1
00:00:00,840 --> 00:00:02,520
Speaker 1: Welcome to the Bloomberg Markets Podcast.

2
00:00:02,720 --> 00:00:05,280
Speaker 2: I'm Paul Sweeney alongside my co host Matt Miller.

3
00:00:05,640 --> 00:00:09,600
Speaker 3: Every business day we bring you interviews from CEOs, market pros,

4
00:00:09,720 --> 00:00:13,600
Speaker 3: and Bloomberg experts, along with essential market moving news.

5
00:00:14,160 --> 00:00:17,279
Speaker 2: Find the Bloomberg Markets podcast called Apple Podcasts or wherever

6
00:00:17,360 --> 00:00:20,480
Speaker 2: you listen to podcasts, and at Bloomberg dot com slash podcast.

7
00:00:21,320 --> 00:00:23,920
Speaker 4: Guess who all else is reading that late night credit

8
00:00:23,960 --> 00:00:29,520
Speaker 4: Crunch stuff. Bloomberg Intelligence Chief European credit strategist Mahish Bima Lingam,

9
00:00:29,560 --> 00:00:32,839
Speaker 4: and Amelia Pollard, a reporter with Bloomberg News, join us

10
00:00:32,880 --> 00:00:35,120
Speaker 4: in zoom and in studio. Paul Sweeney was here, he'd

11
00:00:35,159 --> 00:00:37,199
Speaker 4: give you guys a gold star at least to you

12
00:00:37,280 --> 00:00:39,600
Speaker 4: Amelia for coming in in studio, so we thank you both.

13
00:00:39,840 --> 00:00:43,360
Speaker 4: Let's start with you, Amelia, talk to us about this story.

14
00:00:43,560 --> 00:00:46,040
Speaker 4: Just how dire is it or is this something that's

15
00:00:46,120 --> 00:00:49,000
Speaker 4: kind of fading when you talk about just the credit

16
00:00:49,040 --> 00:00:49,720
Speaker 4: crunch narrative.

17
00:00:50,560 --> 00:00:53,600
Speaker 5: Yeah, thanks for having me. That really remains to be seen.

18
00:00:53,720 --> 00:00:56,120
Speaker 5: But in the last twenty four hours there were at

19
00:00:56,200 --> 00:01:00,640
Speaker 5: least seven major bankruptcies and we're still trying to get

20
00:01:00,640 --> 00:01:02,720
Speaker 5: a sense of you know, is that the most in

21
00:01:02,960 --> 00:01:04,760
Speaker 5: you know, a twenty four hour time span, and it

22
00:01:04,840 --> 00:01:08,400
Speaker 5: seems to be the case that it's the most within

23
00:01:08,640 --> 00:01:11,880
Speaker 5: that short amount of time. Ever we think ever, I mean,

24
00:01:11,880 --> 00:01:14,240
Speaker 5: we're still we're still crunching the numbers right now. But

25
00:01:14,280 --> 00:01:17,800
Speaker 5: I think that this this sort of thing really signals

26
00:01:17,800 --> 00:01:20,320
Speaker 5: that maybe this is the beginning of potentially a big

27
00:01:20,360 --> 00:01:22,440
Speaker 5: wave and the thing that we're seeing right now. So

28
00:01:22,480 --> 00:01:23,920
Speaker 5: some of the some of the companies that filed the

29
00:01:23,959 --> 00:01:27,440
Speaker 5: last twenty four hours, they're known as a zombie companies,

30
00:01:27,440 --> 00:01:30,559
Speaker 5: like they really shouldn't have maybe even lasted this long.

31
00:01:30,680 --> 00:01:33,440
Speaker 5: So we're starting to see some of the unhealthier companies

32
00:01:33,800 --> 00:01:35,679
Speaker 5: start to file now. But the real question will be

33
00:01:36,000 --> 00:01:39,000
Speaker 5: later this year, will there be healthier companies that no

34
00:01:39,000 --> 00:01:41,119
Speaker 5: one saw coming starting to file. So I think that's

35
00:01:41,160 --> 00:01:42,360
Speaker 5: what experts are looking.

36
00:01:42,120 --> 00:01:43,520
Speaker 6: For, my hatch.

37
00:01:43,560 --> 00:01:45,560
Speaker 7: I'm wondering if you can talk about the European side

38
00:01:45,560 --> 00:01:49,240
Speaker 7: of this, because Europe is no stranger to zombie companies,

39
00:01:49,880 --> 00:01:52,600
Speaker 7: and so at what point do you see this credit

40
00:01:52,640 --> 00:01:56,000
Speaker 7: crunch start to bring some of these companies over the edge?

41
00:01:57,120 --> 00:02:00,440
Speaker 8: Oh hi, guys, thank you for having me over. The

42
00:02:00,480 --> 00:02:03,360
Speaker 8: thing is there's a bit of a contrast between the

43
00:02:03,480 --> 00:02:07,360
Speaker 8: US and Europe. I mean even traditionally, Right in the US,

44
00:02:07,440 --> 00:02:10,120
Speaker 8: it is pretty easy for many companies to come to

45
00:02:10,160 --> 00:02:15,079
Speaker 8: the bond markets, borrow and then go to Delaware when needed. Right,

46
00:02:15,639 --> 00:02:17,640
Speaker 8: it is not that easy one to come to the

47
00:02:17,639 --> 00:02:21,200
Speaker 8: bond markets in Europe because generally some of the smaller

48
00:02:21,320 --> 00:02:25,520
Speaker 8: riskier ones are probably funded out of bank balance sheets.

49
00:02:25,560 --> 00:02:28,560
Speaker 8: The bond markets are not as large and as free

50
00:02:28,600 --> 00:02:31,640
Speaker 8: flowing as in the US. That's part one and part two.

51
00:02:31,960 --> 00:02:35,040
Speaker 8: You don't go to Delaware here. Given that how fragmented

52
00:02:35,120 --> 00:02:40,600
Speaker 8: the legal framework is, companies generally don't go bankrupt that easily,

53
00:02:40,919 --> 00:02:44,480
Speaker 8: so you tend not to see as many defaults except

54
00:02:44,480 --> 00:02:46,200
Speaker 8: in the you know, two thousand and two, two and

55
00:02:46,200 --> 00:02:49,720
Speaker 8: three tech crisis. But after that you can see that

56
00:02:49,800 --> 00:02:52,840
Speaker 8: in every peak, the Eurozone default rate tends to be

57
00:02:52,960 --> 00:02:56,760
Speaker 8: much smaller. So right now, if you ask me that question,

58
00:02:56,919 --> 00:03:00,880
Speaker 8: have we seen any Domino s falling this year? We've

59
00:03:00,880 --> 00:03:04,760
Speaker 8: only seen two companies in the bond markets hetter default.

60
00:03:05,120 --> 00:03:08,000
Speaker 8: One company is food Cobon con the other is Prey

61
00:03:08,000 --> 00:03:11,880
Speaker 8: good Glass. Both are you know, non copon payment and

62
00:03:12,080 --> 00:03:14,280
Speaker 8: small companies. You know, one of them is three thirty

63
00:03:14,320 --> 00:03:16,800
Speaker 8: million and the other is three fifty million. So have

64
00:03:16,919 --> 00:03:17,920
Speaker 8: we seen like a flood.

65
00:03:18,080 --> 00:03:18,280
Speaker 9: No.

66
00:03:19,080 --> 00:03:21,240
Speaker 7: It's interesting because we were sitting there. We were talking

67
00:03:21,280 --> 00:03:23,639
Speaker 7: a little earlier about Merger Monday, and part of Merger

68
00:03:23,680 --> 00:03:27,040
Speaker 7: Monday has been a lot of these big traditional private

69
00:03:27,080 --> 00:03:30,640
Speaker 7: asset managers buying other credit firms. The idea here was

70
00:03:30,639 --> 00:03:33,720
Speaker 7: with the banking crisis that some of these private credit

71
00:03:34,000 --> 00:03:36,440
Speaker 7: firms could fill in the void. But you're seeing some

72
00:03:36,480 --> 00:03:38,240
Speaker 7: of these firms have actually been exposed to some of

73
00:03:38,240 --> 00:03:41,600
Speaker 7: these bankrupt companies. Weren't they. You're seeing TPG had some

74
00:03:41,640 --> 00:03:46,200
Speaker 7: exposure what to vice media? Does that kind of make

75
00:03:46,280 --> 00:03:49,880
Speaker 7: them nervous to step in further when they're seeing so

76
00:03:50,000 --> 00:03:53,760
Speaker 7: much trouble here among some of these companies that have

77
00:03:53,920 --> 00:03:56,480
Speaker 7: clearly fallen to bankruptcy.

78
00:03:57,120 --> 00:03:59,320
Speaker 5: Yeah, you know, I think that it's all an equation

79
00:03:59,480 --> 00:04:02,880
Speaker 5: here of you know, how many companies will you have

80
00:04:02,920 --> 00:04:05,000
Speaker 5: exposure to that might go belly up? And so I

81
00:04:05,000 --> 00:04:07,320
Speaker 5: think that, you know, I'm not sure the case for TPG,

82
00:04:07,440 --> 00:04:09,800
Speaker 5: but other private credit firms might see. You know, this

83
00:04:09,920 --> 00:04:11,680
Speaker 5: is just the cost of doing business right now, you know,

84
00:04:11,720 --> 00:04:14,560
Speaker 5: in this kind of risky environment, bankrupt, Yeah, firms will

85
00:04:14,560 --> 00:04:18,120
Speaker 5: go bankrupt. I think the bet is hopefully enough don't

86
00:04:18,320 --> 00:04:21,200
Speaker 5: to make the you know, the investment worth it. I

87
00:04:21,240 --> 00:04:24,279
Speaker 5: do think that I want to say earlier that right

88
00:04:24,320 --> 00:04:27,360
Speaker 5: now we're seeing the fastest pace of filing since two

89
00:04:27,400 --> 00:04:30,400
Speaker 5: thousand and nine. And if that ramps up to you know,

90
00:04:30,600 --> 00:04:33,000
Speaker 5: kind of match two thousand and nine, or even really

91
00:04:33,040 --> 00:04:35,760
Speaker 5: push push even higher, then that might be a problem

92
00:04:35,760 --> 00:04:38,479
Speaker 5: for companies where you know, the ratio is just so

93
00:04:38,640 --> 00:04:41,240
Speaker 5: great that maybe we'll see private lenders pull back. But

94
00:04:41,680 --> 00:04:43,880
Speaker 5: so far, all we're seeing is that they're pushing further

95
00:04:44,040 --> 00:04:45,719
Speaker 5: into the investments.

96
00:04:46,240 --> 00:04:48,839
Speaker 4: Hey, let's put some numbers on this here. We know

97
00:04:48,880 --> 00:04:51,160
Speaker 4: you're European credit strategies, but of course I'm sure you're

98
00:04:51,200 --> 00:04:54,240
Speaker 4: watching the markets around the world. One of the big

99
00:04:54,560 --> 00:04:56,800
Speaker 4: kind of complaints when it comes to credit, or at

100
00:04:56,880 --> 00:05:02,359
Speaker 4: least the lack thereof of a visible crime, is that, hey, look, spreads, yields,

101
00:05:02,360 --> 00:05:06,400
Speaker 4: they're not at these recessionary levels of previous crunches. And

102
00:05:06,440 --> 00:05:07,960
Speaker 4: I think you can say that on both sides of

103
00:05:08,000 --> 00:05:12,000
Speaker 4: the Atlantic, what numbers, what levels are you waiting for

104
00:05:12,120 --> 00:05:14,160
Speaker 4: to say, Okay, guys, this is it. This is such

105
00:05:14,200 --> 00:05:15,800
Speaker 4: dramatic drap that we were all ready for.

106
00:05:16,720 --> 00:05:20,680
Speaker 8: Yeah, So I mean you're asking about market pricing, so

107
00:05:20,760 --> 00:05:25,479
Speaker 8: let's talk about that. So we track what is the

108
00:05:25,600 --> 00:05:29,159
Speaker 8: stress ratio and what is the distress ratio in the

109
00:05:29,200 --> 00:05:31,599
Speaker 8: bond markets, because you know, you go, you go, you

110
00:05:31,640 --> 00:05:34,600
Speaker 8: have the pricing for the entire universe of the index.

111
00:05:35,279 --> 00:05:37,840
Speaker 8: And if you look at that, the stress ratio is

112
00:05:37,880 --> 00:05:40,880
Speaker 8: about follow and half percent. When I say stress, it

113
00:05:40,960 --> 00:05:44,920
Speaker 8: is price under eighty and if you look at distress

114
00:05:45,000 --> 00:05:49,599
Speaker 8: price under sixty, it's only four percent. So you will

115
00:05:49,640 --> 00:05:54,000
Speaker 8: get defaults only from those four percent basically. And if

116
00:05:54,000 --> 00:05:57,159
Speaker 8: you look at his historically, you know, if you look

117
00:05:57,200 --> 00:06:01,080
Speaker 8: at distress ratio a year before much do how many

118
00:06:01,120 --> 00:06:04,680
Speaker 8: of them actually default? Probably about one third, one fourth.

119
00:06:05,040 --> 00:06:08,560
Speaker 8: I really can't see an index default rate more than

120
00:06:08,800 --> 00:06:12,640
Speaker 8: one to one and a half percent here in eurobond markets,

121
00:06:12,839 --> 00:06:15,680
Speaker 8: bond markets, let's be very specific. It could be on

122
00:06:15,839 --> 00:06:18,880
Speaker 8: bank balance sheet, yes, which is why if you look

123
00:06:18,920 --> 00:06:23,960
Speaker 8: at the ECB, lending standards very tight. Similarly, not as

124
00:06:23,960 --> 00:06:26,720
Speaker 8: bad as the Fed Loan Officer Survey. The FAT Loan

125
00:06:26,720 --> 00:06:29,760
Speaker 8: Officer Survey is showing, you know, forty six percent of

126
00:06:29,839 --> 00:06:34,080
Speaker 8: all banks have tightened their standards for next quarter. The

127
00:06:34,279 --> 00:06:39,400
Speaker 8: Eurozone one is that around if I'm not wrong twenty

128
00:06:40,000 --> 00:06:44,200
Speaker 8: twenty seven. But you can also look at financial conditions. Right,

129
00:06:44,200 --> 00:06:46,920
Speaker 8: If you look at financial conditions in Europe, it is

130
00:06:47,040 --> 00:06:49,840
Speaker 8: as tight as in the Eurozone crisis, four and a

131
00:06:49,839 --> 00:06:54,040
Speaker 8: half standard deviations tight. The only period in entire European

132
00:06:54,120 --> 00:06:56,920
Speaker 8: history that things have been tighter is in the Great

133
00:06:56,920 --> 00:07:02,360
Speaker 8: Financial Crisis. Yes, financial conditions are thigh, but we don't

134
00:07:02,400 --> 00:07:06,000
Speaker 8: have enough candidates. You know, we've actually gone, We've actually

135
00:07:06,080 --> 00:07:09,800
Speaker 8: gone name by name, and I can only see four

136
00:07:09,880 --> 00:07:12,800
Speaker 8: Dodgy credits which are probably the next dominance to fall,

137
00:07:13,200 --> 00:07:14,920
Speaker 8: and the four of them are on for about five

138
00:07:14,920 --> 00:07:18,120
Speaker 8: point two billion, two big credits there.

139
00:07:18,520 --> 00:07:23,840
Speaker 7: And Adlath speaking of things to look ahead for in

140
00:07:23,840 --> 00:07:26,160
Speaker 7: about a minute here, Amelia, you know, we're looking at

141
00:07:26,680 --> 00:07:29,720
Speaker 7: a host of companies that are kind of on the

142
00:07:29,720 --> 00:07:31,880
Speaker 7: brink here. And by the way, there is a newsletter

143
00:07:31,920 --> 00:07:34,840
Speaker 7: that Bloomberg writes called The Brank comes out every Tuesday.

144
00:07:35,120 --> 00:07:37,200
Speaker 7: Keep an eye at up for it. But Emilia also

145
00:07:37,200 --> 00:07:41,400
Speaker 7: writes the America's Distressed Watch Today, and you can subscribe

146
00:07:41,400 --> 00:07:43,200
Speaker 7: to that as well. What are we looking forward to

147
00:07:43,360 --> 00:07:45,360
Speaker 7: that is kind of you know seetering here.

