1
00:00:01,400 --> 00:00:04,120
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along

2
00:00:04,120 --> 00:00:06,240
Speaker 1: with my co host of Bonnie Quinn. Every business day

3
00:00:06,240 --> 00:00:09,240
Speaker 1: we bring you interviews from CEOs, A, market pros, and

4
00:00:09,400 --> 00:00:12,799
Speaker 1: Bloomberg experts, along with essential market moving news kind of

5
00:00:12,800 --> 00:00:16,320
Speaker 1: Bloomberg Markets Podcast on Apple podcast or wherever you listen

6
00:00:16,360 --> 00:00:20,439
Speaker 1: to podcasts, and on Bloomberg dot com. So there's a

7
00:00:20,440 --> 00:00:23,560
Speaker 1: lot of trepidation about what would happened with China GDP data,

8
00:00:23,600 --> 00:00:26,960
Speaker 1: of course, China being one of the test cases for

9
00:00:27,000 --> 00:00:29,280
Speaker 1: what happens to an economy when it's going through COVID.

10
00:00:29,720 --> 00:00:32,280
Speaker 1: So we got the third quarter GDP data over the

11
00:00:32,280 --> 00:00:34,640
Speaker 1: weekend and year over year it was up four point

12
00:00:34,720 --> 00:00:38,320
Speaker 1: nine percent, which was quite the miss from what economists

13
00:00:38,320 --> 00:00:40,240
Speaker 1: were looking for, which was how ive and a half percent.

14
00:00:40,560 --> 00:00:42,760
Speaker 1: It was, however, better than the previous quarter three point

15
00:00:42,840 --> 00:00:45,400
Speaker 1: two percent. But really with China, you have to take

16
00:00:45,440 --> 00:00:47,320
Speaker 1: a step back and talk to somebody who knows how

17
00:00:47,360 --> 00:00:49,560
Speaker 1: all of this is put together, and no one better

18
00:00:49,720 --> 00:00:53,280
Speaker 1: to do that than Leland Miller, China Beige Book International founder.

19
00:00:53,600 --> 00:00:56,760
Speaker 1: So Leland four point nine percent doesn't sound like a

20
00:00:56,800 --> 00:00:59,160
Speaker 1: bad rate of growth for an economy that's been hit

21
00:00:59,320 --> 00:01:03,560
Speaker 1: extremely ours by this coronavirus. Explained to us why this

22
00:01:03,640 --> 00:01:06,920
Speaker 1: is a shocker, Well, you know, this is a really

23
00:01:07,000 --> 00:01:10,040
Speaker 1: important number, but it's a really important number for political

24
00:01:10,040 --> 00:01:13,720
Speaker 1: reasons more than economic reasons. So you have China saying

25
00:01:13,760 --> 00:01:16,320
Speaker 1: to the world, look at our response, look at how

26
00:01:16,360 --> 00:01:18,440
Speaker 1: well we've done. We're back to year on year growth.

27
00:01:18,600 --> 00:01:20,920
Speaker 1: And look at everybody else they haven't done done as well.

28
00:01:21,280 --> 00:01:23,200
Speaker 1: You know, we're someone to look up to. Now the

29
00:01:23,240 --> 00:01:25,480
Speaker 1: difference between four point nine and five point five. I

30
00:01:25,600 --> 00:01:28,480
Speaker 1: understand that the street is is agitating over over the

31
00:01:28,520 --> 00:01:31,320
Speaker 1: mis here, but this number is very realistic to start with.

32
00:01:31,800 --> 00:01:34,039
Speaker 1: You know, if you look down at what our data

33
00:01:34,080 --> 00:01:36,640
Speaker 1: are showing, you're not You're still not seeing that year

34
00:01:36,720 --> 00:01:41,080
Speaker 1: and year improvement. You're seeing tremendous month on month, quarter

35
00:01:41,080 --> 00:01:43,920
Speaker 1: and quarter improvement. Things are certainly getting better, but it's

36
00:01:44,000 --> 00:01:45,640
Speaker 1: very important for them to have a year and year

37
00:01:45,760 --> 00:01:49,320
Speaker 1: number uh and and improve improvement and uh and So

38
00:01:49,360 --> 00:01:52,080
Speaker 1: that's what they're that's what they're currently announcing, right and

39
00:01:52,080 --> 00:01:55,000
Speaker 1: now we also got retail sales. For example, you're over

40
00:01:55,040 --> 00:01:59,920
Speaker 1: Europe three point but still you know, down seven in

41
00:02:00,040 --> 00:02:03,360
Speaker 1: September in terms of year, today's year over years so

42
00:02:03,400 --> 00:02:06,240
Speaker 1: a lot of mixed data. So give us your impression

43
00:02:06,240 --> 00:02:08,440
Speaker 1: of how the Chinese economy is doing. So as you say,

44
00:02:08,720 --> 00:02:11,120
Speaker 1: you know, all the data is pretty managed. But at

45
00:02:11,160 --> 00:02:15,040
Speaker 1: the same time China does seem to be growing. Is

46
00:02:15,040 --> 00:02:17,640
Speaker 1: that the case consumers do seem to be spending. China

47
00:02:17,720 --> 00:02:20,840
Speaker 1: does seem to be getting over the hit from the coronavirus. Sure,

48
00:02:21,320 --> 00:02:23,640
Speaker 1: things are getting better, you know, it's still a supply

49
00:02:23,919 --> 00:02:26,200
Speaker 1: side recovery. If you look at what's happening on the

50
00:02:26,240 --> 00:02:29,440
Speaker 1: output side that has been with driving GDP. You know,

51
00:02:29,480 --> 00:02:33,040
Speaker 1: there was a better September figure for for for retail sales.

52
00:02:33,080 --> 00:02:36,200
Speaker 1: But if you look at retail sales UH from the

53
00:02:36,240 --> 00:02:37,679
Speaker 1: beginning of the year to now and compare it to

54
00:02:37,800 --> 00:02:40,040
Speaker 1: last year, it's it is like you said, down over seven.

55
00:02:40,639 --> 00:02:43,520
Speaker 1: So this is not a consumption driven economy. This is

56
00:02:43,520 --> 00:02:47,200
Speaker 1: not a demand recovery. This is the Chinese government deciding

57
00:02:47,240 --> 00:02:48,840
Speaker 1: that they need to get their numbers up, and so

58
00:02:48,880 --> 00:02:52,520
Speaker 1: they're making factories work harder and produce more stuff. There's

59
00:02:52,560 --> 00:02:54,560
Speaker 1: something to be said for getting the growth number up

60
00:02:54,600 --> 00:02:56,640
Speaker 1: to some degree, but I think the idea that people

61
00:02:56,639 --> 00:02:59,639
Speaker 1: are really worried about whether this is four percent or

62
00:02:59,680 --> 00:03:03,119
Speaker 1: three per center five percent. It's not a terribly healthy recovery.

