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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Ley.

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Speaker 1: We bring you insight from the best in economics, finance, investment,

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

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

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Speaker 1: the President on the record sank he's open to an

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Speaker 1: interim deal. Please to say that Cashy Fisher is with

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Speaker 1: us Bernstein head of Wealth and Investment Strategy for the

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Speaker 1: next four hours, with us for the next six minutes.

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Speaker 1: So let's make the most of it. Cathy, great to

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Speaker 1: have you with us. Things aren't as bad as they seem,

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Speaker 1: at least certainly not so compared to three weeks ago.

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Speaker 1: That's right, um, Although I don't want to read too

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Speaker 1: much into the back and forth on things like interim

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Speaker 1: trade deals. Yes, it's good news, but we all know

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Speaker 1: it can change tomorrow. Right. I think that's what the

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Speaker 1: market has recognized. We're going to have ups and downs

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Speaker 1: the trade talks, and as I was saying before, I

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Speaker 1: think a much more realistic recognition that lower interest rates

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Speaker 1: are not a panacea. We are trying to figure out

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Speaker 1: how to deal in a world where global trade has

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Speaker 1: been unmoored by these tariff issues, and countries are doing

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Speaker 1: what they can to offset it, but interest rates alone

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Speaker 1: cannot do it, which is why the topic of fiscal

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Speaker 1: stimulus is back on the table, because countries are going

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Speaker 1: to try to do what they can at their own

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Speaker 1: levels to adjust to a very different environment than we've seen.

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Speaker 1: Many people have come on this program and said, these

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Speaker 1: tariffs aren't going anywhere regardless of who is in the

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Speaker 1: White House, and I think we've got a real flavor

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Speaker 1: of that last night yesterday evening. It was about one

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Speaker 1: hour and about thirty minutes into the debates with the

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Speaker 1: Democratic presidential candidates, the moderator asked the candidates essentially one

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Speaker 1: simple question, and your first day in office, would you

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Speaker 1: unwind remove the tariffs. I didn't hear a single candidate

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Speaker 1: come out firmly and say they would do that. Caine. Remember,

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Speaker 1: the Democrats have always been the party that was anti

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Speaker 1: global trade, so of course the Democrats cannot protest what's

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Speaker 1: going on with tariffs. Absolutely, so we do have to

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Speaker 1: expect that this is a new reality that's going with

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Speaker 1: us for quite some time, and the rishes between the

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Speaker 1: US and and China are quite existential very much how

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Speaker 1: you operate your economy. They're not just buying soybeans. So

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Speaker 1: these things are going to be with us for a

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Speaker 1: long time. When you work every day in wealth management,

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Speaker 1: what do you rationalize as economic growth? I mean, if

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Speaker 1: it's tariff induced, and by definition tariffs will reduce economic growth.

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Speaker 1: Let's go with that core idea. What is the Canthy

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Speaker 1: Fisher run rate of the American economy for investment? Is

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Speaker 1: it sub three percent? Is its subs It's a very

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Speaker 1: good question. It is certainly closer to two than three.

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Speaker 1: And we we cannot ignore the bigger trends, which are demographics,

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Speaker 1: which our technology, these are These are positives and negatives.

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Speaker 1: But we are clearly in a slower growth environment and

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Speaker 1: the deterioration and growth because of ter in recent quarters

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Speaker 1: has been quite Let me dovetail the four percent. Now

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Speaker 1: we're Joyce Chanin of JP Morgan with a four and

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Speaker 1: a half percent out there for Chinese economic growth. And

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Speaker 1: the other four percent was the bombshell in the cover

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Speaker 1: of the Times yesterday or the day before the Times

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Speaker 1: of London of an actual annuity of four point one

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Speaker 1: percent on a life annuity that's in your Wheelhouse. I mean,

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Speaker 1: these are all lower numbers than any of our listeners

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Speaker 1: comprehend what I mean. It's back up saying we're a

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Speaker 1: little more optimistic on China. We think so something in

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Speaker 1: the closest six is still possible in China that still

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Speaker 1: matters a great deal. But um Japan, Germany, these numbers

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Speaker 1: are are notably weak, and we have to accept that

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Speaker 1: this is that we will have lower growth going forward

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Speaker 1: for quite some time. Populism is part of it. There's

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Speaker 1: a lot of big trends that are going to change

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Speaker 1: the dynamics we've been accustomed to. But remember, companies adjust,

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Speaker 1: and that's what I say all the time. Companies figure

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Speaker 1: out how to deal in a different environment, whether it's tariffs,

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Speaker 1: whether it's technology, whether it's changing changing consumer behaviors. And

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Speaker 1: that's what we're trying to decipher. Final question on policy,

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Speaker 1: and we're going to get a fiscal response in Europe.