148
00:07:45,600 --> 00:07:47,200
Speaker 5: Yeah, you know, I think one theme that I've been

149
00:07:47,240 --> 00:07:49,600
Speaker 5: tracking is that a lot of the companies that did

150
00:07:50,240 --> 00:07:53,280
Speaker 5: kind of controversial debt deals last year or even twenty

151
00:07:53,280 --> 00:07:58,520
Speaker 5: twenty twenty twenty one liability management transactions, they're starting to

152
00:07:58,800 --> 00:08:01,560
Speaker 5: find that, you know, whether it be litigation or just

153
00:08:01,600 --> 00:08:03,480
Speaker 5: taking on too much debt in the era of easy

154
00:08:03,480 --> 00:08:05,760
Speaker 5: money is kind of like having a reckoning right now.

155
00:08:05,800 --> 00:08:08,480
Speaker 5: So I think that other companies that have these sorts

156
00:08:08,560 --> 00:08:11,720
Speaker 5: of transactions under their belt in Korra is one for instance.

157
00:08:12,800 --> 00:08:14,280
Speaker 5: So that's been what we've been looking for.

158
00:08:14,320 --> 00:08:17,360
Speaker 4: Next certainly something we're going to be keeping an eye on.

159
00:08:17,720 --> 00:08:20,280
Speaker 4: Amelia Hollard of our credit team. We think you as always,

160
00:08:20,280 --> 00:08:23,440
Speaker 4: of course, alongside Mahesh Bi Malingam, chief European credit strategist

161
00:08:23,640 --> 00:08:25,080
Speaker 4: with Bloomberg Intelligence.

162
00:08:26,600 --> 00:08:30,480
Speaker 10: You're listening to the Team Cancer Live program Bloomberg Markets

163
00:08:30,520 --> 00:08:33,600
Speaker 10: weekdays at ten am Eastern on Bloomberg dot Com, the

164
00:08:33,679 --> 00:08:36,800
Speaker 10: iHeartRadio app and the Bloomberg Business App, or listen on

165
00:08:36,880 --> 00:08:38,880
Speaker 10: demand wherever you get your podcasts.

166
00:08:40,880 --> 00:08:44,360
Speaker 4: There's been such a volume of news in the em

167
00:08:44,400 --> 00:08:48,719
Speaker 4: world today. You have Argentina, you have Turkey, you have Thailand,

168
00:08:48,880 --> 00:08:51,640
Speaker 4: you have South Africa. They are all moving, their currencies

169
00:08:51,640 --> 00:08:53,199
Speaker 4: are moving in a really big way. But I think

170
00:08:53,240 --> 00:08:56,440
Speaker 4: the highlight out of all of them is Turkey, and

171
00:08:56,480 --> 00:08:59,679
Speaker 4: I think there's I mean a presidential election going on

172
00:08:59,720 --> 00:09:04,360
Speaker 4: there of challenging a ruler orcus be a president who

173
00:09:04,400 --> 00:09:07,720
Speaker 4: has been there for almost two decades now, I think,

174
00:09:08,880 --> 00:09:12,840
Speaker 4: and winning at the at the moment by a really

175
00:09:12,920 --> 00:09:15,960
Speaker 4: tiny margin. So let's talk a little bit about how

176
00:09:15,960 --> 00:09:19,640
Speaker 4: that all plays out into these markets here, Nick Stad Millard,

177
00:09:19,640 --> 00:09:20,439
Speaker 4: Am I saying that right?

178
00:09:20,880 --> 00:09:21,360
Speaker 9: Doc Miller?

179
00:09:21,480 --> 00:09:23,520
Speaker 4: Stop, Okay, I'm gonna I'm just gonna call you Nick.

180
00:09:25,320 --> 00:09:27,959
Speaker 4: That works, Yeah, it does. A head of global product

181
00:09:28,040 --> 00:09:31,720
Speaker 4: over at Medley Advisors, talk to us about why this

182
00:09:31,760 --> 00:09:34,840
Speaker 4: is such a significant election. Just give our international audience

183
00:09:34,880 --> 00:09:35,600
Speaker 4: some context here.

184
00:09:36,040 --> 00:09:40,720
Speaker 11: Sure, well, as you said, President Ardowan's AKP party has

185
00:09:40,760 --> 00:09:43,839
Speaker 11: been in power for almost just two decades right now.

186
00:09:44,440 --> 00:09:48,360
Speaker 11: And you know, frankly, Ardwan just wins election after election,

187
00:09:48,480 --> 00:09:51,000
Speaker 11: sometimes they're a bit close, but he's been able to

188
00:09:51,000 --> 00:09:55,199
Speaker 11: consolidate power. He transformed the country into a presidential as system,

189
00:09:55,240 --> 00:09:58,679
Speaker 11: giving him as the president considerably more power under their

190
00:09:58,679 --> 00:10:02,600
Speaker 11: previous parliamentary system. And this is the first time that

191
00:10:02,600 --> 00:10:05,440
Speaker 11: the opposition was really able to put on a united front.

192
00:10:05,480 --> 00:10:08,960
Speaker 11: So six of the major opposition parties came together to

193
00:10:09,000 --> 00:10:13,280
Speaker 11: form a coalition and they got the tacit participation of

194
00:10:13,360 --> 00:10:17,160
Speaker 11: the pro Kurdish HDP party to bring this united push.

195
00:10:17,200 --> 00:10:19,320
Speaker 11: And several of the polls as recently as last week

196
00:10:19,360 --> 00:10:22,960
Speaker 11: we're showing that the opposition candidate Kamal Coilich Darolo could

197
00:10:23,000 --> 00:10:25,439
Speaker 11: win and maybe even get the fifty percent to win

198
00:10:25,480 --> 00:10:29,640
Speaker 11: in the first round. So Erdowan really beat expectations of

199
00:10:29,679 --> 00:10:31,000
Speaker 11: a lot of commentators.

200
00:10:31,240 --> 00:10:33,560
Speaker 4: But at the end of the day, the expectation, I mean,

201
00:10:33,840 --> 00:10:37,160
Speaker 4: the margin with which he's winning at the moment is

202
00:10:37,400 --> 00:10:39,320
Speaker 4: still quite slim, and I think the slim ist it's

203
00:10:39,360 --> 00:10:43,960
Speaker 4: been in well since he started kind of being president.

204
00:10:44,440 --> 00:10:46,439
Speaker 4: At the end of the day, where's that coming from?

205
00:10:46,480 --> 00:10:46,600
Speaker 9: Though?

206
00:10:46,600 --> 00:10:48,280
Speaker 4: Where are the concerns? How much of this is a

207
00:10:48,320 --> 00:10:52,800
Speaker 4: reflection of the government relief post earthquake as opposed to

208
00:10:52,800 --> 00:10:54,320
Speaker 4: simply a demographic change.

209
00:10:55,000 --> 00:10:59,079
Speaker 11: Yeah, So a couple of things. One is Aerdowan's insistent

210
00:10:59,160 --> 00:11:03,600
Speaker 11: on insistent on unorthodox economic policies. He has this belief

211
00:11:04,120 --> 00:11:06,920
Speaker 11: that inflation is caused by interest rates, rather than interest

212
00:11:07,000 --> 00:11:11,000
Speaker 11: rates being the cure for higher inflation. They've spent a

213
00:11:11,000 --> 00:11:13,200
Speaker 11: lot of money, there's been a lot of allegations of

214
00:11:13,240 --> 00:11:16,760
Speaker 11: misspending and corruption over the years as Airdiwan in his

215
00:11:16,800 --> 00:11:20,160
Speaker 11: inner circle have accumulated power. There was also a lot

216
00:11:20,200 --> 00:11:24,080
Speaker 11: of criticism of the government's handling of the earthquake in

217
00:11:24,160 --> 00:11:27,440
Speaker 11: terms of disaster relief and getting to affected citizens quickly.

218
00:11:28,200 --> 00:11:32,160
Speaker 11: So given all that macro backdrop, in most countries, when

219
00:11:32,200 --> 00:11:35,640
Speaker 11: the economy performs poorly and you have rampant inflation and

220
00:11:35,679 --> 00:11:38,600
Speaker 11: a plummeting currency, that's usually very bad for the incumbent.

221
00:11:39,040 --> 00:11:41,400
Speaker 11: So I think the fact that Aarduwan was actually able

222
00:11:41,840 --> 00:11:43,840
Speaker 11: to best his opponent, even if he came up short

223
00:11:43,880 --> 00:11:46,440
Speaker 11: of that fifty and even if it was pretty close

224
00:11:46,440 --> 00:11:49,240
Speaker 11: about four and a half percent, I think that shows

225
00:11:50,000 --> 00:11:53,559
Speaker 11: Ardiwe's mastery as a politician in Turkey and his understanding

226
00:11:53,679 --> 00:11:55,559
Speaker 11: of how to energize his base.

227
00:11:55,960 --> 00:11:58,600
Speaker 7: So now the market read through. You know, we were

228
00:11:58,600 --> 00:12:01,120
Speaker 7: talking just at the beginning of this segment about how

229
00:12:01,240 --> 00:12:03,880
Speaker 7: Turkey's not the only emerging market here where there are

230
00:12:03,880 --> 00:12:06,160
Speaker 7: a lot of things to watch. So how do you

231
00:12:06,200 --> 00:12:08,280
Speaker 7: think about what's happening in Turkey and what it means

232
00:12:08,320 --> 00:12:09,520
Speaker 7: for financial assets?

233
00:12:10,480 --> 00:12:14,960
Speaker 11: Sure, well, unfortunately Turkey has become almost uninvestable for a

234
00:12:15,000 --> 00:12:18,240
Speaker 11: lot of international hedge funds and asset managers. Because the

235
00:12:18,280 --> 00:12:22,480
Speaker 11: currency is very heavily controlled, it's not very liquid, and

236
00:12:22,640 --> 00:12:25,880
Speaker 11: because of various measures they have that suppress bond yields.

237
00:12:25,880 --> 00:12:29,640
Speaker 11: In the domestic market, that's not interesting. So the only

238
00:12:29,720 --> 00:12:33,520
Speaker 11: market really where foreigners are heavily participating still is in

239
00:12:33,520 --> 00:12:36,440
Speaker 11: the hard currency bond market. And I think if there

240
00:12:36,520 --> 00:12:38,920
Speaker 11: is a spillover from what's going on in Turkey into

241
00:12:38,960 --> 00:12:42,000
Speaker 11: the rest of the emerging market complex, it'll be there.

242
00:12:42,640 --> 00:12:45,360
Speaker 11: There are about sixty five or seventy billion dollars of

243
00:12:45,800 --> 00:12:50,520
Speaker 11: foreign holdings of these hard currency bonds. If Ardowan keeps

244
00:12:50,640 --> 00:12:54,640
Speaker 11: his economic policies of currency intervention depleting the central banks

245
00:12:54,760 --> 00:12:57,400
Speaker 11: FX reserves, there's a real risk that they could have

246
00:12:57,440 --> 00:12:59,439
Speaker 11: a currency or a balance of payments crisis in the

247
00:12:59,480 --> 00:13:01,520
Speaker 11: next year because it's just not sustainable.

248
00:13:01,800 --> 00:13:04,640
Speaker 7: How deep is that spillover, Is it just for Turkish

249
00:13:04,720 --> 00:13:08,160
Speaker 7: assets or does it spillover meaningfully into other emerging market assets.

250
00:13:09,160 --> 00:13:11,760
Speaker 11: Well, when you take the global context right now, which

251
00:13:11,800 --> 00:13:16,120
Speaker 11: is high interest rates globally, you know signs of tightening

252
00:13:16,120 --> 00:13:18,440
Speaker 11: credit conditions in the US and Europe, and then you

253
00:13:18,520 --> 00:13:22,880
Speaker 11: add a large emerging market potentially you know, defaulting or

254
00:13:22,920 --> 00:13:26,680
Speaker 11: at least getting into serious distress conditions. It could have

255
00:13:26,880 --> 00:13:29,880
Speaker 11: a serious effect because when you have one off event

256
00:13:30,040 --> 00:13:33,200
Speaker 11: like that, emerging markets asset managers, you know, the big

257
00:13:33,200 --> 00:13:36,400
Speaker 11: asset managers and players, tend to de risk their portfolios

258
00:13:36,440 --> 00:13:39,200
Speaker 11: a bit, which tightens credit conditions for all these other

259
00:13:39,240 --> 00:13:42,280
Speaker 11: emerging markets. When you have this period of high interest

260
00:13:42,360 --> 00:13:46,520
Speaker 11: rates in the US dollar already, that can start to reverberate.

261
00:13:46,600 --> 00:13:49,520
Speaker 11: I don't think it's enough to create a global EM crisis,

262
00:13:49,520 --> 00:13:53,560
Speaker 11: but it could certainly exacerbate some already existing tensions there well.

263
00:13:53,600 --> 00:13:56,080
Speaker 4: Speaking of global EM crisis, one of the I remember

264
00:13:56,200 --> 00:14:00,240
Speaker 4: key takeaways in last year's Spring meetings was the IMS

265
00:14:00,280 --> 00:14:04,560
Speaker 4: Spring Meetings was from Crystillelina Gorgeva, and she had specifically said,

266
00:14:04,600 --> 00:14:07,160
Speaker 4: look in terms of a credit crunch, and this is

267
00:14:07,320 --> 00:14:09,800
Speaker 4: before the banking turmoil and the FED tightening of it all.

268
00:14:10,320 --> 00:14:11,800
Speaker 4: One of the things she was concerned about was some

269
00:14:11,840 --> 00:14:14,760
Speaker 4: sort of sovereign debt crisis, not in the developed world,

270
00:14:14,760 --> 00:14:16,840
Speaker 4: but in the EM world specifically as a function of

271
00:14:17,400 --> 00:14:21,240
Speaker 4: kind of monetary policy. But also the massive altility you

272
00:14:21,280 --> 00:14:23,680
Speaker 4: saw on commodities off the back of the war in

273
00:14:23,800 --> 00:14:28,920
Speaker 4: Ukraine to what extent is Turkey kind of a microcosm

274
00:14:29,120 --> 00:14:33,280
Speaker 4: of that story. The idea here that Monterey policy and commodities,

275
00:14:33,320 --> 00:14:37,400
Speaker 4: as Turkey is crucial to the grain deal story. How

276
00:14:37,480 --> 00:14:40,840
Speaker 4: much of that is idiosyncratic to Turkey as opposed to

277
00:14:40,920 --> 00:14:43,560
Speaker 4: more of a function of the broader em story.

278
00:14:44,280 --> 00:14:45,960
Speaker 11: Well, the short answer is a little bit of both.

279
00:14:46,480 --> 00:14:49,640
Speaker 11: On the one hand, most of the large ems, the Brazils,

280
00:14:49,680 --> 00:14:52,920
Speaker 11: the Mexicos, and the South Africas, have got away from

281
00:14:52,960 --> 00:14:55,840
Speaker 11: what's called the original sin of emerging markets debt, which

282
00:14:55,840 --> 00:14:58,640
Speaker 11: is when you continually borrow in hard currency because it's

283
00:14:58,680 --> 00:15:01,600
Speaker 11: a lower interest rate, usually so you save on your

284
00:15:01,600 --> 00:15:05,440
Speaker 11: interest rate bill, but then you're subject to your currency risk. Turkey,

285
00:15:05,480 --> 00:15:11,040
Speaker 11: because it's suppressed lira interest rates and bond yields, really

286
00:15:11,360 --> 00:15:13,240
Speaker 11: all the foreign funding they get has to come pretty

287
00:15:13,280 --> 00:15:16,800
Speaker 11: much in hard currency format, not in lira borrowing. But

288
00:15:16,880 --> 00:15:19,440
Speaker 11: on the other hand, a big difference between Turkey and

289
00:15:19,440 --> 00:15:21,720
Speaker 11: a lot of these other countries, particularly in Sub Saharan

290
00:15:21,760 --> 00:15:25,760
Speaker 11: Africa that are having extreme distress and debt, is that

291
00:15:25,880 --> 00:15:29,600
Speaker 11: most of those countries are commodities exporters, either copper, some

292
00:15:29,640 --> 00:15:33,200
Speaker 11: sort of metal, or oil, whereas Turkey is actually on

293
00:15:33,240 --> 00:15:35,520
Speaker 11: the opposite side of that trade, So you know, it's

294
00:15:35,560 --> 00:15:39,080
Speaker 11: commodity prices go down, the commodity price producers get squeezed

295
00:15:39,080 --> 00:15:42,080
Speaker 11: and tend to have debt problems. Turkey is a major

296
00:15:42,120 --> 00:15:44,960
Speaker 11: oil and gas importer, so it's actually the surge in

297
00:15:45,080 --> 00:15:47,680
Speaker 11: oil and gas prices that we saw last year that's

298
00:15:47,720 --> 00:15:50,000
Speaker 11: contributing to their very heavy current account deficit.