63
00:03:03,360 --> 00:03:06,280
Speaker 1: It's just a much more healthy, dynamic and recovery than

64
00:03:06,320 --> 00:03:08,680
Speaker 1: we're seeing in the rest of the world. So Leland's

65
00:03:08,720 --> 00:03:11,600
Speaker 1: how much of that sort of unhealthiness that you're talking

66
00:03:11,600 --> 00:03:14,720
Speaker 1: about is related to coronavirus and how much was coming anyway,

67
00:03:14,720 --> 00:03:17,119
Speaker 1: because it was always a question mark about how much

68
00:03:17,160 --> 00:03:20,200
Speaker 1: the trade war had impact to China's economy and just

69
00:03:20,240 --> 00:03:23,200
Speaker 1: the flow of goods and services between China and the US.

70
00:03:24,560 --> 00:03:27,360
Speaker 1: Right Well, I think what what the coronavirus did is

71
00:03:27,360 --> 00:03:30,520
Speaker 1: it put China in a box uh and forced it

72
00:03:30,560 --> 00:03:34,840
Speaker 1: to use tools like property like heavy infrastructure stimulus to

73
00:03:34,840 --> 00:03:37,520
Speaker 1: get the growth number back up, which was something that

74
00:03:37,560 --> 00:03:39,720
Speaker 1: it didn't want to do and it hadn't been doing

75
00:03:39,720 --> 00:03:42,000
Speaker 1: for the past several years. When you look at our

76
00:03:42,080 --> 00:03:44,800
Speaker 1: data and you look at official data, you see that

77
00:03:45,000 --> 00:03:49,640
Speaker 1: since seen when they were very worried about growth metrics

78
00:03:49,680 --> 00:03:51,960
Speaker 1: in the run up to the Party Congress, things that

79
00:03:52,080 --> 00:03:55,440
Speaker 1: actually slowed down over time, and yet the government did

80
00:03:55,480 --> 00:03:58,440
Speaker 1: not go back to this let's juice, let's build bridges

81
00:03:58,440 --> 00:04:01,640
Speaker 1: to nowhere, Let's let's build all these infrastructure developments. No

82
00:04:01,680 --> 00:04:04,120
Speaker 1: one wants to be in they had basically pushed away

83
00:04:04,160 --> 00:04:07,000
Speaker 1: from that because they are legitimately worried about debt. What

84
00:04:07,080 --> 00:04:09,040
Speaker 1: I think coronavirus did is pushed them into such a

85
00:04:09,040 --> 00:04:10,880
Speaker 1: corner that they said, look, we're gonna have to do,

86
00:04:10,920 --> 00:04:12,320
Speaker 1: We're gonna have to do and we're gonna have this

87
00:04:12,360 --> 00:04:15,640
Speaker 1: growth number up. So it is unhealthy levels of debt

88
00:04:15,680 --> 00:04:18,920
Speaker 1: that are building us up. It's he's the same dynamic

89
00:04:19,000 --> 00:04:20,400
Speaker 1: scene and much of the rest of the world, but

90
00:04:20,440 --> 00:04:23,240
Speaker 1: you know, China has a much bigger problem this historically. So, uh,

91
00:04:23,440 --> 00:04:25,479
Speaker 1: there is a recovery, that's good, but yes, the way

92
00:04:25,480 --> 00:04:28,920
Speaker 1: we're getting there is not healthy at all. You have

93
00:04:29,080 --> 00:04:32,280
Speaker 1: said the China made some major colandestine changes to its

94
00:04:32,279 --> 00:04:36,359
Speaker 1: economic data reporting over the weekend. What were these clandestine changes?

95
00:04:36,400 --> 00:04:39,240
Speaker 1: It all sounds very token dagger. Yeah, we've been we've

96
00:04:39,240 --> 00:04:42,040
Speaker 1: been having a field day on on our Twitter feed, uh,

97
00:04:42,200 --> 00:04:44,960
Speaker 1: talking about this. But look, you know, if you look

98
00:04:44,960 --> 00:04:47,360
Speaker 1: at fixed asset investment, which is the proxy that the

99
00:04:47,440 --> 00:04:51,520
Speaker 1: Chinese used for for for investment, you see that, uh,

100
00:04:51,640 --> 00:04:56,000
Speaker 1: in twenty there was a number for the first three quarters,

101
00:04:56,160 --> 00:04:57,840
Speaker 1: and then you see a number for the first three

102
00:04:57,920 --> 00:05:02,599
Speaker 1: quarters of the number in nine was three trillion yuan

103
00:05:02,920 --> 00:05:05,960
Speaker 1: higher than in but when the when Beijing put out

104
00:05:06,000 --> 00:05:08,600
Speaker 1: their data last night, they said that things were up

105
00:05:08,640 --> 00:05:12,040
Speaker 1: eight percent, So we were parsing through the how was

106
00:05:12,120 --> 00:05:14,400
Speaker 1: this a typo? Why would they possibly do it? What

107
00:05:14,440 --> 00:05:17,640
Speaker 1: we found is that essentially the Chinese government has reserved

108
00:05:17,640 --> 00:05:21,159
Speaker 1: the right to no longer report figures regularly. What they're

109
00:05:21,160 --> 00:05:23,920
Speaker 1: gonna do is they're going to rejigger the figures as

110
00:05:23,960 --> 00:05:26,839
Speaker 1: new inputs come in. But they're not gonna announce what

111
00:05:26,880 --> 00:05:29,160
Speaker 1: those new inputs are. They're not going to announce what

112
00:05:29,160 --> 00:05:32,240
Speaker 1: the changing metrics are. They're not gonna announce what the

113
00:05:32,240 --> 00:05:34,840
Speaker 1: components of this sort of index their building is. They're

114
00:05:34,880 --> 00:05:39,240
Speaker 1: simply going to report a number and that number will

115
00:05:39,279 --> 00:05:42,800
Speaker 1: be new based on the needed changes every year. So

116
00:05:42,800 --> 00:05:45,560
Speaker 1: you're gonna have, you know, you have basically three trillion

117
00:05:45,640 --> 00:05:49,400
Speaker 1: yuan they made go away in their fixed asset investment data.

118
00:05:49,720 --> 00:05:52,159
Speaker 1: To report a year on your increase, it doesn't make

119
00:05:52,200 --> 00:05:54,960
Speaker 1: any sense at all, but they've reserved the right to

120
00:05:55,000 --> 00:05:58,000
Speaker 1: do this. Going forward, Leland, what will you be looking

121
00:05:58,000 --> 00:05:59,840
Speaker 1: for next out of China? In order to give us

122
00:05:59,880 --> 00:06:02,520
Speaker 1: an indication of you know, not just the health of

123
00:06:02,520 --> 00:06:04,719
Speaker 1: the Chinese economy, but what that would mean for the

124
00:06:04,720 --> 00:06:08,039
Speaker 1: health of the US economy at this point. Well, you know,

125
00:06:08,120 --> 00:06:10,360
Speaker 1: I think on the Chinese side, you've got to look

126
00:06:10,400 --> 00:06:13,000
Speaker 1: at the retail and how it's recovering over time, and

127
00:06:13,040 --> 00:06:15,280
Speaker 1: not just not just for for one or two months.