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Speaker 1: You know, the tolerance for deficit spending is much greater

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Speaker 1: than it's been ever And while Germany in particular will

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Speaker 1: be the last one to want to do that, I

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Speaker 1: think there's more tolerance now than we've seen before for

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Speaker 1: any kind of fiscal stimulus that could indeed cause greater deficits.

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Speaker 1: It's it's a very broad based trend in every part

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Speaker 1: of the globe. Cathy, thank you so much. With a

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Speaker 1: lot of break thanks helping on today. We've had a

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Speaker 1: lot of news flow, and particularly on Europe. So we

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Speaker 1: are advantaged with Meredith Sumter of e Ray your group

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Speaker 1: to go right to China, right to trade, and we

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Speaker 1: can do this with their definitive knowledge of domestic China

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Speaker 1: and particularly how language is perceived. What will be the

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Speaker 1: domestic language Bear Sumter of the idea they're gonna let

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Speaker 1: soybeans and much needed pork into China. How does that

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Speaker 1: play in the Chinese press? Great question, Tom, Well, certainly

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Speaker 1: Si Jumping will position this as providing relief to China's

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Speaker 1: domestic market more so than any sort of concession that

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Speaker 1: he's looking to to provide to President Trump. He's got,

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Speaker 1: as you know, you know, he's got a very important

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Speaker 1: political anniversary coming up on October one. This is a

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Speaker 1: sevenoth anniversary of the founding the People's Republic of China.

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Speaker 1: So everything is gonna be very carefully stage managed. Uh

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Speaker 1: And for that reason, actually more so than it was

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Speaker 1: strategically a move to to get back to talks Beijing.

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Speaker 1: Let to know that moving forth with a hike in

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Speaker 1: in tariff rates on October one would be politically unpalatable

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Speaker 1: to present She on such an anniversary. And that provided

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Speaker 1: that first opening, that uh, that got us to where

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Speaker 1: we are now, with Chinese negotiators working on the negotiators

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Speaker 1: coming over mid this month, followed by cabinet level negotiators

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Speaker 1: meeting in October. Meredith to understand whether the softening of

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Speaker 1: stances is sustainable. We need a better understanding of what

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Speaker 1: underpins it and if it all comes down to October

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Speaker 1: first in a national celebration, I don't see that it's

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Speaker 1: sounding too sustainable, because once you get beyond that, we

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Speaker 1: back to square one. What are your thoughts about what

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Speaker 1: underpends it beyond on October first celebration. Certainly we're moving

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Speaker 1: towards a mini deal. This is not going to be

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Speaker 1: a structural improvement to the ballad of relationship. More so,

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Speaker 1: it's going to be both sides. Trump and She both

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Speaker 1: have in sentenced to avoid an escalation and to seek

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Speaker 1: economic relief when it's politically feasible to do so, but

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Speaker 1: neither side is desperate enough to make the political concessions

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Speaker 1: necessary to reach a comprehensive agreement. And I think despite

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Speaker 1: the slight lift that we've seen this morning in markets,

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Speaker 1: slight optimism, you know, I think underlying this there is

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Speaker 1: a broader realization among investors that even if you do

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Speaker 1: get some kind of deal or many deals what we're

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Speaker 1: calling it, UH this autumn, this is not going to

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Speaker 1: result in a structural realignment of the of the two

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Speaker 1: largest economies. The President went on the record yesterday evening

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Speaker 1: gets said that he would be open to an interim deal. Meredith,

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Speaker 1: What would that include and what would it exclude? This

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Speaker 1: is a great question because what you hear from the

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Speaker 1: Chinese side and versus what you hear from the Washington side,

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Speaker 1: there's some slight, slight differences there, UH, In that President

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Speaker 1: Trump yesterday had mentioned i P as possibly being part

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Speaker 1: of a mini deal. In order for Beijing to agree

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Speaker 1: to any kind of significant P concessions, they would expect

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Speaker 1: that President Trump would not just delay onward tariff escalation,

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Speaker 1: but actually roll back some existing tariffs, which is something

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Speaker 1: that we judge at this stage President Trump is not

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Speaker 1: interested in moving forth with But you know, again, the

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Speaker 1: the uptick and agg purchases in exchange for a delay

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Speaker 1: of on word teriff escalation and maybe some a few

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Speaker 1: licenses given to Huawei. UH. That's pretty much what we expect, Meredith.