299
00:15:50,200 --> 00:15:52,160
Speaker 7: Speaking of I think that this is kind of an

300
00:15:52,320 --> 00:15:56,400
Speaker 7: underappreciated look at markets here. We talk about currencies kind

301
00:15:56,440 --> 00:16:00,200
Speaker 7: of as an absolute, We look at where they're going,

302
00:16:00,240 --> 00:16:02,600
Speaker 7: how they're trading. But you brought up something else that

303
00:16:02,720 --> 00:16:04,640
Speaker 7: people seem to be watching a lot more closely than

304
00:16:04,680 --> 00:16:07,840
Speaker 7: in the past, which is trade flows. How much are

305
00:16:07,840 --> 00:16:10,480
Speaker 7: you actually watching that relative to just kind of the

306
00:16:10,720 --> 00:16:13,960
Speaker 7: general pricing of commodities when you're looking at the countries

307
00:16:13,960 --> 00:16:16,520
Speaker 7: that they're exposed to, you mean.

308
00:16:16,440 --> 00:16:18,320
Speaker 11: In Turkey specifically or just more.

309
00:16:18,200 --> 00:16:20,320
Speaker 7: General more broadly at this point.

310
00:16:20,760 --> 00:16:24,120
Speaker 11: Yeah, Well, one of the interesting things that we see

311
00:16:24,320 --> 00:16:28,760
Speaker 11: is one a lot of these emerging market economies, particularly

312
00:16:29,880 --> 00:16:32,760
Speaker 11: in Latin America and Sub Saharan Africa, are very heavily

313
00:16:32,760 --> 00:16:36,360
Speaker 11: dependent on commodities prices. But then you have a lot

314
00:16:36,400 --> 00:16:40,120
Speaker 11: of countries that are very heavily dependent on export growth,

315
00:16:40,560 --> 00:16:46,440
Speaker 11: particularly in East Asia. So you have Korea, Taiwan, Singapore, Malaysia.

316
00:16:46,680 --> 00:16:51,840
Speaker 11: They're all manufacturing and exporting, particularly on semiconductors, and as

317
00:16:51,840 --> 00:16:54,160
Speaker 11: we see growth in the US slowing down, that's really

318
00:16:54,480 --> 00:16:57,680
Speaker 11: starting to affect them. Mexico is another one where the

319
00:16:57,680 --> 00:17:01,280
Speaker 11: bulk of their export engine is manufacturing and export into

320
00:17:01,320 --> 00:17:04,600
Speaker 11: the US. So the old saying when the US sneezes,

321
00:17:04,640 --> 00:17:07,240
Speaker 11: the rest of the world catches a cold. That can

322
00:17:07,280 --> 00:17:09,719
Speaker 11: be true even for the emerging markets that are not

323
00:17:09,760 --> 00:17:12,879
Speaker 11: dependent on commodities but are still dependent on US and

324
00:17:12,920 --> 00:17:13,959
Speaker 11: develop market demand.

325
00:17:15,040 --> 00:17:18,640
Speaker 4: Nick Schott Miller, head of Global product over at Medley Advisors,

326
00:17:18,680 --> 00:17:19,520
Speaker 4: we thank you as always.

327
00:17:19,560 --> 00:17:20,000
Speaker 9: AF.

328
00:17:20,000 --> 00:17:23,520
Speaker 10: You're listening to the tape Cancer Live program Bloomberg Markets

329
00:17:23,600 --> 00:17:27,000
Speaker 10: weekdays at ten am Eastern on Bloomberg Radio, the tune

330
00:17:27,040 --> 00:17:28,840
Speaker 10: in app, Bloomberg dot Com.

331
00:17:28,560 --> 00:17:30,000
Speaker 9: And the Bloomberg Business App.

332
00:17:30,040 --> 00:17:32,840
Speaker 10: You can also listen live on Amazon Alexa from our

333
00:17:32,880 --> 00:17:37,920
Speaker 10: flagship New York station, Just say Alexa play Bloomberg eleven thirty.

334
00:17:39,640 --> 00:17:45,120
Speaker 4: This news out of Activision and Microsoft now getting EU approval.

335
00:17:45,680 --> 00:17:48,880
Speaker 4: The irony I think is so telling here is that

336
00:17:49,000 --> 00:17:52,840
Speaker 4: on the one hand, When the UK rejected this deal,

337
00:17:53,280 --> 00:17:57,000
Speaker 4: they said it was because of kind of obviously competitive

338
00:17:57,000 --> 00:18:01,240
Speaker 4: reasons around the cloud gaming space. The EU is saying, well, actually,

339
00:18:01,480 --> 00:18:05,080
Speaker 4: this solves a lot of the issues in the cloud

340
00:18:05,119 --> 00:18:08,560
Speaker 4: gaming space. So two different takes, two different regulatory bodies.

341
00:18:08,600 --> 00:18:10,479
Speaker 7: I am excited to see what our next guest has

342
00:18:10,480 --> 00:18:13,600
Speaker 7: to say about this, but before her way in about

343
00:18:13,600 --> 00:18:17,920
Speaker 7: the deal itself, it also sets some really interesting tones

344
00:18:18,000 --> 00:18:23,440
Speaker 7: on how the UK versus EU deals with corporations business policy,

345
00:18:23,640 --> 00:18:25,680
Speaker 7: large scale mergers.

346
00:18:25,200 --> 00:18:27,560
Speaker 4: And wasn't this the big issue anyway? The idea of

347
00:18:27,800 --> 00:18:31,120
Speaker 4: that European tech regulation was kind of the biggest risk

348
00:18:31,200 --> 00:18:34,840
Speaker 4: for tech when President Trump and President Biden, both who

349
00:18:34,840 --> 00:18:38,520
Speaker 4: have been very hard on tech, haven't exactly had been

350
00:18:38,600 --> 00:18:42,359
Speaker 4: as severe as their counterparts across the Atlantic. Let's get

351
00:18:42,400 --> 00:18:45,840
Speaker 4: a little bit more information this time from a true

352
00:18:45,880 --> 00:18:48,320
Speaker 4: experts onally and I over here just giving our opinions,

353
00:18:48,520 --> 00:18:50,879
Speaker 4: but I guarantee you our next guest really knows what

354
00:18:50,920 --> 00:18:54,040
Speaker 4: she's talking about. Jennifer Ree, our senior litigation analyst for

355
00:18:54,080 --> 00:18:57,600
Speaker 4: anti trust over at Bloomberg Intelligence. Jen thank you as

356
00:18:57,640 --> 00:19:00,840
Speaker 4: always for joining your thoughts on this development.

357
00:19:02,880 --> 00:19:05,720
Speaker 12: Well thanks for having me, you know, I think Actually

358
00:19:05,760 --> 00:19:08,399
Speaker 12: it's not very surprising because I think the EU the

359
00:19:08,400 --> 00:19:11,040
Speaker 12: Commission actually has been dropping hints for a while that

360
00:19:11,080 --> 00:19:14,840
Speaker 12: they made view this deal different from the UK and

361
00:19:14,880 --> 00:19:18,600
Speaker 12: the US, And you know, I think the thing is here,

362
00:19:18,600 --> 00:19:20,800
Speaker 12: you were talking about cloud gaming and the future of

363
00:19:20,840 --> 00:19:24,480
Speaker 12: cloud gaming, and there were differences in opinion between the

364
00:19:24,560 --> 00:19:27,400
Speaker 12: UK and US and the European Commission on what that

365
00:19:27,480 --> 00:19:30,000
Speaker 12: future is and how quickly it's going to come about.

366
00:19:30,440 --> 00:19:33,120
Speaker 12: And I think that it just shows that these merger

367
00:19:33,160 --> 00:19:37,159
Speaker 12: decisions are difficult because they are predictive, and in particular,

368
00:19:37,200 --> 00:19:40,240
Speaker 12: they're predictive when you're talking about you know, technology and

369
00:19:41,240 --> 00:19:44,359
Speaker 12: markets that move really quickly and kind of morphine change

370
00:19:44,480 --> 00:19:47,920
Speaker 12: very very quickly in ways that nobody's that are difficult

371
00:19:47,960 --> 00:19:51,000
Speaker 12: to predict. And I think it's perhaps not surprising that

372
00:19:51,040 --> 00:19:53,840
Speaker 12: two different regulators sort of looked at the same information

373
00:19:53,960 --> 00:19:58,120
Speaker 12: and came out a bit differently on that. And it's

374
00:19:58,119 --> 00:20:00,000
Speaker 12: really all about that, you know, where you think cloud

375
00:20:00,160 --> 00:20:03,120
Speaker 12: gaming is going to go and whether you think Microsoft

376
00:20:03,200 --> 00:20:06,400
Speaker 12: owning Activisions content is going to be able to dominate

377
00:20:06,440 --> 00:20:10,879
Speaker 12: that market and push out other potential cloud providers, and

378
00:20:11,280 --> 00:20:13,840
Speaker 12: the two commissions just saw it differently.

379
00:20:14,359 --> 00:20:16,800
Speaker 7: I have a bit of a dumb question here. Given

380
00:20:16,840 --> 00:20:22,960
Speaker 7: the size of Activism, it's Activision itself. Why does it matter, Basically,

381
00:20:23,000 --> 00:20:26,280
Speaker 7: if Activision is part of Microsoft or standalone. Given how

382
00:20:26,480 --> 00:20:29,960
Speaker 7: large Activision has been in the gaming industry, you would

383
00:20:30,000 --> 00:20:31,920
Speaker 7: think that you would just kind of be worried about

384
00:20:31,960 --> 00:20:35,280
Speaker 7: Activision's competitive dynamic as a standalone company.

385
00:20:36,160 --> 00:20:39,160
Speaker 12: You know, it's a really good question, and the issue

386
00:20:39,200 --> 00:20:42,600
Speaker 12: is that the way the markets were defined, at least

387
00:20:43,000 --> 00:20:46,000
Speaker 12: by the US regulator and generally by the UK, is

388
00:20:46,040 --> 00:20:49,640
Speaker 12: sort of more narrowly. They were looking at specific Activision

389
00:20:49,680 --> 00:20:52,760
Speaker 12: games and games by other companies that create content that

390
00:20:52,800 --> 00:20:55,640
Speaker 12: they call triple A, so it's really big budget games,

391
00:20:55,840 --> 00:20:57,760
Speaker 12: a lot of money and resources are put into them.

392
00:20:57,760 --> 00:20:59,879
Speaker 12: They're expected to be very popular, like Call of Do,

393
00:21:00,560 --> 00:21:03,520
Speaker 12: And when you narrow the market that way, it makes

394
00:21:03,640 --> 00:21:07,159
Speaker 12: Activision more important in the gaming content market than it

395
00:21:07,200 --> 00:21:09,879
Speaker 12: otherwise would be if you look across the spectrum of

396
00:21:09,920 --> 00:21:12,159
Speaker 12: all potential games that could be played on the device,

397
00:21:12,960 --> 00:21:16,040
Speaker 12: and they sort of saw Call of Duty as must

398
00:21:16,040 --> 00:21:19,000
Speaker 12: have content. And so the issue is that if Microsoft

399
00:21:19,040 --> 00:21:22,000
Speaker 12: has this must have content in its hands, because it's

400
00:21:22,040 --> 00:21:25,560
Speaker 12: also very strong in distribution, whether that's through console or

401
00:21:25,560 --> 00:21:29,399
Speaker 12: whether it's through the cloud or a cloud subscription service

402
00:21:29,760 --> 00:21:32,880
Speaker 12: that it would have this ability because people want call

403
00:21:32,920 --> 00:21:35,600
Speaker 12: of duty and will switch over to Microsoft, that it

404
00:21:35,640 --> 00:21:39,520
Speaker 12: has this ability to block out other potential cloud rivals,

405
00:21:39,520 --> 00:21:41,600
Speaker 12: the ones that exist today and the ones that might

406
00:21:41,640 --> 00:21:43,879
Speaker 12: be up and coming, and that's what the US and

407
00:21:43,920 --> 00:21:47,200
Speaker 12: the UK agencies are trying to prevent. So it really

408
00:21:47,240 --> 00:21:49,879
Speaker 12: has more to do with Microsoft's strength in the cloud.

409
00:21:50,240 --> 00:21:53,119
Speaker 7: So when you look at the difference in how the

410
00:21:53,119 --> 00:21:57,479
Speaker 7: EU VERSUS UK is handling this issue, what does this

411
00:21:57,560 --> 00:21:58,680
Speaker 7: mean for the deal itself?

412
00:22:00,359 --> 00:22:03,119
Speaker 12: You know, I actually think it really is only to

413
00:22:03,160 --> 00:22:06,280
Speaker 12: the extent it might be helpful. It's slight, it's incremental

414
00:22:06,359 --> 00:22:09,320
Speaker 12: because they still the companies still have a really high

415
00:22:09,400 --> 00:22:11,480
Speaker 12: standard they're going to have to meet in their appeal,

416
00:22:11,920 --> 00:22:14,120
Speaker 12: which as far as I can tell is they're still

417
00:22:14,119 --> 00:22:17,840
Speaker 12: going forward with it in the UK. For that decision,

418
00:22:17,880 --> 00:22:20,000
Speaker 12: I'll talk about the US in a second, because it

419
00:22:20,080 --> 00:22:22,840
Speaker 12: really they have to prove that what the regulator did

420
00:22:22,920 --> 00:22:26,480
Speaker 12: is completely and totally irrational, not just that maybe it's

421
00:22:26,520 --> 00:22:28,840
Speaker 12: bad judgment or somebody else would look at the same

422
00:22:28,880 --> 00:22:32,280
Speaker 12: facts and think differently, but that it's just way out

423
00:22:32,280 --> 00:22:35,600
Speaker 12: of whack, has no rationality at all, and that's a

424
00:22:35,640 --> 00:22:39,320
Speaker 12: really high standard to meet. And while the European Commission's

425
00:22:39,320 --> 00:22:44,680
Speaker 12: decision might be a factor that's considered in that, it

426
00:22:45,040 --> 00:22:47,360
Speaker 12: still is a really high standard to meet where you're

427
00:22:47,400 --> 00:22:50,920
Speaker 12: doing something that's predictive and reasonable minds could differ because

428
00:22:50,960 --> 00:22:52,960
Speaker 12: it is predictive and no one has a crystal ball.

429
00:22:53,560 --> 00:22:55,480
Speaker 12: I think in the US the companies actually have a

430
00:22:55,480 --> 00:22:58,560
Speaker 12: pretty good shot at prevailing in court. The standard is lower.

431
00:22:58,920 --> 00:23:01,240
Speaker 12: It's a little bit easier to overturn a Federal Trade

432
00:23:01,240 --> 00:23:04,920
Speaker 12: Commission decision in the US than it is to overturn

433
00:23:04,960 --> 00:23:07,040
Speaker 12: a CMA decision in the UK, and I think the

434
00:23:07,080 --> 00:23:08,919
Speaker 12: companies have a good shot there. So it really is

435
00:23:08,920 --> 00:23:11,280
Speaker 12: all about the UK here in terms of the success

436
00:23:11,280 --> 00:23:11,720
Speaker 12: of the deal.

437
00:23:13,280 --> 00:23:15,959
Speaker 4: What could change with the UK though, I mean, what

438
00:23:15,960 --> 00:23:18,480
Speaker 4: does this kind of timeline look like and does this

439
00:23:18,560 --> 00:23:22,080
Speaker 4: at all have any bearing on how the US legal

440
00:23:22,119 --> 00:23:23,520
Speaker 4: system approaches this deal.

