's worth of data on the Bloomberg. We look 0:09:46.600 --> 0:09:52.320 at every if you like, exchange traded fund that invests 0:09:52.400 --> 0:09:55.880 everywhere and those that invest in what we call e 0:09:56.080 --> 0:10:01.240 s G um are over five years, over ten years, 0:10:01.240 --> 0:10:06.880 over two years, outperforming by orders of magnitude the benchmarks, 0:10:06.920 --> 0:10:10.840 the traditional benchmarks of investing, whether it's the SMP five hundred, 0:10:10.880 --> 0:10:15.320 whether it's the Russell three thousand, whether it's any fossil 0:10:15.400 --> 0:10:20.880 fuel UH index that lately has been a star because 0:10:20.960 --> 0:10:25.080 of the war in Ukraine and the rise in in oil, 0:10:25.640 --> 0:10:29.800 in energy, traditional energy, E s G has done better 0:10:30.000 --> 0:10:36.240 than anything else. And that's not a secret actually or surprising, right. 0:10:36.240 --> 0:10:39.920 I mean people, look, people started ten years ago buying 0:10:39.960 --> 0:10:42.760 electric cars on the consumer level because they want to 0:10:43.760 --> 0:10:46.640 guard against climate change or push back against climate change. 0:10:46.640 --> 0:10:48.720 And obviously mom and pop investors are going to be 0:10:48.760 --> 0:10:50.560 doing that. If they feel that way, they're gonna invest 0:10:50.600 --> 0:10:53.439 with their hearts as well as their pocketbooks. And now 0:10:53.440 --> 0:10:55.800 we have huge institutions coming in and doing it as well. 0:10:55.880 --> 0:11:00.000 In Blackrock has ten trillion dollars in assets under managed, 0:11:00.240 --> 0:11:02.400 and they are watching this. Yeah. I think that's a 0:11:02.440 --> 0:11:05.640 great point. Uh. If you look at black Rock, people 0:11:06.440 --> 0:11:11.440 may have forgotten that black Rock really saved the US 0:11:11.600 --> 0:11:14.720 from the worst of the financial crisis. Black Rock was 0:11:14.840 --> 0:11:18.719 the one institution that came in and helped the US government, UH, 0:11:18.920 --> 0:11:23.560 sort out of what was a disaster the likes of 0:11:23.600 --> 0:11:26.000 which we hadn't seen in a couple of generations. You 0:11:26.040 --> 0:11:27.560 have to go back to the depression. So put it 0:11:27.600 --> 0:11:33.720 on fast forward. A company called Tesla UH making zero 0:11:33.800 --> 0:11:38.760 mission vehicles in starting in say two thousand ten, and 0:11:38.800 --> 0:11:40.920 when it went public and then two thousand twelve it 0:11:40.960 --> 0:11:44.800 introduces the models. And Tesla today as a car, as 0:11:44.800 --> 0:11:49.200 a car company, has the highest market valuation in the 0:11:49.240 --> 0:11:54.920 world among automakers. It's more than three times uh the 0:11:55.000 --> 0:11:58.960 value of Toyota, which sells more vehicles than anyone, but 0:11:59.760 --> 0:12:01.760 I am by a wide margin. I mean, Tesla sells 0:12:01.800 --> 0:12:04.319 what half a million vehicles a year in Toyota must twelve. 0:12:04.840 --> 0:12:06.800 And so what does that tell you The market, if 0:12:06.840 --> 0:12:10.400 you like, which is not ideological, which is not political, 0:12:11.440 --> 0:12:14.560 the market, which is just about what's cheap and what's 0:12:14.600 --> 0:12:18.400 expensive and relative value says Tesla is by far the 0:12:18.440 --> 0:12:22.679 most valuable company. And that's because there is a convergence 0:12:22.720 --> 0:12:26.600 of policy and people's preferences, and Tesla is an example 0:12:26.640 --> 0:12:30.040 of that. And uh, it's an example of what's happening 0:12:30.480 --> 0:12:33.920 to