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Speaker 1: We learned last night that the Democrats and Republicans, or

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Speaker 1: at least the Democrats and President Trump, I should say,

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Speaker 1: are on the same page against China, doubtful of any

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Speaker 1: trade fairness and reciprocity UH. As well for the Communist

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Speaker 1: Party in China that Mr G has to attend to

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Speaker 1: for the seventieth anniversary. Is the Communist Party all on

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Speaker 1: the same page? I mean, does he have sort of

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Speaker 1: a national uniform mistrust as does the president? Well, there

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Speaker 1: are she domestically has his detractors. There are many within

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Speaker 1: policy circles in China that that believe that she has

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Speaker 1: made some very big mistakes, such as being too assertive,

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Speaker 1: being too confident coming out, and being too aggressive UH

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Speaker 1: in it's it's it's aims for global leadership, but also

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Speaker 1: its plans for for made in China UH and moving

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Speaker 1: aggressively in ways that not just put the US gave

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Speaker 1: the US pause, but also other major trading UH partners pause.

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Speaker 1: So there's some criticism there. But this is what Trump's

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Speaker 1: that criticism is that when you have an outside power

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Speaker 1: that is looking to, in Beijing's views, gang up on

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Speaker 1: China and forced China to to make moves that she,

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Speaker 1: jumping is saying, is going to undermine that country's ability

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Speaker 1: to transform its economy in a way that is suitable

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Speaker 1: only to China being ganged up on by an outside

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Speaker 1: imperial power. You can see where this is going. Um

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Speaker 1: so he is. We do see that she is using

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Speaker 1: that nationalist card, that nationalist sentiment in a way to

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Speaker 1: shore up more domestic support for his pathway moving forward.

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Speaker 1: Let's talk about what may or may not happen at

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Speaker 1: the back end of next year in the White House.

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Speaker 1: It was really interesting watching the Democratic presidential debates last night,

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Speaker 1: and the views of the Democrats, I have to say,

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Speaker 1: didn't seem too different from the view of the President

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Speaker 1: when it comes to China and the objective of leveling

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Speaker 1: the playing field. There was a great Washington Post piece recently,

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Speaker 1: a great article in public opinion towards trade, and Democratic

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Speaker 1: voters are moving towards increasingly a favorable view of trade. Now,

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Speaker 1: some people might just say that the partisan shift. The

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Speaker 1: article admits to that might be just a shallow view.

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Speaker 1: Yet not a single candidate is willing to weaponize it.

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Speaker 1: Why not? This is something also that we need to

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Speaker 1: watch us more closely, because if you look at the

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Speaker 1: Democratic Party and what the Canada's all said last night,

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Speaker 1: not a single one of them came out and said

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Speaker 1: that they would roll back the protectionist measures that President

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Speaker 1: Trump has put in place. They all agreed we need

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Speaker 1: to do more to negotiate with China and more to

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Speaker 1: realign the two economies. I think it's still too early

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Speaker 1: to say that the Democrats or Democratic voters are moving

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Speaker 1: toward free trade, but rather what they're saying is they're

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Speaker 1: recognizing that President Trump's trade agenda has really not come

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Speaker 1: up with any concrete winds that is impacting them positively,

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Speaker 1: and patience is beginning to run out. One European question, Uh, Meredith,

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Speaker 1: and then we'll let you go, Midge Raman, on all

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Speaker 1: we've observed in the last twenty four hours. You're you're great, midman.

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Speaker 1: What do you think? What do you think on on

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Speaker 1: Brexit Europe? You know, the fiscal fiscal policy to the rescue. Yeah,

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Speaker 1: so you know, really that the relevant upshot from a

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Speaker 1: politics perspective with the ECB easing is that the environment

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Speaker 1: caused by such easy money means that markets are going

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Speaker 1: to be in a more forgiving mood for political risk

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Speaker 1: and you know, talking to Midge, when it comes down

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Speaker 1: to is that investors need to remain focused on the

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Speaker 1: stability or fragility of individual countries in case that risk

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Speaker 1: appetite reverses quickly. Okay, mere something, thank you so much.

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Speaker 1: Thank you, just hugely valuable there and China. Do you

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Speaker 1: want to bring in Simon? I would love to love

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Speaker 1: to get his reaction quite clearly, not his name, Simon

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Speaker 1: friendship chan Will Gordon, the chief of karmis over there

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Speaker 1: joining the sound of London. Sim In your view on

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Speaker 1: the data that just dropped a minute or so ago,

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Speaker 1: I think you're right to focus on the inflationary aspect

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Speaker 1: of that. It's um I think markets had a bit

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Speaker 1: of a shocked and they stay with the core CPI

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Speaker 1: print and the at least on the three months annualized

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Speaker 1: breaking north of three percent, so that caused some anxiety.