441
00:23:25,520 --> 00:23:28,600
Speaker 12: So in the UK the timing is still unclear. There

442
00:23:28,720 --> 00:23:32,120
Speaker 12: was actually a hearing on last Friday in a private

443
00:23:32,160 --> 00:23:34,639
Speaker 12: lawsuit trying to block this deal. That happens once in

444
00:23:34,680 --> 00:23:37,760
Speaker 12: a while, they're not particularly impactful. I don't expect that

445
00:23:37,880 --> 00:23:41,359
Speaker 12: to have any impact here, But the lawyers for Microsoft

446
00:23:41,440 --> 00:23:43,800
Speaker 12: were asked about timing and they said, look, we're working

447
00:23:43,840 --> 00:23:46,679
Speaker 12: really hard right now with the UK to come up

448
00:23:46,720 --> 00:23:49,600
Speaker 12: with a date to argue the appeal, and we don't

449
00:23:49,640 --> 00:23:52,160
Speaker 12: really know what the timeline looks like yet, so that's

450
00:23:52,240 --> 00:23:55,119
Speaker 12: kind of still an unknown. I do understand though, it

451
00:23:55,119 --> 00:23:57,919
Speaker 12: can take a lot of time because an appellate tribunal

452
00:23:58,680 --> 00:24:01,800
Speaker 12: can say, well, we don't but instead of reversing the

453
00:24:01,840 --> 00:24:03,920
Speaker 12: decision or coming out with their own decision, they can

454
00:24:03,920 --> 00:24:06,320
Speaker 12: turn it back to the CMA, And if they turn

455
00:24:06,359 --> 00:24:09,040
Speaker 12: it back to the CMA, then it kind of starts

456
00:24:09,040 --> 00:24:12,320
Speaker 12: things over, so it could take some time. In the US.

457
00:24:12,440 --> 00:24:15,399
Speaker 12: Right now, they are slated to go to trial August. Second,

458
00:24:16,080 --> 00:24:19,680
Speaker 12: I think the timing there would probably be we should

459
00:24:19,720 --> 00:24:23,680
Speaker 12: expect a decision in the first quarter of twenty twenty four.

460
00:24:23,680 --> 00:24:25,879
Speaker 12: And as I said, I do think the companies have

461
00:24:25,920 --> 00:24:31,760
Speaker 12: a pretty good shot at prevailing, and that's before an

462
00:24:31,800 --> 00:24:36,199
Speaker 12: administrative law judge. Now, the FTC can appeal that, and

463
00:24:36,280 --> 00:24:39,040
Speaker 12: the immediate appeal from the administrative law judge is to

464
00:24:39,359 --> 00:24:43,080
Speaker 12: the commissioners themselves, who voted to sue the deal, So

465
00:24:43,160 --> 00:24:46,600
Speaker 12: the commissioners could then reverse the ALJ if the ALJ

466
00:24:46,760 --> 00:24:49,359
Speaker 12: comes out in favor of the companies, and at that

467
00:24:49,520 --> 00:24:51,800
Speaker 12: point the companies would have the option of appealing to

468
00:24:51,840 --> 00:24:54,800
Speaker 12: the federal courts. But we are talking about a pretty

469
00:24:54,840 --> 00:24:57,320
Speaker 12: long timeline here, well into twenty twenty four.

470
00:24:57,800 --> 00:24:59,520
Speaker 4: It's certainly something we're going to keep an eye on

471
00:24:59,600 --> 00:25:02,240
Speaker 4: and come back to you, Jennifer Ree, for your annalysis.

472
00:25:02,240 --> 00:25:04,760
Speaker 4: We think you has always seen your litigation analysts and

473
00:25:04,800 --> 00:25:07,520
Speaker 4: over antitrust over at Bloomberg Intelligence.

474
00:25:08,880 --> 00:25:10,080
Speaker 9: You're listening to the team.

475
00:25:10,440 --> 00:25:13,760
Speaker 10: Can's a live program Bloomberg Markets weekdays at ten am

476
00:25:13,840 --> 00:25:17,240
Speaker 10: Eastern on Bloomberg dot com, the iHeartRadio app and the

477
00:25:17,280 --> 00:25:20,320
Speaker 10: Bloomberg Business app, or listen on demand wherever you get

478
00:25:20,320 --> 00:25:21,320
Speaker 10: your podcasts.

479
00:25:23,200 --> 00:25:25,040
Speaker 4: Today has been a really exciting day for the markets.

480
00:25:25,080 --> 00:25:26,520
Speaker 4: Maybe not on the macro front, but on the micro

481
00:25:26,640 --> 00:25:30,439
Speaker 4: front for sure. Because Jen, it is merger Monday. You

482
00:25:30,440 --> 00:25:32,200
Speaker 4: are starting to see some of those deals come out,

483
00:25:32,200 --> 00:25:36,720
Speaker 4: specifically in the commodity space, thirty eight billion dollars worth

484
00:25:36,720 --> 00:25:40,800
Speaker 4: both about nineteen billion each. We've got one Oak acquiring

485
00:25:40,880 --> 00:25:44,480
Speaker 4: Magellan Midstream Partners, which are not exactly household names, but

486
00:25:45,200 --> 00:25:47,600
Speaker 4: it's a really big deal for a commodity's nerd like

487
00:25:47,720 --> 00:25:50,480
Speaker 4: me who really keeps eye of those pipelines like this

488
00:25:50,560 --> 00:25:52,359
Speaker 4: is these are the pipelines. These are two companies that

489
00:25:52,400 --> 00:25:56,240
Speaker 4: make pipelines that transport natural gas. And in the war,

490
00:25:56,280 --> 00:25:58,920
Speaker 4: in the aftermath of the war in Ukraine, the US

491
00:25:59,000 --> 00:26:01,040
Speaker 4: is exporting a lot of natural gas too, likes of

492
00:26:01,119 --> 00:26:04,480
Speaker 4: Europe to Asia, et cetera. So this is a really

493
00:26:04,520 --> 00:26:07,080
Speaker 4: interesting combo because it would now make them compete with

494
00:26:07,160 --> 00:26:09,080
Speaker 4: kind of the big guys in natural gas. The other

495
00:26:09,119 --> 00:26:13,800
Speaker 4: one numont a gold name acquiring New Crest Mining again

496
00:26:13,840 --> 00:26:16,280
Speaker 4: another nineteen billion dollar deal.

497
00:26:16,440 --> 00:26:18,879
Speaker 6: So lots of action, lots of action, and we have

498
00:26:18,960 --> 00:26:20,879
Speaker 6: lots of questions for the guests that are coming up.

499
00:26:21,080 --> 00:26:24,240
Speaker 4: Oh a ton, and we actually have a perfect, perfect

500
00:26:24,359 --> 00:26:28,199
Speaker 4: roundtable here to join. Let's start with Bloomberg Intelligence's equity

501
00:26:28,240 --> 00:26:31,199
Speaker 4: research analyst Talent Custer. He's starting to us to talk

502
00:26:31,240 --> 00:26:33,240
Speaker 4: about the one Oak deal, and you know we're going

503
00:26:33,320 --> 00:26:36,320
Speaker 4: to merge into that story a Jacob Loring, North American

504
00:26:36,400 --> 00:26:39,560
Speaker 4: mining reporter for Bloomberg News as well. Look, these are

505
00:26:39,560 --> 00:26:41,199
Speaker 4: two of our finests. They're going to talk to us

506
00:26:41,200 --> 00:26:43,119
Speaker 4: about this commodity space. Talent, I want to start with

507
00:26:43,119 --> 00:26:47,680
Speaker 4: you on this one Oak deal. I don't particularly follow

508
00:26:47,720 --> 00:26:50,600
Speaker 4: the pipeline space often, but when I read the reporting

509
00:26:50,600 --> 00:26:52,760
Speaker 4: on this that this was going to help them compete

510
00:26:52,800 --> 00:26:55,480
Speaker 4: with the likes of Williams or Kinder Morgan, it really

511
00:26:55,480 --> 00:26:57,359
Speaker 4: piqued my interest. How big of a deal is this?

512
00:26:57,400 --> 00:26:59,080
Speaker 4: Put this into perspective for our audience.

513
00:27:00,520 --> 00:27:02,680
Speaker 13: It is a big deal. It was surprising. I don't

514
00:27:02,680 --> 00:27:06,119
Speaker 13: know if it in terms of you know, scope and scale,

515
00:27:06,119 --> 00:27:09,359
Speaker 13: it makes them bigger, but in terms of natural gas

516
00:27:09,359 --> 00:27:12,040
Speaker 13: it doesn't really do that because one Oak focused on

517
00:27:12,160 --> 00:27:16,040
Speaker 13: natural gas and Engl's Magellan focuses on crude oil and

518
00:27:16,160 --> 00:27:21,360
Speaker 13: refined products, you know, like diesel and gasoline. So it

519
00:27:21,440 --> 00:27:24,520
Speaker 13: wasn't It's an odd fit. I caught me off card

520
00:27:24,760 --> 00:27:27,560
Speaker 13: I thought, you know, one Oak could be in the

521
00:27:27,600 --> 00:27:29,960
Speaker 13: business to make an acquisition, but I was thinking more

522
00:27:30,960 --> 00:27:35,080
Speaker 13: a gas or ngl asset primarily focused in Texas or Oklahoma.

523
00:27:36,080 --> 00:27:38,600
Speaker 6: But I guess is this forgive my ignorance here, but

524
00:27:38,760 --> 00:27:41,879
Speaker 6: is this basically at the bottom of it an electrification play.

525
00:27:42,000 --> 00:27:45,119
Speaker 6: So we've got that's the move that the world is

526
00:27:45,160 --> 00:27:47,440
Speaker 6: sort of heading towards, and so it makes a lot

527
00:27:47,440 --> 00:27:50,320
Speaker 6: of sense for anyone who's got pipes doing anything to

528
00:27:50,400 --> 00:27:51,400
Speaker 6: kind of join forces.

529
00:27:53,280 --> 00:27:57,120
Speaker 13: I don't necessarily think it's it's that an electrification play.

530
00:27:57,160 --> 00:27:59,960
Speaker 13: I think that, you know, it can help them, you know,

531
00:28:00,040 --> 00:28:04,120
Speaker 13: it gives them another avenue maybe getting into renewable diesel,

532
00:28:04,280 --> 00:28:09,640
Speaker 13: renewable natural, renewable gasoline, sustainable jet fuel, things like that.

533
00:28:10,560 --> 00:28:13,879
Speaker 13: It can help them. It provides more infrastructure and assets

534
00:28:14,000 --> 00:28:15,920
Speaker 13: to maybe move in that direction. But I don't think

535
00:28:15,960 --> 00:28:19,400
Speaker 13: that's that's what this is. I think, you know, one

536
00:28:19,440 --> 00:28:22,720
Speaker 13: Oak is focused in the Bachan, which is a mature play.

537
00:28:22,920 --> 00:28:26,800
Speaker 13: It's not as prolific as the Permian, for example, It's

538
00:28:27,080 --> 00:28:29,920
Speaker 13: further away from hubs. So you know, they were looking

539
00:28:29,960 --> 00:28:33,359
Speaker 13: at at, you know, a low growth in the longer term,

540
00:28:33,520 --> 00:28:36,120
Speaker 13: and Magellan itself was looking at a longer term given

541
00:28:36,119 --> 00:28:40,680
Speaker 13: the business that they're in. But because of the regulatory backdrop,

542
00:28:42,000 --> 00:28:44,280
Speaker 13: you know, we've seen acquisitions over the past couple of years.

543
00:28:44,360 --> 00:28:48,920
Speaker 13: This is a way to grow, you know, inorganically.

544
00:28:49,680 --> 00:28:52,440
Speaker 4: All right, Jacob, your turn to shine here. Let's talk

545
00:28:52,480 --> 00:28:56,520
Speaker 4: about this other deal. Nineteen billion dollars Numont acquiring New Crest.

546
00:28:57,200 --> 00:28:58,800
Speaker 4: This is a really big deal. The last time I

547
00:28:58,800 --> 00:29:01,760
Speaker 4: think there was a the acquisition of this kind was

548
00:29:01,800 --> 00:29:04,400
Speaker 4: back in twenty nineteen when Newmont took over gold Core.

549
00:29:05,120 --> 00:29:08,320
Speaker 4: What's the appeal here? What does Newcrest have that Numont wants?

550
00:29:09,520 --> 00:29:12,840
Speaker 2: Well, I mean, it's trunks as a gold deal, but

551
00:29:13,360 --> 00:29:15,480
Speaker 2: if you sort of read between the lines, it's there's

552
00:29:15,600 --> 00:29:17,720
Speaker 2: part of it that also reads like a copper deal.

553
00:29:18,080 --> 00:29:20,200
Speaker 2: Newcrest has access to a whole bunch of copper, which

554
00:29:20,240 --> 00:29:23,400
Speaker 2: obviously is very highly coveted. Right now. There's a looming

555
00:29:23,480 --> 00:29:26,400
Speaker 2: shortage of copper, and you know, as the world tries

556
00:29:26,440 --> 00:29:28,640
Speaker 2: to sort of, you know, transition to a more to

557
00:29:28,880 --> 00:29:32,200
Speaker 2: a greener edge, you know, there's more demand, especially amongst

558
00:29:32,280 --> 00:29:34,800
Speaker 2: mining companies for copper, and so we're starting to see

559
00:29:34,840 --> 00:29:36,880
Speaker 2: some gold companies kind of make a bit of a

560
00:29:36,960 --> 00:29:40,720
Speaker 2: foray into that area. And that's kind of what's happening here.

561
00:29:40,800 --> 00:29:43,520
Speaker 2: I mean, there are several reasons that Numont has outlined

562
00:29:43,640 --> 00:29:45,840
Speaker 2: for this deal, but one of the big ones that

563
00:29:45,920 --> 00:29:49,280
Speaker 2: sort of strikes me is the fact that Newcrest, amongst

564
00:29:49,360 --> 00:29:52,280
Speaker 2: the gold miners, has a fair amount of copper and

565
00:29:52,440 --> 00:29:55,160
Speaker 2: the minds and fairly early stages of their life. And

566
00:29:55,200 --> 00:29:57,000
Speaker 2: I think Numont's making a bit of a play here

567
00:29:57,040 --> 00:29:59,480
Speaker 2: to say, you know, we're not just a gold company.

568
00:29:59,560 --> 00:30:02,280
Speaker 2: We're all, you know, trying to be part of a

569
00:30:02,400 --> 00:30:05,320
Speaker 2: you know, a bit of a false appeal transition, and

570
00:30:05,840 --> 00:30:07,480
Speaker 2: so we're you know, we're looking for copper too.

571
00:30:08,080 --> 00:30:11,120
Speaker 6: But I guess Numont is nevertheless a gold company, And

572
00:30:11,160 --> 00:30:13,400
Speaker 6: I wonder what your take is on the prospects for

573
00:30:13,440 --> 00:30:16,480
Speaker 6: regulatory approval of this, because you've got a gold joint

574
00:30:16,520 --> 00:30:17,719
Speaker 6: that's going to get even bigger.

575
00:30:19,040 --> 00:30:21,280
Speaker 2: Yeah, I mean, I think for them, it seems like

576
00:30:21,280 --> 00:30:24,160
Speaker 2: it should be fairly straight forward. You generally have seen

577
00:30:24,600 --> 00:30:28,440
Speaker 2: these gold deals go through and it's not clear that

578
00:30:28,440 --> 00:30:30,200
Speaker 2: there is sort of anyone else who's going to try

579
00:30:30,200 --> 00:30:32,240
Speaker 2: to make a move for it. I mean, it'll take

580
00:30:32,320 --> 00:30:34,600
Speaker 2: some time based as they expect that the deal will

581
00:30:34,600 --> 00:30:37,560
Speaker 2: close by by the fourth quarter of this year, so

582
00:30:38,120 --> 00:30:41,680
Speaker 2: they have to get regulatory approval I think in Australia, Canada, Papa,

583
00:30:41,720 --> 00:30:44,960
Speaker 2: New Guinea, possibly another place. So it takes a bit

584
00:30:44,960 --> 00:30:47,200
Speaker 2: of work. But there's nothing to suggest at this point

585
00:30:47,240 --> 00:30:49,840
Speaker 2: that there's you know, there's something that's going to get

586
00:30:49,840 --> 00:30:50,360
Speaker 2: in this way.

587
00:30:51,560 --> 00:30:54,400
Speaker 4: So tell let's let's bring you back in here and

588
00:30:54,480 --> 00:30:57,160
Speaker 4: talk just about kind of the sixty thousand foot view.

589
00:30:57,400 --> 00:31:01,000
Speaker 4: When I think M and A I think that, look,

590
00:31:01,040 --> 00:31:04,000
Speaker 4: this is either a good like an expansionary thing. It

591
00:31:04,040 --> 00:31:06,520
Speaker 4: usually happens at the beginning of expansionary cycles because a

592
00:31:06,560 --> 00:31:09,280
Speaker 4: lot of people are sitting on either cash or or

593
00:31:10,000 --> 00:31:13,760
Speaker 4: looking to kind of invest further. Or it is a

594
00:31:13,960 --> 00:31:16,920
Speaker 4: recessionary take in that you know, these companies are squeezed

595
00:31:16,960 --> 00:31:20,080
Speaker 4: for cash and need to consolidate. Which one is this.