investing worldwide, which is why uh, you know, the 0:12:34.000 --> 0:12:36.400 total amount of money committed to E s G is 0:12:36.440 --> 0:12:39.520 something like thirty five trillion dollars, which is obviously bigger 0:12:39.760 --> 0:12:42.600 than the US economy. Wow. So I mean if I'm 0:12:42.800 --> 0:12:45.920 you know, twice twice the size about right? I mean, 0:12:45.920 --> 0:12:49.760 if if I'm a teacher in Florida, any pension holder, 0:12:50.640 --> 0:12:53.600 I gotta say, Okay, so you're telling me my returns 0:12:53.600 --> 0:12:56.520 are going to be lower because you have this perhaps 0:12:56.520 --> 0:12:59.280 politically driven ideology as relates to E s G. Is 0:12:59.280 --> 0:13:02.480 there any push from within the state or Well, what 0:13:02.559 --> 0:13:05.520 I would like to see is exactly. I mean, It's 0:13:05.520 --> 0:13:08.240 one thing for the governor of Florida to say this 0:13:08.320 --> 0:13:10.480 is what we're doing. It's quite another thing to see 0:13:10.480 --> 0:13:15.560 what Florida does. If Florida adheres to its mandate, which 0:13:15.640 --> 0:13:19.240 is get the best or the highest total return with 0:13:19.280 --> 0:13:22.960 the least volatility, it will have to consider E s 0:13:23.000 --> 0:13:26.520 G investing. Whatever the initiative says, what do you what 0:13:26.559 --> 0:13:30.679 do you think about Engine number one or ARC? I mean, 0:13:30.679 --> 0:13:33.840 where do you think the most exciting M E s 0:13:33.880 --> 0:13:37.640 G investments are coming from? Well? You know, look, I've 0:13:37.720 --> 0:13:40.800 been as you well know many times with the two 0:13:40.800 --> 0:13:43.160 of you. Said that to me, Tesla is one of 0:13:43.160 --> 0:13:50.240 the most exciting events, um because as a disruption, it 0:13:50.320 --> 0:13:54.920 has changed really the face of the automobile industry I 0:13:54.960 --> 0:14:00.640 think forever, and that we are inexorably going to electric vehicles. 0:14:00.760 --> 0:14:04.560 So that that is my my choice if you like, 0:14:05.480 --> 0:14:08.920 not just cars. I just saw some ads for electric boats, 0:14:08.960 --> 0:14:11.240 I mean anything that has we just we just had 0:14:11.320 --> 0:14:13.760 one come out. It has a fifty nautical mile range. 0:14:13.920 --> 0:14:16.400 It has a cruising speed of twenty knots and a 0:14:16.520 --> 0:14:19.000 top speed of thirty knots. And that's pretty incredible for 0:14:19.040 --> 0:14:21.680 a dollar boat that can hold your whole family. I'm 0:14:21.680 --> 0:14:25.440 excited about this product. All right, Matt Winkler, thank you 0:14:25.480 --> 0:14:28.040 so much for joining us as always, Matt Winkler, editor 0:14:28.040 --> 0:14:31.840 in Chief emeritus UH and the founder of Bloomberg News 0:14:32.000 --> 0:14:34.120 so many years ago, joining us here in a Bloomberg 0:14:34.160 --> 0:14:36.600 Interactive broker studio. He's got a column out here looking 0:14:36.640 --> 0:14:38.640 at E. S G Investing, looking at it in the 0:14:38.760 --> 0:14:42.200 lens of Florida, and the governor there ron to Santa Syn. 0:14:42.240 --> 0:14:44.040 You can type that. You can type n I Winkler 0:14:44.120 --> 0:14:47.040 on the Bloomberg can you he's gutting? Of course he has. 0:14:47.480 --> 0:14:50.160 But you can also type that p I N code okay, 0:14:50.280 --> 0:14:54.360 and they can get Bloomberg dot com slash h O 0:14:54.520 --> 0:14:57.520 P I N Bloomberg opinion right now for those people 0:14:57.560 --> 0:15:02.200 that use that intra web thing. Well, there's a lot 0:15:02.320 --> 0:15:06.120 going on in the UK, potential session, surging inflation and 0:15:06.280 --> 0:15:09.400 energy crisis and now a change in the Prime minister. 