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Speaker 1: I think this would reassure people that at least in

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Speaker 1: the net that feels like a healthcare related blip per

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Speaker 1: seasonal blip rather than a significant push forward on on

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Speaker 1: import cost inflation. But it's look at all is playing

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Speaker 1: into the fact that J. Powell has and the rest

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Speaker 1: of them have plenty to absorb. Next week in terms

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Speaker 1: of trying to tack a path between quite conflicting inflationary data,

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Speaker 1: we can it's in manufacturing, but ongoing resilience as we

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Speaker 1: see in the headline retail sales in the US consumption,

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Speaker 1: and just keep adjusting the federal funds right low assignment.

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Speaker 1: They call it a mid cycle adjustment. Typically what we've

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Speaker 1: seen at recent history at least, does that suggest over

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Speaker 1: the last couple of decades that's about seventy five basis

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Speaker 1: points of cuts from the federal reserve? Something is that

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Speaker 1: how you characterize frame things for clients right now, that

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Speaker 1: that's what we're going to get. That is a mid

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Speaker 1: cycle adjustment, just three cuts. What I'm saying to clients

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Speaker 1: is that this is not a FED whether it likes

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Speaker 1: it or not, that is entirely data dependent. They may

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Speaker 1: like to continue to use that terminology. It's beloved of

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Speaker 1: many central bankers, but it's it's politically influenced, whether it's

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Speaker 1: politically compromised as a separate point, but it's certainly politically influenced,

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Speaker 1: and I think at the moment there is there is

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Speaker 1: more inflation in the US economy than the President likes

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Speaker 1: to believe. And therefore the delicate path I need to

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Speaker 1: be set out is it will just be a mixed

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Speaker 1: cycle adjustment of the type we saw perhaps last in

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Speaker 1: where you try and provide some support to underlying demand

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Speaker 1: given some sectoral weakness, or will it be something more

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Speaker 1: perverse and ulter the answer that lies in the White

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Speaker 1: House rather than the Federal Reserve. John I want to

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Speaker 1: point out in the tenure, because we're so used to

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Speaker 1: quoting yielded on a price basis, the tenure US is

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Speaker 1: now down three point that's not quite two years of

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Speaker 1: Cooper and forty basis points on a ten year. In

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Speaker 1: ten days, we've had a big move. It's a huge move.

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Speaker 1: It's a huge move in the context of positioning, and

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Speaker 1: I think that's key here, is that what you're seeing

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Speaker 1: in terms of the kind of our performance of value

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Speaker 1: versus momentum or inequities, which has been triggered by a

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Speaker 1: re assessment on the bond market, means that positioning was

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Speaker 1: very much skewed towards I mean I lost count the

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Speaker 1: number of analyst notes that came out of talking about

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Speaker 1: potential zero percent tenure treasury. They they came out in

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Speaker 1: a flurry, didn't they. Your positioning set up for that,

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Speaker 1: and then you recognize that it is not that simple.

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Speaker 1: Then you have to do somewhat of a handbrake turn,

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Speaker 1: and I think that is what we're now seeing in

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Speaker 1: terms of the price action on the ten year rather

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Speaker 1: than just looking at the yields. Simons very quickly here,

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Speaker 1: I've got one European question. How did madamal guards Jab

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Speaker 1: change yesterday? I mean, what does she do November one,

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Speaker 1: in November two, in November three of what we observed yesterday?

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Speaker 1: I mean, great question. I think the regional banker, the

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Speaker 1: governor's national banks have have alluded to this point during

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Speaker 1: the last twenty for hours. Madame Legarde has been given

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Speaker 1: a state dependent set of policies from Mario Jargy, that

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Speaker 1: is his legacy, and it moved away from time dependent

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Speaker 1: forward guidance. Will she try and pull back from that

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Speaker 1: and say that things will change or will she hold

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Speaker 1: that that is the key element that she has to

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Speaker 1: get across in the first couple of weeks well said

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Speaker 1: in John I literally wrote down in the heat of

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Speaker 1: the press conference when he said time dependent has done.

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Speaker 1: I can't remember the exact language, but really important concept

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Speaker 1: there same in French or Gordon the American economy, John,

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Speaker 1: what do you think of the data? I mean yells

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Speaker 1: higher and look put it together with the data this

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Speaker 1: week inflation came in a little bit hotter as well.