596
00:31:22,560 --> 00:31:22,640
Speaker 1: It?

597
00:31:23,280 --> 00:31:25,440
Speaker 13: You know, it might be a mix of both. You know,

598
00:31:25,480 --> 00:31:28,040
Speaker 13: what I was getting at earlier is that with midstream,

599
00:31:28,040 --> 00:31:32,000
Speaker 13: it's you know, it's interesting in that, you know, the

600
00:31:32,040 --> 00:31:35,680
Speaker 13: regulatory backdrop is is so challenging. It's tough to build infrastructure.

601
00:31:35,680 --> 00:31:39,080
Speaker 13: It's tough for these companies to grow, to sention new

602
00:31:39,120 --> 00:31:42,480
Speaker 13: projects and expand their asset based. So one of the

603
00:31:42,960 --> 00:31:47,960
Speaker 13: ways that they've been doing it is via acquisitions. Most

604
00:31:48,000 --> 00:31:51,680
Speaker 13: of what we've seen is you know, bolt on acquisitions,

605
00:31:51,680 --> 00:31:56,560
Speaker 13: smaller ones to you know, reinforce their their strengths. Obviously,

606
00:31:56,560 --> 00:31:59,320
Speaker 13: there's been a couple corporate you know, larger corporate deals,

607
00:32:00,160 --> 00:32:02,920
Speaker 13: but this one was a surprise. I think more of

608
00:32:02,960 --> 00:32:05,520
Speaker 13: an outlier. I don't necessarily think we're going to see

609
00:32:05,520 --> 00:32:10,000
Speaker 13: a wave of extremely large combinations like this, but I

610
00:32:10,040 --> 00:32:13,320
Speaker 13: do expect to continue seeing M and A because it's

611
00:32:13,400 --> 00:32:15,920
Speaker 13: just a it's a solid strategy for some of these

612
00:32:15,960 --> 00:32:18,960
Speaker 13: companies to grow and cut COFs.

613
00:32:19,360 --> 00:32:21,080
Speaker 6: What do you think of the terms of this deal?

614
00:32:21,160 --> 00:32:22,720
Speaker 6: Do you have a sense that there might be a

615
00:32:22,760 --> 00:32:23,960
Speaker 6: bit of overpaying in this.

616
00:32:26,080 --> 00:32:29,800
Speaker 13: I did. The premium was steep. There's tax implications because

617
00:32:29,800 --> 00:32:34,760
Speaker 13: of the MLP structure of Magellan and the way they negotiated.

618
00:32:35,600 --> 00:32:37,320
Speaker 13: I get the impression that they wanted to make sure

619
00:32:37,360 --> 00:32:39,520
Speaker 13: that there was a big enough premium to cover that.

620
00:32:39,560 --> 00:32:42,040
Speaker 13: But you know, it was at twenty two percent premium

621
00:32:42,320 --> 00:32:44,920
Speaker 13: over what Magellan's unit price was trading at. So I

622
00:32:44,920 --> 00:32:48,480
Speaker 13: think the premium was you know, the price was relatively steep.

623
00:32:49,600 --> 00:32:52,920
Speaker 4: So that is the story on the One Oaks deal, Jacob,

624
00:32:52,960 --> 00:32:55,160
Speaker 4: I want to give you the last word here. When

625
00:32:55,160 --> 00:32:58,120
Speaker 4: you're looking at kind of metals coverage and the metals

626
00:32:58,200 --> 00:33:01,160
Speaker 4: deals the metal framework, what's interesting to me is the

627
00:33:01,200 --> 00:33:04,560
Speaker 4: timing of this Newmont deal. Specifically we covered One Oak

628
00:33:05,440 --> 00:33:08,400
Speaker 4: just with Talent. With the Newmont deal, it's happening with

629
00:33:08,800 --> 00:33:12,440
Speaker 4: gold prices at near record highs. How do you square that.

630
00:33:15,880 --> 00:33:18,400
Speaker 2: We're seeing there there's more investor interest in gold right

631
00:33:18,440 --> 00:33:21,280
Speaker 2: now for all the obvious economic reasons at the same time.

632
00:33:21,880 --> 00:33:24,479
Speaker 2: You know, Neumont has been looking at new Crest for

633
00:33:24,600 --> 00:33:29,120
Speaker 2: quite a while. I think they launched this deal in Seguary.

634
00:33:29,600 --> 00:33:32,440
Speaker 2: But Newcrest has always been sort of number one on

635
00:33:32,480 --> 00:33:35,920
Speaker 2: their corporate development team's list, as you know, the companies

636
00:33:36,000 --> 00:33:38,400
Speaker 2: they wanted to fold into there there and we had

637
00:33:38,440 --> 00:33:41,600
Speaker 2: heard from our reporting that they previously looked at companies

638
00:33:41,640 --> 00:33:43,560
Speaker 2: like Kinross, but for a while this has been the

639
00:33:43,560 --> 00:33:45,480
Speaker 2: top one on their wish list. And I mean the

640
00:33:45,800 --> 00:33:48,520
Speaker 2: catalysts really, you know, separate from the gold price is

641
00:33:48,560 --> 00:33:51,680
Speaker 2: the fact that you know, last November decemberish, the CEO

642
00:33:51,800 --> 00:33:57,600
Speaker 2: of New Crest resigned somewhat unexpectedly, and Newmont finally saw

643
00:33:57,640 --> 00:33:59,600
Speaker 2: this opening to sort of swoop in and they figured,

644
00:33:59,840 --> 00:34:02,480
Speaker 2: you know, in that sense, you know, it was the

645
00:34:02,560 --> 00:34:04,920
Speaker 2: right time. So you know, then we saw it changes

646
00:34:04,960 --> 00:34:07,280
Speaker 2: with the gold price and which we've add sort of

647
00:34:07,280 --> 00:34:09,440
Speaker 2: any interesting sort of wrinkle to this. But you know

648
00:34:09,600 --> 00:34:12,280
Speaker 2: that said, I think it's actually pretty unrelated.

649
00:34:13,320 --> 00:34:16,960
Speaker 4: Well, Jacob Lorink of Bloomberg News and Talent Custer, can

650
00:34:17,000 --> 00:34:19,359
Speaker 4: we research analyst over at Bloomberg Intelligence, We thank you

651
00:34:19,400 --> 00:34:21,680
Speaker 4: as always. Of course, as we speak, we'll look at

652
00:34:21,680 --> 00:34:25,800
Speaker 4: the one Oak share price down about nine percent. Pretty

653
00:34:25,880 --> 00:34:29,120
Speaker 4: natural arbitrage that you see with any kind of acquirer

654
00:34:29,200 --> 00:34:32,000
Speaker 4: and deal. We'll see how the investors respond to it

655
00:34:32,080 --> 00:34:34,160
Speaker 4: when we start to get more information from those shareholders.

656
00:34:34,360 --> 00:34:37,319
Speaker 4: And of course we are looking at Numont as well.

657
00:34:37,320 --> 00:34:39,879
Speaker 4: ANYM is the ticker there, those shares hire by one

658
00:34:39,960 --> 00:34:41,000
Speaker 4: and a half percent.

659
00:34:41,400 --> 00:34:43,960
Speaker 10: You're listening to the tape can to our live program

660
00:34:44,000 --> 00:34:47,960
Speaker 10: Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio,

661
00:34:48,120 --> 00:34:50,200
Speaker 10: the tune in app, Bloomberg dot Com, and.

662
00:34:50,160 --> 00:34:51,479
Speaker 9: The Bloomberg Business App.

663
00:34:51,520 --> 00:34:54,319
Speaker 10: You can also listen live on Amazon Alexa from our

664
00:34:54,360 --> 00:35:01,000
Speaker 10: flagship New York station. Just say Alexa play Bloomberg eleven thirty, Jennifer.

665
00:35:00,680 --> 00:35:01,279
Speaker 14: If you know this.

666
00:35:01,360 --> 00:35:03,440
Speaker 4: Bailey and I sit next to each other back on

667
00:35:03,480 --> 00:35:05,360
Speaker 4: the stocks team, back in the back in our intern

668
00:35:05,719 --> 00:35:07,680
Speaker 4: my intern days, Bailey was a.

669
00:35:07,600 --> 00:35:11,279
Speaker 6: Full fledged adult, but like oh times, it really was.

670
00:35:11,440 --> 00:35:11,640
Speaker 1: Yeah.

671
00:35:11,760 --> 00:35:15,279
Speaker 4: I've been very lucky with with my my desk neighbors

672
00:35:15,320 --> 00:35:18,839
Speaker 4: at Bloomberg. They've they've treated me treated me well. So

673
00:35:19,080 --> 00:35:22,040
Speaker 4: for that, I'm gonna trade one desk neighbor to another.

674
00:35:22,400 --> 00:35:24,640
Speaker 4: Bailey Lipshoalz. We thank you, as always for your market

675
00:35:24,680 --> 00:35:27,840
Speaker 4: to reports. Like I said, as promised, my second dest neighbor,

676
00:35:28,520 --> 00:35:32,960
Speaker 4: John authurs Uh, the star of Bloomberg opinion. Every once

677
00:35:33,000 --> 00:35:34,880
Speaker 4: in a while he crazes us with his presence.

678
00:35:35,280 --> 00:35:37,480
Speaker 1: Thank you, I have seeing you in ages. Thank you.

679
00:35:37,520 --> 00:35:41,719
Speaker 1: That is saying this really isn't good enough. I need

680
00:35:41,800 --> 00:35:45,800
Speaker 1: to introduce myself as a geriatric gen X who catches

681
00:35:45,920 --> 00:35:49,800
Speaker 1: up with TikTok when his kids showed them their TikTok.

682
00:35:50,200 --> 00:35:52,680
Speaker 1: You know what, that's another that's another stage on the

683
00:35:52,719 --> 00:35:54,440
Speaker 1: evolutionary At least.

684
00:35:54,280 --> 00:35:56,759
Speaker 4: You're staying up to date in some way, right. I mean,

685
00:35:56,760 --> 00:35:58,400
Speaker 4: some people don't even know what TikTok is.

686
00:35:58,480 --> 00:36:00,200
Speaker 6: I mean I depend on my niece for all of

687
00:36:00,239 --> 00:36:00,760
Speaker 6: these things.

688
00:36:00,840 --> 00:36:01,239
Speaker 1: There you go.

689
00:36:01,280 --> 00:36:04,080
Speaker 4: You got to get your information where you can, and the.

690
00:36:04,080 --> 00:36:07,000
Speaker 1: Chinese government depends on TikTok to know what my kids

691
00:36:07,000 --> 00:36:09,480
Speaker 1: are getting up to with their social plans. There's probably

692
00:36:09,520 --> 00:36:13,920
Speaker 1: somebody there who knows more about their hopes of dating

693
00:36:14,000 --> 00:36:16,520
Speaker 1: or whatever than I do. But actually there's probably quite

694
00:36:16,560 --> 00:36:18,200
Speaker 1: a lot of people who know more about their dating

695
00:36:18,239 --> 00:36:20,680
Speaker 1: aspirations than I do. Anyway, this is probably not what

696
00:36:20,719 --> 00:36:21,680
Speaker 1: you want to say.

697
00:36:21,760 --> 00:36:23,920
Speaker 4: That's not but you know what, always excited to hear

698
00:36:23,920 --> 00:36:25,960
Speaker 4: your thoughts on that subject, but I do want to

699
00:36:25,960 --> 00:36:28,640
Speaker 4: hear about the debt ceiling first though, because look, we've

700
00:36:28,640 --> 00:36:30,120
Speaker 4: been talking about this for what it's been going on

701
00:36:30,120 --> 00:36:32,360
Speaker 4: for like a month now, and it feels like we

702
00:36:32,520 --> 00:36:35,640
Speaker 4: are kind of getting closer and closer to this X

703
00:36:35,719 --> 00:36:38,920
Speaker 4: date in early June, and yet here we are with

704
00:36:38,960 --> 00:36:40,880
Speaker 4: the market is not doing a whole lot. First it was,

705
00:36:40,920 --> 00:36:43,719
Speaker 4: you know, let's panic, let's buy defensives, let's hop at

706
00:36:43,719 --> 00:36:45,760
Speaker 4: the dollar and treasuries and all that jazz.

707
00:36:46,000 --> 00:36:46,640
Speaker 14: What happened?

708
00:36:47,560 --> 00:36:50,279
Speaker 1: It's it's very difficult to tell. If you look at

709
00:36:50,280 --> 00:36:54,120
Speaker 1: the markets that are absolutely most directly affected, they have

710
00:36:54,280 --> 00:36:58,160
Speaker 1: actually been more affected than in previous debt seeing incidents.

711
00:36:58,200 --> 00:37:02,160
Speaker 1: So if you look at T bills that come due

712
00:37:02,680 --> 00:37:06,080
Speaker 1: before and after when people currently expect the X state

713
00:37:06,120 --> 00:37:10,040
Speaker 1: to be, the gap between them is very wide indeed now,

714
00:37:10,120 --> 00:37:12,120
Speaker 1: and to an extent that we didn't see during the

715
00:37:12,120 --> 00:37:15,360
Speaker 1: first really big fight over this, which is twenty eleven.

716
00:37:17,520 --> 00:37:21,120
Speaker 1: I think a lot of people have simply done the

717
00:37:21,160 --> 00:37:26,920
Speaker 1: game theory and said, this is a chicken game. Somebody

718
00:37:26,960 --> 00:37:31,480
Speaker 1: always swerves, We're not actually going to get a default.

719
00:37:31,680 --> 00:37:35,399
Speaker 1: I think they're probably well, I would bet a lot

720
00:37:35,480 --> 00:37:42,200
Speaker 1: that that's ultimately correct. But it's very strange that the

721
00:37:42,239 --> 00:37:45,600
Speaker 1: stock market has been impacted as little as it has,

722
00:37:46,160 --> 00:37:49,600
Speaker 1: given the fact that those who are most interested in

723
00:37:49,640 --> 00:37:54,520
Speaker 1: this do care, and given that the political risks I think,

724
00:37:54,560 --> 00:37:57,279
Speaker 1: particularly after President Trump in the CNN town hall last

725
00:37:57,320 --> 00:38:02,680
Speaker 1: week basically did he sort of give House Republicans permission

726
00:38:02,719 --> 00:38:05,080
Speaker 1: to press ahead. He almost made it politically difficult for

727
00:38:05,160 --> 00:38:10,319
Speaker 1: them not to. And that really does mean that the

728
00:38:10,480 --> 00:38:15,440
Speaker 1: chances of brinkmanship going too far on political level certainly

729
00:38:15,440 --> 00:38:17,480
Speaker 1: looks stronger now than they did even in twenty eleven.

730
00:38:17,560 --> 00:38:21,080
Speaker 1: This is not the tea Party. This is something different.

731
00:38:21,320 --> 00:38:24,120
Speaker 6: I mean, would you take this as almost a litmus

732
00:38:24,160 --> 00:38:30,480
Speaker 6: test of Trump's influence in the Congress.

733
00:38:32,200 --> 00:38:34,360
Speaker 1: That's an interesting way to look at it. Yes, I

734
00:38:34,360 --> 00:38:39,080
Speaker 1: think it probably is at this point because he's made

735
00:38:39,120 --> 00:38:44,000
Speaker 1: his position as security cats where us on abortion one

736
00:38:44,360 --> 00:38:50,360
Speaker 1: wouldn't be so clear. Given he's got very good, very strong,

737
00:38:51,160 --> 00:38:54,359
Speaker 1: feral political instinct. It surprises me a little that he's

738
00:38:54,840 --> 00:39:00,000
Speaker 1: as confident that Republicans can avoid political blame for a default,

739
00:39:01,200 --> 00:39:04,600
Speaker 1: given that the previous it goes back to New Gingrich

740
00:39:04,640 --> 00:39:07,279
Speaker 1: and try to shut down the governments against Clinton I mean,

741
00:39:07,560 --> 00:39:11,279
Speaker 1: every time some variation on this theme has happened, the

742
00:39:11,320 --> 00:39:17,799
Speaker 1: Republicans have lost politically without exception. So it surprises me

743
00:39:17,880 --> 00:39:21,279
Speaker 1: he's as confident as he is that this is a

744
00:39:21,320 --> 00:39:26,120
Speaker 1: winning issue for the Republicans while obviously being nervous that

745
00:39:26,160 --> 00:39:29,399
Speaker 1: the balance on abortion has now switched quite dangerously away

746
00:39:29,400 --> 00:39:32,920
Speaker 1: from the Republicans. I don't really We now know that

747
00:39:32,960 --> 00:39:35,560
Speaker 1: he's got much better political judgment, political antenning than I

748
00:39:35,640 --> 00:39:38,600
Speaker 1: have or the most of us have. But that's a

749
00:39:38,640 --> 00:39:42,080
Speaker 1: surprising judgment. I do not think the Republicans want to

750
00:39:42,080 --> 00:39:46,239
Speaker 1: go to the country after a default. It's just not good.