0:15:09.480 --> 0:15:12.040 How our markets reacting to that? Well, of course we 0:15:12.080 --> 0:15:13.880 need a voice on the UK. We go to somebody 0:15:13.880 --> 0:15:16.920 who was born and raised outside of Rowan Oak, Virginia 0:15:17.280 --> 0:15:19.920 and literally the middle of nowhere, but he's now in London, 0:15:20.440 --> 0:15:24.920 Tim Craighead, Director of Research, senior European strategist for Blueberg Intelligence. 0:15:24.920 --> 0:15:27.120 He's been in London. We had him in Hong Kong 0:15:27.200 --> 0:15:29.600 running our business there for years. New York. The guy 0:15:29.600 --> 0:15:32.960 has been everywhere. Uh, Tim, a lot going on. You're 0:15:32.960 --> 0:15:35.160 on holiday because I follow you on social media and 0:15:35.200 --> 0:15:38.640 you're biking all over the island of England. But you 0:15:38.720 --> 0:15:42.840 were trained Goldman Sacks. That means you're on call seven. 0:15:43.160 --> 0:15:45.160 So we need a voice on the European markets. We 0:15:45.200 --> 0:15:47.360 go to Tim Craig Head. Tim, what's going on in 0:15:47.360 --> 0:15:51.000 the investing markets. There's a lot across currents there are 0:15:51.040 --> 0:15:54.320 and thanks for having me on from the sunny coast 0:15:54.360 --> 0:15:59.880 of South Devon. But you know, the the cross currents 0:16:00.000 --> 0:16:03.360 are crazy looking at things this afternoon. You've got oil 0:16:03.480 --> 0:16:07.120 down three dollars a barrel if you live at Brient Crude. Um, 0:16:07.160 --> 0:16:10.440 You've got interest rates that continue to trade up. Um, 0:16:10.480 --> 0:16:15.720 You've got economic stats that are waning new lockdowns across 0:16:15.880 --> 0:16:20.880 China with a tumbling currency there. And on the currency front, 0:16:21.360 --> 0:16:25.120 every every currency, it seems under the shining sun is 0:16:25.160 --> 0:16:27.680 weak against the dollar. So you know, bring all that 0:16:27.760 --> 0:16:30.760 to bear in in the UK here we announced and the 0:16:30.720 --> 0:16:34.040 the probably minister and Liz Trust comes into comes in 0:16:34.080 --> 0:16:38.280 the office post her her meeting with the Queen today 0:16:38.400 --> 0:16:43.040 and you know she faces a storm. Um. Interesting with 0:16:43.200 --> 0:16:47.640 all of that in context, the UK market essentially flat. 0:16:47.880 --> 0:16:50.720 So yeah, the kind of tells you something right there 0:16:50.800 --> 0:16:53.480 from the standpoint of what's discounted in the market at 0:16:53.480 --> 0:16:55.360 this point. Well, and right now I see a pound 0:16:55.360 --> 0:16:59.840 trading for a dollar fifteen. Um. I'm not sure that 0:17:00.640 --> 0:17:03.200 has as much to doo with Liz Trust as it 0:17:03.240 --> 0:17:05.400 has to do with um, you know, everything else that's 0:17:05.560 --> 0:17:09.399 going on there from you know, inflation. I think Goldman 0:17:09.440 --> 0:17:12.879 Sachs put out a report saying it could go to 0:17:11.160 --> 0:17:15.960 two concerns about an I m F bailout. Tell us 0:17:16.000 --> 0:17:20.480 about that. Yeah, so you know, I am F bailout. 0:17:20.520 --> 0:17:23.400 I think it's a bit on the extreme side. UM. 0:17:23.640 --> 0:17:28.320 One thing that was key today with Trust coming into 0:17:28.400 --> 0:17:32.480 into offices, there's been a a void from the standpoint 0:17:32.480 --> 0:17:36.200 of what government policy would be given the energy crisis 0:17:36.240 --> 0:17:39.520 here in the UK and more broadly across Europe and 0:17:40.280 --> 0:17:44.960 UM an ongoing growing list of big economies big government. 