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Speaker 1: It looks like the tone is improved around the trade story.

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Speaker 1: I'm not sure how the mood music will adapting. Giles

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Speaker 1: turn joins us to talk a little. We works, Giles

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Speaker 1: covers a technology in Europe. Joins us on the phone

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Speaker 1: from London. Giles, thanks so much for being with us.

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Speaker 1: You know again, as Tom was suggesting, a lot of

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Speaker 1: these high profile I p O s this year have

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Speaker 1: really underperformed and underwhelmed. What is the thinking going here

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Speaker 1: for WE Works? This is this is not without a

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Speaker 1: lot of hair on it. Just to start with, now,

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Speaker 1: we work thinking a lot different from any other I PO.

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Speaker 1: Just that this company seems to be a lot of

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Speaker 1: different from any other company. And you've got to remember

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Speaker 1: that we work has to IPO. That's the feeling from

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Speaker 1: inside the company. It needs cash when the IPOs, it

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Speaker 1: needs to raise about three billions, and if it does

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Speaker 1: that then it gets the further six billion from credit

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Speaker 1: lines from the bank and needs all this stuff to

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Speaker 1: keep growing at the pace is going. If it doesn't IPO,

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Speaker 1: then it needs to find capital from the big dove

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Speaker 1: dove chill. What you just said with fifteen dollars a

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Speaker 1: share are chief financial course, Aponent Bass says, that's the

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Speaker 1: chip chat right now, what you just said about three

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Speaker 1: billion in cash. Does that equate to anything in the

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Speaker 1: vicinity of fifteen dollars this year plus or minus seven cents. Well,

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Speaker 1: I've done, I'm done the math. It needs to be honest,

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Speaker 1: but it looks it needs to It needs to get

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Speaker 1: evaluation of above about really like that's kind of the cap.

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Speaker 1: Fifteen billion is two low basin investor in all types

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Speaker 1: of the bankers trying to push this IPA want to

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Speaker 1: invest it. Paul Sweeney thirty Churchill Place, five Merchants Square

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Speaker 1: to Minster Court, the Monument, n Hackney Road, twelve Bore Gate,

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Speaker 1: seventy seven Levenhall Street, Short Ditch near some Tide Place,

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Speaker 1: thirteen Mirrored Street, the Stage fifty two Bedford Row one,

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Speaker 1: twenty more Gate, forty one, Black Friars ten fen Church one.

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Speaker 1: I can't even get there. They gotta we work at

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Speaker 1: Buckingham Palace. They're everywhere in the big market. So, Charles,

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Speaker 1: you know, one of the what has been some of

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Speaker 1: the pushback that you've heard in the marketplace as related

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Speaker 1: to we work and kind of walking down the valuation

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Speaker 1: and what have you been hearing. Well, there's two kind

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Speaker 1: of two threats to this. The first obviously evaluation. I mean,

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Speaker 1: you can forgive a lot of government problems with tech companies.

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Speaker 1: It seems you've certainly seen it in the past. A

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Speaker 1: lot of people are making money. The problem is that

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Speaker 1: evaluation is too low. People are losing money. But no

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Speaker 1: one really everyone will talk to talk about governance. We've

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Speaker 1: seen today there's plenty of change in the government structure,

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Speaker 1: and investors obviously will make a big deal about this.

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Speaker 1: But when it really comes down to if it was

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Speaker 1: going to list the forty seven billion evaluation, no one's

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Speaker 1: going to be talking about governance issues. The fact is

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Speaker 1: it's still hovering around fifteen and will wait and see

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Speaker 1: what happens today if it gets up to twenty full

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Speaker 1: disclosure number one poultry right next to where Gail Turners

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Speaker 1: coming from Queen Victoria's Street as well, Giles, do the

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Speaker 1: commercial landlords of London, in New York and the other cities,

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Speaker 1: is we worked their friend? Well, I don't know. It's

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Speaker 1: hard to say at the moment. It's certainly their friend

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Speaker 1: at the beginning because it's taken up a lot of

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Speaker 1: demand for for rental based The problem is we workers

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Speaker 1: managed to sign very long leases, which obviously looks good

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Speaker 1: in the short term, but obviously is trying to um

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Speaker 1: not pay much rent to begin with and signing very

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Speaker 1: profitable deal for we work for her three years or

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Speaker 1: it doesn't have to pay much that's rent. There's this

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Speaker 1: huge rent cliff coming. You know when that comes, if

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Speaker 1: we work can't pay his bills, then it's gonna be

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Speaker 1: no one's trends. I just noticed in New York is

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Speaker 1: that we work in my living room exactly running out

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Speaker 1: the space. So, Giles, you kind of bring up a

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Speaker 1: big fundamental issue for the real estate folks, which is

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Speaker 1: you know, going out and leasing long as we worked

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Speaker 1: as long term and then you know leasing out the

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Speaker 1: space to its tennis on a short term basis. That's

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Speaker 1: not the way good real estate works, is it. No,

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Speaker 1: But that's the argument that we were making. Is not

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Speaker 1: going to be like every other company. The idea is

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Speaker 1: that the attitude of people's work environment is changing. People

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Speaker 1: don't want to do job, you know, jobs to life anymore.