751
00:39:46,360 --> 00:39:47,480
Speaker 14: Does the idea of a default though?

752
00:39:47,520 --> 00:39:49,040
Speaker 4: I mean, look, even if we do get an agreement

753
00:39:49,080 --> 00:39:51,080
Speaker 4: at the end of the day, still from what I understand,

754
00:39:51,200 --> 00:39:52,920
Speaker 4: kicking the can down the road to just March of

755
00:39:53,000 --> 00:39:55,840
Speaker 4: next year. I think the deputy director of the National

756
00:39:55,840 --> 00:39:59,000
Speaker 4: Economic Council had said, Look, this is not a long

757
00:39:59,080 --> 00:40:02,400
Speaker 4: term solution, John, What does a long term solution look like.

758
00:40:02,800 --> 00:40:06,200
Speaker 1: I think a long term solution would involve two things.

759
00:40:06,239 --> 00:40:08,960
Speaker 1: One is actually going away with the debt limit in

760
00:40:09,040 --> 00:40:10,960
Speaker 1: some way. This is not the way it was meant

761
00:40:11,000 --> 00:40:15,240
Speaker 1: to work. The arguments being made about the fourteenth Amendment.

762
00:40:15,440 --> 00:40:18,640
Speaker 1: You know that you can't the nation cannot renee on

763
00:40:18,760 --> 00:40:23,120
Speaker 1: debts that it's taken out do seem to me there

764
00:40:23,160 --> 00:40:25,480
Speaker 1: is at least a sensible case that the debt sealing

765
00:40:25,520 --> 00:40:28,560
Speaker 1: runs counter to that, So you need to come up

766
00:40:28,560 --> 00:40:32,000
Speaker 1: with some grand settlements to do away with that. And

767
00:40:32,040 --> 00:40:38,399
Speaker 1: then I think, again delving back into political and financial history,

768
00:40:38,440 --> 00:40:42,120
Speaker 1: in the nineteen eighties, you had the Graham Rudman automatic

769
00:40:42,160 --> 00:40:46,440
Speaker 1: budget stabilizers, which didn't last all that long and weren't

770
00:40:46,480 --> 00:40:52,880
Speaker 1: necessarily terribly effective. But the idea that once a budget,

771
00:40:52,920 --> 00:40:56,480
Speaker 1: once the deficit goes beyond a certain level, a certain

772
00:40:56,520 --> 00:41:02,000
Speaker 1: degree of cuts becomes mandatory and you tie the hands

773
00:41:02,040 --> 00:41:10,440
Speaker 1: of the negotiators, and some variation on that probably is needed,

774
00:41:12,360 --> 00:41:16,560
Speaker 1: and depending on exactly how the mechanics of it work out,

775
00:41:17,320 --> 00:41:21,120
Speaker 1: that that might be a workable way. You just need

776
00:41:21,160 --> 00:41:22,719
Speaker 1: to look at what's been happening in France in the

777
00:41:22,800 --> 00:41:28,120
Speaker 1: last few weeks. You know, Attacking entitlements, which means paying

778
00:41:28,160 --> 00:41:31,680
Speaker 1: people less in their pension than they have saved up

779
00:41:31,680 --> 00:41:34,040
Speaker 1: for and been till they're going to get, is not

780
00:41:34,200 --> 00:41:35,160
Speaker 1: something you want to do.

781
00:41:36,080 --> 00:41:39,320
Speaker 6: But I guess I take your point on what needs

782
00:41:39,360 --> 00:41:41,400
Speaker 6: to happen in order for us to get out of

783
00:41:41,440 --> 00:41:45,680
Speaker 6: this sort of endless cankicking situation. But that will require,

784
00:41:46,080 --> 00:41:50,680
Speaker 6: in my assessment, an enormous amount of bipartisan.

785
00:41:50,040 --> 00:41:51,719
Speaker 1: Political will which doesn't exist.

786
00:41:51,800 --> 00:41:54,120
Speaker 6: Which does not exist. So we have lots of cans

787
00:41:54,120 --> 00:41:56,719
Speaker 6: ahead of us down many roads for many years to come.

788
00:41:56,800 --> 00:41:59,560
Speaker 1: Yeah, And Graham Rudman was indeed often referred to as

789
00:41:59,560 --> 00:42:03,000
Speaker 1: Gramm rud and Hollings because the two Republican senators did

790
00:42:03,000 --> 00:42:06,520
Speaker 1: have a democratic seenmeter Rix Hollings to go along with them. Yes,

791
00:42:06,560 --> 00:42:09,920
Speaker 1: and the idea of you know, I don't know a

792
00:42:10,080 --> 00:42:15,840
Speaker 1: Cruz Wholly, I don't know which democratic semeter. Can you

793
00:42:15,840 --> 00:42:18,920
Speaker 1: imagine putting their name on onto something with those two,

794
00:42:19,880 --> 00:42:21,240
Speaker 1: it is a little hard to imagine.

795
00:42:21,360 --> 00:42:24,279
Speaker 4: The mind bargles, what does this contingency plan look like? John,

796
00:42:24,320 --> 00:42:26,759
Speaker 4: What happens if we hit that debt ceiling? What is

797
00:42:26,840 --> 00:42:29,120
Speaker 4: kind of the doomsday scenario?

798
00:42:30,160 --> 00:42:34,960
Speaker 1: Well, the doomsday scenarios that we really do default and

799
00:42:35,080 --> 00:42:39,560
Speaker 1: if that happens, then things get very interesting indeed, in

800
00:42:39,640 --> 00:42:44,840
Speaker 1: global in global markets, because arguably one of the greatest

801
00:42:44,840 --> 00:42:49,280
Speaker 1: issues of the last fifteen twenty years has been the

802
00:42:49,400 --> 00:42:56,360
Speaker 1: lack the reducing supply of risk free assets. Okay, no, actress,

803
00:42:56,360 --> 00:42:59,120
Speaker 1: it is truly risk free, but for the purposes of

804
00:42:59,160 --> 00:43:03,680
Speaker 1: financial argument, financial calculations. Some are you know, Fanny Maine,

805
00:43:03,760 --> 00:43:07,200
Speaker 1: Freddie macare no longer in their peripheral. Eurozone debt is

806
00:43:07,239 --> 00:43:09,040
Speaker 1: no longer in there. There are barely any triple A

807
00:43:09,080 --> 00:43:14,920
Speaker 1: corporates anymore, even if you manage to resolve it fairly quickly.

808
00:43:15,600 --> 00:43:21,600
Speaker 1: The shock, the crisis level shock of a default, followed

809
00:43:21,640 --> 00:43:24,880
Speaker 1: by the adjustment that would be required now that everybody

810
00:43:24,920 --> 00:43:31,480
Speaker 1: knows that not even treasuries are risk free. I I

811
00:43:31,520 --> 00:43:34,440
Speaker 1: do not know exactly what would happen. What I do

812
00:43:34,520 --> 00:43:35,839
Speaker 1: know is that I don't want to find out.

813
00:43:36,760 --> 00:43:41,720
Speaker 4: For her, a doomsday scenario for sure is the saving

814
00:43:41,840 --> 00:43:46,239
Speaker 4: grace and all of this the dollar It could be

815
00:43:46,400 --> 00:43:51,120
Speaker 4: Oh my gosh, John Arthur's and the dollar.

816
00:43:51,160 --> 00:43:54,000
Speaker 1: And the dollar smile, Yes, this is this is crit

817
00:43:54,239 --> 00:43:57,759
Speaker 1: learned an awful lot about the Bretton Woods Agreement during

818
00:43:57,800 --> 00:44:01,400
Speaker 1: her those long years spent having to sit next to

819
00:44:01,640 --> 00:44:03,239
Speaker 1: next to me at the desk.

820
00:44:03,560 --> 00:44:06,200
Speaker 4: It's true some people are told, you know, fun stories

821
00:44:06,200 --> 00:44:08,840
Speaker 4: about their families or whatever. John Author's told me about

822
00:44:08,880 --> 00:44:10,320
Speaker 4: Breton what's that case.

823
00:44:11,000 --> 00:44:18,239
Speaker 1: John Mayni Okay, So it's possible as it stands at

824
00:44:18,239 --> 00:44:21,800
Speaker 1: the moment, what happened in twenty eleven was one of

825
00:44:21,840 --> 00:44:25,440
Speaker 1: the great counter intuitive market responses of all time, which

826
00:44:25,520 --> 00:44:30,520
Speaker 1: was in response to the debt scening having been as

827
00:44:31,600 --> 00:44:34,359
Speaker 1: problematic as it was. You know that for a few

828
00:44:34,400 --> 00:44:36,200
Speaker 1: hours they didn't manage to doing in the middle of

829
00:44:36,239 --> 00:44:39,080
Speaker 1: the night, they didn't manage to raise the scening and

830
00:44:39,120 --> 00:44:43,319
Speaker 1: so on. People were terrified and they ran for the

831
00:44:43,320 --> 00:44:50,520
Speaker 1: shelter of treasuries. And you seem conceivably to be having

832
00:44:50,600 --> 00:44:53,720
Speaker 1: something similar at the moment that people that the dollar

833
00:44:53,800 --> 00:44:57,680
Speaker 1: has actually ticked up again quite noticeably in the last

834
00:44:57,680 --> 00:45:00,759
Speaker 1: week or two. Nothing you could have your hats on

835
00:45:00,840 --> 00:45:04,719
Speaker 1: too much just yet, but it's possible that people will

836
00:45:04,760 --> 00:45:08,160
Speaker 1: still even if this probably is the US regard the

837
00:45:08,280 --> 00:45:10,600
Speaker 1: US and the dollar as this as the shelter.

838
00:45:11,239 --> 00:45:13,160
Speaker 4: Well, certainly a bit that has been coming through in

839
00:45:13,160 --> 00:45:14,960
Speaker 4: the last few weeks. Twelve twenty eight on the Bloomberg

840
00:45:14,960 --> 00:45:17,880
Speaker 4: Dollar inn Nex one oh two on d XY, folks,

841
00:45:18,280 --> 00:45:20,319
Speaker 4: we are going to be covering that head to toe.

842
00:45:20,400 --> 00:45:24,160
Speaker 4: John Author's over at Bloomberg Opinion. We thank you as always.

843
00:45:24,000 --> 00:45:27,120
Speaker 10: You're listening to the tape. Catch our live program Bloomberg

844
00:45:27,200 --> 00:45:30,799
Speaker 10: Markets weekdays at ten am Eastern on Bloomberg Radio, the

845
00:45:30,840 --> 00:45:32,799
Speaker 10: tune in app, Bloomberg dot Com, and.

846
00:45:32,760 --> 00:45:34,080
Speaker 9: The Bloomberg Business App.

847
00:45:34,120 --> 00:45:36,920
Speaker 10: You can also listen live on Amazon Alexa from our

848
00:45:36,960 --> 00:45:42,040
Speaker 10: flagship New York station, Just say Alexa play Bloomberg eleven thirty.

849
00:45:43,239 --> 00:45:46,000
Speaker 4: Well, let's bring in a true expert, Jennifer Lee, Managing

850
00:45:46,000 --> 00:45:49,160
Speaker 4: Director and senior economist over at BMO Capital Market and

851
00:45:49,480 --> 00:45:53,719
Speaker 4: a true friend to the show. Jennifer, the same concept,

852
00:45:54,120 --> 00:45:56,920
Speaker 4: your thoughts on the same concept here, but let's connect

853
00:45:56,920 --> 00:45:59,960
Speaker 4: the dots to what extent is this debt ceiling debate

854
00:46:00,640 --> 00:46:04,320
Speaker 4: and the changes being made to address it inflationary?

855
00:46:05,640 --> 00:46:07,359
Speaker 14: Well, hither, thank you very much for having me on

856
00:46:07,360 --> 00:46:08,759
Speaker 14: the show today. You know what it.

857
00:46:10,239 --> 00:46:12,160
Speaker 15: I don't I have to question, you know, how much

858
00:46:12,200 --> 00:46:13,800
Speaker 15: more spending do we need?

859
00:46:14,239 --> 00:46:14,400
Speaker 14: You know?

860
00:46:14,440 --> 00:46:16,640
Speaker 15: And just hearing your previous guest, it's kind of, you know,

861
00:46:16,800 --> 00:46:19,080
Speaker 15: his comments on the debt ceiling and what could happen

862
00:46:19,120 --> 00:46:21,040
Speaker 15: if they do default. You know, it's kind of freaking

863
00:46:21,040 --> 00:46:23,520
Speaker 15: me out a little bit, you know, And and and

864
00:46:23,520 --> 00:46:26,480
Speaker 15: and truly, I mean, we already have a strong, still

865
00:46:26,520 --> 00:46:30,840
Speaker 15: moving an economy that's still growing inflation that's already inflationary.

866
00:46:31,080 --> 00:46:34,839
Speaker 15: So you know, we need to start tailoring back all

867
00:46:34,920 --> 00:46:38,560
Speaker 15: this all this spending right now before it's too late.

868
00:46:39,400 --> 00:46:41,400
Speaker 15: So that's I think that those are the two the

869
00:46:41,440 --> 00:46:43,000
Speaker 15: to the points here. I mean, it's not as if

870
00:46:43,200 --> 00:46:46,520
Speaker 15: we are struggling with very low inflation and we need to,

871
00:46:46,600 --> 00:46:48,440
Speaker 15: you know, to spice things up a little bit. Things

872
00:46:48,480 --> 00:46:50,279
Speaker 15: are already quite spiced up enough, and I think we

873
00:46:50,280 --> 00:46:52,240
Speaker 15: need to just start tailing back that spending.

874
00:46:52,800 --> 00:46:55,040
Speaker 6: I guess if you're a central banker, though, you're in

875
00:46:55,160 --> 00:46:57,719
Speaker 6: such a tight situation because on the one hand, you've

876
00:46:57,719 --> 00:47:01,640
Speaker 6: got this persistent inflation pressure, but you've got some cracks

877
00:47:01,640 --> 00:47:03,960
Speaker 6: in the labor market and the economic slowdown. I mean,

878
00:47:04,200 --> 00:47:08,080
Speaker 6: how can a central bank manage this ifout having to

879
00:47:08,120 --> 00:47:09,160
Speaker 6: make a move in rates?

880
00:47:10,080 --> 00:47:12,120
Speaker 15: I guess with with kid gloves really. I mean, like,

881
00:47:12,280 --> 00:47:13,360
Speaker 15: I think, at the end of the day, we have

882
00:47:13,400 --> 00:47:16,840
Speaker 15: to hopefully assume that that someone's gonna pull back and

883
00:47:16,840 --> 00:47:19,000
Speaker 15: that cooler heads will prevail and you know, we won't

884
00:47:19,000 --> 00:47:21,759
Speaker 15: see the US default. But in the meantime, you know,

885
00:47:22,600 --> 00:47:24,839
Speaker 15: central bankers, you know, globe not only only for the FED,

886
00:47:24,840 --> 00:47:27,000
Speaker 15: but around the world, everyone has to sort of keep

887
00:47:27,040 --> 00:47:28,960
Speaker 15: their eye on that inflation, theary ball, and that's what

888
00:47:28,960 --> 00:47:31,440
Speaker 15: everyone is doing these days. You know, we're all getting

889
00:47:31,480 --> 00:47:34,000
Speaker 15: back towards that our most countries are heading back toward

890
00:47:34,040 --> 00:47:37,600
Speaker 15: that two percent target, some faster than others, but you know,

891
00:47:37,640 --> 00:47:39,880
Speaker 15: so everyone is sort of employing different ways of getting

892
00:47:39,960 --> 00:47:40,880
Speaker 15: getting to that point.

893
00:47:41,520 --> 00:47:43,440
Speaker 14: You know, over the past few weeks, we've had, you know.