128
00:06:15,760 --> 00:06:18,279
Speaker 1: But look, China's recovery is going to be based on

129
00:06:18,320 --> 00:06:19,880
Speaker 1: what happens in the rest of the world. If the

130
00:06:19,920 --> 00:06:22,760
Speaker 1: rest of the world does not get coronavirus contained, we

131
00:06:23,200 --> 00:06:26,400
Speaker 1: dipped down into a second wave. That China's data are

132
00:06:26,400 --> 00:06:28,720
Speaker 1: going to be hurt. Its recovery is going to be

133
00:06:28,839 --> 00:06:30,440
Speaker 1: hurt because it's not divorced from the rest of the

134
00:06:30,480 --> 00:06:33,720
Speaker 1: world no matter what's doing back home. Leland, thank you

135
00:06:33,839 --> 00:06:36,479
Speaker 1: so much, as always love to get you on because

136
00:06:37,160 --> 00:06:39,920
Speaker 1: you do all of your research as well, and you

137
00:06:39,920 --> 00:06:43,720
Speaker 1: know you you gather the data just like many economists do.

138
00:06:43,920 --> 00:06:46,680
Speaker 1: But on the ground, Leland mill or China Beige Book

139
00:06:49,400 --> 00:06:52,520
Speaker 1: Duncan donuts. Remember like to make the claim that America

140
00:06:52,640 --> 00:06:54,840
Speaker 1: runs on Duncan, and I'm sure it was true a

141
00:06:54,880 --> 00:06:56,840
Speaker 1: lot of the time. Well, here is the man who

142
00:06:56,920 --> 00:07:00,279
Speaker 1: Duncan run on. Robert Olsenberg is the former CEO of

143
00:07:00,320 --> 00:07:02,560
Speaker 1: what is now Duncan Brand's used to be dunkn Donuts

144
00:07:02,560 --> 00:07:05,840
Speaker 1: and author of Around the Corner to Around the World,

145
00:07:05,960 --> 00:07:10,320
Speaker 1: A Dozen Lessons I learned running Duncan Donuts. Robert looking

146
00:07:10,320 --> 00:07:13,400
Speaker 1: at Duncan Donuts, now, how does it resemble the company

147
00:07:13,440 --> 00:07:17,480
Speaker 1: you first took over? Were very different? But I when

148
00:07:17,480 --> 00:07:20,760
Speaker 1: I joined the company as CEO is twenty five years old,

149
00:07:20,760 --> 00:07:23,560
Speaker 1: a cocky kid, freshwood and n b A. And we

150
00:07:23,720 --> 00:07:25,880
Speaker 1: had something on the order of a hundred stores. I

151
00:07:25,880 --> 00:07:28,280
Speaker 1: think now today we have something on the order nearing

152
00:07:28,320 --> 00:07:33,600
Speaker 1: twelve thousand in forty one countries. It's been transformational, pretty phenomenal. Well,

153
00:07:33,640 --> 00:07:36,160
Speaker 1: a good leader is needed in order to scale that

154
00:07:36,320 --> 00:07:40,960
Speaker 1: kind of business, particularly you know, something that you could

155
00:07:41,000 --> 00:07:43,559
Speaker 1: call a generic enough business. I mean, I know Duncan

156
00:07:43,600 --> 00:07:45,800
Speaker 1: Donuts are very very different from other types of donuts

157
00:07:45,840 --> 00:07:47,880
Speaker 1: out there, but there are a lot of donat chains.

158
00:07:48,280 --> 00:07:50,800
Speaker 1: So how did you do that? What kind of leadership

159
00:07:50,840 --> 00:07:53,360
Speaker 1: skills does it take to scale a business like that?

160
00:07:55,160 --> 00:07:59,680
Speaker 1: A great team, a clear strategy. When we got it right,

161
00:08:00,280 --> 00:08:03,440
Speaker 1: we were very successful. When I got it wrong, we

162
00:08:03,520 --> 00:08:06,920
Speaker 1: suffered the consequences. Luckily, in the thirty five years we

163
00:08:07,000 --> 00:08:10,040
Speaker 1: got more years right than we did get wrong. Uh,

164
00:08:10,040 --> 00:08:13,720
Speaker 1: and a great product and that commitment I think basically

165
00:08:14,240 --> 00:08:18,360
Speaker 1: to do and to create a set of services and

166
00:08:18,400 --> 00:08:21,360
Speaker 1: goods better than the competition, and that was always kept

167
00:08:21,400 --> 00:08:26,120
Speaker 1: us agile and kept us creative and growing and changing.

168
00:08:26,480 --> 00:08:30,800
Speaker 1: As the time change, consumers and competition are constantly changing,

169
00:08:30,800 --> 00:08:33,320
Speaker 1: and companies have to change as well. But those are

170
00:08:33,360 --> 00:08:37,360
Speaker 1: the ingredients I think that made for superior performance for us. Obviously,

171
00:08:37,520 --> 00:08:40,280
Speaker 1: it's a different set of challenges every year, every month,

172
00:08:40,320 --> 00:08:43,720
Speaker 1: every day in business, right, but a pandemic is something

173
00:08:43,760 --> 00:08:46,520
Speaker 1: that doesn't come along too often. If you were running

174
00:08:46,640 --> 00:08:51,000
Speaker 1: Duncan now and you saw what was happening all sorts

175
00:08:51,040 --> 00:08:53,960
Speaker 1: of restaurant owners not being able to save their businesses,

176
00:08:54,280 --> 00:08:57,400
Speaker 1: you know, big businesses depending on PPP funds in order

177
00:08:57,440 --> 00:09:01,560
Speaker 1: to to continue, what would you do? I mean, how

178
00:09:01,559 --> 00:09:05,280
Speaker 1: do you survive something that's just completely all encompassing like that.

179
00:09:06,240 --> 00:09:10,120
Speaker 1: I never had to face anything quite like an worldwide pandemic,

180
00:09:10,160 --> 00:09:14,959
Speaker 1: but did have to face certain cataclysmucker existential threats the

181
00:09:15,080 --> 00:09:18,920
Speaker 1: very survival of the business. I think. Uh. I'd comment

182
00:09:19,040 --> 00:09:21,360
Speaker 1: that the pandemic as I see it, and its impact

183
00:09:21,400 --> 00:09:23,640
Speaker 1: on the restaurant industry, really is a tale of two

184
00:09:23,679 --> 00:09:26,679
Speaker 1: different stories. On the one hand, the first story is

185
00:09:26,760 --> 00:09:30,760
Speaker 1: kind of devastating. It. Basically, the National Restaurant Association says

186
00:09:30,800 --> 00:09:34,560
Speaker 1: that they expect something on the order of fift all

187
00:09:34,640 --> 00:09:39,559
Speaker 1: restaurants open, and six fifty restaurants may be permanently closed

188
00:09:39,840 --> 00:09:42,640
Speaker 1: when the dust clears. That's painful. There may be a

189
00:09:42,679 --> 00:09:45,800
Speaker 1: million and a half or more people out of work.