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Speaker 1: People are happy to work. The startups have to have

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Speaker 1: high turnover. That the argument is pushing very quickly. Gil.

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Speaker 1: What happens Monday? I mean they get to the weekend,

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Speaker 1: everybody regroups. Are you waiting to hear in London or

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Speaker 1: New York from soft Bank or what's the next next? Yeah?

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Speaker 1: I mean if that'd be the key thing. I mean

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Speaker 1: what soft Bank thinks about this being one with may

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Speaker 1: Shihold is just going to be key. Um. Well, if

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Speaker 1: it's happy with this, then fine, I can spect to

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Speaker 1: my get away twenty. But if it's not, then they'll

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Speaker 1: be more arguments to come over the weekend. I bet

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Speaker 1: Gail's turner brilliant update, thank you, thank you out of

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Speaker 1: London as well, and we forget that the wee company

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Speaker 1: is uh truly international. This is a good Friday conversation,

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Speaker 1: which is after we saw yesterday Qui infinity, Paul. It's

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Speaker 1: open to debate how far out that goes. Let's talk

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Speaker 1: about financial repression Infinity Brain Railings with Wells Fargo, Institute

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Speaker 1: of St. Louis and Brian thrilled to have you with

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Speaker 1: us here in the New York studios. And I want

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Speaker 1: to go back to a Bill Gross phrase, which is

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Speaker 1: financial repression, which can be either the negative real rates

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Speaker 1: we have are the very low nominal real rates that

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Speaker 1: investors face in the United States? Does it go on forever?

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Speaker 1: Do we do we have to invest assuming forever this

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Speaker 1: low rate environment? Well, for the time being, it certainly

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Speaker 1: appears that way. I think what you saw out of

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Speaker 1: the e c B and you're seeing from the other

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Speaker 1: central banks is this strong desire to see fiscal policy

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Speaker 1: try to pull us out of UH. But who's gonna

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Speaker 1: help the savor? I mean it, Wells Fargo, with all

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Speaker 1: of your sprawl, the saver is flat under back, not

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Speaker 1: like in Europe. I get that. That's terrible. What does

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Speaker 1: a savor do on a September weekend when they have

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Speaker 1: to find a real yield? Well, I think, and this

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Speaker 1: has been my thought for a while here. I think

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Speaker 1: what we're going to see, and we have been seeing,

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Speaker 1: is this demand for yields. So the savers are going

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Speaker 1: to start taking a little bit more risk because they

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Speaker 1: have to find yields. So you're gonna have UM securities

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Speaker 1: like preferred securities that one of the best performing fixed

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Speaker 1: income sectors this year, UH dividends stocks, MLPs, reats UM.

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Speaker 1: I mean, those are the type of securities I think

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Speaker 1: these savers are going to gravitate to UM. You're causing

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Speaker 1: savers to take more risk than they should otherwise probably

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Speaker 1: be taking, but they really don't have any other choice

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Speaker 1: if they want some income here. So, Brian, I mean

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Speaker 1: Wells Fargo fifteen thousand brokers all over the country. I

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Speaker 1: know you probably spend a lot of your time on

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Speaker 1: the road visiting with those financial advisors and their clients.

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Speaker 1: Are they when you go to those offices across the country,

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Speaker 1: are they willing to take that risk or do you

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Speaker 1: think they maybe taking too much risk here as they

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Speaker 1: search for yield And we could be getting in a

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Speaker 1: little bit the specuative situation. I mean, it all depends

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Speaker 1: on the client's situation, and I think this is what

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Speaker 1: you're seeing in the broader market to right. So for

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Speaker 1: those clients that have accumulated enough wealth, right they're not

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Speaker 1: going to take the risk. You know, they're gonna hang

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Speaker 1: out in short term securities, safe securities For clients that

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Speaker 1: are maybe inner approaching retirement, that maybe having saved uh

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Speaker 1: the amount they need to save and they need that income,

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Speaker 1: they're gonna be forced to take the risk. And so

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Speaker 1: we're trying to find ways for those types of clients,

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00:24:33,840 --> 00:24:36,720
Speaker 1: uh to take a little bit more calculated risk, but

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00:24:36,760 --> 00:24:38,640
Speaker 1: it's still risk, don't get me wrong. So what are

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00:24:38,640 --> 00:24:41,240
Speaker 1: some of the areas that you're finding or you're suggesting

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00:24:41,280 --> 00:24:45,680
Speaker 1: that your private wealth clients look for enhanced yield? Well,

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00:24:45,720 --> 00:24:48,080
Speaker 1: I mean I kind of go back to prefers again.