894
00:47:43,360 --> 00:47:45,560
Speaker 15: The Federal Reserve of hinting at a pause, not exactly

895
00:47:45,600 --> 00:47:47,239
Speaker 15: coming out and saying that they're that they're done, but

896
00:47:47,600 --> 00:47:50,120
Speaker 15: certainly hinting at it. The Baker Canada has paused for

897
00:47:50,120 --> 00:47:52,160
Speaker 15: a couple months in a row. The RBA teased with

898
00:47:52,200 --> 00:47:55,960
Speaker 15: one pause and went back raising rates again. ECB is

899
00:47:56,040 --> 00:47:57,600
Speaker 15: still going a whole hog on the on the rate

900
00:47:57,680 --> 00:47:59,719
Speaker 15: hike front, and so is the Bank of England, and

901
00:47:59,800 --> 00:48:02,840
Speaker 15: that's because they need to bring inflation back down to

902
00:48:02,840 --> 00:48:05,520
Speaker 15: two percent. You know, come sorry to say this, but

903
00:48:05,600 --> 00:48:07,040
Speaker 15: come hell or high water, they've got they've got to do.

904
00:48:07,040 --> 00:48:08,120
Speaker 15: They've got a job to do, and this is what

905
00:48:08,160 --> 00:48:08,799
Speaker 15: they're trying to do.

906
00:48:09,400 --> 00:48:12,680
Speaker 6: Is the difference in between Europe and the US, one

907
00:48:12,800 --> 00:48:16,360
Speaker 6: of concerned about high inflation rates getting entrenched with higher

908
00:48:16,360 --> 00:48:17,560
Speaker 6: wage bargaining deals.

909
00:48:18,520 --> 00:48:19,239
Speaker 14: Yes, for sure.

910
00:48:19,280 --> 00:48:20,799
Speaker 15: So that's uh, you know, we're not seeing as much

911
00:48:20,840 --> 00:48:22,680
Speaker 15: of a wage price spiral here in the US, but

912
00:48:22,800 --> 00:48:24,840
Speaker 15: in Europe, you know, there is that potential for some

913
00:48:25,320 --> 00:48:27,640
Speaker 15: even though the central bankers have said that that's they're

914
00:48:27,640 --> 00:48:29,600
Speaker 15: not seeing too much of it. But we see that

915
00:48:29,640 --> 00:48:31,279
Speaker 15: with in terms of like the strikes, I mean, we

916
00:48:31,360 --> 00:48:34,040
Speaker 15: already know that the labor market is super tight, and

917
00:48:34,160 --> 00:48:36,319
Speaker 15: the workers know that, and you know, some of them

918
00:48:36,320 --> 00:48:38,360
Speaker 15: have gone for years without you know, a new contract.

919
00:48:38,480 --> 00:48:41,319
Speaker 15: So this is the prime opportunity to you know, to

920
00:48:41,360 --> 00:48:43,280
Speaker 15: make their voices heard and to get what they want.

921
00:48:43,600 --> 00:48:45,680
Speaker 15: And we're starting to see the strikes you know, playing

922
00:48:45,719 --> 00:48:48,200
Speaker 15: out across across much of Europe. And now with the

923
00:48:48,200 --> 00:48:51,440
Speaker 15: summer approaching tourist season, you know, you don't want, you know,

924
00:48:51,560 --> 00:48:53,560
Speaker 15: want the to see all the strikes happening again at

925
00:48:53,600 --> 00:48:55,640
Speaker 15: the at the airports like we did last year. So

926
00:48:56,560 --> 00:48:59,080
Speaker 15: that is you know, that's part of the whole narrative

927
00:48:59,120 --> 00:49:00,680
Speaker 15: as well.

928
00:49:00,880 --> 00:49:04,319
Speaker 4: When you're comparing the likes of the US versus say

929
00:49:04,320 --> 00:49:07,319
Speaker 4: the ECB or even the Bank of Canada, the Bank

930
00:49:07,360 --> 00:49:11,120
Speaker 4: of England, et cetera, it feels like, whereas the US

931
00:49:11,320 --> 00:49:16,080
Speaker 4: is approaching the end of their tightening cycle, the easy

932
00:49:16,080 --> 00:49:18,680
Speaker 4: BE and definitely the BO. We say, look, we still

933
00:49:18,719 --> 00:49:21,160
Speaker 4: have a little bit more work to do. To what

934
00:49:21,320 --> 00:49:25,120
Speaker 4: extent is those or are those diverging paths I'm trying

935
00:49:25,120 --> 00:49:28,640
Speaker 4: to find the right grammar here are those diverging paths

936
00:49:28,760 --> 00:49:31,040
Speaker 4: a problem?

937
00:49:31,080 --> 00:49:33,600
Speaker 14: A problem in terms of maybe for the currency.

938
00:49:33,640 --> 00:49:36,520
Speaker 15: I guess if the if the ECB continues to raise rates,

939
00:49:36,520 --> 00:49:37,879
Speaker 15: and so is the Bank of England, if that could

940
00:49:38,400 --> 00:49:41,319
Speaker 15: lift or strengthen their currency somewhat, and also that would

941
00:49:41,360 --> 00:49:44,840
Speaker 15: also help inflation, that would help the inflation story. But

942
00:49:44,880 --> 00:49:46,799
Speaker 15: the Bank of England is certainly one with you know,

943
00:49:46,920 --> 00:49:49,359
Speaker 15: quite you know, quite a problem right now because they

944
00:49:49,400 --> 00:49:53,640
Speaker 15: still have you know, over ten percent headline inflation and

945
00:49:54,040 --> 00:49:57,279
Speaker 15: they barely started turning the corner even with energy prices down,

946
00:49:57,320 --> 00:49:59,399
Speaker 15: whereas everyone else has has turned the corner and it's

947
00:49:59,400 --> 00:50:02,680
Speaker 15: heading back. So again, the easy B is still facing

948
00:50:02,719 --> 00:50:06,840
Speaker 15: record high, record high or close to record high core CPI,

949
00:50:07,600 --> 00:50:11,320
Speaker 15: and every single almost every single central banker or governing

950
00:50:11,360 --> 00:50:14,560
Speaker 15: council member has been even more hawkish than the other.

951
00:50:14,600 --> 00:50:17,640
Speaker 15: It seems, you know, some we have been producing in

952
00:50:17,680 --> 00:50:20,719
Speaker 15: a junior hike in July hike and a couple of

953
00:50:20,719 --> 00:50:22,839
Speaker 15: them have started hinting out a September hike, which is

954
00:50:22,880 --> 00:50:25,640
Speaker 15: like so far in the yonder. I think it's too

955
00:50:25,680 --> 00:50:28,040
Speaker 15: early to talk about that, but the is shuws sort

956
00:50:28,040 --> 00:50:29,560
Speaker 15: of like that mindset that they are ready to do

957
00:50:29,600 --> 00:50:31,279
Speaker 15: what it takes and willing to do what it takes

958
00:50:31,280 --> 00:50:32,760
Speaker 15: to get inflation back down to two percent.

959
00:50:33,360 --> 00:50:35,839
Speaker 6: Because one thing I wonder though, is I mean, I'm

960
00:50:35,960 --> 00:50:38,160
Speaker 6: interested in this idea you have about September being so

961
00:50:38,239 --> 00:50:41,880
Speaker 6: far away, because you know, we're seeing signs of inflation

962
00:50:41,960 --> 00:50:45,640
Speaker 6: pressure easing, but that could reverse very easily. And one

963
00:50:45,640 --> 00:50:48,479
Speaker 6: thing I'm really looking at is food inflation, because we're

964
00:50:48,520 --> 00:50:51,520
Speaker 6: wondering what's going to be happening with, for example, the

965
00:50:51,560 --> 00:50:54,520
Speaker 6: grain shipment agreements coming out of Ukraine. That's a source

966
00:50:54,560 --> 00:50:57,440
Speaker 6: potentially of enormous pressure on food price inflation. And then

967
00:50:57,520 --> 00:51:00,239
Speaker 6: you know, to be sure, central bankers will tell you

968
00:51:00,280 --> 00:51:02,960
Speaker 6: food prices are transitory, but it makes for a pretty

969
00:51:03,040 --> 00:51:05,840
Speaker 6: nasty headline number at some points, and it's going to

970
00:51:05,880 --> 00:51:08,840
Speaker 6: be quite hard for a central bank to be easing

971
00:51:08,960 --> 00:51:11,799
Speaker 6: if that's what they're seeing is a transitory high inflation rate.

972
00:51:11,960 --> 00:51:12,520
Speaker 14: Oh for sure.

973
00:51:12,560 --> 00:51:14,200
Speaker 15: I mean, like the Bank of England just last week

974
00:51:14,239 --> 00:51:17,239
Speaker 15: they were talking about food prices. They soared, you know,

975
00:51:17,280 --> 00:51:20,960
Speaker 15: over nineteen percent year every year. And that's interesting because

976
00:51:21,000 --> 00:51:23,080
Speaker 15: the fact that the UK imports about half of its food.

977
00:51:23,440 --> 00:51:25,400
Speaker 15: But this is the thing that that's the actual component

978
00:51:25,440 --> 00:51:27,120
Speaker 15: that the bank was talking about, because they said that

979
00:51:27,160 --> 00:51:29,520
Speaker 15: it takes up so much of you know, of it's

980
00:51:29,560 --> 00:51:31,880
Speaker 15: such a of a stanilient point of a consumer, of

981
00:51:31,880 --> 00:51:34,960
Speaker 15: the consumer spending basket that it does help shape their

982
00:51:34,960 --> 00:51:37,920
Speaker 15: inflation expectations. So even though food prices, you know, are

983
00:51:37,960 --> 00:51:40,600
Speaker 15: a super volatile and that's why we take food and

984
00:51:40,719 --> 00:51:42,680
Speaker 15: energy out of the headline and get the core measure,

985
00:51:42,920 --> 00:51:47,120
Speaker 15: it still plays a big role in how consumers think

986
00:51:47,120 --> 00:51:50,200
Speaker 15: about inflation going forward. And and that's you know, I

987
00:51:50,320 --> 00:51:52,439
Speaker 15: think there was another ECB survey as well last week

988
00:51:52,440 --> 00:51:55,480
Speaker 15: that showed inflation expectations climbing for the next over the

989
00:51:55,520 --> 00:51:57,719
Speaker 15: next three years. So all of this, you know, even

990
00:51:57,760 --> 00:51:59,600
Speaker 15: though energy prices have come down, which you know, we

991
00:51:59,640 --> 00:52:02,360
Speaker 15: are all for, food prices is still very much of

992
00:52:02,360 --> 00:52:06,400
Speaker 15: a volatile component and we could see some sharp upward

993
00:52:06,440 --> 00:52:09,400
Speaker 15: pressure from those from that key component in coming months.

994
00:52:09,520 --> 00:52:11,759
Speaker 4: And I would argue shelter to some extent as well,

995
00:52:11,800 --> 00:52:13,040
Speaker 4: that kind of bubble that I think a lot of

996
00:52:13,080 --> 00:52:16,200
Speaker 4: people expected to pop by now hasn't, even though we

997
00:52:16,239 --> 00:52:19,480
Speaker 4: are about a year a year and some after the

998
00:52:19,480 --> 00:52:22,000
Speaker 4: FED has started their tightening cycle. Jennifer, are you at

999
00:52:22,040 --> 00:52:25,120
Speaker 4: all worried about some sort of double peak and inflation?

1000
00:52:25,239 --> 00:52:27,960
Speaker 4: Maybe not now, but one or two years from now.

1001
00:52:29,920 --> 00:52:31,960
Speaker 15: You know, I haven't thought of a double peak, but

1002
00:52:32,040 --> 00:52:34,080
Speaker 15: now that I think about it, no, not not quite yet.

1003
00:52:34,080 --> 00:52:37,560
Speaker 15: Maybe not hitting those same highs that we saw last summer,

1004
00:52:37,960 --> 00:52:40,280
Speaker 15: but you know we are still I mean, housing prices

1005
00:52:40,320 --> 00:52:42,840
Speaker 15: have come down, and it takes some time before deshally

1006
00:52:42,920 --> 00:52:45,360
Speaker 15: show up in the in the in the big you

1007
00:52:45,360 --> 00:52:48,200
Speaker 15: know CPI components, and that's why the FED, you know,

1008
00:52:48,520 --> 00:52:50,840
Speaker 15: in making this a lot more complicated, especially for me

1009
00:52:50,840 --> 00:52:52,799
Speaker 15: because I'm losing track of all the different components. But

1010
00:52:53,000 --> 00:52:54,239
Speaker 15: you know, back in the day, we will look at

1011
00:52:54,280 --> 00:52:56,600
Speaker 15: just total. We will look at core when you strip

1012
00:52:56,640 --> 00:52:59,320
Speaker 15: out ex food and energy, and now we're stripping it

1013
00:52:59,360 --> 00:53:02,160
Speaker 15: down between like goods in services and within services you're

1014
00:53:02,160 --> 00:53:04,200
Speaker 15: stripping it down. You're taking out housing, and now you're

1015
00:53:04,200 --> 00:53:06,640
Speaker 15: looking at that super core measure. So you know, this

1016
00:53:06,719 --> 00:53:09,920
Speaker 15: shows how it's not just the headline, it's not just

1017
00:53:09,960 --> 00:53:11,600
Speaker 15: the core measure, but the FED is looking at almost

1018
00:53:11,600 --> 00:53:13,640
Speaker 15: every single component to make sure it's coming back down

1019
00:53:13,640 --> 00:53:16,000
Speaker 15: to where it wants to be before it starts it

1020
00:53:16,040 --> 00:53:18,840
Speaker 15: starts talking about cutting rates or at least stopping at

1021
00:53:18,920 --> 00:53:20,520
Speaker 15: least it's going to stop pulling back on that or

1022
00:53:20,560 --> 00:53:22,720
Speaker 15: pushing the whole hawkish narrative.

1023
00:53:23,480 --> 00:53:25,160
Speaker 4: And it's interesting when you compare that to what you're

1024
00:53:25,160 --> 00:53:28,560
Speaker 4: seeing around the world, because maybe maybe not a fear

1025
00:53:28,560 --> 00:53:30,879
Speaker 4: in the US, but certainly an uptick that you've seen

1026
00:53:30,920 --> 00:53:34,000
Speaker 4: at least in the core data and in say Spanish

1027
00:53:34,080 --> 00:53:36,959
Speaker 4: data or French data as well. Jennifer Lee, a senior

1028
00:53:36,960 --> 00:53:39,680
Speaker 4: commist managing director over at BMO Capital Markets. We thank

1029
00:53:39,680 --> 00:53:43,560
Speaker 4: you as always for your time and your insight. Jennifer

1030
00:53:43,640 --> 00:53:46,760
Speaker 4: Ryan my co host here. There's a lot of scary

1031
00:53:46,800 --> 00:53:49,920
Speaker 4: things out there. I mean, today's conversation has been very doomsday.

1032
00:53:50,280 --> 00:53:52,600
Speaker 6: It's been very doomsday amidst a flat market.

1033
00:53:52,719 --> 00:53:57,400
Speaker 4: I know where financial journalists spare us. This is what

1034
00:53:57,440 --> 00:54:00,640
Speaker 4: we were hired to do, inflict fear in the hearts

1035
00:54:00,680 --> 00:54:04,719
Speaker 4: of our listeners. Just kidding. Look, the market seems to

1036
00:54:04,719 --> 00:54:08,000
Speaker 4: be to uphold or hold fairly well, even in the

1037
00:54:08,000 --> 00:54:09,600
Speaker 4: face of a lot of these and I think that

1038
00:54:09,600 --> 00:54:11,400
Speaker 4: speaks to the strength of these markets, the strength of

1039
00:54:11,400 --> 00:54:14,200
Speaker 4: the American consumer. So there is a bowl argument to

1040
00:54:14,360 --> 00:54:16,920
Speaker 4: be made here, but certainly something that we're going to

1041
00:54:17,000 --> 00:54:18,760
Speaker 4: keep an eye on as things develop.

1042
00:54:19,080 --> 00:54:22,200
Speaker 10: You're listening to the tape catch are live program Bloomberg

1043
00:54:22,280 --> 00:54:25,840
Speaker 10: Markets weekdays at ten am Eastern on Bloomberg Radio, the

1044
00:54:25,920 --> 00:54:28,000
Speaker 10: tune in app, Bloomberg dot Com.

1045
00:54:27,719 --> 00:54:29,160
Speaker 9: And the Bloomberg Business app.

1046
00:54:29,200 --> 00:54:32,000
Speaker 10: You can also listen live on Amazon Alexa from our

1047
00:54:32,000 --> 00:54:36,440
Speaker 10: flagship New York station, Just say Alexa Play Bloomberg eleven thirty.

1048
00:54:39,000 --> 00:54:42,680
Speaker 6: Our next guest is here to talk about artificial intelligence.