190
00:09:46,120 --> 00:09:49,520
Speaker 1: That's also disastrous and painful. On the other hand, the

191
00:09:49,559 --> 00:09:52,480
Speaker 1: second tale is a lot more optimistic. Those firms that

192
00:09:52,559 --> 00:09:55,520
Speaker 1: invested early, which is one of the elements of facing

193
00:09:55,520 --> 00:09:58,760
Speaker 1: a crisis of pre preparation, that invested in convenience and

194
00:09:58,800 --> 00:10:02,880
Speaker 1: delivering on all plat forms. However, consumers wanted to access

195
00:10:02,960 --> 00:10:09,679
Speaker 1: the product drive through windows, home delivery, online ordering, understanding

196
00:10:09,720 --> 00:10:14,560
Speaker 1: the application of the social network that exists in social media.

197
00:10:14,920 --> 00:10:18,679
Speaker 1: Those companies that invested, in my view, will not only

198
00:10:18,800 --> 00:10:22,080
Speaker 1: survive the pandemic, but will thrive. Companies like Duncan that

199
00:10:22,120 --> 00:10:26,959
Speaker 1: have invested and those kinds of um new developments, pre

200
00:10:27,080 --> 00:10:32,520
Speaker 1: preparing continually looking to delight their customers better than the competition,

201
00:10:32,840 --> 00:10:35,600
Speaker 1: will be the ones on the other side. Unfortunately, it's

202
00:10:35,600 --> 00:10:37,880
Speaker 1: going to be some pain left by the independence and

203
00:10:37,920 --> 00:10:40,400
Speaker 1: a lot of people out of work. Hopefully, those chains

204
00:10:40,440 --> 00:10:42,640
Speaker 1: that survive will be able to absorb those, but it

205
00:10:42,760 --> 00:10:46,400
Speaker 1: only will be over time. Fore warrant is were armed.

206
00:10:47,000 --> 00:10:50,960
Speaker 1: These days, there's a lot of quote unquote business heroes

207
00:10:51,160 --> 00:10:54,880
Speaker 1: in Silicon Valley that you know, people look to some

208
00:10:55,040 --> 00:10:59,640
Speaker 1: unlikely characters for inspiration. Who inspires you in management these days?

209
00:10:59,720 --> 00:11:03,640
Speaker 1: Robert Well, he's no longer actively engaged in the management

210
00:11:03,640 --> 00:11:07,640
Speaker 1: of his business. He now runs a major philanthropic activity.

211
00:11:07,679 --> 00:11:11,360
Speaker 1: But the person I'm most inspired by Bill and Melinda Gates.

212
00:11:11,440 --> 00:11:16,200
Speaker 1: I find them to be extraordinary citizens, extraordinary people, and

213
00:11:16,240 --> 00:11:19,920
Speaker 1: I marvel at their brilliance and at their commitment to mankind.

214
00:11:20,800 --> 00:11:23,760
Speaker 1: And all those CEOs that are currently in the CEO

215
00:11:23,920 --> 00:11:28,080
Speaker 1: chair and in the boardroom chair, who do you admire? Well,

216
00:11:29,040 --> 00:11:32,520
Speaker 1: admire the people that I'm closest to and the ones

217
00:11:32,559 --> 00:11:34,400
Speaker 1: that I had the privilege of being able to serve

218
00:11:34,440 --> 00:11:36,440
Speaker 1: with day in and day out. So I was on

219
00:11:36,480 --> 00:11:39,040
Speaker 1: the board of Sonic, and I find Cliff Hudson, who

220
00:11:39,160 --> 00:11:42,320
Speaker 1: was a longtime twenty years CEO of Sonic Restaurants, an

221
00:11:42,360 --> 00:11:48,640
Speaker 1: outstanding leader. I also found Um Goodness. His name escaves

222
00:11:48,679 --> 00:11:51,839
Speaker 1: me for the moment. How Patrick Doyle from Dominoes was

223
00:11:51,880 --> 00:11:55,839
Speaker 1: an extraordinary leader and ranked among the best leaders by

224
00:11:55,880 --> 00:12:02,880
Speaker 1: CEO magazine for years. Both both of them were extraordinary leaders, agile, kind, smart,

225
00:12:03,240 --> 00:12:06,160
Speaker 1: and just thoughtful people. Robert, I'll have to ask you

226
00:12:06,200 --> 00:12:10,079
Speaker 1: about what your thoughts are as we approach the election,

227
00:12:10,280 --> 00:12:14,199
Speaker 1: and you know, very very divided country. Um, you know,

228
00:12:14,280 --> 00:12:18,800
Speaker 1: many issues plaguing the country, and it just seems to

229
00:12:18,840 --> 00:12:22,800
Speaker 1: be sometimes just difficult to even talk about it because

230
00:12:23,000 --> 00:12:26,760
Speaker 1: you know, finding middle ground or finding sort of anybody

231
00:12:26,760 --> 00:12:29,760
Speaker 1: willing to engage is just a little bit difficult. Well,

232
00:12:29,880 --> 00:12:32,920
Speaker 1: what's the first priority that the next president, whether it's

233
00:12:33,000 --> 00:12:36,719
Speaker 1: Donald Trump or a Biden administration, what's what should be

234
00:12:36,760 --> 00:12:42,360
Speaker 1: the first priority in running this country? Thoughtful planning and

235
00:12:42,720 --> 00:12:44,960
Speaker 1: setting a moral tone for the country and bring us

236
00:12:45,000 --> 00:12:47,920
Speaker 1: back together. I think that our country can only take

237
00:12:47,960 --> 00:12:50,200
Speaker 1: so much chaos at any one point in time. So

238
00:12:50,240 --> 00:12:52,280
Speaker 1: a good leader has to be very clear and crisp

239
00:12:52,320 --> 00:12:55,160
Speaker 1: about both the strategy, what the country wants to be,

240
00:12:55,280 --> 00:12:58,000
Speaker 1: what it wants to have, and the four or five

241
00:12:58,040 --> 00:13:00,480
Speaker 1: specific leavers that are most important for all in order

242
00:13:00,520 --> 00:13:03,160
Speaker 1: to be able to bridge scarce resources. So whether it's

243
00:13:03,200 --> 00:13:06,560
Speaker 1: a company of family or a country, and that's a

244
00:13:06,679 --> 00:13:10,640
Speaker 1: critical element. And the second element is to thround yourself

245
00:13:10,640 --> 00:13:13,439
Speaker 1: for the best people, complementary set of skills that will

246
00:13:13,480 --> 00:13:15,920
Speaker 1: help you accomplish that, and then you have to communicate

247
00:13:16,040 --> 00:13:19,120
Speaker 1: all the constituencies to mobilize them behind it. That works

248
00:13:19,120 --> 00:13:21,200
Speaker 1: on a company, and it works on a country, and

249
00:13:21,240 --> 00:13:23,920
Speaker 1: we need a leader who's got those abilities. And you know,

250
00:13:23,960 --> 00:13:26,439
Speaker 1: it certainly sounds pretty easy when you say it, Roberts.