436
00:24:48,320 --> 00:24:50,400
Speaker 1: This is an area we've been pretty favorable on. They're

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00:24:50,400 --> 00:24:54,239
Speaker 1: getting more expensive, Um, no doubt. I think they're up

438
00:24:54,240 --> 00:24:58,280
Speaker 1: over fourteen percent this year. And uh, really these securities

439
00:24:58,280 --> 00:25:02,000
Speaker 1: bought for the income, not for the totally return right. Um,

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00:25:02,040 --> 00:25:05,000
Speaker 1: but I mean still five to five and a half percent,

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00:25:05,760 --> 00:25:10,240
Speaker 1: where the underlying credit is a quality credit and you're

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00:25:10,320 --> 00:25:14,680
Speaker 1: getting the dividends treated dividend treatment, right. Major shoutout in

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00:25:14,680 --> 00:25:16,520
Speaker 1: New York to Chris Whalen has been way out front

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00:25:16,520 --> 00:25:18,800
Speaker 1: as you have in the preferred story as well. I

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00:25:18,800 --> 00:25:21,280
Speaker 1: mean I don't think well as far Ago is gonna

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00:25:21,280 --> 00:25:23,000
Speaker 1: advocate for a hundred year bond, and we know what

447
00:25:23,040 --> 00:25:25,439
Speaker 1: the Austrian pieces done in the yield back up. But

448
00:25:25,520 --> 00:25:28,639
Speaker 1: I got a forty seven year French piece with a

449
00:25:28,720 --> 00:25:32,560
Speaker 1: one in three quarters percent coupon. They're giving it away today, Paul,

450
00:25:32,600 --> 00:25:35,119
Speaker 1: with a hundred and thirty two price that's enough to

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00:25:35,160 --> 00:25:38,080
Speaker 1: make El Goldman choke. Uh. And and the yield is

452
00:25:38,160 --> 00:25:41,680
Speaker 1: point eight eight point eight nine percent And Brian, I

453
00:25:41,680 --> 00:25:45,160
Speaker 1: have enjoyed an eleven percent decline in this puppy over

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00:25:45,200 --> 00:25:47,840
Speaker 1: the last three or four weeks as well. Are we

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00:25:47,920 --> 00:25:50,600
Speaker 1: set in retail up to get killed with this bond

456
00:25:50,640 --> 00:25:53,840
Speaker 1: extension of a US fifty year piece. At some point

457
00:25:54,080 --> 00:25:56,240
Speaker 1: they're all gonna roll over and take an eleven percent

458
00:25:56,359 --> 00:25:58,560
Speaker 1: hitting a cup of coffee. I don't think a retail

459
00:25:58,640 --> 00:26:00,960
Speaker 1: is buying these types of who's buying cur who's buying

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00:26:01,000 --> 00:26:07,240
Speaker 1: them uh, ascid liability matchers, right, pension funds, UM institutions

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00:26:07,480 --> 00:26:13,320
Speaker 1: UH and UH clients or institutions that need to have

462
00:26:13,400 --> 00:26:17,200
Speaker 1: index exposure where these are there? So, but retails not

463
00:26:17,320 --> 00:26:21,120
Speaker 1: buying government elongated big story in your life, in my life,

464
00:26:21,119 --> 00:26:23,560
Speaker 1: in Paul's life, is in the Times of London this week.

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00:26:24,040 --> 00:26:27,080
Speaker 1: The life annuity yield in the United Kingdom is in

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00:26:27,119 --> 00:26:30,000
Speaker 1: the vicinity of four point one percent. I got a

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00:26:30,080 --> 00:26:34,480
Speaker 1: forty seven year French coupon trading under one percent. We're

468
00:26:34,520 --> 00:26:38,960
Speaker 1: given out four point one percent. What's the actual assumption

469
00:26:39,080 --> 00:26:42,760
Speaker 1: for our listeners in the Brian Railey world. I don't know.