0:17:45.359 --> 0:17:49.399 UM has been announcing policies to help get businesses and 0:17:49.480 --> 0:17:54.879 consumers through the winter. And indeed, UM there was fear 0:17:54.920 --> 0:17:58.080 in the UK that Liz Trust would come in with 0:17:58.119 --> 0:18:01.639 an ultra right wing conservative of approach of cutting taxes 0:18:01.680 --> 0:18:04.720 and not offering handouts as she likes to call them. 0:18:04.760 --> 0:18:08.199 But you know, before she's even in the office, UM, 0:18:08.280 --> 0:18:13.320 you know, Bloomberg News actually found today UM the draft 0:18:13.359 --> 0:18:16.560 of a proposal to offer upwards of forty billion in 0:18:16.600 --> 0:18:19.359 support to business and a hundred and thirty billion and 0:18:19.440 --> 0:18:24.040 potential support for consumers to get through energy crisis by 0:18:24.160 --> 0:18:29.600 essentially capping energy prices now so that inflation rate would 0:18:29.600 --> 0:18:33.920 have would have essentially been driven in large part by 0:18:34.400 --> 0:18:37.040 huge escalations and energy prices. By the way, I love 0:18:37.119 --> 0:18:40.440 when politicians do. I love when politicians do massive u 0:18:40.600 --> 0:18:43.840 turns on campaign promises the day they come into office. 0:18:44.240 --> 0:18:47.919 You know, there you go, remember read my lips, no 0:18:48.000 --> 0:18:50.480 new taxes. Sure, yeah, that at least that took him 0:18:50.520 --> 0:18:53.880 like a year or two. That cost him the reelection. 0:18:54.200 --> 0:18:57.800 So Tim, go ahead, go ahead, Tim. Now, I was 0:18:57.840 --> 0:19:00.000 gonna say part of that, part of that pound weakness 0:19:00.200 --> 0:19:03.360 was a lot of the concern that you'd have all 0:19:03.359 --> 0:19:06.879 sorts of havoc with a you know, lower tax rates 0:19:07.000 --> 0:19:09.720 in the middle of of of a crazy period in 0:19:09.760 --> 0:19:13.000 the economy. And in fact, the first thing we're seeing 0:19:13.040 --> 0:19:17.040 some support is for the domestic economy. For Footsie doesn't 0:19:17.040 --> 0:19:19.600 really matter because as we've talked before, it's a mostly 0:19:19.640 --> 0:19:26.440 globally oriented, a big international brand, franchises and consumer and healthcare, 0:19:26.440 --> 0:19:29.919 et cetera. The week pounds actually a boon to those guys. 0:19:30.800 --> 0:19:33.760 So Tim, uh Matt and I were discussing, it's been 0:19:33.760 --> 0:19:36.440 a few years since we've been in the UK. Find 0:19:36.600 --> 0:19:42.520 what's what's your favorite point cost you a devon today? 0:19:42.760 --> 0:19:46.440 That's a critical question on holiday. Um, you notice I 0:19:46.480 --> 0:19:49.400 say holiday in a vacation and I noticed two weeks 0:19:49.400 --> 0:19:51.879 in a row. By the way, See, he's definitely getting 0:19:51.920 --> 0:19:56.920 used as a European thing there. You go so somewhere 0:19:56.960 --> 0:19:59.640 around uh seven or eight pounds that you could find 0:19:59.640 --> 0:20:01.800 them at London, you know North at ten right now 0:20:01.840 --> 0:20:07.320 if you go to the wrong pub. Really that's inflation, dude. Yeah, 0:20:07.359 --> 0:20:09.120 I have a list, by the way, if you ever 0:20:09.560 --> 0:20:13.320 are down in Chelsea or or Fulham. I like the 0:20:13.320 --> 0:20:15.800 Hollywood arms a lot. I'm a big fan of the 0:20:15.840 --> 0:20:18.320 builder's arms. I like the Duke of Clarence. I like 0:20:18.320 --> 0:20:21.560 the Duke on the