251
00:13:26,480 --> 00:13:28,600
Speaker 1: So I hope that whoever starts to run the country

252
00:13:28,600 --> 00:13:31,080
Speaker 1: next reads your book. It's just out and it's a

253
00:13:31,080 --> 00:13:34,360
Speaker 1: fantastic read. It's called Around the Corner to Around the World.

254
00:13:34,440 --> 00:13:38,520
Speaker 1: A dozen lessons I learned running Duncan Donuts and you

255
00:13:38,520 --> 00:13:40,720
Speaker 1: can have a donut with every lesson there for for

256
00:13:40,800 --> 00:13:44,200
Speaker 1: your dozen lessons. Robert Rosen very former CEO of Duncan

257
00:13:44,280 --> 00:13:47,160
Speaker 1: Brands and of course Duncan Donuts as it was. Then,

258
00:13:47,360 --> 00:13:51,600
Speaker 1: thank you for joining us. Just a wonderful conversation. Let's

259
00:13:51,600 --> 00:13:54,040
Speaker 1: bring in our J Gallo. He's senior portfolio manage your

260
00:13:54,040 --> 00:13:57,400
Speaker 1: head of the Municipal Bond group and delighted to have

261
00:13:57,520 --> 00:14:00,400
Speaker 1: him are J. I have to ask you how much

262
00:14:00,520 --> 00:14:03,600
Speaker 1: time have you given to the competing tax bands? Um.

263
00:14:04,400 --> 00:14:08,679
Speaker 1: You know, obviously we're looking at more of a likelihood

264
00:14:08,679 --> 00:14:10,400
Speaker 1: that there's going to be a President Biden and the

265
00:14:10,400 --> 00:14:13,520
Speaker 1: Biden administration at the moment. But it's not fully you know,

266
00:14:14,200 --> 00:14:16,880
Speaker 1: for sure, but he's definitely ahead by a long shot.

267
00:14:16,880 --> 00:14:19,080
Speaker 1: And some of the polls and you have to have

268
00:14:19,120 --> 00:14:21,080
Speaker 1: done a little bit of work on it, what have

269
00:14:21,120 --> 00:14:25,680
Speaker 1: you decided, Well that the tax plans of the two

270
00:14:25,720 --> 00:14:29,640
Speaker 1: candidates are are vastly different. Um. You know, I don't

271
00:14:30,800 --> 00:14:33,360
Speaker 1: I agree with you that though that the polls make

272
00:14:33,440 --> 00:14:37,600
Speaker 1: it pretty likely that President Biden is coming as opposed

273
00:14:37,640 --> 00:14:41,280
Speaker 1: to being vice President Biden, And I would just suggest

274
00:14:41,320 --> 00:14:43,120
Speaker 1: that it's just not based in the cake yet. I

275
00:14:43,120 --> 00:14:44,800
Speaker 1: think that this election is going to be closer than

276
00:14:44,800 --> 00:14:47,320
Speaker 1: a lot of the polls suggest. Remember it does come

277
00:14:47,320 --> 00:14:50,000
Speaker 1: down to state by state, and I think there are

278
00:14:50,040 --> 00:14:54,040
Speaker 1: a number of toss up states where President Trump UM

279
00:14:54,280 --> 00:14:56,480
Speaker 1: may have some of his voters being under sampled and

280
00:14:56,520 --> 00:14:58,960
Speaker 1: not showing up in the traditional polls. I know that's

281
00:14:59,280 --> 00:15:01,520
Speaker 1: somewhat of a of a partisan view, but I'm just

282
00:15:01,560 --> 00:15:05,520
Speaker 1: saying objectively, that's what happened in We saw a lot

283
00:15:05,640 --> 00:15:08,600
Speaker 1: of Trump support that was not accurately assessed by the

284
00:15:08,640 --> 00:15:12,360
Speaker 1: polls leading up to it, and the shy Trump supporter too. Well.

285
00:15:12,480 --> 00:15:14,240
Speaker 1: Given that, then on the fact that your head of

286
00:15:14,280 --> 00:15:17,040
Speaker 1: the ministal bond group, are there states for your sort

287
00:15:17,040 --> 00:15:20,200
Speaker 1: of you know, making making that better or loading up

288
00:15:20,200 --> 00:15:22,960
Speaker 1: the boat a little bit, well, I would say this.

289
00:15:23,200 --> 00:15:25,280
Speaker 1: I would say I think that the greatest impact on

290
00:15:25,440 --> 00:15:29,600
Speaker 1: muni's from the election outcome would be in the event

291
00:15:29,640 --> 00:15:34,000
Speaker 1: of a blue blue wave. So Biden wins Capitol hialth, House,

292
00:15:34,040 --> 00:15:37,680
Speaker 1: Senate are completely in Democratic hands. That would open the

293
00:15:37,720 --> 00:15:41,000
Speaker 1: door for UH for an increase back to thirty nine

294
00:15:41,040 --> 00:15:43,000
Speaker 1: point six for the top marginal tax rate, which is

295
00:15:43,000 --> 00:15:46,240
Speaker 1: where I was before the Trump tax cuts. I would

296
00:15:46,280 --> 00:15:48,560
Speaker 1: also impose a minimum thirty nine point six on all

297
00:15:48,600 --> 00:15:50,880
Speaker 1: investment income for people who make more than a million

298
00:15:50,920 --> 00:15:57,040
Speaker 1: dollars UH. That on average would increase demand for municipal bonds. Also,

299
00:15:57,160 --> 00:16:00,640
Speaker 1: banks who shed munis in droves after their corporate tax

300
00:16:00,720 --> 00:16:03,600
Speaker 1: rate went to from thirty five, they would be facing

301
00:16:03,600 --> 00:16:07,720
Speaker 1: a tax right under the Biden tax plan. Also Polish communis,

302
00:16:07,880 --> 00:16:10,680
Speaker 1: so I think munis would would fare relatively well compared

303
00:16:10,720 --> 00:16:14,360
Speaker 1: to other fixed income in a blue wave undeniably UM

304
00:16:14,400 --> 00:16:17,520
Speaker 1: And you'd also probably get a bigger stimulus plan. So

305
00:16:17,560 --> 00:16:20,280
Speaker 1: the bigger stimulus plan will help all state and local governments.

306
00:16:20,440 --> 00:16:23,680
Speaker 1: Which ones would move the most, the cheapest ones? Uh?