1049
00:54:43,239 --> 00:54:47,600
Speaker 6: Yan Slodgi, the founder of toggle AI, and toggle ai

1050
00:54:47,880 --> 00:54:51,200
Speaker 6: uses generative AI, which is the hot hot thing these days,

1051
00:54:51,800 --> 00:54:55,520
Speaker 6: to provide hedge fund style analytics that predicts price movements

1052
00:54:55,920 --> 00:54:58,879
Speaker 6: and thirty five thousand securities. Did I get that right?

1053
00:54:59,320 --> 00:54:59,640
Speaker 9: You did?

1054
00:54:59,719 --> 00:55:00,799
Speaker 16: Yes, Thank you for having me.

1055
00:55:01,160 --> 00:55:04,120
Speaker 6: So tell us a little bit more about toggle AI.

1056
00:55:04,400 --> 00:55:05,480
Speaker 6: Why should we use it?

1057
00:55:06,400 --> 00:55:09,719
Speaker 16: So toagle AI was created with the specific purpose of

1058
00:55:09,800 --> 00:55:13,400
Speaker 16: helping investors at hedge funds, investment banks, institutional investors at

1059
00:55:13,480 --> 00:55:16,799
Speaker 16: large to just get better insights from their data. And

1060
00:55:16,840 --> 00:55:20,800
Speaker 16: so we felt like as a background in Hedgehund investing

1061
00:55:20,840 --> 00:55:24,080
Speaker 16: ourselves that we really lack the infrastructure to make that

1062
00:55:24,120 --> 00:55:27,720
Speaker 16: more efficient. There's a lot of data available, but really

1063
00:55:27,880 --> 00:55:30,759
Speaker 16: not enough tools to help you get the value from

1064
00:55:30,760 --> 00:55:32,520
Speaker 16: it that exists and is locked in there.

1065
00:55:32,920 --> 00:55:36,160
Speaker 6: So you've been using generator of AI for years, but

1066
00:55:36,880 --> 00:55:39,640
Speaker 6: how does your tech compare to the secret sauce in

1067
00:55:39,680 --> 00:55:43,239
Speaker 6: the new tech that's captured the public imagination since we

1068
00:55:43,320 --> 00:55:45,279
Speaker 6: all learned about chat gibt last year.

1069
00:55:45,800 --> 00:55:49,839
Speaker 16: Yeah, great question. So I would say the most important

1070
00:55:49,840 --> 00:55:52,040
Speaker 16: step forward from our point of view as a kind

1071
00:55:52,080 --> 00:55:55,799
Speaker 16: of intelligent financial analytics platform is the fact that these

1072
00:55:55,880 --> 00:55:59,239
Speaker 16: large language models have for the first time enabled two

1073
00:55:59,320 --> 00:56:02,720
Speaker 16: way communicate. So prior to that, our reliance on language

1074
00:56:02,719 --> 00:56:07,040
Speaker 16: models was primarily to articulate the analysis that the AI

1075
00:56:07,120 --> 00:56:10,719
Speaker 16: would have done across all of these different assets. What

1076
00:56:10,760 --> 00:56:14,080
Speaker 16: you're now able to do is ask follow up questions.

1077
00:56:14,200 --> 00:56:17,040
Speaker 16: So if I highlight an interesting relationship for you, what

1078
00:56:17,080 --> 00:56:20,920
Speaker 16: you were then able to do is say, Okay, here's

1079
00:56:21,000 --> 00:56:23,920
Speaker 16: my question that would like to dig a little bit deeper.

1080
00:56:24,000 --> 00:56:24,880
Speaker 16: That's now possible.

1081
00:56:25,520 --> 00:56:27,560
Speaker 6: I guess one question I have for you, though I

1082
00:56:27,560 --> 00:56:29,600
Speaker 6: have many questions, but this is the first question I'm

1083
00:56:29,600 --> 00:56:32,759
Speaker 6: going to hit you with the one thing that we

1084
00:56:32,800 --> 00:56:36,480
Speaker 6: see across every company that reports earnings that we follow

1085
00:56:36,640 --> 00:56:40,000
Speaker 6: is everyone's got something to say about AI. Everyone's falling

1086
00:56:40,040 --> 00:56:42,440
Speaker 6: over themselves to figure out a way to use it.

1087
00:56:42,960 --> 00:56:46,360
Speaker 6: So you market yourselves as giving traders and hedge funds

1088
00:56:46,360 --> 00:56:49,840
Speaker 6: and opportunity a leg up. But if everyone starts using AI,

1089
00:56:50,040 --> 00:56:52,600
Speaker 6: is in everyone going to start having the same advantage.

1090
00:56:53,120 --> 00:56:57,200
Speaker 16: Yeah, again, you went right to the heart of the matter.

1091
00:56:57,280 --> 00:57:01,560
Speaker 16: I would say the large language models here are really

1092
00:57:01,640 --> 00:57:06,040
Speaker 16: used mostly as an intermediary between the user and then

1093
00:57:06,080 --> 00:57:09,920
Speaker 16: the analytics that the models help you use, So not

1094
00:57:10,040 --> 00:57:13,000
Speaker 16: everybody will have access to the same analytics. In other words,

1095
00:57:13,040 --> 00:57:17,120
Speaker 16: the answers and the analysis that you get through toggle

1096
00:57:17,160 --> 00:57:20,720
Speaker 16: AI are reliant on a whole suite of analytics that

1097
00:57:20,800 --> 00:57:24,520
Speaker 16: we have spent a large number of years developing. And

1098
00:57:24,560 --> 00:57:27,880
Speaker 16: so just having access to chat GPT isn't enough to

1099
00:57:27,960 --> 00:57:29,600
Speaker 16: now create a competitor to toggle.

1100
00:57:30,240 --> 00:57:33,080
Speaker 6: But you bring up chat GPT and then it is

1101
00:57:33,160 --> 00:57:37,800
Speaker 6: unfortunately famously productive of some very curious answers. It will

1102
00:57:37,840 --> 00:57:39,920
Speaker 6: tell a user that he is in love with you,

1103
00:57:40,760 --> 00:57:44,360
Speaker 6: or tell a user you know, some very strange answers

1104
00:57:44,400 --> 00:57:48,080
Speaker 6: that suggest that the reliability issue still needs quite a

1105
00:57:48,120 --> 00:57:50,000
Speaker 6: bit of work to be sorted out. And do you

1106
00:57:50,120 --> 00:57:53,560
Speaker 6: face the same difficulties with your own technology or is

1107
00:57:53,560 --> 00:57:55,280
Speaker 6: that something different that you're using.

1108
00:57:56,000 --> 00:58:00,960
Speaker 16: So the question of hallucinations obviously looms very large in

1109
00:58:01,000 --> 00:58:06,280
Speaker 16: finance because getting the right answer is often extremely important

1110
00:58:06,680 --> 00:58:09,400
Speaker 16: and can involve quite a lot of money, and so

1111
00:58:09,440 --> 00:58:11,400
Speaker 16: people really want to make sure that what they're seeing

1112
00:58:11,520 --> 00:58:14,840
Speaker 16: is correct. The way we address this challenge is by

1113
00:58:14,920 --> 00:58:18,720
Speaker 16: having a much more narrowly specialized large language model that

1114
00:58:18,800 --> 00:58:23,480
Speaker 16: effectively is only able to get answers and source analysis

1115
00:58:23,920 --> 00:58:26,760
Speaker 16: from the tools that we have plugged into it and

1116
00:58:26,840 --> 00:58:29,760
Speaker 16: from the data that we have sourced and controlled, and

1117
00:58:29,840 --> 00:58:32,840
Speaker 16: so it is much less pron in fact, in our case,

1118
00:58:33,080 --> 00:58:36,960
Speaker 16: almost never to giving you the wrong answer like what

1119
00:58:37,000 --> 00:58:38,200
Speaker 16: you might see with chad GPT.

1120
00:58:38,600 --> 00:58:40,840
Speaker 6: Interesting, so you spoke a little bit at the beginning

1121
00:58:40,880 --> 00:58:43,040
Speaker 6: about the types of clients that you've got. Are you

1122
00:58:43,080 --> 00:58:46,400
Speaker 6: looking to expand into different bank trading divisions for example?

1123
00:58:47,120 --> 00:58:50,640
Speaker 16: Absolutely? I mean, you know this is we've been around

1124
00:58:50,680 --> 00:58:53,640
Speaker 16: for just around three years, so we're definitely still growing,

1125
00:58:53,720 --> 00:58:57,320
Speaker 16: growing very fast. I think what has happened with chad

1126
00:58:57,400 --> 00:58:59,880
Speaker 16: GPT and what has really helped us in that respect

1127
00:59:00,480 --> 00:59:04,240
Speaker 16: is that the interest in the technology and the interest

1128
00:59:04,280 --> 00:59:07,520
Speaker 16: in thinking through how it might impact an individual institution

1129
00:59:08,000 --> 00:59:11,800
Speaker 16: has absolutely exploded. And so even if for no other

1130
00:59:11,880 --> 00:59:15,680
Speaker 16: reason than curiosity, people will often take a meeting with

1131
00:59:15,760 --> 00:59:18,040
Speaker 16: us to say, Okay, let's see what this can do.

1132
00:59:18,600 --> 00:59:21,640
Speaker 6: And I guess what hurdles are you encountering when dealing

1133
00:59:21,640 --> 00:59:23,680
Speaker 6: with potential new customers. And the thing I have in

1134
00:59:23,720 --> 00:59:26,280
Speaker 6: mind here is, you know, when chat Gipt came out,

1135
00:59:26,280 --> 00:59:28,680
Speaker 6: there was this great mania for people to find their

1136
00:59:28,800 --> 00:59:31,479
Speaker 6: use cases for it, and then it wasn't too long

1137
00:59:31,560 --> 00:59:34,160
Speaker 6: until we had banks saying, hang on a minute, I

1138
00:59:34,160 --> 00:59:35,960
Speaker 6: don't think this is something that I want to license

1139
00:59:36,000 --> 00:59:37,640
Speaker 6: to the rest of the company, and we're going to

1140
00:59:37,640 --> 00:59:39,400
Speaker 6: put some serious restrictions on using it.

1141
00:59:40,040 --> 00:59:42,880
Speaker 16: Yeah, So again I would say that compared to I

1142
00:59:42,960 --> 00:59:46,360
Speaker 16: think what chad Gipt has done has spawned a lot

1143
00:59:46,400 --> 00:59:50,080
Speaker 16: of interest in this technology and the ability to have

1144
00:59:50,160 --> 00:59:52,240
Speaker 16: communication with the machine. But I think if you are

1145
00:59:52,280 --> 00:59:56,320
Speaker 16: a banking institution, what you're really looking at, and that's

1146
00:59:56,360 --> 00:59:59,440
Speaker 16: the use case that we rely on, is to leverage

1147
00:59:59,440 --> 01:00:04,520
Speaker 16: this technologlogy as an improvement on the user experience. So

1148
01:00:04,560 --> 01:00:07,080
Speaker 16: you're not saying, oh, I'm going to use chad GPT

1149
01:00:07,280 --> 01:00:09,800
Speaker 16: to help me in my day to day workflow. You're

1150
01:00:09,920 --> 01:00:13,640
Speaker 16: using the underlying technology to say, users who prior to

1151
01:00:13,680 --> 01:00:17,160
Speaker 16: that might have been reluctant to use an analytical tool

1152
01:00:17,200 --> 01:00:20,040
Speaker 16: because it involved drop down menus and buttons and so on,

1153
01:00:20,400 --> 01:00:22,840
Speaker 16: are now able to verbalize what they would like to

1154
01:00:22,880 --> 01:00:26,640
Speaker 16: get done, and then the system takes that, empowers the

1155
01:00:26,680 --> 01:00:30,640
Speaker 16: appropriate analytical widget, and then gives you the answer. I

1156
01:00:30,640 --> 01:00:34,960
Speaker 16: think that dramatically lowers the bar to using data for

1157
01:00:35,040 --> 01:00:38,320
Speaker 16: your decisions that I think will have implications for sure

1158
01:00:38,320 --> 01:00:42,120
Speaker 16: in finance, but probably anywhere where data analytics is generally

1159
01:00:42,160 --> 01:00:42,840
Speaker 16: a big industry.

1160
01:00:43,480 --> 01:00:47,120
Speaker 6: Does your pitch to potential customers include the idea that

1161
01:00:47,160 --> 01:00:50,480
Speaker 6: you could potentially provide them with some inefficiencies i e.

1162
01:00:50,880 --> 01:00:53,320
Speaker 6: That they could replace some staff with your systems.

1163
01:00:54,480 --> 01:00:58,120
Speaker 16: We don't center the pitch around basically replacing the staff,

1164
01:00:58,160 --> 01:01:01,000
Speaker 16: but I think what we do generally highlight for them

1165
01:01:01,080 --> 01:01:04,120
Speaker 16: is that it can really turbocharge the workflow of the

1166
01:01:04,200 --> 01:01:07,120
Speaker 16: staff that they have. Giving you an example, a number

1167
01:01:07,160 --> 01:01:10,560
Speaker 16: of banking institutions, for example, will have quite a lot

1168
01:01:10,560 --> 01:01:13,800
Speaker 16: of data locked in written documents, so they produce a

1169
01:01:13,800 --> 01:01:16,400
Speaker 16: lot of research. Dot research gets stored in some kind

1170
01:01:16,440 --> 01:01:21,200
Speaker 16: of online repository, it becomes very difficult to find. Where

1171
01:01:21,520 --> 01:01:24,800
Speaker 16: large language models can be very good is identifying those documents,

1172
01:01:24,800 --> 01:01:28,080
Speaker 16: getting the data for you all in seconds, which other

1173
01:01:28,440 --> 01:01:30,760
Speaker 16: prior to that might have taken hours. So again, it's

1174
01:01:30,760 --> 01:01:35,760
Speaker 16: about making somebody a lot more productive, not necessarily replacing them.

1175
01:01:36,040 --> 01:01:36,280
Speaker 10: Got it.

1176
01:01:36,600 --> 01:01:40,160
Speaker 4: Yon so Logy, CEO and founder of toggle Ai. It's

1177
01:01:40,200 --> 01:01:43,400
Speaker 4: been using generated AI to provide hedge fund style analytics.

1178
01:01:43,440 --> 01:01:46,080
Speaker 4: It is kind of exciting to predict price movements thirty

1179
01:01:46,080 --> 01:01:47,160
Speaker 4: five thousand securities.

1180
01:01:47,200 --> 01:01:47,680
Speaker 14: But it's not just.

1181
01:01:47,680 --> 01:01:50,840
Speaker 4: Stocks, commodities, fixed income. It's all about it, folks. Check

1182
01:01:50,880 --> 01:01:53,160
Speaker 4: it out. Yon Soology joining us right here in the

1183
01:01:53,200 --> 01:01:56,360
Speaker 4: Interactive Broker Studio. We thank you as always for your time.

1184
01:01:56,960 --> 01:01:57,160
Speaker 6: Jen.

1185
01:01:57,240 --> 01:02:00,360
Speaker 4: This is an area that has exploded, and for it

1186
01:02:00,480 --> 01:02:03,280
Speaker 4: to kind of get into financial services is new.

1187
01:02:03,560 --> 01:02:06,000
Speaker 6: It is it is new. I mean, I'm not going

1188
01:02:06,040 --> 01:02:09,320
Speaker 6: to comment on the vast realms of technology that financial

1189
01:02:09,320 --> 01:02:12,200
Speaker 6: services companies use because that would keep us here all day,

1190
01:02:12,200 --> 01:02:15,440
Speaker 6: but it's definitely a hot topic on earnings calls.

1191
01:02:17,960 --> 01:02:21,040
Speaker 3: Thanks for listening to the Bloomberg Markets podcast. You can

1192
01:02:21,080 --> 01:02:24,880
Speaker 3: subscribe and listen to interviews at Apple Podcasts. Or whatever

1193
01:02:24,960 --> 01:02:28,680
Speaker 3: podcast platform you prefer. I'm Matt Miller. I'm on Twitter

1194
01:02:28,880 --> 01:02:32,080
Speaker 3: at Matt Miller nineteen seventy three. And I'm Faull Sweeney.

1195
01:02:32,160 --> 01:02:33,600
Speaker 1: I'm on Twitter at pt Sweeney.

1196
01:02:33,760 --> 01:02:36,400
Speaker 2: Before the podcast, you can always catch us worldwide at

1197
01:02:36,440 --> 01:02:38,200
Speaker 2: Bloomberg Radio