Green Um and I love the 0:20:21.600 --> 0:20:23.760 Anglesey arms if you really want to hang with kind 0:20:23.760 --> 0:20:27.320 of the eurotrash there. But there's so many. Yeah, the 0:20:27.400 --> 0:20:30.960 right places the Washington in Delphize Park and that's named 0:20:30.960 --> 0:20:36.240 after George by the way, exactly all right, Tim, enjoy 0:20:36.320 --> 0:20:41.920 the holiday biking around um southern England. Uh. He's into 0:20:41.960 --> 0:20:45.080 this biking thing in the whole family. It's kind of yeah. 0:20:45.680 --> 0:20:48.600 My dad's into it too. He's very philoton guy, so 0:20:48.680 --> 0:20:52.320 you're also about He also like rock climbs too, so 0:20:52.359 --> 0:20:54.640 I mean, I don't know what's going on. Tim Craigead, 0:20:54.640 --> 0:20:58.560 he's a Director Research, senior European strategist for Bloomberg Intelligence. 0:20:58.600 --> 0:21:04.600 He's based in London. What we said that in the 0:21:04.640 --> 0:21:07.399 next life, I want to come back as a healthcare 0:21:07.680 --> 0:21:10.880 m and a banker. Every week it seems like there's 0:21:10.880 --> 0:21:14.160 a big, blockbuster healthcare deal and banks are getting paid 0:21:14.200 --> 0:21:17.320 left and right. Today, CBS to buy Signify Health in 0:21:17.359 --> 0:21:21.240 an eight billion dollar deal. CBS, you know, big pharmacy company, 0:21:21.240 --> 0:21:24.640 Healthcare Services Company, a hundred thirty billion dollar market gap. 0:21:24.680 --> 0:21:27.600 It's a big company. Stocks down about four percent year today, 0:21:27.640 --> 0:21:30.399 kind of flat today. Let's dive into this deal. Jonathan Palmer, 0:21:30.480 --> 0:21:34.800 senior equity research analyst, a team leader for Bloomberg Intelligence, 0:21:34.840 --> 0:21:38.800 also a proud graduate of the Penn State University, which 0:21:39.040 --> 0:21:41.480 had a good road win this weekend to start the year. 0:21:41.560 --> 0:21:44.560 All right, Johnathan, CBS Signify Health, tell us what's going 0:21:44.600 --> 0:21:46.480 on here? Well, Paul, you you hit the nail right 0:21:46.520 --> 0:21:49.600 in the head when you mentioned services company. And CVS 0:21:49.680 --> 0:21:51.280 has kind of three legs to this tool. They have 0:21:51.359 --> 0:21:53.880 their retail stores, they have what they call their PBM 0:21:53.960 --> 0:21:57.359 or pharmacy Benefit manager, which which manages drug benefits, and 0:21:57.359 --> 0:22:00.480 then they have their insurer Etna, and really all these 0:22:00.520 --> 0:22:04.280 companies in the healthcare services universe want to expand their 0:22:04.280 --> 0:22:07.880 service offering, and Signify does that in a meaningful way 0:22:07.920 --> 0:22:10.680 for CVS because Signify is in the home and they 0:22:10.720 --> 0:22:13.720 have assets where they send people out to people's house 0:22:13.760 --> 0:22:16.640 to do evaluations and managed care. And so the next 0:22:16.680 --> 0:22:19.560 step after you know, we've had the pandemic here from 0:22:19.600 --> 0:22:23.960 the virtual cares home care. Yeah. I mean, if if 0:22:24.000 --> 0:22:28.880 I'm right looking at the medical industry, everything's going towards telemedicine, 0:22:29.400 --> 0:22:33.439 UM home care or a CVS, right because there's no 0:22:33.520 --> 0:22:38.440 reason anymore to go to the medical um offices compound 0:22:38.680 --> 0:22:41.479 or to your local g p UM. You can do 0:22:41.520 --> 0:22:46.280 it all by phone, by phone or by zoom and um. 0:22:46.320 --> 0:22:48.359 You know, the only time I need to interact with 0:22:48.359 --> 0:22:50.360