307
00:16:23,720 --> 00:16:25,520
Speaker 1: You know? So so states of like New Jersey in

308
00:16:25,560 --> 00:16:29,120
Speaker 1: Illinois where spreads are wide, you think their bonds might

309
00:16:29,160 --> 00:16:31,960
Speaker 1: actually fare pretty well in a relative sense in a

310
00:16:32,000 --> 00:16:35,040
Speaker 1: Biden victory. So it does seem like there's at least,

311
00:16:35,080 --> 00:16:38,040
Speaker 1: you know, some kind of chance of a nice little

312
00:16:38,160 --> 00:16:40,560
Speaker 1: pay day here. How are you hedging for that? Even

313
00:16:40,560 --> 00:16:42,320
Speaker 1: if you don't believe that that's what's going to happen,

314
00:16:42,480 --> 00:16:45,480
Speaker 1: or you're you know, you're more you're more than convinced

315
00:16:45,520 --> 00:16:49,360
Speaker 1: either way, there must be some hedging trades that you've

316
00:16:49,360 --> 00:16:52,720
Speaker 1: been putting on. You know. I think that markets are

317
00:16:52,720 --> 00:16:56,400
Speaker 1: pretty bad with binary risks. Um, you know, zero one

318
00:16:56,440 --> 00:16:59,640
Speaker 1: outcome is just not easy to perfectly price in and

319
00:16:59,800 --> 00:17:03,240
Speaker 1: being of the election. Uh So in terms of just

320
00:17:03,640 --> 00:17:07,160
Speaker 1: adding duration or reducing duration, or adding munis or reducing communis,

321
00:17:07,600 --> 00:17:09,680
Speaker 1: uh you know, you you you need to have a

322
00:17:09,720 --> 00:17:12,160
Speaker 1: little more confidence than than fifty fifty. So it makes

323
00:17:12,160 --> 00:17:15,439
Speaker 1: it tough. Since I think the chances of this election

324
00:17:15,480 --> 00:17:18,919
Speaker 1: being indeterminate come election day and maybe in fact being contested,

325
00:17:19,240 --> 00:17:21,440
Speaker 1: I think that's greater than the markets are currently pricing.

326
00:17:21,720 --> 00:17:24,760
Speaker 1: So if you're really going to try to hedge, you know,

327
00:17:24,800 --> 00:17:26,720
Speaker 1: to your question, I think you would need to go

328
00:17:26,800 --> 00:17:30,200
Speaker 1: into options markets. Okay, there's not a lot of options

329
00:17:30,200 --> 00:17:36,880
Speaker 1: on munis, makes it really challenging. I think, uh, one

330
00:17:36,920 --> 00:17:40,359
Speaker 1: important fact here, if we have a contested election, market

331
00:17:40,800 --> 00:17:44,480
Speaker 1: risk access don't like it, treasure gilds probably go down. Ultimately,

332
00:17:44,880 --> 00:17:48,640
Speaker 1: regardless of outcome, that event will fade and we will

333
00:17:48,680 --> 00:17:51,600
Speaker 1: know who the winner is. Biden would be probably more

334
00:17:51,640 --> 00:17:55,200
Speaker 1: bullish for munis. Trump would be somewhat less bullish formmunities.

335
00:17:55,240 --> 00:17:57,800
Speaker 1: But on average, we're no matter what happens, we're going

336
00:17:57,840 --> 00:18:00,440
Speaker 1: to get a stimulus plan. The question of sizing in

337
00:18:00,560 --> 00:18:03,160
Speaker 1: time is still open. In fact, we're still talking about

338
00:18:03,160 --> 00:18:04,720
Speaker 1: it before the election. I just doubt that that's going

339
00:18:04,760 --> 00:18:08,040
Speaker 1: to happen. And how much states and local governments get

340
00:18:08,040 --> 00:18:12,800
Speaker 1: as well, of course, absolutely extraordinarily different. Um r J.

341
00:18:13,000 --> 00:18:15,919
Speaker 1: How are you trading the coronavirus in the various states?

342
00:18:15,960 --> 00:18:18,720
Speaker 1: Obviously Wisconsin is just in trouble right now. We had

343
00:18:19,280 --> 00:18:22,159
Speaker 1: Icago's marriage coming out and saying that you know, she

344
00:18:22,240 --> 00:18:25,800
Speaker 1: wants to avoid lockdowns, but it's getting to that tipping

345
00:18:25,800 --> 00:18:30,160
Speaker 1: point and she absolutely will if necessary. Are you doing

346
00:18:30,200 --> 00:18:33,080
Speaker 1: any kind of municipal or you know, trades related to

347
00:18:33,119 --> 00:18:36,439
Speaker 1: the coronavirus across the States. Well, the coronavirus has had

348
00:18:36,440 --> 00:18:40,480
Speaker 1: a huge impact on municipal fixed income across states, locals

349
00:18:40,600 --> 00:18:44,560
Speaker 1: and revenue bond sector. I would say we, as our

350
00:18:44,600 --> 00:18:48,440
Speaker 1: investment group, our MUNI effort, we have been pretty cautious

351
00:18:48,480 --> 00:18:52,360
Speaker 1: on g os UM for the one primary reason gios

352
00:18:52,400 --> 00:18:55,879
Speaker 1: didn't blow out that much relative to the overall triple

353
00:18:55,960 --> 00:18:59,440
Speaker 1: A MUNI scale during the onset of the COVID crisis. Meanwhile,

354
00:18:59,520 --> 00:19:04,280
Speaker 1: revenue on like airports bonds backed by hotel taxes areas

355
00:19:04,320 --> 00:19:08,600
Speaker 1: that were very heavily impacted by the COVID shock due

356
00:19:08,640 --> 00:19:11,560
Speaker 1: to travel plummeting for example. That's where we've looked for

357
00:19:11,600 --> 00:19:14,560
Speaker 1: opportunities because that's where the risk premiums blew out and

358
00:19:14,600 --> 00:19:18,640
Speaker 1: bonds became very cheap. As far as the o's are concerned, UM,

359
00:19:18,720 --> 00:19:22,080
Speaker 1: we haven't been playing coronavirus regionally all that much. We

360
00:19:22,200 --> 00:19:25,440
Speaker 1: have been playing the coronavirus recovery in our in our

361
00:19:25,480 --> 00:19:29,120
Speaker 1: revenue bond sectors. So we've added to airports for example.

362
00:19:29,680 --> 00:19:32,880
Speaker 1: We've also we have some overweight positions in senior care

363
00:19:32,920 --> 00:19:35,240
Speaker 1: living centers which have been heavily impacted by this. But

364
00:19:35,280 --> 00:19:37,359
Speaker 1: there's a lot of good survivors in there, and if

365
00:19:37,400 --> 00:19:39,320
Speaker 1: we can pick them, we get a nice wind. So

366
00:19:39,600 --> 00:19:42,879
Speaker 1: I think every MUNI investor worth worth their salt is

367
00:19:42,880 --> 00:19:45,840
Speaker 1: spending a lot of time on coronavirus, not only geographically,

368
00:19:46,119 --> 00:19:48,400
Speaker 1: but from a sector standpoint. And on the latter we've

369
00:19:48,400 --> 00:19:51,960
Speaker 1: been much more active than playing the geographies. So interesting,

370
00:19:52,040 --> 00:19:54,600
Speaker 1: Or j thank you for that insight into how your

371
00:19:54,600 --> 00:19:57,600
Speaker 1: portfolio managers are looking at all of this. Or Gallo

372
00:19:57,720 --> 00:19:59,960
Speaker 1: is senior portfolio manager and head of the Municipal Bomb.