470
00:26:42,840 --> 00:26:48,160
Speaker 1: I mean be four I mean, honestly, you know, four

471
00:26:48,280 --> 00:26:51,240
Speaker 1: or four percent type of returns over the long term

472
00:26:51,280 --> 00:26:54,639
Speaker 1: doesn't sound so bad these days, right, I mean I

473
00:26:54,640 --> 00:26:57,159
Speaker 1: don't I don't know when what's the what's the driver

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00:26:57,400 --> 00:27:02,480
Speaker 1: to get um grow moving and returns moving fair, fair,

475
00:27:02,520 --> 00:27:04,920
Speaker 1: to go right to productivity and economic It just means

476
00:27:05,080 --> 00:27:09,160
Speaker 1: you have to work longer, Tom. That's all Tom thought today,

477
00:27:09,200 --> 00:27:10,680
Speaker 1: was it. He was just gonna, you know, right off

478
00:27:10,680 --> 00:27:14,680
Speaker 1: and go to in Jamaica. But no, you gotta keep working.

479
00:27:14,680 --> 00:27:16,600
Speaker 1: You have to earn that return. Brian, What's when you

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00:27:16,680 --> 00:27:18,880
Speaker 1: go out and talk to people at Well's far ago?

481
00:27:19,600 --> 00:27:22,320
Speaker 1: What do you hear from people that you know that's

482
00:27:22,320 --> 00:27:25,560
Speaker 1: not they romantically want the old days of nine c

483
00:27:25,720 --> 00:27:28,880
Speaker 1: d s or nine percent annuities, seven percent city or that.

484
00:27:29,400 --> 00:27:33,800
Speaker 1: But what do people actually say about the mill you

485
00:27:33,840 --> 00:27:36,919
Speaker 1: we're in well, I think, I mean we've been here

486
00:27:36,960 --> 00:27:38,920
Speaker 1: for a while now, so people have kind of become

487
00:27:38,920 --> 00:27:42,200
Speaker 1: accustomed to So we used to get a lot more questions,

488
00:27:42,680 --> 00:27:45,680
Speaker 1: you know, five, seven, eight years ago than we do today.

489
00:27:46,160 --> 00:27:49,000
Speaker 1: So people have adjusted. I'd say the bulk of the

490
00:27:49,119 --> 00:27:52,840
Speaker 1: questions we get today. UM, take it to the extreme.

491
00:27:53,200 --> 00:27:56,920
Speaker 1: People are actually working about rates going negative. Right, so

492
00:27:57,359 --> 00:28:03,200
Speaker 1: you know these two two and a half percent type yields. Um,

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00:28:03,240 --> 00:28:05,800
Speaker 1: you know they're more worried about the extremes here than

494
00:28:05,920 --> 00:28:07,800
Speaker 1: really I mean, if you become accustomed to this little

495
00:28:07,960 --> 00:28:10,359
Speaker 1: as well, Fargo have a belief on this vector. Moving

496
00:28:10,400 --> 00:28:13,480
Speaker 1: down to JP Morgan Young always making a huge splash

497
00:28:13,600 --> 00:28:16,480
Speaker 1: with a model, not a forecast, but a model. They

498
00:28:16,520 --> 00:28:20,400
Speaker 1: could drive us under one percent ten year yield even lower. Oh,

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00:28:20,480 --> 00:28:23,359
Speaker 1: I think certainly we could see you know, the ten

500
00:28:23,480 --> 00:28:26,399
Speaker 1: year fall below one percent. What would it take it

501
00:28:26,440 --> 00:28:32,639
Speaker 1: would take, yeah, I mean probably a recession and probably um,

502
00:28:32,680 --> 00:28:36,480
Speaker 1: you know, of somewhat meaningful slowdown, but we can definitely

503
00:28:36,480 --> 00:28:39,440
Speaker 1: get there. I mean we're kind of do for one right, Okay, Brian, really,

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00:28:39,600 --> 00:28:42,920
Speaker 1: thank you so much. With Wills Fargo their institute talking

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00:28:42,960 --> 00:28:48,560
Speaker 1: about the world of fixed income as well. Thanks for

506
00:28:48,680 --> 00:28:53,040
Speaker 1: listening to the Bloomberg Surveillance podcast. Subscribe and listen to

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00:28:53,240 --> 00:28:58,960
Speaker 1: interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer.

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00:28:59,480 --> 00:29:02,840
Speaker 1: I'm on Winter at Tom Keane before the podcast. You

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00:29:02,880 --> 00:29:06,280
Speaker 1: can always catch us worldwide. I'm Bloomberg Radio