373
00:20:00,040 --> 00:20:03,560
Speaker 1: The group manages almost twelve billion dollars, but the whole

374
00:20:04,160 --> 00:20:08,040
Speaker 1: UH company has nearly six billion dollars in assets under management,

375
00:20:08,080 --> 00:20:10,120
Speaker 1: so a loss to a lot to look through there,

376
00:20:10,160 --> 00:20:12,520
Speaker 1: But then there's a lot of municipal bonds out there

377
00:20:12,560 --> 00:20:17,840
Speaker 1: as well. It's time now to talk deals. It has

378
00:20:17,880 --> 00:20:20,600
Speaker 1: been quite the year in many many different ways. Let's

379
00:20:20,600 --> 00:20:24,360
Speaker 1: bring in Rob Brown, CEO of Lincoln International. So, Rob,

380
00:20:24,400 --> 00:20:26,560
Speaker 1: we've had so many deals this year. I mean today

381
00:20:26,600 --> 00:20:29,520
Speaker 1: obviously there's an early ten billion dollar old stock deal

382
00:20:29,560 --> 00:20:33,480
Speaker 1: in the shale field, but talk to us generally about

383
00:20:33,520 --> 00:20:38,440
Speaker 1: the appetite for companies getting together this year. Well, the

384
00:20:38,560 --> 00:20:43,520
Speaker 1: appetite right now is incredibly strong. Um. We obviously went

385
00:20:43,520 --> 00:20:46,360
Speaker 1: through a period earlier this year when the economy shut

386
00:20:46,440 --> 00:20:49,720
Speaker 1: down and you saw a huge fall off in deals,

387
00:20:49,840 --> 00:20:54,240
Speaker 1: And what we've seen coming out of that is companies

388
00:20:54,280 --> 00:20:56,760
Speaker 1: that have a good COVID story to tell, meaning they

389
00:20:56,800 --> 00:21:01,440
Speaker 1: either performed well during the economic slowdown or they've bounced

390
00:21:01,440 --> 00:21:04,240
Speaker 1: back or their viewed as a sector that is going

391
00:21:04,320 --> 00:21:09,280
Speaker 1: to maybe even more favorable post COVID. Those companies are

392
00:21:09,320 --> 00:21:12,679
Speaker 1: out for sale. And what we're seeing is as investors,

393
00:21:12,720 --> 00:21:17,960
Speaker 1: both strategic and financial, are aggressively putting money into those businesses,

394
00:21:18,160 --> 00:21:22,320
Speaker 1: and in many cases, we're seeing valuations of those businesses

395
00:21:22,520 --> 00:21:25,399
Speaker 1: at the same or even better than pre COVID levels.

396
00:21:26,119 --> 00:21:28,960
Speaker 1: So that's an interesting, you know, part of the discussion

397
00:21:29,160 --> 00:21:33,159
Speaker 1: for me. Why are prices holding up? I mean, you know,

398
00:21:33,240 --> 00:21:36,480
Speaker 1: prices for almost everything are you know, are not holding

399
00:21:36,520 --> 00:21:39,040
Speaker 1: up the way they were pre COVID. And and and

400
00:21:39,119 --> 00:21:42,520
Speaker 1: yet it seems that for companies there isn't that much

401
00:21:42,640 --> 00:21:46,040
Speaker 1: of a discount of COVID discount being built into these prices.

402
00:21:46,240 --> 00:21:50,000
Speaker 1: What am I missing? So? I think it's two things. One,

403
00:21:50,080 --> 00:21:53,800
Speaker 1: I think it's classic supply and demand. So much capital

404
00:21:53,880 --> 00:21:56,719
Speaker 1: was raised over the last five years, particularly in the

405
00:21:56,760 --> 00:22:01,080
Speaker 1: private equity world, but but also corporations. Going into the downturn,

406
00:22:01,400 --> 00:22:04,800
Speaker 1: you had stockpiles of cash, so you had capital that

407
00:22:04,920 --> 00:22:07,280
Speaker 1: wanted to be put to work in acquiring companies that

408
00:22:07,480 --> 00:22:10,320
Speaker 1: for a period of time during this past year, it

409
00:22:10,400 --> 00:22:12,800
Speaker 1: was unable to be put to work. So you have

410
00:22:12,920 --> 00:22:15,879
Speaker 1: the demand to put capital to work, and then you

411
00:22:15,960 --> 00:22:18,959
Speaker 1: have kind of a natural selection. The companies that are

412
00:22:18,960 --> 00:22:21,000
Speaker 1: coming to market right now are the best companies. As

413
00:22:21,040 --> 00:22:23,400
Speaker 1: I said, they're the ones that showed growth during the downturn.

414
00:22:23,440 --> 00:22:26,080
Speaker 1: They're the ones that are in resilience sectors that were

415
00:22:26,080 --> 00:22:28,800
Speaker 1: proven to be essential. So I think as a result

416
00:22:28,880 --> 00:22:31,399
Speaker 1: of that, you still have more money that wants to

417
00:22:31,400 --> 00:22:33,560
Speaker 1: be put to work in buying companies than there are

418
00:22:33,640 --> 00:22:36,600
Speaker 1: high quality companies to buy, and that supplying demand has

419
00:22:36,760 --> 00:22:42,240
Speaker 1: kept prices very elevated. What about people trying to negotiate

420
00:22:42,320 --> 00:22:44,399
Speaker 1: stock for deals. I mean, we definitely saw that that

421
00:22:44,480 --> 00:22:47,560
Speaker 1: set off back in March. Obviously we've recovered a loss

422
00:22:47,640 --> 00:22:50,359
Speaker 1: of ground, but at the same time, is it more

423
00:22:50,400 --> 00:22:52,560
Speaker 1: beneficial for companies to try and do an old stock

424
00:22:52,640 --> 00:22:54,919
Speaker 1: deal or a major portion of the deal in stock.

425
00:22:56,119 --> 00:22:58,520
Speaker 1: I think that's very companies specific. I think to the

426
00:22:58,560 --> 00:23:02,400
Speaker 1: extent companies field stock is still a little undervalued, they

427
00:23:02,440 --> 00:23:04,480
Speaker 1: tend to not want to use stock. I think to

428
00:23:04,560 --> 00:23:08,800
Speaker 1: the extent companies feel like, hey, my stock is fairly valued. Uh,

429
00:23:08,960 --> 00:23:11,240
Speaker 1: they want to use it. So we are seeing it

430
00:23:11,440 --> 00:23:13,800
Speaker 1: be used, but we're not seeing it being used in

431
00:23:14,200 --> 00:23:18,480
Speaker 1: a materially different way than it was pre COVID election.

432
00:23:19,280 --> 00:23:22,040
Speaker 1: So there is a very strong possibility that both the

433
00:23:22,080 --> 00:23:25,720
Speaker 1: White House and Congress turn blue on November three and

434
00:23:25,840 --> 00:23:29,840
Speaker 1: that tax policy will change, including the capital gains tax policy.

435
00:23:30,160 --> 00:23:32,679
Speaker 1: Are you seeing people actually come to market with their

436
00:23:32,720 --> 00:23:35,879
Speaker 1: business because they don't want to have to face paying

437
00:23:35,880 --> 00:23:39,000
Speaker 1: what they might have to pay pay in tax if

438
00:23:39,040 --> 00:23:42,720
Speaker 1: they wait until there is a potential Biden presidency to

439
00:23:42,800 --> 00:23:47,320
Speaker 1: sell their business. Yes, we are definitely seeing that an Interestingly,

440
00:23:47,440 --> 00:23:50,840
Speaker 1: as I said, it's become a very hot m and

441
00:23:50,840 --> 00:23:54,560
Speaker 1: a market. And I think what's happening is the fear

442
00:23:54,800 --> 00:23:59,600
Speaker 1: of cap gains rates going from you or you know,

443
00:23:59,640 --> 00:24:01,800
Speaker 1: the TRUP administration would like to lower in the fifteen

444
00:24:02,359 --> 00:24:06,000
Speaker 1: that fear is actually pouring gasolene on what already is

445
00:24:06,000 --> 00:24:09,560
Speaker 1: a hot market. So not only are we seeing um

446
00:24:09,880 --> 00:24:13,199
Speaker 1: in particularly for private sellers. Uh. But not only are

447
00:24:13,200 --> 00:24:15,919
Speaker 1: we seeing companies come to market, we are in the

448
00:24:15,920 --> 00:24:18,840
Speaker 1: market with some things where the sellers are saying listen.

449
00:24:18,840 --> 00:24:21,399
Speaker 1: I know initially I said, hey, if this closes in

450
00:24:21,520 --> 00:24:23,280
Speaker 1: Q one, that's fine. I'm not in a hurry. What

451
00:24:23,320 --> 00:24:25,320
Speaker 1: we're hearing is, I'd really like to get this done

452
00:24:25,320 --> 00:24:27,720
Speaker 1: this year. I don't want to take that risk, even

453
00:24:27,760 --> 00:24:32,880
Speaker 1: though traditionally when Congress makes tax increases, they make them

454
00:24:32,920 --> 00:24:35,840
Speaker 1: effective the next year. When they make tax decreases, they

455
00:24:35,840 --> 00:24:38,919
Speaker 1: have on occasion made those effective at the beginning of

456
00:24:38,920 --> 00:24:42,800
Speaker 1: the year. But but legally and legislatively they can do

457
00:24:42,840 --> 00:24:45,480
Speaker 1: whatever they want. And so we are seeing sellers feel

458
00:24:45,560 --> 00:24:48,920
Speaker 1: like the odds of the blue wave are probably better

459
00:24:48,960 --> 00:24:51,840
Speaker 1: than they felt they were a couple of months ago,

460
00:24:52,160 --> 00:24:53,720
Speaker 1: and they just don't want to take the risk of

461
00:24:53,840 --> 00:24:57,880
Speaker 1: having to pay doubled in taxes if they sell their business. Well,

462
00:24:57,880 --> 00:25:00,200
Speaker 1: I have to ask about sparks. They blew up this year.

463
00:25:00,280 --> 00:25:01,679
Speaker 1: I mean, there were a couple of big ones and

464
00:25:01,680 --> 00:25:05,600
Speaker 1: then suddenly almost everything you know related to deal making

465
00:25:05,640 --> 00:25:08,840
Speaker 1: seem to be you know, a spack being raised. It's

466
00:25:08,920 --> 00:25:11,919
Speaker 1: the new private equity or something at what happened to

467
00:25:12,000 --> 00:25:17,000
Speaker 1: have this explosion of special purpose acquisition vehicles. Well, that's

468
00:25:17,040 --> 00:25:20,080
Speaker 1: interesting because we are seeing SPACs have more interest in

469
00:25:20,200 --> 00:25:22,960
Speaker 1: our deals that we're selling than we ever had in

470
00:25:22,960 --> 00:25:25,720
Speaker 1: the past. And I think part of it is UH. Spacts,

471
00:25:25,800 --> 00:25:29,680
Speaker 1: where you were historically viewed as the capital of last resort.

472
00:25:29,840 --> 00:25:33,520
Speaker 1: They were very dilutive to sellers and they may be

473
00:25:33,600 --> 00:25:36,560
Speaker 1: weren't raised by the most reputable investors. That's changed. I

474
00:25:36,600 --> 00:25:38,840
Speaker 1: think people are feeling like, hey, SPACs are a way

475
00:25:38,880 --> 00:25:42,320
Speaker 1: to access public markets without having to go through UM,

476
00:25:42,359 --> 00:25:44,159
Speaker 1: you know, the typical road show and I p O.

477
00:25:44,359 --> 00:25:46,919
Speaker 1: So they still can be more dilutive in a sale.

478
00:25:46,920 --> 00:25:50,119
Speaker 1: But I think part of it is UM. Again, it

479
00:25:50,160 --> 00:25:52,359
Speaker 1: gets back to the ability to raise capital, and so

480
00:25:52,480 --> 00:25:55,280
Speaker 1: a lot of SPACs were raised pre COVID UH that

481
00:25:55,320 --> 00:25:58,000
Speaker 1: needed to put money to work. They're raised by sophisticated

482
00:25:58,080 --> 00:26:01,560
Speaker 1: investors with good reputations, and you know, I think as

483
00:26:01,600 --> 00:26:05,000
Speaker 1: the public markets have held up, UM, becoming public is

484
00:26:05,040 --> 00:26:07,919
Speaker 1: still for the right company. It's a way to go

485
00:26:08,000 --> 00:26:12,120
Speaker 1: public UH in a in a quicker, in sometimes cheaper way.

486
00:26:12,200 --> 00:26:16,280
Speaker 1: So we are seeing more SPACs than we've ever seen. UH.

487
00:26:16,359 --> 00:26:19,360
Speaker 1: They're not the right outcome for everybody, but we are

488
00:26:19,680 --> 00:26:22,600
Speaker 1: seeing them participate more in the companies we have for sale.

489
00:26:22,760 --> 00:26:25,119
Speaker 1: All right, Rob, but thank you for that updates. Always

490
00:26:25,119 --> 00:26:28,840
Speaker 1: fascinating to speak with Rob Brown, CEO of Lincoln International

491
00:26:28,880 --> 00:26:31,439
Speaker 1: on the deal landscape. Once again. A major deal today

492
00:26:31,480 --> 00:26:34,159
Speaker 1: in the shale space, Consho being bought by Conago from

493
00:26:34,200 --> 00:26:39,560
Speaker 1: nine point seven billion. Thanks for listening to Bloomberg Markets podcast.

494
00:26:39,720 --> 00:26:43,080
Speaker 1: You can subscribe and listen to interviews at Apple Podcasts

495
00:26:43,200 --> 00:26:46,760
Speaker 1: or whatever podcast platform you prefer. I'm Bonnie Quinn, I'm

496
00:26:46,760 --> 00:26:49,400
Speaker 1: on Twitter at Bonnie Quinn, and I'm Paul Sweeney. I'm

497
00:26:49,400 --> 00:26:52,040
Speaker 1: on Twitter at pt Sweeney. Before the podcast, you can

498
00:26:52,080 --> 00:26:54,320
Speaker 1: always catch us worldwide at Bloomberg Radio